CHAPTER 1

OVERVIEW OF POWER SECTOR

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1.1. INTRODUCTION

An economy’s growth, development, ability to handle global competition is all dependent on

the availability, reliability and quality of the power sector. As the Indian economy continues

to surge ahead, electrification and electricity services have been expanding concurrently to

support the growth rate. The demand for power is growing exponentially and the scope of

growth of this sector is immense.

Existing generation suffers from several recurrent problems. The efficiency and the

availability of the coal power plants are low by international standards. A majority of the

plants use low-heat-content and high-ash unwashed coal. This leads to a high number of

airborne pollutants per unit of power produced. Moreover, past investments have skewed

generation toward coal-fired power plants at the expense of peak-load capacity. In the context

of fast-growing demand, large T&D losses and poor pooling of loads at the national level

exacerbate the lack of generating capacity.

India is one of the main manufacturers and users of energy. Globally, India is presently

positioned as the 11th largest manufacturers of energy. It is also the worlds’ 6th largest energy

users. In spite of its extensive yearly energy output, Indian power sector is a regular importer

of energy because of huge disparity.

Global and Indian economy have decelerated, but power is one of the few commodities in

short supply in India. So, despite the sluggishness in production and demand for

manufactured products, India remains power hungry, both in terms of normal and peak power

demand. Power is derived from various sources in India. These include thermal power,

hydropower or hydroelectricity, solar power, biogas energy, wind power etc. The distribution

of the power generated is undertaken by Rural Electrification Corporation for electricity

power supply.

1.2. GLOBAL OVERVIEW

The energy required to support our economies and lifestyles provides tremendous

convenience and benefits. Energy consumption is reportedly higher in countries where less

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than 5 % of the population lives below the poverty line than it is in countries where most

people live in poverty -- four times higher. For example, Americans make up less than 5 % of

the world’s population yet consume 26 % of the world’s energy. World electricity generation

rose at an average annual rate of 3.7% from 1971 to 2004, greater than the 2.1% growth in

total primary energy supply. This increase was largely due to more electrical appliances,

development of electrical heating in several developed countries and rural electrification

programmes in developing countries.

De-regulation in areas of the global energy markets has led to fierce competition. Now more

than ever electricity has to be produced at a lower cost with many countries imposing ever

tightening environmental legislation to reduce the impact power generation has on the

environment. The enormous challenges are recognised in providing electricity as efficiently

as possible and strive to develop technology to meet your needs. Collectively, developing

countries use 30% of the world's energy, but with projected population and economic growth

in those markets, energy demands are expected to rise 95 %. Overall global consumption is

expected to rise 50 % from 2005 to 2030.

World energy consumption is projected to expand by 50% from 2005 to 2030 in the IEO2008

reference case projection. Although high prices for oil and natural gas, which are expected to

continue throughout the period, are likely to slow the growth of energy demand in the long

term, world energy consumption is projected to continue increasing strongly as a result of

robust economic growth and expanding populations in the world’s developing countries.

Energy demand in the OECD economies is expected to grow slowly over the projection

period, at an average annual rate of 0.7%, whereas energy consumption in the emerging

economies of non-OECD countries is expected to expand by an average of 2.5 % per year.

China and India—the fastest growing non-OECD economies—will be key contributors to

world energy consumption in the future. Over the past decades, their energy consumption as a

share of total world energy use has increased significantly. In 1980, China and India together

accounted for less than 8 % of the world’s total energy consumption. In 2005 their share had

grown to 18 %. Even stronger growth is projected over the next 25 years, with their combined

energy use more than doubling and their share increasing to one-quarter of world energy

consumption in 2030 in the IEO2008 reference case. In contrast, the U.S. share of total world

energy consumption is projected to contract from 22 % in 2005 to about 17 % in 2030. 

Energy consumption in other non-OECD regions also is expected to grow strongly from 2005

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to 2030, with increases of around 60 % projected for the Middle East, Africa, and Central and

South America. A smaller increase, about 36 %, is expected for non-OECD Europe and

Eurasia (including Russia and the other former Soviet Republics), as substantial gains in

energy efficiency result from the replacement of inefficient Soviet-era capital stock and

population growth rates decline. 

Fig .1: World Marketed Energy Consumption, 1980 - 2030

Source: EIA International Energy Annual 2005(June-October 2007)

Oil for power generation has been displaced in particular by dramatic growth in nuclear

electricity generation, which rose from 2.1% in 1971 to 15.7% in 2004. The share of coal

remained stable, at 40% while that of natural gas increased from 13.3% to 19.6%. The share

of hydro-electricity decreased from 23.0% to 16.1%. Due to large programmes to develop

wind and solar energy in several OECD countries, the share of new and renewable energies,

such as solar, wind, geothermal, biomass and waste increased. However, these energy forms

remain limited: in 2004, they accounted for only 2.1% of total electricity production. The

share of electricity production from fossil fuels has gradually fallen, from just under 75% in

1971 to 66% in 2004. This decrease was due to a progressive move away from oil, which fell

from 20.9% to 6.7%.

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Table 1: OECD Multinational Electricity Companies

Company Activity Assets Countries Active

AES Generation 1666MW China, India, Pakistan, Sri Lanka

EDF Generation 1684MW China, Laos, Vietnam

TractebelGeneration & supply

848MW China, Thailand, Laos

Enron Generation 204MW Philippines, Guam

Intergen Generation 1830MWChina, Philippines, Singapore, Australia

Mirant Generation 2261MW Philippines

Transalta Generation 280MW Australia

IP Generation 3817MW Australia, Pakistan, Thailand, Malaysia

CDC Generation 810MW Bangladesh

As per the recent survery, the global electrical & electronics market is worth $1,038.8 billion,

which is forecasted to grow to $ 1,216.8 billion at the end of the year 2008. If electrical &

electronics production statistics are considered, the industry accounted for $1,025.8 billion in

2006, which is forcasted to reach $1,051.5 billion in future.

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Fig.2: Comparative Per Capita Consumption Of Electricity (Kwh)

The per capita consumption is seen to be far behind from the world average and very less

when compared to other countries. So there is a need to improve it.

Though India has achieved many milestones in generation still the there is a wide gap

between demand and supply of power. This is the most important issue to be concerned.

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CHAPTER 2

LITERATURE REVIEW

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2.1 REVIEW OF LITERATURE

Sreekumar (2008) reviews the market-oriented power sector reforms initiated in India in the

early 1990s. It brings out a public interest oriented critique of the three phases of the reforms

—firstly, privatization of generation, secondly, state sector restructuring and finally, the

ongoing reforms since the passage of the Electricity Act 2003. Reforms were taken up as a

response to the crisis in the sector. The article questions the success of the process in solving

the crisis. While acknowledging positive elements like increase in transparency and

participation, it criticizes the process for neglect of development issues like rural

electrification and energy efficiency. The article concludes with some thoughts on developing

an alternate reform approach.

Remes (2007) talks about Russia fourth largest user of electricity in the world, he talks about

RAO UES which controls all the transmission, distribution and supply of electricity, it

controls everything except nuclear power. Anatoly Chubais, The very core of the reform has

been to separate competitive businesses from natural monopolies, both legally, functionally

and regulatory. Consequently, competitive parts – generation companies, supply/sales

companies and service companies – have been separated into legally different companies

from natural monopolies – from Transmission Company, distribution companies and system

Operator Company. It is of utmost importance for the future, to prevent the creation of any

monopoly structures on the markets. UES is suggesting a change in the law allowing the

Antimonopoly Agency to interfere immediately when the share of any company in any

regional free-flow markets. Finally, concluding it can be said that Russia is ahead of the EU

in the reform of the power sector and power sector monopolies. Russia has been able to

create very sophisticated markets, with new elements, and with rational elements to the

regulations.

Singh (2006) address the Power sector reforms in India. Reforms were initiated at a juncture

when the sector was plagued with commercial losses and burgeoning subsidy burden.

Investment in the sector was not able to keep pace with growing demand for electricity. This

paper takes stock of pre-reform situation in Indian power sector and identifies key concerns

that led to initiation of the process of reform. The paper discusses major policy and regulatory

changes undertaken since the early 1990s. The paper also illustrates changes in the market

structure as we move along the reform process. It also discuss some of the major provisions

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of the recently enacted Electricity Act 2003 that aims to replace the prevailing acts which

govern the functioning of the power sector in the country. In this context, it discuss two

issues arising out of it, namely open access and multi-year tariff that we think would have a

significant bearing on the performance of the sector in the near future. The paper also

evaluates the reform process in the light of some of the regulatory changes undertaken.

Finally, the paper briefly discusses the issues involved in introduction of competition in the

power sector primarily through development of a market for bulk power.

Swain, Singh and Kumar (2004) ,describes there were many inhibitors to growth in power

sector but the main problem in the growth was Government Policy, which made it difficult

for a private player to enter. This further created the problem that Indian entrepreneurs didn’t

have enough knowledge and experience in developing power projects. A whole new system

was evolved where private players were invited to be an active participant. The system

demanded financial, political and other major requirement in roads and communication.

Some of the bold steps taken in the Act were moving generation and distribution out of

‘License Raj’, opening access to national grid and demolishing the ‘Single Buyer’ model.

The failure of the large structure and the changing global scenario has forced Government to

think of ways to revive this fundamental infrastructure sector. Two ways that government can

count on for future growth of this sector are “Small Power Plants” and “Clean Development

Mechanism”.

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CHAPTER 3

POWER SECTOR IN INDIA

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3.1. POWER SECTOR IN INDIA

The process of electrification commenced in India almost with the developed world, in the

1880s, with the establishment of a small hydroelectric power station in Darjeeling. However,

commercial production and distribution started in 1889, in Calcutta (now Kolkata). In the

year 1947, the country had a power generating capacity of 1,362 MW. Generation and

distribution of electrical power was carried out primarily by private utility companies such as

Calcutta Electric. Power was available only in a few urban centers; rural areas and villages

did not have electricity. After 1947, all new power generation, transmission and distribution

in the rural sector and the urban centers (which was not served by private utilities) came

under the purview of State and Central government agencies. State Electricity Boards (SEBs)

were formed in all the states.

Legal provisions to support and regulate the sector were put in place through the Indian

Electricity Act, 1910. Shortly after independence, a second Act - The Electricity (Supply)

Act, 1948 was formulated, paving the way for establishing Electricity Boards in the states of

the Union.

In 1960s and 70s, enormous impetus was given for the expansion of distribution of electricity

in rural areas. It was thought by policy makers that as the private players were small and did

not have required resources for the massive expansion drive, the production of power was

reserved for the public sector in the Industrial Policy Resolution of 1956. Since then, almost

all new investment in power generation, transmission and distribution has been made in the

public sector. Most of the private players were bought out by state electricity boards.

From the installed capacity of only 1,362mw in 1947, has increased to 97000 MW as on

March 2000 which has since crossed 100,000 MW mark India has become sixth largest

producer and consumer of electricity in the world equaling the capacities of UK and France

combined. The number of consumers connected to the Indian power grid exceeds is 75

million.

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India's power system today with its extensive regional grids maturing in to an integrated

national grid, has millions of kilometers of T & D lines criss-crossing diverse topography of

the country.

However, the achievements of India's power sector growth looks phony on the face of huge

gaps in supply and demand on one side and antediluvian generation and distribution system

on the verge of collapse having plagued by inefficiencies, mismanagement, political

interference and corruption for decades, on the other. Indian power sector is at the cross road

today. A paradigm shift is in escapable- for better or may be for worse.

3.1.1. EMERGENCE OF REGIONAL POWER SYSTEMS

In order to optimally utilise the dispersed sources for power generation it was decided right at

the beginning of the 1960’s that the country would be divided into 5 regions and the planning

process would aim at achieving regional self sufficiency. The planning was so far based on a

region as a unit for planning and accordingly the power systems have been developed and

operated on regional basis. Today, strong integrated grids exist in all the five regions of the

country and the energy resources developed are widely utilised within the regional grids.

Presently, the Eastern & North-Eastern Regions are operating in parallel. With the proposed

inter-regional links being developed it is envisaged that it would be possible for power to

flow any where in the country with the concept of National Grid becoming a reality during

12th Plan Period.

3.1.2. GENERATION

India has installed power generation capacity of 1,41,079.84 MW as on January 31, 2008,

which is about 100 times the installed capacity of 1362 MW in the year 1947. Power

generation has showcased a robust growth rate which is steadily improving year after year.

There has been significant improvement in the growth in actual generation over the last few

years. As compared to annual growth rate of about 3.1% at the end of 9th Plan and initial

years of 10th Plan, the growth in generation during 2006-07 and 2007-08 was of the order of

7.3% and 6.33% respectively.

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The electricity generation target for the year 2008-09 has been fixed at 744.344 BU

comprising of 631.270 BU thermal; 118.450 BU hydro; 19.000 BU nuclear; and 5.624 BU

import from Bhutan.

