Synergy in Energy

Sashi Mukundan, Head of BP India, shares his views on the draft National Energy Policy
Date: 17 August 2017

A National Energy Policy (NEP) for our country has been long overdue. The draft document was released in June 2017. It shares the key policy directives to provide energy for economic growth in a responsible way. It provides for energy access to all segments of the country and society. And the guiding principle - as the visionaries of this document say - is to define the role of Government as a facilitator rather than an active player in the sector.

As the iterations progress in the crafting of the energy policy and further regulatory interventions are planned, I have a few suggestions.

Safety is key and should be addressed on priority as we, as a country, produce, transport or consume all forms of energy.

Affordability, as we all know, is driven through the development of a competitive market place. This requires access, availability, and choice to the consumer. It will also require bringing efficiency in the market place by providing access to existing infrastructure.

A clear and immediate plan is required for the suggested unbundling content and carriage for all forms of energy.

Regulatory plans are needed to ensure commerciality of energy options to support real and sustainable energy forms.  India, through this NEP, should seek to leapfrog in this transition to a low carbon world.  In doing so, it should incentivize efficiency programs, next-generation solutions, and cutting-edge R&D work.

In the domain of oil and gas where I have some experience, I would like to suggest two key interventions. The first around a change in mindset and, the second, around specific interventions to encourage unconventionals at scale. It is important to recognize that Exploration and Production is not a perfect science and so the focus must be to encourage activities by incentivizing speed, risk taking, and infrastructure/data sharing. Intent should be delivering the contract in spirit and do whatever it takes to speed activities at scale. On Shale and CBM exploration, a rethink along the lines of land access through royalty sharing, as in the US, would help ease access and build scale. Enhanced Oil Recovery (EOR) is another program that needs immediate attention and an aggressive push by carving out mature fields for state-of-the-art technology applications by inviting experienced players. The prize here is very large. A 1% increase in recovery is 500 million barrels or $25 billion of additional domestic production!

The role of gas in the energy equation has never been stronger and clearer. In NEP, gas is a key pillar as it is not only a clean and better fuel but also helps in the transition to a low carbon energy world. Developing a gas-based economy will require including gas and gas-based infrastructures in development models for transport, electricity, cooking and heating, smart cities, industrial corridors and in replacing liquid fuels. Linkage to natural markets is possible if the railway and national highway ‘right of way’ is used to lay natural gas transportation system. ‘Gas Hubs’ with infrastructure, supply source, and demand center should be encouraged around key supply source or demand center to build economies of scale (Gujarat is an example). Unbundling of content and carriage and open access are key to bringing efficiency, competition and penetration of markets.

The most heartwarming progress in energy is when it provides electricity to villages and remote areas. To provide affordable power to all will need more efficiency and open access to encourage competition and optionality to consumers. Assurance is needed to ensure the renewable power options being pursued are reliable and will be available. Electrification across India will need broad linkages to further drive efficiency. Examples being reviving existing gas to power and linking to demand clusters for fuel and power, renewable supply intermittency normalization, industrial and residential energy demand clusters as anchor to penetrate wider and deeper.

Mobile and remote fuelling are areas where regulatory framework is urgently required. This will bring access and affordability across urban, and rural areas and highways. The Indian consumer is looking for support to Electric Vehicle (EV) penetration in the development model of new smart cities. This will be a game changer in city transportation. Globally, Bio-fuels are moving to the next generation, which includes ‘waste to energy’ options. It includes renewable natural gas fuel or biomethane from landfills and municipal solid waste conversion to biofuels. One can keep listing. There are so many areas where synergy in energy will be the flag-bearer of change.

Views expressed here are personal.