India energy demand set to grow fastest in the world; to overtake EU

Source: Business Standard, Feb 09, 2021

New Delhi: India’s energy demand will increase more than that of any other country over the next two decades, the International Energy Agency (IEA) said on Tuesday forecasting India overtaking the European Union as the world’s third-largest energy consumer by 2030.

An expanding economy, population, urbanisation and industrialisation will result in India’s energy needs growing at three times the global average under today’s policies, according to IEA’s India Energy Outlook 2021.

“India has arrived at the centre of the world energy stage,” said Fatih Birol, the IEA’s executive director.

Energy use has doubled since 2000, with most of that demand met by coal and oil. This is set to grow about 35 per cent until 2030, down from 50 per cent before the coronavirus pandemic.

India will see the addition of 13 new Mumbais in urban population, boosting demand for cement, steel, electricity, he said.

Birol said policymakers needed to ensure the next wave of growth is met with renewable energy sources such as solar.

IEA saw primary energy consumption almost doubling to 1,123 million tonnes of oil equivalent as the Gross Domestic Product (GDP) expands to USD 8.6 trillion by 2040.

India at present is the fourth-largest global energy consumer behind China, the United States and the European Union.

Underpinned by “a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040”, India will overtake the European Union by 2030 to move up to the third position, it said in the report.

India accounts for nearly one-quarter of global energy demand growth from 2019-40 — the largest for any country. Its share in the growth in renewable energy is the second-largest in the world, after China, IEA said.

“By 2040, India’s power system is bigger than that of the European Union, and is the world’s third-largest in terms of electricity generation; it also has 30 per cent more installed renewables capacity than the United States,” it said.

A five-fold increase in per capita car ownership will result in India leading the oil demand growth in the world. Also, it will become the fastest-growing market for natural gas, with demand more than tripling by 2040.

“India’s continued industrialisation becomes a major driving force for the global energy economy. Over the last three decades, India accounted for about 10 per cent of world growth in industrial value-added (in PPP terms),” the report said.

By 2040, India is set to account for almost 20 per cent of global growth in industrial value-added, and to lead global growth in industrial final energy consumption, especially in steelmaking. The nation accounts for nearly one-third of global industrial energy demand growth to 2040.

India’s oil demand is seen rising by rise by 74 per cent to 8.7 million barrels per day by 2040 under the existing policies scenario. The natural gas requirement is projected to more than triple to 201 billion cubic meters and coal demand is seen rising to 772 million tonnes in 2040 from the current 590.

To meet its energy needs, India will be more reliant on fossil fuel imports as its domestic oil and gas production stagnates.

Its net dependence on oil imports — taking into account both the import of crude oil and the export of oil products — increases to more than 90 per cent by 2040 from the current 75 per cent as domestic consumption rises much more than production, the report said.

Natural gas import dependency increased from 20 per cent in 2010 to almost 50 per cent in 2019 and is set to grow further to more than 60 per cent in 2040.

“The dynamics look quite different for coal, where India’s demand for imported coal barely gets back to pre-crisis levels over the next decade,” IEA said.

India currently accounts for 16 per cent of the global coal trade and many global coal suppliers were counting on growth in India to underpin planned export-oriented mining investments.

“These expectations are now running up against India’s determination to boost domestic production, leaving relative certainty only over India’s requirement to import coking coal for its rising steel production, together with steam coal for those coastal power generation plants that have been designed to receive imported grades,” it said.

IEA has forecast combined import bill for fossil fuels tripling over the next two decades.

“Energy use (in India) has doubled since 2000, with 80 per cent of demand still being met by coal, oil and solid biomass,” it said.

On a per-capita basis, India’s energy use and emissions are less than half the world average, as are other key indicators such as vehicle ownership, steel and cement output.

“As India recovers from a COVID-induced slump in 2020, it is re-entering a very dynamic period in its energy development. Over the coming years, millions of Indian households are set to buy new appliances, air conditioning units and vehicles,” it said.

India will soon become the world’s most populous country, adding the equivalent of a city the size of Los Angeles to its urban population each year.

“To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now,” it said.

Prior to the global pandemic, India’s energy demand was projected to increase by almost 50 per cent between 2019 and 2030, but growth over this period is now closer to 35 per cent. “An expanding economy, population, urbanisation and industrialisation mean that India sees the largest increase in energy demand of any country,” IEA said.

ONGC to undertake India’s first geothermal field development project in Ladakh

Source: The Economic Times, Feb 08, 2021

NEW DELHI: ONGC plans to undertake India’s first geothermal field development project in Ladakh with an aim to generate a new green energy source for the union territory.

The company signed a preliminary agreement with the union territory for this, a first step towards creating a carbon-neutral Ladakh, the company said in a statement.

