The Indian power sector is one of the most diversified in the world. Sources for power generation range from commercial ones such as coal, lignite, natural gas, oil, hydro and nuclear power to other viable non-conventional sources such as wind, solar, and agriculture and domestic waste. The demand for electricity in the country has been growing at a rapid rate and is expected to grow further in the years to come. In order to meet the increasing requirement of electricity, massive addition to the installed generating capacity in the country is required.
As per the International Energy Agency (IEA) publication on World Energy Statistics 2013, India ranks 5th in Electricity production and 110th in the per-capita consumption of electricity. This was stated by Mr Piyush Goyal, Minister of state for Power, Coal & New and Renewable Energy (Independent Charge).
The Minister further stated that energy deficit in India has reduced from 9.5 per cent in 2010-11 to 4.5 per cent in 2013-14.
The Indian power sector is undergoing a significant change that is redefining the industry outlook. Sustained economic growth continues to drive power demand in India. The Government of India’s focus to attain ‘Power For All’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing on both market side as well as supply side (fuel, logistics, finances and manpower).
Electricity production in India (excluding captive generation) stood at 911.6 TWh in FY13, a 4 per cent growth over the previous fiscal. During FY14, electricity production stood at 967 TWh. Over FY07–14, electricity production expanded at a compound annual growth rate (CAGR) of 5.6 per cent.
As of April 2014, total thermal installed capacity stood at 168.4 gigawatt (GW), while hydro and renewable energy installed capacity totalled 40.5 GW and 31.7 GW, respectively. At 4.8 GW, nuclear energy capacity remained broadly constant from that in the previous year.
Indian solar installations are forecasted to be approximately 1,000 megawatt (MW) in 2014, according to Mercom Capital Group, a global clean energy communications and consulting firm.
Wind energy market of India is expected to attract about Rs 20,000 crore (US$ 3.24 billion) of investments next year, as companies across sectors plan to add 3,000 MW of capacity powered by wind energy.
The investment climate is positive in the power sector. Due to the policy of liberalisation, the sector has witnessed higher investment flows than envisaged. The Ministry of Power has sent its proposal for the addition of 76,000 MW of power capacity in the 12th Five Year plan (2012-17), to the Planning Commission. The Ministry has set a target of adding 93,000 MW in the 13th Five Year Plan (2017-2022).
The industry has attracted FDI worth US$ 9,309.96 million during the period April 2000 to September 2014.
Some of the major investments made into the Indian power sector are as follows:
The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. Some of the initiatives taken by the Government of India to boost the power sector of India are as follows:
The government is targeting capacity addition of around 89 GW under the 12th (2012–17) and around 100 GW under the 13th (2017–22) Five-Year Plan. The expected investments in the power sector during the 12th Plan (2012–17) is US$ 223.9 billion. There is a tangible shift in policy focus on the sources of power. The government is keen on promotion of hydro, renewable and gas-based projects, as well as adoption of clean coal technology.
Wind energy is the largest source of renewable energy in India; it accounts for an estimated 87 per cent of total installed capacity (18.3 GW). There are plans to double wind power generation capacity to 20 GW by 2022.
Biomass is the second largest source of renewable energy, accounting for 12 per cent of total installed capacity in renewable energy. There is a strong upside potential in biomass in the coming years.
Exchange Rate Used: INR 1 = US$ 0.0162 as on January 21, 2015
References:Ministry of Power, Press Information Bureau, Media Reports