CHAPTER 4

POWER SECTOR STATUS IN STATES

Data Collection Survey on Power Sector in India Final Report

CHAPTER 4 POWER SECTOR STATUS IN STATE

4.1 MAHARASHTRA STATE (MS)

Map source: Indian Renewable Energy & Energy Efficiency Database1

4.1.1 Political Situation

The Maharashtra legislative assembly elections were held in October 2014. The Bharatiya Janata Party (BJP) came out with an impressive performance gaining 122 out of 288 seats. The Shiva Sena, which gained 63 seats, was the second best party. The Indian National Congress (INC) and the Nationalist Congress Party (NCP) had to settle for 42 and 41 seats respectively.

After much reluctance and differences, the two largest parties - BJP and Shiva Sena - reconciled and formed a coalition government in the state. Following the coming together of BJP and Shiva Sena, BJP's Devendra Fadnavis was sworn in as the chief minister of the state, who is the first BJP chief minister of Maharashtra. Result of assembly election is shown in Table 4.1.1-1.

1 http://ireeed.gov.in/

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Table 4.1.1-1 Result of Assembly Election in Maharashtra Party Seats won Vote % Bharatiya Janata Party 122 27.8 % Shiv Sena 63 19.3 % Indian National Congress 42 18.0 % Nationalist Congress Party 41 17.2 % Others 20 17.7 % Total 288 100% source: Election Commission of India2

4.1.2 Economic Situation

(1) General

The resources, policy incentives, infrastructure and climate support investments in the state. Maharashtra Agro Industries Development Corporation is responsible for development of agro-based units in the state. MIDC is responsible for the development of industrial infrastructure. Maharashtra Small Scale Industries Development Corporation provides new orientation and strength to the development of small-scale industries in the state.

The Government of Maharashtra is promoting the development of several Special Economic Zones (SEZs) across Maharashtra for sectors such as IT/ITeS, pharmaceuticals, biotechnology, textile, automotive & auto components, gems & jewelry and food processing. As of 2014-15, the state has 9 operational SEZs, out of which majority are contributed by engineering and electronics segment.

Key Industries in Maharashtra - Pharmaceuticals - Biotechnology - IT and ITeS - Electronics - Engineering - Auto & auto components - Oil & gas - Food & agro processing - Gems and jewelry - Banking, financial services and insurance (BFSI) - Textiles

1) Gross State Domestic Product (GSDP)

GSDP of Maharashtra State occupies 15.9 % of total GSDP in 33 states in India in 2013-14 and ranked as the largest economy in all states. Decline in agricultural output for two consecutive years has adversely affected rural economy which is highly dependent on agriculture. However,

2 http://eci.nic.in/eci/eci.html, etc.

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better performance of Services & Industry sectors has contributed to growth in State economy. At this backdrop, advance estimates of Gross State Domestic Product (GSDP) at constant (2011-12) prices maintained fairly decent growth of 5.6 % over the previous year. The ‘Agriculture & Allied activities’ sector is expected to decline, while, ‘Industry’ and ‘Services’ sectors are expected to grow. GSDP at factor cost is shown in Table 4.1.2-1.

Table 4.1.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 74,204,180 77,560,965 83,529,859 89,676,749 94,754,976 Increase --- 4.5% 7.7% 7.4% 5.6% source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India3

2) Structure of industry (against GSDP)

Over 2014, the tertiary sector contributed 61.52 % to SGDP at current prices, followed by the secondary sector (26.82 %). The growth in the secondary sector was driven by manufacturing, construction and electricity, gas & water supply. Agriculture is the major industry in the primary sector, followed by forestry and fishing. Percentage distribution of GSDP is shown in Table 4.1.2-2.

Table 4.1.2-2 Percentage Distribution of GSDP for 2014-15 Item Distribution Tertiary 61.52 % Secondary 26.82 % Primary 11.66 % source: IBEF(India Brand Equity Foundation), 2015 (www.ibef.org)

(2) Economic Policy / Development Policy

Budget 2016-17 of Maharashtra State presents the following policy highlights:

- Water resources: Rs 2,000 Crores has been allocated in 2016-17 for the “Farm Pond on Demand” Scheme, with a view to provide for one lakh farm ponds, 37,500 wells and 90,000 electric pumps. - Energy subsidy: Rs 4,462 Crores is proposed to be allocated for the subsidizing of energy tariff for agriculture, power loom, industrial and commercial consumers. Further, for the provision of energy to industries in the Vidharba and Marathwada regions, Rs 1,000 Crores a year has been proposed. - Modernization of infrastructure: 21,000 km of state highways and major district roads is proposed to be modernized under public private partnership over the next eight years.

