09 and 10 Feb 2016 (The future of Energy in India, Trai Ruling)

The future of Energy in India

Chronology of Energy in India

India’s power sector is at an inflection point, given the government’s conviction that electricity is a critical enabler for  economic growth.India, home to 18% of the world’s population, uses only 6% of the world’s primary energy. India’s energy   consumption has almost doubled since 2000 and the potential for further rapid growth is enormous.


India’s economy, already the world’s third-largest, is growing rapidly and policies are in place to press ahead with the country’s  modernisation and an expansion of its manufacturing. If a well-managed expansion of energy supply can be achieved, the prize in terms of improved welfare and quality of life for India’s 1.3 billion people is huge – first and foremost for the estimated 240 million that remain today without access to electricity.

Policy-makers at national and state levels are intensifying their efforts to ensure that energy is a spur, rather than a hindrance, to India’s advancement, looking to removing obstacles to investment in energy supply while also focusing on energy efficiency and pricing reform (the deregulation of diesel prices in late 2014, taking advantage of the fall in the oil price, means that all oil-based transport fuels are now subsidy-free).

Coal is by far the most important fuel in the energy mix, but India’s recent climate pledge underlined the country’s commitment to a growing role for low-carbon sources of energy, led by solar and wind power.

India seizes the centre of the world energy stage and is set to contribute more than any other country to the projected rise in global energy demand, around one-quarter of the total: even so, energy demand per capita in 2040  is still 40% below the world average.

India’s total energy demand more than doubles in our main scenario, propelled  higher by an economy that is more than five times larger in 2040 and a demographic expansion that makes India the world’s most populous country.

With energy use declining in many developed countries and China entering a much less energy-intensive phase in its development, India emerges as a major driving force in global trends, with all modern fuels and technologies playing a part. Surging consumption of coal in power generation and industry makes India, by a distance, the largest source of growth in global coal use.

Oil demand increases by more than in any other country, approaching 10 mb/d by 2040. India steps up its  deployment of renewable, led by solar power, for which India becomes the world’s second-largest market.

Natural gas consumption also triples to 175 bcm (although, at 8% in 2040, it still plays a relatively limited role in the overall energy mix).

Solid biomass, mainly fuelwood, is the only major source of energy that does not see a large increase. This mainstay of the rural energy economy is the primary cooking fuel for some 840 million people in India today; its use in traditional stoves is a major cause of indoor air pollution and premature death.

Its gradual (albeit not complete) displacement by alternative fuels in our projections to 2040 is achieved, thanks to rising incomes and supportive policies; these include one of the world’s largest cash transfer programmes, which subsidises the purchase of LPG cylinders via payments to individual bank accounts, rather than via an intervention affecting end-user prices.

India’s urbanisation is a key driver of energy trends: an additional 315 million people – almost the population of the United States today – are expected to live in India’s cities by 2040.

This transition has wide-ranging effects on energy use, accelerating the switch to modern fuels, the rise in appliance and vehicle ownership and pushing up  demand for construction materials. Three-quarters of the projected increase in energy demand in residential buildings comes from urban areas, driving the sector’s energy use away from solid biomass (two-thirds of the total today) and towards electricity and oil (45% and 15% of the 2040 total, respectively).

Since most of the 2040 building stock has yet to be constructed, there is a tremendous opportunity for India to expand and tighten efficiency standards and ensure that future demand for energy services – notably for cooling – is met without putting undue strain on energy supply.

Successful initiatives include a huge and cost-effective programme to replace old, inefficient light bulbs with LEDs, but the scope of other efficiency measures for buildings and appliances, while expanding, is still far from comprehensive.

The “Smart Cities” programme, launched in 2015, puts a welcome emphasis on integrated planning and provision of urban services (including power, water, waste and mass transportation), although faces the considerable challenge of coordinated delivery across different branches and levels of government.

India’s need for new infrastructure underlies strong demand for energy-intensive goods, while the rising level of vehicle ownership keeps transport demand on an even steeper upward curve. Energy use in industry is the largest among the end-use sectors, its share in final consumption rising above 50% by 2040.

Industrial energy use is buoyed by substantial growth in output of steel, cement, bricks and other building materials, and by the expansion of domestic  manufacturing encouraged by the “Make in India” initiative.

