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)

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