India's Energy Situation and Trends in New/Renewable Energy And
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IEEJ: November 2009 The 45th Research Session India’s Energy Situation and Trends in New/Renewable Energy and Energy Conservation Policies September 14, 2009 Ichiro Kutani (Part 1) Toshiharu Yagi (Part 2) Mitsuru Motokura (Part 3) Strategy and Industry Research Unit The Institute of Energy Economics, Japan 1 IEEJ: November 2009 Why the India Watch? Rapid economic expansion and Impacts on: growth potential ・Energy markets Increasing energy ・Climate Change demand, rising import dependency India’s energy supply/demand trends and policy development could have great impacts on the future of energy balances for Asia and the World, market stabilization, and the global environmental issues. 2 45th Research Session 9/14/09 IEEJ: November 2009 What are the challenges for India? Response to continuing upsurge of energy demand Antipoverty/rural living standard improvement Environmental issues (pollution & Climate Change) Bolstering means to address the challenges in a balanced way: Nuclear power generation ⇒ to ensure & diversify New & renewable energy energy supplies Energy conservation ⇒ to reduce energy demand 3 45th Research Session 9/14/09 IEEJ: November 2009 Report Organization India overview: Energy balance Energy policies India’s NRE* policies and solar Part 2 photovoltaic generation: NRE policies Solar photovoltaic generation * New & Renewable Energy India’s energy conservation policies: Part 3 Energy efficiency status Energy conservation policies Summary and implication: 4 45th Research Session 9/14/09 IEEJ: November 2009 Energy Balance (Reasons behind strengthened effort on nuclear power, NRE and energy conservation) 5 45th Research Session 9/14/09 IEEJ: November 2009 Economic Growth (GDP) High expansion expected to continue, after a slight dip in 2008 Rs. Trillion at 1999 prices (%) 50 12 Public & Social 10.2 1991: Rao Administration Services 45 9.7 New Economic Policy 9.5 10 (Liberalization) 9.0 40 8.5 Financing, Business 35 7.3 8.0 8 services 6.7 Trade, Transport, 30 6.4 6.4 6.1 7.5 6.7 Communication 5.7 5.8 25 5.4 6 5.3 Manufacturing, 20 4.24.3 Construction, 4.3 Utility 3.5 4.4 3.8 4 15 Agriculture, Fishery, Mining 10 2 1.4 GDP Growth 5 (Right Axis) 0 0 1985 1990 1995 2000 2005 Source: Ministry of Statistics and Programme Implementation, National Account Statistics 6 45th Research Session 9/14/09 IEEJ: November 2009 Energy Consumption Sharp rise in thermal coal, oil for cars and industry Primary Energy Consumption (Mtoe) Final Energy Consumption 300 Electricity Coal 12% 12% Combustible 250 Renewables 28% Coal 39% (Reference) (Reference) TPES Final Energy Consumption Hydro, etc Oil 2007 2007 200 30% 30% Combustible Nuclear Natural Gas Renewables 1% 6% 41% Oil Natural Gas 150 24% 5% Renewables 0% Other 100 6% Industry 32% 50 (Reference) Final Energy Consumption Residential 2007 45% 0 Transport 12% Commercial 1975 1980 1985 1990 1995 2000 2005 4% Coal Oil Natural gas Nuclear Hydro, etc. Source: IEA “Energy Balance of non-OECD countries 2009” 7 45th Research Session 9/14/09 IEEJ: November 2009 Electricity Demand Sharp increases call for new power source urgently Electricity Generated Installed Capacity [GW] (TWh) as of end-May, 2009 900 Hydro, Thermal Nuclear Total Renewables etc. 800 Hydro Central 36.3 4.1 8.6 49.0 700 Nuclear +6.4% P.A. Natural Gas State 47.0 - 29.3 76.4 600 Oil Coal Private 12.8 - 12.2 25.0 500 Total 96.0 4.1 50.2 150.3 400 Source: Central Electricity Authority th 300 Actual capacity addition during the 10 Five Year Plan (2002-06) period was 21.1GW 200 against the plan of 41.1GW. th Targeted capacity addition during the 11 100 Five Year Plan (2007-11) is 78.6MW, but actual 2-year results remain at 17.1MW. 0 Average peak power deficit in FY 2008 was 11.9%, worst at 19% in Western Region. 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Solving power shortage now a critical task Source: IEA “Energy Balance of non-OECD countries 2009” 8 45th Research Session 9/14/09 IEEJ: November 2009 Energy Intensity Despite gradual progress in energy saving, there remains a large room for improvements. Primary Energy Consumption per GDP (In TOE/Million US$ at 2000 prices) 3,000 1,000 China China 900 India Non OECD 2,500 Non OECD 800 789 World 700 2,000 Japan India 600 583 568 1,500 500 400 World 1,000 300 279 200 500 Japan 100 104 0 0 1975 1980 1985 1990 1995 2000 2005 1975 1980 1985 1990 1995 2000 2005 Source: IEEJ “EDMC Handbook of Energy & Economic Database in Japan” 9 45th Research Session 9/14/09 IEEJ: November 2009 Environmental Issues Due to surging energy consumption, CO2 emissions are on a sharp rise mainly in the power