The Remedy to Inflation in Oil Prices : Solar Power


India has started moving towards green energy transition at a remarkable speed. It has
made significant developments in the solar sector. However, the fact that India is still the
third largest oil consumer in the world, consuming 4.69/million barrels per day and has a
share of 4.8% of the world’s total oil consumption becomes an obstacle in its aim to be a
leader in green energy consumption. If the situation remains the same, it is expected that in
the coming years India and China will be consuming 50% of global oil demand. The fact that
crude oil prices are rising every year, is a major factor for these countries to move towards a
more sustainable energy source.

Present Scenario

The fall in crude oil prices from FY 12-13 to FY 15-16 allowed nations to import huge
volumes of crude oil. However, recent increase in oil prices and limitations in
exporting/production of oil has left these nations into a bind. However, after continuous
emphasis on green and sustainable energy solutions, oil prices have risen from $39.9/per
barrel in April 2016 to $61-65/barrel in January 2019. India imports 80% of its oil needs and
the prices are expected to reach 227 MT in 2018-19, costing nearly $125 billion.
Currently India demands ~172 GW of energy and even though India’s total installed energy
capacity is 347 GW, and it is spending millions on oil, there is still a deficit in energy supply (-
1.4%). Keeping in mind the rising oil prices and limited fossil fuel reserves, this deficit is only
likely to increase. Which makes the shift to green energy essentially the right decision for

Solar as Saviour

After Saudi Arabia’s announcement to reduce oil production and supply, it can be rightly
assumed that other oil producers will follow the same path. This will lead to the rising of oil
prices. In the last 30 years, India’s energy demand has grown at 3.6% pa and continues to do
so. If India keeps on depending on oil for energy in this situation, it will have a negative
effect on country’s economy and limit India’s overall growth.
In this scenario, solar energy comes as a boon to India, it is cheaper than oil and shows a
great promise for future in the long run. Various nations have made large investments in
solar energy adoption, once they understood its benefits.

Way Forward

In the current scenario, solar is a perfect way for India to support its energy needs and cut
on its energy expenditure. However, more efforts need to be shown in the solar sector by
not just installing solar panels but manufacturing them as well. Manufacturing solar panels
domestically will help India increase the profit margin and even generate more jobs, along
with initiating socio-economic growth.

Therefore, rising oil prices have shown a clear path to India. This is the time to shift to solar
energy production and consumption to lower down the cost margins and move towards a
more environment friendly world.

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