Energy policy of India

The energy policy of India is largely defined by the country's expanding energy deficit and increased focus on developing alternative sources of energy,^[1][2] particularly nuclear, solar and wind energy.

The primary energy consumption in India is the third biggest after China and USA with 5.3% global share in 2015.^[3][4] The total primary energy consumption from crude oil (29.45%), natural gas (7.7%), coal (54.5%), nuclear energy (1.26%), hydro electricity (5.0%), wind power, biomass electricity and solar power is 595 Mtoe (excluding traditional biomass use) in 2013.^[5] In 2013, India's net imports are nearly 144.3 million tons of crude oil, 16 Mtoe of LNG and 95 Mtoe coal totalling to 255.3 Mtoe of primary energy which is equal to 42.9% of total primary energy consumption. About 70% of India's electricity generation capacity is from fossil fuels. India is largely dependent on fossil fuel imports to meet its energy demands — by 2030, India's dependence on energy imports is expected to exceed 53% of the country's total energy consumption.^[1] In 2009-10, the country imported 159.26 million tonnes of crude oil which amounts to 80% of its domestic crude oil consumption and 31% of the country's total imports are oil imports.^[1][6] By the end of calendar year 2015, India has become a power surplus country with huge power generation capacity idling for want of electricity demand.^[7]

Due to rapid economic expansion, India has one of the world's fastest growing energy markets and is expected to be the second-largest contributor to the increase in global energy demand by 2035, accounting for 18% of the rise in global energy consumption.^[8] Given India's growing energy demands and limited domestic fossil fuel reserves, the country has ambitious plans to expand its renewable and most worked out nuclear power programme.^[9] India has the world's fifth largest wind power market and also plans to add about 100,000 MW of solar power capacity by 2020.^[10][11] India also envisages to increase the contribution of nuclear power to overall electricity generation capacity from 4.2% to 9% within 25 years.^[12] The country has five nuclear reactors under construction (third highest in the world) and plans to construct 18 additional nuclear reactors (second highest in the world) by 2025.^[13]

India: Total primary energy use of 775 Mtoe in 2013 ^[14]

  Coal (44%)

  Biomass and waste (23%)

  Petroleum & oth liquids (23%)

  Natural gas (6%)

  Nuclear (1%)

  Hydroelectric (2%)

  Other renewables (1%)

Power Generation capacity in India

The installed capacity of utility power plants is 267,637 MW as on 31 March 2015 and the gross electricity generated by utilities is 1106 TWh (1106 billion kWh) which includes auxiliary power consumption of power generating stations. The installed capacity of captive power plants in industries (1 MW and above) is 47,082 MW as on 31 March 2015 and generated 166.426 billion kWh in the financial year 2014-15.^[15] In addition, there are nearly 75,000 MW aggregate capacity diesel generator sets with units sizes between 100 KVA and 1000 KVA.^[16] All India per capita consumption of Electricity is nearly 1010 kWh during the financial year 2014-15.^[15]

Some rural areas in India remain to be connected to the electricity grid. Shown here villagers heating tea with the help of firewood.

Ramagundam Thermal Power Station (2600 MW), Telangana

Total installed Power generation Capacity (end of March 2015)^[17]

For state wise break up refer to States of India by installed power capacity.

Energy conservation

Energy conservation has emerged as a major policy objective, and the Energy Conservation Act 2001, was passed by the Indian Parliament in September 2001, 35.5% of the population still live without access to electricity. This Act requires large energy consumers to adhere to energy consumption norms; new buildings to follow the Energy Conservation Building Code; and appliances to meet energy performance standards and to display energy consumption labels. The Act also created the Bureau of Energy Efficiency to implement the provisions of the Act. In 2015, Prime Minister Mr. Modi launched a scheme called Prakash Path urging people to use LED lamps in place of other lamps to drastically cut down lighting power requirement. Energy efficient fans at subsidised price are offered to the electricity consumers by the electricity distribution companies (DisComs) to decrease peak electricity load.^[18]

