|
Economic Highlights
New
Delhi, 27 January 2012
Power Crisis
NEW STRATEGY CRITICAL
By Shivaji Sarkar
India’s power scenario is
yearning for a new strategy. As of now, it has a mixed bag of achievements and
unfulfilled targets. While in each Plan the country is setting a target of
adding nearly one lakh megawatt capacity, it has managed to achieve less than
50 per cent.
Worse, it is now facing a serious crisis in pricing
and fuel linkage. High energy costs are posing severe problems for existing
power units and the fear is that the proposed new ultra mega power projects
(UMPP) may be in jeopardy. As coal is becoming scarce a new power strategy is
desired and has to be devised.
Today, the country has an installed capacity of 1.82
lakh MW. The Ministry of Power has worked out the addition of 1.07 lakh MW
during the 12th Plan. During the 11th plan it had set a
target of 78,7000 MW of capacity addition. It has reduced the target to 52,000
MW and could commission only 41,963 MW till October 2011. Unfortunately, till
the end of the Plan period, March 2012, not much is expected to be added. The
Committee on Estimates of Parliament states slippages in the 11th
Plan would definitely spill over into the 12th Plan.
The target for capacity addition was estimated on the
basis of achieving the original target. However, now the gap is bound to
increase. The 17th Electric Power Survey (EPS) found that the demand
would be 2.18 lakh MW by 2017 and 2.98 lakh MW by 2022. The projected demand in
2011-12 is 1.52 lakh MW. The target of 1.07 lakh MW for addition in 12th
Plan is set accordingly.
If the spill over of 36,000 MW is added, the actual
addition has to be 1.41 lakh MW. This is clearly not easy to achieve. The
reason being that it is just not about erecting plants but also arranging funds
to the tune Rs 7.05 lakh crore! Apparently, owing to slippage of targets, the
banks had to restructure a few lakh crore of rupees debts to power companies
and it is yet to be estimated whether new funds would be arranged by them or
not.
Given the situation, the Power Ministry has rung the alarm
bells saying a whopping 96 power plants are in super critical situation as coal
is running out. The reason could vary from either the coal plants are delaying
supplies or are simply not signing MoUs with them.
Rating agency Fitch has warned that rising cost of
imported coal, coupled with a weakening of rupee could force some Indian
companies to default on their debt obligations. The average cost could rise to
Rs 4.21 per kilowatt hour for projects relying on imported coal, from the
average Rs 2.29. Even Coal India
is demanding higher prices and wants it linked to inflation.
The Central Electricity Authority has been asked to
carry out studies to prepare a realistic blueprint of the 12th Plan
targets. However, Chairman of Estimates Committee Francis Sardinha says that
the committee has severe doubts about achievement of the 12th Plan
capacity addition targets. It may have to put off 800 MW supercritical units
proposed in coastal locations where imported coal could be used. For inland
station using indigenous coal, maximum unit size envisaged is 660 MW. Thus, an estimated
investment of $ 4 billion is required. While the government hopes to manage the
investments despite difficulties, it will still have to work out the fuel
linkages and the high costs for the16 UMPPs.
While the CEA has estimated coal requirement to the
tune of 455million tonnes (MT), indigenous availability is assessed at 402 MT.
The gap is to be met by import of 35 MT in 2011-12. Coal reserves are assessed
at 268 million tonnes. But prospecting
all of it is not feasible as the reserves are in forest areas and many in “no
go” areas marked by the Environment Ministry. Remember, this has already posed
problems for many power projects.
Interestingly, while estimates indicate availability
the fast depleting coal reserves are putting many power projects in jeopardy. Coal
shortage has hit generation at many plants. The assured coal linkages have
become a big challenge for the upcoming power projects.
Perhaps there is a way out. India should learn from the example of Wales and other areas of United Kingdom.
Many ports and other industrial operations have shut down as coal reserves have
exhausted. Building ultra projects have their dangers as reserves too may be under
threat of fast exhaustion. Therefore, wouldn’t huge investments go waste?
Additionally, dependence on imported coal is
increasing. It is expensive and worldwide coal is becoming scarce. There are
some gas-based power plants. But there is a problem with continuous gas supply
as well. Some like the D6 in Krishna-Godavari region has far less gas than was
estimated.
The country has also reconciled to the fact that
liquid fuels cannot form the backbone of our energy plans. It is expensive and
costs foreign exchange. Thus, India
should look for other power generation techniques and gradually start depending
less on thermal energy. It is easier said than done. Alternatives are not easy.
The advantage of India is its low per capita energy
consumption. It often wants to compete with Europe
for increasing power consumption. But it should review considering Europe as its model. Today the European economy is facing
a serious crisis owing to its high energy consumption as also the high cost of
generation.
Europe pays a very high tariff
for electricity and all other energy needs. In 2005, European Energy
commissioner Andris Piebal had predicted the crisis that Europe
finds itself today. He said that rising energy costs would adversely impact not
only the well-being of EU citizens but also their economic growth. Likewise in the
US a study by Logility and Manhattan of 139
industries found that high power and other energy costs were becoming
prohibitive. The US
forecasters have acknowledged that higher energy prices can become a drag on
the overall economy
India needs to look for a
different model where natural light is used more for housing and office
purposes. The country has to look
for renewable sources of energy. The estimated potential for power generation
from wind, small hydel and bio-mass is estimated at 87,000 MW. The present
installed capacity is 21,125 MW. But renewable energy is expensive at present.
The cost has to be reduced from Rs 15 crore per MW to Rs 6 crore through new
research and indigenous production of critical raw materials.
As of now, nuclear energy is not a solution for its
risks, higher gestation and high waste management costs. Large hydro power
plants are not considered environment friendly and we are already witnessing problems
of resettlement. Where lies the answer? The Ministry of Power would need to do
some hard thinking.---INFA
(Copyright,
India News and Feature Alliance)
|
Archives 
