ENERGY INFRASTRUCTURE IN INDIA:

Energy Overview

Commercial primary energy consumption in India has grown by about

700% in the last four decades. The current per capita commercial
primary energy consumption in India is about 350 kgoe/ year which is
well below that of developed countries. Driven by the rising population,
expanding economy and a quest for improved quality of life, energy
usage in India is expected to rise to around 450 kgoe/ year in
2010.

With a targeted GDP growth rate of 7 to 8 percent, and an

estimated energy demand elasticity of 0.80, the energy
requirements of India are expected to grow at 5.6- 6.4 percent per
annum over the next few years. This implies a four-fold increase in
India’s energy requirement over the next 25 years and India faces
significant challenges to meet this.

In its quest for increasing availability of electricity, India has adopted a

blend of thermal, hydel and nuclear sources. Out of these, coal based
thermal power plants and in some regions, hydro power plants have
been the mainstay of electricity generation. Oil, natural gas and
nuclear power accounts for a smaller proportion. Of late, emphasis is
also being laid on non-conventional energy sources i.e. solar, wind and
tidal.

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All India Fuel wise Generating Installed Capacity (as on September 30, 2004)

Coal is the most important & abundant fossil fuel in India and accounts
for 55% of India's energy need. India's industrial heritage was built
upon indigenous coal, largely mined in the eastern and the central
regions of the country. Thirty per cent of commercial energy
requirements are met by petroleum products, nearly 7.5 per cent by
natural gas and 3.5 per cent by primary electricity.

India is, however, poorly endowed with oil assets and has to depend on
crude imports to meet a major share of its needs (around 70 percent).
A large population of India in the rural areas depends on traditional
sources of energy such as firewood, animal dung and biomass. The
usage of such sources of energy is estimated at around 155 mtoe per
annum or approximately 47 percent of total primary energy use.

Coal has been recognized as the most important source of energy for
electricity generation in India. About 75% of the coal in India is
consumed in the power sector. In addition, other industries like steel,
cement, fertilizers, chemicals, paper and thousands of medium and
small-scale industries are also dependent on coal for their process and
energy requirements. In the transport sector, though direct
consumption of coal by the Railways is almost negligible on account of
phasing out of steam locomotives, the energy requirement for electric
traction is still dependent on coal converted into electric power.
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In spite of various policy initiatives to diversify the fuel mix but
considering the limited reserve potentiality of petroleum & natural gas,
eco-conservation restriction on hydel project and geo-political
perception of nuclear power, it is becoming increasingly evident that
coal will continue to occupy centre-stage of India's energy scenario.
Indian coal offers a fuel source to domestic energy market for the next
century & beyond. Based on estimates, the consumption of coal is
projected to rise by nearly 40 percent over the next five years and
almost to double by 2020.

Energy Security

Increasing pressure of population and increasing use of energy in

agriculture, industry and the domestic and public sectors is an area of
concern. At the same time, the need to meet energy demand has
created huge capital requirements needed for setting up power plants,
pipelines, ports, terminals, railway tracks to move fuel etc.

As India continues to grow at the rate of 7-8 percent, energy security

has become a core focus. To alleviate concerns over energy security,
the Government of India has taken multiple steps in recent years which
include encouraging private sector participation, a more holistic
approach towards broad basing its supply base, and improving
efficiency in the sector as a whole. Although India has made a start in
this direction, the Government would need to further its initiatives in
three areas:

• The Government would need to increasingly enter into alliances and

partnerships with key nations in Asia, Africa, Latin America, etc. to
diversify the energy supply base and improve long term supply
security.

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• Currently, different energy segments are viewed independently from
a policy and regulatory perspective. The importance of cross linkages
between different energy segments is now being appreciated and the
importance of developing an integrated energy policy to meet the
common objective of energy security is recognized.

• At an operational level, commensurate investment would be required

in developing infrastructure viz. rail, road, port and power transmission
which are critical for efficiency in the energy value chain.

Looking at the subject in totality, the Government has developed a

comprehensive planning framework through the Indian Hydrocarbon
Vision 2025 that provides a detailed road map for Indian hydrocarbon
industry to enhance the country’s Energy Security.

The principal objectives of the Indian Hydrocarbon Vision 2025 include:

• Developing the sector as a globally competitive industry, ensure
healthy competition and improve product standards
• Ensure energy security keeping in view strategic and defense issues
• Creating infrastructure to meet the demands for coal, petroleum
products and natural gas
• Rationalizing tariff and pricing policy to promote investment
• Putting in place necessary regulatory system
• Exploring new resources of hydrocarbons such as CBM and Gas
Hydrates

It is evident that one of the principal focus of the Indian Hydrocarbon

Vision is to draw private investments through structural and pricing
adjustments in specific energy sub sectors.

Key Imperatives for the Energy sector

To meet its large and growing energy needs, there are certain key
imperatives for the Indian energy sector:

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• Provide impetus for Private Participation

Private participation in the form of financial, technological and

managerial participation is needed to meet the challenging growth
targets. This would also bring in right competition and efficiencies,
needed in the sector. Recognizing this, the GOI has allowed private
participation in Oil and Gas exploration and production, coal mining
(albeit for captive use) and in hydro power and renewable energy.
NELP for oil and gas allows 100 percent foreign equity investment and
is liberal in allowing self-marketing by the investors.

To sustain continued private participation, a number of important steps

have to be taken further.

• Clarity in Policy Framework

There is a need to evolve a clear policy framework for the energy

sector. Clarity is required in matters related to pricing of energy, the
target market structure, cross-border investments and imports and
exports of energy products. In India, clarity is beginning to emerge in
some of these areas and debates have been initiated in others.

• Independent Regulatory Mechanism

An independent regulator is required for the energy sector to

determine prices in the first instance and once competition develops to
ensure that there is a level playing field for all. Today there is much
inefficiency in energy sector pricing due to the monopolistic market
structure. Prices are either self determined by the monopoly
companies or in some cases inappropriately priced according to import
parity prices. There has been adequate debate on this issue and it
appears that sooner than later India will have full fledged regulators for
the energy sector.

• Develop Energy Markets

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Well functioning energy markets are important to attract investments
and bring efficiency in the sector. Currently, there is limited market
activity (examples are an internet portal based trading for a limited
quantity in case of coal and auctioning in case of gas for limited
quantities). Markets will be facilitated and effective when there are
many players and there is an organized marketplace for energy
products.

• Actively pursue cross-border investments in Energy Sector

Energy equity in overseas assets is part of India’s strategy to acquire

energy security. This includes Indian companies such as ONGC, Coal
India, GAIL, Reliance etc. acquiring or seeking to acquire equity
through joint ventures in oil and coal rich nations. The Government is
also pursuing strategic alliances with various countries. The recent
memorandum of understanding with China on this issue is an example.
As per the Indian minister for petroleum and natural gas, “We have
realized that when we compete in an unhealthy manner to acquire oil
fields in third countries, we only end up driving costs for each other.
We have ended up paying billions of dollars more by trying to outbid
each other everywhere. This will end, as co-operation will precede
competition.”

Besides, the Indian Government is also seriously exploring the nuclear

option to meet its energy needs and it is looking at co-operation in this
area with the nuclear suppliers’ group countries.

• Create an enabling infrastructure for Energy Sector growth

Investments in ports, railways, pipelines and power transmission are

urgently needed to attract energy sector investments in the first place
and to enable efficient energy choices. Today, the capacities of these
infrastructures are fully stressed and there is much inefficiency.
Recognizing this, the Government has announced policies to involve
private participation and India is witnessing private investment in
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ports, pipelines and power transmission. Even in case of railways, the
Government has recently announced a policy decision to open
container transportation to private sector on a common-carrier
principle using the existing railroads.

• Rationalize taxes and subsidies to allow efficient pricing

The taxes and duties levied on energy products are lopsided leading to
inefficient energy choices. Taxes on petroleum products such as
aviation fuel for example are among the highest in the world while
railway passenger tariffs are highly subsidized. Likewise, there are high
subsidies for household cooking fuels such as kerosene and Liquefied
Petroleum Gas (LPG) and even electricity for domestic consumption.
The need for cost reflective pricing is being increasingly recognized as
exemplified by the recent Rangarajan Committee Report, the Roadmap
for LPG price rationalization by the Government as well as the recent
notification of the power tariff policy of the Government.

• Provide government support for energy efficiency

The Government needs to create a policy framework that provides

incentives for energy efficiency. This could for example mean providing
incentives in urban areas for mass transport systems, and promoting
R&D in energy efficiency. The environment should encourage energy
efficiency companies to come up and operate profitably. Awareness
has been steadily increasing and policy makers are now thinking on
how this can be achieved.

In parallel, India is also emerging as a significantly active market in

terms of Clean Development Mechanism (CDM) projects being
conceptualized and registered with the Executive Board (EB). The
growing awareness of the CDM benefits would make this an important
area for investments in the Indian energy sector. CDM should also give
the necessary fillip for energy efficiency measures in India.

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The Government of India is recognizing the importance of private
sector participation, and independent regulation in the energy sector.
The future holds a lot of opportunities for international and domestic
private participation.

To know more about energy supply and demand in India and issues
that confront the country, sector overviews covering 1) Power, 2) Oil &
Gas, 3) Coal and 4) Renewable energy are given below:

Power
Introduction

Power is an essential requirement for all facets of our life and has been
recognized as a basic human need. It is the critical infrastructure on
which the socio-economic development of the country depends. The
growth of the economy and its global competitiveness hinges on the
availability of reliable and quality power at competitive rates. The
demand of power in India is enormous and is growing steadily. The
vast Indian power market, today offers one of the highest growth
opportunities for private developers.

India is endowed with a wealth of rich natural resources and sources of

energy. Resources for power generation are unevenly dispersed across
the country. This can be appropriately and optimally utilized to make
available reliable supply of electricity to each and every household.
Electricity is considered key driver for targeted 8 to 10% economic
growth of India. Electricity supply at globally competitive rates would
also make economic activity in the country competitive in the
globalized environment.

