POWER SECTOR SCENARIO IN

INDIA

Krishna Murari(009909) Dhiraj Arora(009915) Ranjan Kumar(009949) B.Subhakar(009910)

PRESENTATION OUTLINE
Where do we stand Power sector Evolution Present Structure Strength & weakness Objective and transformation roadmap Electricity for all by 2012 Major challenges Reforms in the sector Vision of MoP

INDIAN POWER SECTOR - CHRONOLOGY

1947 - Total installed capacity of only 1362 MW. 1948 - Electricity Supply Act leads to formation of SEBs Priority in development through SEBs Development through Five Year Plans Emphasis on hydel power in the first two Plans Uneven distribution of natural resources; inter-state imbalances Early Seventies - Country faces unprecedented power crisis Capacity: 16,664 MW in 1974 1975 - NTPC and NHPC set up in Central Sector 1991 - Liberalization; Private participation permitted 1992 - Power Grid Corp. Formed to facilitate formation of National Grid 1998 - Regulation through formation of CERC/SERC 2003 - Electricity Act2003

GROWTH OF POWER SECTOR

Generating capacity has grown manifold from 1712 MW in 1950 to more than 1,40,000 MW by end of Jan 2008. Generation in the country has also increased from 5 billion units in 1950 to about 617 billion units by end of Jan 2008.

The growth in the transmission lines has been from 2708 ckm in 1950 to more than 265,000 ckm by Jan 2008.
The average PLF increased from 54% in 1990-91 to an impressive 77.6% in 2006-07. 65% households have access to Electricity ,balance to be covered by 2012.

Installed capacity (MW) Growing steadily

1,24,310 112,058

1,41,079

66,000

28,000 13,000 1,700 4,600

1950

1960

1970

1980

1990

2004

2006

2008(jan)

Power Infrastructure in India

Hydro
Private Sector 13% Central Sector 34%

(Jan., 2008)

35,208 MW (24.7%) 90,896 MW (64.6%) Coal Gas Oil 75,002 MW (53.3%) 14,692 MW (10.5%) 1,202 MW (0.9%) 4,120 MW (2.9%) 10,855 MW (7.7%)

Thermal

State Sector 53%

Nuclear Renewables

TOTAL

1,41,079 MW

In addition captive generation capacity of appx. 41,000 MW.

The physical performance has been steadily improving.

662

600 558 550 515.3 499.5 500 448.4 480.7 531.4

587

GENERAION IN BUs

450

400

98-99 99-00 2000- 2001- 2002- 2003- 2004- 200601 02 03 04 05 07

The physical performance has been steadily improving.

76
76.8

ALL INDIA PLF(%)

74 72 70
67.3 69

72.7
72.1 69.9

68 66 64 62 60 58
98-99 99-00 2000-01 2001-02 2002-03 2003-04 2006-07 64.6

IN SPITE OF GROWTH, MAJOR CONCERNS REMAIN

2004-05 Per Capita (kWh) PLF (%) Energy Shortage (%) Consumption* 592 74.8 7.3 2005-06 631 73.6 8.4 2006-07 631 76.8 9.3

Peaking Shortage (%)

11.7

12.3

13.9

Per Capita consumption (kWh / Year) (appx.) Brazil : 2070 China : 1200 Thailand: 2000 Malaysia: 3000 USA : 9000

UNDER THE VIITH SCHEDULE OF THE INDIAN CONSTITUTION, THE POWER SECTOR IS ON THE CONCURRENT LIST, MEANING THAT BOTH PARLIAMENT AND STATE ASSEMBLIES HAVE POWER TO LEGISLATE. IN THE EVENT OF CONFLICT, CENTRAL ACTS PREVAILS.

Centre

CEA Parliamen t MOP, GOI Central PSEs CERC BEE

Legislativ e function

Executive Function

Execution

Regulatory Function

States

State Assemblies

State Govts.

SEBs/Stat e Utilities /IPPs/Lic.

