(Unit 8-Topic 2) power sector & Energy sector in India

Indian Geography (Unit 8-Topic 2.1) 

India’s power sector

Power Sector plays vital role in the economic growth and Human development of any country. It definitely improves the quality of life of human beings and the biotic of this sphere. Electricity consumption is one of the most important indices for measuring the development level of a nation.

Power is one of the most critical components of infrastructure and crucial for the welfare of the Nations. India’s power sector is one of the most diversified in the world. 

Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required for efficient and effective Production of Goods and Services.

India is world’s sixth largest energy consumer, accounting for 3.4 per cent of global energy consumption, with Maharashtra as the leading electricity generator among Indian states. Due to India’s economic rise, the demand for energy has grown at an average of 3.6 per cent, per annum over the past 30 years.

India is also the sixth largest in terms of power generation. About 65 per cent of the electricity consumed in India is generated by thermal power plants, 22 per cent by hydroelectric power plants, 3 per cent by nuclear power plants and rest by 10 per cent from other alternate sources like solar, wind, biomass etc. 

53.7 per cent of India’s commercial energy demand is met through the country’s vast coal reserves. The country has also invested heavily in recent years on renewable sources of energy such as wind & Solar energy.

Additionally, India has committed massive amount of funds for the construction of various nuclear reactors which would generate at least 30,000 MW. 

In July 2009, India unveiled a $19 billion plan to produce 20,000 MW of solar power by 2020 under National Solar Mission.

The per capita power consumption in India is 733.54KWh/yr, which is very minimal as compared to global average of 2340KWh/yr. Power cuts are common throughout India and this has adversely effected the country’s economic growth.

Power for all
The Government of India has an ambitious mission of POWER FOR ALL. This mission would require that the installed generation capacity should be at least 300,000 MW.

The Government of India is committed to improving the quality of life of its citizens through higher electricity consumption. The aim of Government of India is to provide each household access to electricity, round the clock (24x7). The ‘Power for All’ programme is a major step in this direction.

Joint initiative of Government of India and Government of States/Union Territories aims to further enhance the satisfaction levels of the consumers and improve the quality of life of people through 24x7 power supply. This would lead to rapid economic development of the country in all sectors resulting in inclusive development and Inclusive growth.

The Government of India immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24x7 electricity for residential, industrial, commercial and agriculture use.

So the Government of India and The State Governments  should prioritise on perspective planning, policy formulation, processing of projects for investment decision, monitoring of the implementation of power projects, training and manpower development and the administration and enactment of legislation in regard to thermal, hydro power generation, transmission and distribution.

The government should focus
The Government should focus on the following aims and Objective for People of India 

• Access to Electricity - 
• Available for all households. 
• Availability of Power - Demand should be fully met by 2017. 
• Supply of Reliable and Quality Power. 
• Per capita availability of electricity to be increased to over 1200 units by 2017
• Protection of consumers’ interests and Priority.

Objectives

• Sufficient power to achieve GDP growth rate of 8 to 10%
• Reliable power
• Quality power
• Optimum power cost
• Commercial viability of power industry
• Power for all
• Rural electrification

Strategies

• Power Generation Strategy with focus on low cost generation, optimization of capacity utilization, controlling the input cost, optimisation of fuel mix, Technology upgradation and utilization of Non Conventional energy sources
• Transmission Strategy with focus on development of National Grid including Interstate connections, Technology upgradation & optimization of transmission cost.
• Distribution strategy to achieve Distribution Reforms with focus on System upgradation, loss reduction, theft control, consumer service orientation, quality power supply commercialization, Decentralized distributed generation and supply for rural areas.
• Regulation Strategy aimed at protecting Consumer interests and making the sector commercially viable.
• Financing Strategy to generate resources for required growth of the power sector.
• Conservation Strategy to optimise the utilization of electricity with focus on Demand Side management, Load management and Technology upgradation to provide energy efficient equipment / gadgets.
• Communication Strategy for political consensus with media support to enhance the general public awareness.

12th Plan period targets
The Planning Commissions of 12th Plan projects that total domestic energy production would reach 669.6 million tonnes of oil equivalent (MTOE) by 2016–17 and 844 MTOE by 2021–22. For the 12th Five-Year Plan, a total of 88.5 GW (giga watt) of power capacity addition is targeted; of which, 72.3 GW constitutes thermal power, 10.8GW hydro power and 5.3 GW nuclear power.

Electricity is a concurrent subject at Entry 38 in List III of the seventh Schedule of the Constitution of India. The Ministry of Power is primarily responsible for the development of electrical energy in the country.
The power sector in India is mainly governed by the Ministry of Power. There are three major pillars of power sector these are Generation, Transmission, and Distribution. 

As far as generation is concerned it is mainly divided into three sectors these are Central Sector, State Sector, and Private Sector.

The Ministry of Power is the apex body responsible for the development of electrical energy in India. This ministry started functioning independently from 2 July 1992; earlier, it was known as the Ministry of Energy.

