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Course Name Candidate Name
Course Title Reg. No. Assignment No. Date of Dispatch

Module 56/ PGPPM Ashar Milind Mahesh Rashmi
Power Plants & Engineering 210-03-31-8104-2123 PGPM 24 25th February 2011

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2% is projected over the Ninth Five-year Plan in terms of the total plan outlay on energy sector. The indicator of energy–GDP (gross domestic product) elasticity. which include the ASEAN member countries as well as China. An increase of 84. and on the other hand.7% of the total outlay. which is 26.03 trillion rupees at 2001/02 prices. The energy sector in India has been receiving high priority in the planning process. The total outlay on energy in the Tenth Five-year Plan has been projected to be 4. However. the elasticity for primary commercial energy consumption for 1991–2000 was less than unity (Planning Commission 2002). The energy–GDP elasticity during 1953–2001 has been above unity. with its global competitiveness. The Government of India in the mid-term review of the Tenth Plan recognized the fact that under-performance of the energy sector can be a major constraint in delivering a growth rate of 8% GDP during the plan period. . structural economic changes towards lesser energy industry. The energy intensity of India is over twice that of the matured economies. growth of an economy. and India must be determined to achieve this within the next 25 years. Energy intensity is an indicator to show how efficiently energy is used in the economy. the ratio of growth rate of energy to the growth rate GDP. captures both the structure of the economy as well as the efficiency. improvement in efficiency of energy use. that is. In the recent years. the level of economic development has been observed to be reliant on the energy demand. On one hand. India’s energy intensity is also much higher than the emerging economies —the Asian countries. This could be attributed to several factors. There is a strong two-way relationship between economic development and energy consumption. impressive growth of services. It has. which are represented by the OECD (Organization of Economic Co-operation and Development) member countries. called for acceleration of the reforms process and adoption of an integrated energy policy. India’s energy intensity has been decreasing and is expected to continue to decrease. therefore. the President of India emphasized that energy independence has to be the nation’s first and highest priority. On the eve of the 59th Independence Day (on 14 August 2005). However. hinges on the availability of cost-effective and environmentally benign energy sources. since 1999. the government has rightly recognized the energy security concerns of the nation and more importance is being placed on energy independence. and inter-fuel substitution.Indian energy sector: Energy has been universally recognized as one of the most important inputs for economic growth and human development. some of them being demographic shifts from rural to urban areas.

This has led to increased reliance on imports to meet the energy demand. Most of the coal production in India comes from open pit mines contributing to over 81% of the total production while underground mining accounts for rest of the national output (MoC 2005). . oil. About 75% of the coal in the country is consumed in the power sector (MoC 2005). which include fuelwood. India ranks fifth in the world in terms of primary energy consumption (Table E. the existing demand exceeds the supply. and Nepal. This shortage is likely to be met through imports mainly by steel. accounting for about 3. It accounts for 55% of the country’s total energy supplies. Primary commercial energy demand grew at the rate of six per cent between 1981 and 2001 (Planning Commission 2002). power. Despite increasing dependency on commercial fuels. Through sustained increase in investment. Coal : India now ranks third amongst the coal producing countries in the world. was mainly based on availability of indigenous resources. India’s energy policy. India is well-endowed with both exhaustible and renewable energy resources.96 MT. India currently faces coal shortage of 23. and natural gas are the three primary commercial energy sources. India’s primary energy mix has been changing over a period of time. India’s energy consumption has been increasing at one of the fastest rates in the world due to population growth and economic development. is met by non-commercial energy sources. Bhutan. However. especially in the rural household sector. till the end of the 1980s. However.1). Despite the overall increase in energy demand. crop residue. and cement sector (MoC 2005).Resource augmentation and growth in energy supply has not kept pace with increasing demand and. Coal. Coal was by far the largest source of energy. and animal waste.Demand and supply scenario: In the recent years. India continues to face serious energy shortages.5% of the world commercial energy demand in the year 2003. therefore. per capita energy consumption (Table E.1c) in India is still very low compared to other developing countries. Despite this increase in production. a sizeable quantum of energy requirements (40% of total energy requirement). The development of core infrastructure sectors like power. other forms of commercial energy of a much higher quality and efficiency are steadily replacing the traditional energy resources being consumed in the rural sector. steel. India exports insignificant quantity of coal to the neighbouring countries. The traditional buyers of Indian coal are Bangladesh. and cement are dependent on coal. including human and draught animal power. production of coal increased from about 70 MT (million tonnes) (MoC 2005) in early 1970s to 382 MT in 2004/05. Being the most abundant fossil fuel in India till date. it continues to be one of the most important sources for meeting the domestic energy needs.

