SUPPLY & DEMAND GAP OF POWER

Case Study of Gujarat State

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Submitted to : Prof Lalit Khurana

Submiited by : Sparshy Saxena (20081035)

Executive Summary

The report aims to study the demand and supply gap, with a special reference on the state of

Gujarat. The gap is seen in all aspects which include comparison of the present position of

Gujarat with the Indian average., which shows that Gujarat is better placed as compared with the

other states in terms of generation capacities (conventional and renewable), infrastructure and

efficiency. The report also observes the initiatives that are undertaken by the state in order to

overcome the demand shortage in the state. These initiatives include capacity additions, long

term procurement of power and efficiency parameters like Multi-Year Tariff system. Regulators

also play a role in the demand management on account of their policies and ability to control the

market.

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Table of Contents

Executive Summary.......................................................................................................................................2

1. Introduction............................................................................................................................................6

2. Objectives & Methodology....................................................................................................................7

3. Literature Review...................................................................................................................................8

4. Overview of the Power Sector in India................................................................................................11

5. Gujarat Scenario...................................................................................................................................17

5.1 Market structure.................................................................................................................................17

5.2 Market Players...................................................................................................................................19

5.3 Tariff schema.....................................................................................................................................22

6. Demand & Supply Scenario.................................................................................................................23

6.1 All – India Scenario...........................................................................................................................23

6.2 Gujarat Scenario.................................................................................................................................25

6.2.1 Consumer profile........................................................................................................................25

6.2. 2 Fuel profile – present & projected.............................................................................................26

6.2.3 Transmission Losses...................................................................................................................28

6.2.4 Future Demand projections.........................................................................................................30

6.3 Gujarat v/s Indian Average................................................................................................................31

6.4 Reasons for the Gap...........................................................................................................................34

7. Strategies adopted by Gujarat government for Power Management...................................................35

7.1 Capacity additions..............................................................................................................................35

7.1.1 State & Private............................................................................................................................35

7.2 Jyotigram Yojana.........................................................................................................................39

7.3 Energy Development...................................................................................................................40

8 Regulators............................................................................................................................................41

8.1 Regulatory Policies............................................................................................................................42

8.2 Observations......................................................................................................................................44

8.3 Role of Regulators in meeting Demand with Supply........................................................................45

9 Findings................................................................................................................................................48

10 Conclusion.......................................................................................................................................50

Bibliography................................................................................................................................................51

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Appendix 1...................................................................................................................................................52

Appendix 2...................................................................................................................................................53

Appendix 3...................................................................................................................................................54

Appendix 4...................................................................................................................................................55

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FIGURE 1 : INDIAN POWER VALUE CHAIN....................................................................................................................12FIGURE 2 : FUEL BREAK-UP OF POWER PLANTS – 2008...............................................................................................13FIGURE 3 : SECTORED CONTRIBUTION OF POWER – 2009.............................................................................................14FIGURE 4: REGULATORY STRUCTURE OF INDIA............................................................................................................15FIGURE 5 : REGULATORY HEIRARCHY OF INDIA..........................................................................................................16FIGURE 6 : MARKET STRUCTURE - PRE-REFORM...........................................................................................................18FIGURE 7 : MARKET STRUCTURE - POST REFORM.........................................................................................................18FIGURE 8: COMPANY LIST AS PER BUSINESS DISTRIBUTION..........................................................................................20FIGURE 9 : LOADING PROFILE OF GETCO....................................................................................................................21FIGURE 10 : POWER REQUIREMENT ACROSS DIFFERENT POWER REGIONS....................................................................23FIGURE 11 : GUJARAT- CONSUMER PROFILE.................................................................................................................25FIGURE 12 : GROWTH OF GENERATION CAPACITIES......................................................................................................26FIGURE 13 : GUJARAT - FUEL PROFILE PRESENT...........................................................................................................27FIGURE 14 : GUJARAT - FUEL PROFILE PROJECTED.......................................................................................................28FIGURE 15 : POWER INPUT.............................................................................................................................................29FIGURE 16 : POWER RELEASED......................................................................................................................................29FIGURE 17 : OVERALL TRANSMISSION LOSS..................................................................................................................29FIGURE 18 : FUTURE DEMAND PROJECT - END OF 12TH FIVE YEAR PLAN....................................................................30FIGURE 19 : ELECTRICITY SECTOR IN GUJARAT (2000)................................................................................................31FIGURE 20 : PEAK DEMAND COMPARISON.....................................................................................................................32FIGURE 21 : OVERALL DEMAND COMPARISON..............................................................................................................32FIGURE 22 : GROWTH OF CAPACITY ADDITIONS - ELEVENTH FIVE YEAR PLAN............................................................36FIGURE 23 : CONTRIBUTION SHARES OF POWER SUPPLY IN THE STATE.......................................................................37

TABLE 1: DETAILS OF PREVALENT REGULATED TARIFF IN GUJARAT...........................................................................22TABLE 2 : POWER STATISTICS IN THE 11TH PLAN........................................................................................................23TABLE 3 : T&D LOSSES - INDIAN AVERAGE.................................................................................................................31

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1. Introduction

The power sector plays an important role in the economy of any country. the per capita

consumption determines the industrial development of a country.

India, as a whole nation, faces an overall shortage, with more specific emphasis on the Northern

and the Western regions. The gap is visible from relevant government surveys and is seen to be

progressively increasing. The government has taken steps in order to ensure that gap is bridged.

The government has tried its efforts at attracting private investment in the country. It aims at

increasing the amount of private players in the country, indicating a different trend as opposed to

the conventional government monopoly. It has framed adequate policies like the passing of the

Electricity Act 2003, National Electricity Plan which have proved to be instrumental and

influential in changing the power market since reform. They have been able to open up the

monopolized market to inter-state interaction, private participation, special emphasis on rural

consumers and rural electrification. It is seen that inspite of extensive government measures, the

demand and supply gap exists in the country. Hence, it is essential that the gap is studied.

This report has a special focus on the state of Gujarat. Statistics reveal that Gujarat is a better

performer as compared to the other states in India, in terms of T&D losses, building on the

generating capacities and the gap. It shows a better performance even in terms of the

effectiveness of the regulations implemented. I am studying the phenomenon of this gap in detail

and the shortfalls in the correctional measures that are yet to be resolved.

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2. Objectives & Methodology

Since the report deals with studying the state of Gujarat with respect to the supply and demand gap in

comparison with the overall Indian scenario, the following objectives can be formulated :

Identify demand and supply gap in the power market of Gujarat

Identify possible factors responsible for the gap

Offer a probable suggestion to shorten the gap

The report has adopted the following methodology.

Data Collection Method

1) Secondary Sources

a. Research papers

b. Relevant books

c. Relevant government publications

2) Primary Data

a. Semi-structured interview with government officers

Analysis Tools

The report uses simple analytical tools like Pie diagrams, bar charts, ratios.

Limitations

1) Use of secondary resources

2) Confined scope of work

3) Time constraints

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3. Literature Review

This chapter attempts to understand the relevant work done by other people like academicians.

