Economic theory of demand

2. Unit-2: Energy Accounting Framework
Content
• Economic theory of demand
• Production and cost market structure
• National energy map of India
• Energy subsidy – National and international perspectives
2

3. The Economics of Demand
3
What Is Demand Theory?
•Demand theory is an economic principle relating to the
relationship between consumer demand for goods and
services and their prices in the market
•Demand theory forms the basis for the demand curve, which
relates consumer desire to the amount of goods available
•It describes the way that changes in the quantity of a good or
service demanded by consumers affects its price in the
market
•The theory states that the higher the price of a product is, all
else equal, the less of it will be demanded, inferring a
downward sloping demand curve
•Likewise, the more demand that occurs, the greater the price
will be for a given supply

4. Economics of Demand
 Need to discuss
• The Demand Curve
• Elasticity of Demand
• Changes in Demand
4

5. Demand Curve
• Explain the law of demand
• Interpret a demand schedule and demand curve
5

6. Demand Curve
• Demand
• Law of demand
• Marginal utility
• Law of diminishing marginal utility
• Demand curve
• Quantity demanded
• Individual demand
• Market demand
6

7. Demand & Law of Demand
•Demand indicates how much of a product
consumers are both willing and able to buy at
each possible price during a given period, other
things remaining constant
•The law of demand says that quantity demanded
varies inversely with price, other things constant.
Thus, the higher the price, the smaller the
quantity demanded
7

8. Law of Demand
• Demand, wants, and needs
• Substitution effect
• The change in the relative price (the price of one good
relative to the prices of other goods) causes the
substitution effect
• If all prices changed by same margin, there would be
no substitution effect
• Income effect
• Money income – the number of dollars you receive per
period
• Real income – measure in terms of how many goods and
services you can buy
• Diminishing marginal utility
• Marginal utility – additional satisfaction you derive from
each item
• Law of marginal utility you derive from each additional
item consumed decreases as your consumption increases
(example: pizza slices) 8

9. Contd…
•Diminishing marginal utility
•Marginal utility – additional satisfaction you
derive from each item
•Law of marginal utility you derive from each
additional item consumed decreases as your
consumption increases (example: pizza slices)
9

10. Demand Schedule
and Demand Curve
•Demand versus quantity demanded
•Individual demand
•Market demand
10

11. Demand Schedule
11
Price Quantity Demanded
per Pizza per Week (millions)
a 150 8
b 120 14
c 90 20
d 60 26
e 30 32

12. Demand Curve for Pizza
12
8 14 20 26 32
Millions of pizzas per week
150
120
90
60
30
0
Price
per
pizza
a
b
c
d
e
D

13. Individual Demand for Pizzas
13
120
80
40
1
(c) Alok
120
80
40
1 2
(b) Prithvi
120
80
40
Price
1 2 3
Pizzas (per week)
(a) Himanshu
dH
d
P d
A

14. Market Demand for Pizzas
14
120
80
40
Price
1 2 3
Pizzas (per week)
(d) Market demand for pizzas
6
dH
dP
dA
D
+ + =

15. Elasticity of Demand
• Compute the elasticity of demand and
explain its relevance.
• Discuss factors that influence elasticity of
demand
15

16. Computing the
Elasticity of Demand
•Elasticity of demand measures the percentage
change in quantity demanded divided by
percentage change in price
16
Elasticity
of
demand
=
Percentage change in
quantity demanded
Percentage
change in price

17. Computing
Elasticity of Demand
•Elasticity values
• >1 it is elastic
• Percentage change in price will result in larger percentage
change in the quantity demanded
• =1 it is unit-elastic
• <1 it is inelastic
• Demand is usually more elastic at higher prices and
less elastic with lower prices
•Elasticity and total revenue
• Price x’s quantity demanded at that price
17

