The Central Electricity Authority (CEA), in its National Electricity Plan (NEP) 2017-2022, says the country does not need any more coal-based capacity addition until 2022, as plans are afoot to add massive renewable-based capacity. For the first time in recent history, India will not have a power deficit this year. The CEA data shows that India will have a surplus of 3.1 percent during peak hours and 1.1 percent during non-peak hours in 2016-17. In 2015-16, the peak hour deficit stood at -3.2 percent, while non-peak hour deficit was at -2.1 percent. The deficit was as high as 13 percent about a decade ago. The data, based on gap between demand raised and demand met, shows that June 2016 onwards the country will have more electricity than required.
The NEP states that renewable energy generation will contribute about 20.3 percent and 24.2 percent of the total requirement in 2021-22 and 2026-27, respectively. This marks a major shift in policy and implementation. India has ratified the United Nation’s Paris Agreement on climate change.
This new focus may impact equipment suppliers, such as boilers, turbine generators and related segments; as most of them are already strapped for orders, a scarcity of new coal power plants can have an adverse effect. Giving examples: Bharat Heavy Electricals Ltd (BHEL) is estimated to have manufacturing capacity for power equipment of 20,000 MW a year. Several domestic firms have entered into joint ventures (L&T-MHI, GE (Alstom)-Bharat Forge, Toshiba-JSW, Gammon-Ansaldo, Thermax-Babcock and Wilcox, BGR-Hitachi) with indigenous manufacturing capacity for supercritical boilers at 16,200 MW and supercritical turbine generators at 14,000MW. However, with 50,025 MW of coal power projects in different stages of construction, and likely to yield benefits in 2017-22, the CEA does not anticipate any immediate requirement for new coal power plants.
CEA says that likely capacity addition from conventional sources, will be 101,645 MW against a target of 88,537 MW (by end March 2017) - this is close to 115 percent of the target. Out of this, 2.56 percent of the total capacity addition is expected to come from the private sector. However, as most of the coal-based capacity is being built by the private sector, investments are likely to be hit. Concurrently, the 4,000 Mw Ultra Mega Power Plants (UMPPs) would not be needed if the CEA projections are adhered to by the government.
According to CEA in the NEP 2016, the projected peak power demand at the end of 2021-22 is 235 GW, which is about 17 percent lower than the projection made in the 18th Electric Power Survey (EPS) report. There are divergent views about this scenario.
- Officials in the power ministry say the reduced demand projection is made on the past record of slow industrial growth, lag in transmission planning, and sick health of state-owned power distribution companies.
- Demand side management, energy efficiency and conservation measures would reduce peak demand.
The increase in renewable capacities augurs well for gas power plants. The variable nature of renewable capacities - solar power generation peaks during the day and depends on climatic conditions - gives gas power the winning advantage. Gas capacities can be ramped up quickly and are said to offer better efficiencies. However, plants are operating at low capacities (utilization stood at 23 percent in 2015-16) due to shortage of fuel. But, improvement in supplies can make gas plants good balancers to renewable energy, ensuring grid stability.
The government has launched several revival schemes for distribution companies and ten states have joined it. The government has also promised to electrify all villages by 2018 and provide 24x7 power supply for which action plans are being discussed with 21 states.
CEA, the apex technical organization that facilitates development of the power sector in the country to provide quality electricity for all at affordable rates, prepares a draft plan every five years and notifies the plan after obtaining the government's approval; the draft is open for comments from all stakeholders until January 2017. The NEP acts as a guideline for policymaking in the power sector.