The Hindu
Peak power demand to widen to 12.6% this year

KPMG survey says consumption could double by 2020.

Our Bureau

Hyderabad, Jan. 20

The country's peak power capacity deficit is likely to widen to 12.6 per cent of the total capacity in 2010 up from 11.9 per cent last year, according to a survey findings of consultancy firm KPMG.

A report compiled by the KPMG's Global Advisory Practice team titled ‘Think Bric' notes that the electricity consumption in India, currently at 600 trillion kilowatt annually, is set to double by 2020, by then it will potentially surpass Russia's consumption levels.

To cater to the nearly double the current consumption capacity, the total generating capacity should jump by 90 giga Watt (90,000 MW) to 241 GW (241,000 MW). This could be with increased emphasis on nuclear, clean coal including solar and small hydel projects.

The Executive Director of KPMG in India, Mr Manish Agarwal, in a statement said that with GDP growing by about 8 per cent per year during 2000-08, the growth in energy demand is enormous. While private sector generation is increasing, India could face challenges until 2020 to comfortably meet its demand.

Systemic weaknesses

The survey also finds that reforms initiated by the Central and State governments and legislation to improve supply of electricity have improved the situation, but there continue to be systemic weaknesses and contradictions that stifle progress. Factors such as increasing economic activity and improvement in living standard and infrastructure development would increase the demand over the next decade.

In addition to generation deficit, the overall deficit is also due to inefficiencies in the transmission and distribution systems and electricity theft.

While the establishment of independent regulators has helped in the growth of the private sector investment whose share has gone up to about 13 per cent of the total capacity and continues to grow.

Primacy of coal

The study also mentions that coal would remain the dominant primary fuel for power projects already providing almost 70 per cent of the total power generated in the country. With the need to diversify, there are clear openings for nuclear, gas and small hydel projects.

Mr Agarwal mentions more investments will flow if the regulatory framework is made to work for a fair return on investments.