Energy security, climate change and economic development, is repeatedly stressed upon, among other things, that our government is facing harsh challenges in meeting dire energy requirements in an environmentally sustainable manner. There is a desperate need for surveying sources of energy that are not fossil fuel based since the fossil based sources cause climate change. It is because of this concern; we are falling back to generating clean energy such as biofuel, wind, nuclear, solar and hydro power.
The haunting images of Japan’s nuclear power stations and the growing concern over mounting radiation levels has left us thinking about how the world will fuel itself in a sustainable and safe way in the future. New and modern reactors built around the world would supply part of the energy needed to meet the future needs of fast developing countries such as India and China. This, combined with expected advances in technology based on solar, tidal power and wind, formed the early stages of a plan to power the future. A delay in building those plants would force many nations to increase their use of fossil-fuel based sources of energy—a serious setback in the global battle to halve carbon emissions by 2050.
The government of India’s ambitious plans for renewable energy has grown incrementally in the last few years, with it stepping up its target for solar capacity by as much as four times only this year. Until now many of these goals seemed rather far off but have prompted a surge of investment in the country’s renewable energy infrastructure. If the renewable energy secretary, Uma Shankar, is to be believed- the government has now set a bold short-term target under which it will aim to add 17 GW of renewable energy generation capacity in the next six years.
Its ambitious renewable energy targets mirror global climate change commitments, energy security, tightening global supply, rising energy costs, environmental concerns and increasing opposition to nuclear power.
Now, moving ahead, I take you through the reality check of the Indian Power Sector: According to a report by PricewaterhouseCoopers and the Indian Electrical and Electronics Manufacturers Association, around 57% of rural households and 12% of urban households in the world’s second most populous country have no access to electricity. This is at a time when India has posted its claim to a seat at the high table alongside world powers. By and large energy, especially electricity, has a major contribution in speeding up the economic development of the country. A universal thumb rule states that- the elasticity of gross domestic product (GDP) growth and the growth of electric power should be at the same level for a developing economy.
The above mentioned figures partly explains why India’s per capita power consumption of around 700 units (Source: Ministry of Power) a year is way below the world average of 2,600 units and developed countries’ average of 8,000 units. India is in dire need of bigger generation capacity as it was aiming to achieve 1,000 units per capita consumption by 2012 as the Ministry of Power has set a goal – Mission 2012: Power for All.
Amidst all these target achievement pressures India’s power sector is battling a chronic shortage of fuel such as coal and gas to fire power plants. Foreign Direct Investment (FDI) of up to 100% is allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic reactor power plants. Despite making provisions for 100 per cent FDI in the power sector, there is not much response as very few foreign investors have made their foray into the power sector. The government is now, however, claiming to take steps to instill confidence in the foreign investors, to attract foreign direct investment (FDI) in the power sector, critical to the country’s economic growth.
Speaking to the American people on Saturday, May 7, 2011, President Obama said that clean energy is part of the ultimate solution to high gas prices. Until we reduce our dependence on oil, we will be held hostage to the ups and downs of the oil markets. That means we need to continue to invest in clean, alternative sources of energy – like advanced biofuels and natural gas – and more efficient cars, buses and trucks.
It’s high time that our Indian leaders and policy makers too, bring to the fore, the importance of generation and use of renewable energy. The worrying demand-supply mismatch for power needs to be plugged immediately by environmentally sustainable means, for India to stay alive and pumping in the race to the top of the world.
Author: Abhishek Ranjan
Abhishek is a Business Journalist in the making. He blogs at simplifyingbusiness.wordpress.com
Greenomics is a 6 part series which will be published every Friday. The next part to this series will be published on the 27th of May.
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