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Presentation Presentation on on

Investment Opportunities Investment Opportunities in Indian Power Sectorin Indian Power Sector

and and Cooperation with IEACooperation with IEA

ByBy

R.V. SHAHIR.V. SHAHISecretary, Ministry of PowerSecretary, Ministry of Power

Government of IndiaGovernment of IndiaDecember13, 2006December13, 2006

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India has been able to achieve an economic growth rate of

8% per annum during last few years.

Industrial growth rate over 9%.

Domestic savings rates have been rising and reached over

29%.

Inflation level moderate, despite of sharp rise in

international oil prices.

Current Account Deficit only 1.3% of GDP.

Foreign exchange reserves about USD 170 billion.

Strengths of Indian Economy

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During 2007-12, average Economic growth rate projected at

9% pa.

Power sector to also grow by 9% to sustain the economic

growth.

Installed capacity to reach 800 GW by 2031-32 from the

present level of 128 GW. Present captive generation 41,000

MW.

Enabling environment created by enacting Electricity Act

and various policies framed thereunder.

Strengths of Indian Power Sector

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New Electricity Act 2003 - Liberal and competitive

framework.

Entry Barriers

•Removed in generation.

•Reduced in transmission, distribution and supply.

Open access in transmission already in place in

interconnected all India grid.

Open access to consumers above 1 MW by Jan, 2009.

New Liberal Competitive Framework

Contd..

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100% FDI permitted in all segments.

Duty free import of equipment permitted for Mega Power

Projects.

Most project execution through International Competitive

Bidding.

New Liberal Competitive Framework

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Total Village Electrification in 5 years.

By year 2012 :

Per capita availability 1000 units.

Installed capacity over 200,000 MW.

Spinning reserves 5% .

Minimum lifeline consumption of one unit per

household per day.

Inter-regional transmission capacity 37,000

MW.

Quality and reliable power supply.

National Electricity Policy

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Tariff Policy Tariff of all Generation and Transmission Projects in

Private Sector through Competitive route- Public sector to

complete transition in five years.

Reduction of cross subsidy to (+)(-) 20% in next five years.

Emphasis on facilitating Open Access in Distribution; clear

formulation on cross subsidy surcharge.

Transmission Tariff framework sensitive to distance and

direction.

Strict Implementation of Performance Standards.

Agriculture Tariff to leverage sustainable use of Ground

Water Resources.

Time bound introduction of MYT.

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Competitive Tariff Bidding for Project Development

Tariff based International Competitive Bidding for

selection of project developer.

7 Large coal based Ultra Mega projects of 4000 MW each

being developed.

Mix of Coastal projects with imported coal and pit head

integrated coal mining- cum- power projects.

Use of more efficient super critical technology – lower CO2

emissions.

Final tariff bids already received for 2 projects- selection

of successful bidder by December, 2006. Contd..

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Competitive Tariff Bidding contd..

Two more projects to be awarded in April/ June’ 2007.

Bids of other projects in pipeline.

States initiating bids for smaller capacity thermal projects.

Bids for transmission projects in pipeline.

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The Energy Strategy

Full development of hydro potential. Hydro power

irrespective of size, renewable source of energy.

Domestic coal to remain primary source. Emphasis on

Super Critical Plants and Clean Coal Technologies.

Import of coal on moderate scale for coastal locations.

Use of gas dependent on availability and price.

Import of gas – LNG terminals. Gas pipelines from

Western and Central Asia.

Contd..

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Alternate Sources of Energy Emphasis on Biomass.

Wind power potential – success story for rapid

development. More than 3800 MW added in the last four

years.

At over 5500 MW , Wind capacity 4th largest in the

world.

Development of mini and micro hydroelectric projects.

Solar power needs intensive R&D for cost reduction .

Extensive development of solar dependent on CDM

benefits to offset present high cost. Contd..

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The Energy Strategy

Nuclear power presently 3,900 MW- Share of Nuclear

power to be enhanced. No CO2 emissions.

• Mastery in fuel cycle and technology.

• Fuel Constraint.

Rapid increase in share of nuclear power dependent on

International Cooperation.

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Energy Efficiency – High Priority

Bureau of Energy Efficiency (BEE).

Standards and Labeling of appliances.

Building Codes being developed.

Energy conservation norms for industry and

performance standards for equipment being developed.

Public awareness campaign launched.

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Low Energy Intensity and Low Carbon Path of Development

Energy Intensity

TPES/GDP

(KgOE/2000PPP$)

Per Capita CO2 Emissions

(Tonnes/capita)

India 0.18 1.02

China 0.23 3.66

USA 0.22 19.73

OECD 0.19 11.09

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Investment Requirements During XI Plan (2007-2012) in Power Sector

USD 50 Billion for Generation.

Another USD 50 Billion for Transmission, Distribution

and Rural Electrification.

Total USD 100 Billion.

At present 43,000 MW generation capacity is already

under execution. Investment of USD 50 Billion

committed.

Public sector investments have been stepped up ; will

need to be supplemented through private investments.

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Merchant Power Plants Development of Merchant power plants with highly

competitive tariff- a new electricity market development

initiative.

To fill the demand supply gap.

Facilitated by Open access in transmission and

distribution.

Full market risk to be absorbed by the developer.

Coal linkage to be provided for plants up to 1000 MW

size. Captive coal blocks for plants in the range of 500-

1000 MW.

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Present India - IEA Cooperation

MoU signed with IEA during April 1998 for cooperation

in power sector.

Training programmes organised by IEA on Energy

statistics, forecasting etc.

Jointly organised International workshop on Standards

and Labeling.

India participating in IEA Greenhouse Gas R&D

programme.

India participating in IEA DSM implementation

agreement.

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Proposed Future India - IEA Cooperation

Energy Efficiency and Demand Side Management.

Data Management, Demand supply mismatch

projections, Energy Balance : method of assessment.

Establishing World over that Hydro power irrespective

of size is renewable, and accepting these projects under

CDM.

Collaboration in Clean Coal Technologies.

20 year projections for gas availability and prices.

Capital cost benchmarks for Nuclear power projects.

20 year projections for nuclear fuel availability and

prices.

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THANK YOU