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Strategy for Energy Sector

The Government of India has identified power sector as a key sector of focus so as to promote sustained industrial growth. Some initiatives by the Government of India to boost the Indian power sector:

The Ministry of Power, Government of India, has taken various measures to achieve its aim of providing 24X7 affordable and environment friendly ‘Power for All’ by 2019, which includes preparation of state specific action plans, and implementation of Green Energy Corridor for transmission of renewable energy, among other measures.

India has become an associate member of the International Energy Agency (IEA), which makes the Paris-based body more significant, indicating India’s growing prominence in playing an important role in the global energy dialogue, according to the IEA.

The Government of India plans to auction coal blocks for commercial mining by the end of December 2017, which would end the monopoly of state-run firms in coal mining and help in achieving the country’s target of producing 1 billion tonnes of coal by 2020.

The Cabinet Committee on Economic Affairs (CCEA) has approved the enhancement of capacity of the Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects from 20,000 megawatt (MW) to 40,000 MW, which will ensure setting up of at least 50 solar parks each with a capacity of 500 MW and above in various parts of the country.

The Ministry of New and Renewable Energy plans to introduce a fixed-cost component to the tariff for electricity generated from renewable energy sources like solar or wind, in a bid to promote a green economy.

The Union Cabinet has approved the ratification of International Solar Alliance’s (ISA) framework agreement by India, which will provide India a platform to showcase its solar programmes, and put it in a leadership role in climate and renewable energy issues globally.

The Indian power sector has an investment potential of Rs 15 trillion (US$ 225 billion) in the next 4–5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment.

The government’s immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24×7 electricity for residential, industrial, commercial and agriculture use. The government has electrified 13,000 villages so far out of the total 18,452 villages and is targeting electrification of all villages by 2019, within the targeted 1,000 days.

The Government of India is taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc., in order to achieve India’s ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022.

Ensuring energy security

According to the Integrated Energy Policy 2006, energy security of India is quoted as below: “We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices, at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected”.

The energy requirements of Indian economy are estimated to increase substantially in the .next two decades. According to Integrated Energy Policy, for a 9% growth over a sustained period, imports of crude oil in 2031-32 may be between 362-520 million tonnes with import dependence of 91%-94%. For natural gas, it may be 25-135 (Mtoe), which means an import dependence of 20%-57% of supply. Coal imports may be between 300- 736 (Mtoe), which may be an import dependence of 34%-57%. Total import dependence may be 58%-67%, as against the current level of 25%, with imports estimated at the higher end at 1,382 (Mtoe) and total energy consumption at 2,077 (Mtoe). Clearly, the two major fuels – oil and coal – may require large imports in the next two decades

In India, there was hardly any investments in the activities of exploration and production in past two decades. There are small oil fields that are been explored which can barely fulfil our oil demand. The Cairn-Vedanta case is a live example leading to the barrier in the oil field exploration and production. The pending case has directly affected the production of the company and its exploration activities. In the coal sector, there has been 208 coal blocks been awarded to various companies, but activities are yet to start in around 100 blocks. Natural Gas is nowadays the measure issue as around a dozen gas-based plants are coming up in India. The KG- Basin case is the only significant achievement showing the success of the E&P activities.

To ensure energy security various risks are to be handled. The threat of energy security not only arises from the lack of supply, but also due to the uncertainty of availability of imported energy. Domestic production may also harm energy security. Supply risks from domestic production like a strike in CIL or other coal producing company or in that case even railways may create a dent in the energy security of India. As the major sources of energy are imported, there is a threat due to lack of storage facilities in India. The major part of crude oil is been imported and there are hardly any steps taken for its storage. During the economic crisis, India may suffer from shortfall of crude oil for refining and will eventually purchase it at higher prices leading to decline in country’s economy.

India has a major part of the population in the rural areas. Out of these, there are around 125000 villages that have no mark of electricity. Transmission lines are already been laid but not been used as there is lack of interest in providing electricity to the rural population. India is suffering from a deficit of around 12% on an average in terms of electricity and major share of this deficit is due to the lack of electricity in rural areas. The per capita energy consumption in India is around 750 KW which is far more less than China which is our competitor. Due to lack of capability to pay high tariffs, private players in the power sector have ignored setting up a power plant near the rural areas. REC Ltd. (Rural Electrification Corporation Ltd.), the only PSU in India, was set up for rural electrification. Village electrification level India as on 2008 was 85.2%

India is been gifted with diversified renewable potential, but it has not been successful in utilising its resources at the optimum levels. The nation has a potential of around 45000 MW from Wind Power, close to 15000 MW from Small Hydro, 16000 MW from Biomass and can produce 20 MW/sq km of Solar Power. But out of the above numbers, only 30% of the renewable potential have been utilised. The electricity generation mix in India comprise of around 10% of the renewable. There is lack of awareness among the people about the benefits of renewable sources

Importance of energy efficiency and energy conservation has clearly come out from the various supply scenarios and is again supported by rising energy tariffs. The concept of efficiency can be applied in energy extraction, transportation, conversion, as well as in consumption. Further, the same level of service can be provided by alternate means that require less energy. The major areas where it can make a substantial impact are mining, electricity generation, electricity transmission, electricity distribution, transport equipment pumping water, industrial production and processes, mass transport, building design, construction, lighting and household appliances, heating ventilation and air conditioning. It should also be noted that a unit of energy saved by a user is greater than a unit produced as it saves on production, transport, transmission and distribution losses. A “Negawatt” (a

Given the projected economic growth levels, energy demand is expected to continue to rise; rising energy needs, in turn, have drawn attention to the importance of energy security. Energy security is ensured by guaranteeing three factors – availability, accessibility and affordability of energy resources. Coal, oil and natural gas are the most important sources of primary energy in India. Inadequate domestic supplies of these hydrocarbons are forcing the country to increase its import bill.

The import requirements of coal at this juncture are limited but are slated to expand rapidly. Both US and China have large domestic coal reserves. India, however, will have to import in the coming years large quantities of coal as mentioned earlier. Though Coal Videsh under the Ministry of Coal has been formed, it has done very little business so far. Similar arrangements for investments can be worked out for uranium mining.

To strengthen energy security of imports, the second policy initiative required is diversification of energy import sources. In respect of oil, for example, we can tap markets in Venezuela, Columbia, Brazil, Africa, countries of the Middle East and South America. Since the types of oil available from these may not suit our refineries, we will have to develop adequate capabilities to process various types of oil. This will enable flexibility in acquisition.

Similarly, sourcing of natural gas and LNG needs to be from a host of sources. This may include Qatar, Australia, Middle East, Iran, Kazakhstan and Turkmenistan. Some of the pipelines from Iran and Turkmenistan may pass via Afghanistan and Pakistan. We will have to find innovative ways to meet our security concerns. These could be in the form of energy pipelines being owned by large international conglomerates backed by major world economies or funded by international financial organizations

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