Abbreviation:

SHP = Small Hydro Project

BG = Biomas Gasfier

BP = Biomass Power

U & I = Urban & Industrial Water Power

RES = Renewable Sources.

Table.2: Gap Between Demand And Supply Of Power

The table shows the average shortage of electricity in India every year to be approximately

between 7-8%.

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3.1.2.1. STRATEGIES

The various strategies followed to achieve the goal in power sector are,

Power Generation Strategy with focus on low cost generation, optimization of capacity

utilization, controlling the input cost, optimization of fuel mix, Technology up gradation and

utilization of Nonconventional energy sources

Transmission Strategy with focus on development of National Grid including Interstate

connections, Technology up gradation & optimization of transmission cost.

Distribution strategy to achieve Distribution Reforms with focus on System up gradation,

loss reduction, theft control, consumer service orientation, quality power supply

commercialization, Decentralized distributed generation and supply for rural areas.

Regulation Strategy aimed at protecting Consumer interests and making the sector

commercially viable.

Financing Strategy is to generate resources for required growth of the power sector.

Conservation Strategy to optimize the utilization of electricity with focus on Demand Side

management, Load management and Technology up gradation to provide energy efficient

equipment gadgets.

Communication Strategy for political consensus with media support to enhance the general

public awareness.

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To achieve the above objectives National Electric Policy has been designed. To fulfill the

objectives of the NEP, a capacity addition of 78,577 MW has been proposed for the 11 th plan.

This capacity addition is expected to provide a growth of 9.5 % to the power sector.

The Tenth Plan for fiscal years 2002 to 2007 targeted a capacity addition of 41,110 MW,

which was subsequently revised to 30,641 MW; however at the end of the Tenth Plan period,

only 21,180 MW of capacity was added. This shows that India is not upto the mark in

achieving the targets of generation. Our planning is perfect but our path to achieve the target

is not perfect.

3.1.2.2. INVESTMENTS IN GENERATION

The total fund requirement for generation projects, during the Eleventh Plan period is

estimated at Rs. 4,108,960 million, with Rs. 2,020,670 million being required for the central

sector, Rs. 1,237,920 million being required for the state sector and Rs. 850,370 million being

required for the private sector. The total fund requirement includes the fund requirement

estimated at Rs. 1,891,950 million for start-up generation projects benefiting in the Twelfth

Plan.

3.1.3. TRANSMISSION

Transmission of electricity is defined as bulk transfer of power over a long distance at high

voltage, generally of 132 kV. In India bulk transmission has increased from 3708 ckm in

1950 to more than 256,000 ckm today.

The Government of India has an ambitious mission of ‘POWER FOR ALL BY 2012’. This

mission would require that our installed generation capacity should be at least 2, 00,000 MW

by 2012 from the present level of 1, 14,000 MW. To be able to reach this power to the entire

country an expansion of the regional transmission network and inter regional capacity to

transmit power would be essential. The latter is required because resources are unevenly

distributed in the country and power needs to be carried great distances to areas where load

centres exist.

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Ability of the power system to safely withstand a contingency without generation

rescheduling or load-shedding was the main criteria for planning the transmission system.

However, due to various reasons such as spatial development of load in the network, non-

commissioning of load centre generating units originally planned and deficit in reactive

compensation, certain pockets in the power system could not safely operate even under

normal conditions. This had necessitated backing down of generation and operating at a

lower load generation balance in the past. Transmission planning has therefore moved away

from the earlier generation evacuation system planning to integrated system planning.

While the predominant technology for electricity transmission and distribution has been

Alternating Current (AC) technology, High Voltage Direct Current (HVDC) technology has

also been used for interconnection of all regional grids across the country and for bulk

transmission of power over long distances.

Certain provisions in the Electricity Act 2003 such as open access to the transmission and

distribution network, recognition of power trading as a distinct activity, the liberal definition

of a captive generating plant and provision for supply in rural areas are expected to introduce

and encourage competition in the electricity sector. It is expected that all the above measures

on the generation, transmission and distribution front would result in formation of a robust

electricity grid in the country.

GROWTH OF TRANSMISSION

Table.3: CUMLATIVE GROWTH IN TRANSMISSION SECTOR &

PROGRAMME FOR 11th PLAN

  UnitAt the end of VIII Plan ie March 1997

At the end of IX Plan ie March 2002

At the end of X Plan ie March 2007

At the end of XI Plan ie March 2012

          TRANSMISSION

LINES

    VIII Plan IX Plan X Plan XI Plan765 kV ckm 409 971 1704 7132HVDC +/- 500kV ckm 3138 3138 58728 11078

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HVDC 200kV Monopole

ckm 0 162 162 162

400kV ckm 36142 49378 75772 125000230kV/220Kv ckm 79601 96993 114629 150000Total Transmission Line

ckm 119290 150642 198089 293372

SUBSTATIONS              VIII Plan IX Plan X Plan XI PlanHVDC BTB MW 1500 2000 3000 3000

HVDC Bipole+Monopole

MW 1500 3200 5200 11200

Total-HVDC Terminal Capacity

MW 3000 5200 8200 14200

765kV MVA 0 0 2000 53000400Kv MVA 40865 60380 92942 145000230/220Kv MVA 84177 116363 156497 230000Total-AC Subtation Capacity

MVA 125042 176743 251439 428000

3.1.3.1. TRANSMISSION NETWORK

Table.4: Details of Existing Lines and Sub-Stations Region

Details of Existing Lines and Sub-Stations Region

HVDC 400KV 220KV 132KV (MVA)

1 Northern Region

J&K - 300 687 - 1260

HP - 572 192 - -

Delhi - 397 - - 1575

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Haryana - 1789 66 - 2025

Punjab - 1170 401 - 1130

Rajasthan - 791 1032 - -

UP 817 2933 870 - 630

Total NR 817 7952 3248 0 6620

2 Western Region

MP - 5791 - - 945

Maharashtra - 1127 - - NIL

Gujarat - 1195 852 - 630

Total WR - 8113 852 0 1575

3 Southern Region

AP - 2762 - - 3150

Karnataka - 965 - - NIL

Kerala - 260 156 - 630

Tamil Nadu - 1647 64 - 1575

Total SR - 5634 220 0 5355

4 Eastern Region

Bihar - 1057 82 - 1860

Orissa - 1034 - - 2520

West Bengal - 1287 872 333 2025

DVC - 344 - - 630

Total ER - 3722 952 333 7035

5 N.E.Region

Assam - 1978 171 79 1015

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Maghalaya - - - 67 -

Nagaland - - 320 189 100

Manipur - - - 443 6.3

Mizoram - - - 178 -

Tripura - - - 147 5

Arunachal Pradesh - 333 - 42 -

Total NER - 2311 491 1145 1126

Total All India 817 27732 5763 1478 21711

According to this table about 2.5% of Indian villages still remain unelectrified. In addition to

state boards Power Grid Corporation of India Limited has a major role in transmission

Power Grid Corporation of India limited (POWERGRID) was incorporated on October 23,

1989 with an authorized share capital of Rs. 5,000 Crore as a public limited company, wholly

owned by the Government of India. POWERGRID started functioning on management basis

with effect from August, 1991 and it took over transmission assets from NTPC, NHPC,

NEEPCO and other Central/Joint Sector Organizations during 1992-93 in a phased manner.

In addition to this, it also took over the operation of existing Regional Load Dispatch Centers

from CEA, in a phased manner, which has been upgraded with State of-the-art Unified Load

Dispatch and Communication (ULDC) schemes. According to its mandate, the Corporation,

apart from providing transmission system for evacuation of central sector power, is also

responsible for Establishment and Operation of Regional and National Power Grids to

facilitate transfer of power within and across the Regions with Reliability, Security and

Economy on sound commercial principles. Based on its performance POWERGRID was

recognized as a Mini-ratna company by the Government of India in October 1998.

POWERGRID, notified as the Central Transmission Utility of the country, is playing a major

role in Indian Power Sector and is also providing Open Access on its inter-State transmission

system.

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3.1.4. FUTURE PLANS FOR POWER FOR ALL BY 2012

The country’s transmission perspective plan for eleventh plan focuses on the strengthening of

National Power Grid through addition of over 60,000 ckm of Transmission Network by

2012. Such an integrated grid shall carry 60% of the power generated in the country. The

existing inter-regional power transfer capacity is 17,000 MW, which is to be further enhanced

to 37,000 MW by 2012 through creation of “Transmission Super Highways”. Based on the

expected generation capacity addition in XI plan, an investment of about 75,000 Crore is

envisaged in Central Sector and Rs. 65,000 Crore is envisaged in the State Sector.

POWERGRID is working towards achieving its mission of “Establishment and Operation of

Regional and National Power Grids to facilitate transfer of power within and across the

regions with reliability, security and economy, on sound commercial principles".

The exploitable energy resources in our country are unevenly distributed, like Coal resources

are abundant in Bihar/Jharkhand, Orissa, West Bengal and Hydro Resources are mainly

concentrated in Northern and North-Eastern Regions. As a result, some regions do not have

adequate natural resources for setting power plants to meet their future requirements whereas

others have abundant natural resources. Demand for power continues to grow unabated. This

calls for optimal utilization of generating resources for sustainable development. Thus,

formation of National Power Grid is an effective tool to achieve this as various countries

have adopted the model of interconnecting power grid not only at national level but also at

international level.

Further, acquiring Right of Way (ROW) for constructing transmission lines is getting

increasingly difficult, especially in eco-sensitive areas like North-Eastern Region, Chicken

neck area, hilly areas in Jammu & Kashmir and Himachal Pradesh. At the same time, these

areas are also endowed with major hydro potential of the country. This necessitates creation

of “Transmission Super Highways”, so that in future, constraints in ROW do not cause

bottleneck in harnessing generating resources. Inter-connection of these highways from

different part of the country would ultimately lead to formation of a high capacity “National

Power Grid”.

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Thus, developments in power sector emphasize the need for accelerated implementation of

National Power Grid on priority to enable scheduled/unscheduled exchange of power as well

as for providing open access to encourage competition in power market. Formation of such a

National Power Grid has been envisaged in a phased manner.

Initially, considering wide variations in electrical parameters in the regional grids, primarily

HVDC interconnections were established between the regions. This was completed in the

year 2002, thereby achieving inter-regional power transfer capacity of 5000 MW.

In the next phase, inter-regional connectivity is planned to be strengthened with hybrid

system consisting of high capacity EHV/UHV AC and HVDC links. Such a National Power

Grid is envisaged to disperse power not only from Mega sized generation projects but also to

enable transfer of bulk power from one part of the country to another in different operational

scenarios say, in varying climatic conditions across the country: Summer, Winter, Monsoon

etc. Commissioning of links under this phase has already begun with the commissioning of

2000 MW Talcher-II HVDC Bipole, Raipur – Rourkela 400kV D/C AC transmission line

having Series Compensation, augmentation of Gazuwaka HVDC (500MW) back to back link

and Tala transmission system. The inter-regional transfer capacity of 16,200 MW is available

as on date. Further strengthening of National Power Grid is envisaged through high capacity

AC EHV lines, 765 kV UHV AC lines/ HVDC lines. This phase is planned to be

implemented by 2012 when inter-regional power transfer capacity will be enhanced to about

37,700 MW by the end of XI Plan, depending upon planned growth of generation capacity.

3.1.5. DISTRIBUTION

The total installed generating capacity in the country is over 1, 35,000 MW and the total

number of consumers is over 144 million. A vast network of sub transmission in distribution

system has also come up for the utilization of power by the ultimate consumer.

However, due to lack of adequate investment on T&D works, the T&D losses have been

consistently on higher side, and reached to the level of 32.86% in the year 2000-01.The

reduction of these losses was essential to bring economic viability to the State Utilities.

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As the T&D loss was not able to capture all the losses in the net work, concept of Aggregate

Technical and Commercial (AT&C) loss was introduced. AT&C loss captures technical as

well as commercial losses in the network and is a true indicator of total losses in the system.

High technical losses in the system are primarily due to inadequate investments over the

years for system improvement works, which has resulted in unplanned extensions of the

distribution lines, overloading of the system elements like transformers and conductors, and

lack of adequate reactive power support.

The commercial losses are mainly due to low metering efficiency, theft & pilferages. This

may be eliminated by improving metering efficiency, proper energy accounting & auditing

and improved billing & collection efficiency. Fixing of accountability of the personnel feeder

managers may help considerably in reduction of AT&C loss.

With the initiative of the Government of India and of the States, the Accelerated Power

Development & Reform Programme (APDRP) was launched in 2001, for the strengthening

of Sub – Transmission and Distribution network and reduction in AT&C losses.