Rural electrification

1. The key development objectives of the power sector is supply of electricity to all areas including rural areas as mandated in section 6 of the Electricity Act. Both the central government and state governments would jointly endeavour to achieve this objective at the earliest. Consumers, particularly those who are ready to pay a tariff which reflects efficient costs have the right to get uninterrupted twenty four hours supply of quality power. About 56% of rural households have not yet been electrified even though many of these households are willing to pay for electricity. Determined efforts should be made to ensure that the task of rural electrification for securing electricity access to all households and also ensuring that electricity reaches poor and marginal sections of the society at reasonable rates is completed within the next five years. India is using Renewable Sources of Energy like Hydel Energy, Wind Energy, and Solar Energy to electrify villages.
2. Reliable rural electrification system will aim at creating the following:
   1. Rural Electrification Distribution Backbone (REDB) with at least one 33/11 kv (or 66/11 kv) substation in every Block and more if required as per load, networked and connected appropriately to the state transmission system
   2. Emanating from REDB would be supply feeders and one distribution transformer at least in every village settlement.
   3. Household Electrification from distribution transformer to connect every household on demand.
   4. Wherever above is not feasible (it is neither cost effective nor the optimal solution to provide grid connectivity) decentralised distributed generation facilities together with local distribution network would be provided so that every household gets access to electricity. This would be done either through conventional or non-conventional methods of electricity generation whichever is more suitable and economical. Non-conventional sources of energy could be utilised even where grid connectivity exists provided it is found to be cost effective.
   5. Development of infrastructure would also cater for requirement of agriculture & other economic activities including irrigation pump sets, small and medium industries, khadi and village industries, cold chain and social services like health and education.
3. Particular attention would be given in household electrification to dalit bastis, tribal areas and other weaker sections.
4. Rural Electrification Corporation of India, a Government of India enterprise will be the nodal agency at Central Government level to implement the programme for achieving the goal set by National Common Minimum Programme of giving access to electricity to all the households in next five years. Its role is being suitably enlarged to ensure timely implementation of rural electrification projects.
5. Targeted expansion in access to electricity for rural households in the desired timeframe can be achieved if the distribution licensees recover at least the cost of electricity and related O&M expenses from consumers, except for lifeline support to households below the poverty line who would need to be adequately subsidised. Subsidies should be properly targeted at the intended beneficiaries in the most efficient manner. Government recognises the need for providing necessary capital subsidy and soft long-term debt finances for investment in rural electrification as this would reduce the cost of supply in rural areas. Adequate funds would need to be made available for the same through the Plan process. Also commensurate organisational support would need to be created for timely implementation. The Central Government would assist the State Governments in achieving this.
6. Necessary institutional framework would need to be put in place not only to ensure creation of rural electrification infrastructure but also to operate and maintain supply system for securing reliable power supply^[19][20] to consumers. Responsibility of operation & maintenance and cost recovery could be discharged by utilities through appropriate arrangements with Panchayats, local authorities, NGOs and other franchisees etc.
7. The gigantic task of rural electrification requires appropriate cooperation among various agencies of the State Governments, Central Government and participation of the community. Education and awareness programmes would be essential for creating demand for electricity and for achieving the objective of effective community participation.

The electricity industry was restructured by the Electricity Act 2003, which unbundled the vertically integrated electricity supply utilities in each state of India into a transmission utility, and a number of generating and distribution utilities. Electricity Regulatory Commissions in each state set tariffs for electricity sales. The Act also enables open access on the transmission system, allowing any consumer (with a load of greater than 1 MW) to buy electricity from any generator. Significantly, it also requires each Regulatory Commission to specify the minimum percentage of electricity that each distribution utility must source from renewable energy sources.

