ENERGY
Background 8.1.1 The strategy for energy development forms an integral part of the overall economic development strategy. Efficient use of re- sources and long-term sustainability are the two important objectives of economic planning. The concept of sustainability takes account not only of natural resource and ecological balance but also of economic equity and self reliance. Any strategy for energy planning has, therefore, to be consistent with these broad objectives.
8.1.2 The short and medium term strategies of energy planning will, however, have to reckon with the available resources and the technological constraints that are prevalent in the system. As against this, there is the immediate compulsion to meet the priority needs of the economy. Parallel action is, therefore, necessary to ensure that the short-term concerns do not detract the economy away from the long-term goals referred to above.
8.1.3 The demand for energy in the economy arises mainly-from the requirements of lighting and cooking in the household sector, irrigation and other agricultural operations, transport of passengers and freight, fuel and feed stock requirements in the industry and from the energy input needs of various other related activities of the services sector. A sizeable share of these requirements, especially those of the rural household sector, is met from non-commercial sources. The traditional sources of energy include fuelwood, crop residue and animal waste as well as human and draught animal power. The levels of efficiency at which useful energy is presently being realised from the resources are very low, varying between 10 to 15 per cent. However, non-commercial energy resources are steadily getting replaced by coal, oil and electricity which provide energy of a much higher quality and efficiency and involve at the same time high capital cost. Over the last several years, decentralised sources of energy based on non-conventional technologies have also appeared on the energy scene. Some of these new sources are likely to have considerable energy potential for the future.
Changes in the Pattern of Energy Supplies 8.2.1 The total energy supplies, including both commercial and non-commercial forms, increased from 82.7 MTOE (million tonnes of oil equivalent) in 1950-51 to about 291 MTOE in 1990-91. In this, the share of non-commercial fuels has declined from 74 per cent in 1950-51 to 41 per cent in 1990-91. Fuelwood alone accounts for 65 per cent of the total non-commercial energy consumed in the country.
8.2.2 Among the indigenously produced primary commercial fuels, the relative share of oil and gas has increased from 1.2 per cent in 1950-51 to 33 per cent in 1990-91, whereas the share of coal has declined from about 98 per cent in 1950-51 to 61.8 per cent in 1990- 91.
Commercial Energy Production 8.3.1 Over the last four decades, the country has taken major strides in stepping up the production of commercial energy as shown in
Table 1.
8.3.2 While coal continues to be the main source of primary commercial energy not only for direct energy use in industry but also for indirect energy use through power generation, concerted efforts made in exploration and development of hydrocarbons has led to a significant step up in the production of oil and natural gas. Between the two, natural gas is likely to play an increasingly more important role in providing energy in the coming years. Implementation of a large number of projects has also resulted in the increased availability of hydroelectricity. Finally, there have been additions to nuclear power generation capacity and nuclear power has contributed, though on a modest scale, to the overall electricity supplies in the country.
Traditional Primary Energy Resources 8.4.1 Fuelwood is an important source of energy for the rural and, to some extent, urban households. The total forest area in the country was earlier assessed at 75 million hectares, a
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Table 1. Trends in Production of Primary Commercial Energy
Energy Form Production
Unit 1950-51 1960-61 1970-71 1980-81 1990-91
Coal Million 33 55.67 72.95 114.01 211.73
Tonnes
Lignite " - 0.05 3.39 4.80 14.07
Crude oil " 0.26 0.45 6.82 10.51 33.02
Natural Gas MCM - - 1445 2358 17998
Hydro Power Bkwh 2.52 7.84 25.25 46.54 71.54
Nuclear Power " - - 2.42 3.00 6.24
major portion of which has been left today with little tree cover. The growth in demand for wood for industry, house construction, domestic use etc. has far exceeded the annual incremental availability of wood, leading to the gradual denudation of vast areas of tree cover and consequent adverse impact on the environment. This is a process that needs to be reversed.
8.4.2 Fuelwood is supplemented by dung and crop residues in meeting domestic energy needs in the rural areas. The annual availability of wet dung is estimated to be about 960 million tonnes at present. The use of dung cake in its present form deprives the country of a valuable organic manure. The net annual availability of crop residues, which can be used as fuel, is currently estimated at about 50 million tonnes.
8.4.3 The draught animal population in the country has been estimated at 70 million and animal energy continues to be used predominantly in agriculture and rural transportation.
Coal 8.5.1 India accounts for about 0.8 per cent of the total geological reserves and 5.7 per cent of the proved reserves of coal in the world. The geological coal reserves in the country are now estimated at 196 billion tonnes compared to 156 billion tonnes assessed at the beginning of the Seventh Plan. There has been an increase in the estimated coal reserves in Orissa and new discoveries have been made in Birbhum district of West Bengal and in Madhya Pradesh. Based on the present techno-economic parameters, ;the mineable reserves are estimated at 142.35 billion tonnes. The coal deposits in the country are unevenly distributed over the regions.
