Energy Scenario in India 2020

8/13/2019 Energy Scenario in India 2020

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INDIA'S ENERGY SCENARIO IN 2020

SARMA, E.A.S.,Secretary, Ministry of Power, Government of India

MAGGO, J.N.,Joint Adviser, Planning Commission, Government of India

SACHDEVA, A.S.,Deputy Adviser, Planning Commission, Government of India

1. Introduction

The Indian economy uses a variety of energy sources, both commercial and non-commercial.Fuelwood, animal waste and agricultural residue are the traditional or `non-commercial' sourcesof 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% in the early 50'sto 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.

2. At the time of Independence, the country had a very poor infrastructure in terms of energyproduction and supply. The per capita consumption of energy was abysmally low and the accessto energy was very inadequate for the common people. The economy was dependent largely onthe non-commercial sources of energy for meeting the requirements of the households and onanimal and human energy in case of agriculture and transport. During the 50 years that followedIndependence, the demand for energy, particularly for commercial energy, registered a high rateof growth contributed largely by the changes in the demographic structure brought about throughrapid urbanisation, need for socio-economic development and the need for attaining andsustaining self reliance in different sectors of the economy.

3. Over the years, the high rate of growth of energy demand could be sustained primarily throughincreased dependence on commercial energy sources such as coal, oil, natural gas andelectricity. However, the energy supply system that has developed over the years has tended todepend more and more on non-renewable energy resources, the availability of which is severelylimited. Moreover, development of some of these energy resources is beset with seriousenvironmental implications. To some extent, subsidised prices of certain forms of energy also ledto end-use inefficiencies and, therefore, an increase in the gross energy demand. All thesefactors have raised questions about the long-term sustainability of such an energy supply system.Moreover, with the rapid increase in demand for petroleum products, the country has become aheavy importer of oil. The present trends indicate that in the absence of adequate measures ofdemand management, the country may have to resort to import of other forms of energy as welland this has raised issues of long-term energy security of the country.

4. A number of studies have been so far carried out with reference to the energy sector in India.Some of these studies were in relation to individual sub-sectors of energy whereas a few were inthe nature of analysing the energy sector scenario in an integrated framework. However, in theearlier studies, the emphasis was more or less on inter-fuel substitution possibilities and costoptimisation rather than on demand management with specific reference to the environmentalimplications. The present paper places emphasis on the latter aspect i.e. the scope for demandside management and the need for minimising the adverse impact of energy development onenvironment. The essential feature of the approach is to look into the alternatives available forsustainable energy development without in any way compromising the overall objectives ofeconomic and social development. Before the perspective of energy demand and supply isdiscussed, it may be useful to understand the nature of physical resource endowments of thecountry and their present status of development.

2. The Primary Energy Resource Endowment

5. India is not endowed with large primary energy reserves in keeping with her large geographicalarea, growing population and increasing final energy needs. The current assessment in regard to

the primary commercial energy resources indicates that coal is the major energy resource of the


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country. The gross reserves of coal are presently estimated at around 205x109 tonnes. Theproven resources of coal are placed at 73x109tonnes which are sufficient to last the next centuryeven at an annual level of production of over 500x106 tonnes. There are some lignite depositsalso which are estimated to be more than 27x109tonnes. As far as hydrocarbons are concerned,the balance of recoverable reserves are placed at 732x106tonnes of crude oil and 660x10 9m 3ofnatural gas. The hydro-electric potential as assessed by the Central Water Commission and theCentral Electricity Authority in 1987 is 600 TWh. The regional distribution of the primarycommercial energy resource potential is indicated in Table 1.

6. As may be seen from Table 1, the distribution of primary commercial energy resources is quiteskewed. Whereas the Eastern region accounts for nearly 70% of the total coal reserves, theWestern region has over 70% of the hydrocarbons reserves in the country. Similarly, more than70% of the total hydel potential in the country is located in the Northern and the North-Easternregions put together. The Southern region, which has only 6% of the coal reserves and 10% ofthe total hydel potential, has most of the lignite deposits occurring in the country.

7. In addition, there exists potential for coal bed methane, oil shale and gas hydrates in thecountry. Also, as per the Central Electricity Authority, sixty three sites have been identified fordevelopment of pumped storage schemes. The total potential of these schemes adds up toaround 94,000 MW. There exists another 6,780 MW of potential for exploitation throughmini/micro hydel schemes. The nuclear power programme, as per the Eighth Five Year Plan,envisaged having an installed capacity of 10,000 MW.

8. As far as non-commercial or traditional sources are concerned, fuelwood is the major source.The present estimate of fuelwood use in the household sector is around 160x10 6 tonnes andaccounts for 65% of the total non-commercial energy use in the households. The annualavailability of wet dung is estimated at 960x106 tonnes. The consumption of dung cakes ispresently estimated at 80x106 tonnes on an annual basis. The annual yield of crop residues isplaced at around 370x106tonnes of which nearly 45x106tonnes are used in the household sector.

9. Table 2 gives the present assessment of the potential of non-conventional sources of energyand their present status of development.

10. Even though the size of primary commercial energy reserves appears fairly large, theiravailability in per capita terms is quite moderate on account of the large population of the country.

If no significant additions to reserves are made in the future, the per capita availability is going todecline further in wake of the rising population. Table 3 gives the details of per capita reservesand the reserve to production (R/P) ratio of some of the conventional sources of energy as wellas the major implications associated with development of these forms of energy sources.

3. Present Status of Development of Energy Resources

11. Through the process of planned development undertaken over the last five decades, thecountry has taken major strides in stepping up the production of primary commercial energy asshown in Table 4. Coal continues to be the main source of primary commercial energy not onlyfor direct energy use in industry but also for indirect energy use through power generation.Concerted efforts made in exploration and development of hydrocarbons has led to a significantstep up in the production of oil and natural gas. However, in the recent years, the production of

crude oil has been stagnating. The availability of hydro-electricity has also increased significantlyand touched a record generation of 82.71 TWh in 1994-95. There have been additions to nuclearpower generation capacity as well as power generation from nuclear power plants. The windpower generation has also picked up significantly during the last six years.

