2011 INDIA Energy Handbook Demand Driven, Supply Chained Contents 4 Overview of primary energy 7 Energy policy 11 Electricity sector 23 Oil & Gas sector 26 Coal sector 29 Information resources PSI Media Inc • August 2010 2011 India Energy ndia, home to 1.2 billion people and over 17% of the world’s India Energy population, has a seemingly unquenchable thirst for energy. Handbook One harsh result of its meteoric growth is the widening gap Editorial Staff between required energy and that which is produced. Herein Ilies the problem. India is unable to keep up with demand and faces Scott G Schwieger Editorial Director growing pressure from the international community for climate [email protected] change mitigation. A concerted effort by the central and state Thomas F Armistead governments, and the growing importance of private sector access Senior Editor and investment, will drive India into the future. Sridhar Samudrala Dr Usha Ramachandra Foreign direct investment into India ranked third globally at over $35 Consulting Editors billion for FY 2009. This number is expected to increase greatly in Kiyo Komoda the coming years because of a policy roadmap by the Government Creative Director of India that is increasing the liberalization of the nation’s economy, Clark G Schwieger especially in the energy sector. Initiatives include ambitious five- Special Projects Manager year plans for increasing installed electricity infrastructure, the New Giorgio Dodero Exploration and Licensing Policy for increasing the production of oil Technical Consultant and gas, and the nuclear sector’s recent embrace of international Robert G Schwieger Sr companies to provide equipment and related services. Publisher Published by PSI Media Inc, PSI Media, publisher of handbooks and technical Las Vegas, Nev (USA) journals for the energy industry, and International Energy Consultant Corp (IECC), specialists in providing PSI Media Inc publishes specialty solutions for energy companies, governments, and print and electronic media serving regulatory bodies in developing nations, collaborated energy producers and distributors in on this project to provide the industry with an up- targeted national and regional markets, including: to-date overview of the structure and potential Brazil Energy Handbook opportunities for investment in the Indian Energy India Energy Handbook sector. Headed by Sridhar Samudrala, IECC offers a Samudrala Central Europe Energy great deal of insight into Indian affairs. Handbook Regarding the current business climate in India, Samudrala says it CCS—Carbon Capture & Storage Handbook best, “With the financial crisis almost over, India is the major energy user in the Indian sub-continent and requires energy investment from PSI Media Inc every angle. There is also a major initiative to bring in gas from the 7628 Belmondo Lane Las Vegas, Nev 89128 west through Pakistan to meet the energy requirements of India. Tel: 702-869-4739 With all these opportunities, India is one of the best places for energy Fax: 702-869-6867 investments.” SUBSCRIBE TODAY to PSI Media’s ENERGY HANDBOOKS Specialty publications critical to the success of your business development efforts in the power generation and oil and gas sectors Reserve your complimentary copies today at Upcoming 2011 www.psimedia.info/handbooks.html Handbooks: A limited number of sponsorship opportunities are available. Central Europe Please contact: The Americas, Australia/New Zealand: Robert Schwieger Sr, CCS—Carbon Capture [email protected] Europe, Asia, Middle East: Giorgio Dodero, & Storage [email protected] 3 Overview of primary energy Hydro takes a back seat. Hydropower now accounts for about 25% of India’s generation capacity, down from 40% in 1980. The favorable economics of developing thermal generation coupled with difficulty in securing long-term financing presents a substantial roadblock for large-scale hydro development. Jaiprakash Associates ith 15% of the world’s The Government of India’s (GoI) the country off from cooperation and population and an economic Planning Commission predicts dramatic assistance in civil nuclear technology. growth rate that increases the demand increases for coal and oil over the In 2008, India and the Nuclear Suppliers’ aspiration of its people to better next 20 years. Fig 1-1 and Table 1-2 shows Group agreed on a waiver to the embargo Wquality of life, India has a voracious appetite projections of India’s energy requirements on trade in nuclear technology. The waiver for energy. But the country lacks sufficient in its Integrated Energy Policy (IEP) report has removed most of the obstacles, and domestic energy resources, particularly published in August 2006. India now is planning to have 63,000 MW of petroleum and natural gas, and must Nuclear energy now contributes of nuclear generating capacity by 2032. import much of its growing requirements. more than 4,000 MW of power using a India’s long-range plans, however, Currently, about 35% of India’s