OVERVIEW OF INDIAN POWER SECTOR

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“Power is an extremely strategic and important sector for the country’s economy. It is a very

important ministry and it is a very big challenge and a very big charge” Jyotiraditya Scindia

Power Minister

ELECTRICITY IN CONSTITUTION OF INDIA

Item 38 in List III of the Seventh Schedule of the Constitution of India places electricity in the concurrent list, that is, on which both the central and state governments have jurisdiction.However by virtue of part XI of the constitution, in case of overlapping of the law enacted by state and union legislature, the union legislation shall prevail.The state law shall be inoperative only to the extent of inconsistency with the union law.

PRESENT POWER SCENARIO OF INDIAN POWER SECTOR

Total Installed capacity [1]

SECTOR

MW

%AGE

STATE SECTOR 86405.85 40.96

CENTRAL SECTOR 62886.63 29.81

PRIVATE SECTOR 61659.24 29.23

TOTAL 210951.72

Private sector participation in capacity addition has been increased significantly compared to previous years percentage which is a good sign but still more participation needed in growth perspective.1

FUEL MW %AGE

THERMAL 140976.18 66.83

coal 120873.38 57.29

gas 18903.05 8.96

oil 1199.75 0.57

HYDRO(RENEWABLE) 39339.40 18.65

1.http://www.cea.nic.in/reports/monthly/executive_rep/dec12/1-2.pdf

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NUCLEAR 4780.00 2.265

RES** (MNRE) 25856.14 12.26

TOTAL 210951.72

** Renewable Energy Sources (RES) include SHP, BG, BP, U&I and Wind Energy, Source for both the tables: CEA

SHP= Small Hydro Project, BG= Biomass Gasifier , BP= Biomass Power,

U & I=Urban & Industrial Waste Power. As on 31-12-2012[2]

All India Thermal Plf(%) scenario*:

2010-11 2011-12 2012-13(Provisional)$

Up to Dec’12

75.07 73.32 69.63

$ Provisional

* PLF is based on coal / Lignite based Thermal Power Stations only

All India Annual per capita consumption in 2010-11 is 818.8 kWh.In the year 2010-11, T&D losses are 23.97% and AT&C losses are 26.15%.All India Coal consumption for Power Generation in the year 2011-12 is 417.56 Million Tonnes.

Due to the small provision of non-renewable energies such as petroleum, natural gas and coal large numbers of challenges are created for the population of the country and world. The reduction of these resources and rising demand of the people for energy signifies that there is a need to find ways to reduce the use of these fossils fuel but it is not possible because of use of these energies in everything like cooking, transportation and many more. Increase in the cost of energy is directly related to the declining provision of the non- renewable resources. Economical and political factors are also linked with this, due to the increasing demand of the population for these kinds of energies, it is necessary to think about the alternatives to develop energy.

The most important factor about which people have to pay attention is the environmental impact when we talk about non-renewable energy resources. The release from vehicles contaminated the water that we drink and also polluted the air that we breathe. The domino effect of the storms, flood, droughts and the rising level of sea all these are the result of global warming and are caused by the pollution. But with advancement in technology and innovations we are able to solve our energy crises, and the best answer is the renewable energy resources. We can tie together the power of wind, sun and water to produce electricity for the commercial and household use and can also be used as a vehicle power.

Renewable energy in India is a sector that is still underdeveloped. India was the first country in the world to set up a ministry of non-conventional energy resources, in early 1980s.India has introduced

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many programs like Indian Solar Loan Programme and Jawaharlal Nehru National Solar Mission towards improving the Renewable energy based power generation with strategic targets. Following is the present status of Power from Renewables:2

Renewable Energy Programme/ Systems Target for 2012-13

Deployment during December, 2012

Total Deployment in 2012-13

Cumulative achievementto 31.12.2012

I. POWER FROM RENEWABLES:

A. GRID-INTERACTIVE POWER (CAPACITIES IN MW)

Wind Power 2500 99.3 1067.75 18420.4

Small Hydro Power 350 31.55 100.83 3496.14

BioMass Power 105 6 98.5 1248.6

Bagasse Cogenration 350 40.4 254.4 2239.63

Waste to Power - Urban 20

2.4 6.4 96.08

-Industrial - - -

Solar Power (SPV) 800 129.09 234.97 1176.25

Total 4125 308.74 1762.85 26677.1

Source: MNRE[3]

Renewable Off-grid captive power achieved up to 31.12.12 is 803.306 MW and target for 2012-13 is 126 MW.

10th FIVE YEAR PLAN REVIEW

India ranks fifth in the world in terms of primary energy consumption, accounting for 3.5 per cent of world commercial energy demand in 2003. Despite the overall increase in energy demand, per capita energy consumption in India is still very low compared to other developing countries. With a gross domestic product (GDP) growth of 8 per cent set for the Tenth Five-Year Plan, the energy demand is expected to grow at 5.2 per cent. Although, the commercial energy consumption has grown rapidly over the last two decades, a large part of India's population does not have access to it.

India is fortunate to be endowed with both exhaustible (particularly coal) and renewable energy resources. Despite the resource potential and thesignificant rate of growth in energy supply over the last few decades, India faces serious energyshortages. This has led to reliance on increasingimports for meeting the demand of oil and coal. As per current projections, India's dependence on oil imports

2.http://www.cea.nic.in/reports/monthly/executive_rep/dec12/8.pdf 3. http://www.mnre.gov.in/mission-and-vision-2/achievements/

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is expected to increase. The demand of natural gas also outpaces supply and efforts are being made to import natural gas in the form of liquefied natural gas (LNG) and piped gas. The power sector has also been experiencing severe shortages.

The Tenth Plan strategy for the sector includes increasing the production of coal and electricity, accelerated exploration for hydrocarbons, equity oil abroad, introduction of reforms through restructuring/deregulation of the energy sector to increase efficiency, demand management through introduction of energy efficient technologies/processes and appliances. The process of producing, transporting and consuming energy has a significant impact on the environment. Pollution abatement processes would form an important part of the development of energy sector.

In order to have an integrated energyapproach and to meet the policy goals of economic efficiency, energy security, energy access and environment, the establishment of institutional links and coordinating mechanisms has been proposed.

Energy Scenario

India's incremental energy demand for the next decade is projected to be among the highest in the world, spurred by sustained economic growth, rise in income levels and increased availability of goods and services.

India's commercial energy demand is expected to grow even more rapidly than in the past as it goes down the reform path in order to raise standards of living. A large part of India's population does not have access to commercial energy.

Non-Commercial Energy Resources

More than 60 per cent of Indian households depend on traditional sources of energy like fuel wood, dung and crop residues for meeting their cooking and heating needs. Out of the total rural energy consumption, about 65 per cent is met from fuel wood. Fuel wood consumption during 2001-02 is estimated at 223 million tonnes, 180 million tonnesof which is for household consumption and the balance for cottage industry, big hotels etc. The consumption of animal dung and agro-waste is estimated at 130 million tonnes, which does not include the wet dung used for biogas plants. It is assumed that the wet dung used as manure is being diverted to biogas plants as these plants, in addition to providing a cleaner fuel, also supply enriched manure.

Even though there has been an impressive increase in the availability of the two petroleum based domestic fuels - liquefied petroleum gas (LPG) and kerosene (SKO), they do not appear to have made any significant dent in the pattern of fuel consumption in the rural areas. To some extent, the biogas programme has made progress in rural areas and it is estimated that about 3.2 million plants have already been installed as on August 2001. The National Council for Applied Economic Research (NCAER), Delhi, has estimated the likely availability of gas from these plants during 2001-02 at 1,360 million cubic meters.

