Towards a People Centric Energy Policy A

Towards a People Centric Energy Policy & A case for reduced need for conventional Power Plants ----------------------------------- Consultations on Energy Alternatives Bangalore, 25 May 2011 --------------Shankar Sharma Power Policy Analyst Thirthahally, Karnataka – 577432 Shankar. sharma 2005@gmail. com

PART I Indian Power Sector Scenario

Indian Power Scenario Table 1 : Total Installed Capacity (As on 28. 2. 2011: Mo. P Website) Sector MW Percentage State Sector 82, 453 48. 0 Central Sector 52, 713 31. 0 Private Sector 36, 761 21. 0 Total 1, 71, 927

Indian Power Scenario Table 2 : Total Installed Capacity (fuel-wise) (As on 28. 2. 2011: Mo. P Website) Fuel MW Percentage of Total Capacity 111, 324 64. 75 Coal 92, 418 53. 75 Gas 17, 706 10. 3 Oil 1, 200 0. 7 37, 368 21. 73 4, 780 2. 8 18, 455 10. 7 Total Thermal Hydro Nuclear Renewable Total 1, 71, 927

Indian Power Scenario Table 3 : Total Installed Capacity (MW) (CEA website as on 30. 6. 2010) Region Coal Northern 21, 950 3, 563 1, 620 13, 350 2, 690 43, 188 Western 28, 525 8, 144 1, 840 7, 448 4, 850 50, 824 Southern 18, 573 4. 558 1, 100 11, 157 8, 330 44, 656 Eastern 16, 895 190 0 3, 882 335 21, 321 North Eastern 60 766 0 1, 116 218 2, 303 86, 003 17, 221 4, 560 36, 953 16, 429 162, 367 All India Gas Nuclear Hydro R. E. S Total

Indian Power Scenario Table 4 : Power Supply Scenario (April 2010– Jan 2011: CEA) Energy Requirement (MU) Energy Availability (MU) Energy Deficit (%) Northern Region 218, 971 200, 756 8. 3 Western Region 219, 963 190, 509 13. 4 Southern Region 187, 171 177, 428 5. 2 Eastern Region 79, 434 75, 962 4. 4 N E Region 8, 364 7, 591 9. 2 713, 903 52, 246 8. 6 Total for the Country

Indian Power Scenario Table 5 : Power Supply Scenario (April 2010– Jan 2011: CEA) Peak Demand (MW) Peak Demand Met (MW) Peak Deficit (%) Northern Region 37, 431 34, 101 8. 9 Western Region 39, 825 33, 171 16. 7 Southern Region 32, 214 29, 931 7. 1 Eastern Region 13, 767 13, 085 5. 0 N E Region 1, 913 1 1, 560 18. 5 122, 470 108, 901 11. 1 Total for the Country

Indian Power Scenario Table 6: T&D losses (2006 – 2007, CEA annual Report) Region Losses Northern Region 20 to 52 (%) Western Region 21 to 39 (%) Southern Region 19 to 26 (%) Eastern Region 24 to 50 (%) N E Region 34 to 57 (%) All India 28. 65 (%)

Many serious Questions to the society Electricity Supply is needed no doubt. But ……. • How much? – high per capita consumption ? • How? ? – by any means? ? • At what cost? ? ? – at any societal cost ? ? ?

Salient features of Indian Power Sector Ø Despite massive increase in capacity 44% population yet to see electricity Ø Power sources /Power plants concentrated in few areas; requires massive transportation and transmission infrastructure Ø Massive reliance on conventional and centralised power generation Ø No simulation studies of future electricity requirement Ø Unrealistically higher projection of future demand Ø Complete absence of holistic approach Ø Discernible absence of welfare of bio-diversity/ masses Ø Mostly new merchant power plants for profit motive Ø True costs and benefits to society of power plants never determined

