Role of renewables in energy mix in perspective of indian energy independence scenario

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 country’s 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 on buoyant economy and rising population. There is a strong linkage between economic growth and energy demand. Coal is a pre-dominant source of energy in India and constitutes the largest share in India’s energy production and consumption. Despite the recent focus on promoting other energy sources (in particular renewables), it is clear that the current coal-centric energy structure will continue for at least next few decades owing to technical and cost-related factors. The coal sector in India, in the past few years, has been subject to various controversies and issues, which raise question 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 of the economy. Presently we are using various sources of energy mainly, fossil fuels, hydro, nuclear etc. but three centuries ago, we used nothing but renewables, with a fully sustainable energy system consisting of wind power (windmills), hydro power (water mills) and bio-fuels (wood stoves and animal power) and some are still in use. But these renewables have their limitations and could not give its major share in growing economics in increasing energy demands. The fossil fuels particularly coal has given boost particularly to power generation which has contributed major share in energy mix in Indian scenario. On contrary Coal industry has an environmental adverse impact which includes the issues such as land use, waste management, water and air pollution etc., caused by 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 our population 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 not seriously and systematically thought of. The first discussion of renewables in economics was in the post-73 oil shock era, when we rediscovered Hotelling’s work on resource depletion and refined it in various 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 used i.e. a technology that would eventually replace exhaustible resources with energy sources such as nuclear 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 policy makers to grapple with the merits of alternative energy and consider the consequences of moving to carbon-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 with carbon 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 be adopted on a very large scale for a sustainable future, and we may conclude that either nuclear or coal 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 environment friendly sustainable growth. The emphasis is given to evaluate the role of renewable resources in energy mix in the energy scenario of India. 2. INTRODUCTION

In layman’s language, energy means amount of force or power when applied can move one object from one position to another or in other terms Energy defines the capacity of a system to do work. 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 energy remains 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. Many of the renewable energy technologies have been around for years, and as time go by, are increasing in 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 limited quantity and will vanish shortly may be in fifty-sixty years from now. Non-renewable sources are not environmental 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 the form 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 the cleanest sources of energy available on this planet. For e.g.: energy that we receive from the sun can be used to generate electricity. Similarly, energy from wind, geothermal, biomass from plants, tides can 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. Most of 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

International Journal of Management (IJM), ISSN 0976

Volume 5, Issue 11, November (2014), pp.

energy is generated, but have no fuel costs (all except wasteusually free). Their only ongoing costs are maicase of waste-to-energy. In contrast, fossil fuel power stations have significant fuel costs. But the renewables like hydro, solar, wind have a characteristic that there is no surety for its continual throughout the year. Nuclear is close to ongoing fuel costs. The renewable energy sources are generally capital intensive and have no running cost. The renewable-based power station next forty years. A coal-fired power station meets the capital costs but leaving our successors over its forty year life to meet the large fuel costs and the external costs associated with its pollution. When we build a renewable power station we are electricity from it. This has implications for what kind of financing might be appropriate particular it makes long-term debt financing seem fair. 3. GLOBAL ENERGY SCENARIO: RESERVE & PRODUCTION

Prior to the use of coal as a prime fuel for power generation, all energy used was renewable. Almost without a doubt the oldest known use of renewable energy, in the form of traditional biomass to fuel fires, dates from 790,000 yeaoldest usage of renewable energy is harnessing the wind in order to drive ships over water. This practice can be traced back some 7000 years, to ships on the Nile. Moving into the time of recorded history, the primary sources of traditional renewable energy were human power, wind, in grain crushing windmillsrunning out of coal prompted experiments with using solar energy. The importance of solar energy was recognized in a 1911 when natural fuelsthe only means of existence of the human race. In the 1970s environmentalists promoted the development of renewable energy both as a replacemfor an escape from dependence on oil, and the first electricity generating Coal constitutes approximately 60% of the fossil fuel reserves in the world, with the remaining 40% being oil and gas.

-

Average electric power (TWh/year)

Average electric power (GW)

Proportion

(Data source- IEA/OECD)

International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976

(2014), pp. 01-20 © IAEME

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energy is generated, but have no fuel costs (all except waste-to-energy need no fuel, and waste is usually free). Their only ongoing costs are maintenance and operation, plus some energy inp

energy. In contrast, fossil fuel power stations have significant fuel costs. But the renewables like hydro, solar, wind have a characteristic that there is no surety for its continual

Nuclear is close to renewables in its cost structure: large capital costs and small ongoing fuel costs. The renewable energy sources are generally capital intensive and have no

based power station today can provide free electricity to its users forfired power station meets the capital costs but leaving our successors over its

forty year life to meet the large fuel costs and the external costs associated with its pollution. When we build a renewable power station we are effectively pre-paying for the next forty years of electricity from it. This has implications for what kind of financing might be appropriate

term debt financing seem fair.

GLOBAL ENERGY SCENARIO: RESERVE & PRODUCTION

as a prime fuel for power generation, in the mid 19th century, nearly all energy used was renewable. Almost without a doubt the oldest known use of renewable energy, in the form of traditional biomass to fuel fires, dates from 790,000 years ago. Probably the second oldest usage of renewable energy is harnessing the wind in order to drive ships over water. This practice can be traced back some 7000 years, to ships on the Nile. Moving into the time of recorded

traditional renewable energy were human laborwindmills, and firewood, a traditional biomass. By 1873, concerns of

prompted experiments with using solar energy. The importance of solar energy natural fuels having been exhausted; the solar power will remain as

the only means of existence of the human race. In the 1970s environmentalists promoted the development of renewable energy both as a replacement for the eventual depletion of oilfor an escape from dependence on oil, and the first electricity generating wind turbines

ximately 60% of the fossil fuel reserves in the world, with the remaining 40%

Source of Electricity (World total year 2008)