Trends of Economic Growth and Energy Use

The average annual world economic growth in the 1997-2020 periods is projected at 3.2 per cent[4], while the energy growth rate is estimated at 2.1 per cent per annum. This yieldan elasticity of energy consumption at about 0.68 per cent. In India's case, the elasticity was more than unity for the 1953-2001 periods. However, the elasticity for primary commercial energy consumption for the 1991-2000 periods is less than unity. This could be attributed to several factors such as the improvement in efficiency of energy use and the consequent lowering of the overall energy intensity of the economy and the higher share of hydrocarbons in the overall energy mix. The projected requirement of commercial energy is estimated at about 412 MTOE and 554 MTOE in the terminal years of the

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Tenth and Eleventh Plans respectively. Based on the inputs of various working groups, the commercial energy demand during the Tenth Plan and Eleventh Plan is estimated to grow at an average rate of 6.6 per cent and 6.1 per cent respectively. However, the demand may be less by 5 per cent and 10 per cent during 2006-07 and 2011-12 respectively due to increasing use of information technology (IT) and prevalence of e-commerce, which will mainly affect the demand of energy in transport sector.

Availability of Commercial Primary EnergyResources

India's energy use is mostly based on fossil fuels. Although the country has significant coal and hydro resource potential, it is relatively poor in oil and gas resources. As a result it has to depend on imports to meet its energy supplies. The geographical distribution of available primary commercial energy sources in the country is quite skewed, with 77 per cent of the hydro potential located in the northern and north-eastern region of the country. Similarly, about 70 per cent of the total coal reserves are located in the eastern region while most of the hydrocarbon reserves lie in the west.

Coal

The geological coal reserves of the countryare estimated at 220.98 billion tonnes (bt) as on January 2001. Out of this, proven reserves are 84.41 bt, while 98.55 bt are indicated reserves and 38.02 bt are inferred reserves. Coal continues toremain the principal source of commercial energy accounting for nearly 50 per cent of the total supplies. About 70 per cent of the power generated is coal and lignite based and this trend is likely to continue in the foreseeable future.

India has an estimated 1000 billion cubic meters of Coal Bed Methane (CBM), which is likely to emerge as a new source of commercial energy in the country. A demonstration project is under implementation with financial support from the Global Environment Facility (GEF) and the United

Nations Development Programme (UNDP). In April 2001, the Government announced a programme for exploration and production of CBM. Under the first round of bidding, five CBM blocks have been awarded to private companies. Apart from this, exploration work in two blocks has been awarded to two public sector undertakings (PSUs) on nomination basis. The successful implementation of these projects will facilitate exploitation of this clean source of energy.

Lignite

The current estimates of geologicallignite reserves in India are 34.76 bt spread overTamil Nadu and Pondicherry (87.5 per cent), Rajasthan (6.9 per cent), Gujarat (4.9 per cent), Kerala (0.31 per cent) and Jammu and Kashmir (0.37 per cent). The lignite deposits in the southern and western regions have emerged as an important source of fuel supply for states like Tamil Nadu, Rajasthan and Gujarat. Over the years, considerable emphasis has been placed on the development of lignite for power generation. Lignite production is likely to increase from 24.3 million tonnes in 2001-02 to 55.96 million tonnes in 2006-07.

Oil and Natural Gas

The latest estimates indicate that India has around 0.4 per cent of the world's proven reserves of crude oil. As against this, the domestic crude consumption is estimated at 2.8 per cent of the world's consumption. The balance of recoverable reserves as estimated in the beginning of 2001 is placed at 733.70 million tonnes (mt) of crude and 749.65 billion cubic meters (BCM) of natural gas. The share of hydrocarbons in the primary commercial energy consumption of the country has been increasing over the years and is presently estimated at 44.9 per cent (36.0 per cent for oil and 8.9 per cent for

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natural gas). The demand for oil is likely to increase further during the next two decades. The transportation sector will be the main driver for the projected increase in oil demand. Consequently import dependence for oil, which is presently about 70 per cent, is likely to increase further during the Tenth and Eleventh Plans.

India has about 0.4 per cent of world's natural gas reserves. Initially the gas reserves had been developed largely for use as petrochemical feedstock and in the production of fertilisers, but gas is increasingly being used for power generation, industrial applications and more recently in the transport sector. Presently the share of power generation capacity based on gas is about 10 per cent of the total installed capacity. The India Hydrocarbon Vision 2025 of the Government identifies natural gas as the preferred fuel for the future and several options are being explored to increase its supply capacity including building facilities to handle imports of liquefied natural gas (LNG) and setting up of pipelines from major gas producing countries. India is also reported to have significant deposits of gas hydrates. However, the true extent of this resource and its potential for commercial exploitation is still being evaluated.

Hydro Electric Potential

The key advantage of hydroelectric power is the ability to store energy and the flexibility of its use during peak load periods. India is endowed with economically viable hydro potential. The Central

Electricity Authority (CEA) has assessed India's hydro potential to be about 148,700 MW of installedcapacity. The hydroelectric capacity currently under operation is about 26,000 MW and 16,083 MW is under various stages of development. The CEA has also identified 56 sites for pumped storage schemes with an estimated aggregate installed capacity of 94,000 MW. In addition, a potential of 15,000 MW in terms of installed capacity is estimated from small, mini and micro hydel schemes.

Nuclear Resources

Nuclear energy has the potential to meet the future needs of electricity demand in the country. The country has developed the capability to build and operate nuclear power plants observing international standards of safety. The current installed capacity of nuclear power plants is 2,860 MW accounting for 2.8 per cent of the total installed capacity of the country. The Nuclear Power Corporation of India Ltd. (NPCIL) proposes to increase the installed capacity to 9,935 MW by 2011-12. The future strategies focus on a three-stage nuclear power programme for the optimal utilisation of the available nuclear energy resources. The first stage of 10,000 MW is based on pressurised heavy water reactor (PHWR) using indigenous natural uranium resources. The second stage is proposed to be based on fast breeder reactor (FBR) technology using plutonium extracted by reprocessing of the spent fuel from the first stage. In the third stage, the country's vast thorium resources will be utilised for power generation. NPCIL has planned launch of about 17000 MW capacity in the current five year plan (2012-2017)[5] by setting up 10 PHWRS of 700 MW each and 10 Light Water Reactors (LWRs) of 1000 MW each based on international cooperation. With the progressive completion of these reactors by 2021-22, the nuclear power capacity is expected to reach over 20000 MW.

Renewable Sources of Energy

India is endowed with abundant natural and renewable resources of energy viz., sun, wind and biomass. The country has been able to achieve significant capacity addition of 1,367 MW through wind farms and ranks fifth in the world after Germany, United States, Spain and Denmark in the generation of wind energy. The available renewable resources need to be exploited by giving a commercial orientation, wherever possible. It may be necessary to continue with subsidies in the case of socially oriented programmes to meet the energy requirements of rural areas, particularly, remote villages, which may be difficult to service through the conventional power grid in the near future.

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Apart from these resources, the countryhas significant potential for ocean thermal, sea wave power and tidal power.

TRENDS IN COMMERCIAL ENERGY PRODUCTION

The country has seen an expansion in total energy use during the last five decades, with a shift from non-commercial to commercial sources of energy. Accordingly, the production of commercial sources of energy has increased significantly.

Coal production is likely to grow at an annual rate of 4.46 per cent in the Tenth Plan period (compared to 2.4 per cent annual growth rate during the Ninth Plan period) to touch 405 mt in the terminal year, 2007. As against this, the coal demand in that year is estimated at 460.50 mt. Part of the gap is proposed to be met through import of both coking and non-coking coal. About 70 per cent of the projected demand is for public sector utilities. A substantial expansion in the domestic coal production is, therefore, needed to meet the requirements of the targeted generating capacity additions envisaged during the Tenth,Eleventh and twelfth five year plans.

The current domestic production of crude oil caters to nearly 30 per cent of the demand and is likely to marginally increase from 32.03 mt in 2001-02 to 33.97 mt in 2006-07. As against this, the demand for petroleum products, projected as 99.13 mt in 2001-02, is estimated to grow at the rate of 5.7 per cent a year to touch 134.6 mt in the terminal year of the Tenth Plan and 172.5 mt in the terminal year of Eleventh Plan. 2012/12 diesel sales seen up 5.9 pct y/y, gasoline may up 5.8 pct. India 2012/13 oil product demand seen up 6.1 pct. India's natural gas production reached a level of 29.69 BCM in 2001-02. The projected domestic production of natural gas in 2007 is 37.62 BCM. The country has been able to meet the demand with the available domestic production till recently. However, the demand is likely to grow rapidly in the near future. A number of projects for setting up of LNG terminals have been approved by the Government to bridge the demand-supply gap. Four LNG terminals at Dabhol, Dahej, Haziraand Cochin are in advanced stages of development and are likely to be completed by the end of the Tenth Plan.

