2018-CGS-30: Mains Revision-18: Energy Sector
- Challenges For Power Sector Of India
- Shakti Sthala – World’s Largest Solar Park
- Saubhagya Scheme and Challenges in Achieving Universal Electrification
- Energy Management Centre – Kerala
- 100 GW from Solar Energy By 2022
- Bengaluru Aerial Mission
- Diu Runs On 100% Solar Power
- International Solar Alliance
- Rural Electrification In India
- Advantages and impact of Fracking
- National Energy Storage Mission
- LNG diplomacy
- Electrification Status in India
- World Bank Report On Status of Electrification In India
- Saubhagya Scheme and Access To Clean Cooking Fuel
- Rural Electrification Status
- Re-Look Towards Wind Energy
- Energy Poverty in India
- Financial challenges in ensuring electricity for all
- Challenges with Distribution Networks in Ensuring Electricity for All
- Renewable energy potential and women participation in the sector
- Solar-Wind Hybrid Policy
- Oil Prices and Its Impact on The Economy
- Augmenting the capacity of ONGC
- Impact of US sanctions of Iran on Energy Market
Challenges For Power Sector Of India
The geography and its natural resources like hydel energy, wind energy provides India with enormous potential. But still 240 million people in the country don’t have access to electricity.
Bottlenecks to unleash the potential
Various roadblocks for India in unleashing the potential are
- Efficiency: India has high transmission and distribution (T and D) losses. It is as high as 23%. This is causing greater burden on DISCOMS.
- Earthquakes: North Indian Rivers flows through the region which is more prone to earth quakes. This has resulted in below par harness along the north Indian rivers like Ganga.
- Poor quality coal: Indian coal has high sulfur content. This reduces the efficiency of power plants.
- Climate Change: Even though India has high reserves of coal, glooming fear of climate change and India’s commitment under Paris climate deal are acting as damper in aggressive exploitation of coal.
- Technology for renewable energy: India’s location in the tropical zone and its long coastline provides immense opportunities to extract the renewable sources of energy. But the lack of indigenous technology to harness the renewable energy has become a damper.
- Grid parity and grid stability: The varying nature of the renewable energy coupled with the price differentials between the renewable and non-renewable energy are posing challenges in achieving grid parity and grid stability.
Steps undertaken to unlock the potential
- In accordance with these challenges the draft energy policy has various steps like focusing on infrastructure, recognition of hybrid power generation, reducing the t and d losses through Deendayal Upadhyaya Gram Jyoti Yojana, and commitment for generation of 175GW through renewable sources to address various challenges.
India’s per capita power consumption is 805Kwh, which is below the global per capita power consumption of 3000Kwh. As Indian economy is transitioning its power consumption is bound to increase. Therefore India needs to act swiftly to fill these gaps. [The Hindu]
Shakti Sthala – World’s Largest Solar Park
Karnataka has got a new feather in its cap. It now hosts world’s largest solar power park Shakti Sthala. It is located at Pavagada in the Tumkur district of Karnataka.
Specifications of the Park
The significance of this solar park project include
- Generation capacity of 2000 MW created by 2300 farmers.
- Spread over 13,000 acres of land across five villages the project is worth Rs 16,500 crore.
- No land acquisition happened instead farmers will get Rs 21,000 per acre as rent.
- Tariff per unit has been fixed at Rs 3.30 per unit.
- Pavagada is one of the worst drought hit and backward area of the state.
- It witnesses large scale migration. The solar park together with providing employment opportunities has provided for people’s participation in power generation.
- Through an innovative approach the project makes farmers the partners for the holistic development of the region. [com]
Saubhagya Scheme and Challenges in Achieving Universal Electrification
Pradhan Mantri Sahaj Bijli Har Ghar Yojana – ‘Saubhagya’ scheme free electricity connections to all households (both APL and poor families) in rural areas and poor families in urban areas.
Features of the scheme
- Rural Electrification Corporation (REC) has been designated as its nodal agency for the Saubhagya scheme.
- Even through India is electricity surplus country, more than 20% of its population does not have access to electricity. Saubhagya scheme marks a shift in the process of electrification. This scheme shifts the focus from village level to household level thus bringing more inclusiveness in its approach.
- The objective of the Saubhagya scheme is to “provide energy access to all by last mile connectivity and electricity connections to all remaining un-electrified households in rural as well as urban areas to achieve universal household electrification in the country.”
- Under the Saubhagya scheme, DISCOMs will also organize camps in villages/cluster of villages to facilitate on-the-spot filling up of application forms including release of electricity connections to households.
- DISCOMs/Power Department will also adopt innovative mechanism through dedicated web-portal/Mobile App for collection/consolidation of application form in electronic mode and also capturing process of release of electricity connections. The details of consumers’ viz., Name and Aadhar number/Mobile number/Bank account/Driving License/Voter ID etc., as available would be collected by the DISCOMs.
Challenges in achieving the objective of universal electrification
Challenges before the Saubhagya scheme in accomplishing of universal electrifications include
- Though the scheme provides for the free electricity connections. It does not have any provisions related to monthly bill payments. With more than 20% of population in the BPL category they may be unable to pay monthly bills. Thus the sustainability of the universal electrification is in question.
- Estimates suggest that this scheme would potentially require an additional 28,000 MW and additional energy of about 80,000 million units per annum, which is roughly 7% of India’s current installed power capacity. Inability to achieve this would result in power cuts and interruptions. This would undermine the efficacy of the scheme.
