This document summarizes a research paper that analyzes trends in renewable energy consumption in India from 1980 to 2011. It applies linear regression to historical consumption data to derive an equation to predict future consumption. While the equation could predict consumption in 2005, there was a large deviation from the actual value, likely due to external economic factors. Predicting consumption for 2011 using the equation again showed an increased variation from the actual value.
1. Page !1
Application of Analytics to predict
Renewable Energy Consumption in
India.
!
Author: Arpit Patil (CIN - 304397267)
Professor: Marshal Vallelunga Subject:
CIS-527
2. Page !2
Abstract
This research paper seeks to observe the past, present and future
trends in Consumption of Renewable Energy in India. As we look at
the data, we see how the consumption increased very slowly from
1980, stayed almost unchanged until 1986 and experienced a sharp
increase after 1990, only to fall again sharply around 2007-08 and
again increase sharply.
A mathematical equation has been derived, after applying the concept
of Linear Regression to the data. This equation has been used to
compare the actual value of data for a particular year and the value of
data derived after plugging values into the variables of the equation.
There is a variation by a certain degree in these two values. The
paper seeks to throw some light on the factors that affected the
accuracy of the model and use these facts and assumptions to predict
the future trends.
Finally, having understood the data and made some significant
predictions, the paper seeks to prescribe or recommend the steps that
need to be taken to ensure that the consumption of Renewable
Energy increases in future.
3. Page !3
Introduction
Renewable Energy has today become a very important field of
research. With the unabashed use of fossil fuels across the world, the
supply is rapidly decreasing whereas demand for more power has
been increasing exponentially. If the world continues to exploit non-
renewable energy sources such as these without looking for
alternatives, these sources will be completely exhausted in no time.
According to a recent study by Ecotricity - Britain’s leading green
energy supplier, globally - every year we currently consume the
equivalent of 11 billion tonnes of oil in fossil fuels. Crude oil is
vanishing at the rate of 4 billion tonnes a year - If we carry on at this
rate without any increase for our growing population and our
aspirations, our known oil deposits will be gone by 2052.
While developed countries have already started moving to Renewable
Energy sources for satisfying their energy needs, Developing
countries are yet to make a significant move to Renewable Energy
due to the high cost of research involved and the complex technology
it demands.
Among the developing countries, two countries stand out when it
comes to energy consumption. India and China are one of the most
rapidly growing countries in the world and are in the race to become
the next Super Powers. For this to become a reality, both countries
need a continuous supply of energy and are in fact among the world’s
highest consumers of energy. As per the estimates from Enerdata -
The Global Energy Statistical Yearbook, China ranks the highest in
terms of total energy consumption all over the world, whereas India is
placed third after USA.
4. Page !4
China and India, both are under tremendous pressure from the
western countries to slow down the enormous consumption of energy
in the name of saving the environment and help reduce carbon
footprint. Various treaties such as the Kyoto Protocol have significantly
enforced the decrease in consumption of Non-Renewable sources of
energy. While the idea of a pollution free environment is great, it
leaves the developing countries at a disadvantage as they cannot
afford to slow down their growth. In light of this fact, both China and
India have made significant investments in the field of Renewable
Energy and have deployed many clean technologies to meet the
energy needs. In fact, India ranks 6th worldwide in terms of
consumption of renewable energy.
This paper seeks to analyze the consumption of renewable energy in
India from the early 80s until 2011. It throws light on the trend that
follows and tries to predict what will happen in the coming years and
explain the current trend in detail. The concluding part reflects some
measures that should be taken to ensure the consumption of
renewable energy increases.
This paper consists of three main parts:
1- Descriptive Analysis: Seeks to apply mathematical
models to discover trends and answer What
Happened and Why.
2- Predictive Analysis: Seeks to analyze the results of
Descriptive analysis to predict future trends by
exploiting historical data and identifying future risks
and opportunities.
3- Prescriptive Analysis: Advanced analysis done at
the second stage, i.e: Predictive Analysis, is turned
into insight and decisions are made to obtain
optimal results.
5. Page !5
Descriptive Analysis
From the data set, we see that the from year 1980 unto 1987, the
consumption of renewable energy was more or less stable. From
1990, there is a steady increase in consumption which follows a linear
curve again until 1993.
The curve follows a similar trend until year 2002, but rises sharply
from 2003 onwards. The curve shows a sharp rise until 2007 and a
steady fall in 2008 through 2010, after which it again rises sharply.