Lignite 8.6.1 The Seventh Plan laid considerable emphasis on the exploration of lignite especially in the States of Tamil Nadu, Rajasthan and Pondicherry. Reserves in Tamil Nadu are now estimated at 7730 million tonnes as against 3300 million tonnes- estimated at the beginning of the Seventh Plan. As against an estimate of 362 million tonnes in Rajasthan at the beginning of the Seventh Plan, the reserves are now estimated at 870 million tonnes. The reserves in Pondicherry and Gujarat are placed at 586 million tonnes and 383 million tonnes respectively. All these States are located far away from the coal bearing areas. These lignite deposits have been found suitable for power generation and are already being exploited for this purpose in Tamil Nadu.
Hydro Power 8.7.1 Based on a systematic survey carried out during the Seventh Plan, the hydroelectric potential in the country is now,estimated at 600 Bkwh (billion kilowatt hour) as again st 472.15 Bkwh estimated earlier. The regionwise estimate of. the potential is given below:
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Table 2. Regionwise Hydro-Electric (HE)
Potential
Region HE Potential(Bkwh)
1984 1987
Northern 157.76 225.0
Western 36.95 31.4
Southern 68.25 61.8
Eastern 41.65 42.5
N. Eastern 167.54 239.3
All India 472.15 600.0
8.7.2 The present assessment of hydro power potential is provisional as further studies are in progress and the estimates are yet to be firmed up. Out of the total potential available, nearly 18 per cent has either been developed or is being developed. Apart from this, the Central Electricity Authority (CEA) had also undertaken extensive studies to identify the sites for the development of pumped storage schemes. Fifty six sites have been identified for this with a probable potential of 94,000 MW (Megawatt). There exists another nearly 5000 MW of potential for exploitation through mini/micro hydel schemes. A number of such schemes are under implementation.
Oil and Natural Gas 8.8.1 India has about 0.04 per cent of the world's proven reserves of hydrocarbons. The prognosticated geological resources of hydro- carbons in the country are estimated at 21.31 billion tonnes of which 61 per cent are offshore and 39 per cent onland. Out of this, the geological reserves established are, however, 5.32 billion tonnes only. It is assumed that half of the prognosticated resource represents natural gas, of which only 12 per cent has been till now established. The possibility of discovering significant reserves of natural gas in the future will need to be kept in view for the purpose of planning.
Nuclear Resources 8.9.1 The country has uranium resources adequate to meet the life- time requirement of the first stage of nuclear power development pro- gramme of 10,000 MW. Apart from this, there are also large deposits of thorium available in the country. The present estimates show that the known deposits may yield 363,000 tonnes of thorium oxide. Thorium resources, when used through breeder reactors may produce 900,000 Bkwh of electricity.
Other Resources 8.10.1 There is also substantial potential in the form of solar and wind energy in India. While the availability of solar energy is abundant, subject to the techno-economic feasibility of converting it into useful energy, it is estimated that wind energy potential is of the order of 10,000 MW. There is also some scope for exploiting geothermal, ocean thermal and tidal energy at certain specific locations. Extensive and intensive afforestation at the village and regional levels can meet the local biomass requirements such as fuel, fodder etc. Appropriate technologies are required to convert the biomass into energy in an efficient manner. Afforestation will also generate new employment opportunities apart from protecting the environment. Finally, there is considerable potential for conversion of both animal and human excreta into organic manure, extracting methane in the process, which can be used extensively for both cooking and lighting purposes.
Pattern and Growth of Commercial Energy Consumption 8.11.1 Final commercial energy consumption increased from 19.76 MTOE in 1953-54 to 101.5 MTOE in 1990-91 at an implicit average annual growth rate of 4.52 per cent . During the last four decades, there have been changes in both the sectoral and the fuel patterns of consumption. Changes in the relative shares of the different forms of energy in final commercial energy consumption are indicated in Table 3.
8.11.2 It will be seen that the relative shares of oil and electricity in the total final commercial energy consumption has increased steadily over the years. Since these figures relate only to final energy consumption, only the direct use of coal in industry, household sectors etc. has been considered, excluding coal used in power generation. About 65 per cent of the total quantity of coal consumed in the country is used as fuel for thermal power generation. In terms of primary energy consumption, the relative share of coal still continues to be significant. The use
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Table 3 Percentage share of Different Fuels in Commercial
Energy Consumption+
1953-54 1960-61 1970-71 1980-81 1990-91*
Coal 79.6 74.1 59.1 52.6 39.0
Oil & Gas 17.1 20.9 31.3 35.7 43.4
Electri
city 3.3 5.0 9.6 11.7 17.6
Provisional
Table 4. Percentage share in Final Energy Consumption by
different Sectors
Percentage share in Consumption
Sector 1953-54 1960-61 1970-71 1980-81 1990-91
Industry 39.8 40.7 51.6 57.0 50.4
Transport 46.2 44.9 29.4 23.5 24.5
Household 9.9 10.6 14.3 12.3 13.8
Agriculture 1.7 1.8 3.8 6.1 9.0
Others 2.4 2.0 0.9 1.1 2.3
of oil products and gas for power generation, non-energy uses and as feedstocks is similarly excluded from the final energy consumption shown in Table 3.
