Power Industry Market demand/ Consumption:

Total Energy Requirements (MTOE) Year Hydro Nuclear Coal Oil Natural Gas Total 2011-12 12 17 283 186 48 546 2016-17 18 31 375 241 64 729 As in previous years, during the year 201011, demand for electricity in India far outstripped availability, both in terms of base load energy and peak availability. Base load requirement was 861,591 (MU) against availability of 788,355 MU, a 8.5% deficit. During peak loads, the demand was for 122 GW against availability of 110 GW, a 9.8% shortfall. India's power demand is seen rising 55.6 per cent to 1,400 billion kilowatt hours (bkwh) by the end of next five year plan period, which ends in March 2017. The demand for power is expected to increase to 975 billion kWh by 2011-12. However, at an average GDP growth rate of 8 per cent, the overall demand is expected to increase to about 1,097 billion kWh in 2011-12, including the demand from non-utilities.

Market Supply/Investments:
The country's annual electricity generation capacity has increased in last 20 years by about 120 GW, from about 66 GW in 1991 to over 100 GW in 2001, to over 185 GW in 2011. India's Power Finance Corporation Limited projects that current and approved electricity capacity addition projects in India are expected to add about 100 GW of installed capacity between 2012 and 2017. According to India's Ministry of Power, about 14.1 GW of new thermal power plants under construction are expected to be put in use by December 2012, so are 2.1 GW capacity hydropower plants and a 1 GW capacity nuclear power plant. India's installed generation capacity should top 200 GW in 2012. Electricity sector capacity and availability in India (excludes effect of blackouts / power- shedding) Item Total installed capacity (GW) Available base load supply (MU) Available peak load supply (GW) Demand base load (MU) Demand peak load (GW) Value 185.5 837374 118.7 933741 136.2 Date reported November 2011 May 2011 May 2011 May 2011 May 2011

A capacity addition of 17191 MW during the year 2011-12 comprising 14111 MW of thermal, 2080 MW of hydro and 1000 MW of nuclear power stations has been considered. Anticipated Power Supply Position in the Country during 2011-12 Energy State / Region Requirement Availability Surplus(+)/Deficit (-) (MU) (MU) (MU) (%) Chhattisgarh 24471 28697 4226 17.3 Jharkhand 7346 6540 -806 -11.0 Orissa 25430 21511 -3919 -15.4 All India 933741 837374 -96367 -10.3

Requirement (MW) 3025 1200 3700 136193

Peak Availability Surplus(+)/Deficit (-) (MW) (MW) (%) 2964 -61 -2.0 1189 -11 -0.9 3836 136 3.7 118676 -17517 -12.9

Installed Capacity Addition Plan (MW) Sector 11thPlan Total Central State Private Thermal 59,693 24,840 23,301 11,552 Hydro 15,627 8,654 3,482 3,491 Nuclear 3,380 3,380 Grand Total 78,700 36,874 26,783 15,043

Source: CEA, IMaCS Research

A capacity addition of only 32,762 MW has taken place in the 11th Plan till date. As on January 31, 2011, the installed generation capacity, including capacity from renewable energy sources (RES), stands at 170,228 MW. The capacity addition in the next five-year plan is targeted as 106,470 MW. Additionally, under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) scheme, 573 projects have been sanctioned at an estimated cost of Rs. 2,6353,51 crore. These projects cover electrification of 1.18 lakh un-electrified villages, intensive electrification of 3.55 lakh electrified villages and free electricity connections to 246 lakh BPL households. As on 15 February 2011, 92,689 un-electrified villages have been electrified, 1.76 lakh already electrified villages have been intensively electrified and free electricity connections have been released to 148.81 lakh BPL households.

Orissa: The state has pulled investments worth Rs 1.67 lakh crore in the power sector from 29 independent power producers for establishment of thermal power stations. Already 26 power companies in private sector have singed agreements with the state government to set up thermal power plant with an installed capacity of 32,000 MW. The central PSU behemoth National Thermal Power Corporation [NTPC] will set up two plants at Gajamara in Dhenkanal and Darliparli in Sundergarh districts respectively to generate 6400 MW. Besides, the state has agreed to host three of the five new ultra mega power projects (UMPPs) of 4,000 MW each envisaged by the central government that could be structured through special purpose vehicles, promoted by Power Finance Corporation. While ACME Tele-powers would set up a 100 Mw solar thermal power plant either in Bolangir or in Khurda district, GRD Power Private Ltd is planning to set up a 25 Mw solar thermal power plant in Khurda district. Six solar photo-voltaic power projects with an aggregate generating capacity of 105 Mw were given the go-ahead by the state level technical committee (STC). DUET Solar Projects Private Ltd will also be setting up solar power plants in six locations like Nawarangpur, Koraput, Phulbani, Bolangir, Dhenkanal and Sambalpur with a combined generation capacity of 60 Mw. The other projects cleared by STC included EIO Six Orissa Private Ltd (20 Mw, Bolangir), Cambridge Energy Pvt Ltd (5 Mw, Ganjam), Abacus Holding Private Ltd (5 Mw, Nawarangpur), Green O Projects (10 Mw, Khurda) and Green O Lite (5 Mw, Kalahandi).With this the total envisaged capacity in the solar power sector has increased to 294 Mw from 64 Mw earlier. The country's largest hydro power producer NHPC will soon finalise a joint venture with the Orissa government for setting up three hydel projects having a total capacity of 300 MW in the state.

