To promote power generation through renewable energy sources, the Government is giving various fiscal and financial incentives, such as capital/interest subsidy, generation based incentives, accelerated depreciation, concessional excise and customs.

Aug 1 2014 | Focus

Power for all by 2022

India has an installed capacity of 249488.31 MW as of June 30th, 2014. The electricity generation in India is dominated by coal based generation. Out of the total installed capacity, the thermal power generation is 172286.09 MW. In 2013-14, the coal consumption for power generation was 487.9 million tonne. India is the world’s third largest power producer. India’s per capita average annual domestic electricity consumption in 2012-13 was 917.18 KWh (provisional figures). The share of power generation from various sources as on March 31, 2014 was Thermal (69.23%), Hydel (16.68%), Other Renewable Energy Sources (12.12%) and Nuclear (1.97%). The Government of India aims to achieve power for all by 2022. The Centre is making efforts in removing all the bottlenecks in the path of power generation and continues to supplement the efforts of the State Governments / Power Utilities in providing power to all. The Government of India is laying emphasis on the development of hydel, nuclear, solar and wind energy for power generation to reduce greenhouse gas emission and meet the growing demand of electricity from industries, household, agriculture and the infrastructure sector. Sandeep Sharma takes a look at the power sector….

PRIVATE SECTOR PARTICIPATION

The private sector contribution in the power generation is on the rise. Out of the total installed generation capacity of 243030 MW as on March 31, 2014, 82715 MW is in the private sector. The Centre is encouraging development of power sector through combined efforts of both public and private sector. The Electricity Act, 2003 promotes competition and creates a conducive environment for investment in all segments of the electricity industry, both for public and private sector

ELECTRICITY DISTRIBUTION

The distribution of electricity to all consumers falls under the purview of the respective State Government/State Power Utility and it is the responsibility of distribution licensees to supply electricity. During the 12th Plan, 1,07,440 ckm of transmission lines have been planned to be constructed which will also utilize the latest technology available in the field.

T&D LOSSES

The Eighteenth Electric Power Survey (EPS) of India conducted by Central Electricity Authority has estimated the Transmission and Distribution losses as 18.89% at all India level by the end of 12th Five Year Plan. The Central Electricity Authority’s (CEA) report on Transmission & Distribution losses in the country for the year 2012-13 indicates that around 23.04% (provisional) of the power generated is wasted during transmission and distribution. This is quite a significant number which needs to be brought down by using modern technology, grid discipline, energy audit and imposing heavy penalties on those who are involved in power theft. With the aim of reducing Aggregate Technical and Commercial (AT&C) losses, the Government of India assists the State Governments through its scheme, Restructured Accelerated Power Development and Reforms Programme (R-APDRP) for up-gradation, augmentation and strengthening of electrical infrastructure. Projects under the scheme are taken up in two parts in towns having population more than 30,000 (10,000 for special category States) as per census 2001. Part-A of the scheme is for establishing IT enabled system for energy accounting / auditing and Supervisory Control and Data Acquisition (SCADA) for big cities (population:4 lacs and Annual Energy Input: 350 MU) whereas Part-B is for up-gradation, augmentation & strengthening of electrical infrastructure in project towns. Under Part-A (IT enabled system), projects worth Rs 5348.34 Crore for 1412 towns, 72 Part-A (SCADA) projects worth Rs 1601.28 Crore and 1244 Part-B projects worth Rs 31139.71 Crore have been sanctioned till June 30th, 2014 under the R-APDRP programme. Further, Government has notified mandatory labelling of Distribution transformers to ensure that distribution transformer losses are minimized. The Government of India is undertaking a massive programme for strengthening of inter-state and inter-regional transmission capacity for power evacuation. The finance minister has announced in the recent budget a new scheme for strengthening of sub-transmission and distribution networks and for segregation of agricultural feeders.

