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Ultra Mega power plans

by Adam Lane on Aug 16, 2012

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India is planning some massive power projects to meet massive demand over the network. (GETTY IMAGES)
India is planning some massive power projects to meet massive demand over the network. (GETTY IMAGES)

How is India’s utilities market currently performing?
The utilities market in India has softened over the past 8-10 months. Power Generation capacity addition, and Power Transmission and Distribution (T&D) infrastructure expansion have slowed down. This has been driven by issues such as the overall economic slow-down, the availability of funds and high interest rates.

India currently faces a power shortage to the tune of 10 – 11%, and this power deficit scenario is hampering the growth of the overall economy as well as other sectors (industry, manufacturing etc.) which have to rely on an intermittent supply of power.

Where is most investment in the sector going?
The 12th Five Year Plan (financial year 2012-13 – 2016-17) envisages a spend of approximately US $250 billion for the growth and development of the power sector in India. This spend is planned to be split between Power Generation and Power T&D, in an approximate 45:55 ratio.

The 12th plan has an increased focus on making the T&D infrastructure more efficient and robust – including reducing T&D losses which currently stand at around 25% and enhancing rural access to electricity.

What are the major projects underway?
The demand for new power projects is being driven by the need to rapidly expand the country’s power generation capacity, with the objective of closing the power shortage gap. Current major projects underway include the Mundra Ultra Mega Power Plant (UMPP), which is a 4000 MW thermal power plant project, and the Sasan UMPP, a 3960 MW plant.

Power plant projects are progressing at a slow pace, primarily because of delays in fuel/coal linkages and clearances.

What are some of the advantages to working in India for project developers?
There has been a withdrawal of import duty on natural gas for use as fuel in power plants. This announcement will offset sharp spikes in the price of imported natural gas and help in setting up gas-based capacity in the country.

The Government has also abolished the 5% import duty on coal for a two year period up to March 2014. This move benefits power plant developers and independent power producers importing equipment from overseas markets, who can procure capital goods at a cheaper price.

What will India’s power sector look like in ten years?
The market is currently at a crossroad. Several corrective measures are being adopted to improve the current deadlock situation, which includes increasing the role of the private sector.

The rapidly growing demand for electricity has led the Government to plan for huge capacity expansions over the next two decades. As per the Government estimates, cumulative power generation capacity is planned to be increased to 835 GW by the end of the financial year 2032 – in line with the increasing power requirement needed to complement annual economic growth of 8%.

If these plans materialise, India’s power capacity in 2032 would be more than six times that of its capacity of that at the end of its 10th Five Year Plan in 2007. By this time, India is expected to become the third largest country in terms of power generation installed capacity, trailing behind China and the US.

Major India power projects
Mundra UMPP – 4000 MW
Sasan UMPP – 3960 MW
Tirora (1 and 2) - 3300 MW
Lalitpur Thermal Power Plant – 1980 MW
Lanco Babandh – 1320 MW


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