The main objective of the programme was to bring Aggregate Technical & Commercial

(AT&C) losses below 15% in five years in urban and in high-density areas. The programme,

along with other initiatives of the Government of India and of the States, has led to reduction

in the overall AT&C loss from 38.86% in 2001-02 to 34.54% in 2005-06. The commercial

loss of the State Power Utilities reduced significantly during this period from Rs. 29331

Crore to Rs. 19546 Crore. The loss as %age of turnover was reduced from 33% in 2000-01 to

16.60% in 2005-06.

The APDRP programme is being restructured by the Government of India, so that the desired

level of 15% AT&C loss could be achieved by the end of 11th plan.

Since incentive financing is proposed to be integrated with the existing investment program

to achieve commercial viability of SEBs / Utilities and link it to the reform process, the

original APDP was rechristened to Accelerated Power Development & Reforms Programme

(APDRP) during 2002-03 for 10th five year plan.

The objectives of APDRP are:

Improving financial viability of State Power Utilities

Reduction of AT & C losses

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Improving customer satisfaction

Increasing reliability &quality of power supply

The scheme has two components as below:

a. Investment component – Government of India provides Additional Central

Assistance for strengthening and up gradation of sub-transmission and distribution

network. 25% of the project cost is provided as Additional central plan assistance in

form of Grant to the state utilities. To begin with the Govt. also provided loan to the

tune of 25% of the project cost. However in accordance with the recommendation of

12th finance commission, the loan component has been discontinued from FY 2005-

06. Now utilities have to arrange remaining 75% of the project cost from FIs like

PFC/REC or their resources. Special category state (like NE states, J&K, H.P,

Uttaranchal and Sikkim) are entitled for 90% assistance in form of grant and balance

10% fund.

b. Incentive component - An incentive equivalent to 50% of the actual cash loss

reduction by SEBs/ Utilities, is provided as grant. The year 2000-01 is the base year

for the calculation of loss reduction, in subsequent years. The cash losses are

calculated net of subsidy and receivables.

Funds Released:

Table.5: The details of the cash loss reduction and incentives released to various states under APDRP

(As on 31 March 2008)

Sl. No.

StateClaim Year

Incentive Amount Recommended for released to MoF

Amount Released by MoF

1 Andhra Pradesh 2002-03 265.11 265.11

2 Gujarat

2001-02 236.38 236.382002-03 148.08 148.082003-04 366.82 366.822004-05 288.03 288.03

3 Haryana 2001-02 105.49 105.49

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4 Kerala2002-03 64.94 64.942004-05 82.99 82.99

5 Madhya Pradesh 2002-03 297.61 297.616 Maharashtra 2001-02 137.89 137.897 Rajasthan 2001-02 137.71 137.71

8 West Bengal

2002-03 73 732003-04 302.76 302.762004-05 5.88 5.882005-06 115.1 115.1

9 Punjab 2003-04 251.94 251.94Total 2879.63 2879.63

Schemes undertaken under APDRP are for renovation and modernization of sub-stations,

transmission lines & distribution transformers, augmentation of feeders & transformers,

feeder and consumer meters, high voltage distribution system (HVDS), consumer indexing,

SCADA, computerized billing etc.

1. Project Formulation

The State utilities to prepare for each of the high-density areas in order of priority, Detail

Project Reports (DPRs), based on the Technical Manual prepared by the Expert Committee

on Distribution, constituted by the Ministry of Power. These DPRs are to be vetted by NTPC

or PGCIL and put up to MOP for sanction. The different project components shall include:

2. Energy meters on Feeders

Static meters on 11 kV out-going feeders and HT consumers have been contemplated.

Though the Chief Minister’s conference held in March 2001 decided to complete the

implementation of the feeder meters by December 2002, due to various reasons their

procurement and installation is yet to be completed. Since these feeders provide the metering

at the points of bulk deliveries in the distribution system, these are of paramount importance

for carrying out energy audits. Actions for procurement & installation of these are being

pursued vigorously. It is also necessary that the meters be provided with on-line

communication facility so that reliable, continuous data from all the substations are made

available without manual intervention.

3. Energy meters on DTs & Consumers and energy accounting

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In many areas it has been planned to install suitable energy meters at distribution

transformers to facilitate detailed accounting of energy flows and these have to be planned

with suitable data transmission / collection facilities convenient to the utilities. Such meters

can also help in keeping track of the distribution transformer loading and thereby reduce their

outages apart from providing useful information on consumption patterns for demand side

management.

4. 11 kV Feeder as Profit Centre

Administrative measures are considered a powerful tool in our overall reform strategy

because of the tremendous benefits it can provide in a short time span and with least burden

to the SEB's. Recently, Andhra Pradesh has planned to entrust the distribution in selected 11

kV feeders and below levels to selected agencies with the requisite capabilities and have

invited tenders for such tasks. Karnataka has come out with the program of Grama Vidyut

Pradhinidhis for distribution in selected 11kv feeder areas. Success of such endeavors would

go a long way in finding a solution to the issues of the Indian power sector.

5. Technical Loss reduction measures

Measures for technical loss reduction include Installation of capacitors at all levels;

Re-conductoring of over loaded sections

Re-configuration of feeder lines & distribution transformers so as to reduce the

length of LT lines

Make the system less LT oriented by installation of smaller size energy efficient

distribution transformers so that each transformer supplies power to 10 to 15

households only

Development of digital mapping of the entire assets of distribution system

Computerized load flow studies so that investments could be undertaken for long-

term strengthening of the distribution system.

6. Improving customer satisfaction

Customer satisfaction can be improved through providing better quality power in terms of

voltage fluctuations and reliability by reducing outages. These necessarily call for technical

intervention in firstly ensuring that the assets already created are maintained in proper

working condition and secondly through augmenting the system. Further, customer complaint

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redressal mechanisms are to be made more responsive and proactive through building

transparent and reliable system with the help of computerization. The system should be

capable enough to meet the growing demand of information conscious customers.

7. Computerization

Creation of comprehensive, up to date consumer index and system databases on

computerized platforms are essential for creation of platforms for efficient commercial and

technical operation and management of any distribution system. The APDRP program has

laid emphasis on this basic need and actions are on in many areas for creation of such

databases. The energy accounting, billing and revenue management platforms are also

planned under the APDRP program for realizing the objectives outlined above and provide

better services to the customers. Implementations for these are under various stages in

different areas. In addition provisions of computerized automatic data acquisition at the

substations are planned. Based on the needs these would be hooked up to suitable

Supervisory Control and Data Acquisition systems.

8. Turnkey Implementation

The schemes proposed under APDRP have to be implemented in a very short time frame so

that benefits of the investments are perceived and confidence is generated in the FIs that

investments in the distribution sector can be bankable. Execution of the scheme adopting

conventional arrangement of ordering each of the components separately would be time

consuming and delay in arranging any one component could lead to overall time delays.

With the present day manpower position in most of the SEBs it would also not be practical to

coordinate the efforts of multiple agencies. By awarding the works under a turnkey contract

the scheduling of equipment would be the responsibility of the contractor and shall keep in

adhering to the time schedules. Hence turnkey packaging concept would be adopted for

execution of works preferably through empanelled turnkey contractors to expedite project

implementation schedule. Performance Guarantee Mechanism having adopted a turnkey

concept for execution it would be possible to bind the contractor in terms of

- Work completion schedule

- Overall costs

- Equipment performance.

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A scheme of incentives for early completion and penalties for delays or failure to meet

performance guarantees can also be worked out in the turnkey contracts. If required

performance guarantee contract mechanisms will be introduced whereby the turnkey

companies would implement projects with guaranteed AT&C loss reduction with their own

investments. The returns are expected from the guaranteed incremental loss reduction.

Implementation of various activities / interventions will be prioritized to ensure quick

improvements in reliability and quality of power supply, reduction in AT&C losses, increase

in revenues and reduction in outages. The focus will be on 11 KV feeders, Distribution

transformers and the Consumers.

Therefore, the SEBs/State Utilities shall be urged to implement projects sanctioned under this

programme on turnkey basis through pre-qualified turnkey contractors selected on a

competitive basis to ensure quality and expeditious implementation.

9. Technical Specification & Standardization

The Expert Committee has also recommended standardization of technical specifications of

equipment used in the distribution sector. Specifications are being drawn up for energy

efficient and standardized equipments like electronic and static meters, transformers,

capacitors, conductors, insulators etc., with the assistance of the Indian Electrical and

Equipment Manufacturing Association, the Confederation of Indian Industry and the Bureau

of Indian Standards etc. Appropriate Expert Committees have been set up for this purpose.

NTPC and PGCIL have also prepared model bidding documents which are available for use

by the utilities.

10. Accreditation

Project formulation for up gradation of distribution network is a highly specialized job that

involves detailed energy balancing and network reconfiguration necessary for a high voltage

or low voltage distribution system. The SEBs may or may not have adequate skills in the area

and, therefore, may like to acquire the expertise and skills on an outsourcing basis. In order to

cover a large number of urban & industrial areas in the country, within the next 4 to 5 years,

it is essential to make available a number of accredited specialized agencies for the purposes

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of energy audit & accounting, project formulation, turnkey implementation, project

monitoring and project evaluation. SEBs / Utilities, if they so desire, would be able to out-

source the implementation to accredited agencies for quick formulation of quality projects

and their implementation. A Committee with members from NTPC, PGCIL, PFC, CEA,

SEBs /Utilities, credit rating agencies, FIs etc. will be constituted to accredit reputed agencies

for the above purpose. This would require engagement of agencies that are specialists in the

fields of work given below in assisting the states which lack internal capabilities or

manpower, and oversee the proposals & implementation by the states who are well equipped:

Engineering Agencies: To formulate and appraise the DPRs for augmentation of sub-

transmission and distribution system and oversee implementation including quality

checks.

Project Monitoring Agencies: To review the physical and financial progress of the

project and bring out concern areas to the notice of the MOP for immediate resolution

to avoid time and cost over - runs.

Turnkey Contractors: To undertake design, manufacture, supply, erection, testing &

commissioning and provide maintenance facilities and performance warranty for the

various components involved in the sub-transmission and distribution system.

Project Evaluators: To conduct concurrent and post execution evaluation of the

anticipated and actual benefits accrued consequent upon execution of the project.

Energy Accounting & Audit Agencies: The key success of distribution sector lies in

bridging the gap between the energy drawn from the system and the metered energy

supplied to the customers. The MOU with the States has a provision for conducting

energy audit on each feeder. But the results of the audit have shown that a fair amount

of energy accounted for as supplied is based on assessment. For success of the

program and improving revenue realization it is essential that all energy transactions

are adequately metered and properly accounted. Just as any business would have to

get its accounts audited it is necessary that this energy accounting is audited by

eminent third parties so that the programme can sustain on its own strength in the

coming years. For carrying out the detailed activities at field level agencies with

sufficient experience in the respective areas of work are proposed to be identified and

accredited. Any SEB can invite quotations from the accredited parties for the specific

work and immediately place an award thereby saving considerable time and effort.

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This would facilitate in reduction of bidding time, bring in uniformity of terms of

reference and work content. For the other activities especially those involving HR

initiatives at SEB level and DSM and distributed generation concepts, discussions are

being held with international financing agencies to support the programme.

11. Application of Information Technology

Information technology and computer aided tools for revenue increase, outage reduction,

monitoring and control, play a vital role in distribution management. It is, therefore, proposed

to have a technology mission for customizing / development of cost effective and relevant

solutions for consumer and control point data communications, remote monitoring, operation

and control, etc. for the distribution network. Involvement of IT industries in this effort is

envisaged. IT applications will be used in such processes in the distribution sector to ensure

higher revenues as a result of segregation of T&D losses, and controlling commercial losses,

especially for metering, meter reading, billing, collection and outage reduction.

12. Management Information System (MIS)

Operational efficiency improvement and customer servicing also need to be addressed at

various levels in the organization. In this regard, an effective Management Information

System (MIS) is required to ensure effective flow of information to facilitate quick decision-

making at various levels of organization and to improve the operation and management of the

distribution system.

This is proposed to be achieved through computerization and networking. Management

Information System for the SEBs/ Utilities should provide relevant information at each level

of the organization in timely and accurate manner. The timeliness and accuracy of

information improves decision-making. For MIS, information flow is required from lower

level to higher levels with some information in real time and some in batch mode. For real

time information flow, networking within the organization is needed. In addition to this,

information management required for monitoring and decision-making will be different at

various levels in hierarchy. MIS should be able to take care of different needs at various

levels. Otherwise huge data generated from MIS will not be of any significant use. The

structure of MIS should be SEB specific because of difference in their organizational

structures and responsibilities at various levels across the organization.

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A generalized framework of MIS is presented which may be tailored to suit the needs of a

specific SEB/utilities.

13. Capacity Building within SEBs/Utilities

Even though SEBs have expertise in different fields, strengthening of sub-transmission &

distribution network on a scientific basis using computer aided tools requires an integrated

knowledge. Most SEBs, during the regional meetings held in April and then later in June,

2001 expressed their inability to take up such work with their own manpower. It was

considered necessary to promote capacity building exercise in the SEBs/State Power Utilities

to enable SEB personnel to prepare detailed project reports for each of the districts/ circles

and implement the project using APDRP funds at a later stage. Capacity building exercise is

to cover:

Training the manpower

Energy audit & accounting studies

Making the SEB officials collect relevant data from each 11 KV feeder in the

identified circle.

