Role of Renewables in Energy Mix in Perspective of Indian Energy Independence Scenario

8/10/2019 Role of Renewables in Energy Mix in Perspective of Indian Energy Independence Scenario

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),

Volume 5, Issue 11, November (2014), pp. 01-20 IAEME

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ROLE OF RENEWABLES IN ENERGY MIX IN

PERSPECTIVE OF INDIAN ENERGY INDEPENDENCE

SCENARIO

M.R. KOLHE B.E., M.B.A. Dr. P.G. KHOT,

R.T.M.NAGPUR UNIVERSITY, Prof. DEPT OF STATISTICS,NAGPUR INDIA R.T.M.NAGPUR UNIVERSITY,

NAGPUR INDIA

1. ABSTRACT

Any countrys growth is dependent on its ability to provide affordable and sustainable supply

of energy. India is set to witness one of the highest growths in energy demand, largely based onbuoyant economy and rising population. There is a strong linkage between economic growth andenergy demand. Coal is a pre-dominant source of energy in India and constitutes the largest share inIndias energy production and consumption. Despite the recent focus on promoting other energysources (in particular renewables), it is clear that the current coal-centric energy structure willcontinue for at least next few decades owing to technical and cost-related factors. The coal sector inIndia, in the past few years, has been subject to various controversies and issues, which raisequestion on the overall governance of the energy sector. These governance issues, if unaddressed,can hamper the sustainable growth of the sector and in turn the overall growth and development ofthe economy.

Presently we are using various sources of energy mainly, fossil fuels, hydro, nuclear etc. butthree centuries ago, we used nothing but renewables, with a fully sustainable energy systemconsisting of wind power (windmills), hydro power (water mills) and bio-fuels (wood stoves andanimal power) and some are still in use. But these renewables have their limitations and could notgive its major share in growing economics in increasing energy demands. The fossil fuelsparticularly coal has given boost particularly to power generation which has contributed major sharein energy mix in Indian scenario. On contrary Coal industry has an environmental adverse impactwhich includes the issues such as land use, waste management, waterand air pollutionetc., causedby the coal mining, processing and the use of its products. Now we are trying to return to the past i.e.renewables, with the addition of a few new sources such as solar and geothermal. In the interim ourpopulation has increased many fold and economic activities by several orders in magnitude.

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But the role of renewables to replace the conventional energy sources e.g. fossil fuels was notseriously and systematically thought of. The first discussion of renewables in economics was in thepost-73 oil shock era, when we rediscovered Hotellings work on resource depletion and refined it invarious ways. The need for renewables, in the sense of energy from non-exhaustible sources having

no environmental footprint, was also recognized. Then the phrase backstop technology, was usedi.e. a technology that would eventually replace exhaustible resources with energy sources such asnuclear fusion, or solar or wind energy, continuing forever. The need to act on climate change,coupled with the realization that there are no silver bullets like nuclear fusion, has forced policymakers to grapple with the merits of alternative energy and consider the consequences of moving tocarbon-free energy within a few decades. Of course, carbon-free is not the same as renewable:nuclear is carbon-free, but probably not what most people have in mind as renewable, and coal withcarbon capture and storage (CCS) is also carbon-free at the output level, and again not as renewable.It does seem uncontroversial that at least one of nuclear, coal with CCS and renewables has to beadopted on a very large scale for a sustainable future, and we may conclude that either nuclear orcoal with CCS must be in the mix as well as many types of renewables, at least for the foreseeable

future.In this paper, both types of energy i.e. renewable and nonrenewable are studied with their

advantages & disadvantages and to have proper energy mix of these sources for environmentfriendly sustainable growth. The emphasis is given to evaluate the role of renewable resources inenergy mix in the energy scenario of India.

2. INTRODUCTION

In laymans language, energy means amount of force or power when applied can move oneobject from one position to another or in other terms Energy defines the capacity of a system to dowork. It exists in everybody whether they are human beings or animals or non living things for e.g.:Jet, Light, Machines etc. It exists in many forms like kinetic, potential, light, sound, gravitational,elastic, electromagnetic or nuclear. As per to the law of conservation of energy, the total energyremains the same, only it changes its form i.e. it can be converted from one form into another form.The many different natural and renewable energy technologies are by no means breakthrough. Manyof the renewable energy technologies have been around for years, and as time go by, are increasingin efficiency. Here, energy is broadly classified into two main groups: Renewable and Non-renewable.

Non-Renewable Energy is taken from the sources that are available on the earth in limitedquantity and will vanish shortly may be in fifty-sixty years from now. Non-renewable sources are notenvironmental friendly and can have serious affect on our health. They are called non-renewable

because they cannot be re-generated within a short span of time. Non-renewable sources exist in theform of fossil fuels i.e. coal, natural gas and oil.Renewable energy is generated from natural sources e.g. sun, wind, rain, tides and can be

generated again and again as and when required. They are available in plenty and by far most thecleanest sources of energy available on this planet. For e.g.: energy that we receive from the sun canbe used to generate electricity. Similarly, energy from wind, geothermal, biomass from plants, tidescan be used to fulfill our daily energy demands.

Renewables come in many different flavors: they may not be limited to only hydro, solar(photovoltaic and thermal), wind, geothermal, tidal, biofuels, and waste-to-energy processes.However the focus is normally on those that can be used to generate electricity, or to replace it. Mostof them have certain economic characteristics in common large fixed costs and low or no variable

costs, and consequently average costs that are very dependent on output levels. Solar, wind, hydro,geothermal, tidal and waste-to-energy all require substantial up-front capital expenditures before any


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International Journal of Manage

Volume 5, Issue 11, November (20

energy is generated, but have nusually free). Their only ongoingcase of waste-to-energy. In contrenewables like hydro, solar, wi

throughout the year. Nuclear is clongoing fuel costs. The renewrunning cost. The renewable-basenext forty years. A coal-fired poforty year life to meet the large fwe build a renewable power stelectricity from it. This has imparticular it makes long-term deb

3. GLOBAL ENERGY SCENA

Prior to the use of coal asall energy used was renewable. Athe form of traditional biomassoldest usage of renewable energpractice can be traced back somehistory, the primary sources of trpower, wind, in grain crushing wrunning out of coal prompted exwas recognized in a 1911 whenthe only means of existence odevelopment of renewable energfor an escape from dependenceCoal constitutes approximately 6being oil and gas.