1. Impact of Power Sector Reforms on Technology, Efficiency and Emissions: Case Study of

Gujarat, India

P.R. Shukla, Debashish Biswas, Tirthankar Nag,Amee Yajnik, Thomas Heller and David G. Victor,

(2005)

The study examines the impact of the power sector reforms on the electricity generation industry

at the state level in India through a case study of the state of Gujarat. The state has been selected

as a unit of study to bring out the regional variances that are not captured at a more aggregate or

country level study. The study finds that the reforms have led to the emergence of various

ownership structures with associated changes in fuel mix and technology. There has been a

steady improvement in the efficiency of generation with reduction in carbon intensities. The

carbon intensities so obtained are then used for construction of a baseline for the state, which is

then projected up to the year 2010. The study reports a considerable decline in the baseline,

which is expected to touch 0.18 Kg per kWh in 2010.. With the projected growth in the share of

imported coal and natural gas, the dominance of domestic coal based generation is projected to

decline and the state is expected to proceed along a path of declining carbon intensities.

2. The Political Economy of Indian Power Sector Reforms

Rahul Tongia, (2008)

The paper emphasizes on the effect of the government policies on the prevailing power industry.

It depicts the falling out of the government initiatives and the federal strucutre on the basis of

financial strength, market roadblocks all leading to the deterioration of the industry. It briefs us

about eh various measures taken in light of the above problems like delicensing, open access and

elimination of the Single Buyer model within the industry. It considers future options which

could be helpful in bringing about a change in the industry scenario.

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3. Captive Power Plants – Case study of Gujarat, India

P R Shukla, Debasis Biswas, Tirthankar Nag (2004)

While the power sector in India has witnessed success stories in the last 4-5 years, the road that

lies ahead of us is dotted with innumerable challenges that result from the gaps that exist

between what’s planned versus what the power sector has been able to deliver. This document

highlights and quantifies some of these gaps and attempts to analyze the problem. The document

builds on the risks prevalent in the industry, some prominent hurdles that the power sector has

already crossed, and more importantly - others that various players have to overcome.

Understanding these core issues & risks of the power sector help in identifying the opportunities

that lie ahead; for example why is private sector participation an important requirement. A short

peek at our past performances indicate that during the last three five year plans (8th, 9 th and

10th), we have barely managed to achieve half of the capacity addition that was planned. As we

enter the third year of the 11th five year plan, we have already seen slippages on the planned

approx. 79 GW capacity addition.

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4. Managing Power Demand

Manisha Jain, Vikas Gaba, Leena Srivastava (2007)

The paper deals with the demand management measures taken, in reference to the region of

Delhi. It describes the demand and supply gap in the region over a period of few years. With the

help of a survey of a 1000 households, it attempts to understand the usage pattern of the

designated area, in terms of the appliances used. It utilizes this information to develop demand

reduction strategies and the effective cost of these strategies and the impact they would have on

the demand.

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The papers cited above discuss various issues related to the power sector. They discuss the

regulatory issues like post and pre-reform structure of the Indian power sector. It also discusses

issues like future opportunities in the sector which can bring efficiency in the industry. The

papers also discuss about the scope of captive power plants in providing the required supply in

order to bridge the gap. It also discusses a case study of power demand in Delhi, which has been

taken as a reference for some part of the data required. With the restricted literature review, it

can be said that no direct study has been done relating to a power gap in the region of Gujarat.

Hence, my study will hold relevance in the area of study.

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4. Overview of the Power Sector in India

As the Indian economy continues to surge ahead, its power sector is also expanding concurrently

to support the growth rate. The demand for power is growing exponentially and the scope of

growth in this sector is immense.

The Indian power market is characterized by volatile relationship between the supply and

demand of power as well as the virginity of the regulated environment. The virginity of the

regulated environment is due to the radical changes in the industry structure post the

implementation of the Electricity Act in 2003.

Prior to 2003 the market was characterized by vertical integration with the state electricity boards

forming a monopoly and excessive price regulation. Each state’s electricity board was

responsible for generation, transmission and distribution within its own jurisdiction. The

inhibitors to growth in power sector were many—small and big but the main roadblock in the

growth path was Government Policy, which made it difficult or rather impossible for a private

player to enter. This further aggravated the problem that Indian entrepreneurs didn’t have enough

knowledge and experience in developing power projects. Further on, the SEBs turned loss

making and inefficient. They became financially weak to propel any future expansion or growth

in the sector.

In the wake of the growing power needs and the continuous surplus-shortage situations faced in

various parts of the country, the government introduced Electricity Act 2003 for restructuring of

the power sector and to introduce competition and increase efficiency. It delicensed generation,

recognized trading as a separate licensed activity and introduced open access in T&D. as the

amount of losses are high in the power distribution vertical, schemes like APDRP were

implemented to reduce the amount of T&D losses. The industry also became more consumer-

oriented with the setting up of grievance redressal forums and bringing operational efficiency in

order to make the commodity relatively less cheaper to the end consumer. Moreover, it paved

way for private participation which brought about a radical change to the face of the industry.

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The Power Value Chain

The power industry is divided into three verticals.

1) Electricity generation

2) Electricity Transmission

3) Electricity distribution

The power value chain can be pictorially depicted as given below.

Figure 1 : Indian Power Value Chain

Source: Author

The entire transfer of power from the generating station to the end consumer involves changing

of frequency to suit the varied end consumer needs. The power is dispensed to the various

consumers depending on their voltage requirement. Till the feeding of the power into the grid,

technical looses are high, which gets clubbed with theft to constitute AT&C losses in the

distribution part. AT&C losses are as high in the 32% in India, owing primarily to bad metering

systems and electricity theft.

The generating stations are Central owned (Central Generating Stations), State owned or

privately owned or JVs with varying types of ownership patterns. Electricity generated herefrom

is transmitted from these stations through transmission lines of varying voltages, and then

distributed through networks in various areas.

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Upon transfer to the main sub-station, the power is fed into the distribution grids of the country.

On the basis of the distribution grids, India is geographically divided in five regions, namely

Northern, Eastern, Western, North-Eastern and Southern (Soonee, Narsimhan, & Pandey, 2006).

All the states and the union territories fall under either of these regions. The first four of the grids

operate in a synchronous mode, which implies that the power across these regions can flow

seamlessly as per the relative load generation. The Southern region is interconnected with the

rest of the India grid through asynchronous links. This implies that the quantum and direction of

power flow between the Southern grid and rest of India grid can be manually controlled (Pandey,

November 2007).

Let us see the different facts of the Indian power sector, in a very short brief.

The following table gives a snapshot of the total projects in the country as per the type of fuel to

be used and the ownership of the various plants.

Capacity Additions

Hydro

Coal + Lignite

Gas

Nuclear

Figure 2 : Fuel break-up of Power Plants – 2008

Source : MoP, 2008

As seen above, the 11th plan still shows dependence over the use of coal and lignite to about

69%. On comparison with the previous plan layout, the capacity additions have been increased.

