power scenario in india and its implications across various states

8/8/2019 Power Scenario in India and Its Implications Across Various States

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Power Scenario in India and its implicationsacross various states

Submitted to:

Prof. Shailendra Nigam

Submitted By:

Prashant Pandey

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FPG/0810/112

Acknowledgement

It is privilege to express my gratitude to several people who have helped me directly or

indirectly to conduct this project work.

I express our gratitude to my internal guide Prof. Shailendra Nigam for his co-

operation and encouragement.

. I hereby take this opportunity to acknowledge with my sincere and

deep sense of reverence to all the faculty members and everyone who has helped me

complete my project. You people were an inspiration and helped me a lot by sparing a

lot of your valuable time to guide me throughout my project work

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Table of Contents:

1. Introduction 4

2. Indian Energy Scenario 7

3. Long Term Energy Scenario for India 12

4. Energy Pricing in India 14

5. Energy Pricing across various states 15

6. Power Structure across states 17

7. Power Sector- Changing Scenario 25

a) Captive Power Scenario 14

b) Unscheduled Interchanges 31

c) Electricity Act 2003 34

8. Some Important Facts 39

9. Summary and Recommendations 41

10. Bibliography 42

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Introduction:

Electricity is one of the most vital infrastructure inputs for economicdevelopment of a country. The demand of electricity in India is enormous and is

growing steadily. The vast Indian electricity market, today offers one of the highestgrowth opportunities for private developers. Since independence, the Indian electricitysector has grown many folds in size and capacity. The generating capacity underutilities has increased from a meager 1362 MW in 1947 to 112058 MW as on31.3.2004. Electricity generation, which was only 4.1 billion KWh in 1947, has risen to alevel of over 558.134 billion KWh in 2003-2004. In its quest for increasing availability of

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electricity, the country has adopted a blend of thermal, hydel and nuclear sources. Outof these, coal based thermal power plants and in some regions, hydro power plantshave been the mainstay of electricity generation. Oil, natural gas and nuclear poweraccount for a smaller proportion. Thermal plants at present account for 70 percent ofthe total power generation, hydro electricity plants contribute 26 per cent and thenuclear plants account for the rest. Of late, emphasis is also being laid on developmentof non-conventional energy sources i.e. solar, wind and biomass. In the case of thedeveloping countries, the energy sector assumes a critical importance in view of theever increasing energy needs requiring huge investments to meet them.

Energy can be classified into several types based on the following criteria:

Primary and Secondary energy Commercial and Non commercial energy Renewable and Non-Renewable energy

Primary and Secondary Energy

Primary energy sources are those that are either found or stored in nature. Commonprimary energy sources are coal, oil, natural gas, and biomass (such as wood). Otherprimary energy sources available include nuclear energy from radioactive substances,thermal energy stored in earth's interior and potential energy due to earth's gravity.Primary energy sources are mostly converted in industrial utilities into secondaryenergy sources; for example coal, oil or gas converted into steam.

Commercial Energy and Non Commercial Energy

The energy sources that are available in the market for a definite price are known ascommercial energy. By far the most important forms of commercial energy areelectricity, coal and refined petroleum products. Commercial energy forms the basis ofindustrial, agricultural, transport and commercial development in the modern world. Inthe industrialized countries, commercialized fuels are predominant source not only foreconomic production, but also for many household tasks of general population.

Examples: Electricity, lignite, coal, oil, natural gas etc.

The energy sources that are not available in the commercial market for a price areclassified as non-commercial energy. Non-commercial energy sources include fuelssuch as firewood, cattle dung and agricultural wastes, which are traditionally gathered,

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and not bought at a price used especially in rural households. These are also calledtraditional fuels. Non-commercial energy is often ignored in energy accounting.

Examples: Firewood, agro waste in rural areas; solar energy for water heating,electricity generation, for drying grain, fish and fruits; animal power for transport,

threshing, lifting water for irrigation, crushing sugarcane; wind energy for lifting waterand electricity generation

Renewable and Non-Renewable Energy

Renewable energy is energy obtained from sources that are essentially inexhaustible.Examples of renewable resources include wind power, solar power, geothermal energy,tidal power and hydroelectric power .The most important feature of renewable energy isthat it can be harnessed without the release of harmful pollutants.Non-renewable energy is the conventional fossil fuels such as coal, oil and gas, whichare likely to deplete with time.

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Indian Energy Scenario

Coal dominates the energy mix in India, contributing to 55% of the total primary energyproduction. Over the years, there has been a marked increase in the share of naturalgas in primary energy production from 10% in 1994 to 13% in 1999. There has been adecline in the share of oil in primary energy production from 20% to 17% during thesame period.

Energy Supply

Coal Supply

India has huge coal reserves, at least 84,396 million tonnes of proven recoverablereserves (at the end of 2003). These amounts to almost 8.6% of the world reserves and

it may last for about 230 years at the current Reserve to Production (R/P) ratio. Incontrast, the world's proven coal reserves are expected to last only for 192 years at thecurrent R/P ratio.

Reserves/Production (R/P) ratio- If the reserves remaining at the end of the year aredivided by the production in that year, the result is the length of time that the remainingreserves would last if production were to continue at that level.India is the fourth largest producer of coal and lignite in the world. Coal production isconcentrated in these states (Andhra Pradesh, Uttar Pradesh, Bihar, Madhya Pradesh,Maharashtra, Orissa, Jharkhand and West Bengal).

Oil Supply

Oil accounts for about 36 % of India's total energy consumption. India today is one ofthe top ten oil-guzzling nations in the world and will soon overtake Korea as the thirdlargest consumer of oil in Asia after China and Japan. The country's annual crude oilproduction is peaked at about 32 million tonne as against the current peak demand ofabout 110 million tonne. In the current scenario, India's oil consumption by end of 2007is expected to reach 136 million tonne(MT), of which domestic production will be only34 MT. India will have to pay an oil bill of roughly $50 billion, assuming a weightedaverage price of $50 per barrel of crude. In 2003- 04, against total export of $64 billion,oil imports accounted for $21 billion. India imports 70% of its crude needs mainly from

gulf nations. The majority of India's roughly 5.4 billion barrels in oil reserves are locatedin the Bombay High, upper Assam, Cambay and Krishna-Godavari. In terms of sectorwise petroleum product consumption, transport accounts for 42% followed by domesticand industry with 24% and 24% respectively. India spent more than Rs.1, 10,000 croreon oil imports at the end of 2004.

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POWER SHORTAGE:

The power sector has been characterized by shortage of supply vis--vis demand. The

peak shortage has been hovering between 11 to 13% (approx.) and energy shortagebetween 6 to 8.5% (approx).

