Meeting Indias Energy needs

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Meeting Indias Energy Needs

Executive Summary

Energy is one of the major drivers of a growing economy like India and is an
essential building block of economic development. In an effort to meet the
demands of a developing nation, the Indian energy sector has witnessed a rapid
growth. There is a strong two-way relationship between economic development
and energy consumption. On one hand, growth of an economy, with its global
competitiveness, hinges on the availability of cost-effective and environmentally
benign energy sources, and on the other, the level of economic development has
been observed to be reliant on the energy demand.

Rising population, expanding economy and a quest for improved quality of life
have resulted in increased energy usage in India. The country's consumption of
coal, oil, natural gas, and electricity is projected to rise by nearly 40 percent over
the next five years and almost to double by 2020. Already, surging energy
demand is outstripping supply, raising questions about how India will cope in the
future. Electricity is such a chronic problem that manufacturers endure an
average of 17 major power disruptions every month, according to the World
Bank. Despite vast coal reserves, domestic production has lagged behind
demand for ten years, and the shortfall is growing. India imports 70 percent of its
petroleum, exposing it to wild swings in world energy prices and pitting it against
China and other countries keen to buy hydrocarbon reserves.


Problems and Challenges


With a projected population of 1.5 billion and GDP of US $ 4 trillion in 2030, the
challenges India faces in the energy sector are truly enormous. In addition, the
economy growing between 8% and10% levels with the objectives of
environmentally sustainable development and inclusive growth, the quantity and
quality of energy required will increase substantially.

The question is, would India able to meet this challenge?

The current scenario, however, is not encouraging. The Indian Power sector is
witnessing major changes, having made great strides since Independence.
However, the demand for power has been outstripping the growth of availability.
Substantial peak and energy shortages prevail in the country. This is due to
inadequacies in generation, transmission and distribution as well as inefficient
use of electricity. High level of technical and commercial losses and lack of
commercial approach in management of utilities has led to unsustainable
financial operations. Cross-subsidies have only worsened the situation.
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Inadequacies in distribution networks have been one of the major reasons for
poor quality of supply.


Taking 2004-05 data as the base, long term projections for energy, would be
the following:

Primary energy (coal, oil, and gas) supplies to be increased by 3 to 4
times.

Year- on- Year growth of primary energy should be between 4.3 to 5.1%.

Electricity generation capacity and supply should be increased by 5 to 6
times.

Commercial energy supplies needs to grow from 5.2% to 6.1% per
annum.

Power generation to be increased to 8,00,000 MW from current 1,60,000
MW.

A 40 fold increase in renewable energy sources. This would account for 5
to 6% energy needs in 2030.

Ensuring continuous availability of commercial energy to support economic
growth to meet lifeline needs of households with safe clean energy, reducing
carbon emissions in the environment, protection against market risks of imports,
and maintaining a buffer against risks in terms of generation and supply, it is
critical that we ensure energy security in long term.

The energy policies adopted by India, since independence, primarily to serve the
socio-economic development have resulted in inefficiencies in the use and
production of energy. This has eroded the competitiveness of the sectors of
economy.

With these challenges in front of us, it is imperative that a broad based approach
is needed to meet the soaring demand of Indias energy requirements. We have
come out with a 10 point agenda to meet the countrys growing energy needs
and are explained in detail in the following chapters:


The 10 point agenda listed below aims to address these issues.

1. Eliminate inefficiencies in energy chain and manage demand
2. Augmenting primary energy resources
3. Renewable sources of energy
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4. Accelerate capacity addition
5. Public Private partnership
6. Strengthen governance
7. Energy R & D
8. Energy Security
9. Environment and energy sustainability
10. Managing opportunities and Risks



1. Eliminate inefficiencies in energy chain and manage demand

Much of the energy content of the available energy sources is wasted by
inefficiencies the energy conversion and distribution processes. Considering
domestic electric lighting as a typical example, less than 1% of the energy
consumed to provide the electricity is ultimately converted into light energy. The
other 99% is wasted in the supply chain. Using conventional fossil fuelled
generating plant, losses accumulate as follows:

10% of the energy content of the fuel is lost in combustion and only 90% of
the calorific content is transferred to the steam
The steam turbine efficiency in converting the energy content of the steam
into mechanical energy is limited to about 40%. (Carnot's Efficiency Law)
Transmission of the electrical energy over the distribution grid between the
power station and the consumer results in a distribution loss of 10% mainly
due to the resistance of the electrical cables.
Further energy is lost due to the energy conversion efficiency of the end
user's appliance. Incandescent lighting is particularly inefficient converting
only 2% of the electrical energy into light.

