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India
Contents
A note on the creation of this study
Executive Summary
13
21
22
28
29
30
Contributors
World Economic Forum
16
17
20
31
Appendix A: Computation and Structure of the Energy Architecture
Performance Index
32
Appendix B: Technical Notes and Sources for the Energy Architecture
Performance Index
Executive Summary
The last decade has been a period of tremendous growth for India. This
growth has driven a large increase in energy demand, with India now
being the fourth largest consumer of energy globally. Between 1990 and
2008, total demand grew by 95%2 and has put Indias energy
architecture under severe strain. India has provisionally set a 9% GDP
growth target as part of the 12th Five Year Plan, which will require energy
supply to grow 6.5% per year.3 This represents a much more significant
growth target for the sector than in previous years. The focus for the
coming years will therefore be on supporting economic growth by
providing a secure supply of energy. Indeed, inability to meet energy
demand could be the single biggest constraining factor to Indias growth
story.4 This will require India to bring new forms of supply online, deliver
it more effectively to consumers (both urban and rural), and do so at a
market-based price (based upon the eventual eradication of subsidies)
that sends appropriate signals to both the demand and supply sides.
India does have a responsibility to achieve its growth trajectory in an
environmentally sustainable manner, and has set a voluntary target to
cut the emissions intensity of GDP by 20-25% by 2020 compared with
2005 levels.5 Therefore, the way forward should be to identify common
ground between climate change policy and economic growth and
pursue measures that achieve both.
Considering that there needs to be a significant expansion in energy
infrastructure, India has an opportunity to pursue development while
managing emissions growth, enhancing its energy security and creating
world-scale clean-technology industries. This would require that India
leapfrog inefficient technologies, assets and practices and deploy ones
that are more efficient and less emission-intensive. India should
therefore not look to copy the Western model of energy infrastructure
development, and instead pursue a development path that is particular
to its local conditions. This would require that India leapfrog inefficient
technologies, assets and practices and deploy ones that are more
efficient and less emission intensive, with a key opportunity being the
expansion of decentralized distribution and generation.
Executive Summary
The study provides a basis for discussion and a valuable tool for
policy-makers, industry and other stakeholders to use in identifying the
current energy architecture challenges for India and the enabling
environments that should be created to drive the transition to a New
Energy Architecture. We hope it will provide support for any discussion
on Indias energy architecture aimed at generating concrete insight and
priorities for action.
Costly and inefficient subsidies are damaging the economy. The energy
market must be made more transparent and efficient to attract foreign
and private investment. This will require the removal of subsidies and
increased separation between the government and state-owned
companies. Market structures for the transmission of electricity between
states must be rationalized to foster the development of renewable
generation and better load balancing.
India can become a centre of excellence for renewable energy R&D.
India has a large and growing educated population and this must be
leveraged to provide the technical skills that will be required to make the
transition to a New Energy Architecture. Society must be more aware of
the consequences of energy consumption and the role of decentralized
distribution and generation in providing modern forms of energy and
bringing opportunities for economic development.
The provision of information is essential for the deployment of new
technologies. The effective, transparent and sympathetic dissemination
of information will be central in developing Indias energy architecture,
from communicating the removal of subsidies to the need to consume
energy more efficiently. Honest and upfront communication will also be
essential to gaining the involvement of international and private energy
companies in the development of Indias hydrocarbon resources.
The governments role in creating a strong, stable and transparent policy
framework is essential. This will require strong political leadership to
manage the effective removal of subsidies and enable the benefits from
increased private sector participation to be fully passed onto the public.
Indias population is growing in size and wealth and private companies
must look to exploit this opportunity, this will involve investing in
collaborative partnerships to gain access to technology and skills and
deploying new technologies to market. The true cost of energy use and
waste must be communicated by civil society so that changes in
subsidy levels and energy architecture are accepted. Cultural changes
such as the acceptability of electricity theft must be altered. The role of
modern forms of energy in developing the welfare and economy of rural
areas must be imparted.
Tulsi R. Tanti, Wind matters: Making the case for wind in India, Suzlon, 2011
New Energy Architecture India
A Methodology
for Managing
Transition
Effectiveness
7
Industry
Physical
Carriers
Energy Triangle
Civil Society
Government
Energy Sources
Industry
Physical
Carriers
Civil Society
Energy
Access &
Security
Boundary Constraints
Social
Environmental
Sustainability
Boundary Constraints
Definitions
Environmental
Sustainability
Social
Definitions
Government
Markets &
Demand Sectors
Energy
Access &
Security
Markets &
Demand
Sectors
Energy Sources
Social elements :
Social elements :
IncludesIncludes
political
political
institutions, industry and
institutions,
industry and
civil society, which shape
the
physical
elements.
civil society, which
shape
the physical elements.