Saubhagya has some positives such as provision for households outside the reach of grid lines. India needs to augment its capacity to achieve universal access to electricity in true sense. [ET]
Energy Management Centre – Kerala
The Energy Management Centre (EMC), an autonomous institution under the Kerala government has achieved the status of energy-positive campus.
Energy positive campus
The ‘Global Status Report 2017: Towards a zero-emission, efficient, and resilient buildings and construction sector,’ published by the United Nations Environment Programme (UNEP) has listed the EMC campus as one of the recent achievements in the deployment of key technologies for energy-efficiency in buildings.
The 40,000-square foot building is the only one from India to figure in the list, along with five other projects worldwide. The other projects are
- Sierra Crest development in Fontana, California.
- The Association of Nubian Vaults in Sub-Saharan Africa.
- A construction and demolition waste recycling project in Paris.
- The Palm Tree eco-development project in Hanoi, Vietnam.
- The Higashi-Matsushima Smart ecotown in northern Japan.
Energy positive campus in Kerala
The EMC campus which has been built with the assistance of Global Environment Fund has achieved the distinction through
- The EMC campus uses day lighting controls, CFC-free heating, ventilation and cooling systems, along with a halogen-free fire-fighting system.
- Solar reflectance index coating, combined with high-albedo painting and turbo-vents for passive cooling, has been used, and tropical rainforest trees help create cool surroundings.
- It uses certified green construction materials, recycled wood boards, low-emitting paints and adhesives, and green-plus certified carpets.
Building-related carbon emissions have been rising by around 1% per year since 2010, and more than four million deaths are attributable to illness from household air pollution. The expertise and the learning’s from the EMC can aid India in making our buildings energy positive thus marking a journey towards the sustainable model of development. [The Hindu]
100 GW from Solar Energy By 2022
Under the INDC of Paris climate deal India has made a commitment to enhance the solar capacity of India to 100GW by 2022. India had been on track to meet its target of 100 Gigawatt (GW) of solar energy capacity by 2022 but momentum has been severely eroded. Issues such as uncertainty around import duties and future tax rates on existing power purchase agreements have dampened investor sentiment.
Why the momentum is under stress?
- Anti-dumping and safeguard duties:
- The Director General (Safeguards) has recommended imposing a 70% safeguard duty on imported solar cells, panels and modules for a minimum period of 200 days.
- This will impose significant cost on developers. This will result in inflation of the power tariff and the project costs as India is dependent on imports for solar cells, panels and modules.
- Already the goal looks difficult and imposing of import duties on the primary materials of these projects will have an impact. The uncertainty around that is a concern for industry.
- In the pre-GST regime there was 0% tax on solar panels. Now it is 5%. This is leading to uncertainties in the minds of investors about the government policy towards solar power.
- Rooftop component:
- India target of 100GW from solar power is driven by 60% from utility scale capacity and 40% from roof top capacity.
- While the utility scale capacity has achieved 30% of its target, the rooftop component has achieved only 4%.
Way forward: Chinese Model
What’s lacking in achieving the target is an effective ecosystem to make this happen in a speedy and time-bound manner. It’s riddled with a lot of complications and a lot of noise from the industry as well, where everybody wants protectionism.
- China has done nothing like that by embracing protectionism. It has created a bottom up approach where 60-70% of the global manufacturing in solar is from China.
- They have built this huge ecosystem that is fuelling the growth.
- Out of 105 GW solar power added globally last year, 52 GW came from China. This is testimony to the large scale work being undertaken there. [The Hindu]
Bengaluru Aerial Mission
It is a mission for the Aerial mapping of Bengaluru’s rooftop solar energy potential. The mission aims to produce a three dimensional map of rooftop solar power potential using Light Detection and Ranging (LIDAR).
How the mapping is done?
- A helicopter armed with light detection and ranging (LIDAR) system will fly across the city to map its potential to generate rooftop solar energy. The aircraft will cover an approximate area of 1,100 sq. km, generating high resolution images of rooftops of buildings in the city.
Applications: Utilising the data generated
- The data generated would be used by the energy department of the state to plan the roof top solar power plants for achieving a target of 1,000 MW of rooftop solar energy by 2022 from Bengaluru.
- The residents of the city will be able to check the capacity of solar power generation of the rooftops of their respective buildings, when they log in to the BESCOM website to pay electricity bill.
LIDAR: Light Detection and Ranging
- The LIDAR technology will send pulsed laser light on to the rooftop of a building and translate the reflected light into data points.
- Based on objects such as trees surrounding the rooftop, shadow-free area available for solar power generation will be calculated and an estimate will be arrived at as to the capacity of solar generation of each building in the city. [The Hindu]
Diu Runs On 100% Solar Power
Diu becomes first UT to run 100% on solar power. It is also countries first energy surplus union territory. Diu’s success story can be model for the successful harnessing of the renewable energy resources.
Journey of Diu:
- The Union territory of Diu has an area of just 42 square kilometres. Despite scarcity of land, solar power plants have been installed over more than 50 acres.
- Diu generates a total of 13 megawatts of electricity from solar power generating facilities daily.
- Around 3 MW is generated by rooftop solar plants and 10 MW by its other solar power plants.
Benefits from switching over for Diu:
- Three years ago, the people of Diu consumed electricity supplied from the power grid owned by the Gujarat government, resulting in huge line losses. Once the local power company started generating electricity from solar energy, the electricity loss was significantly reduced.
- The self-sufficiency has reduced its dependency on Gujarat government for energy requirements.
- Solar power has come as a big relief for local residents as their monthly bill charges have fallen by around 12 per cent.
Complimenting India’s efforts in generating 100GW from solar energy:
- India’s target of achieving 100 GW envisages a mix between solar power plants and roof top solar energy in a ratio of 60:40.
