2/6/2010

1

1

Modelling for Energy Planning and Policy Analysis for Nepal

Joint TERI – ETSAP Workshop

Energy Modelling Tools & Techniques to address Sustainable Development & Climate Change

Amrit Man NakarmiSJM School of Management, IIT Bombay/

Center for Studies, Institute of EngineeringTribhuwan University, Kathmandu, Nepal

22 January 2010 2

Outline of Presentation

1) Introduction

2) Current Energy Sector Situation

3) Major Issues

4) Renewable energy resources potential

5) Modelling Framework: MAED & MARKAL

6) Future Energy Scenario Analysis

7) Major Policy Recommendations & conclusion

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3

Introduction

4

The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable – environmentally, economically, and socially. But that can –and must – be altered; there is still time to change the road we are on.

- World Energy outlook, 2008IEA

2/6/2010

3

8

Per Capita Primary Energy Supply in 2007

62

22 21 20

714

27

0

10

20

30

40

50

60

70

Ch

ina

In

dia

Pakis

tan

Sri

Lan

ka

Ban

gla

desh

Nep

al

Asia

n A

ver

GJ

Key World Energy Statistics, IEA, 20091 toe = 41.87 GJ

9

Per Capita Electricity Consumption in 2007

2,346

543 475 418144 81

705

0

500

1,000

1,500

2,000

2,500

Ch

ina

Ind

ia

Pakis

tan

Sri

Lan

ka

Ban

gla

desh

Nep

al

Asi

an

Aver

KW

h

Key World Energy Statistics, IEA, 2009

2/6/2010

4

Brief Introduction on Nepal

Population 28.11 million

Per capita GDP US$ 246

Area 147,000 sq km

Length 880 km (East-West)

Breadth 145 to 241 km (North –South)

Key World Energy Statistics, IEA, 2009

DOED, 2006

2/6/2010

5

12

Household

90.2%

Transport

3.80%

Industrial

3.5%

Commercial

1.5%

Agricultural/othe

r

1%

Household Industrial Transport Commercial Agricultural/other

End-use Consumption of Energy in Different Sectors in 2005

WECS, 2006

Total consumption: 367 million GJ

13

Energy Consumption in 2005

Total Energy Consumption 367 million GJ WECS, 2006

Renewable

0.50%

Coal

1.80%

Petroleum

8.20%

Electricity

1.80%

Traditional

87.70%

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14

Fuelwood requirement against sustainable supply (in TJ at 5.5% GDP growth rate)

Calculations based on MARKAL output & WECS, 2006 & Forestry Master Plan, 1988.

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2005 2010 2015 2020 2025 2030

TJ

Sust. Wood supply

SCEN55BA FWD

SCEN55CN FWD

15

Import of Petroleum Products against Commodity Exports

27%

31%

38% 41%45%

53%

57%

0%

10%

20%

30%

40%

50%

60%

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

'200

6/07

Economic survey, GON, 2007/08

Commodity export in

2006/07: NR 61 billion

1 US$ = NR 73.00

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Sensitivity Analysis of ratio of imports of petro products to

commodity exports

47%59%

70%82%

94%106%

117%129%

141%152%

164%176%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

40 50 60 70 80 90 100 110 120 130 140 150

Crude prices at US$ per barrel

%

Commodity exports in 2015 expected to grow at 11% as in the period 1995 -2005 to the value of 139 billion NR at 2001 constant prices.

Calculation based on ADB statistics on Nepal, 2008.