Coal Oil Natural Gas Nuclear Renewable

Average electric power (TWh/year) 8,263 1,111 4,301 2,731 3,288

942.6 126.7 490.7 311.6 375.1

41% 5% 21% 13% 16%

6502(Print), ISSN 0976 - 6510(Online),

energy need no fuel, and waste is ntenance and operation, plus some energy input in the

energy. In contrast, fossil fuel power stations have significant fuel costs. But the renewables like hydro, solar, wind have a characteristic that there is no surety for its continual

renewables in its cost structure: large capital costs and small ongoing fuel costs. The renewable energy sources are generally capital intensive and have no

can provide free electricity to its users for the fired power station meets the capital costs but leaving our successors over its

forty year life to meet the large fuel costs and the external costs associated with its pollution. When paying for the next forty years of

electricity from it. This has implications for what kind of financing might be appropriate – in

in the mid 19th century, nearly all energy used was renewable. Almost without a doubt the oldest known use of renewable energy, in

rs ago. Probably the second oldest usage of renewable energy is harnessing the wind in order to drive ships over water. This practice can be traced back some 7000 years, to ships on the Nile. Moving into the time of recorded

labor, animal power, water , a traditional biomass. By 1873, concerns of

prompted experiments with using solar energy. The importance of solar energy the solar power will remain as

the only means of existence of the human race. In the 1970s environmentalists promoted the depletion of oil, as well as

wind turbines appeared. ximately 60% of the fossil fuel reserves in the world, with the remaining 40%

Renewable Other Total

3,288 568 20,261

375.1 64.8 2311.4

16% 3% 100%



Indian scenario: Oil, Coal & Natural Gas

The Current estimates show oil reserves as April 2010 or 5.7 billion barrels, level of consumption i.e. 2.63 Mbbl/d (418,000more than a quarter of India’s twentyThese include offshore basins covering about 3,80,000 square covering 13,40,000 square kilometersthirty billion tonnes of reserves, five times the current figure, thereby extending the projected depletion date by more than fifty yearsconfirmed natural gas reserves as of April 2010.Regarding coal, proven reserves in the country are in excess of eightytotal reserve position swells to moinferred reserves are added which is enough for 60 yearscoal based on a combination of direct measurements and reasonable geologic assumptions made withigh confidence. "Inferred" reserve coal beds, both downwards into the earth and across the landscape from points of direct measurement.

Mother earth has bestowed us with ample resources requirmean that all these natural resources are to be consumed by current generation only and next generation be deprived of. The fossil fuels for which earth has taken millions of years to form, will it be justified that they be consumedconservation? Mission & Vision

The India’s giants companies natural gas and coal, are public sector companies having major share in production of oil, natural gas and coal have set their mission to produce efficiently and market their products, with due respect to safety, health, environment and conservation.


(2014), pp. 01-20 © IAEME

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& Natural Gas

show India’s total oil reserves of 125 Million metric tonnes of proven 5.7 billion barrels, is enough to last a dozens of Mbbl/d (418,000 m3/d). Recent international studies indicate that no

more than a quarter of India’s twenty-six secondary basins have seen serious exploration activity. covering about 3,80,000 square kilometers

kilometers. It has been estimated that these untapped basins may contain thirty billion tonnes of reserves, five times the current figure, thereby extending the projected

fifty years. India has 1,437 billion cubic metres (50.7×10confirmed natural gas reserves as of April 2010.

roven reserves in the country are in excess of eighty-one billion tonnes, while the total reserve position swells to more than two hundred and eleven billion tones

which is enough for 60 years. "Indicated" reserve means the amount of coal based on a combination of direct measurements and reasonable geologic assumptions made wit

reserve shows amount of resource based on the assumed continuity of coal beds, both downwards into the earth and across the landscape from points of direct

Mother earth has bestowed us with ample resources required for our life. But it does not mean that all these natural resources are to be consumed by current generation only and next generation be deprived of. The fossil fuels for which earth has taken millions of years to form,

they be consumed just in few hundred years, without having

companies ONGC, GAIL and CIL which are major producer of oil &natural gas and coal, are public sector companies having major share in production of oil, natural gas and coal have set their mission to produce efficiently and market their products, with due respect to safety, health, environment and conservation.


125 Million metric tonnes of proven of years, at the present

Recent international studies indicate that no secondary basins have seen serious exploration activity.

kilometers and on shore basins It has been estimated that these untapped basins may contain

thirty billion tonnes of reserves, five times the current figure, thereby extending the projected billion cubic metres (50.7×1012 cu ft) of

one billion tonnes, while the tones if indicated and

"Indicated" reserve means the amount of coal based on a combination of direct measurements and reasonable geologic assumptions made with

of resource based on the assumed continuity of coal beds, both downwards into the earth and across the landscape from points of direct

ed for our life. But it does not mean that all these natural resources are to be consumed by current generation only and letting the next generation be deprived of. The fossil fuels for which earth has taken millions of years to form,

having consideration of

which are major producer of oil & natural gas and coal, are public sector companies having major share in production of oil, natural gas and coal have set their mission to produce efficiently and market their products, with due respect to



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ONGC, is the prime Oil & Natural Gas Producing Company, is global leader in integrated energy business through sustainable growth, knowledge excellence and exemplary governance practices, and has aimed to abide commitment to safety, health and environment to enrich quality of community life. GAIL (Gas Authority India Limited)’s Mission is to accelerate and optimize the effective and economic use of Natural Gas and its fractions for the benefit of the national economy. And its Vision is Be the leading company in Natural Gas and beyond, with Global Focus, Committed to Customer Care, Value Creation for all Stakeholders and Environmental Responsibility. CIL (Coal India Limited) a coal producing giant company in India has set its vision as To emerge as a global player in the primary energy sector committed to provide energy security to the country by attaining environmentally & socially sustainable growth through best practices from mine to market and the mission as To produce and market the planned quantity of coal and coal products efficiently and economically in an eco-friendly manner with due regard to safety, conservation and quality. 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 a fundamental and doubtful question that needs to be answered. Here a new formula for calculating when fossil fuel reserves are likely to be depleted is presented along with an econometrics model to demonstrate the relationship between fossil fuel reserves and some main variables (Shahriar Shafiee et.al. 2009). The new formula is modified from the Klass model and thus assumes a continuous compound rate and computes fossil fuel reserve depletion times for oil, coal and gas of approximately 35, 107 and 37 years, respectively. This means that coal reserves are available up to 2112, and will be the only fossil fuel remaining after 2050. Above statistics indicates that there is comfortable reserves position which reflected in the long-term price trends of fossil fuels and has declined in real terms since the 1970s. In fact, fossil fuel 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,

