Prayas Energy Group, Pune Equity and Environment: Two imperatives for Indian Electricity Policy The role of Renewables and Energy Efficiency Ashwin Gambhir Prayas (Energy Group), Pune Contestations at Koodankulam: legitimacy and constraints Discussion at Council for Social Development, October 18 th 2012, New Delhi
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Prayas Energy Group, Pune
Equity and Environment:Two imperatives for Indian Electricity Policy
The role of Renewables and Energy Efficiency
Ashwin GambhirPrayas (Energy Group), Pune
Contestations at Koodankulam: legitimacy and constraintsDiscussion at Council for Social Development, October 18th 2012, New Delhi
About Prayas Energy Group
Prayas is a Voluntary Org, based at Pune, India
– PEG works on theoretical, conceptual and policy issues in the energy and electricity sectors.
– Based on a comprehensive, analysis-based approach for furthering the ‘public interest’.
– Research & Interventions (regulatory, policy).
– Civil Society training, awareness, and support.
2
Outline
• A macro look at the power sector in India• Three problems of present energy paradigm
– Inequity, – Resource limitation and – Environmental damage
• Way towards a solution– Policy options promoting equity– Energy efficiency– Renewables
Electricity consumption in kWh per capita per year (2007)
Hu
man
Dev
elo
pm
ent
Ind
ex (
HD
I, 2
007)
HDI=0.8; Elec use = 2210 kWh/capita according to the regression fit.
India (2007); HDI=0.612; Elec use = 542 kWh/capita
CubaEcuador
Sri Lanka
(a) India is in the elastic region where steep increase in HDI is seen with increase in electricity use, (b) Several countries have managed to achieve high HDI with similar electricity use as that of India need for direct action for improved HDI.
• Significant population is modern energy poor, constraining their economic development. Modern Energy a must for all.
• However this argument is cynically used many a time to justify each and every large power project, even without broad local acceptance; argued in larger national interest.
• Unfortunate history of resource curse (Coal/Hydro) and increasingly for most proposed nuclear sites.
• Renewable energy is argued for overcoming shortages and providing supply for all, however not much attention to the equity aspect of the incremental costs.
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Energy ImportsIndia net energy import cost ~ 5% of GDP (~ 2% by USA, EU or China)
Indian import bill likely to increase due to:– Higher coal imports & high/increasing prices, Re depreciation.
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Production, Import of Oil (MT)$100 Bn (09-10), 75% Import dependence
Production and Consumption of Fossil Fuels (Oil, Gas and Coal) in Mtoe India from 1981-2010
• India not responsible for global problem of climate change – with 15% population has emitted only 2.5% of GHG emissions.– very low per-capita emissions (~ 2 t/cap/yr; world average of ~4)
• Limited carbon space remaining and India will face major impacts of climate change; highly vulnerable– Long coastline; very rainfall dependent
• Local pollution of water, land and air as well as water scarcity is resulting in popular opposition to power plants in most locations.
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Ambient Air Quality Monitored at Ghuggus (Jan 2007- Aug 2012)
RSPM (µg/m3) Standards RSPM (µg/m3) Actual conc. SPM (µg/m3) StandardsSPM (µg/m3) Actual conc.
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Local environment
Similarly problems with water resources too – pollution as well as conflicts Rising resistance to mining, power plants etc. because of environmental
damage, weak adherence to expected norms, weak government monitoring18
Prayas Energy Group, Pune
So Business-As-Usual growth is impractical and undesirable
Way towards Solution
Go back to Basics for a New Paradigm
Development Growth Energy GHG emissions
Three flexible links• Improved developmental policies• Efficiency of energy use • Non-GHG emitting energy sources; benign on local
environment.
• Policies and structures required to increasingly de-couple the links.
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RGGVY• National Electricity Policy, 2005 recognizes electricity as a major
driver of rural development and hence poverty alleviation. Target to provide access to all HHs and ensure minimum lifeline consumption of 1 kWh/day/HH as a merit good by 2012.
