Energy Sector:Issues And Opportunities

INDEX

S. No Title Page no.

1 Executive Summary 4

2 Introduction 5

3 Segment wise Analysis 8

I. COAL 9

II. OIL 11

III. NATURAL GAS 14

IV. NUCLEAR ENERGY 19

V. HYDRO POWER 22

VI. RENEWABLE ENERGY 24

VII. WIND ENERGY 25

VIII. BIOFUEL 26

5 Integrated Energy Strategy 28

6 Ensuring Energy Security 30

7 Conclusion 34

8 Bibliography 35

Executive summary

As India's economy accelerates, so does the quest for energy to keep its growth humming. The country's consumption of coal, oil, natural gas, and electricity is projected to rise by nearly 40 percent over the next five years and almost to double by 2020.

Already, surging energy demand is outstripping supply, raising hard questions about how India will cope in the future.

Despite vast coal reserves, domestic production has lagged behind demand for ten years, and the shortfall is growing. What's more, India imports 70 percent of its petroleum, exposing it to wild swings in world energy prices and pitting it against China and other countries keen to buy hydrocarbon reserves.

Due to all these uncertainties the demand for energy is growing to increase significantly in an era where the GDP of India is expected to grow to USD 2 trillion by 2020 from the current

level of USD 500 billion. For this reason it becomes essential for India to be energy

dependent.

With 70% oil import and 75% usage of coal for power generation, the economic and

ecological distortion caused is huge. Thus there is a need to shift from these energy

sources. The answers to these are natural gas, nuclear power, renewable energies and biofuels

all of which have huge potential in India. For utilisation of these new energy

sources huge investments are required. There is also a need for private participation in

this sector with the help of the government.

This report intends to provide a comprehensive overview of energy sector in India, encompassing various segments like Coal, Oil, Natural Gas, Nuclear Energy, Hydropower, Renewable Sources, and issues and opportunities associated with them.

It also emphasizes on having an integrated energy strategy which can address the energy security issues.

Introduction

Energy is the basic building block for socio-economic development. Future economic growth crucially depends on the long-term availability of energy in increasing quantities from sources that are accessible, easily available, socially acceptable and environmental friendly.

Although India ranks sixth in total energy consumption in the world (294 MTOE [million tonnes of oil equivalent]), this is only 12% of the energy consumed by the largest consumer, i.e. USA (2278 MTOE). In per capita terms, its consumption is only about 20% of the global average . With India targeting ambitious growth rates of seven to eight per cent over the next two decades, its per capita energy consumption must necessarily rise in the future.

By world standards, India’s current level of energy consumption is very low. The total annual energy consumption for India is estimated at 304 kgoe (kilograms oil equivalent).

Comparison of per capita energy consumption of countries

Per capita Energy Consumption

(Kilogram Oil equivalent)

Per capita Electricity Consumption

(Kilowatt hour)

Source: Planning commission, Govt of India (2003-04)

If the economy keeps growing with the current pace of even higher the demand for energy resources will keep on increasing.

At the projected growth rate in primary energy demand, India needs to strategically evaluate its supply options to meet its energy requirements. Coal would continue to be its dominant energy source. However it would have to actively develop non-coal sources to meet its future needs. It is estimated that at a growth rate of 5 percent in coal production, India’s extractable coal reserves would get exhausted in 40 years.

Source: Planning commission, Govt of India (2003-04)

Therefore, from a long-term perspective and in view of growing environmental concerns from use of coal, the country needs to look at developing other sources such as nuclear and renewable energy such as nuclear and renewable energy India has vast reserves of the nuclear fuel thorium but technology is not yet developed for its commercial use.

Renewable energy could also contribute usefully to India’s energy requirement given that India is well endowed with solar energy. India’s oil assets are meager but recent discoveries hold promise for India’s gas reserves and coal bed methane.

Recently energy sector has gone through major transformations over the years, through unbundling of the electricity companies into separate generation, transmission and distribution companies. A reform of the electricity sector, begun in 2001, recapitalized bankrupt state electricity boards and liberalized the generation of power. The country stepped up its efforts to secure oil and natural gas by investing in fields from Russia to Sudan as well as by encouraging private investment in domestic exploration. It is also pursuing agreements with its neighbors to build pipelines that would bring natural gas from Iran, Turkmenistan, and other gas-rich countries in the region.

While petroleum