Policy Wise: India’s Power Sector

How should India navigate future energy transition?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : International Energy Agency

Mains level : Paper 3- India's transition to renewable and challenges it faces

The article is based on the book by Daniel Yergin, titled ” The New Map: Energy, Climate and the Clash of Nations”. The book throws some questions to countries dependent on oil and suggests the framework for their transition to renewable.

Six broad themes underlying the energy transition

  • The first is the US shale revolution, which transformed the US from a major importer of oil and gas to a significant exporter.
  • The second is the leveraging by Russia of its gas exports to compel former members of the Soviet Union to stay within its sphere of influence and to embrace China into an energy partnership.
  • The third is China’s assertion of its rights over the South China Seas — a critical maritime route for its energy imports and the Belt and Road initiative;
  • The fourth is sectarian strife (Sunni/Shia) in the Middle East which, compounded by volatile and falling oil prices, has brought the region to the edge;
  • The fifth is the Paris climate summit and its impact on public sentiment, investment decisions, corporate governance and regulatory norms.
  • Sixth is the consequential impact of the manifold and impressive advancement of clean energy technologies.

Questions for India

  • The ongoing transition in the energy world raises several questions for India.
  • How might they impact its objective to provide reliable, affordable, clean and universal access to energy?
  • Who will bear the costs of the transition — in particular, the costs of retrofitting industrial infrastructure and upgrading the power grids.
  • How can it prevent the “perfect storm” of high unemployment due to laid-off coal workers and stranded assets thermal power plants, slowed economic growth and environmental degradation?
  • How realistic is a green transition for an economy almost totally dependent on fossil fuels?

Three policy initiatives for the government

1) Securing favourable terms with oil suppliers

  • The government leverage its buyer strength to secure “most favoured” terms of trade for crude supplies.
  • In this regard, they bring out one development that plays to India’s advantage — the onset of “peak oil demand” (that is, demand will plateau before supply depletes).
  • However, there is no consensus on the timing of peak demand.

2) Develop own systems for photovoltaics (PVs) and batteries

  • India must develop its own world-scale, competitive, manufacturing systems for photovoltaics (PVs) and battery storage.
  • Otherwise, India will not be able to provide affordable solar units unless it accepts the further deepening of dependence on Chinese imports.
  • Currently, China manufactures 75 per cent of the world’s lithium batteries; 70 per cent of solar cells; 95 per cent of solar wafers and it controls 60 per cent of the production of poly silica.
  • China is also looking to secure a chokehold over several strategic minerals (cobalt, nickel).

3) Prepare a clean energy technology strategy

  • Technology is the answer to the energy transition.
  • That is what will bring the system to the tipping point of radical change.
  • China has placed clean energy R&D at the forefront of its “Plan 2025”.
  • The India strategy should identify relevant “breakthrough technologies”, establish the funding mechanisms and create the ecosystem for partnerships (domestic and international).

Conclusion

As an economy which is energy import-dependent, fossil-fuel-based India must balance between the rising demand for energy and an unhealthily strong linkage between this demand and environmental pollution.

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