Energy

The Bharatiya Janata Party (BJP), elected as the majority party in May 2014 to govern India in the following five years, faces several challenges to meet the country’s growing energy demand including securing affordable energy supplies and attracting investment for upstream projects and transmission infrastructure. Highly regulated fuel prices for consumers, fuel subsidies that are shouldered by the government and state-owned upstream companies, transmission bottlenecks, a complex regulatory environment, and inconsistent energy sector reform currently hinder energy project investment. Some parts of the energy sector, chiefly coal production, remain relatively closed to private and foreign investment, while others such as electric power, petroleum and other liquids, and natural gas have had regulated price structures that have discouraged private investment in the recent past. Insufficient and aging infrastructure impedes the flow of energy supply to meet India’s growing demand. Along with its pledge for deeper economic reforms, the new administration is supporting several energy reforms such as reducing petroleum product subsidies, reforming natural gas pricing policy, reducing electricity transmission and distribution losses and theft, alleviating regulatory burdens, and providing fiscal incentives to attract energy supply investment and to reduce infrastructure constraints.
Despite having large coal reserves and overall growth in coal and natural gas production over the past two decades, India is increasingly dependent on imported fossil fuels. India’s current administration under Narendra Modi has a goal of reducing India’s import dependency on oil and natural gas to two-thirds by 2022 and to half by 2030.5 India is also looking to further develop and harness its coal and various renewable energy sources. These actions would effectively increase India’s energy supply and create more efficiency in energy consumption. India has already begun implementing oil and natural gas pricing reforms since 2013 to foster sustainable investment and help lower subsidy costs.

Primary energy consumption in India more than doubled between 1990 and 2013, reaching an estimated 775 million tons of oil equivalent.6 The country has the second-largest population in the world, at nearly 1.3 billion people in 2014, growing about 1.4% each year since 2004, according to World Bank data.7 At the same time, India’s per capita energy consumption is one-third of the global average, according to the International Energy Agency (IEA), indicating room for higher energy demand in the long term as the country continues its economic development.

As shown in Figure 2, India’s largest energy source is coal (44%), followed by traditional biomass and waste (24%) and petroleum and other liquids (23%). Other renewable fuel sources make up a small portion of primary energy consumption, although the capacity potential is significant for several of these resources such as solar, wind, and hydroelectricity. Since the beginning of the New Economic Policy in 1991, India’s population has increasingly moved to cities, and urban households have shifted away from using traditional biomass and waste for cooking and lighting to using electricity sourced from other energy sources such as hydrocarbons, nuclear, biofuels, wind, and solar.
India’s power sector is one of the largest and fastest-growing areas of energy demand, rising from 11% to 15% of total energy consumption between 2000 and 2013, according to IEA.9 Although electrification rates in India vary by source based on definitional differences of electricity access, the IEA estimates that 19% of the population (240 million people) lacked basic access to electricity in 2013, while electrified areas still suffer from rolling electricity blackouts.10 The government seeks to balance the country’s growing need for electricity with environmental concerns from the use of coal to produce electricity. India’s transportation sector, primarily fueled by petroleum products, is set to expand as the country focuses on improving road and railway transit.

The energy policy of India is largely defined by the country’s expanding energy deficit and increased focus on developing alternative sources of energy, particularly nuclear, solar and wind energy. India attained 63% overall energy self-sufficiency in 2017.

The primary energy consumption in India grew by 2.3% in 2019 and is the third biggest after China and USA with 5.8% global share. The total primary energy consumption from coal (452.2 Mtoe; 55.88%), crude oil (239.1 Mtoe; 29.55%), natural gas (49.9 Mtoe; 6.17%), nuclear energy (8.8 Mtoe; 1.09%), hydro electricity (31.6 Mtoe; 3.91%) and renewable power (27.5 Mtoe; 3.40%) is 809.2 Mtoe (excluding traditional biomass use) in the calendar year 2018. In 2018, India’s net imports are nearly 205.3 million tons of crude oil and its products, 26.3 Mtoe of LNG and 141.7 Mtoe coal totaling to 373.3 Mtoe of primary energy which is equal to 46.13% of total primary energy consumption. 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. About 80% of India’s electricity generation is from fossil fuels. India is surplus in electricity generation and also marginal exporter of electricity in 2017. Since the end of calendar year 2015, huge power generation capacity has been idling for want of electricity demand. India ranks second after China in renewables production with 208.7 Mtoe in 2016.

In 2017-18, the per-capita energy consumption is 23.355 Giga Joules (0.558 Mtoe) excluding traditional biomass use and the energy intensity of the Indian economy is 0.2332 Mega Joules per INR (56 kcal/INR). 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. Given India’s growing energy demands and limited domestic oil and gas reserves, the country has ambitious plans to expand its renewable and most worked out nuclear power programme. India has the world’s fourth largest wind power market and also plans to add about 100,000 MW of solar power capacity by 2020. India also envisages to increase the contribution of nuclear power to overall electricity generation capacity from 4.2% to 9% within 25 years 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. During the year 2018, the total investment in energy sector by India was 4.1% (US$ 75 billion) of US$ 1.85 trillion global investment.

Indian solar power PV tariff has fallen to ₹2.44 (3.4¢ US) per kWh in May 2017 which is lower than any other type of power generation in India. In the year 2020, the levelized tariff in US dollars for solar PV electricity has fallen to 1.35 cents/kWh. Also the international tariff of solar thermal storage power plants has fallen to US$0.063/kWh, which is cheaper than fossil fuel plants. The cheaper hybrid solar power (mix of solar PV and solar thermal storage power) need not depend on costly and polluting coal/gas fired power generation for ensuring stable grid operation. Solar electricity price is going to become the benchmark price for deciding the other fuel prices (petroleum products, natural gas/biogas/LNG, CNG, LPG, coal, lignite, biomass, etc.) based on their ultimate use and advantages.

Oil and gas :- India ranks third in oil consumption with 212.7 million tons in 2016 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.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 was 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.Internationally, LNG price (One million Btu of LNG = 0.1724 barrels of crude oil (boe) = 24.36 cubic meters of natural gas = 16 kg of natural gas = 29.2 litres diesel = 21.3 kg LPG) is fixed below crude oil price in terms of heating value. LNG is slowly gaining its role as direct use fuel in road and marine transport without regasification. 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. 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. 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. 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. Also, the break even price at user end for switching from imported coal to LNG in electricity generation is estimated near US$6 per million British thermal units ($20/MWh). The advent of cheaper marine CNG transport will restrict LNG use in high end transport sector to replace costly liquid fuels leaving imported CNG use for other needs. As the marine CNG transport is economical for medium distance transport and has fast unloading flexibility at many ports without costly unloading facilities, they have become alternate solution to submarine gas pipelines. Natural gas/methane can also be converted cheaply in to hydrogen gas and carbon black without emitting any green house gas for use in transport sector with fuel cell vehicle technology.

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. 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. India has nearly 63 tcf technically recoverable resources of shale gas which can meet all its needs for twenty years if exploited. India is developing an offshore gas field in Mozambique. The proposed Iran-Pakistan-India pipeline is a part of India’s plan to meet its increasing energy demand.