Challenge Before Power Sector

By: Admin
Oct 03 2017

Despite the encouraging growth trajectory in the energy space over the last few years, the Indian Power sector has still not been able to induce and sustain the required capacity addition matching the ever growing power demand of the country.

Thermal capacity addition is plagued by the growing fuel availability concerns faced by the Industry. A significant gas- based capacity of more than 20,000 MW is idle due to non-availability of gas. Coal supplies by CIL is restricted to around 65% of actual coal requirement by coal- based thermal plants, leading to increased dependence on imported coal with the cascading result of high power generation costs.

Years of populist tariff schemes, mounting AT&C losses and operational inefficiencies have adversely affected the financial health of State Discoms which are currently plagued with humongous out-standing debts.

The micro level policies governing the fuel cost pass-through, mega power policy, competitive bidding guidelines are not in consonance with the macro framework like The Electricity Act 2003 and the National Electricity Policy.

Various aspects like ramping up coal production by both public and private sector in a time-bound manner, increased participation of private sector in coal production and easing of regulatory framework, clearances and approvals for allocation and development of coal blocks & gas infrastructure need to be addressed while pushing up power reforms.

There is a dire need to develop both conventional and non-conventional forms of energy, wherein, three key factors must be kept in view for developing an energy mix: the pattern of energy demand seen in the country; the availability of fuels, and fuel production and import costs.

Regulators need to be sensitized to the challenges faced by the sector and policy framework needs to be crafted and enforced to ensure a win-win situation for all the stakeholders.

A robust and sustainable credit enhancement mechanism for funding in energy sector needs to be put in place through increased participation by global funding agencies like The World Bank, ADB etc. in the entire value chain.

There is a strong need to push for wider-scale implementation of public private partnership models.

The electricity generation target of conventional sources for the year 2017-18 has been fixed as 1229.400 Billion Unit (BU) i.e. growth of around 5.97% over actual conventional generation of 1160.141 BU for the previous year (2016-17).

By 2022, the installed power capacity in India is expected to reach 350 gigawatts (GW) from 243 GW in 2014, on the back of increasing industrialisation and economic development. The total market size of electrical machinery in India is anticipated to reach US$ 100 billion by 2022.

The electrical machinery sector consists of generation, transmission and distribution machinery. The generation equipment market is expected to expand at a CAGR of 12.7 per cent over FY12–22.

The exports of electrical machinery rose to US$ 4.9 billion in FY16 from US$ 3.4 billion in FY12. Boilers & parts and electrical wires and cables were the primary drivers of the increase in exports

The Government of India has been de-licensed the electrical machinery industry and has allowed 100 per cent foreign direct investment (FDI) in the sector. It plans to set up the Electrical Equipment Skill Development Council (EESDC) which would focus on identifying critical manufacturing skills required for the electrical machinery industry.

With many bilateral nuclear agreements in place, India is expected to become a major hub for manufacturing nuclear reactors and associated components. Foreign participation in the development and financing of generation and transmission assets, engineering services, equipment supply and technology collaboration in nuclear and clean coal technologies is also expected to increase.

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