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India's Strategy Towards Energy Security (Part-I), Shri R V Shahi, Former Secretary, Ministry of Power

As we all know, energy is the most important determinant and index of development and of quality of life of any nation or society. If certain countries in the world continue to remain underdeveloped, it is primarily because they have remained - and continue to be so - deprived from the advantages of increased consumption of energy. 17% of world population lives in India, but its share of commercial energy consumption is 3.7%, and per capita commercial energy consumption is one fifth of world average, less than 5% (one twentieth) of U.S.A. and less than 30% of even China. Obviously this reflects in the proportion of Indian people below poverty line - more than 350 million (about 30% of total population) people living at less than one dollar a day of income and more than 800 million people (75% of total population) living at less than two dollars a day.

When the Expert Committee to develop India's Integrated Energy Policy (IEP) was deliberating (during 2005-06) on Energy Security, we examined various concepts, approaches and definitions. Energy Security has become a global concern and challenge both for developed and developing countries and of course for underdeveloped countries. Developed countries have reached such levels of energy consumption to match with their modern lifestyles that any disruption, dislocation or partial unavailability of energy is not only immediately experienced but also it directly affects their working. Many of the developed economies have started experiencing the shortage of energy and also the impact of volatile nature of prices of various energy products, more particularly in the petroleum sector, very intensely. Energy Security, therefore, has to have different connotations in contexts of varying situations in different countries.

The World Energy Assessment (UNDP 1999) report defines Energy Security as "The continuous availability of energy in varied forms in sufficient quantities at reasonable prices". This definition is, of course, too demanding and can at the most aptly fit the situations in advanced countries. Even in these cases, "sufficient" quantity and "reasonable prices" are vague terms. In any case, for countries like India, where per capita consumption of energy, is significantly less and the country has to go a long way, the demands placed on the basis of the formulations contained in the above definition may be unrealistic. The Expert Committee, therefore, discussed this issue at great length and attempted a formulation of energy security which could most approximately suit Indian conditions. We came to the following conclusion in the I.E.P. (2006).

"We are energy secured when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected".

Even the above formulation, in the present situation in which we are placed, appears to be somewhat a goal rather than a realistically realizable target. But, we considered it to be appropriate on agreeing to this formulation because the concept of Energy Security in itself is more of a goal to aim at and work for than to be easily achievable target. In our formulation we provided that we should encompass "all citizens". It may be relevant to mention that in India more than 50% of its population does not have even access to electricity connectivity. And, those in the rural areas who have access face disruptions in supplies for days together. Almost 30% of people living below poverty line have to depend on forest wood and cow dung for cooking their food. In such a situation, a goal to supply life line energy to all citizens, obviously is a goal we should try to achieve but keeping in view the existing situation it would really be a challenge. By "effective demand" we meant that a demand which should be supported by the ability to pay. This again is a debatable point. The rich may have the ability to pay and will therefore be provided, while the poor who may not have the ability to pay may remain deprived. Lifeline energy is a concept which we introduced in the Electricity Policy suggesting that a minimum of 1 Unit of electricity a day should be available to below poverty line (BPL) families all at affordable price.

Of late, energy security has come into sharper focus in the context of the challenges posed by global warming and the concerns emanating from consequences of Climate Change. The rich, not so rich and the poor nations, all have challenges to cope with the Climate Change issues which are closely interlinked with the levels of production and consumption of energy. Unless the rich nations change their life styles, reduce their consumptions or adopt totally different methods of production or do both, their present levels of emissions are unsustainable. Those countries which are in the early stages of development, and India is one of such countries, have to take care of their technologies of energy production as well as address appropriately all issues connected to Demand Side Management (DSM). On balance, problems for developing countries are more inasmuchas they have to fulfill the legitimate aspirations of their people to have a reasonable level of living for which they have to inevitably increase the base of energy production, which normally may run counter to the expectations of developed world to contain energy production and thereby carbon emissions.

