Endowed with 17% of the world’s population, India’s energy resources are not proportionately adequate. It has only 0.4%, 0.4% and 6% of the world’s oil, gas and coal reserves, respectively.
The fourth biggest energy consumer after China, United States and Russia, India’s energy security scenario can at best be termed fragile. The country’s energy policy therefore has to be focused on ensuring energy security.
Besides over-dependence on fossil fuels where coal (55%), oil (29%) and natural gas (8%) are the most important sources of primary energy, the main weaknesses include rising dependence on imports (more than three fourths of its energy requirements is met through imports), volatile politics of the Middle East from where India imports considerable quantities, opaque natural gas pricing, inadequate upstream infrastructure and low level of technology and skilled manpower.
A key item on the priority agenda of the Indian government has been to address the country’s energy situation which is precarious and to develop a structured response to meet it.
Accordingly, the newly-set up National Institution for Transforming India (NITI Aayog) which replaced India's Planning Commission, has been tasked to frame a blueprint to ensure India’s energy security for the next 100 years.
At the core of India’s energy situation is the huge import bill. India imports 77% of its energy needs with an import bill of $150 billion which is expected to double to $300 billion in another 15 years. In order to economise, the government is working on a plan to cut 10% of its energy imports by 2022 and 50% by 2030.
A key feature of the blueprint is the focus on renewable energy—especially solar and wind—with plans to increase it to 300 billion units by 2019 from 60 billion now.
The government also plans to supply green energy at an affordable Rs 4.50 per unit and at the same time doubling total power generation to 2 trillion units by 2019.
NITI Aayog document on energy security said: “India’s renewable energy potential is vast and holds a great promise. It is evident that an integrated approach towards developing domestic energy resources, and giving special attention to the ones in which India may have higher potential, has been engaging the attention of India’s economic planners.”
There is a large scope for effecting efficiency in energy demand sectors. A major demand shift could be effected in the cooking and transport sectors, which are presently heavily dependent on petroleum products. There is also an immense possibility of electrifying the irrigation pumps as well as telecom towers, which presently consume diesel in sizable volumes,” it added.
The blueprint also focuses on adequate electricity supply to consumers at affordable prices, preventing blackouts, strengthening the grid and creating reserve energy, increasing generation capacity, address peak load shortages and revive gas based power projects that are lying stuck due to shortage of domestic gas.
In fact, banks have already warned the government that unless these gases based projects are revived, about Rs 50,000 crore worth assets may turn into non-performing assets.
The blueprint will adequately address issues of energy diplomacy, with specific focus on developing a good business relationship with the Central Asian countries and the stable regimes of oil-rich West Asia.
Reports also speak of a proposal to set up a National Energy Commission with the primary aim of coordinating among six ministries to develop a common strategy and to implement an upcoming overarching energy policy. China has a similar body.
India’s energy needs are heavily dependent on coal-fuelled electricity. Coal production is also expected to touch 1.5 billion tonne in some years thereby reducing the enormous import bill.