The introduction of Availability based tariff has brought about stability to a great extent in the Indian transmission grids. However, presently it is becoming outdated in a power surplus grid. A report in 2005 suggested that there was room for improvement in terms of the efficiency of electricity generation in India, and suggested that two factors possibly responsible for the inefficiency were public ownership of utilities and low capacity utilisation.^[21]

Rural electrification status

Oil and gas

An ONGC platform at Bombay High in the Arabian Sea

India's oil deficit

Gas Balance of India

India ranks third in oil consumption with 195.5 million tons in 2015 after USA and China. During the calendar year 2015, India imported 195.1 million tons crude oil and 23.3 million tons refined petroleum products and exported 55 million tons refined petroleum products. India has built surplus world class refining capacity using imported crude oil for exporting refined petroleum products. The net imports of crude oil is lesser by one fourth after accounting exports and imports of refined petroleum products.^[23] Natural gas production was 29.2 billion cubic meters and consumption 50.6 billion cubic meters during the calendar year 2015.

During the financial year 2012–13, the production of crude oil is 37.86 million tons and 40,679 million standard cubic meters (nearly 26.85 million tons) natural gas. The net import of crude oil & petroleum products is 146.70 million tons worth of Rs 5611.40 billions. This includes 9.534 million tons of LNG imports worth of Rs. 282.15 billions.^[24] Internationally, LNG price (One mmBtu of LNG = 0.1724 barrels of crude oil (boe) = 24.36 cubic meters of natural gas = 29.2 litres diesel) is fixed below crude oil price in terms of heating value.^[5][25] LNG is slowly gaining its role as direct use fuel in road and marine transport without regasification.^[26][27][28] By the end of June 2016, LNG price has fallen by nearly 50% below its oil parity price making it more economical fuel than diesel/gas oil in transport sector.^[29][30] In 2012-13, India consumed 15.744 million tons petrol and 69.179 million tons diesel which are mainly produced from imported crude oil at huge foreign exchange out go. Use of natural gas for heating, cooking and electricity generation is not economical as more and more locally produced natural gas will be converted into LNG for use in transport sector to reduce crude oil imports.^[31][32] In addition to the conventional natural gas production, coal gasification, coal bed methane, coal mine methane and Biogas digesters / Renewable natural gas will also become source of LNG forming decentralised base for production of LNG to cater to the widely distributed demand.^[33][34] There is possibility to convert most of the heavy duty vehicles (including diesel driven rail engines) into LNG fuelled vehicles to reduce diesel consumption drastically with operational cost and least pollution benefits.^[35][36][37] Also, the break even price at user end for switching from imported coal to LNG in electricity generation is estimated near 6 US$/mmBtu.^[38]

The state-owned Oil and Natural Gas Corporation (ONGC) acquired shares in oil fields in countries like Sudan, Syria, Iran, and Nigeria – investments that have led to diplomatic tensions with the United States.^[39] Because of political instability in the Middle East and increasing domestic demand for energy, India is keen on decreasing its dependency on OPEC to meet its oil demand, and increasing its energy security. Several Indian oil companies, primarily led by ONGC and Reliance Industries, have started a massive hunt for oil in several regions in India, including Rajasthan, Krishna Godavari Basin and north-eastern Himalayas.^[40] India is developing an offshore gas field in Mozambique.^[41] The proposed Iran-Pakistan-India pipeline is a part of India's plan to meet its increasing energy demand.

