Energy policy must avert power crisis

Authored by RP Gupta, Author of the Book - Turn Around

In April-2022, India had a power-generation capacity of 401 GW. But it faced a power crisis mainly due to coal shortage. The share of Solar and Wind power-generation capacity was about 24 per cent. But it couldn’t help due to inadequate power storage facilities. India might face a similar power crisis again. For averting such a crisis, India must frame a composite energy policy for both, primary energy (fuel) and secondary energy (Power). We must acknowledge that; the importance of energy is next to food. 

The primary objectives must be to ensure cheap and surplus energy. Import dependency must be gradually curtailed. The auxiliary objectives, such as Green-energy transition, must not dominate over primary objectives. Failing, India might pay a huge economic cost. 

Power supply must be reliable for the uninterrupted production of goods and services. For this, domestic production of primary energy must be increased. Coal shortage has caused the idling of Power generating capacity. Coal-Mines are facing logistics and land-acquisition problems. Incentives for energy savings and waste-heat power generation are missing. Distribution losses are still higher affecting the viability of distribution utilities. All these deficiencies are converting India into a “high-cost economy” losing its global competitiveness. These issues must be resolved through appropriate Energy policy. 

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

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. A major portion of primary energy is consumed for producing secondary energy. 

Despite huge Coal-reserves in India, coal production is not matching demand and therefore, imports are rising. In the sequel, coal price INR/GCV has increased by 2.5/3.0 times in the recent past. That must be resolved on a war footing. The price of power, metal and cement has already inflated impacting the entire economy. High taxes on energy and minerals have compounded the problem. 

Recently, Government has notified the auction of 161 Coal-Blocks; which needs applaud. For quick results, the approvals, land acquisition (minimum 50 per cent) and forest clearance must be clubbed before the auction. For avoiding monopoly in a few hands, joint-venture of small and mid-corporates must be encouraged. By this, shortage, high prices of coal and monopoly shall be resolved.  

Due to prolonged shortages, coal-auction premiums have become prohibitive impacting consumer prices. In the sequel, low-grade coal is dumped inside mines causing the 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; which will partially replace imported gas. 

I believe India has also ample reserves of oil and gas. Those might be of inferior quality and/or might involve higher mining costs. Therefore, India must spend heavily on the exploitation of entire oil and gas reserves in all river basins and sea belts on a 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 for goods and passengers. The uninterrupted 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. In the last two decades, the LPG supply for cooking has increased; that must continue. Several agro, forest and municipal wastes are burnt or stored causing pollution and methane emission. Those must be used in power generation for saving coal. Gobar gas may be incentivised for reducing imported LPG; which will reduce methane-emission which emits 21 times per-CUM compared to CO-2. Even power from sewage must be explored. The recent policy for blending ethanol is the right choice for reducing oil imports. Usage of “butanol” may also be explored. 

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

No doubt, solar and wind power are good options in the long term. However, it should progress rationally till we resolve all related problems. This requires huge power storage capacities through lithium batteries. Its Load factor is below 1/5th of coal plants. Solar panels and batteries are mostly imported. Lithium availability in the world is very critical and other feasible alternatives are partially developed through hydro-pump storage. 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 in for a logical conclusion. Yes- solar agro-pumps, roof-top solar power, and solar captive plants for industries and distant villages are viable options. Those may be incentivised. 

Transitioning to green energy is an auxiliary objective. Currently, the per-capita carbon emission of India is far below than world average. More so, in 2019, Carbon-emission from secondary energy (Power) was barely 34 per cent of the total emission. There are several other ways for reducing carbon emissions with low investment and quick payback. For which, a separate policy is needed. 

Yes, gradual transitions to green energy must continue rationally. But a quick transition might cause a power crisis and slowdown of the Indian economy. Therefore, energy policy must consider all aspects. 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 viability.