Description
The report is about the power and energy sector in india.
2008
Power and Energy Sector Report
Associate Radhika V. Analysts Ranjit Radhakrishnan Tess Zacharia Abhishek Nemuri Rajiv Kumar Vaibhav Kapur 2008
Power and Energy Sector Report 2008
Over View ...................................................................................................................................................... 3 Industry Structure ......................................................................................................................................... 3 Power Production ......................................................................................................................................... 4 Consumer’s Profile ........................................................................................................................................ 5 Key Trends In the Indian Power Sector and SWOT analysis ......................................................................... 5 SWOT Analysis............................................................................................................................................... 8 Market Analysis........................................................................................................................................... 10 Government Regulations in Power Sector .................................................................................................. 14 Status of Projects in Private Sector ............................................................................................................. 16 Outlook ....................................................................................................................................................... 18 Asia Pacific Power Segment ........................................................................................................................ 22 Investment Opportunities........................................................................................................................... 23 References .................................................................................................................................................. 25
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Power and Energy Sector Report 2008
Over View
Population growth and rapid economic development has put pressure on Indian infrastructure, which has not yet reached its potential. The government has realized this and has started to concentrate its effort on infrastructure development. To have a perfect infrastructure in place, it is necessary that the country’s power sector is capable enough to meet the demands. For the growth of every other sector, proper and efficient supply of power is needed. But, the demand for power in the country has always exceeded the power supplied. Shortages, tariffs and over-dependence on non-renewable, imported fuels of energy still continue, while the inefficient transmission and distribution system hamper the pace of the power supply growth. This report analyzes the power sector scenario in India – the current industry structure, key trends, market structure, regulations and policies, major projects and players, and the future prospects.
Industry Structure
Power sector can be further split into 4 sub-sectors: Generation, Transmission, Distribution and Equipment. Power Generation Electricity can be generated by converting various other forms like Fossil Fuel, Wind, Water, Sun and Nuclear fuels. The power is generated by using up the energy from these sources and suitable generating units like a turbine, solar cell etc. Depending upon the fuel the type of generation plants can be listed as follows: Coal based generation, Gas based generation, Diesel plants, Hydroelectric, Nuclear, Solar, Wind, Geothermal and Biomass. Transmission The job of a Transmission company is to transfer the electrical power from its point of generation to the place where it is to be used. The power is normally transmitted over Grids at very high voltages. Along with long transmission lines, many transformers are also installed as a part of the grid. The Grid delivers this power to the substations from where it is further distributed to the consumers. Distribution A distributor of power receives high voltage electricity from the transmission lines and then distributes it to the end customers. These electric voltages are first converted to lower voltages using step down transformers and then delivered to customers’ electrical systems. The distributor also measures the amount of power consumed by each customer and collects the charge from each customer. The distributors face various problems like theft which leads to these companies running into losses.
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Equipment There is a huge market for electrical equipment in the above mentioned 3 sectors and also in various other industries. The companies in this sector manufacture a wide range of equipment – generators, transformers, grid lines, towers, electrical fittings etc.
Power Production
Installed Capacity The Power sector is largely a state held institution with the private sector only holding 12 % of the installed capacity. The government is taking various measures and ensuring reforms to liberalize and disinvest the Power sector.
Installed Capacity
70,394 80,000 60,000 40,000 20,000 0 State Private
Installed…
41,213 15,231
Central
2% 2% 9% Coal Hydro 36% 51% Nuclear Oil Gas
? India is the third largest producer of electricity in Asia, capacity has grown from 1362MW in 1947 to 144,564.97 MW. ? Thermal, Hydel and Nuclear power based generation is in operation now where Thermal is the major mainstay. ? Non-conventional and renewable sources of energy like wind, solar and tidal projects have a huge growth potential
Thermal Generation Coal based thermal power stations are presently the mainstay of power. Because constraints in development of hydro and nuclear power, this would continue. At present, Coal reserves are 202 billion tones- about 70% is consumed in the power sector. Lower grades of coal are being used for power generation resulting in operational problems. These problems reduced the ultilization levels but inspite of these inefficiencies thermal generation is the more practically viable option. Hydroelectric Generation Hydroelectricity generation is the ideal soruce for meeting the power demand.India’s peak demand and has the added advantage of being free from the price difficulties of fuel supply. Only about one-fifth of India’s vast hydel power potential has been utilized so far. Since the 1980s the growth of hydel power generation has been slow at a dismal 4.4% when compared to growth rate of thermal generation which is at 11.6%. India is lagging behind developed countries which concentrate on hydro electric generation
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Nuclear Power Generation Only 2% of the entire power capacity is produced by 14 power plants. Nuclear energy is considered ideal for meeting base load demand. The Government of India has ambitious plans of increasing nuclear power generation to 10,000 MW by 2012 and of doubling that figure by 2020.A huge amount of Public sector investments are expected and PPP may be used to achieve these targets. With the abundant thorium reserves, Nuclear Power Corporation of India Limited (NPCIL) is bracing to play a major role in future to meet the ever-increasing energy demands. The installed capacity at the end of eleventh Plan would be around 10280 MW and 20,000 MW by the year 2020.
Consumer’s Profile
2
1 9 22 5 Domestic Commercial
30
Agriculture Industrial
31
Traction Inter-state Others
Key Trends In the Indian Power Sector and SWOT analysis
Indian power sector on a global scale
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The demand for electricity in India as a developing nation has been increasing exponentially over the years. The Indian economy has been growing at a rate of 6% in the 1990s and at an average of 8% in the recent years .Per capita electricity consumption of India is approx at 612 kWh per capita one of the lowest and not substantiating the GDP where as the world average is 2596 KWH . Energy-GDP Elasticity = 0.58. which is low by world standards and is expected to grow in the coming years. Growth Pattern
In the past, the power sector was propped up by the support from state and central governments to the extent of 25 % of the annual budgets. The power sector in India was characterized by unreliable infrastructure, insufficient generation capacity, widespread transmission and distribution losses and in general inefficient operations. The state run power units were making huge losses and debt ridden state governments were not in a position to expand the generating capacity causing huge demand supply gap. Government Reforms & private sector participation
As a breather for the power sector, the Government of India introduced the much needed reforms in 2003 Electricity Act. The reforms including deregulation have caused increased competitiveness and positive effects in general. The emphasis in power sector is now on open access to generation and distribution of power, power trading, multi buyer model and reorganization of the state electricity boards. However the Indian power industry still faces huge demand - supply gap and there are still serious issues to be addressed. Small capacity projects Since the investment required for setting up a power plant is huge, there is a trend of increasing popularity of small capacity plants which were not viable earlier due to technological constraints. These small capacity plants have the advantage of having smaller setup time and smaller initial investment requirement. So investors are attracted to this option. Ultra mega power projects On the other hand the government realizing the need for fast reduction of demand supply gap has introduced and promoted the concept of ultra mega power projects. These are very large sized projects, approximately 4000 MW each involving an estimated investment of about Rs. 16,000 crore. Currently
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there are 9 ultra mega power projects planned in various stages of development. Dadri & Sasan projects spearheaded by Reliance Energy, Mundra power project by Tata Power etc are some of the major ultra mega power projects .
Environmental Issues Another major factor in the Indian power scenario has been environmental friendly power projects. In India there is generally good awareness about environmental issues and hence the power companies are giving extra effort for energy conservation and environment management. For example the companies have to meet stringent national and international norms relating to environmental safety. Additionally most of the power plants require clearance from ministry of environmental affairs for generation and construction. Renewable energy wave As per the trend in most parts of the world, in India also, generation of renewable energy is becoming the next big thing due to rising energy security pressures. Planned Capacity Additions in Renewable Energy Generation (MW) During the 11th Plan (2007-2012)
Bio Energy 2100
Small Hydro 1400 Wind 10500
In the next decade or so the power utilities sector would witness great development in technologies for power generation from wind, solar, geothermal and other renewable sources. Nuclear power generation is also all set to takeoff in the country and the nuclear deal with US is supposed to give new impetus to this field.
Private sector participation in power transmission and distribution
By the end of the 11th Plan period the Indian government is planning to complete 14 ultra mega transmission projects with private participation. The total estimated cost of these projects is about 25,000 cr. Government has also initiated steps to
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increase private sector participation in distribution. Reliance energy and Tata power are already involved in power distribution.
SWOT Analysis
Strengths
? Sustained economic growth has made proportional power sector growth a necessity. The India government realizes this and is focusing on continued energy sector reforms. The overall growth rate in year 2007-2008 was 6.33 %. ? India ranks sixth in terms of electricity generation. As on April 2008 the total installed capacity is 143311.01 Megawatts. ? The return on investment in power sector for private players can be attractive. The power sector has the potential for a much faster growth. There is a guaranteed rate of return of 14% . ? Availability of skilled and unskilled human resources. ? Availability of adequate natural resources like coal and huge potential for hydroelectric projects. ? With privatization, the investment in transmission and distribution is expected to reduce losses in these operations. ? Power trading is allowed in the sector and there is good opportunity for power trading companies since country has different power distribution between various regions. ? Wide consumer base available.
Weaknesses
? The condition of the state electricity boards is pathetic in terms of finance available. Also there are major deficiencies in the operational and technical front. ? Transmission and distribution losses coupled with large scale thefts cause about 25% loss. ? The supplied power is of bad quality with the 3 % to 6% allowed deviation in frequency exceeded often.
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? Major percentage of power equipment is old leading to high operational losses. ? There is skewed tariff structure and wild range of subsidies which the industry cannot sustain. Government regulated tariffs reduce the bargaining power of suppliers. One example is the deep agricultural subsidies which is bleeding the state electricity boards. ? Poor pace of rural electrification.
