Expert Speak Urban Futures
Published on Jan 21, 2019
Energy use in Indian cities – A case for district energy systems

Source Image: UNEP

A recent report from Oxford Economics stated that 17 among the top 20 fastest growing cities in the world are based in India. Surat tops the list of top 10 cities estimated to grow at the fastest pace in the world between 2019 and 2035, followed by Agra and Bengaluru. Other cities in the list are Hyderabad, Nagpur, Tirupur, Rajkot, Tiruchirapalli, Chennai and Vijayawada. As per the 2011 census, 31 percent of India is urbanised and this figure is expected to touch 60 percent by 2050. India’s urban population is expected to grow from 410 million in 2014 to 814 million by 2050. These people will be setting up their lives starting from a low base of development demanding modern fuels for lighting and cooking, appliances, heating and cooling, vehicles, etc. for an improved quality of life. There will be multiple commercial and residential hubs cropping up in all of these expanding cities of India. As per India Energy Security Scenarios 2047, for a ‘Determined Effort Scenario’, India’s energy demand in 2047 will be close to 1,500 million tonne of oil equivalent.

Cities and energy use

An uninterrupted energy supply will be a key component in increasing the GDP of these Indian cities. Cities account for more than 70 percent of global energy use and for 40 to 50 percent of greenhouse gas emissions worldwide. Handling this urban evolution is a challenge and countries need to address the energy and climate implications it will entail. India has to yet define the development pathways for these complex energy service demands and, hence, this sector provides the opportunity to better plan for the future. The network of energy provision for residential and commercial buildings, mobility, public built spaces and other urban arrangements are going to be long lasting investments of the Indian economy. Currently, space heating and cooling and hot water supply itself are estimated to account for roughly half of global energy consumption in buildings.

A lock-in period will be set based on the type of infrastructure and technology that gets established when investments are made to provide energy services. Such lock-in effects cannot be easily reversed since the cost of altering to new infrastructure can be excessively high.

Hence, this opportunity to provide resilient energy services with optimal energy usage, should not be missed. How energy systems that are built in Indian cities today will decide how the cities survive for the decades to come and hold a direct bearing on resources like water, air, climate, etc.

District energy systems

One of the ways to manage energy demand is implementation of modern district energy systems (DES) in cities. DES consists of diverse technologies like combined heat and power (CHP), thermal storage, heat pumps and decentralised energy that develop collaborations between production and supply of electricity; heating, ventilation and air conditioning (HVAC); domestic hot water, etc. DES can then be incorporated with the energy usage in city infrastructure like solid waste management, public transport, sanitation and sewage treatment, power supply, etc.

Such cohesive, but decentralised, DES are already helping cities across the world achieve significant benefits like affordable energy provision; less reliance on energy imports and fossil fuels; local economic development and green economy; air quality improvements; carbon emission reductions; and an higher share of renewables in the energy mix. DES systems have the capacity to reduce CO2 emissions by as much as 58 percent by 2050 and can help keep the global temperature rise to within 2-3 degrees Celsius. DES can reduce primary energy consumption for heating and cooling of urban buildings by 50 percent.

Many cities worldwide have adopted DES as a proven energy solution. District heating meets 12 percent of heat demand in Europe and 30 percent in China. The largest district cooling capacity is in the United States, at 16 gigawatts-thermal (GW), followed by the United Arab Emirates (10 GW) and Japan (4 GW). In the Gulf countries, district cooling systems (DCS) could provide 30 percent of forecasted cooling needs by 2030, avoiding 20 GW of new power capacity and 200,000 barrels of oil equivalent per day.

DES for India

Habitat III in 2016 adopted a New Urban Agenda which recognised 'modern district energy' networks as a sustainable solution to integrating renewables and efficiency in cities. UN Environment’s ‘District Energy Initiative’ has already identified $ 600 million of energy efficiency projects in five cities across India. Also, there have been six rapid assessments of district cooling in the Indian cities of Bhopal, Bhubaneshwar, Coimbatore, Pune, Rajkot and Thane to help understand the potential and challenges for implementation.

The Global Environment Facility (GEF) has partnered with Energy Efficiency Services Limited (EESL) to finance projects under ‘Creating and Sustaining Markets for Energy Efficiency’ worth $ 454 million (which consists a $ 20 million grant from GEF and $ 200 million loan from Asian Development Bank). To sustain the funding mechanism of such projects, EESL has innovatively proposed an Energy Efficiency Revolving Fund (EERF). EERF will make investments in prototype technologies which, if successful, will be scaled up across the country. The savings accrued from these investments will help the capital to revolve for sustained funding in energy efficiency (EE) projects.

A robust business model for such projects will take time to evolve, since most of them will directly involve various public sector utilities. There is a need to find synergies between national, state and urban local bodies for providing the right policy framework, which will enable a technically and financially sound business model for DES.

Mostly across the globe, the public sector owns and runs DES projects. Although, innovative public-private business models can be explored for higher private investments. In a country like India, the benefit of reduced peak and electricity consumption due to DCS will ask for the participation of public electricity utilities in the business model.

India’s first DCS is installed at Gujrat International Finance Tec (GIFT) City. The air conditioning load requirement for total built up area of 62 million square feet was estimated at 270,000 tonnes of refrigeration (TR) requiring an electrical power demand of 240 MW, considering a separate plant for each building. A feasibility study showed that with the installation of a DCS, this load could be reduced to 180,000 TR requiring a power demand of only 135 MW. Also, the cost effectiveness was high due to low operation and maintenance expenses, optimised operations, better staff economies, etc.

Up-scaling DES in India

Indian cities need to undertake a holistic assessment of their current energy use and future energy needs in order to understand how to develop their socio-economic and environmental goals. This assessment can help to identify potential energy technology pathways to achieve those objectives. For example, assessing a technology’s impact on air quality and carbon emissions, electricity grid dynamics, dependence on fossil fuels and integration of renewables, affordability of energy supply etc. DES, as it has been proven around the world, will offer the most cost-effective solutions with highest impacts. Cities can easily develop an energy strategy with a well-defined role for DES. DES can then have their own goals and targets associated with the benefits they provide.

These assessments will identify the most economically-viable areas in the city for installing a DES – for example, areas with high heating and cooling demand in commercial districts. Such areas can get a demonstration project sanctioned through national or international funding.

This experience of a successful demonstration project can then be leveraged for further financing of new projects and will build the confidence of private investors as well. Also, such prototypes will guide in developing basic institutional frameworks and capacity-building in public sector entities from the national to the city level. DES are new to Indian cities and will need massive training of the existing human resource to run these systems.

Creation of a policy framework around DES will be a challenge in the complex dynamics between national, State and city governments. This collaboration will be dependent on how these entities manage their finances and regulate the energy landscape of the country. There are many best practices across the globe where cites have been successful in demonstrating the use of DES. It is up to the Indian cities to learn from these examples and formulate their own solutions for optimum energy use.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.


Ameya Pimpalkhare

Ameya Pimpalkhare

Ameya Pimpalkhare is an Associate Fellow at ORFs Mumbai Centre. He works on the themes of energy and transportation. His key research interests include: sustainable ...

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