DRAFT OF NATIONAL ENERGY POLICY by NITI AAYOG
India has achieved GDP growth rate of 7.1% for FY 2016-17 and has emerged as the fastest growing economy in the developing world. The Power sector, a key infrastructure element plays an important role in the development of economic growth in the country. It is evident from the correlation between per capita electricity (a proxy for all energy forms) consumption and Human Development Index (HDI).To maintain the continuous development pace of economic growth, the country must meet growing electricity demand.
The Initiatives and reforms of Government in last two years in the power sector has restored faith in stakeholder and resulted in the growth of power sector. According to Power Generation, which is released by Ministry of Power implementation, the growth rate of installed capacity of electricity generation is 4.79% up to April 2017 and peak power deficit reduced to -0.6% at end of May 2017.
NITI Aayog, India came up with a draft copy for National Energy Policy for comments. This is a very good policy support and incentive structure to attract investors in RE generation and creates innovation markets and try to increase use of ancillary application. The National Energy Policy (NEP) aims to chart the way forward to meet the Government’s recent bold announcements in the energy domain.
Approximately 304 million Indians without access to electricity, and about 500 million people, still dependent on solid bio-mass for cooking, it may be acknowledged that the country has to still go a long way on securing its energy security objective.
Present Govt. Policy scenario
- All the Census villages are planned to be electrified by 2018, and universal electrification is to be achieved, with 24×7 electricity by 2022.
- The share of manufacturing in our GDP is to go up to 25% from the present level of 16%, while the Ministry of Petroleum is targeting reduction of oil imports by 10% from 2014-15 levels, both by 2022.
- NDCs target at reduction of emissions intensity by 33%-35% by 2030 over 2005, achieving a 175 GW renewable energy capacity by 2022, and share of non-fossil fuel based capacity in the electricity mix is aimed at above 40% by 2030.
- As per the energy modelling 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.
The policy aims to ensure that electricity reaches every household by 2022 as promised in the Budget 2015-16 and proposes to provide clean cooking fuel to all within a reasonable time.
Identify seven areas of intervention
Increasing energy efficiency helps for using less energy for the same service and reduction of monthly energy consumption bill, is an important element in energy policy. For that reason the government to replace regular bulbs by LED bulbs has the potential to reduce energy load by 20 GW and save nearly 100 billion kWh worth of energy each year after replacement of all incandescent bulbs.
Time horizon of the policy
- Short term up to 2022 (discuss interventions)
- Medium term up to 2040(long enough to contemplate bolder interventions that are required to fully modernize India’s energy sector.)
Nationally Determined Contributions (NDCs) as the signatory to the United Nations Framework Convention on Climate Change (UNFCCC) emphasise the importance of demand side factors. In its submission, India gave particular importance to behavioural change leading to energy conservation, something that has received insufficient attention in the developed countries. The NEP aims to internalise this shift in our energy policy.
Under this policy, the BEE would specifically look at convergence with existing national programmes and plan appropriate interventions:
- 100 Smart Cities.
- Housing for All by 2022.
- Power for All by 2022.
- 175 GW of renewable energy by 2022 to achieve synergy.
- The initiatives of Smart Cities and solar pumps should mandate using only the most efficient appliance set with the cost-effective potential.
Specific goals will be set for major energy consuming sectors:
National Mission for Enhanced Energy Efficiency (NMEEE), launched under the National Action Plan on Climate Change (NAPCC) is trying to achieve its intended goals
India Energy Security Scenario
India Energy Security Scenarios or IESS 2047 allows us to predict energy consumption in the final year of the policy, 2040, under alternative scenarios with respect to efforts towards achieving greater energy efficiency.
In per capita terms, annual energy consumption rises from 670 kgoe in 2015-16 to 1055-1184 kgoe in 2040.
Per-capita annual electricity consumption increases from 1075 KWh in 2015-16 to 2911-2924 kWh in 2040.
The maximum efficiency gains accrue in transportation sector whose share in the total energy consumption in 2040 turns out to be 23% under the ambitious scenario compared with 25% in the baseline scenario.
