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Over view of Indian Electricity sector and 12th Plan

Over view of Indian Electricity sector and 12th Plan

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Indian electricity sector Indian electricity sector Document Transcript

  • IndianElectricitySector:Trends andFutureScience andTechnology inIndependent IndiaNeha B JosephShivraj Singh Negi
  • Indian Electricity Sector: Trends and FutureContentsIntroduction .................................................................................................................................................. 3Projected Electricity Demand ....................................................................................................................... 3Power Capacity and Generation Projects ..................................................................................................... 5Investment Needs ......................................................................................................................................... 7Twelfth Plan Features ................................................................................................................................... 9 Capacity Creation ...................................................................................................................................... 9 Transmission ........................................................................................................................................... 10 Distribution ............................................................................................................................................. 10 Rural Electrification ................................................................................................................................. 10Major Programs .......................................................................................................................................... 10 Nuclear Power......................................................................................................................................... 11 Ultra Mega Power Plants and Coal ......................................................................................................... 11 Development of Renewables .................................................................................................................. 12 Hydro Power Development .................................................................................................................... 14 Conclusion ............................................................................................................................................... 15Appendix ..................................................................................................................................................... 16Science and Technology in Independent India Page 2
  • Indian Electricity Sector: Trends and FutureIntroductionSince Independence in 1947, the Indian Electricity sector has progressed in leaps and bounds. A risingGDP, growing industry, rising income-levels and an ever-expanding population has both contributed tothis rise and has also put tremendous pressure on the Indian Electricity sector. The Indian economy willcontinue to grow. And this will again necessitate massive expansions in the electricity sector. Are theplanners planning the necessary expansion? This paper will look into this important issue.The paper will proceed in three parts. In the first section, we will look at some of the projectedelectricity demand for 2050. We will also look at some of the capacity projects required and theinvestments needed. This will primarily be based on the Energy Technology Perspectives 2010 (ETP2010) prepared by the International Energy Agency. All figures, projections are based on this IEA report.Here, it is important to note that the IEA identifies two different scenarios to analyse the power sector.(read box). In the next section, we will look at some of the provisions relating to the Electricity sector inthe 12th Plan. In the 3rd section, we will again look at some of the major projects in the sector includingthe Ultra Mega Power Projects. This will then be followed by a conclusion.Projected Electricity DemandProjections for future electricity demand in the country are very In Energy Technology Perspectives 2010uncertain, because of the expected continuation of India’s (ETP 2010) (IEA, 2010a), the IEA developsdynamic economic growth and development. GDP development, two different scenarios to analyse the powerindustry structure, population growth and income levels are sector:important drivers for energy and electricity demand.  The Baseline Scenario reflects expected developments on theAccording to IEA analysis, the Indian economy is projected to basis of the energy policies thatgrow at a much faster rate than those of Europe or the United have been implemented orStates during the coming four decades. A consequence of this approved for implementation.  The BLUE Map Scenario isgrowth will be a significant increase in energy use and target‐driven and aims to halveassociated CO2 emissions. In the ETP 2010 Baseline Scenario for global energy‐related CO2India (IEA, 2010a), between 2007 and 2050, GDP will increase emissions by 2050 compared toeightfold, primary energy use quadruple and CO2 emissions 2005 levels. A global carbon price of USD 175/tCO2 in 2050 isincrease almost fivefold. A fivefold increase in electricity needed to achieve this reductiondemand from 792 TWh in 2007 to 4069 TWh in 2050 is target. Worldwide CO2 emissionsprojected in the IEA Baseline Scenario. Total electricity demand in the power sector are reduced by 74% in this scenario relative tois reduced in BLUE Map to the level of 3769 TWh. 2005.Science and Technology in Independent India Page 3
