- •Foreword
- •Table of contents
- •1. Executive summary
- •India is making great strides towards affordable, secure and cleaner energy
- •Major energy reforms lead to greater efficiency
- •India is making energy security a priority
- •Significant progress in sustainable development
- •Energy technology and innovation enables “Make in India”
- •Key recommendations
- •2. General energy policy
- •Country overview
- •Major energy supply and demand trends
- •Energy consumption
- •Primary energy supply
- •Energy production and self-sufficiency
- •Political system and energy sector governance
- •Electricity sector
- •Coal sector
- •Oil and natural gas sectors
- •Climate and environment
- •Other ministries
- •Governance of public companies in the energy sector
- •Economy and the energy sector
- •Financial health of the power sector
- •Energy and climate policy
- •Energy taxation and subsidies
- •Goods and Services Tax
- •Subsidies
- •Electricity access
- •Clean cooking
- •The way towards a national energy policy
- •Energy data and statistics in India
- •Assessment
- •A co-ordinated national energy policy
- •Access to electricity and clean cooking
- •Economic efficiency
- •Energy security
- •Sustainability
- •Energy data and statistics
- •Recommendations
- •3. Energy and sustainable development
- •Overview
- •Energy, environment and sustainable development: An integrated policy response in the context of SDGs
- •Ensuring sustainable energy for all: SDG 7
- •Access to electricity and clean cooking: SDG 7.1 progress and outlook
- •Electricity access
- •Clean cooking
- •Renewables: SDG 7.2 progress and outlook
- •Energy efficiency: SDG 7.3
- •Energy and air quality: SDG 3
- •Current status of air pollutants
- •Air quality policy framework
- •Transport sector
- •Power sector
- •Industrial sector
- •The outlook for air quality
- •Energy-related CO2 emissions and carbon intensity: SDG 13
- •Sectoral GHG status and stated policy outlook
- •Energy sector role in GHG mitigation policy
- •Pricing of energy sector externalities
- •Energy sector climate change adaption and resilience
- •Assessment
- •Energy access
- •Energy sector and air quality
- •Energy and climate adaptation and resilience
- •Energy sector cost-effective response to climate change
- •Recommendations
- •4. Energy efficiency
- •Overview
- •Supply and demand trends
- •Energy consumption by sector
- •Industry
- •Residential
- •Services and agriculture
- •Transport
- •Policy framework and institutions
- •Policies and programmes
- •Industry
- •Buildings
- •Appliances and equipment
- •Municipalities
- •Agriculture
- •Transport
- •Assessment
- •Co-ordination, institutional capacity and data
- •Leveraging private-sector investments
- •Industry
- •Buildings
- •Appliances and equipment
- •Municipalities
- •Agriculture
- •Transport
- •Recommendations
- •5. Renewable energy
- •Overview
- •Supply and demand trends
- •Renewable energy in TPES
- •Electricity from renewable energy
- •Institutions
- •Policy and regulation
- •Electricity
- •Utility-scale renewables
- •Rooftop solar PV
- •Offshore wind
- •Off-grid solar PV
- •Bioenergy and waste
- •Barriers to investment in renewable energy projects
- •Transport
- •Industry
- •Assessment
- •Electricity
- •Transport
- •Industry
- •Recommendations
- •6. Energy technology innovation
- •Overview
- •Energy technology RD&D and innovation policies
- •Energy technology RD&D landscape
- •Public-sector RD&D actors
- •Public-sector RD&D priorities and co-ordination
- •Public-sector funding for energy RD&D
- •Private-sector energy RD&D landscape
- •International collaboration
- •Assessment framework
- •Non-financial support and policies
- •Direct and indirect financial support
- •Assessment
- •Strategic planning of energy RD&D activities
- •Inter-ministerial RD&D programme co-ordination
- •MI RD&D goals
- •Private-sector engagement to spur energy RD&D investment
- •Leadership in energy RD&D international collaboration
- •Recommendations
- •7. Electricity
- •Overview
- •Supply and demand trends
- •Electricity generation
- •Imports and exports
- •Consumption
- •Electricity access
- •Institutions
- •Market structure
- •Transmission
- •Captive producers
- •System operation
- •Power market reforms
- •Assessment framework
- •A. India’s power system transformation
- •Policies for decarbonisation
- •The role of nuclear power
