Thermal power takes the front seat in the Indian Power Sector

On May 10, 2015

“We will look for technologies for clean coal as this will be the mainstay in India’s fuel mix even as we strive to address climate concerns,” said Piyush Goyal, Union Minister of Coal, Power and Renewable Energy recently. According to the government, strong bilateral relations between Japan and India to be further strengthened in the areas of energy cooperation and building smart cities.

Power is one of the most critical components of infrastructure that affects the economic growth of a nation. The Indian power sector is one of the most diversified in the world. Sources for power generation range from conventional ones like coal, natural gas, oil, hydro and nuclear power to non-conventional sources such as wind, solar and domestic waste. In order to meet the increasing requirement of power, massive addition to the installed generating capacity in the country is the need of the hour.

The Indian Government’s aim to attain ‘Power For All’ has resulted in capacity addition. The Planning Commission’s 12th Plan expects total domestic energy production to reach 669.6 million tonnes of oil equivalent (MTOE) by 2016–17 and 844 MTOE by 2021–22. According to the 2014 energy outlook report by BP, British oil giant, by 2030 – 35 the energy demand in India is projected to be the highest among all countries.

India & Thermal Power
India’s power generation witnessed growth at a very impressive rate during the first nine months of the financial year 2014-15. Power stations generated 793.7 billion units of power during this period, 9.9% higher as compared to the corresponding period the year before. The growth in total power generation was driven by the thermal power segment. Thermal power generation accounts for more than 80% of total power generation in India and is expected to grow. Increase in raw material availability and capacity additions will push thermal power generation. According to CMIE’s CapEX database, thermal power generation capacity is expected to grow by 27,744 mw in 2015-16.

Coal to remain important mainstay fuel
India, which has doubled its coal thermal capacity since 2007 is looking towards greater emphasis on clean coal technologies as coal will continue to be the predominant fuel just as Asian major Japan adds another 7200 mw of coal capacity in the next five to seven years.

Speaking about the importance of renewable energy in the overall energy basket, Goyal added that India has set a 175 GW target for renewable energy and this will happen in the next five years. “We are looking at innovative financing models. We are engaging with states to expand rooftops in a big way,” he said recently.

Government Initiatives
The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. The RE-INVEST 2015 which concluded in February this year, is a significant step in making India self-reliant in energy. Apart from this, the Indian Government has announced a massive renewable power production target of 175,000 MW by 2022, comprising 100,000 MW from solar power, 60,000 MW from wind energy, 10,000 MW from biomass and 5,000 MW from small hydro power projects. A Joint Indo-US PACE Setter Fund has also been established with a contribution of $ 4 million from each side to enhance clean energy cooperation.

The Indian power sector has an investment potential of Rs 15 trillion (US$ 237.35 billion) in the next 4-5 years, which will provide immense opportunities in power generation, distribution, transmission and equipment. The immediate aim of the government is to produce two trillion units (kilowatt hours) of energy by 2019. The government had rewritten the National Solar Mission with target of 100,000 MW capacity by 2022. The government has also sought to restart stalled hydro power projects and increased the wind energy target from 20 GW to 60 GW by 2022.

The Path Ahead
As India is set to position itself among the world’s top three manufacturing destination and the Government’s ‘Make-In-India’ campaign catching huge attention across the globe, it is clear that India’s power demand is set to witness sharp rise in the near future. This will certainly affect the overall economy as there will be vast business opportunities for foreign players, Indian conglomerates and especially SMEs. We can say the overall scenario may lead India to become one of the most ‘Power’ful nation.

OTHER GOVERNMENT INITIATIVES

The Union Cabinet of India has approved 15,000 MW of grid-connected solar power projects of National Thermal Power Corp Ltd (NTPC).
The Indian Railways has signed a bilateral power procurement agreement with the Damodar Valley Corporation (DVC). The agreement was signed between North Central Railway and DVC. This is the first time the railways will directly buy power from a supplier.
US federal agencies have committed a total of US$ 4 billion for projects and equipment sourcing, one of the biggest deals for the growing renewable energy sector in India.
A memorandum of collaboration (MoC) was signed in New Delhi on January 20, 2015 between the Indian Institutes of Technology (IITs) and Oil & Natural Gas Corporation (ONGC) to work towards a collective research and development (R&D) programme for developing indigenous technologies to enhance exploration and exploitation of hydrocarbons and alternate sources of energy.

Investments

More than 290 global and domestic companies have committed to generate 266 gigawatts (GW) of solar, wind, mini-hydel and bio-mass based power in India over the next 5-10 years. The initiative would entail an investment of about US$ 310-350 billion.
The sector has attracted FDI worth US$ 9,548.82 million during the period April 2000 to February 2015.
Inox Wind Ltd, a subsidiary of Gujarat Fluorochemicals and a wind energy solutions provider, plans to double its manufacturing capacity to 1,600 MW at a total investment of Rs 200 crore (US$ 31.64 million) by the end of next financial year.
Suzlon Energy Ltd announced that it has completed installing and commissioning 350 MW of wind energy in Brazil. This combined capacity includes projects located in the high wind states of Rio Grande do Norte and Ceara in Brazil.
ACME Group plans to invest Rs 600 crore (US$ 94.93 million) to develop 74 MW of solar photovoltaic (PV) power projects in Punjab.
The Dilip Shanghvi family, founders of Sun Pharma, plans to acquire a 23 per cent stake in Suzlon Energy with a preferential issue of fresh equity for Rs 1,800 crore (US$ 284.8 million).
Reliance Power Ltd has signed an accord with the Government of Rajasthan to develop 6,000 MW of solar power projects in the state over the next 10 years.
Global private equity (PE) fund Actis will invest US$ 230 million to create an Indian renewable energy platform, Ostro Energy, the fund said in a press release. Ostro Energy’s first project Tejuva—a 50.4 MW wind project—is already under construction in Jaisalmer, Rajasthan.

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