To better understand the this trend, we have the data in a tabulated
format:
8. Page !7
We have the exact values for energy consumption for each year.
However, if we were to analyze this trend and find out the reason
behind it, we will have to apply an appropriate mathematical model
and derive an equation.
Here, we take a set of data from the year 1980 through 2000,
illustrated in Table - 2, and apply the mathematical model of Linear
Regression to it:
Table - 2
Y
e
B
il
2
0
7
6
1
9
8
2
1
9
8
3
1
9
7
4
1
9
6
9
1
9
7
2
1
9
8
2
1
9
6
9
1
9
6
9
1
9
7
2
1
9
7
0
1
9
6
1
1
9
5
7
1
9
4
7
1
9
5
3
1
9
5
0
1
9
5
3
1
9
4
9
1
9
4
8
1
9
4
9
1
9
4
6
9. Page !8
Here is how Linear Regression works:
The goal of Regression Analysis is to model the expected value of a
dependent variable ‘Y’ in terms of the value of an independent
variable ‘X’.
In simple linear regression, the model:
Y = a0 + a1X + e,
is used, where ‘e’ is an unobserved random error. In this model, for
each unit increase in the value of ‘X’ , the conditional expectation of ‘Y’
increases by ‘a1’ units.
The basic idea is to find a straight line passing trough a set of ’n’
points in such a way, that the vertical distances between the points of
the data set are as small as possible. It is suggested that the line must
pass through a minimum of 3 points on the graph to get near accurate
results.
When we apply this model of Regression Analysis to our new data set,
i.e: Table - 2, we get a graph which looks something like this:
10. Page !9Page 9
Bilion KW
90
y = 1.9164x - 3749.7
67.5
45
22.5
0
1970 1978 1985 1993 2000
Fig - 1
Here, the independent variable ‘X’ is the year value, from 1970
through 2000 and the dependent variable ‘Y’ is the consumption in
Billion KW.
Notice here, the best fit straight line passes through 6 points. Hence,
we can expect fairly accurate results. Also, the line is drawn such, that
the vertical distance between the points and the line is as small as
possible.
We get the following equation as a result of applying the Linear
Regression model:
y = 1.9146x - 3749.7
11. Page !10
Descriptive Analysis seeks to answer 2 basic questions:
1 - What happened.
2 - Why it happened.
The 1st question can be easily answered by looking at the data. We
can see that the consumption of Renewable Energy in India showed a
stable trend for the years with a gradual decline in some years and a
very sharp rise towards the end of 2009-10.
Now, to see why this happened, we will have to take into account a
number of factors and events that have directly or indirectly influenced
these trends.
Let us look at these in a chronological order. 1980s was a time when
India had just about started to open up its market and step into the
Globalization bandwagon. It was only a decade after the 1971 war
with Pakistan and the birth of Bangladesh towards the end of the
months long war. With this success under it’s belt, India had re-
established peace in the region and could concentrate on it’s own
economic development without any disturbances.
During the same decade, 1974 to be precise, India had successfully
completed it’s 1st Nuclear Weapons tests. But it had come under very
serious sanctions from the west and the United Nations. As a result of
these sanctions, the petroleum and power industries in India faced a
tremendous pressure to meet the ever-growing energy demands of
the nation. Eventually, India started utilizing the knowledge gained
through these nuclear tests to produce power to meet it’s energy
demands.
12. Page !11
The very 1st Nuclear Power reactor was set up in 1969 at Tarapur,
Mumbai. Significant signs of a widespread consumption of this
renewable and clean source of energy started to show towards the
end of the 70s.
As can be seen in the graph, the consumption of renewables was
pretty stable until 1990, with only a slight dip in 1987. In the 90s
decade, there was a gradual increase in consumption of renewables.
This was a time when India had slowly started making a mark at the
global stage and most of the IT and Services jobs were beginning to
get outsourced to major cities in the country. With this, big
multinationals started investing heavily in India and it’s economy
started to boom. As the GDP grew, the government started investing
more into research. As a result, more nuclear plants were being set up
to generate energy and other renewable sources like water, wind,
tides and solar power etc were just about beginning to be tapped.
As the economy became more global, it started getting affected by the
world economy. During the 90s decade, the economy was going
through a shaky patch. As a result of this, spending on research
projects was slowed down as a precautionary measure. This is the
reason why the curve from 1990 through 2000 is somewhat uneven.
