Challenges of Indian Energy Sector

Fossil fuels are the source for 70% of 90,000 MW installed capacity for electricity generation, Hydro-electricity contributes about 25%, and the remaining is mostly from nuclear power plants. Current stocks of Fossil fuels in India are not sufficient enough to suffice our needs of power (about 70% oil is imported), with currency getting dearer, government imposing emission norms and widening gap between demand and supply, Power sector is facing new threats and opportunities.

Coal stock depletion and pollution: Coal accounts to half of the country’s energy consumption. India is the third largest manufacturer of Coal (fossil fuel) and mainly found in eastern part of the country. Though the quality of coal is not very good and has very high ash residual content and humidity and the power plants running on coal are high source of pollution too. (It is accepted that Indian power plants are highly polluting Refer CO2 emission by Indian power plants increases)

Oil Import: Oil consumption, which accounts for roughly a third of India’s energy use, has increased sixfold in the past twenty-five years. India now depends on imports for about 65 percent of its petroleum requirements. With energy demands rising, the figure could be as high as 90 percent by 2025, according to a report by the Center for Strategic and International Studies. With currency getting dearer imports will become costlier and the cost of operation of power plants will rise.

Natural gas demands: Demand of Natural gas has risen faster than any other type of energy source, but India’s has a limited domestic gas reserves and depend major on imports to meet its demand. Though the power producers are switching from highly polluting coal-fired power plants to plants using natural gas but continuous supply of natural gas remains a major concern.

Nuclear Power: With fourteen nuclear power plants run by state-owned companies, nuclear energy accounts for just 3 percent of India’s energy consumption. Large scale expansion of the nuclear energy sector is not possible in immediate future because of slow implementation and the relatively higher expense as compared to other forms of energy.

Looking at the challenges of capacity expansion, implementation, switchover cost, shortage, cost of input and pollution the “Clean energy projects” seems to be a promising domain.

Image source: istockphoto.com

Reference: cfr.org