As per the Indian Constitution, the power sector is a concurrent subject

and is the joint responsibility of the State and Central Governments.
The power sector in India is dominated by the government. The State
and Central Government sectors account for 58% and 32% of the
generation capacity respectively while the private sector accounts for
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about 10%. The bulk of the transmission and distribution functions are
with State utilities. The private sector has a small but growing
presence in distribution and is making an entry into transmission.
Power Sector which had been funded mainly through budgetary
support and external borrowings, was opened to private sector in
1991.

Growth of Power Sector

Growth of Power Sector infrastructure in India since its Independence

has been noteworthy making India the third largest producer of
electricity in Asia. Generating capacity has grown manifold from 1,362
MW in 1947 to 113,506 MW (as on 30.09.2004). The over all
generation in India has increased from 301 Billion Units (BUs) during
1992- 93 to 723.80 BUs in 2008- 09.

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Electricity Consumption

The elasticity of electricity demand (elasticity of electricity

consumption with respect to GDP) was 3.06 in the first Plan and
peaked at 5.11 during third plan and declined to 1.65 in the Eighties.
While consumption went up by 3.14% for every 1% growth in GDP in
the first five-year plan period (1951- 56), it went up by only 0.97% in
the eighth plan period (1992- 97).

The growth in electricity consumption over the past decade has been
slower than the GDP’s growth. This could be due to high growth of the

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services sector or it could reflect improving efficiency of electricity use.
Moreover, captive generation – which isn’t captured by these numbers
— has also increased. However, as growth in the manufacturing sector
picks up, the demand for power is also expected to increase at a faster
rate. Demand will also increase along with electrification. In order to
support a rate of growth of GDP of around 7% per annum, the rate of
growth of power supply needs to be over 10% annually.

Per Capita Consumption of Electricity

Per capita consumption of electricity is expected to rise to over 1000

kilowatt hours per annum (kwh/ annum) in next 10 years (from present
level of 580 kwh). Compare this against over 10,000 kwh/ annum in
the developed countries!

Plant Load Factor (PLF)

The actual all India PLF of Thermal Utilities during April 03- March 04
was 72.7% as against the target of 72.0%.

Unbalanced Growth and Shortages

Along with this quantitative growth, the Indian electricity sector has
also achieved qualitative growth. This is reflected in the advanced
technological capabilities and large number of highly skilled personnel
available in the country. While this must be appreciated, it must also
be realized that the growth of the sector has not been balanced. The
availability of power has increased but demand has consistently
outstripped supply and substantial energy & peak shortages of 7.1% &
11.2% prevail in India. Coupled with this is the urban-rural dichotomy
in supply- as per Census 2001, only about 56% of households have
access to electricity, with the rural access being 44% and urban access
about 82%. In the case of those who do have electricity, reliability and
quality are matters of great concern. The annual per capita
consumption, at about 580 kWh is among the lowest in the world.

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These problems emanate from:
- inadequate power generation capacity
- lack of optimum utilisation of the existing generation capacity
- inadequate inter-regional transmission links
- inadequate and ageing sub-transmission & distribution network
leading to power cuts and local failures/faults
- T&D losses, large scale theft and skewed tariff structure
- slow pace of rural electrification
- inefficient use of electricity by the end consumer
- lack of grid discipline

OIL AND GAS

The Indian Petroleum industry is one of the oldest in the world, with oil
being struck at Makum near Margherita in Assam in 1867 nine years
after Col. Drake's discovery in Titusville. The first Indian oil well at
Digboi in 1889. Refining, transportation, followed with the discovery at
Digboi. It is amazing how the oil was transported in elephant drawn
carts across the jungles and then through the waterways to as far as
the Malabar coast. Seismic surveys were carried out in the 19th
century in jungles of Assam using elephant logistics.

After independence, India didn't loose much time in initiating

geological and seismic surveys in search of oil in the Indian basins.
After discoveries in the western sector in Gujarat, the prevailing
attitude of non-cooperation by multinationals, necessitated the
establishment of Koyali refinery in the 60s. One after the other major
refineries were set up and infrastructure for distribution of the products
expanded at a great pace.

Unique challenges of reaching essential fuel, be it kerosene or LPG to

far-flung, logistically challenging terrains across the vast geography of
India was addressed with amazing resilience. India's forays into
offshore in the 1970's at Aliabet were also very early for a fledgling

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industry of a developing country. The bold initiative taken with faith in
indigenous capabilities in an entirely new and technologies challenging
area is a tribute to the Indian oil technologists of the day. But the faith
was not misplaced as the oilmen did the country proud by bringing the
Mumbai high to production in a then world record time of 26 months
from the day of discovery.

The industry has come a long way since then. The giant offshore
structures, the ultramodern environment friendly refineries, the high-
tech pipeline transportation facilities may appear dazzling. For nearly
fifty years after independence, the oil sector in India, has seen the
growth of giant national oil companies in a sheltered environment. A
process of transition of the sector has begun since the mid nineties,
from a state of complete protection to the phase of open competition.
The move was inevitable if India had to attract funds and technology
from abroad into our petroleum sector.

The sector in recent years has been characterized by rising

consumption of oil products, declining crude production and low
reserve accretion. India remains one of the least-explored countries in
the world, with a well density among the lowest in the world. With
demand for 100 million tonnes, India is the fourth largest oil
consumption zone in Asia, even though on a per capita basis the
consumption is a mere 0.1 tonne, the lowest in the region- This makes
the prospects of the Indian Oil industry even more exciting.

The years since independence have, however, seen the rapid growth of
the upstream and downstream oil sectors. There has been optimal use
of resources for exploration activities and increasing refining capacity
as well as the creation of a vast marketing infrastructure and a pool of
highly trained and skilled manpower. Indigenous crude production has
risen to 35 million tonnes per year, an addition of fourteen refineries,
an installed capacity of 69 million tonnes per year and a network of
5000 km of pipelines.

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As the Indian Economy breaks the shackles of a Hindu rate of growth
to grow at a pace of 8% and above, the single biggest beneficiary
should be the oil & energy sector. Oil and energy are most happening
sectors of the Indian economy today. PSU Oil Companies were in the
limelight over the past two years for a variety of reasons- first, the
companies, then the huge surge in profits, and recently, the sale of
government's stake through public offer.

The oil scenario

The demand for oil is going up steadily. Automobile sale have been
surging every year. Car sales are up by nearly 30%, heavy & medium
commercial vehicle sales have risen even steeper at 40%,
consumption of diesel and LPG are on a steep rise.

Exploration

India remains one of the least explored regions in the world with a well
density of 20 per 10000km2. Of the 26 sedimentary basins, only 6
have been explored so far. The Oil and Natural Gas Corporation
(ONGC) and the Oil India Limited (OIL)- the two upstream public sector
oil companies- in 1981/82 had taken their search to previously
unexplored areas. Number of wells drilled as well as the meterage
increased . However current reserve accretion continues to be low.

NELP

In order to increase exploration activity, the government approved the

New Exploration Licensing Policy (NELP) in March 1997 which would
level the playing field in the upstream sector between private and
public sector companies in all fiscal, financial and contractual
matters.

Salient features of the NELP

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1) There will be no mandatory state participation through ONGC/OIL
nor will there be any carried interest of the government.
2) The two public sector upstream companies would compete for
petroleum exploration licences, instead of the existing system of
granting of licences on nomination basis. The public sector companies
will also be able to avail of the fiscal and contract benefits available to
private companies.
3) Open availability of exploration acreage to provide a continuous
window of opportunity to companies. The acreages will be demarcated
on grid system and pending preparation of the grid, blocks will be
carved out for offer.
4) Freedom to the contractors for the marketing of crude oil and gas in
the domestic market.
5) Royalty payments at the rate of 12.5% for the inland areas and
10%for the offshore. Half the royalty of the offshore area will be
credited to a hydrocarbon development fund to fund and promote
exploration related study and activity.
6) To encourage exploration in deepwater and frontier areas royalty
will be charged at half the prevailing rate for normal offshore area, for
deep water areas beyond 400m bathymetry for the first seven years
after commencement of commercial production.
7) Prompt action by the Ministry of Petroleum and Natural Gas to sign
the PSC's for exploration blocks.
The government to attract private investment in the upstream sector
has conducted regular rounds of bidding.

Powered by the India Hydrocarbons Vision- 2025 report, which gave

priority to a huge push in exploration efforts, the government has
moved into overdrive. As many as 94 blocks have been given out for
exploration under the New Exploration and licensing Policy since April
2000 against just 22 blocks in the preceding 10 years. While ONGC
holds 57. 2 per cent of the total area licensed by the government for

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oil exploration, Reliance Industries and Oil India Ltd have grabbed
licences covering around 26. 6 percent respectively.

Refining

The total installed refining capacity of the 15 refineries in the country

at the end of March 1998 was 69.140 million tonnes per annum and
the total is expected to go up to 131 mtpa by the year 2001/02. The
expected increase in refining capacity should be sufficient to meet the
growth in petroleum product demand (112 mtpa by the end of the
ninth plan) with minimum level of imports.

The Sub-group on refining has suggested certain financial incentives

for the efficient functioning of the refining sector and enhancing
private sector participation during the Ninth five year plan period. In
order to increase capacity utilisation of the existing refineries, 11 new
crude pipelines have been proposed by the Sub-group.

In addition, there is an urgent need to reduce fuel loss in refineries,

which reached a level of 7.1% in 1985/86 and declining marginally to
6.1% in 1996/97. To reduce energy consumption, projects amounting
to Rs 7200 million have been identified, which on implementation, will
achieve a saving of 186000 tonnes per annum (tpa).

COAL

In India, 80% of mining is in coal and the balance 20% is in various

metals and other raw materials such as gold, copper, iron, lead,
bauxite, zinc and uranium. Coal has been a major contributor in
providing energy security during the past century. But it is not a
renewable resource, one day it will exhaust. It is possible that this
pattern may change and there could be emphasis on uranium and

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thorium based power plants during the later part of the 21st century in
addition to the emphasis on renewable energy sources.

Coal: Choice for Indian Energy

Coal is the most important & abundant fossil fuel in India and accounts
for 55% of India's energy need. India's industrial heritage was built
upon indigenous coal, largely mined in the eastern and the central
regions of the country.