SERCs

Central, State and Private utilities have a complementary role for optimal development of power sector in India.
Central
Under MOP: NTPC, NHPC, NEEPCO,DVC,BBMB Other Ministries: NLC, NPC SEBs/State Gencos NJPC, THDC, NHDC IPPs, Licensees (CESC, BSES, AEC) CTU-Power Grid

Generation

State Joint

Private
Central State

Transmission Transmission

STUs- SEBs/State TRANSCOs

State

STUs- SEBs/State Discoms (Major player)

Distribution Distribution

Private

Pvt Discoms and Licensees

Power Trading: PTC, NVVVNL

Financing: PFC, REC

STRENGTHS
Abundant coal reserves (enough to last at least 200 years) Vast hydro-electric potential (150,000 MW out of which only 18 per cent has so far been tapped) A large pool of highly skilled technical personnel Emergence of strong and globally comparable central utilities (NTPC, Powergrid) Political consensus on reforms Potentially one of the largest power markets in the world

Weaknesses
Declining trend of Capacity addition and persisting shortages Poor financial health of State Power Utilities Under utilization of existing capacity due to transmission constraints. Inadequate distribution network Irrational Tariff Poor state of Rural Electrification / Nonelectrified households Increasing Cost of Power

Estimates indicate the need for an additional 100 GW to provide Power for All by 2012
As per the 16th EPS, by the year 2012, Indias peak demand would be 157,107 MW with energy requirement of 975 BU. Peak requirement in MW

157107 * 78037 84574 100423

Energy requirement in BU

975 507 559 617

Mar.'01 (act.) Mar.'04 (act.)

Mar.'07(act)

Mar.'12 (est.)

* Installed capacity to increase to 212,000 MW by year 2012 to meet the peak demand of 1,57,107 MW.

MULTIPRONGED STRATEGY

100000 MW ADDITIONAL POWER THROUGH CAPACITY ADDITION / CREATION

SUPPLY SIDE MANAGEMENT CONTRIBUTION 80000 MW

DEMAND SIDE MANAGEMENT CONTRIBUTION 20000 MW

FRESH CAPACITY ADDITION

RENOVATION & MODERNISATION

AUGMENTATION OF T&D NETWORK

REDUCTION IN T&D LOSSES

END USE EFFICIENCY IMPROVEMENT

Capacity Addition Programme During XI Plan (MW)

FuelMix Thermal Hydro
Nuclear

Central Sector 26800 9685

3380

State Sector 24347 3605

-

Private Sector 7497 3263

-

Total
58644 16553 3380

Total

39865

27952

10760

78577

In addition, 13,500 MW through Non- conventional sources and 12,000 MW through captive power plants.

RENEWABLE ENERGY (INDIA)

POTENTIAL/ AVAILABILITY ( MW) POTENTIAL EXPLOITED (MW)

WIND ENERGY SMALL HYDRO ( UP TO 25 MW) BIOMASS/COGENERATION OCEAN THERMAL

45,000 15,000 19,500 50,000

3595 1705 750 NIL

TIDAL POWER
SOLAR

9,000
20 MW/SQ. KM (40,000 MW) 20,000

NIL
2.64

SEA WAVE POWER

NIL

FUNDS REQUIREMENT TILL 2012

US$ 200 Billion investment required in generation, transmission, distribution etc.
Generating Capacity
212000 MW

140049 MW

Assuming 30:70 ratio, 60 Billion as equity and 140 Billion debt needed in next 8-9 years

Current

Required by 2012

FINANCIAL HEALTH OF SEBS

Gap between cost of supply and average tariff is still high.. Losses per annum still about 1% GDP though showing signs of decline. Old and poor distribution network leading to frequent outages, poor quality / unreliable power and high technical losses. Lack of accountability in distribution setup of SEBs. Lack of investment in power distribution sector.

POWER SUPPLY SHORTAGE PERSISTS

Power Shortages (%) 20.5

Peak Shortages (%)

18.0 11.5 13.0 7.8 8.8 12.2 11.2 7.1 11.7 7.3 12.2 8.3 13.9 9.3

7.3

1992-93 1996-97 2000-01 2002-03 2003-04 2004-05 2005-06 2006-07

HYDRO : THERMAL RATIO HAS GRADUALLY DETERIORATED

67% 59% 54% 60% 71% 75% 74% 75

33% '50

41% '60

46%

40% '80

29% '90

25% 2003

26% 2004

25 2008

'70 Hydro

Thermal + Others

HYDRO POTENTIAL IN THE COUNTRY IS OF THE ORDER OF 150 GW. ONLY 18% HAS BEEN TAPPED SO FAR. OPTIMAL MIX IS 40 : 60 FOR HYDRO : THERMAL TO ENSURE MAXIMUM UTILIZATION OF INSTALLED CAPACITY AND TO REDUCE PEAKING

SHORTAGES.

