Power for All Myth and Reality

Managerial Economic

Table of contents Introduction Problems in the case Current scenario Solution of problems prevalent in case Case summarisation Conclusion

Power For All Reality Or Myth

Managerial Economic

Introduction The power sector in India is going through the rapid change since from the year 2012 when government has promised power for all. For a humble beginning of 1700 MW in 1950-51 to 1, 18,400MW in 2004-05, the development of power sector has travelled a long way. There has been the rapid rise in thermal power generation in 1970-71, 1980-81, 1990-91 and greater rise in hydro electric power production since 2000-01. Government of India has promised “power to all” by 2012. They are using different strategies to achieve this mission. These are power generation, transmission, distribution, regulation, conservation and communication. The electricity sector in India had an installed capacity of 223.625GW as of April 2013, the world’s fifth largest captive power plants generate and additional 34.444GW per capita average annual consumption in india-96KWH in rural areas and 288KWH in urban area. India is world’s largest energy consumer after United States, china and Russia. India has the fifth largest power generation capacity in the world with an installed capacity of 152 GW as on 30th September 2009 which is about 4% of global power generation. The top 4 countries which include U S, Japan, China and Russia together consume about 49% of the total power generated globally. In the year 2004-05 power sector in India has shown decreasing trend of electricity consumption whereas irrigation has shown increasing trend which is considered as a positive sign for our agriculture. The state of Uttar Pradesh is largest in India and having population more than 160 million according to census 2001. It is one of the largest software exporting state in India. It has satellite towns like Noida, Ghaziabad, Greater Noida etc that are emerging as new industrial hubs therefore there is growing demand for infrastructure facilities like power, transport, health, education, road, shopping malls, multiplexes, etc. The power situation in the state of Uttar Pradesh is that of deficit, i.e., demand exceeds the supply and generation of power. The government of India through electricity act 2003 is implementing a ‘power for all’ plan, under which 1, 00,000MW of new installed generating capacity is to be added by the year 2012.

Problems in the case As it is clearly revealed in the case that before the year 2012, the power situation in the state of Uttar Pradesh was in the deficit i.e. demand exceeds the supply and generation of power. The Uttar Pradesh is the Indian‘s largest state as well as growing industrial hub of India were many local and multinational companies are operating the business. If UP were to be a country, it would be the 7th largest country in the world. So the need of electricity Power For All Reality Or Myth

Managerial Economic

in state like UP is growing day by day as because of arrival of new as well as operation of existing industries. The UP had a power generation capacity of 4000MW against the demand of 6500MW of power. Recognising the demand-supply gap at the national level, the government of India through electricity Act 2003 had implemented a “power for all” plan under which 100000 Mw of new installed generating capacity was to be added by the year 2012. Even with the present electrification levels, the additional capacity requirement for supplying continuous power in the state was 1300MW. For universal access the capacity requirement in the state was over than 14200 MW, if UP were to attain the national per capita consumption. Compared to this requirement, the availability in 2009 was just 8650 MW as per the estimates of year 2012, if all the projects fructify. Later on the situation was further exacerbated due to the state reorganisation in 2000. Prior to this U.P’s hydel capacity was 1497MW and thermal capacity was 3909MW. After the reorganisation, U.P retained only 516MW of low cost hydel power while the balance hydel capacity had been allocated to Uttaranchal. The cost due to the unavailability of the cheap hydel power which had since gone to Uttaranchal was Rs 400 crore. It can also be revealed from the case that U.P’s ability to supply power to its customers was limited by the financial capacity of the state power utility to purchase power under the export group recommendation that mandates regular payment of current dues. There was a vicious cycle of poor recovery that leads to inability of UPPCL to purchase power and attract investments leading to the poor quality of supplying power even to the remunerative consumers which results that these consumers move away from the grid.

