`

Indian Energy
Sector: An
overview

By
19PGDM00B001 Abhinav Jha
19PGDM00B005 Aravinthraajan B.R.
19PGDM00B009 Gautam K Sanu
19PGDM00B013 Ananthakrishnan Nair
19PGDM00B017 Pratik P Dhake
19PGDM00B022 Swarojit Sharma

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TABLE OF CONTENTS

EXECUTIVE SUMMARY

INTRODUCTION

CURRENT SCENARIO

PRIMARY SOURCE OF ENERGY

SECONDARY SOURCE OF ENERGY

CHALLENGES FACED BY ENERGY SECTOR

FUEL SECURITY
DISDAINFUL IMAGE OF NUCLEAR FUEL
UNRELIABLE RENEWABLE ENERGY
TECHNOLOGICAL CONSTRAINTS
ENVIRONMENTAL CONCERNS
POLICY AND GOVERNANCE

FUTURE ASPECTS OF ENERGY

TRANSITION FROM THE DARK FUEL

TACKLING THE MENACE OF LOSSES
THE GREENER SOLUTIONS
HYBRID SOLUTIONS

CONCLUSION

BIBLIOGRAPHY

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Executive Summary
This report deals with the energy sector as a catalyst in the growth of Indian
Economy. The report analyses the current scenario, various energy related issues
and development of energy policies which are required for sustainable development
of energy sector. It also considers a high causality between Energy & GDP growth.
More efficient use of energy in Industry, services, Transport & other cases will result
in Supply & Demand Side Efficiency. It also explores various avenues of transitions
from conventional to renewable.

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Introduction
At the launch event of Economic Survey held in July 2019, Honorable Finance
Minister Mrs. Nirmala Sitharaman laid down the roadmap for India to become a $5
trillion economy by 2024-2025. This will require Indian Economy to grow at 8 %
per annum. In order to achieve this, the economic survey covered many aspects such
as growth of MSME sector, Inclusive growth, Private investments etc. Among those,
one of the topics discussed was the need for Affordable, Reliable and Sustainable
energy. This clearly implies that energy (i) which is economical (ii) which can be
depended upon and (iii) which meets the needs of the present without compromising
the ability of future generations to meet their own needs which will play an essential
role in the growth story of India.

Current Scenario
Currently, India is the 3rd largest consumer of Energy and the consumption will
continue to grow owing to its large population. In order to meet this consumption,
India has a diverse network of energy production The following pie chart shows the
energy consumption by various sectors such as coal, crude petroleum, natural gas,
Electricity from various sources such as nuclear, hydro etc.

Figure 1 Source wise Consumption of Energy during 2017-18

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Primary Sources of Energy
Coal: The energy demand of India is primarily met through coal. India has the 5 th
largest reserve of coal in the world .Majority of our power plants are coal based
because of the availability of coal. But, the use of coal has come under scanner
because of India’s Intended Nationally Determined Contribution at United Nations
Framework Convention on Climate Change (UNFCCC) held at Paris. India has
pledged to achieve about 40 percent cumulative electric power installed capacity
from non-fossil fuel-based energy resources by 2030.So, India will have to reduce its
dependency on coal because of this commitment.

Figure 2

Oil: India is an oil deficient country. Therefore, it has to import crude oil from
other countries to fulfil its requirements. According to Ministry of Petroleum and
Natural Gas Planning and Analysis Cell, India’s oil dependence for the year 2018-
2019 was 83.7%. The supply of oil is subjected to production as well as geopolitics.
Recent sanctions put by the USA on Iran are one of the examples of geopolitical
situation where energy security of India comes under risk.

Renewable Energy: In order to address the issue of carbon emission as well as

Climate change, more focus is required in the renewable sector. Total installed
capacity of grid interactive renewable power, which was 57244.23 MW as on
31.03.2017, had gone up to 73351.81 MW as on 31.10.2018 indicating growth of 28%
during the period. India has an estimated renewable energy potential of about 900
GW from various sources. Wind - 102 GW (at 80-meter mast height), small hydro -
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20 GW and 750 GW solar power, assuming 3% wasteland is made available (India
Year Book, 2019). India has set an ambitious target of 175GW energy through
renewable energy by 2022 of which 100 GW is through solar energy. Various
schemes such as Kisan Urja Suraksha Evam Utthaan Mahabhiyan(KUSUM) have
also been run by government to encourage the use of renewable energy like solar
energy in rural area.

