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Evaluating Indiaĺs Energy Fueling Options
In this article, Prabhakar Bhandarkar, Director ľ Business Development, Simon India Ltd, evaluates the energy option for the country and discuss the everincreasing requirement for the energy. He further highlights the significance of energy management and emphasise on the need to reuse and recycle the waste to ensure sustainable development.

India's energy fueling options need realistic assessment in terms of availability, logistics, cost of production, evacuation strategies, integrated approach, pooling into the energy basket, balanced tax structure/ incentives, political inertisation in approvals/ regulatory framework, socio economic modeling to ensure optimal inclusivity and avoid PPP concept turning into political private partnership so that we can soon achieve adequate energy security while guarding the economic growth. The basic fueling options to be evaluated are fossil fuels, nuclear power, hydro generation and renewable feedstocks. Presently the power generation mix in India is 57 per cent Coal, 19 per cent Hydro, 10 per cent Gas and Diesel, 3 per cent Nuclear and 1 per cent Renewable feed stocks.
Global fossil fuel deposits are estimated at 870 trillion tons with Coal 60 per cent, Oil 16 per cent, Gas 13 per cent and Bitumin 11 per cent.

FOSSIL FUELS
Coal & Lignite

India has estimated coal reserves of 253 billion tons and lignite around 28 billion tons. Majority of coal deposits are in Jharkhand (29%), Orissa (24%), Chhattisgarh (17%), West Bengal (11%), Madhya Pradesh (8%), Andhra Pradesh (7%), M.S. (4%), and rest distributed in Uttar Pradesh/Meghalaya/ Assam/Bihar etc. Lignite reserves are mainly in Tamil Nadu, Gujarat & Rajasthan. 60 per cent of coal is said to be mineable and within 300 to 600 metre depth.
Indian coal is mainly non coking anthracite and bituminous in nature with ash content of over 35 per cent. Typically a 8000 MW power plant using Indian coal needs 1.5 million kl per year of oil as secondary fuel, 200 million tons per year of coal and generates 65 million tons per year of ash. With increasing cost of transportation optimal modeling is required for deciding on location of plant from pit head and right blend/mix of coal with adequate heat value. Coal imports from Indonesia, South Africa, Australia etc provide low ash/ high CV coal but does create sulfur problem in flue gases. Many power plants thus do select a suitable blending option for imported and local coal to be used as fuel feed stock. But importation gets adversely affected by country specific regulatory/taxation changes thereby impacting economics of power generation.

Nationalisation in seventies creating monopoly of CIL had closed the coal industry to private sector for sometime and inspite of growth in demand the availability continued to be a major bottleneck for running the plants. Government of India threw open many coal blocks (+90 or so) to private sector during the last decade but the production continued to stagnate. Policies, regulatory controls, local mafia politics and lack of central push forced large number of announced projects to cancel/go slow due to mainly the uncertainty of returns on investments. Some cases the coal block license holder╩s interest was more in resale of his quota at a premium value. Perhaps auction route for allocation of coal mines to genuine private players could be better long term option for the government. Many countries allowing Indian companies the mining rights have imposed pricing restrictions on export thereby adversely affecting the economics of energy production in India based on coal imports. Coal India is trying to increase indigenous production and plans to reach 450 million tons in 2012-13 so also put up coal washeries near pit head to reduce the ash content but faces water problems so also the fact that due to specific coal qualities the reduction achievable in ash content after washing is also marginal where as dry beneficiation of coal is still far away from reality.

Rationalisation of coal pricing (blending and pooling) and mining policies taking into consideration the logistics, heat values, use of efficient technologies (gasification, CTL, IGCC), ash disposal, tax structure, imbalances due to cross subsidisation etc is urgently required as coal will continue to be main fuel for many more decades to address the energy needs of our country.

Coal Bed Methane
Methane gas naturally trapped is coal/ lignite bed seams is Coal Bed Methane (CBM/CSG). Survey of CBM done indicates reserves as follows:-
This is offered by government for exploration and production comprising of seven blocks. The ONGC- Indian Oil Corporation combine has secured two blocks in Jharkhand - Bokaro and North Karampura - where it is investing almost Rs. 100 crores in exploration of CBM over the next five years. The ONGC - Coal India consortium has secured exploration rights in Raniganj (West Bengal) and Jharia (Jharkhand). Matix group is setting up a fertiliser (ammonia/urea) based on CBM in West Bengal. However, the main question remains on cost of CBM as delivered to plant and its sustainability for years of production. Investments made in downstream facilities assuming long term availability of CBM may have to also look for ┬fall back╩ feed stock options in order to ensure long term returns on the investments. However CBM/ CSG quantum will not have significant contribution in the energy basket.

