Since long India's energy portfolio has been dominated by fossil fuels (coal, gas, and oil), which have had availability problems. Rapid economic growth only exacerbated this. Supply continues to struggle to keep pace with demand because of productivity problems, logistics, a lack of accessible reserves, and environmental concerns.
Regulatory controls over prices, production, and allocation of fuel are also leaving a mark on the energy sector, distorting market mechanisms and dissuading significant progress. Almost half of India's energy consumption is subsidized-including power, transportation, and process heat requirements.
This includes subsidies for liquefied petroleum gas (LPG) and diesel, piped natural gas and compressed natural gas that are subsidized by the administered price mechanism (APM), and the cross subsidization of agricultural and domestic power segments by industrial and commercial segments.
In such a scenario it comes as no surprise that the government is looking for cheaper, more sustainable alternatives and is turning … Read More