Coal

A coal mine in Jharkhand state

India has the world's 4th largest coal reserves. In India, coal is the bulk of primary energy contributor with 54.5% share out of the total 595 Mtoe in 2013.^[5] India is the third top coal producer in 2013 with 7.6% production share of coal (including lignite) in the world. Top five hard and brown coal producing countries in 2013 (2012) are (million tons): China 3,680 (3,645), United States 893 (922), India 605 (607), Australia 478 (453) and Indonesia 421 (386). However, India ranks fifth in global coal production at 228 mtoe (5.9%) in 2013 when its inferior quality coal tonnage is converted into tons of oil equivalent.^[5] Coal-fired power plants account for 59% of India's installed electricity capacity.^[42][43] After electricity production, coal is also used for cement production in substantial quantity.^[44] In 2013, India imported nearly 95 Mtoe of steam coal and coking coal which is 29% of total consumption to meet the demand in electricity, cement and steel production.^[5]

Gasification of coal or lignite produces syngas or coal gas or coke oven gas which is a mixture of hydrogen, carbon monoxide and carbon dioxide gases. Coal gas can be converted into synthetic natural gas (SNG) by using Fischer–Tropsch process at low pressure and high temperature.^[45] Coal gas can also be produced by underground coal gasification where the coal deposits are located deep in the ground or uneconomical to mine the coal.^[46] CNG and LNG are emerging as economical alternatives to diesel oil with the escalation in international crude oil prices.^[47] Synthetic natural gas production technologies have tremendous scope to meet the transport sector requirements fully using the locally available coal in India.^[48] Dankuni coal complex is producing syngas which is piped to the industrial users in Calcutta.^[49] Many coal based fertiliser plants which are shut down can also be retrofitted economically to produce SNG as LNG and CNG fetch good price by substituting imports.^[50] Recently, Indian government fixed the natural gas price at producer end as 5.61 US$ per mmbtu on net calorific value (NCV) basis which is at par with the estimated SNG price from coal.^[51][52]

Bio-fuels

Gasification of bio mass yields wood gas or syngas which can be converted into substitute natural gas by Methanation. Nearly 750 million tons of non edible (by cattle) biomass is available annually in India which can be put to higher value addition use and substitute imported crude oil, coal, LNG, urea fertiliser, nuclear fuels, etc. It is estimated that renewable and carbon neutral biomass resources of India can replace present consumption of all fossil fuels when used productively.^[2][53]

Huge quantity of imported coal is being used in pulverised coal-fired power stations. Raw biomass can not be used in the pulverised coal mills as they are difficult to grind into fine powder due to caking property of raw biomass. However biomass can be used after Torrefaction in the pulverised coal mills for replacing imported coal.^[54] North west and southern regions can replace imported coal use with torrefied biomass where surplus agriculture/crop residual biomass is available.

Cheaper production cost of algae oil from algae particularly in tropical countries like India would displace the prime position of crude oil in near future.^[55]

The former President of India, Dr. A. P. J. Abdul Kalam, was a strong advocaters of Jatropha cultivation for production of bio-diesel.^[56] He said that out of the 6,00,000 km² of waste land that is available in India over 3,00,000 km² is suitable for Jatropha cultivation. Once the plant is grown, it has a useful lifespan of several decades. During its life Jatropha requires very little water when compared to other cash crops. A plan for supplying incentives to encourage the use of Jatropha has been coloured with green stripes.

Nuclear power

The Koodankulam Nuclear power plant (2x1000 MW) in Tamil Nadu under construction

India boasts a quickly advancing and active nuclear power programme. It is expected to have 20 GW of nuclear capacity by 2020, though they currently stand as the 9th in the world in terms of nuclear capacity.

An achilles heel of the Indian nuclear power programme, however, is the fact that they are not signatories of the Nuclear Non-Proliferation Treaty. This has many times in their history prevented them from obtaining nuclear technology vital to expanding their use of nuclear industry. Another consequence of this is that much of their programme has been domestically developed, much like their nuclear weapons programme. United States-India Peaceful Atomic Energy Cooperation Act seems to be a way to get access to advanced nuclear technologies for India.

