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CONTENTS

1. INDIA POWER SECTOR OVERVIEW - Page 3 2. KARNATAKA POWER SECTOR SCENARIO Page 7 3. CONVENTIONAL POWER GENERATION IN KARNATAKA Page 17 4. RENEWABLE ENERYG DEVELOPMENT IN KARNATAKA Page 23 5. POWER TRANSMISSION & DISTRIBUTION INFRASTRUCTURE IN KARNATAKA Page 29

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CHAPTER 1: INDIA POWER SECTOR OVERVIEW

India is today the 2nd fastest growing economy globally. Powering the economic growth requires tremendous amount of support from a countrys basic infrastructure Roads, Ports, Electricity, Water, Electricity / Power are key elements supporting the nations infrastructure growth.

India with an installed capacity of 169.7 GW (as on December 2010) was ranked 6th globally in terms of power generation installed capacity. As on June 2011, Indias power generation installed capacity has increased to ~177 GW. In the 11th five year plan (FY2007-FY2012), India to-date has added ~44.7 GW of capacity, which is almost double the capacity added during the 10th five year plan (FY2002-FY2007). Government of India in Y2002 had set a target of adding almost 100 GW of capacity over a 10 year period between FY2002 and FY2012, with the objective of Power for All by 2012. Chart 1.1 below indicates the growth of power generation capacity over the past few years.

Chart 1.1 - India Power Generation Capacity-Cumulative (Figs in GW)

Source: Central Electricity Authority, Ministry of Power

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In spite of the Govt.s aggressive target of power generation capacity addition, the actual capacity addition has not been able to meet planned targets due to various reasons, including: Constrained main plant equipment (boiler, turbine, and generator) manufacturing capacity, etc. Delayed clearances environmental, forest etc. Land acquisition issues Poor financial condition of State Electricity Boards (SEBs) Shortage of BOP suppliers

Chart 1.2 - India Power Generation Capacity, Planned vis--vis actual Capacity Addition (Figs in GW)

Source: Central Electricity Authority, Ministry of Power

Power sector has not been able to keep pace with the rapid increase of Energy Demand. Although Indias Power Transmission & Distribution (T&D) infrastructure ranks 5th globally, with the backdrop of missing power generation capacity addition, rampant power theft, dismal condition and inappropriate maintenance of the equipment/infrastructure has resulted into huge T&D losses, thereby leading to power demand-supply gap scenario.

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Chart 1.3 - India Power Generation Capacity, Planned vis--vis actual Capacity Addition (Figs in GW)

Source : CEA, Ministry of Power

With heavy dependence on fossil fuel imports, India is becoming vulnerable to price volatility. With the increasing demand for hydrocarbon resources and the limited global growth in their supply, an increase in the price of conventional fuels is inevitable. Globally-increasing coal prices, besides the domestic coal supply shortage, have made it imperative for India to diversify its energy sources.

With this background of power demand-supply gap and the long-term strategy for establishing energy security and reducing the carbon footprint, the countrys power generation scenario calls for rapid capacity addition from all possible sources. India has voluntarily committed to reduce carbon emissions, despite its per capita carbon emission being less than a fifth of the global average. As part of Indias strategy to lower the carbon emission intensity, increasing the contribution of Renewable Energy (RE), an emission-free and clean fuel source, as a dependable source of energy is one of the key aspects.

Aggressive plans to increase the countrys power generation capacity requires large tracts of land and equivalent amount of investment in laying the power T&D infrastructure. With approximately 40 percent of the population in India without access to electricity, and hurdles with respect to Right-OfWay, expanding the T&D infrastructure is beset with its own set of challenges. In such a scenario, renewable RE is an excellent energy source in meeting localized power requirements through distributed generation applications, thereby reducing the burden of laying additional T&D infrastructure.

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INCREASING FOCUS ON RENEWABLE ENERGY IN INDIA

The share of RE, as one of the countrys sources of energy, has been steadily increasing over the past few years, almost 5.7 times in comparison to 1.5 times of thermal power (in absolute terms), over a period of last 9 years (end-March 2002 to end-March 2011). Contribution of renewable energy to Indias power generation mix stood at 11.4 percent (March 2011), steadily increasing from a share of 3.3 percent (March 2002). These facts indicate the growing importance of RE in the countrys power generation mix.

Chart 1.4 - India Power Generation Mix by Fuel Source (percentage)

Note: Figures indicated in chart are as at the end of March for each year
Source: CEA, Ministry of Power, MNRE

Small hydropower, biomass, wind, solar, etc. are some sources of RE in India. Wind energy dominates Indias RE basket with a share of 70.9 percent. In fact, growth in wind energy capacity within the country has been a major driving factor for the increasing share of RE in the countrys energy mix.

