Power IBEF

P OW E R
December 2008
www.ibef.org
POW E R
December 2008
Contents
• Profile of Indian Power Sector

• Policy and Regulation
• Opportunities in the Indian Power Sector
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PROFILE OF INDIAN
POWER SECTOR
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PRO F I L E OF I N D I A N P OW E R SECTOR
POWER • December 2008
The Indian Power Sector has a >100 year history
• 1 880s – First electrification – small hydel

in Darjeeling
• 1 889 – Commercial production & Distribution
starts in Calcutta
• Indian Electricity Act, 1910.
• 1947 – Power generating capacity only 1,362 MW
• The Electricity (Supply) Act, 1948 – SEB formation
• Creation of central generation companies
• CEA constituted
• 1 956 – Industrial Policy Resolution reserves
production of power for public sector
• 1 960s and 70s – Impetus for expansion of rural
electrification
• 1975 – NTPC and NHPC set up
• 1 989 – NPTC set up. Renamed POWER GRID
in 1992.
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• 1 991 – Liberalisation; amendments in Electricity

(Supply) Act
• 1992 – Ministry of Power constituted
• 1995 – Policy for Mega power projects introduced
• 1998 – CERC and SERCs set up
• 2001 – Energy Conservation Act
• 2003 – New Electricity Act
• 2005 – National Electricity Policy
• 2006 – Tariff Policy
• 2007 – New Resettlement and Rehabilitation
• 2 007-08 – power generation stands
at 704 Billion Units
• 2008 – New Hydro Policy
• 2008 – Revised Mega Power Project Policy
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• F rom humble beginnings in the 1880s, the Indian

Power Sector has come a long way
• F rom one small unit in 1880s to 1,362 MW in 1947
to over 147,806 MW in September 2008
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The sector has multi-tier institutional arrangement
• T
he primary agency responsible for the power • Ministry of New & Renewable Energy is responsible
sector in India is the Ministry of Power, which for developing renewable power; Funding agency -
started functioning with effect from 2nd July 1992 IREDA
Centre State
Policy Ministry of Power

State Government
Plan CEA
Regulations CERC SERC
Generation Central
Generating Units GENCOs IPPs
Some
Transmission CTU STU Private
Players in
System Operations NRLDC RLDC SLDC Generation
&
Distribution Distribution
Distribution Licencee
Trading Trading Licencee Trading Licencee
Appeal Appellate Tribunal Appellate Tribunal
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A range of key organisations perform several functions
Organisation Established Core Expertise

Damodar Valley Corporation (DVC) 1948 Generation, Transmission and Distribution in specified region.
Bhakra Beas Management Board (BBMB) 1967 Administration, Operation and Maintenance of projects under Board.
Rural Electrification Corporation (REC) 1969 Financing and implementing rural electrification schemes.
National Thermal Power Corporation (NTPC) 1975 Thermal plants: concept to commissioning and operations.
National Hydro Electric Power Corporation (NHPC) 1975 Hydro plants: concept to commissioning and operations.
North Eastern Electric Power Corporation (NEEPCO) 1976 Developing power projects in North Eastern region of the country.
Power Finance Corporation (PFC) 1986 Financing of power development schemes.
Tehri Hydro Development Corporation (THDC) 1988 Development of hydro potential in specific river/valley.
Satluj Jal Vidyut Nigam (SJVN) 1988 Development of hydro potential in specific basin.
Powergrid (Powergrid) 1989 Transmission system for evacuation of central sector power and
establishment/operation of inter-regional grids, load despatch centres.
Power Trading Coprporation (PTC) 2001 Trading of power

Bureau of Energy Efficiency (BEE) 2002 Responsible for spearheading the improvement of energy efficiency of
economy through regulatory and promotional instruments
Appellate Tribunal for Electricity 2004 To hear appeals against the orders of the adjudicating officer or Appropriate
Commission under the Electricity Act, 200
National Load Dispatch Centre (NLDC) 2005 Scheduling and dispatch of electricity across inter-regional links and
monitoring of the national grid.
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Generation has increased over the years
• F rom humble beginnings in the 1880s, the Indian Generation (Billion Units)
power sector has come a long way 2007-08 704.5
• F rom one small unit in 1880s to 1362 MW in 1947 2006-07 662.5
to over 147,806 MW (704 billion units) in 2007-08 2005-06 617.5
2004-05 587.4
2003-04 558.3
2002-03 531.4
2001-02 515.3
2000-01 499.5
1990-91 264.3
0 100 200 300 400 500 600 700 800
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Generation – installed capacity
• T
he state sector accounts for a large share of Installed Capacity Distribution
Private includes utility and renewable power
installed capacity, followed by central and private
sectors
• E merging trend is one of larger share of renewable
16%
power in the total installed capacity mix 52,140
MW 48% 71,296
MW
Installed Capacity (Mega Watt)

