India, a rapidly emerging economy with the world’s second largest population, is facing a heavy energy demand. In spite of the massive addition in generation, transmission and distribution capacity, growth in demand for power has always exceeded the generation capacity escalation. Over the coming years, millions of Indians will look at improving their living standards. Energy requirements will simultaneously increase at a commensurate rate. The government is taking steps towards meeting this demand through renewables deployment. While this is a step in the right direction, given India’s developmental needs there is no ‘silver bullet’ to achieve energy security. To meet the country’s multiple objectives, it will need a balanced energy mix, consisting of increasing share of renewables and all conventional sources.
Renewable energy sources like solar and wind power are an important part of India’s energy future. In the short run, renewables alone can’t meet the total demand for energy as they still depend on flexible back-up when the wind doesn’t blow or the sun doesn’t shine. Given these challenges, fossil fuels will continue to play a role in transport and heavy industry for some time to come. Industry’s demand for energy is expected to grow six fold between 2011–12 and 2051–52, largely met by fossil fuels since it relies so heavily on them. Much of the increase is expected to come from coal used for captive power generation by industries that have unreliable grid power and that can get cheaper power from captive plants. Given the negative externalities associated with coal-based power, and the imperative to move towards renewables, a dynamic policy should incorporate industry’s fast-expanding power needs.
In the long term, the government should provide a consistent policy that would enable the industry sector to move from captive power generation. Developing a smart grid that enables two-way interaction and increases reliability would be an important enabler for industry. Similar action is required in planning for oil and gas demand. The fertilizer sector has shown a strong move from naphtha and towards natural gas; demand for fertilizers is expected to increase threefold by 2051. Given the paucity of natural gas it is important to consider how this demand would be serviced, especially in a politically sensitive and relatively inflexible sector like agriculture.
The potential opportunity for investors in the Indian clean energy market for the rural inhabitants is significant. The need for a dependable supply of electricity for multiple uses was the primary driver of the demand for clean energy products and services. Installed in either the household or the community, clean energy products and services can supply enough electricity for several different uses, such as providing lighting, running fans, charging mobile phones, and operating radios and small appliances.
Also, rural electrification has been identified as a priority for rural development by the Government of India. Wherever grid extension is not feasible, the government has directed that decentralised distribution generation facilities with local distribution network be provided. This appears to be a huge opportunity for this sector when almost 20,000 villages are located in remote areas that cannot be reached by extending the traditional grid. It will also be important to reduce. There is a push to produce power at individual households through solar panels. One of the initiatives in this regard has been initiated by Magsaysay winner Harish Hande and is giving positive outcomes. What will also be needed to ensure better power supply is reducing transmission and distribution losses, which amounts to around 23 percent of the electricity generated in India.
Clean energy products have competitive advantages over conventional products because they can help rural households improve their health and reduce their long-term fuel costs while at the same time gaining public benefits such as less pollution and lower greenhouse gas emissions. Additionally, cleaner fuels or energy efficient devices can help households reduce fuel costs over time. The answer here is not to pick one source of energy over another. Instead, it is vital to recognize the role that different fuels can play at different stages. For instance, natural gas can absorb the infirm renewable energy and consequently, provide support during peaking hours. This would not just ensure in efficient use of energy from all sources but will also meet the drawbacks of renewable power generation.
Natural gas is the cleanest hydrocarbon, which has the advantages of being safe, versatile and easy to transport. It emits less than half the carbon emitted by coal when used in power generation. Moreover, it can be used in process industries and transport. Thus, it is imperative that the central government and state government are in consensus and are willing to create some potential synergies and opportunities that are mutually beneficial. However, at the moment the Centre and states often have different and clashing views on financials of a gas pipeline as well as its modus operandi. There is an urgent need to incentivize the overall fiscal and policy framework that will not just boost gas production and consumption but also helps in the right balance of fuel mix.
India needs to lower its carbon footprint and the government has taken a number of steps to encourage the transition to a low-carbon economy. Renewable sector and the gas industry in India have witnessed reasonable growth in terms of demand over the last few years. However, this growth has been uneven with the renewable sector growing by 13.7% while natural gas has actually shrunk and fallen below the previous year consumption. In contrast, coal has grown by 4.8% while oil has grown by an astounding 8.1%. This further emphasizes the requirement for a single central body for energy policy that encourages the right balance of fuel mix.
The Government of India’s “Power for All” scheme promises continuous and uninterrupted power to all households and industries by March 2019. This means that India is about to face substantial increase in energy demand in the next few years, which will translate into higher demand for electricity. The availability of continuous power helps in sustaining economic activities and generating employment opportunities for local people that lead to better income generation. This will in turn lead to better education, health, connectivity and entertainment. The Government should reassess its way of how India produces and consumes energy and together with its stakeholders work towards a lower-carbon future. State governments must work towards enforcement of national orders to monitor air quality and adopt fuel standards. India must adopt an energy system which is more efficient, has a sustainable mix of sources, which must include renewable energy and natural gas to benefit the people. It is critical to realise that natural gas is the key to realising India’s 2030 pledge and driving the economy further.