  • Indian Electricity Sector: Trends and Future Figure 1 - Electricity demand projections 2007‐50Total Indian electricity demand in 2007/08 stood at 717 kWh per capita (based on UN practice17) (CEA,2009a); an increase of 6.7% over the previous year. For the residential sector, electrical energy sales todomestic consumers amounted on average to 106 kWh in 2007/08, with a range from18 kWh/cap inBihar to 424 kWh/cap in Delhi. Table 1 - Residential electricity demand in India and emerging economies with similar climate in AsiaComparing Indian levels of electricity use to those of other countries in similar climate zones gives someinsight into future domestic demand development in India. Statistics from Singapore, Malaysia andThailand clearly suggest a relation between income levels and per‐capita residential electricity demandGiven a projected GDP per‐capita growth of a factor of 5.7 between 2007 and 2050 in India, one wouldexpect the growth of residential electricity demand per capita to rise by 800 kWh/cap per year in 2050.This implies that the average residential electricity consumption per capita in India would reach nearlytwice the current Delhi demand level in 2050. Assuming a 44% population growth between 2007 and2050, this would result, excluding any efficiency improvements, in a residential electricity demand of1311 TWh, some 12 times the demand level of 2006/07.Science and Technology in Independent India Page 4
  • Indian Electricity Sector: Trends and FutureA breakdown for all demand categories in India in the BLUE Map Scenario is given in the Table below. Intotal, the final electricity demand grows in the BLUE Map Scenario from 567 TWh in 2007 to 3168 TWhin 2050. This is lower than the projected demand increase in the Baseline scenario. On the productionside (industry, commerce and agriculture), significant changes are expected as the economy growsnearly eightfold. This implies a massive expansion of the commercial/services sector (by a factor of six),a significant expansion of manufacturing activity, and more limited growth of activity in agriculture. Table 2 - Final electricity demand breakdown and projection for BLUE Map ScenarioPower Capacity and Generation ProjectsAssuming that the transmission and distribution losses can be reduced to 15% in 2050, about 3700 TWhof electricity production is needed in the BLUE Map Scenario in 2050. At full load, 114 GW can generate1 000 TWh per year. However, in practice plants operate on average far below the maximum load. Thisis related partly to energy resource availability (e.g. for variable renewables) and partly to fluctuations indemand during the year.India had about 168 GW of total installed capacity in 2008, with an average load factor of 48%. Table 3.4shows the power capacity in the ETP Baseline and BLUE Map Scenarios in 2050 (IEA, 2010a). The totalcapacity in 2050 is between 3.8 and 4.5 times the installed capacity in 2008. However, the mix ofresources used is quite different.Science and Technology in Independent India Page 5
  • Indian Electricity Sector: Trends and Future Table 3 - India power generation capacity in the ETP 2010 Scenarios, 2050In the BLUE Map Scenario, total power capacity would amount to 748 GW. The full potential of biomass,geothermal, wind and tidal energy would be used. For hydro, 51% of the potential would be developed.Total coal‐fired capacity would be roughly at the current level but almost all this capacity would beequipped with Carbon Capture and Storage facilities in power plants (CCS). For solar a significantexpansion is assumed, from near zero now to 191 GW.The figure below shows the BLUE Map Scenario projections which highlight the need for large capacityadditions in the regions of Delhi, Calcutta and Patna. Major installations of solar power plants areprojected for the regions of Bhopal, Calcutta and Delhi.Science and Technology in Independent India Page 6
  • Indian Electricity Sector: Trends and Future Figure 2 - Power capacities by region in the BLUE Map Scenario, 2050Investment NeedsThe table below gives an account of the new additional capacity needs and estimated investmentrequirements for the Baseline and the Blue Map Scenarios between 2010 and 2050. It includes allinvestments from fuel production to power generation, electricity T&D and electric end‐use equipment.Science and Technology in Independent India Page 7
  • Indian Electricity Sector: Trends and Future Table 4 - Power sector investment needs in India in Baseline and BLUE Map ScenariosIn the Baseline Scenario, between 2010 and 2050 the Indian power sector needs new cumulativecapacity additions of 746 GW. The cumulative requirement for new capacity is larger than the installedcapacity of 641 GW in 2050, since some technologies may require, depending on their technicallifetimes, a reinvestment between 2010 and 2050. Total investment costs in the Baseline Scenario,including power generation, T&D, electric end‐use equipment, and coal and gas supply, are USD 2.7trillion. On the generation side, the additional investment is required to fund higher capacities fornuclear, Carbon Capture and Storage facilities in power plants (CCS) and solar power. Also, capital isneeded for the expansion of the grid to connect solar plants in remote areas with demand centres, andfor more efficient electric equipment in the end‐use sectors. In the BLUE Map Scenario, theseinvestment needs increase to USD 4.0 trillion.Science and Technology in Independent India Page 8
