Abstract:

This study focuses on the crisis faced by Indian power sector and also the problems faced by
the key players in the industry. In the year 2010 there was an increase in the import tariff rates
of coal, as result the key players found it difficult to produce power and also in meeting the
demand, because of which there was a financial distress in power sector. But Tata Power
being one of the major players in private power industry has managed to overcome this crisis
through Eco Coal. Tata Power is giving an intense competition to the companies owned by
the government. Despite of this crisis the financial performance of Tata Power is increasing,
the company is also making huge investments in R&D for its future wellbeing.

Introduction:

Power sector is one of the most critical components of infrastructure crucial for the economic
growth and welfare of nations. The existences and development of adequate infrastructure is
essential for sustained growth of the Indian economy. Indias power sector is one of the most
diversified in the world. Sources of power generation range from conventional sources such
as coal, lignite, natural gas, oil, hydro and nuclear power to viable non- conventional sources
such as wind, solar, and agricultural and domestic waste. Electricity demand in the country
has increased rapidly and is expected to raise further in the years to com. In order to meet the
increasing demand for electricity in the country, massive addition to the installed generating
capacity is required.

India rank third among 40 countries in EYS Renewable Energy Country

attractivenesss index, on back of strong focus by the government on promoting renewable
energy and implementation of projects in a time bound manner. Indian power sector is
undergoing a significant sustained economic growth continues to drive electricity demand in
India. The government of India focus on attaining power for all has accelerated capacity
addition in the country. At the same time, the competitive intensity is increasing at both the
market and supply sides(fuel, logistics, finances, and manpower)

Total installed capacity of power stations in India stood at 305,554.25 MW August 31,
2016. Electricity generation rose 5.69 percent year on year to 486.44 BU during April-August
2016. The planning commissions 12th five year plan estimates total domestic energy
production to reach 669.6 million tonnes of oil equivalent by 2016-17 and 844 MTOE
installed in 2016, is estimated to increase 20 percent over last year to 2800 MW@, led by
favourable policy support that has encouraged both independent power producers and non
IPPs. India is expected to add nearly 4000 MW# of solar in 2016, nearly twice addition of
2133 MW in2015.

Indias wind energy market is expected to attract investment totalling Rs 100000 crore
by 2020 and wind power capacity is estimated to almost double by 2020 for over 23000 MW
per annuam in the next five years.

INDIAS LOOMING POWER CRISIS:

 Country like India is growing at the faster rate. But to keep the momentum of growth
high, availability of uninterrupted power supply is a must. India has been dependent to a large
extent on energy imports to meet its national energy requirements. Efforts are being made to
increase supply from renewable sources of energy and promote energy conservation in
various consumption sector through appropriate policy intervention. There is a need to focus
on technological options for improving energy efficiency in the industry, power, generation
and commercial buildings and promoting renewable energy technologies in different end use
sectors. There is a need for alternative energy which will not only offset the demand of
conventional fossil fuel, but also pave way to cleaner solutions ironically India has worlds
fifth largest coal reserves and still faces power crisis. But the good news is that a massive
overhaul of the power sector is underway with the government planning to bring in a series of
amendments for instances there will be changes to the electricity act of 2003 across all
segments of the power value chain within the current session of parliament. Coal sector will
soon open up for private sector bringing in more organisation and competitiveness in the
sector. Private companies are already allowed to mine supplies for their own power plant and
other industrial projects and coal India hires some private firms to operate mines but until
now private companies have not been permitted to sell coal however there is no move to fully
privatize coal India. India is currently facing energy crisis with its major dependency on
coals. Crude oil imports to meet sharply growing energy needs of the country more than 40%
household lack access to electricity. There is a need for alternative energy which will not only
offset the demand of conventional fossil fuel but also pave way to cleaner solution with less
poisonous gases emissions. In India the demand for electricity has always been more than the
supply the importance of electricity as a prime driver of growth is very well acknowledged
and in order to boost the development of power system, the Indian government has
participated in a big way through creation of various corporations such as state electricity
boards, NTPC limited, NHPC limited. Indian power sector has made considerable progress in
the last decade and has involved from a nascent market to a developing market led by policy
reforms and increased private sector, participation challenges do exist in the sector, which
India has to overcome to evolve from a developing market to a matured market installation of
power plants requires huge investments. Participation of private sector will definitely make
this investment proposal more competitive and ultimately benefit the consumers from the
government side, sustainable energy policies backed up by financial support is required to
promote the participation of private sectors. State electricity boards are the main customers of
private players in the power sectors. To boost the morale of private sectors. Economically
visible timely and assured payment from state utilities to these private players is a must.

