Vision for an Integrated Energy Policy in India

The vision of our energy policy is to made available clean, safe and convenient form of energy to all sectors in an economically viable manner. Energy needs of household should be met even if that entails directed subsidies to vulnerable households. It further envisages that demand should be met in a technically efficient and environmentally sustainable manner. However to achieve this objective India needs to expand its energy base by exploring all possible energy resources whether conventional or non conventional. Along with this India needs to pursue such strategies which manages demand side problems and promote conservation of coal and petroleum with a focus on increasing energy efficiency which shall remain India’s most important concerns regarding energy security till 2030.

Let’s have a look at the broad aim of the Integrated Energy Policy:

1. An independent regulation in energy sector till the market matures.
2. Price determination and resource allocation should be decided through market forces with a credible regulatory oversight.
3. Ensure Transparency along with targeted subsidies.
4. Improvement in energy efficiency across the energy chain.
5. Policies that reflect externalities of energy consumption need to be factored.
6. Increase accountability through management reforms and incentives for efficiency have to be planned and executed.
7. Provide incentives/disincentives to regulate market and look into consumer behavior.

Reduce Energy Requirements

Reducing energy requirements through energy efficiency and following conservation practices is akin to creating a new energy resource base. It can be done by using technology efficient methods in energy extraction, conversion, transmission, distribution and end-use of energy. For instance: By changing our current fossil fuel extraction methods the efficiency can be increased by around 10 percent. Similarly using efficient coal power plants can increase the efficiency from current level of 30.5 % to around 40%. State of the art super critical pulverized fuel fired boilers can reach an efficiency level of 46 percent depending on plant location. Therefore we should replace the existing technologies with this technology considering our large dependence on coal-based power plants.

Another attempt in reducing our energy requirements can be made by adopting energy efficient transportation means and by promoting public transport. Today a large part of cargo is carried by railways running through diesel engines which need to be replaced with more efficient electric systems. Similar other initiatives can go a long way in reducing our energy requirements.

Strategic Oil Reserve (SOR) Storage Systems

SOR is an important key to maintain nation’s energy as well as economic security. It acts as a valuable buffer against short term oil supply disruptions. In today’s era when we are experiencing turmoil esp. in west Asian countries India may find itself at crossroads, where she may experience a short/ medium term embargo from petroleum exporting nations, against which she needs to secure herself by construction of strategic storage systems.

But to maintain our SORs India need to develop Adequate Port & Domestic Shipping Facilities for Future Oil and Gas Import. The recent collision in Mumbai dockyard has proved the vulnerability of our shipping facilities. So planning along with proper investment needs to be done on priority basis to build our SORs.

Expand Resource Base

India has huge untapped potential of oil and gas reserves. So effort needs to be made to find new reserves. It can be done by providing incentives to private players and removing bottlenecks in our exploration policies. Along with this we have to explore better mine designs and should focus on technologically advanced mining techniques. For eg: In the case of oil and gas, Improved Oil Recovery (IOR) and Enhanced Oil Recovery (EOR) techniques can improve exploitation of in-place reserves leading to its increase easily by 5-10 percentage points.
Similarly in-situ gasification may permit much higher recovery of coal than can be economically mined by conventional techniques. So such techniques should be pursued.
Further options should be explored in foreign countries. For eg: If India can get access to cheap gas abroad then it should collaborate with the particular country for setting up captive energy intensive units such as fertilizer plants. Alternatively, India could set up captive liquefaction plants to bring LNG into the country.

Power Sector Reforms

Power Sector Reforms should focus on following:

• Control of technical and commercial losses in distribution.
• Realizing liberal and group captive regimes foreseen under the Electricity Act 2003.
• Separate carriage from the energy business (content) in both transmission and distribution at different voltages.
• Implement open access provisions of the Electricity Act.
• A robust and efficient inter-state and intra-state transmission system capable of transferring power from surplus regions to deficit regions.
• Rehabilitation of existing thermal stations at least-cost.

Using Efficient Technology In Coal Power Plants

Coal accounts for over 50% of India’s commercial energy consumption and is unlikely to change by 2030. Hence, India must seek clean coal combustion technologies and new coal extraction technologies.

Independent Regulation

Today, only the power sector has a regulatory framework. Regulator for other sectors like petroleum and coal are being envisaged by the govt.The effort needs to step up as Independent regulation is critical for attaining competitive efficiency. Moreover the sector is characterized by large economies of scale and has natural monopoly characteristics in subsectors such as transportation and distribution networks so only an independent regulator can ensure a level playing field.

Reduction in Cost of Power

In terms of purchasing power parity, power tariffs in India are among the highest in the world. Following steps can be taken :

• Generation and transmission projects should be built on tariff-based bidding.
• Regulators should set multi-year tariffs and differentiate them by time of day.
• Develop market-based instruments that extend the tenure of debt to power projects.

Integrated Energy Planning

Today the energy sector is plagued by inefficiencies owing to its regulation by several ministries. It leads to lack of coordination and integration among them. Therefore a well well-established institutional framework consisting of regulatory agencies, the rules and regulations of the sector and policy guidelines is the foremost need.

There should be a single regulator for entire energy sector. This will help in filling the gaps in coordination and bring effectiveness.For eg: . Reform in the power sector is suffering from the lack of progress in coal reforms while coal movement suffers from the lack of tariff rationalization in the railways.Therefore a single regulator will bring more efficiency.

Further the regulatory agency should have international experience, political independence, accountability, autonomy and expertise on technology.

Energy Efficiency & Demand Side Management

Because of limited conventional energy resources exploration of energy resources should be accompanied by energy efficiency and conservation.For eg: efficiency of electricity generation, transmission, distribution and end-use.

Following measures need to be adopted:-

• Enforce truthful labelling on equipment .
• Establish benchmarks of energy consumption .
• Reward best practices.
• Adopt least cost planning approach.
• Promote minimum cycle cost purchase

Diversification of Oil Resources

India should collaborate with new countries to diversify its need of energy resources. For eg: USA shale gas exploration has changed the entire geo political situation of the world. Moreover there are findings which confirms shale gas in certain regions of india. Therefore entering into collaboration with new countries will not only help in meeting India’s energy needs but will also help in developing new technologies along with other countries for exploration in our own country.

Boosting Energy Related R&D

Some recommended key policy initiatives are:-

• A National Energy Fund (NEF) should be set-up to finance energy R&D with an initial allocation of Rs1000 crores, excluding atomic energy.
• Technology missions for developing near-commercial technologies in a time bound manner.
• Academic institutions should be developed as centres of excellence.

Waste to Energy Potentials

Lot of waste is generated from our urban areas as well as agricultural practices which colud be converted into useful energy. Certain new technologies like the anaerobic fermentation process can generate useful energy from bio and other waste products.

Moreover recent initiatives like selling of urban waste to farmers to generate bio gas should be vigorously pursued. It will not only help in expanding our energy base but will also reduce the garbage menace.