Prospects for Reducing Dependence on Fossil Fuels in the Power Sector in Maharashtra

TABLE OF CONTENTS

LIST OF ABBREVIATIONS AND ACRONYMS

LIST OF TABLES

LIST OF FIGURES

1. INTRODUCTION

2. LITERATURE REVIEW

3. RESEARCH METHODOLOGY AND OBJECTIVES

4. OVERVIEW OF THE ENERGY SCENARIO IN MAHARASHTRA

5. THE RENEWABLE ENERGY SCENARIO IN MAHARASHTRA

6. RENEWABLE ENERGY POTENTIAL IN MAHARASHTRA

7. COMPARISON OF RENEWABLE ENERGY SOURCES AND TECHNOLOGIES

8. PATHWAY TO THE CREATION OF A FOSSIL FUEL-INDEPENDENT POWER SECTOR IN MAHARASHTRA

9. CONCLUSION

APPENDIX A: CAPACITY UTILISATION FACTORS

APPENDIX B: OTHER RENEWABLE ENERGY APPLICATIONS

APPENDIX C: RENEWABLE ENERGY POLICIES AND SUPPORTING AGENCIES

RELEVANT TO MAHARASHTRA

BIBLIOGRAPHY

ACKNOWLEDGEMENT

I, Sanjana Mulay, would like to thank the following for the aid provided to me in the course of writing my dissertation on ‘Prospects for Reducing Dependence on Fossil Fuels in the Power Sector in Maharashtra':

The Executive Director of CDSA and the Chairman of the Dissertation Committee, Prof Aneeta Gokhale Benninger, as well as the other members of the Dissertation Committee, Dr. K.M Parchure, Professor, CDSA, and Dr. V.R. Gunale,Former Head, Department of Botany, Savitribai Phule Pune University, for their guidance and assistance;

Mr. Anant Sant, Deputy Technical Director, Maharashtra Energy Regulatory Commission (MERC)

Mr. Sandeep Sonigra, Governing Body Member, Orange County Foundation

My guides,Professor Amitav Mallik (Padma Shri), Former Member, National Security Advisory Board, and Dr S.V. Ghaisas, Director of the School of Energy Studies, Savitribai Phule Pune University. Without their supervision, help and support, I would not have been able to complete this thesis.

ABSTRACT

The demand for electricity in Maharashtra will grow by 57% in the next ten years, from 142,848 MU in 2015 to 223,595 MU in 2025, according to calculations made in this dissertation that take the population growth rate and the State Domestic Product (SDP) growth rate into account. This translates to an increase of 80,746 MU. Dependence on fossil fuels to provide this amount of electricity is an unviable option from both the environmental as well as the economic point of view. The future of Maharashtra thus depends on replacing all fossil fuel-based energy with renewable energy. This dissertation aims to assess the extent to which fossil fuel- based energy can be replaced by renewable energy in 10 years' time i.e. by 2025.By 2025, the electricity requirement of Maharashtra will be 223,595 MU. As per the energy generation addition policies of the state government, a total of 247,066 MU of electricity from fossil fuels, nuclear energy and renewable energy sources will be available in the state as of 2025 (Government of Maharashtra, 2015). If the planned generation addition in coal (8.1 GW) were not to be taken into account, a total of 198,461 MU of electrical energy would be available to the state. There would thus be a deficit of 48,605 MU, which can be replaced with renewable energy.

With regard to price and value analysis, environmental pollution caused, installation time period and lifetime of the equipment and climatic conditions prevailing in Maharashtra, solar energy and onshore wind energy seem to be the most viable options to plug the supply deficit of 48,605 MU that would arise in the state by 2025. In one scenario, 70% (34,024 MU) of 48,605 MUcan be provided by solar energy and 30% (14,582 MU) can be provided by wind energy. In the second scenario, 60% (29,163 MU) can be provided by solar energy and 40% (19,442 MU) can be provided by wind energy.

The replacement of 8.1 GW of coal-thermal capacity with renewable energy could potentially result in the avoidance of 40,500 premature deaths and emissions of 41 million tonnes of carbon dioxide per year. It would also lead to income generation of Rs. 1,266 crores to Rs. 1,486.5 crores for the general public due to the creation of new jobs in the renewable energy sector.