Salient features of Indian Power Sector (contd…) Ø R&R and environmental compliance has been poor Ø Insensitivity to civil society’s views & absence of long term requirements Ø Increased reliance on coal power projected Ø Economically extractable coal reserve to last for about 3 -4 decades Ø Increasing no. of coal power plants will reduce this source drastically Ø Fresh water, huge chunks of land displacement are major issues Ø Low calorific values and high ash content of Indian coal Ø Low overall efficiency levels; low PLF; massive pollution issues Ø Huge coal power complexes leading to highly polluted habitats

Salient features of Indian Power Sector (contd…) Ø New coal power plants are facing massive opposition Ø Coal supply is unreliable even for the existing plants / constraints to coal Ø International obligation to reduce GHG emissions not adequately addressed Ø Most of the rivers are dammed with huge consequences Ø Forest/green cover is only 20% as against 33% cover target Ø Accelerated depletion of bio-diversity due to dams Ø Impact on communities depending on free flow of rivers never considered Ø Despite massive investments nuclear power contributes only 3% Ø Uranium reserve to support only 10, 000 MW; but capacity projected to increase to 65, 000 MW by 2032.

Salient features of Indian Power Sector (contd…) Ø Despite tall claims by nuclear establishment overall performance is poor Ø Many concerns on nuclear safety / lack of public confidence Ø Massive investments in conventional power plants denying support for other technologies Ø Unabated political interference fuelling inefficiency in the power sector Ø Unrealistic electricity tariffs leading to huge wastages Ø Unscientific cost calculation and untargeted subsidies leading to unsustainable financial status of electricity companies Ø Lack of professional management and social obligations Ø Almost complete absence of public participation in decision making Ø Absence of a single body taking a holistic view of social relevance

Since our country has not committed itself to a high level of per capita energy consumption, as compared to the developed economies, there is a credible option of adopting a low carbon energy path way by shifting our reliance to distributed type of renewable energy sources.

Major Issues with Fossil Fuel Power Plants (coal, gas, diesel) Economic • Unsustainable pressure on natural resources such as land, water and minerals; reduced agricultural production Social • Peoples’ displacement due to large sizes of power plants; health; decay of rural India Environmental • Global Warming; pollution of land, water and air; acid rains; impact on bio-diversity

Major Issues with Dam based Hydro Power Plants Economic • Demands large tracts of forests and fertile land; water logging; affects the economy of the down stream population; deposition of silt in dams; deprivation of the same down streams Social • Peoples’ displacement and health; community leadership issues Environmental • Methane emission, submersion and fragmentation of forests; loss of bio- diversity; downstream areas get deprived of fertile silt

Major Issues with Nuclear Power Plants Economic • Demands large tracts of forests and fertile land; huge Capital costs; long term waste management costs; serious shortages of nuclear fuels; impact on plant and animal food Social • Peoples’ displacement and health; community leadership issues; intergenerational issues Environmental • Mining related pollution; radiation emission during operations and from nuclear wastes for centuries

The Impact of Electricity Industry on Global Warming About 38% of GHG emission at the national level (53% of CO 2 emissions in India); [Mo. EF report of 2010] Large dams - tropical deforestation produces 20 per cent of all carbon emissions caused by humans, and destroys long-term carbon sinks Methane from dams is highly potent GHG Additionally – power stations consume a lot of natural resources; land, water, fossil fuel etc; displace people; atmospheric and ground water pollution; Transmission lines need large tracts of lands / forests

Global Electricity Usage and CO 2 Emission (Year 2007) (Source: Key World Energy Statistics, IEA, 2009)

Dangerous reliance on coal power – huge implications • Integrated energy policy has projected a total generating capacity of about 800, 000 MW by 2031 -32, out of which 400, 000 MW may have to be coal based. • Minister of State for Coal: "There are no two opinions about the need to switch over to other modes of power generation ……. Coal-based power production has to be restricted". • Future need for huge quantity of coal import; energy security • At present Approximately 75 coal-based thermal power stations generating about 66, 000 MW • 97% power coal supply responsibility is catered to by Coal India Limited (CIL). • Large requirement of land water; large no. of additional mines