Underground Coal Gasification (UCG)
Five lignite (Rajasthan/Gujarat) and two coal blocks (Godavari/Singarauli) have been identified by the government which could be offered for UCG projects.

However, various techno-commercial and ecological aspects needs to be satisfactorily addressed in terms of site specific operative parameters for UCG plants to be really effective. UCG also is unlikely to add much value into the energy pool.

Oil & Gas
World took almost 125 years to consume the first trillion barrels of oil but next trillion now is getting consumed in couple of decades. Global crude processing capacity will soon be over 15 million tons per day.

The increase in demand for lighter products is forcing the refiners to adopt severe secondary process technologies to handle heavier crudes and may have to reach 85% conversion levels by the year 2025 which was at 70 per cent in 1990 and expected to be around 79 per cent by the year 2015 or so. Middle East (OPEC)/Gulf countries continue to dominate the oil production and in turn control the market through their cartel operations. Crude oil availability is also governed by political tensions in the Gulf region where political mobilisation is occurring in various countries like Egypt, Libya, Tunisia, Yemen, Bahrain, Syria etc thereby starting the process of historical changes and may lead to imbalanced supply status for longer periods. Many national oil companies in places like Iran, Mexico, Indonesia etc are not adequately reinvesting and upgrading their production fields as cash flow from their crude exports in diverted to social expenditure, subsidies and in turn affecting the sustainability of their real production assets. This certainly will add to the volatility in the future markets. North America having discovered economical exploration of tight oil and shale gas is likely to contribute substantial volume in the international oil and gas trade and may even forge ahead of Middle East/ Gulf within next decade or so impacting the international fuel dynamics.

India being a major developing country needs increasing supply of petroleum products. India is likely to become a refinery hub from logistic point of view as many overseas refineries having small capacities are facing closures for various reasons. In the next five years refinering capacity in India with major ongoing expansions will cross over 300 million tons per annum and will contribute to the international petrochemical product trade. Bottom of the barrel concept and increasing integration is also likely to result into contribution to the energy mix as Petcoke gasification syngas leading to multigen products like hydrogen, power, steam etc will release other presently consumed feedstocks into the market pool of fuel products from such refineries. Inspite of substantive exploration efforts by government and private players the crude oil production indigenously has been stagnating for decades. Indian basins are not perceived to be prospective so also the existing oil fields have matured and the production from the wells are steadily declining. Clearing the NELP block allocation for exploration and its impact on indigenous availability of crude oil remains still a long term question mark. India thus continues to rely on oil imports of over 75 per cent of its requirements which is steadily increasing. Indian majors like ONGC, Reliance, Essar etc have also targeted overseas oil fields in Russia/Africa/Middle East etc by suitable investments to help bridging the crude oil availability gap for operating refineries in India.

The share of natural gas in the total energy mix is expected to reach 20 per cent by the year 2025. The demand is likely to rise by 6 to 7 per cent per year. The gas consumption is mainly by the fertiliser and power sectors almost in equal proportion. Inspite of the increase in indigenous production through gas fields in KG Basin as well as Cambay off-shore. The gap between demand and supply is continuously increasing, Gas being considered as clean fuel is also expected to be increasingly used by the automotive (CNG) sector and domestic (city gas) demands. ONGC, GAIL, Reliance and Petronet are presently the major players in the network of gas supply field.

The availability gap for natural gas will be increasingly met by importing LNG. Imports are expected to increase three times within the next five years to a capacity of over 45 mill ton per year needing setting up of number of LNG terminals for storage and regassing facilities so also putting in place corresponding evacuation network. Exploring possibilities of imports through piped gas which being a ┬cross border╩ pipeline involvement has inherent problems of security in the Indian context and still remains a dream project.

A number of LNG projects have been announced but only a few like Petronet LNG, Dabhol, Dahej etc have commenced operations. LNG imports being the bilateral arrangements between India and the producing countries like Qatar, Oman, Iran etc is highly related to international payment security mechanism. The pricing strategy in terms of pooling in the gas basket remains key to balanced approach ensuring availability of gas to fertiliser and power sectors in India. The cross subsidy and tax structure needs to be rationalised without excessive politicisation so as to avoid wasteful usage of the commodities which will continue to ┬exert economic burden╩ on the country in the future. Government certainly is trying to rationalise the policies in terms of bidding/approval conditions, changing to revenue sharing from profit sharing model, looking at Open Acreage Licensing Policy (OALP), tax holidays etc. This is expected to improve the bankability of projects in oil and gas sector and add increasing value to the energy basket.