Recommendations:

Energy efficiency and demand side management have a large scope to
reduce energy requirement. These include the
i. Use of energy efficient appliances and automobiles, hybrid cars
ii. Use of energy efficient buildings and efficient lighting
iii. Cogeneration, distributed generation with Combined Heat and
Power (CHP) use,
iv. energy efficient and well-maintained pumps for industrial and
agricultural water pumping
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v. improve cooking efficiency e.g. through use of smokeless improved
woodstoves
vi. promotion of mass transport as a means of commuting
vii. promote waterways

2. Augmenting primary energy resources

Here we look at three primary energy sources, Coal, Oil and Nuclear Energy.

I. Coal

For a developing country like India one of the most important constraints on our
economic growth is the availability of energy. Coal is the dominant source of
energy in India and accounts for 52.4% of the countrys total energy requirement.
India has total coal reserve of 277 billion tonnes and produced around 532 million
tonnes of coal in the financial year 2010.

Coal is primarily used in three sectors, power, steel and cement, with the power
sector alone consuming around 77% of the non-coking coal produced in India.
With expanding capacities, the demand for coal is expected to grow at a
compounded annual growth rate (CAGR) of 11% over the next two years, as
against the coal production of 6% per annum.

Coal will dominate Indias energy basket in terms of catering to its present and
future needs considering the volatility of crude oil both in terms of price and
supply disruptions. By the end of the 15th Plan (Year 2032), Indias coal power
capacity has to increase to at least 400GW as planned. This would need almost
900 more 500 MW sized plants.

India has 13% of worlds recoverable coal reserves .



29.8%
19.0%
13.9%
12.8%
9.2%
3.7% 4.1% 3.8% 3.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
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But accounts for only 8% of global production



Source: Ministry of Coal, BP Statistical Review of World Energy 2010


Recommendations

1. Coal companies must be asked to conform to international practice of
preparing/washing coal prior to its sale. Washed coal is efficient, saves
transport costs and fetches higher prices in the market.
2. Setting up of a coal regulator who would regulate the coal pricing
mechanism, regulate exploitation of coal and develop a mechanism for
adequate quantities of coal imports. The regulator must ensure that the
mines are planned, developed and designed in a scientific manner
maximizing percentage of coal recovery.
3. Increase sale of coal production through e-auction even over the
recommended 20%.
4. Allow entry of private sector in coal production for realizing efficiency gains
and augmenting domestic coal supply. Only a competitive free market can
do an efficient job of price determination.
5. In situ coal gasification (gasification of coal deep underground in its
original coal seam) can significantly increase the extractable energy from
the vast coal reserves. This allows much higher recovery of coal that can
be economically mined by conventional techniques.
6. Rationalize freight rates for coal transport. Alternate means of moving
coal through coastal shipping, river/canal movement or through pipelines
must be explored and encouraged.
7. Reduce duties on capital goods imported for coal mines
8. National Rehabilitation and Resettlement policy affected by coal mining
should be mooted and accepted by all state governments.
9. Setting up of dedicated freight corridors which will help in faster and
secure delivery


44.0%
15.0%
7.0%
6.0%
4.0% 4.0%
1.0% 1.0%
18.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
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II. Oil
Oil accounts for about 36 % of India's total energy consumption. India today is
one of the top ten oil-guzzling nations in the world and will soon overtake Korea
as the third largest consumer of oil in Asia after China and Japan. The country's
annual crude oil production is about 34 million tonnes as against the current peak
demand of about 110 million tonnes.