Analysis of the data using computer tools to prepare feeder wise computer aided least

cost project report.

Supervision of implementation

Several training programmes were organized by the training institutions such as Power

Management Institute (NTPC), National Power Training Institute, PGCIL etc., and several

working level officers from the various SEBs benefited from such programmes. It is planned

to further strengthen our efforts in imparting quality training to bring about changes in

business perspective crucial to the success of our power reform programme.

It is proposed to provide extensive training to the staff of SEBs / Utilities at all levels to so as

enable them to develop bankable project reports covering techno-commercial activities for

each circle and manage electricity distribution with a commercial orientation. Capacity

building is envisaged as a continuous exercise to ensure that the latest developments are

internalized. Distribution reforms require a structural change in the existing set up of the

SEBs. In order to enable them to manage distribution on a profit centre approach and to

improve their performance on the basis of certain benchmarks, funds under APDRP will be

provided only to those State Govts. /SEBs which agree to certain precedent conditions

through an Agreement The SEBs / State Distribution Utilities will execute a SEB/Utility-

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specific Memorandum of Agreement [MOA] with the Ministry of Power. The Ministry of

Power will also monitor implementation of the precedent conditions before releasing funds.

The efficiency gains on account of APDRP investments shall be intimated to the regulatory

commission to ensure that the benefits and reliefs are passed on to the customer by the private

utilities.

CHAPTER 4

SEGMENTS IN POWER GENERATION

SEGMENTS IN POWER GENERATION

4.1. THERMAL

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Current installed capacity of Thermal Power (as of 12/2008) is 93392.64 MW which is 63.3%

of total installed capacity.

Current installed base of coal based thermal power is 77458.88MW which comes to

53.3% of total installed base.

Current installed base of gas based thermal power is 14734.01MW which is 10.5% of

total installed base.

Current installed base of oil based thermal power is 1199.75 which is .09% of total

installed base.

Maharashtra is the largest producer of thermal power in the country.

Fig. 3: Comparison of Energy Intensity

4.2. HYDRO POWER

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India is blessed with a rich hydro power potential. In the exploitable potential terms, India

ranks fifth in the world. Less than 25% of the potential has been developed as of now. A large

hydro has four main advantages.

   It is a source of green energy.

It has low variable cost.

   It is grid friendly.

It can also can sub serve other purposes by irrigation, flood control, etc.

India has 3 major rivers: the Indus, the Brahmaputra, and the Ganga. It also has three major

river systems? Central Indian, west flowing rivers of south India, and east flowing rivers of

south India with a total of 48 river basins. The total potential from these river basins is

600TWh (Terawatt Hours) of electricity.

Hydroelectric projects can be classified on the basis of purpose, hydraulic features, capacity,

head, constructional features, mode of operation, etc. The main types are

ROR (Run of River) There are not large reservoirs; a part of water flow is diverted to

the plant which is adjacent to the river. After generation the flow is diverted back to the main

flow through the tail race. This type of hydro plants requires a diversion dam and has

unregulated water flow.

Dam Storage In these types of hydro plants, large reservoirs are created by the

construction a sizeable dam across the river and the plants is situated at the toe of the dam.

Here, water could be regulated to generate electricity depending upon the demand

Pumped Storage These types of plants have two reservoirs, one at the upstream of

the power plant and one at the downstream. When there is low peak demand, the water from

the reservoir situated downstream is pumped0020back to the upstream reservoir.

As of today, the total identified hydro potential is 1 48 701 MW (mega watt). According to

the list of hydro electric projects in the country, a total of 29 572 MW,19.9% of the total? Has

been harnessed and 13 286 MW is under construction. A total of 3 660 MW of pumped

storage schemes have also been developed.

Various initiatives for accelerated development have been taken up by the central government

to harness the hydro potential in India. Some of these are

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Hydro Power Policy (1998)

50 000 MW initiative

Preparation of viable models for private sector participation

Ranking of projects

R&M up gradation and life extension programmes

Facilitation for trading and co-operation with other countries

Execution of projects with interstate aspects by Central Public Sector Units

Fig.4: State wise Hydro-power generation

Source: http://www.marketresearch.com/product/display.asp?productid=1695991

4.3. NUCLEAR POWER GENERATION

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In India, out of total installed capacity of 126993.97 MW (as on 31 August 2006); the share

of nuclear power is 3% at 3900 MW. From the electricity generation point of view, nuclear

power plants contributed 17 238.89 GWh out of total electricity generation of 6 17 510.44

GWh during April 2005 - March 2006, amounting to 2.79% of total generation. However,

with exponential growth in energy demand coupled with a finite availability of coal, oil, and

gas; there is a renewed emphasis on nuclear energy. Moreover, nuclear energy is considered

to be an environmentally benign source of energy.

Department of Atomic Energy is carrying out nuclear energy programme in India. The Indian

Nuclear Power Programme has the following three stages.

The first stage, already commercial now, comprised setting up of PHWRs

(pressurised heavy water reactors) and associated fuel cycle facilities. PHWRs use natural

uranium as fuel and heavy water as moderator and coolant. The design, construction, and

operation of these reactors is undertaken by public sector undertaking the NPCIL (Nuclear

Power Corporation of India Ltd). The company operates 16 reactors (2 Boiling Water

Reactors and 14 PHWRs) with a total capacity of 3900 MWe.

In the second stage, it was envisaged to set up FBRs (fast breeder reactors) along with

reprocessing plants and plutonium-based fuel fabrication plants. Plutonium is produced by

irradiation of Uranium-238. The Fast Breeder Programme is in the technology demonstration

stage. Under this stage, the IGCAR (Indira Gandhi Centre for Atomic Research) has

completed design of a 500 MWe PFBR (prototype fast breeder reactor) being implemented

by BHAVINI (Bharatiya Nabhikiya Vidyut Nigam).

The third stage of the Indian Nuclear Power Programme is based on the thorium-

uranium-233 cycle. Uranium-233 is obtained by irradiation of thorium. Presently this stage is

in technology development phase. The ongoing development of 300 MWe AHWR (advanced

heavy water reactor) at BARC (Bhabha Atomic Research Centre) concerns thorium

utilization and its demonstration.

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4.4. SOLAR

India is endowed with rich solar energy resource. The average intensity of solar radiation

received on India is 200 MW/km square (megawatt per kilometer square). With a

geographical area of 3.287 million km square, this amounts to 657.4 million MW. However,

87.5% of the land is used for agriculture, forests, fallow lands, etc., 6.7% for housing,

industry, etc., and 5.8% is either barren, snow bound, or generally inhabitable. Thus, only

12.5% of the land area amounting to 0.413 million km square can, in theory, be used for solar

energy installations. Even if 10% of this area can be used, the available solar energy would be

8 million MW, which is equivalent to 5 909 mtoe (million tons of oil equivalent) per year.

However, solar energy is a dilute source. The energy collected by 1 m square of a solar

collector in a day is approximately equal to that released by burning 1 kg of coal or 1/2 litre

of kerosene. Thus, large areas are needed for collection. Besides, the efficiency of conversion

of solar energy to useful energy is low. Therefore, the energy actually available would be

order of magnitude lower than the aforementioned estimates. Nonetheless, it is obvious that

solar energy can be a good source of meeting energy demands.

On the applications side, the range of solar energy is very large. While at the high end there

are megawatt level solar thermal power plants, at the lower end there are domestic appliances

such as solar cooker, solar water heater, and PV lanterns. Then, in between, there are

applications such as industrial process heat, desalination, refrigeration and air-conditioning,

drying, large scale cooking, water pumping, domestic power systems, and passive solar

architecture. Solar energy can be harnessed to supply thermal as well as electrical energy.

Those technologies that use solar energy resource to generate energy are known as solar

energy technologies.

Solar energy technologies consists of

Solar thermal technologies, which utilize sun's thermal energy and

Solar photovoltaic technology, which convert solar energy directly in to electricity.

Solar energy resource: Since the accurate information about solar energy resource at a

specific location is crucial for designing appropriate solar system. Solar energy resource

assessment becomes an essential activity of any solar energy programme.

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4.5. WIND

The sun’s energy falling on the earth produces large-scale motions of the atmosphere causing

winds, which are also influenced by small scale flows caused by local conditions such as

nature of terrain, buildings, water bodies, etc. Wind energy is extracted by turbines to convert

the energy into electricity.

A small-scale and large-scale wind industry exists globally. The small-scale wind industry

caters for urban settings where a wind farm is not feasible and also where there is a need for

household electricity generation. The large-scale industry is directed towards contributing to

countrywide energy supply.

4.5.1. WIND RESOURCE IN INDIA

The wind resource assessment in India estimates the total wind potential to be around 45 000

MW (mega watt). This potential is distributed mainly in the states of Tamil Nadu, Andhra

Pradesh, Karnataka, Gujarat, Maharashtra, and Rajasthan. The technical potential that is

based on the availability of infrastructure, for example the availability of grid, is estimated to

be around 13 000 MW. In India, the wind resources fall in the low wind regime, the wind

power density being in the range of 250 -450 W/m2. It may be noted that this potential

estimation is based on certain assumptions. With ongoing resource assessment efforts,

extension of grid, improvement in the wind turbine technology, and sophisticated techniques

for the wind farm designing, the gross as well as the technical potential would increase in the

future.

4.5.2. STATUS

Wind power has become one of the prominent power generation technologies amongst the

renewable energy technologies.

4.5.3. TECHNOLOGY TRENDS

Use of wind energy started long ago when it was used for grinding. The commercial use of

wind energy for electrical power generation started in 1970s. Horizontal axis wind turbines

are most commonly used for power generation, although some vertical axis wind turbine

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designs has been developed and tested. The vertical axis turbines have structural as well as

aerodynamic limitations and, hence, are not commercially used.

4.5.4. WIND POWER IN INDIA

Wind turbines offered in India range from 250 kW to 2 MW capacities. As of 31 March

2006, the total installed capacity in the country was 5340 MW, which is 46% of the total

capacity of renewable resources based power generation. There are 7 manufacturers of wind

turbine generators in India.

4.6. SMALL HYDRO

The word hydro comes from a Greek word meaning water. The energy from water has been

harnessed to produce electricity since long. It is the first renewable energy source to be

tapped essentially to produce electricity

Hydro power currently suffices one fifth of the global electricity supply, also improving the

electrical system reliability and stability throughout the world. It also substantially avoids the

green house gas emissions, thus complimenting the measures taken towards the climate

change issues.

Hydro projects below a specified capacity are known as small hydro. The definition of small

hydro differs from country to country, depending on the resources available and the prevalent

national perspective. The small hydro atlas shows that the largest of the projects (30 MW) is

in US and Canada. Small hydro power has emerged as one of the least cost options of

harnessing green energy amongst all the renewable energy technologies.

According to the power generated, small hydro power is classified into small,

mini/micro and Mico hydro.

In India, it is being classified as follows.

Small hydro - 2 MW - 30 MW

Mini - 100 kW - 2 MW

Micro - 10 kW - 100 kW

Mico hydro - 1 kW - 10 kW

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CHAPTER 5

REFORMS IN POWER SECTOR

REFORMS IN THE POWER SECTOR

5.1.1. PRE REFORM STAGE

Confronted with unprecedented economic crisis in 1991, Government of India embarked

upon a massive cleanup exercise encompassing all policies having financial involvement of

Governments- both at the level of Union and States.

Since after Electricity (supply) Act 1948, the power sector was mainly under the government

control which owned 95 % of distribution and around 98% of generation through states' and

central government utilities, the power sector was chiefly funded by support from

government budgets in the form of long term, concessional interest loans. These utilities were

made to carry forward the political agenda of the ruling parties of the day and the cross-

subsidization i.e. charging industrial and commercial consumers above the cost of supply and

to charge agricultural and domestic consumers below cost of supply was an integral part of

the functioning of the utilities.

