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1 Chapter-3 37 ENERGY CONSERVATION AND RENEWABLE ENERGY OPTIONS TO MEET INDIAN ELECTRICITY DEMAND 3.1 Introduction In chapter 2, it has been observed that there will be a huge gap between demand and supply of electrical energy by the year 245 and in the (BAU) scenario. The predicted gap increases from 7.4% in the year 25 to 4% in the year 245.Another problem that is faced by the Indian energy scenario is the emission of green house gases (GHG) due to dominating fossil fuel based electricity production.fig.3.1 shows the contribution of various energy sources towards India s power needs. Renewables, 4 Nuclear, 3 Hydro, 31 Coal, 68 Gas, 12 Oil, 1 Fig.3.1 Resource wise installed electrical generation capacity (in GW) in India [1]. In order to fill present and future electrical energy demand and supply gap, it is necessary to look for various options for either reducing demand or to introduce alternate energy sources or both. Most economic option obviously is to introduce energy conservation measures. In an integrated energy policy report by Planning Commission [2] only new fossil fuel and renewable energy technologies have been considered for future supply options. In a national energy map for India technology vision 23 prepared by TERI [3], supply scenarios have

2 38 been developed for new and renewable energy sources. These two reports have not taken into account the energy saving potential in various sectors of economy. We feel that it is necessary to take a holistic approach to introduce energy saving potentials in various sectors of economy. Considering the vast potential of energy savings and benefits of energy efficiency, the Government of India enacted the Energy Conservation Act, 21[4]. The Act provides for a legal framework, institutional arrangement and a regulatory mechanism at the Central and State level to embark upon energy efficiency drive in the country [5]. Energy Efficiency improvements not only reduce the energy consumed per unit products and services made available but also improve energy security of the country to ensure sustained availability of energy resources at affordable price. Estimated energy saving potential in various sectors is given in Table3.1. Table3.1. Maximum Electricity Saving Potential in different sectors in India [5]. Sector Electricity Saving Potential (%) Industrial 25 Agricultural 3 Domestic 2 Commercial 2 Transport 2 Other 23 Though full exploitation of energy saving potential will reduce the demand and supply gap considerably, still there will be a need for more electricity production. Most of the environmental friendly options available so far are the renewable energy technologies. Harnessing renewable energy sources for electrical energy supply has the dual benefit of GHG mitigation as well as resulting in development of local capabilities and infrastructure. India has a major programme for renewable power. Installed renewable resource wise grid power is given in Table 3.2.

3 Table 3.2. Installed Grid-interactive renewable power by various sources [6]. 39 Grid-interactive renewable power Installed capacity(in MW) Wind Power 67.2 Small Hydro Power(up to 25 MW) Cogeneration-bagasse Bio Power Waste to Energy Solar Power 2.74 Total 8996 The aim of the present study is to establish a model that can project the electricity demand up to 245 under the hypothesis of renewable electricity and energy savings. For this purpose the econometric model developed in chapter 2 has been used to forecast the sectoral electricity demand exploiting full energy saving potential. The remaining demand-supply gap has been narrowed and finally calculated to be filled by renewable energy technologies mainly hydro, wind and bio power. 3.2 Renewable Power Options Major renewable energy sources for power generation in India are hydro, wind and other renewable, which are briefly introduced here: Hydro Power The Indian government considers hydropower as a renewable economic, non-polluting and environmentally benign source of energy. The exploitable hydro-electric potential in terms of installed capacity is estimated to be about 148.7GW (see Table.3.3) out of which a capacity of 3.2 GW has been developed so far and 13.6 GW of capacity is under construction. Also, 56 sites for pumped storage schemes with an aggregate installed capacity of 94 GW have been identified. In fact installed capacity of hydro has increased at a compound growth rate of 4.35% per annum since 1991, higher than all other power sub-sectors.

4 4 Table3.3: Hydropower potential in India [7]. River Basin Potential at 6% Load Factor(MW) Probable Capacity(MW) Indus Basin Brahmaputra Basin Ganga Basin Central India Basin System East Flowing River System Total Wind Power: Power generation from wind has emerged as one of the most rapidly growing renewable energy technologies in recent years. India s wind power occupies fifth position in wind power installation after Germany, USA, Denmark and Spain [8]. The estimated power generation potential in India through wind is about 45 GW out of which 7.5 GW has been exploited [9]. Table 3.4: State wise Wind Energy Potential in India [9]. S.No. State Gross Potential(MW) 1 Andhra Pradesh Gujarat Karnataka Kerala Madhya Pradesh 55 6 Maharashtra Orissa 17 8 Rajasthan 54 9 Tamil Nadu 35 1 West Bengal 45 Total 45195