LIST OF ABBREVIATIONS AND ACRONYMS

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LIST OF TABLES

Table 1: Total installed power generation capacity in Maharashtra*

Table 2: Forecast for electrical energy requirement in Maharashtra taking into account SDP growth

Table 3: Forecast for electrical energy requirement in Maharashtra taking into account population growth

Table 4: Range of forecast for electrical energy requirement in Maharashtra

Table 5: Final forecast for electrical energy requirement in Maharashtra taking into account SDP growth and population growth

Table 6: Consumption of energy by various users in Maharashtra

Table 7: Total Installed Renewable Energy Capacity in Maharashtra (as of 31.03.2015)

Table 8: Wave power at selected sites along the coast of Maharashtra

Table 9: Solar Energy Figures

Table 10: Onshore Wind Energy Figures

Table 11: Offshore Wind Energy Figures

Table 12: Geothermal Energy Figures

Table 13: Tidal Energy Figures

Table 14: Wave Energy Figures

Table 15: Small Hydropower Figures

Table 16: Waste to Energy Figures

Table 17: Biomass Energy Figures

Table 18: Nuclear Energy Figures

Table 19: Comparison of Selected Energy Technologies

Table 20: Electricity Supply Position in 2025 as per Government Policy

Table 21: Recommendation for additional RE generation to be provided by 2025 73 Table 22: Micro grid power connectivity packages

Table 23: Assumed Capacity Utilisation Factors for energy sources

LIST OF FIGURES

Figure 1: Actual Electricity Supply Position of the State of Maharashtra (1)

Figure 2: Actual Electricity Supply Position of the State of Maharashtra (2)

Figure 3: International Comparison of Electricity Prices

Figure 4: Installed Grid- Connected Renewable Energy Capacity in India

Figure 5: State Wise Comparison of Total Installed Renewable Energy Generation Capacity

Figure 6: Cumulative Renewable Energy Capacity Addition in Maharashtra from 2004-05 to 2014-15 (Chart 1)

Figure 7: Cumulative Renewable Energy Capacity Addition in Maharashtra from 2004-05 to 2014-15 (Chart 2)

Figure 8: Solar power potential in Maharashtra

Figure 9: Onshore Wind Energy Potential in Maharashtra

Figure 10: Offshore Wind Energy Potential in Maharashtra

Figure 11: Geothermal energy potential in Maharashtra

Figure 12: Tidal velocity in Maharashtra

Figure 13: Solar Photovoltaic Panels

Figure 14: A Concentrating Solar Thermal Power Plant

Figure 15: Concentrating PV Technology

Figure 16: Horizontal Axis Wind Turbine

Figure 17: Vertical Axis Wind Turbine

Figure 18: An offshore wind farm located at Blyth, U.K

Figure 19: A Geothermal Power Plant

Figure 20: A tidal turbine located in Maine, USA

Figure 21: A tidal barrage at La Rance, France

Figure 22: An artist's impression of the world's first, upcoming

Figure 23: A Buoy System

Figure 24: Oscillating Water Columns

Figure 25: Tapered Channel

Figure 26: A small hydropower project in Himachal Pradesh

Figure 27: An incineration plant

Figure 28: A gasification MSW plant

Figure 29: Bagasse cogeneration

Figure 30: A biogas power plant

Figure 31: A nuclear fission reactor

Figure 32: A hydrogen fuel cell

Figure 33: Trends in Prices of Selected Energy Sources

Figure 34: LCOE of Wind Energy and Utility-Scale Solar PV

Figure 35: Battery bank, windmill and solar thermal

Figure 36: Inverter in use at the micro grid installed at Orange Life Housing Society, Pune