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CHAPTER 2 : KARNATAKA POWER SCENARIO

KARNATAKA STATE - ECONOMIC OVERVIEW Chart 1.4 - Karnataka State Gross Domestic Product (GDP), (000 crores)

Source : Karnataka Economic Survey, Government of Karnataka

Karnatakas economy has been growing at a rapid pace, faster than the overall economic growth of the country. At the end of FY2010-11, Karnatakas GDP reached 397.9 thousand crores. Over the past 5 year period the CAGR of the GDP has been 15.2 %.

From the GDP composition stand-point, an interesting fact emerges. As compared to Agriculture, and industry sector, the share of the services sector in Karnatakas GDP has been increasing at a much faster rate. At the end of 10th five year Plan (FY2006-07), the services sector contributed 50.9% of GDP, which has now increased to 54.9%. This growth of Service sector has been at the cost of the Industry sector, which is reflected in the below chart

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Chart 1.5 - Karnataka GDP composition by Sector (Percentage share)

Source: Karnataka Economic Survey, Government of Karnataka

KARNATAKA POWER SECTOR STRUCTURE

At present, power sector generation in Karnataka is spear headed by the Karnataka Power Corporation Limited (KPCL). The State Electricity Board dealing with the transmission and distribution of electricity -the Karnataka Electricity Board (KEB) -- was unbundled and corporatized in 1999. This resulted in the formation of Karnataka Power Transmission Corporation Ltd. (KPTCL) which retained charge of T&D, while a small generation company, Visveswaraya Vidyut Nigama Limited (VVNL), was given control of the few generation stations earlier controlled by the Board.

KPTCL a 100% Government of Karnataka (GoK) entity, transmission utility unbundled from the erstwhile Karnataka Electricity Board (KEB), as a part of power sector reform in Karnataka. KPTCL in turn was unbundled in June 2002, with the distribution segment split between the existing five main geographical zones. Karnataka Power Transmission Corporation Limited (KPTCL) is the sole transmission utility which handles power from the grid to the distribution level. Power is then distributed to the customers through five Distribution Companies

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Chart 1.6 Karnataka Power Distribution

Karnataka Power Transmission Corporation Limited (KPTCL)

BESCOM, Bangalore Electricity Supply Company

MESCOM, Mangalore Electricity Supply Company

HESCOM, Hubli Electricity Supply Company

GESCOM, Gulbarga Electricity Supply Company

CESCOM, Chamundeshw ari Electricity Supply Company

Source: KERC, KPCL, KPTCL

KARNATAKA POWER GENERATION SCENARIO

The State of Karnataka with an installed power generation capacity of 11.5 GW (as end March 2011), contributed 6.6% of Indias total power generation installed capacity. Installed Power Generation capacity in Karnataka has witnessed a CAGR of 9.5% for the period FY2006-07 to FY2010-11. As depicted in Chart 1.6 below, Thermal power dominates the Power Generation mix with a share of 44% as at end of March 2011 (FY2010-11). The main sources of thermal power in Karnataka are the two main power plants at Raichur and Bellary. Hydel power projects on the rivers of Sharavathi, Kalinadi, Varahi, Ghataprabha, Almatti and Shivanasamudram form the second most important source, contributing 31 % to the total power generation capacity of the State. Karnataka state has a long and enviable history in power generation as Asias first major hydro-electric generating station was set up at Sivasamudram as early as 1902 for commercial operation, at a time when technology was still in its infancy, even in the advanced countries Hydel power source dominated Karnatakas power generation mix until FY2006-07. From thereon, thermal power capacity has been steadily increasing. In contrast Hydel power capacity growth has stagnated

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Kaiga Generating Station in Uttar Kannada district is one of Indias six atomic power plants; in operation since 2000. This plant has four units and in November 2009, approval was granted by National Power Corporation for expansion in the Second Phase that will generate 1400 MW of power when completed.

Chart 1.6 Karnataka Power Generation Capacity Addition, by fuel source (Figs in GW)

Source : CEA, Ministry of Power

Chart 1.7 - Karnataka Power Generation Capacity ,by fuel source (Figs in GW)

Source : CEA, Ministry of Power

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KARNATAKA POWER DEMAND-SUPPLY SCENARIO

As is the case at the pan-India level, State of Karnataka suffers from power shortage, as well. With an annual energy requirement of ~50,500 Million units (MUs) in FY2010-11, the energy availability was to the tune of ~46,600 MUs only, resulting in a deficit of 7.6%.

The figures below highlight the fact that electricity imports reached a peak in the years 2004-05 due to inadequate addition to the generation capacity (hence relatively lower Electricity Generation). In recent years the import of electricity is starting to decline, however to make the state self-reliant, a long way has to be treaded. It will require substantial generation capacity augmentation ( Year on Year), plant load factor improvements ( from an average of mid 60s to the mid 80s in percentage points), energy efficiency measures etc. in the years to come.

