Decoding ‘Power Surplus’

Experts from Feedback Business Consulting Services investigate the happenings in the Indian power sector.
 It has been more than two years into the term of a new government that had swept into power with absolute majority. This was achieved with the help of grand vision laid out for the country which promised all-round development. We are at a point in time, where we can pause and take stock of how far along we are into the process of fulfilling this vision. Here, we investigate the happenings in the power sector that have occurred under the new leadership.
DDUGJY and IPDSDeen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) was one of the first initiatives taken by the new government to enhance the reach and capability of the power sector in India. The programme was carved out of the existing schemes like the R-APDRP (Restructured Accelerated Power Development & Reforms Programme) and Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). DDUGJY involved steps to beef up the distribution infrastructure by bifurcation of agricultural and non-agricultural feeders, strengthening and augmentation of sub-transmission and distribution infrastructure in rural areas and electrification of the rural areas.
Around the same time, the Integrated Power Development Scheme (IPDS) was launched to strengthen the sub-transmission and distribution network, to ensure metering of distribution transformers/feeders/consumers in the urban areas, and weave IT systems into the distribution sector. These objectives have been carried forward from the earlier R-APDRP scheme, with the aim of AT&C loss reduction, establishment of IT-enabled energy accounting/auditing system, improvement in billed energy based on metered consumption and improvement in collection efficiency.
Both these programmes were floated with a net expenditure estimate of close to ` 1,20,000 crore, of which an amount of about ` 53,000 crore was financed from the budgets sanctioned for the parent schemes, R-APDRP and RGGVY. This expenditure was to result into a reinforced skeleton for the power system in the country in the form of a robust and sophisticated transmission and distribution (T&D) network.
100% rural electrificationThe ambition of 100 per cent rural electrification has been long held by all the policymakers, with the last major target of achieving power for all by the year 2012. But, as of August 2013, more than 32,000 villages remained to be electrified. By August 2015, this number had fallen to 18,500.
Under DDUGJY’s rural electrification package, measures were taken up in mission mode starting August 2015 with a target to electrify un-electrified villages of the country by May 2018, to fit into the grander plans of providing ’24 × 7 Power for All’ by the year 2019. Grassroots level work on this programme is being tracked through a network of 409 ‘Gram Vidyut Abhiyantas’ (GVAs) and supervisors at District and Block level. Data from the ground is being monitored through an interactive portal which has been made available for the perusal of the public. Of these 18,500 villages that were in the line to be electrified, separate focus is being given to naxal-affected areas and villages that would be electrified using off-grid systems.
These efforts have borne fruit in the form of reduction of number of un-electrified villages to a little over 8,800 within a period of close to 2 years. The process has been so efficient that the target of 100 per cent village electrification is being expected to be achieved a year early, i.e. by March 2017.
This effort has been commendable, but there is a lack of clarity regarding what happens once 100 per cent village electrification is done? On paper, an electrified village does not mean supply of electricity to all within the village. This dichotomy springs up a question of how the government would go about from 100 per cent electrification to 24 × 7 Power for All? As of now there are no clear guidelines available on how the subsequent steps of 100 per cent household electrification, and 24 × 7 power supply would be made a reality.
Annual coal production of 1.5 bn tonnes by 2019-20For many years till 2014, the coal production in the country was acting as a huge bottleneck for the whole power sector. The increase in coal production was not able to keep up with the increasing demand for coal. The result was that there was a huge shortage of coal at power plants. The power plants were forced to keep a coal stock of about 7 days, which further dropped to a stock of less than 3 days during the rainy seasons.These shortages had forced power plant developers to look at costly coal imports to ensure a reliable supply of fuel. Even the power plants being set up under government programmes, like the Ultra Mega Power Projects (UMPPs) were being designed to be run on imported coal.
In response to this, Coal India came out with a road map to attain the 1 billion tonne annual coal production mark by 2019-20. The projected annual coal demand of the country is estimated to be around 1.2 billion tonnes around that time, by growing at an average rate of 7 per cent. Mahanadi Coalfields Ltd (MCL) and the South Eastern Coalfields Ltd (SECL) are expected to play a pivotal role in attaining the 1 billion tonne production with 250 MTs and 240 MTs respectively. This move was expected to cost an investment of anywhere from ` 50,000 crore to ` 10,00,000 crore in the next five years.
This strategy of increasing coal production is already bearing fruits. Coal production has grown at a CAGR of 7.9 per cent within the last 2 years, and the country is staring at an annual coal production target of 590 million tonne this year. Meanwhile, the country is expected to import only about 160 million tonnes of coal this fiscal, down from 200 million tonnes in 2015-16 and 218 million tonnes in 2014-15. The thermal power plants have been able to maintain a decent coal stock of about 23 days, against a stock of 7 days during the same period in 2014. Accompanying this, there has also been a substantial build-up of coal stock at pitheads. This has spurred the coal producer to conduct e-auction for the surplus coal.
Plans are being formulated to bring in private participation in a much bigger way to cater to the additional demand. 500 million tonnes of annual coal production is being expected from the private sector by 2019-20.
However, for some time, there has been a slowdown in investments in the thermal power generation space in the country. As of now, about 73 GW of thermal power generation capacity is under construction, which does not require an additional 1 billion tonnes of coal to function. Additionally, under the constant pressure from international peers to move away from fossil fuels, to what extent does India bank on this coal needs to be seen.
175 GW of renewable installed capacityPrior to 2014, renewable energy, especially solar energy, was treated as a niche segment. There were only a couple of gigawatts of installed solar power, and a target for the year 2022 of 20 GW.
Under the new government, these targets for renewable energy capacity were scaled up to 175 GW, of which 100 GW of capacity is to come from solar energy, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power.

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