How & Where Are We Going?
Our government has formulated an Integrated Energy Policy (IEP) document that gives a roadmap to develop energy supply options and increased exploitation of renewable energy sources. This article tries to explore how far our power industry is aligned to the global trend…
- P K Chatterjee
Although a few decades back depletion of the fossil fuels was the prime issue drawing the topmost attention of the global science and technology community, and there were isolated efforts to search and/or develop alternative energy sources for generation of electricity, practically since December 1997, i.e., after the Kyoto Protocol, the paradigm started leaning in favour of Renewable Energy (RE). Today, all the nations in the world are targeting to exponentially enrich their RE-based power production capacity. However, we are still decades away to witness a completely RE-dominated energy-world. The recent report titled, “World Energy Outlook 2016 (WEO 2016),” by the International Energy Agency (IEA) echoes the same status quo.
The flagship publication of IEA states, “As a result of major transformations in the global energy system that take place over the next decades, renewables and natural gas are the big winners in the race to meet energy demand growth until 2040.”
Dr Fatih Birol
A detailed analysis of the pledges made for the Paris Agreement on climate change shows that the era of fossil fuels appears far from over and underscores the challenge of reaching more ambitious climate goals. Still, government policies, as well as cost reductions across the energy sector, enable a doubling of both renewables – and of improvements in energy efficiency over the next 25 years. Natural gas continues to expand its role while the shares of coal and oil fall back.
“We see clear winners for the next 25 years – natural gas but especially wind and solar – replacing the champion of the previous 25 years, coal. But there is no single story about the future of global energy: in practice, government policies will determine where we go from here,” says Dr Fatih Birol, the IEA's Executive Director.
Thus, from Dr Birol’s comment, three trends are prominent: first of all to curb global carbon footprint, coal will be replaced by natural gas as far as and as soon as possible. Secondly, wind and solar technologies will witness further boost. And thirdly or most importantly, although the direction of the journey is fixed towards RE-based society, the pace of the journey will be determined by the policies set by respective government of each country.
Indian initiative to boost the O&G sector
Throwing more light on TRANSFORMATION, a communiqué from IEA states that this transformation of the global energy mix described in WEO-2016 means that risks to energy security also evolve. Traditional concerns related to Oil and Gas (O&G) supply remain – and are reinforced by record falls in investment levels. The report shows that another year of lower upstream oil investment in 2017 would create a significant risk of a shortfall in new conventional supply within a few years.
Under such circumstances, when the investment in the O&G sector is inadequate, and emerging compliance rules are imposing several restrictions on use of coal, any wise nation will try to be more reliant on RE-sources, especially, when it is abound in any of the RE resources. That way India has a great potential for harnessing solar energy and wind energy (including off-shore wind energy). And, our government’s pre-conceived target of 175 GW of renewable energy capacity by 2022 is a very timely and practical one.
Also, our government is trying to attract investment in the O&G sector. The recent call of our Minister of State (I/C) for Petroleum & Natural Gas Dharmendra Pradhan inviting the foreign investors to participate in the Discovered Small Fields Bidding Round – 2016 indicates our effort to enrich the sector.
According to Pradhan, “The government is following principles of Enhancing production; Attracting investment and technology; Generating employment; Transparency; and Minimising administrative discretion. Oil and gas sector has also been identified as the major national initiative under ‘Make in India’ policy reform. Hydrocarbon Exploration and Licensing Policy has been launched to make future exploration bidding rounds more attractive for investors.”
Indian emphasis on harnessing RE resources
According to Piyush Goyal, Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, “Three Phases of auction of e-bid Re-gasified Liquefied Natural Gas (RLNG) have been completed so far and 4th Phase is presently under operation from 1st October, 2016 to 31st March, 2017. Under the 4th Phase, Power System Development Fund (PSDF) support ranging from Rs 0.21 per unit to Rs 0.22 per unit has been secured by the successful bidders in the reverse auction.”
WEO 2016 states, “In the longer-term, investment in oil and gas remain essential to meet demand and replace declining production, but the growth in renewables and energy efficiency lessens the call on oil and gas imports in many countries. Increased LNG shipments also change how gas security is perceived. At the same time, the variable nature of renewables in power generation, especially wind and solar, entails a new focus on electricity security.”
As per Goyal, our government has formulated an Integrated Energy Policy (IEP) document that gives a roadmap to develop energy supply options and increased exploitation of renewable energy sources. In addition, for promotion of Renewable Energy (RE), government has amended the National Tariff Policy for electricity in January 2016. By this amendment several provisions for promotion of RE have been made.
While explaining the plan to achieve 100 GW of solar energy by 2022 through installation of projects, Goyal has detailed the schemes that have been launched by the Ministry of New and Renewable Energy (MNRE).
Source: Ministry of Power, Govt. of India
They include: Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects; Scheme for Development of Solar PV Power Plants on Canal Banks/ Canal Tops; Scheme for setting up of 300 MW of Grid connected Solar PV Power Projects by Defence Establishments under Ministry of Defence and Para Military forces with Viability Gap Funding (VGF) under Batch-IV of Phase-II/III of National Solar Mission; Implementation of scheme for setting up of 1,000 MW of Grid- Connected Solar PV Power Projects by CPSUs with VGF under Batch-V of Phase-II of JNNSM; Implementation of Scheme for Setting up of 15000 MW of Grid connected Solar PV Power Projects under Batch II of Phase II of National Solar Mission (by NTPC/NVVN); Setting up of 2000 MW Grid connected solar power with VGF through Solar Energy Corporation of India (SECI); Development of Solar Cities Programme and Scheme for Development of Solar Zones in the country.
