Relevance: mains: G.S paper III: Indian Economy
Introduction
- 18 per cent of the world’s population, India uses only around 6 per cent of the world’s primary energy. The four primary sources of energy are coal, oil, gas and renewable energy.
- Out of the four, India is well endowed in coal as well as renewable energy sources including bio-energy.
Coal
- India have been estimated to be roughly about 300 billion tonnes. It has been the mainstay of the Indian electricity system so far and is likely to remain so in the immediate future as well.
- Due to the vast availability of this fuel source, it could remain the cheapest source of energy for India for a long time, if explored and used efficiently. It is the only energy source for which India is not dependent on imports (except coking coal used for steel
making). - The import of thermal coal can also be reduced to zero if a proper policy framework for exploration cum-mining for commercial use is put in place. Coal is however not an environment friendly fuel compared to renewable energy and is likely to lose out in the long run.
- Though when compared to renewable energy, particularly solar energy, thermal
power plants take up only about l/50th of the land required for generation of the same amount of power at current level of efficiencies.
Oil and Gas
- As far as oil and gas is concerned, these resources in India are not adequate to meet its growing requirement. Of the two, the price of oil has been much more volatile, where the slightest increase puts tremendous pressure on the economy.
- Compared to oil, gas is cheaper and more environment friendly. Though oil comprises 29 per cent of total primary commercial energy mix and gas only 7 per cent, it is imperative that India’s dependence on oil and gas as a source of energy is reduced to the extent possible by encouraging a switch to other forms of energy, such as electricity which can be derived from renewable sources.
Renewable Energy
- The third source is renewable energy from solar- wind- biomass, hydro and more such sources. It is also the most environment friendly. Fortunately, being located in the tropics endows us with virtually unlimited potential of solar and wind energy. The huge availability of biomass sources in the form of crop residue, cattle dung, human waste and food waste, also present large scale opportunities for biomass based energy production.
- The prices of renewable sources, particularly solar and wind, have been reducing drastically and are now almost at par with electricity generated using coal.
- However, the issue with renewable energy is its volatility, uncertainty and seasonality. Further, solar energy, though at par with thermal electricity in terms of cost, requires more than 50 times the land to generate the same quantum of electricity as from thermal power plants. This can become a limiting factor, even though rooftops and farm land offer a solution.
- Yet, while the issue of volatility and uncertainty is being addressed by a number of economical storage solutions, the problem of seasonality may still limit the full exploitation of this source. For this, the conversion of solar energy into hydrogen and methanol would have to be seriously researched and made viable.
Bio-Energy
- Bio-energy can play a major role in strengthening the energy basket of India. Biogas derived from cattle dung, human waste and vegetative waste, can, to a very large extent,
provide cooking solutions which are cheap and environment friendly. Being cheaper, locally available and much more environment friendly, it has the potential to replace LPG in rural areas. - Biomass can also become the source of bio-fuel which would help in reducing the requirement of petroleum oil.
Nuclear Energy
- Nuclear energy also constitutes a significant part of the energy and electricity mix. However, unless the cost of nuclear reactors is controlled significantly, electricity generated from
nuclear reactors may not be as cost effective as energy from renewable sources. - Government may consider budgetary support for non-electricity components. Methanol, a liquid fuel produced from natural gas or coal, has the potential to significantly alter the way gas or coal is used.
- Methanol extracted from natural gas is likely to bring down transportation costs compared to gas, which needs to be liquefied, transported in liquid form at very low temperature (and at a significant cost) and undergo re-gasification.
Energy Security
- In India, access to energy for all at rational prices is of utmost importance. As of June 2, 2019, the access to electricity has been substantially improved with a household electrification percentage of 99.99 per cent. Providing clean, non-polluting cooking fuel in the form of LPG, to nearly 139 million people who are still dependent on biomass for cooking is also expected within a reasonable time frame.
- India improved its ranking in the Energy Transition Index published by World Economic Forum (76th position). Its installed capacity has increased from 3, 44,002 MW in 2018 to 3,56,100.19 MW in 2019. Total generation of energy during 2018-19 was 1376 BU (including imports and renewable sources of energy).
Union Budget 2019: Power Sector
- Union Budget allocates Rs.16400.57 crore for power sector for this financial year which is higher than Rs.1988.02 crore in comparison to last financial year.
- The MM RE sector gets allocated Rs. 4653.45 crore and petroleum sector Rs. 38982.05 crore for this financial year. The Union Budget 2019 for power sector focus on electricity access.
Followings are major announcement in the budget:
Energy Access
- The Government has continued its focuson energy access by setting a target of providing an electricity connection and access to clean cooking fuel to all rural households in the country (except those who are unwilling). It claimed to already have connected 99 per cent of
the households under Saubhagya and given out 7 crores LPG cylinders under Ujjwala scheme. - However, the challenge in energy access is not just of connection but of accessibility and affordability. Focus on Rural Energy Access and Fanners: New Ujjwala-type scheme that will promote solar stoves and battery chargers. Private initiatives will be supported to develop renewable energy as an alternate source of income for farmers.
Focus on Distribution Reforms:
- Performance of Ujwal DISCOM Assurance Yojana (UDAY) is being examined.
Renewable Energy:
- The renewable energy industry expected the Budget to provide some impetus to revive growth. However, there is nothing specific in the Budget in this regard.
- When it comes to power sector, the Budget focused on structural and tariff policy reforms to improve distribution sector efficiency. The priority is well placed, as distribution sector efficiency is at the core of all power sector challenges including 24×7 power supply, generation sector stress, including inadequate demand for renewable energy. This is a massive challenge for the Government.
- Going by past experience, improving distribution sector’s efficiency requires broader structural reforms, such as carriage and content separation proposed in the Electricity Act amendment.
- Meanwhile, a key area that also needs dedicated attention is solar rooftop.