Conference Proceedings: Power on Demand by 2012

Strategies to augment power generation capacity to remove shortages
On account of inadequate generation capacity, the country is plagued by power shortages. The total energy shortage, during 2000-2001, was 39,816 million units, amounting to 7.8 per cent and the peak shortage was 10,157 MW translating to 13 per cent of peak demand. Based on the demand projections made in the 16th Electric Power Survey, over 1,00,000 MW additional generation capacity needs to be added by 2012 to bridge the gap between demand and supply of power.

The Ministry has taken a comprehensive and realistic review of the various power projects to priorities those, which can be commissioned in the X and XI Plans. Based on this review, a capacity addition target of 46,500 MW has been tentatively fixed for Central Public Sector Undertakings under the Ministry of Power. At the State level, the SEBs/State utilities and private sector will add about 41,800 MW. For optimal development of the electricity energy in its totality, an integrated approach, including capacity addition through nuclear and nonconventional energy, has been adopted. The capacity addition targets of 6400 MW through nuclear power and 10,700 MW through non-conventional resources have been accordingly fixed for the period upto 2012.

The large coal reserves in the country provide a ready and economical resource and ensure energy security. Hence, coal has been identified as the mainstay fuel for power generation till 2012. Emphasis has been laid on setting up large pit head stations to avoid high costs associated with transportation of high ash bearing Indian coal and overstraining the already stretched rail network.

Hydroelectricity is clean energy and its generation is not linked to issues concerning fuel supply, especially the price volatility of imported fuels. It enhances our energy security and is ideal for meeting peak demand. Less than one fourth of the vast hydel potential of 1,50,000 MW has been tapped so far. Consequently, thermal generation, which should generally be used for base load operation, is also being used to meet peaking requirements. As against the desirable hydro share of 40 per cent, the current share is only about 25 per cent in India.

The Ministry has developed appropriate strategies of fully exploit the country's hydro potential and accords high priority for its development. It is estimated that for building over 1,00,000 MW of additional power capacity and associated transmission & distribution infrastructure, nearly Rs. 8,00,000 crores of investments would be needed in the next decade. The investors have been wary of the sector due to lack of confidence in getting returns on their investments. The payment security measures taken till now have not yielded desired results. There is little doubt that resource generation within the sector through prompt and efficient collection of appropriate user charges from all the electricity consumers is the only long-term solution to attract investments in the sector. The sector has to be made financially strong from within in order to attract investments from outside. In view of the pending fructification of the long-term measures in this regard, the Ministry has taken steps to set up an alternate payment security mechanism for the investors as an interim resource mobilization strategy. A Committee of Experts has been constituted to identify the sources of funds including Government funding, multilateral and bilateral assistance, institutional financing, market borrowings, internal resources, private investment etc; and suggest institutional policy and other measures required for the massive resource mobilization that is needed. An action plan to expedite financial closure of private sector projects is also going to be implemented.

There have been major slippages in meeting targets of capacity addition during the VIII and IX Five-Year Plans. Only 53.77 per cent of the capacity addition target was achieved during the VIII Plan. During the IX Plan, too, only about half of the target of 40,245 MW is likely to be achieved. To avoid such slippages in the X and XI Plans, a comprehensive project monitoring and control system has been put in place. Special emphasis has been laid on monitoring of projects at pre-implementation stage. A Power Projects Monitoring Committee has been set up. Special Secretary (Power) has been taking weekly reviews to monitory the progress of power projects to be identified for commissioning upto 2012. To ensure greater success in capacity addition, the central power generating companies under Ministry of Power are being asked to add 43 per cent of the total required capacity as against a contribution of 23 per cent during the IX Plan.