Energy Shortage

Year

Demand(billion

Kwh)

Available(Billion

Kwh)

Shortfall(Billion

Kwh)

(%)

2002-2003 424,505 390,330 34,175 8.12003-2004 446,584 420,235 26,349 5.9

2004-2005 480,430 450,594 29,836 6.2

2005-2006 507,216 467,400 39,816 7.8

2006-2007 522,537 483,350 39,187 7.5

2007-2008 545,983 497,890 48,093 8.8

2008-2009 559,264 519,398 39,866 7.1

Peaking Shortage

Year Demand(MW) Available(MW) Shortfall(MW) %

2002-2003 65,435 58,042 7,393 11.30

2003-2004 67,905 58,445 9,460 13.902004-2005 72,669 63,691 8,978 12.40

2005-2006 78,037 67,880 10,157 13.00

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2006-2007 78,441 69,189 9,252 11.80

2007-2008 81,492 71,547 9,845 12.20

2008-2009 84,574 75,066 9,508 11.20

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POWER SECTOR SCENARIO:

Reliable and affordable electricity is the backbone of a nation's economy and itsavailability has to be ensured on a sustainable basis. The present power scenario is asunder:-

The installed capacity which was 1713 MW in 1950's has gone up to 112058MW as on 31.3.04 as shown on chart-1

The gross electricity generation as on 31.12.1950 was 5106 GWH which wasincreased to 558134 GWH in March'04 as on chart-2

The Transmission & Distribution network has registered a growth of 707752 Ckt.Kms as on 31.3.04 from 29271 Ckt. Kms. in 1950's as on chart-3

The per capita consumption of electricity has increased to 506.69 KWh. as on

31.3.03 from 15.6 KWh. as on 31.12.50 as shown on chart-4

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Chart 2 - GROWTH OF TOTAL ELECTRICITY GENERATION IN INDIA

Chart 3 Growth of Transmission and Generation lines in India

Note:The circuit kms of lines includes HVDC, 400kV, 220kV, 110kV, 66kV, 33kV,11kV and distr. lines upto 500 Volts

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Chart 4- GROWTH OF PER CAPITA CONSUMPTION OF ELECTRICITY

Sector Wise Energy Consumption in India

The major commercial energy consuming sectors in the country are classified as shownin the figure. As seen, industry remains the biggest consumer of commercial energyand its share in the overall consumption is 49%.

Long Term Energy Scenario for India

COAL

Coal is the predominant energy source for power production in India, generating

approximately 70% of total domestic electricity. Energy demand in India is expected toincrease over the next 10-15 years. However, to meet expected future demand,indigenous coal production will have to be greatly expanded. Production currentlystands at around 290 Million tonnes per year, but coal demand is expected to morethan double by 2010. Indian coal is typically of poor quality and as such requires beingbeneficiated to improve the quality. Coal imports will also need to increase dramaticallyto satisfy industrial and power generation requirements.

OIL

India's demand for petroleum products is likely to rise from 97.7 million tonnes in 2001-02 to around 139.95 million tonnes in 2006-07, according to projections of the TenthFive-Year Plan. The plan document puts compound annual growth rate (CAGR) at 3.6% during the plan period. Domestic crude oil production is likely to rise marginally from32.03 million tonnes in 2001-02 to 33.97 million tonnes by the end of the 10th planperiod (2006-07). India's self sufficiency in oil has consistently declined from 60% in the

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50s to 30% currently. Same is expected to go down to 8% by 2020. As shown in thefigure, around 92% of India's total oil demand by 2020 has to be met by imports.

Electricity

India currently has a peak demand shortage of around 14% and an energy deficit of8.4%. Keeping this in view and to maintain a GDP (gross domestic product) growth of8% to 10%, the Government of India has very prudently set a target of 215,804 MWpower generation capacity by March 2012 from the level of 100,010 MW as on March2001, that is a capacity addition of 115,794 MW in the next 11 years. In the area ofnuclear power the objective is to achieve 20,000 MW of nuclear generation capacity by

the year 2020.The National Electricity Policy of the Government stipulates that reliableand quality power at affordable price is to be made available to all by the year 2012, i.e.by the end of 11th Plan. In this regard, the projection of the demand of electricity ismade by 16th Electricity Power Survey Committee.

As per the data made by 16thElectric Power Survey, energy requirement at the end of 10th Plan, i.e. March'07 is 720million units (MU), which is likely to increase to 975 MU. Accordingly, a target ofaddition of 41,110 MW of generating capacity, comprising of 14,373MW hydro, 25,417MW thermal and 1300 of nuclear has been planned for the 10th Plan period (2002-07).However, based on the latest status of monitoring, it is expected that about 40,000 MW(comprising of 12,000 MW hydro, 25,500 MW thermal and 2500 MW nuclear) is likely tobe added during the 10th Plan period. In order to meet the target of making qualitypower available to all by the year 2012 (end of 11th Plan), a capacity addition of 67,439MW comprising of 23,359 MW hydro, 38,165 MW thermal and 5915 MW nuclear hasbeen planned for 11th Plan. However, the latest indications suggest that an addition of61,000 MW comprising of 21,000MW hydro, 35,000 MW thermal and 5000 MW nuclearcould be feasible during 11th Plan period. Even with this level of capacity addition, thecountry could face a peaking shortage of about 12.7% and energy shortage of 5.6% bythe end of 11th Plan

INDIAS PERSPECTIVE PLAN FOR ZERO DEFICIT POWER BY 2011/12(SOURCETENTH AND ELEVENTH FIVE-YEAR PLAN PROJECTIONS)

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Thermal(Coal)

(MW)

Gas/LNG/Diesel(MW) Nuclear(MW) Hydro(MW) Total(MW

Installed

capacity

as on

March

2001

61,517 Gas: 10,153

Diesel: 864

2720 25,116 100,0

0

Addition

al

Capacit

y (2001-

2012)

53,333 20,408 9380 32,673

115,79

4

Energy Pricing in India

Price of energy does not reflect true cost to society. The basic assumption underlyingefficiency of market place does not hold in our economy, since energy prices areundervalued and energy wastages are not taken seriously. Pricing practices in India likemany other developing countries are influenced by political, social and economiccompulsions at the state and central level. More often than not, this has been thefoundation for energy sector policies in India. The Indian energy sector offers many

examples of cross subsidies e.g., diesel, LPG and kerosene being subsidized by petrol,petroleum products for industrial usage and industrial, and commercial consumers ofelectricity subsidizing the agricultural and domestic consumers.

