Energy Plan For India

ENERGY PLAN FOR INDIA:
OVERVIEW OF THE COAL AND

RENEWABLE ENERGY SECTORS
Domakonda Akhilesh Reddy
A thesis presented to the faculty of the School of Engineering

and Computing Sciences, New York Institute of Technology,
in partial fulfillment of the requirements for the degree of
Master of Science in Energy Management.
2015
1
Table of contents
Page
1.
2.
3.
4.
5.
List of Tables
List of figures
Acknowledgement
Executive summary
Introduction and Background

Energy Policy Framework
Overview of Energy Sector
Power Sector
Coal Sector
6. Renewable Energy Sector

7. Challenges
8. Conclusion
References
Bibliography
Websites
8
14
37
42
60
73
88
93
95
97
102
LIST OF TABLES
1. Statewise Estimated Reserves of Coal in India
63
LIST OF FIGURES
1. Energy Production (MTOE) comparison between 1990 and 2009
39
2. Top Countries with highest Installed 8 Power Capacity in 2012
42
3. Top ten States by installed capacity, 2012 (GW)
50
4. Fuel Consumption in Rural and Urban India (per 1000 people)
83
ACKNOWLEDGEMENT
I would like to take this opportunity to thank professor Robert N.

Amundsen, my thesis advisor for having provided me with the wonderful
and useful advices during my thesis work. Thank you for guiding us.
I would also like to thank my friends who were very supportive in
providing me with useful data and information.
I would like express my deepest sense of gratitude for the people
who have guided me and constantly been with me throughout thesis work.
Without their guidance, I could not have accomplished all that has been
presented here after.
I highly appreciate all the help and support provided by these people,
thank you so much.
Executive Summary
Many policy reforms over the past 20 years have transformed
Indias Energy sector from a primarily government-owned system towards
one based on market principles, offering equal chances to both private
sector as well as public sector. Political complications, however, blocked
the complete liberalization of Indias Power sector. In this sense, the huge
blackouts that occurred in Northern India in July, 2012 could be seen as a
result of incomplete market examination.
The aim of providing energy access to the entire population led to
well-arranged policies made to protect the poor, but resulted in an
arrangement of untargeted producer and consumer subsidies that hindered
a more proper usage of a well-functioning and financially sound energy
sector. In combination with industrial policy that aims to protect the
manufacturing industry through import, India now finds itself being
captive halfway along the changeover towards a well performing energy
sector.
Indias power sector is unable to deliver a secure and proper supply
of energy in-between growing demand and fuel imports. In addition to a
rising subsidy level and systematic failure to ensure proper revenue
collection along the value chain. Lack of adequate funds to make timely
and sufficient investments leads to fear that India is heading towards
energy crises.
More dependency on imports is making India vulnerable to more

geopolitical risks, changing world market prices and severe international
competition. India should check its current energy policies in support of a
comprehensive and clear-cut policy that encourages economic and social
development through reliable energy supplies. There are six challenges
that needs to be checked to support a well-functioning and financiallysound energy market in India, and they are:
The financial power of Indias power sector should be improved: Energy

companies needs to be economically strong, with access to sufficient
financial resources. Their administrative independence from central or
state ministries is necessary for timely investment. Administration must be
able to freely operate based on sound market analysis and economic
discussions. These companies should allow to cling to the latest energy
technology and improve their administrative expertise.
Pricing system in the power sector must ensure market situation: Present
price setting mechanism, which in reality is determined by the
government, should be changed. Energy managers should be authorized to
work independently without political impact. Price mechanism needs to
give back a realistic favorable costs, or else India's power sector will
continue to operate inefficiently, burdened by the recurring fiscal and
supply side problems.
India needs heavy investment to meets its growing energy demand and
provide access to all citizens: Investment in the energy sector should focus
on adopting the latest, green growth energy technology for India's
6
sustainable energy future. Making the necessary schemes, which may also
include moving away from import substitution policy, will help in
attracting
much
needed
financial
investment
and
to
compete
internationally for investment.

Growth in effective exercise of energy policies is needed by the
improvement of bureaucratic and managerial processes to ensure in time
completion of energy projects. Moreover, coordination between central
and state governments should be improved.
Strong and consistent energy policy is important to design and direct
India's energy sector and assure investment. India's main policy goal to
provide energy at affordable price to the poor should be followed
separately by governments supportive programs, which should not hinder
the financial decisions and administrative practice of energy companies.
Strong political will is necessary successfully cope with energy sector
challenges: India should finish their unfinished energy reforms based on
market principles.
Chapter 1
Introduction and Background

A very quickly increasing demand for energy and growing concern
about economic and environmental consequences call for effective and
thorough energy administration. To apprehend the working of the energy
policy structure administrating Indias energy sector, it is important to
understand the policy objectives and reference in which they are placed.
There are three main energy policy objectives which are pursued by the
Indian government and they are:
Access to energy is the prime goal in Indias energy policy making, as
nearly 1/4th of the population lacks access to electricity.
Energy safety is compelled by increasing dependence on imported fuels,
which is important to meet the Indias huge energy demand.
India is working hard to the mitigation of the climate change, even though
removing energy poverty and assuring economic and social development
remains a top priority.
Fulfilling the above mentioned objectives is not an easy task to
accomplish, as they can conflict against each other.
A strong and sustainable energy sector in India is crucial to
continue the activity of Indian economy. This is also important to the
prosperity of the global economy.
1.1
Country Background
India has the worlds second largest population of 1.27 billion in

2015 (Current Census)1 and worlds seventh largest landmass. The Indian
subcontinent is located in Southern Asia, bordering the Arabian Sea and
Bay of Bengal. It is ethnically and religiously diverse society with 23
official languages, while English is the secondary official language. India
has accomplished fast and remarkable economic development in the past 2
decades and became tenth largest economy in 2011. With its relatively
young population with an average age of 26 years, India is expected to
take over China in terms of population by 2025. Hence, India is arising as
one of the most active economic powers of the world. Yet there are some
conflicts and complications that are assumed as considerable challenges
that we need to overcome like: A democratic political system co-existing
with an economy with traces of socialism and a widening gap between
urban and rural areas as well as among states.
1.2
Political System
India is a federal democratic country based on a parliamentary
system. The president is the head of the state and the prime minister is the
head of the government. India has a dual parliamentary system: The
council of states, or Rajya Sabha, with members chosen by state ministers
_______________
1. http://www.indiaonlinepages.com/population/india-current-population.html
and regional assemblies; and, the House of People, or Lok Sabha, with
members elected by popular vote. The President is the supreme
9
commander of the armed forces and has the power to appoint the prime
minister and the council of ministers based on advice of the prime
minister. Day-to-day policy making is undertaken by the prime minister
who allocates positions within the cabinet. The election cycle for
parliament is five years.
The most important thing to appear in the last decade in India's
politics is the switch from a one-party dominated government to a multiparty coalition system. Since Independence in 1947, The Indian National
Congress party portrayed a commanding role in politics until it was beaten
by the Bhartiya Janata Party (BJP) in 1999, a milestone in Indian politics.
Since 1999, no party has been strong enough to form a majority in Lok
Sabha on its own. Therefore, Congress and BJP have played major roles at
the national level by forming and leading their own coalition. The
Congress party leading the United Progressive Alliance (UPA); and, BJP
leading the National Democratic Alliance (NDA), and the majority in the
Parliament at the moment. IN 2014 assembly elections, when BJP-led
NDA won the elections, the coalition government was consisting of 22
parties, while UPA consisted of only 11 parties. These small parties have
come out as an important part of India's political outlook, but are highly
divided with geographical, ethnic or on caste basis. They also aim to focus
10
on regional and biased issues rather than national issues . Still, state-based
parties usually have large influence on national level politics beyond their
states.
As a federal union of states, India consists of 28 states and seven

union territories. The central government, is formed with executive,
legislature and judiciary branches. The states form their own executive
body under the Chief Minister and legislative assembly and courts. The
union territories are governed by an administrator appointed by the
president and are under greater control by the central government. Indian
constitution divides the responsible areas between central and state
government. Areas
for
which
the
constitution
assigned
shared
responsibilities are called concurrent list. As both state and central

agencies are vested with the power over the same subject, this provides the
possible cause for conflict. In case there is a conflict on a concurrent
subject of national importance, the central law prevails over the state laws.
1.3
Economic Development:
With nominal Gross Domestic Product (GDP) of USD 2,047.8
_______________________________________________________
2. The Economist newspaper, "Election trends in India: the general election has highlighted new
trends in politics in India", Published on May 11, 2009, web page accessed on Feb 12, 2015
http://www.economist.com/node/13639070
3. Bertrand Lefebvre and Cyril Robin, "Pre-electoral Coalitions, Party System and Electoral
Geography: A decade of General Elections of India (1999-2009)", E-book accessed on Feb 13,
2015 http://samaj.revues.org/2795
11
billion, India is the 10th largest economy in the world in 20144. In terms of
Purchasing Power Parity (PPP), India is ranked third after The United
States of America and China with PPP of USD 7,277.3 billion 5. However,
India's nominal per-capita income of USD 4,077 remained much lower
than other large economies.
The Indian economy is changing towards a free market economy,
although with the footprint of a socialist economic model. Motivated by
Soviet Union, after independence Indian policy makers introduced many
democratic aspects into the Indian economy, including central planning,
large public sectors, an import substitution way and strict government
orders, which led to high incompetence in the economy. Indian economic
growth stood still around 3.5 to 4% per year until major economic reforms
began in 19916. The economy has elevated at an moderate proportion of
approximately 7% since 2000. In between, the international economic
collapse in 2008, the Indian economy rapidly bounced back and increased
over 9% between 2009 to 2010.
In an array of economic reforms carried out, during the whole of
the 1990s and 2000s, the most important is the industrial reform, or often
_____________________________________________________
4. http://knoema.com/nwnfkne/world-gdp-ranking-2015-data-and-charts.
5. http://www.statista.com/statistics/263776/gross-domestic-product-gdp-per-capita-in-india/
6. Montek Singh Ahluwalia, "Economic Reforms for nineties", First lecture speech given at
University of Rajasthan, India in 1995, Web page accessed on Feb 13, 2015
http://planningcommission.gov.in/aboutus/speech/spemsa/msa033.pdf
12
called New Economic Policy, created in 1991. During India's balance of

payment emergency and following interference of International Monetary
Fund (IMF), the Indian government released a statement on Industrial
policy, which led to: the elimination of the industrial accreditation for all
industries; the sanction of Foreign Direct Investment (FDI) up to 51%
foreign equity in high priority industries; automatic consent for technology
agreements related to high priority industries; reform and dispossession of
public sector companies, and the modification of India's anti-competitive
law - Monopolies and Restrictive Trade Practices Act 7. Thereupon, all
through the 1990s, privatization and removal of major state-owned
industries, including telecommunication and airlines were started as well
as the liberalization of trade under the World Trade Organization (WTO).
Export of Indian products and services was encouraged and Special
Economic Zones (SEZ's) policy was announced in 2000 and implemented
in 2005 to draw attention of attention of larger foreign investment to India.
Hence, India's export value increased from USD 18 billion in 1990 to
8
USD 238 Billion in Jan, 2015 .
_________________________________________________________
7. Ministry of Industry (MOI), Government of India, "Statement on Industrial Policy", Published
on 07-24-1991, New Delhi, India, Web page accessed on Feb 13, 2015
http://dipp.nic.in/English/Policies/Industrial_policy_statement.pdf
8. http://www.tradingeconomics.com/india/exports
13
Chapter 2
Energy Policy Framework
The Indian Government plays an important role in the energy
sector through state-owned companies, public policy and market
governance. To hold the network dynamics in India's energy policy
framework, understanding not only the individual role of each ministry
and government agency but also their communication and coordination
with other energy based entities is essential. In addition, some of the main
ideas and themes that drive energy policy discussion in India should be
taken into consideration.
2.1
Policy Objectives
There are three major energy policies that India follows and they
are: energy access, energy security and mitigation of climate change. All
of the three objectives are closely related to each other, but sometimes
clash with one other and are derived from the reality of India. Hence, it is
challenging for India to maintain a balanced approach in chasing of all
three above mentioned policy objectives.
2.1.1 Energy Access:

Approximately one-quarter of the population of India lacks access
to electricity. It is substantial to comprehend this distinctiveness of India's
energy situation where most of the potential energy demand still remains
14
unmet, unlike most developed countries where energy demand has reached
or close to saturation stage. Indian government realized that economic
development is slowing down as a result of energy poverty. So, providing
energy access to its entire population has been an elite preference of
Indian code makers for a long time, making it even more critical than
energy security.
2.1.2 Energy Security

Energy Security takes a pivotal seat in government policy making.
The importance of energy policy until the 1990s was on power deficit and
unfulfilled energy needs. Nevertheless, rising reliability on imported
energy sources, developed, better government attention to the subject.
Energy Security is defined as,
" We are energy secure when we can supply lifeline energy to
all our citizens irrespective of their ability to pay for it as well as meet
their effective demand for safe and convenient energy to satisfy their
various needs at competitive prices, at all times and with a prescribed
confidence level considering shocks and disruptions that can be
reasonably expected"
____________________________________________________________
9. Planning Commission, Government of India, "Integrated Energy Policy, Report of The Expert
Committee" Published on 08-09-2006, New Delhi, India, Web page accessed on Feb 16, 2015,
http://planningcommission.nic.in/reports/genrep/rep_intengy.pdf
15
From this definition, India's attention for energy security is threefold:

Firstly, India insists that energy is a help to all citizens, which should be
sliced into its energy security game plan. Secondly, India is apprehensive
about precipitous escalation in global energy prices as they erode the
availability of energy to its people and infuriate the national financial
burden. Thirdly, there is a concern about likely abrupt supply disruption.
2.1.3 Climate Change

