Modeling as a tool for the IR - TERI

1. Modeling as a tool for the Indian Railways -TERI April 8-9, 2005

2. About TERI

7. The development-energy-sustainability nexus

8. Energy-economy linkage • Drivers of energy demand • Population (total, rural/urban distribution) • Overall/ sectoral GDP • Per capita energy consumption • India: ~400 kgoe/capita; US: >8000 kgoe/capita • Energy intensity: final energy consumption per unit of GDP

9. kgoe Energy intensity curve

10. TRANSPORT SECTOR -OVERVIEW

11. Trends in energy use • Industry & transport sector energy requirements – main concern areas • Impact on petroleum imports & power requirements

12. Passenger and freight movement projections (BAU)

13. Modal Split in the Transport Sector

14. Concerns in the sector • Crude import dependence would increase to 94% by 2030 - IEA projections • Transport sector 2nd largest consumer of commercial energy • Largest consuming sector of oil products • Limited scope to move to alternative fuels • Inefficient energy trajectory for the transport sector • Increasing GHG & local pollutants

15. Towards a sustainable transport sector • Share of Railways should be increased as far as possible • Share of public transport to be increased • Efficiency of all transportation options should increase • Emission loading must reduce

16. Transport sector issues • National Transport Policy Committee Recommendation • 72% freight & 60% passenger traffic movement recommended by rail • Consumers preference for door-to-door movement • Railways – larger social welfare dimension • Cross-subsidization • Need for investments on loss making routes • Scope for freight modifications/ routings need to be judiciously analysed & modified

17. Way forward for IR • Increase rail based movement as far as possible • Increase turnaround of wagons / improve utilization of dedicated wagons • Examine scope for freight rationalization • Enhance interconnectivity & multi-modalism • Improving rail technology and capacity augmentation

18. TERI’S activities in the modeling & transport areas

19. TERI’s experience in modeling • Models • Demand forecasting (EViews) • Accounting Frameworks (LEAP) • Optimisation softwares (MARKAL, GAMS LP models) • Analytical tools/data analysis

20. Some recent projects • Modeling projects • CIL Study of Coal in Indian Energy Scene • Asia Least Cost Greenhouse Gas Abatement Study (ALGAS) • National Energy Map – Vision 2020 (using MARKAL) • Transport sector studies • Study on the Potential for Sustainable Tourism Development in the Darjeeling Hill Area • Transportation Economics and Environmental Issues that influence product strategy (TELCO) • Urban transport, Energy and Environment – A case of Delhi • An Indo-British Partnership: Sustainable Transport in Large Indian Cities

21. COLPLAN – A Coal Transportationmodel

22. Objectives of COLPLAN • Examine the use of available coal (indigenous and imported) at the existing power plants under the BAU case • Assess the competitiveness of coal from various sources (imported vs domestic coal) at each of the locations • Analyze the existing linkages to see if these are most optimal (least cost for the energy system) and examine possibilities of alternative linkages by developing alternative scenarios

23. Structure of COLPLAN model

24. Features of the Coal Transportation model • GAMS (Generalized Algebraic Modeling Systems) based static LP model • Optimizes system cost for coal utilization by the Indian power sector • Module added to study ash utilization by Indian cement sector

25. Scenarios • BAU • Free linkage • Free run • Restricted Linkages & grade slippage

27. Non-optimality of linkages • The model indicated significant reduction in the freight component through alternative linkages • CIL to re-examine the viability of the current linkages • Capacity release for IR -> gains through moving other commodities

28. Results (cont.) • CIL to direct more investment to the Western sector coalfields, Singrauli and Sohagpur coalfields • Overall benefits to the economy with improvement in quality of supplies • Gains to CIL with move to superior grades of coal • Consumers would benefit by savings in coal movement • Quality improvements essential for CIL to guard against the loss of its markets to imported coal

29. Some results from the ash module

30. Objective • Hypothesis : Fly ash can be used effectively to: • reduce environmental damage • provide economic benefits to its users especiallycement producers • Examine whether flyash should be charged, subsidized or continue being provided free of cost • At what delivered cost of ash would it still be economical to produce PPC (based only on cost of coal displaced)

31. Data & Assumptions • All data & assumptions for 2001/02 • Demand centres: Individual power plants & 9 cement plant clusters • Linkages as per SLC (Short term) • Actual production PPC : OPC :: 65% : 35% • Average delivered cost of ash: Rs 600/ton • Coal imports max 20 MT

32. Economic benefits with higher PPC production: model results • Shifts towards PPC production lead to reduction in overall system costs • With no constraints on OPC/PPC production, model shifts all production to PPC • With new cement capacity to be created (30 MT), PPC remains the only choice for all the new capacity • Additionally environmental benefits due to decrease in CO2 emissions 

33. Monetary benefits in system costs

34. Scope for negotiation of ash prices With judicious pricing both power & cement plants can be gainers

35. Preference towards superior grades of coal • Reduction in coal requirement results in adjustments of coal off-take • B-D grades increase • E-G grades decrease • A grade always utilized  domestic coal industry needs to review its coal production & pricing policies directed towards enhancing supplies of better quality coal as this would lead to overall system benefits

36. PPC production – a “win-win-win” option • If priced right, all parties could benefit • Power plants – cost saving on ash handling & disposal • Cement plants – save on account of cost of coal displaced and limestone saved • Environment – reducing air pollution due to particulates and one tonne of clinker saved is one tonne of CO2 saved

37. Thought……Is it worthwhile for the Railways to consider using the dedicated coal wagons for moving back ash from the power plants to cement plants on the way?

38. Thought…….Can freight rates be modified to make Railways more competitive for some core commodities along major O-Ds?

39. Scope for Collaborative Projects

40. Possible areas for co-operation • Demand forecasting – to plan for infrastructure requirements in the future • Freight rationalization studies - to capture markets which Railways may be losing • Efficiency analysis/ Energy audits

41. Thank you!