The Hindu Business Line : Towards a sustainable energy strategy

A sustainable energy strategy will have to focus on more efficient delivery and use of power, promoting cleaner and more efficient technology, adequate pollution control mechanisms, cleaner sources such as renewable energy, hydropower and gas, and reduced dependence on coal-based power.

THE Prime Minister, Mr Atal Bihari Vajpayee, is reported to be `deeply worried by the very slow pace of power sector reforms' and considers this among the principal reasons for the growth rate stagnating around 5.5 per cent (Business Line, October 5).

Indeed, it was to accelerate the reforms process that the Government recently adopted several policy measures.

The aim is to improve energy supply and promote energy conservation, saving 25,000 MW within five years.

The new Renewable Energy Policy aims to provide electricity for a few hours daily to remote villages through renewable stand-alone systems and local electricity grids. The Petroleum Ministry has also drafted a National Hydrocarbon Vision 2000/25 document as the basis of future restructuring.

The Energy Efficiency Bill is pending in Parliament. A nodal Bureau of Energy Efficiency (BEE) is proposed which will make it mandatory for designated consumers/specified equipment manufacturers to comply with the notified energy standards and undergo periodic energy audits.

A Central Energy Conservation Fund will be created to finance the Bill's provisions.

However, it suffers from several lacunae, such as imposition of mandatory standards/ norms and inspection-based regimes that are inherently inefficient and difficult to implement in the Indian context.

On the power generation front, the authority to set tariffs has been transferred from the Government to the Central Regulatory Commission.

To boost domestic oil and gas production, the Government also announced the New Exploration and Licensing Policy in 1999 to minimise imports to the extent possible.

India's annual per capita energy consumption is only about 6.3 GJ/cap, which is very low compared to the world average of around 65 GJ/cap. The installed capacity grew from 1,360 MW in 1947 to 97,435 MW in 2000.

Even if the Ninth Plan targets are achieved, there will be a gross power deficit of 11.6 per cent, energy deficit of 1.4 per cent and 18 per cent peak deficit. The estimated primary energy demand is likely to increase from 2000 to 2020, oil - from105MT to 298MT in 2020, coal 394MT to 873MT, and gas 26.5 MT to 185 MT.

Present status

The total installed electricity generation capacity of 94,000 MW, comprises a mix of hydro, coal-based thermal, oil-fired thermal, gas, nuclear and non-conventional energy sources, particularly wind.

Against an optimum of 60:40 thermo-hydro mix for a large power system, the share of hydro-power has steadily declined from 43 per cent in 1970 to 24 per cent in 98-99, with a corresponding increase in the share of thermal power to 74 per cent.

Coal-based thermal power at 85 per cent dominates the thermal mix; the share of oil fell marginally from 3 per cent in 1970 to 2 per cent in 98-99 whereas gas increased from about 2 per cent to 13 per cent.

The share of nuclear power has remained at 2.5 per cent (1,695 MW), and wind accounts for 1 per cent of the total.

The electric power sector has suffered due to estimated annual losses of Rs 24,000 crore by State Electricity Boards (SEBs), mainly due to transmission and distribution loss, theft of electricity, subsidised tariff structures for agriculture and domestic consumers.

This has led to large outstanding dues of Rs 35,000 crores to NTPC, NHPC, CIL, the Railways, etc., and forced reforms to rationalise the power tariffs and `unbundle' the SEBs.

This involves separating generation, transmission and distribution through private corporations; enabling direct access of power from producers to bulk consumers by charging transmission and distribution companies; and developing a rational policy for captive power generation. In order to undertake power sector reforms the ongoing `Accelerated Power Development Programme' has been greatly expanded.

If the electric power sector is to expand to support the envisaged 8 per cent GDP growth, a substantial expansion in domestic coal production will be needed, keeping in mind requirements for another 25 years.

The coal sector is not open to private investment, except for captive mining. To open this sector to private investments, a proposal for amending the Coal Mines (Nationalisation) Act, 1973 has been introduced in Parliament.

It is expected that private investment would improve both supply and quality.

Our dependence on imported oil, expected to be 70 per cent during the early stages of the Tenth Plan, is likely to increase further.

Although the `Administrative Price Mechanism' has been dismantled in favour of market based pricing, this would require fine-tuning of rules and regulations by a `Statutory Regulatory Authority'.

This must be followed by oil security through strategic storage of crude oil and petroleum products, diversification of oil imports, and holding of equity oil abroad.

The restructuring, divestment/ privatisation of the public undertakings may follow subsequently in order to facilitate their competing with MNCs.

Non-conventional sources

Non-conventional energy has great potential to meet the basic energy requirement of the rural people.

According to official data, the gaps between the assessed potential and achievement by the end of 2001 are considerable, in the case of biogas plants 120 lakh potential, versus 32.75 lakh achieved; improved chulhas (smokeless stoves) 1,200 lakh vs 338 lakh; wind 45,000 MW vs 1,507 MW; small hydro 15,000 MW vs 1,423 MW; biomass power / co-generation 19,500 MW vs 358MW, and so on.

The medium-term goals to be achieved by 2012, as indicated in the draft Renewable Energy Policy, include coverage of 30 million households with improved chulhas, installation of an additional 3 million family size biogas plants, deployment of 5 million solar lanterns and 2 million solar home lighting systems, provision of electricity to at least 25 per cent of the 18,000 non-electrified villages, deployment of solar water heating systems in 1 million homes and achieving 10 per cent share of renewables in the new power capacity projected up to 2012.

Strategy for energy efficiency, conservation

It would also mean reduced dependence on coal based power.

For this, the suggested interventions/actions are:

a) Implementing the cost-based tariffs progressively and enhancing competition in generation to make supply and use of energy more efficient;

b) Placing greater reliance on market forces, coupled with proper internalisation of environmental costs, to promote better fuel choices;

c) Government intervention to correct market failures and complementing the operation of the market taking into account the limited financial and organisational resources, addressing the concerns of national energy security;

d) Creating an enabling environment for public sector management in development of hydropower and nuclear power;

e) Providing incentives for research, development, and demonstration of renewable technologies, market development, and mandatory procurement of prescribed minimum of renewable energy in each state; and

f) Restructuring the fuel-mix of the country to reflect the larger share of gas and other alternative energy sources versus oil without diluting the emphasis on increasing domestic production.

Short-term strategies may include renovation and modernisation of power plants, improvement in the transmission and distribution to reduce the loss to about 8 per cent, development of a national grid system and application of cleaner and more efficient generation technologies.

For the sustainable and efficient use of coal for energy generation, the following are essential: enhanced exploration; adoption of best practices to improve coal quality, productivity and safety and to protect the environment; adoption of environmentally-friendly technologies, including coal gasification, beneficiation, and liquefaction for value addition to domestic coal; efficient use of energy; environment protection including restoration of affected land and conservation of biological diversity; and an accepted rehabilitation and resettlement policy for displaced people.

(The author is an independent environmental consultant and Honorary Senior Fellow of the Ashoka Foundation for Research in Ecology and Environment, Bangalore.)

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