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CEA scales down power demand for next 10 years, analysts disagree

CEA scales down power demand for next 10 years, analysts disagree


The Central Electricity Authority has scaled down India’s peak power demand over the next 10 years due to energy conservation measures, reduced the estimated coal requirement and ruled out the need for fresh investment in thermal power generation.

The projected peak demand at the end of 2021-22 is 235 GW, which is about 17% lower than the projection made in the 18th Electric Power Survey (EPS) report, the CEA said in the Draft National Electricity Plan 2016.

Peak demand at the end of 2026-27 is estimated at 317 GW which is 20.7% lower than the earlier projection. The CEA is the apex technical organisation that facilitates development of the power sector in the country to provide quality electricity for all at affordable rates.

The CEA prepares a draft plan every five years. It seeks suggestions and objections from licencees, generating companies and the public and notifies the plan after obtaining the government’s approval.

However, some analysts said there could be huge power shortages if the government sticks to the CEA’s estimates because the assumed expansion in renewable energy, hydroelectric and gas-based projects may not materialise.

“On supply side, the approach has been to factor in entire renewable, hydel and gas-based capacity addition plans as proposed and thus arriving at a coal based capacity addition required as a balancing figure. This approach may be questionable,” said Manish Aggarwal, partner and head-infrastructure M&A, head – energy, KPMG India.

Aggarwal said the sector is already witnessing curtailments and huge payment delays with the addition of renewables and it remains to be seen how the system will absorb the large capacities envisaged.

Hydel projects are at a near standstill, he said. The document assumes capacity addition from gas at 4,340 MW, hydro at 15,330 MW, nuclear at 2,800 MW and renewable sources at 115,326 MW as committed capacity during 2017-22.

About 50,025 MW of coal based power projects are currently under various stages of construction and they do away with the requirement for new coal-fired power plants till 2027.

“We are not sure whether the document factors in the demand pull that would be created by key government initiatives such as the ‘Make in India’ initiative, access to electricity to villages/households and new smart cities,” said Aggarwal.

Anand Gupta Editor - EQ Int'l Media Network


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