Powering the Power Sector

Powering the Power Sector
 
Sanjay Kaul, President of the University of Petroleum & Energy Studies (UPES) gives an overview of the power sector in India highlighting the Challenges imposed by Renewable Energy in grid operations
 
Indian power sector is booming at the moment. Last year about 53,000 MW of generation capacity was added, which took the total installed capacity to 2,07,006 MW. The adjacent chart gives the percentage installed capacity on the basis of fuel. Following are the major issues impeding the growth of Indian power sector:
 
Coal & gas shortage impacting generationDespite large capacity, full utilisation is not possible due to shortage of coal and gas. Almost 25 per cent of the total capacity remains stranded.Coal blocks were allocated to the generating companies, but they could not be developed for various issues, such as, land acquisition and environmental clearances etc. Coal India Ltd. (CIL) has now agreed to sign FSAs (Fuel Supply Agreements) with the generating companies, wherein, CIL would supply 65 per cent of the total coal from domestic production and rest 35 per cent would be imported. But, the change in international markets, such as the enactment of the new law in Indonesia, had significantly impacted the cost of imported coal upwards significantly, thus increasing generation cost. About 70-80 per cent of generation is the fuel cost.
 
Similar is the case with gas based power plants, wherein, indegeneous gas supply, especially from KG basin, has not kept pace with the requirement. Gas availability has dropped from 80 mmcd to less than 30 mmcd and power production from imported gas  / LNG is not considered a viable option as of now due to fluctuation of LNG price in the market and consumer tariff does not support the higher generation cost. Imported gas is almost twice as expensive as the domestic gas.
 
Under-recovery of tariff from the consumersTariff of most of the states being not cost reflective, the distribution companies accumulated under recovery to the tune of Rs. 1.9 lakh crore. Keeping in view the precarious condition, Government of India appointed Shunglu Committee to suggest action plan for improving the health of discoms. Following recommendations were made by the committee:

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