35%
State 71,296
Private 24,370
10,919*
MW
Central 52,140
n State n Private
*Private includes utility capacity only; Does not include n Central
13,451 MW renewable power capacity which
is predominantly private
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Generation – shift in composition of conventional mix
• T
hermal power accounts for much of the power Generation Type %
produced in India, followed by hydro. Other means 13,451
MW
4,120
of generation are negligible in comparison. MW 9%
3%
37,375 25%
Generation Type (MW)
MW
63%
92,860
MW
Hydro 37,375
Thermal 92,860
Nuclear 4,120
Renewables 13,415 n Thermal n Hydro

n Nuclear n Renewable Power
0 20,000 40,000 60,000 80,000 100,000
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Generation – plant load factor has been improving
• P
LF of generating plants has improved consistently PLF (%) during last year of the place
over the last five plan periods. 90.0
85.0
• B
ut slid during Apr-Sep 2008. Inadequate fuel 75.0
70.0
availability and old age the key reasons. 65.0
60.0
55.0
• A
verage PLF of thermal and nuclear plants was 50.0
45.0
73.95 per cent during Apr-Sep 2008. 40.0
VI VII VIII IX X
• P
LF of central plants in Apr-Sep 2008 was Central Sector 61.9 62.2 71.1 74.3 84.8
80.47 per cent while that of state sector units State Sector 49.2 53.0 60.3 67.0 70.6
was 67.79 per cent. Private Sector

Overall
57.5
52.4
69.5
56.5
71.2
64.4
74.7
69.9
86.4
76.8
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Per capita consumption has increased
• P
er capita consumption of power in India has Trend in per Capita Consumption
gone up significantly since the 1990s 2012 (P) 1000

2006 641
2004 592
2001 408
1990 238
1980 131
1970 84
1960 35
1950 18
(KWh)
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The demand – supply gap is growing
• E nergy requirement during Apr-Sep 2008 was Deamand Supply Gap Energy (BU)
321,644 MU; Energy availability was 287,693 MU;
• R
esulting energy shortage of 10.6 per cent compared 559.4
620.9
Demand
to seven per cent in Apr-Sep 2007.
Energy (BU)
Supply gap
447.3 559.4
517.4
• P
eak demand for energy during Apr-Sep 2008 was 168.1
266.4 395.9
106,922 MW; Peak demand met was 91,363 MW. 156.8

245.4
• C
onsequent peak shortage was 14.6 per cent VI VII VIII IX X
compared to 12.1 per cent in Apr-Sep 2007. Plan Period
n Average Energy Demand (BU)

n Generation during last year of the plan period (BU)
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Planned capacity additions (MW) – 11th Five Year Plan Period
• S ignificant capacity additions to generation have been Central State Private Total
planned under the 11th Plan Hydro 8,654 3,482 3,491 15,627
Thermal 24,840 23,301 11,552 59,693
• W
ith more than 70 per cent under construction Nuclear 3,380 0 0 3,380
target is likely to be met without significant delays Total Utility 36,874 26,783 15,043 78,700
as in the past Renewables NA NA NA 14,000
Grand Total 36,874 26,783 15,043 92,700
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Generation backend -- fuel outlook
Coal
• V
ast reserves – mineable coal in excess of 2,800
million tonnes identified; Captive coal block allocation
to encourage private and central sector developers.
Oil
• R
eserves estimated at 700 MMT of oil Ministry
of Petroleum and Natural gas; However, import
dependence to continue in the long term.
Gas
• D
iscoveries of gas to the tune of 700 Sq.bcm in the
last decade; Reliance’s discovery to determine initial
market take off in 2009.
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Generation backend -- fuel outlook
Nuclear
• O
ne of the largest reserves of the nuclear fuel –
thorium. Indo-US deal a +ve outcome; Several other
fuel/technology sourcing avenues have opened up
– Russia, France
Hydro
• P
otential of about 150,000 MW; Only 25 per cent
harnessed so far; Major capacity addition to come
from the North and North-east.
Renewables
• V
ast potential -- solar power, biomass and wind
power; Current installed capacity of 13,451 MW
constitutes about eight per cent of total installed
capacity; India already fourth largest in the world
in terms of wind energy installations.
• S ignificant reserves of coal and gas exist and
significant potential to harness renewable power
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Transmission Network has grown significantly
• T
ransmission lines have grown from 3,708 ckm in
1950 to more than 210,949 ckm now; Plan to increase
to 293,372 ckm by 2012.
• C
ountry divided into five regions for transmission
systems: northern, north eastern, eastern, southern
and western.
• Work ongoing on creating a National Grid.
• Current transmission capacity of 143,000 MW.
• Plan to have 200,000 MW grid capacity and 37,000
MW inter-regional transmission capacity by 2012.
• Substation capacity to be increased by about
48 per cent to 428,000 MW.
X Plan XI Plan Total