Bounda
Factors
performa
energy t
physical
Key question
1. Assessing current
energy architecture
performance
Activity
This project was initiated to help decisionmakers enable a more effective transition to a
New Energy Architecture. To do so, a
methodology has been created to help them
look to the long term and to provide a stable
policy environment, based on a holistic and
in-depth understanding of the consequences
of decisions across the energy value chain. The
end result will be a New Energy Architecture
that is more responsive to balancing the
imperatives of the energy triangle. This process
comes in four steps (see Figure 2):
3. Defining the
enabling
environment
4. Defining areas of
leadership
An archetype approach
How is energy
architecture currently
performing?
What enabling
environment will achieve
transition objectives?
a) Understand current
energy architecture
a) Highlight energy
architecture challenges
a) Create an enabler
toolkit that highlights
the potential actions
that can be taken to
accelerate the
transition
a) Develop high-level
action plan for steps
to be taken by
government, industry,
the finance
community and civil
society to shape the
transition
b) Map enablers to
transition objectives
Step 1:
Assessing Current
Energy Architecture
Performance
The Economic Times, India eyeing 63,000 MW nuclear power capacity by 2032: NPCIL, 11 October 2010
References to Indias energy balance are sourced from the IEA.
Prayas, Energy Group, An Overview of Indian Energy Trends: Low Carbon Growth and Development Challenges, September 2009
12
CEA Annual Report 2009-2010; Ministry of Power, Power Sector at a Glance ALL INDIA
13
ibid
14
Ministry of Coal, Annual Report 2009-2010
15
Ministry of Coal, Provisional Coal Statistics 2009-2010
9
10
11
Just five sectors of industry (iron and steel, cement, chemicals and
petrochemicals, pulp and paper, and aluminium) are responsible for the
majority of industrial energy demand. Economic growth has gradually
decoupled from energy growth, due to the increasing role of the
services sector. The popularity of non-motorized modes of transport
(which are responsible for more than a quarter of all trips in major cities,
and greater than half in small towns and rural areas) and public
transportation (which satisfies more than three quarters of passenger
demand for motorized transport) mean that the consumption of the
transport sector is significantly less than the global average.11 The
residential sector comprises about 39% of final energy consumption in
India, but only 19% of final commercial energy consumption, since
biomass dominates household energy use in rural areas.
Figure 3 Energy Balance (KTOE) in India, 2008
Coal &
Peat
Crude Oil
Oil
Products
Gas
Hydro
Solar,
wind etc.
Biomass
& waste
Nuclear
Electricity
Heat
Total
225,090
38,339
0*
26,299
9,829
1,350
163,565
3,834
468,307
Imports
38,275
130,974
18,611
9,302
795
197,958
Exports
-40,070
-1,656
-38,380
-33
-141
-141
-4,746
-4,746
-336
-336
261,373
169,313
-24,655
35,601
9,829
1,350
163,565
3,834
762
620,973
Stock changes
TPES (Total primary energy supply)
% Share
42,1%
27,3%
5,7%
1,6%
0,2%
26,3%
0,6%
0,1%
0,0%
-4,0%
Key Players by Sector
Renewables
Bharat Petroleum
Hinustan Petroleum
Indian Oil
ONGC
Cairn Energy (private)
Essar Oil (private)
Reliance (private)
Ministry of Petroleum and Natural Gas
Suzlon (priavte)
Tata BP Solar (private)
Moser Baer (private)
Orient Green Power (private)
Greenko (private)
Ministry of New and Renewable
Energies
NTPC
NHPC
NPCI
Power Grid Corporation of India
Tata Power (private)
Ministry of Power
Ministry of Coal
Department of Atomic Energy
Bureau of Energy Efficiency
Central Electrical Authority
Central Electricity Regulatory Commission
Figure 4 Change in Indias EAPI Scores over Time and Relative Performance*
KPI
Index
2008
Actual
Index
2000
Actual
Index*
EAPI
1.02
0.84
0.69
0.42
0.37
0.28
0.05
2,064
0.03
1,270
0.01
776
0,04
HDI
0.21
0.51
0.09
0.44
0.00
0.39
0,21
0.49
10.23%
0.82
3.88%
0.89
2.40%
0.59
0.19
0.29
0.29
0.00
0.42
0.65
30.92%
0.67
28.61%
0.67
28.61%
Environmental Sustainability
0.19
0.26
0.05
1.38
0.10
0,15
-0,40
0,59
-0,03
0,14
0.05
1.67
0.09
0.12
2.42%
0.12
2.39%
0.12
2.44%
0.38
59,23
0.00
92.88
0.00
110.55
0.00
47.84%
0.00
47.84%
0.00
39.18%
0.41
0.32
24.58%
0.34
20.25%
0.38
8.49%
0.24
3.15
0.29
3.20
0.29
3.20
0.23
59.69%
0.03
74.00%
0.03
74.00%
0.83
0.69
0.83
0.69
0.79
0.67
0.41
0,18
1.69
0,00
0,38
0,00
0,04
0.36
-0,07
-0,01
0,20
0,04
*In a number of instances, historic data was not available. In these cases, data was kept constant from the last available year in which it was available. This applies to the following indicators: Share of mineral
products in export data was only available for 2005-2008. In calculations of the index for the years 1999-2004 and 1980, the data from 2005 was kept constant. Water scarcity data was only available for
2000. This was kept constant across the time periods covered. Quality of electricity supply data was only available for 2005-2008. In calculations of the index for the years 1999-2004 and 1980, the data
from 2005 was kept constant. Access to modern forms of energy data was only available for 2003. This was kept constant across the time periods covered.
