Transcript Slide 1

Presentation
on
India’s Strategy Towards
Energy Development and
Energy Security
By
R.V. SHAHI
Secretary, Ministry of Power
Government of India
December 12, 2006
1
 The Prime Minister of India has outlined following approach
to the Eleventh Five Year Plan (year 2007-12) during the
meeting of National Development Council:
“ The GDP growth target proposed in the Approach Paper involves
accelerating growth rate from 8% likely to be achieved in the
base year (2007-08) to 10% in the final year (2011-12) of the
Plan, yielding an average of 9% growth in the XI Plan period.
This is ambitious but feasible. Growth has averaged 8 per cent
over the past three years and is likely to be at this level again this
year. This has never happened in the past. If we achieve the
target of 9% growth in the 11th Plan, India will be firmly placed
in the front ranks of fast growing economies. Most observers
believe that we are at a historic cusp when this transition is
possible”.
2
Contd..
 To deliver a sustained growth rate of 8% to 9% through next
25 years till 2031-32 and to meet the life line energy needs of all
citizens, India needs, at the very least, to increase its primary
energy supply by 3 to 4 times and its Electricity generation
capacity by about 6 times.
 To achieve this objective there are two schools of thought :
• Competitive market is the most efficient way to realise
optimal fuel and technological choices . Energy market
being managed on
competitive principles is bound to
minimise market distortions and maximise efficiency gains.
3
Contd..
• In absence of a mature market with sufficient number of
players in the supply chain, and highly skewed demand
supply
mismatch,
efficiency
gains
may
not
follow
automatically.
 Integrated Energy Policy provides more balanced approach
and enunciates :
“ Wherever possible, energy market should be competitive.
However, competition alone has been shown to have its
limitation in a number of areas of the energy sector and
independent regulation becomes even more critical in such
4
instances.”
The Challenges

India needs 8% to 10% economic growth to meets its
economic and human development goal.

This requires qualitative/quantitative changes in energy
mix.


At 439 KgOE per capita consumption of energy in India is
among the lowest:
- China
1090
- USA
7835
-World Average
1688
Against the word average of
2429 kWh, per capita
electricity consumption at 612 kWh is one of the lowest in
the World.
5
Contd..
The Challenges contd..

Though 85% of villages are considered electrified, 57%
rural households do not have access to electricity.

Non Commercial fuels such as firewood and dung cake
dominate in the Households Energy Consumption.

Energy intensity at 0.20 is better then the world average–
yet there is scope to still improve and become comparable to
UK , Japan and Denmark.
6
Integrated Energy Policy
7
The Vision

“To reliably meet the demand for energy services of all
sectors including the vulnerable households in all parts of
the country with safe, clean and convenient energy at the
least cost in technically efficient, economically viable and
ecologically viable and sustainable ways considering
different fuels and forms of energy, both conventional and
non-conventional as well as new technologies and emerging
energy sources.”
8
The Approach

Till market matures independent regulation across the
energy streams is a necessity.

Pricing and resource allocation to be determined by market
forces under credible regulatory oversight.

Transparent and targeted subsidies.

Improved efficiency across the energy chain.

Incentives/
Disincentives
to
regulate
and
consumer
behavior.

Management reforms to create accountability.
9
Asymmetries Remain…..
“India’s per capita consumption of energy in its various
forms in 2003-04 is well below that of developed
countries and the world average in 2003.
Even in 2032, the per capita consumption in India from
various sources will be well below the 2003 level of per
capita consumption in respect of developed countries.
In fact, India’s projected level of per capita energy
consumption in 2032, will be less than 74% of the world
average in 2003.”
10
Supply Options

India has rather limited natural energy resources.

Coal is abundant but of low calorie and high ash, negligible
sulphur.

Hydro potential is significant , but small compared to our
needs.

Known Reserves of Oil, Gas are limited.

Uranium reserves are meager, but thorium reserves are
large.

Reserve/Production Ratio:
-Extractable Coal
:
86
-Extractable Lignite
:
136
-Oil
:
23
-Gas
:
38
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Enhancing Supply Options

Institute policies to maximise coal production.

