IEEJ：April 2017 © IEEJ2017

India’s energy transition to mid-century:
supporting India’s aspirations

Suman Bery, Nonresident Fellow
IEEJ April 4 2017

IEEJ：April 2017 © IEEJ2017

Four transitions
1234

TRADITIONAL TO MODERN
Fuels, technologies, cost and focus

RURAL TO URBAN
Radical shift in consumption patterns

INTEGRATION WITH GLOBAL ENERGY MARKETS
Deeper partnerships, greater market power

ENVIRONMENTAL SUSTAINABILITY
From marginal to central

IEEJ：April 2017 © IEEJ2017

IEEJ：April 2017 © IEEJ2017

What’s special?

VALUE
Contribution tobetter-rounded debate

TIME HORIZON
Mid-century

PERSPECTIVE
Not prescriptive

ENERGY AS
A SYSTEM
Cross-cutting
challenges

CONTENT
7 different scenarios
3 modelling techniques
3 Institutions

AUDIENCEPolicy aware public,
not just specialists

IEEJ：April 2017 © IEEJ2017

India frugal; needs to remain so

IEEJ：April 2017 © IEEJ2017

Seven scenarios for primary energy

4500

4500

4000

4000

3500

3500

3000

mtoe

3000

mtoe

Total Primary Energy Demand Across Scenarios
Total Primary
Energy Demand Across Scenarios

2500

2000

2500
2000
1500

1500

1000

1000

500

5000
BAU02011
BAU

RESRESUCG

UCG2011OCNS
2051
OCNS

MTNS

MTNS

W&W

LCIG

W&W

LCIG

2051

Oil

Natural Gas

Coal

NuclearHydro-electricity

Biomass

Geothermal

Solar

Wind

Other Renewables

IEEJ：April 2017 © IEEJ2017

Electricity: 18% todayIEEJ：April 2017 © IEEJ2017

Fuels for electrification: key policy focus

Electricity Generation - 2050
10000
9000
8000
7000

TWh

6000
5000
4000
3000
2000
1000
02011
Oil

Coal

BAU
Gas

RES
Nuclear

UCG
Hydro

OCNS
WindSolar

MTNS
W&W
LCIG
Biomass
Other Renewables

IEEJ：April 2017 © IEEJ2017‘T-I-E’ Framework

Ineluctables

Elements

Shift (Why)

Needs (What)

Tools (How)Traditional
to Modern

Eradication ofenergy poverty

Infrastructure

Rural to Urban
Global Integration
Sustainability

Greater Diversity: energy
sources; technology mix
and stakeholders
Modernisation ofinstitutions, decisionmaking

Policy & Politics

Transitions

TechnologyPricing
Energy Diplomacy

IEEJ：April 2017 © IEEJ2017

The Tools: Infrastructure, hard and soft
‘HARD’ INFRASTRUCTURE‘SOFT’ INFRASTRUCTURE

Skewed development (especially in gas)
Overhaul coal transport and alignwith power sector plans

Investment climate for private sector
More than 50% of the investment in XII FYP
is from private sector

ROLE OF COAL CRITICALLEGAL FRAMEWORK

Investing in efficient coal infrastructure
increases yields and reduces risk ofstranded assets.

Impact of existing acts and rules on theimplementation of projects is serial
Felt further down the chain (e.g. pipeline
Issues impact power plant investment)

THE CLEAN TRANSITION

GOVT AS FACILITATOR

Demand creation by developing the gasgrid. Creating assets to balance variable
feed from RE sources is a prerequisite

Better regulation through better contracts
Sanctity of contracts to be respected

RISK OF URBAN FORM LOCK-IN

UNLEASHING PRIVATE SECTOR

Reduce reliance on private transport
Promote alternative technologies intransportation

De-risk investment in energy sector
Enable bond markets for energy
Private sector crucial in augmenting skills
and capacity to deliverIEEJ：April 2017 © IEEJ2017

The Tools: TechnologyNO SILVER BULLETTechnology important on both demand and supply side; Align technical progress and policy environment

Resource
Assessment &Production

3D, 4D imaging
Classification, 3D, 4D imaging&washery,&interpretation,
underground interpretation,
unconventional
coal gasification IOR/EORgasConversion(Ultra)Supercritical,
IGCC, CCS

H-frameturbines

Renewables

thin film
technology for
PV, CSP,Storage

Transmission &Distribution

Smart metering, smart grid

Demand-side

Energy efficiency, clean technologies, Storage

Costeffectiveness

Gas

Environmental
Sustainability

Oil

Availability

Coal

Deployment

MAKE VS. BUY
Avoiding lock-in.
Encouraging local adaptation
In R&D Building global technology research partnerships
Business model innovation for scale up

IEEJ：April 2017 © IEEJ2017

The Tools: Pricing
Rational Pricing should promote efficiency of energy use across the whole value chain, internalise true
costs and motivate investment in sustainable energy technologies and markets whilst improving the targetingof necessary subsidies.

MARKET PRICE DISCOVERYSTIMULATING PRIVATEINVESTMENTDISCOURAGING EXTERNALITIESIMPROVING SUBSIDYDISBURSALPROMOTING INTEGRATION WITH GLOBAL MARKETSIEEJ：April 2017 © IEEJ2017

India and Global Energy Markets
Energy security is not energy self-sufficiency
A complex quest for adequate quantities of energy resources, at prices that are affordable and predictable,
while minimizing the risk of overseas supply disruptions and ensuring sustainability of the environment andof the energy system for future generations.

Focus areas for India
ASSURED SUPPLYSAFE PASSAGE

Developing capacity for energy diplomacy
Critically evaluate overseas investments

Invest in building fleet capacity
Strengthen security partnerships in IOR

SECURE STORAGEFUNCTIONAL NSTITUTIONSBuild domestic storage capacity
Cooperative arragements for storage
Institutional capacity to manage reserves

Transparency; dealing with supply shocks;
collective security; arbitrate disputes;
pooling resources; sharing best practices

EXPLOITING MARKET POWER
Moving from a price taker to price influencer.

IEEJ：April 2017 © IEEJ2017

Policy and Governance‘RECONCILING ECONOMIC ANDPOLITICAL RATIONALITY’•

Aligning National, regional, global politics key
to successful implementation.

•Also interactions within state system(Union/State/City; Government andCourts).

CRITICAL INTERFACESINDEPENDENT REGULATOR?
Can independent regulators protect thesector from populist considerations andpolitical pressures?

ELEMENTS OF NEW POLICY
FRAMEWORK•

Longer-term horizons•Stability, coherence and transparency
across energy value chains

State (Governments, PSUs, Regulators,Courts) with private investor; energy
consumer; civil society.

•

Aim for continuous improvement on
demand side efficiency•

Transport infrastructure•

Facilitation infrastructureIEEJ：April 2017 © IEEJ2017

Summary• India’s growth, employment and strategic
aspirations will all force major changes in the
management of its energy system.
• Distrust of markets, imports, private sector byofficials and consumers will need to beovercome.
• Stability in policy and regulatory framework
essential for private finance.
• What can India learn from Japan?

IEEJ：April 2017 © IEEJ2017

Thank you!

Contact :report@tky.ieej.or.jp