• Electrical India
  • Nov 5, 2015

Peeping Into The
Indian Power Sector

In the last around two years, Indian power sector has grown at a very fast pace. Some of the plans, although made by the previous government, they could not accelerate their execution process. The present government, under the leadership of Prime Minister Narendra Modi and Minister of State (IC) for Power, Coal and New & Renewable Energy Piyush Goyal; has been successfully driving the sector towards an all round success. They have for the first time outpaced the growth rate of several areas under this sector…  

- P K Chatterjee


 As a country full of natural resources, India has enough opportunity to harness its renewable resources for power generation. However, the Indian power scenario (Figure 1) clearly shows that so far we are mainly depending on fossil fuel (Coal, Gas and Diesel) burning for power generation.

  The present Union Government has attached utmost priority to the development of power, as it has made a commitment to provide power to all citizens by 2019. As a result of that we have been witnessing a revamp in the power supply position (Figure 2) since FY 2014-15 onwards.

Power Generation

  Owing mainly to the 8.4% YoY growth in generation capacity, which was the highest in the last two decades; and smooth availability of coal stock in most of the thermal power plants; the Indian power sector witnessed a fairly good increase in power availability.

  For the first time in the country, the annual electricity generation in 2014-15 crossed one thousand Billion Units (BUs) or one Trillion Units. The actual power generation during the FY 2014-15 was 1048.403 BUs. The Compounded Annual Growth Rate (CAGR) of power generation had been around 5 to 6.6%, since 1991-92. It goes without mentioning that the biggest contribution to generation was from the coal based power stations, which recorded an annual growth rate of 12.1%. The year ended with higher power demand and large capacity addition plans.

  Some of the key reforms that affected the turnaround were:

  • Reallocation of coal blocks through e-auction process
  • New gas pooling mechanism to bailout 14,000 MW of stranded power plants 
  • New Ultra Mega Power Project (UMPP) policy to approach plug and play model
  • Improved focus on the T&D sector

A view of the Koldam project…

Figure 1: A graphical presentation of the current energy mix in India (as on 30.09.2015)…
Data Source: Ministry of Power, Government of India.

  The generation capacity addition during 2014-15 was 22,566 MW against a target of 17,830 MW. This is the highest ever achievement in a single year. The capacity addition during the first three years (2012-13 to 2014-15) of 12th Five Year Plan has been 61,014 MW, which has not only exceeded the capacity addition of 54,964 MW of the entire 11th Plan (2007 to 2012) – but also constitutes 68.9% of the total 12th Plan target of 88,537 Mega Watt.

  Out of 22,566 MW added during the year 2014-15, contribution of thermal sector was significant i.e., 20,830 MW (92% of the total). It includes NTPC's 660 MW unit at Barh in Bihar – where the first indigenously manufactured super critical units by BHEL have been commissioned.

  The year marked turn around in hydro sector with 736 MW contribution in central sector that included NTPC’s maiden contribution and entry in hydro sector with Koldam units (Himachal Pradesh). NHPC and SJVNL completed their projects at Parbati III and Rampur respectively. The gas based Monarchak Power Plant of 65.4 MW, Agartala ST-II of 25.5 MW and Palatana Unit-II of 363.3 MW were also commissioned during the year in Tripura – which will benefit the entire North East. Commissioning of Kudankulam Nuclear power station of 1,000 MW during the year will help all the Southern States.

Power Transmission

  Mere enhancement of the generation capacity does not help in reaching power to all parts of the country, as most of the power plants, especially the thermal and hydro power plants, are commissioned away from the thickly populated areas. Considering that, focus is now being put on revamping the transmission sector.

  Following a number of steps taken by the government for expediting forest clearances and intensive monitoring of critical transmission lines, 22,101 Circuit Kilometers (CKM) of transmission lines have been commissioned during the year 2014-15 against 16,748 CKM commissioned during the same period in the previous year, thus having a growth of 31.96%, which is the highest ever achievement in a single year.

