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

• Conclusions

3

Electricity–HDI linkage: Intl experience

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f(x) = 0.0949324694151074 ln(x) + 0.0766045601341874R² = 0.838435463019573

HDI vs electricity consumption per capita/yr

Electricity consumption in kWh per capita per year (2007)

Hu

man

Dev

elo

pm

ent

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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.

Electrification & Economic Development

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State per Capita Domestic Product

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Data for 2009-10

Power Sector Status

• Present Installed capacity ~ 207 GW (RE- 25 GW, 12%)• 2010-11 Generation ~ 950 BU (incl captive) (RE ~ 50 BU, 5%)

• Un electrified population 33% (~40 cr); villages ~ 6% or (35,000)• Peak Load shortage -13% ; Electricity ~10%; unreliable service.• Financial health of Utilities worsening (~70,000 cr losses in 2010-11)

• 6-7% growth in electricity use; projected to double in 2020; largest growth in Industry and commercial/residential.

• Rising energy imports and electricity tariffs

6

Power Generation Capacity including captive,

percentage shares of 210 GW (2010-11)

7

47%

8%1%

18%

2%

7%

1%1%

0%13%

Coal

Gas turbines

Diesel gen-sets

Large Hydro

Indian Nuclear

Wind power

Small Hydro

Biomass + Bagasse Cogen

Solar (PV, Thermal)

Captive

Share of Generation including captive of a total of 900 TWh (2009-10)

8

69.4%11.9%

2.7%

5.0%

10.9%Thermal

Large Hydro

Indian Nuclear

Renewables

Captive

Range of Tariffs in Rs/kWh for all sources

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RE tariffs are as per CERC.Range for solar tariffs is from competitive bidding.Other prices are from Prayas estimates and are only indicative

Prayas Energy Group, Pune

Three problems of Energy Paradigm

Inequity

Limitation of conventional energy resources

Socio - Environmental issues (local and global)

The two faces of India

11

First face is far more prevalent

12

> 100 U

50 - 100 U

< 50 U

No Connection

Highly skewed distribution!

Only 10-12% HHs have monthly electricity consumption > 100 kWh.

Source: Prayas analysis of State ERC orders

Households by electricity use (kWh/month)

Energy and infrastructure deficit and inequity

Concrete/brick walls

Toilets Electricity Clean energy for cooking

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% of expenditure spent on accessing modern energy

Expenditure deciles of population

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Equity and its various facets

• 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.

14

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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ProductionConsumption

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

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198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820090

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Production Consumption

Import Dependency - 38%

Global and local Environment

• 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.

17

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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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/m3

)

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.

20

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.

21

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.

23

Change Nature of Discourse on EE

24

70% of infrastructure that will be in place by 2030 – is still to be built !Prioritize industry & residential/commercial, beginning with new addition.

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Agriculture Commercial Residential Industrial Others

Saving Potential by categories, 2020 (TWh)

New Additions

Retrofit

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Agriculture Commercial Residential Industrial Others

Saving Potential by categories, 2020 (TWh)

New Additions

Retrofit

Saving Potential by categories, 2020 (TWh)

Numbers are only indicative (to show implications of consideration).

Radical Change in Efficiency Policy

25

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.

26

Electricity Demand Projection – IEP, PC

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Hydro

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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.

26

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.

27

Cumulative Capacity of Nuclear and New Renewables

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New Renewables

Additionally by 2017, RE will likely reach 55,000 MW while Nuclear is planned to reach upto 4780 + 2800 = 7580 MW

Total Electricity Generation (TWh) from Nuclear and New Renewables

29Source: CEA Monthly Statistics , Monthly generation report (Renewables sources) 2012-13

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-120

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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)

31

RE capacity addition from 2002-12

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RE Capacity Addition (MW) from 2002-2012

Solar

WTE

SHP

Bagasse Cogen

Biomass

Wind

CAGR (02-12): 22%

Grid Connected Renewable Capacity; March-12

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1985; 8%

3395; 14%

941; 4%

Wind

Biomass

Bagasse

Small Hydro

Energy from Waste

Solar

Wind Potential Estimates (GW) for India

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CWET old CWET revised (2012) Phadle A. et al, 2011 Xi Lu et al, 2010 Hossain J. et al, 20110

500

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700-1000

~ 1400

> 2000

Revised wind power potential significantly different from earlier estimates; from 50 GW to 500-1000 GW.

