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Power

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Power

October, 2010

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 for the growth of this sector is immense. The overall power generation in the country has increased from 723.793 billion unit (BU) during 2008-09 to 771.551 BU during the year 2009-10.

The Indian power sector has the fifth largest electricity generation capacity in the world and the world's third largest transmission and distribution network.

According to the Ministry of Power, India's total installed capacity as on October 31, 2010 is 1,67,278.36 mega watt (MW). Thermal power plants account for 108,602.98 MW, followed by hydro power plants with a capacity of 37,328.40 MW. Renewable energy sources provide 16,786.98 MW of power and the remaining 4,560 MW comes from nuclear energy.

Within the thermal power plants, coal-based power plants have an installed capacity of 89,778.38 MW, gas-based have a capacity of 17,624.85 MW and oil-based have a capacity of 1,199.75 MW.

According to the Central Electricity Authority (CEA), a total of 34 projects were commissioned during 2009-10 with a total capacity of 9,585 MW. These include 31 thermal power plants with a total capacity of 9,106 MW, one hydro power plant with a capacity 39 MW, and two nuclear power plants with a combined capacity of 440 MW.

As on October 31, 2010, a total of 30 projects were commissioned during 2010-11, with a total capacity of 7,020 MW. These include 22 thermal power plants with the total capacity of 6,569 MW and eight hydro power plants with a capacity of 451 MW.

Growth Potential

As per the Economic Survey 2009-10, the 11th Five Year Plan envisaged an additional capacity of 78,700 MW of which 19.9 per cent was hydro, 75.8 per cent thermal and the rest was nuclear.

The Centre has targeted capacity addition of 100,000 MW each in the 12th Five Year Plan (2012-17) and 13th Five Year Plan (2017-22), said Mr Sushil Kumar Shinde, Union Minister of Power.

India has launched its ambitious solar energy mission which aims to generate 20,000 MW of solar power by 2022.

Investments

Mr Sushilkumar Shinde, Union Minister of Power, has stated that the scope for investment in the power sector over the next few years is well over US$ 300 billion and given the large expansion programme in this sector, the country would definitely need and welcome a large amount of foreign direct investment (FDI).

Mr Farooq Abdullah, Union Minister of New and Renewable Energy said the government is targeting to electrify 10000 remote villages across the country with an investment of US$ 112.14 million by March 2012.

India expects investments of up to US$ 55 billion by 2015 in the renewable energy sector, which would generate 35,000 MW of power, stated Debashish Majumdar, Chairman and Managing Director, Indian Renewable Energy Development Agency (IREDA).

According to the Department of Industrial Policy and Promotion (DIPP), the power sector has attracted foreign direct investment (FDI) worth US$ 677 million during April to August 2010. The cumulative FDI received by the power sector between April 2000 and August 2010 was US$ 5.30 billion.

According to data released by Venture Intelligence, a Chennai-based research company, private equity (PE) investments in the country's power sector were worth US$ 1.1 billion in 2009-10 with the total number of deals being 27. PE investments in the conventional energy sector stood at US$ 694 million in 2009-10 as compared to US$ 129 million in 2008-09.

As of October 19, 2010, PE investment in energy in 2010-11 has reached US$ 834 million in 12 deals, stated Venture Intelligence.