EXECUTIVE SUMMARY Availability of power is one of the important ingredients for industrial growth.

It is an importantinfrastructure facility without which no industrial activity can be thought of in modern times.Increasing automation of Indian industries has created huge demand of power in India. This hugedemand has resulted into demand supply gap in India in recent times.This report is based on the extensive study of the power sector in India. Both global and domesticperspectives of power sector focusing more on Indian players have been looked upon in this report.It includes the literature review by scholars which has analyzed the subject of power sector moreextensively. The objective of this report is to get a comprehensive and apparent knowledge of thepower sector, and to study the changes in power sector over a period of time there by analyzingvarious aspects of the power sector. In the report the power generation companies of the industrychosen, are the top five and bottom five companies of the power sector in India, based on the salesturnover. The trends in the demand, supply and generation in the power sector is discussed throughthe trend analysis. Before 2001, Indias ele ctricity-supply was mainly owned and operated by public sector. It wasrunning under the risk of bankruptcy. This created a serious impediment to investments in thesector at the time when India desperately needed them. This led to the emergence of Privateplayers in the power sector.The NTPC, Reliance Infra, Tata Power, Power Grid, & Torrent Power are the market leaders in thepower sector and have high Cumulative Annual Growth Rate (CAGR). This is because of thegovernment support, inflow of foreign investment, growing demand and use of latest technologyfor power generation and transmission. The best management policies are adopted by thesecompanies. The small players GVK power, Indowind Energy, Energy Development, JP Hydro, andKSK energy are also imparting new technology, and management policies to survive thecompetition and meet the demand of power sector.The methodology used in report includes comparative analysis of the top 5 and bottom 5 companies of the sector. The Potters five forces analysis, SWOT analysis, Trend analysis & Ratioanalysis are used to analyze the industry of power sector. The various analysis shows that there hasbeen a continuous growth in generation and consumption of power in India. Thermal, hydro and nuclear are three major source of power generation From the installed capacityof only 1,362mw in 1947, has increased to 97000 MW as on March 2000 which has since crossed100,000 MW mark India has become sixth largest producer and consumer of electricity in theworld equaling the capacities of UK and France combined. The number of consumers connected tothe Indian power grid exceeds is 75 million. Rural electrification is one significant initiative of theindustry to trigger economic development and generate employment by providing electricity as aninput for productive uses in agriculture and rural industries, and improve the quality of life of therural people.The International Energy Outlook 2006 ( IEO2006 ) projects strong growth for worldwide energydemand over the 27-year projection period from 2003 to 2030. Much of the growth in energydemand is among the developing countries in Asia, which includes China and India; demand in theregion nearly triples over the projection period. Total primary energy consumption in thedeveloping countries grows at an average annual rate of 3.0 percent between 2003 and 2030. Incontrast, for the developed countries

 with its more mature energy-consuming nations energyuse grows at a much slower average rate of 1.0 percent per year over the same period. This hugeincrease in projected demand of energy in India and China makes analysis of energy sector of these countries very important.World electricity generation rose at an average annual rate of 3.7% from 1971 to 2004, greaterthan the 2.1% growth in total primary energy supply. Total world consumption of marketed energyis projected to increase by 50 percent from 2005 to 2030. INTRODUCTION An economys growth, development, ability to handle global competition is all dependent on the availability, reliability and quality of the power sector. As the Indian economy continues to surgeahead, electrification and electricity services have been expanding concurrently to support thegrowth rate. The demand for power is growing exponentially and the scope of growth of this sectoris immense.Existing generation suffers from several recurrent problems. The efficiency and the availability of the coal power plants are low by international standards. A majority of the plants use low-heat-content and high-ash unwashed coal. This leads to a high number of airborne pollutants per unit of power produced. Moreover, past investments have skewed generation toward coal-fired powerplants at the expense of peakload capacity. In the context of fast-growing demand, large T&Dlosses and poor pooling of loads at the national level exacerbate the lack of generating capacity.India is one of the main manufacturers and users of energy. Globally, India is presently positionedas the 11 th largest manufacturers of energy. It is also the worlds 6 th largest energy users. In spite of its extensive yearly energy output, Indian power sector is a regular importer of energy because of huge disparity.Global and Indian economy have decelerated, but power is one of the few commodities in shortsupply in India. So, despite the sluggishness in production and demand for manufactured products,India remains power hungry, both in terms of normal and peak power demand. Power is derivedfrom various sources in India. These include thermal power, hydropower or hydroelectricity, solarpower, biogas energy, wind power etc. The distribution of the power generated is undertaken byRural Electrification Corporation for electricity power supply.

GENERATION Capacity The government has revised the capacity addition target to 78,700 MW from 78,577 for theEleventh Plan. However, while in 2007-08 it added capacities of 9,263 MW, in 2008-09 only3,453.70 MW capacities were added against the target of 11,061 MW - 69 per cent below thetarget. This was due to delays in the supply of critical components in thermal projects and non-availability of fuel.The capacity addition target for the Tenth Plan (2002-2007) was estimated at 41,110 MW, out of which only 21,095 MW was achieved (2,872 MW was achieved in 2002-03, 3,952 MW in 2003-04, 3,950 MW in 2004-05 3,468.8 MW in 2005-06 and 6,852.8 MW in 2006-07).Major projects commissioned in the central sector in 200708 and 2008-09 include:

The total installed capacity in India rose from 89,103 MW in 1997-98 to 147,965 MW by the end of 2008-09. In addition, around 19,509 MW of captive power capacity is connected to the grid (as onMarch 2007).Despite the rise in installed capacity, there has been a significant shortfall in capacity a dditions whencompared to the targets set over the last 10 years. This shortfall is the result of t he absence of significant capacity additions by the states and the private sector, which can be attributed to the poorfinancial health of SEBs and private generators unable to achieve financial closure owing to inadequatepayment security mechanisms. Most of the projects in the private sector have been delayed owing toexpensive fuel costs (leading to unviable tariffs), delay in obtaining clearance from the CEA andMinistry of Environment and Forest (MoE&F), signing of power purchase agreements (PPAs) androadblocks in achieving fuel linkage.Over the past 11 years, there has been a marginal shift in the fuel mix. The thermalhydel mix changedfrom 72:25 in 1997-98 to 63:25 in 2008-09. The share of thermal plants fell on the back of increase inthe share of renewable energy-based plants over the past decade. The share of nuclear power plants inthe overall installed capacity, though, continues to remain low.

Power Generation Power generation increased by 3 per cent, from 699.1 billion kWh in 2007-08 to 723.5 billion kWh in2008-09. Between 1998-99 and 2008-09, it increased at a CAGR of 4.9 per cent, from 448 billion kWhto 724 billion kWh.The PLF of thermal power plants rose from 64.6 per cent in 1998-99 to 77.19 in 2008-09. The PLF of Indian plants is lower than that of their international counterparts on account of old plants,i nadequate maintenance, poor quality, unsatisfactory transmission infrastructure and no means of assured fuel supply. Emerging technologies Coal-based Conventional coal-based plants have two major drawbacks - low overall efficiency levels and highpollution levels. As a result, technological research has focused on the development of nonpollutingtechnologies using coal. The most popular of these technologies are fluidized bed combustion (FBC) andintegrated gasification combined cycle (IGCC).

Fluidized bed combustion In FBC, air is blown at high pressure through finely ground coal. The particles mix with the air and form afloating or fluidized bed. This bed acts like a fluid in which the constituent particles collide with one another. Thebed contains around 5 per cent coal (or fuel) and 95 per cent of inert material (such as ash or sand). The temperature in a FBC is 800-900 C, compared with 1,300-1,500C in pulverized coal combustion(PCC). The lower temperature helps in minimizing the production of nitrous oxide. Furthermore, most of thesulphur dioxide formed can also be absorbed with the help of absorbents like limestone.The other advantages of FBC technology are its compact nature, ability to burn low calorific value coal (up to1,800 kcal per kg) and produce less erosive ash. FBC-based plants also have lower capital costs (8-15 per centlower) as compared to PCC-based plants.At present, the only constraint in using this technology is its small size. While the maximum size of a PCC-basedpower plant unit could be around 1,500 MW, FBC plants have a maximum unit size of only 250 MW. Integrated gasification combined cycle IGCC technology is used to enhance the thermal efficiency of coal-based power plants and reduce emissions. InIGCC plants, the coal is gasified using a gasifier. The gaseous coal is purified to remove pollutants such assulphur. The purified coal is subsequently burnt to generate hot gases, which are used to run a gas turbine. Theexhaust gases, containing waste heat, are used to boil water and generate steam. The steam is used to run a steamturbine. IGCC technology can deliver thermal efficiency of up to 48-50 per cent. In addition, it can be used withother heavy fuels such as refinery residues and petroleum coke.IGCC technology is also environment friendly, as pollutants such as sulphur dioxide and oxides of nitrogen, are reduced to very low levels. However, the cost of IGCC plants is higher than conventional plants. Nuclear Power Nuclear power plants reduce carbon dioxide emissions. However, safety concerns abound, particularly thoserelating to exposure to harmful nuclear radiations. In addition, the cost of a nuclear plant is around three timeshigher than that of a gas-based plant. However, new technologies are being developed to address some of thesafety issues associated with nuclear power plants. Pebble bed modular reactor The pebble bed modular reactor (PBMR)differs from a conventional light water reactor as it utilizes no fuelrods and cooling water. The fuel comprises nearly 15,000 small carbon and ceramic-coated specks of uranium thatare pressed into a small pebble. The pebble is coated with a layer of graphite. Inside the pebble, uraniumundergoes fission and releases heat. However, the graphite layer traps the radioactivity. Around 300,000 pebblesare kept in a reactor, which is cooled by a flow of helium gas. The helium gas expands due to the heat and spinsan electricity generating turbine. However, since helium is chemically and radiologically inert, it does not becomeradioactive as it circulates through the pebble bed. One of the main advantages of PBMR technology is that relatively small units producing 100-150 MW of powercan use it. In addition, the core of the reactor does not melt even at high temperatures, a s the operatingtemperature continues to remain below the melting point of the ceramic pebble s that contain the fuel. Thishelps prevent safety hazards. Distributed generation

In distributed generation, small generators are located near the consumer site, within the distribution system.Distributed gencos are not directly connected to the transmission grid. Considering the technologicalimprovements and reduction in the costs of small generators, the amount of power consumption throughdistributed generation is expected to rise in the future.