India’s power system needs to almost quadruple in size by 2040 to catch up and keep pace with electricity demand that – boosted by rising  incomes and new connections to the grid – increases at almost 5% per year.

The power system has grown rapidly in recent years, but the poor financial health of many local distribution companies remains a key structural weakness:  low average end-user tariffs, technical losses in the network, and high levels of non-payment for electricity mean that distribution company revenue often fails to cover the costs owed to generators. This has created a cycle of   uncertainty for generators and held back much-needed investment in network infrastructure. The situation varies from state to state, but stimulating the necessary grid strengthening and capacity additions requires pressing ahead  with regulatory and tariff reform and a robust system of permitting and approvals for new projects.

In the meantime,  regular load-shedding in many parts of the country obliges those consumers who can afford it to invest in costly back-up options, and results in poor quality of service for those who cannot.

Taking population growth into account as well as the high policy priority to achieve universal electricity access, India adds nearly 600 million new  electricity consumers over the period to 2040.

The vast majority of Indians continue to receive their power via the  grid, but mini-grid and off-grid solutions provide more than half of the electricity supply to those gaining access in our projections, especially in areas distant from existing transmission lines or of lower population density.

Over 50% of  new generation capacity to 2040 comes from renewables and nuclear, while new coal-fired plants in India represent nearly half of the net coal capacity added worldwide.

Keeping pace with the demand for electricity requires nearly  900 GW of new capacity, the addition of a power system four-fifths the size of that of the United States today. Uncertainty over the pace at which new large dams or nuclear plants can be built means strong reliance on solar and  wind power (areas where India has high potential and equally high ambition) to deliver on the pledge to build up a  40% share of non-fossil fuel capacity in the power sector by 2030.

Some 340 GW of new wind and solar projects, as well as manufacturing and installation capabilities, are galvanised to 2040 by strong policy support and declining  costs, although the pace of deployment is slowed by anticipated issues with networks, land use and financing. 

Decentralised rooftop solar and off-grid projects account for around 90 GW of this total, but the bulk of the additions  is utility scale. Balancing a power system in which variable renewables meet one-fifth of power demand growth  requires flexibility from other sources (a role largely filled by gas-fired plants in our projections) and a much more  resilient grid.

The share of coal in the power generation mix falls from three-quarters to less than 60%, but coal-fired  power still meets half of the increase in power generation. A shift to more efficient technologies brings up average coal plant efficiency significantly.

Other measures, including the announced moves to higher standards for vehicle  emissions and fuel quality, help to limit the growth in energy-related emissions of particulates, fumes and other local  pollutants. Nonetheless, without a continuous focus on emissions control technologies in the power sector, industry and transport, India faces the risk of a deterioration in urban air quality.

Domestic production strains to keep pace .  A large expansion of coal output makes India the second-largest coal producer in the world, but rising demand also  means that India becomes, before 2020, the world’s largest coal importer, overtaking Japan, the European Union and China.

Reforms to the system of coal procurement and contracting underpin new mining investment and a more  efficient allocation of coal to consumers, including an expansion of competitively-priced imports in parts of coastal India.

Growth in production is constrained by the concentrated structure of the coal industry, issues of land use and permitting, and infrastructure bottlenecks, but is sufficient to bring dependence on imports back  down to current levels around 30%, from a peak of around 40% reached in 2020.

Coal demand that is two-and-a-half-times higher than today by 2040 (although still only around half the projected level in China) is the main factor behind a large rise in India’s energy-related CO2  emissions. These nearly triple to reach 5 gigatonnes in 2040, a significant contribution to the rise in global emissions over this period.  Nonetheless, relative to the size of the economy, energy-related CO2 emissions fall in line with India’s pledge to reduce its emissions intensity  by 33-35% below 2005 levels by 2030, and, expressed on a per capita basis, emissions remain some 20% below the world average in 2040.

Production of oil and gas falls well behind the growth in demand:

India’s reliance on oil imports rises above 90% by 2040, requiring constant vigilance as to the implications for energy security. India has a  relatively small but still under-explored hydrocarbon resource base.

