Government of India Committed to Policy Support for Energy Producers, Distributors

Published
06 Oct 2016
2016
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Yann Zopf, Head of Media Operations, Public Engagement: Tel.: +41 79 204 1610, Email: yann.zopf@weforum.org

· Indian government will create market-friendly mechanisms, introduce transparency and competition

· Renewables, nuclear and gas to comprise larger share of energy mix

· For more information on the India Economic Summit, visit http://wef.ch/ies16

New Delhi, India, 6 October 2016 The government of India is committed to implementing policy reform, creating market-friendly mechanisms and introducing transparency and competition into India’s energy sector, said Dharmendra Pradhan, Minister of State for Petroleum and Natural Gas of India, in a session on Powering India’s Energy Potential, on the opening day of the India Economic Summit.

“India is on a good trajectory,” the minister said, referring to the deregulation of the diesel and petrol markets two years ago, and the removal of the cooking gas subsidy from consumers above a certain income threshold. He said the government is making policy changes to stimulate investment, assure returns, establish free-market mechanisms and introduce certainty, and the private sector must do its part by creating new business models that deliver enhanced production, better distribution and affordable access to energy.

With 18% of the world’s population, India only accounts for 6% of the world’s energy consumption, but is nevertheless the third-largest consumer of power in the world even when nearly 30% of the population remains unconnected to the grid, said Pradhan. That is why the government is committed to a diverse energy mix, he said, adding that gas will replace coal and, in addition to renewables and nuclear, form the basis for the provision of affordable, clean and quality energy. He said the government is also determined to tap bio-energy – from forestry, agriculture and urban domestic waste – as it is a cheap, abundant and highly productive source of energy.

Questioned about the health of state-owned power utilities, Pradhan said a consensus is emerging among political parties against making promises of free energy as a populist promise ahead of elections. Together with the right pricing of renewables and improved distribution networks, this will improve utilities’ fiscal health within the next two years, he said.

Congratulating India on its ambitious target to install 175,000 megawatts of renewable energy capacity by 2022, Leocadia Zak, Director, US Trade and Development Agency (USTDA), USA, warned against a narrow focus on installing renewable energy capacity without improving transmission and distribution, in which the private sector can play an important role. To attract private investment, she said, it is important to ensure that contracts can be enforced.

Ibrahim Baylan, Minister for Policy Coordination and Energy of Sweden, noted India’s successful, large-scale deployment of LED bulbs – through a partial subsidy – and said it is important to take a holistic view of the transition towards a renewables-based energy mix by focusing equally on development of cheaper storage capacity, installation of smart grids and measures to help the photovoltaic cells industry to mature, as these will make solar power cheaper and more profitable than fossil fuel-based power.

Pointing out that the cost of electricity has come down, essentially thanks to technology, Banmali Agrawala, President and Chief Executive Officer of GE South Asia, India, emphasized that it is important to create technology that is relevant and suitable for India – improving the efficiency of biomass use, for instance. The right software and analytics, especially by combining solar and wind power, can minimize the need for storage, he said, agreeing with Minister Prasad that gas, renewables and nuclear are the way forward.

Estimating that India needs three times as much energy as it is producing currently, Tulsi Tanti, Chairman of Suzlon Energy, India, said India’s approach has to be guided by three principles – sustainable affordability, low-carbon footprint and energy security. Supporting India’s goal of installing 175,000 MW of renewable energy production capacity by 2022, Tanti said infrastructure must be based on resources available locally, while long-term plans must be supported by long-term policy frameworks. “Pricing is very important,” he emphasized, explaining that next-generation technology will take heavy investment, and although in the long term renewable energy will be cheaper, pricing at the start of a project has to be lucrative.

Renewable energy purchase obligations should be uniform across the country, he suggested, adding that obligations must be enforced strictly. This will, in turn, support job creation as well as a domestic manufacturing base.

The India Economic Summit, hosted by the World Economic Forum in partnership with the Confederation of Indian Industry (CII), takes place on 6-7 October under the theme, Fostering an Inclusive India through Digital Transformation. The summit, in New Delhi, will welcome more than 600 participants from over 30 countries.

The Co-Chairs of the summit are: Anil Agarwal, Executive Chairman, Vedanta Resources, United Kingdom: Johan C. Aurik, Global Managing Partner and Chairman of the Board, A.T. Kearney, USA; Gita Gopinath, Professor of Economics, Harvard University, USA; Amitabh Kant, Chief Executive Officer, NITI Aayog, India; John Rice, Vice-Chairman, GE, USA; and Vijay Shekhar Sharma, Chief Executive Officer, Paytm, India.

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