CHAPTER 6

INUSTRIAL STRUCTURE OF
POWER SECTOR IN INDIA

Sr. Topic Topic Details Page

No. No. No.
1 6.1 Energy 117

2 6.2 Electrical Power 119

3 6.3 Advantages of Electrical energy 119

4 6.4 Production 120

5 6.5 Hydro-Electric Power Station 121

6 6.6 Advantages 122

7 6.7 1 Disadvantages 122

8 6.8 Boiler Houses Losses 122

9 6.9 Steam Power Stations 122

10 6.10 Advantages 124

11 6.11 Disadvantages 124

12 6.12 India: (Power Sector) 124

13 6.13 Industry Structure and Development 125

6.13.1 Industry Structure 125

6.13.2 Indian Electricity Industry 125

6.13.3 Key Developments 126

6.13.4 Energy Conservation Act, 2001 127

6.13.5 Accelerated Power Development Reform 127

Programme

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6.13.6 Indian Electricity Grid Code 127

6.13.7 National Grid 127

6.13.8 Reforms in the Power Sector 128

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 CHAPTER 6

1NUSTRIAL S TR U C TU R E O F PO W ER S E C TO R IN
IN D IA

6.1 Energy:

Energy provides the power to progress. The natural resources of a

country may be great but it can only be turned in to wealth if they are developed, used
and exchanged to consumer goods. It can not be achieved without energy. Availability
of sufficient energy and its proper use in any country can result in its people rising for
subsistence level to the highest standards of living. It is interesting to note that more
than half the world’s population lives in Asia, where the energy consumption is barely
seven percentage of the world’s total consumption. More than half the world’s
primary energy is consumed in North America and Western Europe.
Table No. 30.
Electricity Consumption of various Countries

Ra Country 0 Electricity Yea Source Populati As Average

nk consumption r of 0 on of 0 power
a (MW-h/yr) 0 Data an per
0 thousand capita
)H (watts
per
person)
0
—
World 16,830,000,000 2005 CIA 6,464,750 2005 297
Est.121
i United 3,816,000,000 2005 CIAm 298,213 2005 1,460
States
2 People's 2,859,000,000 2006 CIA 1,315,844 2005 248
Republic of
China
—
European 2,820,000,000 2004 CIA Est. 459,387 2005 700
Union141
3 Russia 985,200,000 2007 CIA Est. 143,202 2005 785
4 Japan 974,200,000 2005 CIA 128,085 2005 868
5 Germany 545,500,000 2005 CIA 82,689 2005 753
6 Canada 540,200,000 2005 CIA 32,268 2005 1,910
7 India 488,500,000 2005 CIA 1,103,371 2005 50.5
8 France 451,500,000 2005 CIA 60,496 2005 851
9 South 368,600,000 2007 CIA 47,817 2005 879
Korea

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 10 Brazil 368,500,000 2005 CIA 186,405 2005 226
11 U.K. 348,700,000 2005 CIA 59,668 2005 667
12 Italy 307,100,000 2005 CIA 58,093 2005 603
13 Spain 243,000,000 2005 CIA 43,064 2005 644
14 South 241,400,000 2007 CIA 47,432 2005 581
Africa
15 Taiwan 221,000,000 2006 CIA 22,894 2005 1,101
16 Australia 219,800,000 2005 CIA 20,155 2005 1,244
17 Saudi 146,900,000 2005 CIA 24,573 2005 682
Arabia
18 Iran 136,200,000 2005 CIA 69,515 2005 224
19 Thailand 117,700,000 2005 CIA 64,233 2005 209
21 Indonesia 108,000,000 2006 CIA Est. 222,781 2005 55.3
22 Malaysia 78,720,000 2005 CIA 25,347 2005 354
23 Pakistan 67,060,000 2005 CIA 157,935 2005 48.4
24 United 52,620,000 2005 CIA 4,496 2005 1,335
Arab
Emirates
25 New 37,390,000 2006 CIA Est. 4,028 2005 1,059
Zealand
26 Kuwait 36,280,000 2005 CIA 2,687 2005 1,540
27 Hungary 35,980,000 2005 CIA 10,098 2005 406
28 Singapore 35,920,000 2006 CIA 4,326 2005 947
29 Iraq 35,840,000 2007 CIA Est. 28,807 2005 142
30 Bangladesh 19,490,000 2005 CIA 141,822 2005 15.7
31 Sri Lanka 7,072,000 2005 CIA 20,743 2005 38.9
32 Burma 3,744,000 2006 CIA 50,519 2005 8.45
33 Mauritius 2,068,000 2006 CIA 1,245 2005 189
34 Nepal 1,960,000 2006 CIA 27,133 2005 8.24
.35 Afghanista 801,400 2005 CIA 29,863 2005 3.06
n
36 Bhutan 380,000 2005 CIA 2,163 2005 20.0
37 Somalia 251,100 2005 CIA 8,228 2005 3.48
38 Maldives 157,100 2005 CIA 329 2005 54.5
http://en.wikipedia.org/wiki/List o f countries by electricity consumption

