Energy-efficient growth the way forward, says govt

Replacing fossil fuels with cleaner natural gas for power generation, reviving stalled hydel projects, permitting only less polluting plants that use coal on govt agenda

Gas, renewables hold key to sustainable economic growth, say power minister Piyush Goyal (left) and oil minister Dharmendra Pradhan. Photo: Pradeep Gaur/Mint
Gas, renewables hold key to sustainable economic growth, say power minister Piyush Goyal (left) and oil minister Dharmendra Pradhan. Photo: Pradeep Gaur/Mint

New Delhi: India’s fight against climate change and pursuit of energy-efficient economic growth will increasingly rely on replacing coal and diesel with cleaner natural gas for power generation, reviving stalled hydroelectric projects and permitting only high-end and less polluting new power plants that use coal, according to power minister Piyush Goyal and oil minister Dharmendra Pradhan, who spoke at the Mint annual energy conclave in New Delhi on Wednesday.

Achieving the 175 gigawatts (GW) of renewable energy capacity by 2022 is an essential part of the plan.

Speaking on the theme Securing India’s green future, Pradhan pitched for reducing carbon emissions by moving towards a gas-based economy, which the government is aiding with capital investments in the pipeline network.

Gas will lower the cost of back-up power for which cities like Bengaluru presently rely on costly and polluting diesel. The green fuel will help in the socioeconomic and industrial development of the long neglected eastern part of the country, the oil minister said.

“The Prime Minister is very much clear, unless eastern India is developed, empowered and sustains on its own economy, we cannot say the country is developing in total,” said Pradhan.

Gas currently accounts for only 6% of the primary energy mix (which also comprises crude oil and coal), which could go up to 15% by 2030 if an industry goal of investing about Rs2.5-3 trillion over the next few years to produce about 10-15 trillion cu. ft of gas is achieved.

Goyal, who also holds the coal, new and renewable energy and mines ministries, said the government will only allow super-critical and ultra super-critical power plants in the future that are efficient and less polluting.

Coal, which accounts for about 70% of India’s over 300GW electricity generation at present, is abundantly available in the country and is a cheap source of energy.

Goyal said he is in talks with overseas gas producers for supply contracts at below $5 per million British thermal unit (mmBtu). The power ministry has been auctioning imported liquefied natural gas (LNG) for reviving stalled gas-fired power plants with subsidy.

“There are about 7 trillion cu. ft of gas that is being developed in the country as we speak. You will start seeing these projects being announced in the next 12 months. These will add to an investment of Rs1 trillion. It will also create 100,000 skilled jobs during the consumption period,” said Sashi Mukundan, regional president and country head, India, for BP Group.

Goyal said the government is also looking at encouraging generation of coal bed methane and technologies for keeping coal underground and taking the energy out of it. Renewable sources of energy such as solar, wind and hydropower remains a key part of reducing emissions.

According to Sunil Jain, chief executive officer of Hero Future Energies (HFE), the country is set to add 10GW of solar power this fiscal and another 15GW in the next. India now has close to 7GW of solar power capacity.

According to Power Grid Corp. of India Ltd chairman and managing director I.S. Jha, this is the opportune moment for giving a big push to renewable energy, considering the back-up of conventional power that is available.

The backbone of reforms in the power sector is the turnaround of debt-ridden distribution companies for which the government announced the Ujjwal Discom Assurance Yojana (UDAY) in November. Goyal expects the debt takeover of utilities by states and efficiency improvement measures will keep power tariffs stable for some time. “To my mind, the power tariffs in India which used to have a runaway increase in the last 15-20 years can be maintained at the current level going forward and UDAY will have an important role to play in that. By 2019, the annual saving of the power sector as a whole due to the implementation of UDAY against the business-as-usual scenario is about Rs1.8 trillion every year,” said Goyal.

With stable power tariff for 4-5 years, India can more than triple if not quadruple per capita power consumption from about 1,000 units at present, he added.

Experts said a few issues need to be kept in mind if the solar power industry is not to encounter the problems that confronted conventional thermal power in the past. “We need to have a strong system of quality check, starting from the stage of manufacturing (of panels and equipment) considering the huge investments going into this industry. Move carefully, taking adequate steps to ensure 80% of public lending going into projects is adequately anchored and that it will be paid back in time,” said Anil Razdan, former power secretary.

Prerna Kapoor, Kritika Singh and Komal Gupta contributed to this story.