  • Indian Electricity Sector: Trends and FutureComparing the investment needs for the Indian power sector with India’s cumulative gross domesticproduct (PPP based in 2008 prices) of USD 855 trillion between 2010 and 2050, the total investmentneeds related to power generation in the Baseline and BLUE Map scenario represent only a range of 0.3to 0.5% of total cumulative GDP. The question is - Are the planners ready for this? We will proceed byexamining the 12th Five year plan of the Government of India.Twelfth Plan FeaturesThe twelfth plan makes adequate provisions for expansion in the electricity sector to meet the rapidlyrising demand. It plans to combine this with reform process in order to make the sector more efficientand competitive. The generation capacities are to be expanded manifold by ensuring the completion ofa large number of projects quickly in an efficient and cost effective manner. The plan seeks to exploitIndia’s technological capacities and natural endowments in the hydro-electric and the nuclear field (withthe development of Fast Breeder Reactors). In addition, it also wants to exploit the potential ofrenewable with big investments in wind and solar power. Apart from generation major investments areto be made in Transmission and Distribution networks and restructuring the Accelerated PowerDevelopment and Reforms Programme (APDRP), using smart grid technologies in order to bring downthe high T&D losses. The plan also wants to achieve universal electricity coverage.It intends to provide assured fuel supply to new power plants, provide long term finance, boost T&Dnetworks, improve Plant Load Factors in old thermal power plants, improve peak capacity at hydrostations and use captive generation to meet power deficit.Capacity CreationAgainst the Eleventh Plan target of 78700 Megawatts of additional capacity addition less than 50000megawatts have been achieved. It has largely been due to poor project implementation, inadequatedomestic manufacturing capacity, shortage of power equipment (which has forced large scale imports ofmachinery from outside), and lack of adequate fuel supplies. Projects with power generation potentialof up to 80,000 MW are already under construction raising the hopes that the next plan target of adding100000 MW to capacity would be met (Though this figure has recently been revised down to 75000 MWdue to slowdown in core sector of economy1).The share of the private sector in capacity expansion has gone up substantially in the Eleventh Plan andit is expected that 33.0 per cent of the total incremental capacity will come from the private sector. Inthe Twelfth Plan, this share is expected to increase further to about 50.0 per cent. Since most of the newpower capacity will consist of thermal plants, it is essential to ensure that coal availability does notbecome a constraint.India has a substantial potential for creating hydropower capacity, especially in the North Easternregion. The pace of capacity creation in this area has been slow and the plan emphasizes the urgency toexpedite environmental and other clearances, so that the pace of work on these hydro-electric power1 http://www.dnaindia.com/india/report_dna-exclusive-power-ministry-scales-down-goal-for-12th-plan_1615251Science and Technology in Independent India Page 9
  • Indian Electricity Sector: Trends and Futureprojects can be stepped up. Early completion of these projects will also generate an income stream forthe North Eastern States which will enable them to accelerate the pace of development.The plan also intends to take measures to increase the share of gas based power and also of nuclearpower. Safeguards in respect of the latter will be further reviewed and additional measures taken asrequired.TransmissionT&D networks need to be expanded and strengthened in order to support the big expansion inproduction and consumption of electricity. The plan intends to put in a policy framework in place tobring in more private sector investments into the sector. North-Eastern states need special projects forpower evacuation. Since, routes through Bangladesh can cut the costs significantly; the plan considersthe possibility of T&D lines passing through Bangladesh. Technological development for transmissionlines of 765 KV and over 1,000/1,200 KV is of great relevance in order to reduce land requirement andalso transmission losses.DistributionIt is the weakest link in the chain and accounts for heavy unsustainable financial losses. Political pressurerestricts the regulator’s freedom to fix competitive tariffs, free power provided to farm sector andpower theft are principle reasons for this situation. Twelfth Plan wants to make the distribution systemfinancially viable by technological modernization and privatization. Since the distribution is largelyhandled by states, the central government intends to provide adequate incentives to states to increasethe efficiency of their Distribution networks. It also intends to move towards freeing up the electricitytrading regime in India by giving freedom to customers with requirement of 1MVA and above to chosetheir own sources of supply.Rural ElectrificationElectricity connections to all villages and Below Poverty Line (BPL) families were to be provided underthe Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). There are, however, still a large number ofhabitations left uncovered and a very large population that has no connectivity. Twelfth Plan will try touniversalize the access to power by restricting the RGGVY scheme. It will focus on agriculture as well asstrengthening the rural network.Major ProgramsSeveral high investment programs have been launched in order to boost generation capacity. Theserequire significant technological advancements. India is not only collaborating with nations andcorporations in order to import the equipment required but is also setting up a manufacturing base thatwill boost the industrial capabilities of the country.Science and Technology in Independent India Page 10
