Power Equations

India has no option but to take the renewable route for cost efficiency, consistent energy quality and environmental safety.
Prime Minister Narendra Modi said that the Goods and Services Tax (GST) holds the potential to improve India´s energy efficiency by enabling more efficient long-haul transportation across India. He was speaking after inaugurating the Petrotech 2016 conference on December 5, 2016, in New Delhi where he added, ´At the moment, the piped natural gas network in India is 15,000 km in length. We will enhance this to 30,000 km over five years to reach 10 million households.´

Modi went on to add that physical barriers of state boundaries would be removed as a result of the new uniform GST tax regime that will accelerate long-haul transport. He also emphasised the need to increase domestic oil & gas production in a gambit to reduce the high dependence upon imports of the fuel sources. India is the 4th largest importer of oil and the 15th largest importer of petroleum products and Liquefied Natural Gas (LNG) globally.

Modi has set a target of reducing energy imports by 10 per cent with 2022 as the timeline for this to happen.

But the VP of the Association of Indian Forging Industry (AIFI) Murli Shankar Sambasivan has developed a better idea – tapping alternative power sources of solar and wind power. Sambasivan is also joint MD of Super Auto Forge Pvt Ltd (SAF) since 2003 in Tamil Nadu where till three years ago, unreliable power supply (read routine power cuts) made for inefficient operations in this high power consuming industry. Says he, ´Things were not looking up for us in the power intensive forging industry on the issue of reliable power supply. The other discrepancy was the variable power tariffs that are visible in different states of India. While Uttarakhand and Punjab provided comparatively cheaper power, in Gujarat power tariffs for industry stood close to Rs 9 per unit. There cannot be a variance of more than 10 per cent to 15 per cent in power rates in two states of the same country.´

Says a senior Indian Administrative Service (IAS) official, now retired, who served as the chairman of a State Electricity Board (and who preferred anonymity), ´That is the trade-off we face due to the federal nature of our country. There are costs of irrigation that have to be borne before we benefit from cheap hydropower, coal carrying costs, subsidising of household consumers, etc., which are an important element while deciding power tariffs. Hence the discrepancies of rates that exist between different states will have to be suffered by industry that subsidises the cheaper power made available to households as well.´

He adds,´If Uttar Pradesh gets its power from Bihar and we try to artificially undermine the cost of power, it will lead to a transfer of capital.´

While industry did little more than lament and represent to the Union government for years on the issue of reliable and reasonably priced power, Super Auto Forging, of which Sambasivan is a director, currently services 60 per cent of its power requirements through captive power generated through alternative energy source of solar energy and wind power.

Says Sambasivan,´We are currently generating 60 per cent of our power requirements through alternative energy sources. We have set a benchmark for industry and are in the process of raising the bar further to servicing 80 per cent of our power requirements through the alternative power supply channels. Even others like MM Forgings who got into the space are currently producing 50 to 55 per cent of their power needs through alternative energy sources of solar and wind energy.´ He adds that other forging sector firms like MM Forgings and Madras Forgings have jointly exploited the potential of solar energy and produce and use a 20 MW capacity unit for their industrial purposes.

Says Sambasivan,´The move was logical. Renewable energy sources were being emphasised by the Union government and in 1990 wind power was in the spotlight. The government had offered a 100 per cent accelerated depreciation on investments made in this sector, so we enjoined the initiative.´ He adds that similarly, a couple of years back, solar energy found similar traction through incentivisation by the government. The results are there for all to see at Coimbatore.

Shisham Priyadarshini, Partner, Rajani Associates and Amish Shroff, Principal Associate, Rajani Associates, agree totally with Sambasivan.

Says Priyadarshini,´The major advantage for India today is that going forward its renewable energy (RE) potential is vast and largely untapped. As on July 31, 2016, the renewable sources of energy in India – solar, wind, small hydro and bio-energy – contributed only 14.7 per cent of the total installed capacity in the country.´

Her colleague Shroff adds,´The plan to increase renewable generation capacity to 175 GW by 2022 will not only address the problems faced in the power sector but will also provide clean and cost effective energy to the vast number of people across the country.

A Pricewaterhouse Coopers report on the power sector imperatives in 2017-2018 released through a Confederation of Indian Industry (CII) initiative also emphasises the need to pursue renewable energy in India as a means to ensure round the clock power supply across the length and breadth of the country.

The PwC report states,´High tariff poses a further burden. Dependence on imported fuel such as coal and natural gas exposes India to the cost of the uncertain global market. The alternative is to develop domestic coal mines and invest in renewable energy development. This will help not only in securing sustainable tariff but also in increasing energy security. India ranks fifth in the world, both in terms of proved coal reserves as well as hydro potential.´

Availability of electricity to meet requirements is the key priority of the ´Power for All´ programme (launched by the Modi led government at the Centre). In the last few years, India has consistently improved its power supply position. The demand-supply mismatch declined from -9.3 per cent to -2.1 per cent between FY 2012û13 and FY 2015û16, and it is expected to decline further, according to the PwC report.