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February, 2011

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.

The power sector in the country is poised for record capacity addition of 15,000 MW during the present financial year, said Mr Sushilkumar Shinde, Union Minister of Power.

According to the Central Electricity Authority (CEA), Ministry of Power, India's total installed capacity as on January 31, 2010 is 1,70,228.86 mega watt (MW). Thermal power plants account for 1,11,294.48 MW, followed by hydro power plants with a capacity of 37,367.40 MW. Renewable energy sources provide 16,786.98 MW of power and the remaining 4,780 MW comes from nuclear energy.

Within the thermal power plants, coal-based power plants have an installed capacity of 92,638.38 MW, gas-based have a capacity of 17,456.35 MW and oil-based have a capacity of 1,199.75 MW.

According to the 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.

Growth Potential

As per the Economic Survey 2009-10, the Eleventh 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.

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


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 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$ 1,028 million during April to December 2010. The cumulative FDI received by the power sector between April 2000 and December 2010 was US$ 5.65 billion.