Geothermal energy refers to the heat stored beneath the earth’s surface that can be directly used or converted into electricity. A viable geothermal project can ensure a continuous supply of renewable, clean energy.

“Geothermal resource development can revolutionize farming in Ladakh, which is now totally dependent for supply of fresh vegetables, fruits from outside the union territory round the year,” ONGC said.

Geothermal fields in eastern Ladakh were discovered in the 1970s but subsequent efforts at the exploitation by various government and private agencies did not materialise.

ONGC has planned a three-phase development of the fields. Phase-I involves exploratory-cum-production drilling of wells up to 500 metres depth and setting up of a pilot plant of up to 1 MW power capacity. The second phase would involve the deeper and lateral exploration of the reservoir. Commercial development of the geothermal plant will be undertaken in phase three.

Govt seeks to set up three power gear making zones

Source: LiveMint.com, Feb 04, 2021

Atmanirbhar Bharat package for setting up three manufacturing zones for critical power and renewable energy equipment.

“This scheme is for setting up of three manufacturing zones for power and renewable equipment to be set up in three different states. The facilities shall be based on cutting edge, clean, and energy efficient technology for minimizing dependency on import of equipment, critical components, basic raw material, and critical spares required for the power sector and renewable (energy),” the budget documents said.

Power is a strategically important sector and the move to set up dedicated manufacturing zones is aimed at reducing imports of Chinese equipment and attracting private investments across power generation, distribution, and transmission in green and conventional energy spaces. On 15 December, Mint reported on the plans to set up these zones, one each in a coastal state, a hill state and a land-locked state, by offering incentives such as land and electricity at attractive prices. The government has drawn up a list of equipment that it wants to be manufactured in these zones. Read the rest of this entry »

India inks pact with IEA to bolster its energy security

Source: LiveMint.com, Jan 27, 2021

India signed a ‘strategic partnership framework’ on Wednesday with the International Energy Agency (IEA), the world’s premier energy monitor, further bolstering the country’s energy security and it’s cleaner fuel transition plans.

The development comes at a time when international energy markets have been volatile and amid rising tensions between China and India, the world’s second- and third-largest crude oil importers.

“The Strategic Partnership Framework represents a new phase in the relationship between the IEA and India, the world’s third-largest energy consumer, making it the first IEA Association country to take a formal step to further advance ties with the Agency,” IEA said in a statement.

IEA’s 30-member countries also hold 1.55 billion barrels of public emergency oil stocks. In addition, 650 million barrels are held by industry under government obligations and can be released as needed.

The MoU was signed by India’s power secretary Sanjiv Nandan Sahai and Dr. Fatih Birol, IEA’s executive director.

“This partnership will lead to an extensive exchange of knowledge and would be a stepping stone towards India becoming a full member of the IEA,” the power ministry said.

The Paris-based agency is keen on India becoming a member as India’s entry will boost the global energy security apparatus and add heft to its dealings with the Organization of the Petroleum Exporting Countries (Opec)-plus grouping.

Saudi Arabia, the world’s largest oil producer has recently cut production, leading to price volatility. Opec makes up about 40% of global output and 83% of India’s oil imports.

“The contents of the strategic partnership will be jointly decided by the IEA members and India, including a phased increase in benefits and responsibilities for India as an IEA strategic partner, and building on existing areas of work within Association and the Clean Energy Transitions Programme (CETP), such as energy security, clean and sustainable energy, energy efficiency, enhancing petroleum storage capacity in India, expansion of gas-based economy in India etc.,” the statement said. “This marks a major milestone in global energy governance that could lead to eventual IEA membership for India,” the statement added.

Eligibility criteria for becoming a member includes maintaining emergency oil reserves equivalent to at least 90 days of net imports.

India stores 10 days of the country’s crude oil requirements currently, with domestic refiners also maintaining 65 days of crude storage. In addition, the government is building strategic crude oil reserves to support another 12 days of crude oil needs. The partnership with IEA also comes at a time when US President Joe Biden has recommitted to the Paris Agreement. Some of the strategies adopted to meet the objective of energy security and energy transition by India include a faster clean energy trajectory.

Peak power demand hits record 185.82GW

Source: LiveMint.com, Jan 20, 2021

India’s electricity demand touched a record 185.82 gigawatts (GW) on Wednesday morning, crossing the previous record of 182.88GW witnessed on 30 December.

The development hints at a recovery in economic activity after massive disruptions in the wake of the covid crisis. Energy consumption is linked to higher overall demand in the economy. “The peak demand for power crossed 1,85,820 Megawatt at 9:35 AM on today.

This is the highest ever, a record,” power and new and renewable energy minister Raj Kumar Singh said in a tweet.

“The demand (and supply) of power in January (up to 19.01.2021) has grown by 8% as compared to the corresponding period of last year.This is the highest rate of growth ever.

