ENERGY
The vital importance of energy, the growing problems of energy supply and the possibilities of interfuel substitution require that the policy and plans for individual energy producing sectors should be part of an overall energy strategy. Energy is an essential input to all productive economic activity and the process of economic development inevitably demands increasingly higher levels of energy consumption.
THE ENERGY STRATEGY 15.1 The present per capita commercial energy consumption in India is only about a tenth of the global average reflecting the country's low level of income. While India, in common with many developing countries, consumes energy in a variety of forms ranging from electricity obtained from nuclear fuels to agricultural waste and animal dung, the pattern of commercial energy consumption is characterised by a high degree of oil dependency, the share of oil products (measured in coal replacement terms) being close to fifty per cent. Just when the Indian economy had managed to adjust itself to the oil price increases of 1973-74, there has been a three-fold increase in oil prices in the last two years. Apart from the heavy strain this will cast on the country's balance of payments, even the physical availability of oil in the international markets will pose a problem in the years to come. This means that if India's plans of economic growth are not to be hampered by inadequacies of energy supply, reduced dependence on imported oil has to be a key element in out development strategy. The main elements of such a strategy are as follows:
(1) accelerated exploitation of domestic conventional energy resources-oil, coal, hydro and nuclear power;
(2) management of oil demand;
(3) energy conservation;
(4) exploitation of renewable sources of energy like energy forestry and bio-gas, specially to meet the energy requirements of rural communities, and
(5) intensification of research and development in emerging energy technologies.
The Energy sector of the Plan is geared to implement this basic strategy.
Pattern of Energy Consumption 15.2 The total commercial energy consumed increased five-fold during the last twenty-five years. Between 1953-54 and 1975-76, the annual growth rate in commercial energy consumption wits 6.78 per cent as against the GDP growth rate of 3.68 per cent, the GDP-energy elasticity co-efficient has remained stable at around 1.8 and is high compared to developed countries. Fire wood, agricultural waste and animal dung (which are commonly referred to as noncommercial forms of energy) continue to contribute a substantial proportion of the total energy consumed in the country, though reliable data on the extent and pattern of their use are not available. Rough estimates indicate that between 40 and 45 per cent of the total energy consumed is still ac- counted for by non-commercial fuels.
15.3 The household sector in India is the largest consumer of energy accounting for about 50 per cent of the total energy consumption. Most of the energy used in this sector is in the form of noncommercial energy. Of the total of 5.7 lakh villages, about 2.5 lakh villages have been electrified, but the percentage of households electrified is about 14 per cent only. Only an estimated 5 million households use kerosene for cooking. Firewood, animal and vegetable waste constitute the cooking fuel in over 90 per cent of total households in the country. The share of agriculture in commercial energy consumption is still small (10 to 11 per cent), though it has increased rapidly during the last decade. With an estimated 80 million work animals and 44 million plough shares, animal power still provides the overwhelming share of draught energy in agriculture.
15.4 The industries sector has the largest consumption of commercial energy (about 38.5 per cent). What is more, the intensity of energy use in this sec-
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tor has been rising sharply mainly on account of higher electricity consumption. The electricity consumed per rupee of value, added went up sharply from 0,54 kwh in 1960-61 to 1.02 kwh in 1975-76. The relatively high proportion in the industry mix of power-intensive primary metal industries in the initial stages of industrialisation and substitution of other energy forms by electricity appear to have contributed to the high electricity intensity. Road and rail transport dominate the transport scene, accounting for as much as 95 per cent of the fuel-using transport. Of the two, the road system has expanded faster than the rail system in the last three decades. Air transport has registered an increase in the last fifteen years with an annual growth rate of about 10-11 per cent. On the other hand, there has been no Arming development in water transport, including coastaL shipping. As for bullock carts, their number is estimated to have increased slightly from 12 million to 13 million during the sixties.
15.5 Viewed overall, the energy consumption pattern in India shows a high commercial energy-GDP elasticity caused partly by a steady substitution of non commercial by commercial fuels. The bulk of commercial energy consumption is in the industry and transport sectors, while the domestic and the agriculture sectors continue to rely mostly on the so-called non-commercial fuels.
Energy Resources 15.6 The most important source of commercial energy in India is coal. The reserves of coal in seams upto a depth of 600 metres. and of thickness of 1.2 metres and above are estimated at 85,444 million tonnes, of which 24604 million tonnes are categorised as 'proved' reserves. Of the balance, 37585 million tonnes are 'indicated, reserves and the rest 'inferred, reserves. The bulk of the coal reserves are of the non-coking variety (67,533 million tonnes). In the context of the recent developments on the world energy scene, the possibilities of mining at greater depths and from winner seams are coming up for consideration. A quick inventory shows that there could be possible additional reserves of 26,184 million tonnes of coal in seams between 600 and 1200 metres depth and thickness of 0.5 to 1.2 metres.
15.7 As on 1st January, 1980, the balance of net recoverable reserves of oil in the 'definite' category was about 360, million tonnes and of gas about 350 billion cu-metres. Prognostic studies indicate a bright picture regarding the balance potential. But such estimates, it should be remembered, are based on a multiplicity of variables and imponderables and are, as such, subject to wide fluctuations.