Resources In India, power generation is largely dependent on coal, gas, nuclear and hydroelectric sources. Non-conventional sources of energy such as wind and solar energy, account for a small share of the totalinstalled capacity. Fuel oil and diesel are largely used in captive power plants. Coal In India, the proportion of coal-based capacity has increased significantly over the years. According tothe Geological Survey of India, in January 2008, the total coal reserves in India were estimated ataround 257 billion tonnes (including the non-recoverable reserves under riverbeds or urban areas). Outof this, proven reserves stood at 99 billion tonnes, while indicated reserves were 121 billion tonnes, therest being accounted by inferred reserves.In India, the majority of coal reserves are concentrated in the eastern and south eastern regions.Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh, West Bengal and Andhra Pradesh account for around 95 per cent of the countrys total coal reserves. The power generation sector is the largest end-user of coal in India. In 2007-08, it made up for almost 71per cent of total coal consumption.In February 1997, the Central government allowed private sector companies to mine coal for captiveconsumption; and for supply and distribution.In the past, only Coal India Ltd (CIL), a public sector company, could undertake commercial mining andsupply of coal. CIL is organized into several regional subsidiaries, which mine coal in their respectiveregions. Till March 1996, prices of all grades of coal were regulated. However, in April 1996, the pricesof A, B and C grades were deregulated. In February 1997, the price of D grade coal was alsoderegulated. During 1990-2000, the average pithead price of coal increased at a CAGR of 11 per cent. InJune 2004, CIL increased the pithead price of coal by 14-16 per cent. Prices were revised again inDecember 2007 - there was a 10 per cent increase by CIL and its subsidiaries, and by 15 per centincrease by North Eastern Coal Fields Ltd. Even if prices rose further, it will not have any impact on thepower sector, as all PPAs have a fuel cost passage clause.In view of high ash content of Indian coal, the MoE&F has stipulated that all future po wer plants(situated 1,000 kms away from the pithead) should be based on washed coal. But, the existingwashery capacity in India is not adequate to meet the requirements of the power sector. In

addition, CIL does not have adequate funds to invest in coal washeries. However, the private sector hasundertaken some initiatives for setting up coal washeries with foreign participation as well as incollaboration with CIL. Natural Gas Natural gas-based power generation capacity (including naphtha-based capacity) accounted for around10 per cent of the total installed capacity as of March 2009. Further, of the total natural gas produced inIndia, 35 per cent is sourced to generate electricity and 29 per cent to

produce fertilizers.At the end of 2007, the proven and recoverable reserves of natural gas in India were estimated at 1,055billion cubic meters (bcm). Around 40 per cent of the gas reserves are located off the western coast, inthe Bombay High and the Hazira fields. In 200708, the gross production of natural gas was around 32.3bcm. In the past, a large portion of gas production was flared or re-injected due to inadequate evacuationinfrastructure.The HaziraVijaipur-Jagdishpur (HVJ) pipeline evacuates about 40 per cent of the gas produced inIndia. Most of the fertilizers, petrochemicals and power plants based on natural gas are located alongthis pipeline.The consumption of natural gas for power generation and other end uses (like fertilizers) is expectedto increase significantly over the next 510 years, as natural gas is an environment friendly andeconomic fuel. In India, the consumption of natural gas was 114.2 mmscmd in 2007-08. However, theunmet demand continued to be around 20 mmscmd. At the current rate of production, the known andrecoverable gas reserves of India are expected to last for around 30 years. In order to supplementdomestic supply, India is expected to import natural gas, either through pipelines or as liquefied naturalgas (LNG). Hence, substantial investments will be required in receiving terminals, regasification plantsand cryogenic shipping vessels to import LNG. Additional investments are also required in pipelines forthe inland distribution of natural gas. New domestic supply of natural gas has commenced from Reliance Industries Ltd (RIL)s KG Basin block. It is currently producing 40 mmscmd of gas, and is expected to ramp this up to 80 mmscmd of gas by December 2009. Also, discoveries of large natural gas reserves in Myanmar have promptedseveral multinational companies to propose construction of pipelines to transport the surplus natural gasto eastern and northern India. In addition, there are proposals to lay pipelines from West Asia to India

(Afghanistan-Pakistan-India). The proposed pipelines include an onshore pipeline from IranPakistan-India and a submarine pipeline from Oman. However, neither proposal has progressed due to unresolvedpolitical and economic issues. DEMAND - SUPPLY Demand for power registered at a CAGR of around 6 per cent from 1998-99 to 2008-09. Further, therehas been a sectoral shift in demand for electricity. The share of the industrial sector declined steadily till2001-02, and then started rising at a flat rate. The share of industrial demand has increased from 25 percent in 2002-03 to 37 per cent in 2006-07. The agricultural consumption, after peaking at 31 per cent in1998-99, declined to 22 per cent in 2006-07. Conversely, domestic demand rose steadily, from 20 percent in 1996-97 to 24 per cent in 2006-07.As per the forecast of the Seventeenth Electric Power Survey (EPS), energy demand will increase at aCAGR of 8.4 per cent to 969 billion kWh during the Eleventh FiveYear Plan period (2007-2012). Peak demand is projected to register a CAGR of 12.3 per cent to 167,054 MW.The government has revised the capacity addition target to 78,700 MW from 78,577 MW for theEleventh Plan. However, in the first 2 years of the Eleventh Plan only 12,716.70 MW of capacity hasbeen added as against the target of 27,396 MW.This is because only 9,263 MW against the target of 16,335 MW was added in 2007-08. In 2008-09, thetarget fell short by 69 per cent due to delays in the supply of critical components of thermal projects andnon-availability of fuel. Therefore, in 2008-09, only 3,453.70 MW was added against the target of 11,061 MW.Taking these factors into account, CRISIL Research estimates that only around 44,846 MW of capacities will be added during the Eleventh Plan period. The central sector is expected to account fora major portion of the capacity

additions (37 per cent), followed by the state sector (35 per cent) and theprivate sector (28 per cent), respectively. Sectoral demand The pattern of electricity consumption in the various sectors has changed considerably over t heyears. During 1996-97 to 2006-07, electricity consumption in the agricultural, commercial, industrialand domestic sectors increased at a CAGR of 4.9 per cent.

Agricultural sector: The agricultural sector had a very low share of power consumption during the early1970s. However, stress on rural electrification led to an increase in power consumption from 10-15 percent in 1970 to 31 per cent in 1998-99. But low tariffs and lack of proper metering resulted in underrecoveries and inefficient utilization of power in this sector, which led to the sectors share in power consumption declining to 22 per cent 2006-07.Industrial sector: Electricity consumption in the industrial sector increased at a CAGR of 5.1 per centfrom 1996-97 to 2006-07. However, the share of the industrial sector in total electricity consumption fellfrom 37.2 per cent in 1996-97 to 30.2 per cent in 2001-02; but with the opening up of the power sector,it gradually rose to 37.6 per cent in 200607. In view of the continuous uptrend in industrialelectricity tariffs, powerintensive industries find it economical to set up captive power plants,especially through cogeneration. Further, irregular power supply and increasing shutdowns caused bypower shortages, has forced players to rely on captive power facilities.Domestic sector: In the domestic sector, electricity consumption grew at a CAGR of 7.2 per cent from1996-97 to 2006-07. The share of the domestic sector in total electricity consumption went up from 19.7per cent in 1996-97 to 24.4 per cent in 2006-07, driven mainly by urbanization and the increasing usageof household appliances (geysers, air-conditioners, etc).

ELECTRICITY DEMAND FORECAST Electric power surveys: The CEA constitutes a committee every 4-5 years that carries out acomprehensive survey of various consumer segments for estimating the demand for power. Thecommittee publishes the EPS, which provides state-wise demand forecasts, both in terms of energy andpeak power requirements, for a 15-year period. It also provides a sector-wise estimate of energy demandfor a 5-year period.

Elasticity of electricity consumption with respect to GDP growth Electricity consumption is strongly related to the level of economic activity. However, over the past 25years the elasticity of electricity consumption vis--vis the gross domestic product (GDP) has beengradually declining. This decline is likely to continue, owing to: An increase in the share of the services sector (about 56 per cent in 2007-08, compared to lessthan 30 per cent in 1990-91). Efforts by industries to improve energy efficiency (to enhance competitiveness) through moreefficient technologies and energy audits. Greater reliance on captive power plants by power-intensive industries due to the high tariffscharged by SEBs and poor quality of grid power.The average annual GDP growth rate (at constant prices) during the Eighth, Ninth and Tenth Planperiods was 5.9 per cent, 5.5 per cent and around 7.7 per cent, respectively. The annual growth inelectricity generation during these periods was 7.2 per cent, 5.7 per cent, and 4.4 per cent, respectively.

Elasticity of electricity generation with respect to GDP is the percentage change in generationcorresponding to a 1 per cent change in GDP. The elasticity of electricity generation (not includingcaptive generation) with respect to GDP has fallen from around 1.47 during the Sixth Plan period toaround 0.60 during the Tenth Plan period. This implies that energy usage in the economy hasdeclined, partially due to a rise in the share of the services sector (which is less energyintensiveas compared with the industrial sector) in the GDP and partially due to an improvement in energyefficiency.

TRANSMISSION Review The transmission segment plays a key role in transmitting power continuously to variousdistribution entities across the country. Further, the transmission sector needs concomitant capacityadditions in line with the generation capacity additions to enable seamless flow of power. The governments focus on providing electricity to rural areas has led to the power T&D system beingextended to remote villages. The total length of transmission lines in the country has inc reasedfrom 2.50 million circuit kilometers (ckm) in 1980-81 to 6.94 million ckm in 2006-07.

Overview and Structure A reliable T&D system is important for the proper and efficient transfer of power from generatingstations to load centers. A T&D system comprises transmission lines, substations, switching stations,transformers and distribution lines.In order to ensure reliable supply of power and optimal utilization of generating capacity, a T&Dsystem is organized in a grid, which interconnects various generating stations and load centers.This ensures uninterrupted power supply to a load centre, even if there is a failure at the localgenerating station or a maintenance shutdown. In addition, power can be transmitted thro ugh analternate route if a particular section of the transmission line is unavailable.In India, the T&D system is a three-tier structure comprising distribution networks, state gridsand regional grids. These distribution networks and state grids are primarily owned and operated by therespective SEBs or state governments (through state electricity departments). Most interstatetransmission links are owned and operated by PGCIL, with some jointly owned by the S EBsconcerned. In addition, PGCIL owns and operates a number of inter-regional transmission lines (part of the national grid) to facilitate the transfer of power from a surplus region to one with deficit.The transmission capacity added, over the years, has been lower than the generation capacity addition.This is also seen by lower investments in T&D compared to generation. Globally, every rupeeinvested in generation has an equal amount invested in T& D, however in India, every rupee investedin generation has a corresponding 50 paisa invested in T&D. This has also resulted into excess loadingof transmission lines at around 90 per cent.The transmission capacity added as a part of the national grid in the previous year has been at a brisk pace of 5,550 MW from December 2006 to December 2007. This has been in line with the target of 37,150 MW to be added by the end of Eleventh Plan. The current interregional capacity stands at17,000 MW (as on December 2007). The transmission system in India operates at several voltage levels: Extra high voltage (EHV): 765 kV, 400 kV and 220 kV High voltage: 132 kV and 66 kV Medium voltage: 33 kV, 11 kV, 6.6 kV and 3.3 kV Low voltage: 1.1 kV, 220 volts and below Transmission and sub-transmission systems supply power to the distribution system, which, inturn, supply power to end consumers. In order to facilitate the transfer of power betweennei ghbouring states, state grids are inter-connected through high-voltage transmission links to form aregional grid. There are five regional grids: Northern region: Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan,Uttaranchal and Uttar Pradesh