what’s 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 22nd century, we cannot ignore the effort to find out the alternative sources of energy. This is the time to make all our efforts to find out various affordable alternatives to fossil fuels. Moreover, the longer use 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 energy sources 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 the country. 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 producing fields include Bombay High which is operated by ONGC and contributed ~34% of the total gas production in 2011-12, KG-D6 offshore which is operated by Reliance Industries Ltd and contributed ~33% of the total gas production in 2011-12. The total offshore gas production accounts for 88% of the total production in India. The share of the private sector and JVs in the country’s total gas production is expected to increase, owing to recent gas discoveries expected to be monetized by the companies. This study estimates alternative trajectories of energy requirements and examines the likely fuel 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 modeling framework to assess the best energy mix during the modeling time frame. Based on the scenario



assessment, the report provides directions tosector including policy-makers, technologists, and investorto play a key role in meetingavailability of coal is expected to pplans and technology. 4. ISSUES WITH FOSSIL FUELS

India’s dependence on fossil fuel is widely regarded as unsustainable.

not just environmental in character, but is emerging as a macroeconomic one

challenges for India on multiple fronts

developing new renewables and strengthening the macroeconomic fundamentals by making India a

more attractive destination for FDI.

India’s current energy use is unsustainable. This consists of fossil fuels, hydro and nuclear resources on the one hand, and combustible biomass and wastes non-traded resources having a share of almost one quarter in the total prrenewable resources currently have a negligible share (0.36%) in the total commercial (i.e. traded) energy balance. Composition of Primary Commercial Energy of India in % share (2009)

The high dependence of India’s energy systebecause of the high share of carbon footprint in the total ecological footprint and the various other adverse environmental effects, but also because of the economic (or ‘macroeconomic’) unsustainability of such dependence due to heavy financial requirement for imports arising from the growing scarcity of the fossil fuel resources. The such an energy supply are outlined Coal Among the fossil fuels, coal, being a relatively cheap and perceived to be an ‘abundant’ energy resource as compared to hydrocarbons in India, has remained the focus of attention for energy planners ever since the oil shock of the early 1970s to meet the edemand in the country. The total estimated reserve of coal in India as of 31 March 2010 was around 277 billion tonnes, according to the Energy Statistics of India in 2012. However, the minability and extractability of Indian coal are significantly affected by the geological, technical and other surface constraints such as township, riverbed, high environmental fragility due to the location of deposits underneath deep pristine forests and so on resulting in high economic cost for at leathe resource which cannot be as a result measurement due to methodological reasons have further compounded the problem of estimation of reserves for energy planning. The high ash qthe apparent benefit of the low-cost of coal from the geoAll these factors have resulted in the growing import of both coking and nondue to demand exceeding domestic supply and also of washing both coking and also non


(2014), pp. 01-20 © IAEME

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assessment, the report provides directions to various stakeholders associated with the Intechnologists, and investor. It also indicates that coal

to play a key role in meeting the country’s energy requirements. Howpected to plateau in the next couple of decades with the current exploitation

ISSUES WITH FOSSIL FUELS

India’s dependence on fossil fuel is widely regarded as unsustainable. T

not just environmental in character, but is emerging as a macroeconomic one

challenges for India on multiple fronts – discovering new sources of hydrocarbon deposits,


more attractive destination for FDI. energy use is unsustainable. This consists of fossil fuels, hydro and nuclear

resources on the one hand, and combustible biomass and wastes on the other, the latter being largely a share of almost one quarter in the total primary energy supply. New

renewable resources currently have a negligible share (0.36%) in the total commercial (i.e. traded)

Composition of Primary Commercial Energy of India in % share (2009)

The high dependence of India’s energy system on fossil fuel is unsustainable not only because of the high share of carbon footprint in the total ecological footprint and the various other adverse environmental effects, but also because of the economic (or ‘macroeconomic’)

ependence due to heavy financial requirement for imports arising from the growing scarcity of the fossil fuel resources. The issues underlying the financial unsustainability of such an energy supply are outlined as under.

Among the fossil fuels, coal, being a relatively cheap and perceived to be an ‘abundant’ energy resource as compared to hydrocarbons in India, has remained the focus of attention for energy planners ever since the oil shock of the early 1970s to meet the edemand in the country. The total estimated reserve of coal in India as of 31 March 2010 was around 277 billion tonnes, according to the Energy Statistics of India in 2012. However, the minability and

significantly affected by the geological, technical and other surface constraints such as township, riverbed, high environmental fragility due to the location of deposits underneath deep pristine forests and so on resulting in high economic cost for at leathe resource which cannot be as a result categorized as economically viable reserves. Some errors in measurement due to methodological reasons have further compounded the problem of estimation of reserves for energy planning. The high ash quality problem of Indian coal also tends to offset part of

cost of coal from the geo-technically friendly coal fields and basins. All these factors have resulted in the growing import of both coking and nondue to demand exceeding domestic supply and also of washing both coking and also non


eholders associated with the Indian energy . It also indicates that coal would continue

ntry’s energy requirements. However, the indigenous cades with the current exploitation

This unsustainability is

not just environmental in character, but is emerging as a macroeconomic one as well, leading to

discovering new sources of hydrocarbon deposits,


energy use is unsustainable. This consists of fossil fuels, hydro and nuclear on the other, the latter being largely

imary energy supply. New renewable resources currently have a negligible share (0.36%) in the total commercial (i.e. traded)

m on fossil fuel is unsustainable not only because of the high share of carbon footprint in the total ecological footprint and the various other adverse environmental effects, but also because of the economic (or ‘macroeconomic’)

ependence due to heavy financial requirement for imports arising from the underlying the financial unsustainability of

Among the fossil fuels, coal, being a relatively cheap and perceived to be an ‘abundant’ energy resource as compared to hydrocarbons in India, has remained the focus of attention for energy planners ever since the oil shock of the early 1970s to meet the ever-increasing energy demand in the country. The total estimated reserve of coal in India as of 31 March 2010 was around 277 billion tonnes, according to the Energy Statistics of India in 2012. However, the minability and

significantly affected by the geological, technical and other surface constraints such as township, riverbed, high environmental fragility due to the location of deposits underneath deep pristine forests and so on resulting in high economic cost for at least some part of

as economically viable reserves. Some errors in measurement due to methodological reasons have further compounded the problem of estimation of

uality problem of Indian coal also tends to offset part of technically friendly coal fields and basins.