Coal

Grade wise basic price of coal at the pithead excluding statutory levies for run-of-mine(ROM) coal are fixed by Coal India Ltd from time to time. The pithead price of coal inIndia compares favorably with price of imported coal. In spite of this, industries stillimport coal due its higher calorific value and low ash content.

Oil

As part of the energy sector reforms, the government has attempted to bring prices formany of the petroleum products (naphtha, furnace oil, LSHS, LDO and bitumen) in line

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with international prices. The most important achievement has been the linking of dieselprices to international prices and a reduction in subsidy. However, LPG and kerosene,consumed mainly by domestic sectors, continue to be heavily subsidized. Subsidiesand cross-subsidies have resulted in serious distortions in prices, as they do not reflecteconomic costs in many cases.

Natural Gas

The government has been the sole authority for fixing the price of natural gas in thecountry. It has also been taking decisions on the allocation of gas to various competingconsumers. The gas prices vary from Rs 5 to Rs.15 per cubic meters.

Electricity

Electricity tariffs in India are structured in a relatively simple manner. While high tensionconsumers are charged based on both demand (kVA) and energy (kWh), the low-tension (LT) consumer pays only for the energy consumed (kWh) as per tariff system in

most of the electricity boards. The price per kWh varies significantly across States aswell as customer segments within a State. Tariffs in India have been modified toconsider the time of usage and voltage level of supply. In addition to the base tariffs,some State Electricity Boards have additional recovery from customers in form of fuelsurcharges, electricity duties and taxes. For example, for an industrial consumer thedemand charges may vary from Rs. 150 to Rs. 300 per kVA, whereas the energycharges may vary anywhere between Rs. 2 to Rs. 5 per kWh. As for the tariffadjustment mechanism, even when some States have regulatory commissions for tariffreview, the decisions to effect changes are still political and there is no automaticadjustment mechanism, which can ensure recovery of costs for the electricity boards.

Energy pricing :

The energy pricing in India is basically done by Central Electricity Regulatory

Commission. These rates are then exercised upon various states. The states however,

have the right to file a petition against these rates upon which these rates are reviewed

and if found high, then these rates are further revised. The pricing is basically divided

into two segments as follows:

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Energy pricing across various States:

State Energy Charges

(Paise/Kwh)

Demand Charges

(Rs./kVA of Billing

Demand/Month)

Kerla Rs. 270 Rs. 300

Madhya Pradesh Rs. 385 Rs. 288

Maharashtra Rs. 430 Rs. 290

Uttar Pradesh Rs. 351 Rs. 331

Uttaranchal Rs. 382 Rs. 390

Note: These rates have been taken with respect to High Tension Users and may vary

from state to state and from year to year

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Power Structure across States:

Indian power grid system is divided into five regions namely Northern, North Eastern,

Eastern, and Southern and Western Regions. The state of Uttar Pradesh is situated in

the Northern part of India and forms a major constituent of northern region. These

regions have independent load dispatch centre that manages the flow of power in their

jurisdiction. At present, the inter-regional flows of power are quite low. Hence, each

region may be considered as an island due to which the power generated in each

region is distributed in their jurisdiction only.

Uttar Pradesh

1

Central Sector

Generation

ThermalHydro Nuclear

Other

Regional

Grids

Northern

Regional

Grids

UPPCL

GRID

UPPCL

DISTRIBUTION

NETWORK

UPRVN

THERMAL

PROJECTS

(Coal/Gas

based)

Private

Sector

Generation

HCM (Co-generation Project)UPJVN

(hydro

projects)

End Users of Uttar


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UPs Current Delivery System

The Northern Region consists of Delhi, Himachal Pradesh, Punjab, Uttar Pradesh,

Haryana, Jammu & Kashmir, Rajasthan and newly formed Uttaranchal State. Each

state will have their own power generation plants (State Government owned) managed

by respective State Electricity Boards / Corporations. In Uttar Pradesh, power

transmission and distribution is managed by Uttar Pradesh Power Corporation Ltd.

(UPPCL), Lucknow. State governments thermal power generation plants are managed

by the state authority Uttar Pradesh Rajya Utpadan Nigam (UPRUN) and Hydro power

plants by the state authority Uttar Pradesh Jal Vidyut Nigam (UPJVN).

In addition to the

state govt. owned power generation plants, there are private owned power generation

plants exporting power to UPPCL and central government (Government of India) owned

power generation plants managed by Government of India Enterprises like National

Thermal Power Corporation Ltd., Nuclear Power Corporation Ltd., National Hydro

Electric Power Corporation Ltd. etc. Power generated by all generation units is being

fed to the grid (Northern Grid), which is accessible to all states forming part of the

northern grid. Power mix may be thermal, hydro, wind, nuclear. In India, nuclear power

generation is allowed only by central sector organizations.

Current Power Scenario:

As mentioned, UPPCL distribution network gets major portion of thermal and hydro

power from UPRVUN and UPJVN respectively along with the central sector generation

plants and a small portion from private sector power generation /cogeneration plants

and ultimately distributed to the consumer / end users.

Source wise P resent installed

capacity and power generation in UP shows that the share of UPPCL coal based power

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projects is 73 % of total UPPCL installed capacity and 77% of total generation capacity

in the state. Detailed break-up is as under.

S.NO Energy Source Installed Capacity in MW Net Generation in

Mkwh

A. UPPCL

1. Thermal 4,092 17,565

2. Hydro 1,494.5 5,232

3. Micro Hydel 26.43 29

4. Total(UPPCL) 5,612.78 22,826

B. U.Ps Share in Central

Schemes

(Coal/gas/hydro/nuclear) 3,166.49

18,087.41

C. Import from other

sources (incl.

renewable)

- 156.80

TOTAL 8,844.27 41,069.80

Above table shows that present share of Uttar

Pradesh in central power generating schemes is quite substantial i.e. 35% in installed

capacity and 44% in generation. Import from other sources includes power generation

in UP by private sector projects, renewable energy projects (bagasse/biomass based

cogenerations) etc.

