At India-EU Expert Seminar, our MD, Mr. Sidharth Jain shared his insights on the evolving role of gas for global low carbon energy security. 


Increasing the role of Gas in India requires exploring new business models and targeting niche opportunities for LNG. While most of the players in the market are focused on large scale gas volume growth, it is niche opportunities which can provide a platform for players to explore profits and growth. Three opportunities exist in the market:

  • Fueling LNG based ships passing through Indian waters towards Europe/China: IMO (International Maritime Organization) regulations require ships to reduce emissions of SOx and NOx to 1% in deep sea and 0.1% in Europe. Several shipping companies are switching to LNG to meet the fuel requirements as the cost of using LNG is lower than refined HFO (Heavy Fuel Oil) or installing scrubbers. However, lack of fueling facility requires that ship owners sub-optimally use investments in LNG infrastructure or shift to other more expensive options. A business case exists in working with large container ship owners who are trading between Europe and China to provide LNG bunkering and small-scale LNG facility. This seed investment in infrastructure for fuel supply can be further used to fuel ships within the local Indian waters. Considering high air pollution, this is a win-win for both the ship owners – who get lower cost and government – who get better infrastructure.
  • Small scale LNG for truck fueling: A tank full of LNG can provide a range of 400 km to automobiles. A global survey done on the pattern of commercial traffic in cities highlighted that 65% of the commercial traffic is within cities. A shift to LNG allows this traffic to run a cleaner fuel at cheaper cost. Currently, technology for running automobiles on LNG is not available in India and hence the market is constrained. However, this is likely to change as midstream infrastructure is a challenge and companies plan to invest in the technology to move LNG on trucks. This is likely to lead to the development of incentives. A vertically integrated model is worth exploring as the potential is huge. Along with EV policy, this can be a big change. Infrastructure and technology are needed for both and it will make sense for companies to put the case to the government on potential synergies of this opportunity.
  • Demand for grid balancing will have a role for gas plants as energy storage policies are slow to adapt and RE sizes are increasing: The size of RES projects is increasing to 250 MW on average and will go up as high as 1 GW for ensuring scale benefits. At this scale intermittency of power has huge impact on the system stability. The opportunity has to be explored in building ramping up power with large scale RES projects of 1 GW plus along with investments in using peaking plants in Grid. The grid balancing system in India is evolving and has reached the ability to provide frequency control services in real time, to accommodate deviations in planned demand and generation. However, these deviations are expected to increase because of an increase in infirm RE generation in the grid. This will create a demand for grid balancing, for both DISCOMs and generators.

The challenge of managing this intermittent volume of power will be regional, seasonal and time-of-day driven. Hence, the balancing mechanism implemented for its management would need to be designed to address all the above-mentioned challenges.

While the impact of RE generation fluctuation was limited to intra-state markets till date, the first set of inter-state wind and solar plant came online in 2018. This was the first time when RE impacted the grid nationally. Also, these plants were the first to be under the purview of “inter-state imbalance handling framework” launched in 2016 and were subject to penalties in case of deviations. Inter-state RE capacity is expected to increase multi-fold and reach 50 GW+ by FY 2022 as per the planned wind and solar federal auctions. Hence, DISCOMs, grid authorities and generators need to be prepared to manage multi-fold pressure on the grid and utilize power in coming years.

The system as of now has limited ability to ramp up (20-30 mins), which might not be sufficient for RE additions in the future. Since currently balancing is mostly done through coal and closed cycle gas plants, fast ramping with RE switching will present a challenge to the system and expose system deficiency. Coal and gas plants will not be able to respond to the ramping cycle of RE due to inherent system design. The challenge will become more pronounced with a large share of RE on the national grid and large size of RE projects which would be concentrated regionally in 2-3 states due to resource availability.

 With large scale integration of RE in the grid, the government has also planned management of RE at the source with hybrid and energy storage. Push has been given to solar-wind hybrid policy and tenders but that of energy storage has been low. Considering that the market regulations will take time, niche opportunities can be explored with large power plant producers to create a fully backed up gas plus large-scale RES project to help stabilize the system.