POWERGRID’s Outlay 21,370 28,258 49,628
Private Sector participation 9,710 11,185 20,895
Total Central Sector 31,080 39,443 70,523
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Extensive distribution networks but high losses
• E xtensive network of sub-transmission and Extensive distribution networks but high losses
distribution systems have been set up in India. Consumer 92
78
• T
&D losses have been consistently on the higher side, 96
11 KV Feeder
and are presently in the range of 18 per cent to 81
50 per cent in various states; Average 35 per cent. 0 20 40 60 80 100

Percentage
• A
PDRP was identified in 2000-01 as the key area
n March 2006 n 2001
to bring about the efficiency and improve financial
health of the power sector - payoffs localised to
implementation area.
• R
evised APDRP proposed for the 11th Plan Period
two be implemented in two parts; Funds to be given
directly to utilities rather than through the state
government.
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Financial performance
Financial performance of the State power sector

1991-92 2003-04(P) 2004-05(RE) 2005-06(AP)
A. Gross Subsidy involved
(i) On account of sale of electricity to
(a) Agriculture 5,938 23,246 23,805 25,377
(b) Domestic 1,310 8,885 9,639 10,033
(c) Inter-State Sales 201 923 866 591
Total 7,449 33,154 34,311 36,002
(ii) Subventions Received from State Governments 2,045 11,081 9,825 9,831
(iii) Net Subsidy 5.404 22,073 24,486 26,170
(iv) Surplus Generated by sale to other sectors 2,173 6,133 6,967 8,640
(v) Uncoverred Subsidy 3,231 15,941 17,520 17,530
B. Commercial Losses
(i) Commercial Losses (excluding subsidy)@ 4,117 20,379 20,715 22,013
(ii) Commercial Losses (including subsidy) NA 9,298 10,890 12,182
C Rate of Return (ROR%)# -12.70 -28.32 -27.97 -28.13
D Revenue Mibilisation
Additional Revenue Mobilisation from achieving
(a) 3% ROR 4,959 22,538 22,936 24,362
(b) From introducing 50 paise per unit from 2,176 540 755 773
Agriculture/irrigation
RE: Revised Estimates * Provisional AP: Annual Plan Project # for losses without subsidy
@ Commercial losses are different From uncovered subsidy because they include financial results of other activities undertaken by the SEBs. Source: Planning Commission
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Financial performance
• N
on-realisation of revenue for power generated
has led to financial degradation and spiral of
worsening performance
• T
he power sector in India suffers huge financial
losses to the tune of US$ 6 billion per annum.
These losses have accumulated over time and
resulted in inadequate financial resources for
capacity augmentation
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Trends in public investment
• In the expectation of greater private investment, the Trends in public investment
Eighth (1992–1997) and the 9th Five-Year (1997– 3000 25
2002) plans of India included a sharp reduction in plan
allocation in proportion to the total plan outlay 2500 20
• A
not-so-encouraging response from private investors 2000 15
led to its enhancement in the 10th Five-Year plan

(2002–07). 1500 10
• P
ower sector outlay for 10th Plan period was 1000 5
Rs 2,703 billion and estimated expenditure

500
Rs 1,573 billion.
0 0
I II III IV V VI VII VIII IX X
n Power Sector Expenditure (Rs. Billion)

n Power Setor Outlay (Rs. Billion)
Percentage share in Outlay
Percentage share in Expenditure
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Key issues confronting the sector
• Socio-political influences
• High level of network losses
• High level of financial losses
• Inadequate generation and transmission capacity
• Poor quality of supply
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POLICY AND
REGULATION
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24
PO L I C Y A N D R E G U L ATO N
Power market structure
Stakeholder outlook has been slowly improving