Nuclear Energy: Nuclear energy is one of the most efficient and clean source of
energy. India has decided to build 10 Indian designed 700 MW Pressurized Heavy
Water Reactors. The main concern with the nuclear energy is safety. Installed power
capacity of Nuclear as on 31st May 2018 is 6780 MW.

Hydro Electric Energy: India is estimated to have a hydro potential of 145.32GW of

which only 45.4 GW has been used. The main issue regarding not utilizing the
potential is the large infrastructure cost as well as high tariff during initial periods.

Secondary Sources of Energy

Electricity Installed Capacity: As shown in the figure 3 India is highly depended on

Coal based thermal power plants of about 57.27% followed by Large Hydro power
plants. It is high time the dependency over coal is transitioned towards renewable or
any sustainable resource. But the transition should initially begin with the changes
of the current thermal power generation methodology to accommodate
sustainability.

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 Figure 3

Of the total consumption of electricity in 2017-18, industry sector accounted for the
largest share (41.48%), followed by domestic (24.20%), agriculture (18.08%) and
commercial sectors (8.51%). Figure 4 shows the Consumption of Electricity by
various sectors in 2017-18.

Figure 4 Consumption of Electricity by Sectors in 2017-18

It is presumed that energy sector is quite static. But it has surprised many by the
sheer dynamics involved in this business. For Example- With the increase in
production of shale gas USA has reduced the stakes of OPEC countries in oil

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business. Also, with solar energy coming into the picture at very affordable cost have
forced many countries to look for solar as a viable alternative.

One recent but important development in energy sector is the increase in the
demand of electric vehicle. Government of India’s Ministry of Heavy Industries and
Public Enterprise with its Faster Adoption and Manufacturing of Hybrid and
Electric Vehicles, or FAME scheme had managed to increase the sales of the
electrical vehicle using incentive. The current scheme FAME-2 with an outlay of
10,000 crores announced in the recent budget will also help in increasing the
numbers of Electric vehicles. Though there is a massive requirement of charging
infrastructure required to increase the numbers but this too is a welcome step
towards our main goal of fuel transition and reducing our dependence on oil. This
will help us in achieving energy security. The energy sector in India is undergoing
tremendous changes.

Challenges faced by the energy sector

Fuel Security
Even though there is insufficient domestic availability of coking coal in the country,
coal is used as the primary source of electricity generation and accounted for 70.69%
of the total electricity produced in 2017–18. Due to limited production the country
has to rely on imports to cope up with the short fall.
The table below shows the data of coal imports.
(Data source:::https://coal.nic.in/content/production-and-supplies)

Imports often depend on political conditions deeming coal imports as

non- dependable source.
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Concurrently, for Crude oil availability, political issues like Venezuelan crisis,
hostilities in Middle East and sanctions on Iran may choke or largely reduce the
quantum of supply.

The above graphical trend shows how oil prices which are a function of supply and
demand were affected during Rise of ISIS and Syrian civil war in 2014 and during
the peak of Venezuelan crisis during mid-2018.
These factors directly reflect on overall performance of the energy sector.

Disdainful image of Nuclear Fuel

After infelicitous incidents like Chernobyl Disaster (1986) and Fukushima Daichi
(2011), nuclear energy as a whole was perceived as a potential threat to general
masses but nuclear power is crucial if not mandatory to satisfy the country’s energy
needs. Needless to say, new safety prospects can be implemented or thought of in
order to regain confidence for efficient utilization.
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Unreliable Renewable Energy
India has vast renewable potential but due to the nature of some of these resources
which are dependent on environmental factors, may cause hindrance resulting in
inefficient utilization. For example, solar energy is not available 24/7, for wind some
days may be less windy than others.

Technological Constraints

Infrastructural Inadequacies
India’s power grid is Jurassic and has considerable limitations. Antique equipment’s
including transmission lines, relays, poor circuit breaking results in considerable
Transmission and distribution losses, in turn contributing to higher per unit costs
also adversely affecting future expansion plan affordability.
According to latest estimates distribution losses account for 22% of total energy
produced. Diagram below shows the state-wise distribution of T & D, theft losses in
percentages.

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 Some states has T & D losses
as high as 40%
Data Source:
https://www.cnbctv18.com/m
arket/data/around-22-of-
electricity-produced-in-india-
is-lost-in-distribution-
188541.htm

Equipment Shortages
Equipment shortages were an eminent reason why capacity additions were not
achieved in 10th Five Year Plan. While the shortage is basically in the core
component availability of boilers, turbines, generators and construction equipment
,the problem is lack of adequate supply to plants which includes coal-handling, ash-
handling plants etc.