18. The Demand for Pizza
18
8 14 20 26 32
Millions of pizzas per week
150
120
90
60
30
0
Price
per
pizza
D

19. Determinants of
Demand Elasticity
• Availability of substitutes
• The greater the availability of substitutes for a good, the
greater the good’s elasticity of demand
• Share of consumer’s budget spent on the good
• Increase in prices reduced the demand because people
are not both willing and able to purchase @ higher
prices
• A matter of time
• The longer the adjustment period, the greater the
consumer’s ability to substitute
• Some elasticity estimates
• The elasticity of demand is greater in the long run
because consumers have more time to adjust
19

20. Demand Becomes
More Elastic Over Time
20
50 75 95100
Millions of gallons per day
0
1.25
1.00
Price
per
gallon
Dy
D m
Dw

21. Selected
Elasticities of Demand
Product Short Run Long Run
Electricity (residential) 0.1 1.9
Air travel 0.1 2.4
Medical care and hospitalization 0.3 0.9
Gasoline 0.4 1.5
Movies 0.9 3.7
Natural gas (residential) 1.4 2.1
21

22. Other Determinants of Demand
•Consumer Income
•The prices of related goods
•The number and composition of
consumers
•Consumer expectations
•Consumer tastes
22

23. Changes in Consumer
Income
•If income ↑, consumers willing and able to buy more
which ↑ demand
•Demand curve shifts to the right
•Two categories of goods:
•Normal goods – demand increases as money
income increases
•Inferior goods – demand decreases as money
income increases
•Examples: used clothing, bus rides, etc.
23

24. Changes in the Prices of Related
Goods
•Substitutes
•Decrease in price of one item will reduce the
demand for a substitute
•Example: Tacos and Pizza
•Complements
•Certain goods used together
•Example: airline tickets and car rentals
•A decrease in the price of one shifts the demand
of the other rightward
24

25. Cont…
•Changes in size or composition of the population
will increase demand and shift the curve to the
right
•Changes in consumer expectations can shift the
demand curve to the left or the right
•Changes in consumer tastes
•Tastes are your likes and dislikes as a consumer
25

26. Movement along the Curve
•Movement vs. Shift
•A change in price, causes a movement
along the demand curve, changes the
quantity demanded
•A change in one of the determinants of
demand other than price causes a shift of
a demand curve
26

27. Extensions of Demand Analysis
•Role of time
•Your willingness to pay more for time-
saving goods depends on the opportunity
cost of your time!
27

28. Energy subsidy – National and
international perspectives
What is Subsidy?
• A subsidy, often viewed as the converse of a tax, is an
instrument of fiscal policy. It is derived from the Latin word
'subsidium‘, means a subsidy literally implies coming to
assistance from behind.
• Subsidies are a kind of incentive which play an important
role in economic development of developing countries
• Subsidies bring out desired changes by effecting optimal
allocation of resources, stabilizing the price of essential
good & services, redistributing income in favour of poor
people thus achieving the twin objective of growth &
equity of nation.
28

29. 29
The objective is subsidy is often creating a wedge between
consumer prices and producer costs which lead to:
• changes in demand/ supply decisions
• inducing higher consumption/ production
• offsetting market imperfections including internalisation of
externalities
• achievement of social policy objectives including
redistribution of income, population control, etc.
• Subsidies, by means of creating a wedge between
• consumer prices and producer costs, lead to changes in
• demand/ supply decisions

30. Advantages of Subsidy
• Reduces cost of production
• To increase consumption and production, the government
can offer a subsidy to reduce the price and increase quantity
• Enables greater social efficiency. Consumers end up paying
the socially efficient price which includes the external benefit.
30

31. • Subsidy = P0 -P2
• The supply curve shifts to S2 and Price falls from P1 to P2
• People will now consume more at Q1
• Q1 = Social Efficiency: because SMC = SMB
Disadvantages of Subsidy
• According to the UNESCO, India has the lowest public
expenditure on higher education per student in the world.
• As much as 39% of subsidised kerosene is stolen.
• Subsidies may also lead to perverse or unintended
economic effects.. They would result in inefficient resource
allocation if imposed on a competitive market.
• By diverting economic resources away from areas where
their marginal productivity would be higher. Generalised
subsidies waste resources. 31

