Blueprint for Power Sector Development

To mitigate the shortages, the Government of India (GoI) has set a goal - Mission 2012: Power for All. A comprehensive Blueprint for Power Sector development has been prepared encompassing an integrated strategy for the sector development with following objectives:-
- Sufficient power to achieve GDP growth rate of 8%
- Reliable of power
- Quality power
- Optimum power cost
- Commercial viability of power industry
- Power for all

Meeting the target of providing access to all households by 2012 by adding 100,000 MW capacity and integration of regional grids into the national grids with 30,000 MW of inter- regional transfer capacity by the year 2012 is a daunting task. The task would require massive addition to Generation capacity, Transmission system & Distribution network.

Accordingly, the programmes of the GoI revolve around the following:-
- Access to electricity to be available for all households in the next 5 years.
- Availability of power on demand to be fully met by 2012.
- Energy shortage and peaking shortage to be overcome by providing adequate spinning reserves.
- Reliability and quality of power to be supplied in efficient manner.
- Electricity Sector to achieve financial turnaround and commercial viability.
- Consumers’ interests to be accorded top priority

For complete ‘Blueprint for Power Sector Development’, refer to the report - 'Overview of Power Sector in India 2005- revised edition'

Strategies to achieve 'Power for All':

- Power Generation Strategy with focus on an integrated approach including low cost generation, optimization of capacity utilization, controlling the input cost, optimisation of fuel mix, technology upgradation, capacity addition through nuclear and non-conventional energy sources, high priority for development of hydro power, a comprehensive project monitoring and control system
- Transmission Strategy with focus on development of National Grid including Interstate connections, Technology upgradation & optimization of transmission cost.
- Distribution strategy to achieve Distribution Reforms with focus on System upgradation, 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 interests and making the sector commercially viable.
- Financing Strategy to generate resources for required growth of the power sector.
Conservation Strategy to optimise the utilization of electricity with focus on Demand Side management, Load management and Technology upgradation to provide energy efficient equipment / gadgets.
- Communication Strategy for political consensus with media support to enhance the general public awareness.

Power Sector Reforms

The power sector continues to be one of the greatest constraints to maintaining growth and further reducing poverty in India. 45% of the households remain unconnected to the public power system, and those who are connected, often receive infrequent and unreliable service, making power supply a brake on private sector development and economic growth.

The State Electricity Boards (SEBs) have been incurring losses and were unable even to make payments to the CPSUs like NTPC, PGCIL etc for purchase of power. The accumulation of outstanding to the CPSUs grew over Rs 40,000 crore, seriously hampering their capacity addition programme. The reform of the power sector is crucial, as financial losses amount to 1.5% of the GDP. To turn around the financial health of the power sector, the GoI has taken up reforms in the power sector for gradual elimination of losses. The reform process in power sector in India was initiated in 1991 and Indian Power sector is witnessing major structural changes.

Performance/ Policy Initiatives / Decision Taken during the year 2003-04

- Electricity Act 2003 has been enacted in July 2003.
- Accelerated Electrification Programme for One Lakh villages and One Crore rural households launched. The scheme outlay of Rs 6,000 cr. comprises grant component of Rs 2,400 cr.
- 50,000 MW Hydro Initiative launched
- Improvement in Power Supply Position- Since the beginning of the IXth Plan (1996-97), the peak shortfall has reduced from 18% to about 11%. Supply shortfall has also reduced from 11.5% to 7.1%.
- Generation Performance
- Generation during 2003-04 over the previous year improved from 531 BU to 558 BU Overall PLF of generating stations improved from 72.2% to 72.7% while in central sector it improved from 77.1% to 78.7%.

Capacity Addition Target & Achievement

Uninterrupted and reliable supply of electricity for 24 hours a day needs to become a reality for the whole country including rural areas. In order to fully meet both energy and peak demand by 2012, enough generating capacity has to be created with some spare generating capacity so that the system is also reliable. The sector is to be made financially healthy so that the state government finances are not burdened by the losses of this sector and should be able to attract funds from the capital markets without government support. The consumer is paramount and he should be served well with good quality electricity at reasonable rates.

To ensure grid security and quality & reliability of power supply reasonable spinning reserve at national level has to be created in addition to enhancing the overall availability of installed capacity to 85%.

Capacity of about 100,000 MW is planned to be set up during the 10th and 11th plans, ie between 2002 and 2012. This implies doubling the installed capacity and, incidentally, works out to adding about 430 MW every fortnight! Capacity addition plan for addition of 41,110 MW finalized for the Xth Plan period- the Central, State and Private sector’s share is expected to be 51%, 16%, and 25% respectively. About 7% is expected to come from renewable sources and 2% from the Tala project in Bhutan. [Capacity Addition Program, Mission 2012, MoP].

The Hydro Power initiative has also been launched by the Prime Minister in 2003, under which a capacity of 50,000 MW is to be added in the same period- 2002 to 2012. Outlay for power sector for the Xth Plan period has been enhanced to Rs 1,43,399 cr, an increase of approximately 214% over the IXth Plan outlay of Rs 45,591 crores. Advance action plan initiated for capacity identified for addition in the XIth Plan. In the last two Plan periods, barely half of the capacity addition planned was achieved. The optimistic expectations from the IPPs have not been fulfilled and in retrospect it appears that the approach of inviting investments on the basis of government guarantees was perhaps not the best way.

For detailed & updated information on the Indian Power Sector, refer to the report - 'Overview of Power Sector in India 2005- revised edition'