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nergy is cen­tral to our progress and elec­tric­ity as a source of this en­ergy is undis­put­edly the most ef­fi­cient. It drives not only in­dus­tries and ser­vices, nec­es­sary for the growth of economies, but is also es­sen­tial for people to live a dig­ni­fied life. This is more so rel­e­vant in de­vel­op­ing coun­tries like In­dia where the an­nual per capita con­sump­tion of elec­tric­ity was just above 900 KWh in FY13-14 as against a global aver­age of around 3000KWh.

In In­dia, ther­mal power (con­sist­ing of coal/lig­nite, nat­u­ral gas and diesel) con­sti­tutes 69 per cent of to­tal in­stalled ca­pac­ity and is likely to re­main the dom­i­nant source of en­ergy in the fore­see­able fu­ture with coal­based plants alone con­tribut­ing more than 85 per cent of in­stalled ther­mal power ca­pac­ity. The govern­ment is tar­get­ing a ca­pac­ity ad­di­tion of 88 GW in the 12th (2012-17) Plan and en­vis­ages an­other 100 GW in the 13th Plan (2017-2022). The share of ther­mal plants in the 12th Plan is tar­geted at 88 GW leading to an an­nual per capita con­sump­tion of elec­tric­ity over 1400 KWh by 2017.

Coal as a back­bone of power gen­er­a­tion has been ac­cepted in In­dia for the ease of its avail­abil­ity, low cost of pro­duc­tion and avail­abil­ity of tech­nolo­gies al­low­ing large ca­pac­ity ad­di­tions per unit of in­stal­la­tion. The chal­lenge to these plants has been con­cerned around their im­pact on the en­vi­ron­ment viz. min­ing-re­lated fac­tors, spillage dur­ing trans­porta­tion, high ash con­tent of In­dian coal, and high sul­phur con­tent of im­ported coal and emis­sions. So­lu­tions like coal gasi­fi­ca­tion, lo­ca­tion of plants at pit­head and ded­i­cated freight cor­ri­dors are at var­i­ous stages of im­ple­men­ta­tion.

The im­prove­ment in tech­nol­ogy has also led to in­creased ef­fi­cien­cies and lower en­vi­ron­men­tal im­pact. Su­per­crit­i­cal tech­nol­ogy is al­ready avail­able and ul­tra-su­per­crit­i­cal units are now be­ing of­fered to fur­ther en­hance the value of coal gen­er­a­tion. In years ahead, even though we could see a re­duc­tion in per­cent­age terms of the con­tri­bu­tion of coal plants to the over­all in­stalled ca­pac­ity, a large in­crease in ab­so­lute ca­pac­ity is un­avoid­able.

Ad­van­tages of coal

Gas plants, even though more en­vi­ron­ment friendly, have been sub-op­ti­mally utilised. A ma­jor­ity of gas plants are idle and those that are op­er­at­ing are do­ing so at a PLF as low as 25 per cent. Due to their short start and stop times, gas plants are ideally suited for peak load op­er­a­tions. How­ever, high cost of LNG im­ports, re­duc­tion in do­mes­tic gas sup­ply and un­cer­tainty over gas pric­ing has cur­rently made this op­tion unattrac­tive. What is re­quired is a quick res­o­lu­tion on the de­mand for in­crease in gas prices which could sus­tain fur­ther ex­plo­ration and sup­ply sup­ple­mented with an eq­ui­table pol­icy on LNG im­ports.

Rel­a­tively, coal has ad­van­tages of vis-à-vis other sources of power gen­er­a­tion. How­ever, it has been plagued with mul­ti­ple ad­min­is­tra­tive and man­age­ment weak­ness. These in­clude: Low plant load fac­tor (66 per cent for FY2013-14 as com­pared to 72 per cent for FY2012-13) due to both sup­ply side and de­mand side is­sues. Non-avail­abil­ity of fuel to al­ready ex­ist­ing plants due to in­abil­ity of CIL to sup­ply the an­nual con­tracted quan­tity (ACQ) as per fuel sup­ply agree­ment (the penalty clause is ap­pli­ca­ble only if sup­ply is less than 65 per cent of ACQ). A large per­cent­age of do­mes­tic and agri­cul­tural con­sumers do not have the abil­ity or de­sire to pay re­sult­ing in an im­posed re­duc­tion on sup­ply by dis­trib­u­tors. Fur­ther, fi­nan­cially weak dis­coms with high in­debt­ed­ness (the ac­cu­mu­lat- ed debt of all dis­coms is es­ti­mated to be more than `2 lakh crore) has re­sulted in de­fault in pay­ment to gen­er­a­tors. T&D in­fra­struc­ture is in­ad­e­quate and in­ef­fi­cient to pro­vide power to re­gions and con­sumers with the abil­ity to pay and there are large AT&C losses of over 24 per cent. An un­co­or­di­nated govern­ment ma­chin­ery re­quir­ing de­vel­op­ers to strug­gle for clear­ances. An evolv­ing reg­u­la­tory frame­work on is­sues of land ac­qui­si­tion, R&R in­creas­ing risks of vi­a­bil­ity of projects. New play­ers in the sec­tor with­out the re­quired ex­per­tise to build such plants. Lack of good project man­age­ment skills re­sult­ing in cost and time over­runs and sus­pen­sion of works in many cases. A large num­ber of tech­nol­ogy sup­pli­ers with­out wellde­fined cri­te­ria for qual­ity that re­sults in their in­abil­ity to meet per­for­mance pa­ram­e­ters. An un­der­de­vel­oped in­fra­struc­ture for trans­porta­tion, lim­it­ing choice of sites, dam­ages and de­lays. Con­sid­er­ing the cru­cial role power sec­tor plays in the growth of econ­omy, im­me­di­ate re­dres­sal of and de­ci­sive ac­tion on the above men­tioned points is a ne­ces­sity. The prospects for the sec­tor are promis­ing go­ing by some of the de­vel­op­ments in re­cent times as men­tioned be­low. Cre­ation of a na­tional grid:

Prospects

(The views and opin­ions herein are those of the au­thor and do

not nec­es­sar­ily rep­re­sent the views and opin­ions of KPMG in In­dia. All in­for­ma­tion pro­vided is of a gen­eral na­ture and is not in­tended to ad­dress the cir­cum­stances of any par­tic­u­lar indi

vid­ual or en­tity.)

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