After the year 2000, we see a very sharp rise in the consumption of
renewables. This was the time when India’s presence was being truly
felt world over, with almost 70% of skilled jobs in IT and Services
being outsourced to major IT hubs in India from the US. Foreign Direct
Investment increased manifold and India was being recognized as an
Information Technology Superpower. With the Rupee strengthening
against the Dollar, Indian economy became one of the top 5 fastest
growing economies in the world.
13. Page !12
On the other hand, crude oil prices around the world were becoming
very unstable. There was prevailing fluctuation on a regular basis. The
effect of this was seen in India too, with Petroleum prices going up
one day and falling the other. Eventually, Government started to shift
to the use of Compressed Natural Gas in public transportation
vehicles. There were also very significant investment in Hydroelectric
Power generation and Solar Power generation.
Soon, there were many Hydroelectric Power Plants set up and they
started producing a significant amount of power help bridge the gap
between demand and supply. Solar Power systems were implemented
in many Tier-2 and Tier-3 cities on pilot basis and later were
implemented on a full scale.
The slight slump that we can see from 2007 through 2009, is because
of the great recession of 2008. The US economy was going through
one of it’s worst phases. Many of it’s very reputed financial
organizations declared bankrupt and shut shop. This had a ripple
effect on all major economies of the world and India too had to bear
the brunt of this. There was a severe strain on the economy and
serious precautionary measures had to be taken. This is reflected by
the slight decline in the consumption of renewables during that period.
The cost of maintaining the Renewable Energy production plants and
keeping them up-to-date is very high. Hence, every time the economy
took a hit, the investment and funding for these was slowed down.
This trend is clearly reflected in the graph, where we can see the
curve going down whenever there was a strain on the economy.
14. Page !13
Predictive Analysis
Now that we know what happened and the reasons behind it, we can
use this analysis to predict what may happen in the future, taking into
consideration the risks, threats and opportunities that would be
encountered in the long run.
For this analysis, we make use of the equation that we derived as a
result of applying Linear Regression and conducting descriptive
analysis on the data.
The equation we have is:
y = 1.9146x - 3749.7
Now, we have the data as in Table - 2, from 1980 till 2000. The above
equation has been derived from this data.
We can use this equation to predict the energy consumption in any
year after 2000.
Let’s say we want to predict the consumption of energy in the year
2005.
Here, we have ‘x’ as the year value, i.e: 2005. Let us replace this in
the equation and find out what the result is:
y = 1.9146 (2005) - 3749.7
=> y = 3838.773 - 3749.7
=> y = 89.073
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Let us compare this value of ‘y’ that we just got, with the actual value
for that year:
The Actual value is: 109.26. So we see that there is a large deviation
in the 2 values.
This should not come as a surprise at all, since the data we are
looking at is anything but linear. It forms a sinusoidal wave with highs
and lows.
Now let us try to reflect on the factors that led to this deviation in the 2
values. Here, we will have to take into account the risks involved and
what may have happened to reflect such a huge variation in the data.
As we have discussed earlier, the health of the economy directly
affects the the consumption of renewables. As the economy was not
very stable, consumption patterns also varied in a similar manner with
the economy.
It is important to note here, that none of the mathematical models
guarantee a 100% accuracy. This is because there are several
external factors that influence the data.
Now, considering the degree of variation we have seen here, we
should be able to predict what will happen in the near future.
Let us predict the value of ‘y’ for the year 2011 and see how by what
degree the actual value and the one we have got from the equation
varies.
16. Page !15
Substituting the value ‘2011’ in ‘x’ for the above equation, we have:
y = 1.9146 (2011) - 3749.7
=> y = 3850.2606 - 3749.7
=> y = 100.5606
Comparing this value with the actual value: 162, we see that the
degree of variation has increased.
Let us take a look at the current trends in energy generation and
energy capacities:
Total Renewable Energy Installed Capacity (May 2014)[3]
Table - 3
S
o
T
o
W
i
2
1
S
o
2
,
S
m
3
,
B
i
1
,
B
a
g
2
,
W
a
1
0
T
o
3
1
17. Page !16
!
Fig - 2
The above diagrams show the most recent data for energy capacity in
India. We see that Wind Power is the largest source of renewable
energy in India at present, followed by Hydro Power and Solar Power.
