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Indian Gas Perspective –
Present & Future: Role of
natural gas in fulfilling COP21
targets
2nd Annual Gas Summit

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Good times ahead……

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1. Background and Changing environment
2. India’s NDC - Overview
3. Changing times ahead
4. What future holds
5. Key Takeaways
6. How gas industry needs to adapt
7. Big Game changers for future
Table of Contents

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Power sector being highly price sensitive, has been
unable to absorb LNG
Total LNG Imports (Long
Term, Spot) MMSCMD
2003-04 1
2004-05 9
2005-06 19
2006-07 25
2007-08 31
2008-09 30
2009-10 33
2010-11 36
2011-12 43
2012-13 41
2013-14 41
2014-15(P) 50
Source: Metis
Industry-wise Domestic Gas Supply
Gas for 2013-14
(Total- 94.13 MMSCMD)
Industry-wise LNG Supply for
2013-14
(Total- 41.11 MMSCMD)
LNG demand in power sector supported by fall in global energy
prices and PSDF support

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Sustainable Energy Transition for India to be marked by
various factors
1. Increased electricity
demand
2. Increase in per capita
consumption
3. Change in load shape
4. Reducing load factor
5. Addition of industrial
demand

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Sustainable Energy Transition for India to be marked by
various factors
• Boost for non-fossil based
generation and cleaner fuel
generation options
• Improving efficiency of coal based
generation
• Use of Clean coal technologies
• Boost to wind and solar generation
• Limiting GHG emissions
• Need for flexible generation for
integrating RE capacity

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COP21 commitments – a brief

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Commitment under NDC to shape the future
• Reduce emission intensity of GDP by 33%
to 35% by 2030 (wrt 2005 levels).
• Govt. plans to achieve about 40 percent
Generating capacity from non-fossil fuel
based energy resources by 2030
• With a current installed capacity of 5.78
GW (and additional six reactors of 4.3
GW at different stages of commissioning
and construction), efforts are being made
to achieve 63 GW installed capacity by
the year 2032, if supply of fuel is ensured
Targets for 2030
• 175 GW of RE capacity
– 100 GW of solar,
– 60 GW wind and
– 15 GW of Biomass + Small
Hydro
Targets for 2022
• Target for whole economy
• Unclear how will this be
distributed between
– Different sectors
– Centre v/s States

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• In absence of sector wise targets, we have assumed that same emission cuts are imposed on
each sector.
– For Power Sector: From 2005 levels of 14.47 (Emission intensity of ‘GDP at factor cost’ in
gm/INR, 2004-05 series), India has set a target of reaching ~9.41 gm/INR by 2030 (ie a
reduction of ~35%)
• Power system will not be allowed to emit more than specified GHG to comply with target
To meet its commitment for INDC, a cap on total
system emissions will be needed
Historical Assumed

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Changing time ahead
Big game changers for Indian power sector: COP21 and RE
capacity addition

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 How to integrate 175 GW of RE capacity into system?
 Will such huge RE capacity addition result in peak shortages?
 Is system equipped to handle variability in demand?
 Will it be sufficient to meet emission reduction targets, if not then what else can be
done?
 How will system meet emission reduction targets if RE capacity addition falters?
 How will the change in load factor of system impact generation mix requirement?
 Can mix of coal and RE alone be sufficient to balance the overall objectives?
 What would be RE capacity requirement in that case?
 How will system integrate that amount of RE?
 Will there be significant amount of peak and energy shortages in the system?
 What is the incremental cost on health for not reducing emission as promised?
Big game changers for Indian power sector: COP21 and RE capacity addition
Pertinent questions in front of planners right
now

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These questions can be answered using IPM®:
ICF’s proprietary power sector modeling tool

