for Sustainable Growth
[R V Shahi's Weekly
Column for Infraline, November 12, 2007]
India Energy Forum organized, on 11-
12th September, 2007 10th India Power Forum and 7th
Non-Fossil Energy Summit. I had the privilege of inaugurating the Non-Fossil
Energy Summit on September 12. Dr. R. Chidambaram, Principal Scientific Advisor
to the Govt. of India presented a comprehensive key note address, which I will
cover in a subsequent paper. The gist of my inaugural address is being presented
in this paper.
Indian Energy sector is heavily
characterized by fossil fuels - coal, gas, and other petroleum fuels. Though per
capita consumption of energy in India is significantly lower than the world
average, and much lower than the consumption levels in a number of developed
countries. Since the addition in energy production is likely to be high, India's
energy development strategy is being viewed globally with great degree of
attention. For example, on the power side as compared to 135 GW as present, it
is projected that in 25 years the installed capacity will rise to over 800 GW.
This type of a rapid growth over almost two to three decades in the future
causes global concern. Are we going to add very substantially to the CO2
emission problem? Can there be a different strategy? Can we not project a
reduced consumption level? Can we not resort to technologies which don't create
climate change problems? These are the questions that are being raised.
So far as India is concerned, the
government took serious note of the likely global warming problems long back and
started focusing attention on non-conventional energy sources. India is one of
the very few countries in the world that has setup an exclusive ministry to deal
with this issue. Recently this ministry has been renamed as Ministry of New and
Renewable Energy, a change from the earlier name of Ministry of Non-Conventional
Energy Sources. Under the burden of severe problems that the world is likely to
be experiencing because of global warming and climate change, serious efforts
are being made to harness potentials of new and Renewable Energy sources.
According to one estimate the power generation capacity in this category in the
whole world has already exceeded 2,00, 000 MW, of which 74,000 MW is wind power
capacity. In the year 2006, alone the wind turbine capacity increased by more
than 25%. Solar systems which are comparatively excessively costly is also
showing a rapid growth in the recent years. The solar cell production of about
2,500 MW during the year 2006 has been almost 40% more than production in the
In India several initiatives have
been taken resulting in reasonably high progress. Today the grid connected
capacity from these sources is more than 10,000 MW capacity - bio power (524
MW), wind (7092 MW), small hydro (1,975 MW), Co-generation (615 MW), waste to
energy (43 MW), total (10,251 MW). Besides there are non grid connected
capacities in the stand alone distribution arrangement which includes solar
(2.92 MW), bio mass/ co-generation (45.80 MW), bio-mass gasifier (86.53 MW),
waste to energy (19.76 MW), total (155 MW). Thus both grid connected and non
grid capacity constitutes (10,407 MW). During the 10th Five Year Plan
the capacity addition was remarkable about 6,500 MW. During the 11th
Five Year Plan the targeted capacity addition is of the order of 14,000 MW, thus
the total capacity under this group aggregating to about 24,000 MW by 2011-2012.
This would be about 12% of the total installed capacity under the utility
sector, which is likely to be of the order of 210,000 MW (exclusive of captive
plants). Additional target of 14,000 MW is almost 20% of the capacity being
planned (78,000) in the utility group during the current Five year plan.
This level of installed capacity,
under the non-conventional group, which would exceed 12% of the total during the
11th Five Year Plan is not only remarkable but it indicates the
India's Strategy and approach toward these new technologies as also India's
commitment to make concrete and definite contribution towards mitigating global
Wind based power generation has now
come of age in India. It has started almost competing with the conventional
power generation, particularly if we take into account the CDM benefits that may
accrue on account of the technologies used. Bio mass technology needs to be
further improved and refined, its capital cost needs to be brought down and its
fuel arrangement on a long term basis needs to be appropriately tied up. Taking
the advantage of economy of scale by facilitating large scale expansion through
this technology, even this system may be more or less very near the conventional
generation. If we compare the large technical losses in rural electricity supply
from grid connected power, bio-mass based decentralised distributed generation
could emerge as a good option for rural India. Solar system, unfortunately
continues to defy a cost effective solution. It requires global funding and
global collaboration to harness this eternal source of energy. The present
technology or any other technology which can deliver cost effective energy and
power through solar systems needs a break through.