16
17
Economic
development
India has achieved rapid economic growth over the past two decades.
Its energy architecture has supported this development, resulting in a
steady rise of its score on the index from 0.28 to 0.42.
Environmental
sustainability
1990
2008
Share of mineral
products in
export index
HDI index
Import bill as a
share of GDP
index
Energy intensity
index
1990
2008
Freshwater
withdrawals
index
Share of RES in
TPES index
Outdoor air
pollution index
1990
2008
Quality of
electricity
supply index
Diversity of
supply index
1990
2008
Prayas, Energy Group, An Overview of Indian Energy Trends: Low Carbon Growth and
Development Challenges, September 2009
18
0.45
0.90
EAPI scores
0.40
0.80
0.35
EAPI Score
0.70
0.30
0.60
0.50
0.25
Japan
0.20
0.40
0.15
0.30
0.20
0.10
0.10
0.05
0.00
toe/thousand 2000US$
1.00
0.00
1990
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Nagayama, Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries, Energy policy 2007
1.00Reforming the power sector: Controlling electricity theft and improving revenue, September 2004
World Bank,
Power Secretary P. Uma Shankar, Bloomberg Businessweek, Can Indias Power Thieves Be Stopped?, 2011
22
Clean Distributed
0.90 Generation for Slum Electrification: The Case of Mumbai, David Schaengold, Woodrow Wilson School Task Force on Energy for Sustainable Development, 2006
23
Government of India, Report of the expert group on a viable and sustainable system of pricing of petroleum products, 2 February 2010
24
OECD Economic Surveys: India 2011
19
20
140.00
21
core
10
New
Energy Architecture India
0.70
0.60
120.00
100.00
80.00
m3] p.a.
0.80
EAPI Score
1990
1999
2000
2001
2002
2003
0.20
0.15
0.10
toe/thousand 2000US$
Environmental Sustainability
0.05
0.00
2004
2005
2006
2007
2008
140.00
1.00
0.90
EAPI Score
0.70
100.00
0.60
80.00
China
0.50
60.00
0.40
0.30
40.00
EAPI Scores
0.20
120.00
0.80
20.00
0.10
0.00
0.00
1990
1999
2000
2001
2002
2003
2004
2005
2006
2007
The Impact of the Financial and Economic Crisis on Global Energy Investment, IEA Background paper for the G8 Energy Ministers Meeting 24-25 May 2009
Planning Commission, Government of India, Low Carbon Strategies for Inclusive Growth: An Interim Report, May 2011
Prayas, Energy Group, An Overview of Indian Energy Trends: Low Carbon Growth and Development Challenges, September 2009
28
Central Pollution Control Board, 2007; Annual Report for 2006-2007, New Delhi
1.00 of Indian Industry, Building a Low-Carbon Economy, 2008
29
Confederation
30
CSE India, Water Use in India, Chandra Bhushan
2008
25
26
27
0.80
0.70
25.00
20.00
S (%)
0.90
30.00
11
0.45
0.90
EAPI scores
0.40
0.80
0.35
EAPI Score
0.70
0.30
0.60
0.25
0.50
Japan
0.40
Energy Access and Security
0.30
The Indian economy faces significant challenges in terms of meeting its
energy needs0.20
in the coming decade. Although India has extensive
steam-coal reserves,
its known reserves of oil and gas are limited.
0.10
Increasing energy requirements, coupled with a slower than expected
0.00
increase in domestic
crude oil and natural gas production, have meant
that the share of imports
in the energy
growing rapidly.