If India made the massive switch from coal, oil, natural gas and
nuclear power plants to renewable energy, it is possible that 70
percent of India’s electricity and 35 percent of its total energy could be
powered by renewable resources by 2030. I personally think there are
no technological or economic barriers to supplying almost 100 percent
of India’s energy demand through the use of clean renewable energy
from solar, wind, hydro and biogas by 2050.
18. Page !17
Challenges faced by Renewable Energy Industry in India:
The single, most significant problem faced by this industry is funding.
Renewable energy production is a very broad field and requires
extensive R&D and use of sophisticated technologies and materials.
This requires a very large scale investment and the government is
often reluctant to invest in this sector.
The other problem is that the energy demand has been shooting
through the sky. In order to meet the ever growing demand, traditional
method of using fossil fuels etc to generate energy are given more
attention as the technology for harnessing these is already established
and running. Hence, the renewable sector is often neglected.
Risks that may be encountered by the sector in the years to
come:
As we now know, the Renewable Energy sector is largely dependent
on the economy. If the economy is stable, the sector will also remain
stable. However, the economy remains largely unpredictable and
there is always a risk that it may slow down. Unless the economy
becomes satisfyingly stable, there can never be a satisfying answer to
how the Renewable Energy sector will fare in the coming years. At
least, looking at the current trends, this seems to be an obvious
observation.
19. Page !18
A major issue in renewable energy projects is their costliness. The
projects are often capital-intensive and highly leveraged, with unto
70-80% financed through debt. As companies seek to scale up
investments, overcoming financial risks is one of the biggest
challenges.
Beyond financial risk, a significant concern for plant investors, owners
and operators is political and regulatory risk (62%) while weather-
related volume risk comes in third for wind power producers (66%).
These risks increase further as projects grow in scale and complexity.
Now, assuming that these challenges remain unchanged and the risks
are not minimized, we can predict that in the near future, the same
trend will follow.
Let us find out what will be the value of consumption in the year 2020,
using the same equation and assuming that the same trend continues:
y = 1.9146 (2020) - 3749.7
=> y = 3867.492 - 3749.7
=> y = 117.792
So, according to our equation, the consumption of renewable energy
should be 117.792 Billion KW. However, the actual value may vary by
a very large margin.
This is how Predictive Analytics works. It uses the results of
Descriptive Analysis and answers the question: ‘what will happen’ by
taking into consideration the prevalent risks and challenges at present.
20. Page !19
Prescriptive Analysis
Once we have made predictions, we can derive insights from it and
use them to make informed decisions. This is what Prescriptive
Analysis is used for. In this stage, the predictions arrived at after
predictive analysis are given a serious thought and a decision is
arrived at. It is decided as to what measures need to be taken to get a
better result.
From our predictive analysis, we see that if the same trend follows and
the challenges and risks are not eliminated or minimized, the growth
of the Renewable Energy sector will remain slow and largely
dependent on the economy. There needs to be a plan in place to
make renewable power generation independent of the economy and
find easier and cheaper ways to generate power from the renewable
sources.
Here are some ways in which this can be achieved:
Reducing Costs
The challenge before us in the renewable energy sector generally, and in
India particularly, is to reduce the per-unit cost of renewable energy.
Hence, there is a continuous need to innovate to increase efficiencies and
bring down costs.
Innovations can be brought about in various ways – it is possible to
harness lower wind speeds; the energy of tides and waves can be
channeled to produce electricity; alternate transport fuels can make our
journeys less carbon intensive; hydrogen can be an ideal energy storage
and carrier; and it is possible to have a larger grid with lower losses of
electricity.
21. Page !20
Innovations need not always be technology-based. Insightful policy
interventions can also significantly increase the use of renewable energy.
For instance, in India we need to work with the regulators to lay down the
framework for tradable renewable energy certificates.
While this will enable us to achieve a larger share of renewable energy in
our electricity mix, the federal regulator’s recent announcement of
normative guidelines for provincial regulators to fix tariffs for renewable
energy will provide a mechanism for better returns for renewable energy
developers.
We should be hopeful that all these policy interventions will further boost
investments in the sector. We must also work towards closer engagement
with the banks and lending agencies to help developers gain access to
easy and cheaper sources of finance.
Let us look at some of the measures that can be taken to harness
Renewable Energy:
1 Aggressively expand large-scale deployment of both centralized and
distributed renewable energy including solar, wind, hydro, biomass, and
geothermal to ease the strain on the present transmission and distribution
system – and reach more off-grid populations. Facilitate growth in large-
scale deployment by installing 100 million solar roofs and large utility-scale
solar generation, through both centralized and distributed energy within the
next 20 years.
