Page 3 - Transitions in Indian Electricity Sector- A Report by TERI
P. 3
TRANSITIONS IN INDIAN E LECTRICITY SECTOR 2017–2030
Executive Summary
1. The Indian electricity sector is presently going through a major transformation. The accelerated pace of
generation capacity addition over the past few years has led to a situation wherein the electricity supply
potential is greater than the economic demand, a scenario witnessed never before in the history of the Indian
electricity sector. We have also been witnessing changes in the energy mix due to enhanced policy focus
on climate change, energy security concerns, etc., due to which the penetration of renewable electricity,
especially from wind and solar energy, has been increasing steadily and is projected to grow much faster in the
coming years. The demand patterns have also undergone changes due to inter-alia urbanization, increased
space conditioning loads, and adoption of energy efficiency initiatives. Against this backdrop, The Energy
and Resources Institute (TERI) has initiated a study to bring out possible transitions which could address the
changing demand and supply scenarios.
2. We note that the assessment of electricity demand till 2030 would depend on a number of factors, primarily
including economic growth, household connectivity, energy efficiency (including through reduced
transmissions & distribution T&D losses) and the electrification of the transport sector. An analysis of electricity
demand at the national level indicates that the demand in the current year depends on last year’s electricity
consumption (in other words, demand is ‘sticky’) and economic growth in the current year. An assessment of
nature of electricity demand in the few states where almost universal connectivity exists and electricity supply
shortages are marginal suggest that the electricity demand is dependent on economic parameters, including
gross state domestic product and its components with the degree of dependence varying, contingent on the
type of economic activity predominant in the state. This highlights the need for a detailed study in respect of
each state at a more granular level.
3. Consequently, the electricity demand scenario is built on the basis of extrapolating past demand to the
future, taking into account the current year consumption and future economic growth, and adjusting it to
account for future end-use energy efficiency improvements, additional requirement for the newly electrified
households (whose requirements are then assumed to grow with income and economic growth), and
additional requirement for electrified road transport.
4. The present study indicates that the
electricity demand is likely to increase from Exhibit ES-1: All India Electricity Demand Scenario
1115 BU in 2015–16 to 1692 BU in 2022, 2509 Electricity Demand (BU) 4000
BU in 2027, and 3175 BU in 2030 (Exhibit 3,175
ES-1). In this context, it is underlined that
3000 2,509
with improving power supply position and 2000 1,692
reliability of supply, demand projections may
undergo further increase as the industrial, 1000
commercial, and residential consumers, 0
presently sourcing part of their requirements 2001-02 2005-06 2009-10 2013-14 2017-18 2021-22 2025-26 2029-30
from captive power plants, would shift to
grid power. On the other hand, there could Actual Requirement Demand Forecast
also be a downward pull due to more rapid
increase in energy efficiency in the future
(as compared to past trends) due to programmes which increase market size for energy efficient products
while simultaneously leading to price decreases due to increased competition. In general, we believe that the
scenario presented here is a stylised scenario reflecting higher end of electricity demand.
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Executive Summary
1. The Indian electricity sector is presently going through a major transformation. The accelerated pace of
generation capacity addition over the past few years has led to a situation wherein the electricity supply
potential is greater than the economic demand, a scenario witnessed never before in the history of the Indian
electricity sector. We have also been witnessing changes in the energy mix due to enhanced policy focus
on climate change, energy security concerns, etc., due to which the penetration of renewable electricity,
especially from wind and solar energy, has been increasing steadily and is projected to grow much faster in the
coming years. The demand patterns have also undergone changes due to inter-alia urbanization, increased
space conditioning loads, and adoption of energy efficiency initiatives. Against this backdrop, The Energy
and Resources Institute (TERI) has initiated a study to bring out possible transitions which could address the
changing demand and supply scenarios.
2. We note that the assessment of electricity demand till 2030 would depend on a number of factors, primarily
including economic growth, household connectivity, energy efficiency (including through reduced
transmissions & distribution T&D losses) and the electrification of the transport sector. An analysis of electricity
demand at the national level indicates that the demand in the current year depends on last year’s electricity
consumption (in other words, demand is ‘sticky’) and economic growth in the current year. An assessment of
nature of electricity demand in the few states where almost universal connectivity exists and electricity supply
shortages are marginal suggest that the electricity demand is dependent on economic parameters, including
gross state domestic product and its components with the degree of dependence varying, contingent on the
type of economic activity predominant in the state. This highlights the need for a detailed study in respect of
each state at a more granular level.
3. Consequently, the electricity demand scenario is built on the basis of extrapolating past demand to the
future, taking into account the current year consumption and future economic growth, and adjusting it to
account for future end-use energy efficiency improvements, additional requirement for the newly electrified
households (whose requirements are then assumed to grow with income and economic growth), and
additional requirement for electrified road transport.
4. The present study indicates that the
electricity demand is likely to increase from Exhibit ES-1: All India Electricity Demand Scenario
1115 BU in 2015–16 to 1692 BU in 2022, 2509 Electricity Demand (BU) 4000
BU in 2027, and 3175 BU in 2030 (Exhibit 3,175
ES-1). In this context, it is underlined that
3000 2,509
with improving power supply position and 2000 1,692
reliability of supply, demand projections may
undergo further increase as the industrial, 1000
commercial, and residential consumers, 0
presently sourcing part of their requirements 2001-02 2005-06 2009-10 2013-14 2017-18 2021-22 2025-26 2029-30
from captive power plants, would shift to
grid power. On the other hand, there could Actual Requirement Demand Forecast
also be a downward pull due to more rapid
increase in energy efficiency in the future
(as compared to past trends) due to programmes which increase market size for energy efficient products
while simultaneously leading to price decreases due to increased competition. In general, we believe that the
scenario presented here is a stylised scenario reflecting higher end of electricity demand.
|3|
