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Tuesday, 17 May 2016

Large fuel imports a threat to Indian Energy Security

A country must be able to reliably meet the energy demands of all sectors for different needs with safe, convenient and competitive energy in a sustainable manner to have an energy secure future. Nearly 85% of the primary energy comes from non-renewable and fossil fuels which are continuously diminishing.

Adversity on the Energy front:
The Indian economy has been facing great adversity on the energy front. India’s dependence on imported fossil fuels reached to 38% in 2012, despite of the fact that we have sizeable domestic fossil fuel resources. We were ranked as the fourth largest energy consumer in the world in 2011, following China, the United States and Russia. Our country imports more than 75% of the oil demand. The import bill for crude has been rising steadily and was 160 billion $ in the year 2012-13. Even with a significant coal deposits, we are importing nearly 25% of our total coal usage. The import is mainly from Australia, Indonesia and South Africa. The increasing coal shortage is because of a lack of competition among producers, insufficient investments, and other problems in its mining industry.

Country’s major share of electricity generation is from coal based power plants. Currently coal fired thermal power plants (TPP) contribute over 60% of India’s installed capacity and 66% of the electricity generation. In the last decade, coal based power plant generation capacity was doubled and substantial capacity addition is in the pipeline. Coal shortages are a major contributor to shortfalls in electricity generation and the consequent blackouts in the country.

Future of Coal based Power Plants:
Although, the Coal fired power plants are discouraged due to increasing pressure to reduce carbon emission, import dependence and increasing fuel price, reducing price of Renewable Energy etc., it is expected that the installed capacity of these plants will be about 270 GW by 2032. India’s existing coal fired thermal power plants are currently based on sub-critical technology which is inefficient. Super-critical boiler technology is being adopted at a significant scale in the 12th FYP program. A properly integrated and automated coal management system is also required to ensure uninterrupted power generation and unnecessary piling up of inventory.

However, the development and deployment of these efficient technologies is sluggish due to Indian coal having ash content and low calorific value (CV). Government of India (GoI) plans to stop sub-critical power plants addition after 2017. It is expected that ultra-super-critical technology will be commercialized after 2017 and IGCC based power plants after 2017. Some speculations say that ultra-supercritical technology will be commercialized only by 2022, anyway time will tell what is the future of coal based power plants.

Outcome of large dependence on Imported Fuels:
The large dependence on fuel imports and the inability to reverse this trend has impacted the development of Indian economy. The unpleasant effects include depleting foreign exchange reserves, price jolts because of volatility of global energy markets etc. With a large share of imported energy sources, domestic prices of not only energy, but the entire value chain get affected by the volatile international prices. We are also acknowledged for subsidizing energy sources. Therefore, the term “energy security” has a large sense for the country including economic stability and ensuring the well being of the people.
Ways to achieve Sustainable Energy development:
The country should consider all forms of available and emerging energy sources and technologies to achieve Sustainable Energy Development. A greater investment in R & D in alternate and renewable energy sources can make their price competitive with that of conventional energy. We should focus on Energy Efficiency and lower energy intensive routes for the development. 

The cost of protecting the environment and un-doing the environmental damage caused by the energy supply and use should also be included in the energy cost. Elimination of subsidies and other special treatments, to certain segments of the society and consumer, are necessary. Manufacturers should be encouraged to accelerate R & D efforts for bringing out more energy efficient equipments. Minimum efficiency standards for all equipments must be fixed. The government should provide incentives and enhance other market development strategies, for promoting energy efficiency. However these approaches require large upfront funding and a robust policy framework to ensure adequate success over long periods of time.

Demand Side Management (DSM) is also a very successful tool to reduce the overall energy demand. Although we are lagging far behind in a DSM and I personally feel that we must have a strong framework in implementing DSM. Efficient public transport system, electric vehicles and fuel substitution will also play a crucial role. Therefore, India’s energy strategy would necessarily comprise of action on both demand and supply sides with due consideration to policy, finance and technology.