Although, renewable energy growth (especially solar) has been incredible in India, the country is still the third-largest oil consumer in the world (4.14/million barrels per day, 4% share of the world total). It is understandable that Indian solar industry still hasn’t grown large enough to phase out conventional energy usage and satisfy country’s growing energy demand (Installed solar capacity ~16.6 GW out of total energy generation capacity 330 GW). Therefore, the country needs a balance between conventional and renewable energy to sustain present energy requirements at hand. And continuous fall in crude oil prices from FY 12-13 to FY 15-16 allowed the country to import crude oil at a profitable margin.
However, the current rise in crude oil prices (from $39.9 in April 2016 to $52.7 in December 2016) and predictions of continuity in price hike highlights addition of forex outflow and reiterates the importance of solar energy growth.
Analysing The Situation
India imported 183.1 mn metric tonnes of crude oil in FY 12-13, 189.2 million metric tonnes in the year 2013-14, 189.4 million metric tonnes in the year 2014-15, and 202.9 million metric tonnes in the year 2015-16. Although, the import quantity increased every year, the import bill witnessed a decrease of -0.9% in FY 13-14, -21.19% in FY 14-15, -43.21% in FY 15-16. Previous fall in international crude oil prices have led Government of India to stay majorly dependent on fossil fuel while raising the solar sector.
Although, increase in crude oil imports have supported the existing (conventional energy powered) infrastructure, it is important to note that, domestic consumption of petrol, diesel and cooking gas rose by 10%. Thus increasing pollution. And currently the price rise of crude oil (14% in Nov 2017) begs the country to re-think its energy policy framework. Crude oil import expense of India has shown a 20% increase, reaching $56.25 bn from April to October 2017. As the oil prices are expected to continuously rise in the future, at the end of FY 17-18, Indian import bill is expected to reach (approx.) $90 billion, registering a 29% increase over last fiscal.
Although, India is building trade relations with countries like the US to buy crude oil at competitive prices rather than paying premium to the Organization of the Petroleum Exporting Countries (Opec), this is just a stopgap to decrease forex outflow and cannot be considered as a solution. As the limited reserves of fossil fuel deplete, the prices will continue to rise, regardless of our trade arrangements with countries of the world.
Therefore, India needs to focus on renewable energy (mainly solar) to stop paying billions for energy and become self-reliant.
Solar Is the Way Towards Energy Reliance
Oil supplies are tightening as we speak, thus the rise in oil prices. Continuous rise of price will have an ill-effect on Indian economy in the coming future, thus rolling back the benefits India once enjoyed due to low crude oil prices.
In such a scenario where population and energy demand continues to rise in India, it is extremely important to focus on and establish a more sustainable energy source, rather than chasing to meet perpetual price rise of conventional energy.
On the other hand, Solar has been highlighted as the best replacement of conventional energy and has shown capability to satisfy growing world energy requirement. Not just developed, but developing countries like- Brazil, South Africa, Chile, Philippines etc. are betting big on solar, understanding the implications solar growth will have on their respective energy infrastructure. India is also following the trend reaching ~16.6 GW of grid connected solar capacity within less than a decade.
However, taking into consideration of the recent crude oil price rise, more efforts are needed to support solar, allowing rapid solarisation and gaining energy security. Increasing domestic manufacturing growth (rather than importing solar modules) will also help India to kick back profit from the export market (domestic manufacturing can save $42 billion by 2030 from solar import), generate more jobs (Renewable energy created 416,000 jobs in India in 2015, 1,017,800 jobs are expected be created within 2022), and initiate socio-economic growth.
Therefore, it is fair to state that the path before India has been cleared by the recent price rise of crude oil. All that remains now is to reduce oil imports and act aggressively towards complete solarisation of the country while focusing on domestic manufacturing for continued profit extraction from global market.