-

Average electric power (TWh/year)

Average electric power (GW)

Proportion

(Data source- IEA/OECD)

ment (IJM), ISSN 0976 6502(Print), ISS

14), pp. 01-20 IAEME

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fuel costs (all except waste-to-energy neecosts are maintenance and operation, plus sast, fossil fuel power stations have significnd have a characteristic that there is no s

ose to renewables in its cost structure: largeble energy sources are generally capital id power station today can provide free electrer station meets the capital costs but leavinguel costs and the external costs associated wation we are effectively pre-paying for thlications for what kind of financing migfinancing seem fair.

RIO: RESERVE & PRODUCTION

a prime fuel for power generation, in the mlmost without a doubt the oldest known useto fuel fires, dates from 790,000 years agy is harnessing the wind in order to drive7000 years, to ships on the Nile. Moving inditional renewable energy were human lab

indmills, and firewood, a traditional biomasseriments with using solar energy. The impatural fuels having been exhausted; the solathe human race. In the 1970s environmboth as a replacement for the eventual depn oil, and the first electricity generating w% of the fossil fuel reserves in the world,

Source of Electricity (World total year 2008)

Coal Oil Natural Gas Nuclear Ren

8,263 1,111 4,301 2,731 3

942.6 126.7 490.7 311.6 3

41% 5% 21% 13% 1

0976 - 6510(Online),

no fuel, and waste isme energy input in theant fuel costs. But theurety for its continual

capital costs and smallntensive and have noicity to its users for theour successors over itsith its pollution. Whene next forty years oft be appropriate in

id 19th century, nearlyf renewable energy, in. Probably the secondships over water. Thisto the time of recordedr, animal power, water. By 1873, concerns ofrtance of solar energy

r power will remain asntalists promoted the

letion of oil, as well asind turbines appeared.ith the remaining 40%

wable Other Total

,288 568 20,261

5.1 64.8 2311.4

6% 3% 100%


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Indian scenario: Oil, Coal & N

The Current estimates shoil reserves as April 2010 or 5.7level of consumption i.e. 2.63 M

more than a quarter of Indias tThese include offshore basinscovering 13,40,000 square kilomthirty billion tonnes of reservesdepletion date by more than fiftconfirmed natural gas reserves asRegarding coal, proven reservestotal reserve position swells toinferred reservesare added whicoal based on a combination of dihigh confidence. "Inferred" reser

coal beds, both downwards inmeasurement.

Mother earth has bestowmean that all these natural resounext generation be deprived of.will it be justified that they be coconservation?

Mission & Vision

The Indias giants compnatural gas and coal, are public sand coal have set their mission t

safety, health, environment and c


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tural Gas

w Indias total oil reserves of 125 Millionbillion barrels, is enough to last a dozens

bbl/d (418,000 m3/d). Recent international s

enty-six secondary basins have seen serioovering about 3,80,000 square kilometersters. It has been estimated that these untap

, five times the current figure, thereby ey years. India has 1,437 billion cubic metrof April 2010.in the country are in excess of eighty-one bi

ore than two hundred and eleven billionh is enough for 60 years. "Indicated" reservrect measurements and reasonable geologicve shows amount of resource based on the

to the earth and across the landscape

d us with ample resources required for oces are to be consumed by current generatihe fossil fuels for which earth has taken minsumed just in few hundred years, without

nies ONGC, GAIL and CIL which are mctor companies having major share in produproduce efficiently and market their produ

nservation.

0976 - 6510(Online),

etric tonnes of provenf years, at the presenttudies indicate that no

s exploration activity.and on shore basins

ed basins may containtending the projected

es (50.71012cu ft) of

llion tonnes, while theones if indicated ande means the amount ofssumptions made withassumed continuity of

rom points of direct

r life. But it does notn only and letting thelions of years to form,aving consideration of

jor producer of oil &tion of oil, natural gasts, with due respect to


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ONGC, is the prime Oil & Natural Gas Producing Company, isglobal leader in integratedenergy business through sustainable growth, knowledge excellence and exemplary governancepractices, and has aimed toabide commitment to safety, health and environment to enrich quality ofcommunity life.

GAIL (Gas Authority India Limited)s Mission is to accelerate and optimize the effective andeconomic use of Natural Gas and its fractions for the benefit of the national economy. And its Visionis Be the leading company in Natural Gas and beyond, with Global Focus, Committed to CustomerCare, Value Creation for all Stakeholders and Environmental Responsibility.

CIL (Coal India Limited) a coal producing giant company in India has set its vision as Toemerge as a global player in the primary energy sector committed to provide energy security to thecountry by attaining environmentally & socially sustainable growth through best practices from mineto market and the missionas To produce and market the planned quantity of coal and coal productsefficiently and economically in an eco-friendly manner with due regard to safety, conservation andquality.

Presently crude oil, coal and gas are the main resources for world energy supply. The size of

fossil fuel reserves and the dilemma that when non-renewable energy will be diminished, is afundamental and doubtful question that needs to be answered. Here a new formula for calculatingwhen fossil fuel reserves are likely to be depleted is presented along with an econometrics model todemonstrate the relationship between fossil fuel reserves and some main variables (Shahriar Shafieeet.al. 2009). The new formula is modified from the Klass model and thus assumes a continuouscompound rate and computes fossil fuel reserve depletion times for oil, coal and gas ofapproximately 35, 107 and 37 years, respectively. This means that coal reserves are available up to2112, and will be the only fossil fuel remaining after 2050.

