4. Future Energy Sources

The Future

By: Suraj V. ME11B096

With India’s targeted rapid economy growth, the demand for energy is forecasted to shoot up significantly by 2050. The scope for improvement in India’s energy system is vast.  India is perceived as a developing country, but it is developing at a pace that is not matched by many others. We have experienced significant economic growth. But our growth is constrained by energy supply and availability.

India possibly has the most uncertain energy future of any BRIC nation. The energy demand in Brazil, Russia, India and China is expected to grow with rapid economic growth. But Brazil and Russia are rich in energy resources and should cope quite well, but a major challenge will be faced by India and China, as domestic energy resources will fall far short of  the projected demand, as can be seen from the charts given below.

China seems to be handling its energy deficiencies more determinedly than India, whose tentative energy policies do not suggest any immediate solutions. This is bad news for India’s economy, which has already begun to slow. Promoting hard-nosed energy policies, however, could help to bring growth back on track.

About 70% of India's energy generation capacity is from fossil fuels, with coal accounting for 36.8% of India's total energy consumption followed by crude oil and natural gas at 20% and 6% respectively. India is largely dependent on fossil fuel imports to meet its energy demands. This is unsustainable, not only from a climate change standpoint, but also because India’s coal reserves are projected to run out in 45 years.

By 2030, India's dependence on energy imports is expected to exceed 53% of the country's total energy consumption. In 2009-10, the country imported 159.26 million tonnes of crude oil which amounts to 80% of its domestic crude oil consumption and 31% of the country's total imports are oil imports. The growth of electricity generation in India has been hindered by domestic coal shortages and as a consequence, India's coal imports for electricity generation increased by 18% in 2010.

The problem is not only with the demand and supply. India doesn’t have a good distribution network. Almost 400 million Indians—about a third of the subcontinent’s population—don’t have access to electricity. This power deficit, which includes about 100,000 un-electrified villages, places India’s per capita electricity consumption at just 639 kWh—among the world’s lowest rates.

The obstacles to India’s energy was exposed during the massive power outage that struck the country’s north in July 2012. There was a massive grid failure that exposed the dependency of the Indian economy on its fragile energy sources and electricity sector.  It also highlighted the urgency for India to tackle a huge energy deficit by implementing policies to encourage energy conservation and demand-side management, and stimulate investment in energy production and infrastructure.

The July black out was triggered by a sudden surge in electricity demand from the agricultural sector, Hence the root causes was inefficient consumption and inept conservation. The poor monsoon had prompted many farmers to take advantage of the subsidised electricity supply and use it for pumping irrigation water into the fields. This spiked demand and forced the state distribution companies to overdraw electricity from the grid. But the grid was newly integrated and this aided in causing the power outage.

If the energy and electricity pricing would have been more rational, then the crisis could have been avoided by simultaneously promoting conservation and more efficient consumption. China has learnt from this incident and has hence been slowly increasing the its electricity prices. Brazil on the other hand has the opposite problem, as its prices are too high. Russia offers free electricity because it has the resources to do so. The Indian policies need to take the resources it has into account while being framed. More recently, a lot of corruption has entered into the system, and free electricity is being offered in order to get the public votes.

The supply side of electricity production also failed during July 2012 in the Indian grids. The domestic production of fossil fuels in india has been stagnant and continuously been disrupted by government regulated-pricing and various logistical obstacles. If we look at coal, the demand has kept surging for the past 10 years, but its supply has remained the same. India has abundant resources, but the land acquisition disputes, and various state-control norms on coal mining and its transportation has prevented it from reaching major demand cities. As a result India has been relying on more expensive imported coal. But then, electricity is largely sold at low and subsidised rates, due to political compulsions. Hence the companies aren’t able to pass on the higher cost of the imported coal to the customers, and this has led to a severe shortage of both electricity and coal. Increasing burden on the economy has been added due to the subsidies and cost of imports.

Reliance on other energy sources

Shifting to other energy sources is highly problematic for India. India is experiencing a high demand in oil, but the domestic production is stagnating. India is looking at procuring oil from various foreign supplies, but most of them have not been successful.

