In an interesting paper called “India Unleashed”, Gregor Macdonald from Terrajoule.us looks at India’s energy options. He compares a “coal heavy” scenario and a “wind and solar heavy” scenario. India can still choose its trajectory and its choice will have repercussions in the global energy markets.
- Terrajoule expects India’s energy demand to grow by 7.5% p.a. until 2025 to reach 1,428 Mtoe. This is a 2.5-fold increase from today
- A wind and solar scenario would be “revolutionary” but “not outlandish”. Under this, India would produce 400 TWh from solar in 2025 and rely heavily on gas
- The projections are similar to our own, however, we believe that neither coal nor gas will be available in sufficient quantities for India. A renewables-led energy system with storage and grid management needs to be created
India’s energy consumption is far below the global average. The country has 90% of China’s population, but consumes only 20% of the energy. In the last 10 years, energy demand grew by just under 6% p.a. In future, Terrajoule expects it to be higher at 7.5%. This would not imply a radical change in India’s economic pattern, but would rather be a step towards normalization, including some degree of industrialization. It would leave India with an annual energy requirement of 1,428 Mtoe in 2025; up from 565 Mtoe in 2012. India would then account for just over 8% of global energy consumption. With 17% of the global population, it would still be below par. The assumption is quite reasonable. Especially in light of the fact that India’s government will push for accelerated industrialization as the only way to provide sufficient jobs for the millions entering the workforce every year. In a blog post, we have shown that to reach the global average, India would require 2,176 Mtoe (refer).
However, such demand growth will be very challenging to match on the supply side. India is already suffering from undersupply of energy. While it has much (low quality) coal, there are very few conventional or non-conventional gas or oil reserves. It competes with an energy hungry China in global markets and has to work with less-than-friendly neighboring countries on pipeline projects to get access to international fossil fuel reserves.
In the likely scenario, according to Terrajoule, India will become the global driver for coal demand, almost single-handedly prolonging the Second Age of Coal. BP in their World Energy Outlook assumes a somewhat similar scenario, wherein coal does the heavy lifting even as solar grows rapidly (refer). This might look feasible at first: there is no shortage of coal in India or globally. Yet, a closer look reveals the challenges: India’s coal sector is in deep crisis. Coal India, a government monopoly on mining and delivering coal is unable to meet demand. Railway, port and grid infrastructures are insufficient. Rising import coal prices have made new projects unviable. Acquiring land and permits for new power plants is very difficult. All this has led to an underinvestment in coal plants and underutilization of existing plants in recent years.
Under the second scenario, Terrajoule assumes India will become a wind and solar powerhouse, accompanied by a large buildup of gas-fired balancing plants. In 2025, India would consume 15% of global wind and solar power (roughly equivalent to its population share, but about double its share of global energy consumption). In 2025, India would generate 400 TWh of solar power. This is four times the current global generation. However, it is not impossible. We have previously given an idea on how even 1,500 TWh could work (refer) and suggested a game changing shift to solar (refer).
The trouble with this scenario, according to Terrajoule, is the vast requirement for gas as gas-fired plants will have to provide the balancing loads. India imports a vast majority of its gas in the form of LPG. However, the port infrastructure as well as the national pipeline network is still very limited. Achieving this scenario would be “heroic”. To my mind, frankly, there is no alternative. Not achieving this revolutionary change in energy supply will likely condemn the country to continuing shortages in energy supply, slower growth and retarded development. Terrajoule is confident that the rate at which the cost of solar comes down actually accelerates, making solar a very competitive energy source much earlier than 2025. If this is the case, then all efforts should be spent on intelligent grid management, storage technologies and perhaps even reviving the Indian CSP story.
You can download the full report from the Terrajoule.us website for $ 6.99.
Tobias Engelmeier is the Director and Founder at BRIDGE TO INDIA.