There is a well-approved acknowledgement of the effects of
climate change among Indian policy makers and the general public, even
though the preference is given to economic and social development. India
is an endorser to the United Nations Framework Convention on Climate
Change (UNFCC), but is not bound to hold its carbon emissions as an
Annex II countries. Concerning about the foreign efforts to create an
internationally-confining administration to curb carbon emissions, India
finds it unacceptable, declaring that major discharge were produced by
developed countries and that India needs economic development and
industrialization. India's per-capita emissions are only one-third of the
world median and 14% of per-capita emissions of OECD member
countries.
2.2
Policy Concepts
This section analyzes policy concepts, which are essential to
understand the inspiration and actions stirring certain energy policy

16
objectives. They are implanted in certain Indian historical and cultural

traditions. First in the ranks, are the ideas of Indias first Prime Minister,
Jawahar Lal Nehru, who was the key planner of Indias political and
economic format. His dream for pan-Asian agreement and the nonalligned movement in 1950s and 1960s was based on important
assumptions, including non-interference in internal affairs and equality
and mutual benefits. He was also dedicated to advocate self-dependence
10
and chose import substitution as an economic strategy.
2.2.1 Self Sufficiency

Self Sufficiency or energy independence is a common motif in the
11
energy policy dialogue in India . This is a valuable approach in

understanding Indias path to energy security. Although, India has chosen
a game plan for supply or fuel variety to improve energy security, it has
established a stronger importance on maximum usage of domestic sources,
including hydrocarbon, thorium and renewables. In 2007, former President
Mr. APJ Abdul Kalam disclosed an ambitious plan to realize energy
____________________________________________________________
10. Jose Matthew, "Development Policies of India With Special Reference to New Economic
Policy, Published on 02-26-2003, Mahatma Gandhi University, Kerala, India. Concerned
Reference on Page 204-205, Web Page accessed on 17 Feb, 2015. http://www.mgutheses.in/page/?
q=T%200883&search=policy+planning&page=1&rad=all#218
11. Tanvi Madan, "The Brookings Foreign Policy Studies Energy Security Series: India" Published
in November, 2006, Brookings Institute, Washington, DC. Concerned Reference on Page 17. Web
page
accessed
on
Feb
17,
2015.
http://www.brookings.edu/~/media/research/files/reports/2006/11/india/2006india.pdf
17
independence based on hydro, nuclear and renewable energy, stating that

We
need
to
independence.
graduate
from
energy
security
to
energy
12
Still, the quest for self-sufficiency led to Indias ongoing over-dependence

on state owned businesses in the energy sector, which was recognized by
the Indian government.
2.2.2 Non-Interference
Jawaharlal
Nehrus
belief
of
non-interference
possess
considerable influence on Indias policy making. As displayed by Indias

non-participation in the Non-Proliferation Treaty to its hesitancy to
support US sanctions on Iran, non-interference by outsiders and the
protection of Indian sovereignty are fundamental features of Indian
domestic and foreign policy.
____________________________________________________________
12. The Financial Express Newspaper, "It's About Time Gained Energy Independence: President
Kalam " Published on 06-24-2007, New Delhi, India. E-paper accessed on Feb 20, 2015.
http://archive.financialexpress.com/news/its-about-time-india-gained-energy-independencepresident-kalam/202479
18
2.2.3 Inclusive Development

The concept of inclusive development can be broadly defined asGrowth
13
coupled with equal opportunities . Also called inclusive growth,

inclusive development came into sight frequently in recent policy
documents and policy discourse, which is derivable to the expanding
income equality in the country notwithstanding economic development.
2.3 Policy for Energy Efficiency and Demand Side

Management
The significance of energy efficiency and Demand Side
Management has apparently appeared from the different supply scheme
and is emphasized by the increasing oil prices. Efficiency can be raised in
energy extraction, energy conversion, and energy transportation as well as
in energy consumption. Moreover, the same level of assistance can be
given by substitute means needing less energy. The dominant areas where
efficiency in energy use can make an important effect are mining,
electricity generation, electricity transmission, electricity distribution,
pumping water, industrial production, transport equipment, mass transport,
building design, construction, HVAC, lighting and household appliances.
It may be acclaimed that a unit of energy saved by a user is greater than a
____________________________________________________________
13. Ganesh Rauniyar and Ravi Kanbur, "Inclusive Growth and Inclusive Development: A Review
and Synthesis of Asian Development Bank Literature" Published in December, 2009 by Asian
Development Bank, manila, Philippines. Concerned Reference on Page 3. Web page accessed on
Feb
20,
2015.
http://www.adb.org/sites/default/files/evaluation-document/35885/files/op8inclusive-growth-development.pdf
19
unit produced, as it saves on production losses, transport, and transmission

and distribution losses. Thus a Negawatt (a negative Megawatt),
produced by reduced energy need saves more than a Megawatt generated.
In 1990s several studies have supposed the promising and cost
effectiveness of energy efficiency and Demand Side Management in India.
In spite of these promising studies, the real implementation has been slow.
The 8th Five Year Plan made an arrangement of INR 1,000 crores for
energy efficiency to contribute addressed energy savings of 5,000 MW and
6 million tons in the electricity and petroleum sectors respectively.
However, this money was not surely spent for this purpose. A review of
8th five year plan performance does not evaluate actual costs and savings
achieved. The 9th Five year plan proposed the passing of the Energy
Conservation Act and establishing the Bureau of Energy Efficiency.
The 10th Five Year Plan introduces criterion of the hydrocarbon
sector against the rest in the world. It also standardizes demand side
management specifically in the transport sector. The target for energy
savings in the 10th year plan was 95,000 million units (Source: Site of
Planning Commission of India).
To save Petroleum products Petroleum Conservation Research
Association (PCRA) was established by Ministry of Petroleum and
Natural Gas in 1978. The Bureau of Energy Efficiency (BEE) was
established under the Energy Conservation Act, 2001 with effect from 1 st
March, 2002 under the Ministry of Power (MOP). The aim of BEE is to
20
make policies and strategies on self-organizing and market principles

within the overall foundation of the Energy Conservation Act with basic
aim of reducing energy intensity of the Indian economy.
To promote energy efficiency and conservation we need to build a
suitable set of incentives through pricing and other policy measures.
Obstruction to approval of efficient technologies have to be removed.
Encouragement to development and redistribution of more efficient
technologies has to be provided.
Following are some of the policy initiatives which can give quick
returns, like:
Increasing the efficiency of Coal Based Power Plants: Require National
Thermal Power Corporation Limited (NTPC) to obtain technology to
augment the fuel conversion efficiency of the current population of
thermal power stations from an average 30% to 35%. No new thermal
power plant to be allowed without a certified fuel conversion efficiency of
at least 38%.
Switch freight traffic to Railways: Improve railway service to win back
the long distance freight traffic carried by trucks these days which
consumes 5 times as much diesel per net ton kilometer of freight carried.
Carrying 3000 billion tkm of freight by rail instead of trucks can save
some 50 million tons of diesel per year.
21
Boost Urban Mass Transport: Boost urban mass transport by supplying

quality services which may be partly financed by commanding congestion,
pollution and parking charges on those who use personal motor transport.
Fuel Efficient Vehicles: Promote hybrid vehicles in India, which are

internationally already commercial. Also boost vehicles to use ethanol
blended fuels.
Promote grid
interconnection
for
co-generators:
Implement
compulsory purchase of electricity at fixed prices from co-generators by

the grid to boost cogeneration.
Attempt Efficient Lighting Initiative: Applicability of efficient lighting
initiatives should be launched in towns and cities. Services should include
warranties by manufacturers, deferred payment through utility bill savings.
Making Energy Audit compulsory for all loads above 1 MW: Energy
Audit should be done frequently and should be made compulsory for
public buildings, large organizations and energy intensive industries.
2.4
12th Five Year Plan of India:

The need to increase total domestic power production in order to
reduce import dependence, combined with the obligation to move away

from fossil fuels in the longer run in view of climate change deliberation,
demands to the need for forceful attempt to increase the supply of energy
from renewable. India has been a late competitor in the field of renewable
energy, but its inception to make brisk strides in this sector with an annual
growth rate of 33% in 2010 against the global rate of 26% during the same
period. A critical limitation on the scope to which we can transform to
22
renewable is the high unit cost at present, correlated with other

conventional sources. Still, unit cost of renewable energy, notably solar
energy, are coming down and the minimal cost of conventional energy
based on fossil fuel is likely to remain high and rise. These show us that
nearly in next 7 to 8 years the unit price of these renewable energy sources
like wind and solar may come close to the unsubsidized cost of
conventional energy. Because India has a broad potential for both wind
and solar energy, the exploitation of this potential should form an
important part of our long term energy strategy.
The potential for renewable energy has been improved upward
over time. In the early 1980's, India was supposed to have renewable
energy potential of about 85 GW from commercially available sources
namely Wind: 50 GW (at 50m mast height), small hydro: 15 GW, Bioenergy: 20 GW, solar radiation sufficient to generate 50 MW/sq.km using
solar photovoltaic and solar thermal energy. These evaluation have since
been adjusted to reflect technological advancement. Initial estimates from
Centre for Wind Energy Technology (C-WET) advocates that wind energy
potential at 80m height with 2% land availability would be over 100GW.
Some of the key issues facing renewable power generations are:
Regional concentration of
renewable energy potential: Since
renewable energy is location specific and not evenly distributed, hence

there is problem on scaling up grid connected renewable power. Like,
23
wind potential is mainly limited to the wind resource rich states of Tamil
Nadu, Maharashtra, Gujarat, Karnataka, Rajasthan, Andhra Pradesh and
Madhya Pradesh. The states of Gujarat and Rajasthan have excellent solar
radiation and the other suitable places for solar power are Andhra Pradesh,
Tamil Nadu, Karnataka, Madhya Pradesh, Maharashtra and Orissa and so
on. Likewise, small hydro power potential is mainly available with the
Himalayan states and north eastern states. The infrequent nature of Solar
and Wind Power in the absence of an adequate balancing mechanism
limits the flexibility of the state grid to absorb this power.

Paucity and High Cost of removal infrastructure: Application of
fluctuating renewable energy needs a potent transmission infrastructure
from remotely locating generating plants to the load centers. Additionally,
joining geographically scattered renewable energy sources to lower the
fluctuation requires much larger, smarter and upgraded transmission
network.
Administrative Issues: Renewable energy, particularly solar, is somewhat
costlier than conventional power, thus making its acceptance by the cashstarved utilities difficult unless it is incentivized through Renewable
Purchase Obligation (RPO) and introduction of Renewable Energy
Certificate (REC).
Financial Barriers: Renewable energy technologies requires large initial
capital investments, making the leveled cost of generation higher than it is
for many conventional sources. These technologies needs to be backed up
until technology advances and market volumes generated are able to bring
the cost down at the grid level. Furthermore, high technology and projects
24
risk seen by financers for renewable projects makes approach to low cost
and long term funding difficult.
The following are some of the new initiatives in the area of
renewable energy:
National Institute for Solar Energy: The current solar energy center
would be changed into an autonomous institution for endeavoring applied
research, demonstration and development in solar energy including solar
hybrid areas.
National Bioenergy Corporation of India: National Bio Energy
Corporation of India (NBECI) will be set up to enforce bioenergy mission
including cook stove programme.

Renewable Energy Development Fund: In order to address the financing
curb for the grid connected as well as off grid applications of renewables,
it is proposed to create a Renewable Energy Development Fund. The fund
will stop the gap between the sector financing needs and the amount that
falls short of the banks responsibility to their lending to this priority sector.
National Bio-energy Mission: Biomass energy for electricity generation
has turned out to be one of the most attractive source of power which is
scalable, has the largest potential for improving energy access and which
can be linked to generating additional rural income. In view of the success
of such biomass based off grid renewable models in rural areas of Bihar, It
is proposed to launch the Biomass Mission with an objective to create a
policy framework for attracting investment and to and to aid brisk
development of commercial biomass energy market based on application
of excess-residues and development of energy plantations.
25
Renewable Power Evacuation Infrastructure: Special importance will

be placed on creating evacuation infrastructure and transmission facilities
for renewable power in a time bound manner to support the large
expansion in consumption and production of renewable power.

National Biomass Cook Stove Programme: The proposed initiative
plans to generalize access to improved biomass cooked stoves by
providing assistance in exploring a range of technology arrangements,
biomass processing and delivery models influencing public-private
partnership.
India is the second largest wind turbine manufacturer next to
China. The installed manufacturing capacity in India ranges around 6,000
MW per year, with large export potential. the manufacturing base for wind
turbines and its components has expanded to 16 manufacturers with 43
models of varying technologies and capacities. till the year 2000, most of
the machines were of 500 KW or lower capacity. Today, there are around
14 models from 5 different manufacturers of capacity 2 MW and above,
the largest capacity being 2.5 MW. Larger machines have resulted in a
steady increase in the Capacity Utilization Factor (CUF) from 10% to 12%
in 1998 to 22% to 25% in 2012. Technology is moving towards better
aerodynamic design, use of lighter blades, direct drives, permanent magnet
technology and variable speed gearless operation using advanced power
electronics. The health monitoring of wind turbines is now computer
controlled and on real time basis.
26
Improvements in wind turbine technology and its installations at

higher hub heights are working towards introduction of higher capacity
turbines. At the higher hub heights, wind potential is estimated to be
considerably higher compared to the normal wind turbines at 40 - 6meters hub heights. It is estimated that average capacity factor in USA has
shown an increase of 25% - 30% over last 10 years period.
2.5
Massive Thrust Towards 24X7 Power for

Common Man
(An e-book released by Ministry of Power, Coal and New &
Renewable Energy under the leadership of Hon'ble Prime Minister Shri

Narendra Modi Ji showing new initiatives and achievements for 20132015.)
Main Objective:
Affordable, 24X7 power to all households, industrial and commercial

establishments.
27
Adequate power to agricultural sector.