Figure 37: The smart meter in use at Orange Life Housing Society

Figure 38: The micro grid at Dharnai

Figure 39: Filling a gasifier plant with rice husk, Tamkuha, Bihar

Figure 40: Functioning of the geothermal cooling system

1. INTRODUCTION

Maharashtra is the largest power generating state in India, with an installed electricity generation capacity of 38,872 MW (As of 31st July 2015) (Government of Maharashtra,2015). According to the Central Electricity Authority of the Government of India, Maharashtra has 14% of the total installed electricity generation capacity in India, which is mainly from fossil fuels such as coal (63%) and natural gas (9%>)(Government of India, 2015a). If electricity bought from the national grid is not taken into account while assessing the power supply position of the state, there is an average deficit of 20% between electricity requirement and electricity generation (based on data for the years 2013-2015, as data for only these years is available) (Central Electricity Authority, 2015). According to the Central Electricity Authority, India's electricity demand is expected to grow at an average annual rate of 7.4% for the next 25 years (Government of India, 2011). Taking this average growth rate for the next 35 years, we can assume that electricity demand in Maharashtra will grow from 24.5 GW (Gigawatts) in 2015-16 to 297.8 GW in 2050. If we were to assume that this capacity addition would come entirely from coal power plants, it would mean the creation of 279.4 GW of coal power capacity. A 1 GW coal power plant in India releases 5 million tonnes of carbon dioxide, 9.1 ktonnes (kilotonnes) of carbon monoxide, 17 ktonnes of nitrogen oxides, 17.4 ktonnes of sulphur dioxides, and 4.8 ktonnes of particulates with a diameter less than 2.5 pm (PM2.5) annually (Goenka & Guttikunda, 2013).Carbon dioxide and nitrogen oxides are greenhouse gases, while carbon monoxide is a poisonous gas when inhaled in large quantities. PM2.5 and sulphur dioxides are a major cause of several respiratory and cardiopulmonary ailments. 279.4 GW of additional coal power capacity would thus result in the release of an additional 1,397 million tonnes of carbon dioxide, 4,750 ktonnes of nitrogen oxides, 2,543 ktonnes of carbon monoxide, 4,862 ktonnes of sulphur dioxides, and 1,341 ktonnes of PM2.5 into the atmosphere.

According to a study conducted by the NGO Greenpeace, the estimated average annual premature mortality caused by exposure to pollutants generated by coal- fired power plants in the regions of Western Maharashtra, and Eastern Maharashtra and Northern Andhra Pradesh for the year 2011-12 was 1700-2400 deaths for Western Maharashtra and 1100-1500 for Eastern Maharashtra and Northern Andhra Pradesh. Using a conservative value of Rs. 10,00,000 per life lost, this translates to an approximate average cost of Rs. 340 crore per year (Goenka & Guttikunda, 2013).

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Source: IPCC Climate Change 2014 Synthesis Report

The graph above shows the concentration of CO2 emissions in gigatonnes in various Representative Concentration Pathways (RCPs) for the year 2100. The RCPs describe four different 21st century pathways of greenhouse gas (GHG) emissions and atmospheric concentrations, air pollutant emissions and land use.RCP 2.6 represents a stringent mitigation scenario, while RCP 4.5 and RCP 6.0 represent intermediate scenarios. Scenarios without additional efforts to constrain emissions (‘baseline scenarios’) lead to pathways ranging from above RCP6.0 to RCP8.5. In these two scenarios, the concentration of CO2 and its equivalents will increase from anywhere between 720 to more than 1000 parts per million (ppm) by 2100, from less than 100 ppm today. Correspondingly, the global average temperature will rise by anywhere from 2 degrees Celsius to 4.5 degrees and sea levels will rise by 0.18 m to 0.59 m. Thus urgent action needs to be taken if the effects of extreme pollution and global warming are not to be felt.

India has already begun to pay the price for humanity’s skewed approach to development. A recent example of this is the floods in the state of Uttarakhand in June 2013, in which over 5,000 people died. (Press Trust of India, 2013). Studies have been carried out that attribute the heavy rainfall that caused the flooding to climate change (Cho, Li, Wang, Yoon, & Gillies, 2015, Singh et al, 2014). A study conducted by the Indian Institute of Tropical Meteorology and American, French and Thai scientists has revealed that mean temperatures in India will rise by 2 degrees Celsius by the middle of the century and by 3.5 degrees by the end of the century. This will result in a 20% decline in crop yields (Krishna Kumar et al, 2011). The United Nations Food and Agricultural Organisation has stated that a one degree Celsius rise in mean temperature translates into wheat yield losses of approximately 6 million tonnes in India (United Nations Food and Agricultural Organisation, 2010). At current prices, this works out to roughly $1.5 billion. The cumulative loss of income for farmers will be much more- around $20 billion, if we take other crops into account as well (Sethi, 2011).

Gas -compressed natural gas or CNG, liquefied petroleum gas or LPG, liquefied natural gas or LNG and shale oil and gas,which has begun to be extracted in large quantities through the recently discovered method of fracking, are being regarded as viable fuels for power generation as they generate only a fraction of the emissions generated by coal. However, these fuels are also not viable in the long run as they are also fossil fuels.