4. The Energy Supply Infrastructure

4.1 Electricity Sector

12. Electricity is generated from a number of sources including coal, lignite, natural gas, liquid

fuels, hydel, nuclear and wind energy sources. The installed generation capacity in the utilities


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has increased from 1,743 MW in 1950-51, the beginning of the planning era, to 81,171 MW in1994-95 and further to 84,912 MW by the end of 1996-97, the terminal year of the Eighth FiveYear Plan. The gross generation of electricity in the utilities has increased from 5.3 TWh to 350.5TWh in 1994-95 and 394.5 TWh in 1996-97. The generation capacity mix presently is 72:25:3 ofthermal, hydel and nuclear capacity. The share of hydel capacity has come down from an all-timehigh of 50.6% in 1962-63 to 25.5% in 1996-97. The progress in addition to the electricitygeneration capacity in the country for a few selected years is shown in Table 5.

13. In addition to the installed generating capacity of 84,912 MW in the utilities, the non-utilities

have over 12,000 MW of capacity installed with the different power intensive industries for theircaptive use. The generation from this capacity was around 42 TWh in 1996-97. Further, therailways also have about 148 MW of installed capacity with an annual generation of 0.02 TWh.Almost whole of the capacity available with the non-utilities is thermal, based on either coal ordiesel and gas. The changes in the gross electricity generation from different modes of installedgeneration capacity in the utilities since 1950-51 are shown in Table 6.

14. The share of hydel generation has been progressively declining over time in the totalgeneration in the utilities. Another noticeable feature of the electricity generation is the increasinglevels of generation based on natural gas which has shown an appreciable increase over the1970-71 level. A small contribution also has been made in the form of wind energy generation.

4.2 Oil Refineries

15. The first oil refinery in India was set up in Assam at Digboi in the year 1901 with a capacity of0.5x106tonnes. This refinery is still in operation. The installed capacity in the refineries sector hasprogressively increased over the years and was 61.5x106tonnes by the end of the year 1996-97.The crude throughput during that year was 62.82x106tonnes with a refinery production of 59x106tonnes. Nearly 1.6x106tonnes of LPG was also produced from natural gas in 1996-97. The entirerefining capacity is in the public sector. Trends in the domestic production of petroleum productsare shown in Table 7. Table 8 gives the trends in consumption of petroleum products since 1970-71.

16. It may be seen from Tables 7 and 8 that the country is deficient in middle distillates and theindigenous production is supplemented through imports. Kerosene oil and high speed diesel oilconstitute bulk of the imports of middle distillates.

5. Changes in the Pattern of Primary Energy Supplies

17. The total primary energy supply (both commercial and non-commercial) increased from89.6x106toe (tonnes of oil equivalent) in 1953-54 to about 365x106toe in 1996-97. The share ofnon-commercial fuels has declined from 72% in 1953-54 to about 32% in 1996-97. Fuelwoodaccounts for nearly 65% of the total non-commercial energy consumed in the country. Of theindigenous primary commercial energy production, the relative share of oil and natural gas hasincreased from 1.2% in 1950-51 to 27.9% in 1996-97 (as compared to nearly 34% in 1989-90).The share of coal which was 98% in 1950-51 has declined to 67.7% in 1996-97. The changes inthe pattern of primary energy supplies are shown in Table 9.

6. Primary Energy Imports

18. The country is not self-sufficient in oil and oil products. As a result, the import dependence ofthe country for oil has been increasing over time. The degree of self-sufficiency in oil which wasaround 35% in 1975 increased up to 1984-85 and was the highest at 70% during that year. It hasstarted declining thereafter in wake of the decline in indigenous production of crude oil and risingdemand for petroleum products. In addition to POL imports, there have been imports of superiorquality coal for use in the steel industry. The imports of coal have already touched the 10x10 6tonnes mark in 1996-97. A limited quantity of electricity of around 1.5 TWh per annum is alsoimported from Bhutan. The changes in the share of primary energy imports in total primarycommercial energy supplies in the country since 1953-54 are given in Table 10.


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7. Energy Intensity of the Economy

19. The changes in the primary energy intensity of the economy (defined as primary energy useper unit of GDP at constant 1989-90 prices) over the years are given in Table 11. As may beseen from Table 11 above, the overall energy intensity of the economy has declined over theyears. This has been made possible by the gradual substitution of primary non-commercialenergy sources by the more efficient commercial energy sources. As a result the primarycommercial energy intensity has gone up from 18.3 to 28.53 MJ/US $ during the period 1953 to1996.

20. The changes in the sectoral final energy consumption are shown in Table 12.

8. Energy Scenario up to the Year 2020

21. The population of the country, which is likely to cross the 970x106mark by the end of 1998,may exceed 1315x106by the end of the year 2019-20. Based on the present trends available inthe rate of urbanisation, the share of urban population is projected to increase from 25.38% in1990-91 to 43% in the year 2020. The growth in GDP and its structural changes will have aneffect on the demand for energy and the energy supply mix in future. The GDP, which grew at arate of 3.5% on an average up to the 70's, has averaged more than 5.6% per annum growth inthe 80's. The GDP grew at the rate of over 6% per annum during the Seventh Five Year Planperiod as against a target of 5% per annum. The Eighth Plan had set a target of 5.6% per annumgrowth in GDP and the likely achievement is projected to exceed well over 6% per annum. It isassumed in the present paper that these trends in GDP growth are likely to continue in future aswell. The high rate of economic growth is likely to be accompanied by an increasing per capitaincome and changes in life styles. This will have an effect on the energy demand as well. In viewof the rising awareness in regard to the environmental protection and conservation, the futuregrowth in energy sector must consider such concerns in order to develop in a manner which isenvironmentally benign. The key issues facing a developing country like India which have energyimplications are, therefore, rising population, need for economic growth, access to adequatecommercial energy supplies and the financial resources needed to achieve this, rational energypricing regime, improvements in energy efficiency of both the energy supply and consumption,technological upgradation, a matching R&D base and environmental protection.

22. The scope of the present paper encompasses building up of energy demand scenarios for

different sectors of the economy under various assumptions of changing patterns of energy use,efficiency improvements, inter-fuel substitution, satisfaction of energy demand for energyservices, etc.. The study is centered primarily around three scenarios; Business as Usual (BAU),Efficiency-Oriented Scenario (EFF) and Environmentally Constrained Scenario (ENV). Theprojections under each Scenario take into account the overall availability of resources and thelikely growth in the demand for energy in the economy. While BAU denotes a Scenario based onthe existing trends in the energy sector, EFF considers the scope for reduction in the energyintensity of the economy, based on end-use efficiency, inter-fuel substitution and other demandmanagement measures. In the ENV Scenario, the emphasis is on minimising the adverseenvironmental implications of the energy system under different sets of assumption.

