In a recently published report "India 2020 - Energy Policy
Review", the International Energy Agency (IEA) highly appreciated the
efforts of Indian government in achieving energy efficiency, energy security
and sustainability, and robust data and policy governance. IEA also made
significant recommendations for further enhancing the efforts and achieving
greater results. The recommendations assume further significance as these could
have material impact on the investments in the Indian energy sector.
The key points highlighted in the report could be listed as
follows:
India vital for future of global energy market
With a population of 1.4 billion and one of the world’s fastest-growing
major economies, India will be vital for the future of the global energy
markets. The Government of India has made impressive progress in recent years
in increasing citizens’ access to electricity and clean cooking. It has also
successfully implemented a range of energy market reforms and carried out a
huge amount of renewable electricity deployment, notably in solar energy.
Progress towards affordable, secure and cleaner energy
Around 750 million people in India gained access to electricity
between 2000 and 2019, reflecting strong and effective policy implementation.
The IEA highly commends the Government of India for this outstanding result and
supports its efforts to shift the focus towards reaching isolated areas and
ensuring round-the-clock reliability of electricity supply.
The government of India has also made significant progress in
reducing the use of traditional biomass in cooking, the chief cause of indoor
air pollution that particularly affects women and children.
Energy security improving
India’s electricity security has improved markedly through the
creation of a single national power system and major investments in thermal and
renewable capacity. India’s power system is currently experiencing a major
shift to higher shares of variable renewable energy, which is making system
integration and flexibility priority issues. The Government of India has
supported greater interconnections across the country and now requires the
existing coal fleet to operate more flexibly. It is also promoting affordable
battery storage.
India’s coal supply has increased rapidly since the early 2000s,
and coal continues to be the largest domestic source of energy supply and
electricity generation. Amid more stringent air pollution regulations, new coal
power plants that are more efficient, flexible and relatively lower in
emissions will be better positioned for their economic viability. By contrast,
old and inefficient plants, which require expensive retrofits to comply with
environmental standards, are in a difficult position.
The government aims to increase the share of natural gas in the
country’s energy mix to 15% by 2030, from 6% today. The role of gas has grown
in India’s residential and transport sectors but fallen in power generation,
where imported natural gas remains squeezed by cheap renewables and coal.
Reforms to achieve greater energy efficiency
The creation of functioning energy markets will ensure economic
efficiency in the management of the coal, gas and power sectors, which is
critical to achieving energy security and supporting the country’s economic
growth. This will be increasingly important in the future, as energy demand and
investment needs increase in line with India’s economic expansion.
Reform of India’s electricity sector will need to be comprehensive
to achieve these goals. A country-wide wholesale market is very much needed as
a backbone for the national grid.
India also faces the challenge of ensuring the financial health
of its power sector which is dealing with surplus capacity, lower utilization
of coal and natural gas plants, and increasing shares of variable renewable
energy.
Sustainability
India has made important progress towards meeting the United
Nations Sustainable Development Goals, notably Goal 7 on delivering energy
access. Both the energy and emission intensities of India’s gross domestic
product (GDP) have decreased by more than 20% over the past decade. This
represents commendable progress even as total energyrelated carbon dioxide
(CO2) emissions continue to rise. India’s per capita emissions today are 1.6
tonnes of CO2, well below the global average of 4.4 tonnes, while its share of
global total CO2 emissions is some 6.4%.
Energy data and policy governance
Good quality and timely energy data are vital for monitoring,
reviewing progress and enforcing the implementation of energy policies. The
government has identified the critical importance of energy data and is taking
action to improve their collection and dissemination.
Key recommendations
- Establish permanent energy policy co-ordination in the central government, with an overarching national energy policy framework to support the development of a secure, sustainable and affordable energy system.
- Continue to encourage investment in India’s energy sector by
(i) Ensuring full
non-discriminatory access to energy transport networks
(ii) Working with the
states to implement power sector and tariff policy reforms with a focus on
smooth integration of variable renewable energy and power system flexibility
(iii) Moving from
government allocation of energy supplies to allocation by market pricing
(iv) Further
rationalising subsidies and cross-subsidies.
- Prioritise actions to foster greater energy security by:
(i) Reinforcing oil
emergency response measures with larger dedicated emergency stocks and improved
procedures, including demand-restraint action and proper analysis of risks by
using oil disruption scenarios and capitalising on international engagement
(ii) Strengthening
the resilience of India’s energy infrastructure, based on a robust analysis of
the water–energy nexus and cooling demand, notably when planning future
investment.
- Improve the collection, consistency, transparency and availability of energy data across the energy system at central and state government levels.
- Adopt a co-ordinated cross-government strategy for energy RDo&D, which enables impact-oriented measurement and dissemination of results.
- Ensure India’s international energy collaboration continues to be strong and mutually beneficial, highlighting the country’s energy successes and supporting continued opportunities to learn from international best practices.
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