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Construction : Interview | October 2018 | Source : Infrastructure Today

Cross-border trading in electricity would naturally benefit India

A veteran of India's energy sector, Prof Kirit Parikh chaired the committee that submitted the 2013 groundbreaking report on pricing methodology for diesel, domestic LPG and PDS kerosene. INFRASTRUCTURE TODAY recently met up with Parikh at his New Delhi residence for an exclusive interaction. The Chairman of the city-based think tank, Integrated Research and Action for Development (IRADe), while providing profound insights on the various segments of the sector, stated that the next major area of growth would be in cross-border electricity trading in the South Asian region.

Is India on course as a part of its commitments made during the Paris Agreement?
I don't think there will be any problems in meeting the commitments made at Paris because our commitment is to reduce the emission intensity by up 35 per cent and that's quite easy to achieve. With the kind of effort we are making in energy saving with energy efficient LED bulbs and household appliances, the household-side consumption is going to decline significantly. We are also making our automobiles more efficient. Public transportation projects such as the metro rail are being implemented and that should further help bring down fuel consumption. Once the dedicated freight corridor becomes operational, the energy consumed by the transport sector would also reduce. At the same time, we are pursuing the other commitment made in Paris by helping to create 40 per cent of the installed energy capacity through non-fossil sources. Now, with the additional push being given to nuclear power plants, there will be no problem in meeting the target. The target for sequestration of 10 million hectare for afforestation might be slightly difficult to achieve. Due to the high growth rate of the population, there is a pressure on the land. But as the rate of the industrial growth leads to migration to urban areas, the amount of land required for cultivation in rural areas would reduce.

What is the present scope for nuclear energy in the country?
Nuclear energy has become expensive because our nuclear establishment was unable to build plants within the projected costs or timelines. Therefore, nuclear power is not cheaper than coal-based plants. But one must recognise that our total reserves of coal that can be extracted will get exhausted over the next three to four decades. In such a scenario, there can be two options for a stable source of energy. One is that we have a huge solar generation capacity with vast areas of the country covered with PV panels. But that would also require a huge storage capacity. Now, if these costs come down dramatically, then we don't need nuclear. But if they don't, we will need nuclear to replace thermal power. We must, therefore, keep the nuclear option alive and keep on developing it only as an insurance. But the future for nuclear energy will depend on three things- our ability to build plants on time and without cost overruns; the technological progress not happening in storage as expected; and sufficiently assuaging any fears around nuclear energy as an unsafe option. The nuclear establishment has again not done a good job on the third point, in order to create a certain level of confidence in people since it has mostly been occupied with its own technological challenges. In 1970-71, I worked for two years in the Department of Atomic Energy (DAE) and for a setup that was called the Programme Analysis Group. At that time, Vikram Sarabhai was the Chairman and together, we produced a 15-year perspective for the nuclear power industry and recommend 2,700 MW of nuclear capacity by 1985. However, the country failed to achieve that target even by 2000. The most recent example is the 500 MW fast breeder reactor at Kalapakkam in Tamil Nadu. It goes to our credit that no one else in the world has a commercially operational fast breeder reactor of that scale. Unfortunately, the plant hasn't been commissioned. Whenever you inquire as to when is that likely to happen, you are told that it would happen next year. And that's been going on for a number of years now.

In a rush to promote renewable energy is India, are we neglecting other sources of power generation?
Pushing renewables is absolutely critical because that is going to be a major source of energy in the future. And at the rate at which the technology is developing, it's a very major source. Therefore, there is absolutely no doubt that we should have a National Solar Mission to develop technology, plants and skills in the country. But is the pace at which we are going, is that too fast? Well, in a sense, yes, because we were expecting this to happen gradually. Solar plants cost a lot of money to setup and you expect the cost to come down over the years or else you will end up with standard assets. The Gujarat State Electricity Board (GSEB) had committed to provide Rs 11.5 to Rs 13 per kilowatt hour (kWh) for 20 years. If only they had waited for five years, the cost would have been much less. There is a loss in that sense for pushing solar energy too rapidly. However, at this stage, I feel that as the cost of solar plants has come down significantly, we can promote its faster implementation. However, I am not a great supporter of subsidised rooftop solar simply because only the rich have a roof and you are subsidising electricity for them. The demand for electricity would go down as they would require electricity only for a few hours of the day, while in the night, their peak demand would be met by the electricity grid. Therefore, the grid would have to maintain that much of capacity in order to supply the peak load. But at other times that capacity will remain idle for the most part of the day. The burden is then passed on to the distribution company, with their profitability going down enormously. As a result, they will supply less electricity to the poor. Yes, we must exploit rooftop solar but without providing any subsidy on capital investment. Let people do that on their own and increase the capacity charge for the subsidy.

What about cross-border deals in electricity? What is its potential and is infrastructure finally in place for the same?
The cross-border trading in electricity between India, Bangladesh, Nepal and Bhutan would be extremely beneficial to us. It will provide all the hydel power capacity that can help balance much of the renewable power. As our need for coal would go down, our emissions would also reduce. Nepal, Bhutan and Bangladesh would stand to gain the most from it. For instance, Nepal has a lot of hydel power potential. But nobody will invest money into a sector, unless there is an assured market for an outcome. Therefore, only a bilateral trade with India can provide them with that assured market. Without that assured market, Nepal can develop around 9 MW till 2045 for its own consumption. Once they start trading with India, it can go up to 35 MW. That will help grow the country's GDP by up to 20 per cent. And if they also manage to sell electricity to Bangladesh, the benefit would be far greater.

What are your thoughts on the Open Acreage Licensing Policy (OALP) on the exploration of hydrocarbons?
There are two main reasons behind the low-key response to bids for exploration of hydrocarbons in the past. The first being that very large oil companies don't perceive the field as very promising for investment. Secondly, the investors are wary of the government policy, since there is always a lot of uncertainty surrounding it. And even companies, who won those bids, aren't actually doing any actual exploration. Although, under OALP, we have clarified on a lot of things. Let's hope that some of them will work out well.

Leading international players continue to be reluctant about investing in oil exploration. Therefore, how can the Indian oil and gas sector be turned into an attractive investment opportunity?
We cannot make our resources large and attractive for investment. All that we can do is somehow provide a guarantee against any fluctuations in policy. We can permit the exploration companies to do so at a price determined by the market, allow them to sell the output wherever they want and commit to them that at no stage will those resources be nationalised. If we can take care of such apprehensions, many more bids shall be forthcoming from the international players.


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