Major Initiatives and Achievements:
A grant of INR 1.1 Lakh crore given by central government for 24X7
affordable power to rural and urban India.

There was an increase of 15.8% in thermal based electricity generation in
June - November 2014 as compared to June - November 2013.

An addition of 50% capacity from June - November 2014 as compared to
June- November 2013.

0% of defect development and 100% saving the environment.
Doubling the coal production to 100 crore tons by 2020.
Generation of 100,000 MW and 60,000 MW of electricity from solar and
Wind energy respectively by 2020.

1 crore bulbs in New Delhi will be replaced with LED's within 1 year.
INR 10 Lakh Crore is to be invested in renewable energy sources.
Different states will get INR 7 Lakh Crores from coal auctions.
A grant of INR 7,700 Crore from Central Government for comprehensive
upgradation of New Delhi's power infrastructure.
Governments Major Steps towards Coal production:
Doubling India's coal production in next 5 years from 50 crore tons

presently to 100 crore tons by 2019 - 2020, by following major
investments:
1.
A grant of INR 5,000 crores from central government for new
railway rakes and expediting 3 railway lines (20 crores tons), for better
evacuation of coal.
2.
Investing in technology, equipment modernization and efficiency
measures.
3.
Tripling coal exploration in 2 years.
28
Crisis due to cancellation of 204 blocks by hon'ble Supreme Court solved

within 1 month - in future, blocks to be given to private parties, only by e-
auction to ensure full transparency.

Auctions process ensures that power prices do not go up, in fact will
mostly reduce.
Improvement of Transmission and Distribution System:
Two schemes formulated, approved and already being implemented in

record 5 months - Deen Dayal Upadhyay Gram Jyoti Yojana
(DDUGJY) for rural areas and Integrated Power Development Scheme
(IPDS) for urban areas.
Farmers to get power on a separate line.
For rural homes and small scale industries, there will be a separate line for
24X7 power.
40,000 MW of rooftop solar will be set-up in 5 years.
New lines and high capacity transformers to ensure uninterrupted power
supplies in homes.
All homes will have meters, factories and large consumers will have smart
meters in 5 years.
Burnt out transformers and low capacity substitutions will be replaced
with modern equipment.
Central Government will give INR 109,000 crores grant for all above
works to states within next 3 years.
20 year plan for fully integrated transmission network & 24X7 plan for
every state is being prepared.
Long pending transmission projects worth INR 35,000 crores cleared.
Accelerated work on green energy corridors to carry the renewable energy
generated.
INR 10,000 crores for 8 North-Eastern states for new power lines.
29
Grid Security:
Amendments to Electricity Act under approval of Parliament to tighten
grid security, to avert a 2012 like grid collapse and blackout.

"Spinning Reserve" being created for meeting peak load shortages and
grid stability. (Spinning reserve is the extra generating capacity that is
available by increasing the power output of generators that are already
connected to the power system.)

INR 8,600 crores being spent for protection system for safety and security
of the grid.
Improvement in Pricing System:
Electricity Act being amended to create competition and allow consumer
to choose supplier for lower tariffs and better consumer service.

Clamping down on power theft and local theft will lead to lower tariffs.
Increased coal based power generation will bring down tariffs.
Transparent auctions will see power tariffs come down. Moreover, Coal
generating states stand to gain atleast INR 7 Lak Crores through proceeds
from auctions and allotments of coal mines.

Supply of coal from nearest mines will reduce transportation costs by INR
6,000 crores, reducing tariffs. Already one exchange between National
Thermal Power Corporation (NTPC) and Gujarat State Government saved
INR 300 Crores for the customers.

Old and inefficient plants will be replaced by modern plants to reduce coal
consumptions and therefore lower power tariffs.
Energy Security:
30
With increased coal production, country will not be dependent on import
of thermal coal.
Huge thrust on Solar, Wind and Hydel power.
Efforts to quickly restart hydro project stuck up for a long time - like
Subhansari (Lower), Teesta etc.

Budget for renewable sector increased by 65.8% in the first half itself
1.
New scheme to install 100,000 solar pumps for farmers and
drinking water schemes being installed.
2.
Solar power plants on canals.
3.
20,000 MW solar power being setup in 25 ultra mega solar power
parks - land for 11,000 MW in 16 parks already identified.

Accelerated Depreciation (AD) given to boost wind power. (Accelerated
Depreciation refers to any one of the several methods by which a company
depreciates a fixed asset in such a way that the amount of depreciation
taken year is higher during the earlier years of an assets life.)

New renewable energy policies being announced to force solar and wind
power.
Priority for Domestic Players:
INR 100,000 crores worth orders being placed by National Thermal Power
Corporation (NTPC), Coal India Limited, Energy Efficiency Services
Limited, powergrid Corporation etc. to boost local manufacturing.

Large orders being placed on local manufacturers for domestic solar and
wind energy to make them price competitive by increasing capacity and
getting world class technology.

Defence establishments will buy 300 MW solar plants.
31
Borders and Special States:

Grant of INR 9,865 crores for upgrading and strengthening power systems
in 8 North-eastern states (Arunachal Pradesh, Sikkim, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Tripura)
Central Government is solving pending disputes and delayed projects to
tap hydro potentials such as 520 MW Teesta IV and 3,000 MW Dibang,
800 MW Tawang II projects of National Hydroelectric Power Corporation
(NHPC) etc.
Government approval and support for 1000 MW Pakal Dul Project in
Jammu and Kashmir, to be built at a cost of INR 8,112 crores.
Ultra mega solar park in Ladakh being planned.
Digital Technology in Power Sector:

E-Governance: cutting red-tape, online approvals and disbursement of
subsidies, E-Monitoring, ISO 9001-14002 initiatives etc.
Smart metering for high end users of electricity.
Smart grid mission being launched.
Most transparent E-auction of coal mines.
2.6
Key Energy Policies

In this part, underlying energy policies are discussed. Different
energy policies for each fuel sector are debated in the following chapters.
32
Integrated Energy Policy 2008: The Integrated Energy policy is the first
broad and complete energy policy by the Indian Government and manages
all energy sectors. The Prime Minister supervised the Planning
Commission "to form an expert committee to prepare an integrated energy
policy linked with sustainable development that covers all sources of
energy and addresses all aspects of energy use and supply including
energy security, access and availability, affordability and pricing, as well
as efficiency and environmental concerns."
14
The committee was setup in
2004 and the draft report was released in 2006 and the cabinet approved
____________________________________________________________
14. Planning Commission, Government of India, "Integrated Energy Policy, Report of The Expert
Committee" Published on 08-09-2006, New Delhi, India, Web page accessed on Feb 22, 2015,
the report in December 2008.

One of the major important features of the Integrated Energy
Policy is the focus on assuring the changeover to market economy where
private companies battle on a fair foothold with the public companies. It
emphasizes translucent and targeted subsidies and proper energy pricing to
send the right signal to producers and consumers.
The quantity of energy India requires to maintain high economic
growth of 8% to 9% per year over the next 25 years (until 2032) was
addressed by the Integrated Energy Policy by looking beyond the
traditional 5 year cycle to determine how India could best meet its
enormous energy demand.

Five Year Plans
33
The Indian government implements economic plans through fiveyear plans that are developed, executed and monitored by the Planning
Commission. When it comes to energy, the five-year plan has a direct
impact on energy sector development as it lays out energy demand
projections and key issues. The first five year plan was introduced in 1951.
The first 8 five year plans largely focused on growing the public sector
with huge contribution on basic and heavy industries, particularly the
power sector.
Generally, setting the GDP growth rate has been the central objective,
although official targets set in the five year plan are often not achieved.
The average annual growth rate for the 11th plan is expected to be 8.2% as
compared to the official target of 9%.
National Action Plan on Climate Change

The National Action Plan on Climate Change (NAPCC) was
adapted under the direction and counseling of the Hon'ble Prime Minister's
Council on Climate Change and was launched in 2008 to achieve a
continuous growth that together approaches economic and environmental
objectives.
15
The NAPCC built through India's awareness of the need of
inclusive and urgent initiatives to sermon climate change and

environmental issues at the national level.
34
________________________________________________________________________________
15. Press Information Bureau, Government Of India, "PM releases National Action Plan On
Climate Change" Published on 06-30-2008, New Delhi, India. Web page accessed on Feb 23, 2015.
http://pib.nic.in/newsite/erelease.aspx?relid=39899;
Chapter 3
Overview of the Energy Sector
In 2009, India had the third largest energy demand in the world
after China and the USA and just ahead of Russia. As World Energy
Outlook (WEO) 2011 shows, India's energy demand more than doubled
from 319 Million Tons of Oil Equivalent (MTOE) in 1990 to 669 MTOE
in 2009. Noticeably, India's per-capita energy consumption is still at a
much lower level than that of developed countries and even of some
developing countries. India's per capita energy consumption is 0.58
TOE/Capita, compared to the world average of 1.8, OECD (Organization
for Economic Cooperation and Development) of 4.28, China of 1.7 and
16
Africa of 0.67 in 2009 . Low per-capita energy consumption level
35
signifies that India's energy demand still has a long way to reach its
fullness.
3.1
Energy Mix
Energy mix is an overview of a country's reliance on each energy
source and indicates a good explanation to a country's energy challenges.
____________________________________________________________
16. International Energy Agency, "Key World Energy Statistics", 2014 Edition, Organization of
Economic Corporation and Development, Paris, France. Concerned reference on Chapter 3. Web
Page
accessed
on
Feb
25,
2015.
http://www.iea.org/publications/freepublications/publication/keyworld2014.pdf
since economic reforms in 1991, India has undergone through a significant

shift over its energy mix. The most eminent change in the country's energy
mix later then, was the switch from biomass to other energy sources,
mainly coal. The contraction of biomass use coexist with India's economic
development and increasing urbanization over the past 20 years. Biomass
and other wastes such as fuel wood and animal waste are widely used for
cooking and heating purpose by low income families, mostly in rural
areas.
In 2009, India's largest dominant energy source was coal, with a
share of 42%. The second largest share was biomass at 25%, decreased
from 42% in 1990. In 2009, oil showed 24% and natural gas 7%. Alternate
fuels, such as nuclear, hydro and other renewables, have a rather small
share in the total fuel mix.
36
3.2
Sectoral Energy Demand:

Sectoral energy demand demonstrates the economic design of a
country. In 1990, building sector was India's largest energy consumer,

representing 42% of India's total primary energy demand, using biomass
as the main fuel. The contribution of buildings dropped to 29% in 2009
and will further decrease to 18% in 2035. The industry sector used nearly
22% of total primary energy demand in 1990 and will remain same until
17
2035.
The energy sector has been the dominant force behind energy
demand growth in India. It's portion increased from 23% to 38% of total
primary energy demand from 1990 to 2009. This was derivable to
towering
demand
for
electricity
for
industry
uses
and
residential/commercial activities. With this trend, the proportion of power

sector will continue growing to almost 42% in 2035. The transport sector
showed 8% of energy in 1990 and will reach 14% in 2035, a small but
consequential gain, as 90% of transport energy consumption will be based
on oil.
3.3
Energy Supply
37
Household energy production in India grew from 291 million tons

of oil equivalent (Mtoe) in 2009 at a compound annual growth rate
(CAGR) of 2.9%. Biomass was the largest production source with 46% in
1990, but dropped to 33% in 2009. The highest production capacity boost
came from coal production, which increased from 104 Mtoe in 1990 to
244 Mtoe in 2009 at a CAGR of 4.6%. Coal has depicted nearly 50% of
____________________________________________________________
17. Sun-Joo Ahn and Dagmar Graczyk, "Understanding Energy Challenges in India: Policies,
Players and Issues", 2012 Edition, International Energy Agency, Paris, France. Concerned reference
on
page
24.
Web
Page
accessed
on
Feb
27,
2015.
https://www.iea.org/publications/freepublications/publication/India_study_FINAL_WEB.pdf
Fig 1: Energy Production (MTOE) comparison between 1990 and 2009
Source: IEA Publications, Understanding Energy Challenges in India, 2012
total domestic energy production. Briskly developing fuel is, natural gas,
which expanded domestic energy production to 38 Mtoe in 2009 from 10
18
Mtoe in 1990 at a CAGR of 7% .
3.4
Import Dependence
38
As the advancement in energy demand eclipsed domestic energy

production, India's dependence on imported energy aggravated. In
between, 1990 to 2009, as total energy imports increased from 34 Mtoe to
236 Mtoe, India's import dependency increased from 11% to 35%. The
biggest source of import increase was crude oil, showing 70% of the total
increase. India imported only 21 Mtoe of crude oil in 1990, but its reliance
____________________________________________________________
on
page
26.
Web
Page
accessed
on
Feb
27,
2015.
on foreign crude oil was already high at 61%. The definite portion of
imported crude oil reached 162 Mtoe or 81% of India's crude demand in
2009. India only imports LNG and not piped gas.
3.5
Carbon Emissions
India was the third largest discharger of CO2 in the world in 2009,
coming next to China and USA and slightly ahead of Russia. It's Carbon
emissions of 593 million tons CO2 or 2.8% of global emissions in 1990,
almost tripled to 1,548 million tons CO2 or 5.4% in 2009, which increased
to 2.6 billion tons in 2013. This increment is much taller than the world's
average, India's emissions between 1990 and 2009 grew by Compound
Annual Growth Rate of 5.2% against 1.7% for the world.
As per New Policies Scenario (NPS), a new policy section released
under World Energy Outlook (WEO) 2011, India's carbon emissions rises
to 3.5 billion tons of CO2 in 2035 at a Compound Annual Growth Rate of
3.2%, accountable for 8% of global emissions of 43 billion tons of CO 2.
39
Discharge from coal combustion would be 2.2 billion tons of CO 2 or 63%

of India's total emissions.
Chapter 4
Power Sector
In India, electricity is still not accessible to the entire population,
almost 25% or 2.7 billion Indians lack approach to electricity. As such,
The power sector has been at the mean point of India's energy policy. The
growth of the power sector is closely fixed with India's energy policy
objectives of universal energy access and energy security. India had
already built the world's fourth largest installed capacity for power
generation as of 2013 and almost quadrupled electricity generation from
289 terawatt hour (TWh) to 1102.9 TWh (total annual generation of
electricity, including renewables and captive power plants.)
19
40
Still, its per capita electricity consumption remains hardly at one fifth of
world average and 7% of OECD countries level, showing definitely the
steep degree of challenges faced by the Indian government in developing
this important sector.
Moreover, the power sector is a conclusive factor in the development of
India's energy sector. In 2009, the power sector depicted 38% of TPED,
____________________________________________________________
19. http://www.tsp-data-portal.org/TOP-20-Capacity#tspQvChart
Fig 2: Top Countries with highest Installed 8 Power
Capacity in 2012 (GW)
41
Source: http://www.tsp-data-portal.org/TOP-20-Capacity#tspQvChart
this contribution is expected to increase to 47% in 2035 (WEO, 2011). For

the above reason, this section begins with the power sector before looking
at the other fuel sectors. It studies the advancing efforts of the Indian
42
government over the past 20 years to make the power sector more
aggressive and open. Still, central and state governments, makes a
compelling clout on this sector.
4.1
Policy Framework
India's power sector had been a hulking system that was firmly
controlled and ruled by vertically-unified state utilities until economic

reforms began in 1991. The State Electricity Boards (SEBs) regulated the
entire electricity supply chain from generation, transmission to distribution
within a given state. Nevertheless, a wry tariff arrangement and high
transmission and commercial losses resulted in near bankruptcy of the
SEBs and lacking and capricious electricity supply.
4.1.1 Key Policies

