From the desk of Adviser (Energy), NITI Aayog

IESS, 2047 has been created with a shared conviction of NITI Aayog and the energy research community of the value that intellectual advice adds to energy policy. The above belief has been proven by the fact that the IESS, 2047 has supported a number of exercises of energy demand estimation and its implications. This has motivated us to produce the Version 2.0. The latter is not merely an up-dation of numbers, but a de novo exercise in many ways. A sharper analysis of demand and supply sectors has been supplemented with new features as have been elaborated below. The IESS Team also devoted a lot of time on incorporating new features in the website (www.indiaenergy.gov.in) and webtool that might make the Tool more user-friendly. The above aspect can only be experienced and not written about. The widespread use of this analysis will be the true measure of success of this effort. Therefore, only the new analytical additions have been listed as below:

  • Three GDP growth scenarios of 7.4%, 6.7%, and 5.8% in this version enrich the Tool by offering a range of energy related projections. As elasticity of energy demand varies across demands sectors, the same has been recognised in this bottom-up exercise.
  • The Government has announced ambitious developmental targets in the sectors of housing, rural electrification, renewable energy, assured electricity supply, reduction in oil import dependence, among many others. The Ministries are now framing schemes and programmes to translate the above targets into reality. The new version of IESS has adopted the above targets and developed scenarios of energy demand, supply, costs, etc., around them, which may be very useful to line Ministries.
  • It is evident that a transition to a new energy system requires additional infrastructure which can come only after fresh capital infusion. Therefore, the scenarios around new energy pathways proposed by IESS, cannot be evaluated without an assessment of their cost implications. This version offers a detailed exercise on costing. The tool acknowledges that cost projection in the long term can only be offered as costs scenarios which is taken into account by offering a range of cost scenarios till the terminal year of the study.
  • We are aware that innovation and technology quickly outpace existing technologies. The present IESS Version-2.0 boldly brings in hydrogen and fuel cell vehicles, along with a more aggressive role for solar water heaters and roof top solar as energy supply sources. The above addition enhances the quality of projections.

The new features in the present proposal have been supplemented with fine-tuning of the earlier modelling exercises. It is appreciated that scenarios depend a lot on the outlook of the modeller, and inter-model comparisons are difficult to make. However, refining an existing model is always a welcome exercise, as it indicates that the modeller has tightened his/her assumptions and acknowledged better outputs from the existing algorithm. This raises the quality of projections. In the IESS Version 2.0, the team has assumed higher potential of penetration of efficiency in industries which was earlier modelled around merely BEE's Perform-Achieve-Trade (PAT) scheme. The team has acknowledged that adoption of Best Available Technologies (BAT) may offer even better potential results than what is provided in the PAT scheme, and has modified its work on Industry this time. The housing sector always poses a challenge to energy modellers in segregating the role of penetration of ECBC, from more efficient lighting/cooling/heating equipment. The new version incorporates space cooling/heating/lighting assumptions which overcome the above challenge to some extent. The above two examples demonstrates the added value proposition in the new effort.

SALIENT RESULTS

On the basis of this nearly yearlong exercise of the team at NITI Aayog and their partners, the following results are worthy of consideration:

