Shaping India’s energy future: Ambitions, actions and obstacles

Multi-domain, multi-scale, and multi-stakeholder efforts are needed to overcome the combination of acute and chronic challenges facing India’s energy future.

Analogies aren’t perfect, but a number from the healthcare domain could apply to energy. Doctors often characterize diseases or conditions as acute or chronic – energy faces both sets of challenges. In the immediate term, a shortfall of energy (both in terms of access and supply) is the most visible symptom. Less visible are financial losses and leakages (theft or misappropriation). And if we consider the longer term, we have issues of energy security and sustainability to worry about.

Ambitions and Corresponding Actions

The government announced a number of programs and targets in the energy space, a few of which are below. These are ambitious, to say the least, with almost all of them designed for a 5-year time period.

• 24×7 Power for All. Like many governments before, the ambition of uninterrupted power for all is a target of this government. New schemes like feeder separation and Integrated Power Development Scheme (IPDS – aimed at urban areas) aim to operationalize this.

• ~Tripling coal production. With Coal India Limited (CIL) producing the bulk of today’s roughly 500 million tons of coal per annum, the aim is for CIL to double production, and private participants to produce 500 million tons as well. The latter were selected on the basis of transparent (and lucrative) coal block auctions, which, for the first time, would give the lion’s share of the royalties to the states.

• Renewable Energy. The previous Jawaharlal Nehru National Solar Mission (JNNSM) target of about 20,000 MW of solar power was up-scaled to 100,000 MW. When the government undertook a global investor meet (RE-Invest) in February, they received commitments for over 260,000 MW of RE (!), equivalent to today’s entire grid-connected capacity. Even if only a fraction gets built, it’s still remarkable.

• Smart Grids and Smart Cities. The government has announced major ambitions for 100 Smart Cities, and Smart Grids (enhanced power systems that are controllable, robust, efficient, renewables-friendly, etc.,) are an anchor of such deployments.

A number of other positive steps have been taken to improve energy and electricity in India, including far better coordination between Ministries (with a single Minister handling Power, Renewables, and Coal), not just within energy but even with railways (which is the major medium for coal transport). Through such steps, for example, the shortfalls of coal at power plants are a thing of the past (at least in the foreseeable future).

However, there are two worries. One, we’re already tackling lower hanging fruit (which makes sense), but what remains to be done is far harder and will take sustained effort. Second, many improvements are hidden from consumers and citizens. If you ask people what visible change they have seen in energy, the only answer some might give is cheaper petrol, which is more a fallout of softness in global oil prices than linked to any government action. Even deregulating diesel prices – good for the industry and enabled by low input prices – isn’t high on consumers’ wish lists. We don’t have palpable improvements in electricity supply, and Delhi’s air pollution is making headlines for being the worst in the World.

Obstacles

Any government is best as an enabler of improved outcomes, instead of being a direct provider of all services. This isn’t a blind push for privatization, but rather a reflection of reality that the government cannot do it all, and there is value to more stakeholders. In addition, in many domains, the Central Government has a somewhat limited direct role to play – it can provide support and funding but ultimately the direct stakeholders are lower down. Electricity improvements rely on the states (especially for distribution, the most challenging of the domains of electricity, more so than transmission and even generation), and Smart Cities mean local administration. Smart Cities also mean coordinated planning across multiple jurisdictions and domains. Even more than multiple government departments (water, transport, housing, governance, etc.), how to effectively engage with citizens (who should be more than consumers of any design) is not yet clear – letting “the market” decide isn’t enough (else this places disproportional emphasis on the inputs of a few).

Recommendations

• Diagnose the symptoms properly. In electricity, there aren’t enough data available on what is going on at the distribution level (losses, load-shedding, etc.). While IT-centric projects like R-APDRP are underway, these are limited in geography and behind schedule. Proper supply portfolio planning (e.g., meeting the full peak power demand) requires granular Time of Day data, which is scarcely available and rarely analyzed.

• Treat the root cause, and not just the symptoms. A challenge is that there are enormous expectations from the government, but fixing chronic problems cannot be done by some simple solution or magic pill. More than treating symptoms, we have to go to the root cause.  There are attempts to fix the electricity sector, for example, by adding in retail competition, but these may not be practicable given the underlying problems in the sector (losses, shortfalls of supply, lack of data, etc.).

• Recognize the inter-dependencies and trade-offs. The IT sector has a wonderful adage: “Cheaper, faster, better – pick any two”. This exemplifies many of the linkages. Adding RE is great for greener supply, but the variability of solar and wind power means the grids have a greater burden in keeping things balanced (otherwise we would end up balancing in the worst possible way, like today, with more load-shedding). This especially impacts a handful of states, where RE is concentrated.

• Undertake preparatory and parallel work to make staged and integrated deployment of solutions more practical.       It doesn’t make sense to attempt a Smart Grid if basic computerization of data (consumer databases and assets) isn’t complete (e.g., under R-APDRP). Similarly, a city metro isn’t as useful without proper planning for feeder systems (buses, e-rickshaws, etc.)

• Be realistic. Many of the targets are wonderful, but unrealistic.       This leads to either finger-pointing, a loss of consumer/citizen confidence, or short-cuts that have long-term implications. I would rather promise a 5, deliver 7, than promise 10, and deliver 7.

• Try something new. Most energy experts agree that Business As Usual (BAU) won’t work – it’s too slow and sustainability concerns abound (sustainability isn’t just the environment but also economics and equity). To break BAU models, we need new alternatives, both from technologies and business models. Given choices, consumers and industry can innovate towards better outcomes.

Ultimately, while we have always had challenges in execution, and this government is determined to execute well, we also need better designs. After all, a good design must factor in limitations of human capacity and stakeholder incentives.

To close with another health analogy, the absence of disease doesn’t mean one is healthy. We don’t just want to be not sick, we also want to have strength and stamina, and not to mention flexibility, choices, etc., at the lowest cost possible. In its first year, the government has undertaken several good steps towards a sustainable energy future. The challenge is both execution, as well as next steps and new ideas.