Shift occurs in the cooking sector. Energy share of cooking drops from 22% in 2012 to just 3.3% in 2040 in the baseline case and 3.5% in the ambitious scenario.
Actual energy consumption in 2012 and projected consumption under alternative scenarios in major sectors in 2022 and 2040
Importance of demand side factors in formulating the NEP
National Energy Policy also focus on challenges and how to recovers from challenge and also upcoming/ongoing policies of Govt. regarding rural electrification, Clean Cooking Access, Grid Integration of Renewable Electricity and More Efficient Grid Operation.
NEP also shows the pathways of Fossil fuel based energy and also makes their marketing strategy. It also shows the base demand of coal and oil till 2040. NEP also discuss transparency for every Sector.
The NEP aims at achieving 100% electrification by 2022, and will take this to be the main plank of the overall energy strategy. As per the results of the 68th Round of NSS Survey (2011-12), only 4% of the urban households did not use electricity as the primary source of lighting. But, more than 26% of the rural households are in this hapless state which shows an inclination towards kerosene based lighting solutions.
The Government has launched the DDUGJY as its principal vehicle to achieve the above goal by 2022, by first achieving 100% village electrification by 2019.
Challenges of Rural Electrification (Mention in NEP)
Steps for overcome challenges
Provide grid based supply to all households, renewable based supply will be resorted only in exceptional circumstances, adoption of DBT , ‘Energy Access Fund’ can be established to address the urgent need to convert capital subsidies into operational incentives, use of micro-grids in areas where the same makes economic sense, Micro-grids can play another role, even in electrified villages. Micro grids provides meeting peak electricity requirement in electrified villages, and may be in business until the supply quality aspect is resolved.
Renewable energy policy
- Renewable energy capacity target of 175 GW has been declared for the year 2022, by 2040 a likely capacity of 597-710 GW is expected to be achieved.
- No targets are proposed beyond 2022 as the growth is expected to take place autonomously.
- The period 2017-2040 will, therefore, witness a transformation in the electricity sector of India, calling for policy action across the entire value chain of generation, transmission and distribution.
- In the NEP, Large hydropower also considers as renewable energy.
- Electricity markets are now expected to take over the role that Government subsidies have played so far. The sharp reduction in tariffs received in bids for solar and wind power points towards two aspects.
- Exposing these technologies to market discipline
- Need to now address other lagging renewable sources such as hydro and biomass.
- NEP proposes gradual withdrawal of the provisions of ‘must-run’ status and other supports such as non-levy of inter-State transmission charges.
- The NEP advocates framing of a Bioenergy Policy that encompasses all forms of biomass-based energy (solid fuel, first/second generation biofuels and gasifying biomass).
- The present strategy of promoting ethanol and biodiesel admixtures in liquid transport fuels will be continued, even while the Government’s recent focus on augmenting the supply of ethanol through 2nd generation technologies will be pursued vigorously
- NITI Aayog will offer a platform to bring the Central Ministries and State Governments together to solve the inter-agency issues related to integration and growth of Renewable Energy in the country as per the Renewable Energy Integration Roadmap 2030.
- Reduce the risk of the DISCOMS from having to arrange back-up/balancing supply. A scheme to give feed-in-tariff to the existing stranded gas based capacity will be launched to address the balancing issues of renewable power.
- Electric Vehicles that can also double up as a storage device. Suitable application of time-of-the-day tariff mechanisms will be applied to encourage EVs to store-up renewable energy when it is available in excess of demand.
The NEP aims at supporting the Indian ambition to emerge as a well-developed and resilient economy with high level of human development. Additionally, it helps prepare the nation to anticipate the technological and market related changes in the energy sector.
(Note:- In this article Nuclear ,Regulators, Infrastructure, Human Resource Development, Technology and Research & Development , Overseas Engagements, Air Quality are not discussed.)
Ritwik Mondal/MBA(Power Management)/NPTI, Faridabad