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India’s appetite for energy is outstripping supply

India’s fast-paced economic growth and its rapid rate of industrialisation and urbanisation have fuelled energy demand. According to the Central Electricity Authority (CEA), an additional capacity of around 76,000 MW is needed to satisfy the projected demand by 2016-17. Based on the progress made during the 11th Plan (2007-2012), a total capacity of 54,964 MW was added, short of its revised target of 62,374 MW. Despite that, in absolute terms, the capacity addition in the 11th Plan was much higher than the capacity added in the previous five-year plans.

The country’s appetite for energy is growing extremely fast, with demand outstripping supply, resulting in power shortages. India consumes roughly 3% of the world’s total energy. Despite increases in energy use, consumption per capita in India is one of the lowest in the world, but this figure is steadily increasing. India has the fifth-largest generation capacity in the world with a total installed capacity of 199,877 MW as of March 2012. Thermal generation constitutes more than 65% of the total energy generation.

In order to fuel a rapidly growing economy, the Indian energy sector requires investments to the tune of USD 120–150 billion every five years. The imperative for private sector investment is strong in order to complement the public sector in meeting this investment requirement and to bring in the required capabilities and technologies to enhance energy resource extraction. Moreover, government policies and foreign investment in the sector will aim at bridging the gap between supply and demand of electricity in India.

Key Findings:

  • Looking      at the 12th Plan (2012–2017), capacity addition close to      100,000 MW is anticipated, around 50% of which is expected to come from  the private sector. 
  • The      annual energy generation in 2011-12 increased 8.1% y/y to 876.4 billion      units (BU), representing 102.5% of the target generation of 855.0 BU. 
  • The      energy deficit in 2011-12 increased to 10.6% due to poor availability of      coal and its high international price. The southern and western regions      were the worst affected in terms of power availability.

Annual Electricity Energy Generation and Growth RateSource: CEA

Much more in the Emerging Markets Direct report: India Electricity Industry

 
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Posted by on August 17, 2012 in Asia, Energy, India, Industry

 

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