Energising the way to 2020

“Our forefathers did without sugar until the 13th century, without coal fires until the
14th, without buttered bread until the 16th, without tea or soup until the 17th, without
gas, matches or electricity until the 20th”
The quotation given above very well exhibits the importance of electricity in today’s
world. Power in the form electrical energy supply has now become a necessity.
Power supply is one of the most vital inputs for the economic development of any
country through the various modes of development. Adequacy of power supply for
domestic and industrial consumption is a vital factor facilitating the development
process in any country. Power, in fact, is the driver of the development. Thus,
ensuring the adequacy and availability of power supply is a responsibility the
governance of the countries around the world cannot undermine even slightly.
The Indian power sector has undergone radical changes over the years. From highly
inadequate power supply to somewhat adequacy in the supply, from more reliance on
thermal power to reduced reliance on the same and increased reliance on the other
sources of generation of power, from improper distribution and transmission systems
to better technologies related to the same. All this has improved the power scenario in
the country to a great extent but still it is highly deficient and a large part of the Indian
population is still devoid of power supply. India has still not been able to achieve
generation, transmission and distribution efficiencies comparable to that of the other
developed and emerging countries.
Thus, India has a long way to go in achieving sufficiency and energy in the generation
and supply of power for achieving a dominant position in 2020.
Current Energy Scenario in India
Installed Capacities
The current energy scenario in India can be shown with the help of the table given
below :
Sector MW %age
State Sector 76,626.71 52.5
Central Sector 49,842.63 34
Private Sector 25,890.75 13.5
Total 1,52,360.09

Fuel MW %age
Total Thermal 98,044.48 64.6
Coal 80,395.88 53.3
Gas 16,448.85 10.5
Oil 1,199.75 0.9
Hydro (Renewable) 36,885.40 24.7
Nuclear 4,120.00 2.9
RES** (MNRE) 13,310.21 7.7
Total 1,52,360.09
Source : Ministry of Power website
As it is evident from above the installed power generation capacity in India stands at
about 1.52 GW out of which a major part of the energy is generated by public sector
companies making up 86.5 % of the capacity whereas the private sector meagrely
contributes about 13.5 % of it. Also taking into consideration the mode of power
generation 64.6 % of the power generated in India is from thermal modes of power
generation which includes power generation using coal, natural gas and oil out of
which the power generation using coal is the major source making up about 53.3 % of
the total installed power generation capacity in India. Hydro based power generation
is the next highest contributor contributing about 24.7 % of the total power generation
in the country followed by other sources of power generation which includes nuclear
and other non conventional means of generation of power. The nuclear power plants
contribute about 2.9 % to installed generation capacity whereas other renewable
energy sources contribute 7.7 % which include the generation of electricity from
sources like biogas, small hydro power projects, wind and urban and industrial waste
power.
Transmission and Distribution Losses
The transmission and distribution losses are mainly on account of two types of losses
which are technical and commercial in nature. The technical losses are mainly on
account of reasons like lack of development of infrastructure for the transmission and
distribution of power, improper maintenance of the equipments used and overloading
of the current infrastructure which in turn leads to excessive losses in the form of
thermal leakages. The commercial losses are mainly due to theft and pilferage of
electricity, improper metering and monitoring equipments and lack of proper
mechanism for energy accounting and auditing. India is among the countries having
the highest level of such losses. As per the world development indicators database
maintained by the World Bank, India was the 13th worst country in 2004 when it came
to transmission and distribution efficiency. The transmission and distribution losses
over the years have been as follows :

T&D Losses over the years ( in % )

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
33.98 32.54 32.53 31.25 30.42 28.65 27.2
Source : Central Electricity Authority, General Review 2007, 2008; Electricity data 2006-07 & 2007-08

Adequacy of Power Supply

The power supply in the country has not been sufficient to meet the electricity
demands of the people. The demand supply scenario of power in India can be shown
with the help of the following graph :
 Source : Role of E-Governance in Bharat Nirman, 30th Sept. 2009, Spanco Ltd.