The percentage allocation of capacity additions by the fuel type used is done on the basis of the

feasibility of fuel availability. Since the availability of coal is easier and he plants seem to have a

high and secure number of linkages for coal with the suppliers, a higher percentage is allocated

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to coal. The uncertainty related with gas supply/LNG imports has restricted the capacity addition

through gas/LNG to 2114 MW. The measures stated above for bridging the demand-supply gap

are estimated without taking into account the capacity addition be merchant power plants.

The following table gives a break-up of the ownership pattern of these projects.

53% (36,655 MW)

33% (22,989 MW)

14% (9225 MW)

Ownership

Central

State

Private

Figure 3 : Sectored contribution of Power – 2009

Source: Report of Working Group on Power for Eleventh Plan, 2007)

As seen above, the share of central is higher than both the state as well as the private players, at

present, discarding the future investments. Hence, it can be said that the CGS contributes a lot to

the power supply in the country. It can be seen from the above profile of capacity addition plan

that central sector will play a lead role with capacity addition of more than half of the capacity

addition target. There has been a good response from states on the need for capacity addition to

meet their growing demand and the states with IPPs, have been earmarked the balance capacity

for execution. The State owned capacity projected for the 11th Plan is 33.4 % of the total plan as

compared to 27% likely during 10th Plan.

Efforts are also on to include renewable energy sources by increasing the share of wind, biomass,

hydro and solar plants to 13,500 MW in the subsequent Year Plans (Power, 2007).

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Establishes codes for operations, streamlines sector through reforms

Decision on the capacity constraints and additions

System operation through bodies like NLDC-RLDC-SLDC

PGCIL : Controls the interstate transmission and electricity exchange

STATE ELECTRICIY REGULATORY COMMISSIONS : Regulation of tariffs, Decision of operational parameters, implementation of codes and reforms as per the state needs.

CENTRAL ELECTRICITY AUTHORITY: Decides on the Demand & Supply of the area. Hence, the capacities to be added are decided by the regulator. It acts as the implementation body of the policies of the Central government.

Ministry of Power – Planning, Policy formulation, Project processing, Training & Development of Human Resources

Generator Transmission & Distribution

Regulators

The Electricity segment lies in the Concurrent list; hence it is subject to modifications from both, the

Central and the State government. Hence, the role of the regulators cannot be sidelined. Prior to the

market reform, the sector was heavily inundated by the government. Even after the implementation of

reforms, the sector remains governed to a certain extent by the government. The below diagram gives the

entire regulatory picture of the sector.

Figure 4: Regulatory Structure of India

Source: Author

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Subsidiaries - bifurcated duty

handling

Holding Company SEB

Generating Utilities STU Discoms

The following figure gives us the hierarchy of the regulating bodies in the market.

Figure 5 : Regulatory Heirarchy of India

Source: Author

The Ministry of Power and Electricity Regulatory Commissions (Centre and State) are the two

bodies which are involved in the imposing, monitoring and specifying the rules and norms in the

market. They are the principal ministries. These two bodies work in conjunction with various

other bodies like;

1) CEA – R&D unit of the power sector

2) Load Despatch Centers – System operators

3) PGCIL – Monitoring of the inter-state transmissions

4) Government Utilities – Involved in Generation, Transmission, Distribution

The policies are formulated at the government level, Ministry of Power. These policies and acts

are implemented with the aid of the CEA. Demand data, forecasts and other specifications from

CEA are utilized and acts are enacted.

Post-reform, the acts that have been enacted are;

1) Electricity Act 2003

2) National Tariff Policy

3) National Electricity Plan (Rural Electrification)

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State level implementation

Central Body

Policy Making process Ministry of Power

CERC

SERCs

5. Gujarat Scenario

Gujarat is one of the most developed states in India in terms of industry. The per capita

electricity consumption in Gujarat in 2000 has been 835 units compared to the all-India average

of 355 units. The total installed generation capacity has been 8582 MW in 2000. However, the

state suffers a peak energy deficit of 11.5 per cent (Shukla & Biswas, 2005). This shortage is

being met by restricting three-phase supply to the rural areas for four hours, and recess and

holiday staggering. In addition, a two-hour power cut has been imposed on non-continuous

processing units. Gujarat has achieved a high degree of rural electrification and made electricity

available to almost all people in the state. Due to rapid industrialization, the per capita

consumption of power has grown at a rate much faster than the national average.

Gujarat is an energy deficit state and in recent years, the average energy deficit has crossed the

national average. The energy deficit of around 5 percent in 1997 touched almost 10 percent in

2000. Two consecutive years of drought (in 1999 and 2000) have led to a high agricultural

demand due to increased load on the pumping systems as the water table has receded. In

addition, these later years have been marked by a fall in the hydro generation.

5.1 Market structure

The way that the power industry operates cannot be differentiated region wise. The underlying

principle is the same.

The demand is assessed by a competent authority for a particular region, assuming region A. as

per the demand in that area, the distribution system is set in place. In order to suffice the demand,

the authority then decides and plans on the source of supply or a generator. It also plans on the

connectivity between the source and the distribution system by setting up a transmission system.

The implementation of the Electricity Act 2003 has been a viable instrument in bringing about a

structural change in the market structure of Gujarat. Prior to the implementation, the industry

was dominated by state government, GEB, which acted as a vertically integrated company

catering to generation, transmission and distribution of power to the consumers. (Tongia, 2003)

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Figure 6 : Market structure - pre-reform

Source: Impact of Power sector reforms on Technology, Efficiency & Emission; P R Shukla (2005)

As seen above, the industry was dominated by a government monopoly. This led to various

issues like lesser efficiency, lack of a competitive marketplace, monopolistic behavior and lesser

focus on the consumer.

The figure below gives the market structure of power industry in Gujarat, after the

implementation of the Electricity Act 2003.

Figure 7 : Market structure - post reform

Source: Impact of Power sector reforms on Technology, Efficiency & Emission; P R Shukla (2005)

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5.2 Market Players

Power generation in the state is carried out mainly by GEB, which is vertically integrated and

caters to almost the entire state, except for the areas served by the licensees. GEB accounts for

more than half the installed capacity. The federal government and the private sector cater to the

rest. Gujarat State Electricity Corporation Limited (GSECL) has been created as a subsidiary of

GEB with 50 per cent participation from the Gujarat State Government. GSECL manages two

units of GEB and handles the GEB projects.

Gujarat Industries Power Company Limited (GIPCL) follows a cooperative structure and has

been incorporated as a joint sector company to supply electricity to its promoting group of

companies, which include GEB, Gujarat State Fertilizers & Chemicals Ltd., Gujarat Alkalies &

Chemicals Limited, and Petrofils Cooperative Limited. The promoting group holds a share of 68

percent. Around 9 percent shares are held by various federal and state organizations. The federal

organizations include Gas Authority of India Limited and Department of Atomic Energy (DAE).

The government of Gujarat and its subsidiaries holds the state share. Financial institutions,

banks, public, and other organizations hold the rest 20 percent.

The federal sector consists of two plants of NTPC viz. Kawas, Gandhar, and a single nuclear

power plant, Kakrapar, functioning under the DAE. The electricity generated from these plants is

provided to the state through the central transmission utility according to the allocations fixed for

the state by the centre.