32. • A price control may lead to lower production and shortages
and thus generate black markets resulting in profits to
operators in such markets and economic rents to privileged
people who have access to the distribution of the good
concerned at the controlled price
32

33. Effects of Subsidies
• A locative effects: these relate to the sectoral allocation of
resources. Subsidies help draw more resources towards the
subsidized sector
• Redistributive effects: these generally depend upon the
elasticities of demands of the relevant groups for the
subsidized good as well as the elasticity of supply of the
same good and the mode of administering the subsidy
• Fiscal effects: subsidies have obvious fiscal effects since a
large part of subsidies emanate from the budget. They
directly increase fiscal deficits. Subsidies may also indirectly
affect the budget adversely by drawing resources away from
tax-yielding sectors towards sectors that may have a low
tax-revenue potential.
33

34. • Trade effects: a regulated price, which is substantially lower than
the market clearing price, may reduce domestic supply and lead
to an increase in imports. On the other hand, subsidies to
domestic producers may enable them to offer internationally
competitive prices, reducing imports or raising exports
Other Effects
• Subsidies have some fiscal effects since a large part of subsidies
emanate from the budget. They directly increase fiscal deficits
• Subsidies may also indirectly affect the budget adversely by
drawing resources away from tax-yielding sectors towards
sectors that may have a low tax-revenue potential
• A regulated price, which is substantially lower than the market
clearing price, may reduce domestic supply and lead to an
increase in imports.
34

35. •On the other hand, subsidies to domestic
producers may enable them to offer
internationally competitive prices, reducing
imports or raising exports.
•Subsidies have a tendency to self-perpetuate.
They create vested interests and acquire political
hues.
•It is difficult to control over subsidy in India as it
transmitted through market which has much
more imperfections.
35

36. Rationale of Subsidies
• Subsidies are justified in the presence of positive
externalities because in these cases consideration of social
benefits would require higher level of consumption than
what would be obtained on the basis of private benefits
only
• Subsidies, as converse of an indirect tax, constitute an
important fiscal instrument for modifying market
determined outcomes. While taxes reduce disposable
income, subsidies inject money into circulation.
• Subsidies affect the economy through the commodity
market by lowering the relative price of the subsidized
commodity, thereby generating an increase in its demand
36

37. • With an indirect tax, the price of the taxed commodity
increases, and the quantity at which the market for that
commodity is cleared, falls, other things remaining the same
• Taxes appear on the revenue side of government budgets, and
subsidies, on the expenditure side
37

38. Classification of Subsidies
•Public Good-defense, Police & General
administration( non rivalry,
•excludability)
•Merit Good- Protection against disease,
environmental protection, education
(external benefit to society)
•Non Merit-Individual customer
38

39. Different Types of Subsidy
1. Cash Subsidy: Providing food or fertilizer to
consumer at lower price.
2. Interest or credit subsidies
3. Tax subsidies
4. In kind subsidies
5. Procurement subsidies
6. Regulatory subsidy
39

40. Subsidies in India
40
• Subsidies have increased in India for several reasons. In
particular this proliferation can be traced to
1)the expanse of governmental activities
2) relatively weak determination of governments to
recover costs from the respective users of the subsidies,
even when this may be desirable on economic grounds, and
3) generally low efficiency levels of governmental activities.

