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Power sector

发布时间:2017-03-27
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Installed power capacity of 150323.41MW as on june30,2009

Electricity generated was 723.55 billion units of energy in FY 2008-09

Per capita energy consumption is at 704.2KW/year in FY 2007-08

Chart for power capacity

* (All figures in MW)

S. NO.

Region

Hydro (Renewable)

Thermal

Nuclear

R.E.S. @ (MNRE)

Total

1

All India

36916.76

96044.24

4120.00

13242.41

150323.41

Requirement in 2008-09: 777,039 million units

Availability in 2008-09: 691,038 million units

Shortage by 86,001 million units

The main reasons for shortage of power are-

  1. Growth in demand for power outstripping the growth in generation and capacity addition,
  2. Shortage of peaking power in the grid.
  3. Low Plant Load Factor of some of the thermal generating units, mostly in the State Sector
  4. High Transmission & Distribution losses of about 26.91% as in 2007-08.
  5. Inadequate sub-transmission and distribution network in some States.
  6. Inadequate inter regional transmission capacity, for supplying power from surplus regions to deficit regions.
  7. Poor financial position of State Utilities rendering it difficult for them to raise the resources necessary for making required investments to create adequate generation, transmission and distribution system.

Capacity addition in 10th plan was only 21180.2 MW having an achievement of 51.6%. the achievement levels at central, state and private sector are 56.9, 55.9, 27.1 only which is way below the targeted levels.

Energy generation target for 2009-10 are:

Ø Thermal : 648.479 bu

Ø Nuclear : 19 bu

Ø Hydro : 122.032 bu

Plant Load factor : ratio of actual energy generated to the amount that could have been generated. In 2008-09, target PLF was 79.17 and actual came out to be 77.19. the break up for central state and private sectors are 84.30, 71.17 and 91.01.

GoI initiatives for power sector development

  • MOA with state govts subject to states progressing
  • Tariff determination by regulatory commissions
  • APDRP to assist states in building distribution network and reducing transmission losses
  • Ratings of Power utilities for assessing the progress of reforms
  • HVDS for reducing power pilferage for reduction of losses
  • Open access in distribution in phases as per Electricity Regulatory Commissions
  • Development of National Grid
  • Promoting trading of electricity for better utilization of generation assets.
  • Stringent legal provisions relating to theft of electricity

Sector wise power consumption :

Domestic

24.86

24.77

Industrial

34.51

35.63

Agriculture

24.13

22.93

UNBALANCED GROWTH AND SHORTAGES

India faces a power shortage of 73,050 million units

India faces 12% power shortage in 2009 as per estimated value

Fall in hydroelectric generation due to shortage of monsoons account for 10% of power shortage in 2009 summers

723.55BU of power generated in 2008-09

CEA says India faced a power shortage of 8.8% in 2008-09

Northern, western and southern regions are likely to experience energy shortages of nearly 6.3%, 18.8% and 8.2% respectively, while eastern and north eastern regions are expected to get surplus energy by around 12.7% and 3.3% respectively.

Present All India Region wise Installed Capacity (as on July 31, 2009 in MW)

Region

Thermal

Nuclear

Hydro

[email protected]

(MNRE)

Total

Coal

Gas

Diesel

Total

(Renewable)

All India

79208.88

16385.61

1199.75

96794.24

4120.00

36916.76

13242.41

151073.41

POWER TRANSMISSION AND DISTRIBUTION

Implementation done by the POWERGRID Corporation of India, divided into 5 regions.

Uses RLDs with the Unified Load Dispatch and Communication (ULDC) schemes at Rs 2000 crores

No major grid disturbances in the nation in past 5.5 yrs, rate of tripping and line failures reduced to a very low rate

Utilises a length of 317500 circuit kms of High tension transmission lines

Total of 87535 ckms of 400kv transmission lines and 122225ckms of 220kv transmission lines

Total of 108682 Substations with 400kv transmission lines and 174193 substations of 220kv transmission lines

Mainly owned by state electricity boards for distribution until 2001.

BSEC in Mumbai, CESC in Kolkata, SEC in Surat and AEC in Ahmedabad are the only private players

The private players are new to the transmission sector but still are fast rising. There are various projects secured by private players which enhances the transmission network of India.

* List of Transmission Projects for Development through Private Sector/Competitive Bidding (January 2007)

Sl. No.

Name of Transmission Project

Quantum of Power Transmission

Beneficiary States/ Regions

Tentative Target Date

1.

Evacuation System for North Karanpura (1980 MW)

1980 MW

States of ER, WR and NR

2011-12. Transmission target to match generation project

2.

Talcher Augmentation System

To augment transmission for reliable evacuation of power of 2000 MW from Talcher-II project

States of SR

2009-10

3.

Evacuation System for Maithon RB (1000 MW)

1000 MW

Stales of ER, NR and WR

2011-12 Transmission target to match generation project

4.

Scheme for enabling import of NER/ER surplus by NR

1500 MW

States of NER, ER and NR

2011-12

5.

SR-WR Synchronous Inter-Connector

1000 MW

States of SR and WR

2011-12

6.

Kawas - Navsari 400kV D/C

1000 MV

States of WR

2011-12

7

Navsari - Mumbai New location, 400kV D/C

1000 MW

Slates of WR

2011-12

8.

Evacuation System for Barh-II (1320 MW)

1320 MW

States of ER, NR and WR

2011-12 Transmission target to match generation project

9.

Evacuation System for Nabinagar (1000 MW)

1000 MW

States of ER, NR and WR

2011-12 Transmission target to match generation project

10.

