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Sector: Power

Power or electricity is one of the most critical components of infrastructure, affecting

economic growth and wellbeing of nations. The existence and development of adequate
power infrastructure is essential for sustained growth of the Indian economy.

With a production of 1,006 terawatt hours (TWh), India is the fifth largest producer and
consumer of electricity in the world after US, China, Japan and Russia.

The Indian power sector is one of the most diversified in the world. Sources for power
generation range from commercial sources such as coal, lignite, natural gas, oil, hydro and
nuclear power to other viable non-conventional sources such as wind, solar, and agriculture
and domestic waste.

The demand for electricity in the country has been growing at a rapid rate and is expected to
grow further in the years to come. In order to meet the increasing requirement of electricity,
massive addition to the installed generating capacity in the country is required.

Market Size

Electricity production in India (excluding captive generation) stood at 911.6 TWh in FY13, a 4
per cent growth over the previous fiscal. During FY14, electricity production stood at 967
TWh. Over FY0714, electricity production expanded at a compound annual growth rate
(CAGR) of 5.6 per cent.

The Planning Commissions 12th Plan projects that total domestic energy production would
reach 669.6 million tonnes of oil equivalent (MTOE) by 201617 and 844 MTOE by 202122.

As of April 2014, total thermal installed capacity stood at 168.4 gigawatt (GW), while hydro
and renewable energy installed capacity totalled 40.5 GW and 31.7 GW, respectively. At 4.8
GW, nuclear energy capacity remained broadly constant from that in the previous year.Indian
solar installations are forecasted to be approximately 1,000 megawatt (MW) in 2014,
according to Mercom Capital Group, a global clean energy communications and consulting

The investment climate is positive in the power sector. Due to policy of liberalisation, the sector has
witnessed higher investment flows than envisaged. The Ministry of Power has sent its proposal for the
addition of 76,000 MW of power capacity in the 12th Five Year plan (2012-17), to the Planning
Commission. The Ministry has set a target of adding 93,000 MW in the 13th Five Year Plan (20172022).

The industry has attracted FDI worth US$ 9,269.45 million during the period April 2000 to August

Government Initiatives
India has emerged as one of the fastest growing economies in the world. Its current economic
performance reflects a healthy trend based on increased consumption, investment and exports. Over
the next five years, this growth is expected to continue. The Government of India has identified the
power sector as a key sector of focus to promote sustained industrial growth.
Some of the initiatives taken by the Government of India to boost the power sector of India are as

The Government of India has planned to invest Rs 2 trillion (US$ 32.61 billion) in solar and wind power
projects in the deserts to compensate for Indias depleting fossil fuel reserves.

Mr Narendra Modi, the Prime Minister of India, has dedicated to the nation the four laning of Pune-Solapur
National Highway no 9 section and 765 kilovolt (kV) Raichur-Solapur transmission lines.

The Government of India has dedicated the 1,000 MW stage I of Mouda Super Thermal Power Project to the
nation in Mouda, Maharashtra, on the August 21, 2014.

The Government plans to accelerate wind energy generation by adding an ambitious 10,000 MW every year,
or five times the total new capacity that came up in the last fiscal, in order to reduce India's dependence on
costly energy imports.

The Government of India has decided to provide automatic clearance for coal linkage to new power plants and
will also be allowed to enhance capacity up to 50 per cent.

The Government of Andhra Pradesh (AP) plans to set up a 1,000 MW solar park in Guntur district. This move
comes in the backdrop of AP seeking to offer 24x7 power supply from October 2, 2014.

Road Ahead

The government is targeting capacity addition of around 89 GW under the 12th (201217)
and around 100 GW under the 13th (201722) Five-Year Plan. The expected investments in
the power sector during the 12th Plan (201217) is US$ 223.9 billion. There is a tangible shift
in policy focus on the sources of power. The government is keen on promotion of hydro,
renewable and gas-based projects, as well as adoption of clean coal technology.

Wind energy is the largest source of renewable energy in India; it accounts for an estimated
87 per cent of total installed capacity (18.3 GW). There are plans to double wind power
generation capacity to 20 GW by 2022.

Biomass is the second largest source of renewable energy, accounting for 12 per cent of total
installed capacity in renewable energy. There is a strong upside potential in biomass in the
coming years.

Power Project Selected: The Mundra UMPP

The Mundra UMPP - A Source of Clean and Abundant Power

Coastal Gujarat Power Limited (CGPL), Tata Powers wholly-owned subsidiary, has implemented the
4000 MW (800 x 5 units) UMPP near the port city of Mundra in the state of Gujarat in India. This
UMPP is Indias first 800 MW unit thermal power plant using supercritical technology, and is
arguably the most energy-efficient, coal-based thermal power plant in the country.
The Project will supply power to five states namely Gujarat, Rajasthan and Maharashtra in Western
India and to Haryana and Punjab in Northern India, which are currently facing shortage of electricity.
It will provide a competitive source of power and help meet these states growing demand for
electricity. Reliable power from the project will help improve the competitiveness of the
manufacturing and services industries, which often rely on expensive standby diesel generation to
meet their power needs. Competitively priced power will also improve access to electricity in rural
and urban areas, while reducing the subsidy burden on the state Governments.
Mundra UMPP Highlights

Indias first 4000 MW private power project near Mundra Port, Gujarat

Indias most energy efficient plant using supercritical technology

Main power generation equipment sourced from Korea and Japan

Creation of 5000 construction jobs and 700 operations-oriented jobs

A plant with lower Greenhouse Gas (GHG) emissions

The Mundra Project will meet 2% of India's power needs

Consumers in five of India's power starved states will benefit from this project

All the 5 Units (Units 1, 2, 3, 4, and 5) have been commissioned

Project Description

Tata Power won the bid by quoting a price of Rs. 2.26 per unit of electricity

Coastal Gujarat Power Limited (CGPL), a wholly owned subsidiary of the Tata Power
Company Limited will build, own and operate the plant

Project Cost: Rs 170 Billion.

The project is financed with the Debt equity ratio of 75:25

Project financed by debt from ADB and IFC( Rs 18 bn each), EXIM Bank of Korea (Rs 20
bn), SBI (Rs 20 bn) and some other banks (BNP Paribas, OBC)