41. 41
• In the context of their economic effects, subsidies have
been subjected to an intense debate in India in recent
years. Some of the major issues that have emerged in the
literature are indicated below:
1. Whether the magnitude and incidence of subsidies, explicit and
implicit, have spun out of control; their burden on government
finances being unbearable, and their cost being felt in terms of a
decline of real public investment in agriculture.
2. Whether agricultural subsidies distort the cropping pattern and
lead to inter-regional disparities in development
3. Whether general subsidies on scarce inputs like water and
power have distorted their optimal allocation
4. Whether subsidies basically cover only inefficiencies in the
provision of governmental services
5. Whether subsidies like (food subsidies) have a predominant
urban bias
6. Whether subsidies are mistargeted

42. 7. Whether subsidies have a deleterious effect on general
economic growth of sectors not covered by the subsidies
8. Whether agricultural subsidies are biased against small and
marginal farmers
9. How should government services be priced or recovery rates
determined
10. What is the impact of subsidies on the quality of environment
and ecology
42

43. Central Goverment Subisdies
Trends in the subsidies given by Central
Government ( Year 1994-95)
• The bulk of the Central Govt's subsidies arise on the provision
of economic services, which account for 88% of thetotal
subsidies (10% on merit services and 78% on non-merit)
• The recovery rates in the social end economic services are
very low (around 10%)
• Subsidies on non-merit goods are more than five times those
on merit goods, which reflects on an unduly large and ill-
directed subsidy regime.
• The bulk of subsidies on merit goods go for the construction of
roads and bridges, followed by elementary education and
scientific research
• Amongst non-merit services, the biggest recipients are
industries and agriculture and allied services
43

44. • 78% of subsidies which go for non-merit economic services
are amenable to economic pricing.
• Even if one allows for a part of these subsidies being given
in the interest of redistribution or provision of human
needs, a substantial part must be due to inefficiency costs of
public provision of these services and/or inessential input
or output subsidies
• Subsidies to Central Public Enterprises are estimated
separately as the excess of imputed return on the equity
held and loans given by the central government to these
enterprises, over actual receipts in the form of dividends
and interests.
• Subsidy in this manner is calculated for each enterprise.
They are aggregated according to cognate groups.
44

45. EXPLICIT
• The most important explicit subsidies administered through
the Central Government budget are food and fertilizer
subsidies, and until recently, export subsidies
• These subsidies account for about 30% of the total central
subsidies in a year and have grown at a rate of approx 10%
per annum over the period 1971-72 to 1996-97.
• The relative importance of different explicit subsidies has
changed over the years. E.g., food subsidies accounted for
about 70% of total Central explicit subsidies in 1974-75
• Since then, its relative share fell steadily reaching its lowest
of 20.15% in 1990-91. Thence onwards, it has risen steadily
reaching a figure of 40% in 1995-96
45

46. • Export subsidies have been on the decline except for the
spurt in the late 1980s, whereas the relative share of the
food subsidies has been rising although in a cyclical pattern.
• As a proportion of GDP, explicit Central govt. subsidies were
just about 0.305 in 1971-72. they continued to increase
steadily reaching a peak of 2.38% in 1989-90
46

47. State Government Subsidies
• Subsidies given by 15 non-special category States were estimated
for 1993- 94, the latest year for which reasonably detailed data
were available for all these States
• The trends thrown up by the study are:
• Subsidies in social services and economic services both constitute
half each of the total subsidies given by the States.
• The proportion of merit subsidies is much higher in social services
visà-versa economic services
• The overall recovery rate is 5.81% of the total cost (less than 2%
in social services and approx. 9% in economic services).
• There is a distinct tendency for the per capita subsidies to rise as
the per capita incomes rise.
• None of the 15 States spends more than 30-35% of total subsidies
on merit goods.
47

48. • None of the 15 States spends more than 30-35% of total
subsidies on merit goods.
• The recovery rates for merit services show variation in a
narrow band whereas the largest variations are recorded for
recovery rates for non-merit economic services
• The near zero surpluses for all services show that subsidies
are mainly financed by tax-revenues and borrowing in the
States.
• More than one-fifth of non-merit social subsidies accrue to
education, sports and art & culture
• In economic services, irrigation accounts for nearly a quarter
of services whereas power accounts for around 12%.
• Lastly, subsidies to States' public enterprises are large but
recovery in the form of interests and dividends is extremely
low.
48

