Business Today

How to kick the habit

There are two ways to tame the oil monster: One is to become more energy efficient and the other is to develop new energy sources.

K.R. Balasubramanyam        Print Edition: June 29, 2008

Last year, India imported 121.67 million tonnes (MT) of crude—9.1 per cent more than the year before, but guess what happened to the import bill? It ballooned disproportionately, some 40 per cent, to $68 billion. That’s a whole lot of money consumers could have either put away in their savings accounts or spent on consumption, helping the economy along in either case.

A CNG filling station: An environmentfriendly alternative to petrol and diesel
CNG is an environment friendly alternative to petrol, diesel
Worryingly enough, with global crude oil prices showing no signs of easing (Goldman Sachs analysts expect oil prices to touch $200 within two years, and Brent crude has already hit $139 per barrel at the end of the first week of June), the only hope is that slowing world economies will ease their demand for oil. At any rate, with the planet said to be running out of oil, the only viable long-term solution is to develop alternative sources of energy.

So, what are India’s options? According to experts such as Arvind Mahajan, Executive Director at KPMG India and The Energy and Resources Institute’s (TERI) senior fellow, Praveen K. Agarwal, the options are the same as elsewhere in the world—solar, wind, biofuels, hydel and nuclear— except that certain natural geographical advantages of India and its unique situation as a large developing country make certain energy sources more compelling. Take solar energy, for instance. “The sun shines bright for more than 300 days in most parts of India, and that is an option we must look at,” urges Mahajan.

A recent McKinsey report, Powering India—The Road to 2017, too, argues on similar lines. It highlights that India’s annual solar energy yield, at 1,700-1,900 kWh (kilowatt-hour), is among the highest in the world.

Catch the wind: A cheap but difficult resource to tap
A cheap but difficult resource to tap
The irony, however, is that India is set to be only a marginal player accounting, at present, for only 1-2 GW (giga Watt) of the total 90 GW of global solar capacity likely to come on stream by 2015. “Since the cost of solar power can drop to Rs 8-10 per kWh by 2012, it could be a viable source of peaking power. India should reduce the cost of solar power through large-scale development and deployment of solar technology,” the report recommends.


Check how India is utilising its renewable energy sources
On its part, the government is pushing solar products in the market through a slew of incentives and awareness programmes. “Banks are giving loans to households at 2 per cent, to non-profit organisations at 3 per cent and to industries at 5 per cent interest rates to buy solar water heaters,” says N.P. Singh, Advisor in the Ministry of New and Renewable Energy. “Every consumer should know this: A solar water heater with a capacity of 100 litres per day saves 1,500 units of electricity per annum.”

Since homes and offices consume one fourth of the total electricity supply, power utilities in states such as Karnataka, Andhra Pradesh and Orissa offer sops to reduce consumption and, thus, losses. Karnataka’s electricity supply companies, for instance, provide a rebate of 35 paise per unit for consumption of up to 100 units. The initiative has worked. Bangalore has the highest number of solar consumers in the country, although there are other cities such as Pune where private enterprise is conducting interesting experiments with solar power (see Solar township below).

 Solar township

The sun may shine brighter elsewhere, but it has lit up Pune’s Magarpatta the most. The 430-acre township, designed for 7,000 families, squeezes solar power to the maximum and runs a biogas plant that converts organic waste into electricity. Magarpatta has one of the largest residential solar water heating systems in the country, according to Satish Magar, CMD of Magarpatta Township Development & Construction Company. Currently, the place has about 3,194 solar collectors. The total installed capacity is 4.03 lakh litres per day and the power saved annually is 68.94 lakh units (kWh). Once the project is completed, the 7,160 collectors will heat up 9 lakh litres of water per day. According to Magar, the annual savings would be 14.5 million units worth Rs 5.81 crore.

A lot of wind?

With an installed capacity of 8,757 MW in 2007-08, India is already the fourth-largest player in wind energy. The government estimates wind energy potential at 45,000 MW per annum, although at present wind power generation is a relatively modest 8,757 MW per annum— that is, 6 per cent of installed capacity. The problem with wind power is, of course, simple. One needs winds through the year for the turbines to run and generate power. In India, the best locations for wind farms are in Tamil Nadu, Andhra Pradesh, Gujarat, Karnataka and Maharshtra.

Untapped potential: India is yet to capitalise on solar power
India is yet to capitalise on solar power
Limited locational choices mean that wind power can never be a major source of electric energy in the country. More worryingly, wind power capacity addition is slowing down in India, even as China surges ahead. Installations in India in 2007 were down to 1,580 MW from 1,730 MW the year before. The reason for this is lack of consistency in policy among states, says U.B. Reddy, Senior GM with Enercon India, a major player in wind energy.

Projects, he says, could successfully come up in Gujarat, while there are hurdles in other places. Harnessing wind power is tough in other parts of the world, too. According to India Wind Energy Association (IWEA), 20 of the 40 wind energy markets reported fewer installations in 2007 than in 2006. Nuclear energy is another option, but India doesn’t have sufficient fuel supplies; besides, people remain wary of this technology for safety reasons. However, KPMG’s Mahajan says: “Nuclear energy is a solution from a long-term perspective. The Prime Minister should push through the nuclear deal with the US.” But, not even the best-case scenario for nuclear energy puts generation at more than 20,000 MW by 2020.

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