In the private sector, there are three players, AEC, Essar Power Limited (EPL) and Gujarat

Paguthan Energy Corporation (GPEC), which was formerly promoted by Powergen. AEC is a

private licensee, which is responsible for generation, transmission, and distribution of electricity

for the cities of Ahmedabad and Gandhinagar. EPL has a part of its capacity (215 MW)

earmarked for its group company Essar Steel Ltd. and the rest it supplies to GEB (300 MW).

GPEC supplies power to GEB only. Apart from these companies, Gujarat Power Corporation

Limited (GPCL) has been established by the State Government to attract power projects. It does

not play a role in the operation of generation plants.

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GUVNL

PGVCL

MGVCL

DGVCL

UGCVL GETCO GSECL

IPPs

Central - PGCIL

CPPs

Wind

UT Plants

Holding Company

Subsidiaries

The transmission grid in the state is maintained by GEB. It allows transmission of power from

generating companies and to private distribution companies after payment of the wheeling

charges. Recently Gujarat Energy Transmission Corporation (GETCO) has been established to

look after the state transmission sector. It is expected to take full control of the transmission

sector after unbundling of GEB. The private sector is also encouraged to set up transmission

lines and equipment to be operated by GEB. A small transmission system is maintained by AEC

for its own licensed area. Apart from GEB, Power Grid Corporation of India Ltd. (PGCIL), the

federal transmission utility in India, looks after the linkages with the regional grid and

interregional power transfer. The evacuation of electricity from the federal plants and the supply

to the state grid is also controlled by PGCIL. The distribution sector is managed almost entirely

by GEB. The two private licensees, AEC and SEC manage the distribution in their licensed area.

AEC caters mainly to Ahmedabad, Gandhinagar and the adjoining areas while SEC does the

same for Surat.

The above structure can be also be understood as :

Figure 8: Company list as per business distribution

Source : Author

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As seen above, GEB was unbundled into four different companies. , were given independent

responsibilities within the sector, such as generation, bulk purchase and sale, distribution. Being

a large state, four companies were entrusted with the task of distribution in four different regions

(North, Central, West and South) of the state.

GETCO accepts load from all the above contributors mentioned below it. The percentage

contribution of these sources to the power supply of Gujarat can be given as;

41%

17%

23%

5% 14%

Loading Profile of GETCO

GSECL

IPPs

Central - PGCIL

UT Loading

Wind

Figure 9 : Loading profile of GETCO

Source : ARR report - GETCO (2008-09)

The various sources mentioned above are in line with the policy decisions made for the state.

POWERGRID Corporation India Limited supplies power to the sate as representative of the

Central government. Every Five Year Plan allocates some power to be allotted to every region

from Central utilities present in that state as a part of their mandatory quota completion. Hence,

PGCIL completes that requirement by supplying about 23% of the total supply. The Union

Territories of Daman Diu and Dadra & Nagar Haveli contribute to the load system in the state,

though a miniscule amount of 5%. These territories get their share of power allocated from the

Central generating stations which is routed through GETCO. Hence, it is included as a

contributor to the load system in the state. Renewable comprise of a fair amount of about 14%.

(Authority C. E., 2008)

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Besides government players, Torrent Power Limited, regulated by GERC, is also authorized to

cater to the cities of Ahmedabad and Surat. It is a vertically integrated company and holds

distribution licenses in the cities mentioned afore.

5.3 Tariff schema

The tariff is regulated for the above mentioned generators by the GERC. They are;

Company Tariff Consumer segment

Discoms Rs. 3.44 + 0.62 (Fuel Surcharge) Agricultural

Torrent Power Limited Rs. 3.88 + 0.78 (Fuel Surcharge) Urban

Table 1: Details of prevalent regulated tariff in Gujarat

Source :

As seen above, the government discoms cater to agricultural needs. Hence the tariff fixed for

these companies is less. However, with a view on profits, these companies, excluding the fuel

surcharge, have a better price realization than Torrent Power Limited (Commission, 2009).

Other private players in the generation vertical include NMDC, GSEG, Essar etc.

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6. Demand & Supply Scenario

This chapter deals with the demand and supply scenario, on a country level and then on the

individual state level of Gujarat.

6.1 All – India Scenario

India operates on a deficit of 9%-10%. In the 11th Year Plan, the capacity addition is slated to be

around 78,700 MW, increasing to about 100,000 MW in the 12th Year Plan.

All the data presented below does not include the quantum of captive generation.

As per the Eleventh Plan (2007-2012), (Power, 2007), there are the following requirements;

Energy Requirement 1038 BU

Peak Load 151,648 MW

Spinning Reserve 5%

Envisaged Capacity Addition 72,000 MW

Actual needed addition 68,869 MW

Table 2 : Power Statistics in the 11th Plan

Source: MoP, 2007

Reviewing the Indian scenario in light of the five regional grids, the following table gives the

power demand required and met during the previous fiscal year.

Figure 10 : Power requirement across different power regions

Source : CEA, 2009

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As seen above, in spite of the various measures taken by the government to overcome the gap

like captive generation, enhanced incentives for capacity addition investments, Availability

based Tariff (ABT), there exists a profound gap between the requirements and the supply

provided. As seen above, the Southern and Eastern regions show a relatively lesser deficit as

compared to the other regions, with the western region clocking the highest deficit. With the

Southern region operating on a relatively different frequency, the Eastern region shows a higher

efficiency of generation as well lesser commercial losses.

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6.2 Gujarat Scenario

The total installed capacity of Gujarat, including its share from the Centre government’s power

plants, was 12,492 MW, as on May 2009. Additional capacity of 10,000 MW is expected to be

created during the 11th plan, by 2012. In 2008-09, nearly 12.3 consumers in the state consumed

about 45,100 million units of energy1 (Authority G. E., 2009).

6.2.1 Consumer profile

Carry forwarding from the distribution, the end consumer profiles, as of 2005, can be given

11%3%

28%

46%

12%

Consumer profile

Residential

Commercial

Industrial

Agricultural

Others

Figure 11 : Gujarat- consumer profile

Source: ARR Report - GETCO (2008-09)

The above mentioned consumer profile is in sync with 2005. Prior to that, the whole market

structure was different as to the one prevalent now.

The generation vertical was monopolized by the government, hence had only one prominent

player, GEB with an established capacity of 3878 MW (Shukla & Biswas, 2005). The

transmission and the distribution verticals were monopolized by the state electricity board, GEB.

However, the end consumer profiles were more or less the same, with the Industrial and

Agricultural sectors showing variations. The Industrial sector had a demand of about 48% and

the Agricultural sector had a demand of about 33% (Shukla & Biswas, 2005). The substantial

decrease of the industrial demand could be due to the increased promotion of captive generation

or captive Power plants (CPPs). The point could be validated by the fact that the captive

1 The generation capacities, future and Present have been annexed as Appendix 1 and Appendix 2

25

capacities have risen by almost 150% to a level of 2.7 GW till the year 2006 (Hansen, 2007).