Opportunities
? The Indian government has the plan to generate 2, 00,000 MW by 2012 from the current production level of 1, 14,000 MW. This would entail huge investment in the sector during this period . ? The electrical reforms started with the ‘New Electricity Act 2003’ have provided a liberal and competitive framework to the power sector. ? The nuclear power generation can receive a great boost when the nuclear deal between India and the United States of America goes through. ? Competition among private players is not strong. There can be first mover advantage in certain sections like transmission and distribution. ? The thermal plants account for 80% of the power generation in India. Concerns about pollution and fast depletion of non renewable sources of energy have created a major opportunity for firms dealing with renewable energy sources in India. ? There is no ceiling on foreign direct investment in generation, distribution or transmission projects. The FDI inflow has been improving steadily.
? There is great opportunity in setting up small captive power plants catering to customers who are big in terms of power requirement and have inelastic demand. ? Inter regional connectivity will be established in the future with HVDC and extra high voltage AC lines. ? Significant opportunities exist for project promoters as well as for engineering, procurement and construction contractors and operations and maintenance companies.
Threats
? The social constraints in India can impose roadblocks. There is a wide variety of concerns about pollution from thermal plants, safety of nuclear plants, negative impact of hydroelectric projects like displacement of people and submersion of forests. ? Mega power plants require huge initial investment and there is considerable delay before the plant construction is complete and it becomes operational.
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? Indian manufacturers and entrepreneurs are new to the power sector since earlier the sector was fully controlled by the government. ? Regulations can be a deterrent for investors. There are two sets of regulations to be followed since both the state and the central government will have its sets of policies. ? In spite of the consistent economic growth, rising inflation, very large trade deficits and insufficient infrastructure are major areas of concern. ? Many projects have been planned but due to slow regulatory processes, especially in the distribution segment, the supply is far lesser than demand. ? There is considerable political risk particularly since the power projects usually take more than 2 years for completion. Change of governments during this period can cause lot of politically motivated road blocks.
Market Analysis
The Indian power sector is trying to cope up to the challenge of meeting the exploding power demands of the Indian consumers. The problem of demand exceeding supply has always plagued the growth story of Indian power sector story. Always the growth in supply was negated by increase in demand. According to2001 Census, that about 44% people don’t have access to power. Current Supply Scenario for Indian Power Sector India is one of the fastest growing economies in the world. This, along with the increasing population, has necessitated the increased consumption of power in the country to keep the economic activities running in the country. The Electricity Act 2003 is a step in the right direction to address the issues of transmission and distribution losses and rural electrification. The following charts show the growth of peak supply and total energy available from the years 20032008, and the values of the two variables for the months April, May and June 2008.
Peak Supply(MW)
April-June 2008 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 0 20000 40000 60000 80000 100000 Peak Supply(MW)
Chart 1 : Peak Supply for the years 2002-2008 and for the months April, May and June 2008.
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The chart below shows the percentage distribution of power supplied by various sources, with a breakup based on the fuels they use:
140000 120000 100000 80000 60000 40000 20000 0 Hydro Coal Diesel Gas Nuclear R.E.S Total State Private Central Total
The figures indicate an upward trend in the supply curve for the power sector. But, there are issues that still act as potential roadblocks for its effective growth: A dent in the efficiency caused by the losses in transmission and distribution. Nuclear power contributes only a meager percentage to the total supply. Over-dependence on coal is a major concern for the government as it is one of the major contributors to global warming. Hence, if the growth rate of India’s supply has to increase further, usage of renewable sources of energy, particular nuclear energy have to be increased. It is also imperative that the losses from transmission and distribution, which account for about 30% of power loss, be minimized. Current Demand Scenario of Power in India
As mentioned earlier, India’s huge demand for power can be attributed to mainly two reasons: the population explosion and the highly active economy. And with India growing at a fast rate, it is necessary that she has the necessary power to back her up. The charts below give the demand for power in India during the last six years:
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Power and Energy Sector Report 2008 Peak Demand(MW)
April-June 2008 2007-2008 2006-2007 2005-2006 Peak Demand(MW) 2004-2005 2003-2004 2002-2003 0 20000 40000 60000 80000 100000 120000
Peak Demand for the years 2002-2008 and for the months April, May and June 2008.
The chart below shows the deficit in peak supply and energy availability :
30 25 20 15 10 5 0 Energy Deficit (MU) Peak Deficit (%)
Deficit percentages for the years 2002-2008 and for the months April, May and June 2008. The above chart clearly shows that the demand-supply mismatch has only got worse every year. This is a matter of grave importance at present. With the amount of fossil fuels dwindling and the increasing
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pressure on petroleum prices, India must now turn to renewable sources of energy to quench her everincreasing thirst for power. Future Supply and Demand Projections If India’s growth continues at the rate of at least 8% per annum, the country’s power demand is likely to grow from 188GW (Table 3) to 315 to 335 GW [27] by 2017. The primary drivers of this demand are: India’s manufacturing sector would grow at a faster rate. Residential consumption growth would be at a high rate of 14%. The number of villages that would be provided with power would be more than a 100,000 if India realizes its plan of “power for all” by 2012. Load shedding is currently suppressing demand realization. In such a situation, if India’s supply forces have to match the demand, they must be able to manufacture about 415 to 440 GW of power [27], so that after the transmission and distribution losses, the requisite amount of power reaches the consumers. Considering the current availability of about 167GW (Table 1), it must be able to add about 35-40 GW of power capacity per year. This is a tough task, as India’s current rate of increase in supply doesn’t come close to the required rate. Moreover, achieving such a rate means increased emissions (unless renewable sources are used extensively) and higher inputs of fuel. Infrastructure Required To sustain India’s 8% GDP growth for the next 5 years, the power generation has to grow by 11-12% per annum The major reasons for the yawning gap between supply and demand are:
? Transmission and Distribution Losses: This is one of the chief reasons for supply shortage. Out of India’s total generating capacity, only 65% was utilized in 2007 owing to transmission and distribution losses. This has resulted in power cuts and other regulatory measures. ? Poorly performing generating units: The poor performance of India’s power generating units have resulted in power shortages and unreliable power supply quality. The major reason for this is the coal-powered thermal power stations, which account for about 53.75% of the total generating units. This also has an additional implication of environmental pollution. ? Lack of investment capabilities: The state sector utilities are inefficient and State Electricity Boards do not possess resources to finance future investments for enhancing power generation capacity. ? Higher proportion of base-load plants: India has a higher proportion of base-load power plants compared to peak plants, which is a reason for the huge deficit during peak hours.
To address these issues, the following steps can be taken:
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? Accelerate capacity addition, by building over 140 project sites by 2012 create 35-40GW of power capacity per year and training about 300,000 workers to nullify man-power shortage. ? If India must be able to supply power to meet demands, investments must rise to the order of Rs. 24 lakh crores by 2017, a huge sum. ? Harness more renewable sources of energy and secure fuel supplies. At present, natural gas and nuclear energy contribute only 3.8% of the total power ? A better monitoring mechanism must be put in place. This includes regular interviews, establishing project monitoring systems, preparing a performance scorecard etc. [27]. ? Central government must help states in progress by accelerating the development programme, loans to improve distribution process and allocation of some of the centre’s power supplies. ? India must have a balanced mix of base-load and peaking plants to meet the peak power demands [27]. ? Accountability for the power sector has to be increased. The leadership responsible for making decisions in the power sector has to deal with complex issues and difference in interests at the central and state level.
Government Regulations in Power Sector
Need for New laws
? Creating competitive environment will result in enhancing quality and reliability of service to consumer. ? Distancing regulatory responsibilities of Government and passing it onto the Regulatory commissions. ? Need for individual States to enact their own reform laws. ? Requirement of introducing newer concepts like power trading, open access etc.
CEA (Central Electricity Authority)
? CEA to continue as the main technical Advisor of the Govt. of India/ State Government with the responsibility of overall planning. ? CEA to specify the technical standards for electrical plants and electrical lines. ? CEA to be technical adviser to CERC as well as SERC’s ? CEA to specify the safety standards.
Electricity Act 2003 Electricity Act 2003 has been a very positive initiative for the power sector which looks to transform the power sector. It includes consolidation of laws relating to generation, transmission, distribution and trading. Electricity Act 2003 provides a platform for the development of the electricity industry, supply
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of electricity to all areas, a competitive environment and rationalization of tariff and also constitution of CERC (Central Electricity Regulatory commission).
? Policy Reforms in Generation ? Power Generation has been made free from licensing. ? Removal of the condition of TEC (Techno Economic Clearance) for non-hydro generation. ? Captive generating plants have been freely permitted subject to availability of transmission facility. ? Clearance of CEA will be required for hydro projects. This condition is very much necessary due to the concern of dam safety and inter-State issues. ? Promotion to generate electricity from Non-Conventional Sources which includes minimum percentage of purchase of power from renewable sources may be prescribed by Regulatory Commissions.
Policy Reforms in Transmission
? Transmission Utility at the Centre and in the States to undertake planning & development of transmission system. ? Load dispatch to be in the hands of a government company/organization. Flexibility regarding keeping Transmission Utility and load dispatch together or separating them. Load Dispatch function critical for grid stability and neutrality vis a vis generators and distributors ? Open access to the transmission lines to be provided to distribution licensees & generating companies. This would generate competitive pressures and lead to gradual cost reduction.
National Electricity Policy
? Access to electricity for everyone ? Electricity demand to be fully met by 2012 (100 GW addition) ? Reliable & Quality power to be supplied to the consumers.
Viability of State Electricity Boards(SEB)
? ? ? ? ? ?
