Energy status and future outlook: India and Bhutan

Prasanna LAKNUWAN Sri Lanka Energy Managers Association

India is the seventh-largest country in the world, with a total land area of 3,287,263 square kilometres and a population of over 1.1 billion, which is the world’s second largest population. In terms of occupation, two-thirds of the Indian workforce earns its livelihood directly or indirectly through agriculture in rural villages. However, towns and cities account for over two thirds of the Indian economy in terms of Gross Domestic Product (GDP).

The 2007 per capita GDP in Purchasing Power Parity (PPP) basis was US$ 2,563. Major exports include petroleum products, textiles, gems and jewelery, engineering products, chemicals, leather products while major imports include crude oil, machinery, fertilizer and chemicals.

Energy resources and use

India’s energy use is mostly based on fossil fuels. Five different types of energy are being mainly used in India: coal, oil, gas, hydro and nuclear. there is also a growth in the renewable energy sector through wind, biomass and small hydro plants. Their contribution to the total energy demand is, however, still low.

India’s energy resources mix

Energy resources offer good prospects

Coal has been the dominant source of energy for a long time and meets about 56 per cent of India’s energy demand. India is also the third largest coal producer in the world, though some metallurgical coal and thermal coal are imported to meet the shortfall in domestic production.

Petroleum products meet about 28 per cent of total energy demand and about 75 per cent of the crude oil required is imported. India itself has sedimentary basins which need a lot of exploratory effort before being commercially used. There are proved and indicated recoverable natural gas reserves of about 1,100 million cubic metres, sufficient for another five years at the current consumption rate. However, India started importing natural gas in 2004 in the form of Liquefied Natural Gas (LNG) to meet the shortfall between natural gas demand and local production. For importing gas, there are two operating terminals in Dahej and Hazira in Gujarat, another nearing completion at Dhabol in Maharashtra and another under construction in Kochi-Kerala.

By March 2007, the India power system had a total installed capacity of 132,330 MW, which is the third largest in Asia after China and Japan. The generation mix is predominantly thermal 65 per cent followed by hydro electricity 26 per cent, nuclear 3 per cent and the balance 6 per cent is from solar, wind, biomass etc. However, there is still a gap between electricity demand and the supply, indicating the potential for more private sector involvement in power generation. There are five regional transmission grids covering the North Eastern, Eastern, Northern, Western and Southern regions. Power Grid Corporation of India is responsible for them.

Coal India Ltd is the largest mining company in India which accounts for about 80 per cent of total coal supply (431 million tonnes in FY 2007) in the country. The contributions from Singareni Collieries Company Ltd. and Neyveli Lignite Corporation Ltd. are also significant in meeting the coal demand of the country.

India’s refining hub in Jamnagar will be the largest in the world. Indian oil refining industry can be identified as equally dynamic as its coal industry, possessing some of world’s largest refineries and being a significant net exporter of petroleum products. There are 19 refineries with a total refining capacity of 150 million tonnes per annum. State-owned India Oil Corporation (IOC) is the major player while some other private companies such as Reliance and Essar have commissioned their own refineries.

Challenges and growth of energy sector

The existing infrastructure and resources are not adequate to meet the increasing energy demand in the country. Improving energy infrastructure and importing energy sources to meet the shortfall and to do away with load shedding, are essential requirements in the short to medium term. Increasing power generation and transmission capacities, reducing the network losses and improving the reliability and quality of supply are the particular challenges faced by the electricity utilities of India, which have a major role to play in the growing economy.

Bhutan situation

Bhutan is a land-locked country located in the Eastern Himalayas, spread over 38,394 sq. km. Its population in 2003 was estimated by the United Nations at 2,257,000. Bhutan is rich in hydro power potential. Hydro electricity is its major export to India and the foreign exchange earned is a major positive influence on economic growth of Bhutan.

Traditionally, firewood has been the major source of energy for a large number of rural and urban households in Bhutan. Biomass accounts for 91 per cent of residential energy use. Overall, the residential sector emerges as the largest energy consuming sector, accounting for 47 per cent of the total energy consumption. Hydroelectricity is now the main source of commercial energy. In the past, electricity generation was based on small diesel generation and mini/micro hydro power generation, providing a limited supply of electricity supplemented by imports from India. However, after commissioning of some major power plants, Bhutan was able to increase its electricity generation substantially and became a significant exporter of electricity to India.

The present installed capacity of mainly run-of-river type hydro power feeding into the grid is 1,480 MW. However, during the lean season (winter months: November through April) the generation capability goes down to about 350 MW. Tala (1,020 MW), Chhukha (336 MW) and Kurichchu (60MW) can be identified as the major contributors to the generation capacity. In addition to these large hydro power stations, there are some mini and micro hydro power stations providing a combined generation capacity of about eight MW. Total installed diesel generation plant capacity is about 16 MW and these supply the areas where grid power is not available. The government provides a subsidy for diesel generation in these areas.

The present maximum national electricity demand is 160 MW. It is estimated that about 12 per cent of the population will have to be supplied electricity through off-grid electrical systems, due to the difficulty in electrifying them through a common grid. Mini/micro hydro power and solar home lighting systems are the two main options available for such off-fried electrification.

Bhutan has no identified petroleum reserves or a refinery for crude oil processing. The Royal Government of Bhutan has a long term agreement with the Government of India for the supply of petroleum products. However, a limited quantity of coal is available in the eastern part of Bhutan and is mined and used in the local industry to supplement the imports.

Bhutanese distributors directly import petroleum products from Indian petroleum suppliers. At present, there are three such petroleum distributors in Bhutan. Diesel, petrol, kerosene and liquefied petroleum gas (LPG) are the main petroleum products imported from India.

Challenges and growth

Bhutan envisages developing 3,500 MW of additional hydro power capacity by 2020. Preconstruction activities of the Punatsangchchu - 1, Hydroelectric Project with a capacity of 1,095 MW and Dagachhu Hydroelectric Project with a capacity of 114 MW have already been started as a part of this development drive. Development of planned electricity infrastructures including hydro power plants and transmission lines would enable Bhutan to increase its electricity exports and further strengthen its economy in the future.

The vast renewable energy resource in Bhutan offers good prospects for that country to make energy one of their exports, not only to India but to other SAARC countries as well, once SAARC countries agree on a common mechanism to facilitate such electricity trade. India’s capacity to reach economy of scale in energy projects, both the in the petroleum sector and the power sector, offer excellent opportunities to other SAARC countries to explore avenues for securing the energy requirements of their respective countries at more competitive prices.