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SKILL DEVELOPMENT IN RENEWABLE ENERGY – MYRIAD OPPORTUNITIES FOR GLOBAL FOOTPRINTS

“Let’s make India the skill capital of the world” ~ Narendra Modi

Introduction:

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Skill is defined as the ability to carry out the tasks and duties of a given job and has, for the purposes of ISCO-88 (International Standard Classification of Occupations-88) the two following dimensions: (a) Skill level – which is a function of the complexity and range of the tasks and duties involved; and (b) Skill specialisation – defined by the field of knowledge required, the tools and machinery used, the materials worked on or with, as well as the kinds of goods and services produced.

According to Global Talent Competitiveness Index 2015-16, India ranks 89th among 109 nations in the world, in terms of skilled labour force. Among the BRICS nations as well, India fares the lowest in terms of skilled manpower. While China and India remain as the two of the largest economies in Asia who are net exporters of talent, India still lags in imparting skills to its workforce which are far below world standards. As per ILO’s Report of 2011 (Labour Market performance and the challenges of creating employment in India, 2011), only 2% of the total workforce of India has received some form of formal training from recognized institutes while about 80% of the workforce did not even have the opportunity of being trained. It is even paradoxical that despite having a unique demographic dividend, India has failed in using it to its advantage. United Nations Population Fund defines demographic dividend as the potential economic growth that can result from changes in a population’s age structure. Demographic Dividend indicates that since there is a low dependency ratio for workforce between the age-group of 20-25 years, there is a better comparative cost advantage and competitiveness to the economy because of lesser burden of ageing population. It is a planning oversight that India has been unable to tap its advantageous position of having a higher proportion of working age population compared to the rest of the world.

India is ambitiously targeting for real GDP growth for 2016-17 to be in the 7-7.75 per cent range in the backdrop global slowdown. The same would remain a distant dream if India’s 2073.54 billion US dollars economy is burdened with unskilled manpower or unemployed skilled manpower in the years to come.

Creation of Ministry of Skill Development and Entrepreneurship:

Realizing the importance of skilled manpower for India’s near-mature economy, the Government of India notified the formation of the Department of Skill Development and Entrepreneurship on 31st July, 2014 which subsequently led to the creation of the Ministry of Skill Development and Entrepreneurship (MSDE) on 10th November, 2014. Thereafter, on 20th March, 2015, the Union Cabinet approved India’s largest Skill Certification Scheme, i.e. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) which is sought to be implemented by National Skills Development Corporation (NSDC) under the guidance of the MSDE. The Skill Certification Scheme has currently been approved by the Union Cabinet for another four years (2016-2020) to impart skills to 10 million youth of the country.

 India is not the only country in the world which has a dedicated Ministry working towards skill development of its workforce; countries like UK, China and Australia had such departments in place since long. India, however, has a big challenge ahead as according to MSDE, only a small percentage of the total workforce in India has undergone formal skill training as compared to 68% in UK, 75% in Germany, 52% in USA, 80% in Japan and 96% in South Korea. While creation of MSDE is the first step towards skilling India, it is imperative to appreciate that skill development in itself has been an extremely expensive affair and hence, investments in skill building have to be made wisely. In a time where labour is becoming expensive each day, the companies have been choosing machines over manpower. Therefore, the next step towards skill development should be mapping. Collecting, collating, analysing information about where the skill development is most needed and what the labour market wants, are the two primary questions to be looked into. Matching the skilled labour with the labour market is the toughest task. To avoid a situation where about 10 million skilled labourers would be rendered unemployed, it is necessary to have a comprehensive system in place which provides data on returns on investments in skills in terms of their economic and social outcomes.

Power Sector and Power Sector Skill Council:

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Of the few sectors which currently have the capacity to absorb the skilled manpower, energy sector is the most ripe. India’s recent focus on developing its energy infrastructure has not only garnered world attention but has also become a benchmark for other developing nations.

India’s installed capacity stood at 272.5 GW as of 2015 which is fifth largest in the world and as per the 12th Five Year Plan, India is targeting a total of 88.5 GW of power capacity addition by 2017.