Figure 2: The power supply position in the country during 2009-10 to 2015-16…
*Provisional up to September, 2015, Data Source: Ministry of Power, Government of India

  This was 106% of the annual target of 20,882 CKM fixed for 2014-15. Similarly, the overall increase in the transformation capacity has been 65,554 MVA during 2014-15, which is a record achievement in a single year and constitutes 137% of the target of 47,871MVA fixed for 2014-15.

  The major Inter-State Transmission System (ISTS) commissioned in 2014-15 includes Raichur-Sholapur 765 kV 2nd circuit, which strengthened the synchronous interconnection of Southern Region (SR) with rest of the country – thereby facilitating reliable operation of single frequency National Grid. The commissioning of 2nd 765 kV line from Raipur to Wardha to Aurangabad during the year provides an important corridor for transfer of power from Chhattisgarh area towards load centres in Maharashtra and further to Southern Region. Commissioning of Sholapur – Pune 765 kV S/c line has also facilitated improvement of power supply in Maharashtra and SR. Commissioning of Silchar – Imphal and Silchar – Bongaigaon line during the year (2014-15) will result in significant improvement in power supply to Manipur and North-East.

Figure 3: In 2014-15, India witnessed 8.4% YoY growth in its power generation capacity…
Data Source: Ministry of Power, Government of India

Figure 4: Transmission lines added during August '15 (CKTms)
Data Source: Central Electricity Authority (CEA)

  The huge capacity addition coupled with higher generation and improved transmission capacity has resulted in considerably reducing the electrical energy shortage from a level of 7 to 11% during the last two decades to a record low of only 3.6% during the year 2014-15 (Figure 2).

  Power Grid Corporation of India Limited (POWERGRID/ PGCIL), the 'Central Transmison Utility (CTU)' of the country, which is also a 'Navratna' company, is operating under the Ministry of Power. It is engaged in power transmission business with the responsibility for planning, implementation, operation and maintenance of inter-state transmission system and operation of National & Regional Power Grids. PGCIL is a stock market listed company, with 57.90% holding of Government of India and balance by institutional investors and public.

  PGCIL owns and operates about 1,19,579 CKMs of transmission lines at 800/765kV, 400kV, 220kV and 132kV EHVAC & + 500kV HVDC levels and 197 sub-stations. Also, with the transformation capacity of about 2,40,954 MVA as on 30th September 2015, this gigantic transmission network, spreads over the length and breadth of the country. It is consistently maintained at an availability of over 99%.

Power Distribution

  Distribution is the area that finally links up consumers with the power, which may be deemed as a product being distributed to the point of consumption. This is the actual revenue generation point for the sector. Under the Indian constitution, power is a concurrent subject and the responsibility for distribution and supply of power to rural and urban consumers rests with the states.

  Although the union government has taken various steps to improve this area, a lot still needs to be done. Especially, states are supposed to take more initiative. As power theft prevention and appropriate metering are the two big challenges there.

  Government of India provides assistance to states through various central sectors / centrally sponsored schemes for improving the distribution sector.

Integrated Power Development Scheme (IPDS): GoI has approved the scheme on 20.11.2014 with a total outlay of Rs 32,612 crore that includes a budgetary support of Rs 25,354 crore. Targets of the scheme:

  • Strengthening of sub-transmission and distribution networks in the urban areas 
  • Metering of distribution transformers / feeders / consumers in the urban area
  • IT enablement of distribution sector and strengthening of distribution network

  The component of IT enablement of distribution sector and strengthening of distribution network approved in June, 2013 in the form of RAPDRP for 12th and 13th Plans got subsumed in this scheme and approved scheme outlay of Rs 44,011 crore including a budgetary support of Rs 22,727 crore carried over to the new scheme of IPDS.

Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY): GoI has also approved the scheme on 20.11.2014 with a total outlay of Rs 44,033 crore that includes a budgetary support of Rs 33,453 crore from the union government. Targets of the scheme are:

  • Separation of agriculture and non-agriculture feeders
  • Strengthening of sub-transmission and distribution networks in the rural areas 
  • Metering of distribution transformers / feeders / consumers in the rural area
  • Rural electrification
    The component of rural electrification approved in August, 2013 in the form of RGGVY for 12th and 13th Plans got subsumed in this scheme and approved scheme cost of Rs 39,275 crore including a budgetary support of Rs 35,447crore carried over to the new scheme of DDUGJY.

National Electricity Fund (NEF):To promote investment in the distribution sector, GoI had set up National Electricity Fund (Interest Subsidy Scheme) in March 2012 to provide interest subsidy on loans disbursed to the Distribution Companies (DISCOMS) – both in public and private sector, to improve the distribution network for areas not covered by RGGVY and R-APDRP project areas. The preconditions for eligibility are linked to certain reform measures taken by the States and the amount of interest subsidy is linked to the progress achieved in reforms linked parameters.

Figure 6 : The details of state-wise geological resources of coal…(Million tonnes),
Source: Geological Survey of India

Financial Restructuring Scheme: GoI has notified the scheme for Financial Restructuring of State Distribution Companies (DISCOMS) in October 2012 for achieving their financial turnaround by restructuring their short term liabilities with support through a Transitional Finance Mechanism from the union government.

Risk Factors Associated With Coal-based Plants

  Coal-based power plants produce tremendous amounts of pollution, which is harmful for all living beings. According to the findings of the Centre for Science and Environment, “The coal-based power sector currently accounts for approximately 60% of particulate emissions, 45 to 50% of SO² emissions, 30% of NOx emissions and more than 80% of mercury emissions.

  There are currently no standards to curb emissions of SO² , NOx and mercury. The only standards that exist are for PM, which are quite lax compared with the global norms.” However, this year, MoEF&CC (Ministry of Environment, Forest & Climate Change) has published a draft notification to tighten norms for emissions of Particulate Matter (PM), SO² , NOx and mercury – and to cut water use by coal-based thermal power plants.

Figure 7: Nuclear Power Generation
(2006-07 to 2015-16) Source: NPCIL

  As per the Ministry of Coal, “As a result of exploration carried out up to the maximum depth of 1200 metre by the GSI, CMPDI, SCCL and MECL etc., a cumulative total of 301.56 billion tonnes of Geological Resources of Coal have so far been estimated in the country as on 1.4.2014.” However, only a part of this can be used in power plants.

  Looking at the long-term challenge: fossil fuels will be exhausted in another 150 years. Looking at the short-term challenge: fossil fuels, especially coal, highly pollute the environment.

  However, demand for energy will continue to grow in the country. By the middle of the next century, there will be only two types of energy: nuclear energy and renewable energy (renewable energy covers different types of sources like, wind, solar, small hydro, geothermal…).

Nuclear Energy Growth Prospect In India

  According to the research and consulting firm Global Data, India’s cumulative installed capacity will be more than double from 272.8 Gigawatts (GW) in 2014 to 609 GW by 2025, representing a Compound Annual Growth Rate (CAGR) of 7.3%.

  The company’s latest report states that while coal-generated thermal power will continue to dominate, India’s renewable and nuclear energy sectors are both set to record impressive growth during the forecast period (up to 2025).

  According to Chiradeep Chatterjee, Senior Analyst (Power), GlobalData, “India’s nuclear capacity is expected to increase more than six-fold, from 5.8 GW in 2014 to 35.2 GW by 2025, in a bid to reduce the country’s reliance on coal.”

  He continues, “India’s nuclear energy development strategy has been divided into three stages due to its limited reserves of uranium, which are already being used in existing reactors. The potential for generating power from uranium mines in India has been estimated at 10 GW."

  "However, the country has large reserves of thorium, with the result that the transition to breeder reactors that use thorium has been proposed, through this three-stage strategy,” he adds.

Renewable Energy

  Global Data’s report also states that India’s other renewable installed capacity (excluding big hydropower) is expected to be more than triple from 33.1 GW in 2014 to an estimated 125.9 GW by the end of the forecast period (2025).