1990
1999 mix is2000
2001 Import
2002
dependence has risen from 8.49% to 24.58% of GDP. The import
component of domestic oil consumption is about 76% (after adjusting
for the export of refined petroleum products) and in the case of natural
gas, it is about 19%. This has been tempered by Indias diversity of
supply and the promotion of alternative fuel sources, and an aggressive
policy of exploring its basins for hydrocarbons through its New
Exploration and Licensing Policy (NELP). Since the inception of NELP,
1.00
there have been
more than 100 hydrocarbon discoveries, most of them
being natural0.90
gas, totalling over 30 trillion cubic feet.11
These losses are among the highest in the world, comparable with 0.15
some countries in sub-Saharan Africa. According to the World
Economic Forums Global Competitiveness Index, the quality of 0.10
electricity supply has actually worsened in recent years, declining from a
0.05
score of 3.20 in 2005 to 3.15 in 2008. Peak demand deficit surged in
2007-2008 and, despite falling rapidly in 2008-2009, has started rising
0.00
again. Power shortages are an aspect of everyday life and are having
an
2003
2004
2005on industrial
2006 output
2007
2008 GDP
increasingly
negative effect
and impeding
growth; a 2009 study estimated that the downtime cost just to service
sector companies was US$ 9.4 billion, an increase of almost 100% from
2003.32
With the biggest rural population in the world, India faces a huge
electrification challenge. According to the International Energy Agency
(IEA), 25% of the population (289 million) does not currently have access
140.00
to electricity, while 72% of the population (836 million) relies on the
33
traditional use of biomass for cooking. Low energy availability and
120.00
consumption is reflected in the relatively low Human Development
Index
(HDI) of India.
100.00
EAPI Score
Indias power0.80
generation capacity has struggled to keep pace with rapid
economic and population growth and urbanization.
of
India Despite
PM1050GW
level
0.70
total power generating capacity added over the past five years, peak
demand deficits
0.60are expected to remain worryingly high during
2011-2012, ranging from 5.9% in the north-eastern region to 14.5% in
China
the southern 0.50
region.31 In individual states, such as Goa, Daman and Diu,
these deficits0.40
run at over 40%. Transmission and distribution is also
inadequate. Distribution faces substantial technical losses (because of
0.30
overloading of
transformers and conductors, for instance) and, as
previously mentioned, commercial losses of electricity (because of low
0.20
EAPI
Scores
metering efficiency, poor billing and collection and
large-scale
theft of
power).
0.10
0.20
80.00
60.00
40.00
20.00
0.00
0.00
1990
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
30.00
1.00
0.90
20.00
EAPI Score
0.70
0.60
15.00
0.50
EAPI
China
0.40
10.00
0.30
5.00
0.20
0.00
0.10
-5.00
0.00
1990
31
32
33
1999
2000
2001
2002
2003
12
2004
2005
2006
2007
2008
25.00
0.80
toe/thousand 2000US$
1.00
India falls within the Grow archetype. Countries within this archetype
have energy architectures that are focused on securing continued and
rapid economic growth. Their focus is on alleviating supply bottlenecks,
to reduce supply-demand deficits. Key opportunities for these countries
lie in bringing new forms of supply online and delivering it more
effectively to consumers and doing so at a market-based price. It
consists principally of countries that are going through a rapid growth
phase, such as those in East Asia and Central and Eastern Europe. They
feature growing urban populations, but many also have large rural
hinterlands. Due to the growing strain of economic growth, physical
infrastructure often falls short of national needs, despite increasing
investment. Many of these countries experience peak supply deficits
and regular black-outs. The challenge for these countries is to increase
reliability, ensure that power supplies keep up with economic growth,
and avoid shortfalls that constrain growth.
Figure 9 reports the scores and actual data for India and a select group
of Grow nations. Figure 10 is a heat map that complements the raw
scores, allowing for a reading of Indias performance in the EAPI in
relative terms. It provides a sense of the distance in scores that
separates India from other members of the Grow archetype. Blueshaded cells and grey-shaded cells indicate that India scores or ranks
respectively higher or lower than the comparator, while no shading
means that there is no significant divergence. The darker the shading,
the greater the difference in performance.
The heat map mirrors Indias atypical performance pattern described
above. Relative weak points include human development, water scarcity
and the proportion of the population using solid fuels, underlining that
India faces significant challenges in relation to energy access in
comparison to its peers. Relative strengths include energy intensity and
diversity of supply. The figure shows that India is outperformed by its
peers across the three imperatives of the energy triangle China is
stronger on 10 out of the 17 indicators. This underlines the significant
opportunities for improving Indias energy system.
Figure 9 EAPI Results for India and Selected Comparators from the Grow Archetype
Economic Growth and
Development
HDI index
Import bill as a
share of GDP
Energy intensity
Share of mineral
products in export
Country
KPI
Raw
KPI
Raw
KPI
Raw
KPI
Raw
KPI
Raw
Chile
0.30
11277
0.71
0.78
0.57
0.09
0.78
0.14
0.74
23.24
Hungary
0.44
16217
0.76
0.80
0.29
0.14
0.77
0.14
0.96
3.81
India
0.05
2036.9
0.21
0.51
0.49
0.10
0.59
0.19
0.65
30.92
Indonesia
0.08
2983
0.36
0.59
0.62
0.08
0.46
0.24
0.62
33.46
Korea, Rep.