In the National Electricity Policy
notified by the Ministry of Power, Govt. of India in February 2005, special
emphasis has been given for encouraging power generation through
non-conventional energy sources.
"Feasible potential of
non-conventional energy resources, mainly small hydro, wind and bio-mass would
also need to be exploited fully to create additional power generation capacity.
With a view to increase the overall share of non-conventional energy sources in
the electricity mix, efforts will be made to encourage private sector
participation through suitable promotional measures".
Further, the Tariff Policy announced
by the Ministry of Power, Govt. of India in January 2006 has made special
provisions so that non-conventional energy generation including co-generation
"Pursuant to provisions of section
86(1) (e) of the Act, the Appropriate Commission shall fix a minimum percentage
for purchase of energy from such sources taking into account availability of
such resources in the region and its impact on retail tariffs. Such percentage
for purchase of energy should be made applicable for the tariffs to be
determined by the SERCs latest by April 1, 2006.
It will take some time before
non-conventional technologies can compete with conventional sources in terms of
cost of electricity. Therefore, procurement by distribution companies shall be
done at preferential tariffs determined by the Appropriate Commission.
Such procurement by Distribution
Lincensees for future requirements shall be done, as far as possible, through
competitive bidding process under Section 63 of the Act within suppliers
offering energy from same type of non-conventional sources. In the long-term,
these technologies would need to compete with other sources in terms of full
The Central Commission should lay
down guidelines within three months for pricing non-firm power, especially from
non-conventional sources, to be followed in case where such procurement is not
through competitive bidding".
Hydro electric power generation
provides enormous opportunity in India. The potential is more than 1,
50,000 MW. We have been able to harness less than 25%. Fortunately Ministry of
Power has made special efforts. In 2003 the Ministry came out with 50,000 MW
Hydro Electric Initiative and is taking all possible steps so that this source
of energy is appropriately harnessed. In the 11th Five Year Plan it
is expected that at least 16,000 MW of capacity on hydro should be commissioned.
In the 12th Five Year Plan this figure will further increase.
So far as nuclear power is concerned.
National Electricity Policy has recognized that this is an established source of
energy and its capacity should increase significantly.
"Nuclear power is an established
source of energy to meet base load demand. Nuclear power plants are being set up
at locations away from coalmines. Share of nuclear power in the overall capacity
profile will be, among others, important considerations. Public sector
investments to create nuclear generation capacity will need to be stepped up.
Private sector partnership would also be facilitated to see that only targets
are achieved but exceed".
In the short and medium term, some of
the specific steps that are urgently needed to see that our objectives of
developing new capacities based on these sources are met, are as follows:
More than 80% of the
hydro electric potentials of the country are concentrated in North Eastern
States, Uttrakhand, Himachal Pradesh and Jammu & Kashmir. Again, within the
North Eastern Region more than 80% of the North Eastern potential is located in
Arunachal Pradesh. In last couple of years a situation of stalemate continued in
view of many of the States desiring free power to the extent of more than 12%
(12% is as per the Govt. of India policy). In some cases these states have been
expecting upfront premium for allocation of projects. In view of these the
process of allotment of project to developers - both public sector and private
sector - has been slowed down resulting in further slowing down of the hydro
power project development, which even in the past has experienced a slow
progress. This is an issue which should receive top most attention and a
definite line of action needs to be drawn so that the uncertainty remains
forever and projects of allocation of projects is streamlined and expedited.