The demand supply gap as seen above has been showing a widening trend due to the
non commensurate growth between the demand and supply side of power. Only about
56% of households have access to electricity, with the rural access being 44% and
urban access about 82%.
Problems faced by the Indian Power Sector
Though a lot of developments have taken place in the Indian Power Sector, the energy
scenario in the country is far from sufficient to cater to the mammoth population as
well as the growing industrial sector of the company. Based on the current energy
scenario of the country discussed above, the various problems faced by the Indian
Power Sector can be discussed in the following paragraphs.
Firstly, based on the installed capacity of the power in the country, as regards to the
ownership of the units, most of the units are owned by the companies in the public
sector. The involvement of the private sector companies in power generation is very
less. This is mainly on account of the fact that until almost a decade back, the entry of
private players was restricted and as also the foreign investment in these sectors was
not talked about. Based on the various regulations of the government, the entry for the
private players was also full barriers and getting through these wasn’t an easy task for
the new entrants. Thus, the power generation was left to the mercy of the public sector
companies, which is also by far the case now. In fact, in the current state as well a
major stake is controlled by the public sector majors namely, National Thermal Power
Corporation, National Hydro Power Corporation and Nuclear Power Corporation of
India Ltd. and some other such players. Though more and more private sector
companies are venturing into this sector along with government policies facilitating
the entry of foreign players, their presence still has to go a long way to go to match
the presence of the public sector units operating in this sector. Entry of private players
in this sector would definitely help in increasing the efficiency and the effectiveness
in the generation of power and its distribution and bring about necessary
infrastructural and technological developments needed to accentuate the performance
of this sector which would also be facilitated by certain international collaborations
and exposures.
Also, as regards to the sources of generation of power, India has a heavy reliance on
the thermal sources of power and that to on the generation of power using coal based
power plants. In India, specifically, the available resources of coal are not of a good
grade. These resources of coal are of an inferior quality having a high content of ash
and sulphur and also because of all these attributes have a low calorific value. This
leads to lower generation efficiency and also heavy pollution thus contaminating the
environment to a greater extent. At times, the companies also need to import coal
from other countries to meet their needs which in turn leads to higher generation costs
due to increased input costs. The utilisation of the other sources of power is also not
adequate as demanded by the current power situation which warrants an increased use
of other such sources of power which are renewable in nature and are less polluting
than the conventional means of the generation of power. This is given based on the
deteriorating climatic conditions which has led to the various nations take certain
measures to reduce the same and which may lead to mandatory compliances of certain
norms at the international level for countries like India and China in the future.
Secondly, based on the transmission and distribution efficiencies of power, the current
scenario doesn’t even meagrely paint a good picture. As seen above from the given
statistics of the transmission and distribution losses in the country over the years and
as per the statistics presented by the World Bank, the related losses in the country are
very high as compared to international standards. This is, as discussed above, mainly
on account of the fact that the developments have not taken place on the infrastructure
and technology sides in this respect. This has led to a high level of losses and
subsequently high levels of related economic losses and shortages.
Thirdly, based on the demand and supply situation of power in the country, the power
supply in the country is highly deficient as compared to the actual demand for power.
From the above statistics, it is evident that even after claims of electrification of a
large number of villages, the number of households actually receiving electricity is
fairly low. A major part of the rural area of the country is still devoid of power
supply. The urban areas by and large also not getting their hunger for power
completely satiated. Power cuts for long durations making up a significant fraction of
the day are not very uncommon even in cities like Delhi. This shows the inadequacy
of the existing infrastructure of power generation. The various plans have emphasised
on the importance of power for the development of the country and made targets and
also formulated policies for the same. But the country’s glorious history has been an
evidence of the fact that most of the targets in the past have not been met.
Measures taken by the Government
The Indian and the state governments along with the various agencies under them and
operating independently have been taking a lot of efforts to address the issued
mentioned above. Various laws have been formulated to facilitate the regulation and
the development of the power sector in India various agencies like the Bureau of
Energy Efficiency have been constituted which rates the appliances on the basis of
their energy efficiency and accordingly also promote the use of appliances in a
conservative manner so as to conserve energy. Such organisations have launched
programmes targeting the conservation of energy at the consumer level so as to at