Evacuation System for Daripally Integrated Project (3200 MW), 800 MW in 11th Plan

3200 MW (800 MW in 11th Plan)

States of ER, NR and WR

2011-12 Transmission target to match generation project

11.

Evacuation System for Koderma (500 MW)

500 MW

States of NR

2011-12 Transmission target to match generation project

12.

Evacuation System for Mejia Ext. (1000 MW)

1000 MW

States of NR

2011-12 Transmission target to match generation project

13.

Evacuation System for Lara Integrated Project (4000 MW) 800 MW in 11th Plan

4000 MW (800 MW in 11th Plan)

States of WR

2011-12 Transmission target to match generation project

14.

Evacuation System for Simhadri Ext. (1000 MW)

1000 MW

States of SR

2011-12 Transmission target to match generation project

* The Power Grid Corporation has entered into joint venture with the following companies to encourage private participation in the sector:

  • JV with TATA Power Ltd (POWERLINK Transmission Ltd.)
  • JV with Torrent Power Ltd. (Torrent Powergrid Co. Ltd.
  • JV with Jaiprakash Hydro Power Ltd (Jaypee Powergrid Ltd.)
  • JV with Reliance Energy Ltd (Parbati Koldam Transmission systemCo. Ltd.)
  • JV with Teesta Urja. Ltd (Teesta valley Power Transmission Ltd.)

The private sector at present is valued at Rs 20,000crores and a further Rs 2800crores have to be added on by the government sector.

PART II

SEBs:

They were needed in order to transmit the power generated.But due to the high transmission losses, irrational tarrifs and other distribution sector losses.so as many as 9 states reorganised their SEBs so as to provide more transparency and ease of accounting in the areas of power generation,distribution and transmission regions.Based on the study of IIPA the SEBs in various states were restructured.

The financial performance of the SEBs show that all the SEBs have incurred losses inspite of the high demand of power in most regions. The SEBs on an average have a turn around palnned for the year 2011-12. The MoP have amended the APDRP with the inclusion of project and reform components i n order to turnaround the SEBs and reduce the annual cash losses. Also the PFCs have reduced the interests on loan rates to SEBs in order to attract sebs to take loans and carry out the various schemes in plan.

SEBS have to pay dues to the CPSUs like NTPC and Railways. On the directions of ministry of power, the RBI, State govts and National govts have entered into TRIPARTITE Agreement and issues bonds amounting to Rs 31581 crores. With the Tripartite agreement into place it helps the CPSUs to collect the dues from SEBs. the efiiciency of due payment is as high as 100% in last few years. the SEB of GOa has no outstanding loans and as a result does not have authority to issue bonds.

The CPSUs covered under the scheme are National Thermal Power Corporations (NTPC), National Hydro-electric Power Corporation (NHPC), Power Grid Corporation of India Ltd. (PGCIL), North-Eastern Electric Power Corporation (NEEPCO) and Damodar Valley Corporation (DVC) under the Ministry of Power, Coal India Ltd. (CIL) and its subsidiaries and Neyveli Lignite Corporation (NLC) under the Ministry of Coal, Nuclear Power Corporation of India Ltd. (NPCIL) under the Department of Atomic Energy and the Railways.

The SEBs are rated on the basis of parameters jointly decided by ICRA and Crisis in consultation with PFC and MoP. The various parameters include:

State Govt parameters:

* Existence of formal action plan and implementation of the same

* Subsidy payment track record

* Sustainability of subsidy

* Legislative reforms

The top ranking states on these parameters are Delhi, Andhra Pradesh, Haryana, Gujrat and Karnataka

State Electricity Regulatory Commission parameters:

* Infrastructure and operationalising of the SERC

* Timeliness of tariff orders

* Tariff philosophy

The top ranking states are Andhra Pradesh, Karnataka, Haryana, Rajasthan and Delhi.

Overall the external factors reflect the focus of the State Government and the SERC in moving the sector forward through reforms and operational efficiency improvements. The states with the highest scores on the external parameters are Andhra Pradesh,Delhi,Haryana,Karnataka,Rajasthan.

The internal factors include Business risk, Financial risk and Projections and Others(Information risk and quality of MIS)

Business risk involves operational efficiency of the utilities, trends in meterin, billing and collection efficiency are measured.

Financial risk reflects the ability to cover the power purchase and generation costs throught the sale of power. It should cover all operating and interest costs.

In terms of financial projections, the scoring is based on four specific parameters - outlook on power purchase costs, outlook on tariffs, outlook on metering/collection efficiency, outlook on agricultural consumption - each of which ultimately impact the revenue gap of the utility.

The top scoring states with regards to internal factors include, Karnataka, Andhra Pradesh, Tamil Nadu, Maharashtra and Punjab.

Based on the above data here is how analysis can be done:

The sebs have incurred losses inspite of high demand in many states. The problem with sebs is that terrifs are not adjusted based on demand. Regulation has caused this inefficiency. However in a mixed economy like India, it is not a surprise that the sebs have to bare the brunt of the regulation in order to provide affordable energy to the people. A solution to this problem could be incremental / slab billing rates. A form of this system already exists. However inefficiencies in the billing systems have to be removed to get this system implemented. For this purpose, political will and higher involvement of the seb leadership in the ground level activities is required. Other solutions that can be seen are installation of renewable energy sources like wind mills, solar panels, biomass plants locally for high usage customers in industrial areas under the sebs to reduce dependence on the existing generation capacities of the SEBs.

