Power
http://ibef.org/economy/power.aspx
Sector structure
As the Indian economy continues to surge ahead, its power sector has 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.
India's total installed capacity of electricity generation has expanded from 105,045.96 MW at the end of 2001–02 to 150,323.41 MW at the end of June 2009. In fact, India ranks sixth globally in terms of total electricity generation.
Source-wise, thermal power plants account for an overwhelming 63.9 per cent of the total installed capacity, producing 96,044.24 MW. Hydel power plants come next with an installed capacity of 36,916.76 MW, accounting for 24.6 per cent of the total installed electricity generation capacity.
Besides thermal and hydel power, renewable energy sources contribute 8.8 per cent to the total power generation in the country producing 13,242.41 MW.
Nuclear energy makes up the balance 2.7 per cent contributing 4,120 MW.
Growth Potential
According to a report by KPMG and CII, India's energy sector will require an investment of around US$ 120 billion-US$ 150 billion over the next five years.
The government has revised its target of power capacity addition to 90,000 MW in the 11th Five-Year-Plan (2007-12), up by 11,423 MW from the earlier estimate of 78,577 MW to sustain the growth momentum of the economy.
Further, according to the Planning Commission estimates, renewable energy (RE) projects worth US$ 16.50 billion, for the generation of 15,000 MW power, would come up in the 11th Plan.
Moreover, the government has earmarked a total capital subsidy of US$ 6.88 billion for providing electricity connections and for the distribution of infrastructure to rural households.
Nuclear Power Generation
Subsequent to the Indo-US nuclear deal and India getting clearance from the Nuclear Suppliers Group (NSG), nuclear power generation is likely to provide an opportunity of US$ 10 billion in the next five years, according to a JP Morgan estimate. India will now also be partnering several countries for nuclear fuel technology projects.
* As a part of the Eleventh Five-Year-Plan, Nuclear Power Corporation of India Ltd (NPCIL) will be commencing work on 12 reactors. NPCIL will be developing a series of nuclear reactors with capacities between 1,000 MW to 1,650 MW at 5-6 sites along the country's coastline.
* GE Hitachi Nuclear Energy has tied up with NPCIL and Bharat Heavy Electricals Ltd (BHEL) for building multiple GEH-designed nuclear reactors.
* Sweden sees a market of around US$2 billion in India for back-end operations like nuclear waste management.
* NTPC Ltd and NPCIL would jointly invest around US$ 3.09 billion in the next eight years to set up nuclear power plants in the country.
* BHEL plans five joint ventures in the nuclear sector and locomotive manufacturing. The company has decided to invest US$ 204.4 million in a castings and forgings joint venture.
* French-major, Areva is planning a large scale nuclear reactor forgings facility in India with Bharat Forge and will invest over US$ 408.79 million in two shell companies.
Investments
According to an ASSOCHAM study during January-June 2008, investment announcements totalling to US$ 40.84 billion were made in the power sector.
* Reliance Power Transmission will invest nearly US$ 348.66 million in setting up a 1,500-km transmission line.
* Hyderabad-based Greenko Group plans to invest about US$ 300 million in three years for setting up about 15 clean energy projects in the country.
* Japan Bank of International Cooperation (JBIC) has agreed to lend US$ 153.1 million to L&T-MHI Boilers Private Ltd (LTMB) for manufacturing and sale of thermal power generation facilities in India.
* Private power equipment makers such as Alstom and Toshiba will set up their power manufacturing base in India in the next three-four months.
* The National Thermal Power Corporation (NTPC) has signed a Memorandum of Understanding (MoU) with the Chhattisgarh government to set up a 4000-MW power project in the state. The project cost has been estimated at US$ 4.09 billion.
* Sterlite Industries, the country’s largest private sector power producer, is planning to invest US$ 4.1 billion over the next year to create additional capacity of 4,500 MW.
* Power Finance Corporation (PFC) will raise US$ 4.75 billion by the end of this fiscal for financing various power projects.
* The Haryana government has drawn up an investment plan of US$ 377.48 million for the current financial year to strengthen the power distribution system in the state.
Government Initiatives
The government has taken several proactive steps to open the sector for the private players and realise the full potential of the country in the power sector.
* Introduction of the Electricity Act 2003 and the notification of the National Electricity and Tariff policies.
* Constitution of Independent State Electricity Regulatory Commissions in the states.
* Allowing the private sector to set up coal, gas or liquid-based thermal projects, hydel projects and wind or solar projects of any size.
* Allowing foreign equity participation up to 100 per cent in the power sector under the automatic route.
* Providing income tax holiday for a block of 10 years in the first 15 years of operation and waiver of capital goods' import duties on mega power projects (above 1,000 MW generation capacity).
* The government has also taken up some ambitious programmes like the Ultra Mega Power Projects (UMPP), Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY), Accelerated Rural Electrification Programme and the goal of Power for All by 2012 among others to rapidly increase the installed capacity.
Looking ahead
A recent study by consultancy major McKinsey estimates India's power demand to increase from the present 120 gigawatt (GW) to 315 GW–335 GW by 2017, if India continues to grow at an average of 8 per cent over the next 10 years. This would require a five- to ten-fold rise in power production, entailing investments worth US$ 600 billion over the next ten years.
To feed its rapidly growing economy, India is planning to get an additional 60,000 MW of electricity from various hydro-power projects by the end of 2025.
The government targets providing electricity for all by 2012. Under the Rajiv Gandhi Grameen Vidyutikaran Yojna, the Ministry of Power plans to electrify 120,000 villages in the current Five Year Plan (2007–12).
Exchange rate used:
1 USD = 48.43 INR (as on June 2009)
1 USD = 48.92 INR (as on July 2009)
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