India is the world’s third-largest importer of crude oil, although a large and efficient refinery sector gives it a surplus of oil products, mainly transport fuels, for export. In our projections, crude imports rise to 7.2 mb/d in 2040 (second only to China), sourced predominantly from the Middle East. India’s refinery capacity is  projected to rise steadily and refinery output is increasingly directed to meet rising domestic demand. Indian refiners face an ever-more competitive product export market, particularly with the envisaged expansion of refining capacity in the Middle East.

“Make in India” needs energy to work and needs efficiency to prosper:-

Putting manufacturing at the heart of India’s  growth model means a large rise in the energy needed to fuel India’s development. Industry-led growth requires at  least 10-times more energy per unit of value added compared with growth led by the services sector.

The additional  demands on the energy system come primarily from industry, not only from energy-intensive sectors, but also from  other industries that are targeted by the “Make in India” campaign such as textiles, food processing, machinery and industrial equipment. Energy use for road freight, residential consumption and for a more mechanised and productive  agricultural sector also rise. To avoid that this extra demand exacerbates energy security and  environmental strains requires an even-stronger commitment to energy efficiency as a central pillar of India’s energy  strategy, alongside an unwavering push for low-carbon energy and high standards of pollution control.

Meeting India’s energy needs requires a huge commitment of capital:-

India requires a cumulative $2.8 trillion in investment in energy supply in our main scenario, three-quarters of which  goes to the power sector, and a further $0.8 trillion to improve energy efficiency. Investment in energy supply  is held at similar levels in the Indian Vision Case, but only because of a near-doubling in spending on greater  efficiency.Mobilising cost-efficient investment at average levels of well above $100 billion per year is a constant  challenge for Indian policy at national and state levels, requiring effective coordination between multiple institutions  and levels of government (the model of “co-operative federalism”), continued efforts to overhaul

India’s energy  regulatory framework had to simplify an often-complex business environment. A transparent system of approvals and clearances needs to allow viable projects to move ahead according to a predictable timetable, while safeguarding  the consultation and accountability that is essential to win public consent.

India will also need to call upon a broader  range of investors and sources of finance than has been the case in the past, not least in order to relieve the scarcity of long-term finance on suitable terms for low-carbon investment. Sustainable and affordable energy, underpinned  by energy technology cooperation and innovation, is indispensable to India’s outlook for economic growth and  poverty reduction; the carbon intensity of India’s development is also a critical barometer of the success or failure of efforts to tackle global climate change. There is a clear mutual interest, shared by India and the international  community, in strong support for India’s drive to deploy more efficient and low-carbon technologies.


Trai rules in favour of net neutrality

Putting an end to the controversy over differential pricing on the Internet, the Telecom Regulatory Authority of India (Trai) on Monday ruled that differential pricing for data services will not be allowed in the country.

“No service provider shall offer or charge discriminatory tariffs for data services on the basis of content,” the telecom regulator said in its Prohibition of Discriminatory Tariffs for Data Services Regulations, which will come into effect immediately.

Differential pricing means charging of different tariffs by a service provider for data services based on the content accessed, transmitted or received by the consumer.
Key take-away from TRAI’s order

1. TRAI has ruled that no service provider shall offer or allow discriminatory pricing for data services based on content.

2. It has ruled against any arrangement or agreement between any service provider or any person that adheres to differential pricing for data services.

3. TRAI has allowed for special reduction of tariff for accessing or providing emergency services during times of public emergency. The authority has asked for the same to be reported within seven working days.

4. The telecom regulator has ruled that if a service provider is found violating the regulation, there will be a penalty of Rs 50,000 for each day of contravention, subject to a maximum of Rs 50 Lakhs.

5. The TRAI has argued against differential pricing of data services benefitting users. It states, “Allowing service providers to define the nature of access would be equivalent of letting TSPs shape the users’ internet experience.”

6. TRAI has clearly backed Net Neutrality by referring to ISP License agreement which reads, “The subscriber shall have unrestricted access to all the content available on Internet except for such content which is restricted by the Licensor/designated authority under Law.”

7. TRAI has also exempted intranets or closed communication networks from this regulation, but has added a caveat saying if a closed network is used for the purpose of evading these regulations then the prohibition will definitely apply.

8. TRAI has stated that it may review the regulation after two years.

In a nutshell, TRAI has ruled against differential pricing in order to keep the internet open and non-discriminatory for users. TRAINS ruling aims to delink content and discriminatory pricing as some zero-rating platforms had proposed.