It has been found that Canada is the country whose per capita power
consumption is highest in the world. It is due to less population and coldest
atmosphere. People cant live without heater in Ireland.
It has been found that countries whose national output is mainly agriculture and
whose population lives mostly in rural communities enjoy low per capita growth o f
energy consumption. Another factor upon which the growth of energy consumption is
dependent is the extend to which industrial activities forms a part of gross domestic
product. As a country develops a pattern of its energy usage, it undergoes a distinct

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change, though in a simple society, it is almost a consumers good, its effective use is
small and contribution to the development of economy negligible. However, it has
been found that once energy is made available in excess of domestic needs it is not
used solely as a consumer good but become a factory production.

6.2 Electrical Power:

It is comparatively easy to describe what electricity can do that to give a
simple and direct answer to the questions: What exactly ? Electricity has become such
a universal medium of transmission and utilization of energy that almost every one is
familiar with its innumerable uses right from the earliest childhood. Electric energy is
variously utilized as for lighting, transportation, communication for operating electric
furnaces, elevators and during various kinds of machine tools etc. It can be easily
stored and concentrated to produce extremely high temperature in welding and
electrical furnaces, are lights and spark plugs etc.
Turning back to the question regarding the nature of electricity, it may be
noted that ancient Greeks were the first to observe that when amber (it is a yellow
!

brown gum that hardness, in to hard stone like material) is rubbed against a piece of
silk cloth, it attracts lights to objects like small places of paper etc. the agency that
endowed this attracting properties to amber was given the name of electricity by
William Gilbert in 1600 AD. The name electricity is derived from the word ‘electron’
which is the Greek name of amber.
Electric power is the back bone of industrial world today. Further the comfort,
convenience and safely of large population all over the world depends upon electric
power. In fact, it is not exaggeration to say that average wages level and standard of
living in any country are dependent to a very large extent on the amount of power
used per capita in its industry. History, tradition, economic circumstances (such as
availability of natural resources) all govern the development and use of electric power
in a country.

6.3 Advantages of Electrical energy:

Electrical energy is advantageous to the energy in other forms because:
It is cheaper than that in other forms

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Its transmission over a long distance, through conductors of suitable size, is very
convenient and efficient.
Electrical systems starting, control and operating is very simple and convenient.
Electrical system is very flexible, electrical power can be taken to any comer of the
house, factory, street, hospital, mine etc. through solid standard or flexible
conductors.
Electrical drive and electric heating do not produce any smoke, dust and other
undesirable conditions.
Electric Lamps, especially fluorescent tubes give rise to pleasant and cheaper
light as compared to that produced lamps of other types electric lamps can not be kept
due to the danger of the fire or due to some other reasons.
In the return of lighting, for street and home electricity is unrivalled in
inconvenience and cheapness.
For cleanliness, easy to manipulation and flexibility the electric motor is
supreme, so that the use of electrical energy in industry is rapidly increasing.
Electric traction is particularly suitable for dense suburban traffic where quick starting
and bracing are imperative whilst it is essential for underground traffic.
A growing proportion of energy requirements at present is being met of over
the world by the electricity. This trend till further best stimulated because of
increasing availability of clean electricity. It applies especially to the developing
countries Industrial progress will be based on modem technologies, which are
generally electricity intensive.