Significant hydro and nuclear generation capacity is likely to be added during the Tenth Plan period. The capacity addition programme includes 16,083 MW from hydel power plants and 1,300 MW from nuclear power plants. In addition, 2,000 MW of energy is planned to be harnessed from wind farms.

Though coal production increased about three times from 114 mt in 1980-81 to 325 mt in 2001-02, the share of coal in total energy supplies has declined from a level of 58.9 per cent to 51.1 per cent. This could be partly due to the increase in the share of inferiorgrade coal in over-all coal production. The primaryreason, however, is that the share of hydrocarbons in the total energy consumption of the country has been increasing over the years and is currently estimated at 44.9 per cent as compared to 37.2 per cent in 1980-81. Net energy related imports of 87.85 MTOE in 2001-02 include the import of 75.43 mt of crude and petroleum products, 19.60 mt of coal and 1.4 BKwh of electricity from Bhutan. The share of non-commercial sources in the total primary energy supply is 31.8 per cent in 2001-02, down from 53.1 per cent in 1980-81.

Energy Imports

India is emerging as a large importer of crude and is planning to import LNG during the Tenth Plan period. If the present trend continues, India's oil import dependency is likely to grow beyond the current level of 70 per cent. Future strategies should focus on increasing exploration activities to enhance the level of recoverable reserves of the country.

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Coal imports accounted for around 16% of domestic consumption in FY2012, as compared with 7.1% in FY2003. The steel sector has been importing coking coal mainly for blending with domestic coal to obtain the desired quality for steel production. The cement industry and coastal power stations are importing non-coking coal.

The share of primary energy imports in the total commercial energy supply is currently estimated at 29.41 per cent and is likely to increase by the end of the Tenth Plan. This is a matter of concern from the point of view of energy security.

Energy Conservation

Energy efficiency or energy conservation is a multi-faceted activity involving four major sectors of the economy - industry, transport, agriculture and domestic sectors. Although, energy conservation measures were initiated a decade back, they have not yielded the desired results due to lack of adequate focus on institutional arrangements to devise suitable incentives and disincentives backed by statutory power of enforcement.

During the Ninth Plan, a need was felt tohave an Energy Conservation Act and to establishan apex institution to effectively implement a programme of energy conservation. Accordingly, theEnergy Conservation Act, 2001 was passed which mandates the setting up of a Bureau of Energy

Efficiency (BEE) that will introduce stringent energy conservation norms for energy generation, supply and consumption. However, the enforcement of penalties stipulated in the Act have been kept in abeyance for five years during which time people would be made aware of the economics and efficacy of the conservation of energy.

Appropriate supply side and demand side management strategies could achieve significant energy savings. Diffusion of new high efficiency technologies in major energy intensive industries, and in energy conversion, transmission and distribution can lead to a reduction in the energy intensity of the economy. For example, Integrated Gas Combined Cycle (IGCC) at 45 per cent efficiency replacing a conventional pulverised coal plant at 36 per cent efficiency will save around 0.5 Giga Joules (GJ) of primary energy for every one GJ of electricity generated. In addition, proper economic pricing of alternative energy sources can greatly influence the pattern of energy consumption and lead to energy efficiency. Efforts would be made to benchmark the efficiency parameters of the energy sub-sectors with the International Standards.

REFORMS IN THE ENERGY SECTOR

Reforms in the energy sector were initiated to supplement the Government's efforts in the development of the sector and to make it more efficient. The Government has been endeavouring to provide a policy environment that encourages free and fair competition in each element of the energy value chain and attracts capital from all sources - public and private, domestic and foreign.

Encouraging such capital formation is crucial for India to meet its energy needs. Significant progress has been made in establishing independent and transparent regulatory authorities in the power sector to facilitate the rationalisation of electricity tariff as well as to encourage competition while protecting the interests of all stakeholders. The Government also proposes to set up regulatory authorities for the coal and petroleum sector during the Tenth Plan period. There is a need to examine the issue of a single regulatory authority for the energy sector with a view to developing the desired fuel-mix and related issues, in close association with sub-sector regulatory authorities.

The thrust of the reforms has been to deregulate the prices of commercial energy resources (which, until recently, were entirely administered), increase competition through institutional, legislative and regulatory reforms and reduce subsidies. Although subsidies cannot be completely eliminated, greater

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transparency can be achieved by transferring all subsidies to central or state budgets and ensuring that the benefits of subsidies reach the targeted beneficiaries. Such an approach will facilitate optimal and economic resource allocation and avoid distorting market based pricing.

During the 10th plan by planning commission the target was the addition of another 41,110 MW to power industry.

And 41,110 MW comprising of:-

HYDRO - 14,393MW

THERMAL - 25,417MW

NUCLEAR - 1300MW

The sector wise, type wise summary of this capacity addition target is given in Table below.

SECTOR HYDRO THERMAL NUCLEAR TOTAL (%)

CENTRAL 8,742MW 12,790MW 1,300MW 22,832MW (55.5%)

STATE 4,481MW 6,676MW 0MW 11,157MW (27.2%)

PRIVATE 1,170MW 5,951MW 0MW 7,121MW (17.3%)

TOTAL 14,393MW 25,417MW 1,300MW 41,110MW (100%)

Tenth Plan Actual Capacity Addition

A capacity addition of 17,995 MW has been achieved during 10th Plan till 31/12/06.

The total installed capacity as on 31/12/2006 was 1, 27,753 MW Comprising of:-

33,642 MW hydro

84,020 MW thermal including gas & diesel,

3,900 MW nuclear power plants

And 6,191 MW from renewable energy sources including wind.

The year-wise actual power supply position during 2002-03,2003-04, 2004-05 ,2005-06 and 2006-07(till Dec-06) of 10th plan is given in Table below[4]-

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YEAR PEAK

REQUIREMENT

(MW)

AVAILABILIY

(MW)

SHORTAGE

(MW)

2002-2003 81492 71547 9945 (12.2%)

2003-2004 84574 75066 9508 (11.2%)

2004-2005 87906 77652 10254 (11.7%)

2005-2006 93255 81792 11463 (12.3%)

2006-2007

(TILL 31/12/2007)

100466 86425 14041 (14.0%)

Source: Planning Commission

Major Reasons for Slippages

Manufacturing Capability of Main Plant and Balance of Plant equipment to be commensurate with required capacity addition3

Inadequate Construction and Erection Agencies/ Machinery Non-availability of Adequate Fuel and Key material. Inadequate Transportation facilities for Equipment and Fuel Shortage of trained Manpower. Slow process of decision making and cumbersome payment procedure adopted by Utilities

S.NO

MAJOR REASONS OF SLIPPAGE

CAPACITYSLIPPED

(MW)

THERMAL HYDRO

1. Delay in super critical technology tie up by BHEL 3,960 -

2. Geological Surprises - 510

4. http://planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v3/11th_vol3.pdf

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3. Natural Calamities - 450

4. Delay in award of works 998 823

5. Delay in MoE&F clearance 400

6. Investment decision/ Funds tie up constraints/ delay in financial closure

1500 1400

7. Delay in Preparation of DPR & signing of MOU with state govt.

400

8. ESCROW cover (Private Sector) 500

9. R&R issues 400

10. Court Cases 675

11. Law & Order problem 500

Total 7458 5058

Source: Planning Commission

11th YEAR FIVE PLAN

Approach to Selection Of Projects For 11th Plan

The Eleventh Plan envisaged an increase in primary energy at 6.4 per cent per year taking the total availability from 550 Mtoe in the terminal year of the Tenth Plan to 715 Mtoe in the terminal year of the Eleventh Plan.In order to avoid slippages while planning for capacity addition during 11th Plan, efforts have been made to set 11th Plan targets realistically. Present prospects make it evident that the actual growth in primary energy production will be lower than projected in most sub-sectors. Demand for energy will also be lower because of the impact of the global crisis on economic growth. However, it is noteworthy that the net effect will be an increase in the projected import dependence on both coal and crude oil.