India has been using imported enriched uranium and are under International Atomic Energy Agency (IAEA) safeguards, but it has developed various aspects of the nuclear fuel cycle to support its reactors. Development of select technologies has been strongly affected by limited imports. Use of heavy water reactors has been particularly attractive for the nation because it allows Uranium to be burnt with little to no enrichment capabilities. India has also done a great amount of work in the development of a Thorium centred fuel cycle. While Uranium deposits in the nation are extremely limited, there are much greater reserves of Thorium and it could provide hundreds of times the energy with the same mass of fuel. The fact that Thorium can theoretically be utilised in heavy water reactors has tied the development of the two. A prototype reactor that would burn Uranium-Plutonium fuel while irradiating a Thorium blanket is under construction at the Madras/Kalpakkam Atomic Power Station.

Uranium used for the weapons programme has been separate from the power programme, using Uranium from scant indigenous reserves.

Hydro electricity

India is endowed with economically exploitable and viable hydro potential assessed to be about 84,000 MW at 60% capacity factor.^[57] In addition, 6,780 MW in terms of installed capacity from Small, Mini, and Micro Hydel schemes have been assessed. Also, 56 sites for pumped storage schemes with an aggregate installed capacity of 94,000 MW have been identified for catering to peak electricity demand and water pumping for irrigation needs. It is the most widely used form of renewable energy. The hydro-electric potential of India ranks 5th in terms of exploitable hydro-potential on global scenario.

The installed capacity of hydro power is 41,267 MW as of March 2015.^[17] India ranks sixth in hydro electricity generation globally after China, Canada, Brazil, USA and Russia in 2013. During the year 2013, the total hydro electricity generation in India is 132 billion kWh which works out to 25,000 MW at 60% capacity factor.^[5] Till now, hydroelectricity sector is dominated by the state and central government owned companies but this sector is going to grow faster with the participation of private sector for developing the hydro potential located in the Himalaya mountain ranges including north east of India.^[58] However the hydro power potential in central India forming part of Godavari, Mahanadi and Narmada river basins has not yet been developed on major scale due to potential opposition from the tribal population.

Pumped storage schemes are perfect centralised peaking power stations for the load management in the electricity grid. Pumped storage schemes would be in high demand for meeting peak load demand and storing the surplus electricity as India graduates from electricity deficit to electricity surplus. They also produce secondary /seasonal power at no additional cost when rivers are flooding with excess water. Storing electricity by other alternative systems such as batteries, compressed air storage systems, etc. is more costlier than electricity production by standby generator. India has already established nearly 6800 MW pumped storage capacity which is part of its installed hydro power plants.^[59]

Wind power

Progress in India's installed wind power generating capacity since 2006

India has the fifth largest installed wind power capacity in the world.^[60] As of 31 March 2015, the installed capacity of wind power was 23,444 MW an increase of 2312 MW over the previous year^[61][62] Wind power accounts nearly 8.5% of India's total installed power generation capacity and generated 28.314 billion kWh in the fiscal year 2014-15 which is nearly 2.6% of total electricity generation.^[63] The capacity utilisation factor is nearly 15% in the fiscal year 2014-15. The Ministry of New and Renewable Energy (MNRE) of India has announced a revised estimation of the potential wind power resource (excluding offshore wind power potential) from 49,130 MW assessed at 50m Hub heights to 102,788 MW assessed at 80m Hub height at 15% capacity factor.

Solar energy

Solar Resource Map of India

India's solar energy insolation is about 5,000 T kWh per year (i.e. ~ 600 TW), far more than its current total primary energy consumption.^[64][65] India's long-term solar potential could be unparalleled in the world because it has the ideal combination of both high solar insolation and a big potential consumer base density.^[66][67] With a major section of its citizens still surviving off-grid, India's grid system is considerably under-developed. Availability of cheap solar can bring electricity to people, and bypass the need of installation of expensive grid lines. Also a major factor influencing a region's energy intensity is the cost of energy consumed for temperature control. Since cooling load requirements are roughly in phase with the sun's intensity, cooling from intense solar radiation could make perfect energy-economic sense in the subcontinent, whenever the required technology becomes competitively cheaper.

