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Power demand: need for radical approach

NEW DELHI: Leading international consultant McKinsey and Company has projected that in order to meet India’s growing power demand, investments worth $600 billion would be required across the value chain by 2017. Around $300 billion would be necessary for generation, about $110 billion for transmission and the balance $190 billion for distribution.

In its latest report “Powering India — the road to 2017”, McKinsey has advocated a radically new approach to deal with the surging power demand in the country. “Our analyses have suggested that if India continues to grow at an average of 8 per cent for the next 10 years, the demand for power is likely to soar from around 1,20,000 MW to 3,15,000 MW by 2017, nearly 1,00,000 MW higher than most current estimates,” the report states. It said four key factors would drive this demand, including India’s manufacturing sector growing faster than in the past; residential consumption growing at 14 per cent over the next ten years; the connection of 1,25,000 villages to the grid through several initiatives that aspire to provide power for all by 2012 and the realisation of demand suppressed due to load shedding.

To fulfil its power requirement of 3,15,000 MW by 2017, India would require a generation capacity of 4,15,000 MW to 4,40,000 MW after adjusting for plant availability and a modest five per cent spinning reserve. This implies tripling of installed capacity from the current level of about 1,40,000 MW, which, in turn translates into an annual addition of 20,000-40,000 MW. This is a five-fold to ten-fold the 4,000 MW per year that was achieved during the last 10 years.

The report points out that an evaluation of India’s projected profile of capacity addition suggests that much needs to be done to alter the mix. In particular, the country needs to shift its focus from building base load plants to more balanced mix of base load and peaking plants. This is imperative in order to ensure that the country can meet peak demand.

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