8.1 Brief Description of Methodology of Demand Projection

23. The methodology adopted for estimating the long term energy demand is based primarily onthe DEFENDUS approach developed by Prof. A.K.N. Reddy and his associates but with certainmodifications carried out by the authors. The methodology involves generating sectoral energyaccounts for different fuels and analysing the effect of various assumptions made in regard to theestimation of demand, inter-fuel substitution possibilities, improvements in efficiencies, CO2emission, etc.. The base year chosen for projecting the long-term energy demand is 1989-90.

8.2 Estimates of Energy Requirement up to the Year 2020

24. The total energy demand by sectors in the three scenarios is given in Table 13. Table 14

gives the share of different energy sources in the total consumption requirement in different


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sectors of the economy. As may be seen from Table 14, there are major changes taking place inthe requirement of petroleum products, electricity and fuelwood in the final energy demand overthe years in the three scenarios. The changes in the percentage share of various fuels, bothcommercial and non-commercial, in the final energy consumption pattern are given in Table 15.

8.3 Changes in Energy Intensity of the Economy

25. The energy intensity of the economy shows a marked decline over the years in the threescenarios on account of the effect of the efficiency measures adopted and the inter-fuel

substitution possibilities taken into consideration. A comparative picture of the changes in theprimary energy intensity in the three scenarios is shown in Table 16.

26. The primary non-commercial energy intensity shows a marked decline as compared to thechanges in the primary commercial energy intensity. The primary commercial energy intensityincreases in the BAU Scenario over the three terminal years considered as compared to the baseyear but a decline is observed in the EFF and ENV Scenarios. It will be interesting to see thechanges in the final energy consumption-GDP intensity in the three scenarios. These changesare shown in Table 17.

27. The major changes in the final energy intensity w.r.t. GDP are seen in the case of transportand the household sectors. A further analysis brings out the changes in the efficiency of energyuse in these sectors for different activities, in particular the freight movement in the transport

sector and cooking in the household sector, on account of the various measures assumed inestimating the demand for final energy consumption in these sectors. Table 18 shows theincrease in efficiency of energy use in freight transport due to the effect of the measures adoptedfor this purpose which include not only an increase in the efficiency of the transport modes butalso a modal shift in the freight movement. A higher share of rail transport is assumedprogressively over time so as to reach a level of 67% in a period of 20 years from the base year,to be in line with such a recommendation being made in this regard by a number of expertcommittees and groups set up in the past. The effect of these measures is evident as the energyintensity of freight movement shows a considerable decline in the ENV Scenario. The estimatednorm of energy consumption requirement per tonne kilometer in the ENV Scenario in the year2019-20 is almost 42% lower as compared to the estimated norm for the same year in the BAUScenario.

28. The efficiency of energy use for cooking in the household sector also shows a markedimprovement in the ENV Scenario as compared to the one observed in case of the BAUScenario. The requirement of per capita gross energy input to meet fully the useful per capitaenergy requirement in the ENV Scenario in the year 2019-20 is 55% less than the requirement inthe BAU Scenario in the same year. There is a consequential increase in the efficiency of energyuse for cooking which goes up from a mere 11.5% in the year 2019-20 in the BAU Scenario to25.5% in the ENV Scenario. Table 19 shows a comparative picture of efficiency of energy use incooking in the household sector for the three terminal years for all the scenarios.

29. The changes in the efficiency of the cooking system as shown in Table 19 are brought aboutby the increasing use of more efficient commercial energy sources as well as an increase in theefficiency of use of non-commercial energy sources. This results in a large saving of fuelwoodwhich is extremely important from point of view of preventing large scale deforestation taking

place presently on account of indiscriminate mining of fuelwood. The changes in the requirementof fuelwood over the years in the three scenarios are shown in Table 20.

30. As may be seen from Table 20, the requirement of fuelwood declines from 338.1x10 6tonnesin 2019-20 in the BAU Scenario to 84.7x106tonnes in the ENV Scenario. Efforts need to be madeto bring down the use of fuelwood further in the household sector since the level of demandestimated in the ENV Scenario is still higher than what can be maintained in a sustained mannerfor preventing any loss to the forest cover stipulated at around 33% of the total land area of thecountry.

8.4 Energy Import Requirements


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31. The requirement of energy imports will depend on the extent to which the primary energyneeds of the economy are met through indigenous production. As far as indigenous production ofprimary energy is concerned, the production profile for the year 1999-00 is assumed on the basisof the present trends and what is considered feasible within the time span under consideration. Incase of the years 2009-10 and 2019-20, the production of various forms of primary energyparticularly coal and primary electricity is assumed on the basis of the growth achieved in therespective sectors during the period 1979-89. Based on the balance of recoverable reserves ofhydrocarbons, the production of crude oil and natural gas in future is projected to increase at aslow rate. The production of crude oil, which is likely to be 40x10 6tonnes in the year 1999-00, isprojected to increase to 45x106tonnes in 2009-10 and further to 50x106tonnes in 2019-20. Theproduction of natural gas is projected to increase by 10 9m3every year over the level of productionin the year 1996-97. The oil refining capacity, which is likely to go up to 80x106tonnes in the year1999-00, is estimated to increase to 230x106tonnes in 2019-20. The generation from hydel andnuclear capacity is assumed at plant load factor of 40% and 60% respectively for the period1999-2019. These assumptions are summarised in Table 21.

32. In wake of the limited primary energy resource endowments of oil and natural gas and theincreasing demand for petroleum products in the final energy consumption, dependence onenergy imports is going to increase as is brought out in the estimates of energy demand asprojected in the BAU Scenario. The assumptions made in the EFF and ENV Scenarios indicate alower energy demand for final consumption and consequently less of imports. The impact of themeasures adopted in the EFF and ENV Scenarios on energy imports is shown in Table 22.