Chart 1.8 Generation vs Imports in Karnataka ( 2002-2011)

35000

30000

25000

Million Units 20000

15000

10000

5000

0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09(RE) 2009-10 ( P) 2010-11(A)

Electricity Generation ( Million Units) Imports( Million Units)

Source : Economic Survey of Karnataka, 2010-2011

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The T&D losses in the state have been gradually decreasing as depicted in Chart below, decreasing from a value of 29.7% in FY2006-07 to 20.6% in FY2010-11. The fluctuating trend of power shortage with the decreasing trend of T&D losses, clearly indicates the increasing demand for power within the state, and the inability of the state to increase power generation capacity in line with the requirements

The deficit crisis across the state has affected every sector of the industry. This scenario has essentially manifested in unscheduled load-shedding scenario. The government has resorted to unscheduled loadshedding for five to six hours during the day in Bangalore, while other cities and rural areas have plunged into a virtual darkness, affecting industrial, commercial as well as residential customers

Chart 1.9 - Karnataka Power T&D losses, and Power Deficit (Figs in %)

Source : Economic Survey of Karnataka, CEA, Ministry of Power Note : T&D loss figures for FY2008-09, FY2009-10 and FY2010-11 are revised estimates / provisional.

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ELECTRICITY PRICES IN KARNATAKA Electricity prices in Karnataka have been on an rise. Karnataka is amongst the leading states in terms of higher electricity prices

Chart 2.0 - Electricity Prices Comparison (Figs in Rs / Kwh for Domestic consumer with 4KW connected load and consuming on an avg. of 400Kwh/month )

Source India Economic Survey FY2010-11

Chart 2.1 - Electricity Prices Comparison (Figs in Rs / Kwh for Large Industry 1000KW 60% L.F.(438000 KWh/ Month)

Source : India Economic Survey, FY2010-11. Note figures have been rounded off

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ELECTRICTY END USERS

The four major groups of power consumers are: Irrigation pump (IP) sets Domestic lighting & All Electric Homes(AEHs) Industries Commercial lighting.

These four groups together accounted for about 87% of the total power consumption in 2009-10 and almost 88% in the first half of 2010-11. The irrigation pump sets alone consumed more than 1/3 of the total power consumption in the State.

Table 1.1 - Electricity Consumption

Electricity Consumption (MUs) Consumer Groups 1 2 3 4 5 6 7 8 Industries I.P.Sets Domestic Lighting & AEH LT Industries & Water Works Public Water Works and sewerage pumping Commercial Lighting Public Lighting Others Total 2008-09 5693 11217 6710 1519 1779 4010 493 599 32020 2009-10 5932 11772 7360 2366 1044 4350 690 177 33690 2010-11 (up to Dec. 2010) 4958 8733 6060 1878 803 3636 542 135 26745 Average rate (paise / kwhs) (2009-10) 495 102 343 412 354 644 311 1013 333

Source : Economic Survey of Karnataka, 2010-2011

Irrigation Pump Sets consume around 1/3 of the total electricty consumption in Karnataka, which further implies that the agriculture segment creates the maximum demand for power. Domestic lighting & AEH is the second largest consumer of electricty followed closely by the Industrial sector (majority services sector).

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Chart 2.2 - Pattern of Power Consumption & Power Tariffs in Karnataka (2009-10) 0.5 Industries 2.0 I.P.Sets 18.5 13.6
Domestic Lighting & AEH

3.0 7.0

LT Industries & Water Works Public Water Works and sewerage pumping Commercial Lighting

32.7 22.7

Public Lighting Others

Source : Economic Survey of Karnataka, 2010-2011

FORMATION OF POWER COMPANY OF KARNATAKA LIMITED (PCKL) A SPECIAL PURPOSE VEHICLE (SPV)

In order to bridge the Gap between availability and Demand, capacity addition in generation was felt necessary. With this background and to supplement the efforts of KPCL, GOK accorded approval for constitution of SPV viz., PCKL on 12-07-2007 in order to facilitate private investment in development of conventional energy resources,

PCKL facilitates the entry of private players in power projects in the state and also takes up energy trading on behalf of all distribution companies

PCKL makes arrangements with other states for exchange of power to balance the demand during monsoon and summer seasons. PCKL invites bids for sale and purchase of short term power.

PCKL is exploring the opportunities for equity participation and joint venture with the States who are establishing pit head power plants and with neighbouring states where activities on projects have been initiated.

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PCKL on behalf of all ESCOMs has registered itself with Indian Energy Exchange limited for carrying out the transactions of energy on day ahead basis.

