[ferrarirules]

There is so much talk today about energy independence and specifically from India which is net importer of energy. So I thought why don't I bring fore the facts on how India is placed this respect. How is India or other countries dealing with it.

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Energy dependence of India

Oil, gas and coal are the three key fuels of the world as of today. Except Coal, India doesn't have the other two in abundance to sustain its needs.

Crude Oil
Oil is primary driver of transportation and industry in India. We import the 87.7% of the crude that is needed to run the country. The import bill was $132 billion for the year 2023, thanks to favourable international rates. The net import was $108 billion. But the import quantity is increasing YoY. We are the world's third largest importer of crude oil.

Source - Hindu & PPAC

Country-wise Import Split - CIS (Azerbaijan, Kazakhstan and Russia) and Middle-East countries were almost equal suppliers of crude to India for the year 2023-24. So we have a dependency on a limited set of countries to provide us oil and global politics/wars do impact the supplies as well as the prices.

Source - Reuters

LNG
India uses gas for cooking, power generation, fertilizer production and industrial use. In last 25 years with the advent of CNG vehicles, we have started using it for transportation as well. We are world's 4th largest importer of gas. We imported 46% of the gas in FY24. The import value was $13.3 billion.

Source - PPAC

Country-wise Import Split - Majority of our gas is imported from Qatar, United States and UAE. These three countries account for almost 70-80% of the import. So we have a dependency on a limited set of countries to provide us gas and global politics/wars do impact the supplies as well as the prices.

Coal
Coal is primarily is used in power generation and heavy industries in India. India has world's third largest reserves of Coal (Anthracite and Bituminous). India has open import policy for coal which means an industry can import coal if it meets their quality requirements or price point. There are 15 imported coal power plants (privately owned) which are designed to run on imported coal only. The total consumption of coal for FY24 was 1258 MT and out of this import was 261 MT. Imports are 20% of the total consumption.

Country-wise Import Split - Almost 70% of the coal is imported from Australia or Indonesia. There is lesser geopolitical risk in coal as commodity as we have abundant reserves.

Source - Nitiayog Dashboard, Ministry of Coal

Challenges due to India's dependence on oil and gas

1. Country specific imports - With oil and gas being monopolized by OPEC, India is at the mercy of these countries for supply. Recently India was able to diversify supply due to Ukraine war but again country walks a tight rope on diplomatic relations to do all this.

2. Fuel pricing for end consumer is dependent on open market rates but the state run oil marketing companies try to regulate the prices so as to reduce price shocks for the end consumer. Govt tries to compensate OMC for the losses that occur due to price shocks. Examples - Ukraine war, Israel war, US sanctions on Iran, US sanctions on Venezuela.

3. The supply of oil and gas is dependent on global routes. Uncertainty of supply puts a lot of pressure on fuel prices in the country
Examples - Blockage of Suez canal, Ukraine War, Gulf war

4. Transportation of oil and gas - Oil or gas as commodity needs to travel to reach the end consumer. For fuel, Oil needs to travel to Indian port and then to refineries and from refineries it needs to go to distribution hubs to be sent to end consumer. For PNG/CNG, you can build pipelines and deliver it to door step or fuel stations. For LPG, you pick it from refineries and send it to bottling plants. All of this transportation itself needs fuel.

With the problem stated, is there a solution? A simple answer is "yes". There are multiple solutions and biggest solution of them is electrification. I will answer the How?

Electrification

1. Electricity can be generated from multiple sources - Thermal (Coal), Wind, Solar, Hydro. The interesting thing to note is that we are abundant in all these sources. I know thermal is not clean electricity but that not the thought here.
2. Electricity generation is something that can be democratized. An industry or commercial establishment can setup a solar power plant on their roof or a individual house owner can setup roof top solar. Residential Societies can setup roof top solar. I know Solar is only available in day time. Read on!!
3. Electricity can be transmitted over long distance and even exported/imported. Example - Asean Power Grid and India's wish to connect it - Link, India and Middle east undersea power cable - Link, Australia and Singapore undersea power cable - Link
4. Electricity can be stored. Solar is available for specific amount of time and post that one has to rely on other power sources. This is where BeSS can help to store electricity for off solar hours. BeSS can provide grid stability as well when combined with a substation. BeSS can replaced diesel generators which are used in industrial, commercial and residential establishments. Battery prices are falling making BeSS projects easier to implement - Link (Electric Vehicles & India Power Generation Thread)
5. Possibility of micro grids - With Solar and BeSS combined, there is possibility of setting up self sustaining villages. This was implemented in Modhera, Gujarat - Link, Maligaon in Odisha - Link
6. Electricity can be used for transport. Electric vehicles are the prime example. Railways is another big example.

