Energy Scenario in India by Prayaas

Prayas EnergyGroup, Pune

The EnergyScenario in India- Placing Nuke in Context

Ashwini Chitnis & Ashwin Gambhir Prayas (Energy Group), Pune

NUCLEAR ENERGY: Examining the impacts, conflicts and controversiesSambhavnaa: The Institute of Public Policy & Politics

Dec 17-19, 2011, Palampur, HP

About Prayas Energy Group (PEG)

‘Prayas’ means ‘Focused Effort’Voluntary Org, based at Pune, India

– PEG works on theoretical, conceptual and policy issues in the energy and electricity sectors.

– Based on a comprehensive, analysis-based approach for furthering the ‘public interest’.

– Research & Interventions (regulatory, policy).

– Civil Society training, awareness, and support.

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Outline of discussion

1. Snap shot of present Energy/Power Sector2. Energy & Poor3. Demand growth estimates / forecasts4. Supply Options for meeting the growth in demand5. Placing Nuclear energy in the overall context6. Concluding remarks

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In comparison US,EU and China spend ~ 2% of GDP on fossil imports

Power Sector Status

• Present Installed capacity ~ 183 GW (Nuclear 2%)• 2010-11 Generation ~ 950 BU (incl captive) (nuclear 2.7%)• Un electrified population ~ 25-30 cr• Un electrified villages ~ 10% or 60,000• Per capita usage of electricity very low ~ 566 kWh (2008)• Peak Load shortage -13% ; Electricity Shortage ~10%• RGGVY – 1.8 cr HHs electrified since 2005• Coal shortages and price increases with rising imports• Limited Nat Gas and Hydro Potential• Financial health of Utilities worsening (~70,000 cr losses in 2010-11)

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Break-up of Installed Generation Capacity of 210 GW (2010-11)

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Break-up of Actual Generation of 900 TWh (2009-10)


Energy & Poor

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Electricity–HDI linkage: International Experience

• (a) India is in the region where steep increase in HDI is seen with increase in electricity use, (b) Several countries have managed to achieve high HDI with similar electricity use as that of India need for direct action for improved HDI.

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Households by electricity use (kWh/month)

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Very highly skewed distribution!

Only 10% Households have monthly electricity bills more than ~ Rs 300.

Source: Prayas analysis of State ERC orders

Electricity and Poor

• 2/3rd population does not have access to reliable electricity.– More than 1/4th of population is without electricity

connection– Another third does not get it when it wants is

• ~ 20-30 GW would provide basic services to all un-electrified houses and associated public services.

Urgent attention, structural provisions for reliable supply to poor is required

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Demand growth estimates / forecasts

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Power Sector Demand Forecast

GW TWh2009-10 Generation 186 914

2020 Demand Projection

World Bank Low Carbon report 426 2020 Mckinsey Report; Ref case 1870 CSE Report; BAU 1751 CEA 17th EPS projection 1914 IEP (8% growth) 425 2118

Approximately 100% increase in capacity by 2020 based on various forecasts

117 GW of thermal projects (mainly coal) under construction (as on 16th Nov 2010)

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Electricity Demand Projection – IEP, PCElectricity Demand Projection – IEP, PC

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1300 BU increase in 5 years = 200,000 MW additional capacity

Assumes - 63 GW from nuclear power and 150 GW from hydro power in 2031-32

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Addition of ~185 GW of Base Load Thermal capacity

*Source Integrated Energy Policy (PC, GoI) 2006, numbers are indicative


Supply options to meet the increasing demand

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Electricity – Options

• Large Hydro: limited role• Coal: Production Constraints, but resource constraint remains (after

2030, possibly earlier); high cost imports rising steeply• Gas: limited availability • Efficiency: Large low-cost potential (60-90 GW by 2020),

institutional and implementation barriers• Rnewable Energy (RE):

– Already a high installed capacity. – Push by private profits, Govt projecting low cost impact to avoid

opposition. – Going forward cost reduction, deployment for appropriate use,

and preventing the poor from tariff impact• Nuclear: Limited role in medium term, long term is highly uncertain


Role of renewable energy

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RE potential and prices

• Revised wind power potential significantly different from earlier estimates; from 50 GW to 500-1000 GW.