0.59
21630
0.39
0.12
0.64
0.18
0.90
9.45
Mexico
0.31
11646
0.65
0.75
0.90
0.02
0.84
0.12
0.79
18.46
China
0.09
3598.6
0.47
0.65
0.78
0.05
0.29
0.29
0.97
2.66
South Africa
0.21
7992.8
0.36
0.59
0.64
0.07
0.32
0.28
0.72
24.83
Thailand
0.17
6309.3
0.46
0.65
0.30
0.14
0.56
0.21
0.91
7.91
Turkey
0.26
9802
0.52
0.67
0.63
0.08
0.89
0.10
0.92
7.44
Vietnam
0.05
1937.2
0.38
0.13
0.36
0.27
0.77
20.72
13
Environmental Sustainability
Carbon intensity
Share of non-carbon
energy
Country
KPI
Raw
KPI
Chile
0.78
0.49
Hungary
0.79
0.48
India
0.26
Indonesia
Korea, Rep.
Freshwater
withdrawals
Raw
KPI
Raw
KPI
Raw
0.34
6.63
0.35
61.55
0.97
1.28
0.77
15.16
0.90
15.60
1.38
0.12
2.42
0.38
59.23
0.00
47.84
0.37
1.19
0.39
7.68
0.22
72.35
0.87
5.61
0.75
0.55
0.89
17.49
0.72
30.76
Mexico
0.78
0.48
0.34
6.73
0.70
32.69
China
0.00
2.14
0.18
3.53
0.30
65.61
South Africa
0.08
1.70
0.13
2.64
0.82
22.13
0.34
27.86
Thailand
0.32
1.28
0.03
0.57
0.42
55.31
Turkey
0.77
0.50
0.23
4.57
0.64
37.06
0.56
18.50
Vietnam
0.16
1.57
0.19
3.76
0.46
52.71
Import dependence
Quality of electricity
supply
Diversity of supply
Country
KPI
Raw
KPI
Raw
KPI
Raw
KPI
Raw
Chile
0.12
71.34
0.68
5.33
1.00
5.00
0.70
0.61
Hungary
0.17
60.33
0.68
5.29
1.00
5.00
0.88
0.73
India
0.32
24.58
0.24
3.15
0.23
59.69
0.83
0.69
Indonesia
0.73
-74.65
0.39
3.86
0.25
58.36
0.95
0.77
Korea, Rep.
0.08
80.29
0.85
6.15
1.00
5.00
0.87
0.72
Mexico
0.54
-29.34
0.42
4.03
0.86
15.00
0.66
0.59
China
0.40
5.82
0.56
4.72
0.40
48.00
0.54
0.52
South Africa
0.51
-21.16
0.29
3.36
0.83
17.27
0.46
0.47
Thailand
0.25
40.41
0.71
5.48
0.72
25.00
0.87
0.72
Turkey
0.12
70.58
0.45
4.15
0.88
0.72
Vietnam
0.50
-20.14
0.26
3.22
0.22
61.00
0.86
0.71
Diversity of supply
Quality of electricity
supply
Import dependence
Freshwater
withdrawals
Outdoor air
pollution
Carbon intensity
Environmental
sustainability
Share of mineral
products in export
Energy intensity
Import bill as a
share of GDP
HDI
Economic growth
& development
Figure 10 Heat Map Indicating Differences between India and Selected Archetype Comparators*
Country
India
0.42
0.05
0.20
0.49
0.59
0.65
0.19
0.26
0.12
0.38
0.00
0.41
0.32
0.24
0.23
0.83
Chile
-0.22
-0.25
-0.50
-0.08
-0.18
-0.09
-0.42
-0.52
-0.21
0.03
-0.97
-0.22
0.20
-0.44
-0.77
0.13
-0.28
0.15
-0.43
-0.77
-0.05
-0.87
-0.17
-0.42
-0.14
-0.02
-0.12
-0.04
Hungary
-0.24
-0.39
-0.55
0.21
-0.18
-0.31
-0.63
-0.52
-0.64
-0.52
Indonesia
-0.01
-0.03
-0.15
-0.13
0.14
0.03
-0.27
-0.11
-0.27
0.16
Korea, Rep.
-0.21
-0.54
0.10
-0.05
-0.25
-0.59
-0.48
-0.76
-0.34
-0.29
0.23
-0.61
-0.77
Mexico
-0.29
-0.26
-0.44
-0.41
-0.25
-0.14
-0.42
-0.52
-0.22
-0.32
-0.22
-0.23
-0.18
-0.63
0.17
China
-0.07
-0.04
-0.26
-0.29
0.31
-0.33
0.03
0.26
-0.06
0.08
-0.07
-0.08
-0.32
-0.16
0.29
South Africa
-0.01
-0.16
-0.16
-0.15
0.28
-0.07
-0.15
0.18
-0.01
-0.44
Thailand
-0.07
-0.12
-0.26
0.19
0.04
-0.27
-0.07
-0.06
0.09
-0.05
Turkey
-0.25
-0.21
-0.31
-0.14
-0.30
-0.27
-0.36
-0.51
-0.11
-0.27
Vietnam
0.04
0.00
0.12
0.24
-0.12
-0.08
0.11
-0.07
-0.08
*This heat map allows for a reading of Indias performance in the EAPI in relative terms. It provides a sense of the distance
in scores that separates India from other members of the Grow archetype. Blue-shaded cells and grey-shaded cells
indicate that India scores or ranks respectively higher or lower than the comparator, while no shading means that there is
no significant divergence. The darker the shading, the greater the difference in performance.
