IEEJ：July 2017 © IEEJ2017

India’s Energy Strategy: Draft
National Energy Policy (NEP)
2040

NITI Aayog
GGovernmentt off India
I di

12th July,July 20171

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Presentation Structure• Drivers behind the New Energy Policy• Schematic of the Policy Proposals• Proposals in the Supply sub-sectors (Oil& Gas,
GCoal,
C l RenewableR
bl Energy,
EElectricity, Nuclear Energy)• Energy Efficiency• GovernanceGo ernance• India @ 2040
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Drivers behind theNew Energy Policy

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India’sIndias Ambitious Energy Agenda
 Government’s bold announcements for 2022:
 Universal electrification and 24x7 power supply Clean cooking for all 175 GW of renewables electricity capacity
 Raising the share of manufacturing in GDP to 25% (17%presently)
 Reduction of oil imports by 10% points (82% presently)

National Energy Policy must lead tothe achievementi
off these goals.

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Other Motivators
 Developments in the global energy markets:o Sharp decline in the price of oil (50%), and gas (70%) over2014

 Maturity of solar and wind technologies: India hasabundant sunshine and wind potential
 Airi quality
lit concerns iin cities
iti International commitments: Sustainable Development
Goals (SDGs) and Nationally Determined Contributions((NDCs))5

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Id tifi
Identifies
EnergyE
Challenges
Ch ll
 Access and Affordability Importp
Dependence
p– Highg and Risingg (82%(for oil)) Power Sector Transition – Towards Higher Share ofR
Renewablebl Energy
E(RE):(RE) onlyl 6% presentlytl iin generationti Air Quality Concerns Attracting Investment in energy sector ($150 billion per year
until 2040)

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NEP Proposes the Way Forward Offers the roadmap
p of an energy
gy secure India in twotimeframes – 2022 and 2040
 Replaces
R lththe obsoleteb l t Integrated
I tt d Energy
EPolicy
P li (2008)
 Integrates Provincial Governments and Federal Ministries:o Demand side: Agriculture, Housing, Shipping, Road Transport,
Rail Civil Aviation
Rail,Aviation, and Industries
o Supply: Petroleum, Power, Coal, Renewable Energy, andAtomic Energyo Facilitators: Environment, and Finance
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Schematic of the Policy
Proposals

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Upstream

Midstream

Downstream

Agriculture

Electricity
Generation

Transmission

Distribution

Renewable
EnergyIndustries

OilGas

Coal

Consumers

Exploration
andDomestic
Productiond iRefining

Distribution(Diesel, petrol, LPGand Kerosene)

Pipelines &LNG Terminals

City Gas Networks

Washeries
pand Transport

Allocation to users

Transport

Buildings

Cooking
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7 Broad Areas of Intervention

Energy Efficiency

Installation,
Installation
generation, anddistribution of RE

Increasing supplyof oil and gas

Refining anddistribution of oiland gas

Production anddistribution of coal

Generation,transmission, anddistribution ofelectricity

Governance10

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Oil and Gas

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Oil and Gas: Upstream (1/2)
Unexplored Blocks:
 Expedite exploration: Award full acreage for Exploration by2022 (only 20% moderately to well explored; 50% poorlyexplored) Initiate Exploration: In 15 basins out of total of 26,
exploration to be initiated for the first timeo Allow a more attractive profit sharing regime - Uplift (multiplerecovery of exploratory expenditure)o Public funding for collection of seismic data acquisitiono Open up upstream data business to upgrade existing dataand market it to global E&P companies
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Oil and Gas: Upstream (2/2)
Existing Fields:
 Monetize Discoveries: Develop over 200 discoveries ofNOCs/PSC contracts, or recycle acreage
 Induct cutting-edge technology: Formulate policy oncontracts with global companies to raise production fromfi ld off NOC on risk-sharingfieldsik h ibbasisi Incentivize production: Give market price for gas to upstream
producersd– transfer
tf subsidy
b id electronicallyl ti ll tot final
fi l consumers(Urea and power) Approve infrastructure sharing policy: Avoid duplication ofinfrastructure (platforms/pipelines/data) and fully utilize it indevelopment of third party discoveries
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Oil: MidstreamOdst ea aandd Downstream
ost ea M
Maintaini t i India’s
I di ’ exportt capability
bilit off petroleumt lproducts:d t
Resolve issues related to land and infrastructure, explore
coastal locations
 Develop Petroleum Industry hubs: Create petrochemicalcomplexes consisting of refineries and downstream
industries for propylene, polypropylene and ethylene Encourage the regime for marketing of petroleum products:
Declaration of large tankages and storages as ‘commoncarrier’ (with the tariff regulated by the Regulator) for
reducing the cost of entry for new entrants

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Gas: Midstream Common Carrier: Declare LNG terminals as ‘Common
CommonCarriers’ under Petroleum & Natural gas Regulatory BoardAct, with tariff regulated by the Regulator National Gas Grid: Roll out a gas pipeline grid across thecountry – Public funding support to the stranded gas
pipelines of nearly 10,000 Km
 GGas Storages:
StDevelop
la policy
li ffor conversion
ioff ddepleted
l t doil and gas fields into gas storages