MAJOR POWER PLANT PROJECTS INITIATED BY PCKL

PCKL, is carrying out bid processing activities for capacity addition by establishing 3 coal based thermal power projects 1. 1000 MW at Chamalapura in Mysore District, 2. 1320 MW power plant at Ghataprabha in Belgaum District through private investment, for which Govt. land has been allotted 3. Approval for 1320 MW plant at Jewargi in Gulbarga District on long term basis through tariff based competitive bidding process and process of land acquisition has began. PCKL has envisaged establishment of distributed generation for which tenders have been floated for establishment of 5 MW and part thereof capacity power plants at Taluka level in the state of Karnataka. PCKL invited bids for procurement of 2000 MW of power on long term basis through competitive bidding route (Case-I) under merchant Power Plants

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CHAPTER 3 : CONVENTIONAL POWER GENERATION IN KARNATAKA

Hydel power plant which forms a sizeable chunk of the fuel mix in Karnataka depends on the vagaries of nature. Thermal power plants along with renewable energy are most suited for Karnataka. However, with the non-availability of pit-head coal, the state has urged the Centre to allocate captive coal blocks to the power projects of the State and increase Karnataka's share in Central Power generation.

COAL BASED POWER PLANT EXPANSION IN KARNATAKA - CHALLENGES

Distance from the coal mines: The major coal mines are located in the Eastern and North-Eastern parts of India. So, it takes a huge shipment cost to transport coal from these coal mines to Thermal power plants in Karnataka. Coal theft during shipment: The coal is shipped in the hopper wagons which are open & hence it is very much vulnerable to coal theft during the shipment. Increased amount of water/moisture in the coal: As the coal is shipped in the hopper wagons, it soaks huge amount of moisture and also gets affected by the rain. So, when it is used in the plant it affects the equipments adversely due to the increased amount of water in it. Ash disposal: After burning the coal a huge amount of ash remains. Disposal of this ash posing as a problem in the coal based thermal power plants. Hot corrosion and erosion: Hot corrosion and erosion are recognized as serious problems in coal based power generation plants in India. The coal used in Indian power stations has large amounts of ash (about 50%) which contain abrasive mineral species such as hard quartz (up to 15%) which increase the erosion propensity of coal. Hot corrosion and erosion in boilers and related components are responsible for huge losses, both direct and indirect, in power generation. Environmental issues:

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Poor quality of coal used in the coal based thermal power plants in India is causing the environmental degradation through gaseous emission, particulate matters, fly ash and bottom ash.

KARNATAKA COAL REQUIREMENT FOR THERMAL POWER PLANTS: Coal received for Karnataka in 2009-10 for Power Generation is estimated at appx 10.7 MMT as against 11.1 MMT in 2008-09. Coal availability and transportation is a major challenge for coal based power plants.

Table 1.2 Coal receipt for Power Generation in Karnataka in Y 2009-10:

Collieries South Central Coal Fields Western Coal Fields Mahanadi Coal Fields Imports KEMTA TOTAL Coal Receipt in MMT- 2009-10 2.2 2.2 3.5 0.9 2.0 10.7

Source: Karnataka Power Corporation Ltd, Directors Report-2011

Karnataka has plans adding 4,700 MW of coal based power plants over the next 5 years. Coal requirement for the upcoming power plants is estimated at 32.2 MMTPA, which is quite substantial compared to present consumption.

The state government has applied for coal allocation with ministry of coal (Govt of India). However its to be noted that Coal India has not been able to supply additional coal requirements in the country for the last two years. Since the state does not have sizable coal mines it had to depend on other states & imports for sustaining its coal based power plant. Karnataka took initiative to build power plant in Chattisgarh (Godhna Power Plant- 1600 MW) close to coal pit. This is to bypass issues & cost for coal transportation (coal linkages) incase the Power Plant is situated in Karnataka.

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KARNATAKA GAS BASED POWER PLANT: The state government has plans for establishment of the Tadadi Combine Cycle Power Plant (2100 MW). Gas Linkage for the power plant is still to be decided. Feasibility for linkages from LNG Terminal is under review. It is to be noted that cost of power generation from Gas Based Power Plants is dictated by gas prices. The below chart depicts cost of power generation with in Coal & Gas based power plants under different conditions:

Chart 2.3 - Cost per unit comparison between coal and gas based power plants
6.0

Coal Based Power Plants

5.0 4.0 3.0 2.0 1.0 0.0 Imported Coal - Coastal Pithead Coal Station

Fixed

Variable

Tot al

3.37 2.47
1 1.47 1.9 1.47 Coal Station (1000 km from Mine)

