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Energy Security in India

The level of development of a country is directly proportional to its per capita energy consumption. India’s energy consumption is only 3.5% of global energy consumption while it has 17% of world’s population. Vast majority of rural household in India are still dependent on solid biomass including cow dung, wood and charcoal for their energy needs. It is estimated by Niti Ayog that approximately 304 million people in India do not have access to electricity. Government has embarked upon massive programmes like PM Ujjwala Yojna for supplying cooking gas to the rural poor and 24X7 electricity for all by 2022. These measures along with an increase in industrial activity are likely to result in a huge increase in energy demand in our country in the near future. The share of manufacturing in our GDP is expected to go up to 25% from the present level of 16%. As per the energy modeling exercise undertaken by the NITI Aayog — India Energy Security Scenarios (IESS), 2047, the energy demand of India is likely to go up by 2.7-3.2 times between 2012 and 2040, with the electricity component itself rising 4.5 fold. Based on the above assessment, Niti Ayog has identified four key objectives of our National Energy Policy. There are - Access at affordable prices, improved security and independence, greater sustainability and economic growth. As a gross importer of energy India may not have control over International pricing. Making energy affordable to the masses may therefore require subsidies and differential pricing. Energy security is a major challenge which will need concerted efforts in the areas of science and technology, management and diplomacy. Sustainability and environmental concerns are equally important but may not always converge with concerns about pricing and affordability. Fast economic growth will need greater energy consumption and will continue to pose challenges to energy security.

International Energy Agency defines energy security as "uninterrupted availability of energy sources at an affordable price." Considering poverty and deprivation in India, access to energy for all at affordable prices is of utmost importance. We are yet to provide electricity to nearly 304 million people, and clean cooking fuel to nearly 500 million people, which still depend on Biomass. India’s energy security policy must ensure electricity to every household by 2022 as promised in the Budget 2015-16 and also to provide clean cooking fuel to all within a reasonable time.

Currently India's energy resources stand at 5.7 billion barrels of proven oil reserves, 47 trillion cubic feet of proven natural gas reserves and 60,600 million tons of proven coal reserves. Approximately 70% of India’s energy requirement comes from fossil fuels. 52.9% of this is from coal, 29.6% from oil and 10.6% from Natural gas. Renewable Energy Sources account for just 13% and Nuclear a meager 2% of energy in India. India is making proactive policy changes to increase the share of non-fossil fuel based capacity in electricity which is likely to increase to 57%-66% by 2040. However per capita electricity consumption is likely to go up from 887 kWh in 2012 to 2911-2924 kWh in 2040. Per capita energy demand in India is likely to increase from 503 Kilogram of oil equivalent (kgoe) in 2012 to 1055-1184 kgoe in 2040. According to projections by Niti Ayog, in this scenario, in spite of increased domestic production, the overall Import dependence (including non-commercial energy) is likely to increase from 31% in 2012 to 36%-55% in 2040.

Large imports of energy deplete foreign exchange reserves and increases current account deficit. Foreign strategic partnerships are necessary in this scenario. ONGC has made several efforts in this direction but China has given stiff competition to us everywhere. China has used its diplomatic channels successfully and strategically to win bids where India has not succeeded. There is a lack of strategic intent and clarity in India’s approach towards foreign contracts. This can be seen from the following -

• There has been little progress on the Iran-Pakistan-India pipeline.
• Similarly there have been delays in Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline because of diplomatic differences
• Bangladesh has not allowed India to build a pipeline from Myanmar on its territory. India was involved in natural gas exploration on Shwe offshore in Myanmar in the hope of a pipeline. However, it did not work out when Myanmar decided to sell the gas to China.
• India lost out energy contracts in Kazakhstan despite bidding higher than China

The energy sector is deeply interlinked to the geo-political environment globally. It is important for India to secure its supplies through energy diplomacy because its high import dependence is likely to rise further in future.

Niti Ayog has identified seven areas of intervention: -

1. Energy Consumption by businesses, households, transportation and agriculture – The goal is provide clean and affordable energy to household for improved quality of living and to industry for better growth. This in addition to improved plant load factors and reduced T&D losses may also require greater imports.
2. Energy Efficiency measures on the demand side, which entails using less energy for the same service. For example, the recent campaign by the government to replace regular bulbs by LED bulbs which has the potential to save nearly 100 billion kWh each year if all incandescent bulbs are replaced.
3. Rationalization of production and distribution of coal.
4. Improved infrastructure for electricity generation, transmission and distribution.
5. Augmenting supply of oil and gas, both by domestic, and through acquisition of overseas assets.
6. Improving capacity for refining and distribution of oil and gas.
7. Installation, generation and distribution of renewable energy.