  • It has been found that many assumptions of the earlier studies, viz., the Expert Committee Report of the Integrated Energy Policy (IEP) and of the Expert Group on Low Carbon Strategies for Inclusive Growth (LCIG) are modest in many sectors as compared to the potential estimated by the IESS. As an illustration, the solar potential indicated in the IEP was merely 10 GW in 2031-32 whereas the present Tool projects it at nearly 100 GW to be achieved with exceptional efforts by 2022. Similarly, the prospect of deploying natural gas in the power sector has been under-estimated in the Report of IEP as well as the LCIG. Then, while the LCIG Report is bullish on domestic oil production, assuming nearly 119 MMT of oil production in 2030, the IESS is more realistic and assumes more modest production. However, this is dependent on geological resources which remain uncertain until exploration is complete.
  • The Tool reveals that there is a possibility of reducing energy demand by heroic efforts in the area of energy efficiency by 34% in the year 2047. Of this, nearly 80% potential lies just in two sectors - Industry and Transport.
  • Within the Industry sector, an increase in industrial efficiency coupled with shifts in technology towards cleaner alternatives, in both the Cement and Iron and Steel sectors, lead to the realization of the maximum energy savings potential.
  • In the Transport sector, the major potential of reducing energy demand lies in the Passenger Transport segment wherein, shift to public transport and adoption of electric and fuel cell vehicles can make a difference by nearly 40% reduction of energy demand.
  • As regards supply side interventions, the study reveals that over 60% import reduction is achievable with sustained efforts. Amongst these, increase in renewable energy supply and domestic coal production are likely to make most of the difference, and have been adopted by the present Government as its priority areas for action in the energy sector.
  • What is most heartening is, that if action on both demand and supply sides were adopted in a coordinated manner, then India’s import dependence for energy in the year 2047 would be reduced from the default case of 57% to 22%. This will be a major achievement over the present 31% import dependence for primary energy supply which is threatening to rise yet more.
  • The above possibilities demand that India ramps up share of electricity in the delivered energy supply which is presently merely at 16%. There is a possibility to raise the above share to nearly 40% in 2047 aided by a large increase in renewable energy, and adoption of electricity based solutions on demand side such as electric vehicles, electric hobs in cooking, and electrification of diesel-fuelled telecom towers and irrigation pumps.
  • On costing side, the Tool reveals an interesting result that higher efficiency of energy use on the demand side and cleaner energy on the supply side, is actually a cheaper pathway on life-cycle cost basis, than staying with the conventional energy system. This is quite intuitive as is being witnessed presently with LED bulbs and solar energy price trends. However, we have to be cautions to understand that such transitions would require large capital investment, which itself would be a daunting task for the Indian economy to procure and deploy. If the cost of capital on infrastructure were included, then new pathways would also be expensive.
  • On the emissions side, while this is an energy calculator, we get a picture for 75% of the total GHG emission of our economy. GHG emission projection are directly linked to the level of renewable energy and energy efficiency measures that India may deploy in the coming decades. Therefore, there is a wide range of likely energy sector emissions in 2047 from 3.3 Tonnes per capita to 7.8 Tonnes per capita. The moderate effort scenario on both demand and supply sides, which also assumes Government’s present policy outlook towards renewable energy, leads us to a likely emissions of nearly 5 Tonnes per capita. This is much lower than what the developed world is attempting even in response to calls for drastic reduction in emissions.

The above discussion on the new features of IESS Version 2.0 and the results yielded under different scenarios, call for a deeper exercise. Most energy projection exercises do not offer dis-aggregated projections for different demand and supply sectors. Hence, projections only help in macro energy policy advice. The IESS, however, offers numbers for specific sectors which in the Indian context allow sector specific detailed enquiries. For example, this Tool gives a range of renewable energy deployment, linking it to the overall demand for electricity as well as the availability of electricity supply from storage based solutions. While it highlights that ramping up renewable energy is not merely a function of Government’s drive to raise renewable energy capacity, but is also dependent on a number of other technical factors, principally the resilience of the electricity system to balance the grid. Inter-ministerial exercise to harness all the storage based electricity solutions along with MNRE and MoP can further refine an IESS projections and assure the likely investors of stable grids as an attractive investment regime. The aim of the IESS exercise is also to provide the background for such sectoral studies especially because energy is largely an inter-connected subject with multiple influences of demand and supply sectors.

This time, we are also releasing five compilations of the research outputs of IESS:

  • Compilation of one-pagers on all Demand and Supply sectors (IESS, 2047 Handbook)
  • TEnergy demand sectors detailed documents (Sector Specific Insights Part I)
  • Conventional energy supply sector detailed documents (Sector Specific Insights Part II )
  • Clean and Renewable Energy supply sector detailed documents (Sector Specific Insights Part III)
  • Network and Systems- detailed documents (Sector Specific Insights Part IV)

The dedicated website of IESS, 2047 hosts all the research outputs, including the Excel sheets of all sectors. The aim of this exercise goes beyond the placement the data and analyses in the public domain, and extends to encouraging enquiries by individuals and institutions, so that they may contribute to the public debate on India’s energy pathways. Engagement with citizens and institutions is the single most important objective of this effort.