Disparity in Production vs Consumption




In 2009, India was the sixth largest net importer of oil in the world, importing
nearly 2.1 million barrels per day, or about 70 percent, of its oil needs. Nearly 70
percent of Indias crude oil imports come from the Middle East, primarily
from Saudi Arabia, followed by Iran. The quantity of crude oil imported during
2009-10 (up to December 2009) was 109.3 Million Metric Tonnes (MMT), valued
at Rs. 2,48,226 crores.

Demand for energy is expected to double by 2025; by then, 90 percent of Indias
petroleum will be imported. It is expected that India would become the fourth
largest net importer of oil in the world by 2025, behind the United States, China,
and Japan.
Recommendations
1. Enhance hydrocarbon reserves and increase domestic production through
the following measures:
i. Explorations in new frontier areas like deep water and other
geologically and logistically difficult areas.
ii. Creation of a policy environment for developing a vibrant, thriving and
world-class exploration and production industry which can mobilize and
infuse technology and capital and can stand on its own in the process
of globalization for energy security to the country.
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iii. Development of new oil fields and additional development of existing
oil fields.
iv. Implementation of Improved Oil Recovery (IOR) or Enhanced Oil
Recovery (EOR) schemes.
v. Enhancement of strategic oil reserve through accelerated exploration
and increased domestic oil supply
vi. Implementation of specialized technologies, continued technology
acquisition and absorption along with development of indigenous R&D.
vii. Increased private participation through putting the New Exploration
Licensing Policy (NELP) into operation.
viii. Continuation of the supportive role of the government in exploration,
particularly for high-risk ventures.
2. Strengthen logistics - India India's domestic energy supply must be
supported by a good distribution infrastructure. India must spend an
estimated $5 billion in the next ten years to expand the country's domestic
network of oil and gas pipelines.
3. Substitution from oil to gas - Natural gas is a cheap, efficient and
environmentally clean source of energy.
4. Develop Regional Energy cooperation - South Asian countries need
capital and energy to propel economic growth and improve the quality of
life in an environmentally responsible manner. The region is endowed with
untapped energy resources but their development, efficient distribution
and utilization will require cooperation and trade among the countries in
this region.
5. Encourage public private partnership in the oil sector
6. Reduce / remove government subsidies of oil products - fuel subsidies
distort Indias domestic market by forcing Indias state owned oil
companies to accept losses. The International Energy Agency reports that
losses from fuel price subsidies for the 2010-11 fiscal year are expected to
exceed $23 billion.
7. Focus Technology research in areas to boost our energy security such as
i. Recover oil in deep water
ii. Turn natural gas into liquid fuel
iii. Extract methane from coal deposits Coal Bed Methane (CBM) is an
environment-friendly clean fuel similar to natural gas. CBM gas
production in January 2010 was 119742 cubic metres.

III. Nuclear Energy

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Nuclear power is the fourth-largest source of electricity in India after thermal,
hydro and renewable sources of electricity. As of 2010, India has 19 nuclear
power plants in operation generating 4,560 MW while 4 other are under
construction and are expected to generate an additional 2,720 MW. India's
nuclear power industry is undergoing rapid expansion with plans to increase
nuclear power output to 63,000 MW by 2032
1
.

Importance of Nuclear Energy

Modern science has also helped us discover a new source of clean and
renewable energy. Indias indigenous nuclear program was founded to address
the challenge of energy security and attain self-reliance and technological
independence.

Here is a comparison among different energy sources which underlines the need
for deployment of nuclear energy
2
.

If the level of our per capita electricity consumption is raised to the level of a
developed country (~5000 kWh/person/year) and only a single energy resource
is to be used then:


Srl
#
Source of Energy Longevity
1 Domestic extractable Coal reserves ~ 13 years
2 Uranium (Open cycle) ~0.5 years
3 Uranium (Closed cycle) with Fast Breeder reactors ~73 years
4 Known reserves of Thorium in closed cycle with Fast
Breeder Reactors
>250 years
5 Entire renewable energy including hydro electric <70 days/year

It is obvious that for long term energy security nuclear energy based on thorium
has to be a prominent component of Indian energy mix.


