Transcript Global Climate Change: Electric Power Options in India

Long-term Power Options for India:
Modelling and Policy Analysis
P.R. Shukla
Indian Power Sector Dynamics

Government Ownership

Tariff Distortions

Demand - Supply Disequilibrium

High Reliance on Domestic Coal

Restricted Primary Energy Market

Cautious Reform and Restructuring
Indian Power Sector
Overview
Power Capacity in India (GW)
120
Coal
Diesel+Wind
Gas
Hydro
Nuclear
Capacity
100
80
60
40
20
0
1980
1985
1990
Year
1995
Power Generation Capacity
100
80
GW
60
40
20
0
1970
1975
Coal
1980
Oil
Gas
1985
Hydro
Nuclear
1990
Renewables
1995
Plant Ownership and Performance
Plant Load Factor : 1996
(Thermal Power Plants)
71
80


Ownership affects
Performance
SEB Plants have
remained
inefficient
71.2
64.4
60.3
60
40
20
0
SEB’s
CENTRAL
PRIVATE
OTHERS
Sectoral Electricity Consumption
(GWh)

Electricity Consumption
has grown at 8 % in past
few years

Share of Agriculture has
reached 30%
Power Gap and T&D Losses (1995)


Rising Peak Deficit is
major problem
25
Peak Deficit varies
across zones
15
20
%
10
0
T&D
Losses
5
Peak
Deficit
Inefficient technologies
and pilferage cause
high T&D Losses
Energy
Deficit

Electricity Cost & Tariff
1996-97
(Paise/kwh)
250

Cost - Tariff Gap:
24%
200
Cost
150
100
50
Tariff
0
1990
1991
1992
1993
1994
1995
1996
1997
Subsidy in 1997 (Rs. Billion)



80% Subsidy to
farmers
20% to Households
(mainly Rural)
Industries Cross
Subsidizes
180
160
140
120
100
80
60
40

> 1 percent of GDP
20
0
Domestic
Agricultural Cross Subsidy Net Subsidy
Share of Power Sector in Total Emissions (%)
N2O / NOX/ SO2
Emissions
Carbon Emissions
60
80
1990
1995
60
40
40
20
20
0
1990
1995
0
N20
NOX
SO2
Energy and Power in Indian Economy
Index (1975 = 100)
500
400
300
200
100
0
1975
1980
GDP
1985
Energy
1990
1995
Power
Indian Power Sector
Institutional Structure
Power Sector Institutions (Pre 1990)
Institution Functions
CEA
1950
CPRI 1960
REC 1969
MOEF 1974
NTPC 1975
NHPC 1975
PFC 1986
PGCIL 1989
EMC 1989
Arbitration, Advice, Power Policy
Power Engineering Research
Equipment Testing and Certification
Finance and Planning for Rural Electrification
Policy, Legislation
Thermal Power Generation
Hydro Power Generation
Finance for Power Projects, T&D and Renovation
Regional Grid Monitoring, Transfer of Power,
Transmission Line Construction
Energy Conservation Information, Research,Training
Central Power Organization
GOVERNMENT
OF INDIA
DEPT. OF
ATOMIC
ENERGY
NRB
AEC
NATIONAL
DEVELOPMENT
COUNCIL
NPC
CENTRAL
ELECTRICITY
AUTHORITY
PLANNING
COMMISSION
NJPC
STATE
GOVERNMENT
MINISTRY
OF POWER
MNES
DVC
BBMB
THDC
NTPC
NHPC
NEEPCO
ENERGY
MANAGEMENT
CENTRE
CERC
PGCIL
NPTI
CPRI
PFC
REC
State Power Organization
STATE
GOVERNMENT
SERC
MINISTRY OR
DEPARTMENT OF
POWER
STATE
ELECTRICITY
INSPECTION
ORGANISATION
STATE
ELECTRICITY
BOARDS
STATE
ELECTRICITY
DEPARTMENTS
PRIVATE
SECTOR
LICENSEES
Power Sector Reforms
An Overview
Why Reforms? The Symptoms

Demand-Supply Energy Gap

Peak Power Gap

System Inefficiencies

Financial Losses

Vintage Technology

Poor Supply Quality

Environmental Quality
What reforms aim at?

Remove Barriers and reduce
 Risk
 Transaction Costs



Enhance Technology Choices
Enhance Financial Flows
Enhance Efficiency
 Competition
Early Reforms

