Renewable energy is fast emerging as the panacea for India and Japan’s energy problems.

Eight decades ago, far-sighted master inventor Thomas Alva Edison could see well beyond the phonographs, light bulbs, motion-picture cameras, cement mixer and what not that he engineered. Alva clearly predicted the potential of renewable energy – “We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy — sun, wind and tide. ... I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”

He was right on track, of course. Conventional sources of energy are becoming increasingly expensive and harder to source. In some cases – think of the nuclear crisis in Japan following the earthquake and tsunami earlier this year – traditional sources of energy are also being questioned for their safety. Events in Japan are promoting a global rethink of the future role of nuclear energy. Clean and safe energy is the new mantra, worldwide.

Not that Japan has not explored alternative energy sources like geothermal energy and was, until recently, the world’s second largest producer of photovoltaic electricity. The nation has made concerted efforts to lower the contribution of oil to its energy supply and increase the share of nuclear power and natural gas. Now, all that is set to change. Renewable energy has become the number one priority, with Japanese Prime Minister Naoto Kan pledging to boost renewable energy to at least 20 per cent of the country’s electricity supply in the 2020s.

India has also set ambitious goals to increase its renewable energy capabilities over the next few decades. On the anvil are diverse projects including solar and wind energy, small hydro power and waste-to-energy endeavors, among others.

About 40 per cent of the population is deprived of access to regular and reliable energy. The average per capita consumption of energy in India is a measly 500W or thereabouts – much lower than developed countries such as the United States, Europe, Australia and Japan. In spite of that, India is currently the fifth largest consumer of energy in the world, and is expected to become the third largest by 2030. By then, the per capita energy consumption is likely to rise sharply on the back of rapid economic growth and industrialisation.

The global prospects for nuclear power, which currently supplies just 3 per cent of India’s electricity, have taken a setback since the meltdown at the Fukushima Daiichi plant in Japan. The Indian government targeted sourcing a quarter of the nation’s power from atomic sources by 2050. Forty-four new reactors have been planned to meet this demand. Opposition to nuclear power, however, is growing.

The wave of resistance to nuclear energy is fast turning into a flood of opportunities for renewable energy in India. The country is investing in, and counting on, renewable sources of energy like hydroelectric, wind, biomass and solar power to help meet the increasing demand. Renewable energy sources contribute around 10 per cent of the total power generated in the country, or 15,789MW.

India already figures in lists of the ‘Top Ten’ producers of most forms of energy. The country ranks sixth globally in terms of total electricity generation. It has one of the world’s largest programmes in solar energy – the solar energy mission aiming to generate 20,000MW of solar power by 2022. Also, the growth of wind energy has been consistent with global trends. India is currently implementing the world’s largest wind resource assessment programme comprising wind monitoring, wind mapping and complex terrain projects. This programme covers 800 stations in 24 states with around 200 wind-monitoring stations in operation at present.

Globally, India is in the fourth position in generating power through biomass. In the last fifteen years, biomass power has become an industry attracting an annual investment of over US$ 22 billion.

Earlier this year, a two-day international conference was organised by the World Institute of Sustainable Energy (WISE) in Pune. “We are aware of potential risks in nuclear energy generation. Countries like Germany have postponed commissioning of their nuclear power plants for now. In India, we need lower interest rates to help realise the renewable energy potential,” observed G M Pillai, founder and Director General of WISE.

Due to pro-investment policies being followed by the Indian government, there is considerable foreign interest in developing the renewable energy sector. Investment in sustainable energy in India went up to US$ 3.7 billion in 2008, up 12 per cent over the previous year. This is likely to follow an upward trend. Last December, the Indian Renewable Energy Development Agency (IREDA) raised $120 million through a loan agreement with the French Investment Agency and Nordic Investment Bank. This year, the IREDA is expected to sign agreements with banks in Germany and Japan to receive over US$ 630 million to be used for the promotion of renewable energy projects in India.

Japan International Cooperation Agency, an aid donor agency of the Japanese government, has agreed to give India US$ 1.6 billion as a soft loan for six development projects. Part of this grant will be invested in an energy-saving project for small and medium industries and a renewable energy project, and thus accelerate the adoption of NRE and energy conservation projects using Japanese technology. Some of this money will also be directed to establish transportation and forestation infrastructure.

In 2009, Assocham on the part of India and a Japanese NGO engaged in developing technology in renewable energy, designing energy parks and promoting non-conventional energy signed a memorandum of understanding to jointly set up NRE parks in the country using Japanese know-how and latest technology. The parks, which will be setup with help from the Ministries of NRE and Environment and Japanese government, are intended to showcase latest NRE technologies, including solar, wind and clean coal.

Potential investors in India have a lot going for them. The large demand-supply gap presents huge opportunities to enhance energy generation, transmission and distribution. Abundant natural sources of energy and low gestation periods for projects make new ventures attractive. Financial schemes and sops, such as ‘soft’ loans made available on favourable terms, are in place to further interest. On its part, the Reserve Bank of India has identified the renewable energy industry as a ‘priority sector’, clearing the way for quick processing of loans from Indian banks. The government also offers subsidies in the form of premium tariff rates and tax benefits among others. States such as Gujarat, Kerala, Madhya Pradesh, Maharashtra and Tamil Nadu have provided sales tax exemptions/deferment policies for investment in wind power projects.

With the demand for electricity growing at about 8 per cent annually, the country faces a challenge to provide clean and safe energy to its citizens. The outlook is positive, though. With all the interest and investment from domestic and foreign sources, along with much needed support from the government, access to a regular electricity supply might no longer be a pipedream for the average Indian.

Edison would have approved.

Kishor Jagirdar is a Strategic Change Management Specialist, Managing Director - Infopace Management Pvt Ltd and Member Executive Board of India Japan Global Partnership Summit.