PRIORITY AREAS

To provide the required support and impetus to the power sector in India, the Government has taken up the onus to expedite the resolution of issues pertaining to environmental and forest clearances for power projects under implementation. The existing plants are facing shortage of coal thereby leading to fall in the power generation output and plant load factor ratio. The Ministry of Coal / Planning Commission has estimated all India demand for the coal based power utilities sector during 2014-15 to be 551.60 million tonne, whereas the supply of coal to this
sector has been projected to be 466.89 MTs during 2014-15. As per New Coal Distribution Policy (NCDP), the Coal is being supplied to the power plants. The Fuel Supply Agreement (FSA) is entered between power plants and coal companies. In FSA necessary provisions have been made to ensure quantity and quality of the coal supplied to the power plants. Coal India Ltd was impressed upon by the government to enhance domestic coal production in the country. The Centre is keen to bridge the gap of coal demand and supply.The Power utilities have been advised to use imported coal wherever necessary. Lastly the government intends to promote energy conservation, energy efficiency and demand side management measures.

INDUSTRY WOES

Indian Electrical and Electronics Manufacturers’ Association (IEEMA) has claimed that on account of non-closure of contracts due to disputes between the customer utilities and the EPC contractors, projects worth Rs 50,000 crore are held up. The industry association has said that a large number of projects of power utilities have failed to meet contract closure, as a result of which retention and bank guarantee amounts are not being released by the central and state utilities, despite many of these projects have gone live.

STRESSED POWER ASSETS

India’s largest power producer NTPC Ltd is on the lookout to acquire stressed power assets in the country. The CPSE has sought Expression of Interest (EOI) from State Electricity Boards/Power Generation Companies, Independent Power Producers (IPP), Power Plant Developers, Captive Power Producers, or their authorized representatives for “Offering their coal based thermal power projects for possible acquisition by NTPC” vide EOI dated 21.02.2014. So far, the company has received 34 proposals. JSW Energy plans to raise Rs 5,000 crore through an issue of secured/unsecured redeemable nonconvertible debentures. Part of these proceeds will be used to buy out stressed power assets. Similarly, Reliance Power has proposed to buy out hydropower assets of Jaypee Group.

EMPHASIS ON RE

The Centre is keen to promote electricity generation through clean energy sources. India could achieve an installed capacity of 31,707 MW from various renewable energy (RE) sources till March 31, 2014.

To promote power generation through renewable energy sources, the Government is giving various fiscal and financial incentives, such as capital/interest subsidy, generation based incentives, accelerated depreciation, concessional excise and customs. IREDA under the MNRE provides soft term loan for setting up of renewable energy projects. The other steps include setting up of demonstration projects, preferential tariff for purchase of power generated from renewable sources, intensive resource assessment, development of power evacuation and testing facilities, introduction of RE Certification and Renewable Purchase Obligation etc.

FDI IN POWER SECTOR

The existing policy for FDI in Power Sector, allows 100% Foreign Direct Investment (FDI) under automatic route for projects of electric generation (except atomic energy), transmission, distribution and trading. Government of India has also allowed the foreign investment up to 49% (with FDI limit of 26 per cent and FII/FPI limit of 23 per cent) of the paid-up capital in Power Exchanges registered under the CERC (Power Market) Regulations, 2010, under the automatic route, subject to certain conditions.

FUTURE OUTLOOK

The power sector has immense potential and requires proactive approach of all the stakeholders. The Government of India plans to accelerate the power generation capacity addition during 12th Plan. The target set is of 88,537 MW from conventional sources and 30,000 MW from renewable energy sources. The sector is bound to achieve higher growth in the years to come as the new government is keen to sort out the issues pertaining to fuel, support state governments to control transmission and distribution losses, fast track clearances for stucked power projects, facilitate or ease out financing terms for projects to take off. Many of the gas based power projects could not commence operation due to shortage of gas and new gas  based power projects got discouraged. The resolution of gas availability and pricing issue can also go a long way in increasing the power generation in the country. Lastly, power generation through renewable sources is the way forward for India to achieve balance between growth and the environment.

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