The reorganization of SEBs has been a welcome step. In most of the states, the three divisions of the sebs 1) generation, 2) transmission and 3) distribution have been converted into separate companies with independent management, each company having its own goals, mission and vision. However the common thread in these missions is customer satisfaction. This new focus is a welcome change for the future of the power sector in India.

Rural Electrification

Rural electrification is the process of bringing electrical power to rural and remote areas. This power is utilised for various purposes ranging from lighting, household purposes to applications in farming. In India at least half the population resides in villages and most of which receive less than 8 hours of electricity per day.

Energy in the form of rural electrification is the key to the rural and national development in India. This process of rural electrification is being carried out in the following manner:

* Laying of basic power infrastructure for giving access to electricity to un-electrified areas

* Strengthening and buttressing the existing power distribution network

* Funds for rural electrification programmes undertaken by the States are provided in the respective State plans as approved by the Planning Commission on an annual basis

* Financial institutions like Rural Electrification Corporation (REC) supplement the resources of the State Governments by funding Rural Electrification Programmes of the State Governments/Power Utilities/Power Entities, as sponsored by them for financial assistance

* The State Govt. /Power utilities implement the rural electrification programmes

The current status of the Rural Electrification process in India is as follows:

Rural Electrification (as on march 31, 2009):

1.

Total No. of Villages

593732

2.

No. of villages Electrified

489532

3.

% of Villages Electrified

82.4%

Electricity Act 2003

The Electricity Act, 2003 has been enacted and a provision contained

in this Act has come into effect from 10th June, 2003 and this act extends to the

whole of India except to State of Jammu & Kashmir. This Act of 2003 is now regulating the generation, transmission, distribution, trading and use of electricity in

the country.

Basic features of the Electricity Act, 2003

The main features of the Electricity Act, 2003 are briefly stated as follows:

  1. There is a provision for private transmission licenses.
  2. Distribution licenses would be free to undertake generation.
  3. There would be a Transmission Utility at the central and State level.
  4. Generation is being delicensed not as before and captive generation is freely permitted.
  5. The State Electricity Regulatory Commission may permit open access in distribution in phases.
  6. There is direct commercial relationship between the consumer and generating company or a trader.
  7. There is a provision for transfer scheme.
  8. System for generation as well as distribution will be permitted in the rural and remote areas.
  9. There is a provision for Constitution of Central Electricity Authority.
  10. There is provision for Constitution of Central Commission as well as the State Commission.
  11. There is provision for Constitution of Central Advisory Committee as well as the State Advisory Committee.
  12. There is provision for Establishment of Fund by the Central Government and the State Government.
  13. There is provision for Establishment of Appellate Tribunal for adjudicating the grievances face by the Consumers etc.
  14. There is provision for Offences and Penalties to be imposed on the person/ persons on the charge of Theft of Electricity such as materials, damaging work, stolen property etc.
  15. There is provision for Exclusion of Jurisdiction of the Civil Court for speedy adjudication.
  16. There is provision for Constitution of Special Courts for the trial of special cases.
  17. There is provision for Arbitration open to the Consumers, Company etc. for arriving settlement with less time and resources.

Open Access System

The concept of Open Access System was introduced in the Electricity Act 2003. Open Access implies the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission.

This allows any person who has constructed a captive generating plant and maintains and operates such a plant to possess the rights to open access for the purpose of carrying electricity from the plant to the destination of his use.

A few advantages of the Open Access systems are as follows:

1. Distribution Licensees (existing or wherever constituted as a result of

reorganisation of SEBs) can access power from any source; a generator,

a trader, another distribution licensee, a captive generator etc., on

payment of transmission wheeling charges without payment of surcharge.

The Central Transmission Utility (CTU) the State Transmission Utility

(STU) and the transmission licensees are obliged to provide on demand

open access to their respective system for transfer of such power, subject

to regulations framed for the purpose by the appropriate Commission -

Central Commission for inter-State transactions and State Commissions

for intra-State transactions.

2. A person setting up a captive generating plant can carry power from his

captive generating facility to the destination of his use without payment of

surcharge.

3. Any consumer can access a trader, generator, distribution licensee other than

his own distribution licensee when the State Commission allows him open

access under Section 42(2) of the Act, on payment of wheeling charges and a

surcharge to take care of current level of cross subsidy and or additional

surcharge under section 42(4), as the case may be. Thus the consumer is

empowered to select his preferred source of supply of electricity.

Creation of National Grid

The exploitable energy resources of our country are quite unevenly distributed such as abundance of coal resources in Bihar/Jharkhand, Orissa, West Bengal and hydro-electric resources concentrated in Northern and North-Eastern regions. As a result some regions may not have adequate natural resources to meet their future demands. Hence the optimal utilization of generating resources for sustainable development is the direction which needs to be followed. Thus, formation of the National Grid is an effective tool to achieve the same as stated earlier.

The government has setup a state company Powergrid to oversee the unification of all the Indian state electricity board (SEBs) grids which in turn would form the unified national power grid.

One of the major hindrances which the National Grid implementation faces is the increasing difficulty in acquisition of the Right of Way (ROW) for the construction of transmission lines especially in the eco-sensitive areas and major hydro potential areas like North Eastern region, hilly areas in Jammu and Kashmir and Himachal Pradesh.

Thus, developments in power sector emphasize the need for accelerated implementation of National Power Grid on priority to enable scheduled/unscheduled exchange of power as well as for providing open access to encourage competition in power market. Formation of such a National Power Grid has been envisaged in a phased manner.

Private Participation in the Power Sector

After the economic crisis of the 1990's, it was clear the financial viability of SEBs would be a key factor determining the extent of private sector participation. Thus the government took several measures to encourage private sector investment in power.