In the 1990s, a series of power sector reforms made the sector
more open and competing through free trade and backing of private
investment. In 1991, independent investment was granted for power
generation and distribution, while transmission remained closed for
private presence until 1998. The Mega Power Policy 1995 was brought in
to speed up the venture in power generation by giving plants with above
1,000 MW capacity additional incentives. The Power Trading Company
was formed to act as an mediator between the private mega power plants
and the SEBs.
20
The Electricity Regulatory Commission Act 1998
comprise of the Central Electricity Regulatory Commission (CERC) and

43
embolden the states to build their own State Electricity Regulatory

Commission (SERCs) to manage and justify tariffs. The significant policy
efforts in the power sector during the 1990s, still, had limited
accomplishments.
4.1.2 Electricity Act 2003

This act constituted a combined policy framework for generation,
transmission and distribution, trading and consumption of electricity based
on market based mechanism.
21
There were 5 main features of the act:
It embolden more competition in the sector by unbinding SEBs into
generation, transmission and distribution services.

Thermal generation and captive generation were de-authorised.
Impartial open approach in transmission was allowed to all generators to
assure fairness.
____________________________________________________________
20. Ministry of Power, Government Of India, "Policy For Setting Up Of Mega Power Projects In
Pvt Sector", Published on 11-10-1995, New Delhi, India. Web page accessed on March 2, 2015,
http://powermin.nic.in/Policy-Setting-Mega-Power-Projects-Pvt-Sector.
21. Ministry of Law and Justice, Government Of India (Via The Gazette of India), " The Electricity
Act 2003", Published on 06-02-2003, New Delhi, India. The Concerned Reference in on Page 2
under the topic "Definitions". Web Page accessed on March 3, 2015, http://aptel.gov.in/pdf/The
%20Electricity%20Act_2003.pdf
Compulsory metering, harsh punishment of electricity theft and multi-year
tariffs were introduced to curb financial losses of SEBs.

The act included an acquisition agreement of renewable based electricity.
The act also authorized the development of two key policies. The
National Electricity Policy 2005, which provided precise initiatives and
44
programmes
to carry out the directives of the electricity act 2003.
22
It
focused on issues including rural electrification, recovery of cost of

services and targeted subsidies and energy conservation. The National
Tariff Policy 2006, aimed to bolster the financial activity of the sector and
to attract investments. It guaranteed a 16% rate of return on investment
from 2001 to 2004 and 14% return for 2004 onwards.23
4.1.3 Ultra Mega Power Projects (UMPP) 2005

Started in 2005 to expedite power capacity growth, UMPPs are
coal-based power plant projects with over 4000 MW capacity using
supercritical technology and awarded through competitive tariff based
____________________________________________________________
22. Ministry Of Power, Government of India (Via The Gazette of India), "National Electricity
Policy", Published on 02-12-2005, New Delhi, India. Web Page accessed on March 4, 2015,
http://www.gseb.com/guvnl/PDFFiles%5CNational_Electricity_Policy.pdf
23. Central Electricity Regulation Commission, Government of India, "Terms and Conditions for
Tariff for 2009-2014", Published on 01-19-2009, New Delhi, India. Web page accessed on March 4,
2015,
http://cercind.gov.in/Regulations/Terms-and-Conditions-of-Tariff-Regulations_20092014.pdf
bidding.
24
These are inter-state power projects using either domestic coal
from committed captive blocks, or foreign coal for coastal projects.

ASpecial Purpose Vehicle (SPV) is build and appointed for each UMPPs.
The SPV is in command of achieving the essential activities including
45
procurement of land, acquiring coal blocks, getting environment, forest

and water approvals and arranging the sale of power contract.
The first UMPP by TATA Power in Mundra, Gujarat, was
felicitated in 2007
25
leading to the authorizing of the first 800 MW sized
supercritical unit in March 2012.
26
However, it faced huge complications
due to a surprising and retroactive price hike of imported coal from

Indonesia and its failure to hike the tariff.
4.1.4 Rural Electrification Policy 2006

This policy proposed to supply proper connection of electricity to
all households by 2009 (later revised to 2012) and honest power supply at
acceptable rates. The Rajiv Gandhi Grameen Vidyutikaran Yojana
________________________________________________________________________________
24. Ministry Of Power, Government of India, "Ultra Mega Power Plants", Published in 2007, New
Delhi,
India.
Web
page
accessed
on
March
5,
2015.
http://www.powermin.nic.in/whats_new/pdf/ultra%20mega%20project.pdf
25. Bhanu Bhushan and R. Krishnamoorthy, "Adoption of Tariff for Supply of Electricity from the
Mundra Ultra Mega Power Project of Coastal Gujarat Power Limited", Published in 2007, New
Delhi, India. Web page accessed on March 5, 2015. http://cercind.gov.in/03022007/No_182007.pdf
26. Business Standard Newspaper, "TATA Power Commissions Mundra UMPP's first 800 MW
Unit", Published on 03-09-2012, New Delhi, India. E-paper accessed on March 5, 2015.
http://www.business-standard.com/article/companies/tata-power-commissions-mundra-umpp-sfirst-800-mw-unit-112030900104_1.html
Year Plan proposed to electrify 1,15,000 un-electrified villages and 23.4

million BPL households by 2012. A large chunk of Indians without proper
supply of electricity fall under BPL. Bihar, Orissa, Jharkhand and Uttar
Pradesh, constitute 76% un-electrified villages. Over half of all BPL
households reside in Andhra Pradesh, Bihar, Jharkhand, Orissa and West
46
Bengal. As of end of 2011, almost 91% of targeted villages and 77% of

BPL households respectively had been electrified.
4.1.5 12th Five-Year Plan

The Twelfth Plan must push for policy reforms in several areas, the
most important of which are listed below:
Resolution of fuel supply problems related to availability of coal and gas

for the plants expected to come on stream in the twelfth plan will be
critical.
The introduction of open access must have top priority. State
Governments, SERCs and Discoms need to conform to the Electricity Act
2003 , which prohibits tariff regulation for consumers of 1 MW and above.
These consumers must be free to purchase electricity through open access
in a competitive market.
There is a need to develop additional power markets and CERC should
come out with a framework for implementation of such market. To
facilitate further development of power market, jurisdiction issues
regarding forward and future market products may be clarified in the
policy.
Spinning reserves need to be facilitated for grid stability at the regional
level to accommodate infirm renewable energy injection into the grid.

Suitable incentives for low-cost transmission, linking the renewable
energy generation sources, development of smart grid for evacuation and
transmission of renewable power and creation of spinning reserves may be
done through the National Clean Energy Fund.
47
Power procurement and allocation of must be done in line with the Tariff
Policy and the Standard Bid Documents (SBD) issued by Government of
India under Electricity Act, 2003. The National Electricity Policy, 2005
may need to be suitably amended to ensure State Governments abide by
these provisions.
Consumer Grievance Redressal Forum(CGRF) should be made a multimember set-up comprising representation from all stakeholders.
4.2
Supply
4.2.1 Installed Capacity and Generation

In 2012, total installed capacity in India was 199 GW and the
generated electricity (excluding renewable) was 876 TWh in FY
2011/12.
27
The total installed capacity for electricity generation in the
country has increased from 1,45,755 MW as on 03.31.2006 to 2,66,644

MW as on 03.31.2013, showing a CAGR of 7.84%.
28
Moreover, there has
been a growth in generating capacity of 27,391 MW over the last one year,
hence, showing a growth of 11.45%.
29
At the end of March 2013, thermal
power plants valuated for 67.16% of the total installed capacity in the
country, with an installed capacity of 1,79,072 MW. The share of nuclear
energy was only 1.79% i.e. 4.78 GW. Hydro power plants comes next
with an installed capacity of 39,491 MW, accounting for 14.81% of the
48
30
total installed capacity.
India yet had a shortage of 9.8% of electricity
supply during peak time in 2010 and 2011, as only 110 GW of demand
was met out of a peak demand of 122 GW.
4.2.2 Regional Distribution of Capacity

There is a significant intensity of regional concentration of power
generation capacity in India. Most of the installed capacity is located in
____________________________________________________________
27. Central Electricity Authority, Government of India, "Operation Performance of Generating
Stations in the Country During the year 2011-12", Published in April, 2012, New Delhi, India. Web
page accessed on March 6, 2015. http://cea.nic.in/reports/yearly/energy_generation_11_12.pdf.
28-29. Ministry of Statistics and Programme Implementation, Government Of India, "Energy
Statistics", Published in 2014, Twenty First Issue, new Delhi, India. Concerned Reference on page
12.
Web
page
accessed
on
March
6,
2015.
http://mospi.nic.in/mospi_new/upload/Energy_stats_2014.pdf
30. Ministry of Statistics and Programme Implementation, Government Of India, "Energy
13.
Web
page
accessed
on
March
6,
2015.
Fig3: Top ten States by installed capacity, 2012 (GW)
Source: Central Electricity Authority, Monthly Report- All India Installed Capacity-State wise,
2012
49
the western region, portraying 32% of total capacity, 35% of coal and 45%
of gas based capacity. Maharashtra, which is the biggest economic state in
terms of GDP and depicts 9% of the Indian population, has 26 GW or
13% of national capacity. It is followed by Gujarat, also a western state,
which represents 22 GW or 11% of India's total installed capacity.
31
The
top 10 states account for 72% of total installed capacity. In comparison,

the north-east region, residing of 7 small states with 3.8% of India's
32
population, has a united 2.4 GW or 1.2% of India's total capacity.
North
____________________________________________________________
on
page
35.
Web
Page
accessed
on
March
6,
2015.
32. Ministry of Home Affairs, Government of India, "Provisional Population Totals: Census 2011",
Published on 03-31-2011, New Delhi, India. Web Page accessed on March 10, 2015.
http://censusindia.gov.in/2011-prov-results/data_files/india/pov_popu_total_presentation_2011.pdf
Eastern Electric Power Corporation Limited was chartered to start power

generation capacity in this region, but it faced a peak shortage of 18.5% in
FY 2010/2011, highest among regions.
33
Every state has its own uncommon energy mix, mainly got from its
own resource bequest, existing infrastructure and policy initiatives. For
example, Gujarat has a comparatively large gas based installed capacity,
computing for nearly a 1/4th of India's total gas capacity. It is derivable to
Gujarat's closeness to important gas fields and LNG terminals in Hazira
and Dahej, which are India's only two working terminals. 84% of West
50
Bengal and 74% of Uttar Pradesh's installed capacity are coal-based,

bespeaking their large coal reserves, while 42% of Punjab's installed
capacity is Hydro based with its plentiful of water resources. Tamil Nadu
has a high share of renewable based installed capacity of almost 42% due
to the state governments strong initiatives on promoting renewable energy.
4.2.3 Capacity Targets and Projections