National Electricity Plan Demand forecasting Identifying locations for capacity addition Integration of new locations with transmission system Reserve capacity of at least 5% 50,000 MW hydro initiative
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? Push State Governments to review land acquisition procedures ? Allow imported coal & LNG based plants
Other Policy Initiatives Mega Power Projects - Government recognized power projects as Mega Power Projects having a capacity of 1000MW or more and catering to more than one state. The policy was further liberalized with all inter-state projects with capacity of 1000MW and above for thermal projects and 500MW or above for hydel projects to be Mega Power projects. Electricity to Rural Section - Electricity Act 2003 allows electricity generator to provide electricity to rural areas without requiring any license. FDI Policy- 100 % Foreign Direct Investment is permitted in all segments of Power Sector i.e. Generation, Transmission and Distribution FDI With India’s GDP growing at more than 8% for the last few years, the power sector is set to grow at a minimum of 10%. The various opportunities for the growth in Power Sector are
Opportunities
•100% FDI has been allowed in all sectors of the power sector except nuclear power. •Both foreign players and domestic players have equal opportunity to invest. •Projects in Power generation & distribution of all types and sizes have been allowed. •Trading in Power is also allowed by Electricity Act 2003. •Open access to the licensees to construct, operate and maintain transmission lines.
Incentives
•Incentives to invest in thermal & hydro power sector. •Customs duty on import of capital goods for Mega Power projects is Zero. •A tax holiday for 10 years for plants involved in power generation. •Tremendous scope for public-private partnership in the nuclear energy sector. •Incentives for providing electricity in rural areas. •Clear & transparent tariff setting principles.
Status of Projects in Private Sector
Currently the total installed capacity of the private sector is 21246.05 MW which is about 13.5% of the total . Coal and
Sector wise Installed Capacity
Private State 13.5% 52.5% Wind 75%
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diesel powered generating units provide more than 80 % of this power supply. The major projects in execution in private sector are mainly thermal and gas based power plants.
Some of the private power projects: Dadri & Sasan Projects: These are the main ongoing projects for Reliance Infrastructure ltd. Dadri Project is for construction of a 3740 MW gas generation power plant in the district of Dadri in the northern state of Uttar Pradesh, which when completed would be the single largest gas fired generation plant in the world. The first phase is planned to be completed by 2009 after which Reliance Infrastructure has plans to expand it to 7500 MW. The second major project under development by Reliance Infrastructure is the 5×800 coal fired generator plant in Sasan, Madhya Pradesh. Reliance has committed the Government for advancement of the commissioning of its first unit by nearly 16 months to December 2011, as against May 2013 as per the Power Purchase Agreement. The second unit is planned for commission after three months in March 2012. Mundra Project: Tata Power has the contract for building 4000 MW power plant at Mundra, Gujarat. On April 2008,Tata power completed signing of financial agreements for Mundra power project under the Special Purpose Vehicle (SPV) Coastal Gujarat Power Limited (CGPL) .The cost of the project is estimated at INR 17000 crores (USD 4.2 billion) with the first of the five units to be commissioned in February 2011. The entire plant is expected to be commissioned at the end of 2012. Tamnar Project:1000 MW O.P. Jindal Super Thermal Power Plant, at Tamnar near Raigarh in Chattisgarh is one of India’s first mega-power projects in the private sector. The project was executed by Jindal Power Limited. The Financial Closure of the Project has been achieved .The plant is all set to go fully commercial by August 15th 2008. Teesta Project-Hydroelectric project: LANCO Energy Pvt Ltd (LEPL) is constructing 500 MW Teesta VI Hydropower Project across the Teesta River in Sikkim on a Build, Own, Operate, Transfer basis in the joint sector for a period of 35 years. The project is expected to generate 2441 million units per annum to be sold to the Maharashtra State Electricity Distribution Company Ltd (MSEDCL). Status of the project is that several statutory clearances required from the State and Central Agencies have been obtained and civil construction work is expected to start soon. Latest commissioning schedule of the units are from January, 2012 to June, 2012. Suzlon wind power project: Suzlon Wind power project is based in Dhule,Maharashtra. The current installed capacity at Dhule is 650 MW and after an additional capacity of 450 MW is installed the windfarm will reach a cumulative capacity of over 1000 MW, making it the world’s largest windfarm. In addition to this, Suzlon’s windfarm located in Sanganeri in the state of Tamil Nadu in India, has planned for a capacity of over 500 MW and is home to over 250 wind turbines with a total of 350 MW of installed capacity presently .
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Tala transmission project: Tata Power has a 51:49 joint venture with Power Grid Corporation of India, for the 1200 km Tala transmission project. The joint venture is India’s first transmission project to be executed with public-private partnership. The joint venture company named Powerlinks Transmission Limited has been formed primarily to evacuate power from the Tala Hydro Project in Bhutan and to carry surplus electricity from the North Eastern States to the Northern Indian belt. It was inaugurated in the first quarter of financial year 2007-2008 [9]. North Delhi Power Limited Distribution Project: Tata power has a distribution project in joint venture with Government of Delhi called North Delhi Power Limited Distribution Project which has met with considerable success. With the privatization of Delhi Vidyut Board (DVB), Tata Power Company holds managing control in the distribution company North Delhi Power Limited (NDPL). NDPL distributes and supplies power to the North-North West areas of Delhi. With predominantly industrial load consumption, this region has a consumer base of approximately 8 lakhs with an annual power consumption of around 6000 mega units.
Outlook
Renewable energy resources There has always been a deep desire among the mankind to utilize the elements in order to meet the various energy needs. However with the recent developments in the field of renewable resources which makes it economically viable to produce energy that this dream of mankind is coming into reality. The has been a increasing global interest to produce electricity using renewable energy resources. The chief reasons can be attributed to the fact that sooner or later the non- renewable sources of energy , which presently accounts for the major contribution to the power generation, is going to get exhausted leading to cascading ill effect on the whole economy. Although there are various modes of renewable generation but the chief among them which is widely used on commercial level are as follows: Wind India has one of the fourth largest installed capacity in the world in terms of wind energy totaling 8,000 MW. Also there has been an impressive growth rate shown by this sector with CAGR of almost 30 p.c in the last eight years. In 2007 alone India has added 1,700 MW . Encouraged by this trend government of India envisages to add additional 10,500 MW in the eleventh year itself. As per Centre for Wind Energy Technologies, the total potential for wind power in India is around 45,000 MW. Quite encouragingly as per the Indian Wind Turbine Manufacturers association the potential for the total orders is 65,000MW.
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One of the main factor that led to the impressive growth of wind sector is that the sector is allowed a depreciation allowance of 80 per cent in the first year of installation of a project. Also they are not supposed to pay any income tax on the power sales to the utilities for a period of 10 years . Apart from these benefits it has also been noticed that foreign direct investment has also been fast tracked in case of wind power. The government is also considering “Productivity tax Credit” in addition to accelerated depreciation. While this is an issue for existing companies, new investors are less reliant on the tax holiday since they have little or no tax liability. Keeping with the global trend, Indian Wind turbine manufacturers are also moving towards the manufacture of larger turbines in order to bring down costs per swept area. Presently in our country turbines from 250 KW to 1650 KW are available. In India also wind manufacturers are coming up with latest technologies related to stall, pitch, variable speed with variable pitch and gearless drives. Present market for wind turbine is 1500 MW and is expected to grow and stabilize at 2,500 MW per annum. Apart from the impressive growth story of wind sector, there are also few concerns that need to be addressed. One of them is related to the way financing is done for wind power projects . It should move from the present balance sheet financing to standard project financing based on SPV route. ECBs on case to case basis should also be considered. Another major concern is that in India especially in southern states like Tamilnadu etc there is a problem related to the evacuation of power owing to derelict substations. However it is pleasing to note that none of the concerns stated above are grave enough to check the growth of Indian wind industry. Indian wind manufacturers have considerable IT expertise and adequate skilled manpower which helped them to bring down the cost significantly and emerge out as one of the most competitive in the world market. Solar Power India’s very long term solar potential may be taken as unparalleled in the whole world because it is one of the few places which has an ideal combination of high solar reception and large consumer base at the same location. The theoretical solar potential is about 5000 trillion KWh per year ( i.e. 600 TW) which is far greater than the current consumption. However the development of solar power in India is quite dismal . So there is a crucial need to develop cheap solar technology like an ecosystem that consists of local grid clusters with distributed electricity generation so that the need for installing expensive long distance centralized power delivery systems can be avoided . This would ensure cheap electricity to masses . Presently India is one of ninth largest producers of solar thermal systems and seventh largest producer of solar photo voltaic(PV) but the wide deployment of solar power is not there because of its undoubtedly high costs. Estimated unit cost of generation from PV is Rs 12-20 per Kwh and for solar thermal it is Rs 10-15 per Kwh in our country. So it becomes quite evident that the cost of power produced by solar energy systems is 4-5 times higher as compared to that produced by other conventional energy systems. It is also high as compared to other non conventional sources of energy.
