Flipping the Switch: A Look at India’s Future Energy Demands

on October 20, 2014 at 12:00 PM

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In September, India’s new environmental minister, Prakash Javadekar, caught world leaders off-guard at the UN Climate Summit when he told The New York Times that his country’s carbon-dioxide emissions were expected to continue to rise for the next 30 years. Considering India’s energy needs today, and how it hopes to develop in the coming decades, Mr. Javekekar’s comments shouldn’t come as a surprise.

With a population of one billion, around 300 million Indians today still lack access to electricity. But this statistic only tells part of the story. The UN claims that more than two-thirds of India’s population still rely on biomass (wood) and dung-based fuel to meet their energy needs for cooking. About a quarter of the country lacks access to the electrical grid, but India is still the fourth-largest energy consumer in the world, after China, the United States, and Russia.

The Indian government continually proclaims that its first task is the eradication of poverty. Primary energy consumption in India more than doubled between 1990 and 2012. The real questions that should be asked are which fuel sources India will use and how much energy will India consume in the coming decades.


On an electric power consumption per capita basis, India consumes 917 kWh per day, which is extremely low. To compare, on a per capita basis, China consumes 3,298 kWh, Germany 7,081 kWh, and the United States 13,246 kWh. The global average is 2,600kWh. Looked at another way, the average German consumes nearly seven times more electricity than an Indian. Or, an Indian uses less than ten percent of the amount of electricity than an American.

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To make up for this enormous disparity, India has ambitious plans to quickly build new power plants needed to supply a growing population thirsty for electricity. With approximately 276,000 MW of capacity today, India’s twelfth five-year plan (2012-17) estimates that an additional capacity of 88,537 MW is required over the plan period in order to address future demands. This calculation took into consideration the additional capacity necessary to decrease the gap between peak demand and peak deficit, while allowing less efficient, older power plants to retire.

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Total Electricity Capacity: Data Source: Government of India, 2013


Thermal coal will play the leading role in providing India with larger amounts of electricity. Today, coal is India’s most essential energy source, representing 58 percent of India’s installed capacity. In 2013, coal produced 685,857 GWh, 71 percent of India’s total electricity generation.

State-owned Coal India, the world’s largest miner of coal, accounts for over 80 percent of the country’s total production. Despite holding the fifth-largest coal reserves in the world, over regulation has led most experts to believe that domestic production cannot keep up with demand.

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Thermal coal imports to India represent one of the few bright spots in the seaborne coal trade, rising 21 percent in 2013. Glencore, the world’s largest exporter of high-quality thermal coal, told analysts recently that it expects Indian annual imports to rise from 150 million tons to 180 million tons in 2015, and 300 million tons by 2020.

The challenge in India today is keeping power plants supplied with coal. Reports released this month claimed that 37 coal power plants have exhausted their coal or have less than a four-day supply. Sixty of India’s 103 power plants only have enough coal to continue production for less than a week, resulting in widespread power cuts of up to 16 hours a day.

Why haven’t power plants and utilities secured more coal on the international market? The populist government policies in India today have forced utilities to sell electricity at regulated rates. To support this unsustainable effort, Coal India often sells coal to producers for half the price that its coal would fetch on the international market.

Looking ahead, India’s net coal-fired electricity generation is expected to grow by a total of 910 terawatt hours by 2040, more than doubling the 2010 total. The World Resource Institute identified 455 proposed coal-fired power plants in India, with a total installed capacity of 519,396 MW. While coal-fired power plants will be built, the big question is: will India’s infrastructure be resilient enough to keep its power plants well supplied?


India has a hydropower generating capacity of 39,491 MW, representing 18 percent of the country’s installed capacity. In 2013, hydropower produced 113,626 GWh, 11.8 percent of India’s total electricity generation. According to a report by PWC, India is endowed with rich hydropower potential to the tune of 148 GW (which would meet a demand of 84 GW at 60 percent load factor), potentially making it one of the most important sources to meet the energy security needs of the country. As of 2013, 13 GW of hydropower is under construction.

If all 13 GW under construction is built, India still will have tapped only about 33 percent of its potential under current economics. In comparison, Canada and Brazil have achieved 69 and 48 percent, respectively.

Hydropower’s percentage of installed capacity has been in continuous decline since 1966, when it was 46 percent of the country’s installed capacity.

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Source: PWC, Central Electric Authority


According to the IEA, India consumes 3.2 million barrels of petroleum liquids per day. In comparison, the United States, with one third of the population, consumes 18.5 million barrels per day. India’s petroleum demand is only in its infancy, expected to grow at a 2.5 percent annual rate until 2040. India has roughly 11 cars per thousand people, compared to 403 cars per thousand in the United States.

India is poorly endowed with petroleum and extremely dependent on international fuel sources. Last year, Petroleum Minister M Veerappa Moily stated that nearly 80 percent of India’s crude oil requirements were imported.

Natural Gas

Compared to other fuel sources, natural gas has lagged in India, producing just seven percent of India’s electricity. Supported by LNG imports, natural gas consumption is expected to double by 2021. LNG imports are projected to rise from 44.6 million cubic meters per day (MCMD) in 2012-13 to 143 MCMD in 2016-17, and 214 MCMD by 2030. Natural gas demand will come from power generation, petrochemicals, fertilizers, and heavy industry.

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Source: Petroleum & Natural Gas Regulatory Board


India operates 21 nuclear reactors in seven power plants, supplying 3.5 percent of India’s electricity. Since 2008, India’s nuclear fleet have impressively raised their capacity factor from 50 to 80 percent. India is one of the few countries in the world with plans to expand its fleet. With a capacity of 4,780 MW today, the government has a target of reaching 14,600 MW by 2021 and 27,500 by 2032. Looking further down the road, India aims to supply 25 percent of its electricity from nuclear power by 2050.

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Source: Nuclear Power Corporation of India Limited


Narendra Modi, India’s new Prime Minister, has proposed adding 30,000 MW of new renewable sources. The proposal calls for 15,000 MW of wind energy, 10,000 MW of solar energy, 2,100 small-hydro power projects, with the balance to be derived from biomass. Installing 30,000 MW of renewables is commendable, but very small when compared to the 519,396 MW from proposed coal-fired power plants. Even if only half of the coal-fired power plants are built and renewables grow twice as fast as expected, 60,000 MW instead of 30,000 MW, coal’s installed capacity will still be more than four times larger than that comprised by renewable sources.

The Big Picture

In the last decade, India has nearly doubled its electricity consumption on a per capita basis. The growth is remarkable. Since India consumed only about 500 kWh at the turn of the century, the nation still has a long way to go. At 917 kWh per capita, India remains far off the global per capita average of 2,600 kWh.