MOP's 12th Five Year Plan (FYP 2012-2017) aims to add up the
total power capacity to 76 GW. Due to downturn in domestic gas
production, nearly 1 GW of gas capacity would be added, even though the
Ministry of Power affirm that nearly 13 GW of gas capacity are under
________________________________________________________________________________
33. Central Electricity Authority, Government Of India, "Load Generation Balance Report: 201112", Published in May, 2011, New Delhi, India. web Page accessed on March 10, 2015.
http://large.stanford.edu/courses/2012/ph241/bordia1/docs/lgbr_report.pdf
construction and could be functional during the 12th Five Year Plan.
Moreover, The fuel mix for power generation would remain unaltered,
regardless of absolute progress of capacity in every fuel. Only with
significant enhancement of renewable, the coal share would decrease to
22% in 2035. Present contribution of 11% of gas based power generation
would reach 14% - 15% in 2035.
4.2.4 Operational Efficiency
51
India's total electricity generation performance remains somewhat

low as compared to other countries. 20% of operational thermal power
units are more than 25years old and another 40% are more than 15 years,
but less than 25 years old.
34
Nearly all of India's coal fired power plants
are subcritical, with an average efficiency of about 34%, compared to 37%

for subcritical plants in China and 39% for subcritical plants in USA.
35
India puts its first supercritical 660 MW power plant by National Thermal
Power Corporation (NTPC). into operation in 2011. The 12 th Five-year
Plan foresees about 40% of new coal power plants using supercritical
technology. Another prospect of India's low operational efficiency is the
________________________________________________________________________________
34. Central Electricity Authority, Government of India, "National Perspective Plan for Renovation,
Modernization and Life extension of Thermal Power Stations: Up to 2016-17 ", Published in
December, 2009, New Delhi, India. Web page accessed on March 15, 2015.
http://www.cea.nic.in/reports/renov_modern/national_plan.pdf
35. International Energy Agency, "World Energy Outlook", Published in 2011, Paris, France. Web
page
accessed
on
March
17,
2015.
https://www.iea.org/publications/freepublications/publication/WEO2011_WEB.pdf
plant load factor (PLF), which involves the utilization rate of operational
plants. The nation-wide thermal PLF slowly improved to approximately
78% in 2007 and 2008, from below 70% in 1990s. However, it decreased
in recent years to around 73% in fiscal year 2010/11 and FY 2011/12.
4.3
Transmission
India's transmission grid system has a two level structure: intra-
state and local grids are governed by state transmission utilities (STUs),
while inter-state grids are controlled by POWERGRID. India yet, demands
52
to establish a national grid through unification of its current regional grids,

which have a different level of installed capacity and fuel
mix. A well-unified national transmission grid is a key to assuring even
development among regions and optimum utilization of generation
resources, and to manage varying peak demands across regions.
36
4.3.1 Regional Power Grids:

India's power transmission system is divided into five regional
grids and they are: northern, north-eastern, eastern, southern and western
regions. Since August 2006, four regional grids have been fully
____________________________________________________________
36. Central Electricity Authority, Government of India, "Draft National Electricity Plan, Volume
II", Published on February, 2012, New Delhi, India. web Page accessed on March 17, 2015.
http://www.cea.nic.in/reports/powersystems/nep2012/transmission_12.pdf
37
integrated , with the exception of the southern grid that is to be

synchronized with these grids by 2014.
38
The transmission sector needs a better public sector role. Private

companies have two ways to spend on transmission, either as an
Independent Private Transmission Company with 100% equity ownership
or through a Joint Venture with Central Transmission Utility/State
Transmission Utility with a maximum of 74% private equity.
4.4
Distribution
53
The distribution sector in India is yet mostly regulated by state

companies and its amendment is critical for the financial growth of the
power sector. The Central Government scooped out the State Electricity
Boards in FY 2001/02, when some State Electricity Boards skipped on
disbursement to NTPC and NHPC.
4.4.1 Aggregated Transmission and Commercial (AT&C)

Losses
The economic crisis of state Distributed Companies is mainly due
to AT&C losses. The AT&C comprise not only the technological losses
____________________________________________________________
38. Central Electricity Authority, Government of India, "Draft National Electricity Plan, Volume
II", Published on February, 2012, New Delhi, India. web Page accessed on March 17, 2015.
37. Uwe Remme, Nathalie Trudeau, Dagmar Graczyk and Peter Taylor, "Technology Development
Prospects for the India Power Sector", Published in February, 2011, Paris, France. Wen Page
accessed
on
March
17,
2015.
https://www.iea.org/publications/freepublications/publication/technology_development_india.pdf
acquired
during
transmission,
but
also
income
losses
at
the
distribution/retail end due to various causes. There are mainly four types
38
of financial losses :
Fraud transpired by unlawful tapping of transmission lines or damaging of
meters.
non or under billing in which distribution companies fail to bill the
consumers the proper amount.

non-payment in which consumers who are billed, fail to make a payment.
misclassification of consumers in which consumers are mistakenly
categorized as subsidized users.
54
The nation-wide AT&C were 31% in FY 2010/11.
39
Losses are very high
compared to the most efficient countries including South Korea (4%),

Japan (5%), and other emerging economies such as Brazil (17%), China
(5%) and Indonesia (10%) in 2009. The total AT&C loss is estimated to be
40
equivalent to 1.5% of India's GDP.
____________________________________________________________
38. Planning Commission, Government of India, "Draft Report of the Expert Committee on
Integrated Energy policy", Published in December, 2005, New Delhi, India. Web page accessed on
March 20, 2015. http://planningcommission.nic.in/reports/genrep/intengpol.pdf
39. Planning Commission, Government of India, "Report of High Level Panel on Financial
Position of Distribution Utilities ", Published in 2006, New Delhi, India. Web page accessed on
March 25, 2015. http://planningcommission.nic.in/reports/genrep/hlpf/hlpf.pdf
40. Central Electricity Authority, Government of India, "Status of Distribution Sector in the
Country & Introduction to Accelerated Power Development & Reform Programme ", Published in
2010,
New
Delhi,
India.
Web
page
accessed
on
March
25,
2015.
http://www.cea.nic.in/reports/articles/god/guidelines_accelerated_power_dev_reform/status.pdf
4.5
Issues
4.5.1 Insufficient Fuel Supply

A deficiency of coal and natural gas supplies for power production
is a urgent concern in India's power sector. There are two main
explanations for deficient coal supply: leveling out of household
production because of slowing mining growth as a consequence of
obstruction such as delayed land procurement and harsh environmental
approvals; and, the discreet import of coal to account for the dearth of
domestic coal due to deficient import infrastructure and rate difference.
Mixing of imported coal also has industrial restraints due to the blending
55
of diverse qualities. The high expectation of production prospects from

India's Krishna Godavari basins has diminished since 2010 after
production peaked, but then declined nearly by half.
41
4.5.2 Pricing
The dominant affair on pricing is its failure to send a appropriate
indication to suppliers and consumers to accomplish destined behavioral
development. Moreover, present stiff pricing mechanism confines the
selection of protocol instruments for DSM. Untargeted allowance method,
____________________________________________________________
41. The Economic Times E-paper, "Reliance Industries says KG-D6 Gas Output to Drop to 22.60
mmcmd in 2013-14", Published on 02-15-2012, India. E-paper accessed on March 30, 2015.
http://articles.economictimes.indiatimes.com/2012-02-15/news/31063378_1_output-until-newwells-kg-d6-mmcmd
under which power rates are kept unnaturally small, does not reach the
necessarily reach the most needed, while it fails to send proper pricing
signals to those who can adjust consumption to price changes.
4.5.3 Infrastructure
Infrastructure here largely concerns to not only physical facilities
of transmission and distribution grids, but also essential machineries and
maintenance for power companies. Certainty of trustworthy capacity
development of infrastructure at every stage in the power industry value
chain is crucial to avoid barriers in supply.
4.5.4 Investment
56
Private investment in India's power sector is on the rise. Installed

capacity possessed by the private sector in 2012 was nearly 54 GW or
27% of India's total capacity (including renewable energy sources), which
is a considerable boost among the 12% contribution or 17 GW, by the end
of the 10th Five year plan. Almost, 43% of commercially owned capacity is
coal based, with renewable and gas based capacity representing 38% and
12% respectively. The minimal Thermal capacity expansion by the private
sector is almost 21.7 GW during the 11th Five year plan, which is the
above the target of 17.3 GW.
Still, the major issue is the provincial accumulation of private
financing in a few states. Presently, 42% of all private power plants are
located in the western region. Gujarat has 23% of private power plants,
making the private share almost 58% of its capacity. Eastern and northeastern regions, where power capacity expansions are needed, have a share
of 8% and 0.04% for eastern and north-eastern regions respectively in
terms of private ownership. Convenient incentives should be proposed to
private financers in these regions for a more fair boost of power capacity
in India.
57
Chapter 5
COAL SECTOR
Dominant source of energy in India is coal, which depicts 40% of
India's energy mix in 2009, with the installed power capacity as 236 GW
or 56% and almost 70% of produced electricity in 2012, coal is an
important mainstay of India's energy supply.
42
As of 2010, India has the
third largest hard coal reserves, after the USA and China.
43
India was also
the world's third largest coal producer and consumer in 2011 after China
58
and the USA, and is expected to become the second largest consumer by
2025, beating the USA.
44
Accompanied by power demand desperately growing, so will

demand for coal. In addition, the coal sector remains the most regulated
and possibly least competent of all energy sectors in India. Presently, two
________________________________________________________________________________
42. Ranjan Banerjee, via Cornerstone: the Official Journal of the World Coal Industry, "Coal-Based
Electricity Generation in India" Posted on 04-11-2014. Web Journal accessed on April 5, 2015.
http://cornerstonemag.net/coal-based-electricity-generation-in-india/
43. Bundesanstalt Fur Geowissenschaften und Rohstoffe, a German Federal Institute for
Geosciences and natural resources (BGR), "Annual Report: Reserves, Resources and Availability of
Energy Resources 2011", Published in February, 2012, Hannover, Germany. Concerned Reference
on
Page
25.
Web
page
accessed
on
April
6,
2015.
http://www.bgr.bund.de/EN/Themen/Energie/Downloads/annual_report_2011_en.pdf;jsessionid=92
7027DD2F3C50ED5F0418FA66FAD12D.1_cid284?__blob=publicationFile&v=2
44. British Petroleum, "BP Statistical Review of World Energy", Published in June, 2012, London,
UK. Concerned Reference on Page 33-34. Web page accessed on April 8, 2015.
http://www.bp.com/content/dam/bp/pdf/Statistical-Review2012/statistical_review_of_world_energy_2012.pdf
state-owned companies manage a near-ownership of India's coal

production, depicting a portion of 90% and leaving very less space for
private companies to compete. In addition, indigenous coal production has
been deteriorating in last few years and was neglected to attain the
production marks of the 11th plan. Because of coal supply deficiency,
India's power plants are functioning at much cut down level than its
optimum level, creating deficit in electricity generation.
5.1
Policy Framework
Coal details for over 50% of India's energy utilization and nearly
70% of indigenous coal production is devoted for power generation.

59
Because rates were deregulated, the sector has turn into cost effective,
generally, as a result of rate hikes and increased allotment of open cast
production. The sector has also reported enhancements in production, but
regardless of these improvements, the coal sector is overall feeble by
international standards. In the dearth of rivalry, absence of standard
operations and liberated control of its operations, Coal India Limited, is
perforated with superfluous manpower, opposite to international standards,
insufficient estimate formation , destitute accounting and economic
governance system etc. One of the positive news for Indian coal sector is
its flawless safety mark when compared to international experience.
5.1.1 Key Policies

India's private coal mining companies were nationalized under the
Coal Mines Act 1973, which aimed "to ensure the rational, co-ordinated
and scientific development and utilization of coal resources consistent
with the growing requirements of the country."45 Only the central
government or its local office were authorized to control and drive the coal
mines. Afterwards, Coal India Limited (CIL) was established in 1975. The
modification of the act in 1976 allowed companies in iron/steel and power
industry to supply coal from allocated mines for their final use or so called
captive consumption.46 The National Mineral Policy proposed to bolster
foreign and private investment in India's mineral sector. Eligibility for
60
captive production was extended to cement industry and coal washing,

later coal gasification and liquefaction in its amendment in 2007.47
____________________________________________________________
45. Ministry of Coal, Government of India, "The Coal Mines (Nationalization) Act, 1973",
Published on 05-30-1973, New Delhi, India. Concerned reference on page 1, Chapter 1. Web page
accessed
on
April
13,
2015.
http://www.coal.nic.in/sites/upload_files/coal/files/webform/notices/act1973.pdf
46. Captive Consumption means the consumption of goods manufactured by one division or unit
and consumed by another division or unit of the same organization or related undertaking for
manufacturing another product. In short, the product is consumed by the home company itself.
http://www.topcafirms.com/index.php/white-paper/4419-captive-consumption#.VTmOGZMvOyw
47. Prime Minister's Office Via Press Bureau of India, "Government approves captive mining for
production of gas through coal gasification and liquefaction", Published on 08-02-2007, New
Delhi, India. Web page accessed on April 15, 2015. http://www.pib.nic.in/newsite/erelease.aspx
5.1.2 Colliery Control Order 2000

