Net energy and feasible economic growth: a developing country perspective from India

Abstract

The objective of this article is to highlight the significance of net energy consideration in economic policymaking, which has received less or no attention from the stakeholders particularly in the context of developing economies like India. With the rapid growth in the renewable energy sector, in this period of the low-carbon energy transition, there appears to be a growth in gross energy output. However, the net energy outputs reaching the demand sector of the economy may still be low due to the large feedback energy requirements for such rapid growth in energy supply. Such reduced energy availability may lead to reduced gross domestic product (GDP) growth unlike what is envisaged by policymakers. This is in contrast to the conventional standpoint, where assumed economic growth scenarios are used for energy planning. Since electricity use and economic development are found to be strongly correlated for developing economies like India, it is expected that a reduction in net energy available from the power sector will impose constraints on the GDP growth. Hence, a very ambitious electricity supply programme such as the one based on solar electricity may be counterproductive to GDP growth.