Mr R S Sharma
Chairman & Managing
Director – NTPC Ltd

Q. What is the current status of the Indian Power Sector in terms of capacity building and generation?

A. The Indian power sector is passing through a transition phase. The changes in polices and regulations have started showing results. The Government of India has set a target of adding about 78,000 MW in the 11th Plan. The capacity addition achieved in the previous two plans was around 20,000 MW amounting to about 50% of the final targets. In the Eleventh Plan 18,000 MW capacity has already been added, 45,000 MW capacity is in fairly good progress and is expected to be completed with high degree of certainty. Remaining capacity is under construction. While the CAGR for capacity addition across the 10th plan was 4.73%, the capacity growth rate planned for the 11th plan stands at 9.73%.

The power equipment manufacturing capacity both for the main plant (Boiler and TG) as well as Balance of Plants (BOPs) has been recognized as one of the factors affecting rapid power generating capacity addition in the country. Recognising this, great thrust is being given to enhance the power equipment manufacturing capacity in the country. BHEL has planned to enhance its manufacturing capacity to 15,000 MW per year by Dec 09. A number of private players have formed joint ventures with global equipment manufacturers and the domestic power equipment manufacturing capacity is slated to reach at least 25,000 MW in next 3-4 years.

Q. What according to you are the major challenges facing the Indian Power Sector, in terms of generation, capacity building and particularly transmission and distribution, since the percentage of T&D losses is quite high in India?

A. As far as capacity building is concerned the power equipment manufacturing capacity - both for the Boiler and Turbine as well as Balance of Plants such as Coal handling plants, Ash handling plants, Cooling Towers, Chimney etc. - is a major challenge looking at the huge generating capacity addition planned for the future. Going forward, the increase in the power equipment manufacturing capacity in the country is expected to be in line with the generating capacity addition plans. Further, the ongoing bulk procurement process for eleven 660 MW units with the mandatory condition of setting up manufacturing capacity in the country will substantially address the concern regarding the power equipment manufacturing capacity in the country.

Large work force of skilled workers and unskilled workers is needed for adding huge power generating capacity in the country. Also, the number of construction and erection agencies for such execution is also a big challenge. There are concerns regarding delays and high cost of land acquisition, delays in according linkages for water and availability of coal in adequate quantities at the right time. These are issues which need to be addressed with the highest priority so that the projects come up on time and are able to generate power to their maximum capacity.

The other major challenge is the large Aggregate Technical and Commercial (AT&C) losses, where by a significant portion of the generated power is lost or goes unaccounted. This has largely been on account of old and outdated sub-transmission and distribution infrastructure and heavy commercial leakages. The Government of India (GoI) has undertaken initiatives like the APDRP program to provide incentives for reduction of losses by the state distribution utilities. These programs have started showing results. While at the all India level AT&C losses have shown a declining trend from 38.86% in 2001-02 to 32.07% in 2006-07, AT&C losses continue to be very high in many States. Recently, GoI has come out with Restructured- APDRP program with the target to reduce the AT&C losses to 15% by the end of Eleventh Plan.

Q. What steps have been undertaken in order to reduce the acute shortages of power supply in India?

A. The Government of India is taking number of steps to promote rapid growth of the sector along with bringing reforms. Promulgation of the Electricity Act 2003 has been a landmark step in the process of promoting sector growth. The Act promotes a liberal, transparent and enabling framework for power development, for creation of a competitive environment and for taking care of the customers and rural electrification. Some of the major developments with the objective of promoting growth thereby reducing shortages include:

• De-licensing the generation (accept hydro)
• Open access in transmission and distribution
• Identifying trading as a distinct activity
• Strengthening the regulatory system for oversight of tariff fixation, licensing, open access and market development
• National Electricity Policy (NEP), 2005
• Tariff Policy, 2006
• Rural Electricity Policy, 2006
• National Hydro Policy, 2008

In addition to these measures, the integrated energy policy document prepared by Planning Commissioning provides a holistic perspective, optimum utilization of all the energy resources including development of electricity.

Q. The global power generation market is increasingly shifting its focus from fossil fuels to renewable energy. What are NTPC’s views on this?

A. India is endowed with huge coal reserves and almost 78% of the coal produced in the country is used for power generation. Seeing the huge power requirements, coal shall continue to remain the major source for power generation in the foreseeable future. In the medium to long term nuclear is also expected to become a major base load power supplier. As far as renewable energy is concerned it can definitely supplement the power generation, however, even by 2031-32, as per the Integrated Energy Policy, the total contribution from renewable sources including all hydro shall be around 25% of our total installed capacity. In the renewable energy segment wind energy is a significant contributor to the power generation in the country. With a capacity of 10,464 MW, India has the fifth largest wind power installed capacity in the world. The solar insolation in the country is one of highest in the world. Major technology breakthrough in solar could be the catalyst for development of large solar farms and the National Solar Mission shall incentivise development of solar power generation capacity. Hydro power generation is renewable and environmentally benign source of energy and is unaffected by volatility in fuel prices.

Accordingly, NTPC has forayed in to hydro power development and is already implementing hydro projects with a capacity of 1,920 MW. NTPC plans to have 9,000 MW of Hydro Power projects in its portfolio by 2017. At present 80% of NTPC’s portfolio is based on coal. Even going forward, NTPC plans to add large capacities based on coal. By 2017, NTPC intends to have a more diversified fuel mix with 70% of its capacity based on coal, around 14% based on gas, 12% based on hydro, 3% nuclear and 1% based on renewable energy sources.

Q. Could you shed some light on NTPC’s Nuclear Generation Program? What are the issues and opportunities in this sector?

A. Considering the benefits of nuclear power generation and strong project management capability of NTPC, the company envisages setting up 2,000 MW of Nuclear Power Capacity by 2017 through a joint venture with Nuclear Power Corporation of India Ltd. The Nuclear deal with US & other major nuclear equipment suppliers such as France, & Russia will help India to become part of the nuclear business and commerce in the world thus ending the isolation of three decades. India’s Safeguard Agreement with IAEA coupled with NSG waiver will help India to increase its nuclear power capacity rapidly. According to Planning Commission, the nuclear power development target would be 20,000 MW by 2020 and 62,000 MW by 2032. India plans to import the latest reactors of high capacity ratings in large numbers to meet its above targets. With this the country’s nuclear landscape will be rapidly transformed. A large number of reactors, fuel management including re-processing plants, fuel fabrication facilities and waste immobilization plants will have to be built almost simultaneously. Indian industry is looking at huge market unfolding before them over the next two decades through this deal. The nuclear power market is estimated to be at US$ 100 bn.