No doubt, really the Power Generation in India has grown rapidly over the years. Electricity production in India stood at 1,048.7 Terawatt h (1012) in financial year 2015, it is an 8.4 per cent growth over the previous fiscal year 2014.

Over Financial year 2010–2015, electricity production expanded at a Compound Annual Growth Rate (CAGR) of 6.3 per cent. 

According to Ministry of Power Government of India, the Indian power sector has an investment potential of Rs 15 trillion (US$ 237 billion) in the next 4–5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment.

• India’s index of industrial production (iip)/ electricity
• Electricity generation (weight: 10.32%) increased by 0.1 % in August, 2016 over August, 2015. Its cumulative index during April to August, 2016-17 increased by 5.7 % over the corresponding period of previous year.

Indian power sector- international cooperation
Indian power Sector is also concentrating on International Cooperation with various countries for power sector cooperation and development. 

Active interest have been taken in enhancement of bilateral cooperation with Bangladesh, Bhutan, Nepal, Sri Lanka, China, Germany Japan, Russia, united kingdom, United States of America, European Union etc., Multilateral engagements  under the umbrellas of SAARC Nations and other Nations.

For Example a Joint Indo-US PACE (Promoting Energy Access through Clean Energy) Setter Fund has been established, with a contribution of US$ 4 million from each side to enhance clean energy cooperation. 

Sources of power generation in india
(i) Conventional sources

• Coal
• Lignite
• Natural gas
• Oil
• Hydro 
• Nuclear power to viable (ii) non-conventional sources 
• Wind
• Solar    
• Agricultural
• Domestic waste. 

Renewable energy targets
The Government of India announced a massive renewable power production target of 175,000 MW by 2022. This comprises generation of 100,000 MW from solar power, 60,000 MW from wind energy, 10,000 MW from biomass, and 5,000 MW from small hydro power projects. Recently The Union Cabinet of India approved 15,000 MW of grid-connected solar power projects of National Thermal Power Corp Ltd (NTPC).

Priority sector lending
Reserve Bank of India (RBI) has notified including renewable energy under priority sector lending (PSL). Therefore, banks can provide loans up to a limit of US$ 2.36 million to borrowers for renewable energy projects. 

The Andhra Pradesh Government plans to establish an ‘Energy University’, which would focus on research orientation and development of energy efficiency, energy conservation, and renewable sources. The funding for the 'Energy University' will be borne by AP government and power utilities, public sector undertakings such as NTPC, PGCIL, PFC, REC etc,

The Below Bar Charts showing the Indian Power Sector Status
 
Power Sector at a Glance in India 
As on 23-10-2015
Total Installed Capacity
As on 30.09.2015
 

Fuel	MW	%age
Total Thermal	1,94,200	69.7
Coal	1,69,118	60.7
Gas	24,088	8.6
Oil	994	0.4
Hydro (Renewable)	42,283	15.2
Nuclear	5,780	2.1
RES** (NRE)	36,471	13.1

Total: 2,78,734

Power sector at a glance as per sector wise

Sector	MW	%age
State Sector	96,455	34.6
Central Sector	74,171	26.6
Private Sector	1,08,108	38.8

Total: 2,78,734

Energy sector in India

Important for GS-3 Preparation/ Syllabus (Under Pollution and conservation)

Context:

Over the past thirty years, the country’s energy demand has grown at an average of 3.6 per cent per annum.

How much electricity is needed by India?

• As per data for 2014 published by the International Energy Agency, average global per capita electricity consumption is 3030 kWh (kWh is colloquially known as a unit).
• The corresponding figure for India is about 805 units, and for developed countries of the OECD, it is 8,028.
• The projected global average per capita consumption by the middle of the century is 7,500 units.
• The electricity generation capacity in India is the fifth largest in the world. India is also the sixth largest consumer of electricity, and accounts for 3.4 per cent of the global energy consumption.
• Over the past thirty years, the country’s energy demand has grown at an average of 3.6 per cent per annum.

What is the present status of Electricity generation in India?

• The cumulative average growth rate of electricity generation in India for the period 2006-07 to 2015-16 was close to 6%.
• In 2016-17 generation by utilities was 1,242 BU.
• Data for generation from non-utilities is not yet available, but one can assume it to be around the same as in 2015-16, i.e. 168 BU.
• The total generation was thus 1,410 BU.
• For a population of 1.3 billion, it translates to a per capita generation of 1,100 units.
• Electricity generation projected for 2050 is six times the total generation in 2016-17 and in terms of per capita generation, it is about 4.5 times.
• The percentage share of electricity in total energy consumption is increasing.
• As per estimates by the International Atomic Energy Agency, this share was 34.8% in 2015 for Middle East and South Asia, and is projected to increase to 52% in 2050.
• According to the NITI Aayog report India’s solar and wind energy potential is greater than 750 GW and 302 GW respectively.
• The total possible generation from hydropower and VRE can at best be about a quarter of the projected requirement of 8,600 BU.
• India imported 5.24 billion units of electricity from Bhutan last fiscal, which was 0.47 per cent of the total output.

What need to be done?