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However the research into solar continues at Solar Energy Centre which predicts that in the near future breakthroughs in nanotechnology will significantly increase solar cell efficiencies from 15 percent currently to over 50 percent . Nevertheless government of India of India is now offering generation linked incentive of Rs 12 per KWh for solar PV and Rs 10 per KWh for solar thermal. Biomass Energy from biomass can be obtained through sustained utilization of agri-residues and output from energy plantations. Biomass has the potential to supply India with 100 kWh per year( from 17,000 MW capacity). The main options for conversion of biomass into power are thermo-chemical and biochemical. The biochemical involves anaerobic digestion of biomass for production of biogas. However in India there is a considerable commercial potential for biomass energy generation using thermo chemical processes which involves combustion and gasification. Another technology option for biomass energy is co-firing of biomass along with coal in thermal power plants . This method is new to India although it has been commercially used in Europe and the US. Another advantage of this technology is that biomass is considered to be carbon neutral fuel and so it’s co-firing in coal fired boilers results in reduced emission of greenhouse gases along with other pollutants like oxides of sulphur and nitrogen. The cumulative installed capacity of grid connected biomass and bagasse cogeneration power projects as on March 31,2007 was around 1,140.63 MW . Of the total mentioned above , 615.83 MW is from bagasse based cogeneration and 524.8 MW comes from other biomass. An additional 1,707.07 MW of new biomass and bagasse based cogeneration was under implementation as on March 31,2007. Small Hydro Small hydro power plants have been defined by government of India as of capacity of up to 25 MW. The cluster of small hydro power plants has a deeper impact on the stability of the grid than as suggested by definition. This is also regarded as the best option for low cost off-grid power. The estimated potential for all types put together is at least 15,000MW. According to Ministry of New and Renewable energy (MNRE) , the total installed capacity of small hydro projects as on March31,2007 stood at 1975 MW from 602 projects. An aggregate capacity of 650 MW from further 219 projects is partly under construction. The MNRE had a target of adding 550 MW of small hydro power (SHP) in the tenth plan period and has nearly achieved that figure. The eleventh plan target is more ambitious -1400 MW to be added between 2007-2012. It is quite important to note in this context to note that MNRE’s aim is to obtain 2 per cent of India’s grid active power from small hydro sources. One point of importance that can be noted is that the most of the ongoing projects is in the hands of the private players. The ministry says the almost total commercialization of small hydro has been achieved of late. Even state government has said that it’s only the private participation that led to tapping of the full potential of small rivers and canals. Nineteen states have also announced policies to invite private sector participation in SHP projects.
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Fiscal support is primarily given in the form of a subsidy to grid-interactive small hydro , both in public as well as private sectors. Projects in special category states receive higher subsidies than other states and Union territories. This subsidy is released only when the project is deemed complete by MNRE . Also the project when commissioned is required to be tested for its performance by AHEC, IIT Roorkee. The MNRE provides financial assistance for R&M and capacity upgradation also. However, assistance under these heads is provided only for government sector projects. Nuclear Energy The envisaged growth of nuclear power in India is possible provided robust technologies are developed for both the front-end and the back-end of the fuel cycle. India has one of the largest reserves of the nuclear fuel - thorium. However, the nuclear energy program will continue to be uranium based until commercial production based on thorium becomes feasible. There is a persisting need for developing techniques for economic and efficient extraction of uranium from lean sources e.g. sea water. If the Indo-US nuclear deal goes through, there will be a boost to nuclear energy and private participation in this sector would be expected. Indian government is pursuing nuclear energy as a solution to our ever increasing energy demands. Coal, the dominant energy source today, is expected to last for around 45 years with current technologies for extraction. Nuclear Co-operation with US Access to clean nuclear technology and ending 30 year old isolation from international nuclear technology Future agreements with other NSG countries like Russia, France etc, having advanced nuclear technology. Uninterrupted supply of nuclear fuel to reactors placed under IAEA safeguards. Increase in the share of nuclear energy thus ending India’s energy requirements. Facilitate India’s participation in international research community & thus helping India’s indigenous research. Amendment in Atomic Energy Act will facilitate private participation in the field of nuclear energy Implications of Nuclear Deal Aggressive targets on the nuclear closed fuel cycle based three-stage nuclear power programme, where Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI) has been setup for the construction of its first Fast Breeder Reactor (FBR) by 2010. Nuclear power plant capacity targets as envisaged by the Department of Atomic Energy (DAE) are given below:
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- 10,280MWe by 11th Five year plan - 20,000 MWe by 2020 - 50,000 MWe by 2030 - 250,000 MWe of nuclear power by 2050 India’s Nuclear power- Current & Future Currently, India has 17 nuclear power plants being operated by the Nuclear Power Corporation of India Limited (NPCIL) with a total installed power capacity of 4120MWe. By December 2008, new plants of capacity 2660MWe are to be under operation. Major Issues relating to Nuclear Deal
? ? ? ?
Spent fuel reprocessing Access to enrichment and reprocessing technology Conditional access to nuclear fuel if India conducts a nuclear test in future. References to India’s foreign policy towards non-proliferation.
Asia Pacific Power Segment
Asia pacific region includes China, Japan, Australia, Singapore, India, South Korea and Taiwan. Asia pacific Power segment had a compounded annual growth of 8.8 for the five year period from 2002 to 2006.The next five years compounded annual growth is estimated to be 11.2 % signifying accelerated growth.
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China and Japan accounts for 70% of the Asia-Pacific electricity market. India accounts for 14 % of the market. The industrial sales provided almost half the total sales (49.2%), while the residential consumers provided for 29.2% of the market share. The estimates suggest that the electricity market in this region will grow to $667 billion from $393.2 billion it was in 2006. Trends in Asia Pacific Power Segment The two major market models are: a company might own power generation facilities and they produce power and sell it to customers or company may buy electricity in a wholesale market and sell to its end consumers. The major market trends in this region are:Market is moving towards increased liberalization leading to competition and therefore customer benefits are increasing. Buyer power depends on the country of operation. For example in china buyer power is low because market is not liberalized. Overall buyer power is moderate in the region Companies will need huge initial investment to enter the market. But liberalized policies in the region combined with the fact that electricity is a undifferentiated product can encourage new players to enter into the market. The market in the Asia Pacific region is still composed of small number of large scale companies. Indian and Asia-Pacific Power Sectors – A Comparison The rate of increase in power supply, for India and Asia Pacific, is shown in the table below:
25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 Asia Pacific India
This shows that India exhibits a smiliar development pattern as Asia Pacific’s in terms of supply growth rate. But the rate of increase in India is way below the percentage growth exhibited by Asia as a whole. If India has to match its demand, the rate of increase in power supply must come much closer to that of Asia’s.
Investment Opportunities
With India struggling to meet the power demands of its people, it is imperative to leverage investments to meet the demand for the following reasons:
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Generation capacity has to be increased at a much higher rate compared to the current rate of close to 7%. Transmission and distribution losses account for about 35 - 40% of the total losses. Investments of the order of Rs. 1,80,000 crores in the 5 year period from 2007 – 2012 [21] to improve its efficiency. The growth and over dependence on coal-powered plants must be reduced and thermal power stations, generating about 20,000 MW, have to undergo rehabilitation. Firms have started to realize the potential of the power sector and have started investing. Hinduja group has decided to invest 10 billion dollars in power projects across various parts of the country for the next ten years. Areva NP, world’s largest nuclear power firm, has set its sights on India’s nuclear power sector. And private companies like Reliance Power, Essar Power, Sterlite Industries(Sterlite Energy), Jindal Group, Videocon and Gati, a logistics company, are diversifying into the power sector to be a part of what is supposed to be the next success story after IT – power. These companies plan to raise close to $10 billion through IPOs. Should we invest in power? Power sector was one of the most heavily invested stocks by investors in 2007. With the economic recession in 2008, power sector stocks have also declined, like the other sectors. But now, it seems that the sector has crossed the deepest trough and the mid-term future looks much better. Projects are in place to install about 78,700 MW of capacity in the 11th five year plan. Such expansion plans require investments of the order of Rs. 2,50,000 crores, out of which heavy equipments would require about 100,00 – 120,000 crores and civil works, 50,000 – 60,000 crores. And with India’s vision of rural electrification, investments in generation, transmission and distribution are also required. The major companies whose stocks would be favorites are: NTPC: India’s largest power company, generating almost 30% of India’s power. It has already installed about 29,300 MW of power and is diversifying into different power sources to install about 16,180 MW of new power capacities, based on coal and water [23]. If it continues to receive the same profit percentage, its stocks would be worth investing. BHEL: The best option among those who manufacture electric equipments. Its position in this sector makes it an attractive proposition. KEC International: One of the largest power transmission companies in the world, it has recorder profits of about 74% in Q1, 2008 [24]. The major concern is fuel shortage. But with a good strategy for reforms, the shortage should be evened out. Hence, with the development and reforms going on in the power sector, investing in Indian power sector is a good option.
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References
1. Key World Energy Statistics-2007 ,Energy Sector in India – Building on Success for More Results -ADB study 2. Analysis of Power Sector in India: A Structural Perspective by Niranjan Swain, J P Singh and Deepak Kumar 3. http://www.powermin.nic.in/acts_notification/electricity_act2003/preliminary.htm -official website of Indian Power ministry 4. http://www.equitymaster.com/research-it/sector-info/power/ 5. http://www.ficci.com/india-electricity/Booklets/IndianPowerSector.pdf 6. Recent Trends in Indian Power Sector Reforms- Dr.Ganga Agnihotri, V K Parashar, S K Gayakwad 7. Indian power sector-challenges and investment opportunities -Indian Power ministry. 8. Investment Opportunities in Indian Power Sector and Cooperation with International Energy Agency-R.V. Shahi 9. http://www.tatapower.com 10. http://www.thehindubusinessline.com/2008/08/01/stories/2008080152661000.htm 11. http://www.lancogroup.com/power/Power.html 12. www.jswel.net 13. www.rinfra.com/rpt.html 14. http://www.thehindubusinessline.com/iw/2007/05/20/stories/2007052001101300.htm 15. Power Scenario in India at a Glance (http://cea.nic.in/planning/POWER%20SCENARIO%20AT%20A%20GLANCE/POWER%20S CENARIO%20AT%20A%20GLANCE.pdf) 16. www.jindalpower.com 17. www.torrentpower.com 18. www.jilindia.com/underexec_karcham.htm 19. www.suzlon.com 20. IBEF report on Power October 2007. 21. www.ficci.com/media-room/speeches-presentations/2006/may/may12elec/PlenaryIV/SalmanZaheer-WorldBank.ppt 22. http://cea.nic.in/planning/POWER%20SCENARIO%20AT%20A%20GLANCE/POWER%20S CENARIO%20AT%20A%20GLANCE.pdf 23. http://www.ntpc.co.in/
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doc_828025171.pdf
The report is about the power and energy sector in india.