  • Indian Electricity Sector: Trends and FutureNuclear PowerTen new nuclear power projects are planned during the 12th Five Year Plan (2012-17) period2. Besidesthese seven nuclear power reactors with a capacity of 5,300 MW are under construction (See Appendix).It is expected that India will have 20,000 MW nuclear capacities on line by 2020, 63,000 MW by 2032and 25% of electricity will be supplied from nuclear power by 20503. India is slowly moving towardsdevelopment of indigenous Pressurized Heavy Water Reactors and first prototype Fast Breeder Reactorwill be commissioned in 20124. PHWR reactors will be 700 MW gross (640 MW net). The first four arebeing built at Kakrapar and Rajasthan. They are due on line by 2017 after 60 months construction fromfirst concrete to criticality.Russias Atomstroyexport is building the countrys first large nuclear power plant, comprising two VVER-1000 (V-392) reactors, under a Russian-financed US$ 3 billion contract in Kudankulam. The turbines aremade by Leningrad Metal Works. Russia is supplying all the enriched fuel through the life of the plant,though India will reprocess it and keep the plutonium. The commissioning of this project has been hitdue to protests and faults in project implementation.Figure 3 Nuclear Power Plants under constructionUltra Mega Power Plants and CoalUnder the Eleventh Plan it was realized that the use of super critical and ultra-super critical technologiesin power generation can reduce the coal requirement of electricity production. Domestic capacities forbuilding such power plants are being established. The twelfth plan will ensure that much larger part ofthe capacities initiated will be of the super critical variety and from the Thirteenth Plan onwards all newcapacities will be super critical or ultra-super critical.In the pre-reform era, the generation companies were not free to sell the power produced as theywanted. They were often forced to sell the power to the electricity boards of the home states, wherethe power plant was located. These loss making electricity boards were often unable to pay back the2 http://articles.economictimes.indiatimes.com/2011-11-23/news/30433349_1_nuclear-power-india-plans-kudankulam-nuclear-plant3 http://www.world-nuclear.org/info/inf53.html4 http://www.thehindu.com/sci-tech/technology/article1981270.eceScience and Technology in Independent India Page 11
  • Indian Electricity Sector: Trends and Futurecosts of the electricity produced. The generation companies also faced chronic land acquirement issueswhich affected many projects leading to delays.Under a new set of legal and institutional framework, the government has decided to create asupportive environment for the establishment of the UMPPs (Ultra Mega Power Plants)5. The ElectricityAct of 2003 enabled free trading of produced power, where power bought on the markets through freebidding was not subject to regulatory controls. This has been combined with assured paymentmechanism to the producers of electricity. Effort has been made to provide dedicated coal mines toeach power plant with secure and short supply routes. The government has also created shellcompanies for each UMPP project, which acquires all the necessary environment clearances, land, coallinkages, transport permissions, regulatory approvals and water supply arrangements so that the privateinvestors are saved from the bureaucratic struggles6. FDI caps have been removed from these projectsso as to allow foreign investors to invest money in these projects. These large projects require largeinvestments ranging in 4-5 billion US$ which no single domestic lender can risk exposing itself to. Mostof the UMPPs under construction have been financed by a consortium of domestic lenders. In somecases, they are being financed by debts from outside investors. Many of the UMPPs have been financedunder a 75:25 debt equity condition.As of now, contracts for 7 UMPPs have been awarded7 and 5 of them are being constructed by ReliancePower Limited and Two by Tata Power8. The average plant size is 4000 MW with investment of 20000crores9.Development of RenewablesThe 12th Plan envisages that the share of new and renewable energy in electricity could go up to 15.0per cent by 2020. It is hopeful that the rising costs of the conventional fuels will spur technologicaldevelopments that will reduce the current high costs of renewable generation.While the National Solar Mission (NSM) under National Action Plan on Climate Change has planned acapacity of 22,000 MW by 202210, the Centre for Wind Energy Technology has estimated a technicallyfeasible wind potential of 49,000 MW11. NSM also plans to add 2,000MW of off-grid solar power. Out ofthis, 1,100MW grid-connected solar power capacity is to be installed in the first phase ending in March2013. Nearly 800MW of this has already been allocated and is currently under execution12.5 http://pfc.gov.in/brief_umpp.pdf6 http://powermin.gov.in/whats_new/pdf/ultra%20mega%20project.pdf7 http://www.pfc.gov.in/Content/UltraMegaPower.aspx8 http://www.projectsinfo.in/News.aspx?nId=jgM68d88Dvhj6Q25HniRng9 http://www.reliancepower.co.in/business_areas/power_projects/coal_based_projects.htm10 http://articles.timesofindia.indiatimes.com/2009-11-18/india/28064964_1_solar-power-solar-mission-solar-lighting-systems11 http://www.projectsmonitor.com/ELECTRICITY/impetus-for-renewable-energy-in-12th-plan12 http://www.tata.com/article.aspx?artid=pfG3q5JjhJU=Science and Technology in Independent India Page 12