Power Tariff Controversy in Tata Power

Mundra ultra power mega Power plant was won by the Tata Power through competitive Tariff
based on the bidding that took place in 2006. But in the year 2010 Indonesian government
made changes in the mining law, in order to add the coal price exported from Indonesia with
the international market. This impacted on the exporting tariff of coal and for India it caused
an increase in the cola price because of which the foreign debt for coal started increasing.
This even had its impact on Tata powers Mundra UMGPP, where they found it difficult to
 recover the costs. The loss led to Tata Powers net worth erosion of 3800 crore in just 3 years.
In order to overcome this loss company petitioned the Central electricity Regulatory
Commission (CERB) to compensate the hike in tariff. In the year 2014, (CERB) agreed to
provide the compensatory of 52 paise per unit but still it wont be enough to

In the year 2007, 30% stake in two Indonesian thermal coal companies owned by PT Bumi
resources and PT Arutmin Indonesia was acquired Tata power for about $1.1 billion and this
helped Tata Power to provide low cost coal for Mundra UMPP. But in 2010, Indonesia made
changes in their Mining law because of which the price of coal that was getting imported to
India started to increase and they found that it is better to find some alternative rather than
importing it from Indonesia. So, in 2014 Tata power sold its 30% of stake to the Bakrie
Group for a sale consideration of $520 million which later was revised to $400 million.

How Tata power survived

Mundra UMPP is owned by Tata power which has a production capacity of 4000WM, which
is near half of the total production and this half is operating so strong that it is taking care of
the whole of Tata Power and among 12 UMPP that has been initiated by Indian Government
Mundra is the only one that has been functioning well till date. But after the change of rule
made by Indonesian government Tata Power found it difficult to import the coal as the coal
price got increased by 150% as 30% of the coal required by Mundra UMPP was getting
imported for Indonesia. So, MD of Tata Power thought of going out for alternative, they first
set up the cross functional team comprising of members from the whole Tata group and
advice the alternative that will make the cost cheaper. This team came up with an idea of
producing power by blending and deploying a new alternate coal called eco-coal, which was
environmental friendly and emitted less sulphur. After the implementation of this their
efficiency got increased by 72% there by reducing the overall cost. This innovation has
already started well for them where Tata Power have saved Rs. 500 million till March 2013
and is expected to save 2.87 Billion fuel costs per year. Moreover it has given Mundra UMPP
a chance to stay viable. The other reason for its success is the Public-Private Partnership for
generating, transmitting and distribution of power across India which is reducing their cost as
well the burden. For the distribution in North Delhi Tata Power Delhi Distribution Limited
is partnering with Delhi VidyutBoard.

List of top 5 proposed UMPPs

State Plant Special Owned By Production Fuel Source Status

Purpose capacity
Vehicle (MW)

Andhra Krishnapatna Coastal Reliance 3960 Imported Deferred or

Pradesh m Ultra Mega Andhra Power Coal postponed
Power Project Power Ltd.
Nayunipalli Tatiya Not Yet 4000 Imported Proposed
Ultra Mega Andhra awarded Coal
 Power Project mega Power
ltd.
Chhattisgarh Surguja Ultra Chhattisgarh Not Yet 4000 Local coal Uncertain
Mega power SurgujaUltra awarded mine
Project mega Power
project
Gujarat Mundra ultra Coastal Tata Power 4000 Imported (5*800MW)
mega power Gujarat coal All units are
project Power ltd. fully
functional
Jharkhand Tilaiya Ultra Jharkhand Reliance 4000 Local Cola Unknown.
Mega Power Integrated Power mine Reliance
Project Power Ltd. quite
Source; The economic Times

UMPP projects were initiated by Indian government to provide power consumers at a cheaper
price, these plants are very huge with huge production capacity due to which the price of
production will come down (economies of scale). Its estimated that Rs. 15,000 is required to
set up each plant. This will helpingreducing the cost of power production to Rs.2/-(others
more than Rs.2.5/-).Among the above power plants Tata coal is the only onwhich has been
operating well right from the beginning and Mundra contributes to 50% of their total
production and this 50% is the main reason because of which they are surviving. These
plants uses Super-Critical Boiler Technology because of which results in less usage of fuel
compared to sub-critical plants in India because of this Mundra power plant is using
1.7million tonnes less coal per year while it is generating the same quantum of power and this
is the reason why Tata power is surviving till date.

Tata Powers Mega Milestone

Tata Powers Mundra power plant is the only one which has been working well and helped to
push Tata power to the top list in Indias private sector power companies. Anil sardana says
that Mudra going fully operational is anachievement and Mundra Tata Power is producing
4000 MW and it is the first plant to use Supercritical Technology which helps to improve the
efficiency by 32%. MundrasGreenfield technologies have helped Tata Power in generation
of 8500WM as total. This project will help to supply power to 5 states, Maharashtra, Gujarat,
Haryana, Rajasthan and Punjab which currently facing power shortages.

