Load shedding is a regular menace in metro and urban areas. As per World Bank, India faced a 16.6% shortfall of electricity during peak hours in 2008. It was due to 9.9% gap in energy generation & demand.
Now the government and private sector realize the gap between generation & demand, but things are very slow on ground. This is justified by the fact that India adds less than 5,000 MW of new capacity every year. As compared to this, China adds around ten times this capacity annually!
Coal is seen as the key solution to India's power shortage, a daunting barrier to the country's development. India has 10% of the world's coal reserves & is at 4th number in the world for coal reserves. First three are US, Russia & China. However, it had to import large quantity of high grade coal, mostly for making steel.
India plans to add 78.7 GW of power generation capacity during this five year plan ending March, 2012. Most of it will be from coal, which now accounts for about 60% of India's energy mix. This year Adani power, JSW energy, NHPC & Indiabulls power has also raised capital through IPO’s for setting up power plants. They may face a number of issues in developing their power projects. Such issues range from regulatory and environmental approvals, land acquisitions, and fuel and equipment supplies. All these may result in cost overruns of projects & more execution time for the power plants. Indiabulls power & Adani power has no history of operating large power plants. Moreover experience plays a big part in the success of power venture. Even if India remains on track with its renewable energy plans, coal will still account for about 55% of its power supply by 2030. Renewable energy is steadily gaining ground in the West. However, looking at the high cost of solar and wind energy, the questions that arises is - can India afford them?
Demand for power is rising with more Indian middle class buying houses and electronic items. It may also be noted that India’s industrial tariffs are highest in the world, a measure aimed to stop wastage of power. People in semi urban and rural areas cannot afford costly electricity produced from renewable sources. But households & industries are keeping back ups for energy supply.