sector. Air and water pollution is also aggravating. India’s CO2 Emissions by Sector Global CO2 Emissions (Million t-CO2) 800 Electricity and Heat Production 700 Other Energy Industries Manufacturing and Construction USA 21% 600 Transport Residential and Commercial 500 Others Others 43% Global CO2 Emissions 400 28 Billion Tons (2006) China 300 20% 200 Russia Japan 6% 4% 100 India 5% Germany 0 3% 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Source: IEA “CO2 emission from fuel combustion 2008” 10 45th Research Session 9/14/09 IEEJ: November 2009 Reserves/Production Ratios of Fossil Fuels There are coal and other fossil fuel reserves, but… R/P Ratios of Fossil Fuels 120 114 Years 100 80 60 40 35.6 Years 20.7 Years 20 0 Coal Oil Natural Gas Source: BP “Statistical Review of World Energy 2009” 11 45th Research Session 9/14/09 IEEJ: November 2009 Export/Import by Energy Type Import dependency of fossil fuels is on the rise. Coal Oil Natural Gas (Mtoe) (b/d) (bcm) 250 3000 45 Consumption Consumption Consumption 40 Production Production Production 2500 Net Imports Net Imports 200 Net Imports 35 2000 30 150 25 1500 20 100 1000 15 50 10 500 5 0 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: BP “Statistical Review of World Energy June 2009” 12 45th Research Session 9/14/09 IEEJ: November 2009 Financial Burden of Energy Imports Growing energy imports and inflationary prices are pushing up cost burdens. Retail price hike difficult to effect on social policy grounds Cost of Energy Imports Price Subsidy on Kerosene (in Billion US$) (Rs/Liter) 100 10% 40 Under recoveries to oil $100/bbl Natural Gas companies 90 Oil 9% 35 Subsidy from fiscal budget Coal $80.7 Bil. Average retail price, Delhi 72 80 Share of GDP (Right Axis) 8% 30 66 70 7% 6.6% 57 25 60 6% 41 24.06 50 5% 20 31 16.23 26 15.17 12.1 40 4% 15 7.96 30 3% 1.69 3.12 2.45 10 1.65 0.82 0.82 0.82 0.82 0.82 20 2% 5 10 1% 8.98 9.00 9.01 9.06 9.09 9.11 9.18 0 0% 0 2002 2003 2004 2005 2006 2007 2008 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Calculated from BP “Statistical Review of World Energy June 2009” Source: PPAC GDP data by IEEJ “EDMC Handbook of Energy & Economic Database in Japan” 13 45th Research Session 9/14/09 IEEJ: November 2009 Energy Demand Outlook (1) Energy consumption projected to grow by 3.5% p.a. (IEA), with high growth (8.8% p.a.) for nuclear. Primary Energy Consumption Forecasts Population Projection (Mtoe) (in 100 Million) 2,000 18 Hydro, etc. 16.1 1,800 16 Nuclear 14.2 13.1 1,600 Gas 14 Oil 1,400 12 Coal 11.3 1,200 10 3% 8 1,000 8% China 6 India 800 27% 4 Japan 600 2% 1.3 1% 6% 2 1.0 400 26% 24% 5% 45% 0 200 41% 39% 2000 2010 2020 2030 2040 2050 0 2006 India IEEJ IEA India IEEJ IEA Source: UN, World population Prospects, 2008 revision, Medium Case projection 2011 2010 2015 2031 2030 2030 Sources: Government of India Planning Commission “Integrated Energy Policy” Aug. 2008, GDP growth at 8%, including non-commercial energy, IEA “World Energy Outlook 2008”, Reference scenario, also for 2006 results, and IEEJ ”Asia/World Energy Outlook 2007” 14 45th Research Session 9/14/09 IEEJ: November 2009 Energy Demand Outlook (2) India’s share of the world energy demand is projected to increase further. Growth in Primary Energy Consumption (2006-2030) China 1,987 (Mtoe) India 714 Middle east 584 USA 15% Other Asia 397 20% Latin America 332 Other Europe 40% 38% 11% U.S.A. 247 Inside: 2006 Outside: 2030 16% Japan Africa 243 3% Russia 191 5% 5% 16% China Europe 82 India 23% 8% Japan -9 Source: IEA “World Energy Outlook 2008”, Reference scenario 15 45th Research Session 9/14/09 IEEJ: November 2009 Energy Balance Summary Rising energy demand due to economic growth: Sluggish power supply expansion, chronic shortage Inferior energy efficiency compared to world norms Rapid increase in CO2 emissions, worsening pollution Soaring import dependency creating high cost burdens Heightened interest in energy security: Stable supply Requiring supply assurance, demand Reasonable price control, and clean use of energy Sustainability Renewed efforts toward solutions Nuclear power NRE EE&C 16 45th Research Session 9/14/09 IEEJ: November 2009 Energy Policies (Specific efforts on nuclear power, NRE and energy conservation) 17 45th Research Session 9/14/09 IEEJ: November 2009 Organization of the Energy Sector Segmented by energy types Government of India Ministry of Minstry of New Planning Department of Ministry of Coal Ministry of Power Petroleum and and Renewable Commission Natural Gas Energy Atomic Energy Mining companies Central Electricty Authority E&P companies Financial institution Atomic Energy Commission Power and Energy, ・CIL ・ONGC ・IREDA Energy Policy and Generation companies Research institutions ・NLC