* No licence required by CEA and any generating company may establish, operate and maintain a generating station if it complies with the technical standards relating to connectivity with the grid. However, this is not applicable to hydro generating station.

* The limit on automatic approval of foreign equity participation in generation and T&D has been revised from 74% to 100%. This applies to projects with a cost of less than Rs 15000 million.

* Reforms and restructuring exercise has been carried out in various states. This involves enactment of regulatory acts, setting up of regulatory bodies and corporatisation/unbundling of SEBs.

* Besides, the government has relaxed the ceilings on lending by Indian financial institutions for private sector projects.

* Private investment has been allowed in power transmission either through 100% equity or joint venture with PGCIL. In case of latter, the PGCIL will hold only 26% stake and the rest would be held by private party.

* Private sector participation in transmission has been limited to construction and maintenance of transmission lines on BOOT (build-own-operate-transfer) basis under the control of PGCIL.

Response from the Private Sector:

The private investors responded to the policy initiatives very positively. As a result, out of 17406 MW envisaged under private sector during 11th Plan, 16406 MW actively progressed and 1000 MW was added to the energy basket of the country. In addition, a large number of IPPs applied for coal linkage totalling to nearly 1, 87,000 MW.

Many utilities in States like Haryana, Punjab, Madhya Pradesh, Uttar Pradesh, Chhattisgarh, Maharashtra, Karnataka etc. proposed to set up thermal power projects through tariff based competitive bidding route.

Hundred percent foreign direct investments in generation, transmission, distribution and trading (except for atomic energy) have also been permitted on the automatic approval route (RBI route). Load dispatch function has, however, been kept in the domain of Government.

Summary of Private Generating Capacity in the Country as on September, 2008

Name of Source

Capacity

Hydro

1230

Coal

5241.38

Gas

4183

Diesel

597.14

Renewable Energy Sources

994.53

Total

21246.05MW

Major Policy Initiatives to streamline the process of project development:

To accelerate capacity addition several policy initiatives have been undertaken by Ministry of Power. Some of the prominent policies which have boosted the private player's confidence in the sector are:

* National Electricity Policy.

* Ultra Mega Power Project Policy.

* Mega Power Policy.

* Tariff Policy.

Open access to transmission:

Under the new Electricity Act, 2003, non-discriminatory open access in Transmission has been envisaged. The move is intended to encourage competition amongst generators and distributors and trading in power from surplus to deficit regions.

Privatization of Distribution

Privatization of distribution of electricity by the States is one of the options envisaged for bringing about a turnaround in distribution. Under the ongoing reforms programme, distribution has been privatized in Orissa and Delhi.

Private Participation in Transmission

* Power Grid Corporation of India Ltd. (PGCIL) has implemented specific transmission lines associated with Tala HEP, East-North Interconnector and Northern Region transmission system in Joint Venture with TATA POWER by forming a Joint Venture Company (Powerlinks Transmission Ltd.).

* PGCIL has selected Reliance Energy Ltd. as the Joint Venture Partner for execution of specific transmission lines associated with Parbati-II and Koldam HEP and has finalized agreements required for formation of joint venture.

* Memorandums of Understanding (MOUs) were signed by PGCIL with promoters of the following five power projects to set up Joint Ventures for implementing the transmission systems for evacuation of power from these generation projects:-

  • 1100 MW generating project developed by Torrent Power Generation Company Ltd. (TPGL) near Surat in Gujarat.
  • 1000 MW Karcham- Wangtoo Hydro Power Project being developed by Jaypee Karcham Hydro Corporation Ltd. in Himachal Pradesh;
  • 1200 MW Teesta-III generating project being developed by Teesta Urja Limited;
  • 1500 MW gas based Generation project being developed by Essar Power Limited at Hazira near Surat in Gujarat; and
  • 1100 MW (subsequently reduced to 740 MW) Gas Based Combined Cycle Power Project proposed to be developed by IL&FS / ONGC at Pallatana in Tripura.

* PGCIL has signed Joint venture agreement with Torrent Power AEC Ltd. for implementation of dedicated transmission system to evacuate power from 1100 MW generating project being developed by Torrent Power Generation Company Ltd. (TPGL) near Surat in Gujarat. The shareholding of PGCIL and Torrent Power AEC Ltd. in the Joint Venture would be 26% and 74% respectively.

The Empowered Committee, constituted as per the provisions of guidelines for encouraging competition in development of transmission projects has identified the following 14 transmission projects for development through private sector:-

  1. Evacuation System for North Karanpura (1980 MW)
  2. Talcher Augmentation System
  3. Evacuation System for Maithon RB (1000 MW)
  4. Schemed for enabling import of NER/ER surplus by NR
  5. SR-WR Synchronous Inter-Connector
  6. Kawas-Navsari 400 kV D/C
  7. Navsari-Mumbi New location 400 kV D/C
  8. Evacuation System for Barh-II (1320 MW)
  9. Evacuation System for Nabinargar (100 MW)
  10. Evacuation System for Daripally Integrated Project 3200 MW, 800 MW in 11th Plan
  11. Evacuation System for Koderma 500 MW
  12. Evacuation System for Mejia ext. 1000 MW
  13. Evacuation System for Lara Integrated Project 4000 MW in 11th Plan
  14. Evacuation System for Simhadri Ext. (1000 MW)

Foreign Lending to the Indian Power Sector

The Indian government recognizes that the long-term sunk cost, long project planning and construction timeframe, and high-risk portfolio makes it difficult for private investors to raise funds whose maturity matches project completion dates. Since 1991 it has allowed 100% foreign direct investment (FDI) in the power sector (with the exception of nuclear power) under the automatic route (that is, without hindrance from the financial regulatory agency, the Reserve Bank of India) and without limitations on project cost and amount of FDI.

