Power Sector in India Project
Power Sector in India Project
Power Sector in India Project
Contents
• Generation
○ 1.1 Thermal Power
○ 1.2 Hydro Power
○ 1.3 Nuclear Power
○ 1.4 Renewable Power
• Transmission
• Distribution
• Power for ALL by 2012
○ 4.1 Objectives
○ 4.2 Strategies
○ 4.3 Rural electrification
○ 4.4 Subsidies
Generation
Grand Total Installed Capacity is 162,366 MW.
Thermal Power
Current installed capacity of Thermal Power (as of 06/2010) is
104,424 MW which is 63.7% of total installed capacity.
• Current installed base of Coal Based Thermal Power is
86,003 MW which comes to 53% of total installed base.
• Current installed base of Gas Based Thermal Power is
17,221 MW which is 10.61% of total installed base.
• Current installed base of Oil Based Thermal Power is
1,199 MW which is 0.74% of total installed base.
The state of Maharashtra is the largest producer of thermal
power in the country.
Hydro Power
India was one of the pioneering countries in establishing hydro-
electric power plants. The power plant at Darjeeling and
Shimsha (Shivanasamudra) was established in 1898 and 1902
respectively and is one of the first in Asia. The installed
capacity as of 2008 was approximately 36,877. The public
sector has a predominant share of 97% in this sector.
Nuclear Power
Currently, seventeen nuclear power reactors produce 4,560
MW (2.81% of total installed base).
Renewable Power
Current installed base of Renewable energy is 16,492.42 MW
which is 10.12% of total installed base with the southern state
of Tamil Nadu contributing nearly a third of it (5008.26 MW)
largely through wind power.
Transmission
Strategies
• Power Generation Strategy with focus on low cost
generation, optimization of capacity utilization, controlling
the input cost, optimisation of fuel mix, Technology
upgradation and utilization of Non Conventional energy
sources
• Transmission Strategy with focus on development of
National Grid including Interstate connections, Technology
upgradation & optimization of transmission cost.
• Distribution strategy to achieve Distribution Reforms with
focus on System upgradation, loss reduction, theft control,
consumer service orientation, quality power supply
commercialization, Decentralized distributed generation
and supply for rural areas.
• Regulation Strategy aimed at protecting Consumer
interests and making the sector commercially viable.
• Financing Strategy to generate resources for required
growth of the power sector.
• Conservation Strategy to optimise the utilization of
electricity with focus on Demand Side management, Load
management and Technology upgradation to provide
energy efficient equipment / gadgets.
• Communication Strategy for political consensus with
media support to enhance the general public awareness.,
Rural electrification
Jharkhand, Bihar, Uttar Pradesh, Orissa, Uttranchal, Madhya
Pradesh etc are some of the states where significant number
(more than 10%) of villages are yet to be electrified.
• Number of Villages (1991 Census) - 593,732
• Villages Electrified (30 May 2006) - 488,173
• Village level Electrification % - 82.2%
Subsidies
Several state governments in India provide electricity at
subsidised rates or even free to some sections. This includes for
use in agriculture and for consumption by backward classes.
The subsidies are mainly as cross-subsidisation, with the other
users such as industries and private consumers paying the
deficit caused by the subsidised charges collected. Such
measures have resulted in many of the state electricity boards
becoming financially weak.
Financing problems
Compared to typical commercial projects, infrastructure
projects yield relatively low returns and have long payback
periods. Consequently, power plants have been perceived to be
commercially less profitable. Such projects were, therefore,
undertaken by the public sector. Private promoters face
difficulties when trying to obtain funding, as bankers are
unlikely to agree to loans with a maturity higher than three
years, to match the tenor of their deposit liabilities. Even
financial institutions (FIs) find it difficult to extend loans
commensurate with the long payback periods of power
projects.
Moreover, the State Electricity Board (SEB) is invariably the
sole purchaser of the power that a private sector generator
generates. That being the case, the private sector "will not take
the risk of not being paid"16 by SEBs in poor financial health.
The SEBs are also unlikely to get backing from financial
agencies for their commitments to purchase electricity from the
private producers. Hence, counter guarantees from the Central
government have been sought.
Some counter-guarantees from the central government were
eventually obtained in the case of six of the eight "fast track"
projects. Even with these counter-guarantees, promoters tend
to wait for other arrangements such as fuel supply agreements
to be finalized.