2008
Power and Energy Sector Report
Associate Radhika V. Analysts Ranjit Radhakrishnan Tess Zacharia Abhishek Nemuri Rajiv Kumar Vaibhav Kapur 2008
Power and Energy Sector Report 2008
Over View ...................................................................................................................................................... 3 Industry Structure ......................................................................................................................................... 3 Power Production ......................................................................................................................................... 4 Consumer’s Profile ........................................................................................................................................ 5 Key Trends In the Indian Power Sector and SWOT analysis ......................................................................... 5 SWOT Analysis............................................................................................................................................... 8 Market Analysis........................................................................................................................................... 10 Government Regulations in Power Sector .................................................................................................. 14 Status of Projects in Private Sector ............................................................................................................. 16 Outlook ....................................................................................................................................................... 18 Asia Pacific Power Segment ........................................................................................................................ 22 Investment Opportunities........................................................................................................................... 23 References .................................................................................................................................................. 25
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Over View
Population growth and rapid economic development has put pressure on Indian infrastructure, which has not yet reached its potential. The government has realized this and has started to concentrate its effort on infrastructure development. To have a perfect infrastructure in place, it is necessary that the country’s power sector is capable enough to meet the demands. For the growth of every other sector, proper and efficient supply of power is needed. But, the demand for power in the country has always exceeded the power supplied. Shortages, tariffs and over-dependence on non-renewable, imported fuels of energy still continue, while the inefficient transmission and distribution system hamper the pace of the power supply growth. This report analyzes the power sector scenario in India – the current industry structure, key trends, market structure, regulations and policies, major projects and players, and the future prospects.
Industry Structure
Power sector can be further split into 4 sub-sectors: Generation, Transmission, Distribution and Equipment. Power Generation Electricity can be generated by converting various other forms like Fossil Fuel, Wind, Water, Sun and Nuclear fuels. The power is generated by using up the energy from these sources and suitable generating units like a turbine, solar cell etc. Depending upon the fuel the type of generation plants can be listed as follows: Coal based generation, Gas based generation, Diesel plants, Hydroelectric, Nuclear, Solar, Wind, Geothermal and Biomass. Transmission The job of a Transmission company is to transfer the electrical power from its point of generation to the place where it is to be used. The power is normally transmitted over Grids at very high voltages. Along with long transmission lines, many transformers are also installed as a part of the grid. The Grid delivers this power to the substations from where it is further distributed to the consumers. Distribution A distributor of power receives high voltage electricity from the transmission lines and then distributes it to the end customers. These electric voltages are first converted to lower voltages using step down transformers and then delivered to customers’ electrical systems. The distributor also measures the amount of power consumed by each customer and collects the charge from each customer. The distributors face various problems like theft which leads to these companies running into losses.
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Equipment There is a huge market for electrical equipment in the above mentioned 3 sectors and also in various other industries. The companies in this sector manufacture a wide range of equipment – generators, transformers, grid lines, towers, electrical fittings etc.
Power Production
Installed Capacity The Power sector is largely a state held institution with the private sector only holding 12 % of the installed capacity. The government is taking various measures and ensuring reforms to liberalize and disinvest the Power sector.
Installed Capacity
70,394 80,000 60,000 40,000 20,000 0 State Private
Installed…
41,213 15,231
Central
2% 2% 9% Coal Hydro 36% 51% Nuclear Oil Gas
? India is the third largest producer of electricity in Asia, capacity has grown from 1362MW in 1947 to 144,564.97 MW. ? Thermal, Hydel and Nuclear power based generation is in operation now where Thermal is the major mainstay. ? Non-conventional and renewable sources of energy like wind, solar and tidal projects have a huge growth potential
Thermal Generation Coal based thermal power stations are presently the mainstay of power. Because constraints in development of hydro and nuclear power, this would continue. At present, Coal reserves are 202 billion tones- about 70% is consumed in the power sector. Lower grades of coal are being used for power generation resulting in operational problems. These problems reduced the ultilization levels but inspite of these inefficiencies thermal generation is the more practically viable option. Hydroelectric Generation Hydroelectricity generation is the ideal soruce for meeting the power demand.India’s peak demand and has the added advantage of being free from the price difficulties of fuel supply. Only about one-fifth of India’s vast hydel power potential has been utilized so far. Since the 1980s the growth of hydel power generation has been slow at a dismal 4.4% when compared to growth rate of thermal generation which is at 11.6%. India is lagging behind developed countries which concentrate on hydro electric generation
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Nuclear Power Generation Only 2% of the entire power capacity is produced by 14 power plants. Nuclear energy is considered ideal for meeting base load demand. The Government of India has ambitious plans of increasing nuclear power generation to 10,000 MW by 2012 and of doubling that figure by 2020.A huge amount of Public sector investments are expected and PPP may be used to achieve these targets. With the abundant thorium reserves, Nuclear Power Corporation of India Limited (NPCIL) is bracing to play a major role in future to meet the ever-increasing energy demands. The installed capacity at the end of eleventh Plan would be around 10280 MW and 20,000 MW by the year 2020.
Consumer’s Profile
2
1 9 22 5 Domestic Commercial
30
Agriculture Industrial
31
Traction Inter-state Others
Key Trends In the Indian Power Sector and SWOT analysis
Indian power sector on a global scale
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The demand for electricity in India as a developing nation has been increasing exponentially over the years. The Indian economy has been growing at a rate of 6% in the 1990s and at an average of 8% in the recent years .Per capita electricity consumption of India is approx at 612 kWh per capita one of the lowest and not substantiating the GDP where as the world average is 2596 KWH . Energy-GDP Elasticity = 0.58. which is low by world standards and is expected to grow in the coming years. Growth Pattern
In the past, the power sector was propped up by the support from state and central governments to the extent of 25 % of the annual budgets. The power sector in India was characterized by unreliable infrastructure, insufficient generation capacity, widespread transmission and distribution losses and in general inefficient operations. The state run power units were making huge losses and debt ridden state governments were not in a position to expand the generating capacity causing huge demand supply gap. Government Reforms & private sector participation
As a breather for the power sector, the Government of India introduced the much needed reforms in 2003 Electricity Act. The reforms including deregulation have caused increased competitiveness and positive effects in general. The emphasis in power sector is now on open access to generation and distribution of power, power trading, multi buyer model and reorganization of the state electricity boards. However the Indian power industry still faces huge demand - supply gap and there are still serious issues to be addressed. Small capacity projects Since the investment required for setting up a power plant is huge, there is a trend of increasing popularity of small capacity plants which were not viable earlier due to technological constraints. These small capacity plants have the advantage of having smaller setup time and smaller initial investment requirement. So investors are attracted to this option. Ultra mega power projects On the other hand the government realizing the need for fast reduction of demand supply gap has introduced and promoted the concept of ultra mega power projects. These are very large sized projects, approximately 4000 MW each involving an estimated investment of about Rs. 16,000 crore. Currently
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there are 9 ultra mega power projects planned in various stages of development. Dadri & Sasan projects spearheaded by Reliance Energy, Mundra power project by Tata Power etc are some of the major ultra mega power projects .
Environmental Issues Another major factor in the Indian power scenario has been environmental friendly power projects. In India there is generally good awareness about environmental issues and hence the power companies are giving extra effort for energy conservation and environment management. For example the companies have to meet stringent national and international norms relating to environmental safety. Additionally most of the power plants require clearance from ministry of environmental affairs for generation and construction. Renewable energy wave As per the trend in most parts of the world, in India also, generation of renewable energy is becoming the next big thing due to rising energy security pressures. Planned Capacity Additions in Renewable Energy Generation (MW) During the 11th Plan (2007-2012)
Bio Energy 2100
Small Hydro 1400 Wind 10500
In the next decade or so the power utilities sector would witness great development in technologies for power generation from wind, solar, geothermal and other renewable sources. Nuclear power generation is also all set to takeoff in the country and the nuclear deal with US is supposed to give new impetus to this field.
Private sector participation in power transmission and distribution
By the end of the 11th Plan period the Indian government is planning to complete 14 ultra mega transmission projects with private participation. The total estimated cost of these projects is about 25,000 cr. Government has also initiated steps to
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increase private sector participation in distribution. Reliance energy and Tata power are already involved in power distribution.
SWOT Analysis
Strengths
? Sustained economic growth has made proportional power sector growth a necessity. The India government realizes this and is focusing on continued energy sector reforms. The overall growth rate in year 2007-2008 was 6.33 %. ? India ranks sixth in terms of electricity generation. As on April 2008 the total installed capacity is 143311.01 Megawatts. ? The return on investment in power sector for private players can be attractive. The power sector has the potential for a much faster growth. There is a guaranteed rate of return of 14% . ? Availability of skilled and unskilled human resources. ? Availability of adequate natural resources like coal and huge potential for hydroelectric projects. ? With privatization, the investment in transmission and distribution is expected to reduce losses in these operations. ? Power trading is allowed in the sector and there is good opportunity for power trading companies since country has different power distribution between various regions. ? Wide consumer base available.
Weaknesses
? The condition of the state electricity boards is pathetic in terms of finance available. Also there are major deficiencies in the operational and technical front. ? Transmission and distribution losses coupled with large scale thefts cause about 25% loss. ? The supplied power is of bad quality with the 3 % to 6% allowed deviation in frequency exceeded often.
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? Major percentage of power equipment is old leading to high operational losses. ? There is skewed tariff structure and wild range of subsidies which the industry cannot sustain. Government regulated tariffs reduce the bargaining power of suppliers. One example is the deep agricultural subsidies which is bleeding the state electricity boards. ? Poor pace of rural electrification.