3.45
1.98 1.47

3.02
2.03 0.99 Natural Gas @$6/mmbtu

3.36
2.37 0.99 Natural Gas @$7/mmbtu

3.70

4.00

4.50

5.00

2.71

3.01

3.51

4.01

0.99 Natural Gas @$8/mmbtu

0.99 Natural Gas @$9/mmbtu

0.99 Natural Gas @$11.5/mmbtu

0.99 Natural Gas @$12/mmbtu

INR/KWHr

Source: CEA, May 2010

From the above diagram, it can be deduced that gas prices in excess of $8/mmbtu makes power generation from gas based plants expensive. NTPC currently enjoys advantage of low gas prices due to its earlier agreement with GAIL for gas supply. However at present, spot gas prices are hovering around $15/mmtbu hurting gas based power plants in the country. Each $ increase in LNG prices increase power generation cost on an average of 35 paisa. Gas Based power plants are best suited for peak power supply at premium cost. With introduction of smart grid and metering system, variable electricity cost may become a reality.

Karnataka Agriculture Pump Efficiency Improvement: Several states like Maharashtra, Punjab, Gujarat have launched pump efficiency improvement projects for municipal & agricultural/irrigation pump segment.

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It is estimated that for transportation of 1 kilo litre of water to Bangalore the cost is between Rs 16-20. This is a cost and energy efficiency issue and is coined as energy-water-nexus. Irrigation pumps used in agriculture accounts for appx 25% energy consumption in India. However for Karnataka the consumption is estimated at 42.3% of the power generation in the state. With electricity being subsidized for agricultural use, increase consumption of power by agricultural pumps affects the health of the Power Distribution Utilities in the state. Below chart depicts the percentage sales Vs revenue from agricultural consumer for selected states in India

Chart 2.4 - Percentage Electricity Sales Vs Revenue from Agricultural Consumer for Different States

X : Sales in Rs Crore(%) to Total Sales UP West Bengal

Gujarat Maharashtra Karnataka Haryana

Punjab AP

Y : Sales in MKwhr (%) to Total Sales

Note: Values in X & Y Axis are in Percentage

Source Bureau of Energy Efficiency, India

The above chart indicates the need to increase efficiency of agricultural pumps in State of Karnataka. Increase energy efficiency would help in lowering electricity subsidy to rural/agricultural segment which helps in addressing state finances better. Karnataka is already engaged in increasing pump efficiency and notable power saving (up to 50%) has been achieved.

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Table 1.3 - Upcoming Thermal Power Plants In Karnataka:

Project Promoter Karnataka Power Corporation Shri Siddheshwar Sugars Karnataka Power Corporation NTPC/BHEL NTPC Karnataka Power Corporation Power Company of Karnataka Ltd. Ind-Bharat Power (Karwar) Ltd. Mukund Ltd. Karnataka Power Corporation Hassan Thermal Power Surana Power Reliance Industries Atlas Power Karnataka Power Corporation Coastal Karnataka Power Location Yeramarus,Vadaloor Telgi, Bijapur District Raichur North Karnataka Kuldigi,Bijapur District Kudithini,Bellary District Jewrgi,Gulabarga District Hankon,Uttara Kannada District Ginigera, Koppal Edlapura,Raichur District Hassan Raichur Bidar Gulbarga Bidadi Tadri Capacity 1200 MW 14 MW 600 MW 6900 MW 4000 MW 500 MW 1320 MW 300 MW 15 MW 600 MW 1000 MW 400 MW 800 MW Not Specified 1400 MW 4000 MW

Table 1.4 - Ultra Megawatt Power Plant (Umpp) In Karnataka:

Name of Developer NTPC Power Finance Corporation (PFC) Power in MW 4000 MW 4000 MW Capital Involved Rs. 24,000 Crore Rs. 15000, Crore Expected Year of Commissioning Dec 2014 ( First 2400 MW) Under Construction

Location Kudgi in Bijapur District of North Karnataka. Coastal Karnataka

Units 800*5 --

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PROPOSED NATURAL GAS PLANTS IN KARNATAKA:

The Karnataka government is planning to build three gas-based power plants under Public Private Partnership (PPP) with an investment of around Rs 10,000-Rs 13,000 crore. Gas for these projects is to be supplied by the Gas Authority of India (GAIL) from Dabhol in Ratnagiri district in Maharashtra to Bangalore in Karnataka. The proposed gas based plants with a capacity of 700 MW each are to be setup at Belgaum, Davangere and Tumkur, which fall under the proposed gas pipeline route of 850 km length. GAIL has committed to supply gas by FY2012-13, and the pipeline on this route would be designed to carry 16 million metric square cubic metres per day (MMSCD) of gas. These projects would be setup under Public Private Partnership (PPP) model, and the Karnataka Govt. Is likely to award the project to private companies by the end of Y2011 enabling the investing

company to complete it by the end of 2013.