Before people talk about power supply and lack of it. We have been improving in this space. We are not power surplus but we are close to break even

Source-Ministry of Power

Biomass

1. Biomass can be converted to make green hydrogen. Recently a project was awarded to Gensol which will convert 25 tons of biomass to 1 ton green hydrogen - Link. Before you start thinking here come hydrogen cars, Hydrogen is a big requirement for fertilizers, refining and many other industries. All these industries are being asked to move to green hydrogen.
2. Biomass can be converted to biogas for commercial kitchen use - Recently Maruti Suzuki installed a 0.2 ton per day biogas plant for use in plant's canteen and production process - Link

Ethanol

1. Ethanol blending with petrol - Government has slowly increasing ethanol blending in petrol - E10-E15. E20 is targeted for 2025. Ethanol is by product of sugar production so we don't need to import it. India is even testing flex fuel vehicles in conjunction with Toyota - Link. I know a lot of old vehicles are not compliant with E20 fuel and need E10 fuel. There is a thread (Impact of 20% ethanol petrol on current petrol engines) to discuss this

Has any country achieved energy independence? Yes, it is Norway.

Let's see what Norway has achieved. Majority of Norway's power comes from hydropower and thermal power is 1.5 % of the total production for the year 2023.
This was not easy to achieve as they were largely dependent on hydropower, the power generation fluctuated based on rain. To address this, they deployed offshore wind plants. Today, wind caters for 10% of their power generation.
The outcome of all this, biggest requirement of fossil fuels in a country like Norway is heating of homes. The homes in Norway are not heated by gas, they banned fossil fuel based heating in 2017. They achieved non fossil fuel heating - Link

After achieving nearly 100% green grid, there was a big news a few days back was that Norway achieved 94% EVs in their new car sales.- Link to the article.Today Norway exports most of their gas and oil production. They are now looking at ways of converting new truck sales to electric as well.

Summary:

I know all of this is easier said than done. I will summarize with following points:

1. Energy security and independence is key for the long term goal of developed India.
2. We have never been the energy providers of the world. We have an opportunity to become one if we invest and promote renewables and battery manufacturing.
3. Clean environment and net zero carbon footprint are the end goal but the immediate need is energy independence.
4. Every approach has challenges and pitfalls but one needs to start somewhere
5. I know batteries are supplied by China but batteries are recyclable commodity. Hence lesser impact of the import than oil and gas. Also for 60 KW lithium battery - 6 kg lithium is needed. Rest are material which we have available
6. As citizens, we must contribute to this goal by adopting measures like rooftop solar in our homes and businesses. Use electric cooktops with rooftop solar. Societies can also promote solar implementation in their parking spaces or roof top

Please note: This is a not political discussion on govt policy. There are other dedicated thread for govt policy related to EV

Disclaimer: These view are my personal opinion and I am not affiliated to any govt or non govt organization.

[nidhikapoor]

Brilliant and informative write up. Thanks. I had no idea how close we have come to breaking even in power production.

[SmartCat]

Originally Posted by ferrarirules

I know all of this is easier said than done.

Electricity Demand & GDP Growth:

Based on data you have provided, even without significant electrification of transport, India's power demand is growing at 5% pa. That's because there is a correlation between GDP growth (7% pa) and electricity demand.



This is a problem that Norway or other developed countries do not have. Their long term GDP growth is probably 2% pa. Also, unlike India, they will not have a near 1:1 correlation between GDP growth/electricity demand. If their GDP has been growing at 2% pa, the power demand might grow at just 0.5% pa. So, it is far easier for other countries to electrify & replace existing demand for oil & gas.

India oil imports myth:

- We import $130 billion worth oil & gas, but we also export refined petroleum products ($70 billion). So the entire imports are not used for consumption.
- We also export labour to the Middle East. Out of our remittances of $90 billion, majority comes from Middle East. If we stop importing oil, it is very likely that Middle Eastern countries will import labour from some other country.



So the accounts are more or less balanced. 20% ethanol mixing will help cover for any minor discrepancies. Oil imports actually have a positive effect on Budget, because it is so easy to tax.