5 41 The state wise potential for wind power generation is as shown in Table 3.4.The two states Gujarat and Andhra Pradesh are highest wind power producer because the costal region of these states. The cost comparison with other renewable sources makes wind power as an economical power generation technology. The capital cost is comparable with conventional power plants Other Renewable Energies In other renewable energies, small hydro power and bio power are promising to generate electricity to satisfy the demand up to some level. An estimated potential of about 15 GW [9] of small hydro power projects exists in India of which only 1.9 GW has been exploited. Since large potential of this technology exists in hilly areas, development of small hydro power for decentralized power generation can lead to rural electrification and local area development. There is a well established manufacturing base for the full range and type of small hydro equipment in the country. Biomass-based power plants are ideal for decentralized application in rural areas, where either it is expensive to extend the grid or the power demand is low. The estimated potential of bio power is about 17GW [9] of which only 467 MW has been exploited. Power generation systems range from small scale (5-1kW), medium scale (1-1kW) to large scale (about 5MW) application [1]. Waste-to-energy and solar power contribution is 35 and 3 MW respectively [11]. Since these are negligible as compared to above two renewable sources (i.e. small hydro power and bio power) they have not been considered for projection studies. 3.3 Results and Discussion Fig.2.7 in chapter 2 gives the projected electrical energy requirements along with the available supply. It was observed that in the BAU scenario, the demand and supply gap for total energy could rise up to 4% in the year 245 in comparison to a much smaller value of 7.4% in the base year 25. Using the same methodology as given in chapter 2, namely, an autoregressive model followed by an econometric approach and under the assumption of possible reduction in demand, the new sectoral electric energy demand is given in Fig.3.2. The correctness of the data can be

6 42 examined by Durbin-Watson statistics, the results for R 2 and adjusted R 2 values are given in Table 3.5. Table 3.5: Values of coefficients of econometric models together with statistical results for electricity requirement with saving potential based on data for the period 1971 to 25 in individual sectors. Variables Coefficients Standard Errors t- Statistics Statistics Industrial sector Constant R A ti Adjusted R P ti Standard error of estimate.71 Durwin-Watson 1.36 Agricultural sector Constant R A ti Adjusted R 2.97 P ti Standard error of estimate.17 Durwin-Watson 1.91 Domestic sector Constant R A ti Adjusted R P ti Standard error of estimate.158 Durwin-Watson 1.49 Commercial sector Constant R A ti Adjusted R P ti Standard error of estimate.514 Durwin-Watson 1.33 Transport sector Constant R2.99 A ti Adjusted R P ti Standard error of estimate.72 Durwin-Watson 1.36 Other sectors Constant R 2.99 A ti Adjusted R P ti Standard error of estimate.94 Durwin-Watson 1.31 It is seen that R 2 and adjusted R 2 values for all electricity requirement sectors show very high predictive power of the developed models. The Durbin-Watson (D-W) statistics, in agricultural, industrial and domestic sectors are1.91, 1.36 and 1.49 respectively, which gives

7 43 conclusive result for the absence of autocorrelation. The D-W statistics in commercial, transport and others sectors are 1.33, 1.36 and 1.31 respectively which gives a moderate absence of autocorrelation. The t-statistics also shows almost satisfactory results for each independent variable in all sectors. The problem of multicollinearity has also been tested and satisfactory results obtained except for some sectors where the multicollinearity is slightly problematic. The variance of inflation factor (VIF) is found less than five in most of the sectors except transport and other sectors in electricity requirement projection. Due to the limitation on data availability in some sectors the VIF factor is more than five but less than ten. So the model can be considered slightly multi-collinear in these sectors Billion kwh Industrial Agricultural Domestic Commercial Transport Others Fig Electricity requirement projection with maximum saving potential in individual sectors from base year 26 to 245 using econometric models. The projected electricity demand by taking into account the electrical energy saving potentials (Table 3.1), is given in Fig.3.2, for various sectors. The total electricity demand in the year 245 is projected as 38 billion kwh, in contrast to 56 billion kwh without any energy conservation measures as shown in Fig.2.7. The most electricity consumer sectors are industry, domestic, commercial and others in the year 245.It is important to note that the agriculture sector which consumes almost 3% of the electricity in the year 26, shall contribute only 7%, while the commercial sector contribution will be 26% in the year

8 These patterns are essentially due to rapid growth of commercial sector and increasing living standards of people, especially the middle class. Industrial electricity(billion kwh) BAU Savings Potential Agricultural electricity(billion kwh) BAU Saving Potential Domestic electicity(billion kwh) BAU Saving Potential Commercial electricity(billion kwh) 12 1 BAU Saving Potential BAU Saving Potential O thers elec tricity (billion kwh) BAU Saving Potential Fig.3.3 Sector wise comparison of electricity requirement in business as usual and maximum energy saving potential cases.