Installation of solar power plants require nearly 2.4 hectares (6 acres) land per MW capacity which is similar to coal-fired power plants when life cycle coal mining, consumptive water storage & ash disposal areas are also accounted and hydro power plants when submergence area of water reservoir is also accounted. 1.33 million MW capacity solar plants can be installed in India on its 1% land (32,000 square km). There are vast tracts of land suitable for solar power in all parts of India exceeding 8% of its total area which are unproductive barren and devoid of vegetation.^[68][69] Part of waste lands (32,000 square km) when installed with solar power plants can produce 2000 billion kWh of electricity (two times the total generation in 2013-14) with land productivity/yield of 1.25 million Rs per acre (5 Rs/kWh price) which is at par with many industrial areas and many times more than the best productive irrigated agriculture lands.^[70] Moreover, these solar power units are not dependent on supply of any raw material and are self productive. There is unlimited scope for solar electricity to replace all fossil fuel energy requirements (natural gas, coal, lignite and crude oil) if all the marginally productive lands are occupied by solar power plants in future. The solar power potential of India can meet perennially to cater per capita energy consumption at par with USA/Japan for the peak population in its demographic transition.^[71]

Synergy with irrigation water pumping and hydro power stations

Price history of silicon PV cells since 1977. The great thing about solar power is that it is a technology and not a fuel. It is unlimited and the more it is deployed the cheaper it would be.^[72] While the more limited fossil fuels are used, the more expensive they become.

The major disadvantage of solar power (PV type) is that it can not produce electricity during the night time and cloudy day time also. In India, this disadvantage can be overcome by installing pumped-storage hydroelectricity stations. Ultimate electricity requirement for river water pumping (excluding ground water pumping) is 570 billion kWh to pump one cubic meter of water for each square meter area by 125 m height on average for irrigating 140 million hectares of net sown area (42% of total land) for three crops in a year.^[73] This is achieved by utilising all the usable river waters by interlinking Indian rivers.^[74] These river water pumping stations would also be envisaged with pumped-storage hydroelectricity features to generate electricity during the night time. These pumped-storage stations would work at 200% water pumping requirement during the day time and generate electricity at 50% of total capacity during the night time. Also, all existing and future hydro power stations can be expanded with additional pumped-storage hydroelectricity units to cater night time electricity consumption. Most of the ground water pumping power can be met directly by solar power during daytime. To achieve food security, India needs to achieve water security which is possible only by energy security for harnessing its water resources.^[75]

Electricity driven vehicles

The retail prices of petrol and diesel are high in India to make electricity driven vehicles more economical as more and more electricity is generated from solar energy in near future without appreciable environmental effects. During the year 2013, many IPPs offered to sell solar power below 6.50 Rs/kWh to feed into the low voltage (< 33 KV) grid.^[76] This price is below the affordable electricity retail tariff for the solar power to replace petrol and diesel use in transport sector.

The retail price of diesel is 53.00 Rs/litre in 2012-13. The affordable electricity retail price (860 kcal/kWh at 75% input electricity to shaft power efficiency) to replace diesel (lower heating value 8572 kcal/litre at 40% fuel energy to crank shaft efficiency) is 9.97 Rs/kWh. The retail price of petrol is 75.00 Rs/litre in 2012-13. The affordable electricity retail price (860 kcal/kWh at 75% input electricity to shaft power efficiency) to replace petrol (lower heating value 7693 kcal/litre at 33% fuel energy to crank shaft efficiency) is 19.06 Rs/kWh. In 2012-13, India consumed 15.744 million tons petrol and 69.179 million tons diesel which are mainly produced from imported crude oil at huge foreign exchange out go.^[24]

V2G is also feasible with electricity driven vehicles to contribute for catering to the peak load in the electricity grid. The electricity driven vehicles would become popular in future when its energy storage / battery technology becomes more compact, lesser density, longer lasting and maintenance free.^[77][78]