8.11.3 Table 4 shows the changes in the relative shares of the different sectors in final commercial energy consumption over these years.
8.11.4 The share of industry in commercial energy consumption has increased steeply over the years upto 1980-81 but has shown a declining trend thereafter. The reason for the decline in the share of the transport sector is mainly the replacement of coal in railways, by diesel and electricity which are more energy efficient than coal for transportation.
Energy and Economy 8.12.1 Table 5 shows the average annual rate of growth in commercial energy consumption during the last four decades.
8.12.2 During 1953-54 to 1990-91, the average decennial rate of growth of commercial
Table 5. Rate of growth in Commercial
Energy Consumption
Period Rate of Growth
(% per annum)
1953/54-1960/61 5.47
1960/61-1970/71 4.29
1970/71-1980/81 4.21
1980/81-1990/91 4.52
energy consumption ranged between 4.21 per cent and 5.47 per cent. An important point to note in this connection is that in view of the shortages and restrictions, the past trend of consumption of commercial energy does not really represent the growth of demand for such energy but merely reflects the growth of its actual availability.
8.12.3 The coefficients of elasticity of final consumption of the different forms of commer-
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cial energy with respect to GDP during the past four decades have been as shown in Table 6.
8.12.4 The rather steep decline in the observed overall point to point elasticity in the eighties is somewhat deceptive. This needs to be interpreted with due care. As the GDP growth rate tends to fluctuate unduly under the influence of monsoons, such elasticity estimates are affected by the fluctuation and the choice of the terminal year. However, significant lowering in the elasticity of energy use with respect to GDP between 1953-54 and 1990-91 could still be viewed as an evidence of changing technology of the economy and changing pattern of demand for the different forms of energy.
8.12.5 In the case of coal, the GDP elasticity of consumption reflects only the response in terms of reduced use of coal by sectors other than power. The steel plants have used increasing quantities of imported low ash coking coal. There has also been substitution of kerosene oil and LPG for soft coke in the household sector and of diesel for steam traction and electricity for diesel traction in the railways.
Table 6. Elasticities of Consumption of
Commercial Energy w.r.t. GDP
Period Elasticity of Consumption with
reference to GDP
Coal Oil Electricity Total
Commerc-
ial
Energy
1953/54- 1.10 2.14 3.02 1.37
1960-61
1960/61- 0.53 2.31 3.04 1.16
1970/71
1970/71- 0.98 1.83 2.06 1.37
1980/81
1980/81- 0.31 1.12 1.57 0.82
1990/91
8.12.6 The development of commercial energy is highly capital intensive. Furthermore, energy costs enter into the cost strcuture of all productive sectors of the economy as a universal input. This emphasizes the need for reducing specific energy consumption and specific energy costs. Investments in this sector have steadily increased during the successive Five Year Plans. The share of investment in commercial energy as a percentage of total Plan outlay has risen steeply from the Fourth Plan onwards.
8.12.7 It will be seen from Table 7 that the share of the energy sector in the total Plan outlay has increased from 19.7 per cent during the First Plan to 28.2 per cent during the Seventh Plan. This brings out the crucial importance of this sector in the planning process.
Table 7. Share of commercial energy sector in
total Plan outlays
Plans % Share of
energy sector
First 19.7
Second 11.8
Third 18.5
Annual Plans 17.9
Fourth 21.2
Fifth 25.2
Annual Plan 24.9
Sixth 28.1
Seventh 28.2
8.12.8 One adverse consequence of our pattern of energy consumption is the dependence on import for crude oil and petroleum products, causing a heavy drain on the foreign exchange reserves of the country. The Table 8 indicates changes in the ratio of oil imports to total exports and the share of consumption of petroleum products met from indigenous sources over time.
8.12.9 The import bill on petroleum products continues to be substantial and in fact has increased in later part of the Seventh Plan, as the level of demand satisfaction from indigenously available crude oil has declined from 70 per cent in 1985-86 to 56 per cent in 1990-91. This is on account of the stagnation in domestic crude oil production levels. Any further increase in dependence on oil imports, due to an increase in demand, is likely to put severe pressure on foreign exchange reserves and in view of the
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Table 8: Oil imports in relation to Domestic
Oil Production and Total Exports
Value of Oil imports % of oil
net imports as % of demand
of crude oil total exports met
& through
Petroleum indigenous
Product sources
(Rs.Crores)
1970-71 136 8.6 35.4
1975-76 1242 30.8 35.2
1980-81 5258 78.4 31.8
1985-86 4316 42.1 70.1
1989-90 5622 20.8 61.6
1990-91 9775 30.0 56.3