15.8 A systematic survey of India's hydro-electric potential undertaken in the fifties by the Central Water & Power Commission assessed the total firm hydro-potential to be equivalent to an annual generation of 216 Twh (41155 MW at 60 per cent load factor). A fresh survey has been initiated in 1976 by the Central Electricity Authority. The tentative results of the reassessment exercise, which is still incomplete, indicate that the total hydroelectric potential is equivalent to 75400 MW at 60 per cent load factor. the potential which has already been developed till the end of 1978 is 39.4 Twh or about 10 per cent' of the total available potential. Besides, it is estimated that an annual energy generation of about 25 Twh could be obtained economically through mini and micro hydels, canal drops and other possible low head development.
15.9 The reasonably assured uranium resources in India are placed at about 34000 tonnes of U3 , 08, of which about 15000 tonnes are considered economically exploitable at current international prices. The established uranium resources are estimated to be capable of supporting a first stage nuclear power programme consisting of natural uranium reactors of about 80000 MW of installed capacity. When thori- um fuelled breeder reactors are constructed in the subsequent stages of the nuclear programme, the country could draw on an estimated 363,000 tonnes of thorium deposits (ThO ).
15.10 Large as the commercial energy resources of India appear, the reserves are small in per capita terms compared to many other countries. While India has reserves of 176 tonnes of coal per person, USA has 13488 tonnes, USSR 22066 tonnes and China 1168 tonnes. The balance of our proven reserves of oil are also very limited being only 0.55 tonnes per capita as against 34.83 tonnes in USSR, 16.32 tonnes in USA and 2.86 tonnes in China. As exploration proceeds, more reserves may no doubt be found, but the overall picture is unlikely to show any marked change.
Future Energy Demand 15.11 In spite of the uncertainties which affect the factors that determine future energy demand, there is need to make long term forecasts of such demand, as the long gestation of energy supply pro- jects necessitates decisions to be taken far ahead of the materialisation of demand. The Working Group on Energy Policy estimated that if no deliberate measures were initiated to manage the demand, the energy requirement would register a fourfold increase within the next twenty years, if the economic growth rates were to be in the range of 5.5-6 percent during this period. Even it measures were taken to increase the efficiency of fuel utilisation, reduce energy consumption by adopting more energy-efficient technologies and achieve desirable inter-fuel substitution, the energy demand by the turn of the century would be nearly three times what it is at present. According to these projections, the requirements of coal, oil and electricity generation would be of the order of 426 million tonnes, 69 million tonnes and 464 Twh respectively in the year 2000.
15.12 Maintaining a reasonable balance between energy requirement and energy availability will, it is apparent, pose a serious challenge in the coming
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decades. As stated earlier, it calls for a coherent energy strategy which takes into account the country's own resource endowments, the degree to which the energy demand could itself be managed through more efficient utilisation of energy and the extent to which renewable energy technologies appropriate to Indian conditions could be inducted.
Accelerated Exploitation of domestic energy resources 15.13 A faster exploitation of our domestic energy resources has clearly to be a basic element in our energy strategy. While several measures have been initiated in the last few years to accelerate exploration for oil and gas, there are still large areas, both on shore and off-shore, where the exploratory effort needs to be intensified. As oil prices rise, exploration of even relatively less promising areas becomes economic despite a higher discovery cost of oil. Equally, attention would have to be paid to a rapid development of proven hydro, carbon reserves. India has had a long history of coal exploration and though a considerable amount of exploratory drilling remains to be carried out to upgrade and extend the reserves in many areas, the major thrust in the coal sector will have to be on increasing production. Coal being the only fossil fuel in which India is relatively well endowed, it is generally agreed that this would have to be the main source of commercial energy in the next- few decades. There are, without doubt, formidable problems which stand in the way of large and sustained increase in coal production, but these would have to be faced.
15.14 Among the non-fossil conventional sources of energy, we have so far exploited only a small fraction of our substantial potential for hydro electric generation. As hydro power is both renewable and non-polluting, we must develop our hydel resources with a sense of urgency. The task is by no means easy; a substantial proportion of the potential yet to be exploited lies in the sub-Himalayan regions of northern and north-eastern India where the sites are not easily accessible, the working seasons are limited and the geological conditions are difficult. Exploitation of the hydro-potential in some of the river valleys is dependent on satisfactory agreements being reached between the different riverine States. Further, on account of the long gestation and higher initial capital cost, hydro development also involves 'the problem of finding additional investment funds. Nevertheless, this programme has to be given a major push forward.
15.15 While the contribution of nuclear power to the total power generation has remained modest, the need to pursue further development of nuclear power with greater vigour is clearly established. There are regions of the country located far from the coalfields where establishment of coal based power stations will cast a heavy burden on the railway system for transporting coal. Moreover, if the country is to exploit its abundant thorium reserves in future breeder reactors, we must develop a high degree of self-reliance in nuclear power technology and constantly upgrade our scientific and manufacturing ca- pabilities by maintaining an adequate tempo of construction of conventional nuclear reactors.