Hydrogen energy

Hydrogen Energy programme started in India after joining the IPHE (International Partnership for Hydrogen Economy) in the year 2003. There are nineteen other countries including Australia, United States, UK, Japan, etc.^[79] This global partnership helps India to set up commercial use of Hydrogen gas as an energy source. Ministry of New and Renewable Energy (MNRE) is the focal government agency associated with hydrogen energy development in India.^[80]

Hydrogen is a carbon neutral fuel. Solar electricity prices in India have already fallen below the affordable price (≈ INR 5.00 per Kwh to generate 0.041 lb/Kwh hydrogen which is equivalent to 0.071 litres of petrol in terms of lower heating value) to make hydrogen economical fuel by sourcing from electrolysis of water to replace petrol/gasoline as transport fuel.^[81][82][79] Vehicles with fuel cell technology based on hydrogen gas are nearly twice more efficient compared to diesel/petrol fuelled engines.^[79][83] A luxury hydrogen fuel cell car generates one litre of bottled quality drinking water for every 10 km ride which is a significant by product.^[84] Any four wheel vehicle can be retrofitted in to Fuel cell vehicle as its system power density (watts/litre) and system specific power (watts/kg) are comparable with that of internal combustion engine.^[85][86] The cost and durability of fuel cell engines with economies of scale production line are comparable with the gasoline/diesel engines.

The excess power generation capacity available in India is nearly 500 billion units/year presently and another 75,000 MW conventional power generating capacity is in pipeline excluding the targeted 175,000 MW renewable power by 2022.^[87][88][89] The hydrogen fuel generated by 500 billion units of electricity can replace all diesel and petrol consumed by four (or more) wheel road vehicles in India completely obviating the need of crude oil imports for internal consumption. Converting gasoline/diesel driven road vehicles in to fuel cell electric vehicles on priority would save the huge import cost of crude oil and transform the stranded electricity infrastructure in to productive assets with major boost to the overall economic growth.^[90]

Policy framework

In general, India's strategy is the encouragement of the development of renewable sources of energy by the use of incentives by the federal and state governments. Other examples of encouragement by incentive include the use of nuclear energy (India Nuclear Cooperation Promotion Act), promoting windfarms such as Muppandal, and solar energy (Ralegaon Siddhi).

A long-term energy policy perspective is provided by the Integrated Energy Policy Report 2006 which provides policy guidance on energy-sector growth.^[91] Increasing energy consumption associated primarily with activities in transport, mining, and manufacturing in India needs rethinking India's energy production.

Recent steep fall in international oil prices due to shale oil production boom, would tilt the energy policy in favour of crude oil / natural gas.^[92][93][94]

Energy trading with neighbouring countries

The per capita electricity consumption is low compared to many countries despite cheaper electricity tariff in India.^[95] Despite low electricity per capita consumption in India, the country is going to achieve surplus electricity generation during the 12th plan (2012 to 2017) period provided its coal production and transport infrastructure is developed adequately.^[96][97][98] India has been exporting electricity to Bangladesh and Nepal and importing excess electricity in Bhutan.^[99][100] Surplus electricity can be exported to the neighbouring countries in return for natural gas supplies from Pakistan, Bangladesh and Myanmar.

Bangladesh, Myanmar and Pakistan are producing substantial natural gas and using for electricity generation purpose. Bangladesh, Myanmar and Pakistan produce 55 million cubic metres per day (mcmd), 9 mcmd and 118 mcmd out of which 20 mcmd, 1.4 mcmd and 34 mcmd are consumed for electricity generation respectively.^[101][102] Whereas the natural gas production in India is not even adequate to meet its non-electricity requirements.