Table.6: POWER SECTOR REFORMS

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YEAR MAJOR DEVELOPMENTS

1991 The Electricity Laws (Amendment) Act, 1991--Notification. Amends the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 byPrivate Sector allowed to establish generation projects of all types

(except nuclear)100% foreign investment & ownership allowed New pricing structure for sales to SEBs.5 Year Tax holiday; import duties slashed on power projects

1992 Intensive wooing of foreign investors in US, Europe & Japan

1992-97 8 projects given "fast-track" status.Sovereign guarantees from Central Government.Seven reached financial closureDabhol (Enron), Bhadravati (Ispat), Jegurupadu (GVK),

Vishakapatnam (Hinduja), Ib Valley (AES), Neyveli (CMS),Mangalore   (Cogentrix)

1995-96 World Bank Reform Model - First Test Case Orissa   Orissa Electricity Reform Act passed   Establishment of Orissa Electricity Regulatory Commission   SEB unbundled into Orissa Power Generating Company (OPGC), Orissa Hydel Power Corporation (OHPC) and Grid Corporation of Orissa (GRIDCO)  Distribution privatized

1996 Chief Ministers Conference: Common Minimum Action Plan for Power: Recommend policy to create CERC and SERCs  Licensing, planning and other related functions to be delegated to SERCs.  Appeals against orders of SERCs to be in respective High Courts   SERC to determine retail tariffs, including wheeling charges etc., which will ensure a minimum overall 3% rate of return.  Cross -subsidization between categories of consumers may be allowed by SERCs, but no sector to pay less than 50% of the    average cost of supply ( cost of generation plus transmission and    distribution). Tariffs for agricultural sector not to be less than Rs.0.50 Kwh and to be brought to 50% of the average costing not    more than three years.  Recommendations of SERCs to be mandatory, but financial implications any deviations made by State/UT Government, to be provide for the explicitly in the State budget.  Fuel Adjustment Charges (FCA) to be automatically incorporated in the tariff.  Package of incentives and disincentives to encourage and facilitate the implementation of tariff rationalization by the States.  States to allow maximum possible autonomy to the SEBs, which    are to be restructured and corporatized and run on commercial    basis.

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SEBs to professionalize their technical inventory manpower and project management practices.

1997 CEA Clearance exempted for projects under 1000MW but State Government environment clearance required up to 250-500 MW  Liquid fuel policy -- naphtha allocations to IPPs

1998 Mega-Power Policy: special incentives for the construction and operation of hydro-electric power plants of at least 500 MW and thermal plants of at least 1,000 MW.- The Electricity Laws (Amendment) Act, 1998 and Electricity Regulatory Commissions Ordinance -- Notification.Creation of Central Transmission UtilitySTUs to be set up with government companiesEstablishment of CERC and SERCsRationalization of electricity tariffs,Policies regarding subsidiesPromotion of efficient and environmentally benign policies

- Power Grid notified as Central Transmission Utility- Haryana Electricity Reforms Act:HSEB unbundled into Haryana Vidyut Prasaran Nigam Ltd., a Trans

Co. (HVPNL) and Haryana Power Corporation Ltd.Creation of HERCTwo Government owned distribution companies viz. Uttar Haryana

Bijli Vitaran Nigam Ltd. (UHBVNL) and Dakshin Haryana Bijli Vitaran   Nigam (DHBVNL) have been established. DFID's technical co-operation grant of 15 million pounds available

for reforms.

1999 Andhra Pradesh Electricity Reforms ActAPSEB unbundled into Andhra Pradesh Generation Company Ltd.(APGENCO) and Andhra Pradesh Transmission Company Ltd.

(APTRANSCO for transmission & distribution)Creation of APERCOther Developments:World Bank loan of US $ 210 million under the APLDFID's 28 million pounds as technical co-operation grant.CIDA technical assistance of Canadian $ 4 million.

- Karnataka Electricity Reforms ActKEB and KPCL transformed into new companies: Karnataka Power

Transmission Corporation Ltd. (KPTCL) and Visvesvaraya Vidyut Nigama Ltd., a GENCO, (VVNL) Creation of KERC

Other Developments:KPTCL has carved out five Regional Business Centers (RBC) for five

identified zones.

2000 Power Ministers' Conference and Electricity Bill 2000 (draft):Functional disaggregation of generation, transmission   and distribution

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with a view to creating independent profit centres and accountability;Re organization and restructuring of the State Electricity Boards

in accordance with the model, phasing and sequencing to be determined by the respective State GovernmentsStates to determine the extent, nature and pace of privatization.

   (public sector entities may continue if the States find them sustainable);Transmission to be separated as an independent function for   creation

of transmission highways that would enable viable public   and private investments;Amendments to the Indian Electricity Act, 1910 made in 1998 for

facilitating private investment in transmission have been broadly retained except that the private transmission companies would be regulated by the Regulatory Commissions and Transmission Centers inst under the direction, supervision and control of the Central/State Transmission Utilities;Present entitlements of States to cheaper power from existing

generating stations to remain undisturbed;Provision of compulsory metering for enhancing accountability and

viability;Central and State Electricity Regulatory Commissions to continue

broadly on the lines of the Electricity Regulatory Commissions Act, 1998;State Regulatory Commissions enjoined to recognize in their

functioning the need for equitable supply of electricity to rural areas and to weaker sections;Stringent provisions to minimize theft and misuse.

Source: www.cea.nic.in/ power _sec_reports/general_review/0405/index.pdf

5.1.2. ELECTRICITY ACT 2003

An Act to consolidate the laws relating to generation, transmission, distribution, trading and

use of electricity and generally for taking measures conducive to development of electricity

industry, promoting competition therein, protecting interest of consumers and supply of

electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies

regarding subsidies, promotion of efficient and environmentally benign policies constitution

of Central Electricity Authority, Regulatory Commissions and establishment of Appellate

Tribunal and for matters connected therewith or incidental thereto.

5.1.2.1. GENERATION:

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Any Company, association or body of individuals (even unincorporated) can generate

electricity without requirement of techno-economic clearance of CEA, or approval of State

Government or regulator, except in case of hydropower station for which written consent of

Central Electricity Authority is required.

A Generating Company can supply electricity directly to more than one consumer and

is vested with the duty to establish, operate and maintain sub-stations, tie lines etc.

Any entity, (company, co-operative society or association of persons) can establish a

Captive Generation Plant (CGP) primarily for its own use without any entry barriers. Open

access is to be provided to all CGPs. No cross-subsidy surcharge would be levied on the

persons who have established CGP for carrying electricity to destination of his own use.

5.1.2.2. RURAL ELCTRIFICATION/GENERATION/DISTRIBUTION

Government of India will have to formulate a National Policy after consulting State

Governments & CEA, to govern (i) rural electrification and local distribution through local

bodies5, and (ii) rural off-grid supply including those based on renewable/nonconventional

energy resources.

No license is required for generating or distributing in rural areas notified by the State

Govt.

5.1.2.3. LICENSING

Trading has been recognized as a separate licensed activity along with transmission

and distribution. However, a license is not required in respect of (i) trading by a distribution

licensee, (ii) transmission, distribution or trading by any Govt., as the Govt. would be deemed

a licensee.

Electricity Regulatory Commission (ERC), on the recommendation of Government, in

accordance with the national electricity policy and public interest can exempt any of the local

bodies6 from requiring license.

5.1.2.4. TRADING AND CAPTIVE GENERATION

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Trading, i.e., purchase of electricity for resale, is a separate licensed activity, except

for distribution licensees who do not require a separate trading licence. Traders can enter into

direct contracts with the consumers and determine its terms and conditions (including tariff).

The Appropriate Commission may specify

The entry barriers for traders – technical requirements, capital adequacy

Requirement, and credit-worthiness;

Duties re. supply and trading in electricity to be discharged by a trader; and

Fix trading margin in intra-state trading if considered necessary.

ERCs have to develop trading market and have to be guided by National Tariff

Policy.

5.1.2.5. OPEN ACCESS

Open access means non-discriminatory use of transmission lines, distribution system

and associated facilities by any licensee/consumer/Genco in accordance with ERC

regulations.

The licensees, consumers and Gencos have to pay transmission/wheeling charges for

open access. Consumers has to also pay a surcharge (to be utilized to meet cross subsidy)

determined by ERC, for open access.

ERC may order any licensee owning intervening transmission facilities to provide use

of facilities to any other licensee, to the extent of surplus capacity.

A State Transmission Utility is obliged to provide non-discriminatory open access to

its transmission system for use by a licensee or Genco forthwith, or by any consumer once

distribution level open access has been provided.

There is no statutory time limit for introduction of open access. ERC has to determine

by June 10, 2004 the phases and conditions, subject to which open access would be

introduced.

5.1.2.6. DISTRIBUTION

The distribution licensee has a mandatory duty to supply on request of consumer in a

time bound manner if the consumer agrees to pay the applicable tariff. ERC is empowered to

suspend or revoke license of a Discom for failure to maintain

Uninterrupted supply. Distribution licensee is empowered to recover

charges/expenses/security and disconnect supply for non-payment of dues.

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Discoms can enter into direct contracts with consumers.

Discoms can engage in other businesses but have to share revenue to reduce wheeling

charges, and maintains separate accounts for the same.

ERCs may grant more than one distribution licenses can be issued in a given area,

permitting them to supply electricity through their own distribution system. To get a

subsequent distribution license any person will have to comply with additional requirements

prescribed by GoI regarding capital adequacy, creditworthiness, or Code of Conduct etc.. If

an applicant meets such requirements, he shall not be denied grant of the license.

ERCs may permit by regulations a consumer/class to receive supply of electricity

from anyone other than the distribution licensee of the area of supply – against payment of

wheeling charge & surcharge in lieu of cross subsidy.

Distribution licensee is free to undertake distribution for a specified area within his

area of supply without need for a separate license. Provided that the distribution licensee shall

remain liable for the supply.

5.1.2.7. TRANSMISSION

To secure non-discriminatory open access, transmission has been segregated as a

wires function without any trading (buying and selling). Central transmission utility (CTU)

and all State transmission utilities (STUs) are deemed licensee.

CTU and STUs functions are (i) Transmission; (ii) planning & co-ordination of

transmission system; (iii) development of efficient and economical transmission lines from

generating stations to load centers; (iv) providing non-discriminatory open access to the

system.

RLDCs and SLDCs are empowered to issue directions, and exercise supervision &

control to ensure stability, efficiency & economy of grid operation in the region and the State

respectively. Licensees, generating companies and other persons connected with operation of

power system shall comply. SLDC shall ensure compliance with RLDC directions.

Pending creation of separate RLDCs & SLDCs, the CTU and the STU shall perform

the role.

5.1.2.8. TARIFF

Government has been distanced from determination of tariff. This power has been

vested in the CERC/SERC. In determination of tariff CERC/SERC shall be guided by factors

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including National Electricity Policy, tariff policy (formulated by Central Government),

CERC’s principles and methodologies for setting tariff and principles rewarding efficiency

and multiyear tariff.

In case tariff is determined through transparent bidding as per Government of India

guidelines, the same shall be adopted by the ERCs.

To promote competition among distribution licensees, where there are 2 or more

distribution licensees supplying in an area, the ERC may fix only maximum ceiling of tariff

for retail sale.

The PPAs/BSAs entered into before 10th June, 2003 have not been explicitly saved or

granted a protection from regulatory intervention.

5.1.2.9. REGULATORY COMMISSIONS

It is mandatory to establish SERCs within 6 months from 10th June, 2003. Joint

Commission can be constituted for two or more States or Union territories or both by mutual

agreement.

The new functions to be performed by CERC/ SERC include specifying Grid Code,

Supply Code (only SERC), levy fees, fix trading margins in interstate trading.

In exercise of their functions, ERCs shall be guided by – National Electricity Policy,

National Electricity Plan & Tariff Policy; directions of GoI/State Government concerned, in

matters of policy involving public interest – where such Government’s decision shall be final

as to whether the directions relates to a policy involving public interest. There is no express

provision enabling ERCs to depart from such directions.

Provision for separate ERC funds (not consolidated funds) for finance of ERC

expenditures.

5.1.2.10. POLICY ISSUES

Central Government shall prepare, publish and revise National Electricity Policy and

Tariff policy in consultation with State Governments and CEA9.

The implementation of the Act is largely dependent on the nature and scope of the

diverse policy instruments to be issued by Government, and institutions like Special Courts,

Appellate Electricity Tribunal, NLDC, RLDC, SLDC, SERCs and SEB successors to be

constituted by Government’s. It is noteworthy that these instruments will have a bearing are:-

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Role and functioning of ERCs,

Role and functioning of CEA,

Market development,

Governance of the sector – regulation, grid operations, safety issues, and

Enforcement.

5.1.2.11. CONSUMER INTERESTS

Creation of a Consumer redressal forum (CRF) by Distribution licensee in a time

bound manner. The consumers aggrieved from CRF can approach to an ‘ombudsman’10.

Distribution licensee has to supply electricity within 1 month from the date of request

for supply, except where capital works are required for connectivity. Failure of distribution

licensee to supply within said time period would attract penalty.

5.1.2.12. ENFORCEMENTS

Suitable provisions for provisional assessments and recovery of compensatory fines

may be able to address a long-standing vacuum in law.

Special Courts are to be established by Government’s for speedy disposal of cases

relating to theft of electricity.

The scope of offences has been expanded and enhanced punishments have been

prescribed for subsequent or continuing offences.

Stronger powers (accompanied with better safeguards) have been provided for

conducting inspections/search/seizure.