14
Score Difference
-0.34
-0.56
-0.7
-0.11
-0.19
-0.04
-0.59
0.38
-0.23
0.07
-0.47
-0.49
-0.04
-0.08
0.19
-0.20
-0.05
-0.19
-0.01
0.02
-0.4
-0.1
0.1
0.4
-0.05
-0.03
0.7
Energy poverty: 72% of the population continues to rely on biomassbased fuels for cooking, and 289 million people lack access to
electricity, giving India a sub-par performance with regard to energy
access in comparison to its peers.
15
Step 2:
Creating New
Energy Architecture
Objectives
16
Tulsi R. Tanti, Wind matters: Making the case for wind in India, Suzlon, 2011
These transition objectives are intended to indicate the focus that India will have over the course
of the next 15-20 years, and are not intended to be exhaustive.
36
Government of India, Planning Commission, Faster, Sustainable and More Inclusive Growth: An
approach to the 12th Five Year Plan, August 2011
37
Interview participant, New Delhi, October 2011
38
Natural Resources Defense Council, From Copenhagen Accord to Climate Action:
Tracking National Commitments to Curb Global Warming, http://www.nrdc.org/international/
copenhagenaccords/
34
35
17
Tulsi R. Tanti
CEO, Suzlon34
18
India may be the worlds second fastest growing economy, but its
physical infrastructure continues to fall far short of national needs.
Historically, Indias infrastructure investment has averaged about 4% of
GDP half the countrys more than 8% growth rate and half the GDP
percentage that China devotes to infrastructure.42 Infrastructure is so
poor in some instances that companies are forced to build their own.
Infosys, for example, generates much of its own electricity.43
19
Step 3:
Defining the
Enabling
Environment
20
2.
3.
4.
21
Interview conducted with representative from private oil and gas company in New Delhi, October
2011
47
IHS Global Insight, Indias NELP IX licensing round supported by state oil companies but fails to
attract IOC interest, 29 March 2011
48
Review of E&P Licensing Policy, Petroleum Federation of India, 2005
49
International Energy Agency, World Energy Outlook, 2011
50
Pew Centre, Coal Initiative Reports, A Resource and Technology Assessment of Coal Utilization in
India, A Chikkatur, 2008
51
Forms of Mining in India, Indian Infrastructure, Sanjay Sah, 2010
52
Essar Oil, Developments in India CMM/CBM, Prem Sawhney, March 2010
46
22
1.2 Expand and modernize the coal mining industry to enable foreign
participation and full exploitation of indigenous resources
Over the next 20 years, coal will continue to play an important role in Indias
energy architecture. Under its New Policies Scenario, the International
Energy Agency estimates that India will double its coal use by 2035,
displacing the US as the worlds second-largest coal consumer.49 Given
the continuing role of coal in the energy mix, it is important that India take
steps to ensure that domestic resources are able to meet growing
demand, and do so in an environmentally sustainable way.
Coal production has increased dramatically since nationalization and
has grown at 4% CAGR over the past decade. However, it has been
outstripped by growth in the power industry (which accounts for 80% of
consumption) leaving India increasingly reliant on imported coal.50 Coal
resources are known to be extensive with a potential resource base of
248GT and proven reserves of 93GT. However, systematic exploration
has been based on the coal industrys perceptions of extraction, leaving
extractable proven reserves of only 52GT.50 With increasing numbers of
modern coal-fired power plants being built, it is conceivable that they
may outlast domestic coal reserves. Without a clear picture of it coal
position, India may commit to building power plants now that will affect
its long-term dependence on imported coal. It must embark on renewed
coal exploration to obtain a conclusive estimate of reserves, which can
then be used to inform generation policy and capacity planning.
Shortcomings in exploration can be attributed in some part to the
propensity for open cast mining, which has been favoured due to its low
cost, quick access and high recovery rate. It accounts for over 80% of
production, with 62% of explored areas showing coal at a depth of less
than 300 m.50 The focus on open cast mining has led to chronic
underinvestment in underground mining, which now lacks modern
technology and mechanization.51 This lack of investment means that
India is not capable of exploiting its considerable reserves of
underground coal. As shallow coal becomes scarcer, this lack of
capability may well impede continued growth in coal production.