Bangladesh, Myanmar and Pakistan have proven reserves of 184 billion cubic metres (bcm), 283 bcm and 754 bcm respectively. There is ample opportunity for mutually beneficial trading in energy resources with these countries.^[103] India can supply its surplus electricity to Pakistan and Bangladesh in return for the natural gas imports by gas pipe lines. Similarly India can develop on BOOT basis hydro power projects in Bhutan, Nepal and Myanmar. India can also enter into long term power purchase agreements with China for developing the hydro power potential in Brahmaputra river basin of Tibet region. India can also supply its surplus electricity to Sri Lanka by undersea cable link. There is ample trading synergy for India with its neighbouring countries in securing its energy requirements.^[2][19][20]

Electricity as substitute to imported LPG and kerosene

The net import of LPG is 6.093 million tons and the domestic consumption is 13.568 million tons with Rs. 41,546 crores subsidy to the domestic consumers in 2012-13.^[24] The LPG import content is nearly 40% of total consumption in India. The affordable electricity retail price (860 kcal/kWh at 90% heating efficiency) to replace LPG (lower heating value 11,000 kcal/kg at 75% heating efficiency) in domestic cooking is 6.47 Rs/kWh when the retail price of LPG cylinder is Rs 1000 (without subsidy) with 14.2 kg LPG content. Replacing LPG consumption with electricity reduces its imports substantially.

The domestic consumption of Kerosene is 7.349 million tons with Rs. 30,151 crores subsidy to the domestic consumers in 2012-13. The subsidised retail price of Kerosene is 13.69 Rs/litre whereas the export/import price is 48.00 Rs/litre. The affordable electricity retail price(860 kcal/kWh at 90% heating efficiency) to replace Kerosene (lower heating value 8240 kcal/litre at 75% heating efficiency) in domestic cooking is 6.00 Rs/kWh when Kerosene retail price is 48 Rs/litre (without subsidy).

During the year 2013-14, The plant load factor (PLF) of coal-fired thermal power stations is only 65.43% whereas these stations can run above 85% PLF comfortably provided there is adequate electricity demand in the country.^[104] The additional electricity generation at 85% PLF is nearly 240 billion units which is adequate to replace all the LPG and Kerosene consumption in domestic sector.^[105] The incremental cost of generating additional electricity is only their coal fuel cost which is less than 3 Rs/kWh. Enhancing the PLF of coal-fired stations and encouraging domestic electricity consumers to substitute electricity in place of LPG and Kerosene in household cooking, would reduce the government subsidies and idle capacity of thermal power stations can be put to use economically. The domestic consumers who are willing to surrender the subsidised LPG / Kerosene permits or eligible for subsidised LPG / Kerosene permits, may be given free electricity connection and subsidised electricity tariff.

During the year 2014, IPPs are offering to sell solar power below 5.50 Rs/kWh to feed into the high voltage grid.^[106] This price is below the affordable electricity tariff for the solar power to replace LPG and Kerosene use (after including subsidy on LPG & Kerosene) in domestic sector. Two wheelers and three wheelers consume 62% and 6% of petrol respectively in India. The saved LPG/Autogas replaced by electricity in domestic sector can be used by two and three wheelers with operational cost and least pollution benefits.^[35][107] By the middle of 2016, LPG spot prices have fallen below crude oil parity price in terms of heat content (one barrel crude oil is equal to 123.5 kg of LPG) due to LPG glut in the market^[108][109]

In 2016, the levelized tariff in US$ for solar electricity has fallen below 3 cents/Kwh which is far cheaper than the fuel cost incurred by coal based power plants in India.^[110] Solar electricity price is going to become the benchmark price for deciding the other fuel (Petroleum products, LNG, CNG, LPG, coal, lignite, biomass, etc.) prices based on their ultimate use and advantages.^[111]

See also

External links

• Ready Reference Policy Handbook about India at one place
• Latest news about Indian Power Sector at one place
• Highlights of Rajasthan Solar Policy 2011
• Solar to light up Rural India
• Map of oil and gas infrastructure (incomplete)
• India’s River-Linking Scheme: A case of troubled waters

References

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