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Indian Gas Perspective – Present & Future: Role of natural gas in fulfilling COP21 targets
2nd Annual Gas Summit
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©2016 ICF Consulting India Pvt.. Ltd. All Rights Reserved
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Good times ahead……
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1. Background and Changing environment
2. India’s NDC - Overview
3. Changing times ahead
4. What future holds
5. Key Takeaways
6. How gas industry needs to adapt
7. Big Game changers for future
Table of Contents
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Power sector being highly price sensitive, has been unable to absorb LNG
Total LNG Imports (Long Term, Spot) MMSCMD
2003-04 1
2004-05 9
2005-06 19
2006-07 25
2007-08 31
2008-09 30
2009-10 33
2010-11 36
2011-12 43
2012-13 41
2013-14 41
2014-15(P) 50
Source: Metis
Industry-wise Domestic Gas Supply Gas for 2013-14
(Total- 94.13 MMSCMD)
Industry-wise LNG Supply for 2013-14
(Total- 41.11 MMSCMD)
LNG demand in power sector supported by fall in global energy prices and PSDF support
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Sustainable Energy Transition for India to be marked by
various factors
1. Increased electricity
demand
2. Increase in per capita
consumption
3. Change in load shape
4. Reducing load factor
5. Addition of industrial
demand
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Sustainable Energy Transition for India to be marked by
various factors
• Boost for non-fossil based
generation and cleaner fuel
generation options
• Improving efficiency of coal based
generation
• Use of Clean coal technologies
• Boost to wind and solar generation
• Limiting GHG emissions
• Need for flexible generation for
integrating RE capacity
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COP21 commitments – a brief
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Commitment under NDC to shape the future
• Reduce emission intensity of GDP by 33% to 35% by 2030 (wrt 2005 levels).
• Govt. plans to achieve about 40 percent Generating capacity from non-fossil fuel based energy resources by 2030
• With a current installed capacity of 5.78 GW (and additional six reactors of 4.3 GW at different stages of commissioning and construction), efforts are being made to achieve 63 GW installed capacity by the year 2032, if supply of fuel is ensured
Targets for 2030
• 175 GW of RE capacity
– 100 GW of solar,
– 60 GW wind and
– 15 GW of Biomass + Small Hydro
Targets for 2022
• Target for whole economy
• Unclear how will this be distributed between
– Different sectors
– Centre v/s States
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• In absence of sector wise targets, we have assumed that same emission cuts are imposed on each sector.
– For Power Sector: From 2005 levels of 14.47 (Emission intensity of ‘GDP at factor cost’ in gm/INR, 2004-05 series), India has set a target of reaching ~9.41 gm/INR by 2030 (ie a reduction of ~35%)
• Power system will not be allowed to emit more than specified GHG to comply with target
To meet its commitment for INDC, a cap on total
system emissions will be needed
Historical Assumed
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Changing time ahead
Big game changers for Indian power sector: COP21 and RE capacity addition
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How to integrate 175 GW of RE capacity into system?
Will such huge RE capacity addition result in peak shortages?
Is system equipped to handle variability in demand?
Will it be sufficient to meet emission reduction targets, if not then what else can be done?
How will system meet emission reduction targets if RE capacity addition falters?
How will the change in load factor of system impact generation mix requirement?
Can mix of coal and RE alone be sufficient to balance the overall objectives?
What would be RE capacity requirement in that case?
How will system integrate that amount of RE?
Will there be significant amount of peak and energy shortages in the system?
What is the incremental cost on health for not reducing emission as promised?
Big game changers for Indian power sector: COP21 and RE capacity addition
Pertinent questions in front of planners right
now
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These questions can be answered using IPM®:
ICF’s proprietary power sector modeling tool
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I-IPM® is an Excellent and Versatile Long Range
Planning Model
• IPM® uses a Linear-programming based optimization approach
• It simulates least-cost plant dispatching and least-cost investments in generation capacity and interconnections to meet projected load in the region.