least bring about efficient use of energy at the consumer level. The various economic
policies have also been formulated to promote participation of the private sector and
international companies in the power sector. Such initiatives include relaxing FDI
norms in the power sector, announcing tax holidays for specified power projects, etc.
The important aspect of increasing non conventional and less polluting sources of
power generation has been given due importance in the form of programmes
promoting the generation of electricity using solar power, wind power and biofuels.
The government helps these projects by subsidising the cost of finance required by the
companies for undertaking these projects as well as facilitating the process of raising
capital for such projects. The financial institutions also promote such projects by
providing finance at cheaper rates and relaxing norms for raising capital. Tax holidays
are also offered in this respect. The equipments used for the generation of power
using such non conventional and less polluting sources are subject to lesser costs of
importing them. Thus, the government has ensured that these sectors are made
attractive and invite more interest of the various private entities.
The government has turned ambitious on realisation on the importance of power
supply as a driver of development, hence it is on a mission titled ‘ Power for all by
2012 ’. This, according to the government estimates would mean that the installed
capacity of power generation in India should go up to 2,00,000 MW. This is the
mission on which the government is continuously thriving. There are other
programmes under this mission. The rural electrification programme of the
government is a major aspect of it.
The regulators are thriving hard to plug the various kinds of losses arising out of the
generation and distribution of energy. Some of the moves made by the government in
this respect are explained as follows :
If power distribution companies reduce their transmission and distribution losses by
15 per cent, half their loans would be converted to a subsidy. This was a comment
made by the Union Minister of State for Power in the month of September 2009.
E – Governance is one of the various aspects that the government is targeting for the
various aspects of governance of the country. The use of electronic networks,
specifically internet for the various functions of governance have led to radical
changes in its efficiency and the effectiveness. The use of IT in the various processes
related to the distribution, monitoring and accounting of power has been done by the
government.
The upgradation of the transmission and distribution infrastructure has also been
taken up by the government and the related agencies. The efforts in this regard are
evident from the fact that various contracts have been given to various national and
international companies for the same.
There are also policies formulated promoting the establishment of Ultra Mega Power
Projects ( UMPP ) which are now being taken up by many companies. These projects
prove to be more efficient and effective sources of generation of power as compared
to their smaller counterparts.
Suggested Measures
The various measures undertaken by the government may be sufficient to cater
growing energy needs in the country on its path to development and becoming one of
the strongest economies in the world. But however, there are some other measures
that can be taken by the government and other entities in the power sector to meet the
needs of the power hungry economy, India.
In the past there have been instances which have hampered the establishment of the
power projects. The Narmada Bachao Andolan has been a typical example of the
same. The power generated out of the project would have helped increase the power
supply in the adjoining areas and would have improved the power scenario in the
adjoining regions. The andolan led the project suffer and it was the people and the
industries which actually suffered. It should be understood by the various political
parties and other such so called social organisations that these are not the issues which
should be used to demonstrate their people power rather these should be jointly
promoted for better implementation.
Second such suggestion could be on the technological front. The power generation
using wind power can be done off shore. India is blessed with a large coastline and a
good geography as well. Establishing wind power generation units off the shore can
prove to be a very high potential source of clean energy. And given the success of
such projects in some countries proves to be a case for development avenues.
Conclusion
India, based on the given economic growth rates would be requiring, as per the
various estimates, at least around 3 GW of installed capacity for power generation.
Given the success rate of the government initiatives and the various hindrances arising
in the same, this remains a humungous task. However, this would be the bare
minimum requirement on the energy front that would be required to make India what
it aspires to be in 2020. But, also with more and more environment related issues
coming to the fore, sanctions are expected to be imposed on countries like India and
China. Thus, India needs to ‘Energise its way to 2020’ in an accelerated yet
sustainable manner taking care of the roadblocks it may face.

Submitted By :
Ashwinkumar P. Arora, MMS III Finance, Roll No. 09, 9869471362
Krunal K. Shah, eMBA Ins. Marketing, Roll No. 30, 9987769102
References :
“Loan writeoffs if power discoms reduce T&D losses, says minister”, Business
Standard, 22nd September 2009.
Role of e - Governance In Bharat Nirman.ppt, Kaustubh Dhavse, 30th Sept. 2009.
“Renewable Energy Development in Emerging Markets, August 2009”,
arcadiaasia.com

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