Coal has been recognized as the most important source of energy for
electricity generation in India. About 75% of the coal in India is
consumed in the power sector. In addition, other industries like steel,
cement, fertilizers, chemicals, paper and thousands of medium and
small-scale industries are also dependent on coal for their process and
energy requirements. In the transport sector, though direct
consumption of coal by the Railways is almost negligible on account of
phasing out of steam locomotives, the energy requirement for electric
traction is still dependent on coal converted into electric power.

The coal reserves of India up to the depth of 1200 m have been

estimated by the Geological Survey of India at 247.85 billion tonnes as
on January 1, 2005 of which 92 billion tonnes are proven. Hard coal
deposits spread over 27 major coalfields, are mainly confined to
eastern and south central parts of India.

The lignite reserves in India are estimated at around 36 billion tonnes,

of which 90% occur in the southern State of Tamil Nadu. 4150 million
tonnes (mt) spread over 480 sq km is in the Neyveli Lignite fields in
Cuddalore District of which around 2360 Mt have been proved.
Geological reserves of about 1168 mof lignite have been identified in
Jayamkonda Cholapuram of Tiruchy District of Tamilnadu. In
Mannargudi and East of Veeranam, geological reserves of around
22661.62 Mt and 1342.45 mt of lignite have been estimated
respectively. Other states where lignite deposits have been located are
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Rajasthan, Gujarat, Kerala, Jammu and Kashmir and Union Territory of
Pondicherry.

In spite of various policy initiatives to diversify the fuel mix,

considering the limited reserve potentiality of petroleum & natural gas,
eco-conservation restriction on hydel projects and geo-political
perception of nuclear power, coal will continue to occupy centre-stage
of India's energy scenario. Indian coal offers a fuel source to domestic
energy market for the next century & beyond. Based on estimates, the
consumption of coal is projected to rise by nearly 40 percent over the
next five years and almost to double by 2020.

Inventory of Coal Resources of India

As a result of exploration carried out up to the depth of 1200m by the

GSI and other agencies, a cumulative total of 247.85 billion tonnes of
coal resources have been estimated in India as on January 1, 2005.

The state-wise distribution of coal resources and its categorisation:

State Coal Resources in Million Tonnes

Proved Indicate Inferred Total
d
Andhra Pradesh 8263 6079 2584 16926
Arunachal 31 40 19 90
Pradesh
Assam 279 27 34 340
Bihar 0 0 160 160
Chhattisgarh 9373 26191 4411 39975
Jharkhand 35417 30439 6348 72204
Madhya Pradesh 7513 8815 2904 19232
Maharashtra 4653 2309 1620 8582
Meghalaya 117 41 301 459
Nagaland 4 1 15 20
Orissa 15161 30976 14847 60984
Uttar Pradesh 766 296 0 1062
West Bengal 11383 11876 4554 27813
Total 92960 117090 37797 247847

Categorisation of Resources
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The coal resources of India are available in sedimentary rocks of older
Gondwana Formations of peninsular India and younger Tertiary
formations of northern/ north-eastern hilly region. Based on the results
of Regional/ Promotional Exploration, where the boreholes are placed
1-2 Km apart, the resources are classified into Indicated or Inferred
category. Subsequent Detailed Exploration in selected blocks, where
boreholes are placed less than 400 meter apart, upgrades the
resources into more reliable Proved category.

Formation wise and Category-wise coal resources of India as on

January 1, 2005:

(in Million Tonnes)

Formation Proved Indicated Inferred Total

Gondwana Coals 92528 116984 37428 246940
Tertiary Coals 432 106 369 907
Total 92960 117090 37797 247847

Type-wise and Category-wise coal resources of India as on January 1,

2005:

(in Million Tonnes)

Type of Coal Proved Indicated Inferred Total

(A) Coking :-
-Prime Coking 4614 699 - 5313
-Medium 11417 11765 1889 25071
Coking
-Semi-Coking 482 1003 222 1707
Sub-Total Coking 16513 13467 2111 32091

(B) Non-Coking*:- 76447 103623 35686 215756

Total (Coking & 92960 117090 37797 247847
Non-Coking)
* Including all coals of North Eastern Region.

Status of Coal Resources in India during last Five Years

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As a result of Regional, Promotional and Detailed Exploration by GSI,
CMPDI and SCCL etc, the estimation of coal resources of India has
reached 247.85 Bt.

The estimates of coal resources in India during last 5 years:

(in Million Tonnes)

As on Proved Indicated Inferred Total

1.1.2001 84414 90242 39250 213906
1.1.2001(Revised 84414 98546 38023 220983
by Sub-Group-II)
1.1.2002 87320 109377 37417 234114
1.1.2003 90085 112613 38050 240748
1.1.2004 91631 116174 37888 245693
1.1.2005 92960 117090 37797 247847

Sectoral Growth over Years

Growth of Coal sector in India since its Independence has been

noteworthy making India a global player in coal mining and the third
largest producer amongst the coal producing countries in the world.
The production of Coal has risen from a level of about 70 mt at the
time of nationalisation in early 1970s to around 350 mt in 2004- 05.

Most of the coal production in India comes from openpit mines

contributing over 81% of the total production. A number of large
openpit mines of over 10 mt per annum capacity are in operation.
Shovels with capacity upto 25 cu.m, dumpers upto 170 tonnes,
draglines upto 24/96 capacity with in-pit crushing and conveying
system are deployed in hard coal openpit mines. Large capacity bucket
wheel excavators are in operation for lignite mining.

Underground mining currently accounts for around 19% of India’s

national output. Most of the production is achieved by conventional
Bord and Pillar mining methods. Side by side, intermediate
technologies using Side Discharge Loaders (SDL) and Load Haul
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Dumpers (LHD) in Bord and Pillar method of working have been
introduced. Contemporary technology in the form of Long-wall Powered
support has also been introduced on a limited scale. However the
productivity in underground mining requires a quantum jump from 0.5
ton per man-year to 3 tons per man-year in the immediate near term.

Production

Coal production achieved in India (excluding Meghalaya) during 2004-

05 (April-December) was 266.77 mt as compared to the production of
249.87 mt achieved during same period of the previous year i.e. 2003-
2004 showing a growth of 6.8%.

Coal India limited and its subsidiaries are the biggest supplier of coal in
India producing 86% of the total coal production in India from their
collieries. 228.57 mt of coal were produced by Coal India Limited and
its subsidiaries during 2004-2005 (April-December) as against the
production of 213.95 mt in 2003- 04 (April-December), showing a
growth of 6.8%.

Singareni Collieries Company Limited (SCCL) is the main source for

supply of coal to the southern region. The company produced 25.08
million tones (provisional) of coal during 2004-2005 (April- December)
as against 24.65 mt during the corresponding period last year. Small
quantities of coal are also produced by TISCO, IISCO, DVC and others.

Demand & Indigenous Supply Mismatch

Along with this quantitative growth, the Indian coal sector has also
achieved qualitative growth. While this must be appreciated, it must
also be realized that the growth of the sector has not been balanced.
Although domestic coal production especially in CIL subsidiaries have
registered a growth of 5.40% in the recent past but demand has
consistently outstripped indigenous supply and substantial shortages
prevail in India.

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The coal sector in India has been under pressure over its inability to
meet demand (both planned and unplanned) of the user industries.
The gap between demand and indigenous supply does not appear to
have eased and is projected to increase in the coming years. By
Government’s own estimates, coal production will lag behind demand
by about 100 million MT as of 2012 and by 250 million MT by 2020.

Key Challenges facing the Sector

The critical issues facing the coal sector are highlighted below:

• Lack of Investments in Mining

In spite of the economic liberalization of 1991 the mining sector has

not seen major investments. This is possibly due to the problems such
as government policy, land acquisition, development of infrastructure,
transportation system, social engineering and community development
involved in major green field site projects. There is a need to re-look at
the total management solution for attracting investment in new mines.
The solution has to lead to the creation of joint venture institutions
with central government, state government and private sector as
partners.

The facilitation for the project through provision of land, infrastructural

development, community development etc, can be done by the
government agencies whereas the investment in the mine and the
associated technological inputs can come from the private sector. In
addition, the private sector must have the freedom to run the mine in a
cost effective manner. This may be a long term solution for future
mines in India and it will have unique opportunities for both the
government and private sector to work together for India's
development.

22
• Historically, opencast mining has been favored over underground
mining. This has led to land degradation, environmental pollution and
reduced quality of coal as it tends to get mixed with other matter.

• In addition, current economic mining practices are generally limited

to depths of 300 meters and 25 percent of the reserves of the country
are beyond this depth.

• Further, coal mining in India is associated with poor employee

productivity. The output per miner per annum in India varies from 150
to 2,650 tonnes compared to an average of around 12,000 tonnes in
the USA and Australia.

• India has still not been able to develop a comprehensive solution to

deal with the fly ash generated at coal power stations through use of
Indian coal.

• Clean coal technologies, such as Integrated Gasification Combined

Cycle, where the coal is converted to gas, are available, but these are
expensive and need modification to suit Indian coal specifications.

• Challenges in Jharia

Jharia Coal field in Jharkhand is the richest coal bearing area in India
which contains large quantities of high grade coking coal. However,
this area also contains a large number of mine fires which have been
burning for several decades. A major challenge to the mining
community is that of tackling fires which have engulfed large and
densely populated coal bearing areas. A technological, cost effective,
safe and minimum disturbance solution to this problem has to be
found.

Key Reforms in the Coal sector

The vision for coal mining industry should be to come out with an
innovative and comprehensive action plan for providing effective
23
solutions and their progressive implementation. This will involve
innovation and research in satellite based remote sensing, robotics,
mining equipment, mining operation, extraction, beneficiation,
processing and transportation.

The task of transformation of the coal sector is formidable given the

size of investment requirement and the level of political interference
that is expected during such process.

The following efforts can become the cornerstones of reform in the

sector:

1. Deregulation of the coal sector

Deregulation and opening of the sector to private participation will

spur state owned Coal India Limited (CIL) to improve performance, and
help attract investments to the tune of USD 8-10 billion required to
upgrade existing mines and open new ones in the next five to seven
years. Recognizing this, Government has now decided to offer access
to state-owned mining blocks to investors. Simultaneously, Coal India
is being encouraged to further identify coal blocks wherefrom coal
extraction will be commercially viable. As soon as attractive blocks are
offered and successes become visible, private sector investment would
increase significantly.

