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PRESENTATION ON

POWER SECTOR

26 July 2010

By Arjun Srivastav


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POWER SECTOR

India has the fifth largest generation capacity in the world with an installedcapacity of 152 GW as of September 2009, which is about 4 % of global powergeneration.

The Indian government has set ambitious goals in the 11th plan for powersector owing to which the power sector is poised for significant expansion.

The Government of India has an ambitious mission of POWER FOR ALL BY2012. This mission would require that the installed generation capacity shouldbe at least 200,000 MW by 2012 from the present level of 144,564.97 MW.Power requirement will double by 2020 to 400,000MW.

The current installed transmission capacity is only 13 percent of the totalinstalled generation capacity

.


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Overview of the sector

Snapshot of Power Generation Industry

Snapshot of Power Transmission Industry

Snapshot of Power Distribution Industry

Major Players


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India needs to sustain an 8% to 10% economic growth rate, over the next 25 years, if

it is to eradicate poverty and meet its human development goals. To deliver a sustained growth rate of 8% through 2031-32 and to meet the lifeline

energy needs of all citizens, India needs, at the very least, to increase its primaryenergy supply by 3 to 4 times and, its electricity generation capacity/supply by 5 to 6

times of their 2003-04 levels. How will India face this challenge ?

Meeting this vision requires that India pursues all available fuel options and forms ofenergy, both conventional and non-conventional.

India must seek to expand its energy resource base and seek new and emerging

energy sources. Finally, and most importantly, India must pursue technologies that maximize energy

efficiency, demand side management and conservation. ( rational for having a powerconsultancy segment)

Composition of the Power Sector

The sector consists of 3 industriesPower Generation , transmission and distribution


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Overview Indias power generation capacity as on March 2010 was 159,398 MW

64.28% - Thermal Sources 23.13% - Hydro Sources

9.74 - Renewable Sources

2.86 - Nuclear Sources

Favorable Trends Rapid and progressive evolution

Capacity Augmentation

Conventional capacity 9585 MW during 2009-10 ( 2.5 times higher thanthe previous year)

Productivity of power plants has been improving

Factors leading to growth

Increased Private Sector Participation Contribution has risen from 8.66 % 2003 to 18.2% in 2010

Pvt. projects aggregating over 100,000 MW are under various stages ofdevelopment

Forms of contributionPrivate power generation projects & Development ofsupercritical technology through Private Investment for Ultra Mega Projects

Government policy to boost solar and wind power

Emergence of new and alternate energy sources


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Projects and Opportunities

Ultra Mega Power Project (UMPP)

Huge coal based projects with 4000 MW capacity each based on supercritical

technology to be developed through private investment

Govt. has planned 9 UMPPs

4 of the 9 planned UMPPsMundra , Sasan , Krishnapatnam and

Tilaiyahave been allotted to private players

3 of the 9 planned UMPPs are in line - Sarguja ( Chattisgarh),

Bhedabahal ( Orissa ), Cheyyur ( Tamil Nadu)

Remaining 2 of the UMPPs are yet to be finalized

Govt is keen to increase the no. of UMPPs from 9 to 14

Power Finance Corporation ( PFC) is the nodal agency for these projects

Indigenization of supercritical equipment to meet future demand

Central Electricity Authority ( CEA) issued a directive to central and state

public sector utilities in Feb 2010 to procure supercritical equipment only fromdomestic manufacturers to encourage indigenous manufacturing

Govt. Policy and Programmes to boost solar power generation

Jawahar Lal Nehru National Solar mission launched in Nov 2009

Ambitious target of achieving 20,000 MW of solar capacity by 2022 in

three stages


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Govt. Policy and Programmes to boost solar power generation

12 MW of solar power is already connected to the grid

More than 500 MW of solar photovoltaic plants and 350 MW of solar thermal

are in the pipeline

Plans to increase nuclear power generation

Govt. is importing nuclear fuel ( uranium) to boost production

Nuclear Power Corporation of India has commissioned two new reactors of

220 MW each and is set to commission another one

It also plans to set up 8 reactors of 700 MW each and has begun work on 4

of these

Plans are also on for setting up imported reactors in various sites in India

Govt. plans to increase installed nuclear generation capacity from current

4560 MW to 20,000 MW by 2020 and 60,000 MW by 2030-31

Emphasis is also on enhancing gas and wind based power generation and Govt.

is taking a series of steps in this direction


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Challenges faced by the Power Generation Sector

Inadequate equipment capacity

Fuel and manpower shortage

Delays in securing clearances and commitments from state utilities for power

purchase & resistance from environmentalists


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Overview

As of March 2010 , the State Transmission Units ( STU) and Central TransmissionUnit ( CTU) , which are responsible for intra state and interstate transmission networkrespectively , together own and operate a complex transmission system comprisingaround 236,430 ct. km of lines and over 305,550 MVA and 14,000 MW of substationcapacity of voltages above 220 KV

Favorable Trends Significant Investments at Central and State Level

National Level Investment

Powergrid corporation of India ( Powergrid) , the countrys CTU spent a total ofRs.147.1 billion ( Rs. 66.15 billion 2007-08) & (Rs. 80.95 billion in 2008-09)

