Energy Sector Growth and Sustainability: Role of Government

Introduction

Large scale electricity production requires land, water, fuel and heavy financial investments. Thus, there is a nexus between several resources such as land, fuel, water and even food. Affordable energy access to the nation requires a significant investment and planning by the state (Edomah et. al, 2016; Bhattacharyya, 2019; Musti, 2021). Since government owns most resources by and large, and also responsible for providing affordable energy, its role is vital in setting up energy production facilities and also to ensure that energy produced is properly utilized (Samuel and Timothy, 2019). Energy production, transportation and end-use-of-energy are all different aspects that need to be carefully managed. Usually, governments depend on the state appointed (and controlled) regulator through which the proponents of the set policy and legislation are channelled. State owned utility generally takes care of technical and financial aspects of energy transportation. However, land on which the transmission structures, sub-stations and other infrastructure stand will need to be procured and appropriate policies should be in place for their continued use. Land acquisition and lease rights can be better managed only by the governments as several conflicts such as rehabilitation of displaced people and financial compensation for the land owners need to be amicably resolved (Barnes et. al, 2022; Ciaccia, 2022). Thus government role is very vital in the ESI. Over the years, several researchers presented recommendations for policy and legislation towards curtailing greenhouse gases, green energy markets and least cost electricity generation (Ciaccia, 2022). Selection of type of fuel for the power plants also requires a significant amount of consultations and in-depth cost-benefit studies. ESIs have several stakeholders and it is quite challenging to strike a balance between the interests of utilities, regulator, private investors and the end consumers. Utilities have the mandate to provide energy to the end consumer with a set framework (by the regulator) for power purchases and sales. In a way, utilities depend on the market operating conditions and tariff mechanisms, though possibilities for negotiations exist. In reality, revenues in ESI depend mostly on the sales to the consumers through wide ranging tariff structures that are subject to periodical revisions. The tariff structures and energy pricing processes are heavily influenced by the governments and such decisions are channelled through the regulator. Price of unit electricity is a key driver in influencing the inflation (Goddin, 2020; Sperling and Arler, 2020). Any hike in the energy prices can push the costs of other commodities higher and thus driving the inflation further up. However, ESI stakeholders generally will have diverse interests and the regular will control the energy markets to safeguard wider interests of the ESI. For instance, consumers always expect lower electricity tariffs. Independent Power Producers (IPPs) expect decent returns on their investments (Trinasolar, 2022). State has the responsibility provide energy access to all. Electricity outages are the results of both inadequate supply and poor management of supply chains (Bayu et. al, 2022; Sastry (2007); Laureano, 2020). Utility’s role is to ensure that outages are minimum. All such diverse interests and responsibilities will be controlled by the regulator. Thus, the job of regulator is more like a justice of peace; to ensure that the energy market is a level playing field for all the stakeholders. If ESI is not managed properly, then overall energy flows and cash flow are negatively affected. Poor or inadequate energy supply leads to longer outages and the result will be reduced revenues from consumers over the long time as they would move to alternative resources (Musti, 2020b). Poor maintenance of transmission and distribution networks leads to shorter outages and poor voltage quality (Sastry, 2007; Mks, 2005). This also results in reduced revenues, but distribution companies will face more revenue losses.