33. The impact of the measures adopted in the EFF and ENV Scenarios is evident from Table 22.Whereas the indigenous coal production as projected in the BAU Scenario is not sufficient tomeet the overall coal requirement in the country in any of the terminal years, there results aprogressively large surplus of coal in the EFF and ENV Scenarios. Alternatively, the indigenousproduction requirement of coal come down to that extent. As far as import of coal is concerned,this is presently limited to import of some superior quality coal for use in steel industry. It isassumed that the coal imports will continue to be made in the future as well and may go up to10x106tonnes in 1999-00, 15x106tonnes in 2009-10 and 20x106tonnes in 2019-20 to supplementthe indigenous coking coal production for meeting the requirements of the steel industry in theseyears. This would result in a further reduction in the indigenous production of coal. Taking thisinto consideration, the import scenario changes to the extent as shown in Table 23.

34. Based on Table 23, the share of energy imports in the total primary commercial energy supplyin the economy is projected to go up steadily from 16.24% in the base year 1989-90 to 37.82% in2019-20 in the BAU Scenario. Even though the measures adopted in the EFF and the ENVScenarios reduce the demand for primary energy to a large extent, the country would still need toimport 33.46% of the total primary commercial energy requirement in 2019-20 in the ENVScenario. The increase in the share of energy imports in primary commercial energy supply ismostly on account of increase in the demand for oil products and low indigenous production ofcrude oil in the coming years. The self-sufficiency in oil, which was nearly 59% in 1989-90 isprojected to fall sharply to less than 13% in 2019-20. The economy will thus become dependenton energy imports and the vagaries of the international market. The balance of payments, whichis already in the negative, will become more so if no concrete steps are taken to reduce energyconsumption in the coming years.

35. The value of net imports is estimated in terms of 1989-90 US dollars and is given in Table 24.The value of net imports in the BAU Scenario increases at a rapid pace and goes up from US$3674.6x106in 1989-90 to US $9,385x106in 1999-00 and further to US $61,843x106in 2019-20.The value of net imports in the ENV Scenario comes down appreciably from US $9,385x10 6 toUS $6,994x106 in 1999-00 and from US $61,843x106 to US $39,563x106 in 2019-20. The majorshare of the energy import bill will continue to be accounted for by the import of oil and oilproducts. The share of oil and oil products in the total energy import bill is projected to increasefrom 92.3% in 1989-90 to 97.2% in 2019-20 in the ENV Scenario.

36. The share of energy imports as a percentage of total exports in 1989-90 was 22.1%. If theexports continue to increase at the rate of 10% per annum in the period 1989-2019, the share ofenergy imports as a percentage of total exports will continue to remain more or less the same,being 21.3% in the year 2019-20 in the BAU Scenario. However, in the ENV Scenario, the shareof energy imports as a percentage of total exports comes down to 13.6% in the year 2019-20.

This underlines the need for efforts to be made for increasing exports on a sustained basis.


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9. Cost-Benefit Analysis of Renewable Energy Development - Case of HydelPower

37. Energy is a capital intensive sector and presently accounts for a little less than 30% of theplan expenditure in the public sector. Keeping in view the increase in demand for energy asprojected in the different scenarios considered and the rising costs of creating new capacities, theinvestment requirements of the sector would increase accordingly. There are also adverseenvironmental impacts associated with energy production and consumption. This will call for anenergy development strategy which is environmentally friendly and is sustainable in the long run.

Moreover, in view of the depleting nature of the fossil fuels, greater attention is now being paid fordeveloping renewable and non-conventional energy sources which are more environmentallybenign. Such an energy development may result in less of GHG emissions but will have costsinvolved which will have to be borne by the economy and the consumers. An attempt has beenmade in the paper to ascertain the magnitude of investment required for development of powersector to meet fully the demand for electricity as projected in the different scenarios up to the year2019-20. The results of the cost-benefit analysis of development of a renewable energy resourcelike hydro power are presented in the following paragraphs.

38. The gross electricity generation requirements are worked out after taking into considerationthe changes in various technical parameters like transmission & distribution losses, plant loadfactors, auxiliary losses, heat rates of thermal plants, etc. Table 25 gives the gross electricitygeneration requirement for the different terminal years for the three scenarios.

39. The various options considered for power generation are listed below.

(i) Coal Thermal(ii) Gas Combined Cycle(iii) Gas Open Cycle(iv) Hydel(v) Nuclear*(vi) Fuel oil(vii) Biogas diesel(viii) Wind(ix) Solar

* The nuclear option has not been considered while working out the least cost options. Thecapacity levels and the generation levels are taken as given.

40. In addition, some options that will result in savings of power are also considered viz. efficientpumpsets in the farm sector, solar water-heaters replacing electric water heaters and efficientlighting systems (mainly CFLs) replacing the inefficient ones. The cost of such a replacement hasalso been included while estimating the financial savings that are going to arise out of lowerelectricity demand.

41. Based on various assumptions regarding capital costs, O&M costs, gestation lags, plant loadfactors and the fuel cost, the life cycle cost for each of these options has been worked out and isgiven below.

Options Cost (US cents/KWh)Coal Thermal 6.433Gas Combined Cycle 6.475Gas Open Cycle 11.815Hydel 9.334Fuel oil 8.823Biogas diesel 9.268Wind 14.013Solar 59.889


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42. Given such a cost scenario, the gas open cycle option was dropped while estimating the leastcost option for power sector. It has been assumed that the gas will be used only in combinedcycle plants. With the exception of availability of coal, bounds on availability of different resourcesfor the use in the power sector have been fixed for other options for all the terminal years. Forhydro-electricity availability, two scenarios have been considered viz. lower and higher. Based onthe life cycle cost mentioned above and the feasible generation from other options (depending onthe availability of resources), the generation mix for the electricity sector has been worked out foreach of the terminal year considered in the exercise for different demand scenarios viz. BAU,EFF and the ENV scenarios. The investment requirements have also been worked out. Whileestimating the investment requirements, it is assumed that investment on transmission anddistribution will be 70% of the investment requirement for setting up installed generating capacity.

43. For each terminal year, two scenarios have been considered under ENV. These are ENV1and ENV2. Under ENV1, the options are chosen (subject to assumptions about availability ofresources) in the order of cost ranking. In ENV2, the options are chosen on the basis ofemissions i.e. the option with the least emissions per KWh of electricity generated is picked upfirst. In this option greater share of hydel potential is realised than in ENV1. Obviously, in thesecond case the cost per KWh as well as the investment requirement per KWh would be higher.