Apart from the environmental perspective, power generation from fossil fuels is unsustainable from the economic point of view. At current usage, India's coal reserves are projected to be depleted in 40 years (Sargsyan, Bhatia, & Banerjee, 2011).India already imports 19% of the coal required, up from 16% in 2011 (Reuters, 2014). With the increase in demand for coal in Asia, global coal prices are projected to rise (Sargsyan et al., 2011). As a consequence it will become much more difficult, or even impossible, to close the gap between the supply of, and demand for, electricity in the state. An inadequate supply of electricity translates into a shrinking of opportunities for an individual and severely hampers his/her ability to live a decent life, whether it comes to medical assistance, education or recreation.

Electricity generation from fossil fuels is unsustainable and there is thus a need to completely delink the power sector from fossil fuels and explore other sources of energy in order to ensure the environmental and financial sustainability of the power sector.

2. LITERATURE REVIEW

The Global Environmental Crisis

Barbara Ward and Rene Dubos in their book ‘Only One Earth- the Care and Maintenance of a Small Planet'warn that the sudden vast accelerations of modern human civilisation- in numbers, in the use of energy and new materials, in urbanisation, in consumptive ideals, in consequent pollution- have set technological man on a course which could alter dangerously, and perhaps irreversibly, the natural systems of the planet upon which his biological survival depends (Ward & Dubos, 1976). In her other book, ‘Home of Man', Ward lays forth a passionate argument that mankind is at a juncture of history in which the decisions taken or not taken will be crucial not just to the future happiness of one group or another, but to all humanity and even to the continuance of life on earth (Ward, 1976).

Even if complete knowledge of the global warming crisis is not available to us, we should consider it a threat to environmental stability and not delay action using the excuse of not having enough data (Gore, 1992).

Social Values and the Introduction of Monetary Economies Social value systems differ from one culture to another, and they change with time. However, there are a number of more fundamental social values, associated with basic needs, which are determined by the biology of human beings and thus less subject to modification, such as food, an acceptable biological environment, and human relations. Many current societies place more emphasis on pursuing the single goal of gross national income, which is then effectively taken to represent all the desired needs in a single number. It is then assumed that the “economic growth” represented by an increasing gross national product positively influences most of the social values, such as access to food, housing, and a range of consumer goods. The emphasis on economic figures is associated with the use of monetary units to discuss these questions, implying a risk of disregarding those values that cannot be assigned a monetary value (Sorensen, 2004).

The Drawbacks of the Present Economic System Economic theories propose to identify quantitative relations between variables describing economic behaviour in society, based on observations of the past.As external conditions, technology, knowledge, and preferences can all change with time, the economic rules extracted from past experience are not necessarily valid for the future, and economic theory therefore cannot be used for guiding national or international planning and policy, as these activities depend on perceptions of the future conditions (Sorensen, 2004).

PRODUCTION PLANNING

The production plan for the process of production of a particular good consists of the particular amount of labour, raw material and machinery required to make the good, along with the price of the labour, raw material and machinery. The amounts and prices of each component of the production plan are set in such a way as to ensure a profit. Thus the production plan used by entrepreneurs is essentially static. No dynamic development of the production and demand is included. Changes over time can only be dealt with in a “quasi-static” manner by evaluating the optimum production plan, the pricing and the profit distribution, each time the external conditions change and by neglecting the time delays in implementing the planning modifications (Sorensen, 2004).

This method is unsuited for describing economies with a long planning horizon and considerations of resource depletion or environmental quality. By assigning a monetary value to such “externalities” or “external diseconomies”, a dynamic simulation calculation can be carried out, defining the basic economic rules and including time delays in implementing changes, delayed health effects from pollution, and the time measures for significant depletion of non-renewable resources. Rather than basing the planning on instantaneous values of profits, it would then be based on suitable weighted sums of profits during the entire length of the planning horizon (Sorensen, 2004)

DISTRIBUTION PROBLEMS

In a socialist economy, allocation of resources and investments in means of production is made according to an overall plan, whereas in a capitalistic society the members of the capitalist class make individual decisions on the size of investment and the types of production in which to invest. It may then be that the highest profit is in the production of goods which are undesirable to society but still in demand by customers, if sales efforts are backed by aggressive advertising campaigns. There may also be a demand for such goods if more desirable goods are not offered or are too expensive for most consumers. Yet little is done, even in present mixed-economy societies, to influence the quality of the use of capital, although governments do try to influence the level of investments (Sorensen, 2004).

