MARKAL PRESENTATION P.R. Shukla

MARKet ALlocation Model  Multi-period linear programming formulation  Decision variables like,  Investment in technology capacities & their utilization  Energy consumption  Emissions  Electricity generation in different time periods

MARKAL Overall Functioning Techno-economic Database Economic Scenario Emission Scenario MARKAL Consumption and production of energy Marginal ‘values’ of energy forms and emissions Introduction and abandonment of technologies

Bottom up View of the Energy-Economy-Environment System

Typical Reference Energy System

Model Formulation Objective Function To minimize the discounted sum, over 40 yrs, of investment, operating and maintenance cost of all technologies plus the cost of energy imports and carbon tax

Subject to 1.Demand Constraint (one for each end use demand) C ig (t) >= demand k (t) i  DMDG  GRD V k  DM, t  T Where DMD…end-use demand technology GRD…set of grades technologies/energy sources DM….class of all end use demands T…..set of time periods C ig (t)…capacity of technology i of grade G in period t Model Formulation (cntd.)

1.Capacity transfer constraints (to account for technology vintage carry over time periods) 2.Energy carrier balance constraints (supply >= demand of fuel) 3.Cumulative reserve constraints (fuel extraction <= total reserves) Model Formulation (cntd.)

4.Electricity balance constraints (day and night time modelling for electricity system) 5.Process technology capacity utilization constraints (process activity <= available capacity) 6.Electricity production capacity constraints (electricity generation <= available capacity) Model Formulation (cntd.)

7.Electricity peaking constraints (extra capacity to meet peak demand) 8.Total emissions constraints (Carbon, SO 2 etc) Model Formulation (cntd.)

Software Configuration of the Indian MARKAL

Modelling Non-linearities Grades for:  Technologies  Energy Resources

TECHNOLOGY DEPLOYMENT A Probabilistic Approach Pacific Northwest National Laboratory Battelle Memorial Institute ` Median Cost Technology 2 Market Price

TECHNOLOGY COMPETITION A Probabilistic Approach ` Median Cost Technology 1 Median Cost Technology 2 Median Cost Technology 3 Market Price

What are likely Future Energy Trends under Business-as-Usual (BAU) From  Energy Grows 3 times  Commercial Energy 4 times  Coal remains mainstay  High Oil/Gas Imports  Traditional Biomass Stagnates

From  Industry & Residential Grow 3.5 times  Commercial Grows 9 times  Agriculture Stagnates  Transport Grows 5 times Sectoral Energy consumption (EJ)

From  Industry share stagnates around 45%  Agriculture share declines from 28% to 10%  Commercial and Residential grow faster Sectoral Electricity consumption (TWh)

From  Coal share declines from 63% to 45%  Gas share increases from 8% to 23%  Hydro stagnates around 20% Electricity Generation Capacity (GW)

From  Coal share declines from 74% to 61%  Gas share increases from 7% to 19%  Hydro stagnates around 16% Electricity Generation (TWh)

Carbon Emissions (MT)

Sectoral Carbon Emissions (MT)

Carbon Emissions

SO 2 Emissions ('000 Tons)

SO2 Kuznets Curve

NO X Emissions (Million Tons)

GDP, Energy and Electricity

Marginal cost of electricity generation (Cents/kWh)

Mitigation Scenario Analysis

Marginal Cost of Carbon Mitigation ( ) 6 billion tons of mitigation below $25/ ton of carbon Carbon abatement (billion ton) Cost ($/Ton of Carbon)

Coal Demand Exajoules Gas Demand Exajoules Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%) Implications of Mitigation Targets Coal to Gas Switch

Electricity Price under Mitigation Scenarios Average LRMC cents per kWh Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%)  Electricity Price Rises with Mitigation  In 2035, price can more than double

Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%) Electricity Price under Mitigation Scenarios Peak cents per kWh Off-Peak cents per kWh

Renewable Electricity Capacity Giga Watt Share of Renewable Percentage Reference5 % Mitigation 15 % Mitigation25 % Mitigation Implications of Mitigation Targets Renewable Electricity

Reference 5 % Mitigation 15 % Mitigation 25 % Mitigation Implications of Mitigation Targets Wind and Small Hydro Power Capacity (GW) Capacity (GW) WindSmall Hydro

Reference5 % Mitigation 15 % Mitigation25 % Mitigation Implications of Mitigation Targets Solar PV and Biomass Power Capacity (GW) Capacity (GW) Solar PV Biomass

Consumption Trends (Million Tons) High GrowthMedium GrowthLow Growth Oil ProductsCoal

Commercial Energy Demand and Intensity Mtoe toe / million Rs. High Growth Medium Growth Low Growth Low efficiency Commercial Energy IntensityCommercial Energy

Exajoules High Growth 5.5% Medium Growth 5% Low Growth 4.5% Commercial Energy Demand  Economic Growth Drives Energy Demand  Gradual Efficiency Improvement  Limited Fuel Substitution

Coal and Oil Demand Coal Million Tons Oil Million Tons High Growth Medium Growth Low Growth

toe/thousand $ High GrowthMedium Growth Low GrowthLow efficiency Energy Intensity  Energy Intensity improvement rate 1.5%

Million Tons High GrowthMedium GrowthLow Growth Carbon Emissions From  Under BAU, Carbon Emissions rise 360%  Rise can be 470% for high growth case

tons of carbon/ thousand $ High GrowthMedium Growth Low GrowthLow efficiency Carbon Intensity  Carbon Intensity Improvement rate 1.8 %

Coal Demand Exajoule s Gas Demand Exajoules Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%) Implications of Mitigation Targets Coal to Gas Switch

How Carbon Mitigation affects Production Cost? Cost of Aluminum Production ALUMINUM Cost of Steel Production STEEL 1 BT (5%)3 BT (15%)5 BT (25%)