Opportunities
? The Indian government has the plan to generate 2, 00,000 MW by 2012 from the current production level of 1, 14,000 MW. This would entail huge investment in the sector during this period . ? The electrical reforms started with the ‘New Electricity Act 2003’ have provided a liberal and competitive framework to the power sector. ? The nuclear power generation can receive a great boost when the nuclear deal between India and the United States of America goes through. ? Competition among private players is not strong. There can be first mover advantage in certain sections like transmission and distribution. ? The thermal plants account for 80% of the power generation in India. Concerns about pollution and fast depletion of non renewable sources of energy have created a major opportunity for firms dealing with renewable energy sources in India. ? There is no ceiling on foreign direct investment in generation, distribution or transmission projects. The FDI inflow has been improving steadily.
? There is great opportunity in setting up small captive power plants catering to customers who are big in terms of power requirement and have inelastic demand. ? Inter regional connectivity will be established in the future with HVDC and extra high voltage AC lines. ? Significant opportunities exist for project promoters as well as for engineering, procurement and construction contractors and operations and maintenance companies.
Threats
? The social constraints in India can impose roadblocks. There is a wide variety of concerns about pollution from thermal plants, safety of nuclear plants, negative impact of hydroelectric projects like displacement of people and submersion of forests. ? Mega power plants require huge initial investment and there is considerable delay before the plant construction is complete and it becomes operational.
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? Indian manufacturers and entrepreneurs are new to the power sector since earlier the sector was fully controlled by the government. ? Regulations can be a deterrent for investors. There are two sets of regulations to be followed since both the state and the central government will have its sets of policies. ? In spite of the consistent economic growth, rising inflation, very large trade deficits and insufficient infrastructure are major areas of concern. ? Many projects have been planned but due to slow regulatory processes, especially in the distribution segment, the supply is far lesser than demand. ? There is considerable political risk particularly since the power projects usually take more than 2 years for completion. Change of governments during this period can cause lot of politically motivated road blocks.
Market Analysis
The Indian power sector is trying to cope up to the challenge of meeting the exploding power demands of the Indian consumers. The problem of demand exceeding supply has always plagued the growth story of Indian power sector story. Always the growth in supply was negated by increase in demand. According to2001 Census, that about 44% people don’t have access to power. Current Supply Scenario for Indian Power Sector India is one of the fastest growing economies in the world. This, along with the increasing population, has necessitated the increased consumption of power in the country to keep the economic activities running in the country. The Electricity Act 2003 is a step in the right direction to address the issues of transmission and distribution losses and rural electrification. The following charts show the growth of peak supply and total energy available from the years 20032008, and the values of the two variables for the months April, May and June 2008.
Peak Supply(MW)
April-June 2008 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 0 20000 40000 60000 80000 100000 Peak Supply(MW)
Chart 1 : Peak Supply for the years 2002-2008 and for the months April, May and June 2008.
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The chart below shows the percentage distribution of power supplied by various sources, with a breakup based on the fuels they use:
140000 120000 100000 80000 60000 40000 20000 0 Hydro Coal Diesel Gas Nuclear R.E.S Total State Private Central Total
The figures indicate an upward trend in the supply curve for the power sector. But, there are issues that still act as potential roadblocks for its effective growth: A dent in the efficiency caused by the losses in transmission and distribution. Nuclear power contributes only a meager percentage to the total supply. Over-dependence on coal is a major concern for the government as it is one of the major contributors to global warming. Hence, if the growth rate of India’s supply has to increase further, usage of renewable sources of energy, particular nuclear energy have to be increased. It is also imperative that the losses from transmission and distribution, which account for about 30% of power loss, be minimized. Current Demand Scenario of Power in India
As mentioned earlier, India’s huge demand for power can be attributed to mainly two reasons: the population explosion and the highly active economy. And with India growing at a fast rate, it is necessary that she has the necessary power to back her up. The charts below give the demand for power in India during the last six years:
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April-June 2008 2007-2008 2006-2007 2005-2006 Peak Demand(MW) 2004-2005 2003-2004 2002-2003 0 20000 40000 60000 80000 100000 120000
Peak Demand for the years 2002-2008 and for the months April, May and June 2008.
The chart below shows the deficit in peak supply and energy availability :
30 25 20 15 10 5 0 Energy Deficit (MU) Peak Deficit (%)
Deficit percentages for the years 2002-2008 and for the months April, May and June 2008. The above chart clearly shows that the demand-supply mismatch has only got worse every year. This is a matter of grave importance at present. With the amount of fossil fuels dwindling and the increasing
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pressure on petroleum prices, India must now turn to renewable sources of energy to quench her everincreasing thirst for power. Future Supply and Demand Projections If India’s growth continues at the rate of at least 8% per annum, the country’s power demand is likely to grow from 188GW (Table 3) to 315 to 335 GW [27] by 2017. The primary drivers of this demand are: India’s manufacturing sector would grow at a faster rate. Residential consumption growth would be at a high rate of 14%. The number of villages that would be provided with power would be more than a 100,000 if India realizes its plan of “power for all” by 2012. Load shedding is currently suppressing demand realization. In such a situation, if India’s supply forces have to match the demand, they must be able to manufacture about 415 to 440 GW of power [27], so that after the transmission and distribution losses, the requisite amount of power reaches the consumers. Considering the current availability of about 167GW (Table 1), it must be able to add about 35-40 GW of power capacity per year. This is a tough task, as India’s current rate of increase in supply doesn’t come close to the required rate. Moreover, achieving such a rate means increased emissions (unless renewable sources are used extensively) and higher inputs of fuel. Infrastructure Required To sustain India’s 8% GDP growth for the next 5 years, the power generation has to grow by 11-12% per annum The major reasons for the yawning gap between supply and demand are:
? Transmission and Distribution Losses: This is one of the chief reasons for supply shortage. Out of India’s total generating capacity, only 65% was utilized in 2007 owing to transmission and distribution losses. This has resulted in power cuts and other regulatory measures. ? Poorly performing generating units: The poor performance of India’s power generating units have resulted in power shortages and unreliable power supply quality. The major reason for this is the coal-powered thermal power stations, which account for about 53.75% of the total generating units. This also has an additional implication of environmental pollution. ? Lack of investment capabilities: The state sector utilities are inefficient and State Electricity Boards do not possess resources to finance future investments for enhancing power generation capacity. ? Higher proportion of base-load plants: India has a higher proportion of base-load power plants compared to peak plants, which is a reason for the huge deficit during peak hours.
To address these issues, the following steps can be taken:
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? Accelerate capacity addition, by building over 140 project sites by 2012 create 35-40GW of power capacity per year and training about 300,000 workers to nullify man-power shortage. ? If India must be able to supply power to meet demands, investments must rise to the order of Rs. 24 lakh crores by 2017, a huge sum. ? Harness more renewable sources of energy and secure fuel supplies. At present, natural gas and nuclear energy contribute only 3.8% of the total power ? A better monitoring mechanism must be put in place. This includes regular interviews, establishing project monitoring systems, preparing a performance scorecard etc. [27]. ? Central government must help states in progress by accelerating the development programme, loans to improve distribution process and allocation of some of the centre’s power supplies. ? India must have a balanced mix of base-load and peaking plants to meet the peak power demands [27]. ? Accountability for the power sector has to be increased. The leadership responsible for making decisions in the power sector has to deal with complex issues and difference in interests at the central and state level.
Government Regulations in Power Sector
Need for New laws
? Creating competitive environment will result in enhancing quality and reliability of service to consumer. ? Distancing regulatory responsibilities of Government and passing it onto the Regulatory commissions. ? Need for individual States to enact their own reform laws. ? Requirement of introducing newer concepts like power trading, open access etc.
CEA (Central Electricity Authority)
? CEA to continue as the main technical Advisor of the Govt. of India/ State Government with the responsibility of overall planning. ? CEA to specify the technical standards for electrical plants and electrical lines. ? CEA to be technical adviser to CERC as well as SERC’s ? CEA to specify the safety standards.
Electricity Act 2003 Electricity Act 2003 has been a very positive initiative for the power sector which looks to transform the power sector. It includes consolidation of laws relating to generation, transmission, distribution and trading. Electricity Act 2003 provides a platform for the development of the electricity industry, supply
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of electricity to all areas, a competitive environment and rationalization of tariff and also constitution of CERC (Central Electricity Regulatory commission).
? Policy Reforms in Generation ? Power Generation has been made free from licensing. ? Removal of the condition of TEC (Techno Economic Clearance) for non-hydro generation. ? Captive generating plants have been freely permitted subject to availability of transmission facility. ? Clearance of CEA will be required for hydro projects. This condition is very much necessary due to the concern of dam safety and inter-State issues. ? Promotion to generate electricity from Non-Conventional Sources which includes minimum percentage of purchase of power from renewable sources may be prescribed by Regulatory Commissions.
Policy Reforms in Transmission
? Transmission Utility at the Centre and in the States to undertake planning & development of transmission system. ? Load dispatch to be in the hands of a government company/organization. Flexibility regarding keeping Transmission Utility and load dispatch together or separating them. Load Dispatch function critical for grid stability and neutrality vis a vis generators and distributors ? Open access to the transmission lines to be provided to distribution licensees & generating companies. This would generate competitive pressures and lead to gradual cost reduction.
National Electricity Policy
? Access to electricity for everyone ? Electricity demand to be fully met by 2012 (100 GW addition) ? Reliable & Quality power to be supplied to the consumers.
Viability of State Electricity Boards(SEB)
? ? ? ? ? ?