Gas Hydrates
Combination of gas and water beneath the sea-bed trapped under high pressure and low temperature along the coast could be exploited. It is reported that around 20,000 trillions m3 of gas could exist in the global and around 1900 trillion m3 in Indian marine and permafrost gas hydrate accumulation which ranges upto 2 km in depth. Only Russia has been using this fuel from Siberia in some measure. Gas hydrates could be at a depth of 850 ?? 2,000 m. National gas hydrate programme, which began a few years ago involving DGH (Directorate General of Hydrocarbon), alongwith GAIL, ONGC and CSIR, is meant for exploration of GH. Krishna, Godavari, Goa, Andaman Islands etc has the exploratory potential for this work. However, converting gas hydrates into fuel gas economically is yet to be ascertained. Well engineering, reservoir engineering etc, need to be addressed before any commercial activity really begins. May be Russia, Japan, Canada or America will come into the picture for support at some stage.

NUCLEAR ENERGY
Atomic Energy Commission was set up in 1957 at Trombay which subsequently became Bhabha Atomic Research Centre. Pressurised Heavy Water Reactor (PHWR) for nuclear power was planned in 1964 and a prototype unit with Canadian support was put up in Rajasthan I. It started operation in 1972. Subsequent PHWR units installed were mainly repetition of the prototype and India now has over 400 reactor years of operational experience, about 19 operating units with 4200 MW total capacity covering Tarapur (4), Kaiga (3), Kalpakkam (2), Narora (2), Kakrapar (2), Rajasthan (6). Six new units with total 4000 MW capacity are under construction controlled by NPCIL. Even though the Five Year Plan 2012 - 17 targets 100 GWe total new power generation capacity only 3.4 per cent is expected to be from nuclear power route.

Large numbers of nuclear power projects are planned and are under commercial discussions with international players who normally supply the proprietary reactor as well as tie up the atomic fuel source. Tamil Nadu, Maharashtra, Gujarat, Andhra Pradesh, West Bengal, Haryana, Madhya Pradesh, Orissa as well as other states are listed to get new nuclear power stations in the next two decades. Advanced Heavy Water Reactors (AHWR), PHWR and LWR technologies as well as their modified versions are likely to be adopted for new nuclear power generation units. The international players supporting this nuclear power programme are from France, Russia, Canada, UK, USA, South Korea etc.

India expects addition of 20,000 MW nuclear power capacity by the year 2025 and around 60,000 MW by the year 2035. Contribution target of about 25 per cent of total generation to be nuclear based is being talked about and to be achieved by the year 2050 or so.

India's nuclear self sufficiency programme commenced few decades ago included Uranium exploration and mining, fuel fabrication, heavy water production, reactor design and engineering as well as reprocessing and waste management. However, lack of indigenous uranium source and global reluctance to supply by the Nuclear Supplier Group (NSG) had impacted India╩s ambitious growth plans to develop nuclear energy. NPT issue internationally affected many bilateral agreements with the NSG members for sourcing the uranium supply. However, during the last few years, based on India╩s excellent track record on non proliferation inspite of being a nuclear power, helped easing the world opinion and many of the countries involved in the NSG have started re-negotiating bilateral trade agreements for India sourcing the nuclear fuels, incorporating at times their own safe guards and reprocessing restrictions.

India is endowed with abundance of Thorium deposits and during the last five decades or so we have been hearing about development of Thorium based nuclear reactors. Though internationally few countries have claimed development of Thorium based nuclear reactors, India is still in the planning stage for developing indigenous designs. BARC have recently announced that basic design and engineering of Thorium fueled reactor is ready and 300 MW capacity unit is under government╩s consideration for installation at a suitable site within the next few years.

It is expected to be operational by end of this decade. Hopefully, India's dream of thorium based nuclear power reactors will be realised in the near future and the international ┬uranium lobby' do not create the political hurdles and resistance to our exploitable alternative.

Inspite of substantial focus and push by the government in developing nuclear power it is still badly affected by socio environmental issues specially related to radioactive waste management, regulatory and safety aspects (in the light of number of mishaps reported in Russia, Japan etc), non-availability of adequate trained man power to run and maintain the nuclear power plants as well as regional tensions around India so also the political considerations. The debate about large capacity v/s small capacity staggered units is also round the corner gaining momentum and may lead to develop the optimum operating model for nuclear energy generation in India.

