India's Leading Infrastructure Companies

India's Leading Infrastructure Companies 2015

The 12th Five Year Plan focuses on infrastructure development for sustained and inclusive growth of the economy. However, electricity deficit remains a major hindrance on this roadmap. In order to tackle increasing urbanization and to boost industrialisation, the government has undertaken many power sector reforms in the last few years. The target for capacity addition in the 12th Five Year Plan has been fixed at 88,537 megawatt (MW).

In the first two years of the 12th Five Year Plan, there has been significant progress in thermal power addition, however, the capacity of hydro and nuclear power remains low. During the 13th Five Year Plan, the government aims to develop a total domestic capacity of 79,200 MW, out of which 12,000 MW would be from hydro, 18,000 MW from nuclear and 49,200 MW from coal, assuming no exploitation of renewables and gas-based resources for power generation. As of Jun-14, the total installed capacity stood at 249,488 MW, Further, demand for power stood at 91,765 mn units (MU) and availability of energy stood at 88,347 MU, reflecting a power deficit of 3.7%.

Thermal power (power generation from coal, gas and diesel) constitute largest share in installed capacity, amounting to around 69% as of Jun-14. After FY11, private sector participation in thermal power generation increased tremendously. Opening up of inter-state power transmission for private sector has proved beneficial for the sector.

In the 11th Five Year Plan, thermal power capacity of 48,540 MW was commissioned, whereas thermal power capacity of 90,925 MW is estimated under projects that are under implementation and that are likely to be commissioned during the 12th Five Year Plan and beyond. By the end of the 13th Five Year Plan (FY22), thermal efficiency (efficiency of the thermal capacity) is expected to rise to 36.5% from 33.9% in FY07.

Coal is the major source of thermal power. To tackle the anticipated shortage of coal, promoting gas-based generation is crucial. Hence, the government intends to fulfill additional gas capacity of 25,000 MW during the 12th Five Year Plan. In the National Electricity Plan 2012, priority has been accorded to generation of renewable energy in order to reduce GHG (greenhouse gases) emissions and ease reliance on thermal power. As of May-14, capacity of grid-interactive renewable power stood at 31,833 MW, showing 11.9% (y-o-y) growth over May-13. Further, the capacity of off-grid power stood at 1,022.81 MW.

In the 12th Five Year Plan, the government aims to deploy 15,000 MW of wind power, 2,100 MW of mall hydro power, 500 MW biomass, 1,400 MW for bagasse cogeneration and 10,000 MW solar power. India’s flagship program in solar energy ‘Jawaharlal Nehru National Solar Mission’ (JNNSM) sets a target of adding 20 gigawatt (GW) of grid connected and 2 GW of off-grid capacity by 2022 in three phases. In the first phase (2010-13), capacity of 1,100 MW of grid connected solar power has been allocated and over 979 MW has been installed. Further, off-grid capacity of 118 MW has been sanctioned. Gujarat and Rajasthan showed the highest installed capacity during phase I. Between Jan-10 and May-12, the capacity of solar power projects in India went up from 8 MW to over 979 MW.

Government of India (GoI) is committed to provide 24x7 power supply to rural areas. Rajiv Gandhi Grameen Vidyutikaran Yojana, a flagship program of GoI, is a big step towards rural electrification. Under the 12th Plan, the government aims to cover 12,468 unelectrified villages, 0.2 mn villages under intensive electrification and 13.3 mn below poverty line households. In the Budget FY15, a new scheme ‘Deendayal Upadhyaya Gram Jyoti Yojana’ has been announced to further improve electricity augmentation in rural areas and strengthen distribution and transmission system.

With increasing investments in the renewable energy sector in the country, reliance on thermal power is likely to go down in the future. However, as stated in the 12th Plan, the share of renewables in total energy consumption will be as low as 2% by 2021. Therefore, consistent expansion of renewable energy and its utilisation is crucial. Increasing focus on rural electrification is expected to bring inclusive growth in the country.

Investment in distribution sector during the 12th Plan is assessed at र 3.1 tn. ‘National Electricity Fund’ has been set up to provide interest subsidy and promote capital investment in distribution sector. In Feb-14, the Fund approved proposals worth र 96.5 bn of project loans from 8 states. Moreover, the Ministry of Power has allocated 14 Smart Grid pilot projects in various states of India. Further, the government envisages developing 16 Ultra Mega Power Projects (UMPPs) worth 4,000 MW each.