National Electricity Plan Demand forecasting Identifying locations for capacity addition Integration of new locations with transmission system Reserve capacity of at least 5% 50,000 MW hydro initiative
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? Push State Governments to review land acquisition procedures ? Allow imported coal & LNG based plants
Other Policy Initiatives Mega Power Projects - Government recognized power projects as Mega Power Projects having a capacity of 1000MW or more and catering to more than one state. The policy was further liberalized with all inter-state projects with capacity of 1000MW and above for thermal projects and 500MW or above for hydel projects to be Mega Power projects. Electricity to Rural Section - Electricity Act 2003 allows electricity generator to provide electricity to rural areas without requiring any license. FDI Policy- 100 % Foreign Direct Investment is permitted in all segments of Power Sector i.e. Generation, Transmission and Distribution FDI With India’s GDP growing at more than 8% for the last few years, the power sector is set to grow at a minimum of 10%. The various opportunities for the growth in Power Sector are
Opportunities
•100% FDI has been allowed in all sectors of the power sector except nuclear power. •Both foreign players and domestic players have equal opportunity to invest. •Projects in Power generation & distribution of all types and sizes have been allowed. •Trading in Power is also allowed by Electricity Act 2003. •Open access to the licensees to construct, operate and maintain transmission lines.
Incentives
•Incentives to invest in thermal & hydro power sector. •Customs duty on import of capital goods for Mega Power projects is Zero. •A tax holiday for 10 years for plants involved in power generation. •Tremendous scope for public-private partnership in the nuclear energy sector. •Incentives for providing electricity in rural areas. •Clear & transparent tariff setting principles.
Status of Projects in Private Sector
Currently the total installed capacity of the private sector is 21246.05 MW which is about 13.5% of the total . Coal and
Sector wise Installed Capacity
Private State 13.5% 52.5% Wind 75%
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diesel powered generating units provide more than 80 % of this power supply. The major projects in execution in private sector are mainly thermal and gas based power plants.
Some of the private power projects: Dadri & Sasan Projects: These are the main ongoing projects for Reliance Infrastructure ltd. Dadri Project is for construction of a 3740 MW gas generation power plant in the district of Dadri in the northern state of Uttar Pradesh, which when completed would be the single largest gas fired generation plant in the world. The first phase is planned to be completed by 2009 after which Reliance Infrastructure has plans to expand it to 7500 MW. The second major project under development by Reliance Infrastructure is the 5×800 coal fired generator plant in Sasan, Madhya Pradesh. Reliance has committed the Government for advancement of the commissioning of its first unit by nearly 16 months to December 2011, as against May 2013 as per the Power Purchase Agreement. The second unit is planned for commission after three months in March 2012. Mundra Project: Tata Power has the contract for building 4000 MW power plant at Mundra, Gujarat. On April 2008,Tata power completed signing of financial agreements for Mundra power project under the Special Purpose Vehicle (SPV) Coastal Gujarat Power Limited (CGPL) .The cost of the project is estimated at INR 17000 crores (USD 4.2 billion) with the first of the five units to be commissioned in February 2011. The entire plant is expected to be commissioned at the end of 2012. Tamnar Project:1000 MW O.P. Jindal Super Thermal Power Plant, at Tamnar near Raigarh in Chattisgarh is one of India’s first mega-power projects in the private sector. The project was executed by Jindal Power Limited. The Financial Closure of the Project has been achieved .The plant is all set to go fully commercial by August 15th 2008. Teesta Project-Hydroelectric project: LANCO Energy Pvt Ltd (LEPL) is constructing 500 MW Teesta VI Hydropower Project across the Teesta River in Sikkim on a Build, Own, Operate, Transfer basis in the joint sector for a period of 35 years. The project is expected to generate 2441 million units per annum to be sold to the Maharashtra State Electricity Distribution Company Ltd (MSEDCL). Status of the project is that several statutory clearances required from the State and Central Agencies have been obtained and civil construction work is expected to start soon. Latest commissioning schedule of the units are from January, 2012 to June, 2012. Suzlon wind power project: Suzlon Wind power project is based in Dhule,Maharashtra. The current installed capacity at Dhule is 650 MW and after an additional capacity of 450 MW is installed the windfarm will reach a cumulative capacity of over 1000 MW, making it the world’s largest windfarm. In addition to this, Suzlon’s windfarm located in Sanganeri in the state of Tamil Nadu in India, has planned for a capacity of over 500 MW and is home to over 250 wind turbines with a total of 350 MW of installed capacity presently .
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Tala transmission project: Tata Power has a 51:49 joint venture with Power Grid Corporation of India, for the 1200 km Tala transmission project. The joint venture is India’s first transmission project to be executed with public-private partnership. The joint venture company named Powerlinks Transmission Limited has been formed primarily to evacuate power from the Tala Hydro Project in Bhutan and to carry surplus electricity from the North Eastern States to the Northern Indian belt. It was inaugurated in the first quarter of financial year 2007-2008 [9]. North Delhi Power Limited Distribution Project: Tata power has a distribution project in joint venture with Government of Delhi called North Delhi Power Limited Distribution Project which has met with considerable success. With the privatization of Delhi Vidyut Board (DVB), Tata Power Company holds managing control in the distribution company North Delhi Power Limited (NDPL). NDPL distributes and supplies power to the North-North West areas of Delhi. With predominantly industrial load consumption, this region has a consumer base of approximately 8 lakhs with an annual power consumption of around 6000 mega units.
Outlook
Renewable energy resources There has always been a deep desire among the mankind to utilize the elements in order to meet the various energy needs. However with the recent developments in the field of renewable resources which makes it economically viable to produce energy that this dream of mankind is coming into reality. The has been a increasing global interest to produce electricity using renewable energy resources. The chief reasons can be attributed to the fact that sooner or later the non- renewable sources of energy , which presently accounts for the major contribution to the power generation, is going to get exhausted leading to cascading ill effect on the whole economy. Although there are various modes of renewable generation but the chief among them which is widely used on commercial level are as follows: Wind India has one of the fourth largest installed capacity in the world in terms of wind energy totaling 8,000 MW. Also there has been an impressive growth rate shown by this sector with CAGR of almost 30 p.c in the last eight years. In 2007 alone India has added 1,700 MW . Encouraged by this trend government of India envisages to add additional 10,500 MW in the eleventh year itself. As per Centre for Wind Energy Technologies, the total potential for wind power in India is around 45,000 MW. Quite encouragingly as per the Indian Wind Turbine Manufacturers association the potential for the total orders is 65,000MW.
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One of the main factor that led to the impressive growth of wind sector is that the sector is allowed a depreciation allowance of 80 per cent in the first year of installation of a project. Also they are not supposed to pay any income tax on the power sales to the utilities for a period of 10 years . Apart from these benefits it has also been noticed that foreign direct investment has also been fast tracked in case of wind power. The government is also considering “Productivity tax Credit” in addition to accelerated depreciation. While this is an issue for existing companies, new investors are less reliant on the tax holiday since they have little or no tax liability. Keeping with the global trend, Indian Wind turbine manufacturers are also moving towards the manufacture of larger turbines in order to bring down costs per swept area. Presently in our country turbines from 250 KW to 1650 KW are available. In India also wind manufacturers are coming up with latest technologies related to stall, pitch, variable speed with variable pitch and gearless drives. Present market for wind turbine is 1500 MW and is expected to grow and stabilize at 2,500 MW per annum. Apart from the impressive growth story of wind sector, there are also few concerns that need to be addressed. One of them is related to the way financing is done for wind power projects . It should move from the present balance sheet financing to standard project financing based on SPV route. ECBs on case to case basis should also be considered. Another major concern is that in India especially in southern states like Tamilnadu etc there is a problem related to the evacuation of power owing to derelict substations. However it is pleasing to note that none of the concerns stated above are grave enough to check the growth of Indian wind industry. Indian wind manufacturers have considerable IT expertise and adequate skilled manpower which helped them to bring down the cost significantly and emerge out as one of the most competitive in the world market. Solar Power India’s very long term solar potential may be taken as unparalleled in the whole world because it is one of the few places which has an ideal combination of high solar reception and large consumer base at the same location. The theoretical solar potential is about 5000 trillion KWh per year ( i.e. 600 TW) which is far greater than the current consumption. However the development of solar power in India is quite dismal . So there is a crucial need to develop cheap solar technology like an ecosystem that consists of local grid clusters with distributed electricity generation so that the need for installing expensive long distance centralized power delivery systems can be avoided . This would ensure cheap electricity to masses . Presently India is one of ninth largest producers of solar thermal systems and seventh largest producer of solar photo voltaic(PV) but the wide deployment of solar power is not there because of its undoubtedly high costs. Estimated unit cost of generation from PV is Rs 12-20 per Kwh and for solar thermal it is Rs 10-15 per Kwh in our country. So it becomes quite evident that the cost of power produced by solar energy systems is 4-5 times higher as compared to that produced by other conventional energy systems. It is also high as compared to other non conventional sources of energy.