44. The ENV scenarios considered in the preceding paragraph take into account a somewhatmodest rate of addition of hydro-electric capacity, keeping in view the time and investmentconstraints. However, considering the large hydro potential that the country is endowed with, itshould be possible to step up the rate of hydro power development, provided commensurateinvestments could be made. Such a scenario has considerable importance in the Indian contextas it will reduce excessive dependence on coal and contain the total emissions. The acceleratedhydro development (AHD) scenario assumes 75% development of the total hydro-electricpotential by the year 2019-20.

45. Table 26 summarise the significant results that have emerged from this exercise for the year2019-20. The installed capacity requirements in the BAU for the year 2019-20 increase to384,145 MW. The investment requirement to meet this demand is likely to be US $ 867x109(at1989-90 prices and the exchange rate prevailing then). The share of steam generation in the totalgeneration is estimated to be 82.5% requiring about 1175x106 tonnes of coal. The reduction indemand in EFF scenario by 11.8% vis-a-vis BAU scenario reduces the capacity requirement by45,395 MW and the investment requirement by US$ 95x109. However, the cost/KWh increasesbecause greater share of demand is met from hydel sources (which is costly). The CO2emissionsdecline by nearly 220x106tonnes and the requirement of coal by 146x106tonnes. Similar pictureemerges in ENV scenario where there is reduction in capacity requirement, investmentrequirement, coal requirement and CO2 emissions. However, the cost of generation per KWhincreases. A comparison of ENV1 and ENV2 Scenarios shows interesting results. The demand isthe same in the two scenarios and yet the capacity requirement, investment requirement and thecost per KWh is lower in ENV1 than in ENV2. On the other hand, share of steam generation,requirement of coal, total CO2emissions as well as CO2emission/KWh are lower in ENV2. Thisclearly brings out the fact that reducing the emissions have cost attached to it.

46. A reduction in the share of steam generation from 82.5% in BAU to 59.3% in AHD Scenarioincreases the average cost per KWh of electricity generation from 6.77 cents to 7.41 cents. Itreduces the CO2 emissions from electricity generation from 1,887x106 tonnes to 1,112x106tonnes. It is on account of combination of various factors viz reduced overall demand, greaterutilisation of hydel share, limited substitution by wind and solar based energy etc.. To meet thesame demand, a higher share of steam generation compared to hydro is associated with lowercost but greater demand for coal and higher CO2emissions. The trade-off is clear.

10. Conclusions

47. If the process of energy development is allowed to proceed along the lines of BAU, thesupply-demand gap in the energy sector is likely to widen to such an extent that a verysubstantial proportion of the country's export earnings will have to finance the energy import bill inthe coming decades. In the long run, this is evidently unsustainable. In particular, BAU implies asubstantial increase in electricity demand that is difficult to sustain entirely on the basis ofindigenous resources of coal and hydro-electricity that could be developed within the time frame

of this study. As a result, the country may have to import not only oil but also coal in large


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quantities if the steeply increasing demand for electricity is to be fully met. Another importantaspect of BAU is that the supply-demand gap in case of traditional fuels will also increase to suchan extent that the fuelwood requirements will far exceed the rate at which fuelwood isregenerated. This will have serious implications for the environment. Finally, in this scenario, thetotal emissions will be the highest. Apart from the impact it will have on local environment, it couldhave serious global environmental implications.

48. In the second scenario viz EFF, some efficiency improvements are considered. In the timeframe that is considered in this study i.e. up to the year 2019-20, EFF has the effect of

significantly reducing the demand for almost all forms of energy, especially coal. The gapbetween supply and demand for commercial fuels assumes a much less serious proportion,leading to an energy import bill that could be contained within the likely export earnings of thecountry to a much greater extent. In this scenario, the pressure on fuelwood will also be muchless compared to BAU. The total emissions show an impressive reduction and the emissions perunit energy consumption will also be less. In the electricity sector, EFF involves lesser capitalinvestment but a marginally higher unit cost of electricity generation.

49. In ENV, greater efficiency/inter-fuel substitution possibilities are considered. In analysing theimplications, two variants of ENV are further examined for the purpose of ranking the variousoptions in electricity sector. In the first variant, i.e. ENV-1, the various options are rankedaccording to the costs involved for per unit electricity generation. In the second variant i.e. ENV-2,ranking is done on the basis of their implications from the point of view of emissions. There is alsoa third scenario considered in ENV and it is based on Accelerated Hydro Development (AHD).

50. The ENV variants generally bring down the demand for all forms of energy, especiallyelectricity, coal, oil and fuelwood. This in turn reduces the pressure on foreign exchangeresources of the country, apart from reducing the strain on biomass resources.

51. ENV-1 results in substantial savings in investment in electricity sector but would result in afurther marginal increase in the unit cost of electricity. In this scenario, the total as well as the unitemission levels decline further.

52. ENV-2 results in savings in investment in electricity sector compared to BAU/EFF, but not tothe same extent as in ENV-1. In this scenario, the unit cost of electricity is slightly highercompared to ENV-1. This scenario significantly reduces both total and unit emissions. The main

feature of this scenario is the significant reduction that will take place in the requirement of coal.

53. In the AHD scenario, the requirement of coal and, consequently, the emission levels arereduced in the terminal year 2019-20. But this will call for much higher investments during thereferred time frame.

54. The policy implications of these scenarios are self-evident. From the point of view of long termsustainability, the country can ill-afford an energy development scenario that places considerablestrain on its resources. There are explicit advantages in the three ENV scenarios, especiallyENV-2 and AHD that provide much greater benefits from the point of view of the environment.However, to proceed along this path, substantial investments are necessary for which suitablemechanism needs to be evolved for mobilising resources.

55. The shift in the pattern of supply and demand for energy from BAU to either EFF or ENV(ENV-1, ENV-2 and AHD) can take place only if an effort is made to consciously initiateappropriate pricing and investment policies at the earliest and pursue the relevant scenario on thebasis of a well-defined strategy.

This paper is based on the country study entitled `Environmentally Constrained AlternativeEnergy Scenarios' prepared by the authors in April 1997 for Asia and Pacific DevelopmentCentre, Kuala Lumpur, Malaysia under the Programme on Asian Co-operation in Environmentand Energy (PACE-E) of the UNDP. The views expressed in this paper are authors' own and notof the organisations they serve or of the Government of India. Year taken in this paper is thefinancial year. For example, the year 1950-51 represents the period between April 1, 1950 and


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March 31, 1951. Year 1989-90 is taken as the base year. The exchange rate for this year is 1 US$ = Rs. 16.649.