- Though country has made significant achievements in the arena of solar power plants it is lagging behind in the arena of rooftop component.
The success story of Diu where it has effectively integrated the roof top solar power under its solar energy strategy shows the immense potential with the roof top solar energy. India can learn from Diu model to achieve the target of 100GW solar power by 2022, a target which India cannot afford to miss. [ET]
International Solar Alliance
The International Solar Alliance (ISA) is an alliance of more than 121 countries, most of them being sunshine countries, which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn. The primary objective of the alliance is to work for efficient exploitation of solar energy to reduce dependence on fossil fuels.
Objectives of ISA
- Mobilising more than $1 trillion of investments by 2030 for massive deployment of solar energy.
- Global deployment of over 1,000GW of solar generation capacity.
- Making solar energy available at affordable rates, create solar grids and establish solar credit mechanism.
- Reducing the cost of finance and cost of technology.
- Enhancing energy security and sustainable development.
- Addressing common as well as specific obstacles that lie in the way of rapid and massive scaling up of solar energy in these countries;
- Act as a broader platform for deep diplomatic engagement on crucial developmental issues.
ISA: A game changer
- The Delhi agenda which kicked off the International Solar Alliance (ISA) is a refreshing change in global environmental diplomacy. The initiative of such a large scale is led by a developing country India with support from both developed and developing countries. Thus providing for global north-south cooperation.
- The agenda’s 62 signatories agreed to increase the share of solar energy in their respective energy mix and the alliance plans to generate 1 TW of solar energy by 2030 which is three times more than the current global installed solar capacity. Thus taking a step for responsible harnessing of renewable energy as enshrined in the sustainable development goals and Paris climate deal.
- The coalition will facilitate “joint research and development efforts” to reduce the cost of solar projects in member nations. Thus enhancing the affordability and cost competitiveness of the solar energy.
- It marks a departure from the wide prevalent global scenario wherein the deliberations over the transfer of climate-friendly technologies were hostage to the entrenched positions of the US, EU and developing countries.
Challenges before ISA
- Poor technological capabilities of the tropical countries that could come in the way of their leveraging the platform. Ex: India’s dependence on imports for solar cells and technology for storage during non-peak hours.
- Balancing the needs and the vastly different capacities of its members would require the ISA to develop robust procedures. Energy-deficient African members want the club to become a facilitator of their electrification programmes and electricity-sufficient countries like Mauritius, membership of the alliance comes with an aspiration to transit to clean energy.
- The alliance aims to pump in a trillion dollars into solar energy initiatives by 2030. Mobilising the finance would be a humungous task.
Inabilities to address these challenges would reduce ISA as an avenue of bilateral exchange. The alliance should make sure that it does not become the means to advance the climate change mitigation goals of a few of its members. It must work under a broader goal of popularizing solar energy across the globe. [Indian Express]
Rural Electrification In India
Access to affordable electricity for each and every household is a necessary condition for social and economic development.
Initiatives for rural electrification
Various Initiatives have been initiated by to cater to the need for rural electrification.
- In 2005, the Central government launched the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) which subsumed all other ongoing schemes related to rural electrification. The scheme focused on electrification of villages through implementation of decentralized distributed generation (DDG).
- RGGVY was later included in the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) which additionally focuses on feeder separation, improvement of sub-transmission and distribution network, and metering to reduce losses.
Situation is not very promising
Around 35 million households approximately 11% of the total rural households are yet to be electrified.
- The success of rural electrification should not be measured only on the basis of connections provided, but also on the basis of provision of reliable and quality power supply during peak hours. Both of these are still persistent problems faced by a majority of India’s rural households.
- As per the United Nations Development Programme (UNDP) recommended “Energy Plus” approach, supply of electricity only for lighting is a necessary but not sufficient condition for rural livelihood development. This framework emphasizes on energy access in combination with productive use of electricity for income generation and livelihood upliftment.
- The cost of power supply to rural areas is also significantly high. As a majority of the rural households cannot afford high cost supply, utilities are reluctant to supply the required quality and quantity of electricity in these areas.
Saubhagya: a game changer
The recent Saubhagya scheme addresses some of these issues.
- It aims to improve environment, public health, education and connectivity with the help of last-mile power connections across India.
- Households out of reach of the national electricity grid are proposed to be provided with solar power packs along with battery banks with the Rural Electrification Corporation as the nodal agency.
- The Saubhagya scheme will help India, the world’s third-largest energy consumer after the US and China, meet its global climate change commitments as electricity will substitute kerosene for lighting.
- It will also help improve education, health, and connectivity apart from having a multiplier effect on increased economic activities and job creation. [Mint]
Advantages and impact of Fracking
The process of extracting shale oil and gas requires deep vertical drilling followed by horizontal drilling since the shale gas and oil are unconventional natural resources found at 2,500-5,000 m below the earth’s surface, as compared to conventional crude oil found at 1,500 m.
The most common way to extract shale gas is ‘hydraulic fracturing’ (fracking), where high volumes of water mixed with certain chemicals are pushed down to break the rocks and release the trapped energy minerals.
Fracking seems an attractive tool, both politically and economically. To gain such benefits, the government introduced a policy on shale gas and oil in 2013, permitting national oil companies to engage in fracking. Under the first phase, shale gas blocks were identified in Andhra Pradesh, Arunachal Pradesh, Assam, Gujarat, Rajasthan and Tamil Nadu. However, environmental groups have strongly criticised this move, which they say will have adverse environmental impacts.