As per the 1945 Colliery Control Order, the ministry of Coal and
Mines was enabled to govern the rates and dissemination of coal and
subsidies to company. Due to lack of continuous legal relations between
mining companies and buyers, the ministry required that coal producers
distribute their products to the SEBs. 48 The Colliery Control Order 2000
decontrolled rates for all coal qualities but circulation of coal was mainly
supervised by government.
5.1.3 New Coal Distribution Policy 2007
61
The New Coal Distribution Policy (NCDP) was brought in to

expedite delivery of assured batch of coal to customer of core and noncore sector at predetermined prices.49 The important factor was the
addition of a Fuel Supply Agreement (FSA) rule replacing the
interconnecting system. Under the lawful FSA, 100% of coal requisite for
power and fertilizer sector will be met by coal companies and 75% of coal
requisite for other large customers will be provided as well.
________________________________________________________________________________
48. Coal Industry Advisory Board via International Energy Agency, "Coal in the Energy Supply of
India", Published in 2002, Paris, France. Concerned Reference on page 36. Web Page accessed on
April 16, 2015. http://www.iea.org/ciab/papers/coalinindia2002.pdf
49. Ministry of Coal, Government of India via Press Information Bureau, "Government Announces
New Coal Distribution Policy", Published on 10-19-2007, New Delhi, India. Web page accessed on
April19, 2015. http://pib.nic.in/newsite/erelease.aspx?relid=32027
5.2
Supply
5.2.1 Reserves
Conforming by International data, India has the third largest hard
coal reserves in the world with about 74 Bt. In terms of total hard coal
resources, India has the world's seventh largest with 171 Bt or 1% of the
world's share. India's Lignite50 reserves are 4.8 Bt.
India's hard coal resources are supposed to be even better at 248 Bt
to a depth of 1,200 metres, of which 60% lie inside 300 m of the surface,
making them probably available by surface mining technology. Nearly,
62
38% of resources or 93 Bt is called proved coal resources. 51 It should be

noted that the "Indian classification system is primarily based on
geological
evaluations
without
accessing
quality, mineability or
extractability of deposits."52
________________________________________________________________________________
50. "Lignite is raw coal with an energy content less than 16,500 KJ/Kg, in comparison to hard coal
that has an energy content of more than 16,500 KJ/Kg." Bundesanstalt Fur Geowissenschaften und
Rohstoffe, a German Federal Institute for Geosciences and natural resources (BGR), "Annual
Report: Reserves, Resources and Availability of Energy Resources 2011", Published in February,
2012, Hannover, Germany. Concerned Reference on Page 25. Web page accessed on April 6, 2015.
http://www.bgr.bund.de/EN/Themen/Energie/Downloads/annual_report_2011_en.pdf;jsessionid=92
7027DD2F3C50ED5F0418FA66FAD12D.1_cid284?__blob=publicationFile&v=2
51. Central Mine Planning and Design Institute Limited, "United Nations Framework
Classification of Coal Resources Under CIL", Published October, 2012, New Delhi, India. Web
page
accessed
on
April
22,
2015.
http://www.unece.org/fileadmin/DAM/energy/se/pp/unfc/UNFC_ws_India_Oct2013/4t.2_Ahmad.p
df
52. Ananth P. Chikattur, "Coal Initiative Reports: A Resource and Technology Assessment of Coal
Utilization in India", Published in October, 2008, Harvard University, Cambridge, MA, USA.
Concerned
reference
on
Page
8.
Page
accessed
on
April
23,
2015.
http://www.c2es.org/docUploads/india-coal-technology.pdf
Table 1: Statewise Estimated Reserves of Coal in India as on 03-31-2012

and 03-31-2013
63
Source: Ministry of Statistics and Programme Implementation, Government of India, Energy

Statistics, 2014
64
Coal deposits are primarily limited to eastern and south-central parts of

India. The states of Jharkhand, Odisha, Chhattisgarh, West Bengal, Andhra
Pradesh, Maharashtra and Madhya Pradesh reports for more than 99% of
the total coal reserves in the country. The state of Jharkhand had the
highest percentage i.e 27% in the overall reserves of coal in the country as
of 03-31-2013 followed by state of Odisha i.e 24.7%.53 As of 03-31-2013,
the estimated reserves of coal was 298.94 Bt, an addition of 5.44 Bt over
the last year. The estimated total reserves of Lignite in 2013 was 43.22 Bt
against 41.96 Bt in 2012.54
5.3
Production
With the world's third best produced capacity in 2010, India's
indigenous coal production more than doubled from 205 Mt in 1990 to

532 Mt in 2010 and has risen in recent years. The 11 th Five Year Plan
improved coal production to 680 Mt by FY 2011/12, but afterwards it was
corrected to 629 Mt as per 11th medium-term appraisal.55 This was mainly
due to festering manufacture of coal by CIL whose production was
____________________________________________________________
53-54. Ministry of Statistics and Programme Implementation, Government Of India, "Energy
3.
Web
page
accessed
on
April
24,
2015.
55. Planning Commission, Government Of India, "Mid-Term Appraisal for Eleventh Five Year Plan
2007-2012", Published in 2010, New Delhi, India. Concerned Reference on Page 306, Chapter 15.
web
Page
accessed
on
April
24,
2015.
http://planningcommission.gov.in/plans/mta/11th_mta/chapterwise/chap15_energy.pdf
65
435 Mt in FY 2011/12 instead of the original target of 520 Mt.56

Presently, Mining in India is restricted to a depth of 300m even
though 40% of India's reserves are further down than this depth and as a
result almost 90% of CIL's coal mines are open cast. 57 Opencast mining
usually has less manufacturing cost and is less hazardous for labors. But it
creates big environmental devastation of the neighboring ecosystem, acid
mine drainage, erosion of soil and specifically deforestation of mining
area. It has been observed that underground coal mining has the possibility
of lowering the environmental damage.58 Still, India's coal industry do not
have state-of-the-art technology to delve into and produce underground
beyond 300 m at this moment.59 For example, longwell Technology, was
not seriously accepted in India because of breakdown of some of the
installations in 1989 and 1997, but Indian
__________________________________________________________________________________________
56-57. Planning Commission, Government of India, "Report of the Working Group on Coal and
Lignite for Formulation of Twelfth Five Year Plan (2012-2017)", Published on 11-24-2011, New
Delhi, India. Concerned Reference on page 40, chapter 3. Page accessed on April 24, 2015.
http://planningcommission.gov.in/aboutus/committee/wrkgrp12/wg_Coal1406.pdf
58. Planning Commission, Government of India, "Faster, Sustainable and More Inclusive Growth:
An Approach to the Twelfth Five Year Plan (2012-2017)", Published in October, 2011, New Delhi,
India. Concerned Reference on page 37, Chapter 3. Web page accessed on April 24, 2015.
http://planningcommission.gov.in/plans/planrel/12appdrft/appraoch_12plan.pdf
Integrated Energy Policy", Published in 2005, New Delhi, India. Concerned Reference on page
110,
Chapter
11.
Web
page
accessed
on
April
24,
2015.
http://planningcommission.nic.in/reports/genrep/intengpol.pdf
companies have begun to reestablish this technology in recent years.60
66
5.4
Beneficiation (Washing)
Indian coal is generally of inferior quality, with a median heating
value of about 4,500 kcal/kg, compared to over 6,000 kcal/kg for most
internationally exchanged coal and high moisture during monsoon season.
It has a huge ash capacity, usually 30% to 50%, but is little in Sulphur and
very less suitable for iron and steel making.61
Because of this nature of Indian coal, beneficiation or washing is
essential to lower the ash capacity and make coal more appropriate for
customers. The washing of coal add more dependable quality and escalates
its energy efficiency of traditional crushed coal combustion boilers by
10%. Despite its advantages, not all coal is washed in India. CEA
announced a damage of 7.7 TWh or 35% of the coal based production in
2010-11 due to poor quality or wet coal.62
____________________________________________________________
60. The Hindu Newspaper, "Coal India Reintroduces Longwall Mining at Moonidih", Published on
12-03-2008,
New
Delhi,
India.
E-paper
accessed
on
April
24,
2015.
http://www.thehindubusinessline.com/todays-paper/tp-economy/coal-india-reintroduces-long-wallmining-at-moonidih/article1642859.ece
61. International Energy Agency, "World Energy Outlook 2007: China and India Insights",
Published in 2007, Paris, France. Concerned Reference on Page 484, chapter 16. Web page
accessed on April 24, 2015. http://www.worldenergyoutlook.org/media/weowebsite/20081994/weo_2007.pdf
62. Central Electricity Authority, Government of India, "Operation Performance of Generating
Stations in the Country during the year 2010-11", Published in April, 2011, New Delhi, India.
Concerned Reference on page 12. Web page accessed on April 24, 2015.
http://www.cea.nic.in/reports/yearly/energy_generation_10_11.pdf
5.5
Consumption
67
The power sector devoured over 73% of India's coal in 2009,

which raised noticeably from a portion of 61% in 1991. The second largest
customer was the steel and iron industry, showing about 9% in 1991 and
6% in 2009. The cement customer was the third largest customer, using
6% of coal in 1991 but only 2% in 2009.
The estimated total consumption of raw coal by industry has
increased from 407.04 Mt during 2005-06 to 570.23 Mt during 2012-13
with a CAGR of 4.30%. Similarly, consumption of Lignite rose from
30.23 Mt in 2005-06 to 46.41 Mt in 2012-13, with a CAGR of 5.51%.
Consumption of Lignite is highest in electricity generation sector, which
accounts for 80.38%.63
5.6
Issues
5.6.1 Deteriorating Domestic Production

During the 11th Five Year Plan, India's coal demand raised at
CAGR of 8.5%. But, CIL's indigenous manufacturing has increased at a
________________________________________________________________________________
63. Ministry of Statistics and Programme Implementation, Government Of India, "Energy
47.
Web
page
accessed
on
April
24,
2015.
CAGR 4% during the same period.64 There are two reasons for low
production rate:
68
The stiff and sluggish method to acquire environmental and land

permission from MOEF (Ministry of Environment and forest) and
state governments acquired ample days on coal mining projects.

CIL's production was interrupted by its own mediocre productivity
because of repeated strikes and resolute incorporation.
The production deficit would persist to be a genuine issue for the
power sector. Freshly, CIL was compelled to agree on the FSAs (Fuel
Supply Agreement) with power companies for those plants to be
authorized by March, 2015. This would make CIL's total coal assurance
supply to be around 555.56 Mt, almost 250 Mt increase from the existing
FSAs.
5.6.2 Import Dependence

The explicit effect of lethargic indigenous coal production is the
abundant growth of foreign coal. India's coal imports have more than
doubled over the past 5 years, which is notable in a country where the
general image is that coal is plentiful. Increasing coal import dependence
____________________________________________________________
64. Ministry of Coal, Government of India, "Report of the Working Group on Coal & Lignite for
Formulation of Twelfth Five Year Plan (2012-17)", Published on 11-24-2011, New Delhi, India.
Concerned Reference on Page 48. Web page accessed on April 24, 2015.
http://planningcommission.gov.in/aboutus/committee/wrkgrp12/wg_Coal1406.pdf
builds various complex situations like:
Coal imports are not easy due to inadequate supporting

infrastructure.
69
Various qualities of coal allow Indian power plants to mix
imported coal with indigenous coal only upto 10% - 15%.65

The recent campaign of coal exporting countries, including
Indonesia, towards outlawing the exports of lower value coal
signifies that India's increasing coal imports reveals the country
more to extrinsic political risks and augments its situation on
energy security.
India needs a well-unified infrastructure for its coal supply chain,
which comprises of railroads, importing ports and washeries. Slow
development of railways by Indian railways, a government cartel, to
connect mines, dispatch section and end-use destinations, has already
designed a considerable obstacle in coal supply in recent years.
5.6.4 Investment
The coal sector is the lone energy sector staying in reality sealed to
private financing. Two Public Sector Undertakings, Coal India Limited
and Singareni Collieries Company Limited, exclusively have an
ownership in coal production. The only sector open for private financing is
captive production. FDI (Foreign Direct Investment) is granted only in
captive-mining related business: 100% FDI is granted in captive mining
for power projects and coal refining plants trading washed coal to raw coal
producers; FDI up to 74% is granted for other captive consumption. Still,
70
private manufacturers are denied from trading refined coal in the open
market.
The most precarious condition in the coal sector is the lack of
private financing. Once CIL and SCCL fall to attain manufacturing goals,
there is no dependable alternative source to make up the losses other than
imports. Hence, the assistance from private coal mining companies with
technological competence and background would be vital to support the
volume of investment and production, particularly for underground mining
and geographically challenging areas.
Chapter 6
Renewable Sector
71
Renewable energy is becoming more and more substantial part of

India's energy mix. With gigantic possibilities, renewable energy is no
longer seen as a non-conventional source to conventional fossil fuels, but
as a demanding aspect in quest of key policy objectives.66 It improves
India's energy security by expanding its energy mix and lowering import
reliability on fossil fuels. Solar energy, chiefly, is seen as having the
potential for India likely to achieve "energy independence in the long
run".67 Weakening climate change is also one of the reasons why India is
looking out to boost renewable energy.
Contribution of renewable energy in India's energy mix, including
biomass, hydro and renewable sources, was almost 26% in 2009, of which
biomass appraised for the largest share. India had the fifth best scope for
wind energy in the world in 2011 and in 2010 India started an determined
program to actually amplify its capacity for solar energy.
_______________________________________________________________________________
66. Ministry of New and Renewable Energy, Government of India, "Strategic Plan for New and
Renewable Energy Sector for the Period 2011-17", Published on February 2011, New Delhi, India.
Concerned
Reference
on
Page
17.
Web
Page
accessed
on
04-27-2015.
https://www.academia.edu/4267492/Strategic_plan_mnre_2011_17
Integrated Energy Policy", Published on December 2005, New Delhi, India. Concerned Reference
is
in
Summary
Page
ix.
Web
Page
accessed
on
04-27-2015.
http://planningcommission.nic.in/reports/genrep/intengpol.pdf
Even though, equipped solar capacity remains very small, but it has
encouraging possibility for growth. Private financing has been the main
reason for the development of renewable energy sources in India.
72
6.1
Policy for Renewable and Non-Conventional
Energy Sources
The probe of Indias primary energy balance shows that the
renewables account for about 33% of the primary energy consumption in
India. Out of this, the dominant contributor is conventional bio-mass that
is used for cooking followed by electricity generation from large hydro
plants. The definite share of modern renewables in Indias energy mix is
significantly lower about 2% of total.
Detrimental local and global environment impacts (like SOx, NOx,
and SPM and greenhouse gas emissions) correlated with fossil fuel use
have resulted in a heightened significance on renewables. Renewables can
be used for space heating, cooling, water pumping, cooking and for almost
any end-use which is met by fossil fuels.
As the country is short of energy resources they need to develop all
energy sources including the renewable options is predominant. Many
renewables have high initial cost. Of times, growth efforts have been subcritical and subsidy driven development did not provide incentive for
technical improvement or cost reduction.
The environmental allowance for renewables should be funded by
a cess on non-renewables and fuels causing environmental catastrophe. A
bonus on feed-in tariff may not benefit for a stand-alone plant in a remote
area. For such a plant monetary incentive may not be required. The areas
73
which do not have electricity grids, there should be minimum clearances

or permissions for setting up a Distributed Generation system. A
demanding problem for a Distributed Generation system in rural
electrification is the cost recovery and implementation mechanism.
Different administrative experiments for application of Distributed
Generation system in different areas should be tried. The Village
Panchayat (elective village council in India) supported by the state energy
agency and technical experts should decide the appropriate technology
options (like biogas, bio-mass gasification etc...) for the village.
The following specific policies to promote various
renewable energy sources are recommended:
Mini Hydro: A meticulous analysis should be done to classify potential

sites. These classified sites should be auctioned. For rural plants, the
administrators should be encouraged to supply power to meet other
requirements such as agro processing and milling.

