Energy Handbook 2011 - GBR

P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1
C o u n t r y P r o f i l e : I n d i a
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We recognise the
Many of today’s
independent power
producers (IPPs) started out
as captive power divisions
of their parent companies:
India’s ever-dominant
industrial conglomerates.
As Dr. R.P. Singh,
Executive Vice-Chairman
of Jindal Power, explains:
“We first entered the
power sector… when we
constructed a captive plant
for a steel mill. Once we
had successfully executed
the first project for Jindal
Steel & Power Ltd. we
decided that we should
become a major power
player in our own right. By
2009 we had commissioned India’s first
private-sector mega power plant.”
and reliable power to the city of Mumbai.
Since deregulation in 2003 Tata Power
has become the only private-sector
company to be present in the generation,
transmission and distribution sectors.”
Tata Power is also set on exponential
growth: the firm currently has 6 GW of
capacity slated for completion by 2015
and Agrawala says it is aiming for 25 GW
by 2017.
Coal and Gas Power
Currently 53 percent of India’s generation
capacity is coal-fired, and this dominance
is set to continue in the medium term;
India, poor in oil and gas, is coal-rich.
Gas, both from new fields and imported,
will play an increasingly important role in
power generation in the coming years.
India, already host to the world’s fifthlargest
fleet of wind turbines, has placed
major emphasis on renewable energy as
part of its 12th five-year development
plan (due to commence in 2012). Nuclear
power forms the fourth pillar of India’s
generation matrix, but new reactors are
likely to only play a small role in the next
decade.
Energy Ltd. “The location of mines makes
them difficult to develop. Despite the rail
linkages provided by the Government,
the efficiency of coal supply is poor.
Nevertheless, we are fully committed to
ply the domestic linkages for our plants.
But to safeguard the sustainability of our
plants we decided to install them next
to ports, facilitating the use of imported
coal.”
India’s continuing reliance on coal
has attracted international concern
on environmental grounds; not only is
consumption high and growing fast, but
India’s coal is of a low grade, with high
sulphur and ash content. Those within the
industry note however that India badly
needs coal-fired capacity if the country is
to continue to reduce poverty.
“Today the USA generates thrice as much
electricity from coal as India does,” notes
Reliance Power’s Kumar. “Natural gas or
renewable sources of power alone cannot
provide the 150 GW of capacity that the
country is looking for in the next seven
to ten years. Once we decided on having
coal-based power in our portfolio, we
observed that the best way to do it was to
control the entire value chain to mitigate
the risks.” With Indian emissions of
greenhouse gases per capita a fraction of
those in the west (India’s CO2 emissions
per capita are less than a third of the
global average) there is an international
consensus that the country’s emissions
will inevitably have to rise.
Those within the industry are keen to see
coal developed in a responsible manner,
and tend to view coal as one part of a
wider portfolio development strategy
which will include sources which emit
less CO2.
“We recognise the threat of climate
change – there is no doubt that managing
carbon is a business risk,” says Rajiv
Mishra, Managing Director of CLP.
The 2003 Act reworked legislation
threat of climate
designed to create IPPs. India’s industrial
conglomerates have seized the opportunity
change – there to enter the sector and power generation
is no doubt that has become a core business line for many
of the nation’s largest companies. NTPC
managing carbon is
may still be the largest power generation India is the third-largest producer of coal
a business risk. company in India but the likes of Tata in the world and the third-largest importer.
and Reliance ADA are fast catching up. With 85 GW of capacity to feed, and
Reliance was not even in the power considerable new development under
Rajiv Mishra business a decade ago, but as Ashwani way, “king coal” looks set to dominate
Managing Director Kumar, Head of Business Development the sector for the medium term. One
of CLP
at Reliance Power, explains: “We are of the Government’s key strategies to
currently in the process of substantially encourage investment in the power sector
expanding our generation portfolio from has been the creation of special-purpose
about 1 GW to approximately 35 GW… vehicles to fast-track 14 “ultra mega
We are diversified geographically, in terms power plants” (UMPPs) each of 4 GW
of fuel type and in terms of our customers. plus, to create 60+ GW of new privatelyowned
Reliance Power aims to be the leading
coal-fired capacity by 2017 with
power generation company in India.” The low risks for investors. The Ministry of
Tata Group built and operated India’s first Power acquires the land and (where
large-scale hydro plant in 1915 and has applicable) coal rights, and undertakes all
been in the industry ever since. While the clearances and permitting needed to
central and state Governments came to develop a project. Companies then bid for
dominate the sector after independence, the tender on an operating cost basis. So
Tata maintained its foothold in the power far four UMPPs have been awarded.
game and today it is India’s largest privatesector
generator, with 3 GW of installed Despite India’s vast reserves of coal, most
capacity. “Tata Power is almost 100 new plants under development are on the
years old,” explains Banmali Agrawala, coast due to weaknesses in the transport
Tata Power’s Executive Director of infrastructure. “The supply of coal in India
Strategy and Business Development. “We is becoming a challenge, even for some
started off by building hydro projects, of the existing plants,” says L.K. Gupta,
24
with a vision of providing cheap, clean Joint Managing Director and CEO of JSW
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