Rs10.76 lakh crore =

6 * Rs1.76 lakh crore

‘COAL-GATE’ Smile washes away 2G Woos!

Energy and Power Sector of India

ByMathangi Sridhar

Indresh Vikram SinghDipankar BiswasMazid Ali Khan

The Big Picture

55%

21%

2%11%

1%10%

Energy Capacity Generation Statistic in India(as of 2011)

Coal Hydro Nuclear Renewable Diesel Gas

Total Installed Energy Capacity:210GW 3.4% of Indian GDP (2012)

High presence of energy mix in India compared to

world average of 27%

4th largest consumer of energy globally

5th largest producer of energy globally

India’s Energy Trajectory

Pre-independence era : prior to 1947Dates back to Calcutta Electricity Supply Corporation in 1897Electricity Act 1910

Post-Independence Era : (1947-1990)Electricity Act 1948 amendedCreation of SEBsHydropower Project

Phase 1 (1991-1995)IPPEnron caseOrissa Restructuring1995 – Mega Power Policy

Phase 2 (1996-2003)CMNAP GuidelinesNationalization of tariffs

Phase 3 (post 2003)Electricity Act 2003DelicensingOpen Access in T&DSingle-buyer to Multi-buyer model

Pre - Reform

Post - Reform

What changed the energy game?

Generation

Transmission

Distribution

Consumers

Pre - 2003 Post - 2003

Current Status : Twin Issues

1 2 3 4 5 60

200400600800

1000

156.8 245.4395.9

517.4 559.4746.5

168.1266.4 447.3

559.4 620.9830.3

Demand Supply Gap

Availabiliy Demand

Five Year Plans of Indian Government

Pow

er in

Bill

ion

Uni

ts

•Current demand-supply gap of 8% leading to peak shortages at 11-12%•Grid access not available to more than 55% of the rural population

�

2008 2009 2010 2011 20120

200400600800

1000

404 460 476 484 487

306 326 333 357 380

Cost Vs Tariff rates in India

Unit Cost(paise/kWh) Tariff(paise/kWh)

Years

Pais

e/kW

hThe gap between average tariff and average cost per unit of electricity has ranged from between 20 % and 30 % of cost per unit in the last 5 years.

E = m * Coal²

• 70 % of the electricity generated is from coal based power plants.

• On the domestic production front, Coal India Ltd is the largest contributor accounting for 81 % of country's coal production. – 9.5 % of balance comes from the Singareni Collieries Company Ltd– Meghalaya – 6 mn tonnes of production

• 285.86 billion tonnes - country’s total known and estimated coal resources(Sept, 2012)– Coal India Ltd (CIL) holds 65 bn tonnes, NLC and Singareni holds 49 bn tonnes

• Presently the country imports about 85 million tons of coal(2012)

Captive , not attractive!

• Captive mining introduced in 2003 to open up private investments.– Cement , coal & steel industries

• 30 out of 200 blocks have commissioned production– Produced 36.30 million tons in FY 2010-11 against a target of 104 million tons

• Huge loss to Government due to state monopoly– Loot of coal– Corporate tax loss on profits– Inefficiencies in mining & production

• Supreme Court order on allocation of captive mines?

Coal India Ltd :One Man’s Army!

• Coal India Ltd – largest coal producing company in the world

• Classifies customers based on the requirement of coal– Supplies either through e-auction/agencies/FSA

• Shift from differential pricing strategy based on gross calorific value based pricing– At par with international pricing

436MT

487 MT

713MT

Output Target Demand

CIL’s Production in 2011-12918MT

CIL’s Projection for 2017

556MT

Output Demand

About 20% of the output is lost in pilferage, 35%

loss in T&D

CIL : Sitting on Cash Reserves?

2008 2009 2010 2011 20120.00

2,000.004,000.006,000.008,000.00

10,000.00

2,593.583,658.50 3,879.39

4,729.14

8,606.91

Gross Profit (in crore)

Years

Gro

ss p

rofit

in C

rore

2008 2009 2010 2011 20120

5

10

15

3.88 5.56 5.82 7.43

12.77

EPS (in Rs.)

Years

EPS

in R

s

• CIL sits on Rs.65,000 crore(2012) cash reserves but fails to meet coal demand in India

• Lack of land acquisition policy in place– 236 CIL proposals pending with environmental ministry for clearance

• A widening demand-supply gap due to huge administrative issues.

From 1 barrel of Crude Oil…

1 barrel of Crude

OilOthers3%

LPG

35% of Gasoli

ne

• Huge demand for Natural gas has pushed imports of LNG in the recent years

• The recent development of shale gas reserves in North America – opportunity for increased LNG demand in emerging economies like India, China and other emerging markets (Argentina, Brazil, Bangladesh etc.).

• Demand for gas is expected to increase by a CAGR of 14% during 2011-12, to 2016-17, from 194 MMSCMD to 373 MMSCMD.

To Million Units of Natural gas!