Benefits of Fracking
- In the U.S., where shale gas has been commercially exploited for two decades, the prices of fuel and electricity have dropped.
- Recent negotiations between the Secretary of the Organisation of the Petroleum Exporting Countries (OPEC) and American shale producers to control oil production and prices show that the U.S. has gained significant political advantage.
- Similarly, if India commercially exploits shale deposits, it could meet its ever-increasing energy demand, decrease oil and gas imports, and improve the balance of payments.
Negative effects of Fracking
- Fracking consumes large amounts of water (average 15,000 m3/well) and relatively larger surface area, it is bound to impact irrigation and other local requirements.
- In the U.S. experience, out of 260 chemical substances, 58 have been identified to pose a risk to human life and environment, eight are carcinogens and 17 are toxic to freshwater organisms.
- As 25-90% of the fluid is not retrieved and cracks in the shaft are possible, there is a high risk of pollution to nearby underground water. Instances of groundwater pollution have been reported in the U.S. (Pennsylvania) and Canada.
- Fracking has other impacts such as increased air emissions (including greenhouse gases) and seismic activity. Environmental impact assessments of the European Union and the U.K. have recognised these risks. [The Hindu]
National Energy Storage Mission
The mission will focus on seven verticals:
- Indigenous manufacturing
- Assessment of technology and cost trends
- A policy and regulatory framework
- Financing, business models and market creation
- Research and development; standards and testing
- Grid planning for energy storage.
Components of the policy
The objective of this mission will be to strive for leadership in energy storage sector by creating an enabling policy and regulatory framework that encourages manufacturing, deployment, innovation and further cost reduction. The features of the energy storage mission are
- The National Energy Storage Mission expects to kick-start grid-connected energy storage in India, set up a regulatory framework, and encourage indigenous manufacture of batteries.
- The policy sets a “realistic target” of 15-20 gigawatt hours (GWh) of grid-connected storage within the next five years.
- Central Electricity Authority is considering a draft regulation to make storage mandatory for large-scale solar projects ranging between 100 MW and 200 MW
- Mission has proposed three-stage solution approaches:
- Creating an environment for battery manufacturing growth;
- Scaling supply chain strategies
- Scaling of battery cell manufacturing.
Issues in integrating renewable with grids
- The peak supply of renewable sources does not always meet peak demand. For instance, solar energy generation may be at its peak at noon, but unless stored, it will not be available when needed to light up homes at night.
- Renewable sources are inherently intermittent: there are days when the wind doesn’t blow or the sky is cloudy.
- Batteries could help store surplus energy during peak generation times, but are more immediately needed to stabilise the grid when shifting between renewables and the baseload thermal capacity.
Once the installed capacity of renewable reaches 100 GW as committed under Paris climate deal, it will become critical to incorporate storage options to ensure energy accessibility.
It is important to look beyond mere capital expenditure costs and also consider life cycle costs and the distributor’s costs due to grid instability and transmission and distribution losses. [PIB]
LNG diplomacy involves supplying of clean fuel to neighboring countries of Myanmar, Bangladesh, Sri Lanka and Mauritius at an investment of around $2.5 billion. This can provide significant benefits to India.
Petronet, promoted by four Indian state-owned firms—GAIL (India) Ltd, Bharat Petroleum Corp. Ltd, Indian Oil Corp. Ltd and Oil and Natural Gas Corp. Ltd—is exploring a similar opportunity in the Maldives.
Benefits of the initiative
This will aid in curbing Chinese influence in these countries that New Delhi has traditionally considered within its sphere of influence.
- These terminals totaling around 15 million tonnes per annum (mtpa), will reconvert natural gas shipped in a liquid form into gas and would help India exert economic and strategic influence in the region.
- Of the four such overseas terminals planned, the ones with Sri Lanka and Bangladesh have already gained traction.
- PLL is among the firms shortlisted to set up the LNG terminal in Mauritius.
- Fostering cross-border energy trade is an important part of India’s South Asia-focused neighbourhood-first policy, with India also pursuing long-term deals with its neighbours for supplying domestic cooking gas and other petroleum products.
- India has been setting up the building blocks of this new energy partnership with its neighbours. Apart from building power projects in Bhutan, Nepal and Bangladesh, India already has power grid links with Bhutan, Nepal, Bangladesh and Myanmar, and plans to develop power transmission links with Sri Lanka. Also, power-starved Bangladesh wants to buy at least 2,000 megawatts (MW) of electricity from large solar parks being set up in Gujarat and Rajasthan.
- India is also championing for a South Asian Association for Regional Cooperation (SAARC) Energy Initiative to create sub-regional hydrocarbon infrastructure such as gas networks. This is on the lines of the SAARC electricity grid which envisages meeting electricity demand in the region. These steps will aid in enhancing the clout and standing of India and strengthen its standing as regional super power. [Mint]
Electrification Status in India
PM Modi has announced that all inhabited villages in India now enjoy electrification. It signals a significant milestone in the country’s development. It is an achievement that will raise aspirations in the remotest districts.
Complete Electrification is a half-done task
But the statistics reveal several disparities which include the actual number of households in villages that have power connections, the number of hours they get reliable power, and the per capita power that rural and urban Indians consume.
- The existing definition to declare a village electrified is coverage of a mere 10% of households and common facilities such as schools, panchayats and health centres. The claim of electrification pales when viewed against some of these realities.
- Rural household electrification has a wide range across States, from 47% to 100%. The average hours of power supplied in a day to rural areas in January 2018 ranged from 11.5 in Mizoram, 14.91 in Haryana and 17.72 in Uttar Pradesh to 24 hours in Kerala, Gujarat and Tamil Nadu.