Recommendations

1. Attract private sector participation as joint ventures with the government in
construction and operation of nuclear power plants
2. Increasing the economic competitiveness of the nuclear power plants
through proper R&D, design standardization, management competence,
training and regulatory practices

1
Economic times http://economictimes.indiatimes.com/news/news-by-industry/energy/power/India-eyeing-63000-MW-
nuclear-power-capacity-by-2032-NPCIL/articleshow/6730724.cms
2
Indias energy security The role of Nuclear Energy, Ratan K Sinha, Director, BARC
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3. Maintaining the highest standards on safety and environment for nuclear
plants - Establishing a watchdog agency independent of the Department
of Atomic Energy (DAE)/ Nuclear Power Corporation (NPC) to monitor
environmental and safety standards
4. Changes in existing legislation and allow independent power producers in
this field
5. Competitive pricing mechanism in the energy sector


3. Renewable source of Energy

The most important feature of renewable energy is that it can be harnessed
without the release of harmful pollutants into the environment. Renewable
energy currently contributes a small fraction of our energy needs, supplementing
our total energy needs, and is expected to grow very rapidly especially in areas
like wind and solar power.

Renewable Energy Options


Srl
#
Source Capital Cost (Cr.
of Rs / MW)
Estd cost of
Gentn / unit (Rs
/ Kwh)
Total Instd
Capacity (MW)

1 Hydro (Small < 25 MW) 5.00 6.00 2.50-3.50 1748
2 Wind power 4.00-5.00 3.00-4.00 4434
3 Biomass power 4.00 3.00-4.00 377
4 Bagasse cogeneration 3.00-3.50 2.00-3.00 491
5 Biomass gasifier 2.50-3.00 3.00-4.00 71
6 Solar Photovoltaic 25-30 15.00-20.00 3
7 Energy from waste 5.00-10.00 4.00-7.50 46

Table: Capital Costs and Typical costs of Generated electricity from Renewable options
Source: Integrated Energy Policy 2006

Wind Power:
Wind power is emerging as a key factor in supplementing our conventional
energy sources. India is the fourth largest in the world in terms of wind energy
installations, with current installed capacity of renewable energy is around 92204
MW constituting 7.3 percent of Indias total installed capacity
3
. Indian Wind
Turbine Manufacturers Association has identified that the wind power generated
potential of around 65,000 MW in the country. Wind power accounts for 7230
MW of countrys 10.175 MW of renewable electricity generation capacity
4
.

Solar Power:

3
India Energy Outlook May 2007
4
www.monsterandcritics.com Wind Power key to meeting Indias energy needs
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With high solar insolation of 6 kw/meter
2
/day, solar energy has a large potential
in the country. As per Ernst and Young Renewable energy Attractiveness index,
India is among the top 5 destinations worldwide for Solar Energy development.
However, the amount of solar energy produced is a mere 0.4% compared to
other energy sources. 35000 square kilometers area of the Thar Desert has
been set aside for solar power projects to generate 700 2100 Giga watts of
power. Photovoltaic technology is proven but expensive and the cost of electricity
exceeds Rs 20/Kwh. However, there is a potential to reduce costs and increase
efficiencies.

Biomass:
Biomass is a major domestic fuel used for cooking and consists mainly of
agricultural by products and gathered wood. Domestic biomass use in 2000 was
80 Million Tonnes of Oil Equivalent (MTOE). This non conventional energy for
domestic use is mainly managed by women without technology, or investment,
and involves unsustainable practices, backbreaking drudgery, and health
problems besides damage to the environment. To make this energy more
sustainable, the efficiency and convenience of using biomass needs to be
improved through wood gasification or use of biogas plants.

Biodiesel:
Biodiesel, from non edible oils such as Jatropha, Karanj, Mahua, is a natural
diesel substitute. There are a number of projects currently being undertaken in
the cultivation of Jatropha and Karanj, its economic feasibility is still being
assessed with relation to the yields one can get from growing other crops.. The
process of bio-diesel generation and use can also create significant employment
opportunities.

