There are perennial power shortages in the country having adverse impact on the industrial production and agricultural products alike. These are the back bones of any modern economy. The small scale industries are reeling under power shortages with reported heavy losses in almost all states. This grave situation is likely to repeat for at least eight lean months of power shortage every year in the country. The onset of monsoon is likely to give temporary, short term relief – only if the rainfall is in good measure in the catchment area of the hydel power stations.
The large scale industries have their own problems as they cannot sustain on their own without capital intensive captive power sources. This is further adding stress to the already high capital investment woes.
We also know too well that it is but essential that any industry has to install and operate standby Diesel Generator (DG) set to ensure uninterrupted plant operation during power cuts. This additional, otherwise avoidable burden only accentuates the capital and production cost considerably. It is a bare fact that the operating cost of DG sets entirely depends on imported diesel fuel. The agricultural economy too is dependent on energy not only for operating pump sets, but also for processing and transportation of goods to distant destinations at an affordable cost. In the domestic and commercial buildings too, the need for standby units such as UPS, invertors and DG sets have become essential.
Achieve energy efficiency in the best possible manner
There are no two opinions that the power sector is plagued with colossal loss and inefficiency, cost of which is avoidable. When we discuss about energy, we refer firstly to the electrical energy, which lights our homes; powers home appliances such as televisions, fans and air conditioners with which our day to day life is linked. Almost all the industrial production is electricity driven. Bulk of the production of this type of electricity comes from thermal power stations and partly from hydro electric generation with meager contribution from renewable energy – such as wind and solar energy. There are too many problems associated with the generation, transmission and utilisation of the electrical power, including the problems of losses and inefficiencies with all these activities.
One more addition to the existing problem is the shortage of coal in the country to fuel the existing thermal power stations. This necessitates import of over 20% of the coal needs at exorbitant costs adding to the already strained economic woes, boosting the power cost and tariff further.
The belief and relief we shared that the electricity generation in the country is totally indigenous relying on internal resources is no longer true. What about the position of petroleum fuels – petrol and diesel, another major energy resource, on which our economy is totally dependent?
We started facing the initial energy crunch from the early seventies itself, from the days when the oil producing countries started forming a cartel and exerting pressure on the consuming countries, dictating terms and increasing price of crude oil time and again.
Unfortunately all our development is based on imported petroleum products, including the much needed transport sector, which affects our day to day life and price of essential commodities, leading to persistent inflationary trends. The very fact that we totally rely on 80% of our petroleum needs by import is sufficient to illustrate how vulnerable and fragile our economy is to our dependence of imported petroleum fuels.
Our annual crude oil import bill has crossed $144 billion in dollar terms in Financial Year 2011-12, when the dollar value was hovering around Rs 53 /US$, which is almost equivalent to a staggering Rs 7.6 Lac Crores! The management of petroleum products in the country is beset with colossal losses, wastages and gross inefficiencies starting from storage, handling, distribution and above all effective usage of this scarce resource. These all contributed to an appalling 10 fold increase of our import bill for the past one decade.
The glaring revelation and anomalies exist in the usage of this precious fuel in the country is evident when compared with the global consumption. Oil consumption per GDP in India is three times that of Japan and the US, and much more than that of China and Indonesia – the developing economies like India. We run the impending risk of this figure going further up with the slide in rupee value even if the quantity of crude import is static, which is quite unlikely. There is annual increase in import of crude by 7%, and the dollar value has on date increased from Rs 53 to Rs 60 (+).
The gravity of this risk is daunting, and demands embracing energy conservation with utmost alacrity. The government’s consumption of the petrol and diesel oil is considered to be the maximum, whether in central or state administration, most of which is avoidable or controllable by strict and effective administrative steps and implementation of austerity measures. How can we aim at energy security unless we reduce losses and consumption and explore the possibility of internal resources? But is the matter being taken up sincerely by us?
It is now clear – from what we see in reality – that there are losses, wastages and inefficiencies in handling, storage transport and usage of the petroleum fuels – and also electric power. When we discuss losses and wastages, they are sometimes seen but most of the times unseen, which is true of electrical power as well as petroleum fuels. In the case of electric power, there are also losses in generation transmission and utilisation of electrical energy.