  • Indian Electricity Sector: Trends and FutureMany new projects have been planned to add capacity in Grid Interactive Renewable Power whichwould comprise power generation from mainly the following resources:(i) Solar power(ii) Wind power(iii) Biomass power /Bagasse Cogeneration(iv) Small hydro power (SHP)Decentralised Renewable Energy Applications involving multiple off grid renewable energy productionunits like family solar lanterns, family bio-gas plants, solar cookers, green buildings which produce partof the electricity that they consume and will reduce the grid dependence are also planned. Far flungvillages which cannot be connected to the grid will be provided with solar power generation systems.Science and Technology in Independent India Page 13
  • Indian Electricity Sector: Trends and FutureHydro Power DevelopmentAs per “Hydro Development Plan for the Twelfth Five year plan,” a shelf of 109 Hydro Electric schemesaggregating to 30,920 MW has been identified, which includes 46 schemes under the private sector withan installed capacity of 12,007 MW. CEA expects 25,316 MW of Hydro capacity additions to be feasiblefor commissioning during the above mentioned plan with a funding requirement of Rs.82, 972 crores.Development of Hydro Power has also been constrained due to land acquisition issues, shortage ofmanpower, lack of long term power purchase agreements, lack of capital, lack of environmentalclearances and lack of infrastructural facilities like bridges, roads, efficient and reliabletelecommunication links required for dam construction in areas where maximum hydro-potential islocated.As per assessment made by CEA, India is endowed with economically exploitable hydro-power potentialto the tune of 1 48 700 MW of installed capacity. The basin wise assessed potential is as under:-In addition, 56 number of pumped storage projects have also been identified with probable installedcapacity of 94 000 MW. In addition to this, hydro-potential from small, mini & micro schemes has beenScience and Technology in Independent India Page 14
  • Indian Electricity Sector: Trends and Futureestimated as 6782 MW from 1512 sites. Thus, in totality India is endowed with hydro-potential of about2 50 000 MW.ConclusionThere are many characteristics of the Indian electricity sector that makes its future a compelling study.First, the demand growth is bound to be much higher. This necessitates that the whole power sector bere‐planned from scratch, which opens up interesting. Second, while coal is an important indigenousenergy resource, the coal quality is much lower than elsewhere which results in coal not being the mosteconomic option: coal imports or other power supply options might be more cost‐effective. Third,renewable resources, with the exception of solar, are limited in India, particularly when this possiblesupply is juxtaposed with demand growth forecast for the coming decades.Nuclear and coal with CCS represent two alternative, carbon‐free supply options. Clearly, nuclear powermust play a crucial role in a CO2‐free electricity supply in India. The prospects for nuclear have improveddramatically in recent years thanks to two factors: the agreement between India and the United Statesin 2005 lifting a three‐decade US moratorium on nuclear trade with India and allowing the IAEA toinspect civilian nuclear facilities, and in 2008 the consent of the Nuclear Suppliers Group to India’s tradewith non‐members of the Non-Proliferation Treaty. With the growing concern for environmentalprotection and sustainable growth, the urgency of reducing CO2 emissions is increasing: if fulldecarbonisation is to be achieved, coal with CCS must be part of the solution. CCS is a relatively newconcept in CO2‐free electricity supply, and development of a technology suited for Indian coal willrequire special attention. Solar is the only option with a large technical potential, and must be includedin the decarbonisation strategy for India.Expanding electricity access to poor rural villages also requires immediate attention. Continuingprogrammes to develop decentralised solar systems and other types of decentralised renewableelectricityy strategies, could help in the achievement of this important goal. Apart from these goals,maximising transmission and distribution efficiency, together with end‐use efficiency, should be our toppriority.Science and Technology in Independent India Page 15
  • Indian Electricity Sector: Trends and FutureAppendixFigure 1. BWR/PWR (Boiling Water Reactors/Pressurized Water Reactors); PHWR (Pressurized HeavyWater Reactors), FBR (Fast Breeder Reactors)Science and Technology in Independent India Page 16
  • Indian Electricity Sector: Trends and FutureFigure 2.Science and Technology in Independent India Page 17
  • Indian Electricity Sector: Trends and FutureFigure 3.Science and Technology in Independent India Page 18
  • Indian Electricity Sector: Trends and FutureFigure 4. Projected State wise addition of Large Hydro Capacity during 12th Plan (Ref – CEA/Aug 2010).Science and Technology in Independent India Page 19
  • Indian Electricity Sector: Trends and FutureFigure 5. Major Hydro Plants in IndiaScience and Technology in Independent India Page 20