Above statistics indicates that there is comfortable reserves position which reflected in thelong-term price trends of fossil fuels and has declined in real terms since the 1970s. In fact, fossilfuel prices in real terms are lower now than they were in the 1940s.

In view of above it can be concluded that Fossil fuels are not disappearing in a hurry. Ergo,whats the hurry in imposing renewable sources of energy on consumers when the markets are not

ready to accept them?

Although the minable fossil fuels are enough to cater the demand till beginning of 22ndcentury, we cannot ignore the effort to find out the alternative sources of energy. This is the time tomake all our efforts to find out various affordable alternatives to fossil fuels. Moreover, the longeruse of fossil fuels at growing demand will endanger the nature and life on earth.

Therefore the sincere efforts are needed to work out the strategy to evaluate all other energysources and put them in use at global level so that the nature will be saved for our future generations.

Natural Gas: The government has been the sole authority for fixing the price of natural gas in thecountry. It has also been taking decisions on the allocation of gas to various competing consumers.Natural gas has always been a supply-constraint market in India. The most prolific gas producingfields include Bombay High which is operated by ONGC and contributed ~34% of the total gasproduction in 2011-12, KG-D6 offshore which is operated by Reliance Industries Ltd andcontributed ~33% of the total gas production in 2011-12. The total offshore gas production accountsfor 88% of the total production in India. The share of the private sector and JVs in the countrys totalgas production is expected to increase, owing to recent gas discoveries expected to be monetized bythe companies.

This study estimates alternative trajectories of energy requirements and examines the likelyfuel mix for the country under various resource and technological constraints over a 30-year time

frame Economic and technological scenarios have been developed within the integrated modelingframework to assess the best energy mix during the modeling time frame. Based on the scenario


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assessment, the report provides dsector including policy-makers, tto play a key role in meetinavailability of coal is expected to

plans and technology.

4. ISSUES WITH FOSSIL FU

Indias dependence on fos

not just environmental in chara

challenges for India on multip

developing new renewables and

more attractive destination for F

Indias current energy usresources on the one hand, and c

non-traded resources having a srenewable resources currently haenergy balance.

Composition of Primary Com

The high dependence ofbecause of the high share of caradverse environmental effects,unsustainability of such dependegrowing scarcity of the fossil fuesuch an energy supply are outline

CoalAmong the fossil fuels,

energy resource as compared toenergy planners ever since thedemand in the country. The total277 billion tonnes, according to textractability of Indian coal are sconstraints such as township, rivunderneath deep pristine foreststhe resource which cannot be asmeasurement due to methodologireserves for energy planning. Thethe apparent benefit of the low-cAll these factors have resulted indue to demand exceeding dome


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irections to various stakeholders associatedchnologists, and investor. It also indicates th

the countrys energy requirements. Ho plateau in the next couple of decades with

LS

sil fuel is widely regarded as unsustainable.

ter, but is emerging as a macroeconomic

le fronts discovering new sources of

trengthening the macroeconomic fundamen

I.is unsustainable. This consists of fossil fu

mbustible biomass and wastes on the other,

are of almost one quarter in the total primave a negligible share (0.36%) in the total c

ercial Energy of India in % share (2009)

Indias energy system on fossil fuel ison footprint in the total ecological footprin

but also because of the economicce due to heavy financial requirement for il resources. The issues underlying the finan

as under.

oal, being a relatively cheap and perceive

hydrocarbons in India, has remained theoil shock of the early 1970s to meet theestimated reserve of coal in India as of 31he Energy Statistics of India in 2012. Howeignificantly affected by the geological, techerbed, high environmental fragility due to tnd so on resulting in high economic cost fresult categorized as economically viable r

cal reasons have further compounded the prhigh ash quality problem of Indian coal alsst of coal from the geo-technically friendlythe growing import of both coking and non

tic supply and also of washing both cokin

0976 - 6510(Online),

with the Indian energyat coal would continueever, the indigenous

he current exploitation

This unsustainability is

ne as well, leading to

ydrocarbon deposits,

tals by making India a

els, hydro and nuclearthe latter being largely

ry energy supply. Newmmercial (i.e. traded)

nsustainable not onlyt and the various otheror macroeconomic)ports arising from theial unsustainability of

d to be an abundant

focus of attention forver-increasing energyarch 2010 was around

ver, the minability andnical and other surfacehe location of depositsr at least some part ofserves. Some errors in

oblem of estimation oftends to offset part of

coal fields and basins.-coking coal over timeg and also non-coking


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coal. The share of import of coal in total apparent consumption has in fact grown from 2.2% in 1989-1990 to 11.1% in 2010-2011. The unit prices of imports of coal by India also rose during the period1989-1990 to 2010-2011 in both nominal dollars and rupees, particularly since 2000, at therespective annual rates of 10.8% and 11.4%. The rise in the import price of coal in its turn eroded the

relative cost benefit of imports of such coal.In the light of various questions raised regarding pollution, global warming, depletion of coal

reserve due to extensive use of coal, CCS & IGCC are the methods which may find solution to theseissues.

Carbon Capture and Storage (CCS): CCS is method to mitigate global warming and theprimary focus of this study. As the name suggests, in this method, CO2 emitted from thermal powerplants and CO2 intensive industries is captured and stored in various reservoirs to lessen theirpolluting impact on the atmosphere. CCS is therefore hailed as the technology of the future. As ourdependence on fossil fuels is not expected to decline radically in the near future, CCS can provide anexcellent transition from conventional to non-conventional methods of generating power, such assolar power, wind power, geothermal energy, etc. CCS is referred to as fictitious reduction, since

there is no decrease in the emission of CO2 from the Earth, but the polluting impact is lessened.Some suggest that the carbon problem could be solved through the increased use of

