India has transcended from an era of chronic power shortages to an energy surplus scenario over the past 2-3 years
The major reason for this transformative shift is the unprecedented addition of conventional generation capacity under the 12th Five Year Plan period. As against a target of 88.5 GW for conventional generation, actual capacity addition was close to 100 GW. While demand continued to be in line with the macroeconomic trends, generation capacity addition outpaced the demand growth.
Capacity addition and demand increase
The country has witnessed a combination of unprecedented coal-based generation capacity additions (led significantly by the private sector) as well as lower than expected demand growth which has led to improvement in the power deficit situation over the years. Factors such as policy clarity, political push as well as administrative reforms have helped in aggressive addition of generation capacities (predominantly coal based) in the recent years.
While average demand increased by ~7,800 MW, the capacity addition was to the tune of ~25,000 MW, far outpacing the domestic demand. Moreover, India became the net exporter of power for the first time and exported close to 5,800 Million units to Nepal, Myanmar and Bangladesh during 2016-17 (April-February).
Peak and energy deficit
Peak deficit for the country as a whole has thus reduced from ~17 per cent in FY 2007-08 to ~1.6 per cent in FY 2016-17. Similarly, energy deficit has reduced from ~10 per cent in FY 2007-08 to ~1 per cent in FY 2016-17. The system peak demand met by India during 2016-17 was ~159 GW
Generation growth
The share of thermal generation capacity has been considerably stable at ~70 per cent. RE capacity has increased steadily to reach ~18 per cent share
Thermal generation capacity accounts for almost 67 per cent of installed capacity of the country. Coal based power generation contributes to around 35 per cent of the total all India CO2 emission. Reliance on coal-based power is expected to continue in the coming years. In line with the same, India is running one of the largest and most ambitious renewable capacity expansion programs in the world. Newer renewable electricity sources are projected to grow massively by 2022.
Private sector leads installed generation capacity with 44 per cent share. Unprecedented private sector investments in power generation coupled with projected growth in industrialisation and economic activity has encouraged power distribution utilities to tie up with several generators through power purchase agreements (PPAs). Private sector has contributed ~55 per cent of the total capacity addition in the 12th five year plan.
Transmission
India has become an integrated grid with large investments in high voltage (HV) lines and substations. The Indian transmission sector has seen robust growth in the last five years. The sector is largely dominated by the state utilities while the private sector currently accounts for only 3-4 per cent of the total transmission capacity. The Central Electricity Authority (CEA) estimates that an investment of Rs 2.6 lakh crore will be made between FY 18 and FY 22. The investment will be used for the 100,000 circuit km of transmission lines and 2,00,000 MVA transformer capacity of substations at 220 kV and above voltage by the end of 13th five year plan. Government is also planning to set up high capacity transmission corridors to ensure un-interrupted evacuation of power
*11 high capacity corridors have been planned at an estimated cost of Rs 75,000 crore. These projects are aimed at bulk evacuation of power from independent power producers (IPPs)
*Total transmission capacity to be constructed at around 34,000 MW
*Likely to be commissioned by 2021
Distribution
The power distribution segment is similarly dominated by state utilities with presence of private players only in few cities across India. Recently the government has tried to increase private participation in power distribution through distribution franchise model and sub-contracting of non-core operations. However, the sector still remains inefficient with high AT&C losses and poor financial health of distribution utilities. There has been a substantial reduction in the gap between the average cost of supply and the average revenue realised due to the tariff revision carried out for 25/27 States and UTs.
The move resulted in increased realisation of cost of supply as well as increase in operational efficiencies of discoms. Overall Aggregate Technical and Commercial (AT&C) losses stood at ~22 per cent for the entire country in 2017.
The state power distribution utilities have made substantial amount of capital investments in the following:
• Feeder metering, metering of distribution transformers, increasing access to unconnected households, etc.
• System strengthening schemes (these have improved overall operational efficiency as well as led to reduction of overall system losses).
Source: Deloitte