Eastern region: Bihar, Jharkhand, Orissa, Sikkim and West BengalWestern region: Dadra and Nagar Haveli, Daman and Diu, Chhattisgarh, Goa, Gujarat, MadhyaPradesh, and Maharashtra Southern region: Andhra Pradesh, Karnataka, Kerala, Pondicherry and Tamil NaduNorth -eastern region: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland andTripura

As peak demand for power does not take place at the same time in all states, it results in a surplus in onestate and deficit in another. Regional or inter-state grids facilitate the transfer of power from a surplusregion to the one facing a deficit. These regional grids also facilitate the optimal scheduling of maintenance outages and better coordination between power plants.These regional grids will be gradually integrated to form a national grid, whereby power from asurplus region can be transferred to another, resulting in the optimal utilization of generating capacity. For instance, the eastern region has some surplus power, which is transferred to the westernand northern regions as the two regions have deficit scenarios. National grid In order to optimize the utilization of generation capacity through the exchange of powerbetween the surplus and deficit regions, and exploit the uneven distribution of hydroelectric potentialacross various regions, the Central government in 1981 approved a plan for setting up a national grid.The plan envisaged setting up high-voltage transmission links across various regions in order to enablethe transfer of power from surplus to deficit regions.The advantages of a national grid system are:A flatter demand curve (or a higher system load factor) on account of the exchange of powerbetween regions, resulting in a better PLF and more economical operations;Lower investments required for new generation capacities (a full-scale national grid is expectedto reduce the need for new capacities by up to 10,000 MW in the next 10 years.);Better scheduling of planned outages of power plants; andImproved stability of the grid, as the share of an individual generating station in the totalcapacity declines with greater integration of the power system.The process of setting up the national grid was initiated with the formation of the centralsector power generating and transmission companies - National Thermal Power Corporation (NTPC),National Hydroelectric Power Corporation (NHPC) and PGCIL. PGCIL was given the responsibility forplanning, constructing, operating and maintaining all interregional links and taking care of theintegrated operations of the national and regional grids.A national grid would enable optimal utilization of energy resources by facilitating a uniformthermal-hydel mix among various regions. From a regional perspective, the exploitation of

thermal and hydroelectric resources may not be economically viable in some cases, althoug h it maybe so from a national perspective. For instance, Arunachal Pradesh had a hydroelectric potential of around 50,000 MW. (The hydro potential available in Arunachal Pradesh is the highest in thecountry.) However, of this, only 400 MW has been developed and a further 3,000 MW is underdevelopment by NHPC and NEEPCO. Another 23,000 MW

of capacities are being planned by variouscentral and private sector players. However, in terms of installed capacity, 95 per cent of the potential isyet to be developed. The hydroelectric potential of the north-eastern region and eastern region is around60,000 MW and 10,000 MW, respectively. Hence, with the integration of the eastern and northeasternregions, the hydroelectric potential of the north-eastern region can be used to meet the peak demand of the eastern region.Setting up a national grid requires the gradual strengthening and improvement of regional grids,and their progressive integration through extra high voltage (EHV) and HVDC transmiss ion lines.Coordination among the states within a region and among the various regions is critical for the operationof the national grid. This would require an efficient and reliable communication system, comprisingmicrowave links and dedicated data/voice transmission lines between the load dispatch centers andgenerating stations.In addition, synchronization of frequencies is required to integrate regional grids. In the case of adifference in frequencies, HVDC transmission would be effective in integrating the grids through anasynchronous link. Although some interregional links are operational, these do not have adequatecapacity to transmit bulk power, a nd are often loaded to capacity. The national grid, when fullyoperational (likely by around 2012), is expected to have a total inter-regional transmission capacity of 37,150 MW. Grid discipline Several problems related to the integrated operations of regional grids can be attributed to the lack of discipline among grid constituents. Grid discipline involves maintaining the grid frequency within tolerance limits (49.250.3 Hz) and complying with the directions of the Regional Load DespatchCenters (RLDCs), with respect to load despatch and drawing of power.There have been several instances of grid collapse after constituent states drew excess power orbecause there were fluctuations in the grid frequency. Under the Electricity (Supply) Act, S EBs areexpected to comply with the directions of RLDCs to ensure the integrated operation o f regionalgrids. However, in the absence of adequate incentives and disincentives, RLDCs are unable to enforcethe directives.Further, load management, through load shedding or backing down by each of the constituents, is animportant aspect of the operation of a grid system. Inadequate load dispatch and communicationfacilities often result in lack of co-ordination with respect to the scheduling of load and generationbetween states.In 1999, the CERC drafted the Indian Grid Code, which, along with the incentives andd isincentives notified under the Availability-Based Tariff (ABT) Order, is expected to induce bettergrid discipline among the various grid constituents.Unscheduled interchange (UI) charges are levied on defaulting entities which overdraw/under draw fromthe grid and disturb the grid balance. Previously, the UI charges had been escalated up to Rs 10 perunit of excess capacity drawn. However, recently the CERC in order to improve the grid stabilityreduced the band (i.e. From 50.5-49.0 Hz to 50.3-49.2 Hz), and charges to Rs 7.3 per unit of excessunits drawn.

Private investments in transmission In 1998, the Central government enacted the Electricity Laws (Amendment) Act, whichrecognized transmission as an independent activity (distinct from generation and distribution), andallowed private investments in the sector.According to the government policy, the STUs, SEBs or their successor entities and the centraltransmission utility (CTU) PGCIL will identify transmission projects for the intra-state and inter-state/inter-regional transmission of power, respectively. The STUs and CTU will invite private companies to implement these projects through an independentprivate transmission company (IPTC) or on a JV basis.The IPTC would be selected through an international competitive bidding process. The primary criteriafor selection would be the quoted transmission service charges (TSC) and the technical, managerial andfinancial capabilities of the bidders. In the case of JV companies, the CTU and STUs coul d own anequity stake of up to 26 per cent. JV partners could also be selected on the basis of a ninternational competitive bidding process. Further, the primary selection criteria would be th etechnical and financial strength of the bidders. Transmission service charges would be determined on acost plus basis under the supervision of the CERC or SERCs. The IPTCs role will be limited to the construction, ownership and maintenance of transmission lines. Operations of the grid, including load dispatch, scheduling and monitoring, will be undertaken by theSTUs and the CTU at the intra-state and inter-state/inter-regional level, respectively. The CTU andSTUs will be involved in the development phase for obtaining project approvals and variousregulatory and statutory clearances (such as environment and forest cle arance and securing right-of-way), and will transfer the same to the selected private companies. Technology in transmission HVDC transmission One of the pre-requisites for integrating grids is to synchronies their frequencies. In India,synchronous integration of regional grids was not possible due to variations in frequencies and voltages.Therefore, the most viable alternative is the asynchronous transfer of power through HVDCtransmission links.Advantages of HVDC transmissionCost consideration: DC conductors cost less than AC conductors, as DC transmis sionrequires smaller conductors for carrying the same load of power. In addition, only twoconductors are required for DC transmission, while AC transmission requires three.However, the cost of HVDC terminals is higher than that of AC substations. Hence, for a givenload of power to be transferred, there is a break-even distance, beyond which, DC transmissionwould be more economical (approximately 600 km for 500 MW). DISTRIBUTION Distribution is the last and critical leg in the supply of electricity, reaching end consumers such asresidential, commercial, agricultural and industrial segments. Distribution has several comp onentssuch as pricing to various customers, cross subsidization etc. However, as this is a lucrativebusiness, it has been held by the respective state entities, with private participation beingmarginal (only 5-7 per cent of the total). Further, issues is distribution vary from T&D losses torural electrification etc.The government has begun a number of initiatives to improve the electricity supply to villages. Aspart of its initiatives, the power distribution system has been extended to reach remote villages. Atthe end of 2008-09, a total of 488,926 villages were electrified. However,

T&D losses in the countryremain high at around 28 per cent, compared to an average 10-15 per cent in developed countries.This is because of inadequate metering and theft of electricity. (The difference in the amount of electricity supplied and the amount actually metered is usually reported as T&D losses.) High T&Dlosses are also attributed to the T&D of a large amount of power at low voltage - the rise in ruralelectrification has resulted in the proliferation of low voltage (less than 11 kV) transmission lines.T&D losses rose from 22.27 per cent in 1995-96 to an estimated 26.91 per cent in 2007-08. Thelosses peaked at 33.98 per cent in 2001-02, but since have registered a declining trend. Tariffs and financial performance of SEBs In India, average electricity tariffs are lower than the average cost of supply (cost of generation plusT&D costs). The gap between average tariff and average cost of supply has increased from 36 paisaper kWh in 2005-06 to 49 paisa per kWh in 2006-07. The main reason for this has been theannual losses of all SEBs which have been increasing co ntinuously - the commercial losses of all SEBs have gone up from over Rs 40 billion in 199192 to Rs 257 billion in 2006-07.

T&D losses T&D losses can be classified into two main categories:Technical losses The technical component of T&D losses has an inverse relationship with the voltageconfiguration of the T&D system. Transmission of bulk power of high voltage (400 kV, 220 KV,and 132 kV) over long distances is estimated to result in a loss of 4-5 per cent of the total energytransmitted, while distribution at low voltage levels is estimated to lead to a loss of 15-18 per cent of the total energy transmitted.Commercial lossesCommercial losses occur due to non-metering, non-billing or pilferage of power. These losses canbe largely attributed to faulty meters, reading errors, unmetered supply and unauthorizedconnections. On account of inadequate metering arrangement, it is difficult to estimate theextent of the loss and attribute it to a specific reason. Some of these losses are reported as agricultural consumption since most rural connections are unmetered. In addition, a largeproportion of the losses can be attributed to theft through unauthorized connections in both rural andurban areas. Though commercial losses are not completely avoidable, they can be reducedsubstantially through investments.Reasons for high T&D lossesA weak and inadequate T&D system.Large-scale rural electrification programme (due to low voltage distribution lines).Numerous transformation stages: This results in a high component of transformation losses.There are 56 transformation stages in the Indian T&D network due to the proliferationof lowvoltage consumption. The use of low capacity and inefficient transformers results inhigher losses and dis-economies of scale.Improper load management: This overloads transmission lines. Transmission lines should beloaded up to 50-60 per cent of their capacity. However, in India, transmission lines aregenerally loaded to 90 per cent of their capacity, and often operate on alert condition'. As a result, a small disturbance in a section can cause a cascading grid failure.Pilferage and theft of energy. A reduction in T&D losses by one percentage point is equivalent to the power generated froma 600-700 MW plant. Although the cost of achieving the reduction is difficult to estimate, itwould be a fraction of the investment required for setting up a new capacity (around Rs 25 billion).

