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What is Energy?

In Economics,

Energy means power utilized from utilization of physical or chemical resources to run machines and provide heat and light

Example

We burn coal to generate heat, so it is form of energy

We use petrol to run our cars (which is a machine), so petroleum is a form of energy

 

Why do we need energy?

It is used in Industries to Run Machines

It is used in houses for cooking, heating and lighting

It is used in Agriculture to transport agriculture goods, fertilizers, seeds as well as irrigation (tub wells use electricity to draw water for irrigation)

 

In what forms energy available?

Energy is available in various forms like:

Coal

Petroleum

Electricity

Fuel Wood

Cow Dung etc

 

Some of these are commercial while others are non commercial:

Different Sources of Energy

  • Commercial Sources

There is commercial trading of this source of energy

It can be easily brought and sold and is available to consumers at a price

They are produced in power plants

Example

Coal, Petroleum, Electricity

It is used in both urban and rural areas

It is exhaustible source of energy except hydropower energy

(It is available in limited supply and will be finished in future)

They can be conventional or Non Conventional Source of energy

  • Non Commercial Sources

There is no commercial trading of the source of energy

It is normally available to customers free of cost

They are naturally found in nature

Example

Cow Dung, Fire wood

It is mainly used in urban areas

It is inexhaustible source of energy

They are conventional sources of energy

Difference between Conventional and Non Conventional Sources of Energy

  • Conventional Sources

Those sources of energy which have been used for a long time are called conventional sources

Example

Coal

Petroleum

Cow Dung

Fire wood

These generate more pollution and damage environment

These sources of energy are generally used

  • Non Conventional Sources

These are new sources of energy which have been recently developed

Example

Wind Energy

Solar Energy

Tidal Energy

These are more environment friendly

These sources of energy are less used currently but their use is growing

 

Consumption Pattern of Energy in India

More Commercial Energy Used

Share of Commercial Energy is more than non commercial energy

  • Commercial Energy 74%
  • Non Commercial Energy 26%

 

Coal Mostly used

Share of Coal is highest followed by oil and natural gas

  • Coal 54%
  • Oil (Petroleum) 32%
  • Natural Gas 10%
  • Hydro and Other Renewable 4%

 

High Dependence on Imports

As we know, India imports petroleum from Outside India to meet its energy requirement

Hence, Price of petroleum keeps on fluctuating

Hence, it has a severe impact on economy

 

Energy Requirement of Different Sectors

At the time of Independence

Share of Transport Sector was the highest in energy consumption

Energy was very little used in agriculture and households

 

By 2017-18

Share of Agriculture and Household Sector increased considerably

And share of transport sector declined

 

TABLE 8.2

 

 

 

Different Modes of Electricity Generation in India

Electricity is Generated in India through following methods:

Type of Energy Generated by % Share
Thermal Energy Using Coal 82%
Hydro Energy Using Water 8.50%
Nuclear Energy Using Uranium  2.50%
Other Energy Using Solar Energy, Wind Energy 7%

Important Points

Coal is mainly used to generate electricity.

It is a fossil fuel and exhaustible in nature

Burning of coal lead to pollution

 

Share of Atomic Energy is only 2.5% which is much less than global average of 13%

 

Share of Renewable Sources of electricity like solar energy and wind energy is very less

it needs to be increased

 

 

Challenges in Power Sector

1. Insufficient Installed Capacity

Demand for energy in India is rapidly increasing due to Increase in Population as well as Increase in Economic Developemnt

Energy supply needs to increase by 7% but currently we are able to add only 2000 MW energy supply which is very less

 

2. Underutilized Installed Capacity

Plans which are running are not been functioning properly due to bad governance

Hence, they are not able to generate electricity upto their installed capacity

 

3. Transmission Loss

(Electricity which is generated in first transferred to power station auxillaries which transfer to our homes and offices

A lot of electricity is lost during this transmission and hence there is lot of difference between electricity generated and electricity used)

 

4. Wrong Pricing of Electricity

Electricity Rates are heavily subsidized especially to poor and middle class families

In many states ,it is provided free of cost.