Wind Power: For wind power, site selection is easier than hydro power
and wind power plants could be set-up on private land. So, there
may be need to sell-off only sites which are public property.

Bio-Diesel Energy Source: The production of Bio-diesel needs to be
encouraged in such a way that does not include unnecessary subsidy and
only financial production results. Bio-diesel makers also need some
guarantee from the market as well. Bio-diesel can be mixed upto 10% with
diesel without needing any change in vehicle engines. Oil companies
should be enforced to buy Bio-diesel of recommended quality at the
74
convenient price of diesel. As a renewable fuel, the production of which

also generates rural employment, Bio-diesel should not be taxed. Such
kind of 100% tax exemption is given in many countries like, Germany,
Spain, Italy and USA.

Bio Gas Plants: The genuine potential for a Bio gas is in society level
plants. To hearten private or society administrator to set these up, They
need to be provided land and finance. The vital policy required is
provision of land and finance.

Solar Thermal Power Plants: The industrial viability of solar thermal
plants have not yet been fully established. to embolden administrators to
spend in it, a higher premium of feed-in tariff may be given.
6.1.1 Electricity Act 2003

The Electricity Act 2003 gave the first broad structure for the
evolution of renewable power in India throughout nationwide. It contained
fundamental aspects for a preferred rates for renewable based electricity
and a compulsory Renewable Purchase Obligation (RPO) for power utility
companies, chiefly at the state level. 68 This gave path to the initiation of
the Renewable Energy Certificate (REC) program in 2010 to authorize
state electricity distribution boards to complete their RPOs by trading the
RECs. Other domestic power schemes that were administered by the 2003
Act also had substantial features for renewable. The National Electricity
Policy 2005 guarantees the liberal increase of RPO and ordered a
75
competing tender process for their investment by power distribution

companies.69 The National Tariff Policy 2006 ordered SERCs to fix the
minimal percentage of state RPO and to set a preferred
tariff for
renewable power in their states.70
6.1.2 Jawaharlal Nehru National Solar Mission (JNNSM)

2010
The JNNSM was started in 2010 as one of eight missions under
National Action Plan on Climate Change. It has three exercises in phases
and they are as follows71:
____________________________________________________________
68. Ministry of New and Renewable Energy, Government Of India, "Annual Report 2010-2011"
Published in 2011, New Delhi, India. Web Page Accessed on 04-28-2015. http://mnre.gov.in/filemanager/annual-report/2010-2011/EN/content.htm
69 - 70. Ministry of New and Renewable Energy, Government of India, "User Guide for
Renewable Energy Sectors India Energy Security Scenarios, 2047", Published in 2013, New Delhi,
India. Concerned Reference on Page 5 and 6. Web Page accessed on 04-27-2015.
http://indiaenergy.gov.in/doc/RE_Documentation.pdf
71. Ministry of New and Renewable Energy, Government of India, "User Guide for Renewable
Energy Sectors India Energy Security Scenarios, 2047", Published in 2013, New Delhi, India. Web
Page accessed on 04-27-2015. http://indiaenergy.gov.in/doc/RE_Documentation.pdf
Phase 1: 1.1 GW of grid-connected PV and 0.2 GW of off-grid PV
by 2013.
Phase 2: 4 GW of grid-connected PV and 1 GW of off-grid PV by
2017.
Phase 3: 20 GW of grid-connected PV and 2 GW of off-grid PV
by 2022.
76
To speed up the hike of solar capacity, the JNNSM included a Solar

Purchase Obligation (SPO) as part of the RPO and economic
encouragement, which includes monetary assistance and custom duty
exemptions for "specific capital equipment, critical materials and
components".72 It forecasts that solar power would attain grid-consistency
by 2022 and coal thermal power consistency by 2030. In this essence, the
modified National Tariff Policy 2011 which includes 0.25% of SPO by
2013 and up to 3% by 2022.73 The JNNSM has an enthusiastic target to
change India into a global ruler in solar production with a purpose of a 4
GW to 5 GW equivalent of installed capacity by 2020.74
____________________________________________________________
72. Ministry of New and Renewable Energy, Government of India, "Jawaharlal Nehru National
Solar Mission, Towards Building SOLAR INDIA", Published in 2009, New Delhi, India. Concerned
Reference on page 9. Web Page accessed on 04-28-2015. http://www.mnre.gov.in/filemanager/UserFiles/mission_document_JNNSM.pdf
73. Ministry of New and Renewable Energy, Government of India, "Annual Report 2011-12",
Published in 2012, New Delhi, India. Concerned reference on page 55 chapter 6. Web Page
accessed on 04-30-2015. http://mnre.gov.in/file-manager/annual-report/2011-2012/EN/Chapter
%206/chapter_6.htm
74. Ministry of New and Renewable Energy, Government of India, "Jawaharlal Nehru National
Solar Mission, Towards Building SOLAR INDIA", Published in 2009, New Delhi, India. Concerned
Reference on page 9. Web Page accessed on 04-28-2015. http://www.mnre.gov.in/filemanager/UserFiles/mission_document_JNNSM.pdf
6.1.3 National Clean Energy Fund (2010)

By imposing a tax of Rs. 50/ton on coal consumed within the
country, the NCEF was created in 2010 mainly for establishing and
arranging of clean energy in the country.75
6.2
Supply
77
As affirmed by MNRE, India's total renewable capacity for power

production, not including solar is predicted at 90 GW until 2032. Wind
energy has the highest capacity at 49 GW and Karnataka, Gujarat and
Andhra Pradesh, especially are enriched in wind energy resources. In case
of Solar, India is quite superior when it comes to generating power from
sun's energy. On an average, there are 300 sunny days per year and annual
radiation of 200W/m2.76 Now, renewable energy scenario in India, for
different sources of energy are:
Hydro Energy: Tumbling rain could be a good sign for people to

know those places where water is quickly accessible to be used to
generate power from it. This type of power generated from water is
known as hydroelectric power. Hence, these power plants are then
started in those areas which have heavy rainfall. There are 12

____________________________________________________________
75. Ministry of New and Renewable Energy, Government of India, "User Guide for Renewable
Energy Sectors India Energy Security Scenarios, 2047", Published in 2013, New Delhi, India. Web
Page accessed on 04-27-2015. http://indiaenergy.gov.in/doc/RE_Documentation.pdf
76. Ume Remme, Nathalie Trudeau, Dagmar Graczyk and Peter Taylor, "Technology Development
Prospects for the Indian Power Sector", Published in February 2011, Paris, France. Concerned
reference
on
page
32.
Web
page
accessed
on
04-30-2015.
https://www.iea.org/publications/freepublications/publication/technology_development_india.pdf
major such plants in India: 3 in Bihar, 2 in Andhra Pradesh and 1 in

Punjab, Uttaranchal, Karnataka, Uttar Pradesh, Sikkim, Jammu and
Kashmir and Gujarat.

Biomass Energy: one-third of energy in India is contributed by
biomass with a capacity of 22,536 MW, which includes solid
biomass, which is an organic, non-fossil material of biological
origins.77 Biogas which is mainly methane and carbon dioxide is
78
composed by anaerobic digestion of biomass and burned down to

generate heat. Presently, India has 3697 MW installed capacity for
biomass genration. Following is a list of some states with most
capacity for biomass reduction: Andhra Pradesh (200 MW), Bihar
(200 MW), Gujarat (200 MW), Karnataka (300 MW), Maharashtra
(1000 MW), Punjab (150 MW), Tamil Nadu (350 MW), Uttar
Pradesh (1000 MW).78

Solar Energy: Since India is placed between tropic of cancer and
equator, it has a median temperature of 25 - 27 degree Celsius.
India has an installed power production capability of 1686 MW,
making 6th largest user in the globe. Main plants are situated in
Gujarat, Rajasthan, Jodhpur, Tamil Nadu and Orissa.

____________________________________________________________
77. Mukta Nidhi Samnotra, Ministry of New and Renewable Energy via Open Government Data
Platform, Government Of India, "State-wise Potential of Various Renewable Energy Technologies".
Publishing date of excel sheet not available. Excel sheet accessed on 04-30-2015.
https://data.gov.in/catalog/state-wise-potential-various-renewable-energytechnologies#web_catalog_tabs_block_10
78. Peter Meisen, Eleonore Queneudec, "Overview of Sustainable Renewable Energy Potential for
India", Published in October 2006, Global Energy Network Institute. Concerned reference on page
17. Web Page accessed on 04-30-2015. http://www.geni.org/globalenergy/research/renewableenergy-potential-of-india/Renewable%20Energy%20Potential%20for%20India.pdf
Wind Energy: Power can also be generated by wind. India has

19051 MW of installed capacity and ranks 5th and has a capacity to
use up to 102772 MW.79 Tamil Nadu, Gujarat and Maharashtra are
the major suppliers of Wind energy.

Geothermal Energy: One power source, that has not been used at
all, is the geothermal energy, which is huge and least used heat
and power resource that is clean and dependable. With increasing
reliability and growing environmental problems, India will have to
79
promptly start utilizing this source of energy, which has a

possibility of generating 1000 MW.80 Chhattisgarh government has
pronounced to set-up the first Geothermal Power Plant of the
country in Tattapani area of the Balrampur District with the help of
NTPC.
Ocean Energy: There is an abundant availability of tidal and
marine power in India which can be generated by ocean. For tidal
energy ability - locations are the Gulf of Cambay and Gulf of
Kachchh on the West coast with maximum tidal range of 8 m to 11
m and average range of 5 m to 7 m. The Ganges Delta, Sunderbans
____________________________________________________________
79. Rijul Dhingra, Abhinav Jain, Abhishek Pandey and Srishti Mahajan, "Assessment of Renewable
Energy in India", Published in October 2014, International Journal of Environmental Science and
Development. Concerned reference on page 460. Web page accessed on 04-30-2015.
http://www.ijesd.org/papers/527-G3012.pdf
80. Delhi International Renewable Energy Conference 2010, Ministry of New and Renewable
Energy,
New
Delhi.
Web
page
accessed
on
05-01-2015.
http://www.direc2010.gov.in/geothermal.html
West Bengal too has good areas for small scale tidal power
development. The tidal power ability in India is 8000 MW - 9000
MW, of which, 7000 MW is from Gulf of Cambay, 1200 MW from
Gulf of Kachchh and less than 100 MW from Sunderbans.81
6.3
Energy Access
As per WEO 2011, 289 million or 25% of the Indian population
had no access to electricity in 2009.82 There were also 836 million people,
which is approximately 72% of the population, which has no access to
80
clean cooking stoves in 2009. This percentage would lower 63% of the
population, which accounts for 778 million in 2030. India ranked 34th out
of 64 developing countries in the IEA Energy Development Index. Few
countries which had lower per-capita income than India, like Yemen and
Vietnam, were rated above India; This indicates a major challenge for
India's energy sector. The bulk population in energy want live in rural
areas, which features the shortcoming of socio-economic growth between
rural and urban areas. The recent National Sample Survey demonstrates
that the definite monthly payment for fuel and lighting for an urban
resident was much higher than that of rural residents in 2009-10. The
____________________________________________________________
81. R.C. Sharma and Niharika Sharma, International Journal of Environmental Engineering and
Management, "Energy from the Ocean and Scope of its Utilization in India", ISSN 2231-1319,
Volume 4, Number 4 pp. 397-404. Concerned reference on page 400. Page accessed on 05-01-2015.
http://www.ripublication.com/ijeem_spl/ijeemv4n4_17.pdf
82. International Energy Agency, "World Energy Outlook 2011: Executive Summary", Published in
2011,
Paris,
France.
Web
page
accessed
on
05-02-2015.
http://www.worldenergyoutlook.org/media/weowebsite/2011/executive_summary.pdf
opportunity cost means less of financial resource is available for human

capital development. For example, the average portion of education in
total expenditure in rural areas 3.59% whereas urban areas has 8.09%.83
6.3.1 Rural Electrification

Rural electrification has been thought-out as an essential part in
stimulating economic growth, employment, elimination of poverty and
human development.84 The Electricity Act 2003 administered the
formation of a national rural electrification policy and India's major rural
81
electrification program, RGGVY, established in 2005. Under this program,

a monetary aid of 90% of the total project cost for rural electrification is
covered and the remaining 10% of the cost is provided by REC as a loan.
Affirmed by the Ministry of Power, as of July 2011, 572344 out of
a total 593732 villages in India were electrified, indicating that 96% of the
country's villages have access to electricity.85 Out of surplus un-electrified
villages, 10,000 villages are located in remote areas, and are to be
electrified through schemes promoted by MNRE.
________________________________________________________________________________
83. National Sample Survey Office, Government Of India, "Key Indicators of Household
Consumer Expenditure in India, 2009-10", Published in July 2011, New Delhi, India. Web page
accessed on 05-02-15. http://www.indiaenvironmentportal.org.in/files/Key_Indicators-Household
%20Consumer%20Expenditure.pdf
84-85. Ministry of Power, Government of India, "Report of the Working Group on Power for
Twelfth Plan (2012-17)", Published in January 2012, New Delhi, India. Web page accessed on 0502-2015. http://planningcommission.gov.in/aboutus/committee/wrkgrp12/wg_power1904.pdf
6.3.2 Access to Other Modern Energy