All these factors have resulted in the growing import of both coking and non-coking coal over time due to demand exceeding domestic supply and also of washing both coking 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 period 1989-1990 to 2010-2011 in both nominal dollars and rupees, particularly since 2000, at the respective 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 these issues. Carbon Capture and Storage (CCS): CCS is method to mitigate global warming and the primary focus of this study. As the name suggests, in this method, CO2 emitted from thermal power plants and CO2 intensive industries is captured and stored in various reservoirs to lessen their polluting impact on the atmosphere. CCS is therefore hailed as the technology of the future. As our dependence on fossil fuels is not expected to decline radically in the near future, CCS can provide an excellent transition from conventional to non-conventional methods of generating power, such as solar 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 open question, the time it will take them to penetrate the market implies significant continued use of fossil fuels in the interim. Others see a built-in solution to the problem of fossil-fuel combustion: there is a limited supply of fossil fuels, and at some point, their use will become too costly, forcing a switch to alternative energy sources. Thus, the policy should be to wait until the fossil fuel supply is depleted and allow rising fossil fuel prices to induce the development of renewable energy sources. But this argument assumes that fossil fuels will become scarce before the gradual atmospheric buildup of GHGs becomes too costly in terms of its effect on terrestrial ecosystems and human societies Energy efficiency improvements and switching from fossil fuels toward less carbon-intensive energy sources were once seen as the only realistic means of reducing carbon dioxide (CO2) emissions. In recent years, however, analysts and policymakers have begun to recognize the potential for a third option—the development of “end-of-pipe” technologies that would allow for the continued utilization of fossil fuel energy sources while significantly reducing carbon emissions. These technologies have collectively come to be known as carbon capture and storage (CCS) technologies. Using these technologies, 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 of these pollutants, such as sulfur, can be turned into re-usable byproducts. The plant is called integrated because (1) the syngas produced in the gasification section is used as fuel for the gas turbine in the combined cycle, and (2) steam produced by the syngas coolers in the gasification section is used by the steam turbine in the combined cycle. In this example the syngas produced is used 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) to make steam for the steam turbine cycle. An IGCC plant improves the overall process efficiency by adding 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 the available 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 import has been steadily rising over the years. Although India has set up some refinery capacity under a private 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 of petroleum products) have increased from around 25 million tonnes during 1989-1990 to around 120 million tonnes in 2010-2011 – a growth rate of over 7% each year over the past two decades. While the average price of India’s 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 apparent consumption of oil (that is, crude oil production plus net petroleum import) has grown from 43% in 1989-1990 to a high of 76% in 2010-2011. The natural gas market, on the other hand, is only an emerging market in India. The International Energy Agency (IEA) estimates the Indian market of natural gas to be one of the fastest growing in the world over the next 20 years and projects the growth to be around 5.4% per year over 2007-2030 (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 picked up very recently in 2009 with the start of the Krishna-Godavari KG-D6 hydrocarbons bearing field after remaining stagnant for almost a decade. The enactment of the New Exploration Licensing Policy (NELP) by the government has played a key role in ensuring greater participation of private and foreign companies in natural gas discovery and extraction. India has already started importing natural gas in spite of such growth in production the share of import reaching 19% of apparent consumption in 2010-2011. The unit price of natural gas in nominal dollar has also been growing at an 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 path and this would increase going forward the energy consumption in the country. This increase in consumption is expected to be supplemented by an alteration in the primary energy mix of India on account of the substitution of oil by natural gas. The share of natural gas in the energy mix of India is expected to increase to 20% in 2025 as compared to 11% in 2010 However, given that all the plans for 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 by 2025, it is envisaged that the share of natural gas in the primary energy mix would reach 20% till 2030 if not more. In recent years the demand for natural gas in India has increased significantly due to its higher availability, development of transmission and distribution infrastructure, the savings from the usage of natural gas in place of alternate fuels, the environment friendly characteristics of natural gas as a fuel and the overall favorable economics of supplying gas at reasonable prices to end consumers. 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 six major 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 highest consumption due to better pipeline connectivity. However, with the increasing coverage and reach of natural gas infrastructure in India, this regional imbalance is expected to get corrected. In future, the natural gas demand is all set to grow significantly at a CAGR of 6.8% from 242.6 MMSCMD in 2012-13 to 746 MMSCMD in 2029-30. This demand represents the Realistic Demand for natural gas in India. Gas based power generation is expected to contribute the highest, in the range of 36% to 47%, to this demand in the projected period (2012-13 to 2029-30). The share of fertilizer sector in the overall gas consumption in the country is expected to go down from 25% in FY 2013 to 15% in FY 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 CGD sector 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 the total 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 total fossil fuel (in oil equivalent units) has increased in nominal rupees and dollar terms at the rates of 10% per year and 6% per year respectively. As a result of the price rise and the growing imports of all the fossil fuels as indicated above, India’s total bill of net import of energy has grown at an alarming rate of close to 20% per year, leading to an increase of almost 55 times over the past two decades. As a consequence, the share of total energy import bill as a percentage of India’s total export earnings has also been growing over time, and has now reached almost 38% in 2010-2011 which is a source of concern for macro-economic sustainability of such pattern of growth of energy use in India. In view of the sharp decline in the rate of growth of IT related service export earnings to 10% per year, the slowing down of inflow of foreign direct investment (FDI) into India and the footloose 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 stability of India’s currency value. Thus, replacement of fossil fuel by renewables is not only important for the environmental sustainability or greenness of our development process, but also in the interest of the macroeconomic sustainability of our growth process. 6. ENERGY CRISES: PRESENT AND FUTURE