India’s largest grid connected solar rooftop plant of 7.52 MW at Drea Beas, Distt. Amritsar, Punjab…

Figure 8: Source: Ministry of New & Renewable Energy

  Chatterjee says, “India has significant solar power potential, due to its geographical location near the equator, and the country has outlined clear plans for future energy production from this source. One example of a planned solar power project is the multi-phase Jawaharlal Nehru National Solar Mission. Launched in 2010, it set a target of 20 GW of grid-based solar power by 2022 and 2 GW of off-grid capacity for the same year.”

  Renewable energy has witnessed good growth in the last ~ six years. From the total renewable power installed capacity of 14,400 MW at the beginning of 2009, it has reached a capacity of 36,471 MW at the end of September 2015. Wind energy is continuing to dominate India’s renewable energy industry, accounting for over 66% of installed capacity (22,465 MW), followed by biomass power (4,165 MW), small hydro power (3,991 MW), solar power (3,063 MW) and Urban & Industrial Waste 107.5 MW. In terms of electricity generation, the renewable power installed capacity is generating around 70 billion units per year.

Minister of State (IC) for Power, Coal, New & Renewable Energy, Piyush Goyal during  Signing of MOU for setting up a Joint Venture (JV) company ,for first demonstration of offshore wind power project by MNRE, NTPC, PGCIL, IREDA, PFC, PTC…, Source: Ministry of New & Renewable Energy

One MW solar plant in IIT Bombay…
Source: Indian Institute of Technology Bombay

  As per MNRE’s annual report 2014-15, “Renewable energy has a great capacity to usher in universal energy access. In a decentralised or standalone mode, renewable energy is an appropriate, scalable and viable solution for providing power to un-electrified or power deficient villages and hamlets. Around 1.1 million households are using solar energy to meet their lighting energy needs and almost similar number of the households meet their cooking energy needs from biogas plants. Solar Photovoltaic (PV) power systems are being used for a variety of applications such as rural electrification, railway signalling, microwave repeaters, TV transmission and reception and for providing power to border outposts. Over 10,000 remote and inaccessible villages and hamlets have been provided with basic electricity services through distributed renewable power systems.” However, we still need to do a lot as the potential is much more.

  Considering that mega projects need vast technical expertise and big investments, an MOU for setting up a Joint Venture Company (JVC) towards undertaking the First Demonstration Offshore Wind Power Project in the country along the Gujarat coast had been signed on 01 10 2014 in the presence of Piyush Goyal, Union Minister of State (I/C), Power, Coal and New & Renewable Energy.

  The MoU was signed by the MNRE, National Institute of Wind Energy (NIWE), and Consortium of partners consisting of National Thermal Power Corporation (NTPC), Power Grid Corporation of India Ltd (PGCIL), Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation (PFC), Power Trading Corporation (PTC) and Gujarat Power Corporation Ltd (GPCL). Apart from public private partnership model-based projects, there are many projects coming up, which are completely being financed, commissioned and run on private efforts. Several institutes, factories and research centres, individuals are also making their own captive renewable energy plants. Even without subsidy from the government, this field is growing. Exact estimation of this segment is difficult. However, with the growth of the smart grid systems and microgrid systems, it will be easier to estimate the exact values of such generations.

Conclusion

  According to Global Data, despite the strong growth of the nuclear and renewable segment, thermal power will remain the dominant contributor to India’s energy mix, with installed capacity forecast to almost double from 188.9 GW in 2014 to 371.6 GW by 2025.

  However, owing to several negative factors like the Global Warming Potential (GWP), Ozone Depletion Potential (ODP) and Health Damage (Impact) Potential of the coal-fired thermal power plants, we need to completely switch over to other green technologies as soon as possible. Although, deployment of advanced technologies in coal-fired power plants may help in making them cleaner and safer, they cannot completely eliminate their harmful effects.


P K Chatterjee is Editor, Electrical India.

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