Create coastal infrastructure for import and use of
coal.

Alternative coal transportation infrastructure for
movement of coal through coasts and rivers.

Promote
R&D
to
make
in-situ
gasification
commercially viable.

Massive exploration efforts for Oil, Gas and Coal.

Access to hydrocarbon reserves overseas and gas
pipelines to India.
12
Contd..
Enhancing Supply Options contd..

Full Development of Hydro Potential.

Nuclear option to be fully explored.

Developing thorium based nuclear technologies.

Solar Technology Mission- making solar power economically
attractive. (Long term option)

Assess off-shore wind power potential.

Pilot projects on biomass plantation and bio-fuels.

Encourage blending of Ethanol with Petrol.

Coal to Oil is another option to be pursued.

R&D for fusion power.
13
Power Sector Policy
•
Control of huge technical and commercial losses in
Distribution.
•
Liberal captive and group captive regime.
•
Separating cost of pure wires business (Carriage ) from the
energy business( Content).
•
Open Access in distribution to be implemented.
•
Developing a robust and efficient inter- state and intrastate transmission system.
•
Rehabilitation of old thermal power stations.
14
Contd..
Power Sector Policy
•
Reducing cost of Power is essential to make it affordable.
•
Tariff based competitive bidding for generation and
transmission projects. Encouraging public sector to
undertake this process.
•
Funding subsidies by state Government through budget.
•
Availability of long tenor debt to power sector projects
specially, hydro.
•
Supercritical technology coal based power.
15
Contd..
•
Regulation
•Setting Multi Year Tariffs differentiating by Time of
the Day.
•Rewarding utilities for seeking
•Distributed generation with waste heat recovery.
•Demand side management.
•Energy efficiency.
•Establishing feed in tariffs for power from
renewable energy sources.
16
Reducing Energy Requirements

Energy Intensity of some countries
Country
India
Energy Intensity
(KgOE/ $ GDP PPP)
0.18
World Average
China
0.21
0.23
US
0.22
OECD
0.19
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Reducing Energy Requirements--
•
Large potential for energy saving exist in India
•
At least 25 % of total generation could be potentially
saved through DSM.
•
About one-third of total energy is used for domestic
cooking therefore efficient cooking process needs high
priority.
•
BEE to develop standards for all energy intensive
industries and appliances and should develop system of
incentives/penalties.
•
Enforcing truthful Labeling.
•
National Building Codes to be revised to encourage
energy efficient buildings.
18
Policy for Renewable and NonConventional Energy Sources
•
From long term perspective to maximize domestic supply
options and to diversify energy sources, Renewables to
play an important role.
•
Share of renewables in the energy mix by 2031-32 only
about 5 to 6% despite increase by 40 fold .
•
Development of cost effective technologies hold the key.
•
However, Period and limit to subsidy to be well defined.
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Enhancing Energy Security

Reducing Risks
- Expand domestic energy resource base.
- Reducing the requirement through energy efficiency in
production and end use.
- Reduce import dependence through import substitution.
- Diversify fuel choices
- Diversify fuel supply sources.
- Bilateral economic, social and cultural ties.
20
•
Energy R&D
Research and development (R&D) in the energy sector is
critical to augment our energy resources – also
to
promote energy efficiency.
•
Energy R&D to
raise India’s
energy security and
delivering energy independence.
•
Energy R&D to be allotted adequate resources .
•
Setting up of a National Energy Fund (NEF) .
•
NEF to finance energy R&D with an initial allocation of
about USD 225 million, excluding atomic energy.
•
Developing “Centres of Excellence” in energy research.21
Promoting Household Energy Security
•
Providing electricity and clean fuels to all, particularly
the rural population one of the toughest challenges.
•
Traditional fuels create smoke and indoor pollution. Eyes
and lungs of women and children adversely affected.
•
Easy availability of minimum clean energy to maintain
life a basic necessity.
•
Provision of targeted subsidies - not many households
able to pay .
22
Promoting Household Energy Security
•
Electrification of all households by 2010.
•
Providing clean cooking energy such as LPG, NG, biogas
or kerosene , all within 10 years.
•
For households not having access and/or not affording
even the subsidized fuel, fuel wood plantations within one
Km. of all habitations.
•
Entitling
targeted households to 30 units of electricity
and; LPG, kerosene or bio gas equivalent to 6 kg of LPG
pm.
23
National Electricity Policy

Total Village Electrification in 5 years.
By Year 2012 :

Per capita availability 1000 units.

