Energy security calls for integrated action by all stakeholders
The discourse on energy security in India has so far been primarily framed by three issues: energy demand from economic growth, energy poverty and the impact of energy utilisation on the environment. At present, India?s fragile energy security is under pressure because of a severe shortage of domestic coal and gas, uncertainty surrounding important regulations, opaque fuel pricing policies, shortage of skilled manpower and poorly developed upstream infrastructure. A more conducive policy environment coupled with an effective regulatory regime is the basis for accelerating the growth of domestic energy resources.
To maintain an average GDP growth rate of 8% for the next 15 years, the country?s energy resources and supporting infrastructure have to increase manifold. Teri estimates that India will require energy equivalent of 2023 million tonne by 2031 to feed such economic growth.
Significantly, a structural shift has been taking place in India, which has accelerated since the 1991 economic reforms. This shift is from agriculture towards the services sector, which is relatively energy-intensive. India?s urban population, which was 25.5% of total in 1990, is expected to rise at a rate of 1.9% annually to reach 40% by 2030. At the same time, an energy transformation is taking place, with a shift from biomass to electrical energy in rural India.
In such a scenario, energy security calls for integrated action by all stakeholders and addressing the issue of supplying adequate energy, in right quality at affordable price in a sustainable manner. This, indeed, is a formidable challenge.
Lynne Chester (2010) provided a holistic understanding by explaining fundamental aspects that characterise ?energy security?. According to her, energy security is about the management of risk?the risk of unavailable energy supplies; the risk of insufficient capacity to meet demand; the risk of unaffordable energy prices; and the risk of reliance on unsustainable sources of energy. Power companies have to be proactive in addressing these risks, as has done by Tata Power. For instance, Tata Power?s presence across the entire power value chain is a strategic approach to mitigating these risks?to generate 26,000 MW, build 4,000 MW of distribution capacity and secure 50 million tonne of fuel resources per annum by 2020. Its foray into geo-thermal energy and its ability to generate power using coal, gas, oil and renewable sources underline Tata Power?s risk-mitigating efforts, and in tune with the country?s energy mix?a key component in energy security.
Energy security has temporal dimensions?the risks and threats to physical supply differ across short, medium and long-term horizons. Short-term risks include technical failures. Long-term risks are concerned with the adequacy of supply to meet demand and adequacy of infrastructure to deliver supply to markets. Resilience of the energy systems has to be maintained (a reference to ?security margins? that act as a buffer against shocks and provide facilities for recovery after disruptions) through spare capacity, strategic reserves, backup supplies of equipment, adequate storage capacity along the supply chain and stocking of critical components.
It is obvious that all stakeholders have to work towards energy security, and with thoughtful actions, corporate strategies can be aligned to the country?s energy security.
The promise of energy security is alluring. For an import-dependent country like India, energy security is no longer just a desire, but an imperative for an economy that is at the threshold of maturity.
The author is managing director, Tata Power
