Power in India Essay Sample
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- Category: india
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Power in India Essay Sample
For any country to achieve sustained economic growth, the most important is the growth of infrastructure sector and hence the development of power sector. Energy in general and electrical energy in particular is the basic need for any kind of socio-economic developmental activities. There is direct causal relationship between energy consumption and G.D.P. growth in India as shown in the figure – 1.
Figure [ 1 ] Per Capita Electricity consumption vs. GDP (Source: Sajal Ghosh, 2000. Electricity consumption and economic growth in India.)
Various studies have shown that reducing electricity consumption lowers the income also. Therefore, for a country to become superpower, first and the most important thing is to become energy sufficient like USA and other developed countries.
Electricity: Demand and Supply in India
India has achieved an increment of 5.6% in energy availability and 6% in peak demand met as per FY 2010-11 data but at the same time our country faced an energy deficit of 8.5% and a peak deficit of 9.8% in the same year. The expected values of these deficits are 10% and 13% respectively in FY 2011-12.
Figure 2 Energy Requirement vs. Availability (Source: CEA Load Balance Report 2011-12)
Figure [ 3 ] Peak Demand vs. Met Demand (Source: CEA Load Balance Report 2011-12)
India is among the countries having very low average per capita consumption of electricity. Though it has grown steadily at 1.3% CAGR yearly over the last 10 years but it is still a mere 478 kWh according to 2010 statistics. The noticeable thing is that not only the world average per capita consumption is a way higher at 2,300 kWh but also we are far behind the
other comparable countries, like the other BRIC nations.
Figure [ 4 ] Per Capita Electricity, year 2010 (Source: CIA fact book)
Source-wise generating capacity in India
The total installed power generation capacity as on 30.08.2011 was 1,81,558 MW. This was comprised of 1,18,409 MW thermal, 38,206 MW hydro, 4,780 MW nuclear and 20,162 MW Renewable Energy Sources (RES).
Figure [ 5 ] Installed Generation Capacity (As on 30-08-2011) (Source: India Energy Book 2012) The %age share of state sector in installed capacity is continuously decreasing over the years whereas the share of central and private sector has increased. It is expected that 60% of the capacity will come from private sector in XII five year plan. The annual growth in the energy generation during FY 2010-11 has been 5.55% as compared to the CAGR of 5.17% during the period FY 2001-02 to FY 2010-11.
Figure [ 6 ] Sector wise Capacity (Source: India Energy Book 2012)
Challenges for power sector
1. Transmission and Distribution
The most important cog in the power sector value chain is Transmission and Distribution which provides revenues. India is one of the largest energy consuming bases in the world having a vast electricity distribution that caters to nearly 200 million consumers with a connected load of about 400 GW. Indian distribution sector comprises of around 73 distribution utilities – 13 electricity departments, 17 private distribution companies, 40 corporatized distribution companies and 3 State Electricity Boards.
A committee formed by Government of India submitted a report on improvements of Indian electricity sector. The report made a remark on Indian power distribution network as follows:
“India’s power sector is a leaking bucket; the holes deliberately crafted and the leaks carefully collected as economic rents by various stakeholders that control the system. The logical thing to do would be to fix the bucket rather than to persistently emphasize shortages of power and forever make exaggerated estimates of future demands for power. Most initiatives in the power sector (IPPs and mega power projects) are nothing but ways of pouring more water into the bucket so that the consistency and quantity of leaks are assured…”
In India transmission and distribution losses are very high but have been decreasing since 2000 (from 30 % to about 25 % in 2009). Around 5 % of these losses are nontechnical losses (unpaid electricity). The losses exceed 40 % in eight states, range between 30 % and 40 % in seven other states and between 20 % and 30% in a further eight states. India is far above the average for non-OECD countries, which stands at 11 %.
Figure [ 7 ] Electric T&D losses (Source: Enerdata)
2. Fuel Supply
Presently, coal is the most important fuel for electricity generation in India accounting for 53% of the commercial energy sources in the country as compared to the world average of 30%. The country’s demand for coal has grown at a CAGR of more than 7% in the last decade. The demand is met through domestic production and through imports. Imported coal has increased from 7% of total consumption in FY 2002-03 to about 10% in FY 2009-10. In last few years the demand of coal is increasing at a higher rate than the domestic supply. This is widening the demand-supply gap. For FY 2010-11 the targeted coal production was 572 MT as compared to the projected demand of 656 MT. Hence there is a gap of about 84 MT to be met from other sources.
Figure [ 8 ] Mix of Commercial Energy Sources (Source: Statistical Review of world energy 2011) 3. Financial Issues
Due to inordinate delays in environmental clearances, the cost of the projects escalates and in some cases it leads to abandonment of the Project. This results in delayed or hampered Credit off-take by projects and thus they become unable to achieve timely compliance of Conditions Precedent to disbursement. Poor financial health of Discoms would adversely impact their ability to pay for power procured from IPPs which in turn affects the lenders’ willingness to lend to generation and transmission projects of IPPs and IPTCs respectively. These mounting financial losses of the utilities may lead to breach of conditions agreed under the Fiscal Responsibility and Budget Management (FRBM) framework. As a result of that it may lead to severe impacts to the financial health of States and might even jeopardize the investment in the entire power sector.
4. Challenges with Renewable Energy Sources
In the past decade India has seen an appreciable development in renewable energy sector. The sector has its share of challenges. Proper site selection is the key to the efficiency and output of a renewable energy power plant. Some of them also require large areas of land. Technology obsolesces also plays a major role in these types of plants because of their nascent nature.
Indian power sector has undergone huge changes. From being 10th largest producer of electricity in the world, India has become the 5th largest in just one decade. The power sector is moving towards more competitive market driven environment because of emergence of private sector as one of the major players in both conventional and renewable power.
All these developments can only be sustained when there will be financial viability of Discoms by reducing revenue losses in distribution. Proper regulatory environment is also necessary to encourage more private participation.
And last but not the least is the area of energy efficiency. We should remember that one unit of electricity saved is more than one unit of electricity generated.