there has been a huge unmet demand of natural gas in the country.India’s consumption of natural gas has risen faster than any other fuel in the recent years. To bridge this gap. In addition. excluding that from the captive generating plants. was 125.82 MT in 1970/71 to 33.7% during 2003/04.Power: Access to affordable and reliable electricity is critical to a country’s growth and prosperity. India’s natural gas consumption has been met entirely through domestic production in the past. Oil and natural gas The latest estimates indicate that India has around 0.3% and peak shortage of 11. The all India gross electricity generation.5% during the last 10 years. Industries such as power generation. However. the growth in electricity consumption over the past decade has been slower than the GDP’s growth. In absolute terms. and petrochemical production are shifting towards natural gas. the installed power capacity has increased from only 1713 MW (megawatts) as on 31 December 1950 to 118 419 MW as on March 2005 (CEA 2005). The country has made significant progress towards the augmentation of its power infrastructure. Per capita electricity consumption rose from merely 15.4% of the world’s proven reserves of crude oil.96 BCM during the same period. it is a matter of concern that per capita consumption of electricity is among the lowest in the world. apart from encouraging domestic production. Energy requirement increased from 390 BkWh (billion kilowatt-hours) during 1995/96 to 591 BkWh (energy) by the year 2004/05. However. The production of natural gas increased from 1.3 MT during the same period. an in-principle agreement has been reached with Iran for import of 5 MTPA of LNG. The production of crude oil in the country has increased from 6. Natural gas demand has been growing at the rate of about 6.97 MTPA (million tonnes per annum). fertilizer. The production of petroleum products increased from 5. Besides. mainly required for the core sectors of the economy.4 BCM (billion cubic metres) to 31. the import of LNG (liquefied natural gas) is being considered as one of the possible solutions for India’s expected gas shortages.38 MT in 2003/04 (MoPNG 2004b). as on 1 April 2004. in the last 4/5 years.66 MT during 1970/71 to 81 MT by 2003/04.7 MT during 1970/71 to 110 MT in 2003/04. and peak demand increased from 61 GW (gigawatts) to 88 GW over the same time period. poor quality of power supply and frequent power cuts and shortages impose a heavy burden on India’s fast-growing trade and industry. . The refining capacity. The quantity of crude oil imported increased from 11. was 5107 GWh (gigawatt-hours) in 1950 and increased to 565 102 GWh in 2003/04 (CEA 2005). Though. Several LNG terminals have been planned in the country. this increase could be due to high growth of the service sector and efficient use of electricity. imports of other petroleum products increased from 1 MT to 7. and (2) LNG import terminal at Hazira. The country experienced energy shortage of 7.6 kWh (kilowatt-hours) in 1950 to 592 kWh in 2003/04 (CEA 2005). The exports of petroleum products went up from around 0. Moreover. Two LNG terminals have already been commissioned: (1) Petronet LNG Terminal of 5 MTPA (million tonnes per annum) at Dahej.5 MT during 1970/71 to 14 MT by 2003/04.

8 trillion cubic feet by 2025 with the share of electric power sector being of 71% by that time. India has one of the highest potentials for the effective use of renewable energy. Driven by the rising population. Coal consumption is expected to increase to 315 MT over the forecast period. Other renewable energy technologies. imports of petroleum and gas would continue to increase substantially in absolute terms. Greater reliance on renewable energy sources offers enormous economic.5% per annum during the same time. Installed combined electricity generation capacity of hydro and wind has increased from 19 194 MW in 1991/92 to 31 995 MW in 2003/04. involving a large energy import bill. thereby reaching 2. and a quest for improved quality of life. an urgent need to conserve energy and reduce energy requirements by demand-side management and by adopting more efficient technologies in all sectors. There is a significant potential in India for generation of power from renewable energy sources—. Today. With a targeted GDP growth rate of 8% during the Tenth Five-year Plan. It is quite apparent that coal will continue to be the predominant form of energy in future.2%. and the USA. and solar energy. Future scenario: Increasing pressure of population and increasing use of energy in different sectors of the economy is an area of concern for India.Renewable energy sources: Renewable energy sources offer viable option to address the energy security concerns of a country. social.The potential for power production from captive and field-based biomass resources. expanding economy. The International Energy Outlook 2005 (EIA 2005b) projects India’s gas consumption to grow at an average annual rate of 5. using technologies for distributed power generation. Oil demand in India is expected to increase by 3. slightly less than 60% of the projected growth in coal consumption is attributed to the increased demand of coal in the electricity sector while the industrial sector accounts for most of the remaining increase. India is the world’s fifth largest producer of wind power after Denmark. small hydro. . thus requiring an additional 59 000 MW of coal-fired capacity.2% per annum during 2002–25. There is. including solar photovoltaic. is currently assessed at 19 500 MW including 3500 MW of exportable surplus power from bagasse-based cogeneration in sugar mills (MNES 2005). However. and biomass power are also spreading. Germany. and environmental benefits. solar thermal. the total primary energy consumption is expected to about 412 MTOE (million tonnes oil equivalent) and 554 MTOE in the terminal years of the Tenth and Eleventh Plans. Spain. In India.35% during this period (MoF 2005). respectively (Planning Commission 1999). The use of coal for electricity generation in India is expected to increase by 2. therefore. The country has an estimated SHP (small-hydro power) potential of about 15 000 MW. biomass. with a compound growth rate of 4. small hydro. the energy demand is expected to grow at 5.1%.

