India Power Sector

Topics: Electricity generation, Electric power transmission, Electricity distribution Pages: 26 (9589 words) Published: January 6, 2013
INDIA – Power Sector: Emerging Developments & Critical issues 1. Introduction Large number of power projects (XI and XII five year plans) is under construction to overcome the power shortages and meet the growing energy requirements in the country. However, the sector has been encountering problems on account of inadequate / depleting conventional fuel resources, slippages in capacity addition, transmission / open access constraints and high Aggregate Technical & Commercial (AT & C) losses in the country. Since the formulation of Electricity Act 2003, Government of India (GoI) has been taking several initiatives and announced various regulations to strengthen the sector. Significant GoI / regulatory initiatives in recent times have been those pertaining to Mega / Ultra Mega Power Generation projects revised tariff regulations for existing central government projects, competitive bidding for all future power generation projects, tariff norms for renewable energy / introduction of Renewable Energy Certificates, new transmission pricing grid code, power market regulations, Re – structured Accelerated Power Development Reform Programme (APDRP2), National Electricity Fund, etc. 2. Projected demand, XII plan capacity additions and projected investment • According to 17th Electric Power Survey (2007), the energy requirement in the country is projected to grow at a CAGR of 7.5% during 12th plan period reaching from 9,68,658 Giga Watt hour (Gwh) in FY 2012 to 13,92,065 Gwh by FY2017, while peak load requirement is projected to grow from 1,57,324 MW in FY2012 to 2,23,660 MW in FY 2017 at a CAGR of 7.4%. The regionwise projection in energy and peak load requirement during the period FY2012 to FY2022 is shown in Annexure II. • Ministry of Power and Central Electricity Authority (CEA) have projected a total investment requirement of Rs. 11,35,142 crore for the power sector during the 12th Plan period, which also includes investment for generation capacity addition of about 1,00,000 MW. (Existing capacity is 1,64,508 MW) • According to Crisil report (June 2010), about 82,000 MW of generation capacity at an investment of Rs. 5,10,000 crore is likely to be added in the next five years i.e. during FY2011 to FY2015. The Central (with NTPC having the major share), State and Private sectors are estimated to add about 21,500 MW, 15,000 MW and 45,500 MW respectively during the next five years. Further, about 12,900 MW of captive generation capacity at an investment of Rs. 75,000 crore is expected to be implemented by several players. The investments in transmission and distribution segment are projected at Rs. 3,44,000 crore during the above period. • According to Crisil report (June 2010), out of the 82,000 MW capacity (scheduled for commissioning over the next five years), more than 90% of the projects have received environmental /forest clearances, acquired land, achieved financial closures and placed equipment orders. About 80% of the above projects have either signed PPAs or earmarked a portion of their total power for merchant sales. 3. Emerging Developments The emerging developments in the power sector are highlighted below: 3.1 Competitive procurement of power As per the National Tariff Policy, the procurement of power by distribution licensees have to be made through competitive bidding. From January 2011, Central / State public sector companies also are expected to compete with private sector to supply power to the distribution companies through competitive bidding. Thus, volume of power contracted through competitive base bidding {Case 1


(location, technology or fuel not specified) & Case 2 (location specific where the GoI assists developer in securing land, clearances, etc)} is likely to increase in the medium term. 3.2 Thermal projects & Supercritical technology In the medium term, thermal power is likely to remain the major source of generation as the coal based (particularly pit head plants) /gas based projects presently...
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