ENERGY is the prime mover of economic growth and human development. It encompasses all sectors of the economy and every section of society. There is a direct correlation between gross domestic product (GDP) and energy consumption. It has been estimated that 26 tons of oil equivalent is required for a GDP of one million rupees. India’s incremental energy demand for the next decade is projected as one of the highest in the world due to a number of factors such as, accelerated economic growth, rise in population, rise in income level and the phenomenal growth of the transport sector.
The expected increased access of rural population to commercial energy and increased availability of good and services will give a further fillip to this trend.
With an expected GDP growth of eight per cent at the end of the Tenth Plan, energy demand is expected to grow at a rate of five per cent. Current per capita commercial primary energy consumption in India is 350 kg OE. If our energy consumption grows to the level of the developed countries, which is about 10 times more than ours, the life of our meagre proven commercial energy reserves will be just three years for oil and five years for gas. Uranium reserves will last for six years and coal reserves will have a life span of 15 years. Fossil fuels are not only a source of energy, they are also raw material for chemical industries such as fertiliser, petrochemicals, polymer and pharmaceuticals. Thus, energy has become a strategic resource for the country.
Urban needs
There have been serious distortions in our energy planning process. Since inception, our energy policy has been urban centric. As a result, 80 per cent of the commercial energy is being consumed by 30 per cent of our urban and semi-urban population. The rest of the 70 per cent in rural areas still depends upon non-commercial sources of energy such as wood, cow dung and agriculture to meet major energy needs.
Even after 58 years of Independence, only 43 per cent households have electricity connections and the remaining 57 per cent still depend on kerosene to meet their lighting needs. Almost 75 per cent of the total energy consumption in rural areas is used in domestic sector for cooking and lighting. Out of the total rural energy consumption, nearly 65 per cent is provided by wood. This is the major reason for the lack of industrial activity in rural areas, resulting in their under-development. As a result, there is either large-scale migration to urban areas or creation of extremist organisations, leading to social turmoil. There is an urgent need for a comprehensive rural energy policy, which can provide an impetus to rural industrialisation and save millions of women and children from the harmful effects of pollution (equivalent to smoking 200 cigarettes a day) caused by to emissions from biofuels used for cooking.
In each successive plan, one-fourth of the total plan expenditure is in the energy sector. Even so, there is a perpetual gap between supply and demand. This has resulted in frequent power cuts and poor reliability of power supply. One of the main reasons for this mismatch is the multiplicity of ministries dealing with energy such as coal, power, oil and natural gas, atomic energy and non-conventional energy. All of them are concentrating on protecting their respective interests and are sometimes at variance with one another. Prime Minister Manmohan Singh has made the first serious attempt since Independence to shape a comprehensive energy policy by setting up an Energy Coordination Committee.
Rising costs
The biggest challenge ahead in the next 20 years will be to make energy available on a sustainable basis in urban and rural areas at reasonable rates and ensure its efficient use in different sectors of the economy.
A number of crucial steps are required to meet the growing energy needs during the next 20 years and beyond. These steps should aim at policy planning, energy sector reforms, support infrastructure, fuel substitution, supply outsourcing, increasing indigenous production, conservation, and improving energy efficiency and development of new technologies and sources of energy and regional energy cooperation.
Oil resources in the country are limited. As a result, 70 per cent of the oil requirements are being met through imports at a staggering cost of $ 20.4 billion (2003-04). It is projected that in 2012 we will be importing nearly 85 per cent of our oil requirements amounting to more than three million barrels per day. At a projected price of more than $100 per barrel, effect on our economy will be crippling. Even today, a one-dollar rise per barrel in international crude price puts a net burden of Rs 2700 crore on the economy.
In order to reduce the impact of high prices of imported oil on the national economy, one effective solution is to blend gasoline with 10 per cent alcohol. No modification of the existing engines is required. A five per cent alcohol blend has already been tried successfully in nine states and Union Territories. Hence, a 10 per cent alcohol blend will result in replacement of 1 billion liters of imported petroleum. The US, Brazil, and Spain are using up to 24 per cent alcohol in fuel per blends.
Upgrade technology
A national alcohol mission should be launched. There is an urgent need for technological upgradation of the obsolete power alcohol sector. Use of new techniques, such as direct fermentation of sugarcane juice, molecular sieves for rectification, co-generation and multi-feedstock such as sugarcane, beet sugar, sweet sorghum, potatoes, damaged wheat and rice, and agricultural residues in new distilleries can substantially increase profitability. Sugarcane growing states of Punjab, Haryana, UP and Maharashtra, can emerge as energy-producing states. This will bring about an economic and industrial transformation of the rural areas in these states. Apart from creating large-scale employment opportunities, the effort would diversify agricultural operations away from wheat-rice rotation presently today.
Another appropriate measure would be to use biodiesel. Biodiesel can be produced by esterification of non-edible oil extracted from jatropha, karanjia, pinnata, and pongamia seeds; rice bran oil and waste oils. Millions of hectares of wasteland can be used for these plantations. Biodiesel, with diesel oil up to 20 per cent, has been used successfully in buses and railway engines. Five million tons of biodiesel is produced every year in the US.
