Page 24 - Transitions in Indian Electricity Sector- A Report by TERI
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TRANSITIONS IN INDIAN E LECTRICITY SECTOR 2017–2030
4. Conclusions
1. The Indian electricity sector is witnessing a major transformation in respect of demand growth, energy mix and
market operations. Various socio-economic factors and technology developments are contributing to this.
A detailed and critical assessment of the emerging scenario is of paramount importance for the sustainable
development of the sector. A macro-level assessment in stylised scenarios up to 2029–30 are covered in the
present study.
2. Analysis of the demand during the past 15 years shows that the demand is strongly influenced by various
economic factors. These are also found to vary among states, depending upon the economic activity
predominant in that state warranting detailed econometric studies for the states. The present study has
focussed on assessment of electricity demand at all India level on the premise that the total electricity
consumption in a year will depend upon that year’s GDP along-with previous years’ electricity consumption.
Empirically, data on all India electricity consumption and GDP has shown a high correlation coefficient of
more than 95%.
3. Based on the above, all India level demand projections in the stylised scenarios upto 2029–30 have been
carried out using the electricity demand and GDP data from 2001–02 to 2015–16. The impact of future
end-use energy efficiency improvements, electrification of new households and additional requirement for
electrified road transport, which may not follow the past trend has been accounted for exogenously. The
study shows that the demand is likely to grow from 1115 BU in 2015–16 to 1,692 BU in 2021–22, 2,509
BU in 2026–27 and 3,175 in 2029–30 representing a CAGR of 7.2%, 7.7% and 7.8% respectively. Per-capita
consumption of electricity is projected to increase from the prevailing level of 1,075 kWh to 1,490 kWh in
2021–22, 2,121 kWh 2026–27 and 2634 kWh in 2029–30. These demand projections may go up or down
depending on the success of the UDAY programme, Make in India initiative, deceleration in the use of captive
power, energy efficiency, DSM programs, etc.
4. The energy mix is also projected to undergo radical changes with increased focus on RE (especially solar and
wind) and considering the operational and environmental issues related to coal power plants. The increasing
penetration of solar and wind (which have inherent high intermittency and variability) would no doubt present
a number of challenges in respect to planning and operation of power systems. Timely strengthening of
the grid infrastructure, provision of adequate balancing and storage capacity, ensuring requisite flexibility in
ramping up and down, improved forecasting of RE power as well as demand, improved financial health of
utilities would be key factors in this context. Taking these into account two scenarios of RE development have
been considered in this study. The HRES considers capacity increase from the prevailing level of about 50 GW
to 175 GW in 2021–22 and 275 GW in 2025-26. The LRES considers capacity addition of 75 GW during the
first 5 years (reaching a level of 125 GW) in 2021-22 and 100 GW in the next 5 years (reaching a level of 225
GW) in 2026–27.
5. The results indicate that the energy that would be available from RE sources, storage hydro, nuclear and gas
plants (existing as well as those planned/committed) would suffice for meeting the remainder of the demand
for electricity at the national level during the next 7-8 years. This would in other words mean that no new coal
plants would be needed and the plant load factor (PLF) of coal based plants would be in the range of 78-80%
in 2024–25 and 2025–26.
6. The type of new capacity which will be required in the following years would depend upon how the
aforementioned challenges get addressed and cost economics of storage technologies (which could increase
the dispatchability of RE plants). In the HRES, it is assumed that the remainder of the demand in the subsequent
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4. Conclusions
1. The Indian electricity sector is witnessing a major transformation in respect of demand growth, energy mix and
market operations. Various socio-economic factors and technology developments are contributing to this.
A detailed and critical assessment of the emerging scenario is of paramount importance for the sustainable
development of the sector. A macro-level assessment in stylised scenarios up to 2029–30 are covered in the
present study.
2. Analysis of the demand during the past 15 years shows that the demand is strongly influenced by various
economic factors. These are also found to vary among states, depending upon the economic activity
predominant in that state warranting detailed econometric studies for the states. The present study has
focussed on assessment of electricity demand at all India level on the premise that the total electricity
consumption in a year will depend upon that year’s GDP along-with previous years’ electricity consumption.
Empirically, data on all India electricity consumption and GDP has shown a high correlation coefficient of
more than 95%.
3. Based on the above, all India level demand projections in the stylised scenarios upto 2029–30 have been
carried out using the electricity demand and GDP data from 2001–02 to 2015–16. The impact of future
end-use energy efficiency improvements, electrification of new households and additional requirement for
electrified road transport, which may not follow the past trend has been accounted for exogenously. The
study shows that the demand is likely to grow from 1115 BU in 2015–16 to 1,692 BU in 2021–22, 2,509
BU in 2026–27 and 3,175 in 2029–30 representing a CAGR of 7.2%, 7.7% and 7.8% respectively. Per-capita
consumption of electricity is projected to increase from the prevailing level of 1,075 kWh to 1,490 kWh in
2021–22, 2,121 kWh 2026–27 and 2634 kWh in 2029–30. These demand projections may go up or down
depending on the success of the UDAY programme, Make in India initiative, deceleration in the use of captive
power, energy efficiency, DSM programs, etc.
4. The energy mix is also projected to undergo radical changes with increased focus on RE (especially solar and
wind) and considering the operational and environmental issues related to coal power plants. The increasing
penetration of solar and wind (which have inherent high intermittency and variability) would no doubt present
a number of challenges in respect to planning and operation of power systems. Timely strengthening of
the grid infrastructure, provision of adequate balancing and storage capacity, ensuring requisite flexibility in
ramping up and down, improved forecasting of RE power as well as demand, improved financial health of
utilities would be key factors in this context. Taking these into account two scenarios of RE development have
been considered in this study. The HRES considers capacity increase from the prevailing level of about 50 GW
to 175 GW in 2021–22 and 275 GW in 2025-26. The LRES considers capacity addition of 75 GW during the
first 5 years (reaching a level of 125 GW) in 2021-22 and 100 GW in the next 5 years (reaching a level of 225
GW) in 2026–27.
5. The results indicate that the energy that would be available from RE sources, storage hydro, nuclear and gas
plants (existing as well as those planned/committed) would suffice for meeting the remainder of the demand
for electricity at the national level during the next 7-8 years. This would in other words mean that no new coal
plants would be needed and the plant load factor (PLF) of coal based plants would be in the range of 78-80%
in 2024–25 and 2025–26.
6. The type of new capacity which will be required in the following years would depend upon how the
aforementioned challenges get addressed and cost economics of storage technologies (which could increase
the dispatchability of RE plants). In the HRES, it is assumed that the remainder of the demand in the subsequent
| 24 |
