PRESENTATION ON POWER SECTOR

26 July 2010 By Arjun Srivastav

POWER SECTOR

India has the fifth largest generation capacity in the world with an installed capacity of 152 GW as of September 2009, which is about 4 % of global power generation. The Indian government has set ambitious goals in the 11th plan for power sector owing to which the power sector is poised for significant expansion. The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This mission would require that the installed generation capacity should be 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 total installed generation capacity

FOCUS SECTOR - POWER

Contents

Overview of the sector Snapshot of Power Generation Industry Snapshot of Power Transmission Industry Snapshot of Power Distribution Industry Major Players

Overview of the Power Sector

The Challenge
it is to eradicate poverty and meet its human development goals.

India needs to sustain an 8% to 10% economic growth rate, over the next 25 years, if 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 primary energy 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 of energy, 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 power consultancy segment)

Composition of the Power Sector

The sector consists of 3 industries Power Generation , transmission and distribution

SNAPSHOT : Power Generation Industry

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 than the previous year) Productivity of power plants has been improving 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 of development Forms of contribution Private power generation projects & Development of supercritical technology through Private Investment for Ultra Mega Projects Government policy to boost solar and wind power Emergence of new and alternate energy sources

Factors leading to growth

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 UMPPs Mundra , Sasan , Krishnapatnam and Tilaiya have 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 from domestic 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

 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

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

SNAPSHOT : Power Transmission Industry

Overview
As of March 2010 , the State Transmission Units ( STU) and Central Transmission Unit ( CTU) , which are responsible for intra state and interstate transmission network respectively , together own and operate a complex transmission system comprising around 236,430 ct. km of lines and over 305,550 MVA and 14,000 MW of substation capacity 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 of Rs.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% of the total utility spending during the period) Increased private sector participation

Projects and Opportunities

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 years investment of Rs. 489 billion to facilitate smooth transmission of about 55,000 MW of capacity that is proposed to be generated by private power plants in the states of Chattisgarh , 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 on imported coal are coming up . For this , Powergrid has signed long term transmission agreements with 37 private developers for a gross combined generation capacity of over 42,000 MW Development of Transmission Systems by Private Players Transmission systems associated with private generation projects are being developed 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 to Mohindergarh in Haryana. The company is also developing a 765 KV line in joint venture with Mahatransco in Maharashtra to secure evacuation of power from its upcoming power plant in the state

 100% Private Investment invited for Transmission Projects

14 transmission projects identified by the Power Ministry for 100% private investment The bidding process for the first 3 projects has been completed by the 2 nodal agencies Power Finance Corporation & Rural Electrification Corporation The 1st Project East North Interconnection was awarded to Sterlite Technologies Other 2 projects North Karanoura and TALCHER II were bagged by RPTL The bids for the remaining projects were invited by the nodal agencies in March 2010 Some states including Uttar Pradesh and Haryana have also invited tenders for 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

SNAPSHOT : Power Distribution Industry

Overview
Indias distribution infrastructure include more than Rs. 6.9 million ct. km of lines and 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 200203 and 2007-08

Favorable Trends
The level of metering has shown improvement Sales of power and state utility revenues are showing a steady increase every year Cash collections are improving A few utilities / State Electricity Boards have also registered an improvement in cash profits like West Bengal , Assam , Orissa , Andhra Pradesh , Punjab , Kerala and UP and Meghalaya More and more distribution companies are adopting sophisticated IT systems to improve operations and customer service spot billing , call centers , remote meter reading ,automated billing and energy accounting

Projects and Opportunities

Accelerated Power Development and Reform Programme ( 2002-03) Objective- reducing AT&C losses , improving the quality of power supply and consumer satisfaction Restructured Accelerated Power Development and Reform Programme Larger in scale than the original programme ( Rs. 500 Billion) It will be implemented in two parts Part A ( Rs. 400 billion) and Part B ( Rs. 100 billion) Part A establishment of baseline data and IT applications for enegery accounting /auditing and IT based consumer centre Part B Regular Distribution Strengthening Projects Nodal Agency Power 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

 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

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

Major Players in the Power Sector

National Thermal Power Corporation - Single largest power producer in India

National Hydro Power Corporation -Largest hydro power generator in India

Power Grid Corporation of India - Largest Transmission Utility in India

Power Trading Company - 1st Power trading company of India ( 1999)

Power Finance Corporation - State run power sector financing corporation

Bharat Heavy Electricals Ltd - The largest engineering and manufacturing enteroprise in India
Tata Power Company - Biggest integrated power player in India

THANK YOU!