6.4 Production:

Electric energy of power is produced by special plant house in structure comp

arising what are called power stations and within which the electric energy of fuels,
(the energy of falling water) of wind, of nuclear fuels etc. are included. The electric
energy produced by power stations is fed by them in to overhead transmission or
underground cable line for distribution to various consumers : Industrial, City, Public
Services, Rural, Domestic and other consumers.
Depending on what kind of energy is used for producing the electric, energy,
power stations are classed as : thermal, hydroelectric, wind power atomic and other
kinds of stations.

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 Only two types of power generation stations are discussed here i.e. Hydro­
electric power and Steam power station.
6.5 Hydro-Electric Power Station :

Main features of a typical hydro-electrical power stations are :

The catchments area, reservoir and earn.
The pipe lines, tunnels and surge tank.
The turbines.
The electrical plant.
The discharge arrangements and the trail race.

Catchments area is an area bounded by water sheds, which drains into a river
so that water flows past a point. The dam is constructed to create head and water from
the catchments area collects at the back o f the dam to form a reservoir.
From the dam, water is conveyed to the power house usually by two or more
pipe lines and if there is an intervening mountain spurge rocks, tunneling in
employed. In low head installation water may be conveyed to the power house party
by open canal, having screens for restraining logs, fish etc. in the factory leading to
the power stations.
There would be a risk of disruptions to pipe lines and associated plant in the
event of some or all turbines being suddenly shut down (e.g. when electrical load
thrown off on account of some fault in the electrical equipment) particularly are on
high head installation unless adequate precautions are taken. For this purpose a surge
tank (which in its simplest form consist at a convert tower of a height comparable
with the operating head and its connected to the pipe lines) is provided. In event of
load being suddenly thrown off and the water shut off the pressure can be instant
dispirited by the rise of water in this tank.

Potential energy of water is converted into mechanical energy in a water

turbine the water after having done its useful work in the turbine is discharged to the
trail race, which may lead it to the same stream or to another one.
The hydro-electric power solutions have following advantages and
disadvantages:

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6.6 Advantages:

(a) Since water is that source of energy therefore no fuel is required in it.
(b) There is no stand by losses.
(c) Such plants have longer life.
(d) It is a very neat and clean plant because no smoke or ash is produced.
Such plants in addition to generation of electric power also serve other purposes such
as irrigation and flood control.

6.7 Disadvantages:
It is requires a large area.
Its construction cost is very high.
It takes long time for electron.
High cost of transmission line.
Long dry season may affect the power supply.

6.8 Boiler Houses Losses

Boiler Houses Losses Turbine Losses

To dry fuel gases 5%

To moisture in gas 5%

To ash and unbumt carbon 1%

To radiation and leakage 2.5%

Unknown losses 2.5%

Heat rejected to condenser 54%

Alternator Losses 1%

Thus output is about 29%

6.9 Steam Power Stations :

In thermal generating stations, the heat of coal is utilized by the boilers to
produce steam at a high pressure and temperature. The steam so produced is used in

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during the turbines or some times steam engines coupled to generator and then in
generating electric power. The fuel used in boiler is mainly bituminous coal but in
case of emergency some heavy oil can also be used.

53The thermal efficiency of power stations, defined as the ratio of the heat
equivalent of mechanical energy transmitted to the turbine shaft and heat of
combustion, is as low as 30 percent. Overall efficiency of power stations, defined as
the ratio of heat equivalent of electrical output to the heat of combustion is about 29
percent.
The overall efficiency is determined by multiplying the thermal efficiency of
generation (or electrical efficiency). Losses occurring in steam plants may be
summarized as follows:
From the above mentioned figure of various losses occurring in steam plant, it
is obvious that more than fifty percent of total heat of consumption is lost as has
rejected to the condenser. This loss of heat energy is unavoidable as heat energy can
not be converted into mechanical energy without a deep in the temperature, and the
steam in condenser is at the lowest temperature. The thermal efficiency of the plant
mainly depends upon two factor (a) pressure and (b) temperature of the steam
entering the turbine efficiency increases with the increase in temperature and the
pressure of the steam entering the turbine: increase in pressure is more effective as
compared to increase in temperature for increasing the thermal efficiency. For this
reason high pressure and temperatures are used. The thermal efficiency is effectively
increased by decreasing the pressure in the condenser. Pressure in the condenser kept
very low usually 0.04 Kg/cm2.
The thermal efficiency also increased by reheating the steam between turbine
stages but is some what inconvenient. Bleeding of steaming taken to the low pressure
and high pressure water heaters from the turbine or turbines at suitable extraction
points for heating feed water.
The thermal power plant for generation of electric power is preferred where
large amount of power is required to be generated and financial, climate and
geographical conditions do not permit the installation of hydro-electric power stations
and coal is available in plenty.
The advantages and disadvantages of thermal plant are given below:

53 http ://en.wikipedia.org/wiki/thermal_power_piaEt

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6.10 Advantages :

Fuel used is cheaper.

Less space is required in comparison with that for hydro-electric plants.
Cheaper in initial cost in comparison with other types o f power stations of same
capacity.
Cheaper in production cost and comparison with that of diesel power stations.
Such plants can he installed at any place irrespective of the existence of fuels. While
hydro-electric plants can be developed only at source of water power.
Such plants can be located near the load centers while the hydro-electric plants have
essentially to be installed at source of power, which is usually isolated from urban
areas.
6.11 Disadvantages :

Costlier in running cost in comparison with that of hydro-electric power plant.

Atmosphere is polluted by fames and residues from pulverized fuel.

6.12 India : (Power Sector)

Power is basic need for the economic development o f the country. Availability
of electricity has been the most powerful vehicle of introducing economic
development and social change throughout the world. The process of Modernization,
increase in productivity in industry and agriculture and the improvement in the quality
of life of the people basically upon the adequate supply of electrical energy.
Appropriately the programmes relating to the energy, transmission and distribution of
electrical energy have been the highest priority in national planning process.
India is a rich in a natural resources. Unfortunately, Nation could not explore our
natural resources. It has sufficient reserves of coal, lignite and oil. It has sufficient
hydro-electric potential out of which not even 40 % has been exploited. Regarding
nuclear energy this country has rich deposits of thorium, which could be converted
into Uranium.
India has largest power system among developing countries, and fourteenth largest
power system in the world.
Electricity has been available in India for the past 100 years. The first power
station commissioned was a Micro-Hydel scheme near Daijeeling (West Bengal) at
the end of the 19th century. The first major effort in the public sector was the
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commissioning of the first state of the Sirasamudram hydro-electric scheme with an
initial installed capacity at 4.5 MW in 1902. There after small stations continued to be
setup largely around important urban centers, mainly through the efforts of private
companies. By 1915 the installed capacity has increased to 105 MW in 1939, the
installed capacity in the country was 1200 MW. Before independence there were only
private investors.
It was recognized that electricity had to be the mean of modernizing the
economic and social life of the people in the country. Since 80 percent of the people
were living in villages, rural electrification has to be a major and essential component
of the programme. However, it was not likely that the private companies would find
rural electrification to be profitable and therefore, the development of power on a
large scale in the public sector was inescapable. The policy of Government of power
development through the public sector was confirmed by the Industrial; Policy
Resolution of 1956 under which electricity was reserved for development in the
public sector. As a result, 15 state electricity boards came to existence in the country
by 1966. The number of private licenses kept declining with result that at present
there are very few electricity undertaking in the private sector.

6.13 Industry Structure and Development:

6.13.1 Industry Structure:

The Indian Electricity Industry is dominated by Central and State Government
Organization. Major players are the State Electricity Boards (SEB’s), which generate,
transmit and distribute power.
6.13.2 Indian Electricity Industry
Generation Transmission Distributions
NTPC Power Grid Corporation SEB’s
NHPC SEB’s Private utilities
NPC
SEB’s
IPP’s '

Private Utilities
The power industry functions under the superintendence of a Cabinet Level
Minister who is assisted by a Minister of State for power and a team of Secretary level
personnel.

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 The power sector is controlled and monitored through the Central Electricity
Authority (CEA) while the Central Electrical Regulatory Commission (CERC) is the
independent apex regulatory body.
During the early 1990s the focus of the entire Indian power sector was on the
new policies initiatives of setting up independent power projects (IPP’s) to increase
the total generation capacity in the country. This initiative did not give the desired
results due to the fact that power still had to be sold and distributed through the
SEB’s. IPP’s had difficulties in realizing dues for the power sold to SEB’s, due to the
poor financial positions of almost all the SEB’s.
As Mr. Suresh Prabhu, Minister of power (2010) has emphasized time and
again “Distribution is the weakest Link” and hence the current initiatives are focus on
the other end of the power sector, namely, distribution this wave, which began with
the unbundling of some of the SEB’s, is now, processing with the proposed
privatization of some distribution circles.