07 156.30.52 ENERGY SOLD (utilities) 114. 8th Plan Outlay for Power Sector The proposed public sector outlay on power for the 8th plan is for Rs 795. Installed Capacity India's installed power generation capacity rose to 81.02 billion kwh. Power Supply and Demand: ___________________________________________________________ 1984-85 1994-95(Billion KWH) ___________________________________________________________ POWER GENERATION (Public Utilities) Hydro-Elect Thermal Nuclear Total public utilities Non-utilities 53.10 * 82.94 98.3%.Current Scenario: The power generation in 1994-95.164 MW by March 31.89 5.89 billion.5% over 1993-94 but fell short of the year's target by 0.86 12. Plant Load Factor (PLF): The PLF is an important indicator of operational efficiency of thermal power plants.11 * ___________________________________________________________ * 1993-94 The distribution of power consumption among various sectors during 2003-04 is as under: • Industry : 46% • Agriculture : 27% • Transport : 2% • Others : 25% The production of power is distributed amongst various categories as under : • Thermal plants : 74% • Hydro-Electricity : 24% • Nuclear Plants : 2% The Union Power Ministry has made amendments in its scheme to encourage private participation in electricity generation.35 262. which will add 30.02 32. 1995 and is estimated to go upto 2. The annual PLF of thermal plants. at 351. supply and distribution .83 4.000 MW by 2010.538 MW only. which was 60% in 1994-95.61 351. is targeted to rise to 70% by 2010.07 238. recorded a growth of 8.

but a deficit of this order is very much financeable. either through increased electricity productivity (more economic value per kilowatt-hour) or through the invention of techniques and technologies that use electricity more Efficiently. The current account deficit is around 1. Similarly.3% of the GDP and reflects the revival of investment and also the impact of oil prices. which is about 23 times.98) from meagre 1713 MW in 1950. the demand-side resource has no physical limit. Remarkable growth and progress have led to extensive use of electricity in all the sectors of economy in the successive five years plans. Investment Opportunities in Indian Power Sector and Cooperation with International Energy Agency: Investment climate in India is buoyant and various macro-economic parameter are reflecting that pace of growth of the economy has accelerated and macro. Over the years (since 1950) the installed capacity of Power Plants (Utilities) has increased to 89090 MW (31. The efficiency resources are also increasingly global in the way they are developed and marketed. the electricity generation increased from about 5. About 85% of the villages have been electrified except far-flung areas in North Eastern states. The Power Sector has been getting 18-20% of the total Public Sector outlay in initial plan periods. where it is difficult to extend the grid supply. Another feature of energy efficient technology is that when compared on a “level playing field” with supply-side resources. The per capita consumption of electricity in the country also increased from 15 kWh in 1950 to about 338 kWh in 1997-98. and become adopted as standard practice on a time scale that is short compared to the lead time of a power plant megaproject. more often than not the results of that R&D are technologies for the efficient use of electricity that are cost competitive in most places. The Supply/Demand Gap and its Implications for Efficiency and Renewable Potential: Unlike supply side resources like coal or wind. The power Sector has been receiving adequate priority ever since the process of planned development began in 1950. While the R&D of more efficient technologies will tend to be strongest in those countries with the highest electricity prices. In the field of Rural Electrification and pump set energisation. .3. registering a 52d fold increase in 48 years.Growth of Indian power sector: Power development is the key to the economic development.1 billion units to 420 Billion units – 82 fold increase. it tends to deliver saved energy for a much lower unit cost than the equivalent supply. Inflation rate has been moderate despite the sharp hike in International oil prices. Foreign exchange reserves are at a very comfortable label of about $170 billion. country has made a tremendous progress. Domestic saving rates have been rising a reached over 29%. Industrial growth rate has been recorded over 9% consistently in last few years. it grows when electricity using activity grows and it grows whenever someone devises a new way of getting more value for less electricity.economic fundamentals are sound and moving towards right direction. India has been able to achieve an economic growth rate of 8% per annum during last few years and is poised to achieve double digit growth rate.

ii. consumer service orientation. POWER GENERATION STARTEGY: with focus on low cost generation. decentralized distributed generation and supply for rural areas REGULATION STARTEGY: aimed at protecting consumer interest and making the sector commercially viable. Conservation strategy to optimize the utilization of electricity with focus on demand side management. vi. technology upgradation & optimization of transmission cost DISTRIBUTION STRATEGY: to achieve distribution reforms with focus on system upgradation. quality power supply. technology upgradation and utilization of non conventional energy sources.Strategies to achieve ‘Power to All’: i. iv. optimization of fuel cost mix. controlling the input cost. commercialization. TRANSMISSION STRATEGY: with focus on development of national grid including interstate connection. FINANCING STARTEGY: to generate resources for required growth Of the power sector. iii. . COMMUNICATION STRATEGY: for political consensus with media support to enhance the general public awareness. v. loss reduction. load management and technology upgradation to provide energy efficient gadgets. optimization of capacity utilization. theft control.

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