Management of Oil Demand 15.16 Though India's domestic oil production has gone up in the last, twenty years, about sixty per cent of the requirements of crude oil and petroleum products are still being met through imports. As it is, over two thirds of the country's earnings of foreign exchange through merchandise exports have to be utilised for oil import. Unless we are able to strike new oilfields, there is little prospect of decreasing the country's dependence on imports. The demand management of petroleum products therefore assumes vital importance; the object would be to minimise the consumption of oil without hindering the growth of various sectors of the economy. This will require two-pronged action, namely, ensuring adequate availability of alternate sources of energy viz. coal and power, and more economic use of petroleum products in sectors where use of oil is unavoidable.
15.17 Since the transport sector is the largest consumer of petroleum products, a major issue is the steady increase in the share of road transport, which is less efficient than railways from the point of view of energy use. The long term transport policy would therefore have to provide for optimal use of scarce fuels. Within the railway system, the electrification of high density traffic trunk routes would have to be accelerated, as this would be beneficial from the point of view of both energy efficiency and conservation of oil. The consumption of oil as industrial fuel, fortunately, is not large in India. Even then, a concerted effort would have to be made to encourage substitution of oil by coal wherever technically feasible. This process could be accelerated through provision of appropriate financial and fiscal incentives and pricing policies. A rapid exten- sion of the electricity system to the rural areas will also help in curbing growth of oil consumption, the use of diesel pumps could be minimised, while house-hold electrification could reduce the demand for kerosene to some extent.
15.18 Apart from these long-term measures, considerable savings could be achieved through improvement in the efficiency of use of oil products. For instance, it has been estimated by experts in glass making that the average norm in India is four tonnes of glass,drawing per ton of furnace oil, as against seven to nine tons in the developed countries. Studies by the Petroleum Conservation Research Association (PCRA) indicate a savings potential of 12-13 percent of furnace oil in the industrial sector. Similar possibilities exist in other sectors; to illustrate diagnostic studies conducted by PCRA in twenty-four depots of various State Transport Undertakings revealed a potential of at least 6 per cent saving by better driving practices and better maintenance of vehicles. In the domestic sector,
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kerosene stoves with a thermal efficiency of 55 to 60 per cent against the average efficiency of 35 to 40 per cent of a large variety of stoves now sold in the country have already been introduced in the market; supplies of such improved devices need to be vastly stepped up.
Energy Conservation 15.19 It is not as if energy conservation is needed only in the use of oil. The cheapest form of alternative energy is energy saved. More attention will therefore have to be paid to the efficiency of energy generation and energy utilisation. It is well known that the proportion or energy consumed in the production and distribution of electricity is abnormally high in our power system. While the transmission distribution losses in a country like India with a low load density are bound to be higher than in the highly industrialised countries where the loads are more concentrated, it should be possible to bring down the tosses well below the current level of twenty per cent. There can also be no question that improvement in the capacity utilisation of existing generation equipment can be more cost effective than addition of new capacity. While it is true that power system load factors in India are already quite high, there is still some scope for increasing them through demand management.
15.20 The industrial sector, which consumes the largest proportion of commercial energy, must pay special, attention to energy conservation. In many industries in India, the energy consumption per unit of output is distinctly higher than in other countries. it is possible that uneconomic unit size and obsolete technology contribute to higher energy consumption in some industries. Besides, low price of power and sheltered markets have fostered a climate in which the need for energy economy is not sufficiently appreciated. Measures have to be initiated for drawing up energy consumption norms for various kinds of fuel using equipment. Training programmes would have to be launched on a wide scale for the operating personnel in order to inculcate procedures and methods of achieving energy economy. For the small scale sector, assistance would have to be rendered to improve their designs and by providing test facilities. In evaluating new technologies, energy efficiency would hereafter have to be treated as one of the criteria. Simultaneously with offer of incentives for capital investment needed for achieving higher energy efficiency and the desired inter-fuel substitution, one should begin to move towards a package of regulatory measures for energy audit with a view to penalise wasteful energy use.
15.21 Combined generation of electricity and process heat or `co- generation' has to be encouraged in Al industries where it is technically feasible as this optimises energy utilisation, This is already being practised for instance, in the sugar industry, but there is scope in several other industries such as fertilizer, paper, etc. While in new industries facilities for co-generation should be insisted upon wherever it is appropriate, the grant of incentives for the capital investment which may be needed for installing such facilities in existing industries needs to be examined.
15.22 The scope for energy conservation is not confined only to the industrial sector. Earlier, we have seen how savings in the use of oil could be achieved in the transport and domestic sectors. Such possibilities exist even in the agricultural sector; studies of electric pump sets indicate that even though the design efficiencies of the pumps and the motor are not unsatisfactory, mis-match between their capacity (i.e. of the pump and the motor) and wrong choice of suction and delivery pipes among others, result in low overall efficiency of the pump set installations on the ground. Here again, mechanisms would have to be developed to provide technical guidance to farmers and to ensure proper choice of equipment.