Following approach has generally been adopted while including the projects in the list of 11th Plan projects. Planning for capacity addition during 11th Plan, cautious approaches have been adopted while choosing projects for commissioning in the 11thplan.

HYDRO

Execution of hydro projects requires thorough Survey and Investigation, preparation of DPR, development of infrastructure, EIA and other preparatory works, which are time consuming and require two to three years for their preparation

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It would take about 5 years to execute a hydro project after the work is awarded for construction

Thus in order to achieve completion of a hydro project during 11th plan, the project should either be already under construction or execution should start at the beginning of the plan.

The broad criteria adopted for selection of hydro projects for 11th plan are as under:

Those hydro projects whose concurrence has been issued by CEA and order for main civil works is likely to be placed by March 2007

Apart from the above, a few hydro projects of smaller capacity which are ROR type having surface power houses and where gestation period is expected to be less than 5 years have also been included. These projects would need to be rigorously followed up for completion during the 11th Plan.

Keeping in view the preparedness of various hydro projects, a capacity addition of 15,627MW is envisaged for 11th Plan. The net addition to India's hydro-power capacity was only 4,330 MW compared to 40,000 MW of coal-based projects.

Thermal

Those projects already taken up for execution in the 10th Plan period itself and due for commissioning in the 11th Plan period.

Those Thermal Projects who’s Letters of Award (LOA) have already been placed by the State and Central Public Sector Corporations.

Those Thermal Projects whose Letters of Award (LOA) have already been placed and the financial closure achieved by private developers.

Those Thermal Projects whose Letters of Award (LOA) are expected to be placed by 30th September, 2008 and commissioning is expected during the 11th Plan keeping in view the normal gestation period.

Nuclear

Expansion of capacity in atomic energy has been limited in the past due to the lack of availability of domestic uranium or the non-availability of the international supply of uranium fuel because of the restrictions imposed by the Nuclear Suppliers Group (NSG). These restrictions have now been lifted and a much faster expansion in nuclear generation capacity can be expected. Keeping in view the availability of fuel, a moderate capacity addition of 3,160 MW nuclear plants has been programmed during the 11th Plan by the Nuclear Power Corporation, out of which 980MW was achieved up to Dec 2011. India’s nuclear power strategy has depended on a three-stage development programme consisting of conventional nuclear reactors in the first phase, Fast Breeder Reactors (FBRs) in the second phase, and thorium-based reactors in the third phase

Renewable

A capacity of 13,500 MW has been planned under renewable as per information given by MNRE, out of which 14,660 MW capacity additions was done during 11th Plan.

Capacity Addition During 11th Plan (2007-12)

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Based on the preparedness of the projects, it was envisaged that a capacity of about 68,869 MW is feasible for addition during 11th plan period. The sector wise break-up of feasible capacity addition during 11th plan is given in Table below:-

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Ultra Mega Power Plant

Ministry of Power in the year 2006 has launched an initiative of development of coal based ultra mega projects with a capacity of 4,000 MW each on tariff based competitive bidding. Ultra Mega Power projects are either pit head based projects having captive mine block or coastal projects based on imported coal.

UMPP’S awarded

SASAN (MP)

TILAIYYA (JHARKHAND)

KRISHNAPATNAM (ANDHRA PRADESH)

MUNDRA (GUJRAT)

According to the bids submitted by these developers only one unit of 660 MW is expected to be commissioned during the 11th Plan and the remaining unit during 12th Plan.

Launch of Ultra Mega Projects through tariff based competitive bidding recognizing the fact that economies of scale leading to cheaper power can be secured through development of large size power projects using latest super critical technologies, Ministry of Power, CEA and Power Finance Corporation are working in tandem for development of five projects under tariff based competitive bidding route.

The Ultra Mega Power Projects with each having a capacity of 4, 000 MW, would also have scope for expansion in future as well. The size of these projects being large, they will meet the power needs of a number of states through transmission of power on regional and national grids. In the last six months several rounds of discussions were held with states and a number of them, independent of this initiative, would facilitate state specific projects in the range of 1000-2000 MW through competition on similar lines.

In order to enhance investor confidence, reduce risk perception and gets a good response to competitive bidding, it was deemed necessary to provide the site, fuel linkage in captive mining

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blocks, water and obtain environment and forests clearance, substantial progress on land acquisition leading to possession of land, through a Shell Company. In addition, shell companies would also be responsible for tying up necessary inputs from the likely buyers of power and also appropriate terms and conditions with Utilities and Payment Security Mechanism.

In the first phase, two projects at pit head site and three projects at coastal locations have been identified for development of Ultra Mega Projects. Government

approval has already been accorded on 16th January, 2006 for setting up of following five shell companies under the Article No.86 of Articles of Power Finance Corporation :-

(i) Sasan Power Limited (M.P)

(ii) Akaltara Power Limited (C.G)

(iii) Coastal Gujarat Power Limited

(iv) Coastal Karnataka Power Limited

(v) Maharashtra Ultra Mega Power Project Co.

Specification of UMPPs:

Avg. tariff is in range of Rs2-3/unit. Based on supercritical technology. Allocation of power should be to multiple states. Should have dedicated captive coal blocks rather than coal linkage. SPV is subsidiary company appointed by PFC to raise fund for UMPP. It also secure

clearance, acquire land and water for UMPP. It is later purchased by UMPP company.

Special Purpose Vehicle (SPV) is a shell company, a subsidiary company appointed by PFC to raise fund for UMPPs.

Functions of the Shell Companies:-

(a) Preparation of Project Report

(b) Land acquisition

(c) Allocation of fuel linkages/ coal blocks

(d) Allocation of water by the State Govt.

(e) Appointment of consultants for Environment Impact Assessment & Project Report

(f) Appointment of consultants for international bid (ICB) document preparation & evaluation.

(g) Various approvals and statutory clearances.

(h) Off-take/ sale of power – Section 63 of EA 2003 provisions

(i) Power Evacuation System, Load Flow Study, Grid Tolerance/ System Stability with new capacity addition.

Payment security mechanism would consist of:

(a) Revolving Letter of Credit by distribution licensees;

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(b) Escrow account establishing irrevocable claims of receivables of distribution utility;

(c) In a likely event of any default, direct supply to HT consumers or any other more credible distribution licensees as per the provisions of Electricity Act, 2003.

Fuel Requirement

Fuel Requirement (2011-12)

Coal - 545 MT

Lignite - 33 MT

Gas/LNG - 89 MMSCMD

From domestic sources, total coal availability is expected to be 482 MT per annum by 2011-12. Accordingly, imported coal of the order of 40MT, equivalent to 63 MT of Indian coal, may have to be organized. This quantity may reduce provided production of domestic coal is increased.

89 MMSCMD of gas requirement at 90% PLF has been projected in 2011-12.At present, the availability of gas is of the order of 40 MMSCMD and therefore not sufficient to meet the requirement of even existing plants

Out of the projects totalling to 37,524 MW under committed category as given above, orders for Dadri Unit-6 (490 MW) & Mezia Ph-II (1000 MW) has been recently placed. The thermal capacity addition comprises of1 unit of 800 MW, 11 units of 660MW, 53 units of 500/600 MW class, 49 units of 210/250/300 MW class, 7 units of110/125 MW class. With the above capacity addition it would be possible to meet the projected energy requirement of 1038 BU (considering peak demand of 1, 51,500 MW) for meeting per capita consumption of 1000 units at the end of 11th plan. With this capacity addition it would be feasible to achieve a generation growth rate of 9.5%p.a. (CAGR).

Coal linkages

The Linkages of coal demand is primarily done with the objective of planning of coal supplies, keeping in view indigenous coal resources as well as the need to supply fuel of appropriate quality to the consumers and at the same time making the most economic use of the available capacity for production and of coal. The Coal at notified rate are made available by coal companies to power generation companies having long term coal linkages. Presently coal linkages are provided by CIL to power, steel and cement industries.