5.1.2.13. DISPUTE RESOLUTION

The appeal against all orders of ERC/adjudication officer would lie to an expert

Appellate Tribunal (an expert body), which shall dispose appeals within prescribed time.

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Appeal from appellate tribunal lies to Supreme Court. The appeal to Supreme Court is

limited to substantial question of law.

5.1.3. ELECTRICITY (Amendment) ACT, 2007.

The Electricity (Amendment) Act, 2007, amending certain provisions of the Electricity Act,

2003, has been enacted on 29th May, 2007 and brought into force w.e.f. 15.06.2007. The

main features of the amendment Act are: -

Central Government, jointly with State Governments, to endeavor to provide access to

electricity to all areas including villages and hamlets through rural electricity infrastructure

and electrification of households.

No License required for sale from captive units.

Deletions of the provisions for elimination of cross subsidies. The provisions for

reduction of cross subsidies would continue.

Definition of theft expanded to cover use of tampered meters and use for unauthorized

purpose. Theft made explicitly cognizable and non-bail able.

5.1.3.1. DEMAND SIDE MANAGEMENT

Demand-side management is used to describe the actions of a utility, beyond the customer's

meter, with the objective of altering the end-use of electricity - whether it be to increase

demand, decrease it, shift it between high and low peak periods, or manage it when there are

intermittent load demands - in the overall interests of reducing utility costs. In other words

DSM is the implementation of those measures that help the customers to use electricity more

efficiency and it doing so reduce the customers to use the utility costs. DSM can be achieved

through.

Improving the efficiency of various end-uses through better housekeeping correcting

energy leakages, system conversion losses, etc ;

Developing and promoting energy efficient technologies, and

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Demand management through adopting soft options like higher prices during peak

hours, concessional rates during off-peak hours seasonal tariffs, interruptible tariffs, etc.

DSM, in a wider definition, also includes options such as renewable energy systems,

combined heat and power systems, independent power purchase, etc, that utility to meet the

customer's demand at the lowest possible cost. Often the terms energy efficiency and DSM

are used interchangeably. However, it is important to point out that DSM explicitly refers to

all those activities that involve deliberate intervention by the utility in the marketplace so as

to alter the consumer's load profile. Energy efficiency issued in an all encompassing sense

and includes any activity that would directly or indirectly lead to an increase in energy

efficiency. To make this distinction precise, a program that encourages customers to install

energy efficient lighting systems through a rebate program would fall under DSM. On the

other hand, customer purchases of energy efficient lighting as a reaction to the perceived

need for conservation is not DSM but energy efficiency gains.

There has been growing recognition of the importance of energy efficiency in India's

electricity sectors. The Ministry of Power (MoP) is the nodal agency for energy conservation

in the country. The Bureau of Energy Efficiency (BEE), an autonomous body under the MoP,

was set up in 1989 to coordinate initiatives and activities on energy conservation. Several

state electricity boards( SEBs) have also set up Energy Conservation Cells, some of which

have been assisting industries in conducting energy audits. Several reports have been

attempted to estimate the potential for energy conservation in various consuming sectors and

have also identified various Energy Efficiency technologies (EETs) for important end-uses.

The National Energy Efficiency Program (NEEP) of the Government of India(GOI) has

targeted savings of about 5000 MW to be realized by the end of the Eighth plan through both

demand (2750 MW) and supply side (2250 MW) efficiency improvements. In terms of

Government policies, there are special equipment in the first year, subsidies for energy audits,

reduced customs duty for selected control equipment for managing energy use, and so on.

5.1.3.2. Environmental Reform in the Electricity Sector:

Enhanced economic activity and population growth have led to increasing energy demand

that in turn has spurred electricity generation. But large-scale electricity generation and

distribution have adverse environmental impacts, varying by the technologies employed and

their locations. These need to be addressed so that energy services can be enhanced in

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harmony with the environment, within our ecological footprints. Due to the “externalities” of

electricity generation, that is, the negative impacts not directly affecting or being restricted to

those involved, the costs of impact mitigation are typically not included in electricity prices.

Consideration for the environment has therefore to be forced into the reckoning, or preferably

integrated into the system, hence the importance of environment policy in the context of the

power sector.

Focusing on environmental issues and policies applicable to the power sector in China and

India. These countries generate 68% of the electricity generated in developing Asia, but with

a total population of about 2.4 billion, have large unmet needs.

In approaching the problem of environmental protection in the power sector in rapidly

developing country, our analytical framework consists of identification of those state

environmental policies and regulations that pertain to the power sector, both directly and

indirectly, assessment of the barriers encountered, and finally recommendations of likely

solutions to circumvent these problems.

Let us consider the impacts of electricity generation on the environment. The focus is on to

list the national environmental policies that affect these impacts, beginning with general

direction, proceeding to specific rules and standards and then to alternatives to conventional

electricity generation. This leads to the problems that beset effective policy implementation.

CHAPTER 6

STUDY OF SELECTED COMPANIES

STUDY OF SELECTED COMPANIES

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To study and analyze the power sector better, the comparative and analytical study of the Top

5 listed firms of power sector in India is done. The firms are chosen based on their sales

turnover. The below are the firms selected by us for the study,

TOP 5

NTPC 

Reliance Infra                                                                          

Tata Power 

Power Grid 

Torrent         

6.1. NTPC Ltd.

NTPC Limited is the largest power generating and Navratna status company of India; it was

incorporated in the year 1975 as National Thermal Power Corporation Private Limited to

accelerate power development in the country. As a wholly owned company of the

Government of India, NTPC has emerged as a truly national power company, with power

generating facilities in all the major regions of the country. NTPC's core business is

engineering, construction and operation of power generating plants. NTPC as an integrated

Power Major with presence in Hydro Power, Coal mining, Oil & Gas exploration, Power

Distribution & Trading and also enter into Nuclear Power Development. It provides

consultancy also in the area of power plant constructions and power generation to companies

in India and abroad. It is providing power at the cheapest average tariff in the country. With

its experience and expertise in the power sector, also NTPC is extending consultancy services

to various organizations in the power business. The consulting Wing of NTPC is an ISO

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9001:2000 accreditation. In the year of 1982, the company commissioned the first Singrauli

unit.  

 

 The Company's status was converted into a public limited in the year 1985 and the name was

changed to National Thermal Power Corporation Limited. In the year 1989, the company

commissioned first gas based combined cycle plant (88MW) at Anta, Rajasthan and its

consultancy services division was commissioned during the same year. The Company had

taken over the 2x210 Mw Feroze Gandhi Unchahar Thermal Power Station in the year 1991,

which was owned by UP RajyaVidyut Utpadan Nigam of Uttar Pradesh. The first gas turbine

was synchronized in 1991-92 and the Unit-I of the company was synchronized in March of

the year 1992. Pursuant to legislation by Parliament of India, the transmission systems owned

by the company was transferred to Power Grid Corporation of India Ltd during the year of

1992. The Company's three gas turbines and two steam turbines were commissioned in the

1992-93. A tripartite agreement was signed between NTPC, UPSEB and GAIL for direct

power supply to GAIL during the year of 1994. NTPC had undertook the 4x60 MW + 2x110

MW Talcher Thermal Power Station during the year of 1995 from the Orissa State Electricity

Board. MOUs had signed with M/s. Nagarjuna Litecrete Ltd. and M/s. Ria-Shelcon for

setting up ash based products manufacturing units with ash from Ramagundam and Farakka

Power Stations.

In 1998, the company commissioned the first Naptha based plant at Kayamkulam with a

capacity of 350MW. Maharashtra State Electricity Board has signed separate power purchase

agreement with the company for the total power supply of 1,345 mw from Kawas-II,

Gandhar-II, Vindhyachal -II and Siptat power stations in the year of 2000. NTPC has signed

a memorandum of understanding with the Ministry of Power for generating 9,400 million

units of electricity during the year. The Company forayed into wind power segment, started

the preliminary work on two projects in Karnataka and Tamil Nadu each with a capacity of

20 MW. The Company has established a 2000MW gas-based power plant near Mangalore.

The 4x110 MW of Tanda Thermal Power Station, which was taken by the company in the

year 2000, the UP State Electricity Board formerly owned it. NTPC has launched a drive to

recover arrears from the electricity boards of Maharashtra, Madhya Pradesh, Gujarat, Goa,

Daman and Diu and Dadra Nagarhaveli. The Company has signed a memorandum of

understanding with the government to generate 121,000 million units of electricity during

2001-2002. 

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During the year 2002, the company incorporated three wholly owned subsidiary of the

company viz. NTPC Electric Supply Company Limited, NTPC Hydro Limited and NTPC

Vidyut Nigam Limited. Golden Peacock Award conferred to the company for Corporate

Social Responsibility in14th November of the year 2003. Unit IV (500 MW) of Talcher

Super Thermal Power Project - Stage II (TSTPP-II) of THE COMPANY has been

successfully synchronized on 6th February 2005. The 500 MW Unit at Ramagundam Super

Thermal Power Station has commenced commercial operation on 25th March 2005. In May

of the year 2005, NTPC and Defence Metallurgical Research Laboratory (DMRL) have

signed an MOU. NTPC has bagged IPMA International Project Management Award 2005 for

its Simhadri Thermal Power project on 15th November 2005.

NTPC established the medium Term Note ('MTN') Programme in February of the year 2006

to facilitate the raising of funds on a regular basis from the international debt capital markets

and also signed an MOU with Delhi Transco Ltd., (DTL) on 10th February 2006 for

expansion of one of its stations namely National Capital Power Station Stage-II at Dadri (U.

P.). During the March of the year 2006, NTPC Ltd has entered into a Memorandum of

Understanding with Petro net LNG Limited for arranging one MMTPA of LNG, which used

to overcome shortage of gas at the existing gas power stations of NTPC. The Company had

taken over the Badarpur Thermal Power Station with the capacity of 705MW in the year

2006 from Central Electricity Authority. The Company had signed a Memorandum of

Understanding in 11th March of the year 2006 with the Energy and Resources Institute

(TERI) for implementation of distributed generation projects in villages in India.  A 500 MW

unit of Vindhyachal Super Thermal Power Project - Stage III of NTPC Limited located in the

state of Madhya Pradesh has been successfully synchronized on 27th July 2006. NTPC

Limited and Singareni Collieries Company Limited have signed a Memorandum of

Understanding during August of the year 2006, for creation of a Joint Venture Company to

undertake various activities in coal and power sectors including acquisition of coalmines,

development and operation of integrated coal based plants and providing consultancy

services. The Company has signed a Memorandum of Agreement (MOA) in September 21st

of the year 2006 with the Government of Arunachal Pradesh for implementation of the

following two hydroelectric power projects in the States of Arunachal Pradesh. NTPC had

formed a joint venture Company under the name and style of 'Aravali Power Company Pvt

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Ltd' on December 21, 2006 with Haryana Power Generation Corporation Ltd (A Government

of Haryana Undertaking). The Company has signed a MoU in February 14th of the year 2007

with Bharat Earth Movers Limited (BEML) for collaborating and associating with NTPC for

a long-term mutually beneficial business.

A 500 MW unit of Vindhyachal Super Thermal Power Project, Stage III of NTPC Limited

located in the state of Madhya Pradesh has been successfully (test) synchronized in the night

of 8th March 2007. Signed a Memorandum of Understanding with Coal India Limited on

15.03.2007 for undertaking development, operation & maintenance of coal blocks and

integrated coal based power plants. NTPC signed an agreement for a term loan of USD 100

million with KFW of Germany on March 23, 2007 at Frankfurt am Main.  

 

During the year 2007-08, the MOU was signed with ADB for establishment of power

generation capacity of about 500 MW through Renewable Energy Sources. The JVA was

signed between NTPC and BSEB for setting up 3x660 MW at Nabinagar, Bihar and also

another one JVA was signed with UPRVUNL to set-up 2x660 MW power project at Meja

Tehsil in Allahabad, UP. The Joint Venture Company (Subsidiary of NTPC) under the name

of 'Bhartiya Rail Bijlee Company Limited' incorporated with Railways for setting up 1000

MW coal based power plant at Nabinagar, Bihar. Business Collaboration and Share Holder's

Agreement signed with Govt. of Kerala and TELK to acquire around 44.6% stake of TELK.

The MOU was signed with Bharat Forge Limited for setting up a new facility to take up

manufacture of Balance of Plant equipments, castings, forgings, fittings etc. JVA signed with

BHEL for taking up activities related to carrying out EPC and manufacturing of equipments

in the period of 2007-08. The 500 MW Unit-I at Sipat Super Thermal Power Project, Stage-II

has commenced commercial operation in June of the year 2008. NTPC has signed a

Memorandum of Understanding (MOU) with Secretary (Power), Government of India for

generating 2.09 billion units of Electricity during the financial year 2008-09.  

 

 Developing and operating world-class power stations is NTPC's core competence. Its scale

of operation, financial strength and large experience serve to provide an advantage over

competitors. To meet the objective of making available reliable and quality power at

competitive prices, NTPC would continue to speedily implement projects and introduce state-

of-art technologies. 