Capex & gestation period:

However, if policy decisions are taken by Govt to encourage electrification, it does not put any burden on the Govt or the Budget. Both the public/private sector and banking sector has enough resources to go on a electric power plant building spree. That's because electricity production is a profitable business now upto 15% RoE.

I think the unsurmountable problem lies in gestation period of setting up a power plant. It can be anywhere between 1 year (solar) to 10 years (nuclear). If we don't want to depend on imports, manufacturing the building blocks (boilers, solar panels, wind turbine blades etc) of a power plant too needs long gestation capacity building. And I guess power infrastructure (transmission lines/towers) needs to be expanded too.

India's mind boggling size & scale:

Norway's total installed power capacity is 40,000 MW. It probably took them a decade or two to replace oil & gas with electricity. Meanwhile, India added 26,000 MW just last year, just to cover for normal electricity demand growth.

Conclusion:

Remember the problem is not just about meeting future demand of oil/gas with electricity, but also replacing existing massive demand. (Our GDP growth rate + not enough financial incentives to reduce oil imports + nature of capital goods investment for power production) makes it difficult to flatten this uptrending blue line, leave alone make it trend downwards:

[ferrarirules]

Thanks for sharing your thoughts on this. I agree this is easier said than done but then there is famous saying "Rome was not built in a day". I wanted to invoke a thought and awareness that it is in our best interest to look for alternative to oil and gas.

Originally Posted by SmartCat

India oil imports myth:

- We import $130 billion worth oil & gas, but we also export refined petroleum products ($70 billion). So the entire imports are not used for consumption.

The above statement has multiple things wrong in it:

1. "$130 billion worth oil & gas" - $132 billion was import of Crude oil only. LNG import is above this and value for the same was $13.3 billion
2. "export refined petroleum products ($70 billion)" - I had mentioned the net import figure of $108 billion. Value of all petroleum products exported was $47 billion. Value of petroleum products imported was $155 billion -All figures are for year 2023-24.
3. The numbers were worse (thanks to Ukraine war) for FY2022-23 - Total Import - $184 billion including Crude Import -$157 billion, Total Export - $57 billion - Net import - $127 billion




Please see year wise details on the govt site - Petroleum Planning & Analysis cell

[SmartCat]

Originally Posted by ferrarirules

The above statement has multiple things wrong in it

Govt data is missing petrochemicals exports (polymers, polyesters, aromatics etc). So you need to add $20 to $25 billion to that.

Specifically coming to Middle East, India has a positive balance of payments/trade. For eg: India exports to UAE last year was $32 billion. And this is very likely influenced by multi-decade trade partnership (and future prospects) between the two countries. That's why they go out of their way to keep our political leaders happy when they visit Middle East countries.

Sure, because of Ukraine conflict, crude oil import value shot up that year. But during the Covid year, crude oil import bill was down 35%. Over a long term, price fluctuations even out.

[oldcontessafan]

Agree with the broader messages in the original post by @ferrarirules

Couple of points worth noting:

1. There are always EV naysayers saying the electricity used to charge is not green then how come EV is a green option. Reality is that factory emissions are much more manageable than tail pipe emissions. Plus, the grid is greening at a good rate as detailed in the post

2. We have added the third largest amount of renewable generation after US and China, and we have not even scratched the surface. Whereas in EU and US, most of the capacity addition is dependent on replacing coal, India's incremental demand itself is so high that new renewable energy installations are not dependent on coal retirals.

3. India is really abundant in Solar resources. With rapidly falling prices of batteries thanks to China's economies of scale, clean dispatchable generation on par with fossil fuels is not far.

4. India has another blessing in the form of a robust interlinked grid, which allows utilization of cheap land and resources in Rajasthan and deliver it at Tamil Nadu instantly with miniscule transmission losses. For comparison, this is neither easy nor possible everywhere- case in point being US where the regional grids are not linked (Causing catastrophic failures like the Texas freeze due to want of power)

5. Atmanirbhar push is a blessing to the whole sector, we have had torchbearers like Suzlon early on but the current government's pro-renewable stance is enabling manufacturing capacity creation like no other. Today, most of the solar/wind/BESS installations use China sourced materials but that is likely to improve as domestic manufacturing capacities start getting ramped up by end of the decade.

Overall, things are progressing well in this sector

[Kosfactor]

Green energy - the common Myth!