Table 1: Regional Distribution of Primary Commercial Energy Reserves

Region/Resource Coal (109t) Lignite (109t) Crude oil (106t) Nat. Gas (109m3) Hydro(TWh)Northern 1.1 1.1 - 4 225.0Western

48.2

0.5

584

497

31.4

Southern 13.1 25.9 - - 61.8Eastern 141.4 - - - 42.5North-Eastern 0.9 - 148 159 239.3Total 204.7 27.5 732 660 600.0

Sources : Fourth National Power Plan 1997-2012, March 1997, Central Electricity Authority.Petroleum & Natural Gas Statistics, 1994-95, Ministry of Petroleum & Nat. GasAnnual Report 1996-97, Ministry of Coal.

Table 2: Renewable Energy Potential

Source/Technology Potential/Availability Potential ExploitedBiogas Plants 12x106 2.7x106Biomass-based power 17,000 MW 69.5 MWEfficient Woodstoves 120x106 20x106Solar Energy 5x1015Whr/yr 25 MWSmall hydro 10,000 MW 250 MWWind Energy 20,000 MW 1,000 MWOcean Thermal 50,000 MW NilSea Wave Power 20,000 MW NilTidal Power 9,000 MW Nil

Source: Annual Report 1996-97, Ministry of Non-conventional Energy Sources

Table 3: Per Capita Availability of Conventional Energy Resources

Resource Availability R/PRatio Implications

Total Percapita

Coal 73x109t 76 t 90 Moderately high R/P, Land degradation/Resettlement constraints/ Need for Large ImportsSoon

Oil 727x106t 0.75 t 21 Low R/P, Large Imports NecessaryGas 660x109m3 688

cm3 30 Low R/P, Large Imports NecessaryHydro 600 TWH 625

KWh - Large Untapped Potential, Environmental,Resettlement Constraints, Need for Large


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InvestmentsNuclear 350,000

Mwe* - Large Potential, Technology / Safety Issues andNeed for Large Investments*Including Thorium Resources

Table 4: Trends in Production of Primary Commercial Energy

Units Production1950-51 1960-61 1970-71 1980-81 1990-91 1996-97*

Coal 106t 33 55.67 72.95 114.01 211.73 288.65Lignite 106t - 0.05 3.39 4.80 14.07 22.54Crude Oil 106t 0.26 0.45 6.82 10.51 33.02 33.87Natural Gas 106m3 - - 1445 2358 17998 22890Hydro Power TWh 2.52 7.84 25.25 46.54 71.66 68.63Nuclear Power TWh - - 2.42 3.00 6.14 9.01Wind Power TWh - - - - 0.03 0.85

*Provisional

Table 5: Progress in Addition to Installed Generating Capacity in Utilities (MW)

Year Hydro Steam Diesel Gas Nuclear Wind Total1950-51 563 1028 152 - - - 17431960-61 1917 2436 300 - - - 46531970-71 6383 7508 230 168 420 - 147091980-81 11791 17122 167 274 860 - 302141990-91 18753 43004 182 2552 1565 30 660861994-95 20833 52139 302 5632 2225 40 81171

Source: General Review, Public Electricity Supply, All India Statistics, 1994-95, CEA

Table 6: Changes in the Pattern of Gross Electricity Generation in Utilities (TWh)

Year Hydro Steam Diesel Gas Nuclear Wind Total1950-51 2.60 2.69 - - - - 5.291960-61 7.84 8.73 0.37 - - - 16.941970-71 25.25 27.80 0.11 0.25 2.42 - 55.831980-81 46.54 60.71 0.06 0.52 3.00 - 110.841990-91 71.64 178.32 0.08 8.11 6.14 0.03 264.321994-95 82.71 243.11 0.50 18.47 5.65 0.05 350.49

Source: General Review, Public Electricity Supply, All India Statistics, 1994-95, CEA


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Table 7: Trends in Domestic Production of Petroleum Products (106Tonnes)

Year 1970-71 1975-76 1980-81 1985-86 1990-91 1996-97Light Distillates 3.0 3.6 4.1 8.6 10.9 14.3Middle Distillates 8.6 10.8 12.1 21.6 27.0 32.1Heavy Ends 5.5 6.4 7.9 10.0 12.2 14.2Total

17.1

20.8

24.1

40.2

49.5

60.6

Note: Production of light distillates includes LPG production from natural gasSource: Indian Petroleum & Natural Gas Statistics, 1994-95.

Table 8: Trends in Consumption of Refined Petroleum Products (106Tonnes)

Year 1970-71 1975-76 1980-81 1985-86 1990-91 1996-97Light Distillates 2.7 3.6 4.4 6.8 9.8 14.6Middle Distillates 9.0 11.7 17.1 29.7 33.1 49.2Heavy Ends 6.2 7.2 9.5 10.1 12.1 15.4Total 17.9 22.5 31.0 40.9 55.0 79.2

Source : Indian Petroleum & Natural Gas Statistics, 1994-95.

Table 9:Changes in the Pattern of Primary Energy Supply (106toe)

Production1953-54 1960-61 1970-71 1980-81 1990-91 1996-97

Commercial Primary EnergyCoal 23.62 35.64 36.48 56.96 94.68 124.09Lignite - 0.01 0.81 1.23 3.34 6.05Crude Oil 0.19 0.46 7.01 10.79 33.92 34.78Natural Gas - - 0.60 1.41 11.73 18.89Hydro Power 0.24 0.67 2.17 4.00 6.16 5.90Nuclear Power - - 0.63 0.78 1.60 2.35Wind Power - - - - - 0.07Total 24.05 36.78 47.67 75.19 151.43 192.13Net Imports (+) 2.20 6.04 12.66 24.63 31.69 62.29St. Changes (-) 0.24 2.87 0.69 3.80 5.37 7.83Intl. Bunkers (-) 0.53 0.50 0.24 0.21 0.14 0.16Total Commercial Energy Supply

25.48 39.45 59.40 95.81 177.61 246.43Non-Commercial Primary Energy Supply

64.13 74.38 86.72 105.86 118.80 118.80Total Primary Energy Supply


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89.61 113.83 146.12 201.67 296.41 365.23Table 10: Share of Net Imports of Energy in Primary Commercial Energy Supply (%)