These captive capacities contribute to almost 50% of the industrial demand, corresponding to the

quantum of drop in the demand of the sector in question.

Figure 12 : Growth of generation capacities

Source: Biswas, Shukla, Nag (2005)

The figure above gives the growth of generation capacities as per the ownership that further

substantiates the effect of CPP on demand. After 1997, the growth of CPP shows a drastic

increase (P.R. Shukla, 2004) which corresponds to the reduction in demand.

6.2. 2 Fuel profile – present & projected

Most of the plants in Gujarat are yet dominated by Coal, though the use of gas has shown an

increased presence. The following chart gives the Fuel profile of the state.

26

49%

4%

34%

5%7%

2%

Fuel Profile

Coal Lignite Gas nuclear hydro Oil

Figure 13 : Gujarat - Fuel profile present

Source : Author

The above chart gives the fuel profile of the state by plant usage. The profile still shows the

dependency on coal/Lignite, though mostly by the government sector. This shows that the

existing central utilities that have been running on conventional fuel since their inception have

not undergone a change in technology and have neither invested in brownfield projects which

might use newer fuels like gas. Also, coal being a cheaper option, it is more favored.

27

Gas shows an increased usage among the plants, wherein a majority is being invested by IPPs.

Though gas has a higher capex than coal, the pressure of being environment conscious had

driven the utilities to turn towards gas as an option. Not being shadowed by the government

hood, and profits being a major part of their decision making, gas had increased usage as it

provides better efficiency in plants, almost increased by 25% as per the conventional fuel, coal.

62%14%

24%

Future Fuel Additions

Coal Lignite Gas

Figure 14 : Gujarat - fuel profile projected

Source : CEA, 2009

The above chart gives a fuel profile for capacity additions envisaged till 2012. The additions are

heavily dependent on coal. The usage of coal spans heavily across both the government and the

private sector.

6.2.3 Transmission Losses

Transmission losses are calculated as difference between the energy received and energy sent out

of the grid (Commission, 2009). The following tables give a snapshot of the sources from which

the energy is received, energy is sent out and the total difference, which spells the gap between

the both, leading to losses in the state.

28

Generating plants MUs Received

GEB – GESCL 25,946

IPP 11,395

CPP 768

Central sector projects 17,400

Non-conventional energy sources 2,219

Total Energy received 57,728

Figure 15 : power input

Procured by MUs sent out

GUVNL 4,660

DGVCL 9,916

MGVCL 7,065

UGVCL 13,314

PGVCL 18,298

DD & DNH 2,163

Auxiliary Consumption 11

Total Energy sent out 55,247

Figure 16 : power released

Particulars

Total Energy received (MUs) 57,728

Total Energy sent (MUs) 55,247

Transmission Loss (MUs) 2,481

Transmission Loss (%) 4.30

Figure 17 : overall transmission loss

Source 1 : ARR Report - GERC (2008-09)

The above tables give an estimate of the grid management of the state. These figures are for the

time period of the year of 2008-09. The transmission loss for this length amounts to around 4.3%

(Commission, 2009). The reasons are discussed in the following chapters.

29

6.2.4 Future Demand projections

Future projections indicate that the rapid increase in demand is going to continue (Shukla &

Biswas, 2005).

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

0

50

100

150

200

250

300

350

Demand Forecast

Demand Forecast

Dem

and

(TW

h)

Figure 18 : Future demand project - end of 12th five year plan

Source : Author

The above graph shows that the demand is slated to increase exponentially, reaching about 300

TWh at the end of the 12th Five Year plan.

Despite new capacity additions, the percentage gap between energy supply and demand has

remained almost constant for utilities. This suggests that the increase in capacity is not able to

keep pace with the increase in demand. The peak demand also follows a similar a similar trend.

30

6.3 Gujarat v/s Indian Average

The table below gives the comparative analysis between the Indian and the Gujarat electricity

industry.

Figure 19 : Electricity sector in Gujarat (2000)

As stated earlier, Gujarat has a higher per capita consumption as compared to the national

average (Shukla & Biswas, 2005). The T&D losses can be further detailed on a yearly basis as

follows;

Year

2003-2004 24.20%

2004-2005 30.43%

2005-2006 27.91%

2006-2007 24.87%

Table 3 : T&D losses - Indian average

Source : ARR Report - GERC (2008-09)

These are the national values of the amount of T&D losses of the country. The figure of Gujarat

stands somewhere around 32%, higher than the average. The energy deficit is also comparatively

higher.

31

The tables for the statistics for demand, both off-peak and peak for Gujarat and all over India, are

annexed as Annexure 3 and 4.

Let us take a comparative look at these statistics.

Mar/

09

Apr/0

9

May

/09

Jun/

09

Jul/0

9

Aug/0

9

Sep/

09

Oct/09

Nov/0

9

Dec/0

9

Jan/

10

Feb/

10

Mar/

100.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Deficit % Gujarat

Deficit % India

Timeline

Def

icit

%

Figure 20 : Peak demand comparison

Source : Author

The above graph gives a comparison between the peak demands of Gujarat and India as a whole.

The deficit here is represented as a percentage of the actual requirement by the region for the

period of March 2009 to March 2010. As seen, Gujarat falls way below the total national deficit.

Mar/

09

Apr/0

9

May

/09

Jun/

09

Jul/0

9

Aug/0

9

Sep/

09

Oct/09

Nov/0

9

Dec/0

9

Jan/

10

Feb/

10

Mar/

100.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Deficit % Gujarat

Deficit % India

Timeline

Def

icit

%

Figure 21 : Overall demand comparison

Source: Author

32

In case of an overall demand, it still falls below the national levels, however showing a steep

increase during the period from November 2009 to March 2010. The demand is affected by

seasonal variations as well. Hence, the varied demands could be due to the seasonal demand

from the end consumers which include increased warming appliances in late 2009 and cooling

appliances in the early periods of 2010.

It is interesting to note that the pattern of variations is similar in trend to that of the national

values, however with varying frequencies.

In respect with the Western region, the following facts can be deduced :

The state of Gujarat contributes an average of 30.1% to the total supply of power

disseminated in the Western region.

As per the power conditions of the region, the deficit of Gujarat contributes to about

7.4% to the total deficit of the Western region, which averages to about 2980 MU for the

past year as compared to 243 MU for the state of Gujarat.

33

6.4 Reasons for the Gap

Reasons for the supply demand gap can be enlisted as follows:

1) The demand outstrips the potential supply of the state.

The outstripping of the demand is mainly due to lesser capacities and the transmission

losses that occur within the state.

As for increasing the capacities, the government is taking measures to increase the

capacities as stated in the above chapters.

The transmission losses occur due to the following reasons;

Location of Utilities

The location between the generator and the distribution grid is linked with the

length of the transmission lines in between them. The transmission losses are

greater if the length of the lines is greater. This aspect points out to the proper

planning and distribution of utilities in the regions. The planning should be such

that they lie in tandem with the demand in that area and also feasible resource

supply, coupled with a god distribution grid in place. The primary solution is the

proper placing of the much required infrastructure.