Obtaining clearances
There are numerous clearances -- statutory and nonstatutory --
to be obtained for starting a power project.22
The statutory clearances include cost estimate clearance,
techno-economic clearance (TEC) from CEA, water-availability
clearance from the CWC/State government, pollution clearance
from the SPCB/CPCB, forest and environment clearance and
rehabilitation and resettlement clearance from the MoEF and a
The IDBI has been financing purchase of indigenous equipment
by various SEBs through its bills rediscounting scheme.
Fuel imports
In spite of the availability of indigenous sources of electricity (--
hydro-power, coal, biomass), foreign power producers tend to
opt for imported fuel. The larger the number of foreign power
producers in the field, the greater will be the country's
dependence on imported fuel for power generation, worsening
its debt levels still further.
Regulatory commissions
The Indian Electricity Act of 1910 and the Electricity (Supply)
Act of 1948 were amended in 1996 to enable the setting up of
state and central level electricity regulatory commissions. Each
state and union territory was to set up an independent State
Electricity Regulatory Commission (SERC) to
deal with tariff fixation, that is, to determine the tariff for
wholesale or retail sale of electricity and for the use of
transmission facilities. Some states have established their
regulatory commissions, while others are in the process of
establishing.
For example, the minimum qualifying criteria listed in the
request for qualification for the Mangalore Evacuation Project
stated that the lead promoter "demonstrate successful
development in the past of EHV systems (operating at not less
than 380kV) of not less than 2,000 ckm(Charged Kaons at the
Main-Injector) and at least 10 EHV sub-stations (operating at
not less than 380 kV)".
Fiscal measures
The tax holiday, granted to the power sector, has been
extended up to the year 2003. This trifurcation has already
been effected in the state of Orissa,
while in Haryana, the Haryana ERC has granted a license to
Haryana Vidyut Prasaran Nigam for transmission and
distribution.
Mega-power policy
This policy -- formulated in October 1998 for large power
projects at strategic locations -- is applicable to then
construction and operation of hydro-electric power plants of at
least 500 MW and thermal plants of at least 1,000 MW. The
project promoters are insulated from the lack of credit-
worthiness of the SEBs because electricity can be sold either
directly to a "cluster" of large consumers or to the Power
Trading Corporation (PTC) which can withdraw funds from the
State's central share (Central Plan Allocation, etc.) if the SEB
defaults on its payments. There will also be benefits for these
mega power projects: customs duty on the import of capital
equipment has been waived, and some sales tax/octroi
concessions have been provided. However, the reaction to the
mega-policy has not been
very favourable. Representatives of SEBs oppose the idea of
the mega projects bypassing the SEBs and attracting large
customers. IPPs feel that this policy will be a hindrance to
smaller projects, and would prefer that the concessions
extended to mega projects be extended to all IPPs.
Conclusions
System losses
Adding the costs of transmission and distribution (including
system improvement and maintenance) to the generation costs
at private plants would result in even higher tariffs. Further, if
system improvements were not brought about, the technical
losses currently suffered by the SEBs
would hamper private distributors too. Thus it would be useful
to concentrate on improving the efficiency and thereby the
financial position of state undertakings. It is not clear whether
or not "commercial losses" or
theft can be reduced by private suppliers; obviously if these
losses were avoided, their operational efficiency would be
higher than that of the SEBs. However, there is no reason to
conclude that in dealing with as many dispersed connections as
the SEBs, private suppliers will be more successful at
eliminating theft. Further, it does not seem likely that
restructuring of the SEBs, that is, assigning the activities of
generation, transmission and distribution to separate
organizations can improve this situation, except that the brunt
of such losses would be borne by the distributors alone.
Surplus energy/capacity
In some regions of the country, with the completion of projects
under construction, there has come to be (except perhaps
during periods of peak demand) an excess of electricity
availability over that required by customers at the tariff
payable. This surplus may not have occurred if electricity
connections were extended to all homes, and if rural areas
were supplied throughout the day. However, with these
consumers unlikely to be paying the PPA tariffs for electricity,
commissioning of new private power plants could lead to a
surplus.
The electricity surplus is also due to the present industrial
recession, coupled with the shift of several industrial units to
captive generation because of their earlier experience of
inadequate/unreliable grid supply.
However, an upswing in the industrial cycle could expand the
electricity requirement, so that the current surplus position
may not be sustained.