49. Central and State-Aggerate
Subsidies
• Total non-merit subsidy for the Central and State
governments taken together amount to Rs. 1021452.4
million in 1994-95, which is 10.71% of GDP at market prices.
The share of Central government in this is 35.37%, i.e.
roughly half of corresponding State government subsidies
• The recovery-rate for the Centre, in the case of non-merit
subsidies, is 12.13%, which is somewhat higher than the
corresponding figure of 9.28% for the States
• The difference in recovery rates is striking for non-merit
social services, being 18.14% for the Centre and 3.97% for
the States. It is only marginally different for non-merit
economic services (11.65% for Centre and 12.87% for
States) where, in fact, States do better
49

50. 50
• The total non-merit subsidies for the year 1994-95
amounted to 10.71% of GDP at market prices, resulting in a
combined fiscal deficit of 7.3% for the Centre, States and
Union Territories
• Therefore, if these subsidies were phased out, the same
would have a discernible impact on the fiscal deficit
• It can be done by increasing the relevant user charges,
which would also lead to a reduction in their demand

51. 51
Economic
Subsidies
Agriculture &
Cooperation
(16.4)
Irrigation &
Flood Control
(10.8)
Power & Energy
(7.6)
Industry (11.5) Transport (7.3)
Communication
& others (2.4)
Social
Subsidies
Education
(22%)
Health
(9%)
Water Supply
& Sanitation
(5%)
Rural
Housing and others
 In India subsidies can be classified in two categories

52. Inter state variation
• Proportionate distribution of subsidy is not done
• Panjab, Haryana, Maharashtra,& Gujrat has 20% of
population of India But they get 26% of subsidy
• Where as U.P., MP, Bihar & Orissa has 40% of population but
they get 31% of subsidy
• Bihar has more then 33% population below poverty line
compared to other states but receive less then 40% of
average subsidy where in Punjab poverty is 54% less then
average gets more the 40 % of average subsidy
• In Panjab, Haryana, Maharashtra,& Gujrat 18% of rural
population gets 25% of Subsidy where as in UP, MP, Bihar &
Orissa 44% of rural population gets 29% of subsidy
52

53. Different Definitions of Energy Subsidies and
Their Strengths and Weaknesses at
International Level
Definition Focus/
Methodology
Strengths WEAKNESSES
Organisation For Economic Co-operation
And Development (Oecd)
“Both direct budgetary
transfers and tax
expenditures that in some
way provide a benefit or
preference for fossil fuel
production or consumption
relative to alternatives.”
• The inventory
of support is first step to
identifying
subsidies to a sector
• Inventory
approach
• Broad
definition of
“support”
• Inventory
approach adds
to transparency
Can miss a range of
supports delivered
via price measures
(prevalent in
developing countries)
• No estimates for
nuclear or renewable
subsidies
World Bank (WB)
A deliberate policy action by
the government that
specifically targets fossil
fuels, or electricity or heat
generated from fossil fuels.
Support countries in their
subsidy measurement
Good overview
of approaches
to subsidy
calculation
No recent subsidy
calculations
of their own
• No estimates for
nuclear or renewable
subsidies
53

54. Contd..
Definition Focus/
Methodology
Strengths Weaknesses
World Trade Organization (WTO)
A financial contribution by a
government or any public
body within the territory of a
Member”, or when “There is
any form of price support
(where) a benefit is thereby
conferred.
How energy subsidies distort
trade
Dispute settlement
Near universal
Acceptance
Often referenced
Used by many as basis for
their analysis
Not widely used by
some of the main
institutions involved in
subsidy reform
International Energy Agency (IEA)
“Any government action
directed primarily at the energy
sector that lowers the cost of
energy production, raises the
price received by energy
producers or lowers the price
paid by energy consumers. It
can be applied to fossil and non-
fossil energy in the same way.”
On consumer subsidies,
rather than producer
subsidies
• Fossil and renewables
• Price-gap approach
•Broad definition
•Explicitly covers all
energy
• Applied only to
consumer subsidies
• Disagreement over
reference prices
• Can miss a range of
subsidies
• No nuclear numbers
54