HYDRO POWER
Presently it contributes around 11 per cent of the installed generation capacity in India. The potential for + 25 MW Power Plant has been adequately assessed by reliable exploratory agencies which indicate that only 23.74 per cent of the hydro capacity is developed which is equivalent to 34, 505 MW where as under construction is around 8.5 per cent only.
This leaves substantial untapped hydro potential of 67.76 per cent which is yet to be developed for various local as well as techno-economic reasons. Major hydro power potential is in the North and North Eastern regions.

RENEWABLES
Solar Energy
Survey indicates USA and India are most attractive countries in this sector. Many international players are focusing on Indian solar market and bringing in latest state of the art technologies as well as financial assistance in this sector. National Solar Mission targets 20,000 MW power generation within the next ten years or so. Number of international manufacturers of solar panels have established their presence in India. Number of technologies for concentrated solar power plants are available such as;

Tower Technology - where heliostats are used to capture the solar radiation and heat in turn is transferred to molten salt in the primary circuit. The heat from molten salt is used for steam generation to drive the steam turbines in the secondary powergen circuit.

Parabolic Trough Design - where 150 to 200 meters long troughs capture the solar heat and transfers it to oil carrying tube in the centre. The collector tube with special coating and enclosed in vacuum tight evacuated glass tube are in the market increasing the solar heat absorption from panels. The super heated oil (+400└C) is pumped to the conventional power block for steam generation and running of the steam turbine.

There are also hybrid solar technologies available. However, the requirement of huge collector area (100 MW unit needs atleast 900 acres of land) and heavy investments per MW makes the power generated through solar panels extremely expensive. The solar power plants also suffer from its non-availability for generation during nights and needs an alternate fuel source/heat sink to enable continuous operations.

Polycrystalline silicon material used in solar panels for photovoltic cells is also costly. The price of polycrystalline silicon is increasing at 20 to 30 per cent rate due to its requirements/usage by the electronic industries and so also its limited global production.

Indian government has tried to make it mandatory for new power plants to ensure 5 per cent of its generation dedicated to solar source but its impact on the marketable tariff of overall power has been a major set back in its implementation. Existing coal fired thermal plants could install solar collectors on top of the substantial area covered under coal storage/handling, water storage etc and solar heat thus gathered can be integrated in the existing ┬thermal circuit╩ reducing corresponding coal consumption. Typically 4000 MW coal fired thermal power plant needs over 500 acres of land dedicated to coal yard/water reservoir/chemicals storage etc which basically involves ground level operations. This area could be also used by suitably engineered solar collector system functioning at a proper higher level to collect solar heat, as nine acres of land provides one MW equivalent thermal solar heat. Thus 50 MW equivalent thermal energy from solar thermal collectors can be integrated into the circuit accordingly for 4000 MW existing power plant. However, government has been working out suitable incentives and cross subsidies to enable investors in solar power projects to get assured returns on their investments.

Substantial research work is going on in Japan and European countries to develop special composites which can substantially absorb solar heat with optimal receiver design and enable economic generation of solar power. A major techno-economic break through in few years would bring the solar power into countries energy equation effectively. It is expected that solar power could attain parity in terms of tariff due to localised incentives, technology upgrades, mass production, increasing scale of operation so also ever rising prices of fossil fuels in the market in due course.

Wind Power
Wind mill farms have been known for ages and are obviously subject to availability of suitable tunneling slot, where the wind power is sustainable to run the wind mills. Number of manufacturers of wind mills having developed competitive designs are operating in India and nearly 1200 MW wind power capacity is presently installed in India. Tamil Nadu generates over 800 MW where as Gujarat and Maharashtra are producing the balance of wind power. Internationally Germany is leading in this field having around 6,000 MW wind power generation capacity at present. The high investments in this field also suffer from operational availability governed by the wind pattern and its changes which inevitably occur during various seasons of the year.

Biofuels
Ministry of Petroleum and Natural Gas have been promoting use of ethanol blended petrol and diesel for quite sometime. The focus obviously is on developing indigenous renewable fuel source which can also boost the rural economy. The petroleum companies did set up successfully number of retail outlets in states like Maharashtra, Uttar Pradesh etc to market the ethanol blended petrol. An MOU was also entered into with Brazil for transfer of technology for blending of ethanol with auto fuels.