The system of Linkages as in vogue, both for core and non-core sector consumers (as it has been evolved over the years) has proved to be immensely useful in fulfilling its objectives. The usefulness and effectiveness of the linkage system is best diverse coal consuming sector, spread over the country, from coalfields having differential growth in production.

New Coal distribution Policy has introduced the concept of ―Letter of Assurance (LOA), which provides for assured supply of coal to developers, provided they meet stipulated milestones. Once the milestones as stipulated in the LoA are met by the developers, LoA holders would be entitled to enter into Fuel Supply Agreements (FSAs) with the coal companies for long-term supply of coal. The quantity of coal to be supplied along with other commercial terms and conditions are covered in the FSA itself.

Name of Sector Number of LOA’s approved Capacity approved

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Power Utilities 8 4460 MW Captive Power Plants including Cement CPPs

28 944 MW

Independent Power Producers

35 24915 MW

TOTAL 71 30319 MW

Status of Fuel Linkage: Coal

Out of the total likely coal based capacity addition of 52,905 MW, 37,975 MW have been allocated linkage; 6,580 MW have been allocated captive coal blocks; 4,500 MW linkages are yet to be allocated and 2,500 MW coal blocks to be allocated 1,350 MW are likely to be based on imported coal for which formal fuel supply arrangements

are yet to be made. 24,210 MW capacity is pithead based; 24,395 MW is load centre based and 4,300 MW coastal power plants.

Balance of Plants

Balance of Plants was identified as critical items for timely commissioning of Thermal Power Projects. It was observed that a number of Thermal units were getting delayed due to delay in commissioning of Balance of Plants such as Coal Handling Plants (CHPs), Ash Handling Plants (AHPs), Cooling Tower (CTs) etc.

There is a need to develop more vendors for the following Balance of Plants:

Ash Handling Plant

Coal Handling Plant

DM Plants

Condensate Polishing Units

CW and Make up System

Cooling Towers

Air Compressors

Chimneys

Civil and Mechanical Design consultancy packages

De-salination Plants

There are very limited vendors for each of the above BoPs and at times only Single Quotation is received. There is also a need to develop adequate erection and construction agencies for executing civil and mechanical works and engineering consultants for engineering and design of various

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packages. However, adequate capacity is available for the following BoPs as per the presentation given by the various vendors:

a. Ventilation and Air conditioning

b. Ash water recirculation

c. Bus ducts

d. HV/LV switchgear

e. Insulation

It was also suggested that each BoP should invariably be awarded as a package instead of breaking up into equipment, civil contracts and mechanical erection contractors to have single point responsibility. Supportive and developmental attitude should be adopted by the owners to encourage new vendors.

Status of Bops For 11th plan Projects

Name of the system BOPs required for projects under const. (Nos.)

Coal Handling System 68 Ash Handling System 68 DM Plant 69 Cooling Towers 145 Chimneys 117 Fuel Oil System 71 PT Plant 76

ORDERS FOR MAIN PLANT EQUIPMENT 11thPLAN (Figures in MW)

MAIN PLANT EQUIPMENT SUPPLIER

THERMAL HYDRO NUCLEAR TOTAL

BHEL 36,531 6,017 500 43048 (54%)

OTHERS 25,192 9,490 2880 37562 (46%)

TOTAL 61,723 15,507 3,380 80,610

Thermal and Hydro Main Plant Equipment -Need to augment existing indigenous manufacturing facilities and create additional capacity

Current Status (BOP’s And Main Plant)

• BHEL augmentation of manufacturing capacity

To 10,000 MW/annum achieved by Dec 2007.

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To 15,000 MW by Dec. 2009 under progress (10,000 MW/annum for large sized boilers and TGs). Has collaboration with Alstom and Siemens for manufacture of super critical boilers and turbo-generators. In third phase by Dec 2011, proposed to augment

• JVs

L&T/ MHI – Boilers (4000 MW/annum) , TGs (4000 MW). Bharat Forge/ Alstom- TGs (5000 MW).

JSW-Toshiba - TGs (3000 MW).

GB Eng.-Ansaldo-Boilers (2000 MW).

• Proposed Bulk tendering of 11X 660 MW units with mandatory indigenous manufacturing.

Components of Major BOPs

Each Balance of Plant activity consists of various components which include:

Civil works Structural works Electro mechanical equipments and various types of motors, etc Control & Instrumentation

Issues For Completion Of Bops In Time

Placement of Order: Timely placement of order for BOPs. Review of Pre-qualification Requirements for BOP vendor. CEA already recommended

revised PQ to allow entry of new players Enhancement of vendor base for Balance of Plants (BOPs) as the requirement has increased manifold during 11th plan and will further increase

in 12th Plan. There are limited number of suppliers in each category and each having more work than

what it can handle. Favourable conditions to be developed for new / additional vendors

Actions For Completion Of Bops In Time

Vendors must take approval for appointment of sub-contractors in advance from the project authorities.

Vendors must place the orders for civil works as well as procurement of mechanical equipments in time.

Timely releasing of civil construction drawings from consultants and construction agencies. Availability of adequate construction machinery at project site. Deployment of adequate skilled / unskilled man power at site. Proper coordination among various executing agencies engaged at project site.

Loss To The Utilities On Account Of Delay In Completion Of Projects

Cost of delay (Either due to Main Plant or BOPs) Loss on account of purchase of costlier power from alternate sources–Rs.2.5 to 6 crores

/dayfora500MW pit head unit.

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Increase in IDC and consequently the fixed cost Component of tariff-Rs.45lakhs/dayfora500MWcoalbasedunit.

Loss of return to developer - Rs. 25 lakhs / day for a 500 MW Unit@14%ROE.

Manufacturing Capabilities:

The established capacity for manufacturers of various kinds of Boilers, Turbines and Main Equipment is around 6000-7000 MW per annum in the country, which is largely dominated by the CPSU Giant, BHEL CO.

Now many private players are entering in this field seeing the fast growth of this sector. Some of these private players are Alstom, ABB, GE, L&T and some Chinese companies (China Light & Power etc.)

Coal Swapping:

According to concept of Coal Swapping, companies will be allowed to swap their coal linkages amongst their power projects at multiple locations. It was proposed by MoP in order to address fuel supply issue temporarily. To implement the scheme, power producers need to ensure that PPA is executed.

The scheme is beneficial for companies that have both hinterland and costal projects. Moreover Coal swapping proposal is fully beneficial only if the govt. implement the model of Price pooling mechanism. However it is opposed greatly by coal - rich states.

TRANMISSION PLANNING

Under the Power for All missions, India has set a target of 307,000 MW of installed capacity by the end of 2017. The transmission segment has a major role in achieving this mission as an efficient transmission capacity and network will prove essential to transfer power from generating stations to distribution networks. In the past, transmission planning was done with respect to generation and was focused on setting up transmission systems that could evacuate power safely; however, with the changing scenario, the transmission sector started to move towards integrated system planning because generation capacities are distributed unevenly in different regions. While thermal capacity is in the eastern region, hydro capacity is concentrated in the Northern and North-Eastern regions. The capacity is used to evacuate power according to the demand in other regions like the Western region; thus, the integrated system planning has turned out to be a good option.

In the central sector, the central transmission utility (CTU), known as the Power Grid Corporation of India Ltd (PGCIL), is responsible for national and regional transmission planning while the state sectors have separate State Transmission Utilities (STU). Private sector participation is negligible in transmission and there is only one public-private partnership project, the Tala Transmission Project. Four private companies have been granted licenses for developing transmission projects. While three companies have entered joint ventures with PGCIL, one company is a private company that has been awarded independently.

Transmission network includes transmission lines and transmission substations through which electricity is evacuated from a generator to a distributor. India has over 126,999 circuit per km (ckt km) of 220 KV of transmission lines upto Jan 2010 and its substations are of 188,155 Mega Volt Ampere (MVA) capacity for 220 KV upto Jan 2010.