Tata power is try new alternative for coal as the fuel costs have gone high after the change
made Indonesian government. So Tata is experiemnntig with blending of low-calorific value
imported coal to cut its fuel cost which is called as eco-coal and this coal is environmental
friendly and has low sulphur and this helps in reducing the overall fuel cost.

Future plans of investment in renewable energy sector in India

Anil Sardana made a statement that they are seeing to increase their power production
capacity by 30-40 percent by 2025 and this will done majorly using renewable sources of
energy 3300 MW out of its total production is dependent on Non-fossil resources. By 2025,
company have decided to increase its renewable energy footprint to 30-40 percen, where in
8,000MW out of 20,000 MW will dependent of renewable sources of energy rather than
depending on coal. Initiative towards this has been taken by setting up new green project in
Georgia which be commissioned in 2018. Tata power is now investing across the globe
mainly in emerging economies which is currently providing 14-15 percent on their Return on
Investment.

There are negatives, too; they are reeling under the impact of the high cost of imported coal
from Indonesia and the adverse dollar exchange rate. Their Dehrand [in coastal Maharashtra]
mega project is on hold. For the Mundra mega power plant in Gujarat, they had to provide for
about Rs18 billion as impairment. That is a huge impact and has resulted in an overall loss of
about Rs9.68 billion in our consolidated accounts. They have now approached Central
Electricity Regulatory Commission (CERC) to address the issue of imported coal prices.

Ecoal
Ecoal Instant Light is one of the most popular smokeless fuels. It has a fragrance natural
aroma and it is made from 50% recycled materials. Ecoal smokeless coal is made with up to
50% renewable materials, which is better for the environment and as a natural smokeless
mineral fuels. It Burns for up to 38% longer than house coals.
Innovative solution

Coal is one of the largest source of energy for the generation of electricity. coal has
been used for energy resource, and also for the purpose of production of electricity,
heat, which is used for the industrial purposes, such as refining metals.
The extraction of coal which is used for energy production and its by products are all
also been associated with environmental, health effects including climate change.
When the resources are gone off it will not sustain longer in the future days. But if
resources are produced efficiently, it will sustain very much in the long run.
If there is proper recycling facility, it will have the opportunity to produce in the long
term. If there is no proper recycling facility, there will not be any production in the
long term, but they have the opportunity to produce in the short term.
The world's top Ecoal producer has been China since 1983. China had produced 3,747
million tonnes of coal 47.7% of 7,861 million tonnes coal production. Other largest
producers were United States (813 million tonnes), India (678), European
Union (539) and Australia (503) in 2015.
The largest exporters were Australia with 328 million tonnes in 2010 (27.1% of world
coal export) and Indonesia with 316 million tonnes (26.1%). Japan were the largest
importers with 207 million tonnes. China with 195 million tonnes (16.6%) and South
Korea with 126 million tonnes (10.7%).
About 578 million tonnes (637.1 million short tons) in 2011 has been produced by
India. In China, 68.7% electricity comes from the coal.
coal is used for electricity generation, where it is usually burned in a furnace with
a boiler. An alternative purpose of using coal for electricity generation and also to
 improve the integrated gasification combined cycle (IGCC) power plant. Thermal
efficiencies of current IGCC power plants range from 39% to 42% IGCC power
plants outperform conventional pulverized coal-fuel plants in terms of pollutant
emissions, and allow for relatively easy carbon capture.
The 40% of the world's electricity comes from coal, in 2012, about one-third of the
United States' electricity came from coal, down from approximately 49% in 2008.

Government of India established own coal company in September 1956, and National Coal
Development Corporation (NCDC) which has been run by the Railways formed the nucleus
of NCDC. This was the fast growing energy requirements in the country to support rapid
industrialization taking place through 5-year Plans of the Government.

On 1st November 1975, a new public-sector company Coal India Limited (CIL) was formed
to enable better organizational facility in coal sector. The Government of
India nationalized,214 coking-coal mines and 12 coke-ovens which is running in the private
sector, excluding those held by TISCO and IISCO for their captive use. A new Government
company Bharat Coking Coal Limited (BCCL) was formed to control these nationalized
mines and coke-ovens on 1st Jan 1972, on 30th January 1973, all the remaining 711 non-
coking coalmines of the country in private sector were also nationalized.

On 1st November 1975, a new public-sector company Coal India Limited (CIL) was formed
to enable better organizational facility in coal sector.

Achievement of Mundra Power plant and its contribution for Tata power being
successful

Its the only power plant which is contributing 2% of Indias generation capacity.
Its the first power plant that is using supercritical technology which is helped to
increase the efficiency by 32%.
All the 5 plants have been commissioned contributing to the production of 4000MW
(5*800)