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Energy and Peak Demand Requirements, Availability & Shortages :

Particulars Figures, per day

Energy Requirement,

Million Units (MU) 140.79

Energy Availability, in MU 123.97

Energy Shortage in MU

(%)

16.82

(13.56%)

Peak Demand

Registered, in MW

7,138.00

Peak Demand Met, in MW 5,733.00

Peak Demand Shortage,

in MW

1,404.00

(24.50%)

Plans of Capacity Additions:

S.No. Ref./Document Name Thermal MW Hydro MW Total MW

A.As per CEAplanning

1. Ninth 5 year Plan 4,580

4

2 4,622

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2. Tenth 5 year plan

4,250

2,776 7,026

3. Eleventh 5 year plan 500 3,867 4,367.00

B. As per UPPCLplanning

1. Ninth 5 year Plan NA NA NA

2. Tenth 5 year plan

2,050 727.6 2,777.6

3. Eleventh 5 year plan NA NA

NA

The above table shows as against therequirement of 7,026 MW of capacity additions only 2,777.6 MW is planned to be added

by UPPCL (this excludes the additions by centre) This huge gap between capacity

addition plans of central Government and state Government will lead to create a huge

shortfall of demand and supply situation of the state. To reduce this, UP government is

encouraging the private participation in power generation sector, however, yet the due

success is to be achieved.

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Capacity Additions by UPPCL till the year 2007

S.No Project Details Fuel Used Capacity(MW)

A. Thermal Power Projects Coal

1. Aanpara-c Project Gas 2*500

2. Panki Expansion Project Coal 1*210

3. Parichha Expansion

Project

Gas

2*210

4. Hardua Expansion

Project

2*210

Sub Total 2050

B. Hydel Projects

1. Maneri Bhali- II 304.00

2. Lakhwad Vyasi 420.00

3. Shitala 3.60

4. Sub total 727.60

C. Total (Thermal+Hydel) 2,777.60

The additional data collected from official documents/website of UP Government in

which list of new projects proposed / sanctioned and new expansion proposals which

indicates the future capacity additions. These projects are available for private sectorpromoters.

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Summary of New Projects Available in UP for private sectors

S.No Project Details Capacity Remarks

1. Thermal Projects 1,000 UPPCL Project

2. Hydro Projects 2,023

50% is expected to becompleted by 10th Pan

and the balance by 11th

Plan

The availability of projects and the opportunities regarding generation of power

is immense with the greater emphasis on hydro power projects since the primaryinput i.e. water is available in abundance. But due to poor maintenance and lack

of technology and infrastructure, the power scenario in the state of Uttar Pradesh

is still in doldrums wherein some interior places still face acute shortage of

proper supply.

ENERGY SCENARIO OF MAHARASHTRA

a) Power Supply and Consumption Position in Maharashtra

Maharashtra is the largest power generating state in India with the largestelectricity system capacity. As on March 31, 2003, the installed capacity inMaharashtra is 15,208 MW, which is about 14 per cent of the total installedcapacity in India. The state is generating around 3,500 MU to 4,000 MU permonth. The main source of power generation in Maharashtra is fossil fuels suchas coal and natural gas. A little is being contributed by the hydro and nuclearenergy sources. Fuel-wise installed capacity in Maharashtra is given below :

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As per the above table, fossil fuels viz. coal and natural gas constitute 76.5percent of the total installed capacity and hydro comprise only 18.9 per cent. In theabove table, share from other sources such as cogeneration is not included due to theirsmall contribution.

As of March 31, 2002, the total installed capacity of power inMaharashtra was 14,420 MW. Power generation in the state increased in 2001-02 by6.72 percent as compared to 2000-01. These figures take into account the contributionof agencies like Tata Power Company Ltd., BSES Ltd. and Dabhol Power Company(DPC).

S.No ITEM INSTALLED CAPACITY(MW)

1. MSEB 9,771

2. DPC 728

3. TATA Power 1,774

4. BSES 500

Central Share for 2,375

1

S.No Fuel Capacity MW In percent

1. Coal 9,414 61.9

2. Natural Gas 2,224 14.6

3. Hydro 2,874 18.9

4. Wind 399 2.6

5. Nuclear 297 2.0

Total 15,208 100


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5. Maharashtra(NTPS & NPC)

TOTAL 15148

Electricity Generation Pattern in Maharashtra(2000-2006)

Category MUs In Percent

Thermal(Steam) 53,887 84.20

Gas 2,740 4.28

W.H.R 1,255 1.96

Nuclear 1,138 1.78Hydro 4,979 7.78

Total 63,999 100.00

Note: The values taken here are average values of generation during the giventime period

Electrical Energy Utilisation Patter n for Maharashtra during 2000-06

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Presently, the state of Maharashtra is facing a shortfall of 2,500 MW. In order tomatch the demand, new capacity additions to the tune of about 12,500 MW areslated to come up over the next two Five Year Plans.

The state is facing severe powerdeficit and energy shortage. As per the data published by CEA, the power deficitis as high as 19.8 per cent or 2,718 MW against a peak demand of 13,697 MW and

13.4 per cent energy shortage or 11,680 million units during the period 2002-2006.This shortfall is so significant that the state cannot ignore the power supplyposition from the perspective of development.

2

Category MUs In Percent

Industrial 17,435.1 37.58

Agriculture 8,730.2 18.82

Street Light 648.0 1.40

Domestic 11,901.1 25.65

Commercial 4,393.1 9.47

Railways 1,639.5 3.53

Miscellaneous 1,590.8 3.43

Interstate 62.4 0.13

Total 46,400.20 100.00


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Growth in the energy demand in Maharashtra:

In the 16th Electric Power Survey, the CEA has projected an average growth rate of 5.9per cent for the period ending 2017 for Maharashtra. Details of energy growth andcapacity requirement up to the end of 12th Five Year Plan is given below:

Plan Period 2001-02 2006-07 2011-12 2016-17

Energy

Requirement(MkWh)

79,593 1,06,892 1,42,911 1,90,167

Peak Load(MW) 12,472 16,716 22,348 29,738

Growth(percent) 7.43 6.03 5.98 5.88

Average Growth

Rate

(Per Cent) 5.95

As indicated above, the present peak demand is 13,697 MW and only 10,979 MW ismet during the period 2002-03. Including the present deficit and projected growth rate,about 18,759 MW shall be added till the end of 12th Plan Period. Considering theimmediate requirements of energy and till the end of the present 10th Plan Period of2006-07, about 5,737 MW shall be installed during the next four years. Another 5,632MW shall be added during 11th Plan period ending 2012.