The energy crisis is the concern that the world’s demands on the limited natural resources that are used to power industrial society are diminishing as the demand rises. These natural resources are in limited supply. While they do occur naturally, it can take hundreds of thousands of years to replenish the stores. Governments and concerned individuals are working to make the use of renewable resources a priority, and to lessen the irresponsible use of natural supplies through increased conservation. The energy crisis is a broad and complex topic. Most people don’t feel connected to its reality unless the price of gas at the pump goes up or there are lines at the gas station. The energy crisis is something that is ongoing and getting worse, despite many efforts. The reason for this is that there is not a broad understanding of the complex causes and solutions for the energy crisis that will allow for an effort to happen that will resolve it. According to the Wikipedia, “An energy crisis is any great bottleneck (or price rise) in the

supply 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 energy crisis is in the world. One side will always say it is based on faulty science and politics; the other will say that the other side is basing their findings on junk science and political interests. The best way to sum up the reality of the energy crisis is that you cannot have growing demands on limited resources without eventually running out of the resource. That is just common sense. What is really at play in the discussion about how real the energy crisis is concerns the perception of responsibility for the future. There is no real energy crisis if you are not concerned about life after your time on Earth is gone. There is a very real energy crisis if you care about the future that the next generations will inherit.



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Causes of the Energy Crisis- It would be easy to point a finger at one practice or industry and lay the blame for the entire energy crisis at their door, but that would be a very naive and unrealistic interpretation of the cause of the crisis.

1. Overconsumption: The energy crisis is a result of many different strains on our natural resources, not just one. There is a strain on fossil fuels such as oil, gas and coal due to overconsumption – which then in turn can put a strain on our water and oxygen resources by causing pollution. 2. Overpopulation: Another cause of the crisis has been the steady increase in the world’s population and its demands for fuel and products. No matter what type of food or products you choose to use – from fair trade and organic to those made from petroleum products in a sweatshop – not one of them is made or transported without a significant drain on our energy resources.

3. Poor Infrastructure: Aging infrastructure of power generating equipment is yet another reason for energy shortage. Most of the energy producing firms keep on using outdated equipment that restricts the production of energy. It is the responsibility of utilities to keep on upgrading the infrastructure and set a high standard of performance.

4. Unexplored Renewable Energy Options: Renewable energy still remains unused is most of the countries. Most of the energy comes from non-renewable sources like coal. It still remains the top choice to produce energy. Unless we give renewable energy a serious thought, the problem of energy crisis cannot be solved. Renewable energy sources can reduce our dependance on fossil fuels and also helps to reduce greenhouse gas emissions.

5. Delay in Commissioning of Power Plants: In few countries, there is a significant delay in commissioning of new power plants that can fill the gap between demand and supply of energy. The result is that old plants come under huge stress to meet the daily demand for power. When supply doesn’t matches demand, it results in load shedding and breakdown.

6. Wastage of Energy: In most parts of the world, people do not realize the importance of conserving energy. It is only limited to books, internet, newspaper ads, lip service and seminars. Unless we give it a serious thought, things are not going to change anytime sooner. Simple things like switching off fans and lights when not in use, using maximum daylight, walking instead of driving for short distances, using CFL instead of traditional bulbs, proper insulation for leakage of energy can go a long way in saving energy. Read here about 151 ways of saving energy.

7. Poor Distribution System: Frequent tripping and breakdown are result of a poor distribution system.

8. Major Accidents and Natural Calamities: Major accidents like pipeline burst and natural calamities like eruption of volcanoes, floods, earthquakes can also cause interruptions to energy supplies. The huge gap between supply and demand of energy can raise the price of essential items which can give rise to inflation.

9. Wars and attacks: Wars can hamper supply of energy specially it happens in Middle east countries iin 1990 Gilf war and oil price reached to peak causing global shortage.

10. Miscellaneous factors: Tax hikes, strikes, military coup, political events, extreme temperature can cause sudden increase in demand of energy and can choke supply.



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7. RENEWABLE ENERGY SOURCES AND THEIR LIMITATIONS

As the major part of India’s coal import is for the power and steel sector, coal has been substituted 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 of energy development depends on India’s success at the stage of breeder reactor and that in developing thorium-uranium cycle so that it can use its huge stock of thorium reserve. It is now too early to assess the situation, but India needs to engage in trade in uranium and light water reactor market so that it is in a position to successfully experiment with uranium-thorium reactor. So far as large hydro-electric projects are concerned this option is fraught with too many socio-political and political economic problems arising from the environmental effects due to too much disturbance in the local and regional ecosystems of the river basin and river valley as well as human ecological conditions due to the destabilization of human settlements. Besides, the high capital cost of storage of water as power energy resource and high gestation lag of projects when added to the environmental 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 the challenge of the growing eco-scarcity of fossil fuel resources and to combine macroeconomic sustainability with the environmental one. However, as power, steel and transport are responsible for most 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 blending fuel into diesel and petrol have become vital for sustainable or green energy development. This issue of energy security and macroeconomic sustainability of growth also further requires greater flow of hydrocarbons from domestic sources and intensification of hydrocarbon discovery activities. For attracting finance and modern technology for such purpose in this area, it is important to encourage foreign investors to take greater interest in such investment – which depends on the terms of production-sharing and profit-sharing contracts and prices of the products in this sector. While the price of oil, which is quite liquid in trade, is globally determined, the market for gas is mostly localized and region specific. The government is expected to announce its gas pricing and gas utilization policy and fix it for a period of time. This is particularly important to create a competitive environment in such investments in view of the oligopolistic nature of this global industry. The Indian government is at the moment engaged in such task of restructuring the production-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 balance of 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 overall balance of payments. There should also be policies regarding the direction of inflow of foreign investments into the area of renewables and biofuels for the transfer of the required technology and mobilisation of the required financial resources for the purpose. 8. ENERGY SECURITY

The heating up of earth’s atmosphere due to trapping of long wavelength infrared rays by the carbon dioxide layer in the atmosphere is called green house effect. The key greenhouse gases driving global warming are Carbon-dioxide, CFC, methane, Ozone, Nitrous oxide etc. The basic aim of 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 and labels 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 undertaking promotional activities in coordination with centre and state level agencies. Some of the strategies that can be used to meet future challenges to Nation’s 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), India’s primary energy mix has not changed much. The country continues to depend, for most of its energy needs, on coal (>50%) and oil (~30%).



