India’s Energy Demand and Supply

Abstract

This chapter examines India’s energy demand profiles and supply options. Unlike other markets, the energy sector is slow moving and changes in consumption and production profiles are a result of lumpy investment decisions as also gradual improvements in efficiency. As a result, India’s energy sector profile appears unchanged since 1980, with coal and oil dominating the energy mix. This broad average, however, masks a significant shift away from coal and towards oil until 2000s, and the subsequent recovery in coal’s share. The competition between coal and oil in the last century has now been played out between coal and gas over a much shorter period. The outcome has been an energy mix that is dominated by coal with some gains being made by renewables. In addition, India remains significantly import dependent for all forms of fossil fuels. Unlike other markets, the energy sector is slow moving and changes in consumption and production profiles are a result of lumpy investment decisions as also gradual improvements in efficiency. As a result, India’s energy sector profile appears unchanged since 1980, with coal and oil dominating the energy mix. This broad average, however, masks a significant shift away from coal and towards oil until 2000s, and the subsequent recovery in coal’s share. The competition between coal and oil in the last century has now been played out between coal and gas over a much shorter period. The outcome has been an energy mix that is dominated by coal with some gains being made by renewables. In addition, India remains significantly import dependent for all forms of fossil fuels. This scenario is unlikely to change into the future, with a sustained growth in population and GDP driving up energy consumption. This growth in demand would call for both higher volumes of production and imports. In addition, the large increase in demand calls for increased consumption of fossil fuels, especially coal. This is likely despite an expected rapid ramp up renewable energy and nuclear power generation, apart from gains in energy intensity.