Electricity is a key driver of rapid economic growth and industrialization in the country. It is one of the critical infrastructure on which development of several economic sectors depend. India is the world's sixth largest energy consumer accounting for about 3.5% of the world's total annual energy consumption. Availability of reliable and quality power at competitive rates to Indian industry is necessary to make it globally competitive and to enable it to exploit the tremendous potential of employment generation. Over the years, Indian power industry has shown considerable growth. Foreign direct investment (FDI) upto 100 percent has been permitted through automatic route in generation, transmission and distribution segments.The 'Ministry of Power' is the main authority for the overall development of electrical energy in the country. It is responsible for planning and policy formulation; processing of projects for investment decision; monitoring and implementation of power projects; as well as administration and enactment of legislation in regard to power generation, transmission and distribution.
In order to encourage greater investment into power industry, several policy reforms and initiatives have been undertaken from time to time. The most important being, the enactment of 'Electricity Act, 2003', which aims to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity; promote competition in the power sector; and supply electricity to all areas. It seeks to rationalise electricity tariffs, promote efficient and environmentally benign policies, provide stringent penalties in case of theft of electricity, etc. Under the Act, the Central Government has prepared the 'National Electricity Policy' and the 'National Electricity Plan'.
The National Electricity Policy aims at laying guidelines for accelerated development of the power sector and protecting interests of consumers and other stakeholders, keeping in view availability of energy resources, technology, economics of generation and energy security issues. Central Electricity Authority frames a National Electricity Plan once in five years and revise the same from time to time in accordance with the policy. The plan involves forecasting short-term and long term demand for different regions as well as suggesting areas/locations for capacity additions in generation and transmission.
The opportunities in the power sector lies in the regulation and development of following thrust areas, namely:-
- Electricity Generation
The thermal, hydro and nuclear energy are the major sources of generation of electricity in India. The total installed power generation capacity has been 1,35,401.63 MW (as on August 31, 2007), consisting of 86,975.84 MW (thermal); 34,130.76 MW (hydro); 4,120 MW (nuclear); and 10,175.03 MW (renewable energy sources). The All India Plant Load Factor during April-August 2007 has been 77.1 per cent.
Maximum emphasis has been laid on full development of the feasible hydro potential in the country. Hydroelectricity is a clean and renewable source of energy. The Ministry has undertaken several steps to accelerate capacity addition from hydro-electric projects. For instance:- higher budgetary allocation for the hydel sector; investment approval of new hydro-electric projects; promoting State sector projects which were languishing or could not progress due to Inter-State disputes; simplification of procedure for transfer of clearance; etc.
Imported coal based thermal power stations, particularly at coastal locations, are being encouraged based on their economic viability. Use of gas as a fuel for power generation depends upon its availability at reasonable prices. Natural gas is being used in Gas Turbine /Combined Cycle Gas Turbine (GT/CCGT) stations. A national gas grid covering various parts of the country as well as Imported LNG based power plants act as a potential source of electricity. Nuclear power plants are also being set up at different locations to meet base load demand. Both public and private sector investments are needed to step up for creating nuclear generation capacity in the country. Moreover, investment by foreign investors for manufacturing of renewable energy systems and devices are based on:- Wind, Solar Photo-voltaic, Solar Thermal, Small Hydro, Biomass, Co-generation, Geothermal, Tidal and Urban and Industrial Wastes based power projects.
To provide availability of over 1000 units of per capita electricity by year 2012, it has been estimated that need based capacity addition of more than 1,00,000 MW would be required during the period 2002-12. The Ministry has initiated several reform measures to create a favourable environment for addition of new generating capacity in the country. For instance, development of 'Ultra Mega Power Projects (UMPPs)' has been identified as a thrust area. These are very large sized projects, approximately 4000 MW each involving an estimated investment of about Rs. 16,000 crore. These projects will meet the power needs of a number of States/ distribution companies located in these States, and are being developed on a Build, Own, and Operate (BOO) basis.
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