Besides KPCL is also planning to setup a 2100 MW gas based plant at Tadadi, Uttar Kannada district. Imported natural gas is proposed to be used for this plant. Table 1.5 - Proposed Natural Gas Plants In Karnataka
Name of Plant/ Developer Bidadi Combined Cycle Power Plant RGPPL, KPCL KPCL Location Bidadi Belgaum, Davangere and Tumkur Tadadi, Uttara Kannada district Power in MW 1400 MW 2100 MW 2100 MW Units 350*4 700*3 700*3 Capital Involved Rs. 3750 Crores Rs. 13000 Crore Expected Year of Commissioning 2014

CHALLENGES FOR SETTING UP GAS BASED POWER PLANTS The obstacles to realize the full potential of gas-fired generation: The two major obstacles against realizing the full potential of gas-fired power generation in India are gas price sensitivity and availability of gas. India is facing three major challenges on its way to become a well-functioning gas market: (i) Lack of sufficient transmission infrastructure, (ii) Lack of a coherent legal and regulatory framework for the sector; and (iii) Continuous questions about the affordability of gas.

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CHAPTER 4 : RENEWABLE ENERGY DEVELOPMENT IN KARNATAKA

Given the inherent advantage of Renewable energy, the fast depleting fossil fuel sources & its hazardous environmental impact, the Karnataka Govt recognized the need to develop renewable energy based capacity in the State. The Renewable Energy policy 2009-14 was framed in 2009, to regulate and ensure speedy development of renewable energy capacity build-up within the State As per this policy capacity addition targets through various renewable sources were set with a total planned capacity addition of 4200 MW, with a planned outlay of INR 22,000 Crores

Table 1.6 - Karnataka Renewable Energy policy 2009-14 (capacity addition plan, in MW)
Year wise proposed capacity addition RE Source Wind Power 2969 Mini and Small 600 Hydro Cogeneration in 281 Sugar Industry Biomass / Bio Gas 300 Waste to Energy 50 Total 4200 856 906 806 806 826 10 10 10 10 10 60 60 60 60 60 56 56 56 56 57 100 100 150 150 100 630 680 530 530 599 Target MW 09-10 10-11 11-12 12-13 13-14

Source : KREDL

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Chart 2.5 - Karnataka Renewable Energy Capacity Increase, Cumulative (Figures in MW)

Source : KREDL

Strategy for Wind project KPCL is the Karnataka public sector undertaking is the premier Power Generating Company in the State. A priprerancial allotment of Wind Power Projects above 500 MW and Solar Power Projects above 100 MW will be considered. The followings geographical regions in Karnataka State are reserved for allotment of Wind Power Projects to Karnataka Power Corporation Limited. 50 MW at Kappadagudda Extension 270 MW at Hill ranges of Guledagudda Gudur. Hill ranges of Sureban, Yere Kittur, Kallur, Mallur and Basidoni. Hill ranges of Halolli to Katkol (Godachi, Khanpet, Torgal) Hill ranges of Halagatti, Mudakavi, Tadasi, Vasan, Govinakoppa. Hill ranges of Soudatti to Ugargol. Hill ranges of Hanumana Hatti to Kakti. Zalki of Indi Taluk.

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Strategy for Small Hydro Projects: KREDL will take steps to identify the potential sites watershed basin wise including canal based projects and offer the identified sites for development on Public Private Partnership/Build Operate Own Transfer mode. The Mini Hydro Project proposals which do not involve diversion of the water flow resulting in drying up the stream/river stretch will be considered for development. Keeping in view the environmental issues, the Mini Hydro projects in the Western Ghats

Districts/Forest areas will be restricted to maximum 5.00 MW and preferably Run of the River (ROR) projects encouraged. To facilitate successful expeditious commissioning of the targeted hydro projects the various statutory clearances will be facilitated through single window mechanism. Strategy for Biomass projects: Karnataka has 10.5 million Hectors of arable land which generates around 15 million metric tons of agricultural/agro-processing unit residues. The state with 3 million hectors of forest land offers forest residues plus dry bamboo biomass sources, targeted to harness 300 MW of power through biomass projects based on Rankine Cycle/Biomass Boiler and Otto Cycle/ Biogas Plant or Biomass Gasifier. The Biomass plants will be linked to organic fertilizer production units with key input being the waste coming from the Biomass power plant. To offset the negative factors the biomass projects will be encouraged by extending enabling Tariff atmosphere. The government waste lands will be identified and offered to set up Biomass Projects.

