Why this Lethargy in energy sector?

India's lethargy in energy sector

The Indian sub-continent is reeling under an unusually hot summer
combined with a complete lack of rainfall due to certain weather
conditions. The national capital region (NCR) too has been
experiencing temperature levels th¬at are 8 - 9°C above normal for
this time of the year. As such, it is no surprise that due to
increased space conditioning load on the system, the demand for
electricity has been higher than expected. However, should we not plan
for some uncertainties in weather conditions, be it relating to an
increase in demand arising from temperature abnormalities or a
reduction in supplies because of rainfall patterns? Why is it that on
every occasion, when we are faced with severe power crises, we seek to
find excuses in such vagaries of nature?

The power situation for the 11-month period from April 2009 to
February 2010 reveals shortages of nearly 10 per cent in energy supply
and peak capacity shortages of nearly 13 per cent. These nu¬mbers are
conservative as the huge investments that are made into back-up power
generation systems and battery storage systems mask the extent of
shortages. In the past ten years, the peak deficit in the country has
never gone below the 10 per cent mark and has peaked at 16 per cent in
2007-08.

The two major factors contributing to this dismal state of affairs
are: A consistent under achievement in relation to capacity additions
targets. The eleventh five-year plan (2007-12) too had set a capacity
addition target of 78,700 mw, which, following the mid-te¬rm review,
has been downscaled to about 62,000 mw a 20 per cent reduction. In the
first three years of the plan period, we have commissioned only about
20,000 mw of new generation capacity, making it difficult to believe
that in the next two years we would add another 42,000 mw capacity.

The second major issue contributing to these shortages is the
near-complete lack of attention being given to energy efficiency.
Having done a detailed study on the energy demand profile in Delhi and
an analysis of the price elasticity of demand as also the
technological solutions that are available, Teri had estimated that
nearly 25 per cent of the electricity demand could be reduced in the
residential sector through efficiency measures. However, the concerned
decision-makers in the city could not get themselves to either send
the right price signals to the consumers nor put in place any
incentive systems to ensure realisation of these efficiency benefits.

The situation in rural India is possibly worse than the ur¬ban areas.
The Rajiv Gandhi Grameen Vidyutikaran Yojana was launched with much
fanfare in April 2005. The scheme was launched with a view to
providing a 100 per cent household electrification by 2012. Aiming at
a qualitative transformation of rural energy infrastructure, the
scheme envisaged that there would be no discrimination between rural
and urban areas in respect of power supply and implicitly pr¬omised 24
hours of good quality power supply. The subsidy sc¬heme to enable this
transformation was also linked to a pa¬rtnership deployment of
fra¬nchisees in the form of NGOs and CBOs. As of 31 January 2010,
about 96,000 villages still remained to be electrified. In the first
ten months from April 1, 2009 to March 31, 2010, 1,344 villages were
electrified. At this rate, India would take nearly 70 years more to
reach the target of 100 per cent of rural electrification.

A similar lethargy is visible in the energy resource sectors of coal,
oil and gas as well. The gas-pricing dispute between the Ambani
brothers has not been resolved yet but the concerned entities in the
government have allowed a dark sh¬adow to be cast on their
objectivity. With major multinational corporations exiting from their
commitments on the exploration side, little or no pro¬gress is being
made on effectively exploiting the natural gas resources that we have
put in place. The last major expansion of the natural gas pip¬eline
grid took place in 1997 when the HBJ pipeline was commissioned.
However, In¬dia has no real network to talk about. Domestic oil
majors, on the other hand, are deliberately being starved of due
financial returns due to an incoherent, ineffective and inefficient
pricing policy for petroleum products.

The coal sector has completely dropped off the horizon. It is
difficult to remember that it still exists. With the ultra mega power
projects getting captive coal mines, where they are loudly
demonstrating the productivity potential that India has been losing
out on, the public sector coal companies seem to be languishing. No
really inspiring strategy seems to be emerging from the resource
sectors that would give the ray of hope that India needs for its
energy security.

That really makes us turn to look at the renewable energy sector.
After the announcement of the National Solar Mission in November 2009
with great fanfare, no progress is visible. What is ailing the energy
sector? Every major pronouncement that the pri¬me minister has made in
recent years recognises the criticality of the energy sector to
India's economic growth. In¬dia is once again failing on execution and
seems to have nobody to hold accountable.
Source Financial Chronicle, New Delhi, April 22, 2010