However, natural gas is emerging as one of the fastestrate of 8%. Currently, it accounts for 9 Present energy mix of consumption is shown On the other hand, other renewable segments solar, geothermal, wind energy, etc.) and nuclear energy consumption have also registered an impressive annual growth as compared to the last decade. India’s twelfth five year plans estimates that an additional capacity of 75,785 MW is required over the plan period, giving a total capacity of approximately 276,000 MW. To decrease the gap between peak demand and peak deficit and to permit the retirement plants, the plan target has been fixed at 88,537 MW. To meet this target, the private sector share of this additional capacity will be increased to 53 per cent, up from 19 per cent in the eleventh plan. this added capacity, the Plan estimates that thermal energy derived from coal and lignite will account for 79 per cent, up from 76 per cent in the previous plan. Hydro10,897 MW (12 per cent of the estimated additional capacity), and nuclear capac(approximately 6 per cent). Energy imports from Bhutan are expected to total 1,200 MW (1.36 per cent). It is in the renewable sector, however, that major increases are planned; the planned total addition to capacity of 30,000 MW comprises 15,000 MW wind energy, 10,000 MW solar energy, 2,100 small-hydro power and the balance to be derived India’s projected energy mirole. The solar and wind has to contribute their major part in the energy mix 2030. The energy from coal will become increasingly import dependent despite increased production of both renewanuclear energy. Estimated Energy Mix 2030 for India and components of renewable source energy generation is graphically indicated as under:


(2014), pp. 01-20 © IAEME

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However, natural gas is emerging as one of the fastest-growing fuels, registering an annual growth accounts for 9% of the total primary energy consumption.

Present energy mix of consumption is shown in diagram & table below:

On the other hand, other renewable segments solar, geothermal, wind energy, etc.) and nuclear energy consumption have also registered an impressive annual growth as compared to the

India’s twelfth five year plans estimates that an additional capacity of 75,785 MW is required over the plan period, giving a total capacity of approximately 276,000 MW. To decrease the gap between peak demand and peak deficit and to permit the retirement of older, inefficient energy plants, the plan target has been fixed at 88,537 MW. To meet this target, the private sector share of this additional capacity will be increased to 53 per cent, up from 19 per cent in the eleventh plan.

the Plan estimates that thermal energy derived from coal and lignite will account for 79 per cent, up from 76 per cent in the previous plan. Hydro-power is expected to generate 10,897 MW (12 per cent of the estimated additional capacity), and nuclear capac(approximately 6 per cent). Energy imports from Bhutan are expected to total 1,200 MW (1.36 per

sector, however, that major increases are planned; the planned total addition to capacity of 30,000 MW comprises 15,000 MW wind energy, 10,000 MW solar energy,

hydro power and the balance to be derived from biomass. ’s projected energy mix in 2030 is as under wherein the renewable has to play prominent

. The solar and wind has to contribute their major part in the energy mix 2030. The energy from will become increasingly import dependent despite increased production of both renewa

Estimated Energy Mix 2030 for India and components of renewable source energy generation is graphically indicated as under:

Coal

Oil

Renewable*

Gas

Hydro

Nuclear

Total

Source

Coal

Renewable*

Gas

Hydro

Nuclear

Total


growing fuels, registering an annual growth % of the total primary energy consumption.

On the other hand, other renewable segments solar, geothermal, wind energy, etc.) and nuclear energy consumption have also registered an impressive annual growth as compared to the

India’s twelfth five year plans estimates that an additional capacity of 75,785 MW is required over the plan period, giving a total capacity of approximately 276,000 MW. To decrease the gap

of older, inefficient energy plants, the plan target has been fixed at 88,537 MW. To meet this target, the private sector share of this additional capacity will be increased to 53 per cent, up from 19 per cent in the eleventh plan. Of

the Plan estimates that thermal energy derived from coal and lignite will account power is expected to generate

10,897 MW (12 per cent of the estimated additional capacity), and nuclear capacity 5,300 MW (approximately 6 per cent). Energy imports from Bhutan are expected to total 1,200 MW (1.36 per

sector, however, that major increases are planned; the planned total addition to capacity of 30,000 MW comprises 15,000 MW wind energy, 10,000 MW solar energy,

x in 2030 is as under wherein the renewable has to play prominent . The solar and wind has to contribute their major part in the energy mix 2030. The energy from will become increasingly import dependent despite increased production of both renewable and

Estimated Energy Mix 2030 for India and components of renewable 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. India’s 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 coal’s 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 its

market share drops to 57% as transport rises. 10. Oil maintains its dominance in the transport sector as its share actually increases from 94% in

2011 to 95% in 2030. 11. Fossil fuels account for 88% of Indian energy consumption in 2030, down marginally from

92% in 2011. 12. Renewables share of consumption rises from 2% to 14% in 2030. 13. Oil imports will rise by 152% as the country’s production meets less than 10% of demand by

2030. 14. India’s CO2 emissions from energy consumption double, as the country’s 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 the basis for more ambitious achievements in the future. However, a healthy rate of economic growth equaling or exceeding the current rate of 8% per annum would require major provision of infrastructure and enhanced supply of input such as energy. High economic growth would create much larger demand for energy and this would present the country with a variety of choices in terms of supply possibilities. Technology would be an important element of future energy strategy for the country, because related to a range of future demand and supply scenario would be issues of technological 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 India’s energy solution in the future. The Indian government aims to achieve an economic growth rate of over 8% in the next two decades in order to

