January 2021

The year 2020 will be one to remember. Its most defining memory, of course, will be of the global pandemic. But it will also be known as the year when a series of important developments took place in the energy sector.

A large number of countries pledged to phase out coal. The world’s largest greenhouse gas emitter, China announced that it would scale up its nationally determined contribution committed to under the Paris Agreement. Some of the world’s largest private banks, including JP Morgan Chase, HSBC and Morgan Stanley, decided to reduce the carbon intensity of their portfolios over time. Green hydrogen – hydrogen  produced from renewable energy-powered electrolysers – began to take off around the world. France, Canada, the UK and a dozen other countries committed to banning gas-based vehicles within the next two decades.

India was very much a part of this picture. Coal gave way to renewables, which attracted a good response in various auctions. Storage-based renewable energy projects also gained momentum. Meanwhile, an increasing number of corporates decided to join the clean energy club.

As we, hopefully, move towards a post-Covid era, these trends are likely to magnify in 2021. A few shifts are already visible, and a few others are likely to pan out soon.

Covid-19 showed the world that energy systems can exist without coal-based electricity. The cost of building renewable capacity (capital cost) has also become lower than that of building a thermal project. In the medium to long term, there is likely to be a focused shift from coal-based power to renewable energy owing to policy and climate change initiatives, and better economics. In the latest bids for supplying round-the-clock renewable energy, a competitive first-year tariff of Rs 2.90 per unit was discovered, which will further increase the pressure on thermal-based plants.

Going forward, there will be a move away from liquid fuels in mobility, with battery electric vehicles (EVs), fuel cell EVs and green fuels such as hydrogen expected to drive the future of the transportation sector. In addition, there will be a focus on industrial decarbonisation by reducing carbon dioxide emissions through the utilisation of multiple options of energy efficiency, electric production of heat, use of hydrogen and biomass as feedstock or fuel, and carbon capture.

Finally, there will be efforts to maximise the use of renewable energy sources, especially solar, via the deployment of battery energy storage systems and hydrogen as storage.



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