Mega Power State Licensee
Generation CGS IPP/ CPP
Projects Owned owned
CERC
Transmission PowerGrid (CTU) RPC/RLDC STU
Trader SERC
Distribution Distribution Distribution

Licensee Licensee
Consumers
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Improved policy & regulation regimes
Recent policy/regulatory actions Evolving market structure in power sector
EA 2003 introducing
• N
on-discriminatory open access
n
io
tit
s
to transmission at least
or
pe
at
Facilitating open
ul
co
g
re
access, supporting
ial
National
• S ection 63 and – ERCs to follow
y
nt
tb
comp bidding ,
te
‘Tariff’ Policy
en
po
separating wires
competitive bidding process
em
2006
g
sin
ag
businesses
an
ea
m
enforcing USO
cr
• S ection 79(2) - CERC to advise GoI
In
o
icr
m
+
on promoting competition
r
fo
e d
ne
• S ection 60 – Controlling abuse
g
cin
du
Comp. Bidding Contestable Competitive new
of market power
Re
Guidelines -2004/5 Price Discovery generation
Market evolving -- competitive structure

& minimal regulatory micro-management +
market power
Electricity Open Access, Sec 63/ Possible Wholesale/
Act 2003 Section 79( 2)/ Sec 60 Retail Competition
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Improved policy & regulation regimes
Competitive Bidding Guidelines - 2004/05

• C
ompetitive acquisition of new generation
– contestability
National Tariff Policy – 2006
• Promoting retail competition
• S upporting competitive acquisition
of generation capacity
• Enabling choice
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Enabled Market Model under EA 2003
Genco Genco Genco

Generation
Open Access
in Transmission
Creating whole
Transmission
sale competition
Traders
Disco Disco Disco
Open Access Creating Retail

Distribution
in Distribution Competition
Traders
Customer Customer Customer
28 www.ibef.org
Impact on Industry structure under EA 2003

• L ong Term PPAs • Free
access to consumers and traders
Generators • Licensing of capacity; of choice Generators
extended project lead • No restrictions on captive generation
times • Reduced lead times
• N
eed for guarantees • Reduced financial and regulatory risk
• R
estrictions on captive
generation • Provisions
to develop a robust power Traders
trading market
• ulk Supply Tariffs (BST)
B • Will mitigate off-take risk for generators
Transmission • Single Buyer Model (SBM) • Will balance inter-regional disparities
in power availability Transmission
• Natural monopolies
• No private investment
• Non
-discriminatory open access
• etail Supply Tariffs
R to transmission lines
Distribution • Monopoly over consumers • Multi Buyer Model Distribution
• Lopsided tariff structure • Private captive investment allowed
• Power Theft
• Poor collections • Open access (in 5 years)
• Surcharge on open access (not Consumers
applicable to captive generation)
• U
nreliable supply
Consumers • No monopoly over consumers
• Poor quality
• Parallel distribution networks allowed
• 100 per cent metering targeted
• Consumer choice available
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EA 2003 provides institutional framework
Government Owned Vertically

Integrated Monopoly
• Reduction in Losses
• R
egulated Cost Reflective Tariff
– phasing out cross subsidies
• C
ompetition in Generation and
Retail Supply
• Internal resource generation
• Unbundled Utilities • P
rivate sector resource
• Privatized Distribution Expected Outcomes mobilization
• Multiple Distribution Licensees • Improved Reliability and Quality

of Supply
• Non-discriminatory Open Access
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A range of fiscal incentives have been introduced
Mega Power Policy

• E ligibility : Inter-state projects of 700 MW (thermal)
and 350 MW (hydro) for Jammu & Kashmir and
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
• P
reconditions: Purchasing state must have ERC;
Must agree in principle to privatize distribution
in cities of >10 million population
100 per cent FDI allowed in Indian Power Sector
(except Nuclear)
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Rapid large scale capacity addition through UMPP
Ultra Mega Power Projects

• N
ine sites identified ; Each project size about 4,000 MW;
Total estimated investment of Rs 160 billion.
• P
rojects to be completed on built-own-operate (BOO)
basis.
• S uccessful bidder finalized on tariff based competitive
bidding; Takes over SPV from PFC.
• P
FC is the nodal agency for setting up the special purpose
vehicle (SPV) for project (100 per cent subsidiary)
• P
rojects to use supercritical technology based on pithead
(captive block) or imported coal (coastal).
• F ull exemption of central excise duty on goods procured
under supercritical technology.
• F ive coastal sites identified including Mundra in Gujarat
awarded to Tata Power.
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Rapid large scale capacity addition through UMPP
Ultra Mega Power Projects

