New Delhi: Minister of state for petroleum and natural gas Dharmendra Pradhan voiced on Friday the government’s commitment to implementing policy reforms, creating market-friendly mechanisms and introducing transparency and competition in India’s energy sector.

“India is on a good trajectory," the minister said at the India Economic Summit organized by the World Economic Forum (WEF), referring to the deregulation of the diesel and petrol markets two years ago, and the removal of cooking gas subsidy for consumers above a certain income threshold.

He said the government was making policy changes to stimulate investment, assure returns, establish free-market mechanisms and introduce certainty in the energy sector.

The private sector must do its part by creating new business models that deliver enhanced production, better distribution and affordable access to energy, he added. 

Pradhan said India cannot emulate Sweden—which sources a lot of energy from renewables—or the US, where a lot of energy is still coal-based. 

“I don’t want to be either like the left side or the right side," he said referring to panellists from both countries flanking him. “I have to have a mixed basket." 

With 18% of the world’s population, India only accounts for 6% of the world’s energy consumption, but is nevertheless the third-largest consumer of power in the world even when nearly 30% of the population remains unconnected to the grid, said Pradhan.

That is why the government is committed to a diverse energy mix, he said, adding that gas will eventually replace coal and, in addition to renewables and nuclear, form the basis for the provision of affordable, clean and quality energy.

He said the government is also determined to tap bio-energy—from forestry, agriculture and urban domestic waste—as it is a cheap, abundant and highly productive source of energy. 

Questioned about the health of state-owned power utilities, Pradhan said a consensus is emerging among political parties against making promises of free energy as a populist measure ahead of elections.

Together with the right pricing of renewable energy and improved distribution networks, this will improve utilities’ fiscal health within the next two years, he said. 

India has an ambitious target of installing 175,000 megawatts of renewable energy capacity by 2022, noted Leocadia Zak, director, US Trade and Development Agency (USTDA), but warned against a narrow focus on installing renewable energy capacity without improving transmission and distribution systems, in which the private sector can play an important role. To draw private investment, she said, it is critical to ensure that contracts can be enforced. 

Ibrahim Baylan, minister for policy coordination and energy of Sweden, noted India’s successful, large-scale deployment of LED bulbs— through a partial subsidy—and said it is important to take a holistic view of the transition towards a renewables-based energy mix by focusing equally on development of cheaper storage capacity, installation of smart grids and measures to help the photovoltaic cells industry to mature, as these will make solar power cheaper and more profitable than fossil fuel-based power. 

Pointing out that the cost of electricity has come down, essentially thanks to technology, Banmali Agrawala, president and chief executive officer of GE South Asia, emphasized that it is important to create technology that is relevant and suitable for India—improving the efficiency of biomass use, for instance.

The right software and analytics, especially by combining solar and wind power, can minimize the need for storage, he said. 

Estimating that India needs three times as much energy as it is producing currently, Tulsi Tanti, chairman of Suzlon Energy Ltd, said India’s approach has to be guided by three principles: sustainable affordability, low-carbon footprint and energy security.

Supporting India’s goal of installing 175,000MW of renewable energy production capacity by 2022, Tanti said infrastructure must be based on resources available locally, while long-term plans must be supported by long-term policy frameworks.

“Pricing is very important," he emphasized, explaining that next-generation technology will take heavy investment, and although in the long term renewable energy will be cheaper, pricing at the start of a project has to be lucrative. 

Renewable energy purchase obligations should be uniform across the country, he suggested, adding that obligations must be enforced strictly. This will, in turn, support job creation and a domestic manufacturing base.