While talking of India's strategy towards Energy Security we need to focus equally on the Supply Side as well as on Demand Side. Management of both is equally important. Let us examine all the issues connected with Supply Side first. Electricity and Petroleum fuel for transport are two most important ingredients of supply of energy. So far as electricity is concerned, it is only a derived energy, the primary source being the fuel which is used to produce electricity. These would include coal, liquid fuel, gas, atomic energy, water (for hydro electric), wind, bio-mass, bio-gas, geothermal, ocean tides and solar energy. India is at such a stage of its developmental programmes and the energy consumption levels with which it has been able to provide only a less than moderate lifestyle to its people, that energy security for India would require harnessing all forms of energy. It has little choice to prefer one and leave another. Therefore, an ideological approach, with a conviction that we can afford to accord lesser priority to fossil fuels and, in preference, choose non-fossil fuel based energy, would not be a pragmatic solution to Energy Security. All the potentials therefore, to the extent possible, will need to be fully exploited so that we enhance, on Supply Side, our production base. We may examine in brief each one of them for the type of strategies we need to evolve and implement. Energy initiatives to enhance Energy Security would include the following:

  1. Diversification of supply sources (both domestic and import) - all fuels, all technologies, alternative new energy sources.

  2. Reduction of Import - Dependence on outside sources has increased considerably over last 25 years with consequential risks and pressures on energy security. We need to minimize it.

  3. Maintenance of Strategic Reserves - We are not very well placed as compared to global practices and therefore exposed to greater risks in times of fluctuations in global energy markets. The situation needs to improve.

  4. Procuring oil and gas reserves abroad by securing equity position will enhance energy security.

  5. Reducing Demands and energy needs through comprehensive measures on Demand Side Management (DSM).

The Energy Demands have been analysed under various assumptions and scenarios by the Planning Commission. The actual position as in 2006-07 and projections for 2031-32 are as follows :

Sectors

2006-07

(Million Tonnes of Oil Equivalent MTOE)

%

2031-32

%

Mid Point%

Coal

209

39

632-1022

41-54

47

Oil

133

25

350-486

23-29

26

Non-Comml.

147

27

185-225

10-12

11

Gas

35

7

104-197

6-11

8

Nuclear

5

1

76-98

4-6

5

Hydro

10

1.8

13-35

0.7-2

1.5

Renewables

1

0.1

2-87

0.1-5.6

3

Total

540

100.0

1536 -1887

Role of Coal in Energy Security

Coal has continued to be the most predominant source of commercial energy. In coming decades, its role may somewhat reduce as compared to its own proportion in the past, yet, it would perhaps continue to be the most dominant source of energy for generation of power as also in many other production processes. Some of the important issues, that will need to be kept in view so that the energy security is able to receive a higher level of confidence, are as outlined below:

  1. India's capacity mapping in respect of coal reserves will have to be made not only comprehensive but more reliable to specify more accurately the extent of coal reserves which are extractable and which remain to be extracted. Though Central Mines Planning & Design Institute (CMPDI), a Coal India Subsidiary has acquired considerable experience and today is the only agency which can carry out such investigations, it has fallen far too short of what it ought to have done in this regard. There is considerable confusion about the claims that India is endowed with 257 billion tonnes of coal reserves. We need to clear the cloud and establish, in a credible way, more authentic estimate of domestic coal reserves which can really be produced into usable coal by different consuming sectors. So far, the system has been unable to develop multiple agencies and create capacity building for these agencies to acquire required skill and expertise so that for the vast country like ours this task is accomplished in a reasonable time frame. The approach of Coal India to keep everything under its own umbrella, not to allow anyone to enter this territory, and the tacit support of the Ministry of Coal to go along the same mindset has deprived India to even know what it realistically possesses. Of late, there has been a welcome change in the thinking of the Ministry of Coal, and reluctantly even within Coal India, that they cannot continue with this highly restrictive practice. Other agencies are being also brought in now. Ministry of Coal and Coal India should take effective steps so that, through multiple agencies, this exercise is carried out in a comprehensive and expeditious manner.

  2. Even if it is established that our coal reserves can last for a long period of time, it would be desirable that the coal consumption profile of the country is so configured that the longevity of use of domestic coal is enhanced. A suitable blend of domestic coal and coal purchased from outside can enhance energy security of this fuel for a much longer duration. When in the Ministry of Power, we planned for the Ultra Mega Project series, we deliberately decided that a chain of costal power plants based on imported coal/blended coal will supplement a similar set of Ultra Mega Projects at coal pit heads.