Power For All Reality Or Myth

Managerial Economic

Current scenario The electricity sector in India had an installed capacity of 223.625 GW as of April 2013, the world’s fifth largest. Captive power plants generate an additional 34.444 GW per capita average annual consumption in India-96KWh in rural areas and 288 KWH in urban area. India will be the world’s fourth largest energy consumer after United States, china and Russia. The International Energy Agency estimates India will add between 600 GW to 1200 GW of additional new power generation capacity before 2050. India's electricity sector is amongst the world's most active players in renewable energy utilization, especially wind energy. Its per capita energy consumption is very low. To achieve economic growth, we have to use more and more energy to increase the pace of development. The need for electricity has been growing rapidly in recent years as a result of economic activities, weather, and population growth. Though technological advances allow the storage of electricity, it is still not viable to store electricity in large quantities. Therefore, electricity must be generated at the moment that it is demanded. Additionally, the electricity demand varies significantly over time on an hourly, daily, as well as seasonal basis. Power system often encounters unexpectedly high demand levels due to various reasons, such as extreme weather conditions. The power system operator needs to continuously balance the supply and the demand for reliable power delivery across the transmission grid. A wide range of Demand Side Management (DSM) programs have been proposed by Utilities to modify electricity demand profiles. Power plants are necessary for the increasing demand of power/ electricity but operations of these plants have changed air and water quality. The electricity sector in India had an installed capacity of 232.164 GW as on 2013, and non-renewable power plants constitute 87.55% of the installed capacity, and renewable power plants constitute the remaining 12.45% of total installed capacity. India generated 855 BU (855 000 MU i.e. 855 TWh) [3] electricity during 2011–12 fiscal. In terms of fuel, coal-fired plants account for 57% of India's installed

Power For All Reality Or Myth

Managerial Economic

electricity capacity, compared to South Africa's 92%; China's 77%; and Australia's 76%. After coal, renewable hydropower accounts for 19%, renewable energy for 12% and natural gas for about 9% [4-5]. Total per capita consumption of power in India is 778 kWh. Uttar Pradesh (India) has large number of thermal power plants. Lack of clean and reliable energy sources such as electricity is, in part, causing about 80 crore (800 million) people in India to continue using traditional biomass energy sources – namely fuel wood, agricultural waste and livestock dung – for cooking and other domestic needs. Traditional fuel combustion is the primary source of indoor air pollution in India, causes between 300,000 to 400,000 deaths per year and other chronic health issues. India’s coal-fired, oil-fired and natural gas-fired thermal power plants are inefficient and offer significant potential for greenhouse gas (CO2) emission reduction through better technology. Compared to the average emissions from coal-fired, oil-fired and natural gas-fired thermal power plants in European Union (EU-27) countries, India’s thermal power plants emit 50% to 120% more CO2 per kWh produced. During the year 2012, UP power corporation limited has set up certain objectives for which they are currently working. However some of the objectives set up by the organisation are already fulfilled yet there are some other objectives also upon which the organisation is continuously working and these objectives clearly define the current scenario of the corporation. These objectives are as under:1. To acquire, establish, construct, take over, erect, lay, operate, run, manage, hire, lease, buy, sell, maintain, enlarge, alter, renovate, modernize, work and use electrical transmission lines and/or network through extra high voltage, high voltage and associated sub-stations, cables, wires, connected with transmission ancillary services, telecommunication and telemetering equipment in the State of U.P. and elsewhere. To undertake, for and on behalf of others the erection, operation, maintenance, management of extra high voltage, high voltage transmission lines and associated sub-stations, equipment, apparatus, cables and wires. 2. To execute agreements for transmission of power to distribution companies and other persons and to coordinate, aid and advise on the activities of other companies and concerns, including subsidiaries, associates and affiliates engaged

Power For All Reality Or Myth

Managerial Economic

in transmission and wheeling of electrical energy. 3.

To undertake the functioning of State Load Dispatch Centre in terms of Electricity Act, 2003.

4. To schedule and dispatch generation of all units connected to the State power system including the centrally owned generating stations, in respect of the share assigned to the State and electricity purchased from other States undertakings. 5. To study, investigate, collect information and data, review operations, plan, research, design, prepare project reports, diagnose operational difficulties and weaknesses, and advise on the remedial measures to improve and modernize existing EHV, HV lines and sub-stations. 6. To undertake planning and coordination activities of the power system and the works connected with among other Generation, Transmission, Distribution the electricity requirements in the state and NRPC region, Load-Dispatch functions and such other functions as may be assigned to the Company by law or otherwise by Government Govt./SERC/CERC On Jan 15 (UNI) The Uttar Pradesh Power Corporation Ltd (UPPCL) has stepped up its efforts to acquire proposed land for the two coal-based mega thermal power projects in Allahabad district. The two new plants proposed in the private sector will be located in Bara sub division and at Karchana. UPPCL has also underlined its plan to boost Allahabad as another alternative of power generation hub after Sonebhadra. According to UPCCL sources, proposals have been sent to the state government for the acquisition of 2,100 acres of land for the coal based 2,000 MW thermal power plants at Bara and 991 acres of land at for 1,000 MW plant at Karchana. The corporation has also sanctioned Rs 50 crore to be used to for giving compensation to the farmers for both the projects. State Environment Minister Ujjwal Ram Singh, MLA from Karchana, said efforts are on to start the acquisition process before the enforcement of the model code of conduct in view of the coming assembly polls. ''There would be no problem in the acquisition process as 90 per cent of the land is barren in nature,'' he added. UPPCL Managing Director Avaneesh Awasthi said as soon as the process of land acquisition is complete, global tenders would be floated to award both the projects to the private sector. Both the projects would be awarded on tariff-based bidding process, just like it was done for the 1,000 MW Anpara C project. The Anpara C contract was won by Hyderabad-based Lanco Kundapalli, outbidding the Reliance Energy Ltd. ''Coal linkage for both the