- Census data for 2001 and 2011 indicate that the number of rural households that use electricity as their primary source of lighting rose by about 12 percentage points to 55.3%, while in that decade urban households rose five points to 92.7%.
- The per capita consumption between rural and fast-rising urban India also represents a challenge, since there is a divergence between the two. There are twin challenges to be faced in improving access and equity.
These anomalies are often the result of infrastructure deficits and administrative inefficiency and they show that, even with supportive Central schemes, the Power for All 24×7 goal adopted by States and Union Territories with a deadline of April 1, 2019 is far from realistic.
Are alternative sources feasible?
- To many, the falling cost of renewable, decentralised sources such as solar photovoltaic’s represents a ready solution for rural India.
- But the evidence from the States such as Maharashtra, which made an early claim to full electrification six years ago relying partly on solar power, shows that theft, damage and lack of technical capacity can pose serious hurdles.
- The answer lies in a hybrid solution that ensures continued scaling up of both grid-connected and standalone solar systems in appropriate areas, augmenting conventional sources of electricity, with a clear emphasis on rooftop solutions for cities. Cheaper renewables will enable differential pricing for households in remote areas, a key determinant of wider social benefits of electricity.
- Rural electrification in India has been a long effort, achieving rapid growth from the Third Plan to the Twelfth Plan, but getting affordable power to every household needs sustained policy support. [The Hindu]
World Bank Report On Status of Electrification In India
The World Bank report has brought out various aspects of electrification in India
- India is doing “extremely well” on electrification with nearly 85 per cent of the country’s population having access to electricity.
- Between 2010 and 2016 India provided electricity to 30 million people each year, more than any other country.
- While challenges still remain to provide electricity to the rest of the 15 per cent of the 1.25 billion populations, India is all set to achieve the target of universal access to electricity before the 2030 target date.
- Nearly 85 per cent of the country’s population has access to electricity.
- In absolute terms India is doing more on electrification than any other countries. Thirty million a year is really an astounding performance and it stands out from the crowd.
- However, India is not the fastest country in electrification. Bangladesh and Kenya, for example are faster in electrification than India.
- Reliability of service is an area of concern for India. Referring to India’s tremendous electrification effort, the report said it expects 250 million people gaining electricity access between now and the early 2020s, when the country reaches full access.
- The rapid growth of electricity access in India is propelled by the country’s USD 2.5 billion electrification programmes to reach universal electrification. [DD News]
Saubhagya Scheme and Access To Clean Cooking Fuel
India had over 80 crore people using firewood and cow dung cakes for cooking. Smoke from traditional biomass, which is essentially equivalent to secondary smoke from cigarettes results in similar adverse health effects. Women, in particular, have been the real sufferers. According to some estimates, there are about 5 lakh avoidable deaths every year as a result in our country. In addition, there is the impact on overall air pollution, which affects the health of all.
Ujjwala Yojana for clean fuel
This issue of clean cooking fuel has now got focus with the Ujjwala scheme started in 2016. The below poverty line (BPL) rural households are being given a cooking gas connection and a cylinder. However issues with the scheme include
- Unlike urban areas where there usually is home delivery of the gas cylinder to the consumer, in rural areas the consumer is required to go to the dealer to collect the gas cylinder, and this needs at least half a day, which is a real additional cost.
- The related issue is the one of affordability. The refill rate, according to some sources, is only two to four cylinders in a year, against the estimated needs of nine refills in a year.
- The creation of a distribution network to cover all the rural households is a gigantic task, with petroleum companies having drawn up investment plans of Rs 30,000 crore to develop the needed infrastructure is still at a nasant stage.
Saubhagya as an alternative
- There is, however, an alternative, immediate and cheaper option to that of extending LPG cooking gas supply to cover all the rural households.
- The electricity network has already been expanded to cover all the villages, and all the remaining households are being electrified with additional central financial assistance under the Saubhagya scheme.
- These electrified rural households can be encouraged to use electricity for cooking.
- An electric induction stove is cheaper than a gas stove. Bulk procurement by EESL (Energy Efficiency Services Limited) should drive down prices significantly, going by the past experience. So, BPL households can be given induction cook stoves free (these cost about one-third the cost of gas cylinders).
- The required investment in improving the electricity distribution infrastructure would be lower and can be done faster than for LPG.
- The actual cost of using electricity for cooking is similar to that of gas. Whereas the cost of electricity is relatively stable, the cost of LPG goes up with the rise in oil prices as well as with the depreciation of the rupee.
Electricity as a cooking fuel has its own set of challenges. But as the share of renewable resources in electricity generation goes up, so would its share in cooking, whereas with the use of gas the carbon intensity from cooking would remain at a plateau. For the objective of moving to a less carbon-intensive economy, this would be a vital transition. This should encourage in addressing of the challenges in using electricity as an alternate fuel. [Financial Express]
Rural Electrification Status
Definition of an electrified village in India:
An electrified village is defined as one that has the following:
- Provision of basic infrastructure such as distribution transformers and lines in the inhabited locality.
- Provision of electricity in public places like schools, panchayat office, health centers, dispensaries, and community centers.
- At least 10% of the total numbers of households in the village are electrified.
The government has announced that it has electrified all the inhabited census villages.
Still a long way to go in electrification attempts:
But the battle is still half won because
- Nearly one-fifth of India’s rural households (around 31 million) still remain in acute darkness. The government is committed to reaching these households through the Saubhagya scheme by 31 December 2018—a deadline that has been moved up from 31 March 2019. The project’s ambition is praiseworthy.
