Ashish Gupta, Observer Research Foundation
In recent years, the issue of electrifying households of the rural population has become a regular feature in the Indian media. In the ongoing climate debate rural populations are portrayed as vulnerable to climate change and they are advised to stay away from fossil fuel based electricity. They are told that they can save themselves from climate related disasters if they consume electricity from off-grid renewable sources. The idea appeals to them if grid based electricity is unavailable. Renewable energy is propagated as the best way forward for India in the name of climate change and environmental sustainability. This argument is becoming the basis for large projection for renewable energy in the fuel mix for the future. There is no doubt that the share of renewable energy will increase as developing nations succumb to the advise of western nation. But will this wipe out dependence on coal based electricity generation?
In India, financial sustainability for utilities has become a bigger challenge than environmental sustainability. Growing energy demand and declining public spending are contributing to further changing the roles of the government and private sector. This reallocation of responsibilities creates an uncertain business and political environment with frequently changing and sometimes contradictory regulations and, most often, excessive demands on utilities. The primary responsibility of the utilities is to provide reliable supply of power at affordable rates. Therefore the utilities not only have to provide power which is priced low but at the same time maintain their financial sustainability. Needless to say, this sustainability can only be maintained through cheap fossil fuel based electricity.
Secondly, renewable power by definition will be concentrated in those areas where the natural resource is available. These natural resources are usually concentrated in certain geographies. Wind power generation is concentrated in Rajasthan, Gujarat, and Tamil Nadu. However the local grid is often unable to absorb intermittent renewable power.
Thirdly, if energy access is to be provided with renewable energy then the whole transmission system will need a makeover. Given the current transmission infrastructure the integration of renewable power is not only difficult but also not viable. To erect such a transmission infrastructure huge investment will be required. As per the Power Trading Corporation of India the renewable sector will need an investment around Rs 12 lakh crore (Rs 12,000 billion) in the next five to seven years. Where will this money come from? This means additional support will come either from the government or from public utilities. This means that the financial burden on tax payers and electricity utilities will increase. They will be burdened twice, first on the investment front and secondly on the payment front. Given the price sensitive nature of Indian consumers, who is going to pay for costly power? In fact, the more we add renewable power to the grid, the more will be the financial burden of the utilities.
India’s electricity sector is predominantly dependent on fossil fuels. 70% of the primary energy mix is from fossil fuels. Coal is the least expensive fossil fuel for power generation. This will continue and coal will remain the most important fuel for power generation in the years to come. India’s fossil fuel based dependency is not by choice but by compulsion. The best way forward is to improve the efficiency of coal mining, coal conversion and utilization process. Setting targets for energy efficiency and water consumption in the processing steps would result in a more cost-effective and environmentally sustainable coal sector. This will also help conserve coal. Investment in adaptation approach is more important than mitigation approach to address the climate challenge.
Views are those of the author
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Courtesy: Energy News Monitor | Volume XII; Issue 14