HYDRO POTENTIAL GLOBAL SCENARIO

Country

Exploitable Potential (MW)

Installed Capacity (MW)

% of Potential Utilised

Norway Canada Brazil China India

47,000 160,000 170,00 310,000 150,000

27,360 65,678 52,427 56,000 26,261

58 41 31 18 17.5

POWER SECTOR REFORMS

Electricity Act, 2003

Enabling Legislative Framework Generation (other than hydro) freed from licensing Transmission & Distribution: Licensed but unlimited entry Transmission is isolated from Generation, Distribution and Trading Open Access: T&D licensees to act as common carriers

ELECTRICITY ACT 2003FRAMEWORK FOR COMPETITION

The Act creates a liberal and framework for Power Development. transparent

It facilitates investment by creating competitive environment and reforming distribution segment of power industry. Entry Barriers removed/reduced Delicensed generation. freedom to captive generation including group captive.

recognizing trading as an independent activity.

open access in transmission already in place.

Contd

ELECTRICITY ACT 2003FRAMEWORK FOR COMPETITION

(CONTD)

Open access to consumers above 1 MW within five years commencing Multiple licenses in distribution. No requirement of licence for generation and distribution in notified rural areas. The new law envisages deregulation of tariff fixation in certain cases: Tariff determined through competitive bidding is not to be regulated. Where open access has been allowed to a consumer, he can reach an agreement with his supplier for purchase of electricity and the tariff for such transaction would not be regulated.

ENCOURAGING RESULTS

(CONTD)

Trading activity has picked up. 11 licencees are in the fray. Increasing trading volumes for which sellers are receiving payments. Applications for transmission licensees by a private company. Applications for distribution license by private players in Delhi, Mumbai and at other places. Capital cost of new projects and tariff lower than anticipated.--- effective regulation and competition Cost per MW still around Rs. 4 crore in new coalfired thermal power stations. Weighted average tariff of NTPC projects is Rs. 1.62 per kWh.

POWER SECTOR REFORMS

National Electricity policy has been notified All states have signed MoU And MoA. All states have signed Tripartite Agreement. 24 states have constituted SERCs and 18 SERCs have issued Tariff orders In 15 States 100% feeder metering completed and one state have achieved more than 90% metering. In 4 States 100% consumer metering completed and 10 states have achieved more than 90% metering. Post Electricity Act 2003 :Private sector investment has revived

Contd..

RECENT DEVELOPMENTS
3 Ultra Mega Power Projects of 4,000MW each awarded through tariff based competitive bidding. Approval for setting up first power exchange in India accorded by CERC. Rural Electrification : Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) is a major national effort to universalize access to electricity.

TECHNOLOGY UPGRADATION
Supercritical technology is one essential component of the Ultra Mega Power Projects Next stage will be ultra supercritical technology subject to its cost effectiveness

India is also working on an IGCC pilot plant based on Indian coal which has high ash content.

CFLs being promoted. Next stage is to introduce LEDs.

765 KV AC system energised. POWEGRID now looking at 1000 KV.

EXPECTATION AFTER REFORM

1. Fast implementation of sanctioned project

2. Improvement in financial performance.

3. Increase in customer satisfaction. 4. Increase in reliability & quality of power supply 5. Improvement in Performance efficiency

6. Rationalization of tariff

COST OF POWER INDIA VS. REST OF WORLD

Affordability of Electricity
Philippines India China Thailand Chile Brazil Korea Japan Germany UK US Australia 0.94 0.66 0.59 0.50 0.25 0.16 1.47 1.96 3.70 5.26 10.57 10.45

UNAFFORDABLE

AFFORDABLE
2 4 6 8 10 12

Source: CLSA Report on China

Electricity price as a % of per capita GDP

Energy Bills account for 10% of total income for Indian Consumers vis--vis 0.25% for US Consumer and 5% for China

VISION OF THE MINISTRY OF POWER

By year 2012 :
Per capita consumption 1000 units. Installed capacity over 200,000 MW. Spinning reserves 5% . Total household electrification in 5 years. Minimum lifeline consumption of one unit per household per day. Inter-regional transmission capacity 37,000 MW. Quality and reliable power supply.

THANK YOU