Making more efficient production Units

As previously stated crude oil unavailability may trigger acquisitions from different
vendors, the quality obtained from these vendors may vary as the type of crude may
be light or heavy, sweet or sour which may render the refining process less
productive taken the quantities of finished products produced. The production units
can be designed to handle wide range of raw materials.
Similarly, with considerable technological expertise thermal power plants may be
redesigned to produce more power unit per gram of coal.

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Environmental concerns
Greenhouse effect has been linked with climate change. India is the fourth highest
carbon emitter in the world owing to 7% of total emissions. Global temperature has
increased 0.85 C since 1880.The below diagram shows the global temperature rise
since 1880.

The planet is becoming gradually warmer. Global warming leads to melting of polar
ice caps and glaciers leading to sea level rise. The next diagram shows data of global
sea level rise since 1880.

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Global sea level rise can lead to inhabitable coastal zones in turn resulting to mass
migrations, more cyclones and abnormal weather patterns. Adversely affecting
crop yields, and having other physical and socio-economic effects.

Energy industry contributes to about 2/3rds of all carbon emissions in India. In

Paris Agreement (2015) Government of India Pledged:
• “To reduce the emissions intensity of GDP by 33%–35% by 2030”
• “Increase the Non-fossil share of cumulative power generation capacity to
40% by 2030”
Considering the country’s ambitious carbon footprint reduction pledge, it will be
highly onerous task, as implementation of renewable may be hindered due to lack of
facilitative investments or ill drafted policies.

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Policy and Governance

Renewable energy has gained significance in India and there’s growing concern for
the ‘energy security. Energy self-sufficiency has been identified as the major driver
for renewable. Energy in India with rising insecurity in relation to the fluctuating
oil prices. India does not have any integrated renewable energy policy but for other
policies relating to electrification some incentives have been given. More incentives
should be government’s priority.

The National Electricity Policy 2005 stipulates that progressively the share of
electricity from non-conventional sources would need to be increased; such purchase
by distribution companies shall be through competitive bidding process; considering
the fact that it will take some time before non-conventional technologies compete, in
terms of cost, with conventional sources, the commission may determine an
appropriate differential in prices to promote these technologies.

Under the national Rural Electrification Policy also for villages/habitations where
grid Connectivity would not be feasible or not cost effective, off -grid solutions based
on stand-alone systems may be taken up for supply of electricity. Furthermore if
these are not feasible and the alternative is to use isolated lighting technologies like
solar photovoltaic, these may be adopted.

The CEA had norms for the emission of CO2, NOx , SOx, Fluorides and other toxics
where they provide the permissible amount to be released but as in the European
union, there’s no penalty on carbon emission. So as a result industry are not inclined
to reduce their carbon footprint or to switch to renewable and hence there is no
interest towards switching to renewable.

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Future Aspects of Energy
Transition from the Dark Fuel
There is an estimate of about a cumulative total of 319.02 Billion tonnes of Geological
Resources of Coal so far been estimated in the country as on 1.4.2018. But with the
increasing pressure on the environment and the continued use of fossil fuels for the
next 30-40 years consumption will make life unsustainable on earth.

As shown in the above figures India is highly dependent on Coal based thermal
power plants of about 57.27%. It is high time the dependency over coal is
transitioned towards renewable or any other sustainable resource. But the transition
should initially begin with the changes of the current thermal power generation
methodology to accommodate sustainability. This could be achieved by introducing
efficient flue gas systems in the existing coal-based plants. Coal-Based plants could
also be converted to Multi fuel powered plants where in bio mass pellets could be
used along with coal. And in the future coal-based power plants should trend
towards highly efficient Ultra Super Critical Power plants that have efficiency above
45%that are cleaner in terms of emission as well by 2-3%.

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Tackling the menace of losses
Another aspect which is of at most importance in the Indian power sector is the
losses the Indian economy suffers due to losses in the power transmission and
distribution. Even the power grids are a source of losses which could be cutback to
attain efficiency. Introduction of Smart Grids and Smart meters need to be brought
about, which can sense the usage pattern and have an analytical view of the power
consumption. By using smart grids and newer power generation technologies, power
theft and power losses could be reduced. Further reduction in power losses can be
achieved by setting up norms for increasing efficiency in the process industry.
For new projects there after the regulatory bodies should define stricter norms to
promote to renewables. Norms for CO2, NOx, Fluorides, SOx and other toxin
emissions policies.