Increasing economic competitiveness of wind

35

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)

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17.91 17.91

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GERC 2012 Batch II,JNNSM

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KarnatakaBidding

MP Bidding

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r PV

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s/kW

h

Bidding Range: 10.95 - 12.76;Avg tariff of 12.16/kWh,32% < CERC benchmark

Bidding Range: 7.49 - 9.39;Avg tariff of 8.77/kWh,43% < CERC benchmark

State Solar Bidding

7.94 - 8.57.9 - 9.59

Competitive Bidding for solar in India

Land and Water use

38

Source

Land for power plant (Acre/MW)

Consumptive Land for Power Plant. (3% for wind)

Land for mining (30 yr life, 80% PLF) / Submergence

Total land / MW

Total Generation (30 Yrs for coal, 25 for wind and solar) in TWh (BU)

Total land per TWh (BU)

Water Use (-) / Saving (+) over entire life (Million Litres)

Coal 0.9-1.4 0.9-1.4 3.7 4.6-5.1 0.21 22-24 -1176

Wind 28 0.84 0 0.84 0.05 15 306

Solar PV 5 5 0 5 0.04 114 245

Large Hydro - 12.5 12.5 12.5 0.11 116 -3984

Distributed Renewables – green access

• An important option for quick access, especially in remote areas.

• Presently largely limited to lighting service• Significant emerging option for solar for critical social

infrastructure (PHCs, Schools, drinking water schemes etc)

• Higher Costs due to scale and larger O&M needs• Innovative policy options to reduce consumer tariffs under

consideration of FOR.

• Move to grid interactive (feed in and isolation) DRE

39

Green Access/Green Grid

• NAPCC Grid connected RE target ~15% by 2020 (~ 250 TWh)• Grid essential for harnessing large scale RE

– Geographically un-equal distribution– Varying generation, needs balancing mechanism

• 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

40

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)

41

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

500

1000

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2000

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

47

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

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9th (1997-02) 10th (2002-07) 11th (2007-12) 12th (2012-17);Proposed

13th (2017-22); neededfor NAPCC target

Plan wise (past and future proposed) RE and Conventional power generation capacity addition (MWs)

RE Capacity addition

Conventional Capacity addition

12%

35%

28%

22%

24%

The percentage values are for RE capacity addition as a fraction of total capacity addition.

Rooftop Solar: in situ generation for self consumption

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Mumbai Summer & Winter Load Curves and PV generation profiles in April and December

Summer Load Winter Load PV Generation in Dec PV generation in April

Consumer category Energy charges (Rs./kWh) in major cities

Bengaluru Hyderabad Kolkata Mumbai New Delhi Pune

Domestic (High end consumption)

5.60 (> 200 kWh)

6.75 (301-500 kWh); 7.25 (>500 kWh)

7.75 (> 300 kWh)

4.40 (Tatapower); 5.30 (BEST); 9.16 (Rinfra) (all > 300 kWh) 5.30 (Tatapower); 6.80 (BEST); 10.61 (Rinfra) (all > 500 kWh)

4.80 (0- 400 kWh); 6.40 (> 400 kWh)

7.92 (300-500 kWh); 8.78 (500-1000 kWh); 9.50 (> 1000 kWh)

Commercial 7.20 (> 50 kWh)

7.00 (> 100 kWh)

7.80 (> 300 kWh)

5.05 (Tata power); 9.80 (BEST); 10.91 (Rinfra) (all >50 kW)

7.25 – 8.50 (subject to load demand)

8.38 (0-20 kW; >200 kWh); 8.44 (20-50 kW); 10.91 (>50 kW)