• F our pithead sites include Sasan in Madhya Pradesh
awarded to Reliance Energy.
• P
ower ministry to facilitate coordination with other
ministries and state governments involved for
- c oal block allocation/coal linkage, environment and
forest clearances, water linkage, allocating power to
different states, facilitating PPAs and securing payment
mechanism at the state level.
• PFC responsible for facilitating
- b idding process, land acquisition, clearances and
approvals, and securing coal blocks etc.
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OPPORTUNITIES IN THE
INDIAN POWER SECTOR
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34
OP P O RT U N I T I E S I N T H E I N DIAN POWER SECTOR
Opportunities – macro perspective
• E lectrification of households by 2010 – about 44 per

cent yet to be electrified.
Perspective Announced: 2012
• P
er capita availability of 1000 units – 704 units
at present.
• Installed capacity over 2,00,000 MW –
1,47,806 MW installed at present.
• Inter Regional Transmission Capacity
37,000 MW – 17,000 MW at present.
• E nergy Efficiency/conservation savings about
15 per cent.
• Q
uality and Reliable power supply
– tremendous gaps
The scale of requirements have opened up
significant opportunities
Source: MoP, GoI
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Sustained GDP growth will require similar growth in the power sector
India’s GDP Growth rate %
(Base year : 1993-94)

• A
nnual GDP growth rate of about eight per cent
would necessitate a 9-10 per cent growth rate in the 1996-97 7.8
Indian power sector. 1997-98 4.8

1998-99 6.5
• L ower than nine per cent GDP growth rates 1999-00 6.1
2000-01 4.4
expected during 2008-09 and 2009-10 are likely 2001-02 5.6
to affect projected power sector growth rates 2002-03 4.4
adversely. Situation likely to improve by the end 2003-04 8.6

2004-05 7.5
of 11th Plan Period. 2005-06 9.4
2006-07* 9.6
2007-08 9.0
0 2 4 6 8 10 12
* Quick estimate; #Revised estimate
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Multiple Investment Opportunities
Foreign Investment:
• 1 00 per cent FDI is allowed in all segments of power
sector including Trading
• N
o discrimination between domestic or foreign
investors
Fiscal incentives:
• Z
ero customs duty on import of capital goods
for Mega Power Projects
• Income tax holiday for generating plants for
10 years
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Multiple Investment Opportunities
Impressive progress in project execution:

• P
ublic sector investment also stepped up to
supplement the private sector
• 55,000 MW already under execution.
• U
p to Rs 131 billion committed for 2008-09;
Rs 80.4 billion for transmission (Power Grid)
• F inancial closure of 6,661 MW achieved so far
in private sector generation projects
• F inancial closure/ appraisal of another 15,956 MW
under private sector still to be completed
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Power requirement projections show scale of opportunity
• H
uge opportunities exist in the power sector in the Year Total Energy Required Projected Peak Demand
Installed Capacity
(Billion kWh) (GW)
longer term, considering the demand-supply gap Required (GW)
At GDP Growth Rate of At GDP Growth Rate of At GDP Growth Rate of

8% 9% 8% 9% 8% 9%
2011-12 1097 1167 158 168 220 233
2016-17 1524 1687 226 250 306 337
2021-22 2118 2438 323 372 425 488
2026-27 2866 3423 437 522 575 685
2031-32 3880 4806 592 733 778 960
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Required investment scale – ample scope for sector investments
• F or a capacity addition program of 1,00,000 MW,

investments of about US$ 100 Billion needed
• A
dditional US$ 100 Billion needed for
augmentation of Transmission, sub-transmission
and Distribution networks, and Rural electrification
• Total US$ 200 Billion
• 2 0 per cent of the total requirement expected by
Private players
Electricity Act 2003 provides enabling framework
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A range of generation opportunities exist
Enablers
• Generation Delicensed
• Clear and transparent tariff setting principles
• C
ompetitive bidding for power procurement
by licensees
• Open access
• Captive policy
• Incentives for Rural Electrification
• Evolution of power markets
• New hydro and R&R policies
• Captive coal mining blocks
• Second priority after fertilizer for gas allocations
• Other infrastructure development
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A range of generation opportunities exist
Opportunities
IPP
CPP
Target Markets
• Distribution licensees
• Industrial Consumers
• Rural areas
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Transmission opportunities abound
Independent Power Transmission Company