Some Indian companies have ventured abroad to extract coal reserves
in joint ventures and will acquire knowledge and technology to enable
them to reach underground coal back home. However, Indian coal
production must develop rapidly and significant technology and financial
investments are required. These would most easily be acquired by
opening up the industry to allow for foreign and private participation.
Although some steps have been taken to change the regulation of the
coal mining industry allowing private firms to mine for captive
generation more steps are needed to encourage the involvement of
international mining companies with the knowledge and technology
needed to empower growth in Indian coal production.
Although abundant, Indian coal is mostly of low quality with high ash
content and low calorific value. This has been exacerbated by open cast
mining that increases the quantity of overburden mixed with the coal.
Underground mining would go some way towards mitigating this, but
the use of new technologies must also be encouraged; coal bed
methane (CBM) and underground coal gasification (UCG) should also be
encouraged. Indias coal bed methane (CBM) resource has been
estimated at 50 trillion cubic feet52. Foreign and private participation has
been encouraged. Essar Oil has recently started producing CBM from
fields in West Bengal and has stated its intention to acquire more fields.
The first underground coal gasification (UCG) project was put out to
tender by Coal India earlier this year and has attracted bids from private
Indian companies partnering with international mining firms (to provide
the expertise). UCG is a cost-effective environmental solution for
resource recovery in areas beyond the technical and economic confines
of conventional mining. Both technologies are relatively recent and offer
strong potential in India. Efforts should be continued to expand their
application to Indias deep coal reserves.
Estimated
Potential
2010
Capacity
Percentage
Exploited
Average Cost
(US$/kWh)
Biomass
18,000MW
15,000MW
2673MW
14.85%
0.09
2953MW
19.69%
Wind
45,000MW
13,184 W
0.07
29.30%
0.09
Solar
50,000MW
45.5MWp
0.25 0.35
53
54
55
23
24
Anjali Jaiswal, Indias green path to growth: Addressing climate change and building a low-carbon
economy, NRDC
Graus et al. 2007; Chikkatur 2008
58
A Resource and Technology Assessment of Coal Utilization in India, Ananth Chikkatur, 2008
59
NRDC, Taking Energy Efficiency to New Heights, 2011, S. Chary Vedala, R. V. Bilolikar, S. Nalam,
D. Foster
60
Coping with residential Electricity Demand in Indias Future How much Can Efficiency Achieve?
V. Letschert, M. McNeil, Berkeley National Laboratory Environmental Energy Technologies Division,
2007
61
World Resources Institute, Powering UP: The Investment Potential of Energy Services Companies
in India, E. Delio, S. Lall, C. Singh, 2009
62
Options for Energy Efficiency in India and Barriers to Their Adoption, Resources for the Future, S.
Bhattacharya, M. Cooper, 2010
63
This applies to populations of less than 100 inhabitants; the electrification of villages comprising
more than 100 inhabitants will usually be taken on by the RGGVY scheme through its decentralized
distribution and generation. To avoid overlap of efforts, close coordination between the RGGVY and
the MNRE is ensured mainly through the Rural Electrification Corporation.
64
Bharat Nirman Electrification: A Business Plan; http://www.powermin.nic.in/bharatnirman/
bharatnirman.asp
65
Demand for grants 2007-2008, Standing Committee on Energy, 14th Lok Sabha, 20th Report,
Lok Sabha Secretariat, New Delhi
56
57
25
As the shift to a service industry continues and incomes rise, the peak
load deficit will continue to grow as the use of air conditioning,
refrigeration and electrical appliances increases, necessitating an
increment in the number of peaking power plants. In Maharashtra, the
difference between peaks and the base supply is up to 9,000 MW.73 By
introducing wider demand for profile flattening measures such as
reduced tariffs for non-peak consumption and off-peak timed water
heating in combination with hot water storage, the requirement for
peaking plants could be reduced.
Efficiency
(%)
Capital Cost
(USD)
Lifespan
(years)
Fuel Use
p.a
Fuel Price
(USD)
Total Annual
Cost (USD/y)
10
0.5
1500 kg
0.02
30.13
30
500 kg
0.02
11.32
35
2.5
280 liter
0.17
48.11
50
196 liter
0.17
34.35
LPG Stove
60
40
15
165 liter
0.352
63.34
Biogas
55
200
15
73 m3
26.29
100
100
15
0 n/a
13.15
Solar Cooker
26
27
Step 4:
Defining Areas of
Leadership
28
4.1 A Multistakeholder
Action Plan
The creation of an enabling environment that is resilient to risk and
responsive to the imperatives of the energy triangle goes beyond an
individual corporation or governments scope. Three key groups of
stakeholders have a role to play: policy-makers, industry and civil
society. Each stakeholder group should tailor future energy policy to
achieving Indias New Energy Architecture objectives, considering the
following options.