The determination of the prices of various goods is also done in a quasi-static manner. The sensitivity of the price of a good to a change in an external factor, as well as the sensitivity of the demand for a good to a change in its price, are the main determinants of the price of a given commodity in the market. A dynamic theory, however, would require these variables to be dynamic variables coupled to all other parameters describing the economy (Sorensen, 2004).

Indirect Economics

The term “indirect economics” may be taken to relate to those social values which are not or cannot be evaluated in monetary units (Sorensen, 2004). Some of these values are listed below:

- Resource and Environmental Management: The effort required in order to extract non-renewable resources is generally expected to increase as easily accessible deposits become depleted and less and less accessible resources have to be exploited (Sorensen, 2004).
- Energy Analysis: For energy conversion systems, energy accounting is of great interest because the net energy delivered from the system during its physical lifetime is equal to its energy production minus the energy inputs into the materials forming the equipment, its construction and maintenance. Different energy systems producing the same gross energy output may differ in regard to energy inputs, so that a cost comparison based on net energy outputs may not concur with a comparison based on gross output (Sorensen, 2004).
- Social interest rate: The concept of interest is associated with placing a higher value on the ownership of assets in the present rather than in the future. A positive interest rate thus reflects the assumption that it is better to possess a certain sum of money today than it is to be assured of having it in one year's time or in 20 years' time. The numerical value of the interest rate indicates how much better it is to have the money today, and if the interest has been corrected for the expected inflation, it is a pure measure of the advantage given to the present. For the individual with a limited life in front of him or her, this attitude seems a very reasonable one. But for a society, it is difficult to see a justification for rating the present higher than the future. New generations of people will constitute the society in the future, and placing a positive interest on the measure of value implies that the present value of an expense to be paid in the future is lower than that of one to be paid now. This implies that non-renewable resources left for use by future generations are ascribed a value relatively smaller than those used immediately. This places an energy system requiring an amount of non-renewable fuels to be converted every year in a more favourable position than a renewable energy system demanding a large capital investment now. It also implies that part of the pollution created by fuel-energy based conversion, as well as by other industrial processes, is in the form of wastes, which may be either treated, diluted and spread in the environment, or stored, either for good or for later treatment, assuming that future generations will develop more advanced and appropriate methods for treatment or final disposal. A positive interest rate makes it more attractive, when possible, to leave the wastes to future concern, because the present value of a realistic treatment of the costs of future treatment is low. An e.g. of this is nuclear waste (Sorensen, 2004).
- Regional economy: It is sometimes said that the introduction of large energy conversion units and extensive transmission systems will promote centralisation of activities as well as of control, while small conversion units (e.g.) based on renewable energy would promote societies of decentralised structure, with emphasis on regional development. This view cannot be entirely supported in regard to the size of energy generation plants. An array of 100 wind energy turbines or a solar farm may have rated capacities similar to those of large fuel-based power plants, and in the case of wind energy, for e.g., it would not make much sense to disperse the array of converters from a wind-optimal site to the actual load areas, which may be poor sites for wind energy generation. Further, many renewable energy systems greatly benefit from the existence of power grids and other energy transmission systems, allowing alternative energy supply during periods of insufficient local renewable energy, instead of requiring dedicated local energy stores (Sorensen, 2004).
- Use of subsidies for introducing “appropriate technology”: In capitalistic economies with an influential public sector concerned with social priorities, the allocation policy of the government may be used to support individuals or firms that wish to introduce the technological solutions judged most appropriate from the point of view of society, even though other solutions are more attractive in a private economic assessment. A number of subsidy methods are available, including direct subsidy either to manufacturers or to customers, tax credits, loan guarantees, and offers of special loans with favourable conditions. Subsidies can be used for a limited period to speed up the initial introduction of appropriate technology, assuming that in a mature phase the technology can survive on its own. However, the arbitrariness of costs given to various items discussed earlier makes it likely that some solutions may be very attractive to society and yet unable to compete in a market ruled by direct costs alone. Here redistribution subsidies can be used, or governments can decide to change the rules of price fixation using environmental taxation or regulatory commands regarding choice of technology, as is done for e.g. in building regulations for reasons of safety. In both cases, democratic support for these actions must be extant (Sorensen, 2004).

According to a report by the World Bank, significant barriers to renewable energy development remain in India (Sargsyan et al., 2011).These barriers can be grouped into three categories, as shown in the table below.