Despite these and other incentives and lucrative policy measures, FDI in the power sector for 2006 totaled $157 million—accounting for less than 1% of the nation's total FDI. Experts cite several reasons for this, apart from the numerous challenges that afflict the sector, including short and erratic supply of fuel and equipment, high tariff rates, poor plant load factor, power theft, and other transmission and distribution losses. But the primary problem is the poor commercial performance and near-bankruptcy of state electricity boards (SEBs)—a result of pervasive power politics. The prevalence of corruption, lack of corporate governance practices, and red tape (owing to the multi-regulatory system that involves both state and federal levels of government) are also major concerns.

A famous example is Enron's 2001 withdrawal from the Dabhol Power Project because the Maharashtra SEB defaulted on a payment—a situation worsened by the government's noncommittal attitude toward the long-term power purchase agreement. Circumstances have since improved, but foreign companies doing business in India's power sector still have cause for concern, according to Canasia Power Corp., a Canadian company that is developing two 2,000-MW supercritical plants in Gujarat and Uttar Pradesh by 2013-2014.

But like all private developers of other supercritical plants in India, Canasia also faced large-equipment supply concerns—a factor typically cited as a hurdle to the nation's plans to accelerate capacity expansion. Considering the large time frame required for equipment manufacturing in India, Canasia instead opted to source critical equipment from China, because it was the most competitively priced and had the most capacity.

China—already India's largest trading partner and fiercest FDI competitor—is poised to take a lion's share of the power equipment business, according to Lloyd's Register, a third-party assurance certification service provider to the power sector.

Some of the major initiatives taken by the Government to encourage foreign investment in the power sector as of today are as follows:

i. Foreign Direct Investment

100% FDI has been permitted on the automatic approval route in respect of projects relating to electricity generation, transmission and distribution (other than Nuclear Power Plants). Recently, power trading has also been included in the above, subject to compliance with the regulations under the Electricity Act, 2003.

ii. Ultra Mega Power Projects

The Government has taken up an initiative for facilitating the development of Ultra Mega Power Projects of about 4000 MW capacity each under the tariff based competitive bidding route using super critical technology.

iii. Competitive Bidding Guidelines

The Central Government has on 19th January 2005 issued guidelines for competitive bidding for determination of tariff for procurement of power by distribution licensees after due consultation with the Central Electricity Regulatory Commission (CERC). This is expected to further encourage foreign as well as private sector investment. Subsequently, the Central Government has also issued detailed guidelines for tariff based competitive bidding process for procurement of transmission services for transmission of electricity vide notification dated 17th April, 2006.

As per information available with the Department of Industrial Policy & Promotion (DIPP), which maintains the data on Foreign Direct Investment (FDI), the statement showing the details of the FDI made in the power sector during the last three years and the current year, year-wise is given below:

(Amount in million)

2006-07

Jan-Dec

2007-08

Jan-Dec

2008-09

Jan-Dec

2009-10 (upto March, 2009)

Total

FDI in Rs

FDI in US$

FDI in Rs

FDI in US$

FDI in Rs

FDI in US$

FDI in Rs

FDI in US$

FDI in Rs

FDI in US$

8,931.46

197.95

10,207.64

253.37

54,612.13

1,339.25

18,890.75

385.41

93,588.99

2,197.36

Opportunities for FDI in all spheres of the nation's power sector are as tremendous, Abdul Shaikh, a senior international economist with the U.S. Commercial Service's India Business Information Center, noted. True, the country must improve its public finances, sector viability, and fuel supply, while strengthening its political climate and legal framework. But because India currently offers 30% corporate tax and has thrown open import opportunities, the possibilities are apparent. “By 2012, it is estimated that India will need to invest about $170 billion to add 100,000 MW of additional power capacity to fulfill its growing infrastructure needs,” he said.

Professional and Research Bodies

Numerous professional and research bodies have been setup and contribute to the Indian Power Sector through their own core competencies. Some of these bodies are as follows:

Central Power Research Institute (CPRI)

The Central Power Research Institute (CPRI) was established in Bangalore by the Government of India in 1960. It was organized into an autonomous society in the year 1978 under the aegis of the Ministry of Power, Government of India. The main objective of setting up the Institute was to serve as a National Laboratory for undertaking applied research in electric power engineering besides functioning as an independent National Testing and Certification Authority for electrical equipment and components to ensure reliability and improve, innovate and develop new products. With its state-of-the art infrastructure and expertise, CPRI has made significant contributions to the power sector in the country for improved planning, operation and control of power systems. Besides in-house R&D, CPRI also undertakes sponsored research projects from manufacturers and other agencies in different areas of specialization.

National Power Training Institute

National Power Training Institute (NPTI) has been set up by Government of India to function as the National Apex Body for the Human Resources Development of Power Sector personnel in India.