- Electrification schemes like the previous Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), and the ongoing Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Saubhagya schemes have focused on establishing village electricity infrastructure. DDUGJY, for example, provided electricity access to the remaining 18,452 inhabited villages.
- There are issues with these schemes which include confusion over data regarding the number of households in the country and inconsistencies in the data put out by state electricity discoms. The largest issue is the lack of focus on supply-side barriers.
The electricity penetration in India is faced by a complex challenge of Accessibility, Affordability and Availability. The motto of electricity to every household must be implemented through an approach in an integrated to address these challenges. [Mint]
Re-Look Towards Wind Energy
As the country tries to achieve an ambitious renewable energy target of 175 GW, windmills have popped up in at least 65 sq km of forested area, with permissions for another 30 or so sq km still pending. This isn’t surprising given that India’s potential wind power map envelops the Western Ghats (from Kerala to Gujarat) and even large parts of the Eastern Ghats.
Time to have a look at approach towards wind energy:
There are calls to relook at the strategies towards wind energy globally because of the following reasons:
- Global scientific research has also highlighted the impact of windmills on wildlife. For example, in the first few months of 2018 alone, published papers have shown that in the Pacific islands, bat activity is as much as 20 times lower in areas with windmills.
- In Poland, higher stress levels have been observed among rodents in the windmill areas of Poland while in Portugal, windmills close to wolf breeding sites are leading to lower breeding rates.
- In Texas, there has been a staggering 77% decrease in redhead ducks in coastal ponds within wind farms.
Scenario in India:
- In Rajasthan, for instance, transmission lines and spinning blades have reportedly led to increasing mortalities of the critically-endangered Great Indian Bustard.
- In studies of wind farms from Kutch to Andhra Pradesh, direct collisions have been reported.
- In Karnataka, where over 6,000 acres of forest land have been diverted for windmills, anecdotal evidence suggests that not only birds, but also amphibians and mammals such as wolves could be affected.
The current guidelines for wind energy skirt wildlife impact, while the process for forest land diversion focuses primarily on compensatory afforestation. Any mitigation based solely on direct collisions cannot prevent the indirect impacts and the jolts to the local ecosystem. These concerns must be addressed which calls for relooking at our strategies towards wind energy. [The Hindu]
Energy Poverty in India
There is now 100% village electrification in India an important milestone in the country’s development trajectory. At the time of Independence while the major global economies were completing electrification, India inherited a ‘virgin field for electrification’.
But despite dedicated public agencies, a planned approach, a sustained political mandate and continued public spending by the Centre and States, India has been considerably slow in reaching the milestone of 100% electrification of all the inhabited villages.
India’s energy poverty scenario
Another feather in the cap for India is it is now an energy surplus nation. India claims to be a net surplus and exporter of electricity. But critics say that India is still facing the challenge of energy poverty because
- 31 million rural households and about five million urban households are still to be connected to the grid — the highest in any single country.
- At the same time, a significant portion of connected rural households is yet to get adequate quantity and quality of supply.
- But regional imbalances in electricity access have persisted. Seven States (Uttar Pradesh, Bihar, Odisha, Jharkhand, Assam, Rajasthan and Madhya Pradesh) account for 90% of un-electrified households.
- Coincidentally, these States are ranked poorly in social development indices and house about two-thirds of the population living below the poverty line. This concurrence between economic poverty and energy poverty will be a barrier to the goal of universal access.
Efforts undertaken to address the energy poverty
- The Central government has set itself an ambitious target of connecting all remaining households by the end of March 2019 and made budgetary allocations to cover the cost of electrification.
- As part of a Centre-State joint initiative on 24×7 ‘Power for All’, State governments have already committed to ensuring round-the-clock supply to all households from April 2019.
- Schemes like Saubhagya have been proposed to address the issues of last mile connectivity. [The Hindu]
Financial challenges in ensuring electricity for all
Cost factor will be a critical driver in ensuring of electricity for all. The financial challenges in ensuring electricity for are discussed below
- Seven States (Uttar Pradesh, Bihar, Odisha, Jharkhand, Assam, Rajasthan and Madhya Pradesh) account for 90% of un-electrified households.
- Electricity distribution companies (discoms) in these seven States are already highly indebted, accounting for 42% of accumulated debts of all discoms as on March 2016.
- Their debts account for 17% of accumulated liabilities of the States.
- Despite continued State subvention (except by Odisha), all these discoms have been consistently running at a loss, accounting for about 47% of the loss in electricity distribution business.
- State government subventions amounted to 10% of their cumulative gross fiscal deficit in 2015-16 and accounted for 40% of total subvention from all States.
- The losses of these discoms after subsidy add up to 19% of their gross fiscal deficits in the year.
- The fiscal space of these States and discoms seems to be constrained to accommodate additional subsidy.
- On the other hand, existing subsidised lifeline tariffs in these States appear unaffordable to the poor and certainly higher than in States with universal (or high) access. Had it been otherwise, households would have been connected as villages got supply.
Given the context, it is uncertain whether the goal of electrifying all ‘willing households’ by March 2019 would translate into universal access to electricity. The assumption that a waiver of the connection charge and easing the connection process (but with no further rebate on lifeline tariffs) will make poor households willing to take up electricity connection is questionable. [The Hindu]
Challenges with Distribution Networks in Ensuring Electricity for All
Distribution network capacity poses a serious challenge in attaining of the commitment of electricity for all. The challenges related to distribution network capacity are discussed below
- Electrification in India has followed an approach of expansion, often driven by political considerations, without much emphasis on capacity augmentation and making the grid future ready.