renewable energy sources. Even if renewables become cost-competitive, however, which is an openquestion, the time it will take them to penetrate the market implies significant continued use of fossilfuels in the interim. Others see a built-in solution to the problem of fossil-fuel combustion: there is alimited supply of fossil fuels, and at some point, their use will become too costly, forcing a switch toalternative energy sources. Thus, the policy should be to wait until the fossil fuel supply is depletedand allow rising fossil fuel prices to induce the development of renewable energy sources. But thisargument assumes that fossil fuels will become scarce before the gradual atmospheric buildup ofGHGs becomes too costly in terms of its effect on terrestrial ecosystems and human societies Energyefficiency improvements and switching from fossil fuels toward less carbon-intensive energy sourceswere once seen as the only realistic means of reducing carbon dioxide (CO2) emissions. In recentyears, however, analysts and policymakers have begun to recognize the potential for a third optionthe development of end-of-pipe technologies that would allow for the continued utilization offossil fuel energy sources while significantly reducing carbon emissions. These technologies havecollectively come to be known as carbon capture and storage (CCS) technologies. Using thesetechnologies, CO2 would be captured from large, stationary sources (e.g., power plant flue gases),preventing its release to the atmosphere.

Integrated gasification combined cycle (IGCC):IGCC is an integrated gasification combined cycle(IGCC) is a technology that uses a gasifier to turn coal and other carbon based fuels into gas

synthesis gas (syngas). It then removes impurities from the syngas before it is combusted. Some ofthese pollutants, such as sulfur, can be turned into re-usable byproducts. The plant is calledintegrated because (1) the syngas produced in the gasification section is used as fuel for the gasturbine in the combined cycle, and (2) steam produced by the syngas coolers in the gasificationsection is used by the steam turbine in the combined cycle. In this example the syngas produced isused as fuel in a gas turbine which produces electrical power. In a normal combined cycle, so-called"waste heat" from the gas turbine exhaust is used in a Heat Recovery Steam Generator(HRSG) tomake steam for the steam turbine cycle. An IGCC plant improves the overall process efficiency byadding the higher-temperature steam produced by the gasification process to the steam turbine cycle.This steam is then used in steam turbines to produce additional electrical power. This way theavailable coal may be preserved & conserved.


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Oil and Natural gas

India is highly dependent on the import of crude oil to meet its energy demand and oil importhas been steadily rising over the years. Although India has set up some refinery capacity under aprivate initiative which is used only to produce for export of petroleum products, the net imports of

total oil (that is, aggregate of all imports of crude and petroleum products less all exports ofpetroleum products) have increased from around 25 million tonnes during 1989-1990 to around 120million tonnes in 2010-2011 a growth rate of over 7% each year over the past two decades. Whilethe average price of Indias net import of oil has gone up in both nominal rupees by around 14%each year and nominal dollars by around 6% each year, the share of import in the total apparentconsumption of oil (that is, crude oil production plus net petroleum import) has grown from 43% in1989-1990 to a high of 76% in 2010-2011.

The natural gas market, on the other hand, is only an emerging market in India. TheInternational Energy Agency (IEA) estimates the Indian market of natural gas to be one of the fastestgrowing in the world over the next 20 years and projects the growth to be around 5.4% per year over2007-2030 (IEA, 2009). It is being preferred mainly due to its inherent environmentally benign

nature, greater efficiency and cost-effectiveness as a fuel. The production of natural gas has pickedup very recently in 2009 with the start of the Krishna-Godavari KG-D6 hydrocarbons bearing fieldafter remaining stagnant for almost a decade. The enactment of the New Exploration LicensingPolicy (NELP) by the government has played a key role in ensuring greater participation of privateand foreign companies in natural gas discovery and extraction. India has already started importingnatural gas in spite of such growth in production the share of import reaching 19% of apparentconsumption in 2010-2011. The unit price of natural gas in nominal dollar has also been growing atan annual average rate of 3.85% per year since 2004-2005.

The Indian economy presently is believed to have established itself on a healthy growth pathand this would increase going forward the energy consumption in the country. This increase inconsumption is expected to be supplemented by an alteration in the primary energy mix of India onaccount of the substitution of oil by natural gas. The share of natural gas in the energy mix of India isexpected to increase to 20% in 2025 as compared to 11% in 2010 However, given that all the plansfor expansion in natural gas supply in the country with the help of additional RLNG terminals,nationwide transmission pipeline network and transnational pipelines are expected to materialize by2025, it is envisaged that the share of natural gas in the primary energy mix would reach 20% till2030 if not more. In recent years the demand for natural gas in India has increased significantly dueto its higher availability, development of transmission and distribution infrastructure, the savingsfrom the usage of natural gas in place of alternate fuels, the environment friendly characteristics ofnatural gas as a fuel and the overall favorable economics of supplying gas at reasonable prices to endconsumers. Power and Fertilizer sector remain the two biggest contributors to natural gas demand in

India and continue to account for more than 55% of gas consumption. India can be divided into sixmajor regional natural gas markets namely Northern, Western, Central, Southern, Eastern and North-Eastern market, out of which the Western and Northern markets currently have the highestconsumption due to better pipeline connectivity. However, with the increasing coverage and reach ofnatural gas infrastructure in India, this regional imbalance is expected to get corrected. In future, thenatural gas demand is all set to grow significantly at a CAGR of 6.8% from 242.6 MMSCMD in2012-13 to 746 MMSCMD in 2029-30. This demand represents the Realistic Demand for natural gasin India. Gas based power generation is expected to contribute the highest, in the range of 36% to47%, to this demand in the projected period (2012-13 to 2029-30). The share of fertilizer sector inthe overall gas consumption in the country is expected to go down from 25% in FY 2013 to 15% inFY 2030 owing to higher growth in other sectors. The contribution to the overall demand from the

CGD sector is set to increase from 6% to 11% during the projected period. The demand from CGDsector includes demand for combined heating and cooling power plants (CCHP) from Industries.