Private players can construct, operate and maintain
transmission lines
Interregional Link Operations
Private transmission facilities may either take the
form of an independent power transmission company
or a joint venture with the state-owned transmission
utilities
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Transmission opportunities abound
erchant Transmission Capacity for Open Access

M
Customers
Transmission licensees to allow non-discriminatory open
access to their network on payment of
- Transmission charges and
- S urcharge for cross subsidy, applicable to direct
consumers only
The first Transmission Line on JV Route has been

executed with M/s TATA Power and Power Grid
for transmission system associated with Tala HEP
& East-North inter-connector.
44 www.ibef.org
Power Sector investment Development scenario
Witnessing the Changes

• Regulatory Commissions constituted in 22 states
• Tariff
orders, performance standards, terms and
conditions of supply and tariff notified
• Unbundling of the State Electricity Boards (SEBs)
• Distribution reforms initiated
• Orissa and Delhi distribution privatized
• Recovery from SEBs regularized after securitization
• P
rinciples of multi-year-tariff (MYT) regime
proposed for further privatization
• Stability of past contracts (except Dabhol Power)
• P
rivate franchise model introduced in Maharashtra for
power distribution
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Power Sector investment Development scenario
Development Initiated
• L arge capacity addition plans firmed up by Central
PSUs and private sector majors (Tata Power,
Reliance, Torrent)
• S maller players also have major expansion plans
(GVK, GMR)
• E arlier fringe players (captive generation) entry
into the IPP sector (Jindal, Essar)
• E ntry of more number of players for takeover
of new privatized distribution
• S ystem development plans initiated by discoms
to meet ERC determined loss reduction target
in many states
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Key Domestic Players
Generation
National Thermal Power Corporation Limited
• S ixth largest thermal power producer in
the world and India’s largest power producer;
state owned player operating across the country
Tata Power
• T
he Tata group pioneered power generation
in India nine decades ago. Tata company has
presence in all segments - Thermal, Hydro, Solar,
Wind Energy, Transmission & Distribution
47 www.ibef.org
Generation
Reliance Energy Ltd
• India’s leading integrated power utility company
in the private sector. It has a significant presence
in generation, transmission and distribution of
power in the states of Maharashtra, Goa and
Andhra Pradesh.
Torrent Power
• E ntered the power sector by acquiring two old
Gujarat state owned electricity companies and turned
them into power utilities comparable with the best.
Also involved in power distribution.
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BHEL
• 14 manufacturing plants
• Installed 85,786 MW equivalent power generation
units for utilities, captive and industrial plants.
• S upplied over 2,25,000 MVA transformer capacity and
other equipment for T& D network up to 400 kV
(AC & DC).
• C
urrent capacity of 10,000 MW to be augmented to
15,000 MW by December 2009.
• B
HEL has set up Asia’s first 6.2 MW IGCC power
plant. Also signed an MoU with APGENCO for setting
up a 125 MW IGCC plant at Vijayawada.
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Strengths of BHEL
• Improvement on design philosophies to suit Indian
conditions based on vast experience.
• D
eveloped technologies/retrofits to improve the
performance e.g.
* Smart Wall Blower System
* Gravimetric feeders with micro processor controls
* Steam Tube Leakage Detection (STLD) system
* By-pass Over Fire Air System – NOx Control
* High efficiency BFP cartridge.
50 www.ibef.org
Foreign players entered/planning to enter India
• AES Corporation
• CLP Power
• Sumitomo
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Private and foreign participation in Power sector
• M
ajor investors in the Indian Power include CMS
Energy, Unocal, Woodside Petroleum, Siemens, ABB,
AES Transpower, Powergen, CLP, PSEG, Tractabel.
• C
MS holds around 20 per cent stake in 235 MW
gas/naptha fuelled combined cycle power project
promoted by GVK Reddy group at Jogurupadau
in Andhra Pradesh.
• C
MS Energy and ABB are the major promoters
of the 250 MW lignite based power project at
Neyveli, Tamil Nadu.
• C
MS Energy along-with Unocal, Woodside
Petroleum and Siemens are part of a consortium
which plans to set up a 1885 MW LNG based
power project at Ennore, Tamil Nadu.
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Ansaldo Caldie (India)
• J oint Venture between Ansaldo Caldaie

