Remodeling the Landscape of India’s Natural Gas Market through synergy between gas and electricity grids

Abstract

Natural gas demand in India has increased significantly in recent years as a result of development of transmission and distribution infrastructure, cost savings from using natural gas instead of alternative fuels, environmental benefits of natural gas as a fuel, and overall favourable economics of supplying gas at reasonable prices to end consumers. The power and fertilizer industries continue to be the two largest contributors to natural gas demand in India, accounting for more than 55 percent of total gas consumption. However, a proactive enabling environment is required to facilitate the rapid expansion of natural gas infrastructure. The provision of desirable governmental support and the appropriate pricing signals for investment in the industry enable to reform the present set of regulations to adopt to changing needs and making them more robust and addressing the distortions in the fiscal regime applicable for natural gas. In this paper, the existing infrastructure of Natural gas in India is being discussed. Also, brief overview of US markets and European markets in terms of Natural gas is being discussed to provide an overview of International markets. The regulatory angle of Indian gas sector is being discussed citing all the relevant existing rules and regulations. This paper aims to analyse how the common system operator for gas and power can be envisaged in the future by discussing points of similarities between Electricity and gas transmission system and by citing real time examples from International experience.