Indian officials are optimistic about its large domestic shale reserves. But the hurdles of infrastructure and regulatory policies suggest that this isn’t a near term possibility. Although shale gas helps reduce the green house gas emissions, there are a lot more disadvantages

• Shale gas needs 3 to 4 million gallons of water for hydraulic fracturing, which is required to release the gas. But the water supply is scarce. In the next 15-20 years, the demand for water will increase by 50%, but supply will only go up by 5-10%, adequately leading to water scarcity.
• During the production of this gas, there is a possibility of methane leaks.
• The hydraulic fracturing may cause mild seismic shock waves in the exploration area.
•  20% of the mixture rises to the surface, and isn’t disposed off safely. It may leak into aquifers and contaminate drinking water. The remaining 80% remains under the ground.

Domestic sources of natural gas have not been as lucrative as what had earlier been predicted. Example. The offshore D-6 block in the Krishna Godavari basin. If the industry moves from coal to gas, then the imports of gas will go up. But we’ll again be faced with the same problem, a the higher costs cannot be passed onto the consumers due to the pricing policies.

Nuclear power is a promising future source. But the land rights disputes and the government’s disagreements with foreign nuclear-reactor vendors have constrained the setting up and development of the new nuclear facilities. As we’ve already seen the Fukushima crisis has also raised safety concerns. 

Renewable sources, although having seen impressive growth rates, are still expensive and highly dependant on government support. They cannot be scaled up to meet the high Indian demands.

Solar energy has zero emission and has a lot of potential to be harnessed using various devices. Recent developments have enabled solar energy to be used for industrial and domestic use, with some minimum maintenance. Government tax incentives and rebates can be provided to make it more financially viable. Current architectural designs are including provisions for photovoltaic cells and necessary circuitry while making the building plans itself. A lot of households now have solar water heaters installed, and many are using solar powered lights too.

With the present prices and taxes, a solar generation system on 250KWh would cost around Rs 5 Lacs.

Wind power is another efficient alternate energy source. There has been a good deal of development in the wind turbine technology in the last one decade, but the industry is relatively immature. The wint turbines have become larger and efficiencies have improved. Wind farms have become popular. Wind farms can be combined with solar power to attain a totally sustainable project. As the market size increases, the cost of the turbines is expected to fall, and the industry will continue to boom. India now ranks as a “wind superpower”, with a net potential of 45000MW from just 13 identified states.

 India also has a huge hydro energy potential. 20% of it has been realised so far. But new projects are facing resistance from environmentalists, as large scale resettlement of the displaced people becomes a major issue.

Biomass energy can have a major impact on the reliance of India on fossil fuels. Thermo-chemical conversion technologies are used to get energy. Use of biomass fuels will safeguard the environment, as well as create additional job opportunities, ensuring sustainable development and health improvement in rural areas. It could also aid in modernising the agricultural economy. A large amount of energy is expended in the cultivation and processing of crops like sugarcane, food grains, vegetables and fruits which can be recovered by utilizing energy-rich residues for energy production. The integration of biomass-fuelled gasifies and coal-fired energy generation would be advantageous in terms of improved flexibility in response to fluctuations in biomass availability with lower investment costs.

            Hence, we see that renewable energy sources is an alternative, but not the solution to India’s energy woes. Let us now have a look at the fe government policies that were introduced to promote renewable energy sources in India.

• Electricity Act 2003 – Cogeneration and generation of electricity from renewable sources will be promoted by the State Electricity Regulatory Commissions by providing measures for connectivity to the grid . Electricity can also be sold to any National Electricity Policy 2005.
•   National Electricity Policy 2005 – progressively, the share of electricity from non-conventional sources will have to be increased.
• National Tariff Policy 2006 – A Commission shall fix a minimum percentage for purchase of energy from renewable sources taking into account availability of such resources in the region and its impact on retail tariffs.
•   National Rural Electrification Policy (NREP) 2006 - The goals of NREP-2006 include provision of access to electricity to all households by the completion of year 2009, quality and reliable power supply at reasonable rates, and minimum lifeline consumption of one unit/household/day as a merit good by year2012. For villages/habitations where grid connectivity would not be feasible or not cost effective, off-grid solutions based on stand-alone renewable based systems may be taken up for supply of electricity. Where these also are not feasible and if only alternative is to use isolated lighting technologies like solar photovoltaic, these may be adopted.
• Semiconductor Policy - The Semiconductor Policy is meant to encourage semiconductor rand ecosystem manufacturing, of which solar PV (Photo Voltaic) is also a component.  It offers a capital subsidy of 20% for manufacturing plants in SEZs and 25% for manufacturing plants outside of Special Economic Zones (SEZs). The subsidy is however, based on the condition that the net present value (NPV) of the investment is at least US $212 mn.
•   Solar PV generation based incentive - MNRE formed guidelines for generation based incentives for grid connected solar (both thermal and PV) plants in January 2008.The scheme was extended to all existing registered companies, Central and State power generation companies and public/private sector PV power project developers. The scheme promoted grid connected power plants in excess of 1 MW of capacity at a single location. The scheme was limited to 5 MW per developer across India and a maximum of 10 MW per state.
• State level initiatives - The State Electricity Boards and respective agencies for renewable energy at the state level, play a key role in implementation at a state level. Independent of these national efforts, states are promoting solar power. Gujarat, for example, is promoting the installation of 350 MW solar PV by 2011. It offers a feed-in tariff of Rs. 15/kWh for the first 12 years and Rs. 5/kWh for the following 13 years
• Research & development (R&D) initiatives –