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Source: World Bank

The state of Tamil Nadu has the highest installed renewable energy capacity in the country and can be taken to be a success story with regard to the development of a flourishing wind energy sector. An important factor is that annual policy making for the wind sector has remained stable in spite of government changes over the last decade. As counter-part to the government, the Tamil Nadu Electricity Board (TNEB)’s capabilities with regard to the wind sector are also characterised as high. During the very early stages of wind sector development, the TNEB was rendered an important stakeholder in demonstration projects. The TNEB has accumulated substantial knowledge as regards the operational business and ownership felt for wind energy. This goes beyond the usual role of utilities as buyer of power and signatory to power purchase agreements. Tamil Nadu was one of the first states in which wind turbine manufacturers like Suzlon commenced its business. Suzlon 's operations are diversified through backward integration alongside the wind turbine production chain. Suzlon did not only internalise the marketing of wind farm installations but also the manufacturing as well as indigenous production of individual components particularly in locations in Tamil Nadu. The National Institute of Wind Energy (NIWE) is a firm that engages in turbine testing and a wide range of consulting activities with regard to wind farm installation procedures. NIWE's relation to the international R&D community contributed to the transfer of many fruitful lessons learnt.There are a number of private sector industrial firms that have set up wind farms in order to create a source of reliable and cheap power for the running of their factories and offices. The various public and private sector entities have healthy relationships with each other based on mutual cooperation and trust. As the generation of power by private organisations (Independent Power Providers or IPPs) has been encouraged, there is no cartelisation in this sector (Benecke, 2011).

In summary, it can be said that any solutions to the present environmental crisis must have sustainability at their heart. The present economic system is flawed in that it emphasises short-term monetary gains over the long-term value of resources. Social values also complement this train of thought. The pricing of energy from renewable sources reflects this ideology. The costs of renewable energy are set higher than those of energy from fossil fuels as they are measured only by economic indicators, such as the efficiency of land, labour, capital etc. However, the indirect economics of energy production, such as the effect on the environment and on human health, are not dealt with. If we were to factor in the externalities of energy production, then a rather different scenario of prices andefficiency would emerge.

3. RESEARCH METHODOLOGY AND OBJECTIVES RESEARCH METHODOLOGY

- The objective of the study was framed.
- A literature review on the topic was carried out.
- Information regarding the current sources of energy utilised by the state was obtained.
- The present energy requirement of the state of Maharashtra was found out. An electrical energy forecast for the next ten years (up to 2025) was made by taking into account the net State Domestic Product (SDP) and population growth.
- The plans for capacity addition in the power sector by the state government for the period 2015-2025 were obtained. The amount of generation addition that would come from new coal and gas power plants was noted. Only generation addition in coal has been planned by the state government. This amount of added generation was taken as the amount of planned generation that could be potentially replaced with renewable energy.
- Information on the renewable energy potential of the state was collected.
- Information on the various types of renewable energy was collected. The renewable energy sources were analysed for their suitability based on the following criteria:

- Environmental pollution caused, if any
- Levelised cost of the energy source as compared to the levelised cost of power from coal (with and without subsidies)
- Time taken for installation
- Lifetime of the technology

- Primary data collection: Primary data was collected through field trips, interviews with experts in the field, government officials and renewable energy industry members in the city of Pune, Maharashtra. Field trips were made to Orange Life Housing Society on Pashan Road, Pune, Orange Srishti Housing Society at Bavdhan, and Royal Orange Society at Rahatne.
- Secondary data collection: Secondary data was collected by the perusal of government data sources, books, magazines, journals and other periodicals, and websites.
- Sources of secondary data: The main sources of secondary data are as follows:

1. Maharashtra Energy Development Agency (MEDA)
2. Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)
3. Maharashtra Electricity Regulatory Commission (MERC)
4. Ministry of New and Renewable Energy (MNRE)
5. Indian Renewable Energy and Energy Efficiency Policy Database (IREEED)
6. Indian Renewable Energy Development Agency (IREdA)
7. Central Electricity Authority (CeA)
8. United Nations Environment Programme (UNEP)
9. U.S. Geothermal Energy Association (GEA)
10. United States Department of Energy
11. Green Clean Guide
12. Energy Alternatives India (EAI)
13. International Renewable Energy Agency (IRENA)
14. U.S. Energy Information Administration

SECONDARY DATA SOURCES

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- Through the analysis of the collected information, a rough target and outline of a plan to replace the 76% of energy that is generated from fossil fuels and nuclear energy in the state with renewable energy, was put forward.

