What is the role of gas power in India and what are the various market challenges and opportunities associated with LNG? In a recent online discussion, hosted by POWERGEN India, a panel of experts answered these questions.
For the first time in decades, India’s electricity demand is expected to fall, together with a fall in coal-powered generation. The impact of the COVID-19 pandemic and the government’s ambitious renewable energy targets are forcing the sector into a period of great transition.
The panel explored strategies to navigate this transition, to salvage the gas-based power plants from becoming non-performing assets and mitigate the risks associated with gas price fluctuations and supply constraints.
Gurpreet Chugh, Managing Director of ICF chaired the discussion and set the stage for listeners concerning India’s under utilised domestic gas market. Chugh emphasized the market challenges ” such as a lack of availability ” however, stated that the winds of change are blowing as lower LNG prices are predicted.
Chugh reiterated that there are many drivers shaping India’s transition to clean energy, saying: “We can expect more value in moving from coal to gas, especially as gas will be a much needed balancing force for increasing amounts of renewables.
“Gas is the green fossil and stakeholders must consider how to use this resource in the best way possible.”
Sanil C Namboodiripad, Managing Director, ONGC Tripura Power Company Limited provided interesting insights into how India’s grid is undergoing major change. The grid, designed for continual coal baseload operations, is now moving to include more renewable energy. Stated Namboodiripad: “This is where gas power plants will play a major role [for flexibility]. Startup and shut down can occur within a day, meaning cyclic operations will become more popular, increasing flexibility.”
Namboodiripad also elaborated on how ONGC Tripura Power Company has been successful by implementing an independent methodology, keeping electricity prices lower while ensuring steady gas dispatch from the North.
Deepesh Nanda, CEO, GE Gas Power, South Asia elaborated on the fact that opportunities in gas haven’t been capitalized on sufficiently in India’s energy mix. India has now embarked on increasing its focus on renewables. To facilitate this, Nanda talked about how gas will be an important complementary fuel. Said Nanda: “There are currently 265 GE gas turbines in operation in India, gas turbines provide [needed] support for continuous operating plants like refineries. Gas to power has a meaningful role to play.”
Ashu Shinghal, Chief General Manager, GAIL (India) Limited highlighted the all-important issue of pricing. Gas availability at affordable prices is key. India has domestic gas that can supplement imported LNG and renewables. Said Shinghal: “Going forward prices are predicted to be more affordable. It is in the interest of the country to keep these gas assets running at a higher capacity. More investment is needed in these assets.
“India is currently a coal-based economy and government has set ambitious targets to become cleaner. We must put in place the right policies and regulations that encourage gas uptake and investment.”
Shinghal mentioned key strategies needed to mitigate pricing-related risk, as well as risks associated with a more demanding consumer base, laws that restrict long term hedging and multiple taxes that inroad value.
Rajneesh Srivastava, GM & Head Commercial & IT, IPGCL & PPCL made it clear that India’s power sector is at a crossroads. The reduced cost of renewables has placed a lot of pressure on thermal assets and there is concern that many coal and gas assets will become stranded. According to Srivastava, under these circumstances, where the country is shifting to cleaner energy, gas-based power becomes very important. “Gas is the solution and not the problem and policymakers need to understand this. Gas-based power is a beautiful bridge between fossil fuel and environmentally friendly renewables,” he said.
Srivastava believes that due to indigenous gas resources, the economics are there to successfully shift India from coal to gas.
What are your thoughts concerning the role of gas in India’s energy mix? Is India ready to take the leap away from coal, will gas be the much needed baseload to support that move and will the policy framework change sufficiently to promote investment in the growth of these assets?