2. Independent Regulatory body

An independent Regulatory body to govern investment and operation

in the sector is required. Such a body will help create a level playing
field and will allow the Government to distance itself from activities like
allocation of blocks, approval for mines, etc. The body can also be
expected to introduce competitive price regulation.

3. Improvement in operational efficiency of the coal companies

24
Coal India is in need of an organizational transformation to gradually
align its operating costs to international standards. Mining costs of CIL
are at least 35 percent higher than those of leading coal exporting
countries such as Australia, Indonesia, and South Africa.

The productivity should increase from 0.5 tonnes per man-year to 5

tonnes per man-year in underground coal mines using long wall mining
and from 15 tonnes per man-year to 30 tonnes per man-year in open
cast mines. To improve productivity, Coal India will need to invest in
new technologies, improve processes in planning and execution of
projects, and institutionalize a comprehensive risk management
framework. State of the art equipment for open cast mines and also
long wall mining system are required. More thrust should be given to
safety for evolving accident free mining.

4. Strengthening of logistics in coal distribution

In India, the logistics infrastructure such as ports and railways are

overburdened and costly and act as bottlenecks in development of free
market. Privatization of ports may bring the needed efficiencies and
capacities. In addition, capacity addition by the Indian Railways is
necessary to increase freight capacity from the coal producing regions
to demand centers in the northern and central parts of the country. On
the Indian rail network, freight trains get a lower priority than
passenger trains, a problem that promotes delays and inefficiency.
Special freight corridors would raise speeds, cut costs, and increase
the system’s reliability.

5. Policy and Regulatory Framework

The coal industry in India has traditionally been characterized by state

monopoly, lack of independent regulation and lack of transparency in
tariff determination. The Government has now realized that a high
growth rate in domestic production of coal cannot be sustained without

25
carrying out structural reform and introduction of competition through
participation of the private sector.

In this regard, the Government has taken the following measures:

• Distancing of the Government from price determination of all grades
of coal
• Opening of captive coal mining for power, iron and steel, and cement
to private investment
• Foreign investment in Indian companies taking up coal mining for
captive use has been permitted
• The allocation of coal blocks are to be done on the basis of
competitive bidding
• Allowing State Government companies or undertakings to carry out
mining of coal (or lignite) reserves (either by opencast or underground
method) anywhere in the country
• Reduction in customs duty on coal imports to 5 percent
• and Downsizing of the budgetary support to the national coal
industry

6. Investment in R & D

Work is required on clean coal technology to prevent the global

warming and environmental pollution effects. For a long time there has
been a talk about integrated gasification and combined cycle
technology. Organizations like NTPC, BHEL and CSIR laboratories
should work on this project. Coal India and other producers should help
in this project by contributing in beneficiation and washing of the coal
input. There should be a time bound programme for getting the results
from this project. These results will have far reaching implications on
the choice of technology for all future mining applications.

7. Focusing on technology for future

India’s numerous technology research institutes are working on energy

related R&D. However, there is a possibility that they are operating in
26
a fragmented fashion. The Government may get improved recoveries
on its investment by concentrating on few important technology areas.
To start with focus may be applied for tighter emission standards and
development of technologies for extraction of methane from coal
deposits.

All mining operations today involve continuous use of explosives,

thereby generating high noise level, vibrations and shocks and very
high level of dust pollution. This also takes away very large area as
explosive safety zone and environment safety zone. Alternative
technologies for using high power laser system for safe, pollution free
and precision mining need to be evolved.

8. Information Technology for the Mining Industry

India has a unique blend of small and large scale mining operations.
There is a need for assimilating the advances in Information &
Communication technologies into mining operations for technological
upgradation. Experiences from the oil & gas exploration where most
advanced ICT have been successfully used will be useful in the mining
industry as well. Many times the oil & gas industry has given the thrust
to ICT out of necessity– 3D imaging & visualization and networking of
large scale super computers. Indian mining industry could further
modernize by using softwares for an integrated data management,
analysis & 3D geological modelling, 3D plant design and advanced real
time control & monitoring systems. Application of Information
Technology should lead to robotic mining for improving the precision,
safety and overall yield from mining.

In addition to the above, the following measures, which have been

accepted in principle, are awaiting implementation:
• Freeing the sector from controls on distribution
• Establishment of a regulatory authority to resolve price disputes
between producer and consumers of coal

27
• Granting of infrastructure status to coal sector
• Allowing public sector enterprises for joint venture projects with
private sector.

Nationalisation of Coal Mines

Right from its genesis, the commercial coal mining in modern times in
India has been dictated by the needs of the domestic consumption. On
account of the growing needs of the steel industry, a thrust had to be
given on systematic exploitation of coking coal reserves in Jharia
Coalfield. Unsatisfactory mining conditions e.g. slaughter mining,
violation of mine safety laws, industrial unrest, failure to make
investments in mine-development, reluctance to mechanise etc.
prevailed in the coal mines. Adequate capital investment to meet the
burgeoning energy needs of India was not forthcoming from the
private coal mine owners. Unscientific mining practices adopted by
some of them and poor working conditions of labour in some of the
private coal mines became matters of concern for the Government.

Recognising the importance of coal, a primary source of energy in the

national economy and the massive investment needed to meet the
long term requirements of coal in India, coal industry in India was
nationalised in phases in 1972 and 1973. The primary goal for
nationalised coal industry was to ensure a scientific approach to
exploration and exploitation of coal deposits with due attention to
safety, conservation and management of environmental aspects while
accelerating the production level through substantial investment so as
to reduce India's dependence on oil.

The Coking Coal Mines (Emergency Provisions) Ordinance was

promulgated by the Government of India on October 16, 1971 under
which except the captive mines of TISCO and IISCO, the management
of all coking coal mines was taken over by the Government. A new
company called Bharat Coking Coal Limited was formed as a subsidiary

28
company of Steel Authority of India Limited to manage the taken over
mines. These mines were subsequently nationalised w.e.f. May 1,
1972.

Later on the management of 711 coal mines was also taken over by
the Government with effect from January 31, 1973 and they were
nationalised w.e.f. May 1, 1973 and a new Government Company
namely, Coal Mines Authority Limited (CMAL) with headquarters at
Kolkata, was set up by the Government in May, 1973 to manage non-
coking coal mines. The CMAL was organised as a unitary structure on
divisional pattern with four Divisions, the Central Division, the Eastern
Division, the Western Division and the CMPDIL. The mines of erstwhile
National Coal Development Corporation were brought under the
Central Division of the CMAL.

In September, 1975 CIL was formed as a Holding Company with five

subsidiaries namely Bharat Coking Coal Limited (BCCL), Central
Coalfields Limited (CCL), Eastern Coalfields Limited (ECL), Western
Coalfields Limited (WCL) and Central Mine Planning and Design
Institute Limited (CMPDIL).

In view of the projected increase in production and investment

contemplated for CCL and WCL group of coal mines and in view of their
extensive geographical spread resulting in day to day administrative,
technical and communication problems etc. two more coal companies,
namely, Northern Coalfields Limited and South Eastern Coalfields
Limited were formed w.e.f. November 28, 1985.

Considering the prospects of Orissa Coalfields, being the growth centre

for the VIII and IX Plan periods, a new coal company was formed
bifurcating South Eastern Coalfields Limited (SECL). The new company
Mahanadi Coalfields Limited was incorporated on April 3, 1992 with its
headquarters at Sambalpur (Orissa) as fully owned subsidiary of Coal
India Limited to manage the Talcher and IB-Valley Coalfields in Orissa.

29
Legislative History of Coal Mining

The nationalisation was done in two phases, the first with the coking
coal mines in 1971-72 and then with the non-coking coal mines in
1973. In October, 1971, the Coking Coal Mines (Emergency Provisions)
Act, 1971 provided for taking over in public interest of the
management of coking coal mines and coke oven plants pending
nationalisation.

This was followed by the Coking Coal Mines (Nationalisation) Act, 1972
under which the coking coal mines and the coke oven plants other
than those with the Tata Iron & Steel Company Limited and Indian Iron
& Steel Company Limited, were nationalised on May 1, 1972 and
brought under the Bharat Coking Coal Limited (BCCL), a new Central
Government Undertaking.

Another enactment- the Coal Mines (Taking Over of Management) Act,

1973, extended the right of the Government of India to take over the
management of the coking and non-coking coal mines in seven States
including the coking coal mines taken over in 1971. This was followed
by the nationalisation of all these mines on May 1, 1973 with the
enactment of the Coal Mines (Nationalisation) Act, 1973 which now is
the piece of Central legislation determining the eligibility of coal mining
in India.

Amendment to allow Captive Coal Mining

The 1973 Coal Mines Nationalisation Act was amended on May 27,
1976 to allow captive coal mining by private companies engaged in the
production of iron and steel and sub-leasing to private parties of
isolated small pockets not amenable to economic development and not
requiring rail transport. In 1993 the Act was further amended to allow
captive coal mining in the private sector for power generation, washing
of coal obtained from a mine and such other end uses as may be
notified by the Central Government from time to time. Cement
30
production was subsequently notified as a specified end-use for the
purposes of captive coal mining.

Coal India (Regulation of Transfers and Validation) Act, 2000

Even since the nationalization of the coal industry in 1970s, though the
land or right in or over such land acquired under various Acts and the
rights, title and interest in relation to a coal mine or a coke over plant
were directed to be vested in the Coal India Limited or its predecessor
in title, its subsidiary companies were de facto managing such land,
coal mines, or plants.

The absence of a formal legal title to the land or the right over such
land or the right, title and interest in relation to a coal mine or coke
oven plant, in the subsidiary companies has exposed them to litigation
and other legal infirmities. While the Companies Act, 1956 contains
provisions for reconstruction and amalgamations, such reconstruction
or amalgamation could be given effect to prospectively only under that
Act.