The Greener Solutions

Source: www.cewep.eu

Waste to Energy is again a sustainable solution which is planned by the government

to integrate with smart cities. Improper waste management which is again a major
reason for land and water pollution could be tackled using Energy from Waste
technology. Across the EU27, over 400 such waste-to-energy plants are currently
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operating (implying a market share for CNIM of 30-35%) – these plants incinerate
approximately 22% of total municipal waste and the volume of waste incinerations
rising. A similar ideology could be made aware to people and be adopted in India.
This would help in stepping India towards the sustainable energy utilization.
Another technology that is synonymous to Energy from Waste is biomass. Biomass
uses various bio-degradable and organic substances as fuel that again reduces the
stress on the environment. A step further to Biomass is Energy crops. In several
parts of the world Energy crops such as King Grass is cultivated in order to be use
as fuel. These contain very high ethanol content.

King Grass Pellet Smart Grid Solution

Hybrid Solutions
The current problems associated with renewable energy market are the unreliable
nature of renewable energy sources. The maximum power generation in a solar
power plant could only be achieved during the day, even that generation capacity
could be marred by cloudy condition. Similarly, the production capacity of a wind
power plant is also affected by weather conditions. So, in order to alleviate the
unpredictability of the renewable energy and the continuous development of
sustainable energy it is very important to find innovative solutions to overcome this.
One way to achieve is by instead of connecting intermittent renewables of the same
type, different renewables can be integrated together to create very reliable hybrid
systems. Solar farms can be coupled with wind farms or wind farms can be coupled
with biomass plants to provide reliable loads at all times. A far more extensive
hybrid system called the “Combined Power Plant” or the “Renewable-Energy
Combined Cycle Power Station” exists in Germany. Schmak Biogas AG, Solar
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World AG and Enercon together operate this plant. This combined power plant
relies on an integrated network of 36 wind, solar, biomass and hydropower
installations spread across Germany. Wind and Solar produce when those resources
are available, while a collection of biomass and biogas plants and a pumped hydro

facility make up the difference when they are not. Similar techniques should be
replicated to attain sustainable and reliable power.
Another agent of extreme volatility for the energy sector is the oil and gas sector that
Indian energy is heavily depended on. Hydrocarbons are also a major source for
increase in the carbon footprint and it is also extremely unreliable owing to Indian
energy’s dependency on other countries for the acquisition of the same. In order to
avoid this dependency and also to attain a sustainable future, India has set a target
to cut emissions by reducing dependency on crude oil and coal by 2022. Electric
Vehicles and green buildings should be introduced into the Indian market on a large
scale. The infrastructure should be made in such a way that the additional demand
created by these electrical vehicles should also be made available largely through
renewable energy. This will create a sustainable environment wherein we can try
and avoid the utilization of hydrocarbons and can massively cut down on the
emissions.

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Conclusion
Though energy sector is a high investment sector, it remains to be the backbone of
the economic growth of any country. It is imperative for an ambitious country to
focus on its energy sector and be energy independent as well as have a sustainable
environment. India’s dream of becoming a 5 trillion economy needs us to be
incredibly aggressive and take smart decision in shaping up the energy sector for the
future needs. Moving forward, India has taken a huge stride in the right direction.
India’s vision of cutting emissions by 2022 by installing renewable power generation
plant up to a capacity of 175 GW is a noble and necessary step for the survival of the
human race and the planet as a whole. Now the onus is on us to try and achieve this
strategic target that we have set for ourselves, taking the country to new heights.

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Bibliography

1. India Year Book, 2019.

2. Economic Survey, 2019.
3. BP Statistical Review of World Energy 2019.
4. Press Information Bureau (PIB) of India.
5. Ministry of Power Central Electricity Authority, New Delhi.
6. Website of Ministry of Coal, Government of India.
7. Website of Central Electricity Authority (CEA), India.
8. Website – www.infomine.com
9. CNBC Research.
10.Website of Ministry of Statistics and Program Implementation Government
of India.
11.Thermal Engineering and Power Systems by R. S Amano and B. Sunden.
12.In the Dark: How Much Do Power Sector Distortion cost South Asia, a
World Bank Report.
13.Energy Security a Study on Contemporary Governance of Oil and Gas
Sector in India by Sandi Sharma, UPES (2012).
14.Contesting the Future of Nuclear Power by Benjamin K Sovacool
15.Advances in steam turbines for Modern Power Plants by Tadashi Tanuma.

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