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I-IPM® is an Excellent and Versatile Long Range
Planning Model
• IPM® uses a Linear-programming based optimization approach
• It simulates least-cost plant dispatching and least-cost investments in generation
capacity and interconnections to meet projected load in the region.
• IPM® is a long-term capacity expansion and production costing model for electric
power systems including generation, transmission, and hourly demand
• It is a multi-regional, deterministic, dynamic, linear programming model
• Utilizes Dynamic Optimization Framework with an Objective Function of Minimizing
the Present Value of Total System Cost subject to:
– Electricity Demand Constraints
– Reserve Margin Constraints
– Environmental Constraints
– Transmission Constraints
– Fuel Constraints
– Other Operational Constraints
• Simulates rational expectations for perfect foresight providing the framework for
inter-temporal decision making

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ICF has a Global Scope in Power and Fuels
Markets

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What Future holds…..
Integrated Planning
Model – IPM®

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Each technology type has their own technical,
commercial and operational limitations
Limitations
Solar and
Wind
Biomass
Small-
Hydro
Hydro
(RoR)
Hydro
(Storage)
Nuclear Gas
Coal (Super
Critical)
Pace of Land acquisition P
Equipment supply P
Integration issues P
Capital cost P P P P P P
Fuel availability P P
Fuel Cost P P
Ability in providing flexible
generation
NA
Highly
limited
Highly
limited
Highly
limited
Highly
limited
Highly
limited
Overall Potential P P
Fuel uncertainty P P P P
Delays in getting clearance P P P P P P
Local resistance P P P
Geological considerations P P
Emissions P P
If not for fuel prices, Gas is one of the best generation source. More importantly, (i) it can provide
integration support to RE, and (ii) much less pollution than coal

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‘Coal continues to be the mainstay of power in India’
Hon'ble minister of State with Independent Charge for Power, Coal, New
and Renewable Energy
Year 2030Year 2016
Mix much more
healthier in 2030

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NDC commitments to drive long-term gas demand from
power sector, however near term might remain slow
Near term gas
demand is primarily
driven by RE
integration
requirements
Long-term gas
demand is primarily
driven by emission
reduction
requirements
All India Gas Consumption

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However, if RE capacity addition falters, gas requirement
in near term may also rise significantly
All India Gas Consumption
Gas insurance: If RE capacity addition lags, Gas
requirement will also be felt in near term for
meeting emission reduction targets

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 Although system will burn expensive gas based generation, but it will indirectly benefit
common man by reducing its hospital bill
Committing to emission reduction targets will result in
significant reduction in total health costs
Reduction in health expense
of common man

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Role of gas in future……
Merit order stack based on average availability of different plant types
Gas as flexible generation
for RE Integration
Gas as flexible generation
And cleaner fuel

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 Short-term: Gas demand of 15 BCM to 50 BCM (by 2022) dependent on pace of RE capacity
addition
 Long-term: Gas demand of 70 BCM to 80 BCM (by 2035), primarily driven by emission
reduction targets
 As gas continues to be the most expensive source of generation, gas is used as provider of
last resort
 Gas generation is required as mid merit to peaking generation capacity which ramps up
and ramps down during day
Key takeaways

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 Need for strong and independent pipeline network operator
 Quick response gas storage facility needed on National Gas Grid
 Ancillary service markets: Incentive to run at partial load
 Gas exchange for spot purchase and sale of gas
 Change in contracting structure between
 Power plant and DISCOMs
 Power plants and Gas suppliers
Business opportunity for pipeline storage systems
How gas industry needs to adapt….

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 Depleted Field:
 Advantage: large size and natural gas
storage environment, least cost to
develop
 Drawback: slow response (seasonal
storage)
 Auifers:
 Advantage: larger size compared to salt
caverns and quicker response compared
to depleted fields.
 Drawbacks: large cushion gas requirement
 Salt Caverns:
 Advantages: very quick response times
(cycled 10-12 in a year)
 Disadvantage: relatively smaller sizes
 LNG storage: Smallest sized storage but
quickest response rate
Indian gas grid will require LNG storage solution
Storage systems across world

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Game changers for the future…. Things to watch out for
Clean coal technology Battery storage systems
Pump storage and hydro storage systems
Their impact needs
thorough evaluation

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