Table 1.7 - Comparison of Renewable Energy capacity Addition Plan vs. Actual Addition across various sources in Karnataka State (Figures in MW)
Planned Capacity Actual Capacity Difference/Target Addition (MW) Addition (MW) Variation (%) FY2009-10 FY2010-11 FY2009-10 FY2010-11 FY2009-10 FY2010-11 630.0 680.0 146.0 254.1 -76.8% -62.6% 100.0 100.0 154.4 36.5 54.4% -63.5% 56.0 56.0 147.3 108.5 163.0% 93.8% 60.0 60.0 6.0 0.0 -90.0% -100.0% 10.0 10.0 0.0 0.0 -100.0% -100.0%
Source KREDL Annual Reports

RE source Wind Small Hydro Co-generation Bio-mass waste

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Present and Future Investment Scenario in Renewable Energy Sector: Private Sector Investment: During the (2007-2009) three years of Renewable Energy development, in the state, on an average annually about 300 MW Renewable Energy capacity additions brought in about Rs 1,800 crores investment by the private sector. It is expected that the new Renewable policy initiative may bring in an additional investment of Rs 1,600 crores annually by the private sector. With this the private sector investment would amount to Rs 17,000 crores during the policy period.(2009-2014) Companies like Soham are presently operating small hydro plants in the state with a 22 MW plant and 5 other small scale hydro plants. The Government of India, the World Bank and the Global Environmental Facility (GEF) are supporting private investors in renewable energy development project with the aim of improving commercial markets and financing for wind, mini-hydro, and solar PV technologies. Various projects, along with Danish and other assistance and a strengthened India Renewable Energy Development Agency (IREDA) are promoting and financing private-sector renewable energy investments. Public Sector Investment:

The profit making Central and State Public Sector Undertakings may also invest in the Renewable Energy projects and may bring in Rs 5,000 crores. Akshaya Shakthi Nidhi (Green Energy Fund):

In order to facilitate Renewable Energy project financing and Energy conservation and Efficiency measures Green Energy Fund ''Akshaya Shakthi Nidhi'' will be established. "Green Energy Cess" of Rs 0.05 (five paise) per unit would be levied on the electricity supplied to commercial and industrial consumers. It is estimated to generate about Rs 55 crores annually. Out of the Rs 55 crores, 10 % of this fund to the tune of Rs 5 crores will be set apart as contribution to Energy Conservation Fund for Energy Conservation activities.

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The balance Rs 50 crores will be set apart for Renewable Energy project financing. The Akshaya Shakthi Nidhi will be administered by KREDL for promotion of Renewable Energy particularly in Public Private Participation (PPP) mode, decentralized generation and distribution Renewable Energy projects for the benefit of rural sector. The funds may also be utilized for land acquisition and land development activity for Renewable Energy projects including Net Present Value and compensatory Afforestation, soil moisture conservation etc for forest land clearance.

KARNATAKA SOLAR POLICY 2011-2016 Karnataka State Govt recently announced its new Solar Policy 2011-2016. This policy is applicable with effect from 1-July-2011, and shall remain in force up to 31-Mar-2016 or until any changes are made by the State Govt., as deemed fit

Some of the key highlights of the updated Solar policy 2011-12016 are 1. A total of 350 MW of solar energy is targeted to be added by 2016. Split of 350 MW is indicated in the chart below 2. The current tariff for solar power plants set by the state electricity regulator is 14.50 rupees per kilowatt-hour for photovoltaic plants and11.35 rupees per kilowatt-hour for solar thermal plants, according to a tariff order on the website of the Karnataka Electricity Regulatory Commission 3. Renewable Purchase Obligation (RPO), of 0.25% to ESCOMs of the total power consumed. In circumstances of short-fall of solar energy procurement by ESCOMs, the short-fall can be compensated by purchase of solar specific REC

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Chart 2.6 - Karnataka Solar Policy 2011-2016 plan for building up solar energy capacity within the State through various routes

350 MW Solar power for the period 201112 to 2015-16

Source: Government of Karnataka, Karnataka Renewable Energy Development Ltd.

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CHAPTER 5 : POWER TRANSMISSION & DISTRIBUTION INFRASTRUCTURE IN KARNATAKA

In its Policy Statement on restructuring and privatization [GOK, 2001(b)], the Government of Karnataka had specifically mentioned three priorities: 1. Ensuring that the people of Karnataka have equitable access to basic and reasonably priced electricity services, with all households electrified by the year 2010 2. Providing adequate electricity to industry and commerce to achieve economic growth 3. Promoting the kind of energy use that will not damage the environment

As can be seen from the figure below, the power generation demand gap is increasing since the year 2007-2008, primarily due to an increase in the demand for power in the state. The direct consequence of this increasing demand is the increasing import of electricity from neighboring states (as has been discussed in Section on KARNATAKA POWER GENERATION SCENARIO).

