IEM – Integrated Energy Management

ENERGY SECTOR ANALYSIS 12TH FYP, INDIA.

BY KARAN R.TIBDEWAL

INTRODUCTION• 4th Largest consumer of Energy• Therefore to meet its demands• Grow domestic production

capability• Supplemented with imports• Imports Expensive. And getting

costlier.• Also related to Energy Security• Meeting GDP growth and also

energy efficiency – Major challenge

Demands Imports

Domestic Production

ENERGY INTENSITY• Is the energy input associated with

a unit of gross domestic product• Has been declining and will

continue• Implies growth in energy used <

growth of GDP -> Energy elasticity• Ratio of the growth of energy to

growth of GDP is less that unity. Elasticity has been declining over the years.

• Elasticity of commercial energy is > total primary energy because of the going shift from non – commercial to commercial energy

Period Energy Intensity (kgoe/US$)

1981 1.09

1991 0.99

2001 0.85

2011 0.62

GDP (+) How much energy ?

Therefore Household access to clean energy

ENERGY INTENSITY• National Mission on energy

Efficiency launched to improve efficiency.

• Lighting Efficiency – Using LED’s• Improvement in Energy Efficiency

• Reduced Energy Intensity of GDP

• Lower Elasticity of energy against GDP

• Elasticity may improve by 10% by 2017

s. No. Country Energy Intensity (kgoe)

1 UK 0.102

2 Germany 0.121

3 Japan 0.125

4 Brazil 0.134

5 USA 0.173

6 China 0.283

7 South Korea 0.189

8 India 0.191

EXPANDING ACCESS TO ENERGY

Access to cleaner energy for houselholds

(in 2004 – in 2010)

Rural 55 – 67.3

Urban 92 - 94

• Need to expand access to clean energy at affordable prices

• Village Electrification & Connection of rural households to electric supply- Rajiv Gandhi Vidyutikaran Yojana

• Supply of LPG - Critical

Although availability of electric supply still remains a problem

ENERGY DEMAND & SUPPLY• The demand for energy during the

Plan will increase as the economy grows and as access in rural areas expands

• The annual average growth rate of the total energy requirement is expected to accelerate from 5.1 per cent per year in the Eleventh Plan to 5.7 per cent per year in the Twelfth Plan and 5.4 per cent per year in the Thirteenth Plan.

• Demand for Non-commercial is expected to decline – increasing expansion and access to commercial energy

6.91% Commercial energy ( 5 years upto 2011)

2.6% Non - Commercial energy1.5%

Non - Commercial energy(next 10 years)

ENERGY DEMAND AND SUPPLY Share of each energy source in

total domestic production and also its share (including imports) in the total commercial energy consumption

Coal still remains the dominant energy source

Domestic Production is not expected to increase in the next 10 years

Although consumption increase from 50% - 57%

Share of oil – decline LPG increase from 8.5 – 13% The supply from renewables is

expected to increase rapidly from 24,503 MW by the end of the Eleventh Plan to 54,503 MW by the end of the Twelfth and 99,617 MW by the end of the Thirteenth although share still small

ENERGY DEMAND AND SUPPLY Renewable capacity increase Share still small Import dependence still increase Crude oil – main import Import dependence for coal, LNG

and crude oil taken together in the terminal year of the Twelfth Plan is likely to remain at the Eleventh Plan level of 36 per cent.

However, this assumes that we are able to realise projected domestic production levels of coal, petroleum and natural gas. If this is not achieved, the level of import dependence would increase further if the GDP growth rates projected are to be maintained.

ENERGY PRICING

Microeconomic Macroeconomic

• under-pricing energy to the consumer reduces the incentive to be energy-efficient

• Promotes leakage of subsidised products for

• sale in open market and also (in case of kerosene) adulteration.

• Underpricing to the producer reduces both the incentive and also the ability to invest in the sector, depressing production and increasing reliance on imports.

• obviously undermines energySecurity

• Misalignment leads to excessive import dependence with implications for the balance of payments, or if producers are sought to be insulated, it necessitates a subsidy, which places a burden on the budget.

• Economically important, also politically sensitive

• Rational energy prices – balance consumer energy demand with producer supply

• Energy prices should be aligned with the global energy prices, especially when large imports are involved

• Both microeconomic & macroeconomic problems

ENERGY SECURITY• Ensures uninterrupted energy

supply to support economic and commercial activities of the economy

• Imported Energy – lesser security

Domestic Production of

Coal

Stable & Attractive

Policy regime

Investment in

Renewables

Energy assets

investment abroad

Meet any disruption

in Oil Supply

Steps for better

security

Import dependent – more than 80%,Need for more storage capacity

POWER SECTOR• Addition to the Generation

Capacity of 76000 MW corresponding to – 9% GDP growth

• Share of private sector in the additional capacity – 53%

• 19% in 11th Year plan• Share of Power from non fossils –

will be increased

The projected capacity additionin non-fossil fuel plants covers addition of hydrocapacity of 1,0897 MW and nuclear capacity of5,300 MW. Besides this, 1,200 MW import of hydropower from Bhutan has also been considered. Inaddition, it is planned to add a grid interactiverenewable capacity addition of about 30,000 MWcomprising of 15,000 MW wind, 10,000 MW solar,2,100 small hydro, and the balance primarily frombio mass planned

POWER GENERATION

Power Generation

R&M of Hydroplants

Renovation & Modernisation and

Life extension of Thermal Power

Plants

Peaking Power & Reserve

Plants

Pollution & Ash Utilization

Expansion in transmission

System & Capacity

Creation of National Grid

• Projected growth rate in power generation – 9.8%

• Requirement of 1403 BU

POWER GENERATION

EVACUATION OF POWER FROM THE NORTH-EAST

• North East has a very high potential of Hydro

• Close to 50,000 MW• Pace of Implementation poor • Entire capacity to be evacuated

through a narrow strip of about 25km in West Bengal

• Land Acquisition problems• Number of hydro power plants

coming up in the region is expected to be spread, thus increasing cost of transmission

• Does not have adequate 132/220/400 KV systems in AP, Tripura, Manipur

• Distribution System is inadequate

POWER GENERATION

SEPERATION OF RURAL FEEDERS

An important initiative to improve the availability of power in the rural areas and have more effective management of power for the agriculture sectors where the requirements may be for limitedhours, has been to separate rural feeders for lighting and agriculture loads. This was initiated byGujarat utilities and has subsequently been taken up by Rajasthan, Andhra Pradesh, Haryana, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, Karnataka, Maharashtra and a number of other States.

POWER GENERATION

MANAGEMENT OF ENERGY DEMAND & EFFECIENCY

• Efficiency of about 11,000 MW – through 11th FYP schemes

Management of Energy Demand

& Efficiency

Equipment & Appliances

In Industries

National Mission for Enhanced

Energy Efficiency

Efficiency in Transport

POLICY REFORMS Resolution of fuel supply Introduction of Open access Ancillary Power Market Effective Grid Management Spinning Reserves for Grid Stability Suitable incentives for low cost

transmission Increasing share of renewables Reforms in Distribution Sector Independent Oversight over

programmes like RGGYY.