The total assessed losses in electrical energy, which may constitute both technical and administrative losses, vary from 25 to 30%. The total short fall between demand and supply also is somewhere within that figure. In other words, if we need to fill the gap between the much needed supply and demand, we must aim at a target zero of energy losses, and we have to find a solution for the problems of shortage of electrical energy.
Challenges in implementing energy conservation measures
- The capital cost of a thermal power plant as on date is over Rs 6 crores per MW of electrical power. If we succeed in filling the gap between the supply and demand of electrical energy by a target zero losses, assuming the present installed capacity of ~ 2,60,000 MW, the capacity gain by way of energy conservation can be 50,000 MW. The capital investment cost of this project will be a whopping 30,00,000 crores Rs, a mind boggling figure in the present depressing economic scenario in the country
- The assumption is made for the coal based thermal power plants, which still bear the lowest capital cost when compared to the power generated from other sources – such as nuclear, renewable, solar or wind sources, which are highly subsidised, adversely affecting our already fragile economy
- The capacity addition for hydel power generation, although existent in the country, is bleak – as the prospect of exploiting them any further is low due to stiff public resistance and the high cost of massive human rehabilitation
- The projected capital cost also does not take into account the enormous cost and inordinate delay involved in acquiring a coal mine of the needed capacity to provide uninterrupted supply of clean coal, and the associated problems of the additional capital investment. Acquiring and operating in the present day situation is simply impractical – since all the progress of the implementation of the proposed coal mining projects are stalled due to some reason or other, such as clearance of environmental plans and proposals, land acquisition etc., with no solution in site within the foreseeable future
- Even for the sake of argument, if this economically fragile nation takes a crucial decision to earmark the capital cost involved for these mammoth projects by hook or crook, it is a harsh reality that it takes a minimum of five years of gestation period for the projects to take off – and bear fruit from the conceptualisation to commissioning stage. There are already several projects waiting in the pipeline, which were conceptualised before 10 to 20 years with no possibility of seeing the end of the ordeal for some reason or other.
Benefits of energy conservation
From the foregoing facts, it is now clear that there is little possibility of addition to the capacity for power generation in the near future, and solution to the power shortage, hitting our economy to the bottom line. But the moment, we start energy conservation measures at little or no costs, we start saving or earning from day one, contributing to the strained economy to recover in smaller or greater measure.
Incremental measures
If we save 1 unit of energy whether in our home or commercial establishment or anywhere for that matter, we virtually save 2 units of generation – despite the source of energy whether it is from coal or hydel. In addition, in coal based power plants, the coal needs for generating unit power also gets correspondingly reduced to the savings of a nearly whopping six units of coal for a unit of generation.
If we save usage of petrol or diesel by even one litre, we reduce import of over 1 litre of petroleum and the cost of refining, transport and distribution, and losses involved in evaporation and handling. It is assessed that over 35% of the oil import bills can be saved, if energy conservation measures are strictly introduced, by minimising wastages of all kinds and bringing about efficiency in the administrative and operational systems & controls. This accounts for a whopping ` 3.00 lac crores of import bill per annum with a projected import bill of nearly ` 8.8 lac crores. This significant step would also ensure bringing down the current account deficits to a manageable level, which has become a source of headache for the economists as well as policy makers in the country. All these series of concerted efforts taken on a nationwide scale in energy conservation could translate into remarkable cost saving in import, consumption of fuels and generation, which is a significant gain to our ailing economy.
Boosting industrial and agricultural production and productivity
As already pointed out, there is enormous loss in the country due to unutilised industrial capacity because of power shortages and power shut downs. Once the supply position improves the industrial or agricultural production also improves side by side. The reduction in use of standby power units, such as diesel generators, further brings down the operational cost – and the cost of production improving the industrial or agricultural production and productivity scenario in the country which is reeling under recession. The small scale industry sector, the backbone of our economy, struggling for survival, will be saved from total collapse along with the millions of workers depending on this sector. The improvement in the industrial or agricultural economy is accompanied by improved national economy, containment of inflationary trends and price rise, & creation of more job avenues.