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5. AGGREGATE FOSSIL FUEL ENERGY

As now India is importing all kinds of fossil fuels, the percentage share of total import in thetotal apparent consumption of such fuels (in units of oil equivalent tonne) had been increasing

throughout the past two decades and touched 35% in 2010-2011. Meanwhile, the unit price of totalfossil fuel (in oil equivalent units) has increased in nominal rupees and dollar terms at the rates of10% per year and 6% per year respectively. As a result of the price rise and the growing imports ofall the fossil fuels as indicated above, Indias total bill of net import of energy has grown at analarming rate of close to 20% per year, leading to an increase of almost 55 times over the past twodecades. As a consequence, the share of total energy import bill as a percentage of Indias totalexport earnings has also been growing over time, and has now reached almost 38% in 2010-2011which is a source of concern for macro-economic sustainability of such pattern of growth of energyuse in India. In view of the sharp decline in the rate of growth of IT related service export earnings to10% per year, the slowing down of inflow of foreign direct investment (FDI) into India and thefootloose erratic character of inflow of foreign portfolio investment, the current pattern of fossil fuel

use is likely to create macro-economic stress on the front of the balance of payments and the stabilityof Indias currency value. Thus, replacement of fossil fuel by renewables is not only important forthe environmental sustainability or greenness of our development process, but also in the interest ofthe macroeconomic sustainability of our growth process.

6. ENERGY CRISES: PRESENT AND FUTURE

The energy crisis is the concern that the worlds demands on the limited natural resourcesthat are used to power industrial society are diminishing as the demand rises. These natural resourcesare in limited supply. While they do occur naturally, it can take hundreds of thousands of years toreplenish the stores. Governments and concerned individuals are working to make the use ofrenewable resources a priority, and to lessen the irresponsible use of natural supplies throughincreased conservation.

The energy crisis is a broad and complex topic. Most people dont feel connected to its realityunless the price of gas at the pump goes up or there are lines at the gas station. The energy crisis issomething that is ongoing and getting worse, despite many efforts. The reason for this is that there isnot a broad understanding of the complex causes and solutions for the energy crisis that will allowfor an effort to happen that will resolve it.

According to the Wikipedia, An energy crisis is any great bottleneck (or price rise) in thesupply of energy resources to an economy. In popular literature though, it often refers to one of the

energy sources used at a certain time and place, particularly those that supply national electricity

grids or serve as fuel for vehicles.

How real is the Energy Crisis? Many times, there is a renewed debate on how real the energycrisis is in the world. One side will always say it is based on faulty science and politics; the other willsay that the other side is basing their findings on junk science and political interests. The best way tosum up the reality of the energy crisis is that you cannot have growing demands on limited resourceswithout eventually running out of the resource. That is just common sense. What is really at play inthe discussion about how real the energy crisis is concerns the perception of responsibility for thefuture. There is no real energy crisis if you are not concerned about life after your time on Earthisgone. There is a very real energy crisis if you care about the future that the next generations willinherit.


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7. RENEWABLE ENERGY SOURCES AND THEIR LIMITATIONS

As the major part of Indias coal import is for the power and steel sector, coal has beensubstituted by two carbon free non-fossil fuel energy resources from among the conventional ones

namely nuclear and Hydro in large storage for power generation. The prospect of nuclear route ofenergy development depends on Indias success at the stage of breeder reactor and that in developingthorium-uranium cycle so that it can use its huge stock of thorium reserve. It is now too early toassess the situation, but India needs to engage in trade in uranium and light water reactor market sothat it is in a position to successfully experiment with uranium-thorium reactor. So far as largehydro-electric projects are concerned this option is fraught with too many socio-political andpolitical economic problems arising from the environmental effects due to too much disturbance inthe local and regional ecosystems of the river basin and river valley as well as human ecologicalconditions due to the destabilization of human settlements. Besides, the high capital cost of storageof water as power energy resource and high gestation lag of projects when added to theenvironmental costs would often tend to offset the benefit of zero fuel cost of hydro-electric power.

It is obvious that India will have to depend on new renewable energy resources to meet thechallenge of the growing eco-scarcity of fossil fuel resources and to combine macroeconomicsustainability with the environmental one. However, as power, steel and transport are responsible formost of the imports of coal and oil which have limited substitutability by other fuels in these sectors,the development and deployment of the technologies of new renewable resources of wind, solar,biomass and wastes for conversion into power and of bio-liquids to substitute petroleum as blendingfuel into diesel and petrol have become vital for sustainable or green energy development.

This issue of energy security and macroeconomic sustainability of growth also furtherrequires greater flow of hydrocarbons from domestic sources and intensification of hydrocarbondiscovery activities. For attracting finance and modern technology for such purpose in this area, it isimportant to encourage foreign investors to take greater interest in such investment which dependson the terms of production-sharing and profit-sharing contracts and prices of the products in thissector. While the price of oil, which is quite liquid in trade, is globally determined, the market forgas is mostly localized and region specific. The government is expected to announce its gas pricingand gas utilization policy and fix it for a period of time. This is particularly important to create acompetitive environment in such investments in view of the oligopolistic nature of this globalindustry. The Indian government is at the moment engaged in such task of restructuring theproduction-sharing contract and formulating its gas pricing policy.

Finally, India will have to live with net dependence on the import of some fossil fuel energy,however reduced, for supporting the growth of its economy. The current-account deficit in balanceof payments as caused by energy import would warrant the creation of a business environment in

India which would be conducive for attracting FDI and thereby ensure no deficit in the overallbalance of payments. There should also be policies regarding the direction of inflow of foreigninvestments into the area of renewables and biofuels for the transfer of the required technology andmobilisation of the required financial resources for the purpose.

8. ENERGY SECURITY

The heating up of earths atmosphere due to trapping of long wavelength infrared rays by thecarbon dioxide layer in the atmosphere is called green house effect. The key greenhouse gasesdriving global warming are Carbon-dioxide, CFC, methane, Ozone, Nitrous oxide etc. The basic aimof energy security for a nation is to reduce its dependency on the imported energy sources for its

economic growth BEE facilitates Energy efficiency programs in India by preparing standards andlabels of appliances, developing a list of designated consumers, specifying certification and


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accreditation procedures, preparing building codes, maintaining central EC fund and undertakingpromotional activities in coordination with centre and state level agencies.