It was, therefore, considered necessary to empower the Central

Government to direct the transfer of land or the rights in or over such
land or the right, title or interest in relation to a coal mine or coke oven
plant vested in the CIL to a subsidiary company, or where such land or
mine are vested in a subsidiary company, to another subsidiary
company. It was also considered necessary to validate all purported
transfers of land or the rights in or over such land or the right, title and
interest in relation to a coal mine or coke oven plant from CIL to a
subsidiary company and from one subsidiary company to another
subsidiary company before the commencement of the proposed
Legislation.

The Bill was introduced in the Rajya Sabha on February 14, 1995 and
thereafter it was referred to the Standing Committee on Energy for
consideration. The Committee recommended adoption of the Coal India
31
(Regulation of Transfers and Validation) Bill, 2000 and submitted their
report on July 27, 2000 in the Parliament. The Bill was passed by
Parliament during the Winter Session of 2000. The President has given
his assent to the Bill. Thus the Act has come into force, with effect from
its publication in the Gazette of India on December 8, 2000.

Amendment to the Coal Mines (Nationalization) Act, 1973 to

promote non-captive mining of coal

The proposal of Ministry of Coal to amend the Coal Mines

(Nationalisation) Act, 1973 to allow non-captive coal mining was
approved by the Cabinet on February 11, 1997 and subsequently on
May 27, 1997 after the change of Government in April 1997. The draft
Bill for the amendment was got vetted from the Legislative
Department, Ministry of Law and Justice on July 8, 1997.

Before the Bill could be introduced in the Parliament, this Ministry

received a strike notice from the trade unions demanding withdrawal
of the Bill. The matter was discussed with them on several occasions.
While the unions recognized that a demand supply gap will remain at
the end of the IX Plan, they insisted that increased production by the
nationalized coal companies should be made possible by increasing
budgetary support to them.

It was explained to them that provision of budgetary support to Coal

India Ltd has been stopped since 1995-96 and it is not possible for the
Government to restore the support. Unfortunately, despite several
rounds of discussion with the trade unions, they did not appreciate the
need for amendment to the Act.

In 1998, the matter was examined afresh and it was felt that certain
standards would have to be maintained in non-captive coal mining by
the private sector so that the pre-nationalization ills of the nature of
unscientific mining, environmental degradation, exploitation of labour
etc. observed in private coal mining do not recur. A proviso to the Bill
32
providing for powers of the Central Government to lay down such
standards for the private companies in terms of location and minimum
size of the coal and lignite mines having regard to the rational,
coordinated and scientific development and utilization of the coal and
lignite resources, was evolved.

The increase in greenhouse gas emissions and the resulting climatic

changes, which occur globally, have understandably caused world-wide
concern. According to an assessment by the Intergovernmental Panel
on Climate Change, the rise in the average temperature by the end of
the next century i.e., 2100 will be between 10 C and 3.50 C. This has
serious implications for the entire ecosystem of the world. This fact has
led to a series of initiatives at international levels to develop eco-
friendly alternatives that would meet the needs of the present
generation without compromising the abilities of the future
generations.

The developed nations have contributed a greater share of the

emissions of carbon dioxide, leading to global warming. But the current
trends in the developing nations are very alarming and, if unchecked,
developing countries will contribute half of the annual greenhouse
gases. This calls for urgent measures for minimising, if not replacing,
the reliance on fossil fuels to meet the increasing energy requirements.
It is for this reason that the non-conventional renewable sources of
energy have caught the attention of many.

Renewable energy

The oil shocks of 1970s led to spiraling crude oil prices in the world
market which prompted planners to view energy security as an issue of
national strategic importance. Energy security has an important
bearing on achieving national economic development goals and
improving the quality of life of the people. India’s dependence on crude
oil will continue for most part of the 21st century but the continued

33
dependence on crude oil is loaded against it with inherent price
volatility linked to finite global reserves. In addition, global warming,
caused largely by greenhouse gas emissions from fossil fuel energy
generating systems, is also a major concern. India needs to develop
alternate fuels considering the aforesaid two concerns.

The search for alternative fuels that would ensure sustainable

development on the one hand and energy security on the other began
in the 1970s itself. Consequently, new and renewable sources of
energy have emerged as an option. India has a policy framework in
place to tap the potential for renewable energy such as solar, wind,
biomass, small hydro, irrespective of capacity. The Indian scientific
establishment has been working on the development of various
renewable energy technologies/ systems.

In 1981, the Government of India established a Commission for

Additional Sources of Energy (CASE) in the Department of Science and
Technology, on the lines of the Space and Atomic Energy Commissions.
The mandate of CASE is to promote R&D activities in this area. In 1982,
CASE was incorporated in the newly created Department of Non-
Conventional Energy Sources (DNES), which in 1992 became the
Ministry of Non- Conventional Energy Sources (MNES). The name was
subsequently changed to Ministry of New & Renewable Energy Sources
(MNRE) in 2006.

MNRE supports the implementation of a large broad- spectrum of

programs covering the entire range of new and renewable energies.
The program broadly seeks to, inter- alia, supplement conventional
fossil fuel- based power; reach renewable energy, including electricity
to remote rural areas for a variety of applications like water pumping
for irrigation and drinking water purposes, drying farm produce,
improved chulhas and biogas plants, energy recovery from the urban,
municipal and industrial wastes. In addition, exploitation of hydrogen

34
energy, geothermal energy, tidal energy and biofuels for power
generation and automotive applications is also planned.

The Electricity Act 2003 contains several provisions to promote the

accelerated development of power generation from non- conventional
sources. The Electricity Act 2003 provides that co- generation and
generation of electricity for renewable sources would be promoted by
the SERCs by providing suitable measures for connectivity with grid
and sale of electricity to any person and also by specifying, for
purchase of electricity for such sources, a %age of the total
consumption of electricity in the area of a distribution licensee.

Projections made in the Integrated Energy Policy Report (IEPR) reveal

that to achieve its development goals, India would need to rely
increasingly on imported oil, gas and coal in the medium-term (2032).
In this backdrop, the role of new and renewable energy assumes added
significance, whether it replaces coal or oil.

In this regard, IEPR recognizes ‘the need to maximally develop

domestic supply options as well as the need to diversify energy
sources ...’ although renewables are likely to account for only around
5-6 per cent of the primary commercial energy-mix by 2032. It is an
imperative of the development process that this energy in the longer
term will substantially increase its share in the fuel-mix.

Increasing the share of new and renewable energy in the fuel-mix is in

the India’s long-term interest. Although, the development process may
warrant selection of least-cost energy options, strategic and
environmental concerns may, on the other hand, demand a greater
share for new and renewable energy even though this option might
appear somewhat costlier in the medium-term.

35
Power from Renewables

Efforts are being made to reduce the capital cost of projects based on
non- conventional and renewable sources of energy, reduce cost of
energy by promoting competition within such projects and at the same
time, taking adequate promotional measures for development of
technologies and a sustained growth of these sources. The efforts to
increase the share of renewables in the total power generation
capacity of India have yielded results. The share has been continually
rising. Renewables contribute about 10856 MW as on September 30,
2007, which represents 7.7% of the total installed capacity. The power
generation capacity established so far has largely come about through
private investments.

Of this, 6315 MW is the share of wind power placing India at 4th rank
world-wide, 1905 MW of small-hydro power and 1152 MW of bio-power.
About 5923 MW capacity has been added during the first 4 years and
10 months of the 10th Plan (upto 31.1.2007) against a target of 3075
MW for the 10th Plan. Accordingly the share of renewables in 10th Plan
power generating capacity addition is 20 per cent, i.e., double the
initial aim of 10 per cent. Capacity addition during 2006-07 (upto
31.1.2007) has been 1191MW: wind power-933 MW; bio-power-199
MW; small hydro power -69 MW. As per currents trends, renewable
power capacity addition during the year should reach 2000 MW.

New and Renewable Sources of Energy- Potential and

Achievement as on January 01, 2007

No. Sources / Systems Estimated Cumulative

Potential Achievements

I. Power From Renewables

A. Grid-interactive renewable power
1. Bio Power (Agro residues) 16,8811 MWe 510.00 MW
36
2. Wind Power 45,1952 MWe 6315.00 MW
3. Small Hydro Power (up to 25 MW) 15,0003 MWe 1905.00 MW
4. Cogeneration-bagasse 5,000 MWe 602.00 MW
5. Waste to Energy 2,7005 MWe 40.95 MW
Sub Total (in MW) (A) 84,7766 MWe 9372.95 MW
B. Distributed renewable power
6. Solar Power - 2.92 MW
7 Biomass Power / Cogen.(non- - 34.30 MW
bagasse)
8. Biomass Gasifier - 75.85 MW
9. Waste-to- Energy - 11.03 MW
Sub Total (B) - 124.10 MW
Total ( A + B ) - 9497.05 MW
II. Remote Village Electrification - 2501 villages +
830 hamlets
III. Decentralised Energy Systems
10. Family Type Biogas Plants 120 lakh 38.90 lakh

11. Solar Photovoltaic Programme 20 MW/sq.km.

i. Solar Street Lighting System - 54659 nos.
ii. Home Lighting System - 301603 nos.
iii. Solar Lantern - 463058 nos.
iv. Solar Power Plants - 1859.80 kWp
12. Solar Thermal Programme -
i. Solar Water Heating Systems - 1.66 million
sq.m. collector
area
ii. Solar Cookers - 6.03 lakh
13. Wind Pumps - 1141 nos.
14. Aero-generator /Hybrid Systems - 572 kW
15. Solar Photovoltaic Pumps - 7068 nos.
IV. Other Programmes
16. Energy Parks - 493 nos.
17. Akshay Urja Shops - 104 nos.
18. Battery Operated Vehicle - 255 nos.
MWe = Megawatt equivalent; MW = Megawatt; kW = kilowatt; kWp =
kilowatt peak; sq. m. = square meter

Renewable Sources of Energy

The renewable sources of energy are as follows

37
 • Wind Energy
• Small Hydro Power
• Solar Energy
• Biogas Energy and Cogeneration
• Biomass Gasification
• Energy from Urban and Industrial Waste
• Ocean Energy

New Renewable Energy Technologies

Besides Solar, Wind, Biomass, there are quite a few other eco-friendly
and renewable sources from which one can tap energy for varied
applications. Some of them are stated below.