  3. One of the most effective ways of enhancing energy security, in so far as the role of this dominant fuel is concerned, would be to acquire coal mines abroad. In 2005, in the Energy Coordination Committee Meeting presided over by the Prime Minister, it was decided that both public and private sector companies should be encouraged to acquire coal mines in countries like Indonesia, Australia and South Africa etc. Some progress on this front has happened; a lot more is required. Private companies have been more active. Public sector could have been more successful if they had acted in time with seriousness.

  4. A word of caution, however, is considered necessary while talking about acquisition of coal mines abroad. The whole idea of energy security is to secure our country and our consumers from the adverse impact of volatility in the global energy market. This only means that when there are shortages leading to excessive increases in prices, to the extent possible, we should be insulated from such adverse conditions and implications. Even after acquiring coal mines abroad, if the domestic consumers are subjected to the consequences of volatile energy markets in the same manner as if they did not acquire such coal mines abroad, the whole purpose of such acquisitions, aimed at larger object of energy security, gets defeated. An example in case is acquisition by ONGC through ONGC Videsh. This has not, in any visible way, helped mitigating the energy problem within the country in the sense that it has not even partially insulated consumers from highly volatile global petroleum markets. No doubt, it has strengthened the ONGC financials.

  5. The issue of energy security in the context of coal also needs to be viewed from the technological developments in the power sector. In India, more than 75% of coal is consumed by power sector. In last 100 years the coal based power generation process and technology has practically remained stagnant in terms of technological advancements, when we view it from energy efficiency angle. It is a sad commentary on human ingenuity and it does not speak well of scientific community when we find that more than 60% of heat contained in coal is lost when it is transformed into power. Even with the super critical technology, it has not been possible to have the thermo dynamic efficiency of coal based power generation process more than 41-42%. This requires global networking and integration of research organizations and activities so that a more meaningful break though is achieved in the technology of electricity generation by conversion of coal into electricity. Indian coal provides even a bigger challenge because unlike coal available abroad, having high calorific values in the range of 5,000 - 7,000 Kcal per K.G., the Indian coal used for power generation has a C.V. in the range of 3,000 to 4,000.

  6. Our approach towards research and technology development has to change. Our expectation in general that some developed countries would evolve and discover technologies which could be adopted and adapted in India has been harmful. We should have recognized that if our coal has lower heat value someone else is not going to research to solve our problems as to how best appropriate technologies are discovered and established to suitably use the poor quality Indian coal for an optimal output.

  7. Coal Bed Methane (CBM) has a potential and it could lead to a more efficient use of coal for electricity generation as also for other industrial purposes. Energy security concerns could get addressed more effectively if this technology is evolved suited to characteristics of domestic coal.

Recent initiatives in this regard are encouraging. Commercial Production from the first group is likely soon.

CBM I - 7 Blocks offered and awarded.

CBM-II - 8 Blocks have been awarded.

CBM-III- 10 Blocks have been awarded.

  1. Same consideration is relevant even in respect of Integrated Gasification Combined Cycle (IGCC). Indian power plant manufacturers have been waiting that someone else will perfect this technology using Indian coal. This has been ridiculously delayed primarily on account of this type of an approach and mindset, which needs to change. NTPC and BHEL were advised to work together and bring out tangible results. Budgetary support (grant) from Government would accelerate this process.

  2. While the coal, as the primary energy source, is a great strength of Indian economy in view of the comfortable reserves that the country is endowed with, organisationally and institutionally a series of changes and reforms are required to tap the potential in the most effective and optimal manner. Entire dependence and reliance only on the Government controlled institutional frame work for last over 40 years has been the cause of new technological breakthroughs not happening. Legal frame work will need to be altered, regulatory mechanism will need to be put in place and a comprehensive road map will need to be blue printed so that after a transition of a regulated coal market structure, competitive market evolves. The present legislation which has been under consideration of Parliament for amendments for over last 10 years does not brook any further delay. The sooner it happens greater would be the level of confidence achieved towards our steps for energy security.