commercial largely indigenous technology, but the foresee coal as the sector with the most energy needs are imported. Table 1-1 nuclear industry’s development has been growth potential, fueled mostly by demand indicates the primary commercial energy hamstrung by India’s refusal to sign the for power generation (Fig 1-2). consumption in India. Nuclear Non-Proliferation Treaty, cutting Coal reserves are mainly in the eastern 600 1800 Fig 1-1. Total Energy Requirements Fig 1-2. Total Primary Energy Source: IEP Report, Page 28, Table 2.10 by Source, 1980-2030 New renewables 1600 500 Source: USAID, From Ideas to Action: Clean Energy Solutions for Asia to Address Climate Change, Hydro India Country Report 1400 Hydro Nuclear Nuclear 400 Natural gas 1200 Oil 1000 Natural gas 300 MTOE MTOE 800 Oil 600 200 Coal 400 100 200 Coal Biomass 0 0 2011-12 2016-17 2021-22 2026-27 2031-32 1980 1990 2000 2010 2020 2030 4 2011 India Energy Fig 1-3. India Energy Resource Map 300 Fig 1-4. Industrial Energy Demand by Fuel, 2005-2030 Delhi 250 Jaipur Guwahati RAPP Kolkata 200 Bhopal Biomass Talcher & IB Valley 150 Tarapur MTOE Mumbai Legend Electricity Load centre Hyderabad 100 Gas Kaiga Coal Oil Bangalore Hydro 50 Chennai Lignite Coal Coastal Kudankulam 0 Nuclear 2005 2010 2015 2020 2025 2030 Source: Powergrid Source: IEA, World Energy Outlook (2007) region while the load centers are growing Impact of n UN Framework Convention on Climate rapidly in the southern, western and Change – ratified in 1993 northern part of the country. But coal’s environmental n Kyoto Protocol – ratified in 2002 appeal lies in the facts that coal-fuelled regulations n Establishment of National Clean power plants are less costly per installed Development Mechanism Authority megawatt than most other designs. Total carbon-dioxide emissions in the (CDM) in 2003 Mining of India’s large coal deposits can country have been gradually increasing n 337 CDM projects are currently be expanded relatively cheaply, with the and are expected to increase sharply in registered with the UNFCCC with product shipped by rail to the power the next 20 years as India enters a period estimated annual emission reduction plant. of sustained economic growth and higher of 31.62 million tonnes of CO2 per The bulk of India’s hydro potential, in consumption of energy. year contrast, is in the northeastern region Over 50% of the total CO2 emissions are Still, India is facing enormous and the northern part of the country in from the power sector. Cement, shipping, international pressure to reduce its the Himalayas. The distribution of energy and iron and steel are other industries that greenhouse-gas emissions under a resources and load centers is consequently have experienced annual growth rates successor agreement to the Kyoto much skewed. The medium and long- above 4% between 1985 and 2005. In Protocol that is now in development. In term plan is to promote pithead stations fact many industries have great potential June 2008, the National Action Plan on using domestic coal and coastal stations for improving energy efficiency through Climate Change (NAPCC) was announced using imported coal and to strengthen use of combined heat and power (CHP). as a major move toward reducing carbon the inter-regional transmission systems. Fig The primary driver for CHP is economic, intensity, but its real effect is still unclear 1-3 illustrates the distributions of energy but it is also an effective means of reducing (see p. 10). resources across India. CO2 emissions. What is obvious is that India will have Coal is expected to continue to meet Over the past two decades, the GoI to choose between increasing its fossil-fuel India’s energy needs in a significant has been very active in participating in use and reducing its emissions; it cannot do way for power generation and other international efforts for climate change both. Investors should keep this uncertainty industrial purposes. Fig 1-4 illustrates the mitigation: in mind and closely watch developments in industrial energy demand by fuel in India n Vienna Convention – ratified in 1991 Indian climate-change policy to make the till 2030. n Montreal Protocol – ratified in 1992 wisest use of their investment capital. Table 1-1. Commercial Energy Consumption Table 1-2. Total Energy Requirements (MTOE) Source Unit 2007-08 2008-09* Natural Petroleum Products MMT 140.7 145.3 Year Hydro Nuclear Coal Oil Gas Total Natural Gas (net) BCM 31.5 31.8 2011-12 12 17 283 186 48 546 Coal MMT 457.1 493.3 2016-17 18 31 375 241 64 729 Lignite MMT 34.0 NA 2021-22 23 45 521 311 97 997 Electricity Billion kWh 813.1 842.8 2026-27 29 71 706 410 135 1,351 Source: Basic Statistics on Indian Petroleum and Natural Gas, 2008-09, 2031-32 35 98 937 548 197 1,815 Ministry of Petroleum & Natural Gas, New Delhi * Estimate Source: IEP Report, Page 28, Table 2.10 5 Opportunities for foreign investment in India’s energy infrastructure In the first decade of the 21st century, Electric generation.