Year Coal POL Electricity Total1953-54 (-)5.02 13.65 - 8.631960-61 (-)2.08 17.39 - 15.311970-71 (-)0.40 21.71 - 21.311980-81 0.25 25.45 - 25.701990-91 2.22 15.56 0.07 17.851996-97 2.83 22.40 0.05 25.28

Table 11: Changes in Overall Primary Energy Intensities w.r.t. GDP (MJ/US $)

1953-54 1960-61 1970-71 1980-81 1990-91 1996-97Non-Commercial 46.04 40.63 32.96 29.71 19.23 13.75Commercial 18.30 21.55 22.57 26.89 28.75 28.53Total 64.34 62.18 55.53 56.60 47.98 42.28

Table 12: Source-wise Consumption of Final Energy (1015J)

Year Non-commercial Energy Commercial EnergyFuel-wood Dung-cake Agro-Waste Total Coal &Lignite Pet.Product NaturalGas Electricity Total

1953-54 1700 466 519 2685 683 142 - 27 8521960-61 1968 543 603 3114 952 252 - 61 12651970-71 2345 653 633 3631 1070 649 12 175 19061980-81 2864 794 774 4432 1444 1212 33 323 30111990-91 3210 890 874 4974 1827 2218 283 762 50901996-97 3210 890 874 4974 1967 3256 427 1168 6818

Table 13: Sectoral Energy Requirement in Different Scenarios (1015J)

Year Sector of Consumption Total DemandHousehold Commercial Industry Transport Agriculture Others

1989 5488 54 2062 1005 393 725 97271999 BAU 8094 458 3128 1958 692 1046 15377EFF 6156 424 3063 1777 599 1034 13054


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ENV 5644 428 3063 1642 531 1034 123422009 BAU 10141 665 5310 4564 1152 1625 23457EFF 6631 530 5164 3649 967 1595 18536ENV 5161 560 5164 3198 824 1595 165022019 BAU 12584 1077 9436 11252 1947 2811 39107EFF 8499 860 9318 7896 1714 2703 30991ENV 5959 908 9318 6974 1565 2704 27429

Table 14: Changes in the Pattern of Final Energy Requirement by Sources (1015J)

Year Commercial Energy Non-Commercial TotalDemand

Coal &Lignite Petr.Product NaturalGas Electricity Fuelwood Others

1989 1652 2174 289 702 3142 1768 97271999BAU 2267 3573 534 1570 4710 2723 15377EFF 2267 3330 534 1391 3398 2133 13054ENV 2267 3213 534 1295 2965 2067 123422009BAU 3704 7064 742 3124 5722 3101 23457EFF 3704 6033 742 2708 3296 2052 18536ENV 3704 5761 742 2415 1986 1893 165022019BAU 6444 15551 950 5965 6723 3474 39107EFF 6444 12056 950 5407 3842 2292 30991ENV 6444 11505 950 4771 1685 2074 27429Table 15: Changes in the Pattern of Fuel Consumption in the BAU, EFF and ENVScenarios(%)

Year Commercial Energy Non-Commercial TotalDemand

Coal &Lignite Petr.Product NaturalGas Electricity Fuelwood Others

1989 17.0 22.3 3.0 7.2 32.3 18.2 1001999BAU 14.7 23.2 3.5 10.2 30.6 17.8 100EFF 17.4 25.5 4.1 10.7 26.0 16.3 100ENV 18.4 26.0 4.3 10.5 24.0 16.8 1002009BAU 15.8 30.1 3.2 13.3 24.4 13.2 100EFF 20.0 32.5 4.0 14.6 17.8 11.1 100ENV

22.4

34.9

4.5

14.6

12.0

11.6

100


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2019BAU 16.5 39.8 2.4 15.2 17.2 8.9 100EFF 20.8 38.9 3.1 17.4 12.4 7.4 100ENV 23.5 41.9 3.5 17.4 6.1 7.6 100Table 16: Changes in the Primary Energy Intensity of the Economy (MJ/US $)

Year Commercial Non-Commercial Total1989 28.7 20.0 48.71999 BAU 28.6 16.9 45.5EFF 26.3 12.6 38.9ENV 25.1 11.4 36.52009 BAU 30.2 11.2 41.4EFF 25.9 6.8 32.7ENV 23.9 4.9 28.82019 BAU 32.5 7.2 39.7EFF 27.1 4.4 31.5ENV 24.9 2.7 27.6

Table 17: Changes in the Final Energy Consumption Intensity (MJ/US$)

Year Sector of Consumption TotalHousehold Commercial Industry Transport Agriculture Others

1989 22.4 0.2 8.4 4.1 1.6 2.9 39.61999 BAU 18.4 1.0 7.1 4.5 1.6 2.4 35.0EFF 14.0 1.0 7.0 4.0 1.4 2.3 29.7ENV 12.8 1.0 7.0 3.7 1.2 2.4 28.12009 BAU 12.9 0.8 6.7 5.8 1.5 2.1 29.8EFF 8.4 0.7 6.6 4.6 1.2 2.0 23.5ENV 6.6 0.7 6.6 4.1 1.0 2.0 21.02019 BAU 8.9 0.8 6.7 8.0 1.4 2.0 27.8EFF 6.0 0.6 6.6 5.6 1.2 2.0 22.0ENV 4.2 0.7 6.6 5.0 >1.1 1.9 19.5

Table 18: Energy Intensity of Freight Traffic


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1989-90 1999-00 2009-10 2019-20Freight Traffic (109tkm) 537.89 960.73 1715.94 3064.81Energy Intensity (MJ/tkm) 0.7306BAU Energy Requirement (PJ) 669.13 1279.47 2466.45Energy Intensity (MJ/tkm) 0.6965 0.7456 0.8048EFF Energy Requirement (PJ) 662.82 1248.97 2336.58Energy Intensity (MJ/tkm) 0.6899 0.7279 0.7624ENV Energy Requirement (PJ) 528.38 797.63 1415.38Energy Intensity (MJ/tkm) 0.5500 0.4648 0.4618

