03-12-2012, 06:22 PM
Overview of Indian Power Sector
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The Indian Power Industry is one of the largest and most important industries in India as it fulfils the energy requirements of various other industries. It is one of the most critical components of infrastructure that affects economic growth and the well-being of our nation.
India has the world’s 5th largest electricity generation capacity and it is the 6th largest energy consumer accounting for 3.4% of global energy consumption. Due to the fast-paced growth of the Indian economy, the country’s energy demand has grown at an average of 3.6% p.a. over the past 30 years.
In India, power is generated by State utilities, Central utilities and Private players. The share of installed capacity of power available with each of the three sectors can be seen in the pie-chart below:
Working of Power Industry
Thermal Power: - In India, major proportion of power is generated from thermal sources where the main raw material used is coal. Around 83% of thermal power is generated using coal as a raw material whereas 16% of thermal power is generated with the help of Gas and 1% of thermal power is generated with the help of Oil.
Hydro Power:
Hydroelectric power or hydroelectricity is electrical power which is generated through the energy of falling water. India has hydro power generation potential worth 1,50,000 MW, of which only 25 % has been harnessed till date.
Nuclear Power: -
A Nuclear Power Plant is a thermal power station in which the heat source is one or more nuclear reactors. A nuclear reactor is a device to initiate and control a sustained nuclear chain reaction. In the process, heat is generated which is then used to generate electricity.
Renewable Energy Sources: –
The energy obtained from renewable sources like sun, wind, biomass can be converted into power. Renewable energy sources have great potential to contribute to improving energy security of India and reducing green-house gas emissions. India is among the five largest wind power generators in the world.
Transmission and Distribution: –
Transmission of electricity is defined as the bulk transfer of power over a long distance at a high voltage. Transmission and Distribution is as important as generation. The capacity additions to meet India’s growing power demand should be supplemented by adequate transmission infrastructure. Globally, every dollar invested in generation has an equal amount invested in transmission and distribution. However, in India traditionally every dollar invested in generation has a corresponding half a dollar invested in transmission and distribution. Due to this, transmission capacity in India lags behind the generation capacity. Huge investments are required in Transmission and Distribution if India’s power sector is to meet the rising power demand.
Availability of Coal: -
Coal is the mainstay of the power production in India and is expected to remain so in the future. India has limited coal reserves, plus, availability of domestic coal is a challenge on account of various bottlenecks such as capacity expansion of Coal India Limited (the largest coal producing company in the world, coal block allocation, tribal land acquisition, environmental and forest clearances, etc. Transportation of coal is a big concern in itself. Within the country, coal is transported by Indian Railways and in case of imports; coal is to be unloaded at ports. In both cases, India currently faces capacity shortage. Hence, a project developer has to account for and manage its logistics chain in a manner that ensures regular fuel supply which is a big challenge.
Dependence on Equipment Suppliers: -
The power sector is heavily dependent on Equipment suppliers. In fact, equipment shortages have been a significant reason for India missing its capacity addition targets for the 10th five year plan. While the shortage has been primarily in the core components of boilers, turbines and generators, there has been lack of adequate supply of Balance of Plant (BOP) equipment as well. These include coal handling, ash-handling plants, etc. Apart from these, there is shortage of construction equipment as well. Hence, inadequate supply of equipments is a cause of concern for the power companies.
Aggregate Commercial and Technical Losses:-
The Aggregate Technical and Commercial Loss (AT&C) is defined as the power lost due to inefficient transmission and distribution infrastructure. India’s AT&C losses are as high as 30% compared with 5-10% in the developed markets which means out of every 100 units produced, 30 are lost during transmission and distribution. Technical losses are due to inadequate investments over the years for system improvement works. Commercial losses are mainly due to low metering efficiency, pilferage and theft of power. This is a huge problem for the power sector.