• RGGVY launched in 2005, addresses two components– developing distribution infrastructure – free connections to all Below Poverty Line (BPL HHs)
• Critique and concerns– Inability to supply adequate power; APL connections; quality
and adequacy of network; timelines and delays; emphasis on HHs.
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RGGVY – What about electricity?
• Physical infrastructure– 105,851 villages electrified (90% of target)– 20 Million HHs electrified (81% of target)
• Hrs. of supply often < 6 hrs./ day • Structural disincentive (loss of Rs 3.5/kWh of sale to HH)
• Restructuring of RGGVY– GoI to allocate low cost power to RGGVY consumers– Need only 14 GW capacity to address structural
disincentive (likely addition in next 5 yrs ~ 100 GW)– Extremely limited C emissions
22Source: Roundtable on Electricity for All : Challenges and Approaches, by PEG and PIC at Pune on 18th Feb 2012)
Energy Efficiency; reduce energy requirement
• Significant potential; needs to be actualized• EE should be seen as indispensable as power plants, in avoiding
shortages, facilitating inclusive growth and maintaining competitiveness while reducing emissions.
• Long term locked in savings.• Need for National large scale programs.
• Link energy tariffs to consumption norm for commercial blds.• Discourage setting up of inefficient new Industries.
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Change Nature of Discourse on EE
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70% of infrastructure that will be in place by 2030 – is still to be built !Prioritize industry & residential/commercial, beginning with new addition.
Numbers are only indicative (to show implications of consideration).
Radical Change in Efficiency Policy
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Super efficient appliances consuming 40-50% less than 5-star models, are commercially available internationally.
Assist manufacturers to introduce Super Efficient Appliances (as poor consumers are very cost sensitive)
If 60% of stock for only 4 appliances in 2020 is super-efficient, we can save 60 BU and avoid peak capacity of 20000 MW over the business as usual scenario.
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Electricity Demand Projection – IEP, PC
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2004 2007 2012 2017 2022 2027 2032
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Nuclear
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1300 BU increase in 5 years = 200,000 MW additional capacity
Assumes - 63 GW from nuclear power (recently revised to 27 GW by 2025) and 150 GW from hydro power in 2031-32.
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Addition of ~185 GW of Base Load Thermal capacity
*Source Integrated Energy Policy (PC, GoI) 2006, numbers are indicative
Placing Nuclear in context
• Marginal role in Indian power sector, unlikely to reverse.• Various targets; 12th (2.8 GW)/13th plan highly optimistic (18 GW).• 2011 – global nuclear capacity fell by 10 GW, while just the wind and
solar PV increased by 44 GW and 23 GW, 67 GW in total vs (- 10) GW.
• Nuclear (10 yr. gestation) not a panacea for today’s electricity shortages. • The Climate argument- the window for action is the coming decade.
• A true cost comparison with nuclear plants starting construction today should be with wind and solar prices in 2020.
• Notwithstanding all fundamental arguments against nuclear, economics of RE beats nuclear and even solar better considering gestation period.
Total Electricity Generation (TWh) from Nuclear and New Re-newables
Nuclear
New Renewables
Comparing solar PV and nuclear costs
30Source: Blackburn & Cunningham, 2010. Solar and Nuclear Costs – the historic crossover.
Large grid connected Renewables
• Energy security, price rise in fossil fuels; focus on climate has made RE an extremely important supply option for the future.
• RE moving from margins to mainstream. – existing capacity 5 X nuclear and generation ~ 2 X
• $ 9.5 billion (50,000 cr) invested in large RE in India in 2011. – Fastest growing energy sector, 22% CAGR past decade.
• Significant Policy and regulatory push (State and Central) (RPOs, RECs, NAPCC (15% by 2020); State specific policies, SIPS, Green levies; NCEF etc)– 12th Plan; RE ~ 30/40 GW (10 solar, 15/25 Wind)
CWET old CWET revised (2012) Phadle A. et al, 2011 Xi Lu et al, 2010 Hossain J. et al, 20110
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Revised wind power potential significantly different from earlier estimates; from 50 GW to 500-1000 GW.
