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Keynote Address 2017

Estimating and Supplying Electricity needed by Aspirational India

Padmashri Hon. Er. Ravi B. Grover

Homi Bhabha Chair,
Member, Atomic Energy Commission

Guest of Honour

Estimating growth in electricity requirements : A frequently asked question is, “How much electricity is needed by India?” To answer this question, one approach is to follow a top-down econometric model whereby one examines growth in economy, looks at the relationship between economic growth and energy requirements, & incorporates influence of technological and policy changes exogenously. The alternative is to follow a bottom-up approach, whereby one estimates demand based on equipment saturations, efficiencies and usage.

A simplified forecasting method : One can have a first order estimate to draw conclusions based on what is happening elsewhere in the world. As per data for 2014 published by International Energy Agency, average global per capita electricity consumption is 3030 kWh per annum (kWh is colloquially known as a unit). The corresponding figure for India is about 805, and for developed countries of the OECD group, it is 8028. Majority of the OECD countries are in the temperate climate zone. Therefore, let us examine the scene around India: the figure for Singapore is 8844, for Malaysia 4646 and for Thailand 2566. The projected global average per capita consumption by the middle of the century is 7500 units. We can use this data to set a target which India can aim at. An emphasis on energy conservation and improvement in energy efficiency of industry and household gadgets will help in reducing electricity consumption, but looking at the trend in improvement in energy efficiency, bringing it below about 5000 units per annum to enjoy a standard of living as enjoyed by citizens of OECD countries seems difficult. Assuming India's population by the middle of century will be about 1.6 billion and transmission and distribution losses will come down to the lowest technically feasible value of about 7 %, India must plan to generate about 8600 Billion Units (BU) to provide 5000 units per capita per annum to its citizens.

The cumulative average growth rate of electricity generation in India for the period 2006 -07 to 2015-16 was close to 6%. Based on extrapolation, one can conclude that it is possible to exceed this level of electricity generation by around the middle of the century. To put this number in perspective, in 2016-17, generation by utilities was 1242 BU. Data for generation from non-utilities is not yet available, but one can assume it to be the same as in 2015-16 that is 168 BU. The total generation was thus 1410 BU. Assuming a population of 1.3 billion, it translates to a per capita generation of 1100 units. Thus, electricity generation projected for 2050 is six times the total generation in 2016-17 and in terms of per capita generation, it is about 4.5 times. India has a long way to go.

Rising share of electricity in energy mix : The target of per capita availability of 5000 units per annum is very modest. This is due to several reasons. Percentage share of electricity in total energy consumption is increasing due to convenience of end use and cleanliness from climate change perspective. As per estimates by the International Atomic Energy Agency, this share was 34.8% in 2015 for Middle East and South Asia, and is projected to increase to 52% in 2050. The Government of India has announced policy initiatives like electricity and housing for all, accelerated infrastructure development, make in India, electrification of transport and so on. All these initiatives call for availability of more electricity on a reliable basis.

Importance of electricity for aspirational India : Many have opined that we should return to a frugal way of living and consume less electricity. Can one expect young in India to lead a frugal life when electricity consumption is continuously rising elsewhere in the world? Aspirational India has a desire to work and live in air-conditioned spaces, reduce drudgery of home work by using electrical appliances, entertain itself by deploying the best theatre system, communicate with friends and relatives as and when they desire, commute in comfort in non-polluting transport and so on. Once basic amenities are available, an ordinary Indian will become an aspirational Indian.

Human lives have become more productive because of electrical lighting and indoor climate control. Electric bulb gave humans control over lighting inside work-places and homes irrespective of the time of the day. Indoor heating for climate control increased productivity in countries in colder regions of the world and air-conditioning is doing that now in tropical countries including India.

Supplying electricity needed : Given this backdrop, let us look at the supply side and the need to maximise the use of low-carbon energy sources that is large hydro, Variable Renewable Energy (VRE) sources, and nuclear. Last year generation from hydro was 122 BU. While potential for large hydro in India is much more than 122 BU, exploiting the additional potential needs more time.

According to a report of Niti Aayog, India's solar potential is greater than 750 GW and wind 302 GW. Assuming a load factor of 20%, this could generate 1840 BU. All these numbers are rough estimates, but make it clear that total possible generation from large hydro and VRE can at best be about a quarter of the projected requirement of 8600 BU.

Supply options based on low-carbon sources and their characteristics : The share of electricity generated by nuclear power must be ramped up as soon as possible and large investment must be made in research and development in electricity storage technologies to derive full benefit from VRE sources. Until installed capacity based on low carbon sources picks up, fossil fuels have to continue to play their role. I am stressing on nuclear, VRE that is solar and wind, and large hydro in view of three characteristics namely health costs, system costs and the ratio Energy Returned on Energy Invested, EROI in short.