55. Contd..
Definition Focus/
Methodology
Strengths Weaknesses
International Monetary Fund (Imf)
“Pre-tax consumer
subsidies arise when the
prices paid by consumers,
including both firms
(intermediate
consumption) and
households (final
consumption), are below
supply costs including
transport and distribution
costs.
Producer subsidies arise
when prices are above this
level. Post-tax consumer
subsidies arise when the
price paid by consumers is
below the supply cost of
energy plus an appropriate
“Pigouvian” (or
“corrective”) tax…”
Understanding
magnitude of
subsidies to
support reform
• Price-gap
and inventory
approach
Includes unpriced
Negative externalities
• Data intensive
• No estimates for
nuclear or renewables
55

56. Selected country and regional estimates
of renewable energy subsidies in 2017
Power
generation
Usd billion
Calculation
Method
Biofuels
Usd billion
European
Union*
78 Inventory and
Price-gap
10.9-11.9 Price-gap
China -5 Inventory 0.4 Price-gap
Japan 9 Inventory -0.2-0.3 Price-gap
United States 6.7 Inventory 14.1 Inventory and
price-gap
India 2.2 Price-gap 0.9 Price-gap
56

57. Energy Map of India

58. Energy independence to be first and highest priority. We
comprehensive energy security creating . an energy asset
profile our nation’s must achieve by 2020 by that allows our
economy to function with necessary abandon. We must
concurrently strive to achieve energy independence by 2030
through accretions to our traditional stockpiles and strategic
reserves as also skilful use of alternate and renewable sources
of energy.
President APJ Abdul Kalam
VISION FOR NATIONS

59. Energy Security International Market
• Global oil prices entering the "super-pike" phase
• Sustained price rise Vs growth rate & inflation
• Oil prices have crossed $70 per barrel
• High annual oil imports
• High energy consumption than that of any developed
country
• Insulation from ever-volatile international energy market
.
.
.

60. India Energy Status in World
India is both a major energy producer and consumer
Eleventh greatest energy producer, accounting for about 2.4%
of the world’s total annual energy production
World’s sixth greatest energy consumer, accounting for about
3.3% of the world’s total annual energy consumption
Despite its large annual energy production, India is a net
energy importer, mostly due to the large imbalance between
oil production and consumption
India ranks fifth in the world in terms of energy consumption.
Commercial energy consumption in India 3.5% of the world
consumption in 2002
Average annual growth rate of energy consumption about
6% during 1981 -2002

61. THE LOOMING CRISIS
 India has proven oil reserves of less than
6.5 years of our total present consumption
 World crisis ahead in the next few years
 Indian crisis even more severe !
 Unprecedented growth in hydrocarbon consumption –
gasoline the highest
 Biofuels one of the most adaptable options

62. Energy Scenario in India
India is both a major energy producer and consumer.
Eleventh greatest energy producer, accounting for about
2.4% of the world’s total annual energy production.
World’s sixth greatest energy consumer, accounting for
about
3.3% of the world’s total annual energy consumption.
Despite its large annual energy production, India is a net
energy importer, mostly due to the large imbalance between
oil production and consumption
Commercial energy consumption in India is 3.5% of the
world consumption.
Average annual growth rate of energy consumption is about
6% during 1998 - 2007.

63. Energy Sources – Indian Scenario
33%
8%
53%
1% 5%
Oil
LNG
Coal
Nuclear
Hydro

64. Major Concerns in Energy Sector in India
 Growing gap between demand and supply of commercial energy:
electricity, oil and gas.
 Oil intensification of Indian economy due to declining self
sufficiency in oil and increasing oil demand.
 Growing dependence on non-commercial energy sources like
fire-wood, cow-dung and agricultural wastes in rural areas.
 Inadequate development of eco-friendly energy sources
Including hydro and renewable energy.
 Urgency for controlling environmental pollution caused by
burning of fossil fuels and biomass energy.
 Need for sustainable energy pathway for India which will ensure
energy security.

