Coal-fired projections: 

Coal-fired projections: 

Context

• The NITI Aayog’s Draft National Energy Policy (DNEP) has predicted that between now and 2040, there will be a quantum leap in the application of renewable energy together with a drastic reduction in fossil fuel energy intensity.

What are the expectations from this move?

• Considering the economic and population growth, India’s annual per-capita electricity consumption is expected to triple, from 1075 kWh in 2015-16 to over 2900 kWh in 2040.
• The DNEP is expecting a 100% electrification throughout India in the near term.
• The government will be investing $2.5 billion to provide electricity connections to every home in India by the end of 2018.

Why is the policy more concentrating on Coal?

• The DNEP is relying on coal power to sustain the nation’s base load requirement to meet rising energy demand. It proposes that coal will fuel 67% of India’s power generation in 2022.
• The first step is that while India claims it will make a big push for renewables, it will continue to rely on coal for its baseload generation.
• The second step is that even with this target, India will need only 741 million tonnes of coal in 2022 and 876 million tonnes in 2027. But the Ministry of Coal continues to push its ambitious targets to raise coal production to 1.5 billion tonnes by 2020, of which 500 million tonnes is expected to be produced by private coal mines and about 1 billion tonne by the public sector.

What are the hurdles?

• Power plants, both public and private, have been running at merely 60% plant load capacity utilization.
• Coal producers had to wait for a nod from the ministries of coal and power for support. Such support may not be forthcoming.
• The power industry already suffers a high level of bank loan defaults, insolvency and other legal proceedings.

What are the subject of importance?

• The DNEP has acknowledged that India’s oil consumption has grown 63% from 2005 to 2016 whereas the refining capacity has grown only by 15%.
• Gas consumption has increased by 38% while production has actually fallen since 2012.
• India’s energy security does require a large strategic storage of oil to take care of any vagaries in its international supply chain.
• The peaking of India’s oil demand could have been envisaged but has not been identified in the DNEP.
• On the one hand, the draft policy recognizes that by 2040, India’s oil import dependence may reach 55% from the current level of 33%. On the other hand, it offers nothing to curtail such dependence.

What is the way ahead?

• The DNEP is offering to promote use of public transportation and railways to reduce oil consumption.
• Unless electric transport is carefully planned, India’s dependence on imported oil is likely to continue.