Demand Variations

The variations in demand also cause a fluctuation in the losses. Demand variation

causes a difference in the amount of power that is being drawn from the grid.

Demand could decrease due to the following reasons:

o Seasonal variations

o Availability of alternate sources of power

o Consumer indifference due to inefficiency of the system

Planning for demand is essential in this case. Proper projections could be helpful

to a certain extent in this case.

34

7. Strategies adopted by Gujarat government for Power Management

On an all-India basis, the measures taken to bridge the supply demand gap are through capacity

additions envisaged in the five year plans. However, besides allotting power from the Centre,

planning is required at the state level as well.

Gujarat government has undertaken various measures to overcome the supply gap through the

below stated measures:

1) Capacity Additions

2) Jyotigram Yojana

3) Energy Development

4) Multi-Year Tariff

7.1 Capacity additions

7.1.1 State & Private

In lieu of the Centre’s Five Year plan capacity additions, the state government also adheres to

capacity additions as a primary resort to overcome the deficiency.

Post reform, the Central Electricity Authority (CEA) decides on the forecasted demand for the

state, by the Electric Power Survey.

Based on the future projections of demand in the area, the state takes measures for increasing the

amount of power that is o be fed in the grid. These schemes for utilities could as Greenfield or

Brownfield projects. The following map gives the area and location of the government planned

and existing projects.

The rate at which the state attempts to add capacities to the region can be seen as follows;

35

2007-08 2008-09 2009-10 2010-11 2011-120

500

1000

1500

2000

2500

3000

3500

4000

4500

Growth of Addition

Growth of Addition

Figure 22 : growth of capacity additions - Eleventh five year plan

Source : GEPL, 2010

The capacity of projects to be added is high in the alternate year periods, reaching to a total of

11,164 MU at the end of 2012.

As opposed to a total monopoly in the sector, introduction of private investments brings

efficiency and competition in the field.

The sector has seen a lot of private sector participation, with the delicensing of the generation

sector. The participation is autonomous in the generation vertical, while some companies are

regulated to participate in the transmission and distribution verticals. In case of Ahmedabad,

Torrent Power Limited is authorized to transmit and distribute electricity in the areas of

Ahmedabad and Surat.

36

The graph below gives the ownership pattern of the present ownership of plants.

State44%

IPP32%

Centre23%

Share of Power Contribution

Figure 23 : Contribution shares of power supply in the State

Source : GEPL, 2010

As seen above, the presence of private participation continues to be on the rise with participators

like Essar, Adani group, Torrent Power Limited. It also includes other government institutions

like GMDC, GSPC and GPCL.

The private participators bring efficiency to the market place. Since the competition increases, as

opposed to the one company’s pan presence in the entire chain, the players strive to achieve

operational efficiency. It helps them to reap in profits which improve their market position and

market capitalization.

From the consumer’s point of view, they are assured of uninterrupted supply and better service.

They are catered to in a better and optimal way.

On a macro level, the whole scenario also improves. The load is taken off the shoulders of the

government and hence, the task is executed efficiently. The gap can be abridged more easily and

more efficiently.

37

Vibrant Gujarat

Vibrant Gujarat has been a vital platform for bringing investments in the state. MoUs were

signed for providing capacity additions to the state during the conference. Details are as follows.

Out of all the MoUs signed, the power sector attracted a total investment of 211,895 crore, in the

various verticals of the sector. At an average capital cost of around Rs. 5 crore/MWh, the whole

investment leads to the capacity target of 42,379 MW.

Long-term arrangements

Recently the government has made arrangements with few companies for long term supply of

power to the state. The government has initiated bids on a competitive bidding basis from many

companies, including Shapoorji Pallonnji, Essar Power, Jindal Energy, Pipavav Energy, out of

which KSK Energy was awarded the right to supply long term power to GUVNL in order to

bridge the gap. This deal would supply about 1010 MW at a price of Rs. 2.34/unit (KSK Energy

arm lowest bidder to provide 1010 MW to GUVNL, 2010). The tender floated by the company

was for 3000 MW on a long-term basis.

These types of long term arrangements are cheap to source and ensure the much needed power

for the state.

38

7.2 Jyotigram Yojana

The ‘Jyotigram Yojana’ has been initiated by the Gujarat government which provides 24-

hour 3-phase electricity to about 18,000 villages in the state. Data states that the entire

electrification of these villages was carried out within 1000 days with a budget of about

Rs.1290 crores. The scheme also aims at reducing the amount of transmission losses and

electricity theft by about 2.4%. Currently, the objectives completed are setting up of

transmission infrastructure including transmission lines, electric poles and transformers.

Gujarat is one of the 13 states that have proactively implemented the Rajiv Gandhi Gramin

Vidyut Yojana, and led to the reach of electricity to all of the rural households. In the year

2001, the status of Gujarat was that 80% of the villages were electrified, which increased to

100% in the year 2005 (Modi, 2005). The RGGVY was implemented on a national level, but

Gujarat was one of the forefront states to implement the scheme on a state level and fast-

track the development. The step has helped in uplifting the rural living standards. It has

created employment through the introduction of industries in the area and also made

available opportunities for human development through possible introduction of services like

IT and electronic media.

The scheme is essential in taking care of the demand from the rural sector. The move would

have to initiate the investors towards the generation and capacity addition vertical. This

would ultimately increase the power input and help in bridging the power gap. It also has a

significant contribution from the renewable energy sector, which indirectly leads to the

promotion of that sector as well.

39

7.3 Energy Development

Gujarat has a high potential for the development of renewable energy sources. In tandem

with the available edge, the state has chosen to tap these resources accordingly.

It has a vision to pioneer the usage of clean sources of energy in order to counter the growing

global energy crisis.

The state has a mix of Solar, Wind and biomass generating stations, in majority. In addition

to the use of conventional fuel used, these sources provide the extra amount of power that is

used within the state. The government has state-specific policies to utilize these resources

efficiently.

The state of Gujarat has the highest wind power potential in the country of 9675 MW out of

which it has harnessed about 14% and it has policies in place to harness the rest.

The state receives high solar radiation levels with 300 days of clear sun. This potential is

enough to transform the state into a hub of Solar generation. Due to the open political will of

the state, Gujarat is slated to bag the biggest solar plant in the world of 5 GW capacity. Other

moves include building captive solar generation farms.

The various initiatives include the promotion of solar devices and increase in the number of

private wind generators.

40

8 Regulators

The following section gives an account of the regulators and their scope in the power industry.

The whole setup, as discussed earlier is divided into generating and T&D utilities. All the

internal operations are executed by these organizations. The internal transmission and

distribution are operated upon by STUs and state Discoms. In certain areas, private entities are

authorized to operate in the market, under regulation. The government generation utilities control

the state and government share of capacity additions.

State Transmission utilities (STUs) provide and regulate the transmission network. The

companies provide for the necessary grid network and their operations.

The load balancing is an essential part of the grid management aspect of the power sector.

The inter-state transmission of power is regulated by the PowerGrid Corporation of India

Limited. PGCIL provides the inter-state transmission infrastructure and regulates the

transmission charges.