(85 per cent) and GB Engineering (15 per cent)
• Product Range:
- D
esign, Manufacture and Supply of Utility Boilers
and HRSGs
• M
anufacturing Facilities in India:
- T
richy - In JV with existing manufacturers
(established)- Specialized Manufacturing bays for
products like Burners, Ljungstorm Airheaters, etc.
- T
uticorin - New Facility to augment the
manufacuturing capability in India –investments
for future big projects including large (Year 2008)
53 www.ibef.org
Ansaldo Caldie (India)
• Projects Handled in India:

- 1 980’s — 3 X 200 MW Coal Fired Boilers for NTPC
Ramagundam
- 1 990 — 2 X 500 MW Coal Fired Boilers for NTPC
Farakka
- 1 998 — 1 X HRSG for 230 MW GT for Reliance
Energy, Samalkot
- 2003
— 2 X 210 MW Lignite Fired Tower Boilers
for NLC, Tamil Nadu
54 www.ibef.org
L&T – MHI Boilers Pvt Ltd
• JV Established on April 18, 2007 by L&T (Larsen

& Toubro Ltd.) – 51 per cent Shares MHI (Mitsubishi
Heavy Industries) – 49 per cent Shares
• Investment : US$ 167 Million
• Capability : 3,000 - 4,000 MW per annum
• Factory : Operation within 18 months
• Employee : 1,250
• Location : Delhi and Surat
55 www.ibef.org
Alstom Hydro
• A
LSTOM HYDRO has developed the BARODA
facility from 2004 as an autonomous Manufacturing
and Project Execution facility with two objectives:
- t o participate in the expansion of the Indian
domestic market for hydro power with a strong
determination to execute major projects
- to execute export hydro projects from India.
• 1 2 major high capacity machines in operation
today; all have been fully refurbished between
2005 and 2007.
• F our more heavy machines will be in operation
by March 2008, increasing production capacity
to 900,000 hours
56 www.ibef.org
Alstom Hydro
• Key Projects executed/under execution:

- VishnuPrayag (2 x 100MW, India) -
Pelton runner repair
- C
huzachen (2 x5 5 MW, India ) -
Complete Turbine & Generator
- C
hamera III (3 x 77 MW, India ) -
- S ubansiri (8 x 250 MW, India) -
- U
ri II (4 x 60 MW, India) -
57 www.ibef.org
Toshiba Corporation
• Toshiba – hydro power projects in India

- K
OLDAM 4 x 200 MW, HEP
- TEESTA-V (3x170MW)
- U
MIAM I&II HEP(4x10.5MW, 2x9MW)
- U
MIAM-I R&M (2003)
- P
URULIA PUMPED STORAGE, HEP (4x225MW)
- D
AM (2x10.6MW Turbine)
- H
AMPI (2x10.6MW Turbine, 1962)
- S SNNL (6 x 200 MW), HEP
58 www.ibef.org
VA Tech Hydro
• V
A TECH HYDRO is the first foreign company
to set-up hydro manufacturing facilities in India
• C
apability for turnkey execution of complete
electrical Electro-Mechanical works
• Manufacturing facilities for:
- Turbines, Governors, MIV & Auxiliaries
- H
ydro Generator, Excitation,
Automation & Protection Systems
• Orders in hand/completed
- O
ver 3000 MVA installed/order booked
- Hydro (New): 1600 MVA
- Hydro (R&M): 1400 MVA
59 www.ibef.org
VA Tech Hydro
- O
ver 550 MW of Compact Hydro plants
executed
- O
ver 144 nos. Excitation Systems installed/
order booked
- O
ver 200 nos. Governors installed/order
booked
- S upplies all over the world (18 countries
in five continents)
60 www.ibef.org
FDI outlook has been improving steadily

Actual FDI inflows in Power Sector – 2000 to 2008 (Rs. Million) – trend is positive
2000 2001 2002 2003 2004 2005 2007 Up to

Sep 2008
FDI in power sector 4760.2 8225.1 30494.6 1907.4 2510.6 1518.5 3,875 2,285
Total 100,923 158,419 161,234 95,640 147,814 192,707 98,664 120,531

FDI inflow
Share of power 4.72 5.19 18.91 1.99 1.7 0.79 3.92 1.89
sector (%)
61 www.ibef.org
FDI outlook has been improving steadily

Foreign holdings in select Indian power companies – trend is +ve
Sector Majority 31 December 31 December 31 March 30 September

ownership 2004 2005 2006 2008
NTPC Generation Public 4.84 6.86 7.07 4.25
BHEL Equipment Public 20.56 22.07 22.42 16.62

