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The power sector was amongst the first sectors to be opened to private sector investment during the early 1990s. Though the initial impetus was on investment for power generation projects, the government also allowed private investment in distribution and transmission.
India currently has around 104,000 MW of installed power generating capacity. Thermal power plants comprise almost 80 percent of this capacity, hydroelectric plants about 16 percent, while the remainder are from nuclear plants. A relatively smaller percentage is contributed by non-conventional energy sources.
A large number of private power projects are in the pipeline. The Central Electricity Authority (CEA) has granted techno-economic clearances (TECs) to 57 private power projects totalling approximately 30,000 MW. Of these, projects adding up to over 7,000 MW have been commissioned and another 3,000 MW are currently under construction.
Considering the economic growth targets, significant power generation capacities need to be added. The Planning Commission has estimated that around 47,000 MW of new power generation facilities will have to be set up over the next 5 years. This would require an investment of around US$73 billion.
Opportunities
Although India currently has a very low per capita consumption of power, the current capacity is not adequate to meet the demand. Significant investment opportunities exist in all segments within the power sector.
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The private sector is likely to contribute almost one-fifth of the additional generation capacity;
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Power distribution activities in some states have already been privatized and many are in the process of adopting this structure. Encouraged by the success of privatization of power distribution in Delhi, the state governments of Andhra Pradesh and Karnataka have started drawing up a road map for privatization of power distribution in their respective states;
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The Central Government has identified 65 circles where distribution reforms will be undertaken. Incentives will be provided to the respective state governments which undertake these reforms. These circles will be developed as a model for distribution reforms;
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Power transmission projects are being identified by the central and state transmission utilities for private participation; and,
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Significant opportunities exist for project promoters as well as for engineering procurement and construction contractors and operations and maintenance companies.
Opportunities also exist in introducing energy audit and efficiency concepts, development of renewable sources of energy generation – mini hydro, windmills, solar, bio-gas and introduction of clean coal technology for power generation.
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