Some of the strategies that can be used to meet future challenges to Nations energy security are:

Building stockpiles of fuels Diversification of energy supply sources Increased capacity of fuel switching Demand restraint Development of renewable energy sources Energy efficiency Sustainable development

Some of the long-term energy strategies available for the better energy secured nation are as under:

Efficient generation of energy resources Efficient production of coal, oil and natural gas Reduction of natural gas flaring

Improving energy infrastructure Building new refineries Creation of urban gas transmission and distribution network

Maximizing efficiency of rail transport of coal production. Building a new coal & gas fired power stations. Maximizing efficiency of rail transport of coal production. Building new coal and gas fired power stations.

Enhancing energy efficiency Improving energy efficiency in accordance with national, socio-economic, and environmental

priorities Promoting of energy efficiency and emission standards Labeling programmes for products and adoption of energy efficient technologies in large

industries

Deregulation and privatization of energy sector

Reducing cross subsidies on oil products and electricity tariffs Decontrolling coal prices and making natural gas prices competitive Privatization of oil, coal and power sectors for improved efficiency.

Investment legislation to attract foreign investments. Streamlining approval process for attracting private sector participation in power generation,

transmission and distribution as they do not reflect economic costs at all in many cases.

9. ENERGY MIX

Over the last two decades (1990-2011), Indias primary energy mix has not changed much.

The country continues to depend, for most of its energy needs, on coal (>50%) and oil (~30%).


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However, natural gas is emerginrate of 8%. Currently, it accounts

Present energy mix of consumpti

On the other hand, othenuclear energy consumption havlast decade.

Indias twelfth five year pover the plan period, giving a tbetween peak demand and peakplants, the plan target has been fithis additional capacity will be inthis added capacity, the Plan estifor 79 per cent, up from 76 per10,897 MW (12 per cent of the(approximately 6 per cent). Enercent). It is in the renewable secaddition to capacity of 30,000 M2,100 small-hydro power and the

Indias projected energyrole. The solar and wind has to c

coal will become increasingly imnuclear energy. Estimated Energeneration is graphically indicate


14), pp. 01-20 IAEME

13

as one of the fastest-growing fuels, registfor 9% of the total primary energy consumpt

n is shown in diagram & table below:

r renewable segments solar, geothermal,also registered an impressive annual gro

lans estimates that an additional capacity oftal capacity of approximately 276,000 Mdeficit and to permit the retirement of ol

xed at 88,537 MW. To meet this target, thecreased to 53 per cent, up from 19 per cent iates that thermal energy derived from coalcent in the previous plan. Hydro-power iestimated additional capacity), and nucley imports from Bhutan are expected to tot

tor, however, that major increases are planW comprises 15,000 MW wind energy, 10,balance to be derived from biomass.ix in 2030 is as under wherein the renewablntribute their major part in the energy mix

port dependent despite increased productiony Mix 2030 for India and components of reas under:

Coal

Oil

Renewable*

Gas

Hydro

Nuclear

Total

Source

Coal

Renewable*

Gas

Hydro

Nuclear

Total

0976 - 6510(Online),

ring an annual growthion.

ind energy, etc.) andth as compared to the

5,785 MW is required. To decrease the gapder, inefficient energyprivate sector share ofn the eleventh plan. Ofnd lignite will accountexpected to generate

r capacity 5,300 MWl 1,200 MW (1.36 perned; the planned total000 MW solar energy,

has to play prominent030. The energy from

of both renewable andnewable source energy

53%

30%

2%

9%

5%

1%

100%

2030

62%

14%

6%

10%

8%

100%


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Silent points regarding energy mix for 2030 are appended below:

1. Indias energy production expected to rise by 95%.2. Coal remains the dominant fuel produced in India growing by 116% and accounting for 62%

of total energy produced in 2030.3.

A production decline in oil is offset by gains in hydro, nuclear, and renewable.4. Coal will remain the leading fuel in power generation at 62% in 2030.5. Despite coals loss of market share in power generation, the fuel meets 63% of the growth

while renewables contribute 14%, hydro 10%, nuclear 8%, and gas 6%.6. Net energy imports increase by 135% as the country imports 42% of total energy demand in

2030, up from 37% today.7. Energy consumption grows by 110%. India sees strong growth in renewable, hydro, and

nuclear as well.8. Energy consumed in power generation rises by 104%; energy demand in transport rises by

180%.

9.

Industry remains the largest final energy consumer of all sectors increasing by 104%, but itsmarket share drops to 57% as transport rises.

10. Oil maintains its dominance in the transport sector as its share actually increases from 94% in2011 to 95% in 2030.

11. Fossil fuels account for 88% of Indian energy consumption in 2030, down marginally from92% in 2011.

12. Renewables share of consumption rises from 2% to 14% in 2030.13. Oil imports will rise by 152% as the countrys production meets less than 10% of demand by

2030.14. Indias CO2 emissions from energy consumption double, as the countrys energy intensity

declines by 28% by 2030.

10. ECONOMY: SCOPE OF RENEWABLE IN INDIAN ENERGY SCENARIO:

India has recorded impressive rates of economic growth in recent years, which provide thebasis for more ambitious achievements in the future. However, a healthy rate of economic growthequaling or exceeding the current rate of 8% per annum would require major provision ofinfrastructure and enhanced supply of input such as energy. High economic growth would createmuch larger demand for energy and this would present the country with a variety of choices in termsof supply possibilities. Technology would be an important element of future energy strategy for thecountry, because related to a range of future demand and supply scenario would be issues oftechnological choices both on the supply and demand sides, which need to be understood at this

stage, if they are to become an important part of Indias energy solution in the future. The Indiangovernment aims to achieve an economic growth rate of over 8% in the next two decades in order to

RenewableSources

2030

Solar 52%

Wind 39%Biomass 7%

Others 2%


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be able to meet its development objectives. However, rapid economic growth would also imply theneed for structural changes in the economy as well as for induced shifts in the patterns of end-usedemands. To meet the needs of the Indian populace in the most effective manner, it is important tomap out the energy demand and supply dynamics in the country.