1 US$ =NR 73.0017

Monthly household life cycle costs of cooking in different fuels (based on D’sa and Murthy, 2004)

Year Kerosene LPG Electricity

1997 180 465 605

2000 385 405 680

2003 410 510 788

2009* 912 794 788

Economic cost

862 853

* At price adjustment in March 2009 (NOC, 2009)

NRs

Current LPG Price: loss of NR 87/cyl (Sept. 2009)Electricity price at NR7.30/unit

US$ 1 =NR 73.00

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Sales of petro-products in 2009

Petro-products Sales in KL/MT % growth from 2008

Gasoline 124,169 22%

Diesel 446,468 46%

LPG MT 115,813 24%

Kerosene 70,089 -65%

Total petro-products

828,022 14%

Source: NOC, 2009

Electricity sales and expected demand in 2010

Expected demand in

2010

GWh

Sales in 2009

GWh

Deficit in %

Expected demand/

sales

4,018 2,309 43%

Source: NEA, 20091 GWh = 1 million KWh (units)

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9

Load Curve on 8 March, 2009 (NEA)

Expected powercuts a day: 12 hours in dry season in 2010 (March- June)21

Major Issues in energy sector

Consumption of traditional fuels -unsustainable

Dependence on imported petroleum products – too much

Harnessing of the indigenous hydropower resources – very poor

Fuel substitution - strongly needed

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Energy Resources Potential

Renewable energy sources

Theoretical potential MW/MWa

Economical potential MW/MWa

Utilized

MW/units

% of utilization

Hydropower 83,000 42,000 688 1.6

Microhydro 50 10.2 20

Solar PV power plant

9,750 0

Solar PV home system

122 3.2 3

Wind Power 1,215 0

Biogas plant (MWa)

864 60 7

Solar water heating Urban (MWa)

82 23 28

Based on NEA, 2009; WECS, 2006; AEPC, 2008 and author’s calculations 23

Methodology

Useful Energy Demand Projection using Model for Analysis of Energy Demand (MAED) developed by International Atomic Energy Agency (IAEA), Vienna, Austria.

Energy Supply System Analysis using ASWER MARKAL developed by Energy Technology Systems Analysis Programme (ETSAP), International Energy Agency (IEA), Paris, France.

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End-use Approach for demand projection using MAED-2

Final Energy Demand in 2030

q Industrial sector

q Transport Sector

q Household Sector

q Service Sector

Ba

se

Ye

ar

20

05

Social data

Economic Data

Technological

data

Developmental

Policies

MA

ED

-2

100 90 80 70 60

Developmental

scenarios in future

years

Market

identification:

Identify the base

year 2005

Establish potential

economic &

demographic

scenarios: 2005 -

2030

Establish the

base scenario

Identify

technologies to the

growing of Nepali

market

MARKAL Energy

Systems Modelling

Framework

Energy Resources

Process Technologies

Conversion Technologies

End-use Technologies

Demands

Establish constraints to study

cases

Energy Mix Scenarios

MARKAL Methodological Diagram

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Methodology

Participatory workshops for issues identification

Collection of data from WECS, CBS, MOF, MOF&SC, NPC, NEA, NOC, World Bank, ADB, UN, ESMAP etc.

Analysis/Time horizon : from 2005 to 2030

Macroeconomic indicators –

GDP growth rate - 4.3 percent (average)

GDP growth rate – 5.5 percent

GDP growth rate - 7.0 percent Demographic parameter – population growth rate:

medium variant growth rate (leading from 2.23 percent to 1.74 percent in 2020 and onwards; CBS, 2003)

27

Future Energy Scenario

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28

Scenarios (Policy Interventions at Reference Case)

Introduction of Clean Energy Technology at Reference Case Traditional fuels and fossil fuels replaced by

electricity and/or fossil fuels.

Sub-sector 2020 2030

Industrial and commercial

Traditional and fossil fuels decreased by 20%

*Decreased 30%

Residential Urban Fuelwood share decreased by 50%

*Decreased by 75%

Residential Rural Fuelwood share decreased by 10%

*Decreased by 30%

*replaced by electricity, kerosene & LPG 29

Scenarios - Policy Interventions at Reference Case

CFL Penetration

Incandescent bulbs replaced by CFLs at the rate of 50 percent in 2020 and then linearly to 100 percent in 2030 industrial, commercial and residential sectors.