- •B. Electricity markets to maximise investments and consumer outcomes
- •The wholesale market
- •Wholesale market reforms
- •Investment in the power sector
- •Power assets under financial stress
- •The retail markets in India
- •Retail market rules and regulations
- •Metering and smart meters
- •The financial health of the DISCOMs
- •Tariff reforms
- •Electricity retail pricing
- •C. Ensure power system security
- •Reliability
- •Generation adequacy
- •Network adequacy
- •Quality of supply
- •Flexibility of the power system
- •Assessment
- •Recommendations
- •8. System integration of variable renewable energy
- •Overview
- •Supply and demand trends
- •Penetration of VRE at the state level
- •India’s system integration challenges
- •General considerations for system integration
- •Different timescales of system flexibility requirements
- •System operation and electricity markets
- •System operation – generation dispatch
- •System operation – forecasting of wind and solar output
- •Power market design to support system integration of renewables
- •Flexibility resources in India
- •Power plants
- •Thermal plants
- •VRE sources
- •Electricity networks and grid infrastructure
- •Case study – Green Energy Corridors
- •Distributed resources
- •Demand response and retail pricing
- •Storage
- •Battery storage
- •Future sector coupling, hydrogen (ammonia)
- •IEA flexibility analysis – A scenario outlook to 2040
- •Assessment
- •Advanced system operation
- •Improving electricity market design
- •Flexibility resources
- •Recommendations
- •9. Coal
- •Overview
- •Supply and demand
- •Resoures and reserves
- •Domestic production
- •Imports
- •Coal consumption
- •Institutional framework
- •The public sector
- •The private sector
- •Government policies
- •Royalties and levies
- •Commercial mining
- •Coal and railways
- •Coal supply allocation and pricing
- •Coal washing
- •Local air quality policies
- •India’s climate commitments and the role of coal
- •Carbon capture and storage
- •Assessment
- •Recommendations
- •Overview
- •Supply and demand
- •Oil supply
- •Oil demand
- •Oil trade: imports and exports
- •Crude oil imports
- •Oil products imports and exports
- •Institutions
- •Retail market and prices
- •Market structure
- •Pricing
- •Upstream: Exploration and production policies
- •Infrastructure
- •Refineries
- •Ports and pipelines
- •Storage
- •Security of supply
- •Emergency response policy and strategic stocks
- •Demand restraint
- •Assessment
- •Recommendations
- •11. Natural gas
- •Overview
- •Supply and demand
- •Gas production and reserves
- •Institutions
- •Gas infrastructure
- •Gas policy
- •Markets and regulation
- •Upstream
- •Midstream
- •Downstream
- •Security of gas supply
- •Domestic gas production
- •Diversity of the LNG import portfolio
- •Pipeline import options
- •Availability of additional LNG volumes
- •Availability of seasonal storage
- •Assessment
- •Recommendations
- •ANNEX A: Organisations visited
- •ANNEX B: Energy balances and key statistical data
- •ANNEX C: Acronyms, abbreviations and units of measure
10. OIL
Demand restraint
India does not have any policy to manage the demand for oil during an oil supply emergency, apart from general provisions under the Essential Commodities Act 1995 to maintain equitable distribution of petroleum products.
An Emergency Response Assessment was carried out in collaboration with the IEA in 2013/14, followed by constructive recommendations. PPAC has carried out a vulnerability assessment of the concentration of infrastructure in the selected areas. New infrastructure being constructed since the assessment has been spread out across the east and west coast equally to better respond to emergency disruptions.
Assessment
India is the world’s third-largest consumer of oil after China and the United States. The growth of oil consumption in India is expected to surpass that of China in the mid-2020s. Its oil consumption of 4.4 mb/d in 2017 already represents 5% of global consumption, and it is set to grow at a rapid pace of 3.9% per year (well ahead of the global average of 1.2%) in the medium term (IEA 2019c), despite the market penetration of alternative fuels like biofuels and gas. The GoI is pursuing a policy of decreasing the country’s import dependence on oil, alongside encouraging increases in renewable energy and natural gas usage.