India is likely to surpass China as the largest source of energy demand growth in the world by2035, according to the latest BP Energy Outlook 2035. The growth in demand for energy in Indiawill outpace each of the other so-called BRIC (Brazil, Russia, China, and India) countries,recognized as the upcoming engines of economic growth in the world, the report said. Indias energydemand is expected to grow by 132%, while China and Brazils energy demand will grow by 71%and Russias by 20%. Growth in Indias energy demand will be around double the aggregate of non-OECD countries. OECD countries refer to the 20 nations that are signatories to the Convention onthe Organisation for Economic Co-operation and Development, and mostly comprise matureeconomies. India consumed around 536 million tonnes (mt) of coal, 42mt of lignite, 211.42mt ofcrude, 46.5 billion cubic meters of natural gas, and 755,847 giga-watt-hours of electricity in fiscal2012, according to a report titled Energy Statistics 2013, of the ministry of statistics and programme

implementation. The report, an annual feature published by British energy firm BP Plc, says Indiaand China will together account for half of the energy demand growth in the world till 2035, which ispegged at 41%. Over the next two decades, Indias energy consumption is also expected to grow at asignificant rate of 11%, albeit at a lower clip than energy demand growth. This will compel India tobe dependent on imports of fossil fuels such as coal well into in the future, the report states. Acrossfuel categories like liquids (crude oil, natural gas liquids) and coal, India is likely to outpace China interms of demand growth. In coal, for instance, Chinas demand is declining, driven by therebalancing of Chinas economy towards services and domestic consumption, and supported byefficiency improvements and more stringent environmental policy, the report observes. India, on theother hand, is continuing with its industrialization drive. Among fossil fuels, the biggest spurt of183% in demand will be seen by natural gas, a commodity whose scarcity has already caused a fewconcerns in the Indian economy. The country was supposed to have significant production ofdomestic natural gas supply, especially from the high-potential Krishna-Godavari basin whereoperators like Reliance Industries Ltd and Oil and Natural Gas Corp. Ltd are active. But geologicalchallenges have prevented this from materializing so far and heavy volumes of expensive gas arebeing imported at present. Indias energy import bill may reach $300 billion by 2030, said RahoolPanandiker, principal at Boston Consulting Group. This has serious implications for policymakerswho need to come up with ways to ensure that domestic energy production is boosted as much aspossible, else factors like the current account deficit and geopolitical tension in oil and gas producingregions of the world may pose a threat for India, he said.

The continual increase in demand of fossil fuels for energy generation may meet the energy

crises of the country but on the other hand it will have negative impact on environment as a whole.Thereby the drive to boost up the usage of renewable is required to be enhanced at the fast track sothat there will neither be deficiency of energy nor fear of degradation of nature.

Renewable energy sources are clean and indigenously available, and can play an importantrole in addressing the energy security concerns of a country. Today, India has one of the highestpotentials for effectively using renewable energy sources. The country is the worlds fifth largestproducer of wind power after Germany, USA, Spain, and Denmark. There is a significant potential inIndia for the generation of power from renewable energy sourceswind, small hydro, biomass, andsolar energy. The penetration of other renewable energy technologies, including solar photovoltaic,solar thermal, small hydro, and biomass power is also increasing. Greater reliance on renewableenergy sources offers enormous economic, social, and environmental benefits. Increasing pressure of

population and increasing use of energy in different sectors of the economy are concern areas for


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India. There is an urgent need to reduce energy requirements by demand-side management and byadopting more efficient technologies in all sectors.

11. ENERGY INDEPENDENCE SCENARIO

In this Energy Independence scenario the total primary energy demand in 2030 is lower at1387mtoe (versus 1508mtoe in BAU). The fuel mix shifts towards renewable, although fossil fuelsremain dominant at 68 per cent of the mix. Underpinning the Energy Independence scenario is astrong supply response and a focus on demand management. This is higher than current plans, butnot beyond reach given enabling market conditions. The biggest shift in the Energy Independencescenario, however, is in the import dependence, which reduces to 1520 per cent. Coal importsreduce to 9 per cent, liquids imports reduce to 62 per cent, and gas imports reduce to existing LNGcontracts. While liquid imports remain high in this scenario, there is considerably higher flexibilityand tolerance across the fossil fuel basket, to optimize between coal, liquid and gas import volumes.Next to this section, describes each of the initiatives for energy independence, and the actions

required to make them a reality.

1.Achieve 1200mtpa domestic coal productionCoal will remain the bedrock of Indias energy requirements for the foreseeable future.

Achieving 1200mtpa of coal production by 2030 will require incremental annual production of950mtpa, to make up for existing mines that will decline over the next 15 years. This will requireIndia to:

1. Accelerate development of Coal projects which are at various stages of approval anddevelopment

2. Fast-track captive coal blocks which have already been allocated, with a production potential

of 850mtpa. Some of these blocks are awaiting approvals or land acquisition, and anotherhave seen no development.

3. Allow private players to explore, develop and market coal. India has 7 per cent of the worldscoal reserves and only 0.5 per cent of its exploration expenditure. Exploration anddevelopment at scale will require market-based pricing and a robust coal market.

Import dependence on energy would reduce to 1520 per cent

2.Unlock unconventional gas productionSeveral recent progressive steps have resolved many pending bottlenecks in upstream oil and

gas. To enable rapid development of 100mmscmd of unconventional gas, India must:

1.

Expand the scope of its shale gas policy to include private and public sector players alikeEnsure sufficient fiscal and infrastructural incentives to attract investment in unconventionalsupply chains and services

2.