Investments in Power Projects as planned during the 10 th and 11th Five Year Plan

Approval given to 5 Power Projects of the M.S. Electricity Board;Expected Capacity Addition 3,040 MW, Except Urban Gas BasedProject, work order in rest of Projects issued

Urban Gas Based Expansion Project ( 1,040 MW) New Parli Unit II (250 MW) Paras Expansion Project II (250 MW) Khaperkheda Expansion Project (500 MW) Bhusawal Expansion Project (1000 MW)

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Further generation capacity addition is expected in coming 4 / 5 years,though 5 Power Projects Planned by the Generation Company

Chandrapur Expansion Project (800 MW) Koradi Expansion & Replacement of Set Project (1,600 MW) Parli Replacement of Set Project (250 MW) Paras Replacement of Set Project (250 MW) Bhusawal Replacement of set project (250 MW) Power production from Dabhol Plant commenced Policy for development of small (25 MW) Hydro Projects on Build,

Operate for 30 years & Transfer Basis First State in the country have its own non-conventional energy Policy and

independent Ministry for non-conventional Energy, proposed to establish non-

conventional Energy Generation Projects of aggregate capacity 1,000 MW fromUrga Ankur Nidhi of Rs. 418 Crore, 3 Projects have already been sanctionedrecently

In accordance with the new Wind Energy Policy, Projects of aggregate capacity1,500 MW commissioned

Single Phasing Scheme commissioner in the State. Out of 12,617 targetedvillages, the number of beneficiary villages so far is 11,068 which has facilitatedLoad Management of about 510 MW and has also facilitated continuous powersupply to Gaothan & Street Light

Separate Gaothan Feeder Scheme commissioned in the State, out of 7,367targeted villages, the number of beneficiary villages so far is 1,500 which has

facilitated Load Management of about 250 MW Distribution of electricity in & around Bhiwandi City entrusted to Distribution

Franchise, similarly destruction of electricity in some part of the Nagpur city isalso being handed over to Franchisee

Exemption for five years from payment of Electricity Duty to Captive Powerproducers on electricity generated for self use

Energization of 283326 agricultural pumps in last three years, target for the year2007-08 is 216000 which is highest in the Country

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Power Sector- Changing Scenario- A Marketing Perspective

From the time the first five year plan was into effect in the early 1950s, there have beenconsiderable changes the way the power is generated, transmitted and distributed inthe country. During the earlier times, business of generating electricity was purely underthe governments control but with lighter regulations that provoked the entrance ofprivate players and continuing effort to improve the losses during generation, powersector in itself has become very lucrative and a many ways have emerged where poweris not only sold off by the state grid to industrial users but power is also distributedamong the business entities (dealing in power) so as to earn profits. The industrieshaving their own power plants (Captive Power Plants), if and when have generation ofexcess power, they sell off this excess power to generate revenue and ultimately lead

to a rise in their profits. This distribution of power among the private players is termedas Unscheduled Interchange.

The Indian government is seriously addressing the need toimprove the efficiency of power generation and is focusing on a mix of conventional andrenewable energy. This has opened up some good business opportunities, especially inpower transmission and distribution technology. With the government aiming to doublethe level of energy generation from 100,000 to 200,000 megawatts by 2012, Indiasongoing energy efficiency program offers good prospects for companies involved inpower station construction. Renewable energy is another key focus, and privateinvestors are being encouraged to get involved in new projects and take advantage of

the significant tax and customs concessions being offered by regional and nationalgovernment. India is very keen to develop wind energy, and has set the target ofcreating an additional capacity of 10 GW by 2012. Understandably, in a country whereagriculture plays such a key role there is keen interest in biogas. Studies suggest apotential capacity here of 66,000 MW compared with the 900 MW per year currentlyproduced in India.

Thus, there are a number of ways through which the power is beinggenerated and distributed from either the grid to the individual power consumers orfrom within one private player to another private player for a certain amount of moneywhich we refer to as Un-Scheduled interchange. Terms such as Captive power, theelectricity act, 2003 on the basis of which all the operation within the power sector takesplace and the meaning and significance of Un-scheduled interchange are described in

detail as under:

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Captive Power Scenario in India

Captive Power refers to generation from a unit set up by industry for its exclusiveconsumption. The estimates on captive power capacity in the country vary with theCentral Electricity Authority putting the figure at about 11600 MW while industry expertsfeel that it is much higher, close to 20000 MW. Industrial sector is one of the largestconsumers of electrical energy in India. However, a number of industries are nowincreasingly relying on their own generation (captive and cogeneration) rather than ongrid supply, primarily for the following reasons:

Non-availability of adequate grid supply Poor quality and reliability of grid supply High tariff as a result of heavy cross- subsidisation

The State Governments and SEBs have been concerned about the growingimportance of Captive Power Plants on account of the following reasons:

Captive plants may have adverse impacts on the finances of the utility, such as: Industrial load is the main source for cross-subsidising revenue flows Billing and collection is much more efficient for HT consumers SEBs ability to service escrow accounts for security packages is also reduced Non-optimal growth of the sector. Problems in grid management especially in case of states with surplus power Adverse environmental impacts arising from types of fuels used and from

higher emissions per unit of production, as compared to large powerplants

Reliability of power supply from captive plants as a source of firm power

While the problem of the captive power plant owners stems from:

Non-remunerative tariff structure for surplus power produced by them No risk sharing in case of non-availability of fuel, change in variable cost due to

switching of fuel after entering into power purchase agreement (PPA), etc Inadequacies in wheeling and banking facilities

High contract demand charges. High level of duties and taxes on sale of power High wheeling losses assumed for power to be sold to grid by captive or co-gen

plant Need to devote time and energy to an activity, which is not their core business Restrictions on the minimum amount of power to be wheeled

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If the captive power plant (CPP) fails, charges for back-up or standby power fromthe grid are twice the normal rate for captive plants

No formal policy for purchase of cogenerated power (in most of the states)

It is estimated that about 30% of the total energy requirement of the Indian industry iscurrently met through in house power plants. The state-wise captive capacity is givenas follows:

State Installed Capacity Captive Capacity

Andhra Pradesh 8204 1220

Assam 1078 Nil

Bihar 4656 614

Delhi 1436 Nil

Gujarat 8376 1505

Haryana 882 335

Himachal Pradesh 3570 32

Jammu and

Kashmir

1536

3Karnataka 3462 1045

Kerala 1766 151

Madhya Pradesh 7173 1333

Maharashtra 11072 570

Meghalaya 239 Nil

Orissa 3243 1544

Punjab 2620 311

Rajasthan 2176 528

Tamil Nadu 8271 1107

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Uttar Pradesh 12473 1240

West Bengal 6515 786

Total 89167 12322

Rules and Norms for Captive power generation across states:

Maharashtra

The permission for installation and running the captive power plant will begranted by the government and the capacity of the CPP will be limited to coverthe existing demand(MW) plus 1/3 of existing demand in MW or demand in MW for future expansion

Third party sale is allowed and in this case a tripartite agreement will have to be

signed between the Board, CPP owner and the third party receiving power fromCPP

CPP can sell surplus power to maximum two industrial units and is alsorestricted up to 25 percent of the generated units (kWh)