Measures to reduce lossesTechnical losses Technical losses can be reduced by adopting the following measures:Reducing the length of LT lines by relocating distribution substations, installing ad ditionalsubstations and convertingLT lines into HT lines.Installing capacitors at suitable locations.Reducing the number of transformation stages and using high-efficiency transformers.Installing time-of-day meters with incentives to promote the usage of off-peak energy, in order toreduce over-loading of T&D lines.Using better equipment such as all aluminum alloy conductors (AAACs); this can reduce heatlosses by 8-12 per cent and eliminate magnetic losses. Although AAACs are priced around 10per cent higher than aluminum conductor steel reinforced (ACSR), their average life is 60-80years, as compared with around 30 years for ACSR.Installing high-quality energy meters at the premises of all consumers and substations. Commercial losses Commercial losses can be reduced by adopting the following measures:Supplying metered energy to all consumers.Prompt calibration, replacement of faulty meters and using tamperproof meters.Preventing pilferage through stronger legislation and better enforcement. Privatization Privatization of distribution is generally accepted as the first phase in the reforms and restructuring of the power sector. With private participation in power distribution, significant benefits are expected toaccrue, such as:Reduction in T&D losses.Improvement in metering and billing practices.Improvement in revenue collection. Distribution reforms To improve distribution, the government formulated the Accelerated Power Development Ref ormProgramme (APDRP).This programme aims to improve the financial viability of state power utilities,reduce aggregate technical and commercial losses to around 10 per cent, improve customer satisfaction,and increase reliability and quality of power supply.The APDRP has two components -investment and incentive components. Under the investmentcomponent, the government provides assistance worth 50 per cent of the project cost, of which 25per cent is a grant and 25 per cent is a loan. The balance 50 per cent has to be arranged by t heutilities either through internal resource generation or from financial institutions or from other sources of funds (such as state government, the Rural Electrification Corporation, Life Insurance Corporation,ICICI, SIDBI and market bonds). Special category states such as Jammu and Kashmir, HimachalPradesh, Uttaranchal and Sikkim receive full assistance from the Central government, out of which 90per cent is grant and the remaining 10 per cent is loan. Priority is given to projects from those states thathave committed to a timebound programme of reforms as elaborated in the Memorandum of Understanding (MoU) and Memorandum of Agreement (MoA), and are progressing on thosecommitments. As part of the incentive component, the utilities are rewarded for actual cash lossreductions by waiving half of the cash losses reduced by way of free grant. The cash losse sare calculated as the net of subsidy and receivables. Up to March 31, 2008, the funds releasedunder this component were Rs 28.8 billion. The disbursement for 2006-07 and 200708 was Rs10.2 billion and Rs 14.0 billion, respectively. (This includes both the investment and incentivecomponents.) New R-APDRP Till December 2008, the Government of India had sanctioned 571 projects, amounting to Rs170.33 billion to strengthen and upgrade sub-transmission and distribution systems of the

variousstates. The states have so far utilized Rs 126.07 billion. An amount of Rs 28.79 billion has alsobeen released to nine states for achieving reduction in cash losses under the incentive componentof the programme.As per the new APDRP policy, projects under the scheme shall be taken up in two parts:Part-A includes the projects for establishing baseline data and IT applications forenergy accounting/auditing a nd IT-based consumer service centers.Part-B includes the regular distribution strengthening projects REFORMS IN THE POWER SECTOR Pre Reform Stage Confronted with unprecedented economic crisis in 1991, Government of India embarked upon amassive cleanup exercise encompassing all policies having financial involvement of Governments- both at the level of Union and States.Since after Electricity (supply) Act 1948, the power sector was mainly under the governmentcontrol which owned 95 % of distribution and around 98% of generation through states' andcentral government utilities, the power sector was chiefly funded by support from governmentbudgets in the form of long term, concessional interest loans. These utilities were made to carryforward the political agenda of the ruling parties of the day and the cross- subsidization i.e.charging industrial and commercial consumers above the cost of supply and to chargeagricultural and domestic consumers below cost of supply was an integral part of the functioningof the utilities.

Generation Any Company, association or body of individuals (even unincorporated) can generate electricitywithout requirement of techno-economic clearance of CEA, or approval of State Government orregulator, except in case of hydropower station for which written consent of Central ElectricityAuthority is required.A Generating Company can supply electricity directly to more than one consumer and is vestedwith the duty to establish, operate and maintain sub-stations, tie lines etc.Any entity, (company, co-operative society or association of persons) can establish a CaptiveGeneration Plant (CGP) primarily for its own use without any entry barriers. Open access is to beprovided to all CGPs. No cross-subsidy surcharge would be levied on the persons who haveestablished CGP for carrying electricity to destination of his own use. Rural Electrification/Generation/Distribution Government of India will have to formulate a National Policy after consulting StateGovernments & CEA, to govern (i) rural electrification and local distribution through local bodies5, and (ii) rural off-grid supply including those based on renewable/nonconventionalenergy resources.No license is required for generating or distributing in rural areas notified by the State Govt. Licensing Trading has been recognized as a separate licensed activity along with transmission anddistribution. However, a license is not required in respect of (i) trading by a distribution licensee,(ii) transmission, distribution or trading by any Govt., as the Govt. would be deemed a licensee.Electricity Regulatory Commission (ERC), on the recommendation of Government, inaccordance with the national electricity policy and public interest can exempt any of the localbodies6 from requiring license. Trading and Captive Generation Trading, i.e., purchase of electricity for resale, is a separate licensed activity, except fordistribution licensees who do not require a separate trading license. Traders can enter into

directcontracts with the consumers and determine its terms and conditions (including tariff).The Appropriate Commission may specifyThe entry barriers for traders technical requirements, capital adequacyrequirement, and credit-worthiness;Duties re. supply and trading in electricity to be discharged by a trader; andFix trading margin in intra-state trading if considered necessary.ERCs have to develop trading market and have to be guided by National Tariff Policy.

Open Access Open access means non-discriminatory use of transmission lines, distribution system andassociated facilities by any licensee/consumer/Genco in accordance with ERC regulations.The licensees, consumers and Gencos have to pay transmission/wheeling charges for openaccess. Consumers has to also pay a surcharge (to be utilized to meet cross subsidy) determinedby ERC, for open access.ERC may order any licensee owning intervening transmission facilities to provide use of facilities to any other licensee, to the extent of surplus capacity.A State Transmission Utility is obliged to provide non-discriminatory open access to itstransmission system for use by a licensee or Genco forthwith, or by any consumer oncedistribution level open access has been provided.There is no statutory time limit for introduction of open access. ERC has to determine by June10, 2004 the phases and conditions, subject to which open access would be introduced. Distribution The distribution licensee has a mandatory duty to supply on request of consumer in a time boundmanner if the consumer agrees to pay the applicable tariff. ERC is empowered to suspend orrevoke license of a Discom for failure to maintainUninterrupted supply. Distribution licensee is empowered to recover charges/expenses/securityand disconnect supply for non-payment of dues.Discoms can enter into direct contracts with consumers.Discoms can engage in other businesses but have to share revenue to reduce wheeling charges,and maintains separate accounts for the same.ERCs may grant more than one distribution licenses can be issued in a given area, permittingthem to supply electricity through their own distribution system. To get a subsequent distributionlicense any person will have to comply with additional requirements prescribed by GoI regardingcapital adequacy, creditworthiness, or Code of Conduct etc. If an applicant meets suchrequirements, he shall not be denied grant of the license. ERCs may permit by regulations a consumer/class to receive supply of electricity from anyoneother than the distribution licensee of the area of supply against payment of wheeling charge &surcharge in lieu of cross subsidy.Distribution licensee is free to undertake distribution for a specified area within his area of supply without need for a separate license. Provided that the distribution licensee shall remainliable for the supply. Transmission To secure non-discriminatory open access, transmission has been segregated as a wires functionwithout any trading (buying and selling). Central transmission utility (CTU) and all Statetransmission utilities (STUs) are deemed licensee.CTU and STUs functions are (i) Transmission; (ii) planning & co-ordination of transmissionsystem; (iii) development of efficient and economical transmission lines from generating stationsto load centers; (iv) providing non-discriminatory open access to the system.RLDCs and SLDCs are empowered to issue directions, and exercise supervision & control toensure stability, efficiency & economy of grid operation in the region and the State respectively.Licensees, generating

companies and other persons connected with operation of power systemshall comply. SLDC shall ensure compliance with RLDC directions.Pending creation of separate RLDCs & SLDCs, the CTU and the STU shall perform the role. Tariff Government has been distanced from determination of tariff. This power has been vested in theCERC/SERC. In determination of tariff CERC/SERC shall be guided by factors including National Electricity Policy, tariff policy (formulated by Central Government), CERCs principles and methodologies for setting tariff and principles rewarding efficiency and multiyear tariff.In case tariff is determined through transparent bidding as per Government of India guidelines,the same shall be adopted by the ERCs.To promote competition among distribution licensees, where there are 2 or more distributionlicensees supplying in an area, the ERC may fix only maximum ceiling of tariff for retail sale.The PPAs/BSAs entered into before 10th June, 2003 have not been explicitly saved or granted aprotection from regulatory intervention. Regulatory Commission It is mandatory to establish SERCs within 6 months from 10th June, 2003. Joint Commission canbe constituted for two or more States or Union territories or both by mutual agreement.The new functions to be performed by CERC/ SERC include specifying Grid Code, Supply Code(only SERC), levy fees, fix trading margins in interstate trading.In exercise of their functions, ERCs shall be guided by National Electricity Policy, NationalElectricity Plan & Tariff Policy; directions of GoI/State Government concerned, in matters of policy involving public interest where such Governments decision shall be final as to whether the directions relates to a policy involving public interest. There is no express provision enablingERCs to depart from such directions.Provision for separate ERC funds (not consolidated funds) for finance of ERC expenditures. Policy Issues Central Government shall prepare, publish and revise National Electricity Policy and Tariff policy in consultation with State Governments and CEA9.The implementation of the Act is largely dependent on the nature and scope of the diverse policyinstruments to be issued by Government, and institutions like Special Courts, AppellateElectricity Tribunal, NLDC, RLDC, SLDC, SERCs and SEB successors to be constituted by Governments. I t is noteworthy that these instruments will have a bearing are:-

Role and functioning of ERCs,

Role and functioning of CEA,

Market development,

Governance of the sector regulation, grid operations, safety issues, and

Enforcement. Mega Power Policy Eligibility: Inter-state projects of 700 MW (thermal) and 350 MW (hydro) for Jammu & Kashmirand North Eastern states; 1,000 MW (thermal) and 500 MW (hydro) for others. Exemption from custom duties, excise & central levies. Increased ECB capital limits. State Implementation support. Decreased import duty on fuel i.e. coal & liquid fuel Deemed export benefits to domestic bidders Price preference to PSU bidders Preconditions: Purchasing state must have ERC; Must agree in principle to privatize distribution in cities of >10 million population Ultra Mega Power Projects Nine sites identified; each project size about 4,000 MW; Total estimated investment of Rs 160billion. Projects to be completed on built -own-operate (BOO) basis. Successful bi dder finalized on tariff based competitive bidding; takes over SPV from PFC. PFC is the nodal agency for setting up the special purpose vehicle (SPV) for project (100 per cent subsidiary) Projects to use supercritical technology based on pithead (capti ve block) or imported coal(coastal). Full exemption of central excise duty on goods procured under supercritical technology. Five coastal sites identified including Mundra in Gujarat awarded to Tata Power. Consumer Interests Creation of a Consumer redressal forum (CRF) by Distribution licensee in a time bound manner. The consumers aggrieved from CRF can approach to an ombudsman10. Distribution licensee has to supply electricity within 1 month from the date of request for supply,except where capital works are required for connectivity. Failure of distribution licensee tosupply within said time period would attract penalty. Enforcements