Allow full exploration and exploitation of all resources in NELP blocks3. Allow market determined pricing for unconventional gas and the freedom to market gas.

3.Support conventional oil and gas productionTo achieve 150mtoe of conventional oil and gas production in 2030, India will need to ensure

the viability of redeveloping its existing mature basins, e.g., western offshore, attract sufficientinvestment into new licensing rounds, and remove the remaining bottlenecks to resourcedevelopment. In particular, it will require to:


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1. Allow market pricing of crude oil from nomination blocks, to make the necessary high costinvestments in EOR4and the related technology development-viable.

2. Ensure market pricing for gas and the freedom to market gas produced under NELP or theproposed open acreage policy.

3.

Streamline contract administration by enforcing time bound deemed approvals withmanagement committee accountability, codifying standard practices around grey zones inproduct sharing contracts, defining policies for license extension, exploration in producingblocks and extension of block areas, strengthening and empowering DGH5 and making it astatutory body focused on approving and monitoring work programs, budgets and fielddevelopment plans.

4.Light up 50,000 villages through off grid solarTraditional models are increasingly proving unviable to electrify and supply villages. Yet, the

demand surge and economic benefits in newly electrified villages are plain to see. Off grid solar (andin places wind, bio mass and micro hydel) are better suited, scalable solutions to electrify remote

villages and supplement supply in partially electrified ones. To scale up off grid solar, India willneed to:

1. Fine-tune, scale up and roll out models that have been successfully piloted, while introducingnew elements like competitive bidding and viability gap funding to ensure competition andtransparency

2. Introduce village level O&M capabilities and governance to manage distributed solar assetsDevise interventions/ incentives for rural micro-enterprises and other anchor loads (e.g.,telecom towers) to shift to renewable solutions vs using diesel power

3. Channelize and attract funds from central and state budgetary allocations, corporate socialresponsibility budgets, as well as private risk capital.

5.Add 100+ GW of grid connected solar and windIndia has demonstrated exceptional progress on the renewables front, more than doubling

installed capacity in the last 5 years, from 14.5 GW in 2008 to approximately 30 GW by December2013. This translates to more than 3 GW of installed capacity per year. Though outstanding, Indiawould need to, on average, double this rate over the next 15 years to achieve the 100 GW aspirations.This would need India to:

1. Enforce Renewable Purchase Obligations (RPOs) unilaterally. Targets have been set for eachstate. Renewable Energy Certificates (RECs) remain unsold, forcing REC prices to floorlevels, significantly eroding developer returns. Mandating states to meet RPO targets, and

enforcing penalties for noncompliance would be required.2.

Invest in low wind speed technology with focus on building domestic R&D andmanufacturing capabilities to add 40+ GW by 2030.

3.

Devise interventions and incentives for rural micro-enterprises and other anchor loads (e.g.,telecom towers) to shift to renewables vs using diesel.

4. Introduce a peaking power policy to allow developers to invest in storage to make solarviable for evening peaks.

6.Reduce industry and building power demand by 30 per centIndias overall energy intensity at 0.56koe/USD is high compared to even other developing

countries like Brazil at 0.25koe/USD or Malaysia at 0.4koe/USD, indicating significant improvement

potential. India has started positively on this journey, achieving energy intensity reductions of 1 percent per year. A substantial amount of demand reduction is already assumed in the BAU case


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(equivalent to 344mtoe with energy intensity dropping to 0.47koe/USD). An energy intensity of0.4koe/USD by 2030 could be achieved by:

1. Reducing residential and commercial energy intensity. This would involve increasingpenetration of labelled appliances from 20 to 90 per cent, CFL/ LEDs from 15 to 90 per cent,and stringent implementation of the ECBC norms for commercial buildings Targeting energyreduction in power intensive industrial segments through year on year targets, time of daytariffs and incentivizing production of energy efficient industrial equipments.

2. Driving energy efficiency in agriculture, moving towards electric pumps (from diesel) andmandating use of Bureau of Energy Efficiency (BEE) star labelled equipments.

3. Reducing AT&C losses: Indias AT&C losses at about 2324 per cent are extremely highcompared to 5 to 7 per cent in best practice countries like Japan, Germany and Korea. Evensome developing countries, e.g., Malaysia have achieved sub-10 per cent loss levels. Indiacould achieve these levels through a mix of technology (e.g., smart grids) and effectivedistribution ownership and management.

7.A stronger technology ecosystemIndia must focus on increasing technology depth across all parts of the value chain through:

1. Larger R&D investments, since Indian energy companies spend between half to one-fifth oftheir global counterparts on R&D, on a per barrel basis

2. Greater R&D effectiveness through stronger R&D processes and approaches, dedicatedresearch cadres, closer monitoring of outcomes and a greater commercial orientation

3. Global and Indian collaborations, which could take the form of bilateral alliances, industryforums, academic alliances or venture investments in technology firms

4. Incentivizing and attracting local manufacturing in the energy value chain, including oil fieldservices, specialized materials and chemicals, and energy efficient storage and usage

technologies.

8.Catalysing industry participation and investmentWhile some of these have been mentioned earlier, the importance of reliable market

mechanisms in attracting private investment cannot be over emphasized, including:

1. Market-linked prices and marketing freedom for gas and coal2. Moving subsidies to an arms length basis, directly to consumers as far as possible, to avoid

distortions in industry conduct and inappropriate incentives for consumption3. Ensuring new policies are not enacted with retrospective effect.

9.Mobilizing institutions and markets

10.A central energy fundAn ambitious agenda for energy independence would benefit from a source of funding to be

able to drive targeted investments and influence outcomes. An energy fund established withcontributions from large Indian energy players and the government, run on the lines of a professionalfund, could serve to:

1. Enable and catalyze consortia to bid for large international assets and corporate entities(primarily across coal, gas and liquids), and

2. Share investment risk during development of unproven technologies and applications, and

Incubate new technology ventures.


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Role of Renewables in Energy Mix in Perspective of Indian Energy Independence Scenario

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