India, home to 18 per cent of the world’s population, uses only 6 per cent of the world’s primary energy. This, however, is rapidly changing and the energy landscape in India is evolving like never before. Energy, today, is considered crucial to achieve India’s development ambitions, to support an expanding economy, to bring electricity to rural areas, to fuel the demand for greater mobility and to develop the infrastructure needed to meet the demands of what is soon expected to be the world’s most populous country. India’s energy consumption has almost doubled since 2000 and the potential for further rapid growth is enormous, says a Deloitte report.

Given the huge opportunity for growth in the sector, an overall investment of close to $750 billion could potentially come in over the next decade. The paradigm shift in the Indian energy sector will increasingly influence and shape the global energy economy.

Here are the snapshots.

Power: One of the most diversified sectors; sources of power generation range from conventional sources to viable non-conventional sources

*Most of the states in India have transcended from power deficit to surplus power conditions

Renewable Energy: Sector at the forefront of growth in capacity addition

*India targets to add renewable energy capacity to 175 GW by 2022 and 275 GW by 2027

*India to reduce the emissions intensity of its GDP by 33 – 35 per cent by 2030 from the 2005 level

Megatrends shaping the energy landscape

Rapid urbanisation, evolving demographics and market dynamics are going to shape the energy market going forward, says the Deloitte report.

Urbanisation: There has been considerable growth in urbanisation over the last two decades and approximately 33 per cent of the population is currently urban. With economic growth and increase in employment opportunities across industrial corridors, the urbanisation is likely to increase in tandem. Power demand, vehicle penetration and various consumption side factors are closely linked to urbanisation.

Demographic: India is likely to account for more than half of the increase in Asia’s workforce in the coming decade, which consequently will have considerable impact on the already burgeoning middle class disposable income. With increase in income levels, consumerism is also likely to grow. As white goods and vehicle penetration levels go up, the energy demand will largely be shaped by this evolution of working class population.

Market dynamics: Over the past two decades, the energy market dynamics has evolved considerably. Oil supply in the recent past saw an unprecedented influx driving the prices sharply down. Gas has been plentiful in supply, though limited by application areas, and remained a low priced commodity. Changing demand patterns which are closely linked to prices, coupled with climate change and global geopolitics will dictate the market dynamics going forward.

Two steps forward, one step back

In 2017 global energy demand grew by 2.2 per cent, above its 10-year average of 1.7 per cent. This above-trend growth was driven by stronger economic growth in the developed world and a slight slowing in the pace of improvement in energy intensity, says the just released ‘BP Statistical Review of World Energy’.

Demand for oil grew by 1.8 per cent while growth in production was below average for the second consecutive year. Production from OPEC and the 10 other countries that agreed cuts decreased, while producing countries outside of that group, particularly the US driven by tight oil, saw increases. Consumption exceeded production for much of 2017 and as a result OECD inventories fell back to more normal levels. 2017 was a strong year for natural gas with consumption up 3 per cent and production up 4 per cent – the fastest growth rates since immediately following the global financial crisis.

The single biggest factor fueling global gas consumption was the surge in Chinese gas demand, where consumption increased by over 15 per cent, driven by government environmental policies encouraging coal-to-gas switching.

Renewables grew strongly in 2017, with wind and solar leading the way. Coal consumption was also up, growing for the first time since 2013.

The ‘BP Statistical Review on World Energy’ presents the following highlights.

Primary energy

*Primary energy consumption growth averaged 2.2 per cent in 2017, up from 1.2 per cent last year and the fastest since 2013. This compares with the 10-year average of 1.7 per cent per year.

*Bio fuel, natural gas accounted for the largest increment in energy consumption, followed by renewables and then oil.

*Energy consumption rose by 3.1 per cent in China. China was the largest growth market for energy for the 17th consecutive year.

*Carbon emissions from energy consumption increased by 1.6 per cent, after little or no growth for the three years from 2014 to 2016.

Oil

*The oil price (Dated Brent) averaged $54.19 per barrel, up from $43.73/barrel in 2016. This was the first annual increase since 2012.

*Refinery throughput rose by an above-average 1.6 million b/d, while refining capacity growth was only 0.6 million b/d, below average for the third consecutive year. As a result, refinery utilisation climbed to its highest level in nine years.

Natural gas

*Natural gas consumption rose by 96 billion cubic metres (bcm), or 3 per cent, the fastest since 2010.

*Consumption growth was driven by China (31 bcm), the Middle East (28 bcm) and Europe (26 bcm). Consumption in the US fell by 1.2 per cent, or 11 bcm.

*Gas trade expanded by 63 bcm, or 6.2 per cent, with growth in LNG outpacing growth in pipeline trade.

*The increase in gas exports was driven largely by Australian and US LNG (up by 17 and 13 bcm respectively), and Russian pipeline exports (15 bcm).

Coal

Coal consumption increased by 25 million tonnes of oil equivalent (mtoe), or 1 per cent, the first growth since 2013.

*Consumption growth was driven largely by India (18 mtoe), with China consumption also up slightly (4 Mtoe) following three successive annual declines during 2014-2016. OECD demand fell for the fourth year in a row (-4 mtoe).

Coal’s share in primary energy fell to 27.6 per cent, the lowest since 2004.

Renewables, hydro and nuclear

*Renewable power grew by 17 per cent, higher than the 10-year average and the largest increment on record (69 mtoe).

*Wind provided more than half of renewables growth, while solar contributed more than a third despite accounting for just 21 per cent of the total.

*Hydroelectric power rose by just 0.9 per cent, compared with the 10-year average of 2.9 per cent.

*Power generation rose by 2.8 per cent, close to the 10-year average. Practically all growth came from emerging economies (94 per cent). Generation in the OECD has remained relative flat since 2010.

*Renewables accounted for almost half of the growth in power generation (49 per cent), with most of the remainder provided for by coal (44 per cent).

*The share of renewables in global power generation increased from 7.4 per cent to 8.4 per cent.