Suitable provisions for provisional assessments and recovery of compensatory fines may be ableto address a long-standing vacuum in law. Special Courts are to be established by Governments for speedy disposal of cases relating to theft of electricity.The scope of offences has been expanded and enhanced punishments have been prescribed forsubsequent or continuing offences.Stronger powers (accompanied with better safeguards) have been provided for conductinginspections/search/seizure. Dispute Resolution The appeal against all orders of ERC/adjudication officer would lie to an expert AppellateTribunal (an expert body), which shall dispose appeals within prescribed time.Appeal from appellate tribunal lies to Supreme Court. The appeal to Supreme Court is limited tosubstantial question of law. Electricity (Amendment) Act, 2007. The Electricity (Amendment) Act, 2007, amending certain provisions of the Electricity Act,2003, has been enacted on 29th May, 2007 and brought into force w.e.f. 15.06.2007. The mainfeatures of the amendment Act are: -

Central Government, jointly with State Governments, to endeavor to provide access toelectricity to all areas including villages and hamlets through rural electricity infrastructure andelectrification of households.

No License required for sale from captive units.

Deletions of the provisions for elimination of cross subsidies. The provisions forreduction of cross subsidies would continue.

Definition of theft expanded to cover use of tampered meters and use for unauthorizedpurpose. Theft made explicitly cognizable and non-bail able. Demand Side Management Demand-side management is used to describe the actions of a utility, beyond the customer'smeter, with the objective of altering the end-use of electricity - whether it be to increase demand,decrease it, shift it between high and low peak periods, or manage it when there are intermittentload demands - in the overall interests of reducing utility costs. In other words DSM is theimplementation of those measures that help the customers to use electricity more efficiency andit doing so reduce the customers to use the utility costs. DSM can be achieved through.

Improving the efficiency of various end-uses through better housekeeping correctingenergy leakages, system conversion losses, etc ;

Developing and promoting energy efficient technologies, and

Demand management through adopting soft options like higher prices during peak hours,concessional rates during off-peak hours seasonal tariffs, interruptible tariffs, etc.DSM, in a wider definition, also includes options such as renewable energy systems, combinedheat and power systems, independent power purchase, etc, that utility to meet the customer's

demand at the lowest possible cost. Often the terms energy efficiency and DSM are usedinterchangeably. However, it is important to point out that DSM explicitly refers to all thoseactivities that involve deliberate intervention by the utility in the marketplace so as to alter theconsumer's load profile. Energy efficiency issued in an all encompassing sense and includes anyactivity that would directly or indirectly lead to an increase in energy efficiency. To make thisdistinction precise, a program that encourages customers to install energy efficient lightingsystems through a rebate program would fall under DSM. On the other hand, customer purchasesof energy efficient lighting as a reaction to the perceived need for conservation is not DSM butenergy efficiency gains.There has been growing recognition of the importance of energy efficiency in India's electricitysectors. The Ministry of Power (MoP) is the nodal agency for energy conservation in thecountry. The Bureau of Energy Efficiency (BEE), an autonomous body under the MoP, was setup in 1989 to coordinate initiatives and activities on energy conservation. Several state electricityboards (SEBs) have also set up Energy Conservation Cells, some of which have been assistingindustries in conducting energy audits. Several reports have been attempted to estimate thepotential for energy conservation in various consuming sectors and have also identified variousEnergy Efficiency technologies (EETs) for important end-uses. The National Energy EfficiencyProgram (NEEP) of the Government of India (GOI) has targeted savings of about 5000 MW tobe realized by the end of the Eighth plan through both demand (2750 MW) and supply side(2250 MW) efficiency improvements. In terms of Government policies, there are specialequipment in the first year, subsidies for energy audits, reduced customs duty for selected controlequipment for managing energy use, and so on. Environmental Reform in the Electricity Sector: Enhanced economic activity and population growth have led to increasing energy demand that inturn has spurred electricity generation. But large-scale electricity generation and distributionhave adverse environmental impacts, varying by the technologies employed and their locations.These need to be addressed so that energy services can be enhanced in harmony with the environment, within our ecological footprints. Due to the externalities of electricity generation, that is, the negative impacts not directly affecting or being restricted to those involved, the costs of impact mitigation are typically not included in electricity prices. Consideration for theenvironment has therefore to be forced into the reckoning, or preferably integrated into thesystem, hence the importance of environment policy in the context of the power sector.Focusing on environmental issues and policies applicable to the power sector in China and India.These countries generate 68% of the electricity generated in developing Asia, but with a totalpopulation of about 2.4 billion, have large unmet needs.In approaching the problem of environmental protection in the power sector in rapidlydeveloping country, our analytical framework consists of identification of those stateenvironmental policies and regulations that pertain to the power sector, both directly andindirectly, assessment of the barriers encountered, and finally

recommendations of likelysolutions to circumvent these problems.Let us consider the impacts of electricity generation on the environment. The focus is on to listthe national environmental policies that affect these impacts, beginning with general direction,proceeding to specific rules and standards and then to alternatives to conventional electricitygeneration. This leads to the problems that beset effective policy implementation. STUDY OF SELECTED COMPANIES To study and analyze the power sector better, the comparative and analytical study of the firmsof power sector in India is done. The firms are chosen based on their sales turnover. The beloware the firms selected by us for the study,

NTPC

Energy Develop

Tata Power

Power Grid

Torrent Power

JP Hydro

Reliance Infra

KSK Energy

GVK Power

Indowind EnergyThe study of few selected major companies is as follows: 1. NTPC Ltd. NTPC Limited is the largest power generating and Navratna status company of India; it wasincorporated in the year 1975 as National Thermal Power Corporation Private Limited toaccelerate power development in the country. As a wholly owned company of the Governmentof India, NTPC has emerged as a truly national power company, with power generating facilitiesin all the major regions of the country. NTPC's core business is engineering, construction andoperation of power generating plants. NTPC as an integrated

Power Major with presence inHydro Power, Coal mining, Oil & Gas exploration, Power Distribution & Trading and also enterinto Nuclear Power Development. It provides consultancy also in the area of power plantconstructions and power generation to companies in India and abroad. It is providing power atthe cheapest average tariff in the country. With its experience and expertise in the power sector,also NTPC is extending consultancy services to various organizations in the power business. Theconsulting Wing of NTPC is an ISO 9001:2000 accreditation. In the year of 1982, the companycommissioned the first Singrauli unit.Developing and operating world-class power stations is NTPC's core competence. Its scale of operation, financial strength and large experience serve to provide an advantage overcompetitors. To meet the objective of making available reliable and quality power at competitiveprices, NTPC would continue to speedily implement projects and introduce stateof-arttechnologies. 2. RELIANCE INFRASTRUCTURE LTD Reliance Energy Limited (REL), with its corporate lineage going back to 1929. At the time of incorporation REL was called as Bombay Suburban Electric Supply Limited (BSES). Thecompany has been in the field of power distribution for nearly eight decades and with itsemphasis on continuous improvements. REL is a fully integrated utility engaged in thegeneration, transmission and distribution of electricity. It ranks among India's top listed privatecompanies on all major financial parameters, including assets, sales, profits and marketcapitalization. REL (BSES) has several group companies - ST-BSES Coal Washery (Joint Venture), BSES Infrastructure Finance, Utility Powertech (Joint Venture), Ticapco, BSESTelecom, BSES Kerala Power, BSES Andhra Power and three new companies of Orissa. Thecompany has a strategy of adding value by strategic alliances within the group. 3. TATA POWER COMPANY LTD Tata Power Company Limited (TPC), India's largest integrated Electric Power Utility in privatesector with a reputation for reliability, incorporated in the year 1919 at Mumbai. TPC pioneeredthe generation of electricity in India nine decades ago. The core business of Tata PowerCompany is to generate, transmit and distribute electricity. The Company operates in twobusiness segments: Power and Other. The Power segment is engaged in generation, transmissionand distribution of electricity. The other segment deals with electronic equipment, projectconsultancy. 4. POWER GRID CORPORATION OF INDIA LTD The Company was incorporated in October 23rd of the year 1989 as the National PowerTransmission Corporation Limited with the responsibility of planning, executing, owning,operating and maintaining the high voltage transmission systems in the country. Subsequently,the company name was changed to the present name Power Grid Corporation of India Limited(PGCIL) with effect from October 23rd of the year 1992. The company's operational areaincludes Development of Inter-State transmission Systems and Grid Management. Developmentof Inter-State transmission Systems consists of Planning & Design, Construction, QualityAssurance & Inspection and Operation & Maintenance. Grid Management includesEstablishment of modern Load Despatch Centers, Real-time Grid Operation, Optimumscheduling & dispatch and Energy accounting including settlements. The Diversification consistsof Broadband Telecom Services, Sub-transmission, Distribution and Rural Electrification. Thecompany has certified as PAS 99:2006, which integrates the requirements of ISO 9001:2000 forquality, ISO 14001:2004 for environment management and OHSAS 18000:1999 for health andsafety management systems. 5. JP HYDROPOWER

The Company was incorporated on December 21, 1994 with the object, interalia, to set up hydro-electric or Thermal power projects and for the supply of general electric power. The Certificateof Commencement of Business was granted on January 9, 1995. Our registered office is in NewDelhi. Jaiprakash Hydro-Power Limited (JHPL), a part of the Jaypee Group owns and operatesthe 300 MW Baspa-II Hydroelectric Project at District Kinnaur in Himachal Pradesh. JPVL plan to implement a 2400MW hydroelectric project (the Lower Siang project), expected tocommence operations in 2014 and a 500 MW hydroelectric project (the Hirong project),expected to commence operations in 2015, in the state of Arunachal Pradesh (collectively theArunachal projects). These projects were initially awarded to JAL and were transferred to us through a tripartite agreement dated December 13, 2007. The memoranda of agreement for theseprojects provide for the Government of Arunachal Pradesh to own 11% of the equity capital inthe special purpose vehicle that are to be incorporated to implement each of these projects. JPVLproposes to subscribe 55.36% of the equity capital of Jaypee Karcham Hydro CorporationLimited (JKHCL), which is implementing a 1000 MW ( 4*250 MW units) runof-the-riverhydroelectric power projects on the river Sutlej, in Kinnaur district of the state of HimachalPradesh , expected to commence operations in 2011 (the Karcham Wangtoo project). MAJOR FINDINGS:

Most of the SEBs though are supported by state government, are running under loss. Thisis because of power theft, transmission losses, use of conventional methods for powergeneration and transmission and out dated management policies.

