Composite Energy Policy Needs Well-Defined Objectives

The importance of energy is almost equivalent to food. As a primary objective, India must ensure cheap and surplus energy and reduce imports failing which India might pay huge economic costs. Transitioning to green energy is an auxiliary objective for reducing carbon-emission. That must not dominate over primary-objective. India must frame a composite energy policy with well-defined objectives for both, primary and secondary energy. 

The green-energy transition must be on a slow track till India develops indigenous technologies for manufacturing high-efficiency solar panels and energy-storage facilities. There is scarcity of lithium and about 70 per cent lithium of world is refined at China. Import dependency up-on China is not desired in the long run, particularly in the energy-sector.

India must ensure that; Power supply is reliable for uninterrupted production enabling optimum use of productive-assets. For this, the power grid must be stable with surplus capacity taking care of peak-demand. Currently, load-factor of Power generation plants are historically low inflating generation cost. Coal-Mines are facing logistics and land-acquisition problems. Incentives for energy-savings and waste-heat power generation are missing. Distribution losses are prohibitive affecting the financial viability of distribution utilities. All these deficiencies have converted India in to “high-cost economy” losing its global competitiveness. These issues must be resolved through composite energy policy.

During 2000-01 to 2019-20, demand of Primary-energy has increased from 441 to 929 MTOE (Million-ton Oil-equivalent) @4 per cent on CGAR basis. During same period, demand of secondary-energy has increased from 369 to 1207 trillion units @6.4 per cent CGAR basis and GDP has also grown @6.4 per cent on CGAR basis. While planning future GDP growth, all such data should be considered for avoiding any mismatch for consistent growth.

In 2021, India’s share of primary-energy consumption through Coal, Oil & gas and Biomass was about 44 per cent, 35-36 per cent and 12 per cent respectively and balance through hydro, nuclear, solar and wind. Major portion of primary-energy is consumed for producing secondary-energy.

Despite huge Coal-reserves in India, coal production is not matching with demand and therefore, imports are rising. In sequel, coal price INR/GCV have sky-rocketed in the recent past. That must be resolved on war-footing. The price of power, metal and cement has already inflated impacting entire economy. High taxes and auction premium on energy and minerals have compounded the problem.

Recently, Government has notified auction of 161 Coal-Blocks; that needs applaud. For quick results, the approvals, land-acquisition (minimum 50%) and forest-clearance must be clubbed before auction. For avoiding monopoly in few hands, joint-venture of mid-corporates must be encouraged for coal-blocks. State PSUs having mining experience may be allotted coal-blocks without auction premium. By this, shortage and high prices of coal and monopoly shall be resolved. 

Due to prolonged shortage, Coal-auction premiums have become prohibitive impacting consumer’s price. In sequel, low-grade coal is dumped inside mines causing wastage of precious energy-resources. India must exempt auction-premium on unusable low-grade coal and encourage beneficiation plants. Simultaneously, India must also incentivise coal-shale gas and coal-bed methane (CBM) gas; that will partially replace imported gas.

I believe; India has ample reserves of oil and gas. Those might be of inferior quality and/or might involve higher mining cost. Therefore, India must spend on the exploitation of entire oil and gas reserves in all river-basins and sea-belts on war-footing. Oil and gas can’t be replaced so easily with alternate energies in near future. But its consumption can be certainly reduced by developing public transport of goods and passengers. Un-interrupted power supply can reduce oil consumption in DG sets. 

Traditional biomass for primary-energy is firewood, charcoal and animal waste which is majorly used for cooking. Several agro, forest and municipal wastes are burnt or stored causing pollution or methane emission. Those must be used in power-generation for saving coal. “Gobar” gas may be incentivised for reducing imported LPG. That will reduce methane-emission which is equivalent to 21-times of carbon-emission. Even power from sewage must be explored. Recent policy for blending of ethanol is a right-choice for reducing oil-import. Usage of “Butanol” may also be explored.

Despite long gestation, Hydro-power must be added considering its allied advantages. This facilitates irrigation, increases ground-water level and controls flood. Along with climate pact, nuclear fuel supply may be tied and Nuclear power capacity may be doubled; that provides quick solution. 

No-doubt, in long run, solar and wind power are better options. However, it should progress in a rationale manner till we resolve all related problems, as discussed above. These small plants impose problems in quick synchronizing with power-grid. Its Load-factor is below 1/5th of coal plants. Solar-panels and batteries are mostly imported.  Lithium availability in world is very critical and other feasible alternatives such as hydro-pump storage are not yet developed. More so, the cost-economics must be compared with coal at production-cost excluding taxes and auction-premium. Also the investment and cost of power-storage, transmission & distribution should be factored for arriving at logical conclusion. Yes-solar agro-pumps, roof-top solar power, solar captive-plants for industries and distant villages are viable solutions. 

However, gradual transitions to green-energy must continue in a rationale manner. But quick transition under compulsion of global pact might cause energy-crisis or forex-crisis and slowdown Indian economy. Therefore, a composite energy policy must consider all aspects without intermixing with carbon-emission targets. Simultaneous research on alternate energies like Hydrogen, MHD, bio-energy, tidal energy, geothermal energy, fusion energy and substitute of battery-storage must continue for long-term sustainability and economic viability.

R.P.Gupta (Electrical-engineer), Author: Book, Turn Around India 

RP Gupta

Guest Author The author is an Economist and Author