Transmission and distribution losses of electricity grid reduced from 25 percent in base year to 20 percent in 2015, and then linearly to 10 percent in 2030

*replaced by electricity, kerosene & LPG

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Scenarios - Policy interventions at reference case Introduction of New Transportation

Technology : Ethanol and bio-diesel mixing in petrol and diesel

respectively. Ethanol mix 10 percent 2020 onwards and 20 percent in 2030. Bio-diesel mix 5 percent 2020 onwards and 10 percent in 2030, and

Electric and hybrid cars introduced. Diesel and petrol cars to be reduced by 10 percent of reference case in 2020, 20 percent in 2025, and 30 percent in 2030.

Electric cars will be substituting at the rate of 5 percent in 2020, 10 percent in 2025, and 15 percent in 2030.

Hybrid cars will be substituting the remaining as 5 percent in 2020, 10 percent in 2025, 15 percent in 2030.

31

Scenarios - Policy interventions at reference case

All combined policy measures:

All combined policy measures pluswind power plant and solar water

heating system introduced.

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Energy consumptions in reference and combined policy cases

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2005 2010 2015 2020 2025 2030

TJ

Transport

Residential

Industrial

Commercial

Agriculture

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2005 2010 2015 2020 2025 2030

TJ

Transport

Residential

Industrial

Commercial

Agriculture

Reference case Combined case

33

Fuel Mix at Reference & combined policy cases

Energy mix in different periods

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2010 2015 2020 2025 2030

in %

RET

Grid electricity

coal

Petrol. Prod

Trad. Biomass

Energy mix in combined policy case

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2010 2015 2020 2025 2030

in %

RET

grid electricity

coal

Petrol. Prod

Trad. Biomass

Reference case Combined case

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Scenario Comparison

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2005 2010 2015 2020 2025 2030

TJ

SCen43BA

Scen55BA

Scen70BA

Scen55IRS

Scen55TR

SCen55CN

TJ

Model computation

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2005 2010 2015 2020 2025 2030

TJ

Econometric

Pokharel

NPCmedium

Scen55BA

SCen55CN

Comparison with other models

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Sustainable Energy Indicators in Reference Case Scenario

USD 1.00 = NR 73.00

Indicators Units 2005 2010 2015 2020 2025 2030

Final energy consumption/capita GJ/capita 15 16 18 21 25 30

Electricity consumption/capita kWh/capita 67 87 123 183 297 423

Energy Intensity GJ/1000$ 54 51 48 46 45 46

Electricty intensity kWh/1000$ 247 275 327 406 546 641

Electricity power utilized per cent 1% 3% 4% 7% 11% 18%

Total Energy Consumption/ value

added in industrial sector GJ/1000$ value added 23.7 23.9 26.7 31.0 38.4 43.9

commercial energy / value added GJ/ Bill Nrs 29,701 41,858 59,502 85,059 121,904 174,837

Total Energy Used/household GJ/HH 76.1 81.6 87.6 95.8 107.2 123.3

Electricity used/HH kWh/HH 177 261 372 536 774 1,115

Transport Energy Utilization GJ/M T-km 1.3 1.9 1.9 1.9 2.0 2.0

Transport Energy Utilization GJ/M P-km 0.4 0.5 0.5 0.5 0.5 0.5

share of non-carbon energy in

primary supply per cent 1.7% 1.99% 2.52% 3.29% 4.52% 5.27%

Share of renewable energy in final

total energy consumption per cent 2% 3% 3% 4% 6% 6%

the ratio of net import to total

primary energy supply per cent 10% 12% 15% 18% 21% 25%

GHG emission for every ton of

energy production and use GHG in Kg/capita 806 895 1,006 1,157 1,376 1,690

Sustainable Energy indicators for combined caseEnergy Indicators Units 2005 2010 2015 2020 2025 2030

