INDIAN POWER SECTOR: CURRENT SCENARIO & FUTURE GROWTH

Availability of energy had always been a major factor in socio-economic growth of any country and hence it is prudent to take a broader look of power scenario in Indian context.

Since inception of independent modern India, we have come a long way in every sector of business and society. Power sector also is not exception to it. From the per capita consumption 16kWh in 1947, now our demand has grown almost 80 times to 1,181 kWh and to cater to this we enhanced our installed capacity 350 times – from 1,362 MW in 1947 to 361 GW in 2019.

The total infrastructure that caters to this demand of per capita power comes under the term “Power Scenario”. From potential of installed generation capacity to the limitations in distribution of power, the present and the future aspiration of this sector is worth analysing. Let us analyse the challenges in this sector first.

Challenges

Present installed capacity in India is 361 GW approximately and we are on the verge of becoming an energy surplus state with respect to per capita and peak demand, however challenges in power sector are quite evident these days and these challenges are making most of the stakeholders anxious. Major reason for this anxiety is volatility in the sector with respect to government decisions, environmental concerns, geopolitical situation and very fast changing technology in power sector as well as related sectors such as transportation.

Power sector has seen both peak growth as well as steep recession in last 15 years. Sector was outperforming the 7-8 per cent growing GDP of the country in years 2000 to 2012. However, after 2015 to present thermal sector has seen steep decline. Let us discuss major reason for this decline. 361 GW of installed capacity comes from major sectors as given in Figure 1.

As it can be seen clearly that fossil fuel-based power plants cater more than 80 per cent energy demand of our country.

When we were short of generation with respect to demand of power in late 1990s Government focused on increasing the generation capacity and flood of new coal based super critical power plants came in to existence and business in power sector flourished to its pinnacle by 2010 to 2012.

Capacity addition from conventional sources in 12th Five-Year Plan was approximately 100 GW (112 per cent more than target) and from renewables was 33 GW. This figure may be appreciated more if we see the journey of 55 years since 1947 to 2002, India has added 105 GW in these 55 years compare to 133 GW addition in 12th Plan alone. However most remarkably we exceeded the target in 12th Plan though there were considerable slippages in capacity addition from renewable sources such as hydro and from non-fossil-based sources such as nuclear.

And this shows irony in our focus because we almost ignored the geo-political sentiments of the world and environmental concerns over thermal power plants in last two decades. Kyoto Protocol came in to effect in 2005, but countries had already started responsible thinking of low-carbon emission in early 1990s and hence most of the European Union, USA, Canada, Japan etc. had migrated to hydro and nuclear for their major power needs by this time.

World Health Organisation’s estimate tells that approximately 4 lac people die yearly in India due to use of fossil-fuel in various utilities. Further Indian coal is estimated to be biggest source of greenhouse gases in country.

Apart from air pollution, deforestation, soil pollution, waste ash are other major environmental concerns associated with thermal power are proving it one of the biggest environmental threat not only for the country but also for the whole world.

Understanding need of the hour, the Indian government has signed Paris Agreement COP21 in 2016 and hence thrust has been changed not only for promotion of renewable energy but also making stringent norms for emissions for existing fossil fuel-based plant in the country. As of 2016, the existing coal-fired power stations in the utility and captive power sectors were estimated to require nearly Rs 1.25 crore per MW capacity to install pollution control equipment to comply with the latest emission norms set out by the Ministry of Environment & Forests.

Fuel gas de-sulfurization plants (FGD) and selective catalytic reduction (SCR) plants are made mandatory for control of SOx and NOx emission levels.

Opportunities for improvement

Every area which will promote non-fossil fuel-based energy usage shall be of prime importance not only in India but also in whole world. All the policies will revolve around this “Greener Energy Concept” only. Hence terms such as coal gasification, e-mobility, solar power are no longer jargons but these are becoming businesses of present time.

The government’s National Electricity Plan of 2018 states that the country does not need a single more nonrenewable power plants in the utility sector until 2027, with the commissioning of 50,025 MW coal-based power plants under construction and addition of 275,000 MW total renewable power capacity after the retirement of nearly 48,000 MW old coal-fired plants.