• PV prices are plummeting. Studies suggesting grid parity in India by 2017-20. Resource practically unlimited.

• NAPCC has recommended 15% target by 2020. What level of RE targets to support; what level of tariff impact ok? 15% RE by 2022 will have impact of ~ 15 p/kWh; absolute additional requirement of Rs 25,000 cr

• RE (non-solar) is quite cost competitive with new conventional capacity addition. In the range of ~ 4/kWh.

• Solar prices are dropping sharply, last auction of 350 MWs discovered an average price of Rs 8.7/kWh, bids as low as 7.5.

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The flip side of RE

• Who will bear the higher incremental cost of RE, especially at a time when the DISCOMs are 70,000 cr in losses?

• There is need for a equitable sharing of this cost where in high use consumers (industrial, commercial and high use residential) pay for RE through Green Cess or differential pricing through Tariff Policy

• RE is not just about deployment, but the country needs to focus as much on Manufacturing.

• There is a need for long term integrated planning with far greater coordination between MNRE, MoP, ERCs, CEA etc. (ex: Tx infra planning, equity in state RPOs etc)

• Efficient Procurement policies based on competitive bidding to lower retail tariff impacts on consumer, which in turn will help increase targets.

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RE principles

• Why RE? (energy security, mitigate local pollution, – mitigate GHG emissions, augment supply, – promote Indian manufacturing and industry, reduce price volatility etc)

• How much RE? (National target – based on clear principles and priorities, – RE targets linked to reasonable tariff impacts, – sustainable growth, grid handling capacity etc)

• How to do RE? (Ensure socially equitable tariff impact across consumers and fair burden sharing of the national objective amongst all states, – Incentivizing cost and price reduction of RE through transparent and efficient

procurement mechanisms, – ensuring social inclusion and protection of local environment, – create level playing field within renewables, – RE development needs to be strategic – integral to technology-industry-

manufacturing policy, incentivize generation equipment over consumption equip.)

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Large Solar push in India

• National Solar Mission – 22 GW by 2022– Deployment goal by 2013 (1st Ph): – 500MW Large Thermal, 500MW Large PV, – 100MW Rooftop PV; 200MW Off-grid PV

• States like Gujarat and Rajasthan pushing own solar policies and incentives. Karnataka and TN following.

• Tariff policy changed to include solar specific RPOs with target of 3% by 2022. (Tariff impact crucial for sustainability)

• 12th plan targets quite high.~ 10,000 MW grid connected~ 2000 MW off-grid

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DRE

• Greater focus is needed on DRE, which can provide quick access in the transition period. Far greater social impact.

• Equity in pricing through regulated prices.

• Move away from capital subsides to performance oriented ones.• Grid compatibility (feed in/isolate; avoid conflict with grid expansion,

more synergy and co-benefits)• Structured and comprehensive M&V with redefined result framework; – Focus efforts on results (no of working systems and electricity generated

etc) more than activities and inputs (no of installations and installed capacity).

– Ensure accountability and improve effectiveness and sustainability• High technical standards and warranties & multi year O&M; • Grievance redressal mechanism via toll free number

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Role of Energy efficiency

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Why energy efficiency ?

• More output per unit of energy• A low cost option to meet energy demand • Avoided capacity addition = Avoided emissions

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Cost of energy efficiency is much lower than the cost of another green option of renewable energy

Source: LBNL and RAP

Change Nature of Discourse on EE

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EE should be seen as indispensable as power plants, in avoiding shortages, facilitating growth and maintaining competitiveness. [Resource constraints, Energy security, local social and environmental issues]

70% of infrastructure that will be in place by 2030 – is still to be built !