• Chemical Sources Of Energy

• Hydrogen Energy
• Geothermal Energy
• Alternate Fuels for Surface Transportation

Wind Power

Amongst the different

renewable energy sources,
wind energy is making a
significant contribution to the
grid power installed capacity of
India, and is emerging as a
competitive option. India’s wind
power potential has been
assessed at 45,000 MW for sites having wind power density (wpd)
greater than 200 W/m2 at 50 m hub-height, assuming land availability
in potential area @ 1 per cent and requirement of wind farms @ 12
ha/MW. Further, preliminary surveys do not at this juncture suggest a
sizeable grid-interactive off-shore wind power potential.

38
The cumulative installed capacity of grid-interactive wind power
projects up to 31.3.2006 was 5382 MW. During 2006-07 888 MW have
been installed up to January 01, 2007 and as per trends it is likely that
a total of 1700 MW would be added during the year. With this, the
capacity addition of wind power during the 10th Plan would be 5415
MW. Tamil Nadu is maintaining its lead in wind installations, accounting
for over 50% of total capacity in India. Public sector undertakings,
public utilities and corporate houses have been invited to invest in
commercial wind power projects to partly meet their power
requirements. Wind turbines of 1, 1.25, 1.5 and 1.65 MW are being
installed across India in large numbers. Asia’s largest wind turbine
generator of 2 MW capacity has been installed at Chettikulam in
Tirunelveli Dist Tamil Nadu. Muppandal in Tamil Nadu continues to
have one of the largest concentrations of wind farms in India.

Supporting this effort is the world’s largest wind resource assessment

program. Wind Energy program of MNRE aims at utilizing wind energy
for water pumping, battery charging and power generation. The
program supports wind resource assessment, research & development,
field testing, demonstration of different technologies, strengthening of
manufacturing base etc. The program comprises Small Wind Energy &
Hybrid Systems program and Wind Power program.

Wind Resource potential

Assuming 1% of land availability for wind power generation, India has a

potential of 45,000 MW on- shore. The technical potential has been
estimated at about 13,000 MW, assuming grid penetration of about
20%. Master Plans have been prepared for 97 potential sites taking
into account the zone of influence around each mast. 211 wind
monitoring stations in 13 states and Union Territories having a mean
annual wind power density greater than or equal to 200 W/m2 at 50 m
height above ground level have been identified for wind power
development. It is also proposed to prepare a Wind Atlas for India,

39
which will give the overall potential in various States and identify high
windy areas and specific sites for setting up wind power projects.

The Wind Resource Assessment Program is being implemented in India

through the Centre for Wind Energy Technology (C-WET), an
autonomous institution of the Ministry. Around 1,150 wind
monitoring/mapping stations were set up in 25 States and Union
Territories, out of which 50 wind monitoring stations are in operation
with the remaining stations having been closed after collection and
analysis of data.

Small Wind Energy and Hybrid Systems

Small Wind Energy Systems such as water pumping windmills, aero-

generators and wind- solar hybrid systems harness wind power
potential for meeting mechanical and electrical power requirement in
decentralised mode. These systems are useful for deployment in
several rural and remote areas of India, which are unelectrified or have
intermittent electric supply.

The Ministry is implementing a program on small wind energy and

hybrid systems, with the main objectives of (i) field testing,
demonstrating, and strengthening the manufacturing base of water
pumping windmills, aero- generators / hybrid systems, and (ii)
undertaking research & development for improvement of designs and
efficiency of these systems. The promotional scheme for these systems
has been modified during the year restricting system capacity and
sites eligible for subsidy.

An aggregate capacity of 484.58 kW of such systems has been

installed under the scheme, of which 88.4 kW has been installed during
April-December 2006. Such systems in the unit capacity range of 1-10
kW have been mostly installed in Maharashtra, Goa, Karnataka and
West Bengal.

40
State- Wise & Year- Wise Wind Power Installed Capacity (as on
January 01, 2007) (in MW)

Cumulative Installed Capacity

State
(MW)
Andhra Pradesh 121.60
Gujarat 401.40
Karnataka 745.60
Kerala 2.00
Madhya
54.90
Pradesh
Maharashtra 1283.70
Rajasthan 440.80
Tamil Nadu 3216.10
West Bengal 1.10
Others 3.20
Total 6270.40

Promotional Policies

Both fiscal incentives and promotional measures initiated by MNRE

have helped the accelerated development of wind power development
in India. The package of incentives available for wind energy projects
included tax concessions such as 80 per cent accelerated depreciation,
tax holiday for power generation projects, loans from IREDA, customs
and excise duty relief, liberalised foreign investment procedures, etc.

Preferential tariffs are being reviewed by the State Electricity

Regulatory Commissions (ERCs). Three States- Andhra Pradesh,
Madhya Pradesh and Maharashtra have announced promotional
policies through their respective ERCs. The Maharashtra Electricity
Regulatory Commission (MERC) has passed its order for making
purchase of electricity generated from renewable sources obligatory
for all utilities in Maharashtra. This Renewable Purchase Obligation
(RPO) shall be applicable from financial year 2004- 05. The operational
details of mechanism are being worked out. Karnataka Electricity
Regulatory Commission has directed that each distribution licencee
shall purchase a minimum quantum of 5% and maximum quantum of
41
10% electricity annually from renewable sources expressed as a
percentage of its total consumption.

Small Hydro Power

Among the various renewable sources of energy, small hydro is

significant in the form of decentralised power generation, even in hilly
regions where the terrain is difficult for promotion of other energy
sources. All projects between 3 MW and 25 MW are considered as
Small Hydro Projects. Small Hydro Power (SHP) project essentially
harness energy from flowing or falling water from rivers, rivulets,
artificially created storage dams or canal drops.

The small hydro power (SHP) sector (upto 25 MW station capacity) is

moving towards attaining commercial status in India. SHP projects are
increasingly becoming economically viable. It has been recognized that
SHP can play a role in improving the energy position in some parts of
India and in particular in remote and inaccessible areas. The gestation
period and capital investments are getting reduced in SHP projects.
While small water streams are being tapped in the hilly areas, canal
drops are being exploited for generation of power in the plain areas.

Potential

The potential of small hydro power projects is estimated at 15,000

MWe, not all of which might be technically feasible and economically
viable. Technically feasible potential of identified sites, which are
around 4400 in number, is placed at around 10,500 MWe.

State Wise Details of Identified SHP Sites upto 25 MW Capacity

State/ UT Identified NumberTotal Capacity

of Sites (in MW)
Andhra Pradesh 286 254.63
Arunachal Pradesh 492 1059.03
Assam 46 118.00

42
 Bihar 92 194.02
Chhattisgarh 47 57.90
Goa 3 2.60
Gujarat 290 156.83
Haryana 22 30.05
Himachal Pradesh 323 1624.78
Jammu & Kashmir 201 1207.27
Jharkhand 89 170.05
Karnataka 230 652.61
Kerala 198 466.85
Madya Pradesh 85 336.33
Maharashtra 234 599.47
Manipur 96 105.63
Meghalaya 98 181.50
Mizoram 88 190.32
Nagaland 86 181.39
Orissa 161 156.76
Punjab 78 65.26
Rajasthan 49 27.26
Sikkim 68 202.75
Tamil Nadu 147 338.92
Tripura 8 9.85
Uttar Pradesh 211 267.06
Uttaranchal 354 1478.24
West Bengal 145 182.62
A & N Island 6 6.40
Total 4,233 10,324.37

Progress

The cumulative installed capacity of grid interactive small hydro power

projects up to 31.3.2006 is 1826 MW. During 2006-07, 79 MW have
been installed up to January 01, 2007.

Incentives

A package of incentives which includes fiscal concessions such as

concessional custom duty, income tax exemption on projects for power
generation for 10 years, etc. are available to small hydro power
projects. The State Electricity Regulatory Commissions (SERC) in
Andhra Pradesh, Himachal Pradesh, Karnataka, Maharashtra, Manipur
and Punjab have announced preferential tariff.

43
New SHP projects both in the public and private sectors are eligible for
subsidy. Subsidy is also provided for renovation and modernization of
existing as well as languishing SHP projects, only in the public sector.
In the case of private sector projects, subsidy is released after
successful commissioning and commencement of commercial
generation from the project, to the Financial Institution (FI) for
offsetting it against the term loan provided to the developer.

State Wise Details of SHP Projects (upto 25 MW) Setup &

Under Implementation (as on January 01, 2007)

State Projects’ Set up Projects Ongoing

Nos. Capacity Nos. Capacity
(in MW) (in MW)
Andhra
57 178.81 9 13.90
Pradesh
Arunachal
64 44.30 48 41.27
Pradesh
Assam 3 2.11 7 26.00
Bihar 7 50.40 7 9.50
Chhattisgar
5 18.00 1 1.0
h
Goa 1 0.05 - -
Gujarat 2 7.00 - -
Haryana 5 62.70 - -
Himachal
57 132.73 6 28.10
Pradesh
J&K 32 111.49 5 5.56
Jharkhand 6 4.05 8 34.85
Karnataka 63 383.63 9 23.99
Kerala 16 98.62 5 43.75
Madhya
8 41.16 3 24.20
Pradesh
Maharashtra 28 208.58 4 24.25
Manipur 8 5.45 3 2.75
Meghalaya 3 30.71 9 3.28
Mizoram 16 14.76 3 15.50
Nagaland 9 20.67 5 12.20
Orissa 6 7.30 7 40.92
Punjab 29 122.55 1 2.00
44
 Rajasthan 10 23.85 - -
Sikkim 14 38.61 4 12.20
Tamil Nadu 12 77.70 2 7.90
Tripura 3 16.01 - -
Uttar
9 25.10 - -
Pradesh
Uttarakhand 76 75.45 37 23.01
West Bengal 23 98.40 5 3.80
A&N Islands 1 5.25 - -
Total 573 1,905.44 188 393.93

Solar Energy

The exploitation of solar energy has been one of the major programs.
Solar energy, which is manifested in the form of heat and light, is
harnessed through solar thermal and solar photovoltaic (SPV) routes
for applications like cooking, water heating, drying farm produce,
water pumping, home and street lighting, power generation for
meeting decentralized requirements in villages, schools, hospitals, etc.
In spite of the limitations of being a dilute source and intermittent in
nature, solar energy has the potential for meeting and supplementing
various energy requirements.

