We don't have another 100 years for the energy transition

We are on the front lines of the great energy transition. This energy transition is one of the biggest things that will happen in our lifetime, along with advances in AI in synthetic biology.

Energy transitions are extraordinarily complex and involve changes in systems, infrastructure, policies, industrial activity, and social behaviour. So they play out over a long time, i.e. decades or even centuries. The first Energy transition from biomass to coal played out over 200 years in different parts of the world. The transition to oil was faster, 70-100 years. This transition from fossil fuels to renewables has three characteristics which are quite different from the previous two

Firstly, the first two were not really transitions. We are still burning biomass, coal, oil, and gas. All we did was add new energy sources to existing ones. This time it’s different. We have to transition away from fossil fuels to renewable sources.

Secondly, we are in a race against time to limit global warming. We don’t have another 100 years. We have to figure out how to accomplish this in 50 years in most parts of the world.

Thirdly, it’s not just about carbon. This time, it’s also about development. Climate change will disproportionately affect poor people, and the biggest thing for climate adaptation is getting people out of extreme poverty. Think about how many people in india used to die in the 50s, 60s and 70s from heat waves and cyclones. Today, very few do. Why? Because we have better infrastructure and fewer people living in extreme poverty. However, we still have a billion people who are in the dark and burning biomass, mainly in Africa. We still have another 2 billion people in South Asia who are energy-poor, which means using less than 1000 kWh of electricity every year. 1000kWh is a really low threshold. For instance, our fridge uses 400kWh per year, and our iPhone uses about the same.

So, we are also in a race against time for energy access.

Energy Transition will require us to overcome great challenges

1. We've made massive progress on the cost and scale of deployment of wind and solar, but they don't produce as much energy as fossil fuels and can be inconsistent. We need new and improved ways to store energy to make it affordable and environmentally friendly. Current battery chemistries might only be a temporary solution. We also need advanced technologies that can provide a steady and powerful energy supply, like Small Modular Nuclear Reactors (SMNR) and nuclear fusion.
2. We need huge upgrades on transmission and distribution because places where the sun shines and the wind blows are often far away from where it is consumed. Since the amount of energy produced and consumed can vary, we need smarter grids that can efficiently manage these variations.
3. Finally, we need to make giant leaps in energy efficiency: how we consume, transmit, and generate it.

All of this points to the need for much more intensive collaboration between companies, governments, investors, and philanthropists to create an ecosystem of the right policies and financing to innovate and deploy innovations at speed and scale.

India is on the front lines of this transition

We have the largest population and are already the 3rd largest emitter of greenhouse gases despite having extremely low energy consumption of just over 1000kwH per annum. With our economy growing at 6% and aiming to become a developed country by 2047, our energy consumption is soaring into double digits. Climate change is going to exacerbate our energy needs dramatically. Temperatures in India are routinely approaching 50 degrees Celsius, and the percentage of homes with AC is expected to soar from 10% today to 90% by 2050.  So, it’s going to be an incredible challenge to deliver the trinity of development, energy security and decarbonisation.

Fortunately, we have been making good progress. Thanks to a shared understanding among political, bureaucratic, and private sector leadership, the energy transition is not only a challenge but also a big opportunity for development and job creation. We have been fortunate to have constructive policies that have brought in investments and a tremendous amount of entrepreneurship. World Economic Forum ranks India amongst the fastest-advancing nations on the Energy Transition Index. We are doing well right now. Last quarter, 70% of the new capacity commission was renewable. But it’s a race against coal because there is a huge pipeline of new coal plants that are being built. What is going to be required is much more concerted action between all actors to develop and execute statewide energy transition plans.

One of the most promising examples of this is in Maharashtra, which has a huge challenge because it has an ageing generation, transmission and distribution energy infrastructure. As a result, there is a shortage of energy. Tariffs are amongst the highest in India, and most of the power is dirty. Industries are beginning to relocate to the neighbouring state, Gujarat. So key actors, including the state govt, MSEDCL , MAHAPREIT , TATA Power , etc, came together to develop a comprehensive energy plan for the state for 2030. The plan has identified over 100 discrete projects across generation, storage, transmission & distribution, demand management, and energy efficiency. This will require about $30bn in investment. The government is now setting up a project management unit to develop a bid and monitor the execution of these projects. All this has happened in less than a year. This is a terrific example of what can happen when key stakeholders come together.

With great leadership and opportunity comes great responsibility

While we can see the strides being made across the spectrum, here’s what companies working towards energy transition must consider-:

Firstly, Invest adequately in capacity across the supply chain to support the requirements of not only traditional customers or utilities in developed countries but also in the Global South. The big challenge for many African, Asian and Latin American countries is not just capital but equally supply chain constraints.

Secondly, prioritise innovation to make energy infrastructure more efficient, cost-effective, and intelligent to accelerate the pace of advancements.

Finally, the most significant barrier to progress is not technical or financial; it is human capital. We need to build more capability for good decision-making across the system, particularly in regulators, in government and state-owned Gen and T&D companies, and our pace of progress will depend heavily on strengthening capability. This cannot be left to the government alone.

The energy transition is a monumental task that requires our collective effort and urgency. It’s a job for all of us. It is nation-building in a lasting way. Remember, we’ve got #OnlyOneEarth.