EDITORIAL: Going off-grid to power solution
by Sunita
Narain
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Supply issues
comprise one part of the energy conundrum, as we discussed last fortnight. The
cost of energy and our ability to pay for it is the other. The matter gets vexed
because the rise in price of raw material of all energy sources is accompanied
by huge inefficiency in distribution and accounting. But importantly, we remain
a poor country where cost of energy is a factor in its availability and
accessibility for all.
Coal is clearly the king of cheap energy. But
increasingly, even here, costs have been escalating. For instance, Tata Power
Company’s ultra-mega thermal power plant at Mundra in Gujarat was cited as a
circuit breaker. This 4,000 MW plant, based on imported coal, would supply at Rs
2.26 per unit for the next 25 years. The economics worked till coal prices were
in the range of US $30-40 per tonne. Now coal costs have surged to US $110-120
per tonne, upsetting the imported coal applecart. Reliance Power’s 4,000 MW
Krishnapatnam project and JSW Energy’s 2,000 MW expansion plan for Ratnagiri
plant is reportedly on hold for the same reason.
Similarly, there are
constraints on gas imports. We have not managed to negotiate many long-term
supply contracts—and the ones we have with Iran are in trouble because of US
pressure to disengage with this country. We also have constraints of geography
as any pipeline from the gas-rich West and Central Asian region has to traverse
through ‘hostile’ and ‘high-risk’ territories. All in all, imported gas is
coming to us at prices, which make it unaffordable for power
generation.
Take Delhi, for instance. It has built some 1,750 MW capacity
gas power plants and is ready to do more so that it can steer clear of dirty
coal. But the squeeze on domestic gas because of the Reliance Gas’s mess-up (see
‘Powerless and lost’, Down to Earth, August 31, and ‘How India is getting gas
and coal policy wrong’, Down to Earth, April 15, 2012) means that plants do not
produce energy. The government now wants these to move to imported gas—costing
some US $17-20 MMSCD—which would take the cost of each unit to an unaffordable
Rs 9-10, as compared to the current Rs 2.90 per unit, using domestic
gas.
So, the only way for energy supply costs to remain low is if the
country looks the other way when there is corruption in allocation of coal or
land or water, or it discounts the price of its raw materials and environment.
The hullabaloo over the reports of the Comptroller and Auditor General (CAG) on
coal block allocation and the performance of mega power projects must be seen in
this light.
For instance, coal was allocated to Reliance’s Sasan power
plant for generating captive power. It was argued that this forest-rich coal
block in Madhya Pradesh needed to be mined in the interests of cheap power (the
accepted bid was for Rs 2.45 per unit). This ‘blind belief’ swayed the Central
and state governments into giving away surplus coal-fields and then allowing
Reliance to sell this coal to other projects at market prices. It became an open
loot of natural resources. To keep costs low, environmental damages are
discounted, local people are displaced and livelihoods destroyed. All this must
be corrected.
It is clear that power generation costs will only go up.
Today, constraints on power generation are blamed on cash-strapped state
electricity boards that cannot pay for the power they need to buy in order to
supply. In this situation, increasing electricity costs will make the situation
further untenable.
We need big ideas for the future. We need to
understand how to reduce losses in distribution. We know Indians are prudent
(not wasteful) because energy price is high and more importantly, supply is
unreliable. But we also know that there are huge leakages—estimated at 25 per
cent by the Central Electricity Authority. This needs to be fixed. For this, we
need to look at generating energy locally so that distribution costs are brought
down, transmission losses are curtailed and recovery from clients made easier.
It is here we need to look at the massive opportunity provided by renewable
energy, particularly solar. But before that we must understand that new energy
sources like solar will work only if we figure out a new business model for
generation and supply—and not look for solar to work within the leaking and
non-remunerative grid system.
My colleagues at the Centre for Science and
Environment have proposed off-grid but interactive systems for rural
electrification. In this system, like the German roof-top energy revolution,
government would provide feed-in tariff incentives for entrepreneurs to set up
local solar energy systems. This energy would be fed through mini grids to
users—poor and rich would pay costs. It is important to remember that solar
energy costs are decreasing—the latest bids for projects put the price at Rs 7
per unit. This is still more than the price of coal- or gas- based power. But
while costs of coal and gas will only go up, solar can and will come
down.
Energy supply could be decentralised because demand is also
decentralised. There could be a revolution in the making. But only if we see the
light in the tunnel.
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