  3. The small beginning for opening the coal sector through captive coal mining route is, no doubt, a step in the right direction, but a fuller reform towards opening the sector to private sector investment to create the required competition with the public sector coal companies will be a sine-qua-non for the coal sector to deliver in the larger interest of the economy. Till that happens captive mining to succeed will require a lot of support and handholding of both Central and State Governments.

Water Resources and Energy Security

Next to coal is the water resource of India.

  1. Fortunately we could generate as much as 150,000 MW of power on the basis of estimated potential of hydro electricity. Hydro electric projects not only provide a substantial solution to energy security but there are also solid answers to the climate change concerns. Above all the hydro electric provide the greatest comfort to the consumers of freeing them from the vagaries of ever increasing prices of fossil fuels. We must, however, note that the potential could be larger than this because a number of small water streams which could be usefully employed for setting up mini/micro hydro electric schemes may not have been fully captured in these estimates.

  2. Of the potentials established we have hardly exploited about 22%, the balance 78% remaining untapped. This state of affairs is not only true for India, as a matter of fact, global indifference to hydro electric schemes kept the world deprived of more than 80% of hydro electric potentials - for the world as a whole the hydro electric capacity is only about 20% of the potential.

  3. If we analyse as to why such a benign source of energy could not be fully utilized, we would discover a very inconvenient truth. The fossil fuel segment of the global industry, particularly the petroleum sector, kept on emphasizing, in last several decades, the virtues of petroleum fuel including liquid and gas, and more than that kept on criticizing the hydro electric projects highlighting, in a highly disproportionate fashion, the consequences of hydro electric projects in terms of submergence of large areas, dislocation of population etc. This approach was unfortunate. It has cost the world enormously in terms of global warming.

  4. A source of energy which could have greatly mitigated the challenges posed by climate change was allowed to be kept in the background in the last few decades and it remained a lost opportunity. It is only in 2005 that even the premier World Body of Energy Professionals, the World Energy Council, in its annual statement, recognized that hydro electric projects of all sizes are renewable source of electricity generation. From India, in last six to seven years we kept articulating that whether it is a run of the river project or a storage project or a mini or micro hydel scheme, all types of hydro projects are renewable source of energy and that the world as a whole must accept it. In the last three to four years there has been a growing realization and recognition of this approach but even now there are a large number of countries and bodies which have reservations about accepting all types of hydro projects as renewables.

  5. If only just after Kyoto Protocol this position had been unanimously agreed with the stipulation that CDM benefits could be available to all hydro projects the proportion of hydro electric generation would have radically improved.

  6. In India, development of hydro electric projects has been taken up on a priority basis. National Electricity Policy 2005 has emphasized the urgent need for expeditious execution of these projects. The 50,000 MW Hydro Electric Initiative which was prepared by the Ministry of Power and was launched by the Hon'ble Prime Minister of India in 2003, envisages development of over 160 projects aggregating to a capacity of more than 50,000 MW. This scheme has been under implementation. What is needed is an exclusive attention and a special institutional frame work entrusted with the responsibility and commensurate authority to deliver this scheme.

  7. We must go beyond 50,000 MW Hydro Initiative. Investigation process needs to be invigorated, all the missing links need to be identified. The previous study done by Central Electricity Authority, which covered ranking of different hydro electric schemes, led to identification of about 400 projects totaling 107,000 MW capacities. As a first step, the gap between the projects identified under the ranking study and 50,000 MW initiative must be translated into preparation of project reports for the remaining projects. This set of projects should then be brought into project manage mode for a sequential approach leading to commissioning of these projects. The next step then should be to go beyond the projects identified through Ranking Study and see to what extent we can reach the level of 150,000 MW and beyond if possible.

  8. One of the major objections to taking up storage based large hydro electric projects has been the concern about submergence of large areas necessitating, in many cases, dislocations of townships and villages and consequent rehabilitation and resettlement problems. It has been often brought out that the developers of such hydro electric projects have not taken due care of rehabilitation and resettlement aspects with a human approach. Quite often the interests of project affected people have been neglected. Though there are good examples where things have been done almost to the satisfaction of concerned people, in majority of the cases the experiences have been otherwise. This obviously has been responsible for creating pockets of resistance in areas where the country has concentrations of hydro electric potentials. Hydro Project developers do need to establish their credibility on this score. R&R has to have a more realistic and human approach and should create better satisfaction among and acceptance by people.