It operates on all India basis through its four Regional Power Training Institutes located at Neyveli (Tamil Nadu), Durgapur (West Bengal), Badarpur (New Delhi) and Nagpur (Maharashtra). The NPTI including its four Regional Power Training Institutes, is fully equipped with the latest state-of-the-art training infrastructure and has expert faculties with long years of professional and teaching background. The Institutes conducts a number of training programmes for Power Engineers, Operators and Technicians in the areas of Thermal and Hydro Power Generation, Power System and other related areas. The Training Institute at Badarpur is equipped with a computer based full scope replica simulator of 210MW Fossil Fuel Thermal Power Plant to provide off-job/hands on training. Two more simulators of 500 MW and 210MW have been commissioned at NPTI H.Q., Faridabad and at Nagpur Institute respectively. In addition, an Institute for Advanced Learning & Management Studies for higher echelons of Power Sector is being established at NPTI Complex, Faridabad. It will have departments in specialised areas of Hydro, Thermal, Power System and Management Studies. It will function as a nodal Institute for Power Sector training not only for designing, implementing and supervising the whole power sector training activities but also to create the right type of organisational culture.

Centre of Energy Management, MDI

The Centre for Energy Management has been set up by the Management Development Institute, Gurgaon in collaboration with other organisations in view of the urgent need to address the issues persisting in the power sector. As part of the activities of the centre, MDI joins hands with organisations / departments of national and international repute for conducting study, research, consultancy and organising seminars and conferences in areas of energy and power sector. All activities of the centre range from formulating local and national level strategies to suggesting global solutions to critical energy and power related issues.

Industry Organisations

The power sector reveals that it can be largely segregated into four different categories on the basis of type of players in the industry. These include:

Central Government Corporations:

which consist of corporations like the National Thermal Power Corporation (NTPC), Nuclear Power Corporation, National Hydro Electric Power Corporation (NHPC), and some other smaller players.

State Government Corporations. which consist of the various state electricity boards and other corporations, that have been promoted by the respective governments. Poor management, transmission and distribution (T&D) losses and poor recoveries of dues are some of the factors, which are responsible for the plight of these corporations. Currently, the financial health of many SEBs is precarious and their revenue-raising capabilities are more or less dependent on assured guarantees from the respective governments.

Private Sector Licensees:

In the private sector, some companies had been given licences to carry on generation and distribution activities. While some of these companies are generation and distribution companies, others like Surat Electricity are just distribution companies.

Independent Power Producers:

The Independent Power Producers (IPPs) are the companies that have been given a nod to set up generation capacities.

The following names are a few of these major prime players apart from government organisations:

§ Bhakra Beas Management Board

§ Enercon Systems India

§ Essar Group

§ GMR Group

§ Gujarat State Petroleum Corporation Ltd

§ Jindal Steel & Power Limited

§ Karnataka Power Transmission Corporation Limited (KPTCL)

§ Karnataka Renewable Energy Development Limited

§ Konarka

§ Magnum Power Generation Limited

§ Nippo Batteries

§ Reliance Energy Ltd.

§ Shri Shakti

§ Durgapur Projects Limited

§ Satluj Jal Vidyut Nigam Ltd.

§ United Power

§ Ventral Systems Pvt. Ltd.

§ Enron India Power Plant

§ Celetronix Power India

§ Caterpillar Power India

§ Alton Power India

§ Thorium Power India

§ GE Power Controls India

§ Green Power India

PART III

Players in New & Renewable Energy Sources:

PESTLE Analysis from a new entrant's point of view in the domain of wind power

Political & Legal: Central and State governments have undertaken aggressive policies to attract investments in the wind sector. Indeed it appears certain states are competing amongst each other to attract the most wind investment. Policies differ from state to state and are continually evolving. They offer a combination of feed in tariffs, portfolio standards, subsidised capital, and tax incentives to lure investment. The numerous power sector reforms also provide value addition to the electricity value chain. But given that such programmes represent added cost to government budgets, negative fiscal development can put pressure on the government to alter or even curtail these policies. Numerous risks in this aspect exist for a new entrant such as expropriation, currency convertibility, currency availability, political violence and contract frustration. Also India has agreed to the Kyoto Protocol to mitigate climate change and wind energy clean development mechanism projects are being promoted vigorously.

Social:

One of the bigger risks new entrants face are those due to policy changes that take place in the wake of a change in political party post-elections. These directly impact the socially sensitive issues as power distribution and tariffs. Even if the new entrants themselves are not the target of policy changes, the indirect impact wrought by potentially negative effects on utility's and state government's fiscal well being are very real. Also the fundamental paradox situation of achieving long term high level returns and the public perception of electricity as a common good that should be supplied at the lowest cost possible; something that is clearly present in India is a major factor for new entrants to look at.

Economic:

The Indian economy has been growing at a considerable rate over the past two decades. When taken together with reforms, this has yielded more resources for both government and consumers. This eases somewhat the burden of overcoming years of underinvestment in critical parts of the economy. Also there are a number of suitably experienced, complementary companies in India that can be suitable prospective partners for new entrants to enter and make their presence felt in the wind market. Existence of institutions like CII and the EIWEN partnership go a long way to help prospective entrants find a home and a partner. Additionally the SEZs provide excellent benefits and incentives for new entrants to enter the wind power sector. Credit risks with respect to the SEBs that is the SEBs dependency on the government to draw support for their payments which are subject to considerable political pressure and uncertainty over time is a factor which new investors must look at before entering the market. This only serves to exacerbate current and ongoing fiscal pressures on the SEB's, most of whom run large operating deficits. While the Indian wind market is demonstrating its ability to scale up the size of individual wind farms, there has been little success achieved in the way of true nonrecourse funding structures. Initial costs of setting up operations in India are also a major hindrance which needs to be overcome by the new entrants.