Dangerous reliance on coal power – huge implications • Large number of merchant power plants • About 140, 000 MW of coal power plants approved Ø Vidarbha >> 30, 000 MW Ø Konkan >> 40, 000 MW Ø AP coast >> 70 Power plants • Coastal areas are targeted for ease of import and sea water • More coal fields are being opened • More of forests are getting destroyed • More of tribals being displaced • Global warming and Climate Change : What is India’s commitment ?

Coal power Efficiency

Implications on Global warming ? “Emissions have been, and continue to be driven, by economic growth; yet stabilization of greenhouse-gas concentrations in the atmosphere is feasible and consistent with continued growth. ” “Emissions from deforestation are very significant – they are estimated to represent more than 18% of global emissions” “Curbing deforestation is a highly cost-effective way of reducing greenhouse gas emissions. ” What our society is doing at present is to supply inefficiently derived energy from limited conventional sources at subsidized rates for highly inefficient and / wasteful end uses, for which the real subsidy cost will be passed on to future generations.

Extent of Inefficiency “India’s power sector is a leaking bucket; the holes deliberately crafted and the leaks carefully collected as economic rents by various stake holders that control the system. The logical thing to do would be to fix the bucket rather than to persistently emphasise shortages of power and forever make exaggerated estimates of future demand for power. Most initiatives in the power sector (IPPs and mega power projects) are nothing but ways of pouring more water into the bucket so that consistency and quantity of leaks are assured …. ” Deepak S Parekh, Chairman, Infrastructure Development Finance Corporation, September 2004. As per 13 th Finance Commission, national level financial loss of ESCOMs could be > Rs. 69, 000 Crores in 2010 -11 and > Rs. 116, 000 Crores in 2014 -15

Power saga in India Between 1989 & 2009 Installed generating capacity increased from 58, 012 MW to 1, 52, 148 MW ( + 162%) Between 2000 & 2008 Monthly generation from conventional sources increased from 43, 596 MU to 65, 057 MU (+50%) Between 1992 & 2006 National per capita electricity consumption increased from 283 k. WH to 429 k. WH ( +52%) per capita consumption in Karnataka = 720 Units (in 2009) per capita consumption in Bangalore = 2, 674 Units (in 2009) per capita consumption in villages << 200 Units But 44% of the households have no access to electricity even in 2009. Many villages remain unelectrified; huge power cuts throughout the year; poor quality of supply; gross inefficiency; vulgar levels of inequity continues. Multiple crises continue !!!

With this background • Do we need many more large power projects? • Must they be fossil fuel or large dam based? • Since fossil fuel & dam based power projects contribute heavily to the global warming effect what suitable alternatives are available to us ? • Since the policies since independence have largely failed to meet our requirements, is there a need for a paradigm shift?

PART II Integrated Energy Policy

Salient Features of IEP Vision: To reliably meet energy demand at competitive prices – Major focus on GDP growth rate; 8% through 2031 -32 – By 2031 -32 total installed capacity to increase from 160, 000 MW to 8, 000 MW – Much of the discussion is on fossil fuels – Coal: projected to remain India’s most important energy source; but expected to last for 40 years only – Coal accounts for 50% of commercial energy; 78% of domestic coal for power generation – Coal power capacity to increase 5 times to 400, 000 MW – Hydro power capacity to increase to 150, 000 MW at ALF of 30% – Nuclear power capacity to increase to 63, 000 MW

Integrated Energy Policy Salient Features – High priority for stepping up coal production and supply; more mines – Import of coal for coastal power generation (UMPPS? ) – Feeble attempts to improve the efficiency in the industry – Inadequate focus on DSM and energy conservation – Lowering energy intensity of GDP growth rate; potential of up to 25% reduction – Hydrocarbon resources grossly inadequate to meet our demand Energy independence: considered feasible only beyond 2050

