Power or electricity is very essential constituent of

infrastructure affecting economic growth and welfare of the

country. Currently, the power sector is at a crucial juncture
of its evolution, with many private producers and domestic
manufacturers also playing a significant role in various
capacities, and greater reliance on markets, subject to
regulation. Developers of Power Plants have been facing
numerous constraints like coal/gas allocation, environment
clearance, land acquisition, financing and funds tie-ups,
etc. for last about 4 years. This has resulted in only very
few new projects coming up.

1. Performance of the industry

India is the 5th largest producer of electricity in the world.
At an electricity-GDP elasticity ratio of 0.8, electricity will
continue to remain a key input for India's economic growth.
Electricity demand is likely to reach 155 GW by 2016-17 &
217 GW by 2021-22 whereas peak demand will reach 202
GW & 295 GW over the same period respectively. In India,
the total power generated has been 1048.5 BU during the
FY 2014-15. There has been a shift to renewable power as
the same constitutes of 27.25% of the total installed
capacity.
India has a huge hydro power potential of 148 GW, out of
which only 42 G has been realized till date. Steps have
been taken to attract investments into the hydro sector
and increase the falling share of hydroelectricity in the
country's installed capacity mix. Government is planning
Hydropower Purchase Obligation (HPO), which will obligate
the power distribution companies to purchase power from
hydro power plants. This has led to signs of revival in hydro
power segment. However, the Supreme Court verdict
staying 23 Hydro Projects in Uttarakhand has acted as a
dampener, thereby delaying the imminent revival in the
sector. The Nuclear business is primarily driven by
government policies, public perceptions and global
dynamics.

2. Installed capacity in India

For the 12th plan period (FY 13-17), the Government of
India has targeted capacity addition of 88,537 MW against
which capacity addition of 61,014 MW has been achieved
up to FY 14-15. During FY 14-15, a capacity addition of
22,566 MW has been achieved which is 127% of the target
of 17,830 MW. Private sector contribution accounts for 59%
in the total capacity addition during FY 14-15.
India is likely to add 600 GW to 1200 GW of additional new
power generation capacity before Year 2050. The target for
12th Five year plan is that of 118.54 GW out of which
88.54GW is to come from conventional sources while the
remainder to come from Renewable energy. The
government plan is not only on target but seems it will
exceed the targeted capacity. Break up of Power sector is
such that 188.90 GW is Thermal power which is 70.6% of
the total installed capacity while Hydro accounts for
41.27GW which is 15.4% of total. The share of Renewable
energy is 31.69 GW which is 11.8%.
India?s around 36 per cent of power capacity is in western
region followed by 26 per cent in northern region, 24 per
cent in southern region, 12 per cent in eastern region, and
only 1 per cent in north-eastern and island regions.
Western region leads in thermal power and northern region
in hydro with 78594.42 MW and 17946.77 MW respectively.
Southern region leads in Renewable Energy Sources (RES),
with 42 per cent share in all-India aggregate, followed by
western region (36 per cent) and northern region (21 per
cent).
Marking a major change from pattern till recently, private
sector has increasingly forayed into power infrastructure in
recent years. Thus, during the 11th Plan 39 per cent of
conventional energy capacity addition was from private
sector, while 35 per cent coming from state government
utilities and around 26 per cent from central government
power companies. Most of the capacity in private sector
was in thermal power with 56899.73 MW.

3. Power Generation
The total power generation in the country during FY 14-15
was 1048 BU (including Bhutan import) as against a
generation target of 1023 BUs, about 2.5% above target.
The contribution from the private sector was 281.53 BU
which was 109.5% against target of 256.98 BU. Moreover,
the government has set a target of producing 1,098 BUs of
power during 2015-16. The central sector plants will
contribute 411 BUs and state sector 401 BUs to the total
targeted capacity. Of the total 1,098 BUs that the
government is aiming to generate in the current fiscal, 965
BUs will come from thermal power and the remaining from
hydel plants (133 BUs). As many as seven hydro projects,
which are likely to come up during the current financial
year, will contribute 2,766 million units of electricity to the
total generation.
The power generation in September 2015 surged 10 per
cent to 95179.43 million units (MU) from 85928.86 MU in
same month previous year. The power generation between
April- September 2015 stood at 555447.85 MU, up by 4.42
percent as compared to 531954.11 MU in year ago period.