Indirect benefits
- Ensuring sustained economic growth: If we are successful in achieving the target zero energy losses by implementing energy conservation measures, there is every possibility of doubling the economic growth rate of over 8 to 9 percentage of GDP or even more. Even small, or incremental improvements in energy efficiency will have a positive impact on the economy, corresponding to the quantum and magnitude of energy efficiency achieved. However, the growth and progress achieved in the economy by energy conservation measures would be more sustainable –when compared to monetary measures for controlling the sliding rupee value, which are more controlled by external factors
- Creation of more employment opportunities: One of the aftermaths of the economic down turn is the possible layoffs, retrenchments, job losses and consequent sufferings. But a stronger industrial economy resulting out of energy efficiency not only ensures job and work stability but also brings in its wake in many new avenues, where the youth, talents, and skills are needed.
How to achieve energy conservation goal of target zero energy loss?
It is mandatory that concerted efforts from the government, public, and the energy consuming industries and organisational sectors should take this onerous task on a war footing to achieve the zero target energy loss and take the economy forward to the new front. The government had understood the gravity of the situation long back and passed the Energy Conservation Act as early as in 2001, and made it mandatory to conduct energy audit and implement the recommendation every two years in all energy intensive industries and commercial buildings.
Although more than 14 years have elapsed, there is little progress in energy conservation efforts. But the time is ripe in this crucial stage for implementation of the mandatory provisions of the ‘act’ to bear fruit in this significant act, which is passed both in the Lok Sabha and Rajya Sabha. The public awareness in energy conservation efforts is also a ‘must’. There should be awareness programme for educational institutions and even homes. After all, charity begins at home.
One of the major areas of creating awareness to the people of all strata of society is to campaign for the noble cause of conducting ‘home energy management and audits.’ The estimated cost saving expected by Indian Institute of Energy Management professionals is to the tune of 30,000 crores per annum from home and commercial sector, out of the total wastage of over Rs 100,000 per annum identified in this sector.
What is the cost benefit of energy conservation?
Energy conservation: Perhaps the easiest way to start with it is, with simple positive changes that we can introduce in our day to day energy management styles, for example: switching off the lights, fans, air conditioners etc., – which cost you nothing but only needs awareness and certain amount of discipline and organising the work and housekeeping and better administration. It is applicable in the home front, industry or any energy consuming units and governmental departments and administration.
How much can you save?
It is roughly estimated that nearly 10% of the energy bills could be saved with no cost options of this kind. The second medium cost option needs a nominal investment for replacing obsolete energy saving gadgets or devises without warranting major replacement. A simple example is fluorescent tube light assembly – wherein replacement of the resistance choke with an electronic choke brings about a saving of nearly 30% with nominal expense towards replacement. The cost of the replacement we can recover within six months, which can be termed as the ‘pay back period’. The next high cost option is replacement of the obsolete energy guzzling gadgets or equipments with better technology fuel or energy saving gadgets. A reasonable maximum payback period of three years is considered amply justifiable for the replacement and the saving expectation of about 30%.
State of renewable energy resources in the present energy economy
This article is incomplete without discussing the renewable energy sector, where the future lies. It is an undeniable fact that the future is totally dependent on these resources, however, what about the economic significance of renewable energy sources?
- The fact remains that the capital cost of the renewable energy project is more than the conventional power projects
- The cost of power is much more than that of the grid supplies
- Renewable energy cannot sustain as on date without subsidy, having adverse direct impact on economy
- Unless and until the cost of the energy from renewable energy project is on par or even less than the cost of grid supply, the renewable projects are liable to have a negative effect on the economy
- Please go though the ‘energy conservation pyramid.’ Energy conservation and efficiency, both of them need little or no capital investment. Only human as well as political and administrative will, form the base of the pyramid, which is of maximum priority. Renewable energy involving maximum capital outlay and need for subsidy, has to be targeted after achieving 100% energy conservation and efficiency.
FIG: Energy Conservation Pyramid
Energy Conservation Act – 2001
It is noteworthy to mention about this important Act passed in the Parliament way back in 2001 yet to be implemented, making it mandatory for the power intensive units to implement the relevant provisions of the act including conducting periodical energy audits.
Conclusions
- Energy conservation route is the easiest, cost effective and cheapest to achieve energy security by bridging the supply and demand gap
- Energy conservation route is in fact a ‘low hanging fruit,’ the benefit of which is within reach, ready to be enjoyed
- Energy conservartion leads to better industrial and agricultural production and productivity liable to boost Indian econoly to greater heights
- It’s way to create more employment
- Easily implementable through Energy Conservation Act – 2001, passed way back in the parliament
- It is important to reconsider the subsidy element attached to the renewable energy projects to save the substantial cost element, and the economy.