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Gas: Downstream
 City Gas Distribution (CGD): Incentivize the creation of CGD
networks (this will free up LPG for distribution in rural areas) Level Playing Field for Gas with Oil: Eliminate import duty onLNG to level the playing field with respect to crude oil; also
equalize taxes and subsidies
 Gas Based Economy: Formulate a comprehensive policy forpromotion
tioff GasG Economy
Ebyb encouraging
itheth use off gas
across demand sectors (share of gas is 7% in primary energy)

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Coal17

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Coal Market and Pricing
 Beyond a small e-auction
e auction market
market, coal economy is runlargely through administrative allocations
 Multiple prices prevail – fixed by the national coal company((Coal India Ltd. or CIL))
 Consumers allege that CIL charges higher prices of coalcomparedd tot theth implicit
ili it costt off mining
i icoall bbyIndependent Power Producers (IPPs)
 No incentive to enhance efficiency due to the ‘passthrough’ of coal costs into electricity prices
through18

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Coal Sector: Recommendations
 Corporatize the 7 subsidiaries of CIL into independentcompanies to compete against one another Open up coal sector to commercial mining Increased efficiency, greater competition and enhancediinvestment
tt tot result
lt ini substantial
b t ti l decline
d liini coall pricei
 User industries (including power intensive industries) tobenefit and become globally more competitive Power consumers to be fully protected through Direct
Benefit Transfer (DBT) subsidy

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Renewable Energy (RE)20

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RE: Upstream (1/3)
 Develop Appropriate Frameworks: RE is growing
rapidly leading a transformation of the Power sector.
pp pp
policyy framework needs to beAn appropriate
developed.
 Right Market Signals will be Given: RE agenda islargely driven by private capital, which will require
market signals for continued pace of growth Balancing of the Grid : Government has a vital rolein the Integration
gand balancing
g of the variableenergy (wind and solar)

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RE: Upstream (2/3)
 Promote Minor RE Sources: Biomass-based p
power and Small
Hydro to be encouraged, especially for balancing variableenergy.
 To Frame Bio-energy Policy: Need to issue an allpg policy
py including
g all forms of biomass (going(g gencompassing
beyond biofuels) P
Promotet Hydro
H d Projects:
P j t OnlyO l one-third
thi d off India’s
I di ’ hydroh dpotential (45 GW out of 150 GW) developed so far. Need totackle land and R&R issues.

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RE: Upstream (3/3)
 Future Growth to be Market Driven: Beyond
y2022, to ensuresmooth integration, capacity growth will be market-driven
without any targeting (target of 175 GW in 2022)
 For Household Electrification:
1. Grid-based supply to be the first option
2. Solar/micro grids - only for inaccessible areas Promotion of RE use in Heating: Heating applications indomestic and industrial sectors will be promoted

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RE: Midstream and Downstream Introduce a Scheme for Balancing Energy: DISCOMS to be
insulated against high cost of integrating RE by extending
financial support to cost of balancing.
o Existing gas based capacity can be harnessed forbalancing REo Similar support for Hydro and Biomass based power CCompliancelioff RenewableRbl PurchasePhObli ti
Obligations(RPOs)(RPO )
through Rooftop Solar: Encourage DISCOMs to support
rooftopp solar throughg net meteringg and building
g bye-laws
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IEEJ：July 2017 © IEEJ2017Electricity

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Electricity: Health of DISCOMs
 Healthy DISCOMs most critical to the success of electricity
sector Regime
grecommended in the longer
g term to ensure healthy
DISCOMs:o Success of Debt restructuringg (UDAY)() crucial
o Separation of wire and content
o Entry to multiple sellers of electricity in each Circle as inIndia’s Telecom sectoro Consumers to be protected through DBT

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Electricity: Further Recommendations
 Strategy For Universal Electrification: Roll out a strategy foruniversal electrification and 24X7 supply by 2022
 RRetireti Expensive
Ei Generation
Gti
Capacity:
Cit Environmental
E it lregulations on emission treatment impose high costo Over 20 GW thermal plants of below 250 MW and over 25years age should be placed in ‘reserve’ category TTransferf StrandedStd d PPAPPAs tto NewNDDemanders:dN d off Power
NeedP
purchase agreement by new consumers may be met bytransfer of capacity being backed down by DISCOMS27IEEJ：July 2017 © IEEJ2017

Nuclear Energy

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Nuclear Energy
 Endorsement of Nuclear Power: Achievement of NDCtarget of 63 GW by 2032 (8 GW presently) recognizedby the new Policy
 Becoming Technology Neutral: All technologies to bepursued Expedite the development of indigenous
pursued.
thorium reactors
 Also Pursue Commerciality: Given high capital costand over-supplied power market - technology and fuelsuppliers
lishould
h ld sharehmarketk t riskik29

