Well, natural gas can fill that void.
In the last decade, large reciprocating gas-engines have also made inroads into the gas-turbine market. These machines offer the comfort of enormous flexibility, with its ability to start and stop instantly and to ramp up and turn down rapidly. This nimble-footedness comes in useful to handle peak loads or to act as a foil for unpredictable wind energy. Such plants of sizes 25-300 MW can be set up in less than 18 months.
Gas is the cleanest of fossil fuels and its combustion at high efficiencies results in a much smaller carbon footprint than that of coal. Gas plants can be located very close to load centres, eliminating losses that arise from long-distance transmission. Gas flows almost invisibly through hidden pipelines, unlike coal that involves messy transportation and storage.
Gas-based power plants pose one serious challenge, however. They need….a constant supply of gas, which is what India doesn’t seem to have enough of. To make matters worse, there are competing applications that demand gas, such as fertilizer plants ( to replace costly naphtha), transportation ( to replace costly diesel or petrol) and domestic use ( to replace the very costly LPG). For statistics on gas supply vs demand in India, refer to this news report that appeared today.
There are, broadly speaking, three ways of meeting our requirement of natural gas.
- One, we can tap domestic sources- onshore and offshore. We met with success first with the Bombay High exploration in the ‘80s, and recently at K-G Basin. Being our own resource, we have the flexibility to decide the price of the gas.
- Two, we can build multiple, large terminals to import liquefied gas (LNG) and store them. The supply can be ensured through long-term contracts (with fixed or predictable pricing) or through short-term spot purchases (price subject to the vagaries of the global market). LNG transportation has seen several innovations and efficiency improvements, and large LNG tankers are being launched every day.
- Three, we can get gas from neighbouring (or close-by) countries through cross-country pipelines. India has seriously considered the possibilities of importing gas from Myanmar (through Bangladesh), Iran (through Pakistan, and alternatively through sub-marine pipelines) and Turkmenistan (through Afghanistan and Pakistan). While all these projects were viable and would have greatly benefited India, geo-political considerations came in the way and they remain non-starters.( Read this blog post and this column by Nitin Pai for an understanding of the sensitivities).
Domestic gas sources alone will not be able to meet our demand. Cross-country lines don’t seem likely.So, in the medium term, LNG remains our best bet. Blessed with a long coast-line, siting terminals shouldn’t be a problem. Pipelines from the LNG terminals can carry re-gasified fuel and link up with the trunk lines emanating from KG Basin and Bombay High, to form an extensive national grid.
While LNG price in Asia closely correlates with the price of crude oil, the American and European markets have witnessed a trend of gas price floating independently. With large new discoveries in the Americas, and new technologies enabling the unshackling of the locked-up shale gas, it is widely believed that global supplies will be plentiful and that the decade ahead will see a gradual cooling off of price.
Indian companies are looking to acquire gas assets abroad, and if this is coupled with efforts to own and manage a fleet of LNG tankers, we can reap rich dividends in the long run.
LNG terminals have a long gestation time of 3-4 years. Several, gas-based power plants can be built in the meantime so as to be ready to receive the gas from these terminals. So, proper planning and sound execution have to be taken for granted. Assuming we can get our act together, we can hope to add another 30000 MW of base-load plants that run on gas by the end of the XII Plan. About 15% of our electricity needs can be met by gas plants.
This pre-supposes, of course, that we will manage to abandon our limiting mindset which constantly compares the price of any alternative form of energy with that of coal-based power and rules out the former.
Gas-based power plants will also serve another purpose- to reduce peaking shortages that threaten to assume alarming proportions. We’ll examine that in the next post.