Table 19: Efficiency of Energy Use in Household Sector for Cooking

1989-90 1999-00 2009-10 2019-20Per Capita Useful Energy Req. (MJ) 740.5 815.3 883.2 925.9BAU ScenarioPer Capita Gross Energy Req. (MJ) 7693.9 8000.9 8054.0Efficiency of Energy Use (%) 10.6 11.0 11.5EFF ScenarioPer Capita Gross Energy Req. (MJ) 5869.4 5035.8 5063.9Efficiency of Energy Use (%) 13.9 17.5 18.3ENV ScenarioPer Capita Gross Energy Req. (MJ) 5450.0 4019.2 3638.0Efficiency of Energy Use (%) 14.9 22.0 25.5

Table 20: Changes in the Requirement of Fuelwood (106tonnes)

1989-90 1999-00 2009-10 2019-20BAU Scenario 158.0 236.8 287.7 338.1EFF Scenario 158.0 170.9 165.7 193.2ENV Scenario 158.0 149.1 99.8 84.7

Table 21: Assumptions for Indigenous Primary Energy Production in BAU Scenario

1989-90 1999-00 2009-10 2019-20Hydro Power Capacity (MW) 18311 25235 32158 39082Nuclear Power Capacity (MW) 1565 2620 4105 10000Wind Power Generation (GWh) 6 310 920 2730Solar Power Generation (GWh) - 50 100 300Crude Oil Production (106t) 34.09 40 45 50Natural Gas Production (106m3)* 11172 24450 33950 43450Coal Production (106t) 200.89 331.41 640.47 1237.75


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Lignite Production (106t) 12.85 25.00 45.00 60.00* Natural gas production is net of flaring

Table 22: Net Imports of Primary Energy (1015J)

Source 1989-90 1999-00 2009-10 2019-20BAU EFF ENV BAU EFF ENV BAU EFF ENV

Coal 126 630 -113 -511 1330 -1158 -2421 1995 -2717 -5343Crude Oil 845 1733 1733 1733 4550 4550 4550 78007.67.677777 7800 7800Pet. Prod. 170 670 415 291 1634 559 264 7513 3932 3334Electricity 7 7 7 7 7 7 7 7 7 7Total 1146 3040 2042 1520 7521 3958 2400 17315 9023 5798

Table 23: Net Imports of Primary Commercial Energy - Modified Scenario (1015J)

Source 1989-90 1999-00 2009-10 2019-20BAU EFF ENV BAU EFF ENV BAU EFF ENV

Coal 126 630 293 293 1330 440 440 1995 586 586Crude Oil 845 1733 1733 1733 4550 4550 4550 78007.67.677777 7800 7800Pet. Prod. 170 670 415 291 1634 559 264 7513 3932 3334Electricity 7 7 7 7 7 7 7 7 7 7Total 1146 3040 2448 2324 7521 5556 5261 17315 12325 11727

Table 24: Value of Net Imports of Primary Commercial Energy (10

6

US $)

Source 1989-90 1999-00 2009-10 2019-20

BAU EFF ENV BAU EFF ENV BAU EFF ENVCoal 243.0 1116 519 519 2356 779 779 3534 1038 1038Crude Oil 2456.2 5040 5040 5040 13232 13232 13232 226847.67.67777722 22684 22684Pet.Prod. 936.5 3172 1965 1378 7736 2646 1250 35568 18615 15784Electricity 38.9 57 57 57 57 57 57 57 57 57Total 3674.6 9385 7581 6994 23381 16714 15318 61843 42394 39563

Table 25: Requirement of Gross Electricity Generation (GWh)

1989-90 1999-00 2009-10 2019-20BAU Scenario 268664 577638 1135858 2138470EFF Scenario 268664 511184 972219 1914991ENV Scenario 268664 475329 856360 1669443


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Table 26: Results for Electricity Sector Based on Cost and Emissions Ranking (Year 2019-20)

BAU EFF ENV1 ENV2 AHDGross Generation Req. (GWh) 2138470 1914991 1669443 1669443 1669443Savings in Gross Generation (GWh) - 223479 469027 469027 469027Capacity Required (MW) 384145 338750 297530 330870 341260Savings in Capacity Required (MW) - 45395 86615 53275 42885Total Cost (109US $) * 867 772 696 836 881Savings in Cost (109US $) * - 95 171 31 (-)14Cost/KWh (US Cents) * 6.77 6.79 6.84 7.25 7.41CO2Emissions (106t) 1886.8 1666.2 1420.8 1200.6 1112.2CO2emissions (gms/KWh) 864.0 870.0 851.1 719.2 666.2Share of Steam Generation (%) 82.5 80.6 77.8 64.6 59.3Share of Hydel Generation (%) 6.4 7.2 8.2 21.2 26.5Requirement of Coal (106t) 1175 1029 865 718 659

* Excluding the cost of Nuclear option.

Summary

The paper provides an overview of the energy sector development in India during the last fiftyyears and the likely energy scenario in the year 2020. The initial part of the paper gives acomprehensive picture of the progress made in creation of the energy supply infrastructure, the

changes in sectoral energy consumption pattern and the energy-economy relationship as evolvedover time. The long term projections of energy demand are made using a spread sheet basedmodel. The model essentially follows the DEFENDUS approach as developed by Prof. A.K.N.Reddy and his associates but with suitable modifications made by the authors in regard to themethodology of projection of energy demand for different sectors. The scope of the present paperencompasses building up of energy demand scenarios for different sectors of the economy undervarious assumptions of changing patterns of energy use, efficiency improvements, inter-fuelsubstitution, satisfaction of energy demand for energy services, etc.. The study is centeredprimarily around three scenarios; Business as Usual (BAU), Efficiency-Oriented Scenario (EFF)and Environmentally Constrained Scenario (ENV). The projections under each Scenario take intoaccount the overall availability of resources and the likely growth in the demand for energy in theeconomy. While BAU denotes a Scenario based on the existing trends in the energy sector, EFFconsiders the scope for reduction in the energy intensity of the economy, based on end-useefficiency, inter-fuel substitution and other demand management measures. In the ENV Scenario,the emphasis is on minimising the adverse environmental implications of the energy systemunder different sets of assumption. The various implications arising out of the energy demandprojections in the three scenarios have been discussed. The paper also attempts to estimate thecosts and benefits of renewable energy development by analysing the implications of exploitationof hydel power potential in the overall context of power sector development needs arising out ofthe demand for power as projected in the three scenarios for the year 2019-20.

Energy Scenario in India 2020

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