Countries like India \ China are the Industrial \ Manufacturing hubs - we need cheap energy prices. So we need to invest in energy sources that are affordable and clean, in that order.

Norway - Another Myth!

They are a rich country and among the largest exporters of Oil

So they all can purchase expensive EVs like Tesla, virtue signal to the world as clean and China will have to do the dirty work of plundering the earth in search of Lithium.

Sorry to say this but Europe is not the answer, they are a consumer and creator of these problems in the first place.

India is finding its own answers, charting its own course, happy to see that.

[DigitalOne]

Fantastic write-up !!

Originally Posted by ferrarirules

1. Electricity can be generated from multiple sources - Thermal (Coal), Wind, Solar, Hydro.

Nuclear energy is missed . Nuclear energy is something that can be generated at large scale and is environment friendly. This would be the key to our energy independence.

Can you or any other knowledgeable member elaborate on India's current capacity and how we are advancing on this green energy?

I hope the politicians can have a consensus on Nuclear energy and make a national commitment on this. Too much to hope for ??

[SmartCat]

Originally Posted by DigitalOne

Nuclear energy is missed. Nuclear energy is something that can be generated at large scale and is environment friendly. This would be the key to our energy independence. Can you or any other knowledgeable member elaborate on India's current capacity and how we are advancing on this green energy? I hope the politicians can have a consensus on Nuclear energy and make a national commitment on this.

It is mostly an economics issue -

- It is 8x to 10x more expensive than coal power plant
- Typically takes 8 years to 10 years to build.
- Local Uranium supplies is just enough to build bombs. Fuel to power the nuke plants has to be imported.

[NPV]

Originally Posted by SmartCat

It is mostly an economics issue -

- It is 8x to 10x more expensive than coal power plant
- Typically takes 8 years to 10 years to build.
- Local Uranium supplies is just enough to build bombs. Fuel to power the nuke plants has to be imported.

And most importantly safety aspects, remember what happened in Japan during the Tsunami outbreak?

[shortbread]

Originally Posted by Kosfactor

Green energy - the common Myth!

If you carefully read the original post, the focus was on energy dependence rather than debating what is clean or not; it was all supported by solid data, not myths.

[krrisdrive]

Independence in any business is unsustainable in these connected global times. Ask any Sri Lankans how they feel about 'Sustainable food systems'. We know want happened there.

Manipulating a country's strength and weakness through policies is acceptable to some extent, but trying to change the course will have unintended consequences.

Atmanirbhar or independence is a myth. Leave alone energy.

[alpha1]

What is the purpose of energy independance again?
If it is due to Soveignity issues, then I can still understand the sentiment; but if it is money economic and monetary purpose then there is another side to the story.

India being "net importer" of sources of energy like oil, gas and coal implies that the demand pressure on rupees is less and the demand pressure for other currencies is high. This ultimately leads a declining forex conversion ratio - ultimately helping our exporters (of products and services). A high forex conversion ratio will spell doom for the rising and shining growth sectors of India (including IT)!

Does this mean we should stop the endeavor to power ourselves with alternate fuels - definitely not. But economics should dictate that transition, not the desire to be "independent" (which ultimately would be funded via govt schemes, leading to eventual tax burden)

[SKC-auto]

Before 2015, Green energy was costly than say energy from Coal, today solar, onshore wind, offshore wind along with battery storage are all cheaper than Fossil fuels.

Still people are stuck in old times, now it is cheaper to have green energy - Not a myth anymore.

Energy independence is not a myth, it is doable with current technology. Though, we need inter connections with different countries.

Like, Thailand or Vietnam can sell solar energy when it is 3am in India, India can supply solar energy until 9pm in Vietnam. We may have less wind in Tamilnadu, but can have good wind at Gujarat.

[locusjag]

There is one more way that urban India can attain better energy efficiencies. That will require liberalization of floor space indices (FSIs).

Let's take the case of Chennai. The FSI is around 2 only, which means with the year-on-year influx of people from villages into the city, the city has had to expand horizontally area-wise. If the FSI weren't so measly, high-rise apartments could have easily accommodated the influx of people and these are highly energy efficient on a per-capita basis. Right now, the city keeps growing and people keep buying private vehicles because public transport lags population growth by ~5-10 years. To get anywhere, people need to drive long and hard through dense traffic, thereby consuming a lot of fossil fuel per head.