Captive generating company or any other company intending to sell surpluselectricity to third parties would require a prior permission from the EnergyDepartment of the State Government under section 28 of the Indian ElectricityAct 1910

The wheeling charges and transmission losses are determined in terms ofdistance transmitted. The wheeling charges and transmission losses aredetermined as 2% and 5% respectively for a distance of 050 km; 4% and 8%

respectively for a distance of 50200 km; and 6% and 10% respectively for adistance above 200 km Rate at which surplus power would be purchased would be decided by MSEB

and it will not purchase any power during night hours, that is 2200 hrs to 0600hrs

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In case of planned shutdown of the CPP, the excess demand recorded over andabove the revised contract demand will be charged at double the normaldemand charge rate of the respective tariff in force from time to time

Uttar Pradesh

Presently, the transmission and distribution system of the Uttar Pradesh StateElectricity Board (UPSEB) is not in a position to handle any further load.However, the wheeling of electricity is allowed on a selective basis provided thecaptive developers pay 15% wheeling charges of the energy received

While fixing the tariff for captive power plant UPSEB will not share the fixedcharges (interest on loans, depreciation, O&M, income tax, etc.) for the captivepower plant. However the UP Government may share this fixed charges by wayof soft loan, subsidy etc. as the consumer is installing the captive power plantprimarily for meeting his load due to sophistication of the plant which may affectits functioning due to quality variation in UPSEB supply system

The board control room may direct captive power plant control room to regulatethe export during the night hours from 2200 hrs to 0600 hrs

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Un-scheduled Interchange (UI) and its significance in the Indian Electric SupplyIndustry

Introduction:

The two fundamental characteristics of power delivered to a customer are frequencyand voltage. The short run supply-demand balance is indicated by frequency.Frequency is a public good having large external effects. Stable operation of theinterconnected power system, requires that frequency be maintained within a certaintolerance as defined by the standards adopted in a country.

Power systems all over the world have to makeprovisions for achieving a balance between real time demand and supply. Powermarkets generally have control areas that are prohibited from deviating from scheduledinterchange. Concept of Area Control Error (ACE) used to measure these

instantaneous deviations takes into account of both frequency and net excess flow outof a control area. Control areas are required to keep their ACE near zero formaintaining a constant frequency in the interconnection. This model for load frequencycontrol used in developed countries may be a good practice but given the techno-economic and socio- political realities prevailing in India, it is currently incompatible withIndian power system.

THE IMPACT OF UI MECHANISM

The UI mechanism was brought in to perform under such trying circumstances.Although the complexities and contradictions in the system still prevail but there is notan iota of doubt that the scheme has delivered results. The UI mechanism rode on thechariot of floating frequency and the used the disease itself for curing the chronicillness of the power system operation. It is the bedrock on which the foundation ofcompetitive electricity market has been built in India and is flourishing. UI mechanismhas assumed cult-like status in the Indian power sector. It is not surprising that themechanism has split the Diaspora into believers and non-believers. Everyone hasinterpreted the mechanism in his/her own way and in the process certainmisconceptions and misunderstandings have also cropped up. A large sectionunderstands UI mechanism to be merely a penal and disciplinary mechanism to deter

utilities from deviating from schedule.

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UI AS REAL-TIME PRICING MECHANISM

The UI rate is a frequency-actuated signal available at any wall socket. Every utilityreacts to this signal in real time and adjusts its generation/ demand and a new

equilibrium is achieved. The UI curve by virtue of its design empowers every utility thathas some means to regulate supply/demand to readjust its interchange with the gridand gain from the migration of frequency/UI rate from the earlier level. The decreasingmarginal returns with every additional unit of deviation from the scheduled interchangeacts as a counterweight, which forces the utility to seriously weigh the consequences ofits actions. Thus the collective action by all the players in this non-cooperative zero sumgame, restores the equilibrium to new value, which may or may not be the same as thatbefore the perturbation. What results is a Nash equilibrium at which every playeremerges a winner by having maximised his pay-off.

UI FOR MERIT ORDER AND EFFICIENCY

Economists consider perfect competition as an instrument to realize productive andallocative efficiency. A market is considered perfect only when every competitor is smallenough to have no discernible influence against the invisible hand of the market. Thisimplies that every player in a perfectly competitive market is aware of the marketcondition and is a price taker.

The UI mechanism adopted in India tries to

fulfill that design requirement in a rather unconventional manner. Every utility is awareof the UI vector ex ante and in real time (perfect information); the UI rate applies to all

inter utility transactions at the regional level (homogeneity); there are no contracts to be

signed, no access charges fees; no transmission charges; no losses applicable (no

entry barriers); every utility big or small having some control over its generation or load

is transformed into a formidable player in real time. All generators connected to the grid

can contribute to the unscheduled flow of electricity, dramatically increasing the number

of competitors that can serve any customer connected to the grid (atomicity). The UI

mechanism has established a real time balancing market that is workably competitive

and provides a powerful force for efficiency and innovation. While the diligent and

proactive players have derived rich dividends by being proactive, a large number ofplayers are yet to realize this aspect of UI mechanism. This also explains the

unpopularity of UI mechanism in some quarters.

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POWER EXCHANGE AND UI MECHANISM

There seems to be some substance in the argument put forth by the proponents of

Power Exchange in the country that the absence of an organised day ahead-market is

one of the reasons for the lack of investor confidence in the Indian market. Bilateraltrading is being used for increasing the availability of power for a load serving utility

especially after the enactment of the short term open access regulations but the

exorbitant transaction costs and lack of transparency in price setting are a big deterrent.

(Transaction costs are the costs of negotiating, executing and enforcing payment for

each purchase.) The setting up of the Power Exchange could provide another option for

power procurement. It could promote further competition on the supply side as well as

on the demand side by bringing all sellers and buyers together on a common

marketplace with standardized contracts, bid formats, and trading procedures. This

would set up a transparent price discovery mechanism in day ahead exactly as UI

mechanism is doing in real-time.

CONCLUSION

The UI mechanism has been a good course correction for the Indian power market and

therefore we need to take further steps to reinforce the gains. It is time we started

planning for the next step in this initiative. There are other difficult jigsaw pieces that

have to be placed rightly before we can entirely solve the Indian power sector puzzle.We need to revisit and probably redesign the transmission pricing and hydro tariff to

make it more scientific and effective. Intra state ABT and open access are essential for

getting a stronger demand side response. With the interconnection of the Northern and

Central grid in near future we would need to reconsider the reactive tariff to suit the new

circumstances. Thus a lot more need to be accomplished to realize the vision of power

to all by 2012.