a.    Basic research having a long term perspective for the development of innovative and new materials

b.    Technology validation and demonstration projects aimed at field evaluation of different configurations

c.     Development of R&D infrastructure in private public partnership mode

d.    Support for incubation and start0ups in this domain.

Even after all these policies, major energy comes from fossil fuels even in 2020, as can be seen by this estimate put up by EUI.

 

India’s energy future (2020)

An annual growth rate of 8% will not be possible by just cleaning up the policy maze in the energy sector. It can inject oxygen into the system, but it solves only the structural problems. It is not the final solution. India will confront its enormous energy deficit only if it moves away from an administered price regime, and allows the markets to determine the prices of coal and gas, as well as electricity. The state electricity boards need to be subjected to strict budget constraints, and they should be enabled to adopt commercial decisions without any government interference. Overcoming the deficit, and ensuring adequate growth for the sector requires some reforms-

·         Stable supply of fuel for generation

·         Efficient transmission and distribution

·         Rational pricing of electricity

In an attempt to control the price of electricity, the price of inputs have been controlled. But poor pricing policy and perpetuation of monopoly has constrained the supply of coal.

Ensuring a stable supply of power and fuel needs a overhaul of the policies in the sector. And unless the government undertakes these overhauls, the investments in generation, transmission and distribution won’t be forthcoming.

In India, 23% of the power accounts for distribution loss. Even if these losses are reduced, a percentage of Indians will still have no access to electricity.

So what is the solution? Instead of concentrating on major power plants, we can concentrating on setting up of small power plants that generate power enough for a small town/community/or even individual. This is called “Microgeneration”, or “Decentralized Energy Generation in India”.

It is the generation of zero or low-carbon electrical power by individuals, small businesses and communities to meet their own needs. This can be in the form of small wind turbines, solar power photovoltaic or biomass conversion systems. Microgeneration can act as a catalyst for cultural changes in consumer attitude, and provides evidence of the important impact that microgeneration has on consumers’ attitude and behavior regarding energy production and use. Microgeneration is both a serious form of clean energy production and also a cultural movement that is gathering momentum worldwide.

For example, Small community based biomass power plants in villages can be developed that fulfil their demand for energy. These biomass plants may use weeds like Daicha, Ipomia as fuel. Villagers can be trained to run and maintain the plant. The power can be sold to the villagers at a nominal margin of profit.  Their benefits are many-

·         Clean source of power.

·         Can be built at places with remote access. No need of electric poles.

·         Can be built close to villages. So negligible distribution losses

·         This exposure can make villagers more aware of opportunities

·         Provides jobs to a few people

·         Dependency on diesel gensets for irrigation is not there.

Similar to this, there may be many more solutions possible. We need to start focussing on the Micro level too. I do not mean that we need to discard big power plants but we need to decrease the dependency on Macro power generation and distribution system. There is an urgent need for transition from petroleum-based energy systems to one based on renewable resources to decrease reliance on depleting reserves of fossil fuels and to mitigate climate change. In addition, renewable energy has the potential to create many employment opportunities at all levels, especially in rural areas.

In the mean time, India’s energy security remains reliant on imports of coal, oil and gas, which strains the government budget. Coal will continue to be the dominant fossil fuel in India’s energy mix, and oil a major component. There is a growing demand for both fuels, but supplies of oil are limited and India has to buy an increasing volume from overseas, exposing itself to vulnerability in its oil security. Gas has grown in significance, but sufficient discoveries have not been made to ease India’s energy concerns. As far as renewable energy and nuclear energy are concerned, they will continue to contribute just a tiny amount to energy security in the coming decade. However, despite concerns about safety, nuclear is the energy of the future.