In India ethanol is mainly produced by the sugar industries as a by product through molasses fermentation and distilleries. The alcohol produced of various grades has number of industrial applications as well as for manufacture of potable alcohol. The governmental control on movement of molasses as well as alcohol distilleries has been a political commodity like most of the agro output in the country. The limited processing of pure dry ethanol to be used for gasohol production has been therefore affecting its availability for blending with petrol. Thus inspite of government╩s intention to set up large number of retail outlets (over 12000!) and increase the proportion of blend up to 10 per cent of ethanol in phases it has not yet been even partly successful.

Technologies for producing ethanol from cellulosic biomass through fermentation and chemical hydrolysis have been internationally developed right from lab through to commercial scale production in Western countries. However, logistics of biomass collection and huge quantities required for minimum economic scale alcohol production plant are still making this alternate route for alcohol production a far sited cry in India. Globally, over 150 bill. tons per year of biomass grows and even 10 per cent of the same if used for fuel production will reduce substantial oil consumption in the world. The gasohol alternative thus is likely to remain a political subject in India for years to come and may not add substantial value towards energy security inspite of its potential to do so in the country. Allowing agro produce for alcohol production borders on the food security concerns.

Biodiesel production from cheap nonedible vegetable oils and waste used oils and fats by trans-esterification can ideally be blended with regular diesel as fuel for automobiles. The process technology for transesterification of vegetable oils is known for decades and in Western countries waste vegetable oils have been converted into biodiesel. However, economy of collection of waste vegetable oils and continued availability for manufacturing the biodiesel has always been a subject of major concern, apart from effective utilisation of the by product glycerin generated in the manufacturing process. The value addition being marginal during conversion, the price at which vegetable oil needs to be available to biodiesel units has to be lower than the price of diesel marketed in the countries. In India even the non-edible vegetable oils are priced at much higher range and hence biodiesel industry has not picked up as yet. Government plans to develop Jatropha, a tree borne oil seeds, for providing oil to biodiesel industry by planting such trees in waste and degraded lands are yet to fructify. Many joint task forces involving railways/petroleum oil companies have been formed to utilize the surplus land for planting such Jatropha trees perhaps still remain on paper and a ┬political vapour ware╩. Agribiotech research efforts could be ideal to increase the oil yield from non-edible oil crops as well as B.T. modified jatropha seeds to enable plantation and growth in waste lands with minimal water demands which in turn could provide feed stock for biodiesel production.

In view of ethanol as well as vegetable oil remaining mainly the agricultural commodities will always be a subject of local/state/central politics involving subsidies for farmers (incentives to politicians), may be tough to become a prospective business opportunity towards energy needs in our country.

Substantive research work is going on internationally covering biomethane, biobutanol, enzymatic hydrolysis, microbial fuel cells, biomass pretreatment, genetic manipulation and their utility for biofuel industry, efficient bioreactor design, bio processing of residues and waste of energy etc. A break through in terms of commercial viability of technology will be a key driver for site specific biofuel commercial production. Algal biofuel, pyrolytic bio oil and syngas as well as ligno cellulosic production are at an advanced stage of development and could add value to the renewable energy basket. Focused efforts on GM energy crops for increasing yields would give boost to biofuel sector.

Consumer Control
Apart from exploration of alternate fuels for energy security for the country it is a ┬fact╩ to be realised that optimal and efficient energy consumption will be the key towards longterm energy security. The three ┬R╩s that is Reduce/Recycle/Recover must remain in focus for public and governmental policies. Logistics and regional variation in energy production cost should guide the growth policies and politics. Even 1 per cent saving in energy consumption is worth over 8 million tons of coal energy equivalent. Each kw saved is 2.5 kw generated. Improving linkage efficiency for energy conservation must be a national priority.

Energy management systems must focus on steady and sustainable reduction in business energy consumption as well as improving the overall efficiencies of the entire value chain right from generation through to optimum utilisation. Subsidising automobile purchasing using infact the tax payers contribution by extending excessive easy car loan banking transactions is only helping the automobile industry but burdening the increase in petrol consumption and adds to enormous pollution as well as traffic congestions. Infact over 300 vehicles are presently added everyday in Mumbai leading to alarming level of infrastructure/pollution problems not only in Mumbai but also in other metro cites.

The major challenge in the 21st century is to manage sustainable growth without imbalanced increase in energy demands and costs. Also ensuring that energy assets created are also optimally and efficiently serviced as sustainability is governed by integrated approach covering all critical parameters. The strong correlation between ┬Economic Power╩ and ┬Energy Costs╩ could otherwise lead the world to witness more selective wars over energy needs.