- As a result, the distribution infrastructure is overburdened, as the demand has grown, causing a high level of technical losses and frequent breakdowns.
- The distribution network capacity in several States is inadequate to carry available electricity.
- Subsequently, discoms have been resorting to load shedding while their contracted generation capacities are underutilised.
- Adding new load to the existing fragile distribution network will only compromise the quality and reliability of supply. It could result in continued blackouts for the rural poor during peak hours.
- While the Central government has come up with multiple schemes with budgetary allocations since 2001, the available funding support has been short of the growing requirement.
- Moreover, many States have failed to utilise the limited funding. Current allocations under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS), to augment rural and urban distribution networks, respectively, are only a fraction of the requirement.
- Moreover, disbursement of these grants has been much slower, 17% under DDUGJY and 31% under IPDS, reflecting sluggish implementation.
Low achievement of earlier electrification schemes has often been blamed on incompatibility and a lack of cooperation between the Centre and States. Given that six of the seven low access States as well as the Centre are run by a single political party (and allies), there seems to be a strong political consensus on the goal of universal access. Time will tell whether this political consensus will aid in the realsing of commitment towards 100% household electrification. [The Hindu]
Renewable energy potential and women participation in the sector
As per the commitment of differential responsibility according to respective capability India has committed itself for the stimulating the investments in the renewable energy sector. This also provides for a unique opportunity to promote growth.
Renewable energy sector as a stimulator of growth
- India’s ambitious target of achieving 175 GW of renewable energy (RE) by 2022 could create 3,30,000 jobs in the wind and solar energy sectors alone.
- These opportunities provide better salaries and health-care benefits, skilling and training opportunities, and enhance the quality of life and wellbeing of the citizens.
- The government has committed to installing 175 GW of RE by 2022. Several of these installations will be in rural areas, where a large number of the poor live. The new RE projects are planned in a manner that also creates good quality jobs which would boost economic growth.
- Renewable energy sector will promote clean energy which will aid in reducing pollutions. These clean energy initiatives will aid in promoting good health and well being which is vital for building of quality human resource.
- There are structural challenges in assuring 100% household electrification. The renewable energy sector can aid in addressing these structural challenges. The initiative of Saubhagya is a step in this regard. The electrification can cause spill over effect to bring in prosperity to the under-previlaged.
Pollution entails the cost on the people and often the low strata in the society who pay the price for the increasing pollution. Renewable energy can be an efficient tool in fighting pollution.
Women participation in the sector is abysmally low
But the participation of women in the renewable energy sector is not very encouraging. This is testified by the facts which are highlighted below.
- India’s RE industry sector, as with other sectors, has low participation of women.
- A majority of women currently employed in the RE sector work at project sites, doing civil masonry work, which is temporary and labour-intensive with little potential for future growth.
- Moreover, the working conditions on many sites are not always suitable for women as they are devoid of safety and support systems.
- Where there is a need for more skilled or semi-skilled labour, fewer women can respond due to existing barriers to formal education and training.
- Technical training institutes do not admit applicants who have not graduated Class 12.
- Even where women meet the prerequisite for admission into training institutes, the institutes tend to be located in towns and cities, making it difficult for rural women to effectively participate, especially when they are also expected to carry out other household responsibilities.
Consequently, there are very few women in production, facilities, and operations and maintenance roles in the RE sector.
Enhancing the participation of women:
A recent study has found that
- Jobs in the RE sector can impact poverty, provided several “tweaks” are made to the existing systems.
- Particularly with the growth of the decentralised RE and off-grid energy sector, there is significant potential to include local women in the workforce.
- The study concluded that if the government, clean energy enterprises, training institutes and civil society work together to implement these “tweaks”, India could create good-quality employment opportunities that can support the inclusion of more women.
But such interventions need to be designed with women at the centre and not as an afterthought.
Various such measures can include
- Training institutes could reduce the bar on entry, allowing for less formally educated women to learn new skills and receive training.
- Training should be customised to respect specific needs like location, hours of engagement, safety and sanitation.
- Mobile training modules that can cater to small groups of women in remote areas can be developed.
- Training institutes and civil society organisations should collaborate and strengthen connections with clean energy enterprises to help trained women secure employment.
This sensitisation to women’s specific needs can help increase participation of women in the RE workforce. If the public and private sectors come together to bring such jobs to women, particularly in poorer communities, India’s transition to clean energy could also improve the quality of life for women and their families. [The Hindu]
Solar-Wind Hybrid Policy
For the first time government has announced the solar-wind hybrid policy. The policy aims to give a boost to the renewable energy generation by promoting new projects as well as hybridisation of the existing ones.
Features of the solar-wind hybrid policy
- In order to accomplish the target of achieving 175 gigawatt (gw) of installed capacity from renewable energy sources by 2022, which includes 100 gw of solar and 60 gw of wind power capacity the policy provides for a comprehensive framework to promote large grid-connected wind-solar photovoltaic (PV) hybrid system for optional and efficient utilisation of transmission infrastructure and land, thereby reducing the variability in renewable power generation and achieving better grid stability.
- The policy also aims to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV plants.
- The policy provides for procurement of power from a hybrid project on tariff-based transparent bidding process for which government entities may invite bids.
- It also permits use of battery storage in hybrid projects for optimising output and further reduces variability.
- The policy also mandates the regulatory authorities to formulate necessary standards and regulations for wind-solar hybrid systems.
- The government will extend all fiscal and financial incentives available to wind and solar power projects to hybrid projects.
- Government will also support technology development projects in the field.