OBJECTIVES

1. To study the costs and benefits of all the possible renewable sources of energy in the state as well as the practical difficulties entailed by them, through comparative analysis, and recommend the most suitable and affordable ones.
2. To assess the feasibility of making Maharashtra completely reliant on renewable energy alone and to prepare a plan to make the state as independent from fossil fuels as possible, given the present state of technological advancement in the renewable energy sector.

4. OVERVIEW OF THE ELECTRICAL ENERGY SCENARIO IN MAHARASHTRA

Maharashtra is the largest power generating state in India, with an installed electricity generation capacity of 38,872 MW (As of 31st July 2015) (Government of India, 2015). According to the Central Electricity Authority of the Government of India, Maharashtra has 14% of the total installed electricity generation capacity in India (Government of India, 2015a). The following is a breakup of the total installed power generation capacity in Maharashtra, showing the various sources of energy utilised for electricity generation in the state:

Table1: Total installed power generation capacity in Maharashtra*

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Source: CEA, MNRE *Figures have been rounded off

Most of the installed capacity is that of coal-fired power plants, at 63%. It is somewhat heartening to see that all the renewable energy sources taken together (excluding large hydropower) are the second largest source of electrical energy in the state, making up 17% of the total installed power generation capacity. This is followed by large hydropower and gas, both at 9%,and nuclear energy at 2%.

Figure 1: Actual Electricity Supply Position of the State of Maharashtra (1)

Actual Electricity Supply Position of the State of Maharashtra (1)

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Source: Central Electricity Authority MU: Million Units

The chart above shows the actual electrical energy supply position of Maharashtra from the period 2005 -2014, barring the year 2011. Data for the year 2011 was not available.The figures for the availability of electricity take into account electricity acquired by MERC from the national grid. If electricity bought from the national grid is also taken into account, it can be said that the electricity deficit in the state has decreased from 15% in 2005 to 2% in 2014, after rising to a high of 22% in 2008. Between 2005 and 2014, electricity requirement grew at an Average AnnualGrowth Rate (AAGR) of 5%, while availability grew at an AAGR of 7%, leading to a drastic decrease in the electricity deficit.

However, if electricity bought from the national grid is not taken into account and only power plants operating in Maharashtra are considered, quite a different picture regarding the actual power supply position is presented. The graph below shows the actual power supply position of the state for the years 2013 to 2015, if only electricity produced by state power plants is taken into account when calculating availability of electricity. Generation data for Maharashtra could only be found for the years 2013, 2014 and 2015. For the year 2013 generation data was available only for 8 months and for 2015 data is understandably available only up to August i.e. 8 months. Thus the figures for electricity supply requirement are taken only for 8 months.

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Source: Central Electricity Authority * Data taken for 8 months

The electricity deficit for the years 2013, 2014 and 2015 (up to August) is 25%, 21% and 20% respectively, as against 2% for 2013 and 2% for 2014 as shown in Fig.1 Thus the state needs to be self-sufficient when it comes to electricity generation.

Forecasting future electricity demand The average annual rate of growth of the net State Domestic Product (SDP) of Maharashtra during theperiod 2005-2014 was 8% (Government of India, 2015). The AAGR of electricity requirement for the same period, as mentioned earlier, was 5%. We can thus obtain the elasticity of electricity demand with respect to SDP using the formula for income elasticity of demand. Income elasticity of demand refers to a change in demand in response to a change in income. The formula for income elasticity of demand is:

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We have thus obtained a relationship between SDP and electricity requirement.

This value for elasticity of demand is in consonance with the available literature on the relationship between GDP and electricity demand, which gives the elasticity of demand for electricity to be anywhere between 0.2 to 1.19 (Bildirici, 2012; Chang, Kim, Miller, Park, & Park, 2014; Kiss, 2010; Mohanty & Chaturvedi, 2015).To calculate the future electricity requirement of Maharashtra, it is assumed that the SDP will grow at an average rate of 7% per year. By thus inserting an elasticity of demand of 0.6 and a future SDP growth rate of 7% into the formula above, we can obtain the future AAGR of electricity requirement. The AAGR comes out to be 4.2%.

The following table shows theforecast for electrical energy requirement in Maharashtra for the next ten years, in million units (MU), based on the income elasticity of demand calculations made above:

Table 2: Forecast for electrical energy requirement in Maharashtra taking into account SDP growth

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However, an electricity forecast made on the basis of only one parameter remains incomplete. When forecasting electricity, it is necessary to take into account at least two variables in order to ensure a sound estimate. Thus, population growth in Maharashtra also needs to be factored in.