• An emphasis on energy conservation and improvement in energy efficiency of industry and household gadgets will help in reducing electricity consumption.
• Assuming India’s population by the middle of century will be about 1.6 billion and transmission and distribution losses will come down to the lowest technically feasible value of about 7%, India must plan to generate about 8,600 Billion Units (BU) to provide 5,000 units per capita per annum to its citizens.
• The use of low-carbon energy sources like hydropower, variable renewable energy (VRE), and nuclear power.
• Incorporates influence of technological and policy changes exogenously.

What are the government’s steps?

• The Government of India has announced policy initiatives such as electricity and housing for all, accelerated infrastructure development, Make in India, electrification of transport, etc. which call for more electricity and on a reliable basis.
• India’s new Hydrocarbon Exploration Licensing Policy, putting a new market-friendly regime in place for oil and gas exploration back in March, has helped as well.
• As per the Shunglu Committee Report on the power sector, in the coming five years, the Distribution Franchisee model is expected to grow manifold, thereby improving the power distribution scenario of the country.
• The Union Cabinet approved the Deendayal Upadhyaya Gram Jyoti Yojana(DDUGJY) for ensuring 24×7 power supply.
• Draft national energy policy seeks to keep India’s economy heavily reliant on fossil fuels even in 2040.
• There are four key objectives of our energy policy: Access at affordable prices, improved security and Independence, Greater Sustainability and Economic Growth.
• The NEP aims at achieving 100% electrification by 2022, and will take this to be the main plank of the overall energy.
• Recent moves such as the Cabinet nod to the construction of 10 indigenous pressurised heavy water reactors, taking further steps for the construction of units 3-6 at Kudankulam, and completing all steps towards operationalisation of the nuclear cooperation agreement with Japan are all steps in the right direction.

What are the features of Draft National Energy Policy?

• It aims to create independence in the energy sector and to provide 24×7 hours power to all
• It Focus on energy independence through rationalisation of costs, subsidy & boost to renewable sector
• It aims to produce 175 GW energy from the renewable sector till 2022
• Emphasis on transition from the coal to clean energy for domestic use
• Focus on the infrastructure development ie. The projects like TAPI to development the gas pipelines
• The overarching policy recommendations are based on India’s energy ambitions for the year 2040
• The NEP anticipates major transformations on the energy demand and supply sides arising out of fast evolving technology, consumer behaviour and air quality consideration
• It provides for a flexible energy system which would quickly respond to the market cu
• The broad objectives of the policy are: enhanced energy independence, increased access at affordable prices, greater sustainability and higher economic growt

Related statistics:

• By the year 2040, India’s electricity demand will rise 4.5 times over 2012 levels.
• clean energy (like renewables, nuclear and hydro) may account for 13.5% of electricity produced by 2040 (from 3.7% in 2012),
• Greater efficiency and technology can cut energy demand in 2040 by 16.6%;
• Up to 90% of this reduction is possible in transport, industry and construction.
• New buildings codes could cut energy use by 50% in new construction.
• If most Indian vehicles were electric by 2030, pollution levels in cities could drop 80%-90%, and India could save $100 billion, a sum over two times larger than the current defence budget
• By 2040, India’s population is predicted to increase to 1.6 billion, and the rate of urbanisation (projected average rate of change of the size of the urban population over a given period of time) of this population will be 47%.
• The share of manufacturing in the country’s gross domestic product will double from its current levels to 30%.
• As of 2017, nearly 25% of the population is still without access to electricity and 40% without access to clean cooking fuel.

What are the challenges?

There are many roadblocks in unleashing the full potential of India’s power sector

• Fuel availability is one of the concern faced by the industry.
• There are other concerns such as land acquisition which has made purchase of land for power projects very expensive.
• Capital crunch in the energy sector is the biggest challenge before the country
• India is currently facing energy crisis with its major dependency on coal, crude oil imports to meet sharply
• The current power infrastructure in India is not capable of providing sufficient and reliable power supply growing energy needs of the country.

What are the solutions?

• There is a need for improvement in generation and transmission/distribution of electricity by adapting new, innovative strategies.
• there is a need for renovation and modernisation of generation equipment, i.e., improving the performance of existing old power plants.
• Need to encourage more private players.
• The investment pattern should focus on generation, transmission and distribution segments in order to achieve balanced growth in the power sector
• Solar energy technology is very important tool which can lowers worldwide carbon emissions.
• Currently, the installed capacity of solar energy projects in India is about 4.22 GW. India is planning to produce 100 GW of solar power by 2022.

What are the Government policies and acts?

Government acts and policies

Government of India has come out with Acts and Policies to support renewable Energy

• The Electricity Act 2003 has promotes electricity generation from co-generation and renewable energy sources. This Act accelerated the process of renewable energy development in the country.
• The National Electricity Policy 2005 stipulates that the share of electricity from non- conventional resources would need to be increased such purchase by distribution companies shall be through competitive process
• According to Tariff Policy 2006 states the Appropriate Commission shall decide a minimum percentage for purchase of energy.

Conclusion:

Presently, the power sector expects a major shift in reforms, policies and incentives that encourage investments in power generation and transmission for its rapid growth.