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However the research into solar continues at Solar Energy Centre which predicts that in the near future breakthroughs in nanotechnology will significantly increase solar cell efficiencies from 15 percent currently to over 50 percent . Nevertheless government of India of India is now offering generation linked incentive of Rs 12 per KWh for solar PV and Rs 10 per KWh for solar thermal. Biomass Energy from biomass can be obtained through sustained utilization of agri-residues and output from energy plantations. Biomass has the potential to supply India with 100 kWh per year( from 17,000 MW capacity). The main options for conversion of biomass into power are thermo-chemical and biochemical. The biochemical involves anaerobic digestion of biomass for production of biogas. However in India there is a considerable commercial potential for biomass energy generation using thermo chemical processes which involves combustion and gasification. Another technology option for biomass energy is co-firing of biomass along with coal in thermal power plants . This method is new to India although it has been commercially used in Europe and the US. Another advantage of this technology is that biomass is considered to be carbon neutral fuel and so it’s co-firing in coal fired boilers results in reduced emission of greenhouse gases along with other pollutants like oxides of sulphur and nitrogen. The cumulative installed capacity of grid connected biomass and bagasse cogeneration power projects as on March 31,2007 was around 1,140.63 MW . Of the total mentioned above , 615.83 MW is from bagasse based cogeneration and 524.8 MW comes from other biomass. An additional 1,707.07 MW of new biomass and bagasse based cogeneration was under implementation as on March 31,2007. Small Hydro Small hydro power plants have been defined by government of India as of capacity of up to 25 MW. The cluster of small hydro power plants has a deeper impact on the stability of the grid than as suggested by definition. This is also regarded as the best option for low cost off-grid power. The estimated potential for all types put together is at least 15,000MW. According to Ministry of New and Renewable energy (MNRE) , the total installed capacity of small hydro projects as on March31,2007 stood at 1975 MW from 602 projects. An aggregate capacity of 650 MW from further 219 projects is partly under construction. The MNRE had a target of adding 550 MW of small hydro power (SHP) in the tenth plan period and has nearly achieved that figure. The eleventh plan target is more ambitious -1400 MW to be added between 2007-2012. It is quite important to note in this context to note that MNRE’s aim is to obtain 2 per cent of India’s grid active power from small hydro sources. One point of importance that can be noted is that the most of the ongoing projects is in the hands of the private players. The ministry says the almost total commercialization of small hydro has been achieved of late. Even state government has said that it’s only the private participation that led to tapping of the full potential of small rivers and canals. Nineteen states have also announced policies to invite private sector participation in SHP projects.
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Fiscal support is primarily given in the form of a subsidy to grid-interactive small hydro , both in public as well as private sectors. Projects in special category states receive higher subsidies than other states and Union territories. This subsidy is released only when the project is deemed complete by MNRE . Also the project when commissioned is required to be tested for its performance by AHEC, IIT Roorkee. The MNRE provides financial assistance for R&M and capacity upgradation also. However, assistance under these heads is provided only for government sector projects. Nuclear Energy The envisaged growth of nuclear power in India is possible provided robust technologies are developed for both the front-end and the back-end of the fuel cycle. India has one of the largest reserves of the nuclear fuel - thorium. However, the nuclear energy program will continue to be uranium based until commercial production based on thorium becomes feasible. There is a persisting need for developing techniques for economic and efficient extraction of uranium from lean sources e.g. sea water. If the Indo-US nuclear deal goes through, there will be a boost to nuclear energy and private participation in this sector would be expected. Indian government is pursuing nuclear energy as a solution to our ever increasing energy demands. Coal, the dominant energy source today, is expected to last for around 45 years with current technologies for extraction. Nuclear Co-operation with US Access to clean nuclear technology and ending 30 year old isolation from international nuclear technology Future agreements with other NSG countries like Russia, France etc, having advanced nuclear technology. Uninterrupted supply of nuclear fuel to reactors placed under IAEA safeguards. Increase in the share of nuclear energy thus ending India’s energy requirements. Facilitate India’s participation in international research community & thus helping India’s indigenous research. Amendment in Atomic Energy Act will facilitate private participation in the field of nuclear energy Implications of Nuclear Deal Aggressive targets on the nuclear closed fuel cycle based three-stage nuclear power programme, where Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI) has been setup for the construction of its first Fast Breeder Reactor (FBR) by 2010. Nuclear power plant capacity targets as envisaged by the Department of Atomic Energy (DAE) are given below:
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- 10,280MWe by 11th Five year plan - 20,000 MWe by 2020 - 50,000 MWe by 2030 - 250,000 MWe of nuclear power by 2050 India’s Nuclear power- Current & Future Currently, India has 17 nuclear power plants being operated by the Nuclear Power Corporation of India Limited (NPCIL) with a total installed power capacity of 4120MWe. By December 2008, new plants of capacity 2660MWe are to be under operation. Major Issues relating to Nuclear Deal
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Spent fuel reprocessing Access to enrichment and reprocessing technology Conditional access to nuclear fuel if India conducts a nuclear test in future. References to India’s foreign policy towards non-proliferation.
Asia Pacific Power Segment
Asia pacific region includes China, Japan, Australia, Singapore, India, South Korea and Taiwan. Asia pacific Power segment had a compounded annual growth of 8.8 for the five year period from 2002 to 2006.The next five years compounded annual growth is estimated to be 11.2 % signifying accelerated growth.
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China and Japan accounts for 70% of the Asia-Pacific electricity market. India accounts for 14 % of the market. The industrial sales provided almost half the total sales (49.2%), while the residential consumers provided for 29.2% of the market share. The estimates suggest that the electricity market in this region will grow to $667 billion from $393.2 billion it was in 2006. Trends in Asia Pacific Power Segment The two major market models are: a company might own power generation facilities and they produce power and sell it to customers or company may buy electricity in a wholesale market and sell to its end consumers. The major market trends in this region are:Market is moving towards increased liberalization leading to competition and therefore customer benefits are increasing. Buyer power depends on the country of operation. For example in china buyer power is low because market is not liberalized. Overall buyer power is moderate in the region Companies will need huge initial investment to enter the market. But liberalized policies in the region combined with the fact that electricity is a undifferentiated product can encourage new players to enter into the market. The market in the Asia Pacific region is still composed of small number of large scale companies. Indian and Asia-Pacific Power Sectors – A Comparison The rate of increase in power supply, for India and Asia Pacific, is shown in the table below:
25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 Asia Pacific India
This shows that India exhibits a smiliar development pattern as Asia Pacific’s in terms of supply growth rate. But the rate of increase in India is way below the percentage growth exhibited by Asia as a whole. If India has to match its demand, the rate of increase in power supply must come much closer to that of Asia’s.
Investment Opportunities
With India struggling to meet the power demands of its people, it is imperative to leverage investments to meet the demand for the following reasons:
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Generation capacity has to be increased at a much higher rate compared to the current rate of close to 7%. Transmission and distribution losses account for about 35 - 40% of the total losses. Investments of the order of Rs. 1,80,000 crores in the 5 year period from 2007 – 2012 [21] to improve its efficiency. The growth and over dependence on coal-powered plants must be reduced and thermal power stations, generating about 20,000 MW, have to undergo rehabilitation. Firms have started to realize the potential of the power sector and have started investing. Hinduja group has decided to invest 10 billion dollars in power projects across various parts of the country for the next ten years. Areva NP, world’s largest nuclear power firm, has set its sights on India’s nuclear power sector. And private companies like Reliance Power, Essar Power, Sterlite Industries(Sterlite Energy), Jindal Group, Videocon and Gati, a logistics company, are diversifying into the power sector to be a part of what is supposed to be the next success story after IT – power. These companies plan to raise close to $10 billion through IPOs. Should we invest in power? Power sector was one of the most heavily invested stocks by investors in 2007. With the economic recession in 2008, power sector stocks have also declined, like the other sectors. But now, it seems that the sector has crossed the deepest trough and the mid-term future looks much better. Projects are in place to install about 78,700 MW of capacity in the 11th five year plan. Such expansion plans require investments of the order of Rs. 2,50,000 crores, out of which heavy equipments would require about 100,00 – 120,000 crores and civil works, 50,000 – 60,000 crores. And with India’s vision of rural electrification, investments in generation, transmission and distribution are also required. The major companies whose stocks would be favorites are: NTPC: India’s largest power company, generating almost 30% of India’s power. It has already installed about 29,300 MW of power and is diversifying into different power sources to install about 16,180 MW of new power capacities, based on coal and water [23]. If it continues to receive the same profit percentage, its stocks would be worth investing. BHEL: The best option among those who manufacture electric equipments. Its position in this sector makes it an attractive proposition. KEC International: One of the largest power transmission companies in the world, it has recorder profits of about 74% in Q1, 2008 [24]. The major concern is fuel shortage. But with a good strategy for reforms, the shortage should be evened out. Hence, with the development and reforms going on in the power sector, investing in Indian power sector is a good option.
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References
1. Key World Energy Statistics-2007 ,Energy Sector in India – Building on Success for More Results -ADB study 2. Analysis of Power Sector in India: A Structural Perspective by Niranjan Swain, J P Singh and Deepak Kumar 3. http://www.powermin.nic.in/acts_notification/electricity_act2003/preliminary.htm -official website of Indian Power ministry 4. http://www.equitymaster.com/research-it/sector-info/power/ 5. http://www.ficci.com/india-electricity/Booklets/IndianPowerSector.pdf 6. Recent Trends in Indian Power Sector Reforms- Dr.Ganga Agnihotri, V K Parashar, S K Gayakwad 7. Indian power sector-challenges and investment opportunities -Indian Power ministry. 8. Investment Opportunities in Indian Power Sector and Cooperation with International Energy Agency-R.V. Shahi 9. http://www.tatapower.com 10. http://www.thehindubusinessline.com/2008/08/01/stories/2008080152661000.htm 11. http://www.lancogroup.com/power/Power.html 12. www.jswel.net 13. www.rinfra.com/rpt.html 14. http://www.thehindubusinessline.com/iw/2007/05/20/stories/2007052001101300.htm 15. Power Scenario in India at a Glance (http://cea.nic.in/planning/POWER%20SCENARIO%20AT%20A%20GLANCE/POWER%20S CENARIO%20AT%20A%20GLANCE.pdf) 16. www.jindalpower.com 17. www.torrentpower.com 18. www.jilindia.com/underexec_karcham.htm 19. www.suzlon.com 20. IBEF report on Power October 2007. 21. www.ficci.com/media-room/speeches-presentations/2006/may/may12elec/PlenaryIV/SalmanZaheer-WorldBank.ppt 22. http://cea.nic.in/planning/POWER%20SCENARIO%20AT%20A%20GLANCE/POWER%20S CENARIO%20AT%20A%20GLANCE.pdf 23. http://www.ntpc.co.in/
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doc_828025171.pdf