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Fig.5: Growth of NTPC

COMPANY PROFILE:

Company name : NTPC Ltd

Address : NTPC Bhawan Scope Complex,

7-Institutional Area Lodi Road,

New Delhi - 110003,  New Delhi.

Year of Establishment : 1975

Chairman : Mr. R S Sharma

E-mail : info@ntpc.co.in

Website : http://www.ntpc.co.in

Production Capacity : 29,394 MW

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6.2. RELIANCE INFRASTRUCTURE LTD

Reliance Energy Limited (REL), with its corporate lineage going back to 1929. At the time of

incorporation REL was called as Bombay Suburban Electric Supply Limited (BSES). The

company has been in the field of power distribution for nearly eight decades and with its

emphasis on continuous improvements. REL is a fully integrated utility engaged in the

generation, transmission and distribution of electricity. It ranks among India's top listed

private companies on all major financial parameters, including assets, sales, profits and

market capitalization. A key constituent of the Reliance - Anil Dhirubhai Ambani Group,

India's third largest business house. Reliance Energy has emerged as one of the leading

players in India in the Engineering, Procurement and Construction (EPC) segment of the

power sector. Reliance Energy company currently pursue several gas, coal, wind and hydro-

based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and

Uttaranchal with aggregate capacity of over 13,510 MW. Reliance Energy is also active in

the trading and transmission of power sector and has forayed as an equity investor in to the

infrastructure business, including in the prestigious Mumbai metro rail project and various

road projects of the National Highways Authority of India. REL has also entered into the

Internet service provider business in a big way by the name of powersurfer.net. REL (BSES)

has several group companies - ST-BSES Coal Washery (Joint Venture), BSES Infrastructure

Finance, Utility Powertech (Joint Venture), Ticapco, BSES Telecom, BSES Kerala Power,

BSES Andhra Power and three new companies of Orissa. The company has a strategy of

adding value by strategic alliances within the group. 

In March 2000 company has been operated "BSES Telecom" as an Internet service provider

(ISP) in Mumbai and has a fiber optic network to support its last mile services and also

exploring alliances for providing utility solutions. Dahanu Power Station achieved a plant

load factor (PLF) of 82.68% during 2000-01. In 2001-02, the BSES Kerala Power Ltd had

commissioned the power station in the Combined Cycle mode but due to various reasons the

BKPL has suspended its operations from October, 2001. OFGW of 220 KW transmission line

between Ghodbunder, Versova and Dahanu was successfully completed. RE L's Wind

Energy has one of the highest PLF in the country in the wind farm segment. Contracts and

EPC Division was instrumental in construction and erection works of 5,000 mw in Indian and

other industrial and infrastructure projects. BSES Infrastructure Finance has tied up funds for

Page | 56

various projects to the tune of over Rs 1,500 crore. Utility Powertech is a JV with National

Thermal Power Corporation (NTPC) has 250 operational sites.

During the year 2002-2003, the company has successfully commissioned 210 MW Gas Based

Combined Cycle power plants for BSES Andhra Power and 24 MW Bagasse fired Power

Plant for Godavari Sugar Mills Ltd and 20 MW for Suryachakra Power Corporation Ltd. In

April 2003 Andhra Power Ltd and Reliance Salgocar Power Company Ltd were amalgamated

with the company. During the year 2003-2004, the Company was renamed to Reliance

Energy Ltd from its old name BSES. Reliance energy continues to receive prestigious awards

and recognitions for its outstanding performance in various fields and through various

sources. The Dahanu Power Station received the National Award for Excellence in Energy

Management and National Award for Excellence in Water Management from the

Confederation of Indian Industry and also company got the Maharashtra safety award-2004

from the Maharashtra Chapter of National Safety Council. 

Gold Shield for Meritorious Performance by the Central Electricity Authority (CEA) of the

Government of India for its excellent performance amongst Indian thermal power plants in

the year 2004-05, which was presented by the Honorable Prime Minister of India. The power

station also obtained OSHAS 18001 certification from BVQI during the year of 2005-06.

During the year 2006-07, Reliance Energy had received many awards such as Golden

Peacock Award for its pursuit of excellence in corporate governance, International Quality

Crown Award London 2006 in Gold category, Srishti Good Green Governance (G-Cube)

Award and participated in the prestigious Ramakrishna Bajaj National Quality Awards, the

company was awarded a commendation certificate for the same. In April 2007 REL planned

to set up a 1,400 Mw gas-based power project in Delhi and also company has estimated that it

would have to invest Rs 60,000 crore in next five years to add a capacity of 15,000 MW of

power. As on September 2007 REL considered to hive off its engineering, procurement and

construction (EPC) division into a new company.

Reliance Energy distribute more than 28 billion units of electricity to cover 25 million

consumers across different parts of the country including Mumbai and Delhi in an area that

spans over 1,24,300 sq. kms. It generates 941 MW of electricity, through its power stations

located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. These projects are at

various stages of development. Company wants to attain global best practices and become a

world-class utility and to provide uninterrupted, affordable, quality, reliable and clean power

Page | 57

to millions of customers. Future plan and action of the company is installation of third

cooling tower cell to improve plant reliability and output. Energy savings by installation of

energy efficient blades on cooling tower fans. ETP pump modification to reduce auxiliary

power consumption. Auto - locking facility of energy meters at midnight to facilitate

simultaneous logging of energy meter readings. The company has targeted to complete all

activities under the six sigma project, ISO 27001 and OHSAS certifications during 2007-08,

which will make Reliance Energy the first utility in the country to achieve these

certifications. These initiatives are aimed to cater the market and at further promoting

business excellence in all functional areas of the company. In 2008 company engaged in

several mega projects under implementation and under consideration in different functional

areas, in that the notable two big projects are engineering, procurement and construction

(EPC) contract from Damodar Valley Corporation (DVC) to set up the 2 x 600 MW coal

based power station at Raghunathpur in West Bengal worth of Rs 3,725 crore and Airport

Metro Express Line, Delhi project on BOOT basis for a concession period of 30 years worth

of Rs 2,500 crore.

PROFILE:

Company name : Reliance Infrastructure Ltd

Address : Reliance Energy Centre,

Santa Cruz (East),

  Mumbai - 400055, Maharashtra

Year of Establishment : 1929

Chairman : Anil D Ambani

E-mail : helpdesk@rel.co.in/rel.investor@relianceada.com

 Website : http://www.rinfra.com

Production Capacity : 941 MW

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6.3. TATA POWER COMPANY LTD

Tata Power Company Limited (TPC), India's largest integrated Electric Power Utility in

private sector with a reputation for reliability, incorporated in the year 1919 at Mumbai. TPC

pioneered the generation of electricity in India nine decades ago. The core business of Tata

Power Company is to generate, transmit and distribute electricity. The Company operates in

two business segments: Power and Other. The Power segment is engaged in generation,

transmission and distribution of electricity. The other segment deals with electronic

equipment, project consultancy.

The Tata-Ebasco Consulting Engineering Services' was established based on partnership with

Ebasco India, Ltd for consulting engineering together with its two associated companies in

the year 1961. In the year 1969, a new company under the name Chemical Terminal Trombay

Ltd was formed in participation with other Tata Companies and Elephanta India Private Ltd

to installation of storage tanks on a part of the Company's ash disposal area at Trombay and

the laying of a pipeline connecting the storage tanks with the Mumbai Port Trust's pier at Pir

Pau. TPC sets up its new manufacturing facility at Bangalore during the year 1980, for

commercial production of electronic items designed by its R&D laboratory.

TPC has undertaken a 180 MW combined cycle plant at Trombay using gas turbines. In

1989, six new outlets for BEST at 33 KV from Carnac receiving stations were commissioned

during the year. In the same year the company also associated with Siemens in the erection

and commissioned the mechanical and electrical equipment for the 4 x 130 MW gas turbines

and 2 x 150 MW steam turbines at NTPC's combined cycle power plant at Dadri in Uttar

Pradesh. The second 500 MW units 6 at Trombay was trial synchronized with the grid on

23rd March 1990. The Company took up two major generation projects, viz., 150MW

Pumped Storage Unit at Bhira and a gas-based 180 MW Combined Cycle Plant at Trombay

Thermal Power Station in case of a major system disturbance and supply power to essential

consumers, viz., Railways, BMC, BARC, etc. TPC started one new 110 KV substation at

Versova during 1991, which comprised 2 x 90 MVA, 110/33 KV power transformers along

with 33 KV indoor SF6switchgear and supervisory control and data acquisition system and

also another one switching station was established in the same year, which comprised 3 x 250

MVA, 220/110/33 KV autotransformers, space saving 245 KV gas insulated switchgear and

supervisory control and data acquisition system.

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The modern 22 KV indoor SF6switchgear was installed at Salsette and also the 60 MVAR

new capacitor banks were installed during the year 1992 at Versova and Malad. Apart from

these, replacement of 110 KV oil circuit breakers by modern SF6 breakers at Kalyan,

Ambernath, Vikhroli and Salsette receiving stations and extension of fibre optic

communication network were also carried out during the same year. In 1994, the Trombay

Unit-7 steam turbine generator of the company was harmonized, which generated 650 MUS

with PLF of 61.9%. During the year, the Company undertook the work of strengthening dams

as per designs codes in respect of earthquakes. 

The Government of Maharashtra had accorded its permission for rebuilding a dam at

Somwadi. A MoU was signed between TEC and the Tennesse Valley Authority of USA for

renovation and modernisation of power plants. In the same year 1994, the Company issued

91,549 Global Depository Shares. The 150 MW Pumped storage unit was commissioned in

the year 1995, based on the synchronous condenser mode and also the Company undertook

the work of modernisation and renovation of old 12 MW hydro units at Bhivpuri and Khopoli

Generating Stations. In the year 1996, the generating station five 25 MW units were

refurbished by installation of new modern turbine runners of higher efficiency at Bhira.

During same the year, the Company bagged the Multi-fuel based 80 MW power project from

the Government of Karnataka. The thermal Units at Trombay operated by the company in the

year 1997 based on-line availability of about 74% and utilization of about 64.3%. TPC

entered into a Joint Venture Agreement with Total Gas and Power India in the year 1998 for

establishment of LNG Terminal at Trombay.

During 1999, the company acquired a generating station consisting of 37.5 MW Unit at

Wadi, Karnataka and also in the year the Power Purchase Agreement for 81.3 MW Diesel-

based Power Plant at Belgaum, Karnataka was signed with Karnataka Electricity Board. Tata

Power Company has obtained A' licence as Internet service provider that enables it to operate

throughout the country in the year 2000. The Andhra Valley Power Supply Company Ltd and

Tata Hydro Electric Supply Company Ltd were merged with the company in the same year

2000. Tata Power Company Ltd on September of the year 2001, decided to sell its stake

consisting of 45 lakh shares in Tata Liebert Ltd (TLL) considering of Rs 170 per share to

Emerson Electric (Mauritius) Ltd. The Company signed an agreement with Power Grid

Corporation of India Ltd for 'Tala Transmission Line' in the year 2002. The 120 MW Unit 3

at the Jojobera Power Plant of the Company situated in Jamshedpur was commenced its

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commercial production. TPC has signed the share acquisition agreement with Gvt of National

Capital Territory of Delhi to acquire the North North-West Delhi Distribution Co. Ltd.

(Discom-III), a distribution company belonging to the Delhi Vidyut Board (DVB), which

supplies power to north and northwestern Delhi. The company ties up with the UK-based

energy major British Petroleum to jointly work on 2,184 mw Dabhol power project during

the year 2003. During the same year 2003, TPC awarded the contract for supply and

construction of 180 KM long 400 KV Double Circuit Transmission Line from Palandur to

Chandrapur (Maharashtra) By Power Grid Corporation of India Ltd. Tata Power infuses Rs

352 crore in the group's telecom businesses.

Tata Power acquired 100% equity stake in Tata Power Trading Co. Pvt Ltd in the year 2004.

The Christened Tata Power Trading Company was incorporated in the year as a subsidiary of

the company. TPC has signed a Development Agreement with GAIL India Ltd & BP to

jointly participate in evaluating the Dabhol gas and power opportunity. A MoU was signed

with National Power Company of Al-Zamil Group, Kingdom of Saudi Arabia. The company

bagged the 2nd Wartsila - Mantosh Sondhi Award for outstanding contribution to the Indian

Power Sector in 2004. Tata Power signed a generation pact with DVC on Maithon Project in

the year 2005 and entered into an agreement for sale of shares in Tata Power Broadband. The

company received CII EXIM Bank Award 2005 for 'Certificate for Strong Commitment to

Excel'. During the period of 2006, the company joined hands with Siemens. The company

signed a joint venture agreement with Tata Steel to set up a Captive Power plants in

Chattisgarh, Orissa and Jharkhand. The company received seven licenses from the Gvt of

India, Ministry of Commerce and Industry, Dept of Industrial Policy & Promotion for its

Strategic Electronics Division (Tata Power SED).