Installed capacity over 200,000 MW.

Spinning reserves 5% .

Minimum lifeline consumption of one unit per
household per day.

Inter-regional transmission capacity 37,000 MW.

Quality and reliable power supply.
24
Tariff Policy

Tariff of all Generation and Transmission Projects in
Private Sector through Competitive route- Public sector to
complete transition in five years.

Reduction of cross subsidy to (+)(-) 20% in next five years.

Emphasis on facilitating Open Access in Distribution; clear
formulation on cross subsidy surcharge.

Transmission Tariff framework sensitive to distance and
direction.

Strict Implementation of Performance Standards.

Agriculture Tariff to leverage sustainable use of Ground
Water Resources.

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Time bound introduction of MYT.
Merchant Power Plants

Development of Merchant power plants with highly
competitive tariff- a new electricity market development
initiative.

To fill the demand supply gap.

Facilitated by Open access
in transmission and
distribution.

Full market risk to be absorbed by the developer.

Coal linkage to be provided for plants up to 1000 MW
size. Captive coal blocks for plants in the range of 5001000 MW.
26
Rural Electrification Policy

Objectives:
• Access to electricity to all households by 2009.
• 24 Hours power supply in rural areas.
• Quality and reliable power supply at reasonable rates.
• Minimum lifeline consumption of 1 unit per household
per day – merit good by 2012.
27
RE Policy- Salient Features

State Governments required to prepare and notify RE plans
within 6 months – indicating delivery mechanisms.

Involvement
of
local
community
in
RE.
Adequate
representation of women in District Committees.

Least cost option for RE – Full life cycle cost and subsidies to
be considered.

Emphasis on development of economic load in convergence
with other programmes - making rural supply economically
viable.

Policy gives essential features of franchisee arrangement.
28
Contd..
RE Policy- Salient Features

Phased introduction of system of franchisee in areas other
than RGGVY projects – ensuring revenue sustainability of
rural supply.

Benefit of capital subsidy for RE projects to be fully passed on
to the consumers.

Annuity based approach for capital subsidy to decentralised
generation systems.

Encouraging
energy
efficient
equipment
–
irrigation
pumpsets.

Encouraging standalone systems up to 1 MW with cost
effective proven technologies and using local resources.

Tariff from standalone systems to be decided by competitive
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market forces. Benefits of subsidy to be fully passed on.
Climate Change Issues - India’s Response

India’s Energy Intensity
and Per capita CO2 emissions
amongst the lowest in the world.

India committed to follow a low carbon path for
development.

Hydro power irrespective of size is renewable. Full
development of hydro potential. All hydro projects should be
accepted as CDM projects.

Nuclear power a clean option. Development depends upon
access and availability of nuclear fuel.

All alternate sources of energy to be fully developed.

Significant progress in Energy Efficiency measures.
30
Contd..
Climate Change- India’s Energy Strategy contd..

High volatility in oil prices.

Coal a major source of energy - Energy security.

Super Critical Power Generation Technology
for better
efficiency.

Efforts to develop 120 MW pilot project based on IGCC
technology.

Currently available technologies to be modified to adopt high
ash content of Indian coal.

India signatory of CSLF Charter .

India a founder partner in “ Methane to Market
Partnership” initiative.
31
Contd..
Climate Change- India’s Energy Strategy contd..

India joined Canada, EU, Japan, China and South Korea in
“ International Partnership for a Hydrogen Economy
(IPHE)”.

India first Asian country to join the US Government Steering
Committee for FutureGen Initiative.

India a full partner country in cooperative international
R&D for “ International Thermonuclear Experimental
Reactor (IETR) project.

India signed Charter of Asia Pacific Partnership for Clean
Development and Climate
Australia and South Korea.
along with US, China, Japan,
32
Thank You
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