IEC 2013 Securing tomorrow’s energy today: Policy & Regulations Session B: Long Term Energy Security February 2013

Energy Security defined Expert Committee Report on Integrated Energy Policy (IEP) in its August 2006 report defines Energy Security as follows: “We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices, at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected.” Nuclear Power in India – Opportunities and Challenges

Energy Demand in India expected to increase at a fast pace putting pressure on supplies Primary Energy Consumption dominated by coal and hydrocarbons Per capita consumption of 585 Kgoe; well below world average of 1,797 Kgoe In the last five years, India has averaged a growth rate of 8% and the demand for energy India is the fourth largest primary energy consumer, after China, USA and Russia and accounts for ~4.6 % of total global consumption As per WEO, energy demand expected to increase at CAGR of 5.69% from FY10 to FY20 Demand side management through energy efficiency has seen thrust (energy conservation potential estimated ~23%) Indian Primary Energy Mix (2011) Source: BP Statistical Review 2012 While it is certain that India will see an increased escalation of energy demand, efficient utilization of energy remains a big challenge

Energy Supply key concerns include rising imports of hydrocarbons and stagnating production of coal among others Increasing Import Dependence of India Rising Imports of energy including hydrocarbon/ coal Low proven reserves of hydrocarbons (Reserves to Production ratio of 18 years for oil/ 27 years for gas) ~34 percent remains poorly to completely unexplored in terms of hydrocarbons Stagnating production in coal/ increasing demand supply gap /lack of private investment Solar and wind having high cost of production Hydro sector faced by issues related to R&R, land acquisition, clearances and evacuation infrastructure Shale gas policy under formulation Anti-nuclear sentiment and technology related challenges Source: BP Statistical Review Increasing Demand Supply Deficit of Coal (MT) Source: India Energy Book, 2012 High import dependence for energy amounts to high vulnerability and compromised energy security of the nation. Also, it adds to concerns regarding continuously increasing fiscal deficit and depleting foreign Exchange

Higher imports of coal and diesel, affect the country’s balance of trade Nuclear Power in India – Opportunities and Challenges

Diversifying Energy Supply Reduction in Energy Intensity Energy Security is an interplay of Regulations, Policies and Energy Strategies of the Country Sustainability Reliability Affordability Diversifying Energy Supply Reduction in Energy Intensity Geo-Politics and Energy Diplomacy Policies Regulations Energy Security Strategies

Development Plan for each Need for an Integrated Resource Policy to ensure long term Sustainability Integrated Resource Policy: Energy, Water, Food Inter-linkages of Energy with resources like food and water to be understood Energy and food e.g. fertilizers, Energy and water e.g. power (UMPPs) Institutional arrangement for integrated development of various resources Integrated Resource Policy Integrated Energy Policy Integrated Energy Policy to be a sub set of Integrated Resource Policy Need to institute a mechanism to implement Integrated Energy Policy Need to keep the IEP dynamic Development Plan for each Energy Sector Mix of Energy to be used Integrated development of each resource Longer term perspective on development and utilization Integrated Resource policy linked with sustainable development that covers all resources and addresses all aspects including security, access, availability, affordability and pricing of resources

There is a need for revisiting Energy Strategy of the Country Energy Strategy in changing Geo-political Environment and stagnating domestic production The global energy scenario is redrawn by rising energy prices, evolving Geo-political environment (Arab Spring), changing trade flows, retreat from nuclear power in some countries, growth in the use of renewable and global spread of unconventional gas production. There is a need for revisiting Energy Strategy of the Country Improving production Efficiency in Coal sector Private investment in Coal Sector/ Underground mining Incentivizing Deep water/ ultra deep water exploration., unconventional energy, etc. An attractive fiscal regime incentivizes risk taking and promotes cost control, apart from capturing economic returns Developed energy markets with transparent pricing and energy trading Rangarajan Committee Report Focus on Renewables and nuclear energy Need to focus on Energy Diplomacy through Bi-lateral government level ties Creating Interdependence with resource rich countries (especially in Africa) through integrated packages creating socio- economic impact Regional co-operation and interdependence (Nepal/ Bhutan/ Myanmar/ Bangladesh/ Sri Lanka) in the areas: Common Sourcing of Energy/ transnational pipelines Complementary fuel arrgt/ Energy Mix- Hydro/ coal Regional Grid- interlinkage/ Power Exchange Mechanism Investment by Indian players Logistics Bottlenecks, etc. Geo- Politics and Energy Diplomacy Ramping up Domestic Energy Production

Cross- Sector Concerns Stable And Consistent Regulatory Environment To Attract Investment And Develop Resources At Required Pace Regulator Institutionalization of coal sector regulator Upstream Regulations Resource Allocation Competitive bidding framework for resources allocation- Coal/ hydro/ etc. Attractive Fiscal regime to ensure increased investment- government involvement in contract administration, review of investment decision and pricing in Hydrocarbon sector Stable pricing mechanism to promote long term investment Balancing between market driven pricing and energy access to poor Pooling of resources having Multiple price points being considered by government Transparency in subsidy mechanism Pricing Cross- Sector Concerns Instituting a cross-sector mechanism to address concerns such as land acquisition, R&R, etc. Leaner, transparent and efficient approval process- Co-ordination committee at the Centre and State level to be set up with senior representation from the concerned departments. Regulatory Environment to Transform Indian Energy Sector to a Market Economy providing a level playing field to all the players thereby promoting efficiency and protecting consumer interest

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