Considered one of the high-performing ministers in the Narendra Modi government, energy minister Piyush Goyal met ministers, investors and toured parts of Britain’s energy infrastructure during a busy two-day visit to London last week. The first energy ministers’ summit between India and Britain is due to be held in New Delhi in July. Amid new focus on solar energy generation, Goyal believes coal will remain an imperative for India’s energy needs for the forseeable future. He spoke on a range of energy issues during an interview with Hindustan Times.
Will the large scale of demand for LED bulbs create the enabling environment to manufacture in India or they will be met through imports?
Even now, except for the chips, everything is manufactured in India. Going forward, I am told people are now starting manufacture end-to-end in India, considering the huge volumes that we are now consuming. Earlier, it was a small programme of the government, now one government company is selling 700,000 bulbs a day. We closed March 2016 by selling 90 million bulbs by that company; (checks smartphone and shows the figure) the actual figure is 97,237,518 bulbs. This year they will probably go over 150 million or 170 million bulbs. The company procures them from various sources, all AAA companies, through a transparent process. The prices have come down by 83 per cent in the last 18 months. They used to buy it at 310 rupees two years ago, now the price is down to 54.90 rupees, thanks to transparency, honesty, economies of scale and large volumes. And this is 30 per cent more illumination: earlier it was a 7 watt bulb; we now give a 9 watt bulb. That’s the power of numbers that India offers to the world; that is what I have been talking to investors here. The scale at which India is developing; the potential market size that India offers; a billion plus people aspiring for a better quality of life – it is the world’s largest energy market going forward. While most of the countries will be reducing their energy consumption, India will be quadrupling its energy consumption in the next 15 years.
What about solar cells, they are mostly imported from China.
We are looking at a programme to encourage domestic manufacturing. Very soon we will come out with a policy on that. I would like to see domestic solar manufacturing capacity to go up to at least 10 giga watt in the next few years, per year.
After LEDs you are now looking at energy efficient fans and ACs. Is there a pricing plan for them?
Going to the next level is the LED fans. A pilot of 100,000 fans has been launched in Vishakhapatnam. We will be taking up more products; next will be energy efficient agricultural pumps.
You said recently that you wanted to eliminate thermal coal imports altogether within two or three years – can you elaborate how that will be possible?
Our production of coal is increasing very rapidly. Coal India Limited increased production in our first year of government by 6.9 per cent; second year by 8.6 per cent. This kind of growth in coal production was never witnessed before. Today we have a situation in which the country has surplus coal. When I became Power minister two-thirds of our power plants were running on critical stocks; today not a single power plan has critical stocks. In fact they are sitting on so much stocks that they are telling us to hold back supplies. We have plans to ramp up coal production very aggressively – go up to a billion tonnes only in Coal India and as a nation up to a billion and a half tonnes. In this backdrop, our challenge will be to transport coal to distant, coastal plants, for which we are working for coastal movement of coal to take it to southern and western shores, so that we can eliminate imports.
What are the implications of this for the future.
India is going to expand its energy consumption to four times what it is today in the next 15 years. Western countries can cut down coal and replace it by renewables; I will need to have more coal. Where will the baseload come from? I can’t tell my people that you will get power only from 6am to 5pm and after that we live in darkness. You need 24-hour power, you need a baseload; and that baseload for India is coal. We are looking at clean coal technologies to reduce the impact of pollution. In fact, the west has put an embargo on financing coal-based power plants. I think it is so counter-productive, because I want to replace my old plants with new super-efficient coal-based plants, but because of this embargo I don’t get enough capital. I won’t be able to replace them with energy efficient plants or less polluting plants and will continue to spew more carbon in the atmosphere because of this ill-conceived embargo. There is no other country whose commitment to climate change is comparable to India’s, whereas the developed world was supposed to put a 100 billion dollars for clean energy financing, but we don’t see a single dollar out of that as yet. This was a commitment made several years ago.
What is the situation on the promise to provide electricity to everyone in the country?
That is something we are committed to, which is why we will need to have more developmental space to have more affordable energy in the system. By 2022 we had committed to provide this to all, we now feel that we may be able to do it by 2019 given the amount of work that has already happened and the fact that we believe electricity is very important for every human being to improve his quality of life.
Have you quantified the employment generation potential of the overall reforms in the sector?
My solar energy programme alone will generate about a million jobs. But overall the energy sector as it closes upto 2030 we see these huge investments coming in to quadruple our energy, I can see this sector giving us potential employment to 3 to 4 million people in different aspects: generation, transmission, distribution, efficiency, coal mining, lignite mining.
Is the low solar tariff (Rs.4.34 a unit as per latest NTPC project in Rajasthan) sustainable?
Of course, it is. There is very good radiation in Rajasthan. NTPC is a AAA company, which gave a lot of comfort to investors and the counter-party risk was almost eliminated. It is an open, transparent bidding process, reputed companies have bid at that price. It is something I have no control on. I am only providing a business opportunity. International and domestic players are coming in and bidding.
Can you say something on India’s plans for nuclear power?
I don’t deal with the nuclear subject but we are open to it. We are working with different countries to secure uranium supplies, we are talking to companies on technology options. We are working to see which is the best, most safe technology to bring in. Already, some plants are under expansion in India. Jaitapur is under consideration; it is at at an advanced stage of discussion.
How are you addressing fuel shortage of gas-based power plants? We don’t have enough domestic gas supplies.
We have a serious problem that we don’t have enough gas in India. So for two years we had given a support programme by which we were importing gas and helping plants to make them operational. Right now the prices are very low, so the plants are quite feasible to operate even with market purchases. Going forward I am looking at tying up long-term contracts on gas so that if I can get a firm price of gas on long-term basis we can have these plants regularly work and provide spinning reserves or peaking reserves to support my renewable energy programme.
Are you looking at more investment on renewables or fossil-based activities of the sector, given that globally new investment in renewable energy has exceeded fossil fuels.
When you have two or three children, you look after all of them equally. We are also putting huge focus on renewables; as I said, we have the world’s largest renewable energy programme. We plan to have 40 per cent of our installed capacity from renewables by 2030.
Will there be new initiatives for fossil fuels?
We are actively looking at clean coal technologies. We already have join research on clean coal going on with Australia. I’ll be going to MIT next month; I have already had one round of discussions; our teams are engaged with them and we are initiating more joint research with MIT on clean coal technologies. By and large all new coal-based plants coming up are super efficient plants; going forward we will also introduce ultra super efficient plants. So while using coal is an imperative for us, we are very committed to using coal efficiently and ensuring pollution is minimum.
Is there anything investors here were particularly interested in?
There is so much excitement about investing in India from investors in London; even among international investors based in London. I feel there is huge potential for India and the UK to work together both on the technology space and on the investment space. There is lot of interest in Indian debt paper, looking at ‘masala’ bonds, green bonds to be issued through the London markets. Investors were very keen that India should look at further simplfying the regulatory framework and providing a single window structure where any investor can have a one-stop shop to understand the entire Indian eco system. There is some interest around dollar- denominated tariffs. We had very engaging discussions on all these issues.
Any concerns they had that you were able to allay, or not?
Usually in any such interactions certain questions so come up, lot of suggestions come up and everybody was very much excited about the immense potential that India holds in the energy sector to attract international investment. I am very confident that UK and India can work together, particularly given the commitments that both prime ministers gave to the energy sector in the joint statement that was issued during Mr Modi’s visit (in November 2015).