Energy sector in India

Context:

Over the past thirty years, the country’s energy demand has grown at an average of 3.6 per cent per annum.

How much electricity is needed by India?

• As per data for 2014 published by the International Energy Agency, average global per capita electricity consumption is 3030 kWh (kWh is colloquially known as a unit).
• The corresponding figure for India is about 805 units, and for developed countries of the OECD, it is 8,028.
• The projected global average per capita consumption by the middle of the century is 7,500 units.
• The electricity generation capacity in India is the fifth largest in the world. India is also the sixth largest consumer of electricity, and accounts for 3.4 per cent of the global energy consumption.
• Over the past thirty years, the country’s energy demand has grown at an average of 3.6 per cent per annum.

What is the present status of Electricity generation in India?

• The cumulative average growth rate of electricity generation in India for the period 2006-07 to 2015-16 was close to 6%.
• In 2016-17 generation by utilities was 1,242 BU.
• Data for generation from non-utilities is not yet available, but one can assume it to be around the same as in 2015-16, i.e. 168 BU.
• The total generation was thus 1,410 BU.
• For a population of 1.3 billion, it translates to a per capita generation of 1,100 units.
• Electricity generation projected for 2050 is six times the total generation in 2016-17 and in terms of per capita generation, it is about 4.5 times.
• The percentage share of electricity in total energy consumption is increasing.
• As per estimates by the International Atomic Energy Agency, this share was 34.8% in 2015 for Middle East and South Asia, and is projected to increase to 52% in 2050.
• According to the NITI Aayog report India’s solar and wind energy potential is greater than 750 GW and 302 GW respectively.
• The total possible generation from hydropower and VRE can at best be about a quarter of the projected requirement of 8,600 BU.
• India imported 5.24 billion units of electricity from Bhutan last fiscal, which was 0.47 per cent of the total output.

What need to be done?

• An emphasis on energy conservation and improvement in energy efficiency of industry and household gadgets will help in reducing electricity consumption.
• Assuming India’s population by the middle of century will be about 1.6 billion and transmission and distribution losses will come down to the lowest technically feasible value of about 7%, India must plan to generate about 8,600 Billion Units (BU) to provide 5,000 units per capita per annum to its citizens.
• The use of low-carbon energy sources like hydropower, variable renewable energy (VRE), and nuclear power.
• Incorporates influence of technological and policy changes exogenously.

What are the government’s steps?

• The Government of India has announced policy initiatives such as electricity and housing for all, accelerated infrastructure development, Make in India, electrification of transport, etc. which call for more electricity and on a reliable basis.
• India’s new Hydrocarbon Exploration Licensing Policy, putting a new market-friendly regime in place for oil and gas exploration back in March, has helped as well.
• As per the Shunglu Committee Report on the power sector, in the coming five years, the Distribution Franchisee model is expected to grow manifold, thereby improving the power distribution scenario of the country.
• The Union Cabinet approved the Deendayal Upadhyaya Gram Jyoti Yojana(DDUGJY) for ensuring 24×7 power supply.
• Draft national energy policy seeks to keep India’s economy heavily reliant on fossil fuels even in 2040.
• There are four key objectives of our energy policy: Access at affordable prices, improved security and Independence, Greater Sustainability and Economic Growth.
• The NEP aims at achieving 100% electrification by 2022, and will take this to be the main plank of the overall energy.
• Recent moves such as the Cabinet nod to the construction of 10 indigenous pressurised heavy water reactors, taking further steps for the construction of units 3-6 at Kudankulam, and completing all steps towards operationalisation of the nuclear cooperation agreement with Japan are all steps in the right direction.

What are the features of Draft National Energy Policy?

• It aims to create independence in the energy sector and to provide 24×7 hours power to all
• It Focus on energy independence through rationalisation of costs, subsidy & boost to renewable sector
• It aims to produce 175 GW energy from the renewable sector till 2022
• Emphasis on transition from the coal to clean energy for domestic use
• Focus on the infrastructure development ie. The projects like TAPI to development the gas pipelines
• The overarching policy recommendations are based on India’s energy ambitions for the year 2040
• The NEP anticipates major transformations on the energy demand and supply sides arising out of fast evolving technology, consumer behaviour and air quality consideration
• It provides for a flexible energy system which would quickly respond to the market cu
• The broad objectives of the policy are: enhanced energy independence, increased access at affordable prices, greater sustainability and higher economic growt

Related statistics:

• By the year 2040, India’s electricity demand will rise 4.5 times over 2012 levels.
• clean energy (like renewables, nuclear and hydro) may account for 13.5% of electricity produced by 2040 (from 3.7% in 2012),
• Greater efficiency and technology can cut energy demand in 2040 by 16.6%;
• Up to 90% of this reduction is possible in transport, industry and construction.
• New buildings codes could cut energy use by 50% in new construction.
• If most Indian vehicles were electric by 2030, pollution levels in cities could drop 80%-90%, and India could save $100 billion, a sum over two times larger than the current defence budget
• By 2040, India’s population is predicted to increase to 1.6 billion, and the rate of urbanisation (projected average rate of change of the size of the urban population over a given period of time) of this population will be 47%.
• The share of manufacturing in the country’s gross domestic product will double from its current levels to 30%.
• As of 2017, nearly 25% of the population is still without access to electricity and 40% without access to clean cooking fuel.

What are the challenges?

There are many roadblocks in unleashing the full potential of India’s power sector

• Fuel availability is one of the concern faced by the industry.
• There are other concerns such as land acquisition which has made purchase of land for power projects very expensive.
• Capital crunch in the energy sector is the biggest challenge before the country
• India is currently facing energy crisis with its major dependency on coal, crude oil imports to meet sharply
• The current power infrastructure in India is not capable of providing sufficient and reliable power supply growing energy needs of the country.

What are the solutions?

• There is a need for improvement in generation and transmission/distribution of electricity by adapting new, innovative strategies.
• there is a need for renovation and modernisation of generation equipment, i.e., improving the performance of existing old power plants.
• Need to encourage more private players.
• The investment pattern should focus on generation, transmission and distribution segments in order to achieve balanced growth in the power sector
• Solar energy technology is very important tool which can lowers worldwide carbon emissions.
• Currently, the installed capacity of solar energy projects in India is about 4.22 GW. India is planning to produce 100 GW of solar power by 2022.

What are the Government policies and acts?

Government acts and policies

Government of India has come out with Acts and Policies to support renewable Energy

• The Electricity Act 2003 has promotes electricity generation from co-generation and renewable energy sources. This Act accelerated the process of renewable energy development in the country.
• The National Electricity Policy 2005 stipulates that the share of electricity from non- conventional resources would need to be increased such purchase by distribution companies shall be through competitive process
• According to Tariff Policy 2006 states the Appropriate Commission shall decide a minimum percentage for purchase of energy.

Conclusion:

Presently, the power sector expects a major shift in reforms, policies and incentives that encourage investments in power generation and transmission for its rapid growth.