Till about a few months back the forest
clearance was getting delayed considerably only for such forests where there
is an issue of wild life involvement. Such forest clearances required the
recommendation of Wild Life Board and finally each case required to be
cleared by the Hon'ble Supreme Court. This itself was a big problem and
lengthy one. In recent months because of some disconnect between the legal
process and the opinion of the Ministry of Environment and Forest, every case
of forest clearance - with or without wild life involvement - needs to be
cleared by the Hon'ble Supreme Court. There are projects where project
developers have tied up everything - EPC contract, Financial closure,
contractor's mobilization, environmental clearance. But due to forest clearance
not being available the whole process of construction is held up. This again is
an issue which requires to be resolved not in terms of months but in terms of
In the past the power project development
agencies under Ministry of Power and coal mine development agencies under
Ministry of Coal have deposited huge sums of money for compensatory afforestation to the concerned state governments. It has been seen
that not even 25% of the funds deposited has been utilized for forest
development. In fact, with these funds, a number of regional and national
forests could have been developed. A central level SPV only for forest
development is the answer. This proposition itself has been under consideration
for several years. Confidence of people, NGOs and others could rise if such
actions are taken. As a corollary their confidence level is low because
commensurate forest development has not taken place.
Wherever large storage based
hydroelectric projects have to be built, and villages and towns have to be
displaced, the rehabilitation and resettlement package needs to be worked
out so as to take care of the genuine expectations and problems of people.
The approach and policy have to be evolved with a human touch. More
importantly, a proper implementation mechanism should ensure the
implementation of what is decided.
For development of
nuclear power the following issues need appropriate attention:
If we are tying up fuel
supply from outside, after the present problems concerning the Agreement with US
and understanding with Nuclear Supply Group nations are resolved, we should be
very clear about long term pricing formula including escalations, if any. A
small dependence on petroleum fuel for power generation has taught us good
lessons in a very hard way. Fortunately Indian power sector is not substantially
dependent on petroleum fuels. Those countries which planned their large
capacities on petroleum fuel including gas have been experiencing very serious
problems. This aspect needs to be kept in view while planning for capacity
addition through nuclear fuel. Availability and price of nuclear fuel tied up on
a long term basis should guide our approach on this.
May not be immediately
but in next year or two we should look at our legislations concerning nuclear
power plants. We cannot depend only on Nuclear Power Corporation for developing
power generation through nuclear fuel. We may have other government companies,
subsequently joint venture companies and, with due safeguards, even private
sector companies. Then only we would be able to meet our targeted capacity of
about 60,000 MW through nuclear route in next 25 years.
When we embark upon a
larger slice for nuclear power capacity, our regulatory mechanism from safety
point of view will have to be even stronger. In the recent months also a few
accidents in a few countries re-emphasise the need for extra ordinary care and
For rural areas,
decentralized distributed generation (DDG) can be a good option. The following
aspects may be relevant to mention:
For hill states micro hydrel needs all possible encouragement. Coupled with local area distribution
network it could be most cost effective solution.
For other areas
bio-mass based small generation facilities together with local area distribution
could provide a reasonably good solution. What may be necessary to make this
system cost effective is that they could also have the grid connectivity
facility so that when entire power is not needed in the local area power can be
supplied to the grid.
For DDG to succeed,
franchisee arrangement may be a must, so that commercial aspects are adequately
safeguarded. Also, in order that confidence develops, the equipment suppliers
may consider taking responsibility for running the system for 10-15 years and
they can also enter into arrangement with franchisee for taking care of
commercial issues of distribution of power. Decentralized Distributed Generation
scheme could be supported under the present government of India scheme of Public
Private Partnership (PPP) which can provide the viability gap funding, wherever
needed, in a transparent manner.
Inspite of several
efforts, both in India and abroad, it has not been possible to harness solar
energy in a cost effective manner so far. In India almost 8 months in the year,
most parts of the country have solar energy availability. NTPC, BHEL and
government and other organization can join hands on a technology development
research with substantial funding support, say Rs. 1000 crores, aimed at cost
effective technologies. The objective should be that in next 5-7 years, at least
100 MW aggregate capacity is developed which could be cost effective. And,
subsequently the capacities could be multiplied.
Copy Right: R.V.