This paradigm shift in national policy narrates that no new subcritical or even super critical thermal plants (coal based) will be constructed in coming decade. Few advanced ultra-super critical plants may turnup due to better efficiency of AUSC technology and approximately 20 per cent low carbon emission as compare to subcritical. However, whole of our policy thrust will be on greener and cleaner source of energy.

In India we have limited water resources and our hydro power potential is dependent on many international treaties with China, Pakistan and Bangladesh. Potential of major rivers such as Ganges, Narmada, Chambal and Brahmaputra has already been utilised.

Hence major focus for renewable energy shifts to solar power. India is ranked 6th in the world in terms of solar power generation but we have enormous unused solar potential. Further, due to advancement in semiconductor technology per unit cost of solar power declining day by day and making it very lucrative option for any policy maker.

The country’s solar installed capacity has reached 30.709 GW as of 31 August 2019. India expanded its solar-generation capacity 8 times from 2,650 MW on 26 May 2014 to over 20 GW as on 31 January 2018.

The government aims to add 100 GW solar power by 2022 which earlier seemed to be very optimistic but now appearing quite achievable. Seriousness of our commitment for solar power may be seen from our initiative to form International Solar Alliance, 121 countries are its member right now.

In coming few months solar-based power plants will be India’s third largest source of energy.

We are witnessing daily new technological advancement and innovative ideas in this sector for making Solar power affordable, concepts such as floating solar are becoming popular today in India also. Recent example is NTPC’s 100MW Ramagundam floating plant which is largest plant of its kind.

Future ahead in power sector

In coming years when we will be having abundance of clean energy from renewables, quality of energy will also take equal importance. India’s aggregate transmission and commercial (AT&C) losses were nearly 21.35 per cent in 2017-18.This compares unfavourably to the total AT&C loss in the electricity sector of the United States, which was only 9.43 per cent out of 4,113 billion kWh electricity supplied during the year 2013. The Indian government has set a target of reducing losses to 17.1 per cent by 2017 and to 14.1 per cent by 2022.

Plant load factor coal-based power plants is decreasing continuously as per figure 2.

Due to this policy makers are taking issue of power distribution very seriously. Many projects have been started for necessary infrastructure to ensure uninterrupted electricity supply to all households, industries, and commercial establishment and hence to increase plant load factor of various plants.

New technologies for smart grids and intelligent distribution networks are also being introduced at various levels of national grid. However, in distribution segment, India has a very long way to go and immense opportunities of improvement.

Further, the stability of grid will be a great challenge in coming years. As we are pumping solar power increasingly, in coming years frequent load through-off of thermal plants will increase considerably. Technology wise it is difficult for a thermal plant to switch-on and off frequently and this will be required because most of the time solar will cater to load in day time and thermal will come into picture in evening. This daily load through off will decrease efficiency of thermal plant significantly and hence will increase its carbon footprint. So, this technological gap of existing plants will be challenge for grid stability in future years.

Decommissioning of old thermal plants and poor efficiency of running ones will make them economically less viable and hence time has come now to think seriously for nuclear plants in the country and time has come to overcome the technology gaps in field of nuclear power.

Fate of Indian power industry will lot depend on fast breeder reactor technology in future years.

In coming decade transportation sector in India and in world will also see a big transformation. Soon fossil fuel based vehicles will be matter of history and battery-operated vehicles will take important place in our daily lives.

Power sector will not remain unaffected by this mass change because ultimately for charging of so many batteries we will require electricity.

Companies with technological edge in battery and chargers will have a very bright future in coming decades.

Ventures dealing with alternate fuels such as methanol, dimethyl ether (DME), and water-gas will also be very lucrative choice in various utilities. Big giants in automobile sector of European Union have already started use DME-based newly developed engines in large commercial vehicles and even in ships and ferries.

Hybrid equipment and vehicle working on combination of solar energy and battery operation or DME shall be in demand soon. Methanol can be thought of cleaner alternative to coal for power generation, China has already taken this concept to far and further working on it.

So finally, it can be said that in very short time we will see a big transformation in power sector of India and only those players will survive who have read pulse of this transformation in time.