Renewable Sources

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 the need for structural changes in the economy as well as for induced shifts in the patterns of end-use demands. To meet the needs of the Indian populace in the most effective manner, it is important to map 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 by 2035, according to the latest BP Energy Outlook 2035. The growth in demand for energy in India will 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. India’s energy demand is expected to grow by 132%, while China and Brazil’s energy demand will grow by 71% and Russia’s by 20%. Growth in India’s 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 on the Organisation for Economic Co-operation and Development, and mostly comprise mature economies. India consumed around 536 million tonnes (mt) of coal, 42mt of lignite, 211.42mt of crude, 46.5 billion cubic meters of natural gas, and 755,847 giga-watt-hours of electricity in fiscal 2012, 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 India and China will together account for half of the energy demand growth in the world till 2035, which is pegged at 41%. Over the next two decades, India’s energy consumption is also expected to grow at a significant rate of 11%, albeit at a lower clip than energy demand growth. This will compel India to be dependent on imports of fossil fuels such as coal well into in the future, the report states. Across fuel categories like liquids (crude oil, natural gas liquids) and coal, India is likely to outpace China in terms of demand growth. In coal, for instance, China’s demand is declining, “driven by the rebalancing of China’s economy towards services and domestic consumption, and supported by efficiency improvements and more stringent environmental policy,” the report observes. India, on the other hand, is continuing with its industrialization drive. Among fossil fuels, the biggest spurt of 183% in demand will be seen by natural gas, a commodity whose scarcity has already caused a few concerns in the Indian economy. The country was supposed to have significant production of domestic natural gas supply, especially from the high-potential Krishna-Godavari basin where operators like Reliance Industries Ltd and Oil and Natural Gas Corp. Ltd are active. But geological challenges have prevented this from materializing so far and heavy volumes of expensive gas are being imported at present. India’s energy import bill may reach $300 billion by 2030, said Rahool Panandiker, principal at Boston Consulting Group. “This has serious implications for policymakers who need to come up with ways to ensure that domestic energy production is boosted as much as possible, else factors like the current account deficit and geopolitical tension in oil and gas producing regions 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 so that 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 important role in addressing the energy security concerns of a country. Today, India has one of the highest potentials for effectively using renewable energy sources. The country is the world’s fifth largest producer of wind power after Germany, USA, Spain, and Denmark. There is a significant potential in India for the generation of power from renewable energy sources—wind, small hydro, biomass, and solar energy. The penetration of other renewable energy technologies, including solar photovoltaic, solar thermal, small hydro, and biomass power is also increasing. Greater reliance on renewable energy 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 by adopting more efficient technologies in all sectors. 11. ENERGY INDEPENDENCE SCENARIO

In this ‘Energy Independence’ scenario the total primary energy demand in 2030 is lower at 1387mtoe (versus 1508mtoe in BAU). The fuel mix shifts towards renewable, although fossil fuels remain dominant at 68 per cent of the mix. Underpinning the Energy Independence scenario is a strong supply response and a focus on demand management. This is higher than current plans, but not beyond reach given enabling market conditions. The biggest shift in the Energy Independence scenario, however, is in the import dependence, which reduces to 15–20 per cent. Coal imports reduce to 9 per cent, liquids imports reduce to 62 per cent, and gas imports reduce to existing LNG contracts. While liquid imports remain high in this scenario, there is considerably higher flexibility and 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 production Coal will remain the bedrock of India’s energy requirements for the foreseeable future. Achieving 1200mtpa of coal production by 2030 will require incremental annual production of 950mtpa, to make up for existing mines that will decline over the next 15 years. This will require India to:

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

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 another have seen no development.

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

Import dependence on energy would reduce to 15–20 per cent

2. Unlock unconventional gas production Several 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 alike Ensure sufficient fiscal and infrastructural incentives to attract investment in unconventional supply chains and services

2. Allow full exploration and exploitation of all resources in NELP blocks 3. Allow market determined pricing for unconventional gas and the freedom to market gas.

3. Support conventional oil and gas production To 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 sufficient investment into new licensing rounds, and remove the remaining bottlenecks to resource development. 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 cost investments in EOR4—and the related technology development-viable.

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

3. Streamline contract administration by enforcing time bound deemed approvals with management committee accountability, codifying standard practices around grey zones in product sharing contracts, defining policies for license extension, exploration in producing blocks and extension of block areas, strengthening and empowering DGH5 and making it a statutory body focused on approving and monitoring work programs, budgets and field development plans.

4. Light up 50,000 villages through off grid solar Traditional 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 (and in 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 will need to:

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

2. Introduce village level O&M capabilities and governance to manage distributed solar assets Devise 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 social responsibility budgets, as well as private risk capital.

5. Add 100+ GW of grid connected solar and wind India 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 December 2013. This translates to more than 3 GW of installed capacity per year. Though outstanding, India would 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 each state. Renewable Energy Certificates (RECs) remain unsold, forcing REC prices to floor levels, 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 and manufacturing 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 solar viable for evening peaks.

6. Reduce industry and building power demand by 30 per cent India’s 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 per cent 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 of 0.4koe/USD by 2030 could be achieved by:

1. Reducing residential and commercial energy intensity. This would involve increasing penetration 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 energy reduction in power intensive industrial segments through year on year targets, time of day tariffs and incentivizing production of energy efficient industrial equipments.

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

3. Reducing AT&C losses: India’s AT&C losses at about 23–24 per cent are extremely high compared to 5 to 7 per cent in best practice countries like Japan, Germany and Korea. Even some developing countries, e.g., Malaysia have achieved sub-10 per cent loss levels. India could achieve these levels through a mix of technology (e.g., smart grids) and effective distribution ownership and management.

7. A stronger technology ecosystem India 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 of their global counterparts on R&D, on a per barrel basis

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

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

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

8. Catalysing industry participation and investment While 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 coal 2. Moving subsidies to an arm’s length basis, directly to consumers as far as possible, to avoid

distortions in industry conduct and inappropriate incentives for consumption 3. Ensuring new policies are not enacted with retrospective effect.