- The policy provides for the integration of both the energy sources, wind and solar, at AC as well as DC levels.
Solar and wind power are variable in nature. This poses certain challenges on grid security and stability. Therefore suitable policy interventions are required not only for new wind-solar hybrid plants, but also for encouraging hybridisation of existing plants the policy is a good step in this direction. [ET]
Oil Prices and Its Impact on The Economy
India was a key beneficiary of declining oil prices between 2013-2015. The declining oil prices contributed immensely to the Indian economy.
Benefits to economy from declining oil prices
- Low oil prices in the international market had resulted in about 0.6% of the gross domestic product (GDP) in India’s fiscal deficit between FY14 and FY16.
- Lower crude prices also contributed to the narrower current account deficit.
- Since the government didn’t pass on the benefits of increasing prices of crude oil to the consumers it got greater leverages in its planning its spending and managing fiscal deficit and current account deficit.
Reasons for Increasing oil prices
- According to the IMFs world economic outlook roughly 80% of the recent oil price increase was caused by deterioration in supply conditions.
- The “Oil Price Dynamics” report published by the Federal Reserve Bank of New York. The report finds that the “Oil Price Dynamics” report published by the Federal Reserve Bank of New York states that less than two-fifth of the rise in oil prices since the beginning of 2018 was on account of supply-side factors.
- S. President Donald Trump’s decision to withdraw the country from the Iran nuclear deal and re-imposing of the sanctions on Iran. Iran is a big player in the market which exports around 2.2 million barrels per day. The sanctions are bound to create instability in the market.
- Political and economic instability in Venezuela which is a major petroleum exporting country. The Trump administration is threatening Venezuela with new sanctions
- The coordinated action by Russia and Saudi Arabia to keep supply on a tight leash is creating bottlenecks in the supply side.
- The heightened instability in West Asia in the form of Saudi Arabia-Iran rivalry and the looming possibility of new military conflicts add to the instability in the oil prices.
Implications of rising oil prices on macroeconomic indicators
The various implications of the rising oil prices on the various macroeconomic indicators are discussed below
Current account deficit
An increase of $10 per barrel in crude oil prices will lead to an adverse impact of $10-11 billion (or 0.4% of GDP) on current account deficit.
There are two contrasting factors at work which would define the quantum of impact on the current account deficit
- Higher oil prices will push the import bill higher.
- Higher oil prices can be partly offset by the higher oil exports and better remittances.
- As more than half of the remittances are routed through the gulf countries an increase in economic activity in the gulf countries would result in increasing remittances.
As a result there would be some amount of balancing act to reduce the quantum of increase in the current account deficit.
Oil has a weightage of 2.4% in headline CPI. Hence the adverse impact will depend on the quantum of increase in the prices of oil in the International market. But for sure the increasing oil prices will result in the upward pressure on the inflation.
Increasing oil prices will also result in increase of the subsidy burden as the political and economic considerations will prevent in the complete transfer of the increasing price burden to the consumers.
Market is of the view that windfall gains due to low prices in the international market and reduced subsidy are behind us and India has to be ready to deal with the increase in the prices of the crude oil. [Mint]
Augmenting the capacity of ONGC
India’s state-owned exploration company Oil and Natural Gas Corp. Ltd (ONGC) has been taking steps to augment its capacity.
Steps to augment the capacity by ONGC
- By early 2019 ONGC will quadruple the output from an offshore gas block in the Bay of Bengal where it has spent billion dollars last year.
- ONGC bought the Deendayal field in 2017 from state-owned company Gujarat State Petroleum Corp. Ltd (GSPC). Output from the Deendayal natural gas block off India’s east coast will reach as high as a million standard cubic metres per day by January 2019.
- The Deendayal natural gas block will also help us in developing the adjoining gas fields in the KG (Krishna-Godavari) basin at lesser capital expenditure and time.
- ONGC and Reliance Industries Ltd (RIL), along with partner BP Plc, are developing several natural gas discoveries in the KG basin. These discoveries could contribute up to 50 million cubic metres of daily output, or about a third of India’s current demand.
- The company registered a marginal jump in production in fiscal 2016/17, and then production increased by another 6 percent last year in the year through March 2018.
As the government has set the target of increasing the share of natural gas in India’s energy mix to 15% by 2030, from 6.5% now and is planning for steps to reduce the import dependence the capacity augmentation by ONGC is a welcome step. [Mint]
Impact of US sanctions of Iran on Energy Market
Sectors such as financial and banking, underwriting services, insurance, shipping and shipbuilding and port operation had got relief from the sanctions under the Iran nuclear deal in 2016. All these influence the oil trade to a large extent.
Since the Trump administration has provided a six-month wind-down period for energy-related sanctions against Iran. The full-fledged impact of the re-imposition of sanctions on Iran will take effect only in six months.
US sanctions on Iran and Energy market
- Russia and China which are part of the Iran deal have said they will not participate in American sanctions. It is unclear how far European companies could withstand American pressure and continue trade with Iran. All of these will shape the energy market in the future.
- French oil company Total has announced that it will halt a natural gas development project in Iran unless it receives a waiver from the U.S. government.
- Countries like India and China are expected to continue the oil trade with Iran even if it is in reduced quantities.
- Experts differ on how much of Iran’s current export of around 2.2 million barrels per day would be off the global market in the coming days.
In 2012, when sanctions were imposed, Iran’s exports had fallen by half. The Trump administration appears to be in no mood to give any waiver to European companies. The oil market is betting on America’s ability and will to enforce the sanctions. The Americas ability to enforce the sanctions will determine how the oil market will unfold in the coming days. [The Hindu]