What makes this “victory” even more surprising was the complete asymmetry of the two sides involved. On one side was Facebook, a company whose market cap is greater than the GDPs of 144 countries, allied with a bunch of big telecom companies (telcos). They had already “won” easy victories for their platform in a number of countries, and felt India would be no exception. They had an ad campaign that estimates put at Rs.400 crore. On the other side was a motley group of free software and Internet activists, with unlikely allies such as comedy group AIB, a bunch of start-ups, and some political figures and formations.

The argument that Facebook was using appeared simple. Why should anybody deny the poor getting some access to the Internet — even if this was limited? Isn’t something better than nothing? Mark Zuckerberg not only wrote articles terming his opponents “Net Neutrality fundamentalists”, but also appeared in advertorials in the electronic media to push Free Basics. Some commentators wrote plugs for Facebook in the guise of opinion pieces, all more or less posing different variations of the broad theme that Zuckerberg’s heart beats for the Indian poor.

People’s campaign prevails

First is, of course, the energy and the creativity of the groups fighting Free Basics. They not only ran an innovative and creative campaign, but were also able to bring tech activists on to the streets. What surprised even them was the response of the people.

Facebook and their ad agencies completely underestimated the Indian public. Even if all of them do not use the Internet, they understand the difference between having access to the full Internet, with nearly a billion websites, and the so-called Free Basics platform that provides Facebook and a few other sites. They are sophisticated enough to know that Free Basics would not offer them any of the things they really want to access. No search, no email, no access to various services; no pictures or video clips for entertainment either. No access to the rich diversity of views and material on the Internet. Only a sterile walled garden where, at best, you can see what your friends are doing.

A level playing field

What is the flip side of such a platform? Other people who want to have the full Internet could still access it, so why is Facebook’s Free Basics harmful?

TRAI has correctly pointed out that the tariff principle at play is whether we can have differential pricing of data based on the content we see. If we accept this principle, what then prevents telcos from charging various websites and Internet services for accessing their subscribers? Accepting that one form of price discrimination is okay opens the door to all other forms of discrimination as well.

This is where Net Neutrality comes in. The most important characteristic of the Internet is whether it is the richest corporation in the world or an individual writing a blog, both are treated identically on the Internet. If the blogger had to negotiate with the Internet service providers (ISPs) — in today’s world the telcos — to reach the telco subscribers, she would have to negotiate with thousands of such ISPs. Telcos would then be the gatekeepers of the Internet. Only the biggest corporations could then survive on the Net. This is how the cable TV model works; for their channels to be carried, the TV channels have to negotiate with all the platforms such as Dish TV, Tata Sky, etc. If we accept that telcos can act as gatekeepers, we would then lose what has given the Internet its unique power, the ability for us not only to be consumers but also creators of content.

In its nascent phase, the big telco monopolies tried to levy a “tax” on all Internet content providers. The Internet companies were then the new kids on the block. They and the Internet user community fought back such attempts. This was the first net neutrality war, and it established the principle of non-discrimination on the Internet between different types of content or sites.

The scenario has changed dramatically today. We have the emergence of powerful Internet monopolies that are much bigger than the telcos. Not surprisingly, these companies now see the virtues of monopoly. They would like to combine with telcos to create monopolies for their platforms, ensuring that they control the future of the Internet and freeze their competition out.

Today, we have nearly a billion websites on the Internet and 3.5 billion users. This means that nearly one out of three users is both a content provider as well as content consumer. What the Internet monopolies want is that we should be passive consumers of their content, or at best generate captive content only for their platforms. This is why they have joined hands with telcos to offer various forms of zero-rating services.

Google to offer flood alerts for India

Google will make public emergency alerts for floods available in India as part its efforts to make critical information more accessible around natural disasters.

Users in India can now find ‘flood alerts’ along with ‘river level’ information for more than 170 areas in which the Central Water Commission (CWC) has active observation stations.

In 2015, Google introduced ‘cyclone alerts’, which offers information with details about the hazard, including a map and expected timeline, as well as tips on how to stay safe.


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By | 2017-02-13T21:17:35+00:00 February 10th, 2016|Daily Current Events|0 Comments