Present Energy Scenario in India
1. India ranks 76th on the World Economic Forums Global energy transition index today. While energy systems have globally become less affordable and less environmentally sustainable than they were five years ago, access to energy has improved with less than one billion now living without access to electricity. India is amongst the countries with high pollution levels, with a relatively high CO2 intensity in its energy systems. Despite this, India has made significant strides to improve energy access in recent years and currently scores well in the area of regulation and political commitment towards energy transition.
2. In 2029 - 2030 at 6% GDP growth, demand will peak at approximately 255000 MW and 295000 MW at 9% growth. India will therefore remain a net energy importer for the foreseeable future. The primary energy consumption in India is the third highest after China and USA with 5.8% of global share. The growth rate was 7.9% in 2018. The total primary energy consumption, in 2018 was 809.2 Mtoe (million tonne oil equivalent), accounted by Crude Oil (239.1 Mtoe; 29.55%), Natural Gas (49.9 Mtoe; 6.17%), Coal (452.2 Mtoe; 55.88%), Nuclear Energy (8.8 Mtoe; 1.09%), Hydro Electricity (31.6 Mtoe; 3.91%) and Renewable Energy-(RE) (27.5 Mtoe; 3.40%).
3. In 2018, India’s net imports were nearly 205.3 million tons of Crude Oil and its products, 26.3 Mtoe of Liquefied Natural Gas (LNG) and 141.7 Mtoe Coal totaling 373.3 Mtoe of Primary Energy (46.13% of total Primary Energy Consumption). Import dependence is likely to grow in future years to 53% by 2030.
4. Maximum energy intensity sector is Industry, accounting for 58% of total energy consumption. Consumption of raw Coal is on account of power generation (527MT), Steel (54MT), Cement (6.4MT) & Sponge Iron (5.8MT). Maximum use of Natural Gas is by the fertilizer Sector (30%) followed by Power Generation (23%) and Domestic fuel (14.5%). Electricity consumption by industry accounts for 40%, Domestic 24%, Agriculture 18%, Commercial 9% & Railway Traction 2%.
5. Energy intensity in India’s GDP has shown a small but welcome decline during the past few years. It was 0.2401 Mega Joules per Rupee in 2016-17 against 0.2732 Mega Joules per Rupee in 2011-12. Decline can be attributed to growth of the Service Sector and energy efficiency programmes. This emphasizes a need for India to quickly transit to knowledge economy.
6. With major dependency on import of Oil & Gas, India has to primarily depend on Coal, because of large reserves that it has with large reserves for its energy requirements. Constraints may however arise due to climate impact. In continued use of Coal, focus should be on clean Coal technologies, provision of emissions control and more efficient energy conversion technologies.
7. Govt has done well to pursue renewable energy sources (900,000MW potential). It has set an ambitious target of 170,000 MW (Solar 100,000MW, Wind 60,000MW, with Bio Mass/ Mini Hydel by RE accounting for remaining 10,000MN by 2022. In the case of RE provisioning for storage support in view of diurnal and seasonal variations is the main issue.
RECOMMENDATIONS
8. Surya Foundation Think Tank recommendations pertaining to Energy Security Challenges in Power, Renewable Energy, Coal, Oil and Gas sectors are enumerated in the succeeding paragraphs:-
(a) Thermal. - 226279 (63.6%) of which Coal based is 194444.50 (54.6%) and balance Lignite and Gas.
(b) Hydro. - 45399.22 (12.7%).
(c) Nuclear. - 6780 (1.9%).
(d) Renewable Energy. - 77641.63 (21.8%). Break up of Renewable Energy capacity is.
(i) Wind Power. - 35625.97(MW) (45.88%),
(ii) Solar Power. - 28180.71(MW) (36.29%),
(iii) Bio Power + Co-Generation. - 9103.50(MW) (11.72%),
(iv) Small Hydro Power. - 4593.15(MW) (5.9%),
(v) Waste Energy. - 138.30. (MW)
10. Conventional Electricity Generation. In India in 2018-19 it totalled 1,249 Billion
Units (BU) with break up as under.
(a) Thermal. (Coal/Lignite, Oil/Gas)-1072BU (85.8%).
(b) Hydro. 135BU (8.0%).
(c) Nuclear. 37.7BU (3.14%). (d) Imports from Bhutan. 0.36%. (Note- Pre eminent role is of Thermal Generation.)
11. Renewable Energy Generation. During the period April 2018 to February 2019, it accounted for 93146 Million units (MU) equivalent to 93.14BU. Break up is as under.
(a) Wind.- 49,759 MU.
(b) Solar. - 22,559 MU.
(c) Bagasse. -10,553 MU.
(d) Bio mass. - 3,134 MU.
(e) Small Hydro Projects. -7,314 MU.
Note : Wind and Solar are main contributors in Renewable Energy (RE) Generation. The Overall RE contribution is 7% in the country’s total generation of power. There is an imperative need for monitoring RE generation against capacity installed (Data 1KW Solar unit produces around 1100 to 1400 units/KWh and 1KW Wind Turbine 3000 units under average Indian conditions).
12. The Financial sickness of State Electricity Boards (SEBs) / Discoms is a matter of deep concern and is hindering the growth of the Power Sector and Private Sector participation in particular. Despite (UDAY) initiatives many (SEBs) are still averaging 20% Aggregate Technical & Commercial (AT&C) losses and some states nearly 30%.
13. The average sale price realization per unit electricity produced against cost of production continues to be low. Discoms are having large outstanding with Generating Companies, leading to financial distress of Generating Companies. The State Govts will have to raise agriculture tariff to recover costs and compensate the farmers with subsidy in the form of Direct Benefit Transfer (DBT). It is recommended that this issue be reviewed periodically in Interstate Council of Ministers for quick solution.