These entities are all controlled by the State electricity Regulatory Commissions (SERCs), who

regulate the tariff and the operational level at which they should operate. These entities are

essential in deciding the state reforms and their implementation. They also carry out the

necessary audit of the companies (Dubash, 2005).

41

8.1 Regulatory Policies

The Gujarat Electricity Regulatory Commission (GERC) is the authority which is responsible for

regulatory monitoring in the state. With a view to meet the increasing demand by adequate

supply, the brief below describes the rules that the state has in place to tackle the power gap.

Tariff Regulation

The commissions regulate the tariffs of the utilities, which are under the hood of the government.

These include government entities and those private entities that have been licensed to operate

within the limits that they were awarded the bid for. These tariffs were earlier fixed on a cost-

plus basis. But as a move towards efficiency, the tariffs have now been fixed to a performance

trajectory based on the principle of a Multi-Year tariff system.

Open-Ended Generation Incentives

A state has both central and state generating utilities. On the regulatory front, demand forecasts

are issued by the CEA at a central level. As per these forecasts, the state government is required

to take initiatives regarding the capacity additions. The Center might take up this role, in case it

is approached by the state government. The UMPP (Ultra Mega Power Plant) at Mundra, by the

Tata group is one such Central initiative. In such cases, the state government needs to inform the

Centre regarding its share of offtake from the designated initiative.

A state might approach the Centre for such initiatives in case of its inability to supply the

required quantum of power. This inability could arise due to;

1) Lack of Financial resources & Affordability

2) Lack of resources like fuel, intellectual property, contractual tie-ups; in a profitable

fashion

The state could also take up this alternative as a resort to increasing the private investor

participation in the state.

Ideally, the state should plan the increase in the capacities of the state as per the forecasts, either

by Greenfield or Brownfield projects. As a pitfall, there is no provision that states the

enforcement of these additions. Ultimately, the wish of increase lies on the will of the state

government. Let the published forecasted demand of a state be 100 MW for a certain year.

42

Suppose that state’s government distribution company decides to purchase power from a private

generator on a long term basis. In case the power amounts to more that the forecasted demand of

100 MW, the distributor has to take permission from CEA. However, there is no rule which

makes it obligatory for the distributor to arrange for power in response to the increased demand

of 100 MW. The distributor may or may not make arrangements for the same, as per its

motivation.

In absence of state initiatives, the Center can either utilize its assets in the state or induce

investments at its own interest. However, there might be a possibility that state does not respond

to such initiatives because of not cited reasons. There is no rule that enforces a state to do so.

43

8.2 Observations

As per the above elaborate layout of the scenario, the following observations can be made.

1) The regulations are more focused on financial & technical parameters and corporate

governance of the entities

2) It shows a lesser focus on future developments. This is proved by the increasing share of

government expansions of coal-fired plants. Gas shows an increasing usage but the

change is too gradual and slow.

3) The regulations aim more at streamlining the industry. They are structure-orientation

specific. They attempt to define procedures, ensuring compliance. This could be due to

the fact that the industry is at its nascent stage, post the implementation of the new

reforms in 2003. This was a big leap in breaking away from the government monopolized

market. Earlier, since everything was under one umbrella; the move is essential for

market stability. With the entry of private participation, market playing rules need to be

set.

4) The regulatory framework developed in not in a totality of the business scenario. This

could be due to the naivety of the market, hence increasing the vulnerability of the

market,

5) One important observation is the freedom and incentives granted to captive plants and

renewable sourced plants. The policies have also been relaxed for co-generation.

However, these are open-ended incentives, whose benefit-bearing capacities depend more

on the free will of the concerned utilities. There is no regulatory obligation whatsoever.

Based on the above observations, the market regulatory structure is apt for the evolving market.

However, the aspect of sole specification of rules and not compliance leaves a big dent in the

supply-demand gap.

The initiatives of UMPPs, Captive plants and Merchant power plants are being able to bridge the

gap to a certain extent. However, increased enforcement by the government could speed up the

process.

44

8.3 Role of Regulators in meeting Demand with Supply

As far as the state of Gujarat is concerned, the state does not face a permanent shortage of power.

There is a presence of a shortage of peak demand. We have discussed the various regulatory

policies that are in place in order to curb the demand in the state. It can be concluded that the

government and the regulators do play a role in the demand management in the state.

It is understood that the gap can be controlled either by handling the supply or improving the

efficiency of usage. As far as efficiency goes, the government has adequate initiatives in place to

control the efficiency factor. However, this policy comes with a large lead time till it becomes

effective.

As discussed above, the regulators carry out the following duties which indirectly affect the

demand and supply gap.

1) Regulation of Tariffs

2) Demand of Annual performance reports from utilities

3) Increasing share of renewable power

4) Implementation of load control measures

Let us see the tariff in detail.

The MYT is an efficiency based tariff system. Every utility has a trajectory of operational target

that has been approved by the government through the MYT. If a company adheres to the MYT-

approved trajectory, they get to pass on the costs to the consumers; else they absorb the costs,

which cut into their profits.

The MYT for a utility is decided on the basis of historical performance data, operating

conditions. The benchmark is set which gives an incentive to the utilities to increase their

efficiency. Increased efficiency leads to an increase in the amount of power forwarded by the

utility, which indirectly helps in bridging the gap.

GERC has the authority to ask the utilities for their annual performance report. The report

includes details like their losses, operational or T&D, financial performance. Based on this

information, it has the power to direct them towards certain measures.

45

Let us take the example of a distribution licensee. In accordance with the demand in a particular

area, the government has the power to order a distribution licensee to increase the power it

supplies or distributes in order to fulfill its annual revenue requirement. As per the current

scenario, post-reform, the distribution licensee does not have to set up capacity building

infrastructure. Hence, it declares for the acceptance of bids through a competitive bidding

process. The number of bids received by the licensee is beyond the scope of control of the

regulator. This gives an indirect incentive for generators to increase their capacities.

As far direct incentives for increasing generation are concerned, the government have open-

ended policies in place. They aim to make the generation tariff investor friendly. As per the

current ROE of 14%, CERC has decided to increase the ROE to 15.5%. It also attempts to

provide a single window clearance for the generators to reduce hassles. This is the only extent to

which the regulator can ensure that the licensee gets enough bids. Lesser bids are often received

in the absence of regulatory incentives, as in case of a lowest Rs.7/unit bid by Torrent Power

Limited for the area of Sabarkantha, Gujarat.

However, in case of increasing the ROE, with the tariff is fixed, it suggests a financial clinch.

The retail tariff is fixed by GERC, and is revised every 3 years. If the ROE is increase, it is but

logical that the retail tariff is increased accordingly. But this option cannot be brought about

subsequently and has to be designed as per the customer profiling.

The GERC also attempts to shift focus to renewable sources of energy. Unconventional sources

of energy have a highly untapped potential which could be utilized as an additional source for

generating power. As a move towards renewable sources, the government licensees have a

liability of procuring 0.25% of their distribution requirement from solar plants. This liability is

slated to increase to increase to 0.5% and finally 1% subsequently.