There has been a general improvement and rationalisation of the business environment. Taxes are in the process of being simplified. Introduction of GST and VAT have reduced the need for complex tax structures. Import duties have been greatly reduced from a peak rate of 300% in certain instances to an average of about 20% across all categories, with encouraged sectors often benefiting from waiver of those taxes/duties. In the current Indian context, it is very difficult for a foreign player to enter the wind market particularly as a project based investor; as it is difficult for established domestic Indian power producers to enter their own country's wind market on a project basis. Unless there is a way to provide a broader swathe of the market with a means to effectively access sites and wind data, there will remain a substantial barrier to wider participation in the wind farm development market, limited primarily, as it is currently, to domestic wind turbine manufacturers.

Technological:

Availability of locally sourced equipment and contractors provides significant benefits for incoming entrants. The ability to purchase equipment in INR minimizes potential for currency mismatch with project revenue streams. A number of foreign turbine manufacturers have set up partnerships in India, bringing advanced technology with them. There are also a number of ‘home-grown' manufacturers that are making significant inroads in both the domestic and foreign wind markets. The negative side to the existence of domestically sourced equipment is that it eliminates the potential for mobilizing export credit financing from foreign suppliers which though in speculative grade markets tends to be expensive. India's Centre for Wind Energy Technology (CWET) is an excellent tool for facilitating further development of wind generation in India. CWET works to identify wind resources and provides developers with expert data on project sites with high potential and aids in reducing wind generation costs.

Environment:

The government has identified nearly 216 potential sites in the country for the generation of wind power called as wind farmable sites majorly in states of Gujarat, Maharashtra, Andhra Pradesh and Karnataka. India's ranks currently 4th in wind energy capacity in the world.

PESTLE Analysis from a new entrant's point of view in the domain of solar power

Political & Legal:

The National Action Plan on Climate Change puts forward some specific policy measures, including research and development to lower the cost of production and maintenance, establishing a solar energy research centre, and a target to establish at least 1000MW of concentrating solar power in India by 2017. The stated ultimate aim of the Solar Mission is to develop base-load prices and dispatch-able concentrated solar power that is cost-competitive power to fossil fuels within 20 to 25 years. The Indian government is currently trialling a feed-in tariff for solar power, of up to 10 rupees per kWh (19 US cents), for 10 years of operations, with a limit of 10 MW for each state. The government has put in place numerous policies to attract incentives from the foreign investment point of view in solar photovoltaic technology. The Solar Thermal Energy Demonstration Programme is the initiative taken by the government in the direction of using solar thermal energy as the means of rural electrification. Also in July 2009, there has been an unveiling of a $19 billion plan to produce 20 GW of solar power by 2020. One salient feature of this plan is the use of solar powered equipment mandatory for all government buildings.

Social:

The domain has the potential to provide immense amount of benefits to society as nearly 44% of the Indian population in the country does not have access to electricity. This implies to achieve social equity, energy equity is an important driving force and solar power is one of the best solutions for our environment and future as well.

Technological:

Solar power is finding various avenues on the application front both in the rural and urban areas. Solar water heaters, green buildings, solar/ green cities, solar photovoltaic systems, Akshay Urja shops and solar air heating /steam systems are a few of the applications in the urban, industrial and commercial domain. Thrust is being given to make the solar cells and modules cost effective through R&D in the areas of poly silicon material, crystalline silicon solar cells & modules, storage systems, concentrating solar cells etc. Solar Energy Centre (SEC) is a forerunner organisation in development of solar energy technologies and its promotion through product development. Collaboration with European Union countries and sharing their expertise has already resulted in renewables partnerships, low carbon finance, strategic policy research and many other ventures. These show opportunities for advancement on the R&D front in the domain of solar power.

Economic:

Initial investment and setup costs are daunting by most standards for setting up at larger scales. Affordability remains a concern for solar energy products although the costs are expected to reduce thereby increasing demand. On the brighter side most of the raw materials, components, solar cells, photovoltaic modules and systems have concessional or nil duty imports or even excise duties are exempted. Most demand lies in the solar home systems and power plants across states in India. One of the key challenges which solar power faces is the current levels of fuel subsidy that its competition enjoys such as the kerosene subsidy. Even procurement of large land tracts in high solar insolation areas for grid connected solar plants is a major challenge for new entrants.

Environment:

In India, there is a very promising solar resource, with annual global radiation of between 1600 and 2200 kWh per square metre, which is typical of tropical and sub-tropical regions. The Indian government's estimate is that just 1%of India's landmass could meet its energy requirements until 2030. Rajasthan, Gujarat, West Madhya Pradesh and North Maharashtra all receive more than 3000 to 3200 hours of bright sunshine in a year. Over 2600 to 2800 hours of bright sunshine are available over the rest of the country, except Kerala, the north-eastern states, and Jammu and Kashmir where they are appreciably lower.

During monsoon (June - August), a significant decrease in sunshine occurs over the whole country except Jammu and Kashmir where the maximum duration of sunshine occurs in June and July, and minimum in January due to its location. The north-eastern states and south-east peninsula also receive relatively less sunshine during October and November due to the north-east monsoons. As far as the availability of global solar radiation is concerned, more than 2000 kWh/m2-year are received over Rajasthan and Gujarat, while east Bihar, North West Bengal and the north-eastern states receive less than 1700 kWh/m2-year. The availability of diffuse solar radiation varies widely in the country. The annual pattern shows a minimum of 740 kWh/m2-year over Rajasthan increasing eastwards to 840 kWh/m2-year in the north-eastern states, and south wards to 920 kWh/m2-year. In all a huge market for solar energy exists; given the high solar incidence in India (there are about 300 clear sunny days in a year in most parts of India and the daily average solar energy incident over India varies from 4-7 kWh/m2. There also appears to be renewed international interest in India. In March, Californian start-up eSolar announced a licence deal for its solar power technology for the construction of up to 1 gigawatt of solar farms in India over the next decade.