It is not only the solar projects, MNRE has also made an ambitious plan for wind power generation. The ministry had sanctioned a scheme for setting up of 1,000 MW Inter State Transmission System (ISTS) connected Wind Power Projects on 14th June 2016. The scheme provided for formulation of Guidelines by MNRE for implementation of the scheme. Accordingly, MNRE has issued the required Guidelines on 22nd October 2016.
Wind and Solar Energy Potential in India (Source: MNRE)
As per the guidelines that will be implemented by Solar Energy Corporation of India (SECI): Wind projects will be selected through open and transparent competitive bidding process followed by e-reverse auction; Eligible project capacity will be minimum 50 MW and maximum 250 MW per bidder; Trading Company, selected by SECI, will sign Power Purchase Agreement (PPA) with selected bidder and back-to-back Power Sale Agreement (PSA) with buying entities at a pooled price of the total bids selected.
The duration of PPA and PSA will be 25 years from commencement of the commercial operation date of the project. The transmission of power up to the point of interconnection where the metering is done for energy accounting shall be the responsibility of the bidder. Use of state transmission system to bring wind power at ISTS point is also allowed; Part commissioning allowed subject to commissioning of at least 50 MW or 50% of the allocated Project Capacity, whichever is higher; Project to be completed within 18 months from issue of Letter of Award. Maximum period of 27 months allowed for completion of project with penalties; Minimum declared Capacity Utilisation Factor to be 20%. Provision of compensation in case of shortfall in minimum generation; and wind projects will have to submit monthly performance data through online.
Achievement in the recent past
So far we have seen the potentials, trends and future plans, let us now have a look at the achievements in the last two and a half years – in other words during the regime of the BJP government. Recently to answer questions in Rajya Sabha, our Power Minister Goyal has given the following details, which have been accepted undisputedly.
He has stated, “A capacity addition of 14.30 GW of renewable energy has been reported during the last two and a half years under Grid Connected Renewable Power, which include 5.8 GW from Solar Power, 7.04 GW from Wind Power, 0.53 from Small Hydro Power and 0.93 from Bio-power.”
NITI Aayog (NITI: National Institution for Transforming India) has presented the achievement of the various infrastructure ministries including MNRE before the Prime Minister on 22nd August 2016. The progress and overall achievement made under Wind Power, Solar Power, Solar Roof Top, Solar power capacity tendered, state policies etc., were satisfactory.
According to Bloomberg New Energy Finance's annual long-term view [New Energy Outlook (NEO)], “Cheaper coal and cheaper gas will not derail the transformation and decarbonisation of the world’s power systems. By 2040, zero-emission energy sources will make up 60% of installed capacity. Wind and solar will account for 64% of the 8.6TW of new power generating capacity added worldwide over the next 25 years, and for almost 60% of the $11.4 trillion invested.”
Today, India’s 307.28 GW of installed electricity generating capacity is significantly higher than around 160 GW of peak load demand. In fact, India’s coal generation capacity alone is higher than its peak demand. However, there are some challenges, like coal supply shortages, high level of Transmission and Distribution (T&D) losses, delayed evacuation due to lack of T&D infrastructure, challenges arising out of RE integration, and poor financial health of utilities, that are still keeping parts of the sub-continent dark (under load shedding).
An alternative to load shedding is on-site generation of electricity to supplement the power grid. Our government has approved stepping up of India’s solar power capacity target under the Jawaharlal Nehru National Solar Mission (JNNSM) by five times, reaching 100,000 MW by 2022.
It is commercial losses that play a major role in the sector – and need to be eliminated. Government is working on that through encouraging decentralised power generation, wherever necessary and feasible.
The present BJP government has taken up several measures to reduce energy consumption in the country. One of the widespread and effective steps is distribution of LED lamps at reasonable price under different schemes through DISCOMs.
The state-owned Energy Efficiency Services Ltd (EESL) that distributed around 6 lakh LED bulbs a year is today giving close to 8 lakh bulbs a day. ‘Affordable LEDs for All' programme, being led by EESL, involves replacement of incandescent lamps/CFL bulbs with LED bulbs to save energy and reduce the bills of customers.
Lots of reformative steps are being taken in the Indian power sector, it’s not possible to include everything within the small span of this article.
However, I hope, from the information presented so far, it is evident that our present Indian government too is driving the power reform’s vehicle in the direction of the latest, best global practices, maintaining a good balance between renewables and fossil fuel developments, which is unavoidable in the near future.
Also, our government is focused on reducing the total energy consumption in the country.
The Indian government is committed to provide affordable, 24x7 powers to all households by 2019. Its effort has convinced around 293 global and domestic companies to invest to 266 GW of solar, wind, mini-hydel and biomass-based power projects in the country.
We may see about US$ 310 to 350 billion worth investment in the RE sector of India in the next 5 to 10 years.
However, as government is nothing but a group of selected people (representatives) – of the people, for the people and by the people; the citizens of India have a major role to play to translate its (government’s) goal (or target) into reality.
P K Chatterjee is an Editor of Electrical India.
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