Another fossil fuel, natural gas, is emerging as preferred fuel for power generation and for the fertiliser industry due to higher efficiency and low carbon emissions. In view of our heavy demand and limited reserves, there will be a net gap of 170 million cubic metres per day. This has to be bridged by the import of gas — liquefied natural gas (LNG) and compressed natural gas (CNG) through pipelines. Efforts for acquiring overseas equity in oil and natural gas must be accelerated to enhance energy security. Our oil entities have succeeded in acquiring stakes in Russia, Sudan, Libya, Syria and Iran. There is need to tap potential sources in Australia, Canada and South America.
On the conservation front, there is potential for saving 1200 MW of peak power capacity by replacing 10 million incandescent lamps with compact florescent lamps (CFLs) at 50 to 60 times less than the cost of installing a new power plant. Recently, in a nation-wide campaign, 7.2 million CFLs were installed in the European Union, three million in China and 1.7 million in Mexico. The price of CFLs manufactured in India is many times higher than the international price. The Indian CFL industry has a vested interest in keeping prices high so as to earn higher profits. In order to make these lamps affordable, import duties should be abolished.
India has a very high energy input per unit of GDP, which is 3.5 times higher than Japan and double that in the US. Even China has reduced it in recent years by a factor of two. This indicates a colossal waste of energy. It has been estimated that there is a potential to save 25000 MW through energy conservation measures in different sectors of the economy.
Investment in energy conservation and efficiency improvement has short return periods and the capital investment required is four to five times less than that for adding new capacity. However, progress in this direction is slow. Even the Energy Conservation Bill 2001 enacted to remedy this situation has not made much impact because of the provisions on voluntary compliance. Stringent regulatory provisions should be imported in the Bill, and an energy cess should be levied on the pattern under the Water Pollution Act from non-compliant users, who are using more than the stipulated power for a process.
Supply problem
There has been a tremendous increase in electricity generation from 4.1 billion kilowatt-hours in 1947-48 to 600 billion kilowatt-hours in 2003-04. However, there is still a deficit of seven per cent in supply and 11 per cent in peaking power. Industry has been adversely affected by frequent power cuts. The supply problem is further compounded by a staggering loss of 38 per cent in transmission and distribution (T&D), which is more than three times the international norm. As a result, only 600 of the 1000 billion units produced in the country reached the consumer in 2003-04.
There is an urgent need to reduce T&D losses through more efficient management of supply and demand. There will be an additional requirement of 100GW of power generation capacity by 2011-12. However, while planning new power projects, direct cost criteria alone should not be used in assessing different electricity options.
There is a need to internalise all costs of generation, including cost of impact on environment (Kyoto Protocol for carbon emissions), health, waste/ byproduct disposal and cost of infrastructure for transportation of fuel. The present power generation energy mix of 83 per cent thermal, 13 per cent hydel and three per cent nuclear needs restructuring in favour of low carbon-based generation such as hydel, gas, nuclear and renewable sources of energy.
Coal is going to remain the backbone of electricity generation in India in view of the abundant reserves. A deficit of 220 million tons of coal has been projected for the year 2011-12. This should be bridged by improving the mining technology and privatisation of coal mining, as captive mining has not shown good results. As far as possible, clean coal technologies such as super-critical and integrated gasification cycle should be propagated in new plants on environmental and better thermal efficiency considerations. Indian coal contains more than 40 per cent ash and there is need to explore the use of underground gasification technology.
Regional resources
Energy planners must take into consideration the fact that nearly 70 per cent of our coal resources are in the eastern region, 70 per cent hydrocarbons in the western region and 70 per cent hydel resources in the north and north-east. The energy infrastructure in different parts of the country should be based on the specific energy resources available in that region, so as to reduce transport bottlenecks.
Pithead power plants should be encouraged and the power generated should be transmitted through grid. In order to accomplish this, there is an urgent need for completing the inter-connectivity of the regional power grids. This will also help in transmitting surplus power from one region to the other.
Recent historic deals on civil nuclear co-operation during Prime Minister Manmohan Singh’s path-breaking visits to the US and France has opened new vistas of nuclear power in India. As a result, an ambitious programme of 200GW nuclear power formulated by the Atomic Energy Commission may materialise, provided the negotiations move in the right direction. India has the largest reserves of thorium in the world and thorium-based thermal and fast-breeding technology should be developed in a short period.
Renewable energy technologies can play a very important role in reducing our dependence on imported fossil fuels. There exists a potential for generating 4500MW from wind power, 15000MW from small hydro up to 25 MW, 19500MW from biomass and 1700MW from urban and industrial wastes. Power generation systems based on renewable energy to produce 5000MW have already been installed.
Since Independence, our emphasis has been shifting from one energy source to another. This is a major reason for the precarious energy situation we are facing today.
A time has come to take a holistic approach in energy planning, otherwise our energy security will be compromised and we will have to pay a very heavy price for this neglect
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