Corporatization of SEBs

Privatization

Unbundling

Regulatory Changes
Slow Changing Reality
 Weak Electricity/ Energy Market
 Weak Grassroots Democracy
 Strong Urban-Rural Divide
 Antiquated-Inverse Bureaucracy
 Corruption (High Transaction Costs)
 Regional Conflicts
Future Power Sector Trends:
Model Analysis
Economic and Environmental
Power Planning Software
(EEPS)
EEPS: Model Structure
User Inputs
Exogenous
Power Demand
Power Plant Characteristics
(cost, performance,
emission control)
Fuel Availability
(coal, gas, oil)
Fuel Characteristics
(cost, heat value,
composition)
Transmission Grid
Characteristics
(cost, geometry,
performance)
Levelized
Cost
Calculations
Least-Cost
Optimization
of New Power
Plants
Environmental
Damage (Optional)
(emission externalities)
Existing Power System
(capacity, generation,
emissions, plants under
construction)
OUTPUT:
Power Plant
Capacity Mix,
Emissions Profile,
Total Costs
Emission Caps or
Limitations
Renewable Energy
Availability
( hydro, wind, bio)
Equipment
Manufacturing
and Import
Limitations
EEPS
 Excel
spreadsheet program using Solver
based on Simplex linear programming
algorithm
 Driven by exogenous electricity demand
assumptions
 Analysis over 20 years at 5 year time steps
 Spread- National as well as regional analysis
 Determination of power supply options
needed to meet future electricity demand.
EEPS
 Minimization
of present value of system
costs.
 Costs- Capital, O&M, Fuel and
Environmental costs
 Levelized cost determination of power
generation technologies
 Fourteen power generation technologies are
modeled
EEPS
 Technology
choices constrained by
 fuel availability and price
 penetration rate of technologies
 emission standards/caps
 Regional
analysis in a national model
possible to account for differences in
 availability, quality and cost of energy supply
 energy demand pattern
 technology characteristics
Analysis with
EEPS
Power Capacity: Scenario Results (2015)
SusDev
Environment
Efficiency
Reform
Baseline
0
50
100
150
200
250
GW
Coal
Gas
Oil
Nuclear
Hydro
Renewables
Investment in Power Generation
15
$ Billion
12
9
6
3
0
2000
S.D.
Base
2005
2010
A.T.
Env
2015
Efficiency
Reforms
Marginal Cost of Electricity Generation
Costs (c/kWhr)
6
5
4
2000
2005
2010
2015
Years
Ad. Tech
Env
Efficiency
SusDev
Base
Reforms
Carbon Emissions
Million Tons
250
200
150
100
50
1995
S.D.
Base
2000
2005
A.T.
Env
2010
2015
Efficiency
Reforms
Sulfur Dioxide Emissions
Million Tons
6
4.5
3
1.5
0
1995
2000
2005
2010
2015
A.T.
Efficiency
S.D.
Env
Reforms
Base
Power Generation Capacity (Future)
300
GW
250
200
150
100
50
0
1995
2000
Coal
Oil
2005
Gas
Hydro
2010
Nuclear
Renewables
2015
Policy Insights
 High
economic growth can be less polluting.
 Natural
gas is a robust option for power.
 Local
pollution controls penetrate clean coal
technologies, rather than substitute coal.
 Capacity
building for renewables is a good
hedging strategy, but investing is not.
 Regional
co-operation for energy and power are
effective economic and environmental strategies.
Conclusions
1. Power Sector has substantial mitigation potential.
Carbon Saving (2000 - 2015)
SusDev
AdTec
DemEff
Reforms
0
200
400
600
2. Local environmental policies have little carbon
mitigation co-benefits.
3. Climate Change Mitigation policies for the Indian Power
sector will have to be crafted for own sake.
India Power Sector:
Analysis with MARKAL
Model
Electricity Capacity : BAU Scenario
From 1995-2035

Capacity Grows 4 times

Coal remains mainstay

Gas Penetrates

Hydro Triples

Nuclear and Renewable
remain marginal
Electricity Price under Mitigation Scenarios
Average LRMC
10

Electricity Price
Rises with Mitigation
In 2035, price can
more than double
9
8
7
cents per kWh

6
5
4
3
2
1
0
1995
2005
2015
2025
2035
Reference
1 BT (5%)
2 BT (10%)
3 BT (15%)
4 BT (20%)
5 BT (25%)
Electricity Price under Mitigation Scenarios
Peak LRMC
Off-Peak LRMC
15
cents per kWh
cents per kWh
15
12
9
6
12
9
6
3
3
0
0
1995
1995
2005
2015
2025
Reference
3 BT (15%)
2035
1 BT (5%)
4 BT (20%)
2005
2 BT (10%)
5 BT (25%)
2015
2025
2035
Implications of Mitigation Targets
Renewable Electricity
Renewable Electricity Capacity
Share of Renewable
100
25
Percentage
30
Giga Watt
120
80
60
40
20
15
10
20
5
0
0
1995
2005
2015
2025
2035
Reference
15 % Mitigation
1995
2005
2015
5 % Mitigation
25 % Mitigation
2025
2035
Insights from
Scenario Analysis
Energy Supply/ Technology
 Domestic
 Natural
coal will be the mainstay
Gas is the robust option
 Learning
renewables is good hedging
option, but high investment is not
Environment
 Local
Pollution Controls penetrate
Clean Coal Technologies rather than
substitute Coal
 Global
Climate Change policies can
significantly alter the Indian Power
Sector dynamics
Market Reforms

Market reforms can save a billion $ each
year in the medium run, but can
increase short run electricity cost

In short run, technology push policies
are more effective than market reforms

High economic growth with market
reform can be less polluting
Regional Co-operation
 Regional co-operation for energy
and power are effective economic
and environmental strategies
Grid Integration and Regional Co-operation
 Reduction in capacity
requirements-6% in
2015
 Investment savings - 14.5
billion $ between 2000
and 2015
 Progressive reductions in
marginal electricity costs
Reduction (%)
Marginal Cost Reduction
6
4.5
3
1.5
0
2005
2015
Year
Grid Integration
Grid Integration + Regional Co-operation
Grid Integration and Regional Co-operation
Emissions Reduction (2015)
 2% increase in gas
share in 2015
 5% increase in hydro
share in 2015
 Significant reduction in
emissions
10.5
9.0
Reduction (%)
 Increased share of gas
and hydro
7.5
6.0
4.5
3.0
1.5
0.0
Carbon
Year
SOX
Grid Integration
Grid Integration + Regional Co-operation
Proposed Oil & Gas Import Routes
and Gas Pipelines in India
RISK: Political Uncertainties
FACTS:
 Turkmenistan to N. India
 20 BCum, Inv. $2 Billion
 Piped Gas Price : $3.5/GJ
 LNG Price : $5/GJ
 Dom. Coal Price : $1-2/GJ
 Imp. Coal Price: $2-3/GJ
RISK COST:
 $1.5 Billion/ year
Proposed Oil & Gas Import Routes
Proposed Oil & Gas Import Routes