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Electricity is a key driver of rapid economic growth
and industrialization in the country. It is one of the critical infrastructure
on which development of several economic sectors depend. India is the
world's sixth largest energy consumer accounting for about 3.5% of the
world's total annual energy consumption. Availability of reliable and
quality power at competitive rates to Indian industry is necessary to
make it globally competitive and to enable it to exploit the tremendous
potential of employment generation. Over the years, Indian power industry
has shown considerable growth. Foreign direct investment (FDI) upto 100
percent has been permitted through automatic route in generation, transmission
and distribution segments.
The 'Ministry
of Power' is the main authority for the overall development of electrical
energy in the country. It is responsible for planning and policy formulation;
processing of projects for investment decision; monitoring and implementation
of power projects; as well as administration and enactment of legislation
in regard to power generation, transmission and distribution.
In order to encourage greater investment into power industry,
several policy reforms and initiatives have been undertaken from time
to time. The most important being, the enactment of 'Electricity
Act, 2003', which aims to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity; promote competition
in the power sector; and supply electricity to all areas. It seeks to
rationalise electricity tariffs, promote efficient and environmentally
benign policies, provide stringent penalties in case of theft of electricity,
etc. Under the Act, the Central Government has prepared the 'National
Electricity Policy' and the 'National Electricity Plan'.
The National Electricity Policy aims at laying guidelines
for accelerated development of the power sector and protecting interests
of consumers and other stakeholders, keeping in view availability of energy
resources, technology, economics of generation and energy security issues.
Central Electricity Authority frames a National Electricity Plan once
in five years and revise the same from time to time in accordance with
the policy. The plan involves forecasting short-term and long term demand
for different regions as well as suggesting areas/locations for capacity
additions in generation and transmission.
The opportunities in the power sector lies in the regulation
and development of following thrust areas, namely:-
- Electricity Generation
The thermal, hydro and nuclear energy are the major sources
of generation of electricity in India. The total installed power generation
capacity has been 1,35,401.63 MW (as on August 31, 2007), consisting of
86,975.84 MW (thermal); 34,130.76 MW (hydro); 4,120 MW (nuclear); and
10,175.03 MW (renewable energy sources). The All India Plant Load Factor
during April-August 2007 has been 77.1 per cent.
Maximum emphasis has been laid on full development of the
feasible hydro potential in the country. Hydroelectricity is a clean and
renewable source of energy. The Ministry has undertaken several steps
to accelerate capacity addition from hydro-electric projects. For instance:-
higher budgetary allocation for the hydel sector; investment approval
of new hydro-electric projects; promoting State sector projects which
were languishing or could not progress due to Inter-State disputes; simplification
of procedure for transfer of clearance; etc.
Imported coal based thermal power stations, particularly
at coastal locations, are being encouraged based on their economic viability.
Use of gas as a fuel for power generation depends upon its availability
at reasonable prices. Natural gas is being used in Gas Turbine /Combined
Cycle Gas Turbine (GT/CCGT) stations. A national gas grid covering various
parts of the country as well as Imported LNG based power plants act as
a potential source of electricity. Nuclear power plants are also being
set up at different locations to meet base load demand. Both public and
private sector investments are needed to step up for creating nuclear
generation capacity in the country. Moreover, investment by foreign investors
for manufacturing of renewable energy systems and devices are based on:-
Wind, Solar Photo-voltaic, Solar Thermal, Small Hydro, Biomass, Co-generation,
Geothermal, Tidal and Urban and Industrial Wastes based power projects.
To provide availability of over 1000 units of per capita
electricity by year 2012, it has been estimated that need based capacity
addition of more than 1,00,000 MW would be required during the period
2002-12. The Ministry has initiated several reform measures to create
a favourable environment for addition of new generating capacity in the
country. For instance, development of 'Ultra
Mega Power Projects (UMPPs)' has been identified as a thrust area.
These are very large sized projects, approximately 4000 MW each involving
an estimated investment of about Rs. 16,000 crore. These projects will
meet the power needs of a number of States/ distribution companies located
in these States, and are being developed on a Build, Own, and Operate
(BOO) basis.
- Electricity Transmission
Transmission of electricity is defined as bulk transfer
of power over a long distance at a high voltage, generally of 132 kV and
above. A well planned and strong transmission network ensures optimal
utilization of transmission capacities and generation facilities. The
entire country has been divided into five regions for transmission systems,
namely Northern Region, North Eastern Region, Eastern Region, Southern
Region and Western Region. The interconnected transmission system within
each region is called the regional grid. Formation of strong 'National
Power Grid' has been recognised as a major initiative for facilitating
the development of power industry and fulfilling the objective of 'electricity
to all' at affordable rates.
The Central Transmission Utility (CTU) is responsible for
the national and regional transmission system planning and development
and is also providing Open Access on its inter-State transmission system.