65.  India’s current energy basket is coal dominated and is
likely to stay this way in the near future. Limited
domestic coal supply coupled with its poor quality.
 Low level of technological advancements and high
instance of environmental perils pose serious
challenges for over dependence on coal.
 Limited domestic reserves and uncertain foreign supply
of hydrocarbons in wake of their rising international
price have seriously impaired country’s energy security.

66. Energy Gaps
 Approximately 2.4 billion people use traditional
biomass for cooking
 Still 1.6 million people lack access to Electricity
 World’s energy needs will be up by 60% by the year
2030 with fossils fuel still being the dominant energy
mix
 Indoor biomass stoves kills up to 1.6 million
Women and children in developing countries

67. SOME MORE PROBLEMS
 Tarapur nuclear reactor requires refueling
 Gas pipeline from Turkmenistan, through
Pakistan, but questionable reserves
 Gas pipeline from Myanmar through
Bangladesh discouraged by U.S.
 Protests against hydro-electricdam at
Narmada

68. Energy Requirement of
India
Over the next 25 years, six fold increase projected
in electricity and four fold increase in crude oil

69. EconomicGrowth
Social Empowerment Environmental Sustenance
Economic
opportunity
Energy
Social
progress Environmentand
Healthprotection
Energy, Environment and
Sustainable Development

70. Future Scenario - 2030
 Global production of oil - peak by 2030
 60% of new investments in energy – electricity

 Renewable energy - meet 14% (world’s total primary
energy demand) - to remain same in 2030
Share of biofuels (transportation) - 1% but
will go to 3% by 2030

71. Other Options
 Renewable are indigenous, non-depleting,
modular and environment-friendly
 Renewables can provide energyaccess and meet
unmet demand
 Provide captive energy thus conserving fossil fuels and
electricity
 Supplement fossil fuels in transportation
 Renewables can contribute to energy
Security in a sustainable manner

72. TYPES OF ENERGY
 FOSSIL FUELS OIL & NATURAL GAS WITH COAL
INDEGINIOUS PRODUCTION
 HYDROGEN
 NUCLEAR ENERGRY
 BIOMASS TECH
 BIOFUEL
 ETHANOL BLEND
 ENERGY FROM WASTE
 RENEWABLE ENERGY
 SOLAR
 WIND
 HYDRO
 TIDAL

74. QUESTIONS
 How to ensure that planning for energy is not done in isolation?
 How to manage two conflicting issues, especially in the
developing countries going for a green growth where majority
of the population still lacks basic energy services?
 How to mobilize resources to create access to modern energy
services, given the background of rising energy insecurity and
economic instability due to rise in the oil prices?

75. Renewable Energy

76. • Renewable energy is the energy which is used &
renewed. Its sources could be derived from sun, wind,
water etc.
• There is no dearth of its sources
• Sunlight falling on the united state in one day contains more
then twice the energy we consume in an entire year

77. Renewable Energy

78. Renewable Energy: Better Option
Renewable energy (re) is a preferred option for india
 Large untapped re potential
 Vast land resources for production of biomass &
bio-fuels
 Abundant sunshine
 Increase in population and growing consumption
Plentiful sites for harnessing windenergy and small
hydro
Why renewable energy is particularly relevant for rural
India
 No access to on grid sys for rural population.
 Vision 2012

82. Importance of Stand-alone Renewable
Systems
Stand-alone re systems are economically viable
Standalone re systems shall :
Avoid the high costs involved in transmission capex.
Avoid distribution losses – technical & otherwise
Avoid recurring fuel cost
Boost the rural economy
Encourage self help groups & self dependence
Enable villageco-operatives to supply and/ or
monitor distribution
Make available much needed energy for basic needs
at the doorstep at affordable prices.
 Brings gain for Indian economy.