7

6

9

India stands 6th in production figures

globally

Contributes to 7% of total GDP

India stands 9th in consumption figures

globally

•Currently, power sector consumes about 37% followed by fertilizers with 23%•Development of National Gas Grid•LNG regasification terminals

2001-02 2006-07 2011-120

2000

4000

6000

8000

10000

12000

14000

151 231 31381 95

158868

7600

12800

Demand (MMSCMD) Supply (MMSCMD)Imports (cubic meteres)

Years

Mill

ion

Met

ric

Stan

dard

Cub

ic

met

re/d

ay

But the story continues…

To march towards 2020, to achieve 15% target of GOI

Let’s go the green way!

‘New –clear’ and Clean Source• Six nuclear power plants producing 4780 MW

• India is endowed with 1/3 rd of world’s thorium reserves.

• Power Generation by NPCIL : 26,473 million units in 2011

19901992

19941996

19982000

20022004

20062008

20100

10

20

30

40

50

60

70

World IndiaMicrosoft Office Excel Worksheet

Hydro is next in the row!

Microsoft Office Excel Worksheet

• New Electricity Act 2003 and 2005

• 100,000 MW is planned for the coming 5 years

• Continuous decline of hydro power from 50% in 1963 to 25% in 2010

Hydropower ClassPico < 5 kw

Micro < 100 kw

Mini < 2000 kw

Small < 25000 kw

Medium < 100,000 kw

Large > 100,000 kw

The real game changing event was de-centralization

The answer my friend is blowing in the Wind!

• Current production capacity of wind turbines – range of 3000 to 4000 MW

• Fiscal concession such as income tax exemption, excise duty exemption etc available from the government

• Last year 6 new companies were given approval

• Bold move- Government washing hands off to the States

Microsoft Office Excel Worksheet

Going the Solar Way!

• 2008 - National Action Plan on Climate Change was announced, constituting 8 major national mission

• Jawaharlal Nehru National Solar Mission (JNNSM) was launched in January 2010

• Gujarat ranks first in manufacturing solar power; 2/3rd of the 900 MW of PV in the country

• 48 cities and 23 states to be built as solar cities, Nagpur and Chandigarh will be built as a model solar cities

Is India heading towards darkness?

30%

25%16%

5%

16%

8%

Energy Mix of India in 2020

Coal Oil GasNuclear Traditional Renewable

• India power consumption to double by 2020

• Dependency on import of fuel for power generation expected to increase to 73% to 2020

• India, even with a low per capita

consumption of electricity, is already the third largest emitter of GHG gases.

• Excluding a few private players like Reliance, TATA, industry is dominated by public sector

Power Play @ 2020

• Coal : Mine the Gap!– Output estimated to grow from 257.7m tonnes of energy (mtoe) in 2011 to

320.2 mtoe in 2020. – Increased private sector participation to reduce imports

• Natural Gas : Unnatural Progress– Will grow to displace coal to increase imports– Australia – LNG provider?

• Oil : Less than Slick– Privatization of ONGC

• Renewables : Rapid Evolution– Minimum of $50 bn investment required in renewable energy alone by 2020

Electricity Saved is Electricity Produced!

• If you turn off your monitor for a minute, a bulb can be lit in some remote part of India for about 2 minutes.

• Try to switch off all your electrical appliances for at least half an hour everyday.

• Do not switch on the power when TV and Audio Systems are not in use i.e. idle operation leads to an energy loss of 10 watts/device

• If you reside at an above sea-level region, minimize the use of fans.

Doing this and more can save about 30% of the total domestic power consumption in India!!!

http://en.wikipedia.org/wiki/Electricity_sector_in_Indiahttp://www.indiaenergyportal.org/overview_detail.php http://businesstoday.intoday.in/categorylist/13/1/energy.htmlhttp://powermin.nic.in/ http://www.dnb.co.in/IndiasEnergySector/Regu_Power.asphttp://agmetalminer.com/2012/04/19/india-working-on-ppp-model-for-coal-india-ltd-mines-part-one/ http://www.powermin.nic.in/indian_electricity_scenario/introduction.htm http://www.economist.com/node/21543138http://www.indiacore.com/overview-energy.htmlhttp://www.business-standard.com/india/news/coal-india%5Cs-modified-fsa/487096/http://indiatoday.intoday.in/story/corruption-in-mining-reserves-and-growing-domestic-demand-of-coal/1/217325.htmlhttp://www.indianpowermarket.com/2011/05/indian-power-sector-snapshot.htmlhttp://stockshastra.moneyworks4me.com/indian-power-sector-analysis-industry-overview-and-research-2011/http://energy.about.com/od/Coal/a/All-Coal-Is-Not-Created-Equal.htmhttp://articles.economictimes.indiatimes.com/2012-08-20/news/33287986_1_captive-mines-captive-iron-ore-coal-mines-nationalisation-acthttp://www.thehindu.com/news/national/auction-not-sole-route-for-allocation-of-natural-resources-supreme-court/article3942022.ecehttp://www.eia.gov/electricity/data.cfmhttp://articles.economictimes.indiatimes.com/2012-02-10/news/31046103_1_capacity-addition-energy-efficiency-energy-conservationhttp://www.business-standard.com/india/news/shortage-hit-india-exporting-coal-to-chinajapan/479589/ http://www.coalcontroller.gov.in/coal_admin/files/Statistics/Statistic-9.pdf http://ighem.org/Paper2010/TSA01.pdf http://www.youtube.com/watch?v=numrTQEceVA

Links

THANK YOU