While, the State Transmission Utility (STU) is responsible for planning
and development of the intra-state transmission system. The Power
Grid Corporation of India Limited (PGCIL)/ Power Grid has been set
up for establishment and operation of regional and national power grids,
in order to facilitate transfer of power within and across the regions
with reliability, security and economy, on sound commercial principles.
Out of the Rs. 8,00,000 crores required for doubling the
power capacity to 2,00,000 MW by the year 2012, about Rs. 2,00,000 crores
would be required for the associated transmission system including creation
of a National Grid. An investment of about Rs. 71,000 crores is envisaged
in transmission under central sector, out of which Power Grid has planned
to invest about Rs. 50,000 crores on its own and the remaining Rs. 21,000
crores is expected to be brought in by the private investors.
Government of India has issued guidelines for mobilising
resources from private sector. These guidelines envisage two distinct
routes for private sector participation in transmission, namely:- (i)
Joint Venture (JV) Route, wherein the CTU/STU shall own at least 26% equity
and the balance shall be contributed by the Joint Venture Partner (JVP);
and (ii) Independent Private Transmission Company (IPTC) Route, wherein
100 percent equity shall be owned by the private entity.
As on March 31,2006, PGCIL is operating about 55,120 ckt
kms of transmission lines consisting of 563 ckt kms of 800 KV; 4368 ckt
kms of HVDC system; 40179 ckt kms of 400 KV; 7734 ckt kms of 220 KV and
2241 ckt kms of 132 KV and 37 ckt kms of 66 KV lines along with 93 sub-stations
with about 54380 MVA transformation capacity. About 45 per cent of total
power generated in the country is being transferred over PGCIL's transmission
network.
- Electricity Distribution
Distribution is the most critical segment of the electricity
business chain. The Ministry of Power has been undertaking various initiatives
and policy measures for bringing about improvement in the power distribution
network of the country. For instance, the 'Accelerated
Power Development and Reforms Programme (APDRP)' has been launched
with the following objectives:-
- Improve financial viability of State Power Utilities;
- Improve commercial viability of State Electricity Boards;
- Reduce aggregate technical and commercial (AT&C)
losses to around 10%;
- Iimprove customer satisfaction; and
- Increase reliability and quality of power supply.
APDRP has two components, namely:- (i) Investment component
- for strengthening and up gradation of the sub-transmission and distribution
system in densely electrified zones in the urban and industrial areas;
and (ii) Incentive component - for encouraging/ motivating utilities to
reduce cash losses. 29 States have signed the Memorandum of Understanding
with the Ministry to take various steps to undertake distribution reforms
in a time bound manner.
- Rural Electrification
Rural electricity involves supply of energy for various
production oriented activities like minor irrigation, rural industries
etc. as well as for electrification of villages. A village is declared
to be electrified if:- (i) basic infrastructure such as Distribution Transformer
and Distribution lines are provided in the inhabited locality as well
as the Dalit Basti/ hamlet where it exists. (For electrification through
Non Conventional Energy Sources a Distribution transformer may not be
necessary); (ii) electricity is provided to public places like schools,
panchayat office, health centres, dispensaries, community centers, etc;
and (iii) the number of households electrified are at least 10% of the
total number of households in the village.
'Rural Electrification' has been regarded as a vital programme
for socioeconomic development of rural areas. It aims to trigger economic
growth and generate employment by providing electricity as an input for
productive uses in agriculture and rural industries. Accordingly, both
the Central Government and the State Governments are making all efforts
to secure electricity access to all rural households and to ensure that
it reaches poor and marginal sections of the society at reasonable rates.
Rural
Electrification Corporation of India (REC) is the nodal agency at
Central level to achieve the goal set by National Common Minimum Programme
of giving access to electricity to all the households in next five years.
It has been set up with the objective of financing and promoting rural
electrification projects all over the country. The projects cover electrification
of villages, including tribal villages and Dalit Bastis, energisation
of pump sets, provision of power for small, agro-based and rural industries,
lighting of rural households and street lighting.
Several programmes has been launched, from time to time,
for electrification of rural areas. Some of them are:-
- Pradhan Mantri Gramodya Yojana (PMGY)
- Kutir Jyoti Scheme
- Accelerated Rural Electrification Programme
- Accelerated Electrification of One lakh Villages and
One Crore Households
- Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY)
All States except Delhi and Goa have signed agreements under
RGGVY. In 2006-07, 20743 unelectrified villages have been electrified
(as on 23.02.2007).
- Other focus areas of policy initiatives and measures
in the power industry, namely:-
- Recovery of Cost of services and Targeted Subsidies
- Technology Development and Research and Development (R&D)
- Financing Power Sector Programmes Including Private Sector
Participation
- Energy Conservation
- Environmental Issues
- Training and Human Resource Development
- Cogeneration and Non-Conventional Energy Sources
- Protection of Consumer interests and Quality Standards
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