In the year 2007, TPC has signed a MoU with the Government of Chhattisgarh for the setting

up of a 1000 MW coal fired mega power plant in the State. The company has roped in Korea-

based Doosan Heavy Industries and Construction Ltd for supercritical boilers for its Mundra

ultra mega power project. The acquisition of Coastal Gujarat Power Ltd was med by the

company and a Special Purpose Vehicle (SPV) formed for Mundra Ultra Mega Power Project

(UMPP). TPC has signed an EPC contract for supply of five (5) 800 MW Steam Turbine

Generators with Toshiba Corporation for the first 4000 MW Ultra Mega Power Project

(UMPP) in India to be located at Mundra, Gujarat in August 2007.

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As on February 2008, The Tata Power Company Limited (Tata Power) and Damodar Valley

Corporation (DVC) jointly completed its financing for the 1050 MW coal based thermal

power project, being set up in Dhanbad District of Jharkhand State. Recognising the steady

and stable performance in generating quality and reliable energy, the Central Electricity

Authority has awarded Tata Power's Bhira Hydro generation facility with the Silver Shield

award for the meritorious performance in March 2008. April of the year 2008, Tata Power

completes the Signing of Financial Agreements for 4000 MW Ultra Mega Power Project,

coming up at Mundra, Gujarat. The cost of the project is estimated at INR 17000 crores (USD

4.2 billion). Tata Power announced in September of the year 2008, it would acquire a 11.4

per cent stake in Geodynamics Ltd, an Australian company specialising in geothermal

energy, for Rs 165 crore.

Tata Power is surging ahead, lighting up lives through its activities from its inception. The

challenge of fulfilling the ever growing needs of power have been met by Tata Power through

efficient generation, transmission, distribution and constant upgradation of its technology in

every aspects.

PROFILE:

Company name : Tata Power Company Ltd

Address : Bombay House,

24 Homi Mody Street,

Mumbai,  400001,  Maharashtra

Year of Establishment : 1919

Chairman : Mr. R N Tata

E-mail : investorcomplaints@tatapower.com

Website : http://www.tatapower.com

Production Capacity : 2300MW

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CHAPTER-7

ANALYSIS

7.1 SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage

of planning and helps marketers to focus on key issues. SWOT stands for strengths,

weaknesses, opportunities, and threats.

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective. These come from within the company's unique value

chain. SWOT analysis groups key pieces of information into two main categories:

Internal factors – The strengths and weaknesses internal to the organization.

External factors – The opportunities and threats presented by the external

environment to the organization

SWOT analysis is a flexible concept that can be used in various scenarios from assessing

projects or business ventures, making decisions, solving problems, evaluating candidates for

a position to marketing strategy formulation.

Fig.6: SWOT Analysis

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The SWOT analysis provides information that is helpful in matching the firm's resources and

capabilities to the competitive environment in which it operates. As such, it is instrumental in

5into an environmental scan:

  Fig.7: SWOT Analysis Framework

Environmental Scan

          / \           

Internal Analysis       External Analysis

/ \                  / \

Strengths   Weaknesses       Opportunities   Threats

|

SWOT Matrix

STRENGHTS AND OPPORTUNITIES OF POWER SECTOR:

Well established and vast transmission and distribution network.

Highly qualified engineering and technical personnel.

Regulatory framework is further facilitated with enactment of Electricity Bill, 2003.

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The Electricity Bill, 2003 holds promises for the power sector and certainly for the

consumer by way of competition reliability and rationalized tariff structure.

Emergence of strong and globally comparable central utilities (NTPC,

POWERGRID).

India has substantial non-conventional energy resource base and technologies to meet

growing power requirements by tapping this energy.

WEAKNESSES AND THREATS TO POWER SECTOR:

Poor infrastructure has led to heavy T&D losses. Old and poor transmission and

distribution network has led to frequent power outages and poor quality of power

Lack of proper metering and theft has led to large scale losses. Only 51% of the power

generated is billed and only 41% is realized

Moreover, Government provides power to agricultural sector at subsidized rates and

also free of cost in some states. All these factors have resulted in financial disorder of

the State Electricity Boards (SEBs).

Restoration of SEBs financial health and improvement in their operating performance

continues to be a critical issue. The Government of India has signed a Memorandum of

Understanding (MOU) with various states reflecting the joint commitment of centre and

states to undertake reforms in a time bound manner

Poor return to utilities, which affect their profitability and capacity to make further

investments

Increasing gap between unit cost of supply & revenue, approximately Rs 1.10/ unit

Managerial and financial inefficiencies in state sector utilities have adversely affected

capacity addition and systems improvement

Non-availability of quality coal may hamper thermal plants’ efficiency in power

generation

Inability of SEBs to raise funds, as most of the SEBs is on the verge of bankruptcy due

to poor operational performance. Adding to the problems, SEBs need huge money to

measure up competition from efficient private players

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The major risk of privatizing a critical sector like power is the precedence of

commercial over public interest. Some of these interests that will take a back seat

include development of environment friendly generation and provision of electricity for

rural areas. The new Electricity Act does not provide any specific financial incentives

for private players to address public issues

The SBEs which are right now holding 60% of total installed capacity, will be hit

adversely by some provisions of the new electricity act such as delicensing of

generation and open access for IPPs and CPPs, there by such units will take away the

most lucrative customers (like industrial and commercial users) from the SEBs. This

will not only affect SEB’s but also the entire power sector for near term.

CHAPTER 8

Issues and challenges

8 ISSUES AND CHALLENGES

8.1 While India has made impressive progress in the Power Sector since independence, it has

not been sufficient. In terms of generation, while new capacity has been added, demand has

far outstripped the supply leading to a widening gap. The primary reason of the widening gap

lies in the distribution link in the value chain. The generation companies have not found it

easy to recover their dues from their biggest buyers, mainly the State Electricity Boards

(SEBs). SEBs suffer huge financial losses every year due to power theft and ineffective

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practices of billing and collection. Apparently, the losses have reached an alarming Rs.

26,000 crore. It is clear that the biggest fundamental issue hampering the viability of the

Indian Power Sector is the sheer volume or level of Transmission and Distribution (T&D)

losses that amount to 25%, a very high level by any standard. To make the matter worse,

indirect calculations show T&D losses to be much higher in the range of 40-50%. In addition,

the distribution system in India is often characterized by inefficiency, low productivity,

frequent interruption in supply and poor voltage.

8.2 The power supply position is characterized by shortages both in terms of demand met

during peak time and overall energy supply. The peaking shortage is much more in every

region and it is about 12% on all India basis. The energy shortages on regional basis are

varying in magnitude and overall shortage on all India basis is about 7%. To meet the

growing demand and shortages encountered in various regions, generation capacity is

required to be doubled in 10 years, so that the total demand both in terms of peak and

energy can be met

8.3 With the advent of economic liberalization in 1991, the power sector was the focus of

attention for attracting private investment specially FDI in generation. Eight fast track

projects were even offered counter guarantees for payment by the Central Government in

addition to the guarantees of the State Governments. By 1995-96, 57,000 MW of

projects were proposed by potential developers and 27,000MWhad received techno-

economic clearance from the Central Electricity Authority. These were all MOU based

projects with negotiated costs and tariffs . In the absence of a transparent process of

8.4 bidding, many of these had high costs. Due to lack of adequate payment security

mechanisms, combined in some cases with public perceptions of high cost in tariffs,

most of these projects did not get implemented. Since 1990 till date only 9922MWof

generation has come in the private sector.

8.5 The decade of the 1990s also saw the gradual deterioration of the financial health of

State Electricity Boards. Towards the latter half of 1990s, it was apparent that the

deterioration in the finances of the State Electricity Boards was becoming unsustainable.

Restoration of the financial health of the State Electricity Boards / State Utilities was

recognized as the most critical challenge facing the sector. In this context it becomes

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clear that the distribution sector needed urgent attention if the trend of deteriorating

financial health had to be reversed. The reversal would need a combination of the

following key measures:-

a. Control of theft of electricity

b. Reduction in the cost of supply through reduction in technical losses.

c. Better management and lowering the cost of generation

d. Payment of user charge and Tariff rationalization

CHAPTER 9

CONCLUSION & FINDINGS

9.CONCLUSION & FINDINGS:

Power is one of the prime movers of economic development. The basic responsibility of

power supply industry is to provide adequate electricity at economic cost, while ensuring

reliability and quality of supply. Significant impetus by successive Governments has resulted

in increase in capacity from 1,300 MW during independence to more than 100,000 MW

today. Along with the growth in installed generation capacity, there has also been a

phenomenal increase in the transmission and distribution capacity. However, despite the

significant progress in capacity addition, the demand for electricity continues to outstrip

supply with the result that energy and peaking shortages continue to plaque the economy. The

per capita consumption is among the lowest in the World at 408 kwh/year (as on 2001).

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With responsibility for electricity supply shared constitutionally between the central

government and the states, the Government of India has placed increased emphasis on

improving the efficiency of supply, consumption, and pricing of electricity. Significant

reforms are being undertaken in power sector management and financing at the state level.

With reforms in this sector gaining pace, many structural changes are taking place both at the

policy and technical levels. With the passing of the Electricity Act 2003, generation,

transmission and distribution sectors have been thrown open to competition along with the

ushering in of a de-regulated regime. The Government proposes to enhance public funding

for the sector as well as encourage the public sector undertakings to take up projects in joint

ventures with private investors and state governments in the 10th and 11th Plan period. There is

also a focus on initiating suitable policy measures to accelerate the pace of hydro power

development as well as to make nuclear power generation as competitive as power generation

from other fuels.

The financial weakness of the SEBs has been one of the major stumbling blocks in achieving

financial closure of Independent Power Producers (IPPs). The Government of India, with

World Bank assistance, has been encouraging the states to undertake in depth power sector

reforms. This involves distancing the state government from operation of the power sector,

establishing an independent regulatory framework for the sector, progressively reducing

subsidies and restoring the creditworthiness of the utilities through financial restructuring and

cost-recovery based tariffs, and divesting existing distribution assets to private operators.

The Indian power sector is undergoing a crucial phase of transition. Both the Central and

State governments are actively engaged in finding viable solutions to achieve sustainable

development of the power sector. As of now, regulation, rapid capacity addition, and SEB-

reform, with a specific focus on improving revenues from the distribution segment, are

emerging as important areas of reforms in the sector.

8.6 MAJOR FINDINGS:

Most of the SEBs though are supported by state government, are running under loss.

This is because of power theft, transmission losses, use of conventional methods for

power generation and transmission and out dated management policies.

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Indian power sector has been witnessing a wide demand – supply gap. Although

electricity generation has increased substantially, it has not been able to meet the

demand.

India is going to build an additional capacity of 1 lakh MW by 2012 including private

sector contribution.

In a bid to bring structural transformations, necessary reform programs should be

carried out in distribution and transmission process.

India possesses a vast opportunity to grow in the field of power generation, transmission, and

distribution. The target of over 150,000 MW of hydel power germination is yet to be

achieved. By the year 2012, India requires an additional 100,000 MW of generation capacity.

A huge capital investment is required to meet this target. This has welcomed numerous power

generation, transmission, and distribution companies across the globe to establish their

operations in the country under the famous PPP (public-private partnership) programmes.

The power sector is still experiencing a large demand-supply gap. This has called for an

effective consideration of some of strategic initiatives. There are strong opportunities in

transmission network ventures - additional 60,000 circuit kilometers of transmission network

is expected by 2012 with a total investment opportunity of about US$ 200 billion.

REFERENCE

WEBSITES:

www.Ibef.org

www.india.gov.in

www.teriin.org

www.coreinternational.com

www.energywatch.org.in

WEB PAGES:

http://www.indexmundi.com/India/electricity_consumption.html

http://www.indexmundi.com/India/electricity_production.html

http://www.cea.nic.in

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http:// www.topnews.in/business-news/power-sector .html

http://www.energywatch.org.in

LITERATURE REFERENCE:

Remes .M (2007), “Russia forerunning EU in power sector forum”, Journal of Baltic Rim Economies, Expert article 154, 21st December,2007, pp: 20-21http://www.tse.fi/FI/yksikot/erillislaitokset/pei/Documents/bre/expert_article154_62007.pdf

Singh. A (2006), “Power sector reform in India: current issues and prospects”, Elsevier in its journal Energy Policy, Vol: 34 (16)http://ideas.repec.org/s/eee/enepol.html

Sreekumar. N (2008), “Market-Oriented Power Sector Reforms: A Critique”, Journal of Governance and Public Policy.http://ideas.repec.org/s/icf/icfjgp.html

Swain. N, J P Singh and D. Kumar (2004) “Analysis of Power Sector in India: A Structural Perspective”.http://www.ieiglobal.org/ESDVol5No2/indianreform.pdf

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