By Biju Thomas
The Indo - US nuclear deal has been a hot debatable issue among Indians in recent days. The result may be either way. Considering the Indian energy need everyone will admit the need of urgent attention in this field. India is in a fastest growing stage and a part of BRIC countries. If it sustains the current growth rate, it becomes unavoidable to seek another energy source even though we have energy from natural resources.

In order to achieve double digit GDP we must ensure reliable availability of energy, particularly electric power and petroleum products, at internationally competitive prices. At present, of the total size of India’s electric power system, coal comprises about 55%, hydroelectric about 26%, natural gas about 10%, renewable about 5%, and nuclear makes up only 3% of total installed capacity.

India’s current installed generation capacity is around 1,44,000 MW of power, and plans to add 20,000 MW of generation capacity each year to meet its energy goals by 2012. It is difficult to achieve this target on yearly basis using natural resources.

Coal
In India coal is expected to provide most of India’s electricity. In fact, coal has not met its full market potential in the last decade with coal supplies being unreliable and of poor quality. If we concentrate only on conventional methods, result will be worse on account of CO2 emission and India will become the world's third-largest carbon dioxide (CO2) emitter by 2015 in terms of cumulative emissions. In reality two-third of India's CO2 emissions comes from coal used in power generation, and it will increase to 69 per cent by 2030.

Hydroelectric is the second largest power producing source in India. The expansion and creation of dams for this purpose has been creating large opposition from locals. This pattern is evident in all large democracies and there is no evidence that it will become significantly easier to site domestic hydro facilities in the future. India being a democratic country as well, makes it difficult to build up hydro plants in future.

Renewable Energy
India has been using wind and solar energy in a few states and makes extensive use of biomass digesters in rural areas. India seeks an aggressive expansion of renewable energy program, particularly in wind power; but the projection (about 6 GW of installed renewable electricity generation capacity by 2020) is certainly too low. Expected developments in this sector by 2010 are not likely to increase more than 10 percent of the installed capacity.

Natural Gas
Apart from the mentioned above, gas energy would be the most reasonable source for recent and future power production. Gas is attractive because it is the cleanest of the fossil fuels and the capital cost of gas plants is much lower than that for all the other main sources such as nuclear, coal, and hydro.

So among the limitations India is seeking a tremendous energy source, Nuclear power. Until now, nuclear power has been controlled by the central government, mainly for non-energy purposes, and has not been exposed to commercial purposes. But India is facing a severe shortage in input. According to the Atomic Energy Commission estimates, domestic resources could support only about 10 GW of installed nuclear capacity.

In this situation, the UPA government is trying to sign the nuclear deal with US with the aim of fulfilling our future energy needs. Whether it would realize or not, we can know the end result of the fusions and fissions in Indian parliament today when Prime Minister Manmohan Singh seeks a trust vote.

Biju Thomas is Senior Manager (Research), JRG Securities Limited