83. SOLAR POWER PROGRAMME
 Earliest source of energy known to the mankind.
 Salient features – wide-spread distribution, environment
friendly, and virtually inexhaustible supply
 India receives solar energy equivalent to
Over 5000 trillion kwh/year.

85. TODA
Y NEAR
TERM
MID
TERM
LONG
TERM
ROAD MAP FOR RENEWABLE,
SOLAR

86. WIND ENERGY
We have used the wind as energy source for a long time.
Chinese were using it to pump water for irrigating crops 4000
years ago. In Europe wind power was used in middle ages to
grind corn, which is where the term “wind mill” comes from.

87. WIND ENERGY

90. TODA
Y NEAR
TERM
MID
TERM
LONG
TERM
ROAD MAP FOR WIND ENERGY

91. HYDEL ENERGY
WE HAVE USED RUNNING WATER AS ENERGY SOURCE FOR
THOUSAND OF YEARS FOR GRINDING CORN. THE FIRST
HOUSE IN THE WORLD TO BE LIT BY HYDRO ELECTRICITY
WAS CRAGSIDE HOUSE IN ENGLAND IN 1878

92. WATER MILLS
TODA
Y NEAR
TERM
MID
TERM
LONG
TERM
ROAD MAP FOR HYDEL ENERGY

103. TIDAL ENERGY
Tidal energy is produced by using the kinetic energy of
the tides.
In order to produce some practical amounts of power
(electricity), a small difference between the high and
low tides of at least say five metres in required.
Dam is built across a river estuary. When the tides goes
in and out, the water flows through tunnels in the dam.
Power is generated as hydro electric power.

104. TODA
Y NEAR
TERM
MID
TERM
LONG
TERM
ROAD MAP FOR TIDAL ENERGY

105. TIDAL ENERGY AT A GLANCE
Exploitations of tidal energy is in initial stage, no
project installed so far.
The main potential sites for tidal power generation in India
are the Gulf of Kutch and the Gulf of Khambat (Cambay)
and the Gangetic Delta in the Sundarbans area of West
Bengal.
 Salient features:-
 Once built, tidal power is free
 It needs no fuel
 Not expensive to maintain
 Tides are totally perdictable
 Building a dam across in estuary is expensive
 Effect the habitat of birds and fish as it alter tidal
current
 Can provide power for around 10 hrs/day

106. TIDAL POWER INDIA: TIDAL ENERGY
POTENTIAL IN EXCESS OF 15 GIGAWATTS
IN A WRITTEN REPLY
INDIA'S
STATE
MINISTER OF
FOR NON-
CONVENTIONAL
ENERGY SOURCES
ESTIMATED THAT OVER
15,000 MW OF TIDAL
POWER POTENTIAL HAS
BEEN ESTIMATED IN
THE COUNTRY

107. GEOTHERMAL ENERGY
Derived from greek word “geo” means earth and
“thermal” means heat
Working priciple
 Hot rocks, underground heat, water to produce
steam.
 Holes are drilled down to the hot region, steam
comes up, is purified and used to drive turbines,
which drive electric generators.
 If there is no natural “ground water” in the hot
rocks, more holes are drilled and water is pumped
down to them.

108. TODA
Y NEAR
TERM
MID
TERM
LONG
TERM
ROAD MAP FOR GEO
THERMAL ENERGY

109. PRESENT STATUS
Geothermal energy based power production over the
world has gone up from 5800 mw to 8400 mw from
1998 to 1999.
In India it is in initial stage, no geothermal power
Project installed.
Ongoing projects:
Tattapani geothermal area in madhya pradesh
Puga geothermal area in ladakh
More than 300 geothermal potential sites

110. THRUST AREAS
Creation of geothermal data base.
Geothermal resource and manpower development
Its application for power generation.