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Energy Efficiency

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Demand Reduction: Opportunities for Interventions

Buildings• Adoption of LED• Efficient appliances• Building codes

Transport• Shift towards
td railil• Public transport• E-vehicles• Transit-oriented
Transit oriented Urban development

Industry• Increase p
penetration of Perform Achieve Trade ((PAT))
with higher targets• Shift towards efficient technologies & processes

Cookingg• Enhanced efficiency of cook stoves• Shift to cleaner cooking fuels: LPG, PNG, biogas andelectric cooking
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Energy Efficiency
 All Fuels to be Addressed: Energy Efficiency andConservation to be driven across fuels (not only electricity) Market Price of Fuels: Right price helps in getting better
results from efficiency programs – vulnerable sections to beprotected through DBT
 Efficiency to be Built Into National Programs: 100 Smart
gcities, 770 million LED bulbs scheme, Power for All, Housingfor All, Make In India – LED, equipment/devices)
 A More Comprehensive Mission: Launch a revamped
National Mission on Energy Efficiency with better linkages
with demand sectors
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Governance

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Higher Uptake of Technology and R&D
 Supportpp
To Ministries: A Chief Technology
gy Officer to beposted in all Energy Ministries
 Technology Inputs to Energy: A separate ‘Heat
Heat Strategy
Strategy’ isproposed for use of electricity and biomass (RE) in providing
heat in industries (50% of energy use is as heat) Raise Profile of Research Institutes: All research institutions
operated by national energy companies to become
autonomous
p Appropriate
pp pTechnology:
gy For developmentpof Develop
Energy Efficiency interventions suited to our climaticconditions, a new technical institute will be created
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Regulators: Interventions
 Policy Directions: Government may give policy directions toRegulators to meet its energy related welfare objectives
 Other Issues:o Amending selected energy-related statutes –Electricity Act, PNGRB Act (e.g. content andcarriage and common carrier)o creating a competent cadre to have expertise onemerging
ittechnologiesh l io Ensuring financial independence

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Effective Institutional Mechanisms
 Overarching Coordination across Energy Ministries:
Implementation of the NEP to be reviewed by a highpowered mechanism Power Sector Coordination: Federal Power Ministry to host acoordination mechanism to liaise between fuel supply andconsumer Ministries.
 Promotion of Indian Energy Strategy: A coordination
mechanism to be set up in the Foreign Ministry to effectively
promote India’s energy strategy internationally36

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Overseas Engagements
 Support aggressive acquisition strategy: Pursue natural
resource assets, and domestic marketing of energy sourced
from Indian overseas assets (LNG from GAIL and ONGC assets
in US and Mozambique and other destinations) Tap Indian Technical Diaspora: Indian Missions to seek theirassistance at leading energy centers to access technology
and manpower Exploit
pOpportunities
ppin the Neighbourhood:gNational energygycompanies to pursue commercial opportunities - crosscountry gas pipelines, power generation and transmission,hydro projects
 Efficient Decision-Making: Greater freedom to national oilcompaniesi ini overseas investments
itt37

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Investment-Related Interventions
 Step-Up Investments: Energy sector needs $150 billion
investment every year to address India’s
India s energy needs(LNG terminals, storages, battery, and EVs) Develop Sector-WiseSector Wise Projects: NITI Aayog to undertake astudy to determine sector-wise investment opportunities
 FiFinance Mi
Ministryi t tot LLead
d Initiative:
I iti ti
F attraction
Fortttioffdomestic and overseas investors
 Promote Rural and Decentralized Investment Proposals:
Energy Ministries to develop sectoral policies for
distributed/small size rural energy infra (mini-grids,(mini-grids LPG
distribution and cooking ecosystem)

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Other Issues
 Joint Strategy in Academia: Energy Industry and States towork closer to set up technical colleges/universities
 A National Mission on Clean Cooking Fuel: To offer wider
gchoice to rural consumers: an aim of 100% clean cooking
fuel coverage by 2022 (efficient cook stove for biomass,Induction cookers and biogas)

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India@2040

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High Developmental Ambitions (2040)
 Population: 1.2 Billion (2014)  1.6 Billion (2040)*
 Urbanization:i i
31%% ((2012))  47%% (2040)*()
GDP Trajectory
9.0%
8.0%
7 0%
7.0%

8.0%

8.2%

8.3%

8.1%

8.0%

6 8%
6.8%

6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
‐
2012‐17*Extrapolated from India’s INDCs.

2017‐222022‐272027‐322032‐37

2037‐40
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High Developmental Ambitions (2040)

Per capita
electricity of3000 kWhAt 8% CAGR,
GDP at $15Trillion$3.6 trillioniinvestment
tt iinenergyRural-Urban
energygy divide
overcome by2032

Energy intensity
falls by 73-80%

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Thank youAnil Kumar Jain
Additional Secretary
NITI Aayog
Government of India
New Delhi
anilk.jain@gov.in
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Contact :report@tky.ieej.or.jp