9 45 The transport sector shows significant growth in electricity demand. It increases from 12 billion kwh in year 25 to 125 billion kwh in 245 with an average growth rate of 5.9%. In other sectors also, the electric requirement shows significant growth rate over the forecasting period and becomes 561 billion kwh in 245 with respect to 31 billion kwh in the base year 25 with an average growth rate of 7.5%. Fig.3.3 shows a comparison of electricity requirement in business as usual and maximum serving potential cases for each economic sectors of India. All the economic sectors, except agriculture sector, are growing exponentially in both the scenarios (BAU and savings potential) Electricity saved Electricity requirement after saving potential Billion kwh Fig.3.4 Total electricity requirement after applying electricity saving potential and energy saved in year The total electricity demand after applying the saving potential and therefore the saved electricity is shown in Fig.3.4. After the energy saving potentials are fully exploited, the demand reduces to 38 billion kwh (4.7% reduction).however, there is still a gap of 1562 billion kwh, which can be filled by alternate environmental friendly energy source. The next projections of electrical energy supply are renewable based. Addition of 1% large hydro at present level and an annual additional capacity at a rate of 5.2% increases the supply to 2223 billion kwh, 1% of wind power and a growth rate of 4.2% supplied an additional 435 billion kwh (total 2658 billion kwh) and an additional of 5% other renewable energy (i.e.

10 46 small hydro and bio-power) fulfills the total demand (Fig.3.5) and even provides excess energy. 6 Billion kwh Apply Electricity Saving Potential Addition of 1% Large Hydro Addition of1% Wind Adition of 5% Other Renew able Supply(BAU) Fig.3.5.The electricity contribution from various options from year 26 to 245 to meet the total requirement. In case if, it is not possible to apply maximum energy conservation potential in various sectors of Indian economy immediately then it can be start with lower percentage of energy savings and can be accelerated in future time periods. Considering these possibilities, three alternative scenarios have been developed with 15%, 1% and 5% energy savings. The result shows that a significant amount of energy can be saved in these scenarios and substantial carbon dioxide reduction is also possible in these cases. The results of the simulations are shown in Fig.3.6. Electricity Requirement(billion kwh) BAU scenario" 25% saving potential 15% saving 1% saving 5% saving Electricity Requirement(billion kwh) BAU scenario 3% saving potential 15% saving 1% saving 5% saving (a) Industrial Electricity Requirement in various (b) Agricultural electricity requirements in various scenarios from year 26 to 245. scenarios from year 26 to 245.

11 47 Electricity Requirement(billion kwh) BAU scenario 25% saving potential 15% saving 1% saving 5% saving Electricity Requirement(billion kwh) BAU scenario 2% saving potential 15% saving 1% saving 5% saving (c) Domestic electricity requirement in various (d) Commercial electricity requirements in various scenarios from year 26 to 245. scenarios from year 26 to 245. E lec tric ity R equirem ent( billion k W h ) BAU scenario 2% saving potential 15% saving 1% saving 5% saving E le c tr ic ity R e q u ir e m e n t( b illio n k W h ) BAU scenario 23% savng potential 15% saving 1% saving 5% saving (e) Transport electricity requirement in various (f) Others Sector electricity requirement in various scenarios from year 26 to 245. scenarios from year 26 to 245. Fig.3.6 Electricity requirement in various sector of economy with alternative energy savings potentials 3.4 Conclusions The present demand and supply gap in the Indian electricity scenario amounts to 7.4% at peak demand and may grow up to 4% if the present trends of supply and consumption are allowed to continue. There is an urgent need of policy intervention in reducing demand as well as introduce environment friendly technology such as wind, hydro, solar and biomass etc. Using econometric methods it has been shown that the energy conservation potential reduces electricity demand up to 4% in year 245 i.e billion kwh. This will also reduce green

12 48 house gas emissions resulting from the use of coal, oil and gas. There will be a gap of about 3% (1562 billion kwh),which can be fulfilled by a mix of renewable energy sources, i.e. large hydro 1%,wind 1% and biomass & small hydro 5%. A policy towards utilization of environment friendly renewable source will also make India an environmental friendly energy supply country in the 21 st century. The energy savings potentials show not only the substantial reduction in energy requirement but this can also reduce the carbon dioxide in the atmosphere. References [1] CMIE (27) India s Energy Sector, Centre for Monitoring the Indian Economy, Mumbai, India. [2] PC (26) Integrated Energy Policy: Report of the Expert Committee, Planning Commission and New Delhi, India. [3] TERI (26) National Energy Map for India: Technology Vision 23, A Report by The Energy and Resource Institute, New Delhi, India. [4] CEA (25) Annual Report 25, Central Electricity Authority, Ministry of Power, New Delhi, India. [5] BEE (25) Annual Report 25, Bureau of Energy Efficiency, Ministry of Power, New Delhi, India. [6] MNRE (25) Annual Report 24 6, Ministry of New and Renewable Energy, New Delhi, India. [7] CEA (26) Central Electricity Authority, Ministry of Power, New Delhi, India. [8] TEDDY (26) TERI Energy Data Directory and book 26 (TEDDY), The Energy and Resource Institute, New Delhi, India. [9] MNRE (26) Annual Report 25 6, Ministry of New and Renewable Energy, New Delhi, India [1] Ravindranath, N.H. and Hall, D.O. (1995) Biomass Energy and Environment: A Developing County Perspective from India, Oxford University Press, Oxford. [11] MoP (26) Annual Report 26, Ministry of Power, New Delhi, India.