14. The new tariff policy proposed may provide for advance payments, (letter of credits) for supply of electricity and encourage installation of prepaid meters. The policy may consider the need for some compensatory tariff for the contribution made by Gas & Hydro based generation to support & address issues regarding volatility in price differential between imported & indigenous coal. Regulatory delays to tariff revision will also have to be gone into.
15. Thermal (Coal based) generation forms the back bone for the production of electricity. Hence, the need for stepping up indigenous coal production, as presently there is a shortage of 200MT, lack of proper coal linkages and adequate timely availability of rail wagons and quick implementation of rail coal evacuation projects.
16. There is also a serious shortage of gas availability. Around 200,000MW generation capacity is lying idle and underutilized on this account.
17. There is an urgent need for all thermal plants to be fitted with de sulphurisation equipment and electrostatic precipitators in the ‘flue’ gas system before discharge. This may entail additional investment and some rise in electricity prices (around 60 paisa per unit). This is an unavoidable necessity to contain emission.
18. Progress on Hydro Power capacity additions is lagging behind. Present Hydro capacity is 15% against 50% at time of independence. The Govt has done well to give Renewable Energy (RE) status to Hydro plants beyond 25MW. The Hydro sector is beset with a number of problems – Geological, Topological, Hydrological, Seismic Risks, Cost Escalation, problems with approach infrastructure, long delay in Statuary Clearances, land acquisitions and Relief and Resettlement (R&R) problems, long gestation period requiring long term credits, agitations (example Assam blockade of Arunanchal Hydro projects).
19. Private sector stalled Hydro projects in Arunanchal Pradesh will have to be quickly revived. Considering the risks it is recommended that large Hydro projects be handled by Govt agencies (Centre/State) and Private Sector investments diverted to Thermal and Renewable Generation.
20. There is need to step up Nuclear Generation capacity. R&D efforts will have to be boosted for Thorium based generation, as there is an abundant availability of Thorium in India. 21. Progress on Ultra Mega Thermal Power Projects (UMPPs) would need to stepped up, including recommencing stalled projects at Tilaya & Krishnapatnam
22. Considering forthcoming large capacity additions in RE, (with diurnal/seasonal variations), it will be important to plan immediately large Grid storages with pumped Hydro storage projects. Two projects may be taken up immediately on the pattern of UMPP, one each in the Southern and Western regions of the country.
RENEWABLE ENERGY
23. It is important that as a part of “Make in India” initiative Govt of India should take urgent action not only to increase existing capacity of Solar Module manufacture in the country but invite FDI for setting up manufacture from ingot /wafer stage, offering even some special incentives. The Govt can consider this under “Govt procurement” route and give some tariff protection in the nascent stages of the industry.
24. Indigenous R&D in Solar technology should be given a thrust, by forming a consortium of Govt Scientific laboratories. Govt PSU’s like Bharat Heavy Electricals Limited (BHEL), Coal India Limited (CIL) etc, Academia & Private Sector. This should be declared as a “Mission Area” for the Govt. with proper monitoring.
25. The Govt needs to be complimented for the launch of the Kisan Urja Suraksha evam Utthan Mahabhiyan (KUSUM) initiative this year to support Solar generation to farmers & Rural areas which include “off grid solar pumps”, grid connected solar installations (0.5 to 2MW) & solarisation of drinking water tube wells. Govt will bear 60% of cost (Centre/States) 30% by credit & farmers to pay upfront 10%. It is suggested State Electricity boards may coordinate this subject by setting up micro generation wings at all levels. This will also facilitate grid connectivity problems.
26. The govt has proposed that attractive tariff be given to farmers for grid feedback. This will incentivize them to save water and prevent ground water depletion. KUSUM will bring relief to sickness in State Electricity Boards.
COAL SECTOR
32. Some pilot projects may be considered for underground gasification, in collaboration with USSR, USA etc for technology/equipment support. This will enable recovery of energy from coal seams that are too deep to extract or disturbed.
33. Coal India must attempt progressive reduction in cost of coal production as this has a bearing on Indian industry’s Global competitiveness. Coal freight rates of Railways will also need to be brought down.
PETROLEUM AND NATURAL GAS SECTOR
Key Issues
34. While efforts to boost indigenous exploration of Oil and Gas continues with exploration policies ie Hydrocarbon Exploration & Licensing Policy (HELP), Open Acreage Licensing Policy (OLAP) and Gas pricing reforms, it will be in India’s interest that Oil and other PSU’s vigorously pursue overseas acquisition of strategic assets in Oil and Gas, and in Coal specially in the area of coking and high grade coal and strategic minerals.
35. India will have to take a quick decision on import of Gas through pipelines after evaluating risks in TAPI, Iran / Qatar supply routes etc. India should also pursue joint ventures for fertilizers production, steel melting from export of iron ore pellets to Gas rich nearby friendly countries.
36. Conservation efforts in Oil and Gas should continue.
37. Ethanol blending in auto fuels is around 3 to 5% against increased limits of 20% which is permissible. There is need to increase production of Ethanol production by focusing on sugar cane production in the good rainfall Eastern Sector, as a part of Second Green Revolution initiative.
38. In view of the possible Global scenario of large Natural Gas availability, India should plan a progressive shift to Gas based economy from Oil, in so far imports are concerned.
39. Appointment of a common Regulator for Energy (Coal, Petroleum & Natural, Gas, Electricity) & and an apex Inter Ministerial Policy Body should be considered in the context of uncertain energy scenario, volatility in international prices & need for making balanced investment decisions from a long term angle.
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