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Electricity Act 2003

The electricity act which came into force in India in mid-June 2003 consolidates and

removes a lot of older legislations on electricity. The act has introduced significant

changes in industry structure by moving from a single buyer market to a multi-buyer

multi-seller system. The regulatory regime has been made flexible, with a multi layer

approach and without requiring a regulatory commission to follow rate-of-return

regulations. The act brings clarity to the roles of different organizations and provides for

better financial management of the regulatory commissions. The penal provisions for

the dishonest use of electricity have been tightened and special courts are provided to

deliver speedy justice. The act puts in place some, time bounded targets for licensees

and for the restructuring of the electricity industry.

Early developments

The developments of electricity in India was fashioned in India by two legislations

namely the Indian electricity act, 1910 and the electricity supply act, 1948. The IE-1910

introduced the licensing system in the country while IE-1948 was responsible for

greater state involvement in the industry. The 1910 act was introduced at a time when

the electricity industry of India was fragmented and mostly concentrated in urban areas.

The industry at this phase was highly competitive and the act attempted to instill somecohesion in the industry by introducing licensing mechanism and promoting safety

standards.

In the mid-1990s, some states took the initiative to restructure their electricity

supply industry through promulgation of reform acts. These reform acts chartered

restructuring of the states electricity industry by de-integrating the SEBs into separate

generation, transmission and distribution companies. Generation segment was

considered as potentially competitive and kept outside the purview of the regulatory

supervision. Transmission and distribution are considered as monopolistic activities

within the geographic area and regulated businesses. Licensing was chosen as theform of regulatory control and rate of return regulation was introduced. All the reform

acts introduced a single buyer model, where the transmission and bulk supply licensee

acts as the buyer of all electricity produced by the generators and sell electricity to the

distribution and retain supply licensees for further supply and distribution. Transmission

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and bulk supply was controlled by a single company while a number of distribution

companies were introduced having monopoly supply rights.

This was followed by a central act called Electricity Regulatory Commissions Act,

1998(ERC-1998 for short). Although this is a new piece of legislation, its scope was

limited to install an independent regulatory set up at the central level and state level,without each state requiring its own legislation and without any prior restructuring of the

electricity industry.

Industry Structure as envisaged in the electricity Act, 2003

The act has made an attempt to create a multi-buyer, multi-seller system of some sort

without introducing any sort of balancing system and provided for some retail

competition by allowing them choice of supply to certain consumers.

Generation

Electricity generation has been made a non-licensed activity and the techno-economic

clearance from the Central Electricity Authority (CEA) has been done away with for any

power plant, except hydro-electric power stations above a certain amount of capital

investment. The generators can sell electricity to any licensees or where allowed by the

state regulatory commissions, to consumers directly. The provision of direct sale of

electricity by the generators, when and where allowed, would promote more IPP

participation in the power generation, as these consumers are more credit worthy and

bankable compared to many SEBs. However, the act provides for imposition of a

surcharge by the regulatory body to compensate for some loss in cross-subsidy

revenue to SEBs due to direct sale of electricity to consumers.Transmission

Transmission, both at the inter-state and the intra-state level is a regulated activity

requiring a license. The act prohibits a transmitting utility to undertake generation or

trading. This provision is quite contrary to the state reform acts, where the state

transmission utility performs both the functions of transmitter and bulk supplier. This

condition helps avoiding conflict of interest in transmission and supply activities but as

this condition is in contradiction with the state reform acts , the state transmission

utilities of those states where the reform act is in operation would have to undertake

necessary changes to rectify the contradiction.

Trading:

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The act specifies trading as a licensed activity but provides little detail about traders

functions. Trading has been defined as purchase of electricity for resale. This could

involve wholesale supply (i.e. purchasing power from generators and selling to the

distribution licensees) or retail supply (i.e. purchasing power from generators or

distribution licensees from sale to end consumers). As the act does not make distinction

between distribution and retail supply, it is not clear whether a licensed trader wouldrequire a distribution license for retail supply.

Distribution and Retail Supply:

The act does not make any distinction between distribution and retail supply of

electricity. It appears that distribution has been considered to imply both distribution and

supply activities. Distribution is a licensed activity and distribution licensees are allowed

to undertake trading without any separate licensee. Thus a distribution licensee can

undertake trading three activities: trading, distribution and supply through one license.The reason for combining these three activities in a license is not clear. A distribution

licensee is also an agent , who does not require a license. The licensee is responsible

for the functioning of the agent. This new provision is somewhat awkward as it leaves

room for misuse.

Role of Central and State Governments:

The act reserves a significant involvement of the central government in the functioning

of the power sector. It has been assigned a number of duties, including plan and policyformulation and approval, rule making, appointing designating authority, prescribing

duties and other tasks, funding and issuing directions.

On the policy front, the central government is responsible for preparing, publishing and

revising the following:

a) National Electricity policy and Tariff policy

b) National policy for stand-alone system for rural areas based on renewable and

non-conventional energy sources

c) National policy for rural electrification and local distribution in rural areas

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Central Electricity Authority:

The Central Electricity Authority (CEA) was an agency created under the ESA-1948

and the present act retains the agency by relegating it mostly to a consultative role.

There was some overlap of duties and power between the central commission and the

CEA which has now been removed. The CEA is responsible for preparing a nationalelectricity plan every 5 years and shall seek central governments approval on the plan.

Commissions:

The act retains the two-level regulatory system for the power sector. At the central

level, the Central Electricity Regulatory Commission ( CERC) would be responsible for

regulating tarriff of generating stations owned by the central governement, or those

involved in geneerating or supplying in more than one states, and regulating inter-state

transmission of electricity. The state commissions on the other hand regulate intra-state

transmission and supply of electricity within the jurisdiction of each state. The

commissions would have quasi-judicial powers as before and the act providesprotection to members against any arbitary removal.

Appellate Tribunal:

This is a new organisation created by the present act to deal with appeals against the

orers of the commissions or adjudicating officers set up by the commissions in settling

sidputes. Earlier the High Court was the appellate authority and they have dealt withmost of the cases quite logically. The appellate tribunal would help reduce the burden

on High Courts and should settle the disputes more expeditiously. The tribunal would

produce certain amount of sector specific expertise, which should help in discharging its

duties better than a High Vourt. The orders of the tribunal can be challenged in the

Supreme Court by the aggrieved party. The act however does not specify any funding

mechanism for the Appellate Tribunal.

LOAD DISPATCH CENTRES:

The act has created a three-tier load dispatching system, namely a National load

dispatch centre (NDLC), a regional load dispatch centres (RLDC) and the state load

dispatch centres (SLDC). RLDC and SLDC were already exsisted under the earlier act

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but there was some confusion about their power and organisation hierarchy. The

present act has attempted to resolve the problem.