Integrated Energy Policy Salient Features – Least cost planning and Life-cycle costs referred to; but no CBA – Higher value of hydro power than fossil fuel power plants; higher k. WH /Unit of primary energy – Nuclear power: poor reserve of Uranium; import of fuels – Much emphasis on per capita calculation of energy consumption, water storage and GHG emissions

Integrated Energy Policy Salient Features – Passing mention of environmental and R&R issues; no serious discussions – Role of renewables mentioned as significant; but not much confidence indicated; – Role of renewables projected as only 5 -6% share by 2031 -32 – Mention of solar power’s important role in energy independence – No ambitious plan to harness renewable sources

Integrated Energy Policy Salient Features – Critical elements for energy security: increase efficiency, reduce requirements and augment domestic energy resource base – Not much action on this front recommended – Energy related R&D suggested – Climate change concerns mentioned; not addressed adequately – Stress on accelerated development of coal, hydro and nuclear power

Integrated Energy Policy Comments Desirable Vision: Develop a policy to enable meeting the legitimate demand for energy of all sections of the society at realistic prices on a sustainable basis without compromising the interest of other aspects of the society such as flora, fauna and general environment. – Socio-economic and environmental issues of large projects not discussed in detail

Integrated Energy Policy – Target of 120, 000 MW of hydro power in next 25 years not realistic – Only about 33, 000 MW of hydel power commissioned so far Nuclear industry: huge capital cost and safe disposal of spent fuels should be a major concern – They are not even mentioned in the report Low PLF in the existing thermal power stations; as low as 25% in some states; a major concern – Increase overall PLF from 75% to 90%; can increase availability by more than 15, 000 MW

Integrated Energy Policy – Overall efficiency from coal to electricity at consumers’ premises : only about 10 -15%; not emphasised – Agricultural pumping loss : about 45 %; not discussed – BEE estimates : at the prevailing cost of additional energy generation, it costs a unit of energy about one fourth the cost to save than to produce it with new capacity. – AT&C loss reduction from 40% to 10%: savings of about 30, 000 MW

Integrated Energy Policy – Considerable scope in energy usage efficiency and conservation – DSM potential: 15% as per IEP – There cannot be cheap energy as proposed by IEP; only realistically priced energy – Prayas Group survey: 30% savings potential in domestic sector Ø About 25, 000 MW

Integrated Energy Policy – Absence of a holistic approach; other sectors of the society not considered; water, air, forests, environment etc – IEP’s emphasis on ‘large unexploited hydro potential’ needs careful discussions – IEP considers renewables largely on large size and grid interface basis – Huge scope in distributed type of renewable energy sources

Integrated Energy Policy – Increased efficiencies, DSM, conservation etc will reduce demand growth rate – Appropriate Tariff policies will similarly will reduce demand – Wider use of distributed renewable energy source will reduce the demand on the grid – Other direct benefits: reduced losses, rural development

Part III Alternative Energy Policy for the Country (People centric and Environmentally friendly)

N&RE Potential In India Potential: (Grid Remarks interactive power only) 1. Wind energy > 45, 000 MW 2. Small hydro 15, 000 MW 3. Solar over 5, 000 trillion k. WH/year Potential estimated to be more than the total energy needs of the country 4. Bio-mass >> 25, 000 Not known

Energy Security for Future Can be feasible only through: – Integrated Energy Resource Management – Holistic Approach – Sustainable Practices – Concern for other Sectors of the Society

The road ahead • Planning Commission estimates that CO 2 generated from energy use can be reduced by 35% through effective deployment of efficiency, DSM measures and renewable energy sources. • Planning Commission’s main action recommendation for energy security is: “relentlessly pursue energy efficiency and energy conservation as the most important virtual source of domestic energy”. • Bureau of Energy Efficiency has estimated: at the prevailing cost of additional energy generation, it costs a unit of energy about one fourth the cost to save than to produce it with new capacity.

