While there can be room for power politics but there shall not be politics on power
A K Jha,Director - Technical, National Thermal Power Corporation (NTPC) & Chairman Central Advisory Board (CAB) EnerTECH World Expo 2014

Energy security is a critical issue for India because of continuously increasing dependence on imports to meet the ever widening demand- supply gap. A K Jha, Director - Technical, National Thermal Power Corporation (NTPC ) & Chairman Central Advisory Board (CAB) EnerTECH World Expo 2014, expressed, "It would be an idea worth exploring that whether we can have a combine ministry of energy rather than having separate ministries for Coal, Gas and Power etc"while inaugurating the power and energy exposition held concurrently during the Oil & Gas World Expo 2014. Excerpts Ö

Energy security mandates optimum utilisation of both available as well as scarce resources through 360 degree approach that involves all stakeholders of the energy value chain from energy production to power generation, transmission & distribution along with all systems working efficiently; balancing demand and supply sides most effectively to provide affordable power to the achieve desired growth rates and meeting individual energy needs.

Although India is the 6th largest country in terms of power generation, per capita consumption stands at 800 units per capita, which is very low as compared to the world average of 2400 units per capita. Industry is the largest consumer of energy and accounts for 38 per cent of consumption, while agriculture and domestic consumers form 22 per cent each, commercial 8 percent and miscellaneous 10 percent of India's energy pie.

Thermal power has a dominant share in India's energy basket and comprises 65 percent of country's power generation followed by hydropower 22 percent, renewable sources like wind, solar & biomass 10 percent; and nuclear energy which accounts for 3 per cent of total power generation.

Under the 11th Five Year Plan, India added record capacity of 54,964 MW of capacity and envisages augmenting the capacity by 85,000 MW by the end of 2017. Thermal energy will continue dominating the energy sector as setting up gas based plants would still be a challenge due to scarcity of availability. Government has set ambitious target of scaling up renewable capacity from current 27,000 MW and add another 30,000 MW. India has committed to producing 30,000 MW of nuclear power by 2032. Thus the power portfolio of India is well diversified in terms of fuel mix which mitigates the risk of the energy security to a very large extent.

In India, mainstream capacity comes from coal based stations. However, the irony of situation is that despite having the 5th largest coal reserves globally, India has to still depend on imports to meet the coal requirement of power plants. In order to meet the augment the targeted capacity by 2017, power plants would require around 688 million tonne per annum (MTPA) by 2017 and projected supplies are likely to be short by 159 MTPA which would require India to rely on coal imports for the supply deficit. Over the past five years, while power generation capacity has increased at CAGR 14 percent , coal supplies have grown only at 6 per cent CAGR. Bottlenecks in land acquisitions and receiving environmental clearances and issues such as payment crisis have proved to be major deterrents for the growth of power sector. There are also logistics issues related to moving coal production from the mines because of lack of railway connectivity that India's national company, Coal India Ltd (CIL) is facing. The Government has entrusted CIL & NTPC with the work to develop the rail lines to create the necessary logistics supply chain for movement of coal to power stations.

Demand supply gap has compelled the power producers to enter the fuel suppl agreements for 65 percent of Plant Load Factor (PLF) capacity as against the promised coal linkage for 85 per cent PLF. As a result, out of 89 generating stations, only 55 are working below their full capacity.

On the other hand, gas based power plants of 15000 MW capacity are also stranded due to gas deficit. Post gas discovery in KG basin, power producers had shown lot of interest in establishing fuel linkages for the proposed gas based power plants however this request was turned down by the regulators who decided to allocate the gas on the basis of priority depending on the completion of power project. This was in stark contrast with the existing policy for thermal plants where the coal linkages were mandatory to even get environmental clearances. NTPC decided had to put the plans of capacity addition of 5000 MW gas based plant on back burner, however many private players forged ahead with the plan and now the entire capacity is stranded and capital blocked!! In fact, NTPCís existing gas based capacity of 4000 MW is also running at 13 PLF due to gas shortage and the government has decided not to provide ay clearances for setting up more gas based capacity until 2016.

Poor financial health of Distribution Companies (DISCOMs) is another major constraint due to which power companies have to resort to load shedding. The paradox is that during load shedding consumers generate their own energy using diesel generators at the rate of Rs 18-20 per unit. Cumulative loss to DISCOMs has reached figure of Rs 2,40,000 crore in 2012 and combined debt reached Rs 1,90,000 crore as most of DISCOMs had opted for short term loans to meet their operational cost requirement. In 2001, the Government did come up with one time settlement policy scheme for dues with the hope that in 15 year time, by 2016 the DISCOMS would become financially viable. But in 2012, Government announced the financial restructuring package for debt ridden distribution entities however, for long term healthy growth, it is critical for DISCOMs to reduce the losses. As a matter of fact, practice of following annual tariff rationalisation according to changing input cost by State Electricity Regulators instead of past practice non division of tariff for years together and timely payment of subsidy announced by the state for certain section of consumers can positively impact on the health of DISCOMs.

Out of 195 allocated coal blocks to public and private sector companies, some are under scrutiny by the courts, which is another major issue, as such assets stand great chance of becoming Non Performing Assets (NPA) for banks, capital investors and developers. Such distress assets may lead to the perception of power projects as high risk investments which may lead to interest hikes for project financing, escalating the cost of power generation and eventually impacting the tariff for the end user or consumer.

Indian government's efforts to speed up nuclear energy capacity addition though joint venture of central PSU with Nuclear Power Corporation of India Ltd (NPCIL) are also on hold due to the amendment required in Atomic Energy Act. Moreover, the clearance of nuclear liability bill is taking long time which is proving to be a major deterrent towards the interest of foreign nuclear power equipment suppliers due to high risk and liability for the manufacturer. NTPC has already entered the JV with NCPIL for construction of 2X700 MW nuclear power stations in Haryana.

Way Forward
In today's context, it is important to have an integrated energy policy but that is not enough unless there is integration in implementation of policy by all the concerned departments at all levels - in tandem.

It would be an idea worth exploring that whether we can have a combine ministry of energy rather than having separate ministries for Coal, Gas and Power etc. There is also the need to speed up of setting up nuclear plan to address the twin issues of CO2 emission & the rising imported fuel cost and amendment to the Atomic Energy Act needs to be expedited. Early commercial flow of energy between Southern grid and rest of the country will help in balancing the power cost in the two different regions. Further strengthening of inter-region grids are necessity to ensure the free flow of power is done then we are able to avoid blackout as we witnessed in 2012.

Challenges of having large amount of renewable energy in the grid, available for only limited hours and forecasting its availability needs to be addressed through implementation of smart grid. This would require our DISCOMs to be financially viable and technically competent for effective implementation and management of smart grids towards consumer benefit.

Appointment of coal regulator to fix reasonable price to check the electricity prices should be considered given the fact that Indian consumers are extremely price sensitive. A committee to finalise railway goods tariff would also be a good move to keep a check on cross subsidies which adds substantially to the power cost and cannot be totally eliminated.

Last but not the least, political leadership should agree that while there can be room for power politics but there shall not be politics on power; and then only India can think of taking quantum leap to 800 unit per capita power consumption as compared to the world average of 2400 unit per capita to be truly in the category of developed nation.