EDITORIAL 2: For energy security, a redesign
Context
Energy security has typically been discussed within the frame of access, reliability and affordability of fossil fuels. Today, however, against the backdrop of global warming and India’s commitment to reach net zero carbon emissions by 2070, this results in too narrow a perspective.
On a two track
- India is on a two track energy trajectory. One track relates to the demand for fossil fuels (coal, oil and gas) and the other to renewables (solar, wind, bio etc).
- The national objective is to decrease the share of the former and increase that of the latter in the energy consumption basket.
- To achieve this goal, India must focus on not just conservation of the usage of fossils, but also the simplification and coherence of the energy regulatory system.
- India has done well to safeguard its energy security in the traditional sense. It has opened up multiple sources of crude oil and has resisted western government pressure to sanction Russia.
- Also, by steadily increasing the share of Russian crude in its import basket from 2.1 per cent by value in 2021-22 to 35.1 per cent in 2024-25, it has reduced the weighted average cost of the basket of imported crude by at least $2/barrel.
- Further, demand management and efficiency has reduced the intensity of fossil fuel demand per unit of GDP.
Not a robust situation
- However, when looked at through the broader prism that captures the trajectory of renewables, the situation does not look as robust.
- This is not because growth in the capacity of renewable energy has been slow. In fact, on the contrary, it has been impressive, albeit from a low base.
- Five years back renewables accounted for 19 per cent of electricity generating capacity. Today it accounts for 49 per cent (234 GW).
- What is worrying is the slowdown in the pace of this growth and the imbalance between the generation of capacity and the development of supporting transmission and distribution infrastructure.
The reasons and the solutions
- There are several reasons for this slowdown, but one major factor is the regulatory miasma surrounding the sector.
- Every businessman has had to deal with bureaucracy. But even the most hardened will catch their breath reading these statistics.
- It takes months to secure all approvals before any construction could commence.
- The word “usable” is the key. For it is one thing to create generation capacity. Quite another to develop the interstate transmission network; establish backup storage systems; build the distribution network and set the tariffs and standards for this capacity to be consumed.
- And as the experience of Spain earlier this year brought into sharp relief, it is even more complicated to ensure that connectivity between these different segments of the value chain is seamless, balanced and technically solid.
- The supply of hydrocarbons depends crucially on geology. Governments have no control over a country’s natural resource endowments.
- On the other hand, the supply of renewables faces no structural block. Sunlight and wind are “freely” available; the technology for generating wind and solar energy is well established; the economics are competitive; and there is investor interest.
- The rub is the multiplicity of regulatory agencies and regulators that bear on this sector. Plus the fact there is no one executive authority with nodal responsibility or accountability for its operations.
- The positive is the government faces no structural block like geology to overcome this rub. It can, if it so wishes, undertake a root and branch reconfiguration and redesign of the current regulatory system.
- It can simplify the regulatory process by removing or converging the current multiple layers of oversight.
- It can standardise operating rules; ease the process of land acquisition; digitise the approval process; align technical standards and safety conditions; render transparent the setting of network charges and supply contracts; and expedite dispute resolution.
Conclusion
The government does, of course, face the block of legacy vested interests. It is a powerful block but it cannot withstand determined political will. Such will is required for the prize of weakening the current unhealthy link between economic growth, energy demand and environmental protection — for “Energy Atmanirbharta”.