India, being a tropical country, is blessed with plenty of sunshine. The

average daily solar radiation varies between 4 to 7 kWh per square
meter for different parts of India. There are on an average 250 to 300
clear sunny days a year. Thus, it receives about 5,000 trillion kWh of
solar energy in a year. It is environment friendly and is freely available
locally.

Though the energy density is low and the availability is not continuous,
it has now become possible to harness this abundantly available
energy very reliably for many purposes by converting it to usable heat
or through direct generation of electricity. The conversion systems are
modular in nature and can be appropriately used for decentralised
applications. As a result of sustained research and development,

45
several technologies have already been commercialised while some
technologies are still under development.

The main objectives of the solar thermal program are to develop and
promote the use of these technologies in order to meet the heat
energy requirements in domestic, institutional and industrial sectors in
India and also to generate electricity in an environment friendly
manner. For harnessing the enormous potential of solar energy, MNRE
is implementing a variety of programs in India.

Solar Photovoltaic Program

As a result of development and deployment of PV technologies for

more than two decades, a strong research infrastructure and a good
manufacturing base for production of single and polycrystalline silicon
solar cells/modules has been established in India, which ranks fifth in
the world among the PV module manufacturing countries.

Although the cost of the technology is high, it has been gradually

decreasing. Today, PV technology has become cost competitive to
other technologies based on conventional energy for meeting power
requirements of small load in remote areas. There is a need to bring
down the cost of PV modules further so that PV technology becomes
commercially viable.

Under the SPV Demonstration and Utilisation Program grants in aid is

given to the implementing organisations for providing subsidy to the
users for purchase/ installation of solar home systems, solar street
lighting systems, stand alone power plants, building integrated
photovoltaics etc. The program is being implemented through the
State Nodal Agencies (SNAs), selected NGOs, central public sector
undertakings and ‘Aditya Solar Shops’ in India. The solar home
systems have been provided to all categories of individual users and
non- commercial users. The power plants are designed to provide grid

46
quality power with better reliability to a village/hamlet or institution
etc.

A total of 60,000 SPV home-lighting systems, 6000 SPV street lights

and 27,500 solar lanterns were allocated to various states and UTs.
3.24 lakh SPV home lighting systems, 0.53 lakh SPV street lighting
systems and stand alone SPV power plants of an aggregate capacity of
1851 kWp have been installed up to January 01, 2007, since inception
of the programme.

Solar Grid Power program

The solar grid power program has two components- the thermal
conversion technology and the photovoltaic technology. The Solar
Photovoltaic technology converts sunlight into electricity without any
pollution. The solar photovoltaic (SPV) program has resulted in
significant technological developments for various applications.

34 grid- interactive SPV power projects with an installed capacity of 2.8

MW have been installed and 6 more projects with an aggregate
capacity of 400 KW are under installation. MNRE has supported
demonstration projects involving grid interactive SPV power plants.
Under this program, Central Financial Assistance (CFA) in the form of
grants-in-aid and subsidies is being provided to beneficiaries- State
Nodal Agencies (SNAs) and SEBs for resource assessment, feasibility
studies, research and development and to design, install and operate
Solar Photovoltaic Power Plants in grid interactive mode.

CFA of 2/3rds of the project cost, subject to a maximum of Rs 1.2 crore

for a 100 kWp system is being provided. For Special Category States
i.e. North Eastern States including Sikkim, Jammu & Kashmir, Himachal
Pradesh, Uttaranchal and unelectrified island regions the CFA is up to
90% of the project cost with maximum of Rs 1.62 crore per 100 kWp.

47
During 2004- 05, three grid interactive SPV power plants viz. 100 kWp
in village Gorrir, District Jhunjhunu, Rajasthan, 50 kWp at Havelock
island of Andaman & Nicobar Islands and a 25 kWp on the Chief
Secretariat of Pondicherry, have been commissioned till January 01,
2005.

As solar grid power technologies are not commercially viable, they at

the present juncture serve the purpose of technology demonstration.
Sufficient experience in installation, operation, maintenance and other
aspects of grid interactive power plants has been gained. Present
technological advances suggest that these technologies will start
becoming viable from 2020 onwards. A policy decision has been taken
not to support any new grid interactive SPV power plants.

During the past few years, many organisations have started using the
SPV systems for varied uses like power for rural telephones, railway
signaling, low power transmitters, cathode protection, etc

Water Heating

One of the areas of Solar thermal technology is heating of water for

domestic, commercial and industrial uses. India has been making and
using solar water heaters for almost three decades. Solar water
heating systems are becoming increasingly popular. Hotels, hostels,
hospitals, and other large institutions & industries have gone in for
these systems. Water heating systems with a total collector area of
one million sq. m have so far been installed. State Governments have
been advised to make necessary provisions in buildings to incorporate
solar water heating systems.

When this solar heater replaces an electric geyser, it not only saves
electricity but also reduces the peak load demands. Also a domestic
water heater of 100 litres capacity can prevent emissions of 1.5 tonnes
of carbon dioxide every year.

48
Biomass Energy and Cogeneration

The availability of biomass in India is estimated at about 540 million

tons per year covering residues from agriculture, forestry, and
plantations. Principal agricultural residues include rice husk, rice straw,
bagasse, sugar cane tops and leaves, trash, groundnut shells, cotton
stalks, mustard stalks, etc. It has been estimated that about 70- 75%
of these wastes are used as fodder, as fuel for domestic cooking and
for other economic purposes leaving behind 120-150 million tons of
usable agricultural residues per year which could be made available for
power generation. By using these surplus agricultural residues, more
than 16,000 MW of grid quality power can be generated with presently
available technologies. In addition, the potential of bagasse
cogeneration is estimated at 5000 MWe, if all the 500 sugar mills in
India switch over to modern techniques of co- generation. Thus, India is
considered to have a biomass power potential of about 21,000 MW.

To tap this potential, MNRE has been implementing biomass energy/

co- generation program for the last 10 years. The program aims at
optimum utilization of biomass materials for power generation or for
replacement of conventional fuels through adoption of efficient and
state- of- the- art conversion technologies. The technologies being
promoted include combustion/ gasification/ cogeneration, using gas/
steam turbines, dual fuel engines/ gas engines, or a combination
thereof, either for generation of power alone, or for cogeneration of
more than one energy form, for captive and/ or grid connected
applications. The Program has two main components- a) Biomass
Power/ Co-generation & b) Biomass gasification.

It is well established that industries in which both process heat and

electricity are needed are well suited for cogeneration of electricity.
Optimum bagasse cogeneration in the sugar mills and biomass power
generation from surplus agricultural residues, are being actively
promoted.

49
The cumulative installed capacity of grid-interactive biomass and
bagasse cogeneration power projects up to March 31, 2006 was 912
MW. During 2006-07, 190 MW has been installed up to January 01,
2007 and as per trends it is likely that a total of 220 MW would be
added during the year. With this, the capacity addition during the 10th
Plan would be 750 MW.

A few Regulatory Commissions have already come out with their

formulations to promote arrangements between the co- generator and
the concerned distribution licensee for purchase of power from such
plants. Cogeneration system is being encouraged in a few states in the
overall interest of energy efficiency and also grid stability. Notable
initiatives include a biomass resource assessment program to bring out
a Biomass Resource Atlas for India; facilitating fast track projects; new
modes of implementation of projects in co- operative/ public sector
sugar mills; and, technology development and demonstration of
producer gas engines and advanced biomass gasification.

State- Wise Grid-interactive Biomass Power Installed Capacity

(as on Jan 01, 2007) in MW

Cumulative
State Installed Capacity
(MW)
Andhra Pradesh 301.25
Chhattisgarh 88.50
Gujarat 0.50
Haryana 6.00
Karnataka 254.28
Madhya Pradesh 1.00
Maharashtra 62.00
Punjab 28.00
Rajasthan 23.30
Tamil Nadu 215.50
Uttar Pradesh 121.50
Total 1101.83

50
Biomass Gasification

Biomass Gasification process yields producer gas as a result of a

thermo- chemical reaction. This producer gas contains, by volume, 13-
15% hydrogen, 18- 25% carbon mono- oxide, 5- 10% carbon dioxide
and 48- 54% nitrogen. Its calorific value is 5,500kJ/Nm 3. The gas can
either be burnt directly for thermal applications or used in dual- fuel or
100% gas engines for mechanical and electrical applications.

A number of gasification and biomass briquetting technologies have

been indigenously developed. Some leading institutions in India are
being supported to conduct research and development to further
improve these technologies. India today ranks among the technology
leaders in the world. Biomass gasifiers capable of producing power
from a few KW up to 550 KW have been developed indigenously. They
have successfully undergone stringent testing abroad, and are being
exported to countries in Asia, Latin America, Europe and USA. A large
number of installations for providing power to small scale industries
and for electrification of a village or group of villages have been
undertaken.

Special application packages have been developed for use of biomass

gasification technologies for thermal and electrical applications in Rice
Mills, Cold Storages, Textile Mills, Tube and Tyre Manufacturing
Companies, Plywood Industries, Steel re-rolling mills, Tea/ Coffee
drying units, Brick kilns, Ceramic Industries for reducing energy costs
with an attractive payback period. MNRE has been providing financial
incentives in the form of capital subsidies for various categories of
systems installed in the field. A significant development during 2004-
05 has been near commercialisation of 100% producer gas based
electricity generation systems.

Biomass gasifier systems aggregating to 1.00 MWe have been

commissioned in Tamil Nadu, Karnataka, Arunachal Pradesh and

51
Nagaland as on January 01, 2007. Sixty small capacity biomass gasifier
demonstration systems of 9 kWe coupled with 100% gas engines for
water pumping and power generation are under various stages of
commissioning in Tamil Nadu. A total of 1844 biomass gasifier systems
aggregating 62 MW (equivalent) have been commissioned in 22 States
and UTs till January 01, 2005.

Energy from Waste

Garbage in urban areas is another non- conventional source of energy.