4. Government initiatives
Govt. set to allot mines for commercial coal mining to the
state entities
The government, which is armed with Coal Mines Special
Provisions Bill, 2015, is all set to allott mines to the state
entities for commercial mining of coal. The government will
continue auctioning coal blocks to private companies after
passing of the Coal Mines Special Provisions Bill, 2015 in
Parliament. However, the government has decided to
assign mines to private entities only in second phase.
Overall, the centre is in the process of allotting 204 coal
blocks in a transparent manner of which 67 blocks have
been allotted by either auction or on a nomination basis to
state entities. Till now, 29 blocks have been auctioned and
another 38 allotted to the state-owned entities. Further, the

objective of the government was for a methodology of

offering linkages in a transparent manner and auction was
not the only option available to them. The government had
appointed SBI capital to suggest on this and a policy paper
is expected be ready on this by June 30, 2015.
Govt. to invest 1 lakh crore to set up 5new UMPPs
Indian government is planning to set up 5 new ultra mega
power projects (UMPPs), under the plug and play model,
entailing investments of around Rs 1 lakh crore. UMPP is
coal-based thermal power project that has 4,000 MW
generation capacity. The govt. however did not announce
the states where these projects are proposed to be set up.
Under the 'plug and play' system coal blocks will be
auctioned after they are granted various clearances to
speed up and simplify mining and get better valuation. One
such project is likely to be set up in power starved state of
Bihar. The proposed plant in Bihar may be fed from a mine
either in Jharkhand or Odisha. Power Finance Corporation
(PFC) is the nodal agency for UMPPs in the country. So far,
4 UMPPs have been awarded, of which Sasan (Madhya
Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya
(Jharkhand) have been bagged by Reliance Power. Tata
Power is operating the Mundra UMPP in Gujarat.
Investments
The investment climate is positive in the power sector. Due
to policy of liberalisation, the sector has witnessed higher
investment flows than envisaged. The Ministry of Power
has sent its proposal for the addition of 76,000 MW of
power capacity in the 12th Five Year plan (2012-17), to the
Planning Commission. The Ministry has set a target of
adding 93,000 MW in the 13th Five Year Plan (2017-2022).
The industry has attracted FDI worth Rs 48,357.00 crore or
$9,828.08 million during the period April 2000 to June
2015.

5. Recent developments
Cabinet working on proposal to resolve discom issues

The Power Ministry is working on a proposal to deal with

over Rs 4 lakh crore loans of power distribution companies
(discoms) with a view to bring down their liabilities and will
put it soon before the Union Cabinet. Hit by subsidised
tariffs, state electricity discoms are facing cash crunch and
are incurring annual losses of about Rs 60,000 crore. This is
also affecting public sector banks as their bad loans are
rising. The governments will entirely take over the debt of
power discoms of eight states under the new financial
restructuring plan (FRP) for power distribution companies.
These eight states are Rajasthan, Andhra Pradesh, Uttar
Pradesh, Tamil Nadu, Haryana, Jharkhand, Bihar and
Telangana.
Odisha to invest Rs 887 crore for renovating 3 hydel
projects
In a bid to raise production of green electricity in the state,
the Odisha government has decided to renovate three
major hydro-power stations. In this regard, the state
government will invest around Rs 887 crore and the hydelpower stations at Hirakud, Chipilima and Balimela would be
renovated in phases. Of total, the Odisha government will
invest Rs 158 crore to renovate two units (37.5 X 2) of
Hirakud power station. The capacity of Hirakud station
would increase from 75 MW to 86 MW after renovation. The
state govt will also invest Rs 65.67 crore in renovation of
34-MW power station at Chipilima, while Rs 664 crore will
be spend in the renovation of Balimela Hydel Project, which
has an installed capacity of 510 MW.
Government to waive transmission charges for clean power
In a bid to give a push to clean energy projects in the
country, the government has decided to waive
transmission charges for electricity generated from
renewable sources. In this regard, the government is
bringing out a legal framework where all inter-state
transmission of renewable energy will be at zero cost. So
renewable energy will not be charged any transmission
charges across the country. The government has already

started with Rs 38,000 crore of green energy corridors and

it is identifying more areas and are urging states to come
with area where it can expand renewable energy so that
more transmission grids can be made which the Central
government is doing. The government has set a target of
175 GW of renewable energy capacity by 2022, which
includes 100 GW of solar power, 60 GW of wind power, 10
GW of biomass-fired power and 5 GW of small hydro power.
Corporate developments in power sector
?Leading power trading firm PTC India has inked pact with
the Solar Energy Corporation of India (SECI) for sale and
purchase of power generated from 3,000-mw solar
projects.
?Wind turbine maker Suzlon Group has completed
commissioning of 50.40 mega watt (MW) wind power
turnkey project for Ostro Energy which is owned by Actis.
?Welspun Renewables? 32 MW solar power project in
Bathinda has been commissioned, making it Punjab's
largest solar photo-voltaic power plant.