ECONOMYNEXT – The global energy crisis is pushing governments to seek alternate power generation sources. The crisis, mainly a result of the Ukraine-Russia war, has spiked interest in non-renewable energy sources and the need to diversify. Russia is a key player in the global energy market.
For climate change campaigners the switch is a positive outcome. However, the crisis is seeing some nations, India for instance, steaming ahead with the plan to utilise more coal, a fossil fuel the country has in abundance, even though it is connected to respiratory illnesses and smog etc. India is the world’s second-largest producer of coal, just behind China which is the biggest.
The news is disconcerting for India’s neighbours who have long sought improved power generation agreements that would be beneficial to both sides and even regionally.
India plans to be self-sufficient in its energy needs, especially to support the industrial sector and the growing economy, explains Lydia Powell, Head, Centre for Resources Management, Observer Research Foundation, India.
She says India was very focused until the Ukraine-Russian conflict on moving towards renewable energy sources.
However, the conflict and the increasing price of natural gas have resulted in India rethinking its plans and deciding to exploit its locally available product. Ironically, the climate change-induced heat waves resulted in an increased power demand, hence the emphasis on coal, which is cheaply available, she points out.
She adds that India relied more on natural gas and its import of electricity from South Asian nations is minimal, dispelling the idea that being the largest nation in the region, its appetite for energy is as much.
Powell was speaking at a Webinar titled Energy Transition and Energy Security in South Asia.
Held on December 15th, the webinar organised by the Friedrich Nauman Foundation for Freedom, South Asia, included panellists Hitendra Dev Shakya, the former Managing Director of Nepal Electricity Authority, and Shafiqul Alam, Lead Energy Analyst, Institute for Energy Economics and Financial Analysis, Bangladesh. The webinar was moderated by Arpita Nepal, Founder and Director of Research, at Samriddhi Foundation, Nepal.
India plans to be self-reliant, producing more energy locally, ensuring an uninterrupted supply to the manufacturing sector and the expanding economic environment. The key is to not run out of power, Powell states.
India’s interest in trading in electricity with neighbouring countries was before 2015, says Powell, pointing out that it was a time when the country’s power supply was in deficit. But now, that interest has waned, owing to a surplus capacity, mostly because of private sector involvement in coal-based power generation.
Bangladesh on the other hand scrapped its reliance on coal during the COVID-19 pandemic says Shafiqul Alam, and has since decided to be less dependent on imported energy sources.
The volatile market conditions which saw overall power costs increasing drastically in the past one and half years, had seen the country adjust its tariff rates three times in as many months this year.
Bangladesh is currently working on a long-term master plan that will integrate both clean and renewable energy sources.
While the private sector is showing interest in solar power, a Danish firm is carrying out feasibility studies for an offshore 500 mgwt wind power plant.
Already 30mgwt from another plant is connected to the grid, says Alam.
While import agreements are in place with India and Nepal, Alam states the issue is not so much around bilateral deals, but multilateral ones.
Bangladesh has surplus energy, with consumption of the installed capacity in winter months ranging between 30 to 40 per cent. Even in the summer, when consumption is at its peak, there is a 20 per cent reserve capacity.
It is an opportunity for the BBIN nations- Bangladesh, Bhutan, India and Nepal to have power exchange agreements, where whenever a country faces a shortage, power could be tapped from the interconnected grids. For that to happen, however, he says policymakers need a change of attitude; instead of expanding the capacities of each country, or leaning towards fossil fuels, they must work with neighbouring nations to generate clean energy. There are times when the Indian energy market prices are lower than the cost of generating power in Bangladesh. The potential for a joint energy exchange is obvious, he notes, when all these are factored in.
Hitendra Dev Shakya supports the idea of regional corporation.
A nation that depends on biomass and hydropower for the bulk of its energy production, Nepal is challenged with connectivity and quality supply owing to its mountainous terrain despite 91 per cent grid access.
Nepal, says Dev Shakya, needs to strengthen its grid, not expand, as disruptions also result in the spilling of the power produced.
There was a time when Nepal was asked to produce more electricity for the market, however, ‘We now have the goods but there are no buyers. ´Therefore, he believes India’s smaller neighbours, Bangladesh, Bhutan and Nepal should work together to harmonise their practices and also consider joint ventures.
Both regional and international studies reveal that if there is a coordinated power generation venture, the participating nations could save up to a billion dollars each year.
Nepal is experiencing an increase in demand for electricity at a rate of 15 per cent annually.
“If we think multilaterally it will save money for all concerned and will be able to provide services to people irrespective of which country they live in.” In an East-to-West connection between India and Nepal, for instance, transmission costs and losses could be reduced while the Grid is better supported.
He adds that the potential for solar energy remains high in Nepal, though again, the mountainous terrain and short distances require pump storage facilities to make it viable.
Keynote Speaker, a member of the FNF staff, and expert on environmental and energy economics, Maximillian Luz Reinhardt notes that the recently concluded COP28 provides more opportunity to explore the potential of renewable energy sources. The scope should be broadened beyond solar and wind power, to include nuclear and other sources he advises.
Reinhardt points to China’s huge installed capacity in wind and solar energy, which could dampen the efforts of other nations to expand in those fields. (Latest studies indicate that China’s installed capacity in both wind and solar amounts to about a third of the world’s total.)
He states nations must be watchful, as the advent of smart technology also poses a threat from rogue entities that could tamper with power supplies.
In a special message, Torsten Herbst of the Free Democratic Party and a Member of the Bundestag reiterated the need for nations to diversify to ensure energy reliability and climate neutrality. (Colombo/Dec27/2023)