India's Energy Challenges: Illustrative Approaches to Solutions

May 26, 2011 - 12:00pm
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Energy security and climate change have emerged as key global challenges in the 21st century. A low carbon development strategy is in India’s interest and is not incompatible with its energy security concerns. Energy demand in India is expected to grow at an annual rate of nearly 4-5 percent over the next 10 years with projected economic growth rates of 8-9 percent. Finding adequate supplies of energy to satisfy this increased demand is a significant challenge. The Indian energy sector continues to struggle to overcome chronic energy shortages caused by a combination of low levels of domestically available fossil fuels (except coal), a historically low level of investment in the energy sector, increasing global competition for energy supplies and the high intensity of energy use particularly in the value-added industry sector. Further the growth of renewable energy resources in the national energy scenario has been modest and much of the planned expansion in India’s power sector is predicated on the use of coal, with related negative implications for emissions of both local air pollutants and greenhouse gases. India faces formidable challenges in meeting its energy needs. Over 600 million of its people have no access to electricity or are underserved and over 700 million depend on traditional fuels. Per capita consumption of 650 units of electricity per annum is well below the global average. The country imports 70 percent of its oil, 11 percent of its coal, and 17 percent of its natural gas. Its total installed electrical generating capacity is a little more than 160 gigawatts (GW), leading to estimated shortages of nearly 10 percent in energy and almost 17 percent in peak demand. According to the Integrated Energy Policy report by the Indian Planning Commission , quote: “… deliver a sustained growth rate of 8% through 2031-32 and to meet the lifeline energy needs of all citizens, India needs, at the very least, (italics by the author) to increase its primary energy supply by 3 to 4 times and, its electricity generation capacity by 5 to 6 times of its 2003-04 levels. India’s commercial energy supply would need to grow from 5.2% to 6.1% per annum while its total primary energy supply would need to grow at 4.3% to 5.1% annually”. The report also makes the pertinent observation that by the year 2030, power generation capacity must increase to nearly 800,000 MW from the current capacity of 160,000 MW (exclusive of captive power). This translates, in simple mathematics, to an addition of about 500 MW every week over the next 25 years!!. The formidable increase in energy demand will serve to increase the country’s reliance on indigenous coal, and to a lesser extent oil, to meet its energy demand. While the country has large reserves of coal, it relies on imported oil for almost two-thirds of its oil needs, possesses limited natural gas reserves, and faces chronic electricity shortages. The inability of the electricity grid to supply reliable power, particularly to business consumers, has prompted increased use of captive power generation that often uses diesel fuel. The rising demand for petroleum products and natural gas is expected to be met through imports. Coupled with deteriorating coal quality, India’s energy situation is likely to worsen its vulnerability to volatile fuel prices in a tightening world oil and gas market. These vulnerabilities are being addressed through diversification of energy imports, the development of indigenous fossil and renewable energy sources, and, last but not least, reduction of the intensity of energy use of the Indian economy. There is another point of view as well that needs to be considered in India’s case besides reducing vulnerabilities to supply disruptions. Given the poor energy access to households – just 45% of rural households in India have access to electricity – energy security broadly defined must ensure that minimum energy needs of vulnerable sections of the population are met. We will address the critical technology and policy issues that will shape the response of the Indian nation to the challenges that it faces over the next decade in meeting its energy demand while pursuing a low carbon strategy. Discussions would cover the role of renewables, energy efficiency, cleaner coal strategies, innovations in the Indian power sector and the role of regional energy cooperation among South Asian countries in advancing energy security

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