• IPM® is a long-term capacity expansion and production costing model for electric power systems including generation, transmission, and hourly demand
• It is a multi-regional, deterministic, dynamic, linear programming model
• Utilizes Dynamic Optimization Framework with an Objective Function of Minimizing the Present Value of Total System Cost subject to:
– Electricity Demand Constraints
– Reserve Margin Constraints
– Environmental Constraints
– Transmission Constraints
– Fuel Constraints
– Other Operational Constraints
• Simulates rational expectations for perfect foresight providing the framework for inter-temporal decision making
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ICF has a Global Scope in Power and Fuels
Markets
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What Future holds…..
Integrated Planning
Model – IPM®
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Each technology type has their own technical,
commercial and operational limitations
Limitations Solar and
Wind Biomass
Small-Hydro
Hydro (RoR)
Hydro (Storage)
Nuclear Gas Coal (Super
Critical)
Pace of Land acquisition P
Equipment supply P
Integration issues P
Capital cost P P P P P P
Fuel availability P P
Fuel Cost P P
Ability in providing flexible generation
NA Highly limited
Highly limited
Highly limited
Highly limited
Highly limited
Overall Potential P P
Fuel uncertainty P P P P
Delays in getting clearance P P P P P P
Local resistance P P P
Geological considerations P P
Emissions P P
If not for fuel prices, Gas is one of the best generation source. More importantly, (i) it can provide integration support to RE, and (ii) much less pollution than coal
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‘Coal continues to be the mainstay of power in India’ Hon'ble minister of State with Independent Charge for Power, Coal, New
and Renewable Energy
Year 2030 Year 2016
Mix much more
healthier in 2030
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NDC commitments to drive long-term gas demand from
power sector, however near term might remain slow
Near term gas
demand is primarily
driven by RE
integration
requirements
Long-term gas
demand is primarily
driven by emission
reduction
requirements
All India Gas Consumption
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However, if RE capacity addition falters, gas requirement
in near term may also rise significantly
All India Gas Consumption
Gas insurance: If RE capacity addition lags, Gas
requirement will also be felt in near term for
meeting emission reduction targets
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Although system will burn expensive gas based generation, but it will indirectly benefit common man by reducing its hospital bill
Committing to emission reduction targets will result in
significant reduction in total health costs
Reduction in health expense
of common man
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Role of gas in future……
Merit order stack based on average availability of different plant types
Gas as flexible generation for RE Integration
Gas as flexible generation And cleaner fuel
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Short-term: Gas demand of 15 BCM to 50 BCM (by 2022) dependent on pace of RE capacity addition
Long-term: Gas demand of 70 BCM to 80 BCM (by 2035), primarily driven by emission reduction targets
As gas continues to be the most expensive source of generation, gas is used as provider of last resort
Gas generation is required as mid merit to peaking generation capacity which ramps up and ramps down during day
Key takeaways
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Need for strong and independent pipeline network operator
Quick response gas storage facility needed on National Gas Grid
Ancillary service markets: Incentive to run at partial load
Gas exchange for spot purchase and sale of gas
Change in contracting structure between
Power plant and DISCOMs
Power plants and Gas suppliers
Business opportunity for pipeline storage systems
How gas industry needs to adapt….
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Depleted Field:
Advantage: large size and natural gas storage environment, least cost to develop
Drawback: slow response (seasonal storage)
Auifers:
Advantage: larger size compared to salt caverns and quicker response compared to depleted fields.
Drawbacks: large cushion gas requirement
Salt Caverns:
Advantages: very quick response times (cycled 10-12 in a year)
Disadvantage: relatively smaller sizes
LNG storage: Smallest sized storage but quickest response rate
Indian gas grid will require LNG storage solution
Storage systems across world
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Game changers for the future…. Things to watch out for
Clean coal technology Battery storage systems
Pump storage and hydro storage systems
Their impact needs
thorough evaluation
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