This rapid growth is mainly driven by transport, mostly freight. Industry is the second main oil consumer, including for non-energy use in the chemical and petrochemical industry. The increased use of LPG as a cleaner cooking fuel, replacing firewood or kerosene, makes India one of the world’s largest LPG importers.
Proven oil reserves in India are limited compared to domestic needs and production is in decline. The possible new discoveries in Rajasthan are unlikely to fully compensate for the depletion of existing fields. A new policy framework with fiscal incentives to promote enhanced recovery was issued in October 2018 and February 2019.
India’s strong dependence on oil imports, already at 83%, is expected to increase. With an oil import bill of around 4% of GDP today, and 65% of imports coming from the Middle East through the Strait of Hormuz, the Indian economy is and will become even more exposed to risks of supply disruptions, geopolitical uncertainties and the volatility of oil prices.
The operationalisation since 2017 of HELP is a welcome new step to liberalise the upstream market and attract foreign investors. The Round 1 of the OALP was successfully concluded in May 2018, with around 76% of the total blocks being awarded to private companies. It is well recognised that foreign investors can not only contribute to the diversification and security of supply, but also be an effective vehicle to import international good practices on decommissioning and the safety of offshore operations. However, the appetite of foreign investors remains low for now, reflecting how the upstream sector remains highly concentrated in the hands of India’s national oil companies, which hold the lion’s share of acreage but have financial constraints on developing them, and the poorly documented geological reserve base (Sen A., 2016).
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10. OIL
India is improving the quality of its geological data, but there is still a perceived low potential for oil prospects in comparison with other sites in the world.
India is the fourth-largest oil refiner of the world and a net exporter of refined products. According to India’s roadmap on oil refining, the country’s aims to reach 443 Mt total refining capacity by 2030, exceeding its estimated domestic demand level. In the medium term out to 2025, the IEA expects India to add 0.5 mb/d of refining capacity by 2024 and see reduced diesel net exports due to refinery capacity being below demand growth.
The IEA welcomes the attention given by the GoI to energy security, which in the oil sector is reflected by two main developments. The first is the active energy diplomacy of India to diversify its sources of supply and to acquire shares in overseas oil fields (Russia, Oman, the United Arab Emirates and Namibia). This progress indicates a successful transition from the conventional buyer–seller engagement to a strategic partnership based on bilateral investments. The second is the progressive building up of dedicated oil emergency stocks as part of an internal oil emergency response policy.
India’s dedicated oil emergency stocks are in the form of crude oil held by ISPRL to supplement the commercial storage at refineries. The first underground caverns for the strategic reserves with a capacity of 40 mb have been built and are now filled, partly by the stocks owned by ISPRL, and partly through a public–private partnership with ADNOC. A second phase for additional capacity of 50 mb is now under preparation, with new sites selected in October 2018. The business model and the type of public–private partnerships to build the caverns of the second phase are still under investigation. In 2019 Saudi Aramco also voiced interest in investing. The United States has announced support to the efforts of India to increase its strategic oil reserves.
India’s net oil imports are expected to more than double up to 2040. Today's ISPRL storage capacity of 40 mb can cover around 10 days of present day net imports. But the same volume will cover only 4 days of net imports in 2040. It is therefore important to indeed pursue the announced second phase of the strategic stockholding policy and prepare future phases. The IEA welcomes current efforts to intensify discussions with potential investors and other countries with a long experience of holding stocks.
The GoI has announced it will drop investment requirements for local content amidst plans for further opening up the oil market. However, the GoI should balance the interest in attracting investment with the need for investment in the security of supply, including stockholding and reserves.
The existing contingency plan should be reviewed to ensure that in the case of a serious supply disruption, the emergency stocks are available and physically accessible for the large consumption centres across the whole territory. The 2012 joint India–IEA Emergency Response Exercise had detected that the infrastructure to connect Delhi was vulnerable. The subsequent emergency response assessment carried out by the IEA in 2013/14 provided constructive recommendations, which were well received by the GoI. The GoI asked PPAC to carry out a vulnerability assessment of the concentration of infrastructure in particular areas. With considerable new infrastructure being constructed since then, the Indian government is open to re-evaluating the adequacy of infrastructure in collaboration with external institutions such as the IEA. The emergency plan could also be expanded to identify priority users and to include demand restraint measures in case of imminent major disruptions.