Manufacturer
CESC Generation & Private 15.08 17.20 19.19 23.28
Distribution
62 www.ibef.org
POW E R
December 2008
DISCLAIMER
This presentation has been prepared jointly by the India Brand Author’s and IBEF’s knowledge and belief, the content is not
Equity Foundation (“IBEF”) and ICRA Management Consulting to be construed in any manner whatsoever as a substitute for
Services Limited, IMaCS (“Authors”). professional advice.
All rights reserved. All copyright in this presentation and related The Author and IBEF neither recommend or endorse any
works is owned by IBEF and the Authors. The same may not be specific products or services that may have been mentioned
reproduced, wholly or in part in any material form (including in this presentation and nor do they assume any liability or
photocopying or storing it in any medium by electronic responsibility for the outcome of decisions taken as a result
means and whether or not transiently or incidentally to some of any reliance placed in this presentation.
other use of this presentation), modified or in any manner
Neither the Author nor IBEF shall be liable for any direct or
communicated to any third party except with the written
indirect damages that may arise due to any act or omission
approval of IBEF.
on the part of the user due to any reliance placed or guidance
This presentation is for information purposes only. While due taken from any portion of this presentation.
care has been taken during the compilation of this presentation
to ensure that the information is accurate to the best of the
www.ibef.org
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P OW E R

• Profile of Indian Power Sector

The Indian Power Sector has a >100 year history

• 1 880s – First electrification – small hydel

The Indian Power Sector has a >100 year history

• 1 991 – Liberalisation; amendments in Electricity

The Indian Power Sector has a >100 year history

• F rom humble beginnings in the 1880s, the Indian

The sector has multi-tier institutional arrangement

Policy Ministry of Power

Regulations CERC SERC

Trading Trading Licencee Trading Licencee

Appeal Appellate Tribunal Appellate Tribunal

A range of key organisations perform several functions

Organisation Established Core Expertise

Power Trading Coprporation (PTC) 2001 Trading of power

Generation has increased over the years

• F rom one small unit in 1880s to 1362 MW in 1947 2006-07 662.5

to over 147,806 MW (704 billion units) in 2007-08 2005-06 617.5

0 100 200 300 400 500 600 700 800

Generation – installed capacity

Installed Capacity (Mega Watt)

Generation – shift in composition of conventional mix

Renewables 13,415 n Thermal n Hydro

Generation – plant load factor has been improving

was 67.79 per cent. Private Sector

Per capita consumption has increased

gone up significantly since the 1990s 2012 (P) 1000

The demand – supply gap is growing

106,922 MW; Peak demand met was 91,363 MW. 156.8

compared to 12.1 per cent in Apr-Sep 2007. Plan Period

n Average Energy Demand (BU)

Planned capacity additions (MW) – 11th Five Year Plan Period

Generation backend -- fuel outlook

Generation backend -- fuel outlook

Transmission Network has grown significantly

X Plan XI Plan Total

Extensive distribution networks but high losses

50 per cent in various states; Average 35 per cent. 0 20 40 60 80 100

Financial performance of the State power sector

Trends in public investment

led to its enhancement in the 10th Five-Year plan

Rs 2,703 billion and estimated expenditure

I II III IV V VI VII VIII IX X

n Power Sector Expenditure (Rs. Billion)

Key issues confronting the sector

Power market structure

Stakeholder outlook has been slowly improving

Transmission PowerGrid (CTU) RPC/RLDC STU

Distribution Distribution Distribution

Improved policy & regulation regimes

Recent policy/regulatory actions Evolving market structure in power sector

Guidelines -2004/5 Price Discovery generation

Market evolving -- competitive structure

Improved policy & regulation regimes

Competitive Bidding Guidelines - 2004/05

Enabled Market Model under EA 2003

Genco Genco Genco

Disco Disco Disco

• Profile of Indian Power Sector

• 1 880s – First electrification – small hydel

• 1 991 – Liberalisation; amendments in Electricity

• F rom humble beginnings in the 1880s, the Indian

• F rom one small unit in 1880s to 1362 MW in 1947 2006-07 662.5

Government Owned Vertically

• Multiple Distribution Licensees • Improved Reliability and Quality

Mega Power Policy

• E lectrification of households by 2010 – about 44 per

• F or a capacity addition program of 1,00,000 MW,

erchant Transmission Capacity for Open Access

• J oint Venture between Ansaldo Caldaie

• Projects Handled in India:

• JV Established on April 18, 2007 by L&T (Larsen

• Key Projects executed/under execution: