POWER PLANTS AND ENGINEERING

Course number: PGPM 24 Assignment Number: 8

Submitted by: Prathamesh R. Kabe

Reg. No:- 211-02.31-9091-2122

POST GRADUATE PROGRAMME IN PROJECT MANAGEMENT

NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH, PUNE

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Assignment
Enhancing the level of the energy consumption, particularly in less developed and developing countries, is a global challenge. 20 % of world population living in industrialized countries consumes 60 % of energy and remaining 80% of population has to manage within 40% of total energy. This has obliviously resulted in wide disparities between the standard of living and quality of life of high energy consuming countries on the one hand and those who dont have the opportunities of adequate access to energy on the other. It is precisely for these reasons that development of different sources of energy and increase in its consumption has become a priority agenda of all the developing countries.

In the light of the above, prepare an assignment on how to solve the problem of energy deficiency in India by alternate sources of energy.

The assignment should cover the following: 1. Indias Energy Sector 2. Power Sector present scenario 3. Growth of Power sector 4. Investment in power sector 5. Current problems in Power Sector 6. Demand Supply Gap 7. Strategies in achieving Power for all

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1. Indias Energy Sector

Energy is universally recognized as one of the most significant input for economic growth and human development. The growth of the nation, encompassing all sectors of economy and all sections of society, is contingent on meeting its energy requirements adequately. Energy sector in India is dominated by government and its agencies. There is strong two way relationship between economic development and energy consumption. Primary commercial energy demand grew @5% between 1980-1981 and 2005-2006. India accounted for 3.9% of worlds commercial energy demand. High economic growth leads to higher rates of growth in energy consumption. Indias energy sector mainly divided as follows. State Sector is the largest in all energy sectors in India. It consists of 45.32% of Indias total electricity needs. State Sector is having installed capacity of 83563.65 MW. Central consist of 31.02% of Indias total electricity needs. Central Sector is having installed capacity of 56572.63 MW. Private Sector is the largest in all energy sectors in India. It consists of 23.14% of Indias total electricity needs. Private Sector is having installed capacity of 42208.84 MW.

India's Energy Sector

State Sector Central Scetor Private Sector

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2. Power sector present scenario In past our growth rates of gross domestic product (GDP) have been such as to double our per capita income over the period of 20 years. The changing world scenario Political, economical, social and cultural has proven to all of us that such a growth rate will reduce Indias stature in the world and put it in the receiving end of the game. Indias Power sector can be classified by the generation of electricity using different fuels such as Thermal, Hydro, Nuclear and Renewable Energy Sources (RES).
Fuel Total Thermal Coal Gas Oil Hydro Nuclear Renewable Energy Sources (RES) MW 118695.98 99753.38 17742.85 1199.75 38706.40 4780 20162. 24 %age 65.09 54.70 9.73 0.65 21.22 2.62 11.05

Power sector Present Scenario

Total Thermal Hydro Nuclear RES

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3. Growth of Power sector

Growth of power sector in India since its independence has been noteworthy making India the third largest producer of electricity in Asia. This is reflected in the advanced technological capabilities and large number of highly skilled personals available in the country. While this must be appreciated, it must also be realized that the growth of the sector has not been balanced. A recent study across 12 states revels that, on an average, 9% of the electricity production in India is lost due to power outages. The inhibitors to growth in power sector were many small and big but the main roadblock in the growth path was Government policy, which made it difficult or rather impossible for private player to enter. This further aggravated the problem that Indian entrepreneurs didnt have enough knowledge and experience in developing power projects. To worsen the scenario, the SEB s and other government agencies became financially weak to propel any future expansion or growth in the sector. Electricity Act 2003 was a major step in solving the above underlying problems of the power sector. A whole new system was evolved where private players were invited to be an active participant. Two of the avenues that government can count on for future growth of this sector are midgets of small power plants and CDM clean development mechanism.

Plan wise Outlay

20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1 2 3 4 5 6 7 8 9 10

Power VS Overall

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POWER OVERALL Power VS Overall

393 2069 18.99

427 4800 8.90

1020 8094 12.60

Plan wise Outlay 2448 7294 19265 15902 39287 95700 15.39 18.57 20.13

34273 180000 19.04

79589 434100 18.33

124526 859200 14.49

270276 1484131 18.21

Plan wise Expenditure

20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1 2 3 4 5 6 7 8 9

Power VS Overall

POWER OVERALL Power VS Overall

260 1960 13.27

445 4600 9.67

1252 8576 14.60

Plan wise Expenditure 2932 7399 18299 15779 39426 109291 18.58 18.77 16.74

37895 218730 17.33

7667 485457 1.58

110328 808611 13.64

4. Investment in Power sector

With objective of meeting the rising demand of our growing economy and to provide electricity to all by 2012, an ambitious target of 78,700 MW has been set for the 11 th five year plan. Its sector wise and source wise break up in MW is as follows,

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Source/Sector Central State Private Total Percentage

Hydro 8,654 3,482 3,491 15,627 20%

Thermal 24,840 23,301 11,552 56,693 76%

Nuclear 3,380 3,380 4%

Total 36,874 26,783 15,043 78,700 100%

Percentage 47% 34% 19% 100%

The investment in power sector over the 10th plan (actual), 11th plan (proposed) and 12th plan (projected) is depicted below,

Investment in Power Sector

180 160 140 120 100 80 60 60 40 20 0 X th Plan (actual) XI th Plan (proposed) XII th Plan (Projected) 13 47 37 60 96 Govt. Pvt Total 133 111 171

Figures in US $ Billion

In INR total investment in power sector in Xth plan was Rs 291,850 Cr or US$ 60 billion. For the XIth plan the INR figure is Rs 666,525 Cr out of which Rs 185,512 Cr is private sector share.

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Investment targets by Govt.

140 120 100 80 60 40 20 0 Generation T& D 48 32 86 68 43 Xth Plan XI th Plan (Proposed) XII th Plan (Projected) 133

Though the investment targets by the government has been kept at around US$ 133 billion, the actual investment is however, expected to be around US$ 86 billion primarily on account of slippage in the target achievement by central sector. A power project implementation period is around 36 to 48 months from the date of award of the mandate and hence only those projects which have been cleared up to march 2008would be in position meets the target date. One can keep un awarded central projects out of the purview of the target achievement figures and on that account alone, a total of over US$ 15 billion will remain un-realized. Similarly there could be slippages in the already awarded projects and therefore a shortage of around US$ 20 to 25 billion is expected during the XIth plan period.

5. Current problems in Power Sector

The most important cause of the problems being faced in the power sector is the irrational and UN remunerative tariff structure. Although the tariff is fixed and realized by SEBs, the state governments have constantly interfered in tariff setting without subsidizing SEBs for the losses arising out of the state Government desire to provide power at concessional rates to certain sectors, especially agriculture. Power supply to agriculture and domestic

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consumers is heavily subsidized. Only a part of this subsidy is recovered by SEBs through cross subsidization of tariff from commercial and industrial consumers. The SEBs in the process, have been incurring heavy losses. If the SEBs were to continue to operate on the same lines, their internal resources generation during next ten years will be negative, being of the order of 77,000 crore. This raises serious doubts about the ability of the states to contribute their share to capacity addition during the ninth plan and thereafter. The highlights the importance of initiating power sector reforms at the earliest and the need for tariff rationalization. Other problems in power sector of India are: A. Inadequate power generation capacity. B. Lack of optimum utilization of existing generation capacity. C. Inadequate inter transmission links. D. Inadequate and aging sub-transmission & Distribution network leading to power cuts and local failure. E. Large scale theft and skewed tariff structure. F. Slow pace of rural electrification.

G. Inefficient use of electricity by end user consumer. H. Lack of grid discipline

6. Demand supply gap

For the past two decades, India has had to face increasing deficit in power supply, both for meeting its normal energy requirements as well as its peak load demand. The problem is acute during peak hours and summers, and necessitates planned load shedding by many utilities to maintain the grid in a healthy state. The average all-India shortages in 2009-10 were at 10 per cent in terms of normal energy requirement and about 13 per cent in terms of peak load. With the shortage at both the normal and the peak levels, Indian power industry does not exhibit much cyclicality. Further, with assured returns, the margins of players and their profitability is almost independent of the economic cycles. Electricity is the most important component of primary energy. Indias electricity consumption has grown at an average rate of 7.3 per cent during the period 2002-07 to about 577.9 TWh. Consumption has increased at a faster rate
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since 2002-03, reflecting buoyant industrial demand. Industrial consumers are the largest group of electricity consumers, followed by the domestic, agricultural and commercial consumers, in that order. Indias per capita electricity consumption increased from 178 kWh in 1985-86 to 704.4 kWh in 2007-08. Over the period, 2001-08, per capita consumption has increased at an average rate of 4.45 per cent. It is still much lower compared to the international standards. Electricity Demand and Supply FY Energy (MU) Demand Availability Shortage 2002-03 545,983 497,890 48,093 2003-04 559,264 519,398 39,866 2004-05 591,373 548,115 43,258 2005-06 631,024 578,511 52,513 2006-07 693,057 624,716 68,341 2007-08 737,052 664,660 72,392 2008-09 777,039 691,038 86,001 2009-10 830,594 746,644 83,950 Electricity Requirement % 8.8 7.1 7.3 8.3 9.9 9.8 11.1 10.1 Peak Demand (MW) Demand Met Shortage 81,492 71,547 9,945 84,574 75,066 9,508 87,906 77,652 10,254 93,214 81,792 11,422 100,715 86,818 13,897 108,866 90,793 18,073 109,809 96,785 13,024 118,472 102,725 15,747 % 12.2 11.2 11.7 12.3 13.8 16.6 11.9 13.3

The demand for power is expected to increase to 975 billion kWh by 2011-12. However, at an average GDP growth rate of 8 per cent, the overall demand is expected to increase to about 1,097 billion kWh in 2011-12, including the demand from non-utilities. The 17th Electric Power Survey (EPS) has forecast a peak demand of 152,746 MW for 2010-11. That means a capacity addition requirement of about 72,000 MW during the Eleventh Plan period. Though the target set for capacity addition during the Eleventh Plan period is 78,700 MW, only 62,000 MW is expected to be added by the end of the period.

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Projected Requirement of Electricity Energy Requirement (Billion kWh) GDP growth at 2003-04 2006-07 2011-12 2016-17 2021-22 2026-27 2031-32 8.0% 633 761 1,097 1,524 2,118 2,866 3,880 9.0% 633 774 1,167 1,687 2,438 3,423 4,806 8.0% 89 107 158 226 323 437 592 Peak Demand (GW) 9.0% 89 109 168 250 372 522 733 8.0% 131 153 220 306 425 575 778 Installed Capacity Required (GW) 9.0% 131 155 233 337 488 685 960

Capacity Addition Plan The following table provides the Eleventh Plan targets for adding generation capacity. In a reversal of the trend witnessed during the 1990s, a substantial contribution is expected from the hydropower sector. Also, the private sector is expected to account for 15 GW of the planned capacity addition of 78.7 GW during this period. Installed Capacity Addition Plan (MW)
Sector 11thPlan Total Central State Private Thermal 59,693 24,840 23,301 11,552 Hydro 15,627 8,654 3,482 3,491 Nuclear 3,380 3,380 Grand Total 78,700 36,874 26,783 15,043

Source: CEA, IMaCS Research

Recognizing the large potential of coal reserves in the country as an economic and readily available resource, a significant proportion of the future capacity additions is expected to be based on coal. Further, to reduce the environmental impact and to increase efficiency, the strategies proposed by the power ministry include introduction of large-sized units (660-800
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MW) employing the super-critical technology. The source-wise capacity addition as envisaged under Eleventh Plan period is as given below: Additional generation capacity would require commensurate investments in transmission infrastructure as well. Huge transmission capacity enhancement is required under Phase-III of National Grid Programme, which targets an inter-regional exchange capacity of 37,700 MW by 2012. With rapid industrialization and growing power requirements, many states have decided to set up high-capacity intra-state power transmission systems. PPP model is being adopted by many utilities to attract private investment in transmission sector. The future capacity addition plan envisaged is as given in the table below: Projected Transmission Line Length (Ckm)

Sector 765 kV 500 kV HVDC 400 kV 220 kV Total

11thPlan 5,428 5,206 49,278 35,371 95,283

12thPlan 8,000 4,500 51,000 50,000 113,500

7. Strategies in achieving Power for all

Power shortage has been a persistent problem for a long time. To mitigate shortages, the government has set a goal, mission 2012-Power for all. The union ministry of power has developed appropriate strategies and a blue print to address the issue in a time bound manner. The outcome of these strategies hinges on their effective country wide implementation. These strategies and the blue prints are flexible and can be adjusted to accommodate positive inputs and developments. Meeting the target of providing access to all households by 2012 is a daunting task which would require huge generation capacity

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(100,000 MW), Transmission systems and distribution networks. The government role is revolving around following tasks: 1. Reliability of Power 2. Quality of power 3. Tariffs 4. Commercial viability of power industry Strategies to achieve Power for all Power generation Strategy with focus on low cost generation, optimization of capacity utilization, controlling the input cost, optimization of fuel mix, technology up gradation and utilization of non conventional energy sources. Transmission Strategy focus on development of national grid including interstates connections, technology up gradation and optimization of transmission coast. Distribution Strategy to achieve distribution reforms with focus on system up gradation 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 interest and making the sector commercially viable. Financing Strategy to generate resources for required growth of the power sector, conservation strategy to optimize the utilization of electricity with focus on demand side management, load management and technology up gradation to provide energy efficient gadgets. Communication Strategy for political consensus with media support to enhance the genera, public awareness.

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NICMAR Bibliography:-

PGPM 24

1. NICMAR lesson book Power Plant Engineering (PGPM 24 ) 2. Position Paper on The power Sector in INDIA Dec 2009 3. Industry Insight Indian Power Sector 4. CEA, IMaCS Research 5. Website: www.powermin.nic.in

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