9. Mobilizing institutions and markets 10. A central energy fund An 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 with contributions from large Indian energy players and the government, run on the lines of a professional fund, 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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12. CONCLUSION

India is the world’s fourth largest economy as well as the fourth largest energy consumer. India imports a substantial portion of its energy from coal, oil & gas. As the Indian economy continues to grow, so will its energy consumption, especially as the growth of its manufacturing sector catches up with services and agriculture. With domestic resource production facing various challenges, the general expectation has been that Indian energy imports will continue to grow, and energy security concerns will intensify. The outlook and options for Indian energy independence therefore becomes an important topic. In view of above facts, it is essential that a 2030 outlook is particularly relevant, since it is difficult to significantly change energy policy & thinking in 5/10 years, but almost any boundary conditions can be changed over a 15-year period. Moreover, there have been few if any, in-depth perspectives on this topic for 2030. India’s energy demand, which was nearly 700mtoe (million tonnes of oil equivalent) in 2010, is expected to cross 1500mtoe by 2030. Its dependence on imports is expected to increase from 30 per cent to over 50 per cent, suggesting the need for a new way forward. India’s primary energy demand by fuel type in 2010 and business as usual (BAU) projections for 2030. Primary demand in 2010 stood at 691mtoe. Of this, about 41 per cent was coal, 24 per cent was liquids, 23 per cent was non-commercial fuel, 8 per cent was gas, and the remainder was a mix of hydro, renewables and nuclear power. Despite recent strides in renewable and nuclear power, this is a predominantly fossil fuel based mix, with 73per cent of primary energy coming from coal, oil and gas. Possible import dependence above 50 per cent of 1500mtoe and growing is a clear indication that a different set of energy outcomes versus BAU will be required if India is to keep its growing economy supplied with sufficient reliable and cost effective energy. Domestic resources will need to be explored and exploited to target levels that have not been traditionally considered in current long-term plans. This will require stable, viable market mechanisms that attract sufficient investment across the value chains. All possible energy sources will need attention, including coal, conventional and unconventional oil and gas, renewables, nuclear power and energy efficiency. Following are the factors that give India the opportunity to address its energy security concerns:

1. India has ample opportunity to increase coal production, provided transparent resource access and development regulations are put in place

2. India has substantial unconventional hydrocarbon potential, even though reserve estimates vary widely at this early stage

3. Conventional oil and gas still holds great potential in India, especially via the redevelopment and intensive exploitation of existing mature basins, provided viable pricing and taxation mechanisms are in place

4. India has had remarkable momentum in increasing renewable power capacity (both wind and solar), and doing so while setting global cost benchmarks

5. With a vast proportion of India’s infrastructure yet to be built, India can leapfrog the developed world in energy efficient buildings, long distance rail transportation, and an optimal road-rail modal mix etc.

6. India has a unique opportunity to create stronger and more secure supply partnerships with oil and gas supplying countries in the Middle East and Africa, who will be seeking large and stable markets to absorb imports displaced by the US.

We believe that it is possible for India to achieve substantially higher domestic energy supply, lower demand and more secure imports than in the BAU case by utilizing the ample



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resources of renewables at an affordable cost and for longer period without disturbing the fixed available resources of fossil fuels keeping them safe forthcoming generations.

REFERENCES

[1] www.ideasforindia.in (The Unsustainability of fossil fuel use in India by R. Sengupta) - http://www.ideasforindia.in/article.aspx?article_id=126#sthash.HVMbtHxj.dpuf.

[2] http://www.groundtruthtrekking.org/Issues/AlaskaCoal/CoalTerminology.html#ixzz3I4WPVQsd.

[3] http://www.futuredirections.org.au/publications/indian-ocean/1118-meeting-india-s-energy-requirements-in-2030-1.html#sthash.OmolPeTf.dpuf.

[4] http://www.livemint.com/Industry/DkEx9mPwpSso24SWhBMxrL/Indias-energy-demand-to-surpass-Chinas-by-2035-BP.html?utm_source=copy.

[5] http://www.currentscience.ac.in/Volumes/105/07/0914.pdf. [6] en.wikipedia.org/wiki/Integrated_gasification_combined_cycle Extract from paper: national

energy map for India – technology vision 2030. [7] Dr.S.M.Ali and Prof. K.K.Rout, “Application of Renewable Energy Sources for Effective

Energy Management”, International Journal of Electrical Engineering & Technology (IJEET), Volume 1, Issue 1, 2010, pp. 18 - 31, ISSN Print : 0976-6545, ISSN Online: 0976-6553.

[8] Archana S. Talhar (Belge) and Sanjay B. Bodkhe, “Modernization of Traditional Grid into Smart Grid through Renewable Sources”, International Journal of Electrical Engineering & Technology (IJEET), Volume 5, Issue 2, 2014, pp. 1 - 11, ISSN Print : 0976-6545, ISSN Online: 0976-6553.

[9] M.R. Kolhe and Dr. P.G. Khot, “Coal – An Energy Source for Present and Future”, International Journal of Management (IJM), Volume 5, Issue 10, 2014, pp. 71 - 90, ISSN Print: 0976-6502, ISSN Online: 0976-6510.

ABBREVIATIONS

CCS-Carbon Capture & Storage, IEA-International Energy Agency, IGCC-Integrated gasification

combined cycle NELP-New Exploration Licensing Policy, CHCP-Combine Heating & Cooling Plant, OECD-Organization for Economic Cooperation and development, Mtoe- Million tonne oil equivalent, BAU-Business As Usual, MTPA-Million Tonne Per Annum, O&M-Operate & Maintenance, RPO-Renewal Purchase Obligation, BEE- Bureau of Energy Efficiency, AT&C Loss- Aggregate Technical and Commercial Loss, R&D-Research & Development, ECBC-Energy Conservation and Building Code, CAGR- Compound Annual Growth Rate.

AUTHOR’S PROFILE

M.R. Kolhe, received the Bachelor of Engineering degree in Electrical Engineering from Visvesvaraya Regional College of Engineering Nagpur (now: Visvesvaraya National Institute of Technology, Nagpur) and M.B.A. degree from GS College of Commerce, Nagpur in 1974 and 1990, respectively. During 1975-2013, he worked in Western Coalfields Limited (Government of India Undertaking) and retired in 2013 as General Manager (Electrical & Mechanical).

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