Recommendations:

1. Build awareness of Renewable energy
a. Vigorous promotion of renewable energy by government agencies,
corporate, public sector, academic institutions etc.
b. Establishment of a national body to increase awareness of
renewable energy at grass roots level
2. Financial support and incentives
a. Increase fiscal incentives, including accelerated depreciation for
setting up renewable projects.
b. Provide tax holidays for power generation projects
c. Provide soft loans for companies involved in renewable energy
sources.
3. Exemption in customs and excise duty, low import tariff for raw materials
and components
4. Liberalize foreign investment clearance procedures
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5. Compulsory installation of solar water heating systems for all urban
residential and commercial establishments.
6. Encourage R & D in the development of
a. cost effective high efficiency and long lasting photo voltaic cells
b. efficient wind turbines to generate energy even at low intensity
c. small-scale, low maintenance, biomass gasifiers for generation of
power in rural areas
7. Cultivation of energy crops on marginal and degraded land.

4. Accelerate capacity addition

It takes five to six years to build a thermal power plant in India in contrast to two
to three years taken in China, and less than four years in most other countries.
Delays in acquiring sites and obtaining necessary approvals, as well as
equipment shortages and other bottlenecks are constraining the pace of capacity
addition. To accomplish a step change in the rate of capacity addition, it is
imperative to:
Commission around 150 Project sites by 2013 with end-to-end approvals
in Place. These project packages must include land with access to water,
basic connectivity and site-related approvals.

Create 30 GW per year capacity for equipment manufacturing and related
supply chain. This would require augmenting the manufacturing capacity,
unshackling PSUs by revamping international approval norms and
encouraging participation by local and international players

Train and develop 300,000 skilled and semi-skilled workers. Resolving
the severe shortages in manpower will require a host of new training
programmes conducted by the Government and the private sector.

Secure Fuel Supplies: In spite of having the worlds fourth-largest
reserves of coal, new discoveries of gas, Indias inadequate fuel supplies
are constraining the growth of its power sector. In the past few years,
Indias fuel imports have increased substantially and are only likely to
increase further in the coming years. We would need to accelerate
Captive Mine Development and create the requisite infrastructure capacity
for 100 MMTPA of coal imports besides launching a vigorous renewable
energy programmes to generate 30 GW by 2020

5. Public Private Partnership
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In order to build the much needed infrastructure for power generation, oil
and gas and transportation of energy from the supply point to the point of
demand, will require the mobilization of public and private funds within the
desired investment framework. The rising energy demand is putting
enormous strain on Indias infrastructure. Public funds will not be sufficient
to support rapidly growing energy demand and to increase energy access.
Also some of the worlds biggest banks and private equity funds had
announced dedicated infrastructure funds for India. Unfortunately today
Indias investment program is struggling to find private investors to
participate in expanding infrastructure due to the financial crunch.


Public- Private Partnership in Commercial Civilian Nuclear Energy

Prior to any form of private participation, an amendment to the Atomic Energy
Act, 1962 - which forbids private investments in nuclear power generation
will be necessary. The government is seriously considering the opening up of
the non-strategic components of its nuclear programme including
opportunities to enter into joint ventures with the private sector in power
generation. The conclusion of the civilian agreements is expected to throw up
more opportunities. However, the private sector will face challenges in the
following areas:

Managing the decommissioning of the nuclear plant
Spent fuel storage and subsequent fuel resource management
procedures
Unlimited liability in the event of a nuclear accident can cause serious
financial implications.

Develop regional energy partnerships

The resource-rich nations of Africa, Asia, and the Middle East are attractive
energy partners for India, since they are potential sources of both fuel and
investment. These countries, for their part, seek access to large, growing
markets like India and need the assurance of long-term demand before they
expand oil and gas production. Only recently have the two sides begun to
recognize the potential for closer economic cooperation.

Better diplomatic and commercial ties will be needed to make such energy
partnerships a reality. India's government should encourage joint ventures
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and cross-shareholdings between companies in resource-rich nations and
India's national oil companies or major energy users. It must also support
regional cooperation in areas such as energy security and the creation of
Asian markets for oil and gas


6. Strengthen governance

The regulatory mechanism needs to be improved drastically. Accountability in the
energy sector is currently fragmented. The regulator needs to be empowered so
as to facilitate restructuring to optimize operations, improve the productivity of the
sector on par with international standards and establish standards for
undertaking energy efficient and conservation programs in all critical operations.