The demand side management is done through load control measures. The state of Gujarat has

load Control measures across industrial belts. The state is divided into 7 zones or belts. Across

these zones, the different control measures that are executed are as follows :

Peak hours staggering where in the different belts observe alternate recess hours during

the day in order to reduce the load. This distributes the demand over a length of day,

thereby reducing the pressure during peak hours.

46

The non-continuous industries are supposed to observe a holiday (restriction of drawal by

50 %%) as per the day allotted to their belt. In order to operate on that day, the industries

have started making use of diesel generating stations in order to fulfill their requirement.

The government could make use of these standby capacities in order to meet the peak

demand shortage. This comes across as a viable option as the capacity of these stations

can be utilized on days other that the load shedding holidays, as the investment or these

capacities has already been done by the industries. Operating these stations on other days

and feeding that power into the grid is a feasible solution. Currently GUVNL pays these

industries the variable cost plus Re.1 in exchange for their standby capacity power.

Thus, taking into account all the above factors, the regulators, though do not have a direct

impact on the investment, but can create opportunities for curbing the gap indirectly.

47

9 Findings

The findings of the report above can be pictorially represented as:

48

Reasons for Gap

Effects due to Gap

Solutions Offered

The state still shows additions of conventional fuel, despite the policies for the usage of

renewable sources being in place. This indicates a lag from the government side in the

implementation of these reforms. If accelerated it could aide in the extra influx of power in the

state. Few other issues that probably crop up are lesser investments in the generation side.

However, they are not that low, when seen in relative terms with other states. Hence,

theoretically it might be possible to state about an increase in the generation capacities but

practically, it has to be efficiently monitored, looking at the current scenario where the

government is seen to be open to private participation. Increasing the use of exclusive resources

like renewable potential, LNG terminals in a more efficient way is one way of improving the

supply side. However, these steps involve heavy investments, which could be a hurdle in the way

of these solutions being implanted. Tapping of excess industrial capacities from DG sets is a

novel way to harness the latent electricity available during the non-load shedding periods and it

also covers their heavy capital expenditures, as far as the industrial consumers are concerned.

49

10Conclusion

As compared to other regions in the country, Gujarat is in a better position in terms of meeting

the demand with power supply. The state has near sufficient generation capacities, primarily

aimed at the efficient gas grid, quantitative investments due to business convocations like the

Vibrant Gujarat. The state at present has 3821 MW of capacity, which is expected to increase to

5240 MW over the next five years.

The primary reason is the outstripping of demand. The peak demand, mainly, is being tackled by

various measures like load control, utilization of standby capacities and incentivizing generation.

The various regulatory policies in place aim at increasing the efficiency of utilities, increasing

their accountability regarding their operations. All these factors indirectly affect the gap by

fluctuating the supply and demand gap.

As a supplement to the control of the supply, the government has also taken various demand

management measures like promoting the efficient use of power, distributing the industrial load

over a time frame. All these efforts tend to decrease the load during the peak hours and hence,

make the power management more effective.

50

Bibliography

Authority, C. E. (2008). Annual Report. Ministry of Power, Government of India.

Authority, G. E. (2009). Information Brochure . Ahmedabad.

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Deo, D. P. (2010). Policy and Regulatory Framework of Indian Power Sector. Central Electricity Regulatory Commission.

Dubash, N. K. (2005). The New Regulatory Politics of Electricity in India: Independent, Embedded or Transcendent. The Politics of Necessity, Oxford .

Energy Calculator. (2010). Retrieved May 1, 2010, from Jamshedpur Utilities & Services Company Limited: http://www.juscoltd.com/energy-calculator.asp

Hansen, C. J. (2007). Bottom-up Electricity Reform Using Industrial Captive Generation: A Case Study of Gujarat, India. Oxford Institue for Energy Studies.

KSK Energy arm lowest bidder to provide 1010 MW to GUVNL. (2010, March 13). Retrieved April 23, 2010, from Business Standard: www.business-standard.com/india/news/ksk-energy-arm-lowest-bidder-to-supply-1010-mw-power-to-guvnl/13/44/388411

Limited, A. I. (2007). Concept Paper on Multi Year Tariff Process. Maharashtra Electricity Regulatory Commission.

Limited, M. -E. (2009). Multi Year Tariff Principles. Haryana Electricity Regulatory Commission.

P.R. Shukla, D. B. (2004). Captive Power Plants: Case Study of Gujarat, India.

Pandey, V. (November 2007). Electricity Grid Management in India - An Overview. 'Electrical India' - Vol 47 No 11.

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Shukla, P. R., & Biswas, D. (2005). Impact of Power Sector Reforms on Technology, Efficiency and Emissions : Case Study Gujarat. Ahmedabad.

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(p. 46).

51

Appendix 1

52

Appendix 2

53

Appendix 3

Year Peak Demand Demand Met Deficit (MW) Deficit %

Gujarat India Gujarat India Gujarat India Gujarat India

Mar-09 9003 109492 8960 96785 43 12707 0.5 11.6

Apr-09 8975 110958 8481 97355 494 13603 5.5 12.3

May-09 8465 107920 8243 95033 222 12887 2.6 11.9

Jun-09 8633 111662 8274 96871 359 14791 4.2 13.2

Jul-09 8051 109553 7781 96282 270 13271 3.4 12.1

Aug-09 9748 116281 9155 99277 593 17004 6.1 14.6

Sep-09 10290 115116 9389 101609 901 13507 8.8 11.7

Oct-09 10406 115432 9515 101564 891 13868 8.6 12.0

Nov-09 9624 109721 8743 95783 881 13938 9.2 12.7

Dec-09 9528 112394 8520 97738 1008 14656 10.6 13.0

Jan-10 9223 112505 8498 98438 725 14067 7.9 12.5

Feb-10 9275 114362 8320 99822 955 14540 10.3 12.7

Mar-10 10040 118472 9047 102725 993 15747 9.9 13.3

54

Appendix 4

Year Requirement Availability Deficit (MW) Deficit %

Gujarat India Gujarat India Gujarat India Gujarat India

Mar-09 5651 69595 5638 61997 13 7598 0.2 10.9

Apr-09 5785 67992 5600 60377 185 7615 3.2 11.2

May-09 5714 68471 5677 62477 37 5994 0.6 8.8

Jun-09 5484 69508 5410 62126 74 7382 1.3 10.6

Jul-09 4654 68361 4622 62685 32 5676 0.7 8.3

Aug-09 5835 73273 5711 65287 124 7986 2.1 10.9

Sep-09 6134 68994 6060 62339 74 6655 1.2 9.6

Oct-09 5977 69714 5917 63180 60 6534 1.0 9.4

Nov-09 6199 62994 5694 57350 505 5644 8.1 9.0

Dec-09 6262 68650 5715 61487 547 7163 8.7 10.4

Jan-10 6036 70306 5495 62776 541 7530 9.0 10.7

Feb-10 5506 65594 5064 58906 442 6688 8.0 10.2

Mar-10 6826 76493 6298 67513 528 8980 7.7 11.7

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