Indian power sector has been witnessing a wide demand supply gap. Althoughelectricity generation has increased substantially, it has not been able to meet the demand.

India is going to build an additional capacity of 1 lakh MW by 2012 including privatesector contribution.

In a bid to bring structural transformations, necessary reform programs should be carriedout in distribution and transmission process.India possesses a vast opportunity to grow in the field of power generation, transmission, anddistribution. The target of over 150,000 MW of hydel power germination is yet to be achieved.By the year 2012, India requires an additional 100,000 MW of generation capacity. A hugecapital investment is required to meet this target. This has welcomed numerous powergeneration, transmission, and distribution companies across the globe to establish theiroperations in the country under the famous PPP (publicprivate partnership) programmes. Thepower sector is still experiencing a large demandsupply gap. This has called for an effectiveconsideration of some of strategic initiatives. There are strong opportunities in transmissionnetwork ventures - additional 60,000 circuit

kilometers of transmission network is expected by2012 with a total investment opportunity of about US$ 200 billion. IMPACT OF CERC REGULATIONS ON CENTRAL PLAYERS The impact analysis of CERC regulations is described below for different modes of operation Generation CERC regulations in this area are: Return on equity to be higher at 15.5 per centImpact: Positive The return on equity would increase from 14.0 per cent to 15.5 per cent for existingplants from 2009-10 onwards. In case of projects commissioned on or after April 1, 2009,an additional return of 0.5 per cent shall be allowed if such projects are completed withinthe time specified.This is expected s to be a positive for the players in the central sector as from 2009-10onwards these players would start earning a higher return on equity 15.5 per cent posttax (from the previous 14 per cent) on the existing capacities. This when added with thetax at normal rate is expected to give a pre-tax rate of 23.5 per cent [tax at MinimumAlternative Tax (MAT)] rate would earn a pretax rate of 17.5 per cent). The completionof new projects within the stipulated time would result in an incremental benefit of 0.5per cent (coal-based 500 MW green-field plants need to be commissioned within 44months to achieve the extra 0.5 per cent return on equity), thus new projects stand to gaina return on equity of 16 per cent.1. Depreciation rate increased to 5.28 per cent, AAD done away withImpact: NeutralThe Central Electricity Regulatory Commission (CERC) has done away with the advanceagainst depreciation (AAD) norm stated in the CERC Regulation Policy 2004-09 and hasincreased the depreciation rate to 5.28 per cent for a period of 12 years.CRISIL Research expects this norm to have a neutral impact. Earlier AAD was providedin the CERC Regulation 2004-09 in order to balance the mismatch between tenure of loans (to be paid in 10 years) and asset life (spread over 25 years). The new CERCregulation however discontinues the benefit of AAD. In order to compensate for the same, depreciation rates have been increased to 5.28 per cent for a period of 12 years andthe balance depreciation is spread equally over the life of the asset.2. Long term loansImpact: Positive The generation company or the transmission licensee, as the case may be, shall makeevery effort to re-finance the loan as long as it results in net savings on interest and inthat event the costs associated with such re-financing shall be borne by thebeneficiaries. Also, the net savings shall be shared between the beneficiaries and thegeneration company or the transmission licensee, as the case may be, in the ratio of 2:1.This is expected to be a positive for players. In the past, net savings from anyrestructuring activity had to be completely passed on to the beneficiaries. However, asper the new regulation, the generation company would be allowed to retain one-thirdof the net savings.3. Operation and maintenance (O&M) expensesImpact: NeutralAs per the revised norm (for a 500 MW coal-based power plant) the incrementalO&M expense is increased to 5.72 per cent annually, from the earlier 4 per cent. TheO&M expense increased from Rs 9.3 lakh/MW

in 2004-05 to Rs 10.5 lakh/MW in2008-09 and will now rise from Rs 13 lakh/MW in 200910 to Rs 16.2 lakh/MW in2013-14.An incremental compensation has been permitted after the completion of 10 years, 15years and 20 years of the useful life of the plant, which translates into Rs 0.15 lakh / MW 0.65 lakh / MW.This move is positive but the impact is neutral for players as the O&M expense formsa small proportion of the total costs.

4. Working capital normsImpact: Neutral CERC has proposed that henceforth maintenance spares would be calculated at 20 percent of the O&M expenses as compared to the previous norm of calculating at 1 percent of the historical costs.5. Gross station heat-rateImpact: NegativeCERC norms have tightened the gross station heatrate. Typically a 500 MW coal-based power plant had a normative station heat rate of 2,450 kcal/kwh as per the oldnorms; this has been changed to 2,425 kcal/kwh with the new regulations.We expect this norm to have a negative impact as the tightening of the gross stationheat rate norms would result in efficient players retaining lower savings/earnings.6. IncentivesImpact: PositiveThe new CERC regulation states that the incentive would be based on PlantAvailability Factor (PAF) rather than the Plant Load Factor (PLF), which was thecriterion under the previous regulation.CRISIL Research expects this to be a positive. In the past, players have suffered dueto inadequate fuel supply leading to low PLFs. Calculation, now based on PAF willprovide adequate incentive to players.The incentive calculation for plants with less than 10 years of commercial operationwould be calculated as follows: Annual fixed charges * (30/365) * (0.5 * 0.5 Actual monthly PAF/ NormativePAF) For plants above 10 years of commercial operation, the calculation would be asfollows: Annual fixed charges * (30/365) * (Actual monthly PAF/ Normative PAF) Transmission The CERC regulations for the transmission segment are broadly similar to the generationsegment. However, the following are the cases which differ from generation segment: Operation and maintenance (O&M) expenses In the CERC Regulation 2004-09, the O&M expenses were at Rs 0.23 lakh / km andaround Rs 28.12 lakh/ bay for the overall lines and sub-stations, respectively.However, the O&M expenses as per CERC Regulation 2009-14 have segregated theline costs in single, double circuit etc and sub-station costs by bay division viz, 765kV, 400 KV etc. The norm for AC and HVDC lines in case of a single circuit wouldincrease from Rs 0.5 lakh/ km to Rs 0.67 lakh/ km and for a sub-station (220Kv) fromRs 36.68 lakh/bay to Rs 45.82/bay. Working capital norms Henceforth, maintenance spares would be calculated at 15 per cent of the O&Mexpenses as compared to the previous norm where it was calculated at 1 per cent of the historical costs. IMPACT OF CERC REGULATIONS ON TARIFF AND END CUSTOMERS

As per CRISIL Research there is expected to be a 5-8 per cent increase in tariff rate The benefit from the increase of return on equity (14.0 per cent to 15.5 per cent) has not beencompletely off-set by the tightening of other norms and hence we expect an increment of 5-8 percent in the tariff rates, based on the assumptions below: ADVANCED METERING INFRASTRUCTURE WHAT IS AMI? AMI is not a single technology implementation, but rather a fully configured infrastructure thatmust be integrated into existing and new utility processes and applications. This infrastructureincludes home network systems, including communicating thermostats and other in-homecontrols, smart meters, communication networks from the meters to local data concentrators,back-haul communications networks to corporate data centers, meter data management systems(MDMS) and, finally, data integration into existing and new software application platforms.Additionally, AMI provides a very intelligent step toward modernizing the entire power system.At the consumer level, smart meters communicate consumption data to both the user and theservice provider. Smart meters communicate with in home displays to make consumers moreaware of their energy usage. Going further, electric pricing information supplied by the serviceprovider enables load control devices like smart thermostats to modulate electric demand, basedon pre-established consumer price preferences. More advanced customers deploy distributedenergy resources (DER) based on these economic signals. And consumer portals process theAMI data in ways that enable more intelligent energy consumption decisions, even providinginteractive services like prepayment.The service provider (utility) employs existing, enhanced or new back office systems that collectand analyze AMI data to help optimize operations, economics and consumer service. Forexample, AMI provides immediate feedback on consumer outages and power quality, enablingthe service provider to rapidly address grid deficiencies. And AMIs bidirectional communications infrastructure also supports grid automation at the station and circuit level. Thevast amount of new data flowing from AMI allows improved management of utility assets as well as better planning of asset maintenance, additions and replacements. The resulting moreefficient and reliable grid is one of AMIs many benefits. WHAT ARE THE TECHNOLOGY OPTIONS FOR AMI? An AMI system is comprised of a number of technologies and applications that have beenintegrated to perform as one: Smart meters Wide -area communications infrastructure Home (local) area networks (HANs) Meter Data Management Systems (MDMS)

 Operational Gateways SMART METERS Conventional electromechanical meters served as the utility cash register for most of its history.At the residential level, these meters simply recorded the total energy consumed over a period of time typically a month. Smart meters are solid state programmable devices that perform manymore functions, including most or all of the following: Time -based pricing Consumption da ta for consumer and utility Net metering Loss of power (and restoration) notification Remote turns on / turns off operations Load limiting for bad pay or demand response purposes Energy prepayment Power quality monitoring Tamper and energy th eft detection Communications with other intelligent devices in the home And a smart meter is a green meter because it enables the demand response that can lead toemissions and carbon reductions. It facilitates greater energy efficiency since informationfeedback alone has been shown to cause consumers to reduce usage. COMMUNICATIONS INFRASTRUCTURE The AMI communications infrastructure supports continuous interaction between the utility, theconsumer and the controllable electrical load. It must employ open bi-directional communicationstandards, yet be highly secure. It has the potential to also serve as the foundation for a multitudeof modern grid functions beyond AMI. Various architectures can be employed, with one of themost common being local concentrators that collect data from groups of meters and transmit thatdata to a central server via a backhaul channel. Various media can be considered to provide partor all of this architecture: Power Line Carrier (PLC) Broadband over power lines (BPL) Copper or optical fiber Wireless (Radio frequency), either centralized or a distributed mesh Internet

