Challenges in India’s Energy Sector

Source-This post on Challenges in India’s Energy Sector has been created based on the article “THE ROADMAP FOR NET-ZERO EMISSIONS “published in “LiveMint” on 17 July 2024.

UPSC Syllabus-GS Paper-3- Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Context- India’s goal of achieving net zero emissions by 2070 faces many challenges in the energy sector. Tackling these issues requires a combination of technological innovation, policy changes, international collaboration, and strategic planning.

Electricity generation in India accounts for 70% of coal use, with coal-based power making up 75% of total electricity generation.

What are the challenges in India’s energy sector?

1) Solar Power:

A) Solar electricity generation is limited to sunlight hours, resulting in a utilization rate of only 18-20% per year, compared to 80% for coal-fired plants. Thus, a 1 MW coal power plant is equivalent to 4 MW of solar capacity in terms of asset creation.

B) Initial investment for solar is 4 to 5 times higher than for coal-based plants. This creates a challenge in securing long-term climate finance at low interest rates.

C) Large-scale land requirements for solar installations.

D) Solar and wind power are not available continuously.

2) Nuclear Power: There are issues related to cost overruns and delayed project completions.

3) Carbon Capture and Energy Efficiency- Carbon capture and storage (CCUS) are currently costly, and there are few uses for it. Additionally, the storage capacity for CO2 is limited.

4) Energy Efficiency: Energy efficiency has been effectively implemented in India. However, these gains are incremental, as the country needs to grow economically to meet human development goals and support its rising aspirational class.

5)  Oil and Gas Substitution –

A) Electric Vehicles: It can reduce petroleum consumption. However, heavy-duty trucks, shipping, and airplanes can’t rely on electricity due to the need for large battery capacity. Further, transitioning two-wheelers, three-wheelers, and cars to electric will also raise electricity demand, stressing the power system.

B) Green Hydrogen: It needs renewable electricity from water splitting, but it’s currently very expensive.

6) Geopolitical Considerations– Rising demand for battery storage will lead to more lithium imports. This will be creating energy security concerns for India because it relies heavily on lithium, mainly controlled by China.

What should be the way forward?

1) Climate Financing– A fair way to raise funds from the Global North is to implement an annual fee of $1 per tonne of carbon dioxide for each country, starting from 1990.

Read More- Climate Change Negotiations after Bonn Climate Meet – Challenges and Way Forward

2) Solar energy sector Reforms-

A) Policy incentives for rooftop installations in homes, industries, roadside areas, and water bodies can help minimize land requirements.

B) To maintain a continuous power supply, use battery storage, pumped hydro plants, flexible coal and nuclear operations, and import electricity from neighboring countries like Nepal and Bhutan.

3) Nuclear Energy Sector– Policy measures are needed to improve management efficiency and ensure timely project delivery.

4) Capacity Building– As a strong energy system with decentralized networks evolves, there is a need for skilled workforce. This requires capacity building at both central and state levels.

5) Policy Implementation: The budget should streamline the energy market, include petroleum products in the goods and services tax, eliminate dual pricing of natural gas, and establish market-based pricing etc.

Question for practice

What are the issues facing India’s energy sector, and what steps should be taken to move forward?