Final energy consumption/capita GJ/capita 15 16 16 17 18 21

Electricity consumption per capita kWh/capita 67 99 158 282 533 882

Energy Intensity GJ/1000$ 54 49 43 38 34 31

Electricity Intensity kWh/1000$ 249 313 444 663 1,026 1,382

Electricity power utilized per cent 1% 2% 4% 7% 13% 23%

Total Energy Consumption/ value

added in industrial sector

GJ/1000$ value

added 24 24 26 30 36 41

commercial energy / value added GJ/ Bill Nrs 29,701 41,153 54,388 72,285 98,539 134,756

Total Energy Used/household GJ/HH 76 79 77 76 74 75

Electricity used per HH kWh/HH 177 261 475 853 1,549 2,552

Transport Energy Utilization GJ/M T-km 1 2 2 2 2 2

Transport Energy Utilization GJ/M P-km 0.4 0.5 0.5 0.4 0.4 0.4

share of non-carbon energy in

primary supply per cent 1.7% 2.3% 3.7% 6.3% 11.0% 15.9%Share of modern renewable energy in

final

total energy consumption per cent 2% 3% 5% 8% 14% 19%

the ratio of net import to total

primary energy supply per cent 10% 12% 16% 20% 25% 31%

GHG emission for every ton of

energy production and use GHG in Kg/capita 806 859 894 936 977 1,069

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39

HDI and per capita electricity consumption (ADB, 2007)

2,000 KWh per capita is needed to achieve HDI of 0.8.

40

Per Capita Electricity Consumption in 2007

2,346

543 475 418144

882705

0

500

1,000

1,500

2,000

2,500

Ch

ina

In

dia

Pakis

tan

Sri

Lan

ka

Ban

gla

desh

Nep

al

20

30

Asia

n A

ver

KW

h

Key World Energy Statistics, IEA, 2009

2/6/2010

19

Energy Intensity

41

-

10

20

30

40

50

60

2005 2010 2015 2020 2025 2030

GJ

/10

00$

SCEN55BA

-

10

20

30

40

50

60

2005 2010 2015 2020 2025 2030

GJ

/10

00$

SCEN55BA

-

10

20

30

40

50

60

2005 2010 2015 2020 2025 2030

GJ

/10

00$

SCEN55BA

-

10

20

30

40

50

60

2005 2010 2015 2020 2025 2030

GJ

/10

00$

SCEN55BA

-

10

20

30

40

50

60

2005 2010 2015 2020 2025 2030

GJ

/10

00$

SCEN55BA

SCEN55CN

Share of Renewable Energy in Total Final Energy

42

2% 3%3%

4%

6%6%

2%3%

5%

8%

14%

19%

0%

5%

10%

15%

20%

25%

2005 2010 2015 2020 2025 2030

%

Combined Policy case

Reference case

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Net Imports to Total Energy Consumptions

43

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2005 2010 2015 2020 2025 2030

TJ

Reference case

Combined Policy case

GHG Emissions in CO2 equivalent

-

10

20

30

40

50

60

70

80

2005 2010 2015 2020 2025 2030

in m

illi

on

CO

2 t

on

s

SCEN55BA

SCEN55CN

25 million tons in 2030 savings

12 billion NR through carbon trading (164 million USD) in 2030.

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Power Plant Installed capacity

618 9051,596

2,910

5,540

9,581

1,171 1,7882,845

4,797

7,481

-

2,000

4,000

6,000

8,000

10,000

12,000

2005 2010 2015 2020 2025 2030

MW

Reference

Combined

Total undiscounted supply investments

48,322

96,756

209,108

432,995

683,348

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2010 2015 2020 2025 2030

NR

millio

n

1 US$ = NR73.00

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Undiscounted Investment in RET

4,6357,702

26,122

51,734

87,079

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2010 2015 2020 2025 2030

Mil

lio

n N

R

1 US$ = NR73.00

48

Major Policy Options

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49

Major Policy recommendations & conclusion

Discourage use of fossil fuels

Prioritize indigenous hydropower as lead energy resources

Promote energy efficiency program

Emphasize on renewable energy technology

Deregulate energy sector

Regional cooperation with SA countries

Further improvement/development of MARKAL model and MARKAL-MACRO

Thank you !