Worldwide energy consumption has nearly doubled over the last four decades. Electricity use has nearly tripled. If these trends continue, global energy consumption may double again by mid-century. Fossil fuels (oil, natural gas and coal) will continue to supply much of the energy used worldwide, and oil is expected to remain the dominant energy source given its importance in the transportation and industrial end-use sectors. Coal and natural gas are expected to remain the most important fuels for electricity generation and the share of nuclear power and renewable energy sources, though increasing, is likely to remain low for some time.
Ever since the potentially dangerous effects of global warming and climate change have been recognised, the global focus has shifted to clean and renewable energy as they provide the solution to the impending crisis and ensure sustainable development. Volatility in the price of fossil fuels and their limited availability, environment concerns and the capacity of renewables to provide power in isolated and rural areas have put renewable energy at centre stage for the future.
Globally, the significance of renewables relative to conventional energy is increasing. Currently, around 4% of global power comes from renewables, excluding large hydropower plants, which account for a further 15%. With 16% of the world?s population, India has only 0.6% of global oil reserves and 7% of coal reserves. With economic growth envisaged at 8-9% a year for the next several years, despite the dampening effects of the global financial meltdown over the next two years, our energy requirement is expected to grow exponentially.
Greater consumption of energy is both necessary for economic growth and also as a result of it. India is facing an energy crisis, which impacts economic performance. The gap between domestic demand for energy and domestic sources of supply is widening at a rapid rate. Consequently, India?s dependence on imported energy sources is increasing. Currently, only 8% of India?s installed capacity is based on renewable sources (small hydropower units, biomass, solar, wind, etc). Large hydropower, also a renewable, is a significant 25%, while thermal (coal, oil and gas), the mainstay, is 65%.
A little under a fourth of the hydropower potential in India has been developed so far. Compared to the high utilisation of hydro potential in other countries, the utilisation in India is very low. Although large hydro remains one of the lowest-cost energy technologies, which is also renewable and non-polluting, problems such as land acquisition, environmental constraints, resettlement, finance and availability of sites have impeded its progress over the years resulting in project delays, cost escalation and underachievement of targets.
The advantages of hydropower are enormous. Apart from being renewable, non-polluting and environment friendly, it requires the least maintenance and has higher efficiency levels with low ancillary consumption compared with other power resources. Additionally, the cost of hydropower generation declines over a period of time as opposed to thermal power projects where costs increase due to increasing fuel cost. Small hydro projects have an additional advantage of fewer issues of rehabilitation & resettlement, submergence, deforestation, etc.
Wind energy has seen rapid expansion over the last few years and technological advancement leading to cost competitiveness and opportunities for carbon trading have been key drivers for investments in wind energy. Solar energy is the most abundant energy resource in the world and presents a wide application canvas, but we need some major R&D breakthroughs in cost reduction and maintenance of solar thermal power generation systems.
Renewable and clean energy projects are key to providing energy where power is in short supply and for off-grid applications. What is needed is an environment conducive to the growth of these resources and a stable policy framework, which is uniform across all the states. Some of the major issues confronting the renewable sector broadly include the need to reduce the cost of and improve the efficiency of technology, risk of investment and tight financing options, slow pace of electricity reforms, conflicting stands taken by various state electricity regulatory commissions and low availability of credit.
To sustain our growth process, it is crucial that we ensure uninterrupted energy supply at reasonable prices. Sustainability of the growth process will depend crucially on the level of energy security or independence that India is able to achieve in the future. For optimal development of the power sector, an integrated approach, including capacity addition with added focus on renewables, building a strong national grid with enhanced capacity of inter-regional links, developing a vibrant power market, demand management through energy efficiency and conservation, policy reform, etc has to be adopted. Nuclear energy is only part of the story and we should not lose sight of the others.
The writer is additional secretary, PHD Chamber of Commerce & Industry. These are his personal views
