India's power consumption to double by 2020

Electricity consumption in India, currently at some 600 TWh annually, is set to double by next decade, surpassing Russian consumption levels.
According to a power industry research, Think BRIC! by KPMG's global advisory practice, in order to supply this extra electricity, total generating capacity would have to jump by 90 GW, to 241 GW, with an increased emphasis on nuclear, clean coal and renewables, including solar and small-hydro. The research finds that while the state and central governments have initiated reforms, legislation designed to supply electricity to all consumer groups, conservative elements, social programmes, systemic weaknesses and internal contradictions 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.
''A rural electrification programme in the 1980s brought electricity to 200,000 villages for the first time," says Manish Agarwal, executive director, KPMG in India, said. "Generation capacity hit 150 GW in 2006, a 40-% 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 mm Indians still have no access to electricity.''

Agarwal says, ''With per capita GDP rising by about 8 % 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 % of total capacity, up from 11.9 % 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 combatthis, 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 % of the total and rising.

Coal, which already provides almost 70 % 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 forforeign capital investment since it has an advantage for future investment in production and manufacturing facilities. Government and private utilities are endeavouring 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 %. 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 Agarwal.