 Combinations of the above Future inclusion of smart grid applications and potential consumer services should be consideredwhen determining communication bandwidth requirements. HOME AREA NETWORKS (HAN) A HAN interfaces with a consumer portal to link smart meters to controllable electrical devices.Its energy management functions may include: In -home displays so the consumer always knows what energy is being used and what itis costing Responsiveness to price signals based on consumer -entered preferences Set points that limit utility or local control actions to a consumer specified band Control of loads without continuing consumer involvement Consumer over -ride capabilityThe HAN/consumer portal provides a smart interface to the market by acting as the consumersagent. It can also support new value added services such as security monitoring. A HAN maybe implemented in a number of ways, with the consumer portal located in any of several possibledevices including the meter itself, the neighborhood collector, a stand-alone utility-suppliedgateway or even within customersupplied equipment. METER DATA MANAGEMENT SYSTEM (MDMS) A MDMS is a database with analytical tools that enable interaction with other informationsystems (see Operational Gateways below) such as the following: Consumer Information System (CIS), billing systems, and the utility web site Outage Management System (OMS) E nterprise Resource Planning (ERP) power quality management and load forecastingsystems Mobile Workforce Management (MWM) Geographic Information System (GIS) Transformer Load Management (TLM) One of the primary functions of an MDMS is to perform validation, editing and estimation(VEE) on the AMI data to ensure that despite disruptions in the communications network or atcustomer premises, the data flowing to the systems described above is complete and accurate. OPERATIONAL GATEWAYS AMI interfaces with many system-side applications (see MDMS above) to support AdvancedDistribution Operations (ADO), Advanced Transmission Operations (ATO) and Advanced AssetManagement (AAM). WHAT ARE SOME DEPLOYMENT APPROACHES? Deployment approaches will depend upon th e utilitys starting point, geography, regulatory situation and long-term vision. For those utilities that already have deployed anAMR system, the question will be whether they can build on that system or need to start afresh.If the system includes a two-way communications infrastructure, it should be possible to upgradethe metering to accommodate

a range of AMI applications. Where the communicationsinfrastructure is unidirectional (i.e. outgoing only), it may be possible to overlay a return channelusing a complementary technology. This option would have to be compared to the cost andbenefits of installing a new integrated two-way communications infrastructure. The speed,reliability and security of the communications infrastructure will determine the range of applications it can support. For utilities with widespread and diverse territories, it may be thatmultiple communications solutions will be needed. Pilot programs that explore the performanceof various solutions can be useful as the first phase of an AMI deployment. The choice of an AMI communications infrastructure is also influenced by the utilitys long-term vision for AMI. If AMI is seen as the foundation for overall grid modernization, thecommunications system will need to accommodate anticipated future needs and have theflexibility to handle applications that are not even currently on the utilitys radar screen. Experience has shown that these evolving grid modernization applications often produce majorbenefits. The deployment of AMI is a strategic initiative that must be endorsed by the utilityregulator. The benefits of AMI, and ultimately of overall grid modernization, flow to not justthe utility, but also to the consumer and society in general. Hence regulators need to consider thepossibility that traditional utility economic analysis may not capture the true value of an AMIstrategic initiative and that an expanded framework may be more appropriate, as discussed laterin this document. Some regulators may see AMI and grid modernization as very desirable andthey will encourage their utilities to move aggressively. Others may be less proactive and willexpect their utilities to broach AMI and bring with them a compelling argument on its merits. Ineither case, recognition of the wide-ranging societal benefits of AMI must be addressed. Together, the utility and its regulators should communicate the full benefits of an AMIinitiative to consumers and society at large. There is a general lack of understanding amongthe public regarding how electricity is produced and delivered, how it affects their quality of lifeand how it can meet their needs in the 21st century. In particular, the value of consumers increased involvement in electricity markets, and the potential benefits for consumers involvedin such programs needs to be explained. WHAT ARE THE BENEFITS OF AMI? AMI provides benefits to consumers, utilities and society as a whole. CONSUMER BENEFITS For the consumer, this means more choices about price and service, less intrusion and moreinformation with which to manage consumption, cost and other decisions. It also means higherreliability, better power quality, and more prompt, more accurate billing. In addition, AMI will help keep down utility costs, and therefore electricity prices. And, as members of society,consumers also reap all the benefits that accrue to society in general, as described below. UTILITY BENEFITS Utility benefits fall into two major categories, billing and operations. AMI helps the utility avoidestimated readings, provide accurate and timely bills, operate more efficiently and reliably, andoffer significantly better consumer service. AMI eliminates the vehicle, training,

healthinsurance, and other overhead expenses of manual meter reading, while the shorter read-to-pay time advances the utilitys cash flow, creating a one -time benefit. And consumer concerns aboutmeter readers on their premises are eliminated.Operationally, with AMI the utility knows immediately when and where an outage occurs so itcan dispatch repair crews in a more timely and efficient way. Meter-level outage and restorationinformation accelerates the outage restoration process, which includes notifying consumers aboutwhen power is likely to return.Using AMI, the utility can receive significant benefits from being able to manage customeraccounts more promptly and efficiently, starting with the ability to remotely connect anddisconnect service without having to send personnel to the customer site. Similarly, manymaintenance and customer service issues can be resolved more quickly and cost-effectivelythrough the use of remote diagnostics. And AMI enables new programs and methods for creatingand recovering revenue such as distributed generation and prepayment programs.AMI also provides vast amounts of energy usage and grid status information that can be used byconsumers to make more informed consumption decisions and by utilities to make betterdecisions about system improvements and service offerings. Instead of relying on rough estimates, engineers armed with AMIs detailed knowledge of distribution loads and electricalquality can accurately size equipment and protection devices, and better understand distributionsystem behavior. This huge increase in valuable information helps the utility: Assess equipment health Maximize asset utilization and life Optimize maintenance, capital and O&M spending Pinpoint grid problems Improve grid planning Locate/ identify power quality issues Detect/reduce energy theft SOCIETAL BENEFITS Society, in general, benefits from AMI in many ways. One way is through improved efficiencyin energy delivery and use, producing a favorable environmental impact. It can accelerate the useof distributed generation, which can in turn encourage the use of green energy sources. And it islikely that emissions trading will be enabled by AMIs detailed measurement and recordingcapabilities. A major benefit of AMI is its facilitation of demand response and innovative energytariffs. During periods of high energy demand, a small reduction in demand produces a relativelylarge reduction in the market price of electricity. And reduced demand can avoid rollingblackouts. According to Edison Electric Institute (EEI), the direct costs (e.g. power costs) of rolling blackouts in California have been estimated at tens of millions of dollars. Business andconsumer losses may be many times higher. Hence, a modest demand response capability couldproduce a societal benefit worth billions of dollars. The benefits accrued may vary depending onthe type of demand response programs initiated. For instance, demand response distributed to theindividual premise in forms like thermostat and pool pump

control allows load to be reducedwithout sacrificing consumer satisfaction. However, even just shifting demand away from peak hours through time-of-use tariffs can have major benefits, including the reduced cost to bothutilities and consumers by deferring building new, expensive peak generation facilities.There is also a societal fairness issue that AMI addresses. Full deployment of AMI results in theelimination of old and obsolete electromechanical meters that tend to slow down as they age.Modern AMI meters maintain their accuracy over time, resulting in a more equitable situationfor all consumers. In addition, modern meters are self monitoring, making it easier to identifyinaccurate measurements, incorrect installations and, especially, electric energy theft.As reported by Edison Electric Institute (EEI), price and demand reductions during high-demandperiods lead to:Reduced -peak capacity requirementscongestion costsT&D costselectrical lossesgeneration costsmarket influence by any one supplier Improved -electric system efficiency (lower operating costs)electric system reliability (lower maintenance costs)settlement data management WHAT BARRIERS IMPACT SUCCESSFUL DEPLOYMENT OF AMI? The transition to AMI and ultimately to a modern grid is not without obstacles. Business Case Limitations : Limiting the assessment of AMI benefits to just thoseassociated with utility operations biases the business case against deployment. A morecomplete societal business case often produces a different conclusion. If one includessuch items as the avoided societal costs and consequences of rolling and regionalblackouts, AMI benefits can be many times the utility operating benefits. While some of these benefits accrue to constituents outside the utility, they are nonetheless directconsequences of AMI and should be addressed in the business case. Depreciation Rules : The accounting treatment of the value of in-service meters isanother important element in any AMI decision. In most cases it will be necessary toreplace obsolete meters before they have been fully depreciated; creating a write-down(i.e. an expense that reduces utility earnings) that can affect regulated income. Standards : While AMI technology is moving at a rapid pace, standards are needed toensure interoperability among the many AMI offerings. Open standards are the best wayto drive down the costs of AMI deployments and to give utilities the assurance that alarge AMI investment will not become stranded if the selected vendor fails. Rate Designs : Innovative rate designs that reflect actual market conditions are needed tocomplement the capabilities of AMI technology and realize the potential of demandresponse. Current ratemaking structures make it difficult to roll out new technologies.Utilities that install energy-saving systems can see their sales drop without any offsettingbenefit Education

: Consumer education is needed regarding the merits of AMI, DR and thesocietal benefits from grid modernization. Consumers also need to understand anddemand a modern electric grid that will improve their overall quality of life and enhanceUS competitiveness in a global economy. Technical Resources : Utility and vendor technical staffs have been cut back over thepast decade. Rebuilding these staffs and attracting the needed technical talent is a barrierto the full reali zation of AMIs potential. Regulatory Barriers : Overlapping federal, regional, state and municipal agencies createan impediment. The industry is neither fully regulated nor completely deregulated. Financial Constraints : The grid is capital intensive and faces problems imposed by utilities constrained balance sheets. Technology Hurdles : It is a challenge to fix a moving train. Utilities cannot turn off the power for a year or two while they install upgrades. RENEWABLE ENERGY Renewable energy isenergygenerated fromnatural resources such assunlight, wind, rain, tides,andgeothermal heat which arerenewable(naturally replenished). In 2006, about 18%of global final energy consumption came from renewables, with 13% coming fromtraditionalbiomass,such aswoodburning. Hydroelectricitywas the next largest renewablesource, providing 3% of global energy consumption and 15% of global electricity generation. Renewable Energy Scenario in India Conventional sources of energy such as coal and petroleum products have severaldrawbacks, especially with respect to the impact on the environment and the depletion of natural resources. However, significant technological improvements in the design and operationof coal-based power plants, aimed at lowering emissions, have led to higher capital costs.World fossil fuel reserves have been depleting rapidly. It has been estimated that at the currentrate of production, natural gas reserves are expected to last for 31-34 years while coal reserves inIndia are expected to last for 118 years. Hence, the government has been focusing on exploiting non-conventional and renewable sourcesof power. At present, non-conventional sources of energy account for a negligible

proportion of the total energy consumed in India. At the end of 2008-09, non-conventional energy sources,largely wind and co-generation power, accounted for around 9 per cent of the total capacity.India is blessed with an abundance of sunlight, water and biomass. Vigorous efforts during thepast two decades are now bearing fruit as people in all walks of life are more aware of thebenefits of renewable energy, especially decentralized energy where required in villages and inurban or semi-urban centers. India h as the worlds largest programme for renewable energy. Government created the Department of Non-conventional Energy Sources (DNES) in 1982. In1992 a full fledged Ministry of Non-conventional Energy Sources was established under theoverall charge of the Prime Minister. The range of its activities cover Promotion of renewable energy technologiesCreate an conducive environment to promote renewable energy technologiesCreate an conducive environment for their commercialization,Renewable energy resource assessment, research and development and its demonstrationProduction of biogas units, solar thermal devices, solar photovoltaic, wind energy andsmall hydropower units. Co-Generation In some industries like chemicals, the manufacturing process generates considerable amounts of heat, which can be used to produce steam. This steam, in turn, can be used to run a turbinegenerator. In a co-generation plant the turbine runs on low-pressure steam, as compared with thehigh-pressure steam used in conventional thermal plants.The capital required to set up a co-generation plant is much lower, as compared with a coal-based plant, as the need for a boiler is eliminated (due to the availability of process steam).Typically, cogeneration plants cost Rs 20-30 million per MW of capacity, while coal-basedpower plants cost Rs 40-50 million per MW of capacity. The main factors that determine thecost of a cogeneration plant are the quantity and the quality of steam generated in themanufacturing process.

