Energy occupies the top most position among resources. Dependence on energy is a function of rising applications of technology in almost all aspects of life. In fact, economic growth is an expression of pareto-optimum utilisation of available resources. With each passing decade, the world seems to be generally exhausting its conventional forms of energy, namely, oil, gas, coal, etc. The thrust on exploring, developing and commercialising the use of non-conventional, renewable energy sources has been gaining momentum. The challenge today is to bring down dependence on conventional sources of energy.
India consumes 3.45% of world?s total annual energy consumption as against 2.49% of energy production. These numbers put India as the fifth largest consumer and seventh largest producer of energy in the world. Being a net importer of energy, India would require a judicious mix of policy initiatives?that is, reduction in energy intensity, improvement in energy efficiency, reduction in transmission losses and development of non-conventional energy sources on a large scale.
The globally acceptable level of Transmission and Distribution (T&D) losses is 5-10%. While the average T&D loss in the US is 7% , in India it is as high as 28%. The financial health of SEBs remains a concern, with their combined losses crossing R70,000 crore.
Understanding between exporters and importers of energy is crucial and critical for stability of supply and demand. It is an important factor for national security for both of them. Given the nature of uneven distribution, the focus of energy policy today, in both developed and developing countries is achieving energy independence to ensure adequate levels of energy security. Trade equations are being aligned towards this goal. Therefore, India?s policies in building energy-independence should aim at creating capacity to absorb supply shocks in the short-term through domestic spare production facilities, additional reserves and adequate storage facility.
There is a growing need to cushion respective areas of alternative energy sources with a mix of policy initiatives. This coordination also calls for a much greater scale of inclusion and participation from all the states. While there is an appreciable amount of support given by the government, there is a lot of scope for improvement. The slow pace of growth of technology utilised in exploration of alternative sources of energy are major setbacks.
The energy pricing framework in India is moving towards market determined prices. Artificially lowering the prices encourages wasteful consumption, smuggling and adulteration and undermines competition. These inconsistencies inherent in the framework of subsidies make a strong case for their minimisation and gradual elimination. The level of T&D losses is uncomfortably high and the gap between consumed and billed energy wide. This amounts to hidden subsidies. Given this scenario, along with cross subsidisation of electricity prices, a dual pricing system of electricity in which big industrial consumers are charged high prices on the guarantee of reliable, uninterrupted power would not only keep these industrial consumers competitive, but would also offset the financial losses suffered by SEBs on account of electricity pilferage and non-payment of bills by other consumers.
The writer is director general, SCOPE and a former CMD of GAIL India