8/6/2019 The Indian Economy Uses a Variety of Energy Sources

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Energy Scenario in IndiaThe Indian economy uses a variety of energy sources, both commercial and non-commercial.Fuel wood, animal waste and agricultural residue are the traditional or `non-commercial'sources of energy that continue to meet the bulk of the rural energy requirements even today.However, the share of these fuels in the primary energy supply has declined from over 70% inthe early 50's to a little over 30%as of today.The traditional fuels are gradually getting replaced by the "commercial fuels" such

as coal, lignite, petroleum products, natural gas and electricity.

As the electricity is one of the most important input in the Industrial Sector, the developmentof the nation is generally compared by the per capita consumption of electricity. In thedeveloping countries, the indicator can not be related directly with the average development of the nation. The use of Electricity is basically done on following accounts : 1) Industrial (2)Commercial & Residential lighting (3) Agriculture and Irrigation. In developing countries,30% dwellings are yet to be provided with electricity supply.

Whereas, in the developed foreign countries, the automation of industries is mainly responsiblefor higher consumption of Electrical power. The use of domestic electrical equipment is also

comparatively very high in developed countries.Harnessed energy has become a symbol of growth and instrument for development. Electric power particularly the hydro is among the cleanest and renewable energy input for economicactivity, domestic and civic conveniences, climate control, communication and technology.The Ministry of Power has set on objective of providing "Power for all by 2012". This willentail electrification of all villages by 2007 and of all households by 2012.As you are kindlyaware, electricity is one of the key infrastructure elements for the economic growth of thecountry. India since independence have made big strides in the power sector but with per capita consumption of around 600 Kwh per year, we are amongst lowest rungs of the countriesin this vital indicator of economic and social development and power cuts are still resorted toeven in metro cities what to talk of rural areas. Indian economy, therefore, desperately

needs a better functioning power sector which can meet the market demand for quality power at a globally competentrate.The infrastructure would need the availability of assured and quality power at affordable pricethrough reliable and adequate generation, transmission and distribution facilities.

Power generation in India began more than a century ago in 1898 when the first hydro power unit was set up at Darjeeling. When India achieved freedom in 1947, the country had aninstalled capacity of 1,360 MW.The present installed (conventional fuel) generating capacity in the country is 1,18,780 MW.The share of hydro with 32,370 MW capacity is about 27%. Thermal accounts for maximum

share of 70% with 83,100 MW. It comprises of 63,374 MW from coal, Multi Fuel 1744 MWLignite Based 3455 MW and 13451.9 MW from Gas and liquid fuel and 1,075.1 MW fromDiesel. The share of Nuclear is about 2.7% with 3310 MW. The attainment is significant.However what we achieved in over 50 years will need to beattained now in nearly 10 years.The present annual energy requirement in 2002-03 was 5,45,674 MU, of which only 4,97,589MU were available, leaving a shortfall of 8.8%. While the peaking requirement was 81,492MW in 2002-03, a peak of 71,547 MW only could be met, leaving a shortage of 12.2%.The 16th Electric Power Survey (EPS) carried out by the Central Electricity Authority has projected a peak demand of 1,15,705 MW and an energy requirement of 7,19,097 MU by theendof 10th Plan while the requirement by the end of 11th Plan has been projected as 9,75,222

MU and 1,57,107 MW respectively.

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ADDITIONAL CAPACITY REQUIREMENT

Accordingly at the end of the 10th Plan, an additional capacity of 55,158 MW is needed.However it is likely that a capacity addition of 41,110 MW would only be feasible during the period keeping in view the financial level of the power sector and preparedness of projects.The effort is to close the deficit by the end of the 11th Plan to ensure "Power for all by 2012".

HYDRO / THERMAL MIXThe Indian power system requirement had been assessed to need a hydro power andthermal / nuclear power mix in the ratio of 40.60 for flexibility in system operation dependingon typical load pattern. The present ratio is 25:75 which needs to be corrected immediately tomeet peak load requirements as well as system and frequency stability

HYDRO CAPACITY ADDITION

The estimated hydro potential in the country is 1,50,000 MW (corresponding to 84,044 MW at60% load factor) out of which only 26,910 MW amounting to 18% of the total potential has been harnessed. While 14,393 MW hydro capacity is planned to be added in 10th Plan, actionhas been taken to ensure that more than 20,000 MW of hydro capacity is added during the 11th

Plan period.

Energy is the prime mover of economic growth and is vital to the sustenance of a

modern economy. Future economic growth crucially depends on the long-term availability of 

energy from sources that are affordable, accessible and environmentally friendly.

India ranks sixth in the world in total energy consumption and needs to accelerate the

development of the sector to meet its growth aspirations. The country, though rich in coal

and abundantly endowed with renewable energy in the form of solar, wind, hydro and bio-

energy has very small hydrocarbon reserves (0.4% of the world’s reserve). India, like many

other developing countries, is a net importer of energy, more than 25 percent of primary

energy needs being met through imports mainly in the form of crude oil and natural gas. Therising oil import bill has been the focus of serious concerns due to the pressure it has placed

on scarce foreign exchange resources and is also largely responsible for energy supply

shortages. The sub-optimal consumption of commercial energy adversely affects the

productive sectors, which in turn hampers economic growth.

If we look at the pattern of energy production, coal and oil account for 54 percent and

34 percent respectively with natural gas, hydro and nuclear contributing to the balance. In

the power generation front, nearly 62 percent of power generation is from coal fired thermal

power plants and 70 percent of the coal produced every year in India has been used for

thermal generation.

The distribution of primary commercial energy resources in India is quite skewed. 70

percent of the total hydro potential is located in the Northern and Northeastern regions,

whereas the Eastern region accounts for nearly 70 percent of the total coal reserves in thecountry. The Southern region, which has only 6 percent of the total coal reserves and 10

percent of the total hydro potential, has most of the lignite deposits occurring in the country.

On the consumption front, the industrial sector in India is a major energy user

accounting for about 52 percent of commercial energy consumption. Per capita energy

consumption in India is one of the lowest in the world as shown in Fig. 1. But, energy

intensity, which is energy consumption per unit of GDP, is one of the highest in comparison

to other developed and developing countries. For example, it is 3.7 times that of Japan, 1.55

times that of the United States, 1.47 times that of Asia and 1.5 times that of the world

average. Thus, there is a huge scope for energy conservation in the country.

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During the pre-reform period, the commercial energy sector was totally regulated by the

government. The economic reform and liberalization, in the post 90s, has gradually

welcomed private sector participation in the coal, oil, gas and electricity sectors in India.

Energy prices in India have been under an administrated regime with subsidies provided to

meet certain socio-economic needs of the public. This has led to distortion and inefficiency in

the use of different sources of energy. The government has taken serious steps to deregulate

the energy price from an Administered Price Mechanism (APM) regime. The prices of all

grades of coal and petroleum products have already been deregulated. In the electricitysector, most of the State Electricity Boards (SEBs) have started taking reform measures and

regulatory commissions have been set up to determine tariffs based on economic rational.

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