29
Appendices:
The Creation of the
Energy Architecture
Performance Index
30
Appendix A: Computation
and Structure of the Energy
Architecture Performance
Index
This appendix presents the structure of the Energy Architecture
Performance Index (EAPI). The index is designed to understand how
countries are performing in relation to each of the imperatives of the
energy triangle: economic growth and development; environmental
sustainability; and energy access and security. A sub-index was created
for each of these imperatives. For each sub-index a set of key
performance indicators (KPIs) were chosen based on an understanding
of the objectives of the imperative:
Economic growth and development: This sub-index aims to
measure the extent to which energy architecture supports, rather
than detracts from, economic growth and development. The
following KPIs were chosen:
Energy intensity
Cost of energy imports as a share of GDP
Share of mineral products in export
GDP per capita
HDI
Environmental sustainability: This sub-index aims to measure the
extent to which energy architecture has been constructed in a
manner that reduces negative environmental externalities. The
following KPIs were chosen:
0,
BASE
,
Score =
TOP BASE
1,
> BASE
Instead of using the maximum and minimum values of each data set,
anomalies were first removed by establishing TOP and BASE levels.
TOP is the point of the raw data that is mapped to 1 and is calculated
based from the mean +/- two standard deviations (dependent on
whether a high or low value for the original metric is good or bad).
BASE is the point of the raw data that is mapped to 0 and is calculated
from the mean +/- two standard deviations (dependent on whether a
high or low value for the original metrics is good or bad). All other
values then follow a linear distribution from the BASE to the TOP.
In the case of diversity of supply, the raw data was first converted into a
Simpsons Diversity Index to measure the distribution of energy supply
across seven supply sources: coal and peat; crude oil and oil products;
gas; nuclear; hydro; other renewables such as geothermal and solar;
and combustible renewable and waste. The Simpsons Diversity Index is
expressed using the below function, where n is the relative abundance
of each energy source:
31
Historic data
To understand how countries have progressed over time, historic data
was collected for the years 1999 to 2008, and also for 1990. To
complete the normalization process for historic data the TOP and BASE
values used were those from todays index. The historic indicators thus
show how countries are performing in comparison to today.
In a number of instances historic data was not available. In these
instances, data was kept constant from the last available year in which it
was available. This applies to the following indicators:
Economic growth and development
Share of mineral products in export: Data was only available for
2005-2008. In calculations of the index for the years 1999-2004
and 1980, the data from 2005 was kept constant.
Environmental sustainability
- Water scarcity: Data was only available for 2000. This was
kept constant across the time periods covered.
Energy access and security
Quality of electricity supply: Data was only available for
2005-2008. In calculations of the index for the years 1999-2004
and 1980, the data from 2005 was kept constant.
Access to modern forms of energy: Data was only available for
2003. This was kept constant across the time periods covered.
Creating archetypes
32
HDI
Import dependence
Environmental Sustainability
Carbon intensity of energy use
Carbon intensity (total carbon dioxide emissions from the consumption
of energy per dollar of GDP using market exchange rates (metric tons of
carbon dioxide per thousand year 2005 US dollars) | 2008
Estimate carbon dioxide emissions from the consumption and flaring of
fossil fuels, per thousand dollars of GDP, using market exchange rates.
When there are several fuels, as in this case, carbon intensity is based
on their combined emissions coefficients weighted by their energy
consumption levels. (Source: EIA)
Share of non-carbon energy sources
Alternative and nuclear energy/TPES | 2008
Clean energy is non-carbon energy that does not produce carbon
dioxide when generated. It includes hydropower, nuclear, geothermal
and solar power among others. This is taken as a share of total primary
energy use. (Source: The World Bank)
Outdoor air pollution
PM10 [mg/m3] per annum | 2008
Particulate matter concentrations refer to fine suspended particulates
less than 10 microns in diameter (PM10) that are capable of penetrating
deep into the respiratory tract and causing significant health damage.
Data for countries and aggregates for regions and income groups are
urban-population weighted PM10 levels in residential areas of cities with
more than 100,000 residents. The estimates represent the average
annual exposure level of the average urban resident to outdoor
particulate matter. (Source: The World Bank)
Water scarcity
Freshwater withdrawals as a share of internal resources | 2000
Annual freshwater withdrawals refer to total water withdrawals, not
counting evaporation losses from storage basins, and are a proxy
measure for water scarcity. Withdrawals also include water from
desalination plants in countries where they are a significant source.
Withdrawals can exceed 100% of total renewable resources where
extraction from non-renewable aquifers or desalination plants is
considerable or where there is significant water reuse. Withdrawals for
agriculture and industry include withdrawals for irrigation and livestock
production and for direct industrial use (including withdrawals for cooling
thermoelectric plants). Withdrawals for domestic uses include drinking
water, municipal use or supply, and use for public services, commercial
establishments, and homes. Data are for the most recent year available
for 1987-2002. (Source: AQUASTAT)
33