PESTLE Analysis from a new entrant's point of view in the domain of biomass power

Political & Legal: The Ministry has notified a Schemeon Biomass Energy and Co-Generation (non-bagasse) in Industrywith the following objectives:

  1. To encourage the deployment of biomass energy systems in industry for meeting thermal and electrical energy requirements.
  2. To promote decentralized / distributed power generation through supply of surplus power to the grid.
  3. To conserve the use of fossil fuels for captive requirements in industry.
  4. To bring about reduction in greenhouse gas emissions in industry
  5. To create awareness about the potential and benefits of alternative modes of energy generation in industry.

The scheme has a provision for providing Central Financial Assistance in the form of capital subsidy for encouraging setting up Biomass Gasifiers and Biomass Co-generation (non-bagasse) projects in the industries for meeting their thermal and electricity requirements. This allows entrants from both the private and public sectors to be able to enter this market with a lot of assistance from the government. Other public sector undertakings such as the Indian Renewable Energy Development Agency Limited (IREDA) is a Public Sector Undertaking under the administrative control of the Ministry of Non-conventional Energy Sources (MNES), Government of India, engaged in the promotion, development and financing of renewable energy and energy efficiency projects in India which the new entrants can look to for guidance in the biomass power industry.

Social:

Biomass power projects have resulted in direct and indirect socio-economic impacts in and around the project sites. The biomass power projects are generally located in outskirts of the town particularly in rural areas where sufficient biomass is available in different forms. Therefore, by setting up these power projects there is an positive impact on irrigation and agricultural patterns and have resulted in revenue generation to the farmers in that region. This has led to local increased level of economic activity and in turn better quality of life. The projects have also strengthened the grid and improved the quality and availability of power in the local areas. This has triggered the growth of small establishments and entrepreneurial activities for catering to the peripheral needs of the power plant such as machine shops for maintenance of biomass processing equipment. In some areas, seeing the demand for biomass fuel, farmers have, with the support the project promoters, taken up wasteland development for energy crop plantations. Biomass power generation has been taken up in states such as Haryana, Punjab and Karnataka and there is acceptance on the social front as it caters to aspects as employment, electricity generation and improvement in quality of life.

Economic:

Besides theCentral Financial Assistance,fiscal incentivessuch as 80% accelerated depreciation; concessional import duty, excise duty, tax holiday for 10 years etc. are available for biomass power projects. There are further benefits of concessional custom duty and excise duty exemptionavailable on equipments. In addition,StateElectricity Regulatory Commissions have determined preferential tariffs andRenewable Purchase Standards (RPS).Indian Renewable Energy Development Agency (IREDA)provides loan for setting up wind power and bagasse cogeneration projects. New entrants face the challenge of bearing the high costs of setting up the plant and the competition from local promoters.

Industrial co-generation has in the past not received adequate attention, as cheap power and fuel were abundantly available. However, with increasing tariffs, and unreliable supply of grid power, there is considerable opportunity for the industrial sector to tap the potential for producing electricity and thermal energy in the co-generation mode.

Technological:

In India, biomass power is generated via the combustion or pyrolysis or the gasification process. Co-generation in the sugar mills is another viable way of adding to the power generated in the country. Manufacturing capability exists in the country for the equipment/machinery required for setting up Biomass Projects. Except for some critical control equipment, and high efficiency turbines, most of the equipments can be procured from indigenous sources. There is significant potential in breweries, caustic soda plants, textile mills, distilleries, fertilizer plants, paper and pulp industry, solvent extraction units, rice mills, petrochemical plants, etc. Furthermore, co-generation projects based on conventional fuels such as coal, oil, lignite, gas and un/semi-utilized wastes / rejects like dolochar, coal rejects and refinery mud, etc. can also be installed in industry for meeting their power and energy requirements. R&D efforts are being directed towards improving the reliability of different component s of the systems implemented which the new entrants can target as a distinct opportunity.

Environment:

The industrial sector today consumes nearly 35% of total electricity generated in the country. High quality stable power is today's necessity to attain the higher growth rate projected for the sector. Majority of industries in India require both electrical and thermal energy. This is either acquired by buying power from the State Electricity Boards, or by generating their own power largely through diesel generators and thermal energy requirements are met through mostly by utilizing fossil fuels such as coal, oil or natural gas. As fossil fuels are limited, and have adverse environmental impact, it is incumbent to use non-conventional energy sources including biomass resources such as crop residues and agro-industrial wastes for generation of energy in the industries mainly through biomass gasification technology for meeting their total or partial requirements for both electrical and thermal energy.

There are several industries such as sugar, paper and pulp, textiles, fertilizers, petroleum, petrochemicals and food processing, etc. which require electrical as well as thermal energy for their operations. These requirements can either be met through different energy sources, or from a single source. Simultaneous generation of power and thermal energy from a single fuel source is termed as co-generation. The power generated from such co-generation plants can be used for meeting the captive requirements and the surplus power produced can be exported to the grid.

The current availability of biomass in India is estimated at about 500 million metric tons per year. Studies sponsored by the Ministry have estimated surplus biomass availability at about 120 - 150 million metric tons per annum covering agricultural and forestry residues corresponding to apotentialof about 16,000 MW. This apart, about5,000 MW additional powercould be generated through bagasse based cogeneration in the country's 550 sugar mills, if these sugar mills were to adopt technically and economically optimal levels of cogeneration for extracting power from the bagasse produced by them.

PESTLE Analysis from a new

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