India Power Consumption to double by 2020
Currently at some 600TWh annually, is set to double by 2020, to tread ahead of Russia - Country's peak power capacity deficit expected to widen in 2010 to 12.6 percent of total capacity - Increase in usage of renewables resources, expansion of thermal plants, mini-hydro plants, solar energy and nuclear energy to meet the growing consumption levels
Tweet-- Mumbai, 19 January, 2009: Electricity consumption in India, currently at some 600TWh annually, is set to double by next decade, by then it would have surpassed Russian levels in the process. KPMG's Global Advisory Practice released a power industry research published under the title 'Think BRIC!' reveals that in order to supply this extra electricity, total generating capacity should jump by 90 GW, to 241GW, with an increased emphasis on nuclear, clean coal and renewables, including solar and small-hydro.
The survey finds that while the state and federal governments have initiated reforms, legislation designed to supply electricity to all consumer groups, conservative elements, social programs, systemic weaknesses and contradictions within frequently combine to stifle progress. Additionally factors like increasing economic activity, wealth and population, an improved standard of living and infrastructure developments are all expected to underline a continuous increase in demand for power in the next decade.
Manish Agarwal, Executive Director, KPMG in India, said, "A rural electrification program in the 1980s brought electricity to 200,000 villages for the first time. Generation capacity hit 150GW in 2006, a 40 percent increase on the 2000 figure, after reforms in 2003 initiated a much needed restructuring of the power sector. However one respondent of our survey estimated that at least 500 million Indians still have no access to electricity."
He further added, "With per capita GDP rising by about 8 percent per year in 2000-2008, the growth in energy demand is enormous; in particular regarding electricity. While private sector investment in generation is increasing, India could face challenges until 2020 to comfortably meet its demand."
According to the study, the country's peak power capacity deficit is expected to widen in 2010 to 12.6 percent of total capacity, up from 11.9 percent last year. In addition to the generation deficit, this deficit is also contributed by the inefficiencies in the transmission and distribution systems and electricity theft. To combat this, some respondents expressed confidence in government assurances on formation of an independent regulatory system which will support growth in private investment, in public-private partnerships. They also point to the private investors, who have already made a start in building independent power plants, with the share of privately generated electricity currently at around 13 percent of the total and rising.
Coal, which already provides almost 70 percent of India's power, will remain the dominant primary fuel, holding out commercial opportunities to those producers who are global leaders in high efficiency, clean-burn plant. But with India needing to diversify production, openings will exist for nuclear, gas and small hydro schemes. Also the need to extend basic electricity to vast rural population means that there are massive opportunities in terms of wind, biomass and, if we can get the prices right, especially solar energy.
The respondents surveyed also feel that India is an attractive destination for foreign capital investment since India has an advantage for future investment in production and manufacturing facilities. Government and private utilities are endeavoring to set up an infrastructure framework to facilitate investments in the country.
The survey also reveals that as compared to the other BRIC countries, India had the second highest growth rate between 2000 and 2008 with an electricity consumption of 5.7 percent. Despite this the country has the lowest electricity consumption per capita out of the BRIC countries. India's electricity consumption per capita is expected to be roughly 841 kWh in 2020, representing only about one quarter of the global average.
"While government finances will find it impossible to manage alone, private finance and skills are largely available if investors feel the regulatory and legal framework is made to work for a fair return." added Mr. Agarwal.
Notes to Editor
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For a copy of the report, log on to www.in.kpmg.com