The surging demand for power is a certain indicator that our economy is getting back on track,” Singh tweeted.

Wednesday’s development follows a revival in other economic indicators, such as refineries, goods and GST collections, and railway freight volumes. India’s peak demand in FY19 was at 168.74GW.

“Wheels of Economy are Turning: Breaking all records, peak demand for power crossed 1,85,820 megawatt at 9:35 am today,” added Piyush Goyal, minister for railways; commerce and industry; consumer affairs and food and public distribution, in a tweet.

India has an installed power generation capacity of 373.43GW. The country’s peak electricity demand came down with commercial and industrial power demand taking a hit after many factories were shut down during the covid-led lockdown. However, domestic consumption, which generates comparatively lower tariffs, was up. The industrial and agriculture sectors account for 41.16% and 17.69%, respectively, of India’s total power demand. Commercial electricity consumption accounts for 8.24% of the demand. “All-India daily-peak demand was higher by an average of 6.5%/6.2% YoY in Q3FY21 and by 3%/5.3% YoY in Jan’21 (MTD till 17th),” ICICI Securities wrote in a report on Wednesday. “Improvement in overall demand on the back of higher C&I (commercial and industrial) and retail demand has been the major factor behind this improvement.”

Cabinet approves Rs 5,281.94 crore investment for 850 MW Ratle hydro power project in Kishtwar

Source: The Economic Times, Jan 20, 2021

New Delhi: The Union Cabinet on Wednesday approved an investment proposal of Rs 5,281.94 crore for the 850 MW Ratle hydro power project on river Chenab in Kishtwar district of Union Territory of Jammu and Kashmir, an official statement said. The project will be constructed by a joint venture company (JVC) to be incorporated between National Hydroelectric Power Corporation (NHPC) and Jammu & Kashmir State Power Development Corporation Ltd (JKSPDC) with equity contribution of 51 per cent and 49 per cent, respectively.

The Government of India is also supporting the Union Territory of Jammu and Kashmir by providing grant of Rs 776.44 crore for equity contribution of JKSPDC in the JVC, the statement added.

NHPC shall invest Rs 808.14 crore from its internal resources. The Ratle hydro electric project shall be commissioned within 60 months.

The power generated from the project will help in providing balancing of grid and improve the power supply position, it added.

To make the project viable, the government of the UT of Jammu and Kashmir will extend exemption from levy of water usage charges for 10 years after commissioning of the project, reimbursement of state’s share of GST (SGST) and waiver of free power to the UT in a decremental manner.

That is, the free power to the Union Territory would be 1 per cent in the first year after commissioning of the project and rise at the rate of 1 per cent per year to 12 per cent in the 12th year, it added.
The construction activities of the project will result in direct and indirect employment to around 4,000 persons and will contribute to overall socio-economic development of the Union Territory.

Further, the Union Territory of Jammu and Kashmir will be getting free power worth Rs 5,289 crore and levy of water usage charges worth Rs 9,581 crore during the project life cycle of 40 years.

India’s oil imports at near 3 year high in December

Source: The Economic Times, Jan 19, 2021

NEW DELHI: India‘s crude oil imports in December soared to the highest levels in nearly three years to more than 5 million barrels per day (bpd) as its refiners cranked up output to meet a rebound in fuel demand, data from trade sources showed.

India’s year-end rush for crude supplies coincided with stronger demand from north Asian buyers during winter, boosting prices and an accelerating de-stocking of floating storage globally.

December oil imports by India, the world’s third biggest crude importer and consumer, were about 29% more than the previous month and about 11.6% higher than a year earlier, the data showed, after fuel consumption rose for a fourth straight month to an 11-month high in December.

“India’s refinery utilisation rates are also nearing full capacity and probably refiners are replenishing inventory anticipating higher prices during winter,” said Ehsan Ul Haq, analyst with Refinitiv.

“This is the harbinger of a recovery in fuel demand and improving refining margins.”

However, India’s annual crude imports declined by about a tenth in 2020 from the previous year to 4.04 million bpd, the lowest in five years, data compiled by Reuters showed.
The share of India’s imports from the Organization of the Petroleum Exporting Countries, including supplies from the Saudi-Kuwait Neutral Zone, fell to a record low of 67% in December. OPEC‘s average share for the first nine months of India’s current fiscal year which ends in March was about 74%.

While India cut back imports from Middle Eastern, African and U.S. oil in December from the previous month, it marginally lifted its intake of Latin American and Caspian Sea oil.

In December, Iraq remained the top oil supplier to India followed by Saudi Arabia, United Arab Emirates. Nigeria emerged as the fourth biggest supplier, pushing the United States down to the sixth position just after Brazil.

India’s fuel demand at 11-month high in December amid economic recovery

Source: Business Standard, Jan 09, 2021

New Delhi: India’s fuel demand rose for the fourth straight month in December as the resumption of economic activity took consumption to 11-month high, but it was about 2 per cent lower than pre-COVID levels.