How to meet the demand in future years ? ü Efficiency & DSM measures will meet part of the additional demand ü Renewable energy sources is the answer !!!

IPCC report ‘Special Report Renewable Energy Sources (SRREN)’ Ø renewable energy could account for almost 80% of the world's energy supply within four decades Ø feasible only if governments pursue the policies needed to promote green power

RE share projections in Europe (Percentage of total energy: excluding large hydro) 2009 2025 Iceland 29. 8 % 31. 5% Denmark 28. 7% Portugal 21. 6 % 57. 7% 51. 4% Spain 16. 1% 40. 5% Finland 12. 6% 24. 1% (Source: HIS Emerging Energy Research)

New & renewable energy sources • Solar PV cells • Solar water heaters, Solar cookers & Solar driers • Solar street lights • Solar water pumps • Small size wind mills • Bio-mass plants (eg. Gobar gas plants) • Mini & micro hydel plants • Hybrid of solar, wind and bio-mass

Major advantages of Renewable energy sources - distributed source mode as against large ones • people friendly & environmentally friendly • self sufficiency for rural communities and individual houses • reliable supply option; no recurring charges • rural employment opportunities • leads to reduced urban migration; a sustainable option • most suitable to rural communities • accelerated rural electrification • reduced burden on grid supply • reduce GHG emissions • will reduce the need for coal and dam power stations

New & renewable energy sources • European Union has a plan to meet 20% of all its energy needs by 2020 AD through N&RES • Israel is reported to be targeting 50% • Greenpeace has come up with plans to meet 100% & 50% of energy needs of New Zealand India • There are many time tested and techno-economically viable sources • Country has a huge potential in harnessing roof top solar PVS; 10% of households @ 2 k. W >>> 200, 000 MW • Additionally roof top surface of schools, colleges, industries, commercial, warehouse and office buildings – huge potential • Bio-mass energy at community levels • Combination of solar, bio-mass and wind energy

A case study An identified need to meet 400 MW of additional demand -------------------------------Option I : 400 MW Gundia hydel power plant in WGs COSTS: Direct Financial Cost : About 2, 000 Crores Societal Costs + tax incentives Ø loss of about 110 hectares of thick evergreen rainfall forest Ø loss of fertile agricultural lands Ø displacement of people Ø perpetual loss of agricultural production and forest produce Ø Huge impact on local bio-diversity Ø A total of unknown but huge ecological cost BENEFITS : About 400 MW of power at less than 25% load factor Long term employment for about 50 people(? ) Dividend to state govt. ? ? ? Additional revenue to KPCL

Option II : Integrated Energy Management Approach One or more of the following options can provide much more power COSTS Ø T&D loss reduction Ø Utilisation loss reduction / DSM Ø Usage of CFLs - 600 MW >> 900 Crores 400 MW OR A combination of Ø Wind energy Ø Biomass – Ø Solar – Water heating – Ø Solar –residential lighting – BENEFITS Ø Negligible societal cost; negligible or nil land displacement Ø Ø Ø No loss of forests & bio-diversity Negligible or nil health or environmental costs Perpetual benefits Highly reduced T& D losses; reduced man power costs Boost to agricultural and rural employment