Recommendations:

a. Strengthen Energy Coordination committee to facilitate decision
making on all important matters pertinent to energy
b. Set up a Cabinet Committee on Energy with representations from
multiple ministries at the central government such as Power, Oil,
Gas, Coal, Foreign Affairs, Shipping, Finance etc and relevant
participation from states for policy formulation and resolve any key
issues
c. Setting up of an Integrated Energy Ministry as a single point contact
for all energy related issues
d. Setting up of a nodal ministry or agency that assumes responsibility
for monitoring, reviewing and debottlenecking the sector and
unshackling the Public Sector Units.
e. Strengthen the leadership of the companies dealing with energy
with specific tenures for CMDs, assess the effectiveness of boards
and review processes to ensure the highest quality.


7. Energy R & D
Energy Technology Research and Development is about researching and
developing better ways of energy generation, distribution and transmission in
addition to researching alternate energies. It is about the improvement of existing
technologies and the invention, development, commercial adoption of emerging
ones in an environmentally and socially acceptable manner.

Why Energy Research & Development:
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The fossil fuels reserves are depleting day by day and the current reserves will
not last long if we continue to use them in the current way.

Fossil Fuel Reserves Reserve-Production (R/P) ratios
(at 1999 production rates)
Coal 70 billion tons 212 years
Oil 600 million tons 15.6 years
Natural gas 490 billion cubic meters 22.9 years

India predominantly uses Coal, Oil and Gas for energy needs. To meet the
growing energy needs India needs to have research capabilities to explore and
utilize the other forms of energy like Nuclear, Solar and Wind effectively. Thermal
power plants are operating at a Plan Load Factor of below 45%. Appropriate
renovation and modernization using newer technologies will increase the output
by 20%.

The estimated Transmission & Distribution energy losses for 1997-98, 1998-99
and 1999-00 were about 24.8%, 25% and 23.7% respectively. India is incurring
huge energy losses in the distribution channel because of lack of proper
technology. India is the fifth-largest emitter of fossil-fuel-derived CO2, and its
total emissions grew at an annual average rate of almost 6% in the 1990s. India
as an environmental conscious country needs to reduce the green house gas
emissions with research on power generation and energy use in industry and
transportation.

Recommendations for Energy Research and Development

1. Increase Energy Research budget: India spends a meager amount on
Research & Development compare to some developed countries. During
1996-97, Indias R&D spend was USD 2.34 billion and of this only 7.6% was
spent on Energy.

2. Develop new educational resources for Energy Research: To increase the
Energy research capabilities India needs to develop new educational
resources to support the infrastructure and talent base required.

3. Ensure Multi-Agency coordination across Energy research agencies: Develop
a multi-agency strategy to coordinate basic energy research among major
government scientific agencies.

4. Ensure Multi-Department coordination across government ministries:
Develop a strong coordination framework among government ministries like
Ministry of Science & Technology, Department of Atomic Energy, Ministry of
Petroleum & Natural Gas, Ministry of Power, Ministry of Coal, Ministry of
Nonrenewable Energy Sources and Ministry of Heavy Industries.
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5. Encourage private participation in Energy Research: Indian Energy R&D
institutions and their activities are characterized by the dominance of the
public sector in most areas. Private participation is must to carry out large
scale research. The policies should encourage entrepreneurs to participate in
Energy research, use of newer technologies subsidized, and special
economic zones created for industries that are researching on newer energy
models and renewable energy sources.
6. Develop technologies that seek to achieve progressively higher efficiency
covering all the different stages and forms of energy conversion.

With India GDP continue to grow at 7-8 percent there is a strong need for
sustained energy. Successfully developing and deploying a diverse and
sustainable portfolio of energy solutions will require basic research that produces
scientific advances that leapfrog current technologies. Indias growth story is
limited by its research and development on Energy.

