Power Industry Scenario in INDIA

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As per leading market research firm RNCOS (2008) report on “Indian Power Sector Analysis” more than 64% of India’s total installed capacity is contributed by thermal power. Significant jump in unit size and steam parameters will result in higher efficiencies and better economics for the Indian power sector. Western region accounts for largest share (30.09%) of the installed power in India followed by Southern region with 27.76%.

Unbalanced growth remains the cause of concern for the Indian power sector. Only about 56% of households have access to electricity, with the rural access being 44% and urban access about 82%.


Southern region remains the dominant region in renewable energy source accounting for more than 57% of the total renewable energy installed capacity.

Key players currently operating in the Indian power sector are National Thermal Power Corporation Limited, Nuclear Power Corporation of India Limited, North Eastern Electric Power Corporation Limited, Power Grid Corporation of India, Tata Power, etc.


SIZE

The total installed capacity in India is calculated to be 145,554.97 mega watt, out of which 75,837.93 mega watt (52.5%) is from State, 48,470.99 mega watt (34%) from Centre, and 21,246.05 mega watt (13.5%) is from Private sector initiative.



· Generation capacity of 141 GW; 663 billion units produced (1 unit = 1kwh)-January 2008. CAGR of 5% over the last 5 years


· India has the fifth largest electricity generation capacity in the world. Low per capita consumption at 631 units; less than half of China


· Transmission & Distribution network of 6.6 million circuit km - the third largest in the world


· Coal fired plants constitute 54% of the installed generation capacity, followed by 25% from hydel power, 10% gas based, 3% from nuclear energy and 8% from renewable sources


STRUCTURE


· Majority of Generation, Transmission and Distribution capacities are with either public sector companies or with State Electricity Boards (SEBs)


· Private sector participation is increasing especially in Generation and Distribution


· Distribution licences for several cities are already with the private sector


· Three large ultra-mega power projects of 4000MW each have been recently awarded to the private sector on the basis of global tenders.


MAIN PLAYERS


Major players in the Power sector can be broadly divided into public, private and international private sectors.


With the country’s power requirement expected to touch 8,00,000 MW by 2031-32, India would need an investment of Rs6,00,000 crore. This investment is possible only by attracting foreign direct investment and public-private participation in the power sector, At present, the energy shortage in the country was estimated at 10% and it touches 13% during peak seasons. There are states, where the energy shortage is 25%.


This is a serious impediment in the way of industrial development and economic process. We need a crash project for capacity building and need to eliminate power shortage by 2012.





OPPORTUNITY
India possesses a vast opportunity to grow in the field of power generation, transmission, and distribution. The target of over 150,000 MW of hydel power germination is yet to be achieved. By the year 2012, India requires an additional 100,000 MW of generation capacity. A huge capital investment is required to meet this target. This has welcomed numerous power generation, transmission, and distribution companies across the globe to establish their operations in the country under the famous PPP (public-private partnership)programmes. The power sector is still experiencing a large demand-supply gap. This has called for an effective consideration of some of strategic initiatives. There are strong opportunities in transmission network ventures - additional 60,000 circuit kilometers of transmission network is expected by 2012 with a total investment opportunity of about US$ 200 billion.


The implementation of key reforms is likely to foster growth in all segments:


· Unbundling of vertically integrated SEBs


· “Open Access” to transmission and distribution network


· Distribution circles to be privatised


· Tariff reforms by regulatory authorities


· Opportunities in generation for:


· Coal based plants at pithead or coastal locations (imported coal)


· Natural Gas/CNG based turbines at load centres or near gas terminals


· Hydel power potential of 150,000 MW is untapped as assessed by the Government of India


· Renovation, modernisation, up-rating and life extension of old thermal and hydro power plants


INITIATIVES


· Allowing foreign equity participation up to 100 per cent in the power sector under the automatic route.


· Encouraging the private sector to set up coal, gas or liquid-based thermal projects, hydel projects and wind or solar projects of any size.


· Constitution of Independent State Electricity Regulatory Commissions in the states.


· Deregulation of the ancillary sectors such as coal.


· Introduction of the Electricity Act 2003 and the notification of the National Electricity and Tariff policies.


· Provision of income tax holiday for a block of 10 years in the first 15 years of operation and waiver of capital goods' import duties on mega power projects (above 1,000 MW generation capacity).


· Un-bundling of the State Electricity Boards (SEBs) into generation, transmission, and distribution companies for better transparency and accountability.


OUTLOOK


· Over 78,000 MW of new generation capacity is planned in the next five years. A corresponding investment is required in Transmission and Distribution networks


· Power costs need to be reduced from the current high of 8-10 cents/unit by a combination of lower AT & C losses, increased generation efficiencies and added low-cost generating capacity


POTENTIAL


· Large demand-supply gap: All India average energy shortfall of 10% and peak demand shortfall of 13%.


· Unbundling of vertically integrated SEBs


· “Open Access” to Transmission and Distribution networks


· Select distribution circles to be franchised/privatised


· Tariff reforms by regulatory authorities


Opportunities in Generation for:


· Coal based plants at pithead or coastal locations (imported coal)


· Natural Gas/CNG based turbines at load centres or near gas terminals


· Hydel power potential of 150,000 MW is untapped as assessed by Government of INDIA


· Renovation, modernisation, up-rating and life extension of old thermal and hydro power plants


Opportunities in Transmission network ventures - additional 60,000 circuit km of transmission network expected by 2012.


· Opportunities in Distribution through bidding for the privatisation of distribution in thirteen states that have unbundled/corporatised their State Electricity Boards – expected to take place over the next 2-3 years


· Total investment opportunity of about US$ 200 billion over a seven year horizon.

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