The population of the state grew at an AAGR of 1.5% over the last decade, from 96,878,627 in 2001 to 112,374,333 in 2011. (Census of India, 2011). We can thus calculate the elasticity of electricity demand with relation to population by using the formula above:

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We have now also obtained a relationship between electricity demand and population.

To calculate the future electricity requirement of Maharashtra, it is assumed that the population will continue to grow at a rate of 1.5% per year. By thus inserting an elasticity of demand of 3.3 and a future population growth rate of 1.5% into the formula above, we can obtain the future AAGR of electricity requirement. The AAGR comes out to be 4.95%.

The following table shows the long-term forecast for electrical energy requirement in Maharashtra for the next ten years, in million units (MU), based on the population elasticity of demand calculations made above:

Table 3:Forecast for electrical energy requirement in Maharashtra taking into account population growth

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We have thus so far obtained a forecast for electricity requirement for the coming decade, taking into account the SDP growth rate and the population growth rate separately. We are thus presented with a range of electricity demand figures, with the quantities arrived at by taking into account SDP growth forming the lowest value and the quantities arrived at by taking into account population growth rate forming the highest value:

Table 4: Range of forecast for electrical energy requirement in Maharashtra

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According to Table 4, by 2025, the electrical energy requirement for the state will be 214,779 MU - 232,410 MU. If we were to take this forecast, however, it would be extremely difficult to arrive at a determinate value for electrical energy requirement. There is a need to arrive at a value for electricity requirement for every year in the coming decade that takes into account both the variables of SDP growth and population growth. By taking the average of the electricity requirement figures that take SDP growth into account, and the figures that take population growth into account, we can arrive at a sufficiently accurate figure for electricity demand that would factor in both the variables of SDP growth and population growth. The forecast arrived at by utilising this method is presented in the table below.

Table 5: Final forecast for electrical energy requirement in Maharashtra taking into account SDP growth and population growth

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According to Table 5, the demand for electricity in Maharashtra will grow by 57% in the next ten years, from 142,848 MU in 2015 to 223,595 MU in 2025.

The following table shows the consumption of energy by the various users in Maharashtra for the year 2013-14.

Table 6: Consumption of energy by various users in Maharashtra

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Source: Planning Commission of India MkWh: Million Kilowatt-Hours

Figure 3: International Comparison of Electricity Prices

Source: MAHADISCOM, IEA, Australian Energy Market Operator, Strom-Report, ICIS

The chart above gives a comparison of global electricity prices in US cents per kWh with relation to the prices prevailing in Maharashtra. All data is for 2015 other than for Japan, where the 2014 price has been taken. Globally, the electricity tariff in Maharashtra is quite low, coming second to Australia at 10 cents/kWh. The electricity tariff in Australia is the lowest in the selection, at 2.6 cents/kWh. The UK has the highest prevailing tariff rates at 72 cents/kWh.

5. THE RENEWABLE ENERGY SCENARIO IN MAHARASHTRA

Renewable energy is technically defined as those forms of solar energy that are available and replenished in time scales no longer than human lifetimes, such as wind energy and energy from biomass (United Nations, 1995). India ranks fifth in the world in terms of total installed renewable energy capacity (Ren21, 2014).

Brief Overview of the Renewable Energy Scenario in India

Renewables contribute 28.4% of the total installed capacity in the country, if largehydropower is included, and 13.2% if large hydropower is excluded. (Central Electricity Authority, 2015).

Figure 4: Installed Grid- Connected Renewable Energy Capacity in India

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Source: Ministry of New and Renewable Energy, 2015

India ranks fifth in the world in terms of total installed renewable energy capacity (not including large hydropower), behind China, the United States, Germany, and Italy & Spain (tied at fourth place) (Ren21, 2014).

THE RENEWABLE ENERGY SCENARIO IN MAHARASHTRA INSTALLED RENEWABLE ENERGY CAPACITY IN MAHARASHTRA

Figure 5: State Wise Comparison of Total Installed Renewable Energy Generation Capacity

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Source: Central Electricity Authority, Maharashtra Energy Development Agency

The chart above gives a comparison of the total installed renewable energy generation capacity. Maharashtra ranks second in the country behind Tamil Nadu, with 6705 MW of electricity generation coming from renewable energy sources. It is followed by Gujarat, Rajasthan and Karnataka. Dadra and Nagar Haveli, and Daman and Diu do not have any installed renewable energy capacity at all.

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