The total demand for petroleum products in December 2020 fell to 18.59 million tonnes from 18.94 million tonnes a year back, according to provisional data published by the oil ministry’s Petroleum Planning and Analysis Cell.

Fuel consumption, however, posted a month-on-month increase for the fourth straight month, helped by reviving transportation and business activity.

India had consumed 17.86 million tonnes in November.

The consumption in December was the highest since February 2020.

While petrol had reached pre-COVID levels in September, diesel consumption returned to normal in October. However, its demand fell again in November and now in December.

Diesel demand, which had soared 7.4 per cent year-on-year in October, dropped 6.9 per cent in November and by 2.7 per cent in December to 7.18 million tonnes. Month-on-month, the demand slightly improved from 7.04 million tonnes.

Fuel demand had snipped by 49 per cent in April after a nationwide lockdown, imposed to curb the spread of coronavirus, shut industries and took most vehicles off-road.

The 69-day nationwide lockdown was followed by local and state-level restrictions. The curbs have eased only slowly and in phases, while localised restrictions in containment zones remain.

The onset of the festive season has fuelled a rise in consumption, but the public transport is not back to normal levels yet, as schools and educational institutions continue to remain shut in most parts of the country.

Demand for naphtha, which is used as industrial fuel for generating electricity and producing petrochemicals, fell 2.67 per cent to 1.23 million tonnes in December.

But, bitumen, used in road construction, consumption jumped by 20 per cent to 7,61,000 tonnes.

LPG – the only fuel that showed growth even during the lockdown period on the back of the government giving free cooking gas to the poor – was up 7.4 per cent at 2.53 million tonnes. Aviation turbine fuel or ATF sales fell 41 per cent to 4,28,000 tonnes as most airlines are yet to resume full operations. On a month-on-month basis, it improved by 13.5 per cent.

Private power cos to get Rs 40,000 crore liquidity boost: Crisil

Source: Economic Times, Dec 23, 2020

MUMBAI: Private sector coal-based power generators may see an equity infusion to the tune of Rs 40,000 crore, driven by government’s initiatives and state-run Coal India’s decision to extend the tenure of credit available to them, Crisil rating agency said in a report on Tuesday.

The central government announced a Rs 1.2 lakh crore loan scheme under Atmanirbhar Bharat to enable discoms to pay for outstanding dues to power generation companies. As per the scheme, the first tranche that would account for half of the total package, would be disbursed immediately and the balance upon discoms committing to operational improvements.

“To reduce the overdues, discoms have already begun signing into this scheme under the Atmanirbhar Bharat package. As of end-November, nearly half of the first tranche has been disbursed. Given the policy thrust, we expect full disbursement by the end of this fiscal. Private coal-based power plants should see a liquidity relief of about Rs 30,000 crore given that half of the overdues are owed to them,” said Nitesh Jain, Director, CRISIL Ratings.

The scheme comes as a big relief for power generators as state discoms have been delaying payment due to their weak financial position and weak cash flows during Covid-19-led lockdowns. Overdues to private generators was a staggering Rs 59,000 crore as of October this year.

The second thing that is seen boosting liquidity is that Coal India, which caters to around 80% of the coal requirements of the sector, decided to allow letter of credit facility of 90-180 days against cash advances of the coal purchases. Lower working capital requirements and easier access to coal would ensure reduced interest burden and improved operating efficiencies. This will lend stability to the credit profiles of power gencos.

“We estimate that even with a three-month credit period, payments for coal purchases worth Rs 10,000 crore can be deferred by power gencos, helping better cash-flow management. Together, these two measures, i.e. relief to discoms under the Atmanirbhar Bharat package, and credit period by Coal India could provide a Rs 40,000 crore liquidity boost to gencos,” said Naveen Vaidyanathan, associate director, CRISIL Ratings.

Crisil said that for the purpose of this analysis, it considered 53 gigawatts of operational coal-based power plants out of the total 231 gigawatts.

India seeks cheaper renewable power contracts to spur solar, wind projects

Source: Business Standard, Dec 10, 2020

India is considering plans to assist renewable energy developers as cash-strapped utilities shun the long-term contracts needed to underwrite new wind and solar projects, according to people familiar with the proposals.

State-run Solar Energy Corp. is discussing an option to pool electricity supply from renewable energy projects by developers including Adani Green Energy Ltd. and offer it to utilities at a more affordable price, according to the people, who requested anonymity to discuss private details. That should help the firms seal pacts with utilities and enable construction to start on as much as 15.2 gigawatts of renewable energy capacity, a sixth of current installations, and help the government meet its climate goals.

India’s renewable energy ministry didn’t respond to an emailed request for comment. Read the rest of this entry »