It has planned capital expenditure of Rs. 120 billion for 2009-10

Plans to make an investment of Rs. 550 billion during the current plan period

State Level Investment

STUs spent Rs. 185.84 billion during the 1st two years of the plan period ( 23% ofthe total utility spending during the period)

Increased private sector participation


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Development of the National Grid by the CTU

High Voltage Transmission Corridors

Powergrid is taking steps to develop 7 high voltage transmission corridors

( 800KV and 770 kv ) over the next 5 yearsinvestment of Rs. 489 billionto facilitate smooth transmission of about 55,000 MW of capacity that isproposed to be generated by private power plants in the states ofChattisgarh , Orissa and Jharkhand

2 more transmission corridors are expected to be developed by CTU to

wheel power from coastal Tamil Nadu , where private projects based onimported coal are coming up . For this , Powergrid has signed long termtransmission agreements with 37 private developers for a gross combinedgeneration capacity of over 42,000 MW

Development of Transmission Systems by Private Players

Transmission systems associated with private generation projects are beingdeveloped by private players independently or in joint venture with the CTU

and STU This includes Adani Powers Rs. 15 billion dedicated 1000km long bi-polar

500 KV high voltage direct current line from its Mundra Project in Gujrat toMohindergarh in Haryana.

The company is also developing a 765 KV line in joint venture withMahatransco in Maharashtra to secure evacuation of power from itsupcoming power plant in the state


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100% Private Investment invited for Transmission Projects

14 transmission projects identified by the Power Ministry for 100% privateinvestment

The bidding process for the first 3 projects has been completed by the 2

nodal agenciesPower Finance Corporation & Rural ElectrificationCorporation

The 1st ProjectEast North Interconnectionwas awarded to SterliteTechnologies

Other 2 projectsNorth Karanoura and TALCHER IIwere bagged byRPTL

The bids for the remaining projects were invited by the nodal agencies inMarch 2010

Some states including Uttar Pradesh and Haryana have also invited tendersfor state level projects

Challenges faced by the Power Transmission Sector

Delays in clearances

Inadequate margins in the system

Grid indiscipline

Lack of basic infrastructure

Unco-ordinated planning

Inadequate equipment manufacturing capacity

Fast changing technology leading to obsocelence

Slow progress in strengthening and augmentation of networks


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Overview

Indias distribution infrastructure include more than Rs. 6.9 million ct. km of linesand over 284,365 MVA of distribution of transformer capacity as of march 2008

It is growing at a rate of 2.07% and 7.65% respectively over the period of 2002-03 and 2007-08

Favorable Trends

The level of metering has shown improvement

Sales of power and state utility revenues are showing a steady increase everyyear

Cash collections are improving

A few utilities / State Electricity Boards have also registered an improvement incash profits like West Bengal , Assam , Orissa , Andhra Pradesh , Punjab ,Kerala and UP and Meghalaya

More and more distribution companies are adopting sophisticated IT systems toimprove operations and customer servicespot billing , call centers , remotemeter reading ,automated billing and energy accounting


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Accelerated Power Development and Reform Programme ( 2002-03)

Objective- reducing AT&C losses , improving the quality of power supply andconsumer satisfaction

Restructured Accelerated Power Development and Reform Programme

Larger in scale than the original programme ( Rs. 500 Billion)

It will be implemented in two partsPart A ( Rs. 400 billion) and Part B ( Rs.

100 billion) Part Aestablishment of baseline data and IT applications for enegery

accounting /auditing and IT based consumer centre

Part BRegular Distribution Strengthening Projects

Nodal AgencyPower Finance Corporation

Rajiv Gandhi Gramin Vidyuti Karan Yojana Provides focus and funds to rural distribution systems as of April 2010

573 projects under the programme


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Privatization of distribution

Process has been slow to take off Orissa -1st state to privatize distribution followed by Delhi

Benefits - Bringing down AT& C losses and improvement of customer services

Franchise Model in privatization of distribution

1st Franchise operation launched in Maharashtra with the state transferring

the rights to supply , maintain , recover electricity dues in certain sectors to

Pvt. players UP Govt. introduced input based franchises in urban areas for power

distribution

Other states will also follow on the same model ( plans in place for

Rajasthan , Karnataka and Maharashtra and Madhya Pradesh)

Setting up of State Electrification Regulatory Commissions

Established in 23 Indian States

Has led to tariff rationalization


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Challenges faced by the Power Distribution Industry

High aggregate technical and commercial losses

Rampant power thefts

Technical issues

Policies of offering subsidized or free power

Dilapidated networks

Inadequate metering

Poor recovery of dues

Poor operational and financial management

Lack of customer orientation


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- Single largest power producer in India

-Largest hydro power generator in India

- Largest Transmission Utility in India

- 1st Power trading company of India ( 1999)

- State run power sector financing corporation

- The largest engineering and manufacturing enteroprise in India

- Biggest integrated power player in India


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THANK YOU!

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