Growth in Transmission Network over the Plan Period

The development in the transmission system was carried out in coordination with the growth in generation capacity. New and advanced technologies were introduced in the transmission system for

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bulk power transmission. 220 KV of transmission power was introduced in 1960, and another 400 KV was introduced in 1977. HVDC and HVDC bi-pole transmission was set up back-to-back in 1989 and in 1990 respectively.

The transmission line expanded from 52,034 ckm during the sixth plan to 269,571 ckm at the end of the eleventh plan while the transmission substation size increased from 46,621 MVA to 372,894 MVA from the Sixth 5-year Plan to the end of 11th plan.

Inter-Regional Transmission

During the fifties, electricity was supplied by generating stations to load centres; however, with the increase in capacity, a state grid was built for ensuring reliability in power supply. Even though demand from different regions was rising, the resources were confined to some regions like the eastern and north eastern regions. One way to cater to the demand was to set up plants near the load centre but that was an expensive option. Another option, which was taken during the seventies, was to form regional grids. A regional grid interconnects regions and transfers energy, which further keeps pace with formation of public sector utilities like NHPC and NTPC.

The National Grid constitutes the complete transmission network, including transmissionsystem for evacuation of power from generating stations, the inter-regional links andcomplete Inter State transmission system and right upto Intra-State transmission of STU withDISCOMs. In view of this, development of national grid is an evolutionary process. Thesummation of the transmission capacities of inter-Regional links is a figurativerepresentation of the bonds between the regions. These aggregate numbers do not indicateactual power transfer capability across different regions/States. The power transfercapability between any two points in a grid depends upon a number of variable factors, suchas - load flow pattern, voltage stability, angular stability, loop flows and line loading ofweakest link in the grid. For instance, present aggregate inter-regional transmission capacityof Northern Region is 9320 MW (6330 MW with ER and 2990 MW with WR), whereas,simultaneous transfer import capability of NR may work out to about 5000 - 6000 MWdepending upon operational conditions. The system operator has to assess the transfercapability between two points of the grid from time to time and restrict the power flowaccordingly Due to India’s uneven distribution of resources regional grids were created in the early sixties for power planning and for operation of the electric power system. During the seventies, regional grids were in place and inter-connected operations were obtained. The development of regional grids was further accelerated by the central generating companies (NHPC, NTPC) that introduced regional power stations and constructed EHV (Extra High Voltage) transmission lines.

Formation of the National Grid

In the current 5-year plan, a transmission plan has been evolved for strengthening the regional grids to establish and to operate both the regional and the national power grid to facilitate transfer of power across different regions and to support the generation capacity addition programme of around 80 GW.

Power Grid is now working on the planned set up of a national power grid to facilitate transfer of power within the different regions in India by the end of the Eleventh 5-year Plan. This grid will support the inter-regional energy transfer and will exploit the country’s unevenly distributed energy resources. The national grid will also help the power-deficit regions to fulfill their demand from the regions that have excess power.

The Power Grid has achieved several milestones towards the development of National Grid such as the implementation of Asia’s longest Talcher-Kolar High Voltage Double Circuit (HVDC) bipole link including its upgradation and the commissioning of Muzaffarpur-Gorakhpur high capacity 400 KV

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D/C that interconnects all four regional grids (Northern, Western, Eastern and North-Eastern) and is operating as a synchronous grid.

The difficulty encountered during the construction of the transmission lines was the Right of Way (ROW), especially in the hilly terrains of the Northern and North-Eastern regions, which are endowed with hydro resources. Transmission Super Highways are the solution for the ROWs so that they do not cause bottlenecks in harnessing generating resources. Interconnection of these highways from different parts of the country will ultimately lead to formation of a high-capacity national power grid.

The objectives underlying the formation of National Grid are:

To transfer power from surplus regions to deficit regions Utilise maximum resources from diversified regions Ensure reliable, economical and quality power Many inter-regional schemes have been planned for the phased development of the National

Grid.

12thplan target of transmission lines.

TRANMISSION LINES UNIT TARGET UPTO 12TH PLAN MARCH 2017

765kV CKM 31164 HVDC+/-500 kV CKM 18892 400kV CKM 152979 230/220kV CKM 175976 TOTAL CKM 379011

11thplan status of inter regional transmission capacity (MW)

INTER REGIONAL Till March, 2012 ER-SR 3630 ER-NR 10,030 ER-WR 4,390 ER-NER 1,260 NR-WR 4220 WR-SR 1,520 NER/ER-NR/WR TOTAL

0 25,050

Source: planning commision

Technology Development In Tranmission System

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New technologies would need to be adopted and implemented in a proactive manner to achieve the objective of optimum utilization of the available transmission assets as well as conservation of Right-of-Way, reducing transmission costs, reduction of losses etc.

Some of the new technologies adopted/being adopted in its transmission system include:

High capacity 6000MW +800kV HVDC system Flexible AC Transmission System (FACTS) Application of Series Compensation Upgradation/Uprating of transmission line High temperature endurance conductor Tall/Multi-circuit & Compact tower Development of indigeneous 800KV circuit breakers

HVDC (HIGH VOLTAGE DC TRANSMISSION)

A high-voltage, direct current (HVDC) electric power transmission system uses direct current for the bulk transmission of electrical power.

HVDC comes into play if very high volumes of electricity need to be transmitted over distances above 800 km. In this very advanced technology AC is converted to DC and pumped into the lines. This may seem a convoluted, complicated way. It is indeed: very few countries can today master, install and manage HVDC systems. The advantages are lower line losses, ‘slimmer’ hardware across the countryside, stable grid behavior, dispersed generation of power, and overall economy. India’s hydel riches are in the North East, coals in the East and consumers all over the land. Pristine locations can silently generate power and need not create polluting industries nearby as consumers. HVDC ‘vacates’ massive quantum of power with ease to far away points.

Advantages of HVDC lines:-

Lesser number of conductors and insulators and therefore reduce conductor and insulator cost Power transmission and stabilization between unsynchronized AC distribution systems Less corona loss and reduced radio and telephonic interference Power loss are also reduced with DC as there are two conductors for a biploar HVDC line

HVDC lines in INDIA

At present the 3 lines are in operation while, another 3 are under progress.And these are following

Chandrapur to Padghe (Mumbai)--(1500 MW at ±500 kV DC) Rihand to Delhi (Dadri) (1500 MW at ±500 kV DC) Talchar to Kolar (2500 MW) Sileru to Barsoor(400MW at ± 200kV) Biswanath to Agra(6000MW at ± 800kV)

DISTRIBUTION INCLUDING VILLAGE AND HOUSEHOLD ELECTRIFICATION

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The Distribution Sector plays a crucial role in the overall functioning of the Power Sector. TheGovernment is emphasising on an efficient and well performing distribution sector and focusing onthe improvement of financial health of utilities towards providing reliable and quality power supply and universal access to power.Accessibility of Power in Rural Areas, AT&C loss Reduction, financial viability of discoms, Smart Grid,Demand Side Management (DSM), Private Sector Participation/Private Public Participation (PPP), etc.are also some initiatives taking centre stage today. These have largely been influenced by drivers inPolicies and Acts introduced over the past decade. Considering the ambitious targets that were setfor the 11th Plan, significant progress has been achieved. The key focus for the 12th Plan is to carryforward the achievements of the 11th Plan and to introduce improved initiatives. Viability of thepower sector is largely hinged on the Distribution sector. Rajiv Gandhi Grameen VidyutikaranYojana (RGGVY) in 10th and 11th PlanGovernment of India, in April 2005, launched RGGVY – A comprehensive scheme of Rural ElectricityInfrastructure and Household Electrification for providing access of electricity to all rural households.There is a provision of capital subsidy of 90% of the total project cost under the scheme and balance10% of the project cost are being provided by REC as loan. Rural Electrification Corporation Limited (REC) is the nodal agency for implementation of the scheme in the entire country. Equal emphasis has also been accorded to sustainable rural power supply through deployment of rural franchisees and provision for revenue subsidies from the State Government as required under Electricity Act, 2003 so as to facilitate arriving at revenue sustainable rural power supply arrangement. Under the scheme, projects have been financed with capital subsidy for provision of –