Chhattisgarh: NTPC has already started construction on its 2640 MW Sipat Super Thermal Plant and another 600 MW plant in Korba. Government of Gujarat is putting up a 500 MW generation plant in Korba. Private sector MoUs total another 1500 MW, and more projects are in the pipeline. NTPC recently commisioned its first super-critical power project at Sipat in Chhattisgarh. The Sipat project has three units of 660 MW in stage I and 2 units of 500 MW in stage II, which are already operational. Chhattisgarh government-run power companies will pump in 17,000 crore in the state over the next three years to increase power production and also improve the power transmission and distribution infrastructure The Electricity Board of Chhattisgarh is planning to set up a 1,200 MW power plant at Korba worth USD 2.44 billion. Jharkhand: Capacity in MWs 2x500 2x500 500 500 3x660 120 2x500 2x500 2x110 3x210 2x210 Being developed by DVC DVC DVC DVC NTPC TATA Powers TATA Powers Sound Craft M'bai KSK H'bad TVNL JSEB

1. Koderma 2. Ramgarh 3. Bokaro 4. Maithan (Dhanbad) 5. Karanpura (Hazaribag) 6. JojoBera (Jamshedpur) 7. Chandil 8. Chandil 9. Dumka 10. Tenughat(Extension) 11. Patratu(Extension)

Apart from the thermal power plants emphasis is also being given to hydro- power development. Sites numbering 90 have been identified for mini hydal plants and the State Government have opened them for private entrepreneurs

Impact on Business/ Key issues/Challenges:India's Power sector (generation) faces many issues. Some are: India is facing a severe shortage of coal. India's coal producer, state-controlled Coal India, is constrained by primitive mining techniques and is rife with theft and corruption. Poor coal transport infrastructure has worsened these problems. To expand its coal production capacity, Coal India needs to mine new deposits. However, most of India's coal lies under protected forests or designated tribal lands. Any mining activity or land acquisition for infrastructure in these coal-rich areas of India has been rife with political demonstrations, social activism and public interest litigations. The giant new offshore natural gas field has delivered less fuel than projected. India faces a shortage of natural gas.

Hydroelectric power projects in India's mountainous north and northeast regions have been slowed down by ecological, environmental and rehabilitation controversies, coupled with public interest litigations. India's nuclear power generation potential has been stymied by political activism since the Fukushima disaster in Japan. Average transmission, distribution and consumer-level losses exceeding 30%. Indias coal-fired, oil-fired and natural gas-fired thermal power plants are inefficient and emit 50 to 120 percent more CO2 per kWh produced. Indias power sector is also plagued by the dual responsibility of the states and the federal government. Power produced and sold in the same state is subject to the oversight of the State Electricity Board and the State Electricity Regulatory Commission, whereas power sold between states is subject to federal oversight and regulation. Far too many state and federal institutions involved in energy decision-making. In the absence of a single institution responsible for the energy sector, comprehensive and sound policymaking is impossible. One final issue is the land acquisition bill under debate in India.

How to strategize on key issues/Action Plan:

Short and Medium term
Invest more in the power generation to increase the supply which lags far behind the country demand. Should invest more in renewable resources of power generation to tackle the problem of shortage of coal supply. More emphasis on quality and efficiency as the various power plants are not running to their optimal production capacity. New and better technologies through transfer of technology and R&D to efficiently tap the natural gas from the gas reserves. Training camps/ institutions for labour to enhance availability of skilled and trained manpower and thus increase the productivity and efficiency of labour. Use of green and clean technologies to reduce emissions and increase efficiency. Invest more in power generation using renewable resources like wind and solar power which are currently untapped to a huge extent. Strategically position new power plants to remove the problems of distribution and to take the advantage of state policies that favours such initiatives. Provide proper information to the local people and sought their participation in the process of land acquisition and their relocation to tackle the problems of land acquisition.

Long Term
Investing more in R&D and find methods to develop substitute for coal for power generation like clinically generated synthetic coal to have uninterrupted supply of raw materials. R&D will help in improving qualities of coal that will help increase the productivity. Find out substitutes to traditional raw materials in power generation like other forms of carbon compounds, to gain first mover advantage and then later on use the experience and economies of scale to reduce cost and increase efficiency and productivity through integration. Negotiate with the government to change its policies:- Structural reforms like de-licensing of thermal generation, , introduction of ultra-mega power projects (UMPP) and liberalization of mega power policy to be undertaken to improve the power situation.