In addition, as the cost of fuel is nil, the cost of the electricity generated through cogeneration ismarginal, as compared with the cost of purchased power. The surplus power (after meeting therequirement of the manufacturing process) can be sold to the grid. Wind Power In India, wind power potential is largely concentrated in the coastal regions, and is estimated ataround 48,500 MW. As on November 30, 2008, the installed capacity of wind power in Indiawas around 9,587 MW. Tamil Nadu has the highest installed capacity of wind power at around4,116 MW.The functioning of a wind power generation starts when the wind turbine converts the kineticenergy of wind into rotary motion, which can be used, either directly to run a machine (windmills or wind pumps), or to run an electric generator, that is, a wind turbine g enerator(WTG). WTGs are available in capacities ranging from 250-750 kW. The velocity and density of wind and the size (diameter) of the rotor determine, at a particular site, the output of a WTG. Solar power Electricity from solar energy can be generated by two methods - solar photo-voltaic (SPV) cellsand solar thermal power. SPV devices generate power by directly converting light energy toelectricity. SPV modules are composed of semi-conductor material (silicon) and when sunlightfalls on them, it frees electrons, which produces electricity. SPV modules are made of severalinter-connected solar cells, in order to provide power on a large scale. Modules can be furtherinter-connected to form solar arrays.In solar thermal power systems,

heat energy from the sun is concentrated, using parabolicreflectors, to heat a fluid like water to a high temperature. The cost of generating solar power hasbeen estimated at Rs 15 per kWh. The Centre and state governments have tied up to giveincentives of Rs 12 per unit for generating power from solar energy. Cost of generation fromconventional sources is Rs 2.53.5 per kWh. Generation of solar power is more expensive owingto the higher capital costs of solar power plants. A solar power plant of 1 MW could require aninvestment of up to Rs 200 million, compared to Rs 40 million for a conventional thermal powerplant and Rs 60 million for hydro power plant. SPV Systems More than 700000 PV systems of capacity over 44MW for different applications are installed allover India. The market segment and usage is mainly for home lighting, street lighting, solarlanterns and water pumping for irrigation. Over 17 grid interactive solar photovoltaic generatingmore than 1400 KW are in operation in 8 states of India. As the demand for power growsexponentially and conventional fuel based power generating capacity grows arithmetically, SPVbased power generation can be a source to meet the expected shortfall. Especially in rural, far-flung where the likelihood of conventional electric lines is remote, SPV power generation is thebest alternative. Small hydroelectric plants Taking into account the problems associated with large hydel plants, small hydroelectricpower plants (up to 25 MW) are considered to be economical and environment friendly.They are suitable for remote and inaccessible areas, as a decentralized source of power.Over 4,000 prospective sites, with a total potential of over 15,000 MW, have been identified toset up small hydel plants (up to 25 MW). The highest potential is found in Himachal Pradesh,Uttaranchal, Jammu and Kashmir and Arunachal Pradesh. Biomass Power The Biomass power/cogeneration programme is implemented with the main objective of promoting technologies for optimum use of countrys biomass resources for grid and off grid power generation. Biomass materials successfully used for power generation include bagasse,rice husk, straw, cotton stalk, coconut shells, soya husk, de-oiled cakes, coffee waste, jutewastes, and groundnut shells, saw dust etc. The technologies being promoted includecombustion/ cogeneration and gasification either for power in captive or grid connected modesor for heat applications. Potential The current availability of biomass in India is estimated at about 500 million metric tons peryear. Studies sponsored by the Ministry has estimated surplus biomass availability at about 120 150 million metric tons per annum covering agricultural and forestry residues corresponding toa potential of about 16,000 MW. This apart, about5,000 MW additional powercould begenerated through bagasse based cogeneration in the countrys 550 Sugar mills, if these sugar mills were to adopt technically and economically optimal levels of cogeneration for extractingpower from the bagasse produced by them. Different Technologies UsedCombustion The thermo chemical processes for conversion of biomass to useful products involvecombustion, gasification or pyrolysis. The most commonly used route is combustion. Theadvantage is that the technology used is similar to that of a thermal plant

based on coal, exceptfor the boiler. The cycle used is the conventional ranking cycle with biomass being burnt in highpressure boiler to generate steam and operating a turbine with generated steam. The net powercycle efficiencies that can be achieved are about 23-25%. The exhaust of the steam turbine caneither be fully condensed to produce power, or used partly or fully for another useful heatingactivity. The latter mode is called cogeneration. In India, cogeneration route finds applicationmainly in industries. Gasification Instead of combustion, it is possible to convert the biomass into producer gas by gasification(partial combustion). Thermo-chemical gasification involves burning the biomass with insufficient air so that complete combustion doesnt occur, but a gas eous product is obtained.The producer gas is a mixture of carbon monoxide and hydrogen. Gasifiers are classified asupdraft or downdraft depending on the direction of flow of the biomass and producer gas. Indiahas significant experience in atmospheric gasifiers. Geothermal Power Geothermal energy can be produced in two ways: by using the steam coming out of hot watersprings or by pumping water into the hot earth crust and then using the resulting steam togenerate power. The state is looking at the second option for generating power as the area has nohot springs. The geothermal power technology is a proven technology and effectively used in countries like Iceland, New Zealand, etc. At Rs 4.5-5 crore per mega watt, it is also cost-efficient, which is similar to the conventional thermal power plants The Maharashtra government has identified Jalgaon district as the countrys first geothermal power hub. Analysis of geological data by experts at the Indian Institute of Technology,Bombay, indicated that there is a potential for geothermal power generation in the Jalgaondistrict, which is adjacent to Madhya Pradesh. According to preliminary estimates the area mayhave the potential of generating around 2,000 mega watts of power similar to the conventional thermal power plants The Maharashtra government has identified Jalgaon district as the countrys first geothermal power hub. Analysis of geological data by experts at the Indian Institute of Technology,Bombay, indicated that there is a potential for geothermal power generation in the Jalgaondistrict, which is adjacent to Madhya Pradesh. According to preliminary estimates the area mayhave the potential of generating around 2,000 mega watts of power will require uranium imports The Atomic Energy Commission however envisages some 500 GWon line by 2060. Nuclear Power industry development in India: More recent reactor developments The new series of 540 MW (gross, 490 MW net) nuclear reactors are developed indigenouslyfrom the 220 MW (gross) model PHWR. The Tarapur 3&4 units were built by NPCIL.The first - Tarapur 4 - started up in March 2005, was connected to the grid in June and startedcommercial operation in September.Russia is supplying the country's first large nuclear power plant, comprising two VVER-1000(V-392) reactors, under a Russian-financed US$ 3 billion contract. The AES-92 units atKudankulam in Tamil Nadu state are being built by NPCIL and will be commissioned andoperated by NPCIL under IAEA safeguards. Unlike other Atomstroyexport projects such as inIran there has been only about 80 Russian supervisory staff on the job. Russia will supply all theenriched fuel, though India will

reprocess it and keep the plutonium. The first unit was due tostart supplying power in March 2008 and go into commercial operation late in 2008, but thisschedule has slipped by about two years. The second unit is about 6-8 months behind it.Under plans for the India-specific safeguards to be administered by the IAEA in relation to thecivil-military separation plan, eight further reactors will be safeguarded (beyond Tarapur 1&2,Rawatbhata 1&2, and Kudankulam 1&2): Rawatbhata 3&4 by 2010, Rawatbhata 5&6 by 2008,Kakrapar 1&2 by 2012 and Narora 1&2 by 2014. India's nuclear power reactors under construction:

Nuclear industry developments beyond the trade restrictions Following the Nuclear Suppliers' Group agreement which was achieved in September 2008, thescope for supply of both reactors and fuel from suppliers in other countries opened up.The Russian PWR types were apart from India's three-stage plan for nuclear power and weresimply to increase generating capacity more rapidly. Now there are plans for eight 1000 MWunits at the Kudankulam site, and in January 2007 a memorandum of understanding was signedfor Russia to build four more there, as well as others elsewhere in India. The new units will bethe larger 1200 MW AES-2006 versions of the first two.Between 2010 and 2020, further construction is expected to take total gross capacity to 21,180MW. The nuclear capacity target is part of national energy policy. This planned incrementincludes those set out in the Table below including the initial 300 MW Advanced Heavy WaterReactor (AHWR).In 2005 four sites were approved for eight new reactors. Two of the sites - Kakrapar andRawatbhata, would have 700 MW indigenous PHWR units, Kudankulam would have imported1000 or 1200 MW light water reactors alongside the two being built there by Russia, and thefourth site was greenfield for two 1000 MW LWR units - Jaitapur (Jaithalpur) in the Ratnagiridistrict of Maharashtra state, on the west coast. The plan has since expanded to six 1600 MWEPR units here.NPCIL had exploratory meetings and technical discussions with three major reactor suppliers -Areva of France, GE-Hitachi and Westinghouse Electric Corporation of the USA for supply of reactors for these projects and for new units at Kaiga. These resulted in more formal agreementswith each reactor supplier early in 2009, as mentioned below.

In April 2007 the government gave approval for the first four of these eight units (below), usingindigenous technology, probably starting construction in 2009. In late 2008 NPCIL announcedthat as part of the Eleventh Five Year Plan (2007-12), it would start site work for 12 reactorsincluding the rest of the eight PHWRs of 700 MW each, three or four fast breeder reactors andone 300 MW advanced heavy water reactor in 2009. NPCIL said that "India is now focusing oncapacity addition through indigenization" with progressively higher local content for importeddesigns, up to 80%. Looking further ahead its augmentation plan included construction of 25-30light water reactors of at least 1000 MW by 2030. Non-proliferation, US-India agreement and Nuclear Suppliers' Group India's nuclear industry has been largely without IAEA safeguards, though four nuclear powerplants have been under facility-specific arrangements related to India's INFCIRC/66 safeguardsagreement with IAEA.India's situation as a nuclear-armed country excluded it from the Nuclear Non-ProliferationTreaty (NPT) so this and the related lack of full-scope IAEA safeguards meant that India wasisolated from world trade by the Nuclear Suppliers' Group. A clean waiver to the trade embargowas agreed in September 2008 in recognition of the country's impeccable non-proliferationcredentials.In July 2007 a nuclear cooperation agreement with India was finalized, opening the way forIndia's participation in

international commerce in nuclear fuel and equipment and requiring Indiato put most of the country's nuclear power reactors under IAEA safeguards and close down theCirus research reactor by 2010.It would allow India to reprocess US-origin and other foreign-sourced nuclear fuel at a newnational plant under IAEA safeguards. This would be used for fuel arising from those 14reactors designated as unambiguously civilian and under full IAEA safeguards. One of theimportant results of it will be bilateral trade agreement with USA, Russia and France.