Health Costs : Health effects arise due to pollutants such as particulate matter and harmful gases released through the stack, and manifest as external costs. The term 'external costs' is used to denote the cost that the party responsible for generating emissions does not account for and consequently consumers of electricity do not pay for. External costs are paid in terms of health effects (deaths, serious illness, minor illness) by those who are exposed to emissions. External costs have been extensively studied in the European Union through ExternE project over about 15 years' period ending in 2005. Study follows dose-response approach, where pathways through which pollutants are dispersed are mapped, dose of pollutants received by humans is estimated, its health effects studied and finally a monetary estimate (lost working days and cost of medication) of the health effect is evaluated. Results are well summarised by Markandeya and Wilkinson (2007) and nuclear has minimum health effects or external costs among the electricity generation technologies studied namely, lignite, coal, oil, gas, biomass and nuclear. All aspects related to radioactivity were factored in the study.

Following ExternE, EU launched another project, New Energy Externalities Development for Sustainability (NEEDS) and this study (Ricci A, 2009) also concluded that nuclear has very low external costs as compared to other technology options. Based on low external costs, this study favours nuclear along with wind and solar.

System Costs : An electricity generating plant provides electricity to a consumer through a transmission and distribution network. It does not exist in isolation. It is a part of an electricity grid. One can divide the cost of electricity in two parts namely plant-level costs and grid-level costs. Plant level costs arise from capital cost and generation cost. Generation cost combines the cost of capital (that is return on equity and interest on debt), fuel, operation and maintenance. Owner of an electricity generator focuses on plant level costs.

Components of grid level costs, apart from losses, are the following.
• Grid connection, • Grid-extension and reinforcement, • Short-term balancing costs, and • Long-term costs for maintaining adequate back-up supply.

All commercial electricity generators are connected to the grid. In some countries pumped water storage facilities are in operation to store any excess electricity. However, compared to the size of the grid, such facilities in India are extremely limited. Therefore, generation must always match demand. In view of their intermittent nature, VRE sources, such as solar and wind, generate 'system effect' that are significantly larger than those caused by 'dispatchable' technologies that is the technologies that are available when needed such as nuclear, large hydro and thermal. VRE sources demand strengthening of the grid, impose higher level of short-term balancing costs as well as long-term costs for maintaining back-up supply. Such costs are known as 'system costs'.

To explain in simple language, for arriving at peak load that grid has to cater to, one cannot take advantage of VRE sources as they may not be available when peak demand arises. Total installed capacity based on dispatchable sources have to be equal to the peak load and therefore, capital investment in VRE generators is an additional investment. The policy of priority feed-in available to VRE generators forces dispatchable generators to operate at low capacity factors & thereby raises the cost of electricity generation.

Draft National Electricity Plan issued by the Central Electricity Authority (CEA) in December 2016 explains system costs in qualitative terms and system costs have been quantified by studies in other countries and compiled in a report by the Nuclear Energy Agency of OECD. To quote one example, based on data from Germany, at 10% penetration, system cost of generation by solar is ₹2.32 per unit, while for nuclear, it is 0.02 per unit. Further, for VRE, it rises with increased penetration, while for nuclear, it marginally declines with increased penetration.

To encourage generation by VRE sources, they are provided with priority feed-in. Result is that coal-fired power plants have to back down whenever VRE sources are available resulting in operation of coal-fired plants at low capacity factors. This can be clearly inferred from the data on CEA website. Priority feed-in provided to VRE generators without asking them to make provision for electricity storage is a huge subsidy. No attempt has been made in India to quantify this subsidy. Comparing cost of generation of electricity by nuclear and coal with that of solar and wind without including system costs amounts to ignoring a huge subsidy. From a long-term point of view, ignoring this fact will reduce the reliability of Indian electricity grid which is already suffering from large transmission and distribution losses.

EROI : The third issue that is the concept of Energy Returned on Investment, EROI in short. Net energy gain or useful energy that is available to society is the difference between energy returned and energy invested. It is an evolving field of study and precise value of EROI for various energy systems are being calculated only in recent years. Several complexities are involved in method of calculations. The first is the system boundary. Take the case of petroleum. One can calculate EROI for extraction of petroleum. Or one can include the complete chain involving extraction, refining and transport to the end user. At every stage of this chain, energy has to be invested. Therefore, it is very important to draw appropriate system boundary when one is comparing various energy systems.

The second issue is to appreciate the difference between the primary energy & the electrical energy. As per the second law of thermodynamics, fraction of thermal energy that can be converted into electrical energy depends on temperatures of the heat source and the heat sink, and it is not possible to convert all the thermal energy into electrical energy. The primary energy and the electrical energy are two different forms of energy and in calculations of EROI, one has to understand the difference. Some conventions have been developed by energy economists for such an analysis. While comparing data from different researchers, one has to ensure that proper convention has been followed by those whose data is being compared.

The third issue is accounting for difference between the EROI of an energy source and the EROI of the grid which has several sources connected to it. The EROI of the grid is a weighted average of the EROI of all sources connected to it. While setting up energy infrastructure, one draws electricity from the grid and the grid in any region will have an associated EROI. This could be higher or lower than the EROI of the source being investigated. One has to apply a correction for this factor to arrive at the inherent characteristic of the energy source under investigation. The EROI which has been so corrected is called the dynamic EROI.