An estimated 30 million tons of solid waste and 4,400 million cubic
metres of liquid waste are generated annually in urban areas of India.
In addition, a large quantity of solid and liquid waste is also generated
in the industrial sector. Most of this waste finds its way into rivers,
ponds, lands, etc., without proper treatment, emitting gases like
methane (CH4), carbon dioxide (CO2), etc, resulting in bad odour,
pollution of water & air.

This problem can be mitigated through adoption of environment

friendly technologies for treatment and processing of waste before it is
disposed off. These technologies not only reduce the quantity of
wastes, but also improve its quality to meet the required pollution
control standards, besides generating a substantial quantity of energy.

Potential for installing about 1,700 MW of power generating capacity

from urban and municipal wastes and about 1,000 MW from industrial
wastes exists in India, which is likely to increase further with economic
development. Projects for utilizing this energy potential are being
undertaken. The aggregate capacity of waste to energy projects
installed stands at 46.5 MW till January 01, 2005. A project for
generating 6 MW power using municipal solid waste has been
commissioned at Vijayawada in Andhra Pradesh. A similar project to
produce 5 MW power using municipal solid waste has been
52
commissioned at Hyderabad. A demonstration project for generation of
5 MW (net) power and 75 tons of bio- fertilizer per day from garbage
has been commissioned at Lucknow. Two power generation projects
from vegetable market and slaughterhouse wastes have been
commissioned.

MNRE is supporting Waste-to-Energy projects in India through two

schemes namely i) National program on Energy Recovery from Urban,
Municipal and Industrial Wastes and ii) UNDP/ GEF assisted project on
Development of High Rate Biomethanation Processes as a means of
Reducing Greenhouse Gases Emission.

National Program on Energy Recovery

The National Program on Energy Recovery from Urban & Industrial

wastes, launched during the year 1995-96, has the following
objectives:

a) To promote setting up of projects for recovery of energy from

wastes of renewable nature from Urban and Industrial sectors;
and

b) To create conducive conditions and environment, with fiscal

and financial regime, to develop, demonstrate and disseminate
utilisation of wastes for recovery of energy.

c) To develop and demonstrate new technologies on waste-to-

energy through R&D projects and pilot plants.

The scheme is applicable to private and public sector entrepreneurs

and organisations as well as NGOs for setting up of waste-to-energy
projects on the basis of Build, Own & Operate (BOO), Build, Own,
Operate & Transfer (BOOT), Build, Operate & Transfer (BOT) and Build
Operate Lease & Transfer (BOLT). It is being implemented through
State Nodal Agencies.

53
Attractive financial and fiscal incentives are being provided under the
National program on Energy Recovery from Urban, Municipal and
Industrial Wastes for promotion and development of projects based on
appropriate conversion technologies such as biomethanation,
gasification, pelletisation, etc. During 2004-05, projects based on
industrial wastes were entitled to interest subsidy for reducing the rate
of interest to 4% for special category States and 6% for other States on
the loans availed by promoters through financial institutions. Besides,
incentives to State Nodal Agencies for their involvement and
facilitating in execution of the projects were included under the
scheme.

National Master Plan

A National Master Plan (NMP) for Development of ‘Waste-to-Energy

Program’ in India, is being prepared as part of the UNDP/GEF assisted
Project on ‘Development of High Rate Biomethanation Processes’. The
overall structure of NMP is to prepare a Road Map for Recovery of
Energy from Wastes during the next 15 years. The draft document on
the National Master Plan prepared during 2003-04 was discussed with
all the stakeholders in a conference organised in Delhi in April 2004
and is now under finalisation.

New Technologies

New and emerging technologies like Hydrogen energy, Fuel Cells,

Biofuels, Electric & Hybrid Electric Vehicles, Geothermal energy and
Ocean energy hold major promise for meeting the future energy
needs, especially for power generation and transportation. Several
advances have been made in developing new technologies. MNRE is
implementing broad based programs on these frontier technologies

54
and has taken several initiatives to accelerate their development and
demonstration with the participation of premier research & academic
Institutions, universities, laboratories and industry.

Hydrogen & Fuel Cells

Hydrogen, high in energy content, is receiving world- wide attention as

a clean and efficient energy carrier with a potential to replace liquid
fossil fuels. When burnt, hydrogen produces water as a by- product and
is, therefore, environmentally benign. At present, hydrogen is available
as a by- product from several chemical processes, plants or industries.
Hydrogen can be produced through several routes such as biological
conversion of various organic effluents like distillery starch, sugar
processing etc. It is produced by electrolysis of water using electricity
and by thermal decomposition of water through solar energy or
nuclear power. Hydrogen can also be produced through gasification of
coal and by steam reformation of natural gas, naptha etc.

Fuel cells electrochemically produce direct current (DC) electricity

through reaction between hydrogen and oxygen. Emerging fuel cell
and hydrogen energy technologies are suited for stationary and
portable power generation as well as for transportation purposes.
Hydrogen can be used either directly in IC engines or through fuel
cells. Fuel cells can be potentially used in domestic, industrial,
transport and agricultural sectors and also in remote areas for reliable
power supply. Fuel cell power systems can be used as uninterruptible
power supply (UPS) systems, replacing batteries and diesel generators.
Low operating temperature (up to 100°C) fuel cells are better suited
for transport and small power generation applications. Medium and
high temperature (up to 1000°C) fuel cells are preferred for power
generation/ combined heat and power applications.

In view of the growing importance being attached to the development

of fuel cells and hydrogen, a National Hydrogen Energy Board has been

55
set up in October 2003. The Board will provide guidance for the
preparation and implementation of the National Hydrogen Energy Road
Map, covering all aspects of hydrogen energy starting from production,
storage, delivery, applications, codes & standards, public awareness
and capacity building.

The National Hydrogen Energy Road Map, prepared and accepted in

2006, covers all aspects of hydrogen energy development in India
including its production, storage, transport, delivery, applications,
codes & standards and public awareness and capacity building. The
National Hydrogen Energy Road Map forms the basis for
implementation of the National Hydrogen Energy Programame
including development and implementation of R&D projects.

The National Hydrogen Energy Road Map has suggested certain

projects for development and demonstration of products/devices for
the end use applications in transportation and for decentralized power
generation sectors, to be implemented jointly by research
organizations and industry on cost sharing basis between the
Government and industry.

The focus of the Fuel Cell programme is to mainly support research

and development activities on different types of fuel cells.

Biofuels

Biofuel has been considered as one of the most preferred alternative

fuel for petrol and diesel, particularly in the transport sector. Biofuels
are fuels generated from biomass, which are renewable energy
sources. There are different routes to use biomass as energy source
such as directly burning it, controlled combustion to generate producer
gas, anaerobic digestion to generate methane and fermentation
process to produce alcohol. Oil extraction from the oilseed plants,
treating of oil with alcohol to produce biodiesel is another way of using
biomass as a fuel. While all above processes/methods generate
56
biofuels, internationally alcohol and biodiesel have been named as bio-
fuels.

MNRE has initiated a comprehensive program on Biofuels for surface

transportation since 2002-03 to develop the technology for converting
vegetable oils, mainly non-edible oils, to biofuels and promote the use
of these biofuels in automotive sector after taking care of different
aspects of the conventional diesel/ petrol engines.

MNRE has also taken up a scheme on Biofuel Pilot Demonstration

Project in rural areas for implementation with the objective to provide
energy through non-edible vegetable oilseeds for rural people in far-
flung areas for lighting, agricultural operations and other community
based stationary applications such as drinking water etc. A number of
developmental activities are being taken up in India for development
and production of biofuels, which include 5% compulsory blends of
ethanol in petrol in 9 States and trials for 10% & above ethanol blends.

A Biofuel Policy is in the process of being finalized. The Policy, when in

place, is expected to give a direction and momentum for the
development of biofuels through substitution of petrol and diesel for
transport, stationary and portable uses.

Geothermal Energy

Geothermal energy, which is derived from the high temperature

geothermal fluids, can be utilized for power generation and thermal
applications like greenhouse cultivation, space heating and cooking.
Geothermal energy has been commercially exploited by as many as 20
countries to generate approximately 9000 MW of electricity. However,
for further utilization of geothermal energy, adequate infrastructure
needs to be created and training needs to be undertaken.

Over the years various agencies like the Geological Survey of India
(GSI), Oil & Natural Gas Corporation (ONGC), National Geophysical

57
Research Institute (NGRI), and Central Electricity Authority (CEA) have
conducted studies to assess the geothermal potential in India. Valuable
data has been generated through these studies for the exploitation of
geothermal potential at some fields in India. As a result of systematic
geothermal exploration down to depths of upto 400 meters,
preliminary data has been generated for nearly 340 hot springs in
India. The use of geothermal energy has earlier been demonstrated in
India for small- scale power generation and thermal applications.
Assessing the suitability of sites through magneto- telluric
investigations and other studies are also planned.

Ocean Energy

The vast potential of energy of the seas and oceans, which cover about
3/ 4th of our planet, can make a significant contribution to meet our
energy requirement. The various forms of energy from the seas and
oceans which are receiving attention at present are Tidal Power, Ocean
Thermal Energy Conversion (OTEC), Waves and Ocean Currents. The
realization of power from oceans is limited due to large technological
gaps and limited resources. At the present level of technological
advancement only tides can be harnessed for power generation. In
India, the Gulf of Kutchh and Gulf of Cambay in Gujarat and the delta
of the Ganga in Sunderbans in West Bengal are potential sites for
generating tidal power. The technology required for harnessing tidal
power has been demonstrated in other countries. The main barrier in
its introduction in India so far is that the technology is not
commercially viable.

MNRE, however, has been supporting the deployment of tidal power

generation in India and in this context has sponsored the preparation
of a feasibility report by the West Bengal Renewable Energy
Development Agency (WBREDA) to set up a 3.6 MW capacity tidal
power plant at Durgaduani Creek in the Sunderbans area of West
Bengal. During 2003- 04 an Environmental lmpact Assessment study

58
on the proposed project was completed by WBREDA. This study has
covered several aspects relating to the impact on physical, biological
and human aspects such as topography, hydrology, water & air quality,
forest & vegetation, fauna, aquatic ecology, rehabilitation, services,
health & education etc. The revised project cost has been estimated at
Rs.40.15 crore. The project is being appraised for technical feasibility
and economic viability.

59