Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/615987
22 | 18TH - 24TH DECEMBER 2015 | UTILITY WEEK Markets & Trading Country profile U K energy secretary Amber Rudd, speaking ahead of a visit from Indian Prime Minister Narendra Modi in November, said: "The UK and India's part- nership on energy is going from strength to strength." She insisted that the UK's experi- ence in green finance and technology mean it is "well-placed" to work with India to "pro- mote secure, affordable and sustainable sup- plies of energy and address climate change". Modi's visit paved the way for a compre- hensive package of collaboration on energy and climate change to support economic growth, energy security and energy access. The UK has a commitment to reduce its greenhouse gas emissions by at least 80 per cent by 2050, while India hopes to reduce its emissions by 33-35 per cent by 2030, com- pared with 2005 levels. It also has a target of generating 40 per cent of its electricity from renewable sources by 2030. The two countries hope that by sharing expertise and experience on how "well-func- tioning" energy and gas markets can pro- mote energy security and economic growth they will both reach these goals. Indeed, it is hoped that a collaborative approach will allow them to do so more cost effectively. Economic growth The Indian economy has seen a rapid increase in its growth rate in the past two years in particular, recently helped by the global decline in oil prices. Economists now consider it the seventh-largest economy in the world. While most emerging economies, even China, are struggling against global headwinds, India's economic growth has increased under the supervision of Modi. From 4.5 per cent in 2013, growth jumped up to 6.9 per cent in 2014, aer he took office. India's economic growth rate also overtook that of China this financial year, expanding at 7.4 per cent in Q2, and this is predicted to rise to more than 8 per cent in 2016/17. To put that into perspective, the growth of the UK economy has averaged 2.5 per cent since 1956, according to Office for National Statis- tics (ONS) figures. This continuous economic growth has caused the country's energy consumption to rise rapidly. The World Energy Council says it is now one of the largest energy consum- ers in the world aer China, the US and Rus- sia, and this demand continues to rise at an annual rate of 2.8 per cent. Power deficit In parallel to this economic progress, India's population has also soared. The United Nations suggests India will overtake China to become the world's most populous nation by 2022, which will be sure to add to the strain of demand. The Central Electricity Authority (CEA) of India says the country could well face an energy shortage of 2.1 per cent and a peak shortage of 2.6 per cent this coming financial year. Currently, India has a fih of the world's population but only a 30th of its energy, say analysts at Goldman Sachs. "It just doesn't produce enough to meet its needs. Hence, it has to import energy: oil, gas, and increas- ingly coal. "On 30 July 2012, India's northern elec- tricity grid broke down due to overdrawing by states, plunging an estimated 640 million people into darkness," they add. "As facto- ries couldn't operate, homes remained dark, and people were stuck in elevators, the reali- sation dawned that the Indian economy just could not grow without the country resolving its energy problem." The vast majority of India's electricity needs are met by coal, with hydropower the second-largest power source. Coal consumption is outpacing India's domestic production. To help meet the short- fall and to support expanded coal genera- tion, India has set a coal production target of 1.5 billion metric tons by 2020. Renewable targets India's energy supply shortage, coupled with unreliable infrastructure, have led to a highly unstable grid and power cuts are the norm. While ramping up more coal-fired plant is the immediate answer to this security of supply problem, India does have big India, land of opportunity India's growth rate outstrips China, and it is on course to become the most populous country on the planet, but it still has yet to meet people's needs for basic utility services. Lois Vallely reports. INSTALLED CAPACITY (GW) 2015 Total electricity capacity 276GW Total fossil fuel 192GW Coal 168GW Gas 23GW Diesel 1GW Nuclear 6GW Hydro 42GW Total renewables 37GW Small hydro 4GW Wind 24GW Biomass 5GW Solar 4GW NTPC* SUPPLY Coal 34GW (out of 168GW total) 20% Gas 4GW (out of 23GW) 17% *NTCP, formerly National Thermal Power Corporation, the largest state-owned electricity generator in India INSTALLED CAPACITY (%) 2014 Coal 59% Natural gas 9% Diesel 1% Nuclear 2% Hydro 16% Other renewables 13% Biomass and waste 2% Solar 1% Wind 8% Small hydro 2% Source: US Energy Information Administration, India's Central Electricity Authority RENEWABLES FACT FILE The renewables industry projected to be worth £160 billion over the next five years, according to the Indian government's Economic Survey. Ernst & Young's Renewables Energy Market Attractiveness In- dex rates India as the fifth most attractive market worldwide. Nearly 100,l000 households are served by decentralised renewables energy companies, with an expected growth of 60-70% annually to 900,000 by 2018. The decentralised energy market segment is projected to be worth $150 million by 2018, according to Climate Group. ✒ p24