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10. OIL
Internal inter-ministerial procedures at the central government level have also been established to release oil stocks in case of an emergency. However, in case of a serious disruption, the challenge still remains to ensure proper co-ordination between the central government, the states and industry actors. The division of responsibilities between multitudes of actors should therefore be clarified for more efficient co-operative response during a crisis.
Investment is needed to upgrade the capacity of refineries to comply with the new emissions standard BS VI (EURO 6), requiring fuels with reduced sulphur content. There is scope to improve India’s oil market framework to increase refinery output sold at market prices and ensure a level playing field between the national oil companies, joint ventures and private companies. The PNGRB was created in 2006 to protect the interests of consumers and entities engaged in the sector and to promote competition. Regulatory oversight is important to ensure non-discriminatory third-party network access, in particular on pricing, over which PNGRB has no legal authority. Therefore, India’s regulatory oversight of the sector could be further strengthened to ensure non-discriminatory access and pricing. This becomes even more important given the emerging foreign investment and the many new players entering the Indian oil market.
India should be commended for its reform of LPG subsidies. Action to better target and rationalise LPG subsidies by organising a direct transfer of the aid for cooking gas to the appropriate users has been a tremendous success. The Direct Benefit Transfer and Pratyaksh Hanstantrit Labh (PAHAL) have improved the health of the indoor environment and its occupants, and saved in total USD 8.8 billion during 2013-19. The IEA encourages India to further target subsidies in the oil sector to foster clean energy access for all.
Recommendations
The Government of India should:
Reinforce its oil emergency response policy to adapt it to the expected strong growth in oil consumption, with increased dedicated emergency stocks and procedures, including demand restraint measures and a proper analysis of risks by using oil disruption scenarios.
Enhance international engagement by India on global oil security issues.
Strengthen the regulatory oversight of the sector, non-discriminatory access to oil transport and the level-playing field in the midand downstream oil sector.
Further promote the diversification of oil sources and reduce India’s high oil import dependence by enhancing exploration and production activities and the development of alternative sources, such as biofuels.
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References
DGCIS (India Directorate General of Commercial Intelligence and Statistics) (2018), Annual Report, 2017/18, http://www.dgciskol.gov.in/Writereaddata/Downloads/Annual_Report_2017-2018.pdf
IEA (International Energy Agency) (2019a), World Energy Balances 2019 (database), IEA, Paris, www.iea.org/statistics/.
IEA (2019b), Oil Information 2019, IEA, Paris, www.iea.org/statistics/. IEA (2019c), Oil Market Report 2019, IEA, Paris,
IEA (2019d), Monthly Oil Data Service 2019, IEA, Paris, https://www.iea.org/statistics/mods/.
IEA (2019e), World Energy Prices 2019, IEA, Paris, www.iea.org/statistics/. IEA (2018a), Future of Petrochemicals, IEA, Paris.
IEA (2018b), The Costs and Benefits of Emergency Stockholding, IEA, Paris. IEA (2018c), World Energy Outlook 2018, IEA, Paris.
IOCL (Indian Oil Corporation Limited) (2018), Supply Chain Management of LPG in India, https://www.lpgc.or.jp/corporate/information/images/Mr.Lakshminarayanan.pdf.
MoPNG (Ministry of Petroleum and Natural Gas) (2019), Nearly 1.04 crore LPG Consumers Voluntarily Surrender their LPG Subsidy under ‘GiveItUp’ Campaign, http://pib.nic.in/newsite/PrintRelease.aspx?relid=188354.
MoPNG (2018a), Indian Petroleum and Natural Gas Statistics 2017/18, http://petroleum.nic.in/sites/default/files/ipngstat_0.pdf
MoPNG (2018b), Bid Round –II under Discovered Small Field Policy will be launched on 9th August 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=181654.
Planning Commission (2005), Draft Report of the Expert Committee on Integrated Energy Policy, http://planningcommission.nic.in/reports/genrep/intengpol.pdf.
Sen, A. (2016), India’s Upstream Revival – HELP or hurdle? Oxford Institute for Energy Studies, November 2016, https://www.oxfordenergy.org/wpcms/wp- content/uploads/2016/11/Indias-Upstream-Revival-HELP-or-Hurdle.pdf?v=11aedd0e4327.
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IEA. All rights reserved.