The Power challenges of Narendra Modi government in India

India’s new government, led by the Prime Minister Narendra Modi, is planning to launch a national energy policy and will focus on developing infrastructure in the
sector as it strives to revive economic growth. By 2022, every family in India will have access to electricity, according to a speech by Pranab Mukherjee, India’s president. Blackouts are common in many parts of India and more than 300 million people do not have access to electricity, according to the World Bank.  

Image credit: Firstpost  

About 60 per cent of India’s electricity comes through coal. India has long resisted pressure to commit to any emissions targets on the grounds that it could hamper its economy, and hurt the poor. One good news for Modi government is – a fewer power cuts are likely in India this summer after a surge in output at Coal
India helped generators amass record stocks, a turnaround for Narendra Modi who had to battle a power crisis within months of becoming prime minister last May.  

To bridge the energy deficit in India, Prime Minister Narendra Modi has made a strong pitch for making renewable sources like solar and wind power affordable,
even as he asserted that this green energy push was not to impress the world. He also said India is working on building a consortium of 50 countries with abundant solar radiation, to pool research and technological advancements to improve its accessibility to the poor and in the remote areas.  

The Indian government’s strategy to focus on renewable stems from the fact that India has an energy import bill of around $150 billion, which is expected to reach $300 billion by 2030. India imports 80 per cent of its crude oil and 18 per cent of its natural gas requirements. As of April 2014, total thermal installed capacity stood at 168.4 GW, while hydro and renewable energy installed capacity totaled 40.5 GW and 31.7 GW, respectively. Wind energy market of India is expected to attract about Rs 20,000 crore (US$ 3.16 billion) of investments next year, as companies across sectors plan to add 3,000 MW of capacity powered by wind energy.  

The Government, which is spending $1 trillion in infrastructure development, is expected to spend at least $300 billion in the power sector in the next five years. Funding is not an issue as in the past but skilled manpower could come in the way which is now being tackled adequately by the new government. The Public Private Partnership has however not worked well in the infrastructure sector and it may require some tweaking.  

Around 293 global and domestic companies have committed to generate 266 GW of solar, wind, mini-hydel and bio-mass based power in India over the next 5-10 years. The initiative would entail an investment of about US$ 310-350 billion. The industry has attracted FDI worth US$ 9,548.82 million during the period April
2000 to February 2015.  

India’s natural gas production from hydrocarbon resources is expected to rise 52 per cent in the next three years, outstripping the growth in demand from power and fertilizer firms during the same period, according to the oil ministry. India’s natural gas output is projected to increase to almost 230 million metric standard cubic metres per day (mmscmd) by 2017-18 from the current 138.33 mmscmd as at the end of 2014-15, a growth of 52 per cent.

This is against a growth in demand of 27 per cent from the core natural gas consuming sectors—power and fertilizer. This is a welcome development for the energy sector as in the past India had been a laggard in even meeting its natural gas production target with the production at 3.365 billion cubic metres (bcm), down 5% from 3.54 bcm produced in 2013-14 and down 8.1% from the target production of 3.66 bcm.  

In the last 10 years, while India’s domestic production has grown by 10%, India’s imports of R-LNG has grown by 335% due to a major growth in demand, which has
risen by almost 46%, according to PPAC. With investment climate improving, inflation moderating, growth picking up in the face of stable government, the outcome of these initiative will become visible on the ground in the coming months and years.  

Urgent changes need to be made to address the problems, analysts say. “If the government creates an environment where fuel is available, land is available and you have environmental clearance procedures in place, private investment will come in generation,” says Ashok Banerjee, the professor of finance at the Indian Institute of Management. “The problem is getting any investment in transmission. The government of India will have to invest a lot of money in building transmission infrastructure because that is lagging.” Investment in renewable sources in India is likely to pay off, as the country strives to solve its power problems.

India has huge renewables capacity in the form of wind, solar, biomass, tidal. Although, there has been substantial increase in renewables generation, it is extremely important to fast track the growth of renewables generation in the country as this is essential for energy security. (Source: Press Information Bureau, Government of India)