With immense scope for investment in power sector, there is a requirement of augmenting the capacity across the value chain including manufacturing, construction, fuel and material supplies, project planning and implementation, financial management and operations and maintenance management. To bring about this augmentation, there will be an immediate need for additional skilled manpower in related industries, which India does not have currently.

Visualizing the immediate necessity of such skilled manpower in the power sector, Power Sector Skill Council was rolled out as a society in 2013 with Central Energy Authority, Ministry of New and Renewable Energy and Indian Electrical and Electronics Manufacturers Association as lead organisations, pursuant to National Skill Development Policy of 2009 which mandates NSDC to constitute Sector Skill Councils. Inter alia key deliverables of the PSSC for the next 10 years, creation of 100 job roles for which National Occupational Standards are to be established is of prime importance.

Skilling in renewable energy sector:

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India’s power sector as a whole is gaining world attention, but its renewable energy segment is emerging as a show stealer. India has a target for renewable generation of 175 GW by 2022 which includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power. Foreign Direct Investment up to 100% is permitted under the automatic route for renewable energy generation and distribution projects subject to provisions of the Electricity Act, 2003. India has recently also floated the draft National Renewable Energy Act, 2015 which is a comprehensive and all-inclusive legal framework for development of renewable energy. Looking at the unstoppable pace at which India is heading towards clean energy, REN21, the global renewable energy multi-stakeholder network, in its Global Status Report of 2016 has listed India among the top five countries for investment in renewable energy, only behind China, the US, Japan and the UK.

While skill development in the power sector appears to be a worthy investment for India, channelizing the same specifically towards renewable energy segment would provide multifarious benefits.

Increasing demand for skilled manpower in green energy:

India spearheaded the formation of International Solar Alliance (ISA) at COP-21 Climate Conference Summit of 2015 at Paris, France with nations vouching for better participation to combat climate change through increased use of solar energy. ISA aims towards driving down solar prices, standardization of solar technologies and increased research and development. ISA has opened the doors for international exchange of technology and manpower in solar sector. While India would benefit from this cross-country platform, it should also grab every opportunity to make the best of its huge population by imparting them the required skills for international advantage. Almost every developed, developing or under-developed economy is tapping the numerous non-conventional sources of energy. Within a decade, there will be a huge demand for non-conventional energy experts and workers required to be positioned across projects. Training the workforce today will make India a leading exporter of qualified experts in energy market. The Planning Commission of India expects that the ageing economies will have a shortage of skilled manpower of about 56.7 million by 2020.In the backdrop of India’s upper hand in demographic dividend; there is a huge opportunity to become a global reservoir of skilled manpower.

The draft National Renewable Energy Act, 2015 provides for constitution of National Renewable Energy Committee (NREC) where the Committee shall identify measures for skill development while the draft Act lays heavy emphasis on indigenous renewable energy manufacturing sector for cost reduction/ strategic purposes/ customization for Indian conditions and promotion of export of renewable energy products and devices from the country (Clause 10). Special provisions have been made for promoting skill development and entrepreneurship in the field of renewable energy through various measures by the Central and State government, like focusing on entrepreneurship development, establishing institutes dedicated to renewable energy innovation, providing assistance to project developers and many more (Clause 19(4)). Creation of a National Renewable Energy Fund for giving effect to the targets of the Act including skill development is a laudable step (Clause 23).

In compliance of the Electricity Act, 2003, the Central Government notified the Rural Electrification Policy (REP) on 23rd August, 2006 in line with Rajiv Gandhi Gramin Vidyutikaran Yojna (now renamed as Deen Dayal Upadhyaya Gramin Vidyutikaran Yojna). REP emphasized on alternative methods/ techniques for achieving the set targets in un-electrified villages i.e. focus on Decentralized Distributed Generation (DDG) wherever central/ state grid connectivity was not feasible, increased usage of solar technologies at household level and many more. The per capita consumption of electricity in India was 355 units in 1999- 2000 and was pegged at 1010 units in 2014-2015. The energy requirement of India is expected to rise exponentially from 936589 MUs in 2011-12 to 37,10,083 MUs in 2031-32. With the per capita consumption of energy and total energy requirement set to increase manifold over the coming years with rapid rural electrification and increased usage of electricity across households, there will be a huge requirement for skilled manpower to manage and develop the installations for villages, especially the DDG sets, solar parks and many more. Imparting skills to the local inhabitants of villages will be a positive step towards all-inclusive development. It will not only make the entire system self-sustainable but also set the path for movement of workforce from agricultural sector to manufacturing and services sector. Creation of employable youths and employment would be a direct consequence. The same skilled labour would be an asset for the thriving economy across industries including maintenance, manufacturing, construction, and management.

