Economic and security factors drive the shift to renewable energy

Government mandates and policies are pivotal in incentivising adoption and stimulating demand, kickstarting the transition towards green energy.

While climate change and decarbonisation are primary drivers for the energy transition, the economic imperative of energy security and import substitution cannot be overlooked. A successful transition requires alignment across technical, economic, and infrastructural dimensions, innovative policy interventions and funding mechanisms. By addressing these challenges holistically, nations can meet their energy needs sustainably and position themselves as leaders in the global shift towards renewable energy. Subramanian Chidambaran speaks with the EPR Magazine to share his thoughts on the energy transition.

Diverse motivations for transition

The energy transition is occurring for multifaceted reasons, beyond just the imperative of decarbonisation due to climate change. One crucial aspect is the economic landscape, particularly in countries like India, where over 80 percent of energy is imported, significantly strains financial budgets. As India anticipates exponential economic growth, the parallel surge in energy demand exacerbates the import dependence conundrum. To mitigate this, the focus shifts towards energy security and import substitution, driving the need for indigenous energy sources. Solar energy emerges as a promising solution given India’s abundant solar radiation. However, solar energy’s intermittency necessitates complementary storage mechanisms like batteries and hydrogen. Thus, the energy transition encompasses a shift from fossil fuels to renewables like solar, hydrogen, and battery storage, driven by climate concerns, economic imperatives, and energy security.

Critical factors in technology adoption

For any technology to be adopted successfully, three critical aspects must align: technical performance, total cost of ownership (TCO), and infrastructure accessibility. Firstly, the new technology must demonstrate comparable or superior performance to incumbents. Secondly, it must offer a viable TCO throughout its lifecycle. Lastly, a robust infrastructure network must support its accessibility, ensuring uninterrupted availability akin to traditional fueling stations for fossil fuels. The circular relationship between demand and cost often poses a challenge, particularly in developing markets like electric vehicles (EVs). Government intervention through subsidies and incentives kickstarts this cycle but is unsustainable in the long term. Thus, the transition to sustainable energy hinges on creating self-sufficient ecosystems where demand drives down costs organically.

Enabling green hydrogen adoption

Converging various crucial factors in green hydrogen is imperative to facilitate its widespread adoption. Firstly, government mandates and policies are pivotal in incentivising adoption and stimulating demand, kickstarting the transition towards green hydrogen. Raw material accessibility is another critical aspect. Access to affordable green power and water is essential for hydrogen production to ensure its viability and sustainability. Access to cutting-edge technology is paramount. This often necessitates partnerships or licensing agreements with global leaders to provide access to the best-in-class technology. A robust local supply chain is vital for enhancing competitiveness and reducing costs throughout the value chain. Optimisation of the entire value chain is essential. From production to distribution, every component must be cost-effective to ensure the overall affordability of green hydrogen. Efficient storage and distribution systems are crucial for reducing the final product’s overall cost and making it more accessible to consumers. Addressing safety concerns and enhancing awareness about green hydrogen is essential to instil confidence in this new energy source. Investment in talent development is necessary to build expertise and support the transition towards green hydrogen, ensuring its sustainability in the long run. Finally, innovative funding mechanisms are required to diversify funding sources beyond government subsidies, involving financial partners and institutions to sustain the transition towards green hydrogen.

By addressing these aspects comprehensively, India and other nations can effectively navigate the energy transition, secure their energy future, and potentially become global leaders in renewable energy production and export.

Spokesperson: Subramanian Chidambaran, Chief Strategy Officer, Cummins India