Chart 2.7 - Electricity Demand vs Generation ( 2002 -2011)

40000

35000

30000

25000

20000

15000

10000

5000

0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09(RE) 2009-10 ( P) 2010-11(A)

Electricity Generation ( Million Units)

Power Consumption ( Million Units)

Source : Economic Survey of Karnataka, 2010-2011

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Table 1.8 - Transmission line ( CKM) and substations across various voltage levels as on 31st July 2011

Voltage Level (kV) 400 220 110 66 33

Substations 4 88 319 535 370 1316

Transmission Line in ckm 1978 9372 8840 9569 8494 38254

A couple of other reasons of this demand- supply gap are the relatively slower pace of power capacity augmentation (Both Generation and T&D) in the state and the high AT&C losses. Apart from having adequate generation capacity, it is also important to have an efficient Transmission & Distribution network which can provide electricity even to the most remote places at the same time ensuring that the power losses are minimized and the power quality is maintained across the network

Key recommendations:

Need to Scrutinize Every Segment of the Value Chain.

From generation to transmission to distribution to the end user every component must be observed thoroughly to understand the shortcomings. Equitable investment in the T&D sector to ensure it does not lag behind power generation sector and there is adequate infrastructure for evacuation of power. To reduce losses being incurred, every executive at every organization must be made accountable. The flow of energy from Power Generation to Power T&D to End user and the reverse flow of money must be ensured for smooth operation.

Replicating Successful Models Implemented Elsewhere Two cases highlighted for bench-marking: Development of national highways in China and;

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Distributed franchisee model for bill collection that has improved collection efficiency in certain villages in Gujarat. Distributed Power Generation with Solar Energy with Smart Equipments in West Bengal : As part of the initiative to promote solar and smart solutions, WBGEDC is in process to implement and install solar panels in various school and education institutes with smart equipments. This initiative is aimed at introducing self powerreliant schooling concept in West Bengal. Success of this initiative can also ensure extra power to the grid in future.

Distributed Power Generation Decentralized and renewable energy technologies are expected to have a big impact on the way the power sector develops in the coming years. Distributed power can reduce line losses although presently, capital cost of technologies like solar is prohibitive. Private participation should be encouraged for the development of Micro-grids.

Availability vs. Reliability The per capita consumption of energy in India stands at around 700 kWh today. The government has set a target of 1000 kWh for the per capita consumption. In view of this target, power needs to be made available to those who have no access to it. Solutions such as Energy Management Software and Asset Management Systems although important, are secondary to the primary issue of power availability.

Exploring Indian Power T&D Models Private-Public Partnership (PPP) model, which has been successful in other sectors, must be explored in depth in the power sector. This opens the forum for devising new transmission and distribution models that could be perceived in future to achieve a network which is transparent with minimum AT&C/ T&D losses.

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The Need for Evolution in Substation Technology: The future outlook on GIS (Gas Insulated Substations) against the current trend of EHV (Electrical High Voltage) substations. GI Substations have advantages like reduced space, less maintenance and highly reliable, in comparison to EHV substations; but at the same time GI Substations are expensive by nearly 40% compared to EHV substations. Indian utility majors are required to perceive at this technology challenge for future expansions and refurbishments. Almost 80% of the substations in China are GIS.

High T&D Equipment Demand: In regards to the plans from various government T&D regulatory authorities like PGCIL and Powergrid, regarding installation of ultra-high voltage (UHV) electrical transmission network and consequent T&D equipment demand estimated under the 11th and 12th Five-year plans, some of the challenges that present themselves in front of equipment manufacturers are: Sourcing upgraded Technology for UHV transmission (765 KV to 1200 KV), as globally very few equipment manufacturers have the capability in this range. Meeting the equipment demand, with an optimized cost structure. High cost competition from Chinese equipment manufacturers in the T&D space.

DSM (Demand Side Management): Introduction and implementation of DSM (Demand Side Management) systems, providing real-time information regarding electricity consumption pattern to the consumers. This system shall ensure higher satisfaction among consumers, transparency in metering measures from various T&D authorities and also provide scope for new smart metering technology.

Need for Proficient Remote Electrification/ MICRO-GRIDS: This concept in India is currently in a nascent stage. Current long network transmission is aggregated by very high T&D loss. These losses can be overcome through some of the measures as under, which present themselves as a challenge on this front: Privatization of T&D infrastructure providers Micro-Generation (Micro-Grids) Measures in far flung cities, to reduce T&D losses.

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Localization of T&D (through training)

HOT SPOT Management Technologies: There is a need for SCADA and PLC Based smart metering technology for efficient Asset Monitoring, Asset Management and Protection to ensure reliable power in India in a long term perspective.

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