 Need for a cross-functional support:

At this juncture, a comparison can be drawn from India’s Information Technology sector (IT sector) which witnessed a boom in 1990s marking India’s presence on global map. IT sector had increased its contribution to India’s GDP from 1.2% in 1998 to 9.5% in 2015 – which was not accidental. India gained prominence and global competitiveness in a sector with most modest exports and industrialization. The State’s investment in R&D labs, education, technical institutions were significant in creating human capital and infrastructural clusters. Government initiatives of 1980s which nurtured and facilitated the needs of the IT sector cannot be overlooked, like, the banking sector had helped in raising finance through debt even in the absence of collateral. Similarly, various states cooperated for commissioning software technology parks which were analogous to the SEZs of China’s manufacturing sector which heavily contributed to software exports.

 Similarly, a multi-dimensional approach for creating skills which would be required in the renewable energy sector across countries would play a vital role in taking India’s GDP towards a double-digit growth. It is imperative that sufficient support be provided by various departments and ministries across states, like Ministry of Rural Development for aligning skill development with PSSC, creation of SEZs like Solar Technology Parks for imbibing manufacturing skills and for manufacturing and many more initiatives need to be coordinated at multi-level. Most importantly, decentralizing skill imparting and training is necessary. Shifting the focus from mega/ metro cities to tier 3 cities/ towns or villages would reduce the training cost and provide the maximum possible return.

 Institute of Energy Management and Research (IEMR) in its report on ‘Human Capital Challenges in the Indian Power Sector’ argues that with an increasing focus on energy efficiency and renewable energy, there is an opportunity to productively engage millions of people to participate in harnessing small hydro, biomass & bio-fuels, solar and wind resources, provided they have the appropriate specialised knowledge. Moreover, demand side management, power trading, carbon credits, smart grids, etc. will also require manpower with specialised training.

 Having a comprehensive database of information pertaining to world figures, requirement, facts and reports may be easy, however, developing a system for analysing the trends, gauging the field requirements and providing reliable ready-to-use information to various departments is particularly a challenging task. This gap can be filled by Indian Statistical Institute which may provide the statistical infrastructure to the MSDE for capitalising on renewable energy sector.

Conclusion:

As per Central Electricity Authority, India plans to add 30,000MW of installed capacity during the 12th Plan and 30,500MW during the 13th Five Year Plan from renewable energy sources. It is also projected that there would be a huge shift in the energy consumption pattern of India within a decade. The West has already started to witness a remarkable shift in consumption patterns. This is the right time for India to train its workforce and make them globally wanted. The Least Developed Countries (LDCs) also provide the best on-ground investment opportunities for developing renewable energy, and Indian companies are tapping the same with investment and technology. With the availability of skilled labour, LDCs would be the best investment destination in terms of exported manpower as well.

The labour of energy production, i.e. the labour required per unit of energy produced, is much higher in renewable energy sources than in conventional energy production primarily due to distributed nature of the projects. If India is aiming for a considerable growth in green energy, then the shortage of skilled workforce may adversely impact the prospects as the current sources of training are not scalable as per the required manpower. Therefore, there is an urgent need to identify the gaps, assess the demand and build skilled workforce. Support from the allied sectors, government departments, think tanks, expert institutes and synchronisation between Centre and states, and many such factors will play a vital role in boosting the slow paced skill development in which India has been lagging behind since long. Planning and developing a holistic model of skilling and then effectively working on it will eventually make India the skill capital of the world.

About the Author:

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Sahil Goyal is a Chartered Accountant by profession and currently working with a leading consultancy firm. He is also the President of Ambalika, a non-profit organization aimed towards uplifting the economic and social conditions of tribal communities by empowering them through imparting skills for livelihood.