Karnataka Electricity Industry – Integrated Resource Management Model for Demand supply PART I: High level calculations of benefits: forecast for peak demand power (MW) Year 2009 onwards 2009 2011 2013 2015 2017 2018 MW 7595 8051 8453 8791 9055 9281 B 1. Generation improvement through R, M & U MW 16 16 16 B 2. Transmission & Distribution loss reduction MW 110 110 110 B 3. Non-agricultural uses MW 110 110 110 B 4. Agricultural use (100 MW reduction during peak hours assumed) MW 10 10 10 MW 246 738 1230 1722 2214 2460 C 1. AEH Installations (50% reduction during evening hrs assumed) MW 105 105 105 C 2. Residential installations MW 30 30 30 C 3. IP sets (100 MW savings during evening hrs assumed) MW 10 10 10 C 4. Public & commercial lighting MW 4 4 4 MW 149 149 149 A Load forecast @7% growth from 6, 200 MW base in 2006 with 0. 5% reduction in CAGR every year (peak hour demand) B Peak demand reduction feasible through existing system improvements Aggregate peak demand reduction feasible through efficiency measures C Peak demand reduction feasible through solar technology Aggregate peak demand reduction feasible through solar technology D Demand reduction feasible through wind energy MW 60 60 60 E Demand reduction feasible through biomass MW 48 48 48 F Aggregate peak demand reduction feasible through NCE sources MW 257 771 1285 1799 2313 2570 G Net peak demand forecast on the grid (= A-(B+F)) MW 7092 6542 5938 5270 4528 4251

PART II: High level calculations of benefits: forecast for annual energy requirement (MU) Load forecast @7% growth from 34, 300 MU base in 2006 with 0. 5% reduction in CAGR every year (annual energy demand ) MU 42019 44540 46767 48638 50097 51349 I 1. Generation improvement through R, M & U MU 80 80 80 I 2. Transmission & Distribution loss reduction MU 700 700 700 I 3. Non-agricultural use MU 430 430 430 I 4. Agricultural use MU 250 250 250 MU 1460 4380 7300 10220 13140 14600 G 1. AEH Installations MU 110 110 110 G 2. Residential installations MU 60 60 60 G 3. IP sets MU 320 320 320 G 4. Public & commercial lighting Aggregate annual energy reduction feasible through solar technology MU 64 64 64 MU 554 554 554 Energy reduction feasible through wind energy MU 210 210 210 Energy reduction feasible through biomass MU 200 200 200 Aggregate annual energy reduction feasible through NCE sources MU 964 2892 4820 6748 8676 9640 Net annual energy demand forecast on the grid (= H-(I+M)) MU 39595 37268 34647 31670 28281 27109 Energy reduction feasible through existing system improvements Aggregate annual energy reduction feasible from efficiency measures Energy reduction feasible through solar technology

Break up of Projected Installed Capacity by 2031 -32 (As an alternative to IEP) Capacity (MW) Share in total capacity by 2031 -32 Coal 110, 000 28 % Increase from present capacity of 80, 000 MW; IEP has projected 470, 000 MW; gradual reduction; early peaking Hydro 40, 000 10 % Only < 25 MW capacity R-0 -R plants only after 2032; Against IEP projection of 150, 000 MW Nuclear 10, 000 3% Only known sources of domestic nuclear fuel to be used; targeted to be replaced fully by 2050 Natural Gas 25, 000 6% Targeted to be replaced fully by 2050 Solar (Grid interactive large size units only) 60, 000 15 % National solar mission target of 20, 000 MW by 2020 should be ramped up adequately Solar (Roof-top isolated and Grid interactive small size units ) 60, 000 15 % Huge potential to be harnessed early by policy interventions; a must for accelerated rural electrification and for T&D loss reduction Wind 30, 000 8% Same as projected by IEP; expected to increase share after 2032 through off-shore wind farms Bio-mass 50, 000 13 % Same as projected by IEP; mostly community based plants Other renewables (Ocean energy and Geo-thermal) 7, 000 2% Nascent technologies but huge potential; likely to get better focus after 2032 Total Capacity 390, 000 Comments

Ø There are credible ways of meeting our electricity needs without a large number of conventional power plants ! Ø The society must move resolutely in this direction !! Ø Half measures will not suffice !!! Ø A holistic, responsible and highly accountable approach is required. Ø People centric policies are essential and feasible. Ø Sustainability should be criteria Ø Obligations to future generations

Thanks !!!