The rural population in India mainly depends on traditional
biomass for their daily life due to a lack of access to modern energy and
low affordability in rural areas. Still, the utilization of traditional biomass
for cooking, heating and lighting causes serious health, environmental and
safety problems, especially for women and children who mostly make
their meals and bear the burden of collecting fuels.86 Hence, using new,
clean energy would bring an ample enhancement in the quality of life of
rural residents.
82
Fig 4: Fuel Consumption in Rural and Urban India (per 1000 people)
Source: Ministry of Statistics and Programme Implementation, National Sample Survey, 66 th round,
2011
The MNRE is carrying out various initiations like, solar water heating
systems, solar lanterns, solar steam cooking systems and biomass gasifiers
to replace conventional fuels. The National Biomass Cookstoves
Initiatives (NBCI) is also one of the major policy initiation of the MNRE,
whose goal is to make biomass devouring more competent and cost
effective, as consumers are in the poorer section of the community.
6.4
Issues
83
For backing the growth of renewable sector, the development of

transmission infrastructure, for both intra and inter-state, needed.
Nevertheless, massively owed state power services will affront huge
confrontation in finding funds to spend on transmission networks.
Likewise, to other energy projects, area procurement has been recognized
as a main issue for renewable process throughout India. The maximum
time period for procuring the land could vary from 6 to 12 months to more
than a year depending on the case.87 The World Bank planned a single
window consent for all approvals. As more renewable projects are carried
____________________________________________________________
Integrated Energy Policy", Published in December 2005, New Delhi, India. Web Page accessed on
03-05-2015. http://planningcommission.nic.in/reports/genrep/intengpol.pdf
87. Energy Sector Management Assistance Program, World Bank, "Report on Barriers for Solar
Power Development in India ", Published in 2010, Washington DC, USA. Web Page accessed on
05-03-2015. https://www.esmap.org/sites/esmap.org/files/The%20World%20Bank_Barriers%20for
%20Solar%20Power%20Development%20in%20India%20Report_FINAL.pdf
out, the fight for appropriate land is getting sturdy and also increases the
land cost.
6.4.2 Domestic Content

As mentioned earlier, the main goal of JNNSM is to lead India as a
highest international solar manufacturer. The JNNSM needed that to be
picked for the JNNSM arrangement for 2011-12 all solar PV projects
should use 100% of cells and modules which were made in India and 30%
of regional content guaranteed in all plants for a solar thermal project.88
84
The domestic content necessity is mostly borrowed from India's

culture of import substitution approach. Still it should be cautiously
evaluated to assure that domestic content necessity does not prevent the
development of solar capacity.
6.4.3 Investment
The steps taken by the Indian Government to boost the
contribution in renewable power should be acknowledged. miscellaneous
inducements are provided including accelerated depreciation, concessional
custom duty, excise duty exemption and income tax exemption. For
Independent Power Producers, Generation Based Incentives (GBI) of INR
________________________________________________________________________________
88. Ministry of New and Renewable Energy, Government of India, "JNNSM: Building Solar India",
Published in 2010, New Delhi, India. Web page accessed on 05-03-2015.
http://pib.nic.in/archieve/others/2010/jul/jnnsm.pdf
0.5/KWh and preferred rates are given, while GBI and accelerated
depreciation are jointly restricted.89 The competing auction process for
renewable sector aims to instigates developers to be more innovative and
efficient. While general rates were fixed by CERC in 2010-11 at INR
17.91/KWh for solar PV, INR 15.31/KWh for solar thermal, actual rates
for solar projects bid in 2010 were INR 12.20/KWh and INR 8.78/KWh in
2011.90
85
________________________________________________________________________________
89-90. Ministry of New and Renewable Energy, Government of India, "Annual Report 2011-12",
Published in 2012, New Delhi, India. Web Page accessed on 05-03-2015. http://mnre.gov.in/filemanager/annual-report/2011-2012/EN/Chapter%201/chapter_1.htm
Chapter 7
Challenges
India has accomplished an influential economic growth since 1991.
Since that time, the country has observed huge reduction in poverty and
has felt vast advancement in the living standards. India now has an
economy with an active private sector and a prospering middle class, still,
India is confronting rising disputes to keep up its economic growth. In the
86
first fourth of 2012, Indian economy grew by 5.3%, the least in last 10
years. With upsurge in trade and budget deficiency, and a devaluing INR,
widespread concern exists over whether India could see the return of a
"1991-like crisis".92
As observed from the above chapters, there are two major issues
which we need to tackle in order revive the Indian energy sector and they
are:
A genuine energy deficiency throughout various fuel sectors. The

shortage of fuel results in ample deficit of electricity, which
impede economic and social advancement.
________________________________________________________________________________
92. James Fontanella-Khan, "Indian GDP Growth Slides to 5.3%", Published on 05-31-2012,
Financial Times Newspaper New Delhi, India. E-paper accessed on 05-04-2015.
http://www.ft.com/cms/s/0/9c06f126-aadf-11e1-b875-00144feabdc0.html#axzz3ZMukuFdz
There is an rising need to import more energy as a result of the

country's deteriorating indigenous production.
The are 4 major Challenges which have been focused in the thesis
work: pricing, investment, policy and political will. There are also few
other barriers as well which arise because of the above mentioned
challenges like players and implementation. These barriers should be
focused on by Indian policy makers, as the declining energy circumstances
can dearth the country's chance for a healthy economy.
87
7.1
Pricing
Pricing is the essential to assure the economic growth of business
individuals and to draw attention of financers in each fuel sector. The

significance of pricing was acknowledged by the deputy chairman of the
Planning Commission: "The energy challenge in the twelfth plan is how to
deal with a situation in which global energy prices will be high and the
cost of alternative energy sources will also be high. Our ability to grow
rapidly in this environment depends critically on our ability to transmit the
high energy prices to energy users in the economy, rather than keep the
prices artificially low."93
________________________________________________________________________________
93. Montek Singh Ahluwalia, "Prospects and Policy Challenges in the Twelfth Plan", Published in
2011,
New
Delhi,
India.
Web
page
accessed
on
05-04-2015.
www.planningcommission.nic.in/aboutus/speech/spemsa/spe_21052011.pdf
Suitable pricing that assures long term business activity should be in place.
Few components of the energy sector in India keep end-user tariffs too
low: like, power rates for agricultural customers and subsidized cooking
and transport fuels. The complication is that these allowances are
untargeted and are useless in relation to benefiting the poor, whereas the
comprehensive tariff is not enough for companies to recover costs.
Apparently, energy prices should be directed and accustomed in an
appropriate method and sufficiently by autonomous managers to display
changing costs. Still, in India, regulators, including CERC and SERCs
88
work in a very strict way due to political influence. This endangers the
working expedience. Like, TATA Power, the operator of Mundra project, is
reportedly running the plant on lower coal quality and plans to appeal to
the government for a tariff revision.94
7.2
Investment
Private investment in India has firmly increased since the
liberalization of the power, oil and gas sector. Still, regardless of some of
the positive changes that private financing brought to India's energy sector.
Many of the big international companies are still unwilling to finance in
India's energy sector. However, the coal sector that immediately
________________________________________________________________________________
94. Shubhra Tandon, MG Arun, "TATA Power Capex Plan faces Delay on Coal Shortage",
Published on 06-29-2012, Indian Express Newspaper, Mumbai, India. E-paper accessed on 05-052015.
http://archive.indianexpress.com/news/tata-power-capex-plan-faces-delay-on-coalshortage/968065/
needs private partnership stays closed. In terms of general investment

environment , the doing business index (DBI) by World Bank ranked India
at 132nd out of 183 countries in the world.95
India wants large contribution to build a dependable and sufficient
energy supply chain. World Energy Outlook 2011, believes that India
would want a total contribution of USD 2306 billion on overall energy
supply infrastructure from 2011 to 2035. This is considerable amount
seeing that India's government budget for total capital expenditure is
estimated for USD 68 billion for 2012-1396
89
7.3
Policy
A well-planned policy and an open image are essential to model
and manage the overall energy sector and expected contribution, mainly in
India as most of the essential players are public enterprises and energy
access is not available for everyone.
India's Integrated Energy Policy 2008 was a key move towards the
formation of all-inclusive and understandable national energy policy. Still,
accumulating all energy blueprints and goals in one policy document does
________________________________________________________________________________
95 World Bank, "Doing Business: Measuring Business Regulation". Web page accessed on 05-052015. http://www.doingbusiness.org/rankings
96. International Monetary Fund (IMF), "India: 2012 Article IV Consultation- Staff Report; Staff
Statement and Supplements; Public Information Notice on the Executive Board Discussion; and
Statement by the Executive Director for India ", Published in April 2012, IMF Country Report No.
12/96. Web Page accessed on 05-06-2015. http://www.imf.org/external/pubs/ft/scr/2012/cr1296.pdf
not suffices to ensure unification of all energy codemaking and

implementation. In addition, India's long run energy vision should be
taken into account when these policies and plans are designed.
There have been situations where internally conflicting, policies
have been chosen by energy ministries. They generally happened when the
government tried to accomplish many policy aims with single policy. Like,
JNNSM points to hike India's installed solar capacity considerably,
JNNSM also says that it would build India as a global solar manufacturing
center (Chapter 6). In order to do that, it imposed a compulsory domestic
90
content for solar PV and thermal project, mirroring initial industrial policy
of import substitution.
Chapter 8
Conclusion
A genuine energy deficit and increasing burden on imports have
been felt in the Indian power sector. In the middle of 2012, India energy
deficiency experienced to huge power cuts throughout the nation.
Factories and commercial places were closed and public demonstrations
started for improved power supply. Since Liberalization of the power
91
sector, India now stands at the cross-junction, with a requirement for the
next generation of energy sector reform.
Peoples understanding should change that energy is not a privilege,
but an asset. Energy supply cannot be taken assumed, and it needs enough
resources to be brought to the customers. India's policy aims of inclusive
development and inexpensive energy should be continued, but business
growth should not be gone in the course of action. This thinking is the
bedrock of a working energy market and tenable, green growth economy
that India follows.
India has certainly joined the international energy market. It
depends on considerable amounts of energy from foreign sources. India
can lower its exposure to energy rates vacillation through a competitive
energy market, but it cannot confine itself from rate fluctuation. At the
same point, to augment its energy supply volume to meet the quickly
developing energy demand of the people, India needs more financial
contribution. Compelling portion of the needed investment should come
from foreign investors, for whom it competes with other countries.
Ultimately, energy barriers should given more preference than
political interests. A dependable and sufficient supply of latest and green
energy is the precondition for India's persisting economic development.
Nothing is more pricey than the turmoil of the national currency, which
has so much possibility to succeed.
92
93
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Energy Plan For India

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Energy Plan For India

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ENERGY PLAN FOR INDIA:

OVERVIEW OF THE COAL AND

Domakonda Akhilesh Reddy

A thesis presented to the faculty of the School of Engineering

Introduction and Background

6. Renewable Energy Sector

1. Energy Production (MTOE) comparison between 1990 and 2009

2. Top Countries with highest Installed 8 Power Capacity in 2012

3. Top ten States by installed capacity, 2012 (GW)

4. Fuel Consumption in Rural and Urban India (per 1000 people)

I would like to take this opportunity to thank professor Robert N.

More dependency on imports is making India vulnerable to more

The financial power of Indias power sector should be improved: Energy

internationally for investment.

Introduction and Background

India has the worlds second largest population of 1.27 billion in

As a federal union of states, India consists of 28 states and seven

responsibilities are called concurrent list. As both state and central

called New Economic Policy, created in 1991. During India's balance of

USD 238 Billion in Jan, 2015 .

2.1.1 Energy Access:

2.1.2 Energy Security

From this definition, India's attention for energy security is threefold:

2.1.3 Climate Change

understand the inspiration and actions stirring certain energy policy

objectives. They are implanted in certain Indian historical and cultural

and chose import substitution as an economic strategy.

2.2.1 Self Sufficiency

energy policy dialogue in India . This is a valuable approach in

independence based on hydro, nuclear and renewable energy, stating that

Still, the quest for self-sufficiency led to Indias ongoing over-dependence

considerable influence on Indias policy making. As displayed by Indias

2.2.3 Inclusive Development

coupled with equal opportunities . Also called inclusive growth,

2.3 Policy for Energy Efficiency and Demand Side

unit produced, as it saves on production losses, transport, and transmission

make policies and strategies on self-organizing and market principles

Boost Urban Mass Transport: Boost urban mass transport by supplying

Fuel Efficient Vehicles: Promote hybrid vehicles in India, which are

compulsory purchase of electricity at fixed prices from co-generators by

12th Five Year Plan of India:

reduce import dependence, combined with the obligation to move away

renewable is the high unit cost at present, correlated with other

renewable energy potential: Since

renewable energy is location specific and not evenly distributed, hence

limits the flexibility of the state grid to absorb this power.

including cook stove programme.

Renewable Power Evacuation Infrastructure: Special importance will

expansion in consumption and production of renewable power.

Improvements in wind turbine technology and its installations at

Massive Thrust Towards 24X7 Power for

Renewable Energy under the leadership of Hon'ble Prime Minister Shri

Affordable, 24X7 power to all households, industrial and commercial

Adequate power to agricultural sector.

affordable power to rural and urban India.

June - November 2014 as compared to June - November 2013.

June- November 2013.

Wind energy respectively by 2020.

Doubling India's coal production in next 5 years from 50 crore tons

Crisis due to cancellation of 204 blocks by hon'ble Supreme Court solved

auction to ensure full transparency.

Two schemes formulated, approved and already being implemented in

grid security, to avert a 2012 like grid collapse and blackout.