CONCLUSION:

The recently introduced Electricity Act 2003 of India has consolidated a number of

legislations on electricity in India. The new act has attempted to move away from the

single buyer model being followed so far and has allowed relatively free entry togeneration and captive power generation. Removal of restriction on captive power and

broadening the scope of captive generation by including association of consumers

would help promote proliferation of captive power, which in turn would reduce the

creamy consumers providing cross-subsidy to the distribution companies. Loss of

creamy consumers would allow introduction of open-access to certain class of

consumers and perhaps entry of IPPs in generation. The above phenomenon is

expected to allow removal of cross-subsidies and promotion of cost-reflective tariff

regime in the distribution business. In absence of such tariffs, the distribution business

is expected to suffer and thereby affecting the entire supply chain. However, the

acceptability of such tariff to consumers would remain an issue.

The act introduced a

few new entities and has clarified the roles of different players. It has introduced a

better arrangement for funding of commissions and strict provisions for subsidy

provision by governments. The tariff determination has been made flexible and

commissions are now empowered to move a multi-year tariff regime and decide the

tariff principles. The provisions related to thefts, collusion of employees are also string

and should help check the menace.

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Some Important facts:

Commercial sources of Energy (sources that cost i.e. coal, petroleum, electricity)are only 50% of total energy consumption in India. Means non-commercialsources like fuel wood, agricultural waste & animal dung constitute of the totalenergy consumption in India

More than 60% of Indian households depend on traditional sources of Energy forcooking & heating needs

At current rate of consumption & production, coal reserves in India would last forabout 130 years

At current rate of consumption & production, oil in India would last only for about20 to 25 years

In commercial energy consumption, coal constitutes 29%, Oil & gas 54% &electricity 17%

We are using only 20% of total hydro-power potential. (Estimated annual energypotential from hydro-electric sources is around 90000 MW while we are currentlyproducing only 18000 MW)

Out of total electricity production, 65.8% comes from thermal power plants,26.3% from hydro electricity & only 3.1% from nuclear power. Non-conventional,renewable energy sources like solar, wind energy constitute nearly 4.9%. (As perNIC site on Ministry of Power)

Public sector produces 558 billion kWh of electricity while private sector only 58

billion kWh Uranium reserves in country 70,000 tonnes (equivalent to 120 billion tonnes of

coal) and Thorium reserves 3, 60,000 tonnes (equivalent to 600 billion tonnesof coal) which is about 5 times the coal reserves in country

65% of total rural energy consumption is met from fuel woods- (180 milliontonnes for households + 43 million tonnes for cottage industry, hotels etc). At thisrate, in near future, fuel wood could be a greater constraint than availability offood grains. (The problem can be solved by government spending of around Rs.1000 crore annually)

If animal dung is not utilized for burning and is used as fertilizer, food productionwould increase considerably because 73 million tonnes of animal dung is burnt

every year for energy purposes, which is far more than total fertilizer consumedin agriculture production in India

From 1951 to 2004, the coal production has increased 12 times, crude oil 110times & electricity 65 times

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In 1973, price for petroleum crude oil in global market was only $2 per barrel($2.09 exactly)

India has not experienced a sudden shock in its balance of payments aftersteep increase in global oil prices thanks to large inward remittance of foreigncurrencies by Indians working abroad

Only 0.3% of worlds known oil reserves are in India

Transport sector accounts for 56% of total oil consumption in India

Millions of poor people in India spend up to 100 man-days every year ingathering fuel wood for cooking purposes.

Demand for coal rises @ 4 to 5% per year, for petroleum products 6 to 7% peryear & for electricity 9 to 10% per year.

India is second largest exploiter of Wind Energy 1000 MW (70% by privatesector).

There are 33 lakh bio-gas plants, 2 lakh solar cookers & 10000 street lighting

systems using solar photo-voltaic technology. Out of total electricity consumption in India, 34% goes to Industry, 24% to

agriculture, 21 % to domestic use, 12% to public lighting & 2% to railway traction.These figures do not include captive (i.e. private sector) power generation.

Currently 5, 87,560 villages in India have electricity. Still 1, 12,400 villageshavent seen what electricity is(Most of these are in Assam, Orissa, UP, MP andRajasthan). And that does not mean that every house in those 5, 87,560electrified villages has electricity, even if 10% of the households get electricity,government declares the village electrified (This is as per new modifieddefinition of electrified villages formulated in 2003-04.)

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Summary and Recommendations :

The power sector of India has come a long way since the first electricity act first cameinto force in the early 1948. Even with the generation of electricity with non-conventional sources, electricity produced in thermal power plants still constitute amajor proportion of the total electricity produced. Now, this is good as good as themajor input i.e. coal is present in abundance. That not being the case, emphasis is nowslowly turning towards other methods of production such as co-generation. Having saidall that, the condition of electricity in the rural and remote parts of India is still very awrywith more than one lakh villages not having any relevance to electricity. The situation isworsening in the urban parts of the country where the sector badly suffers from lack oftechnology, skilled and technical labor and lack of proper infrastructure. The variation inpricing of electricity across states is prompting the industrial users to buy electricity fromwithin the private players thus giving rise to unscheduled interchanges. This in turnmakes sure that no proper idea of the demand of electricity can be made and hence the

pricing of electricity in most spheres, be it industrial or non industrial suffers. All of thesereasons and many more make us believe that even with the introduction of the recentelectricity act, which has made the electricity policy of the country more transparent andwith special courts being set up, the situation of electricity, in general is not going to beany better.

Thegood part though is the recent shift towards cogeneration from sugarcane waste andwaste from rice husks. This has somewhat reduced the burden on the bigger grids tosupply excess power for the heavy consumers. With the privatization of this sector andwith many private players coming up in many states, the onus is now on the stateelectricity boards to perform well and distribute uninterrupted power supply. Overall,

the future is potentially promising and there has to be a more transparent approach andthe government must look towards this sector with utmost importance as the situation ofelectricity is a major driver for the economic growth in the future. The idea should bemore or less oriented towards building a better infrastructure and focusing more onnon-conventional sources of power to generate electricity. The government mustmanipulate their policy and relax their norms so as to bring participation from foreignplayers though this plan might expose the weak Indian power sector and coulddeteriorate it even further. The large number of losses during generation as well as ahuge amount of power loss during distribution must be checked and the sectorespecially the state electricity boards must be made more attractive to involve peoplewith a more technical interface and a better knowledge about the overall processesstarting from generation of electricity to its final distribution towards the end consumers.

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power scenario in india and its implications across various states

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