India first time set to achieve power capacity target for a plan period

Within first 14 months, orders for manufacturing and commissioning of entire 88,537 Mw capacity for 12th Plan have been placed

For the first time in its history, perennially power deficit India is set to achieve its electricity capacity addition target for any Plan period. A Business Standard analysis of the status of equipment order placement and the time required for commissioning of power units reveals the 12th Plan’s capacity target of 88,537 Megawatt is likely to be met with only minor slippages.

The good news is, within the first 14 months, orders for manufacturing and commissioning of the entire 88,537 Mw capacity for the 12th Plan have been placed, according to the Central Electricity Authority (CEA), the country’s apex power planning body. For comparison, full order placement had taken more than two years in the last Plan period. 

“We are much better placed in the current Plan period, as compared to 11th Plan, because orders for a bulk of the capacity had been placed in the first last itself. At least 40,000 Mw will have been added by March next year giving us the confidence of meeting the target this time,” a senior CEA official said.

Delays in placement of orders has been identified as the chief reason for slippage of power capacity targets in five year Plans in the country, followed by delays in supply by equipment manufacturer Bharat heavy Electricals Ltd (BHEL). Other reasons include fuel constraints and delayed clearances, according to the power ministry’s National Electricity Plan document.        

The country has already added 20,622 Mw in the first year of the current Plan period (2012-13) and an additional 1,852 Mw in the first two months of the current financial year. So, a total of 22,474 Mw capacity – or 25% of the Plan target – has already been added in the first 14 months. The rest of the 60,063 Mw is to be added in the remaining 46 months.

The entire capacity is to be added in seven categories of unit sizes ranging from less than 250 Mw size to 800 Mw size (see table). The maximum number of units – 36 -- are to be set up in the 250/270 Mw category. A typical 250 Mw sub-critical unit requires 35 months for commissioning beginning from the date of award of Letter of Intent (LoI) on the equipment manufacturer.

Even if it is assumed that all the orders for the 250 Mw category were placed as late as today, the entire 9,000 Mw capacity from 36 units of 250 Mw each will be on stream by June 2016, a good nine months before the close of the Plan period in March 2017. Similarly, as 660 Mw units require 45 months for commissioning, 21,120 Mw from 32 units of 660 Mw would be commissioned by February 2017.

Even the three units of 800 Mw capacity each to be commissioned in the 12th Plan totaling to 2,400 Mw, belonging to Tata Power’s Mundra Ultra Mega Power Project (UMPP), have already been commissioned.

"A major fillip to the investors has been the latest decision of CCEA allowing coal cost pass-through further bolstering the confidence that the 12th Plan’s target is achievable,” Ashok Khurana, former power secretary and Director General of Association of Power Producers (APP) said.

He added the private sector investors are now closely watching the first tariff hike decision from CERC allowing pass-through.
The only grey area is the 2,539 Mw of gas-based power capacity to come up in 12th Plan. Its commissioning looks doubtful owing to the precarious gas supply situation and uncertainty over pricing. Apart from fuel, possible delays in supply from BHEL remain a crucial factor that could play spoilsport.