According to a study published by researchers from Princeton University, for an electricity growth scenario for the period 2010-2100, the dynamic EROI is as follows: nuclear (62), hydro (57), wind (39), coal (38), gas (8) and solar (6). This data do not factor in energy associated with grid integration, which is very high for solar & wind due to requirement of storage, energy efficiency associated with storage, and grid extension.

The final issue is what value of the EROI is adequate for a grid. This is a difficult question and to understand it, please see Figure 1, which was first presented by E. Mearn in a conference organised by the Royal Society of Chemists in Scotland in 2008.

One may note that useful energy available to society as percentage of energy invested decreases slowly with decreases in EROI until about 7 & then it decreases sharply. This diagram, popularly known as Energy Cliff, provides guidance about what value of EROI is necessary from the point of view of usefulness of a given energy source to the society. Energy cliff shown in the Figure 1 tells us that a very low value of EROI cannot provide a sustainable source of energy. Setting up of energy infrastructure and generation of electricity involves flow of construction material as well as water. Lower the EROI, larger will be the environmental foot-print of a given source of energy. Energy economists are coming to understand these issues only now and when this understanding becomes widespread, energy planners will be able to frame policies to monetise gains associated with energy sources having high value of EROI. In the literature, one can see some criticism of the concept of EROI because different publications give different numbers. The difference comes from issues of boundary and consistency, but there is no doubt about nuclear, hydro, wind and coal having a high EROI.

Concluding remarks : While deploying various energy sources, energy planners should factor in all costs and benefits in a transparent manner so that energy can be made available to citizens at affordable prices and with a high degree of reliability. Research and development is needed to develop electricity storage technologies at industrial scale so that system costs of VRE sources can be decreased and extent of penetration can be increased. Considering imperatives of climate change, a judicious mix of all low-carbon energy generating technologies that is VRE, large hydro and nuclear, should be incentivised.

In view of positive characteristics of nuclear energy, I am very optimistic about its future at the national as well as at the global level. With this background, one can review India's nuclear programme. Installed capacity of plants in operation is 6780 MW. Seven plants are under construction. These are 2x700 MW at Kakrapar, 2x700 MW at Rawatbhata, 2x1000 MW at Kudankulam (units 3 & 4), and a Prototype Fast Breeder Reactor of 500 MW at Kalpakkam. This makes the total capacity under construction as 5300 MW. Plants already approved include 2x1000 MW at Kudankulam (Units 5 & 6), 2x700 MW at Gorakhpur, Haryana, and 10x700 MW PHWR (Gorakhpur 3&4: 2x700; Chutka: 2x700; Mahi Banswara: 4x700; Kaiga: 2x700). Units under advanced stage of planning are as follows.

• 6x1200 MW at a new site (the new site is under approval); all VVERs to be set up in technical collaboration with Russia.
• 2 x 600 MW FBRs at Kalpakkam and 4x600 MW FBRs at a new site to be constructed by Bhavini.
• Reactors at additional sites already approved : 2x700 at Bargi (MP), 4x700 at Bhimpur (MP), and 6x1000 at Haripur.
• 6 x 1100 MW at Kovvada, all AP1000, to be set up in collaboration with Westinghouse; USA.
• 6 x 1594 MW at Chhaya Mithi Virdi, all ESBWRs, to be set up in collaboration with GE-Hitachi; USA.
• 6 x 1650 MW at Jaitapur, all EPRs to be set up in collaboration with France.

There is uncertainty regarding projects to be set up in collaboration with the USA and France because of issues such as bankruptcy of Westinghouse, takeover of Areva by EdF etc. However, sites having been chosen, one can always set up indigenous nuclear power plants at those sites.

Overall, the programme to expand nuclear installed capacity is quite aggressive, but one can expect still more approvals in the years to come as the Government is committed to follow a low-carbon growth trajectory. One may recall that in 2015, India communicated its Intended Nationally Determined Contribution (INDC, 2015) for the period 2021 to 2030 to the climate change conference and to achieve the target of enhanced generation from non-fossil sources, the communication lists the following.

• To make efforts to achieve 63 GW installed capacity based on nuclear generation by 2032 provided nuclear fuel supply is ensured.
• To aggressively pursue development of vast hydro potential in the country.
• To achieve by 2022 a target of 60 GW installed capacity based on wind, 100 GW based on solar and 10 GW based on bio-mass.
The target of 63 GW by nuclear by 2032 is ambitious, but necessary for India to follow a low-carbon growth path. DAE and industry in India have the capability to achieve this target.

1 This article combines and expands the material included in articles published by the1 author in the newspapers 'Economic Times' on 15.07.2017 and 'The Hindu' on 31.08.2017.
2 This article combines and expands the material included in articles published by the author in the newspapers 'Economic Times' on 15.07.2017 and 'The Hindu' on 31.08.2017.
3 Large hydro is, in many cases, only seasonally dispatchable. s, only seasonally dispatchable.

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