Increasing economic competitiveness of wind
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Overall Cost of generation of conventional fuel based vs Wind Tariffs
Source: Rs/Unit
Cost of Generation - imported Coal 4.1
Cost of Generation- Gas (60%) & R-LNG (40%) 4.4
Cost of Generation - Domestic Coal (50%) and Imported Coal (50%) 3.8
Wind (CERC based @ 23% PLF) Maharashtra 4.7
Wind Tariff - Tamil Nadu 3.4
Wind Tariff - Andhra Pradesh 3.5
Wind Tariff - Gujarat 3.6
Wind Tariff - Karnataka 3.7
Wind Tariff - Rajasthan 4.2
Source: ICRA, 2011
RE (non-solar) is quite cost competitive with new conventional capacity addition. In the range of ~ 4/kWh. (can reduce with competitive bidding).
The Solar story• Practically unlimited potential, subject to land availability.• Significant efficiency improvement possible, on track• All industry estimates point to further price drop, parity
expected much faster.• Exponential Growth worldwide (~27 GW PV in 2011)
• Enables large investments, better monitoring, less drain on government finances
• Grid RE needed (2010-2010)– 75 GW / 160 TWh (BU) – Equivalent to powering 100 mil. HH @ 100 units / month
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What needs to be done for RE
• Cost reduction through efficient procurement (Competitive Bidding).
• Protect poor from high cost (financial, environmental or social); equitable sharing of incremental costs.
• Promote Indian manufacturing (energy security, jobs & cost reduction)
• 15% RE by 2020 will need doubling the rate of RE capacity addition (3,500 MW/year 8,000 MW/year)
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Facilitative role from Govt:
• Effective land policy (solar parks, create level playing field, social inclusion (land lease limited to footprint, profit sharing must for sustained growth)
• Mandate EIA/ SIAs for RE projects• Mandate solar purchase only for rich (proportional to the
industry, commercial & high residential consumption)
• Finance is a major issue. Facilitate low cost finance availability.• Grid Integration of large scale RE, long term Tx evacuation
planning urgently needed; Power Sector Resistance. • Focus solar PV initially on critical social infrastructure.• R&D (basic and applied) key for continued cost reduction
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Sources of Electricity, 2020 (IEP and Low-C Gr)
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IEP (Scenario-5) 2020
LowC 2020 0
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TWh
Hydro
Nuclear
Coal
Renewable
Efficiency
Two Official forecasts show
Increasing role of - Efficiency and RE
Reduced - Energy Demand Forecast- Role of Nuclear
Long Term Energy Planning- a crying need
• BAU is simply impractical and unsustainable. – Relook at type of industrialisation - future development
paradigm– Tariff policy to discourage excessive, luxury use of energy.
• Need for a more realistic and rational energy supply and demand projection studies (comprehensively considering various factors)
• More electricity needed, but – Earnest action for Energy Efficiency (>> gas, nuclear, hydro put
together)– Immediate attention to needs of poor (RGGVY, reserve low cost coal)
• Link policy to specific objective goals.– RE for energy security and supply / not for global climate– Multi-criteria framework for assessing mitigation options.
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Conclusions
• Paradigm change – from growth to development– supply to demand side thinking, – from fossil and nuclear to EE/RE.
– Forward looking planning • comprehensive and truly integrated• With emphasis on governance
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A parting message
• “Limits to available energy resources are hurting economies and curtailing development in poorer countries. India, being more vulnerable to energy shortages than most other countries, needs to urgently implement a multi-dimensional solution to avoid a crisis… To avert economic hardship and work towards mitigating climate change, we must find answers to the energy conundrum soon. This is possible through a three-pronged strategy to ‘replace, improve, and reduce'.” (replace fossil fuel based energy sources with renewables, improve end use efficiency and reduce consumption, especially of the rich).
46Source: Girish Sant, Handling the Energy Crisis, the Hindu Business line, 30th January 2012
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THANK YOU
Prayas Energy Groupwww.prayaspune.org/peg
ashwin [at] prayaspune [dot] org
Lifecycle water use of electricity (Gallons/MWh)
48Source: Wilson et al, 2012. Burning our Rivers: The water footprint of electricity