The Future of Indian Electricity Demand: How much, by whom, and under what conditions?

Abstract

As of 2017, 73 percent of electricity generation in India was based on coal (Central Electricity Authority, 2017). The electricity sector (grid and captive generation) consumes over 80 percent of the domestic coal off-take in India (Ministry of Coal, 2017). Due to its capital intensive and public good nature, electricity supply in India is highly regulated, where policies and plans are focused around creating adequate supply capacity and reserves, to generate, sell and purchase power. Coal demand for electricity depends on the overall level of electricity demand, its nature (who is demanding, at what location and what time in the day) and the availability and preference ordering of other sources of supply. Aside from the more immediate issues of supply planning, electricity demand modelling directly feeds into concerns around access, energy security and environmental sustainability. Electricity demand, as is elaborated later, depends on a number of variables, some with deep uncertainty into the future. For example, India’s GDP growth projections till 2030 vary from around 7-8 percent projected by governmental sources and IMF, to 5.5-6.5 percent as projected by certain banks, development organisations, and research institutions (Uehara, Masashi; Tahara, Kengo; et al, 2017; Ministry of Environment, Forests and Climate Change, GoI, 2015). These have profoundly different implications in terms of levels and composition of economic activity and associated energy intensities (Uehara, Masashi; Tahara, Kengo; et al, 2017; Ministry of Environment, Forests and Climate Change, GoI, 2015). It then becomes necessary to understand plausible and marginal yet possible scenarios of electricity demand to plan for the future electricity grid accordingly.