  9. While saying so, it is also true that the negative aspects have been disproportionately highlighted by a number of ill informed NGO's and others. Equally discomforting has been the lack luster approach of project developers, and their efforts on policy advocacy have been far from being satisfactory. As a result, even the good aspects of project management, rehabilitation efforts, enormous advantages and merits of hydro electric energy have been over shadowed by adverse publicity done by those who have been opposed to such projects. If we have to rely, for our energy security, on India's immense hydro electric potential - and there is no reason that we should not do so - not only our efforts on rehabilitation have to be further intensified but also equally important will be our strategy, approach and actions towards creating more well informed awareness among the people to see that hydro energy receives the support, sympathy, consideration and appreciation of people at large.

  10. The deteriorating proportion of hydro electric generation capacity is not only attributable to the unsympathetic and less considerate approach of the NGO's and many other people, as mentioned above, but it is also attributable to the delayed and protracted process of clearances and sanctions. If we have to expedite harnessing this important source of energy, we must recognize that water resources are invariably associated with dense forests and quite often also with wild life. In the recent years, the approach of the regulatory mechanism has somewhat not been only less helpful but, in fact, they have been to the point of being unkind to hydro electric project development. Many developers, both in the public sector and in the private sector, have been having frustrating experiences on dealing with the authorities in getting the sanctions necessary for starting of the project. There are countries which have taken care of environmental requirements and safeguards and have yet succeeded in following a speedy cycle time of project management including these clearances and construction. We need to adapt such approaches, policies, practices and procedures. It is not that importance of hydro electric projects has not been emphasized in the past. In fact, in all official and non official deliberations, there have been unanimous conclusions expressing concerns about diminishing ratio of hydro electric capacity and about the need for seriously pursuing hydro projects. Yet, when it comes to giving shape to these concrete conclusions, our actions have been far too short of our expectation and desire.

  11. A high power authority, empowered to sanction and get implemented these projects as a single window agency, appears to be a solution worth pursuing. This agency could be entrusted with defined role, targeted accountability and of course commensurate authority. Multiplicity of agencies and authorities to sanction projects is an issue not only relevant to hydro projects but also to many other projects. However, what is being emphasized here is that in case of hydro project these procedures have stood in the way in the harshest possible manner and therefore the country has faced the consequences. We need to recognize the follies and flaws in our policies and procedures and respond to the issues so that atleast in the future the impediments are tackled and the situation is redeemed.

  12. One of the other problems of some of the hydro projects is their apprehended unviability in commercial terms in the short run. If we critically evaluate only in terms of commercial considerations, justifications might appear difficult. However, if we take a longer term view, say 25 to 30 years, and provide long term funding, the problem of commercial viability could automatically get resolved. Considering the fact that hydro projects do provide power at nominal rates after the capital cost has been depreciated, this approach could render a large number of projects, which appear unattractive initially, into doable projects with such long term perspective taken into consideration.

  13. Hydro electric potentials in the neighbouring countries, such as Nepal, Bhutan and Myanmar are of the order over of 1,30,000 MW (these could be found to be even more after proper investigations are carried out). Except for Bhutan we have not been able to make any visible progress in other countries. An exclusive corporation with this specific task and initial financial back up could be one of the solutions. The other strategy could be to sit with these Governments and facilitate workable Private Participation Policies to attract Indian and other private sector developers to develop these projects. Transmission Grids from these countries would be another important initiative which will facilitate this process. A permanent organizational set up (and not a Committee or Task Force) created by deputing officers from Ministry of External Affairs, Ministry of Power, CEA, Ministry of Water Resources, CWC etc. could be given a budget and the task.

This is the first of the two Articles on the subject of Energy Security in Indian context. In this first Article we have covered, apart from the general concept about energy security and other connected issues, the role and relevance of the coal based energy and hydro electric potential. In the second of this series we will cover Nuclear Energy, Petroleum fuel including Gas, Bio-mass, Bio-gas, Bio-fuels, Wind, Geothermal, Tidal and Solar Energy. Besides, we will also cover the issues in relation to Energy Efficiency and Demand Side Management which, in Indian context, are extremely important to enhance the level of energy security.