Numbers are only indicative (to show implications of consideration).

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Saving Potential by categories, 2020 (TWh)

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Why energy efficient appliances ?

• Large efficiency gap – which would not be met without such policy intervention

• Residential consumption from appliances was 21% of the total electricity consumption in 2007-08 (CEA)

• Room air-conditioners(RAC), refrigerators televisions, ceiling fans account for about 50% of this.

• Average life more than 10 years

• Long term locked-in savings

Residential Electricity Consumption distribution for 2008.

Source: Prayas Energy group study, 2009 25

Urgency for promoting super efficient appliancesIncreasing stock of appliances due to booming sales caused by consistent high economic growth

Super efficient appliances (SEA), 40-70% more efficient than the current stock, are commercially available in international markets

Increasing stock of appliances due to booming sales caused by consistent high economic growth

Super efficient appliances (SEA), 40-70% more efficient than the current stock, are commercially available in international markets

RAC: Room air-conditioners

Large, permanent savings possible if urgent steps are taken to ensure new appliances are super-efficient

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Role of Nuclear

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Placing Nuke in context

• 12/13th plan targets all over the place, quite misleading, highly optimistic for 13th plan.

• 2011 – global nuclear capacity fell by 10 GW, while just the wind and solar PV capacity is set to increase by 44 GW and 23 GW respectively, 67 GW in total vs – 10 GW.

• Nuclear with a gestation of 10 years is not a panacea for today’s shortages.

• A true cost comparison with nuclear plants starting construction today with wind and solar prices in 2020 (surely much lower than nuclear in that time frame).

• Very marginal role in Indian power sector today, very unlikely that role would reverse for a variety of reasons.

• Pure economics of RE and EE would beat nuclear today and most certainly when the first new nuclear plants come online.

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Concluding remarks

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Development, Energy, and Climate

• Indian Energy use and emissions are low compared to industrialized countries…. BUT

• We need to search for Sustainable development options for India, quickly due to factors like– Constraints on energy use, arising from (a) limited domestic

energy resources, (b) climate constraints, and(c) land, water and social issues related to energy projects

– High cost of renewable energy,– Very high inequity (large population is energy poor)

Reduce Energy Requirement

Indian economic growth, wellbeing of people is constrained by energy

Large potential of Energy Efficiency needs to be actualized Link energy tariff to energy consumption norm for

Commercial buildings Industry: discourage inefficient plants from setting up Appliances: Assist manufacturers to introduce Super

Efficient Appliances (as poor Indian consumers are very cost sensitive)

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Looking beyond 2020

• BAU is simply impractical and unsustainable. [Land, water, fuel, climate, other resources]

• Relook at type of industrialisation - future development paradigm

• Tariff policy to discourage excessive, luxury use of energy.

• More electricity needed, but – Immediate attention to needs of poor– Earnest action for Energy Efficiency (more important than

gas, nuclear, hydro put together)– Long term planning for Renewables.

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Important linkages, are quite flexible

Development – Growth – Energy – Emissions A B C

Very little discussion about the first link of development (Techno-fix v/s political-economy solution).

Pro-people policies may lead to faster reduction in poverty than BAU economic growth.

3E (equity - environment - economy approach)

Conclusions

• Access to modern energy services is a fundamental prerequisite for poverty reduction and sustainable human development - people without access are constrained to a life of poverty. Source: Practical Action (2010) Poor People’s Energy Outlook 2010. Rugby, UK.

• Our priority should be development (needs of neediest, increasing self reliance and sustainable in the long run, i.e. in harmony with the environment) and energy plays a very crucial role, an important tool for development.

• Change of paradigm – – from macro-growth to development (3E), – from supply to demand side thinking, – from fossil fuels to EE and RE in the long run.

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THANK YOU

Prayas Energy Groupwww.prayaspune.org/peg

ashwini [at] prayaspune [dot] orgashwin [at] prayaspune [dot] org

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Energy Scenario in India by Prayaas