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.

According to the Central Electricity Authority (CEA), India's total installed capacity of electricity generation has expanded from 105,045.96 MW at the end of 2001–02 to 156,092.23 MW at the end of December 2009. In fact, India ranks sixth globally in terms of total electricity generation.

Source-wise, at the end of December 2009, thermal power plants accounted for an overwhelming 64 per cent of the total installed capacity, producing 99861.48 MW. Hydel power plants come next with an installed capacity of 36,885.40 MW, accounting for 23.60 per cent of the total installed electricity generation capacity.

Besides thermal and hydel power, renewable energy sources contribute 9.80 per cent to the total power generation in the country producing 15,225.35 MW.

Nuclear energy makes up the balance 2.60 per cent, contributing 4,120 MW.

Growth Potential

According to a report by KPMG and CII, released in December 2007, 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 92,700 MW in the 11th Five Year Plan (2007-12), from the earlier estimate of 78,577 MW (as of June 2007) to sustain the growth momentum of the economy.

Further, according to 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.

Public sector power major National Thermal Power Corporation (NTPC) is planning scale up its capacity from the present 30,000 MW to 75,000 MW by 2017.

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

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.

Since the Indo-US nuclear deal, India has signed a crucial civil nuclear agreement with Mongolia for supply of uranium to New Delhi. In November 2009, the Indo-French civil nuclear agreement was unanimously adopted by the French Parliament, paving way for companies to build nuclear power plants in India. India has also signed a civil nuclear pact with Argentina and has reached an agreement on civil nuclear cooperation with Canada. In December 2009, Russia and India signed an agreement to expand nuclear cooperation. Recently, Britain and India have reached an outline agreement on nuclear energy cooperation and are looking at expanding ties in defence manufacturing.

• Hindustan Construction Company (HCC) has signed a memorandum of understanding (MoU) with the international engineering and project management company AMEC plc, to jointly explore the application of consulting and EPC services for the establishment of nuclear power plants in India.
• The Central government has finalised six 1,000 MW nuclear power units at Mithivirdi in Gujarat, involving an investment of US$ 12.8 billion.
• Indian Oil Corporation Ltd (IOCL) has signed a memorandum of understanding (MoU) with the Nuclear Power Corp of India (NPCIL) for setting up of a US$ 2.2 billion nuclear power plant.