8. Energy Security

Indias energy security is primarily about ensuring the continuous availability of
commercial energy at competitive prices to support its economic growth. This
would mean

1. Security of supply of oil and natural gas; secure lines of
interdependence.
2. Independence from imports, or oil self-sufficiency,
3. Going beyond the countrys overall requirements as a whole and
looking at the requirements of individuals.

Why Energy Security

With the economy expected to grow between 7-8% over the next 20 years, India
is expected to become the third largest consumer of energy by 2030. Indias
import dependence has intensified concerns that without reliable, affordable
energy it will be unable to sustain high economic growth. India imports its three
major sources of energy in varying degrees, and its dependence on imported oil
is expected to increase even further. Besides, high oil prices, continuing
geopolitical uncertainty stoking fears of a possible supply disruption or volatility in
oil prices and hardly any viable energy alternatives have only heightened
apprehensions on energy security. Dependence on energy imports has also
exposed us to external price shocks. Reducing energy requirements and
increasing efficiency are two very important measures to increase energy
security.

Recommendations for energy security
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1. Reduce energy requirements through energy efficiency and
conservations: Major opportunities exist in reducing energy requirements
without reducing energy services. Efficiency improvements can be made
in energy extraction, conversion, transmission, distribution and end use of
energy.
a. improve efficiency in extracting fossil fuels say by 10%
b. use of energy efficient appliances, automobiles, hybrid cars,
energy efficient buildings, efficient lighting,
c. encourage use of public transport facilities and impose hefty
parking charges to discourage use of private cars
2. Substitute imported energy by domestic alternatives: Energy security
can be increased by reducing the need for imported energy and
substituting it with other forms of energy.
a. electrification of railways to replace diesel trains,
b. use of biodiesel and ethanol as substitutes for diesel and petrol.
c. Use of hybrid vehicles and/or electric vehicles to reduce
requirements of petrol
3. Diversify supply sources. Nearly 2/3
rd
of our oil imports are from 4
countries Saudi Arabia, Nigeria, Kuwait and Iran though we import oil
from 25 different countries. Diversification of supply sources would help
increase our energy security. Additionally, India could do with diversifying
its energy mix by using different types of fuel such as renewable energy
and nuclear power and be less dependent on one particular fuel.

4. Expand Resource base and develop alternative energy sources: Our
resource base can be expanded by enhancing recovery from existing
resource bases through advanced mining techniques, finding new
reserves through exploration and developing new sources of energy
through R & D. E.g. R & D should look at increasing the average
capacity factor of the wind farms from the current 17% to at least 25 -
30%. Adequate technologies and allocation of funds for energy related
R&D needs to be promoted for developing indigenous solutions which are
typical to India
5. Increase ability to withstand supply shocks: A strategic reserve of oil, say
supplies for a period of 60-90 days, should be maintained as a buffer
should there be any disruption in supply through blockade in a situation of
conflict. A buffer could also provide a cushion for any price fluctuations
6. Increase ability to import energy and face market risks: A proportion of
foreign exchange earnings must be set apart to guard against the market
risk of a sudden price increase. Options and Future contracts can also be
used to hedge against any price volatility.
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7. Increase redundancy to deal with technical risk: Despite having adequate
energy resources, technical failures, such as failure of generators, tripping
of transmission lines, leaking of gas pipes etc., can disrupt supply of
energy to people. The best solution to be secure against such risks is by
providing redundancy. E.g. electrical networks minimize probability of
loss of load by providing alternate routes.
8. One ministry to manage the Energy sector: Indian energy sector is
currently handled by 5 separate ministries Coal, Petroleum and Natural
Gas, Atomic Energy, Power and Non-Conventional Energy sources).
They often work in silos, making independent policies and decisions which
are neither optimal nor in the best interests of the country. Since these
areas fall under the umbrella of Indian energy, it would be easier to fix
accountability and responsibility on one ministry and foster the growth of
Indian energy.

To summarize, the following recommendations would help India meet its energy
requirements in an efficient, cost effective way and move towards sustainable
energy security.