A. Rural Electricity Distribution Backbone (REDB) - Provision of 33/11 KV (or 66/11 KV) substationsof adequate capacity and lines in blocks where these do not exist. B. Creation of Village Electrification Infrastructure (VEI) - Provision of distributiontransformers of appropriate capacity in electrified villages / habitation(s). C. Decentralised Distributed Generation (DDG) and Supply - Decentralised generation-cumdistributionfrom conventional or renewable or non-conventional sources such as biomass, biofuel, bio gas, mini hydro, geo thermal and solar etc. for villages where grid connectivity iseither not feasible or not cost effective provided it is not covered under the programme ofMinistry of New and Renewable Energy. D. Electrification of Below Poverty Line Households - Free electricity connection to un-electrifiedBelow Poverty Line (BPL) households as per norms of Kutir Jyoti Programe in all ruralhabitations. Households above poverty line would be paying for their connections atprescribed connection charges and no subsidy would be available for this purpose. Restructured Accelerated Power Development & Reforms Programme (R-APDRP)

Re-structured APDRP was approved as a Central Sector Scheme on 31.07.2008 with total outlay of Rs.51,577 Cr. Major Charecteristics of R-APDRP Scheme are as follows:

Objective: To reduce AT&C loss through establishment of base line data and integrated IT applications for energy audit / accounting and investing in improvement of distributioninfrastructure.

Projects under the scheme to be taken up in Two Parts.

o Part-A: Projects for establishment of baseline data and IT applications for energy accounting/auditing & IT based consumer service centers. (100% GOI loan convertible ingrant).

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o Part-B: Regular distribution strengthening projects. (up-to 50% conversion of loan into grant on achieving targets)

The focus of the programme is on actual, demonstrable performance in terms of AT&C lossreduction. The coverage of programme is urban areas – towns and cities with population more than30,000 (10,000 for special category states). Private distribution utilities are not covered under theprogramme and to be reviewed after two years from date of approval of R-APDRP. The prescribedimplementation period for Part A and Part B projects is 3 years from date of sanction and 5 yearsrespectively. Further, the repayment tenure for Part A is 10 years (including 3 years moratorium) andfor Part B is 20 years (including 5 years moratorium)

Gujarat - Jyotigram Yojana (Rural Lighting Scheme)

Gujarat Government launched the scheme in September 2003 with an objective to segregate theagriculture load from residential, industrial and commercial loads. The pilot scheme covering eightdistricts was completed in October 2004 and later on it was extended to cover over 18000 villagesand about 9700 hamlets with an total expenditure of Rs.1,100 Cr. The primary objective was toimprove quality and quantity of power supply for non agricultural consumption in rural areas hasbeen met and Gujarat has managed to control the subsidy and financial losses.

Public Private Partnership through rural franchisees

Management of rural infrastructure has to be based upon all inclusive growth model that involves rural set ups and provides the local Panchayat Raj institutions a supervisory function to ensure the durability and sustainability of electricity infrastructure. Franchisee system for management of rural distribution has been made mandatory under RGGVY to make the revenue model sustainable. RGGVY allows enterprising individuals, NGOs, private entrepreneurs, co-operatives, Panchayat Raj institutions to become franchisees. The franchisees system needs major push in 11th plan with initiatives for capacity building and financial support.

Financial support to Franchisees

Not many people are coming forward for franchisee ship especially from remote rural areas where loads are small and sustainability difficult. As franchisees will be mainly rural entrepreneurs, they will have difficulties in raising small funds for their micro level projects to guarantee their performance or meet working capital requirements. No funds have been allocated under RGGVY for development of franchisees. It is necessary to develop institutions that extend micro credit to meet the franchise level financing needs.

Distribution of power in Rural Areas through Decentralized Distributed Generation (DDG)

Electricity Act, 2003 provides the requisite framework for accelerating electrification in rural areas with necessary empowerment. It permits operation of stand-alone systems independent of the regulatory regime. Integrated Energy Policy 2006 has estimated the requirement of power at 8,00,000 MW by 2031. It implies that India must add 25000 MW or more every year for a quarter century. It is a colossal task and would require exploitation of all renewable and fossil resources. Secondly, the creation of huge rural village and block level electricity infrastructure will require immediate supply of power. Village level energy resources like biomass, hydro and solar energy will help to reduce the dependence on grid based thermal, gas nuclear and hydro power. India has a potential to generate 10-15000 MW of power from the available biomass. DDG based on this resource will meet the critical needs of parched villages asking for timely power. Cost of electricity should be based on cost to serve

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basis and DDG to be taken up on a mission mode. Viability gap funding may be adopted in case of grid interconnected schemes. Bio mass cultivation may be encouraged to support DDG and bio-fuel cultivation to be funded by Financial Institutions (FIs).

One Megawatt Power Plants in Rural Areas

To meet the power supply requirements of rural areas stand alone / grid connected power plants of optimum one megawatt capacity power plants should be encouraged. REC should act as nodal agency for providing technical and financial support under the scheme.

AkshayPrakashYojana

Maharashtra has launched a new programme called AkshayPrakashYojana aimed at demand side management. This programme has shown good results in ensuring quality and reliable supply of power to the villages. Both consumers and utilities are benefiting under this programme. It is recommended that this programme should be popularized among other utilities.

Centres for Excellence for Distribution of Power

The Electricity Act has opened new avenues for variety of players to take up distribution of power. In the changed environment and to seize the new opportunities REC should set up centers of excellence for distribution of power in all the states to take up rural distribution by setting up a subsidiary company.

Non Discriminatory Supply Option

RGGVY scheme provides for making adequate arrangements for supply of electricity and there should be no discrimination in the hours of supply between rural and urban areas. To achieve this, there should be a clear allocation of Power Supply for the rural areas

Agricultural Sector

Agricultural consumption comprises of approx 20% to 40% of the total consumption of the utility in the states. There is a fear with regard to depletion of water table due to unrestricted exploitation of the ground water. The adoption of flat rate pricing for agricultural power is cause for this perverse state of affairs. Under this system, a farmer pays a fixed price per horsepower per month for electricity. Therefore, the marginal cost of pumping water is zero. This leads to energy wastage, over-pumping and inefficient selection of crops. Flat rate pumping also masks the true cost of power to farmers. Agriculture consumption is mostly un-metered and this allows manipulation of the loss by the utilities in the name of Agriculture Consumption therefore, during the 11th plan all agriculture connections need to be compulsorily metered

TECHNOLOGY ASSESSMENT AND NEEDS

Pre-paid Meters

Pre-paid meters, should be promoted in the 11th Plan. This will enable efficient use of power for agricultural use and will also eliminate adverse impact on water table due to excessive exploitation of ground water. Though it involves huge capital cost the gains from the system would offset such costs in the long run. It is also expected that large scale use would bring down the cost of the technologies.

HVDS System

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The advantages of HVDS system are well known particularly in containing theft of electricity. Besides, it improves the quality of power significantly and thereby customer satisfaction. HVDS system needs to be given a special focus in the 11th Plan to get immediate results in loss reduction. Efforts should be made to bring down HT/LT ratio during the 11th Plan.

Priority to IT applications

It is well established that IT application can play a major role in AT&C loss reduction and provide management of distribution utilities. The IT task force clearly laid out a plan for introduction of IT on a large scale in the power distribution sector. The task force recommendation should be implemented. It is also suggested that the incentive fund under APDRP should be re-deployed for promoting cost effective IT in the entire distribution sector.

Customer Indexing & GIS based Database

Customer indexing is absent in most of the utilities. This is a major impediment for any reform in the sector. Consumer indexing has been done by some utilities but incomplete. Consumer indexing based on GIS application needs to be given priority in the 11th Plan.

Load Management

In the scenario of energy and peak shortages, load management plays a very important role for efficient use of energy. Feeder separation programme needs to be given a major push in those states where agricultural consumption is more than 20%. In addition SCADA/DA should be introduced in all the million plus towns by the end of 11th Plan.

