Professional Documents
Culture Documents
The per capita electricity consumption for 2005-06 at 631^ kWh (CEA General Review 2006), remains far below the world average of 2,429 kWh.
2
Share of hydro declining in the generation mix Unmet planned targets in generation capacity addition In last 3 Plan periods, target versus achievement ~ 50% 11th Plan (2007-2012) Target: 78577 MW
3
Northern Region:
Western Region : Southern Region: Eastern Region: North-Eastern Region:
9.1%
23.2% 9.0% 11.0% 23.0%
Aims for Power to All by the year 2012 Domestic energy resources not adequate to meet the total requirement Need for diversification of energy resources and regional cooperation - for energy security
4
Monopoly Suppliers (SEBs, Private Licensees) Generators (CGSs, IPPs and SEBs) with capacity fully tied up Each SEB had an allocated share in a Central/ Jointly owned station Price setting by Central/ State Governments SEBs hardly having any say Entire sector developed on fixed rate return Interplay of market forces remained non-existent Utilities would back-down in case of low demand and resort to load shedding in case of excess demand Power as a resource for earning revenue did not exist in this cost based regime
Prior to power trading as a business concept: power exchanges between the States/vertically integrated utilities were characterized by:
Small , Intermittent volumes Mostly in the nature of emergency support Without any commercial arrangements Non-payment or payment delays with resultant disputes
The exchanges were further limited due to lack of transmission inter-connections Sustained shortages, both in energy and peak demand, discouraged initiatives Skepticism about success of trading was widespread
6
Facilitate development of Power Projects particularly through private investment Promote Power Trading to optimally utilize the existing resources Develop power market for market based investments into the Indian Power Sector Promote exchange of power with neighbouring countries
Pioneer Role : Initiated development of short term power market and introduced innovative products for customers Efforts lead to beginning of sustained trading during 2000-01 (1.6 Billion units ) and also optimum utilization of existing resources Exponential growth established the viability of trading as a business concept
7
Established the viability of concept Power market can play key role in growth of sector Credible intermediary Payment Security Mechanism Weekly billing to reduce credit risks Right to divert in case of default Relationship of trust, transparency Comfort to developer of power projects by addressing market risks Comfort to lender by addressing credit risks
Transmission
TRADER
DISCOM
Distribution
Customer
Customer
10
Development of Power Market EA 2003, Section 66, The Appropriate Commission shall endeavor to promote the development of power market, guided by the National Electricity Policy
Suitable safeguards to prevent adverse effect on competition Recognized Trading as a distinct activity Definition under section(2) (47): Purchase of electricity for resale thereof Adequate and progressive provisions governing open access both : to transmission networks (inter-state and intra-state) and to distribution networks
11
National Electricity Policy 2005 Para 5.7 To promote market development, 15% of the new generating capacities, be sold outside long term PPAs. -As the power markets develop, it would be feasible to finance projects with competitive generation costs outside the long term PPAs.this will increase the depth of power markets.and in long run would lead to reduction in tariff Ministry of Power A progressive Merchant Power Policy with a view to add 15,000 MW capacity by 2011-12
12
Inter-state trading licenses (25 Years validity) in the purview of CERC Twenty Six (26) Trading licenses issued by CERC Volume of bilateral exchanges is still low (about 2.5% to 3% of energy generation) Total short term market approximately 21 billion units* in 2007-08 * Includes cross- border
14188
15023
10000
5000
0 FY 04 FY 05 FY 06 FY 07 FY 08
13
Trading Volumes (MU) Licensees PTC # 9889 NVVN 3324 Adani 1322 Tata Power 1682 JSW 1479 Reliance Energy 776 Lanco 2600 Others 229 Total 21301
14
75
98
Large merchant capacity is being funded States Governments of Chhattisgarh, Jharkhand, Orissa, Himachal Pradesh, J&K,
A paradigm shift from Cost plus return regime to market determined returns
2003-04 2004-05
1751 1735
2691 2708
2005-06 2006-07
2007-08
1762 2963
5234
3452 5695
9778
19
PTC - an active member of Indo-Nepal Power Exchange Committee Pursuing opportunities for short term and long term trade in electricity for mutual benefits Acting as facilitator for transmission inter-connection between the two countries- Investment in transmission capacity Arranged 25 MW RTC power to NEA Initialed PPA with SMEC West Seti for purchase of 750 MW power and MoU with Braspower for purchase of 309 MW power from Arun III HEP Proposing to facilitate formation and partner in a company in Nepal for accelerating hydro power development.
20
West Seti HEP of 750 MW (5 Units of 150 MW) is a reservoir type hydro project located in western part of Nepal Being developed by SMEC West Seti Hydroelectric Power Corporation Ltd. as an Export Project- financial closure expected shortly
Reservoir Capacity Equivalent to one full month generation-which could provide peaking power for about 8 Hrs at full capacity round the year
Market values such power highly due to peaking support and flexibility !
21
The market determined prices in the short term market has encouraged IPPS and merchant generators to look at the sector with renewed vigour and as an investment destination An evidence of this is that PTC has entered into PPAs to procure long term power with IPPS for more than 10,000 MW and / MoUs for around 30,000 MW
Power market has in fact become a catalyst for private investment in power sector
75,000 MW under development by IPPs without any Government support
Rising cost of traded power: (The average cost Rs. 4.50/kWh in 2007-08)
Due to overall shortage situation (widening demand-supply gap) Lack of capacity additions Linkage with UI rates and Rising fuel prices
2.30% (%) 2.20% 2.10% 2.00% 1.90% 2003-04 2004-05 2005-06 (Period) 2006-07 2007-08
24
25
Key Challenges
Market depth to be increased more players, regional participation Open Access Implementation New Segment of prospective participants Industry SEZs HT consumers Group Captives Merchant generators Sufficient transmission capacities required for a vibrant power market Government to initially support through viability gap funding
26
Demand
Liquidity
New Products on anvil week ahead, fortnight- ahead, month-ahead, year ahead etc Regional Energy Cooperation
27
778
8% GDP Growth
2828 BU 78% Hydro Nuclear Thermal RE
9% GDP growth
Total 3628 BU
Window of Opportunities
Nepal is rich in hydro potential > 43000 MW techno-economic Indian Power Market is a voluntary market tariff competitiveness is key Nepal Power Projects, due to moderate transmission distance involved up to load centers could be competitive Integrated Energy Policy of India encourages hydro power from Nepal A huge market next door, waiting to be tapped!
29
30