This leads to loss of State electricity boards

 

5. Distribution of Free Electricity to Farmers

In Many states, farmers get electricity free of cost or at subsidized rates for irrigation

This leads to losses of SEB

 

6. Theft of Electricity

Many people steal electricity and tamper their Electricity meters

This leads to losses of SEB

 

7. Insufficient Role of Private Sector/Foreign Investors

In many cities, Electricity Boards which were earlier under Govt

 

8. Shortage of Raw Materials

Thermal Power Plants mainly run on coal

However, supply of coal is insufficient in many areas

 

9. Public Unrest

Common Public has to face lot of problems due to frequent power cuts as well as high electricity bills

 

What is the reason for heavy losses to State Electricity Boards?

State Electricity Boards are suffering huge losses due to following reasons:

Transmission Loss

Wrong Pricing of Electricity

Distribution of Free Electricity to Farmers

Theft of Electricity

 

What measures to be taken to Revive Electricity Sector?

or

What steps to be taken to ensure Energy Requirement of India is fullfilled (there is Additional Electricity Supply)?

1. More Public investment

Govt needs to increase its spending in Electricity Sector by opening Power Plants

This will generate additional electricity

 

2. Better Research and Development Efforts

Research and Development needed to develop alternative sources of energy and reduce the dependence on coal and petroleum (Example-Electric Cars)

 

3. Use of Renewable Sources of Energy

Currently coal and petroleum are mainly used to generate electricity

These are harmful to environment

Instead of them, we can use alternative sources of energy like wind energy, solar energy

 

 

4. Use of CFL and LED Bulbs to Save Energy

Traditional bulbs consume lot of electricity

They were replaced by CFL Bulbs which were later replaced by LED Bulbs

LED Bulb consumes half electricity compared to a CFL Bulb and 1/10 energy as compared to traditional incandescent bulb

Moreover, this bulb last longer compared to traditional bulb

This has led to saving of Rs 400 for a average household in electricity

 

 

NCERT Questions

Question 6

What is the significance of ‘energy’?

Differentiate between commercial and non-commercial sources of energy.

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Question 7

What are the three basic sources of generating power?

View Answer

 

Question 8

What do you mean by transmission and distribution losses?

How can they be reduced?

View Answer

 

Question 9

What are the various non-commercial sources of energy?

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Question 10

Justify that energy crisis can be overcome with the use of renewable sources of energy.

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Question 11

How has the consumption pattern of energy changed over the years?

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Question 12

How are the rates of consumption of energy and economic growth connected?

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Question 13

What problems are being faced by the power sector in India?

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Question 14

Discuss the reforms which have been initiated recently to meet the energy crisis in India.

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Other Questions

Question 1

Distinguish between conventional and non-conventional sources of energy?

View Answer

 

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Transcript

Commercial Sources Non Commercial Sources There is commercial trading of this source of energy There is no commercial trading of the source of energy It can be easily brought and sold and is available to consumers at a price It is normally available to customers free of cost They are produced in power plants They are naturally found in nature Example Example Coal, Petroleum, Electricity Cow Dung, Fire wood It is used in both urban and rural areas It is mainly used in urban areas It is exhaustible source of energy except hydropower energy (It is available in limited supply and will be finished in future) It is inexhausible source of energy They can be conventional or Non Conventional Source of energy They are conventional sources of energy Conventional Sources Non Conventional Sources Those sources of energy which have been used for a long time are called conventional sources These are new sources of energy which have been recently developed Ex: Coal, Petroleum, Cow Dung, Fire wood Ex: Wind Energy, Solar Energy, Tidal Energy These generate more pollution and damage environment These are more environment friendly These sources of energy are generally used These sources of energy are less used currently but their use is growing

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CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.