Demand Side Management & Energy Efficiency

Using of energy efficient devices should be incentivised. The focus should be on use of efficient pumpsets in the agricultural sector. Use of CFL lighting etc. should be encouraged. An awareness campaign should be launched to educate stakeholders at all levels and quantifiable targets should be fixed to improve energy efficiency gains.

Reliability Monitoring of Power Distribution System

Present reliability of power is carried out by CEA in terms of outages of 11 kV feeders on monthly basis in respect of State capitals and major urban conglomeration. There are number of reliability indices which are in practice internationally. The international practices should be adopted for proper monitoring of reliability. The reliability monitoring is to be gradually brought in line with the world practice i.e. to measure the outage in terms of consumer hours and number of consumer interruptions. The reliability monitoring will become more fruitful once “Consumer Indexing” i.e. linking of every consumer to the feeder is completed by all the Discoms /SEBs and will provide a direct index for customer satisfaction.

Distribution Network Planning

Inadequate network planning is one of the reasons for hap-hazard and unscientific development of the distribution system. The utility should move to proper distribution network planning both for demand forecasting on medium and long term basis and for determining need for system expansion and improvement to meet the load growth. Utility should prepare perspective network plan for 10 year period and this should become part of the conditionalities for sanction of grants under various programmes.

Energy Accounting & Auditing

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Energy Accounting & Auditing is done in many utilities but not comprehensive. In absence of complete energy accounting and auditing, the system losses cannot be measured accurately and also identification of areas of losses becomes difficult. 11th Plan should make efforts to standardize energy accounting and auditing practices and incentivize utilities undertakings complete accounting and auditing exercise.

SUMMARY OF 12TH FIVE YEAR PLAN

Faster, Sustainable and More Inclusive Growth

“Twelfth Plan will focus on strengthening the functions of the power sector”

Montek Singh Ahluwalia

(Planning Commission Deputy Chairman)

The ongoing plan by planning commission is 12th plan that have the Implementation period from 2012 to 2017. The capacity addition during this plan will be 95,485 MW. Private Sector is going to be the key to India’s Power Generation Story in 12th plan. There will be more projects coming up in private sector than in central and state sectors combined together.

The 12th plan will be favourable for private sector to invest in power projects. According to a strategy plan of power ministry submitted to the Cabinet, private sector will account for 62 per cent of the 1,00,,000 MW capacity slated to come up during the Plan period (2012-17), a big jump from the 20 per cent factored in for the current Plan period ending March 2012.

Demand summary of All India Forecast (In Billion Units) (As per EPS report)

12th plan capacity addition requirement

690969

13921915

2006-07 2011-12(11th plan end)

2016-17(12th plan end)

13th plan

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Tentative details of 12th plan capacity addition

THERMAL • No. of projects - 70 • No. of units - 148

HYDRO • No. of projects - 87

• No. of units - 340

NUCLEAR • No. of projects - 3 • No. of units - 6

Estimated total fund requirement during 12th Plan

GENERATION 4,95,083

TRANSMISSION 2,40,000

DISTRIBUTION 4,00,000

TOTAL 11,35.083

Estimated phasing of fund requirement for generation during 12th plan

75%

5%

20%THERMALNUCLEARHYDRO

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TYPE 2012-13 2013-14 2014-15 2015-16 2016-17 TOTAL

HYDRO 21,857 23,694 25,058 27,136 28,904 1,26,649

THERMAL 76,367 66,905 62,701 61,867 62,828 3,30,668

NUCLEAR 5,753 6,955 7,443 8,225 9,360 37,766

TOTAL 1,03,977 97,554 95,202 97,258 1,01,092 4,95,083

Target considered as a herculean task

Even as the Indian government draws–up ambitious plans envisaging 100 GW capacity additions in the 12th Plan period, the country’s Power sector is facing multidimensional challenges. These issues are constraining growth in the Power sector and may adversely impact economic growth in the long term. The Confederation of Indian Industry (CII) statement says that unless the issues plaguing the Power sector are urgently addressed, the aspiration for 9% growth in the 12th Plan may not be met.

Ministry has always minimised the targets in past plans Fuel shortage in existing projects Issue of power tariffs hurting the profitability of power producers Land acquisition and clearances are bigger issues Coal issues India's coal demand will go up to 842 million tonnes (MT) by the end of the 12th Five-Year

Plan (2012-17), necessitating about 238 MT of imports to bridge the shortfall in domestic output. The production shortfall in the current fiscal, the final year of the 11th Five-Year Plan (2007-12), is projected at 142 MT, with domestic output likely to amount to 554 MT. "Projected coal demand is to the extent of 764 to 842 MT by the end of the 12th Plan. Domestic production will be about 604 MT or so. So we still face a shortfall of about 238 MT," Planning Commission Senior Advisor (Power) Arbind Prasad said on the sidelines of a conference on 'Coal Distribution and Transport Logistics'. Prasad said unless the widening demand-supply gap for coal was bridged, the projected shortfall of 238 MT would have to be met through imports.

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"Most likely, this shortfall will be met through imports, if the international markets remain favourable," he said. He said the commission has estimated domestic production at 604 MT by 2017 on the basis of projected annual growth of around 7 per cent in output. CIL to invest Rs 35,000 Cr – Rs 40,000 Cr in 12th plan period for development of new projects, buying machinery & building washeries

Amendment in coal linkage policy for 12th five year plan

Actual supply of coal will be subject to 85% of power being tied up through long term power purchase agreements with distribution utilities through tariff based competitive bidding

The ministry had in October 2009 notified a grading system as per which companies would be rated based on progress made in land acquisition, forest clearances and equipment orders placement.

Each of the factors would be assigned a specific weightage and the power ministry before recommending them for coal linkages. Those with highest weightage points would get coal on priority basis. The recent amendment to coal linkage policy is an addition to this criterion.

The power ministry had decided that 60% of available coal would be earmarked for the central and state sector projects, including plants based on tariff based competitive bidding.

Only 35 per cent of the coal earmarked for the power sector would go to private projects awarded planned for the 12th five-year plan. Captive power projects would receive the balance 5 per cent share.

EXPECTED TRANSMISSION REQUIREMENT: 2012-17

Expected Transmission Requirement All India

+/-800 kV HVDC Bipole Projects, 6000MW 2 to 3

+/-600 kV HVDC Bipole Projects, 4000MW 1

HVDC Bipole +/-800 kV ckm 4000

HVDC Bipole +/-600 kV ckm 1000

765/400 kV substation nos 40 to 50

765 kV Transmission Lines ckm 25,000 to 30,000

765/400 kV MVA 1,10,000

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400 kV Transmission Line ckm ( 40% quad, 60% TM) 50,000

400/220 kV , 400/132 kV (MVA) 80,000

220 kV Transmission Line ckm 40,000

220/132, 220/110 95,000

Details of Inter-Regional capacity planned for 12th plan

SYSTEM ADDITIONS IN 12TH PLAN BY 12TH PLAN

ER-SR 4200 7830

ER-NR 5900 18030

ER-WR 10500 16990

ER-NER 0 2860

NR-WR 10200 14420

WR-SR 6300 9020

NER/ER-NR/WR 0 6000

132/110KV 0 600

TOTAL 37100 75750

LATEST POWER SECTOR NEWS

1. CERC has notified third amendment to the terms and conditions of tariff regulations, 2012 regarding pumped hydro generating station.

2. MNRE has proposed tariff-based competitive bidding for procurement of electricity from grid-connected renewable energy projects.

3. NTPC has laid the foundation stone for the second phase of the Mouda supercritical thermal power project (1,320 MW) in Maharashtra.

4. Tamil Nadu government has announced the Tamil Nadu Solar Energy Policy, 2012 to achieve solar power target of 3GW.

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5. ONGC to soon commence drilling activities for its first geothermal project, with plant capacity of 5-10MW, in Gujrat.

6. Tata power is planning to increase its renewable power capacity to 6,000 MW by 2020. 7. TATA POWER SOLAR also known as Tata BP Solar has commissioned the first of two

1KW solar PV plants under the “My Delhi, I Care” initiative.