Energy efficiency in all sectors
Emphasis on mass transport
Active policy on renewable energy
Accelerated development of nuclear energy and hydro electricity
Technology missions for clean coal technologies
Focused R & D on climate friendly technologies and improving
competencies in energy security

9. Environment and energy sustainability
There has been a steady rise in global temperatures all over the world during the
last two decades. As per CNN, this "threatens to stress water resources,
challenge crops and livestock, raise sea levels and adversely affect human
health ... Longer and more intense heat waves; increased heavy downpours
likely to cause widespread complications such as flooding and waterborne
diseases; reduced summer runoff, creating greater competition for water,
especially in the West; rising ocean water temperatures that will threaten coral
reefs; an increase in wildfires and insect infestations; and more frequent coastal
flooding caused by rising seas."
In order to achieve sustainability in the energy chain, it is important to identify,
measure, value and integrate the environmental impacts of activities in the
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energy sector. Environmental concerns are associated with all forms of energy
including fossil fuels, nuclear energy and renewables throughout the energy
chain from exploration/mining, transportation and generation to end use.
Pollutants associated with the combustion of fossil fuels Suspended Particulate
Matter, SO
2
, NO
2
and CO
2
pose a major threat to both ecological and man
manmade resources. Environmental risks from nuclear power include
radioactive seepage, lack of proper disposal of radioactive wastes besides the
threat of a nuclear disaster, which could be catastrophic.
Similarly, setting up of hydro electric plants could result in large scale
displacement of people of traditional communities besides submergence of land.
Recommendations:
a. Use of advanced mining technologies and better management
practices to reduce environmental impacts.
b. Establish environmental taxes and subsidies based on Polluter
pays principle. This could go a long way in preserving
environmental quality.
c. Regular environmental audits of power plants, dams, mines, etc.
should be mandated
d. To come out with a Policy framework that provides incentives for
energy efficiency. E.g. providing incentives for use of mass
transport systems in urban areas, promote R & D in energy
efficiency.
e. Build awareness of the benefits Clean Development Mechanism
should provide the necessary fillip for energy efficiency measures.

10. Managing opportunities and Risks

In order to ensure substantial nuclear growth the Issues that have to be
addressed are the Factors affecting whether governments and utilities want to
build power plants:

Achieving a safe, secure, and peaceful nuclear revival will require major
institutional innovations
Avoiding major accidents, nuclear terrorism, or cascades of proliferation will be
central to nuclears ability to grow enough to contribute to mitigating climate
change
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The 3 Ss safety, security, safeguards are key enablers for large-scale
nuclear energy growth
Major new nonproliferation steps are needed, but will not be agreed without
major progress toward nuclear disarmament
Hence, if we hope for a world in which the role of nuclear energy gets bigger, we
need a world in which the role of nuclear weapons gets far, far smaller.

Methodology / Approach used to prepare the Report
Honorable Prime Minister, We are certainly confident with our recommendation
made on the basis of extensive research done by our team using various
sources.
The team is qualified to make such recommendation since it has wider
representation in terms of professional line / experience we bring but involved
certainly at the senior level in terms of growth and opportunity on the products /
services we refer or suggest.
We duly considered the various government policies with regard to Energy, apart
from the following sources to bring the right insight to your kind attention;
01. Planning Commission
02. Electricity Regulatory Authorities
03. Energy Market / Supplier Challenges
04. Collective exchange of thoughts
05. Browsing various website and collecting information on energy
06. Referring books
07. Studying the methods of using energy followed by other countries and see
its applicability in India.
08. Studying the various five year plans formulated by the government, and
the importance given to the energy sector in the same
09. Complete review on the Generation, Transmission and Distribution
Network Policies, challenges and alternate management are carried out
by our team and thus the recommendation is given as 10 point agenda for
your kind consideration.

Conclusion

We have made an attempt to outline the possible areas of improvement which
we believe will help growth and success of the Indian Energy sector. Through the
scope of this project, we have been able to develop an overview of the several
factors that is inhibiting growth in this section. The Ten Point Agenda lists down
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key initiatives whose successful implementation will directly result in growth in
the sector.








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