Power For All Reality Or Myth

Managerial Economic

projects will not be a problem as the Union coal ministry has given a firm commitment to UP, and the process is likely to be completed soon after the award of the project to the private bidder,'' said Mr Awasthi. He added that for getting the status of mega power project, 75 per cent of the power generation would go to UP while rest will go to other states. ''UP government would try its best to get the project commissioned by the end of 11th five year plan in 2012,'' he added. The UP government encouraged by the success in awarding the contract for the 1,000 MW Anpara C thermal power project to the private sector, in October 2006, had initiated the process of setting up two plants with 3,000 MW capacity in the private sector in Allahabad district. Owing to the nationwide outcry over the acquisition of vast agricultural land for the SEZ, barren land in Karchana and Bara are to be acquired for the

new

plants.

Besides,

both

the

sites

have

adequate

water

resources

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the

project.

Solution of problems prevalent in case Solution 1:- Since U.P has became the commercial hub from past few decades and hence more local as well as multinational companies are attracted towards it to grab the market. So the need of power in these sectors is growing but as revealed from case, government was not able meet the rapid demand of growing power which finally became the problem for the state. In simple words we can say demand for energy was more than its supply. Solution 3:- Since the demand for electricity in this state is more but supply at early stage was not satisfactory, the government was not able to provide avenues to generate electricity. Due to this the price of electricity rises in this state. Soon after the government started power for all in year 2012 due to which the state get some new projects and was able to satisfy the need to somehow. However we cannot say that prices for electricity in U.P are less but because of new initiatives, the government was able to keep the prices of electricity at its bay. Moreover

Power For All Reality Or Myth

Managerial Economic

the demand is further rising in the state, if some new projects were not developed it is obvious that prices may further rise.

Case summarization

Power For All Reality Or Myth

Managerial Economic

The government has promised power to all by 2012. The growth of power sector in India is constant. From the humble beginning of 1700 MW in 1950-51 to 118400 MW in year 200405, the development of power sector has travelled a way. There has been constant quantum rise in thermal power generation in 1970-71, 1980-81 and 1990-1991 an enormous rise in hydro electricity power production since 2000-2001. Similarly to meet the demands of growing electricity in state of U.P the government has started working on next projects

Conclusion

Power For All Reality Or Myth

Managerial Economic

Government of India is moving towards using the non conventional source of energy. The Indian government has strictly laws for tapping electric wires. Government has launched programmes namely: Village electrification programme: - The Central government has come up with a draft mini-grid policy which should give a big boost to them in the country. The need is to have a coordinated plan to extend the existing grid and to set up more mini-grids in remote villages. This would require not just coordination but active collaboration among the states and the Centre. Only this can turn the dream of 'power for all' into a reality. Solar energy programme: - The sun is a powerful source that can help our planet by giving us clean, reusable energy to power our world. The use of this energy is free, does not create pollution, and if used wisely can help us become less dependent on other more costly and damaging forms of power. After participating in this Web Quest I hope you are able to see the benefits of this valuable resource and help change the future for energy use. Energy conservative programme: - To make sure we have plenty of energy in the future, it's up to all of us to use energy wisely. We must all conserve energy and use it efficiently. It's also up to those who will create the new energy technologies of the future. All energy sources have an impact on the environment. Concerns about the greenhouse effect and global warming, air pollution, and energy security have led to increasing interest and more development in renewable energy sources such as solar, wind, geothermal, wave power and hydrogen. But we'll need to continue to use fossil fuels and nuclear energy until new, cleaner technologies can replace them. One of you who are reading this might be another Albert Einstein or Marie Curie and find a new source of energy. Until then, it's up to all of us. The future is ours, but we need energy to get there.

Power For All Reality Or Myth

Managerial Economic

Power For All Reality Or Myth