RENEWABLE ENERGY

Published on 25 Feb 2025

Renewable energy drives economic growth by offering a sustainable, reliable energy source that reduces reliance on fossil fuels, fosters job creation, and supports technological innovation. India’s renewable energy sector, with a capacity exceeding 175 GW as of 2023, enhances energy security and contributes to economic stability.

Renewable energy and India’s economic growth

How renewable energy supports India’s economic growth?

• Employment Generation: The renewable energy sector has created over 1.2 million jobs, with solar alone accounting for around 700,000 jobs, boosting economic activity across various regions.

• Energy Independence: By increasing its renewable energy capacity to over 175 GW, India reduces reliance on imported fossil fuels, saving approximately $15 billion annually on oil and gas imports.

• Investment Attraction: India’s renewable energy sector has attracted over $30 billion in foreign direct investment (FDI), fostering economic growth through new technologies and infrastructure development.

• Industrial Growth: The growth of the renewable sector drives advancements in technology and manufacturing, with companies like Adani Green and Tata Power leading in solar and wind energy, stimulating industrial progress.

• Reduced Environmental Costs:  Transitioning to renewable energy helps lower pollution levels, potentially saving up to ₹1.8 trillion annually in health-related costs and environmental damages.

• Rural and Infrastructure Development: Renewable projects in rural areas, such as solar parks in Gujarat and wind farms in Tamil Nadu, improve local infrastructure and provide electricity to underserved regions, enhancing economic development.

• Energy Cost Stability: Renewable energy projects help stabilize energy prices by providing a predictable and low-cost power source. 

• Example: Solar energy costs have fallen to ₹2.5 per kWh, reducing electricity costs for consumers and industries.

• Government Support and Policies: Initiatives like the National Solar Mission and Production Linked Incentive (PLI) schemes promote growth, providing incentives and subsidies that drive further investment and development in the renewable sector.

• Export Opportunities: India is emerging as a global player in renewable energy technology, with exports of solar panels and wind turbines contributing to economic growth. 

• Energy Access and Inclusivity: Renewable energy projects are enhancing energy access in remote and underserved areas, improving quality of life and enabling local businesses. 

• Example: Initiatives like solar-powered microgrids in rural Uttar Pradesh have provided electricity to over 500,000 households.

• Infrastructure Development: Large-scale renewable energy projects stimulate infrastructure development, including roads, transmission lines, and storage facilities. 

• Example: The construction of the 2.5 GW Bhadla Solar Park in Rajasthan involved significant infrastructure improvements.

Shift in subsidies to achieve renewable energy targets

Shifting subsidies from fossil fuels to renewable energy will play a critical role in helping India meet its goal of sourcing 50% of its energy from renewable sources by 2030. Here’s how:

• Investment and Cost Dynamics

• Increased Investments: Redirecting subsidies to renewables will attract higher investments, contributing to the growth of solar and wind energy, which saw solar capacity rise from 2.6 GW in 2014 to over 60 GW by 2023.

• Reduced Costs: Subsidies will lower renewable energy production costs, making them more competitive. For instance, solar energy costs in India have dropped by 85% since 2010, partly due to supportive policies.

• Rural Electrification and Energy Security

• Rural Electrification: Subsidies for renewables can support solar micro-grids, enhancing rural electrification, with over 60 million rural households gaining access to electricity through solar solutions by 2021.

• Energy Security: Decreasing reliance on fossil fuel imports, which currently cover over 80% of India’s oil needs, will improve energy security and reduce foreign exchange outflows.

• Employment and Climate Targets

• Job Creation: The renewable sector is expected to generate over 1 million jobs by 2030. Solar energy alone has already created over 300,000 jobs, especially in rural regions.

• Climate Commitments: Supporting renewables helps meet India’s Paris Agreement targets, aiming to reduce emissions intensity by 33-35% from 2005 levels by 2030.

• Technology and Public Health

• Technological Advancement: Subsidies will accelerate the adoption of advanced technologies like battery storage, essential for achieving India’s target of 500 GW non-fossil fuel-based energy by 2030.

Health Benefits: Transitioning to cleaner energy sources will reduce air pollution, which is linked to 1.7 million premature deaths annually in India, improving public health and lowering healthcare costs.

Tags:
Economy

Keywords:
Renewable energy Solar energy Non-conventional energy Subsidies for renewable energy

Syllabus:
General Studies Paper 3

Topics:
Infrastructure Development