6.13.3 Key Developments:

The “Blueprint for power sector development” as released by the Minister of
Power, has spelt out its objectives as making reliable and quality power available on
demand by 2012 at economic prices, while making the sector commercially sound and
self sustaining and at the same time, achieving environmental sustainability. Power
has been recognized as critical infrastructures for economic development and
improving the quality of life. Achieving this would require an additional 105400 MW
in the next 10 years, i.e. the same capacity that has been built up over the last 50
years, at an estimated cost of Rs. 800000 crores. This is proposed to be achieved by
the following measures, namely, increase in generating capacity through capacity
addition and refurbishment and up gradation of plants, improved plant availability and
also reduced T & D losses.

The Annual Report on the working of SEB’s indicates that the installed
generation capacity is 102907 MW as at the end of October, 2001.
While the generation at the national level during 2000-01 increase by 3.9 % to touch
almost 500 billion units, the average plant load factor for 2000-01 was estimated to be
only 69 %. The peak energy shortage was estimated to be 10157 MW (13%) and total
energy shortage was nearly 40 billion unit (7.8%) during 2000-01.

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 This highlights the urgent need to control T & D losses and ensure complete
metering of all supplies.
Distribution has not been identified as the weakest link in the power supply
chain. Some of the measures invited by the Ministry of Power and the Government of
India to improve the Indian Power Sector scenario are :

6.13.4 Energy Conservation Act, 2001 :

This act promotes energy conservation activities through various method such
as energy efficient equipments compulsory energy audit etc.

6.13.5 Accelerated Power Development Reform Programme (APDRP) :

This programme has been moved to provide a mechanism for financial
assistance to the states. The states, which undertake power sector reforms shall be
rewarded, based on their actual performance and progress.
The center has earmarked ? 3500 crores for 2002-03. It has also identified 63
key distribution circles as enters of Excellence to carry out the first face of these
reforms. These funds are for innovations and modernization of the plants and for
strengthening of the distribution systems.

6.13.6 Indian Electricity Grid Code :

This code, formulated last year, is now being implemented to ensure proper
regulation of inter regional transmission.

6.13.7 National G rid:

It is proposed to setup a National Grid to include evaluation of power from
surplus region to deficit areas. This would be undertaken in a phased manner over the
next 10 years.

6.13.8 Reforms in the Power Sector :

A chief Minister’s conference was held in March, 2001 to discuss reforms in
the power sector. This conference has enabled a consensus as to the urgent need to
implement reforms in the power sector.

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 As a pre-requisite to any financial assistance, the states are now required to set
up State Electricity Regulatory Commissions (SERCs) to determine tariff and regulate
the power sector scenario at the state level.
The Electricity Bill 2001 is still awaiting parliamentary approval. The key
highlights of this bills are :
• Compulsory metering for all supplies.
• Enabling trading in power.
• Open access to the transmission system and private transmission to be
allowed.
• Elimination of licensing requirement for generation and distribution in rural
areas.
• More straight provisions against theft of electricity.
In Gujarat, the Gujarat Electricity Industry (Re-organization and Regulation)
Bill 2001 is proposed to be tabled in the state assembly. The key highlights of this
bills are summarized below :
• Unbundling of the generation, transmission and distribution assets.
• Enabling private sector participation in distribution circles.
• Setting of specific benchmark for customer distribution circles.
• Settings of Standards for system efficiency.
• Deterrence measures for power theft.
Even during the period of public sector domination, some private on Sector
Company operated in the licenses of the State Electricity Boards. These companies
not just existed but also flourished appreciably during the period and are rated among
the best in the country, in terms of performance and profitability. These private power
companies operated their own power generation and distribution systems and have a
total capacity of around 3000MW. They distribute power to around ten million
consumers.
Economic liberalization and the new wisdom of reducing the role of the public
sector warrants a greater participations of the private sector in the country’s power
sector in response to the new economic realities, the government formulated a policy
in 1991 to encourage greater investment by the private sector in the power sector.
Legislation governing the electricity sector was amended in the electricity sector was
amended in October 1991 to allowing private investors to set up generating

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companies are also power directly to consumer with the consent to the State
Government.

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