2 Enact a National Renewable Energy Standard/Policy of 20 percent by
2020 – to create demand, new industries and innovation, and a new wave
of green jobs.
22. Page !21
3 Develop favorable government policies to ease the project permitting
process, and to provide startup capital to promote the exponential growth
of renewable energy. Create and fund a national smart infrastructure bank
for renewable energy.
4 Accelerate local demand for renewable energy by providing preferential
Feed-in-Tariffs (FIT) and other incentives such as accelerated depreciation;
tax holidays; renewable energy funds; initiatives for international
partnerships/collaboration incentives for new technologies; human
resources development; zero import duty on capital equipment and raw
materials; excise duty exemption; and low interest rate loans.
5 Establish R&D facilities within academia, research institutions, industry,
government and civil society to guide technology development.
6 Accelerate the development and implementation of solar and wind farms;
utility-scale solar and wind generation nationwide.
7 Initiate a move to electrify automotive transportation or develop electric
vehicles and/or plug-in hybrids – such as the Nissan Leaf or Chevy Volt,
etc. Develop and implement time-of-day pricing to encourage charging of
electric vehicles at night. Adopt nationwide charging of electric cars from
solar panels on roofs, and solar-powered electric vehicle charging stations
around the country. Thousands of these solar-powered recharging stations
could spread across India just like the present public call offices (PCO),
giving birth to the “Green Revolution.” These recharging connections could
be deployed in highly-concentrated areas, including shopping malls,
motels, restaurants, and public places where cars are typically parked for
long periods.
23. Page !22
8 Aggressively invest in a smart, two-way grid (and micro-grid). Invest in
smart meters, as well as reliable networks that can accommodate the two-
way flow of electrons. Such networks need to be resilient enough to avoid
blackouts and accommodate the advanced power generation technologies
of the future.
9 Develop large-scale solar manufacturing in India (transforming India into a
global solar manufacturing hub).
10 Work towards a Hydrogen Economy development plan. Hydrogen can be
fed into fuel cells for generating heat and electricity – as well as for
powering fuel cell vehicles. Produce hydrogen using renewable energy
with solar and wind power. If done successfully, hydrogen and electricity
will eventually become society’s primary energy carriers of the twenty-first
century.
India can ramp up its efforts to develop and implement large utility-
scale solar and wind energy farms to meet the country’s economic
development goals, while creating energy independence and realizing
potentially enormous environmental benefits. Both issues have a
direct influence on national security and the health of the Indian
economy.
These are some of the very important measures that can be taken to
bring about a positive change in the current trends and
make renewable energy an independent sector.
24. Page !23
Conclusion
Today’s technology provides us with a real opportunity to transform
the promise of boundless and clean energy into reality. From rooftop
solar power in urban agglomerations, to decentralized and off-grid
solutions in remote rural communities – the opportunities in renewable
power are immense.
I believe that governments, in their facilitative role, have to create
enabling ecosystems, which will, in turn, facilitate the healthy
unleashing of the entrepreneurial spirit of the private sector and lead
to the rapid development and deployment of renewable energy.
A renewable, energy-powered future is already here, not decades
away. Newly built solar plants are already considerably cheaper than
new nuclear plants per kilowatt hour of electricity produced, and solar
energy will compete head on with conventional energy generation. In
places such as California and Italy it has already reached so-called
“grid parity.”
India needs a radical transformation of its energy system to the use of
renewable energy, especially solar and wind, to end the “India’s
addiction to oil,” lift its massive population out of poverty and combat
climate change. India can’t afford to delay renewable energy
deployment to meet its future energy needs.
So, we have seen how analytics can be applied to some very critical
problems and hope to find an appropriate solution.
25. Page !24
Citations
Websites:
CSULA/Library: Articles and Databases/Data Planet: Renewable
energy consumption in India.
ecotricity.co.uk: Supply of Fossil Fuels.
yearbook.enerdata.net: Share of renewables in primary consumption.
en.wikipedia.org: Linear Regression, Total Renewable Energy by
Installed capacity.
theactuary.com: Risks in renewable energy industry.
triplepundit.com: Challenges and Opportunities for renewable energy,
steps taken to improve the renewable energy sector in India.
eia.gov: Overview of renewable energy consumption in India.