3 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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- Ease of transport for women: 300 exclusive “Tejasvini” buses are proposed to be provided for women passengers, with an allocation of Rs 50 Crores in 2016-17.

(3) Financial Situation

The Maharashtra Fiscal Responsibility and Budget Management (FRBM) Act, 2006 provides annual targets to progressively reduce the outstanding public debt, revenue deficit and fiscal deficit of the state government.

- Revenue deficit: It is the excess of revenue expenditure over revenue receipts. A revenue deficit indicates the need for the government to borrow on expenses which do not create assets. The government has estimated a revenue deficit of Rs 3,645 Crores in 2016-17. In 2015-16, the government has revised its revenue deficit to Rs 9,290 Crores, which is 147% higher than the budgeted target of Rs 3,757 Crores. This is driven by increase in spending on relief to natural calamities. - Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities of the government. The government had projected a fiscal deficit of Rs 35,031 Crores (1.6% of GSDP) in 2016-17. This is a decline from a fiscal deficit of Rs 37,950 Crores (1.93% of GSDP) in 2015-16. The expected fiscal deficit of 1.59 % of GSDP for 2016-17 is well within the limit of 3 % of GSDP set by the FRBM Act, 2005 and also well within the limit of 2.8 % of GSDP set by the 14th Finance Commission (FC). - otal Debt Stock: It is the accumulation of borrowings over the years. In 2016-17, the outstanding public debt is expected at 16.15 % of the GSDP, which is a slight decrease from 16.26 % in 2015-16, in line with the declining trend over the past years. Transition of fiscal management is shown in Table 4.1.2-3.

Table 4.1.2-3 Transition of Fiscal Management (Percent) Item 2013-14 2014-15 2015-16 2016-17 Target for 2016-17 Revenue deficit / GDP -0.34 -0.68 -0.47 -0.17 0.00 Fiscal deficit / GDP -1.72 -1.78 -1.93 -1.59 -3.25 Total debt stock / GDP 17.84 16.62 16.26 16.15 22.64 source: Medium term Fiscal Policy, Maharashtra 2016-20174

(4) Foreign investment

Maharashtra Chief Minister Devendra Fadnavis announced in September 2015, to set up a 'Japan Desk', a one-stop shop in the state for all Japanese companies for the purpose of inviting more investment from Japan. He also mentioned that his government was trying to set up Japanese Industrial Park at Supa with the help of Japan External Trade Organization (JETRO).

4 https://finance.maharashtra.gov.in/sitemap/finance/pdf/FRBM/FRBM_1617.pdf

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1) Transition of FDI

Foreign Direct Inflow (FDI) equity inflows received by RBI’s regional office in Mumbai, which covers states/union territory of Maharashtra, Dadra & Nagar Haveli, and Daman & Diu, is as shown in Table 4.1.2-4. The amount has been increasing steadily.

Table 4.1.2-4 Transition of DFI Unit: Crore Rupees (US$M) Cumulative Percentage of Year 2013-14 2014-15 2015-16 (2000-2016) total inflow Amount 20,595 38,933 62,731 415,753 29% (3,420) (6,361) (9,511) (82,629) source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion5

2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.1.2-5.

Table 4.1.2-5 Transition of Japanese Firms

Year 2011 2012 2013 2014 2015 Number 218 277 395 625 712 source: Embassy of India in Japan6

4.1.3 State Budget and Financial Situation of Executing Agency

(1) State Budget for Power Sector7

Budget 2016-17 of Maharashtra State provides the following key highlights for the power sector:

- A new scheme has been announced for the upgradation and modernization of the electricity distribution system in 120 zones in the state with an allocation of Rs. 300 Crores. - Rs.784 Crores has been allocated for investment in the energy sector in the state, in order to increase capacity - Rs.456 Crores is proposed to increase the capacity of renewable energy sources. Table 4.1.3-1 shows department-wise plan outlay for budget 2016-17.

Table 4.1.3-1 Department-wise Plan Outlay for Maharashtra Budget 2016-17 (unit: Rs. Crores) Item 2014-15 2015-16 2016-17 Industries, Energy and Labour 15,469 14,583 9,840 Water Resources 9,842 11,652 11,720 source: PRS Legislative Research, March 19, 20168

5 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf 6 http://www.in.emb-japan.go.jp/Japanese/2015j_co_list.pdf 7 http://www.prsindia.org/parliamenttrack/state-budgets/ 8 http://www.prsindia.org/parliamenttrack/state-budgets/

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(2) Financial Situation of Executing Agency

Executing agency of pumped storage projects in Maharashtra State is the government of Maharashtra (Water Resources Department, GOMWRD) for construction, and MAHAGENCO for operation and maintenance. Here an overview of financial situation of MAHAGENCO is presented.

MAHAGENCO is a power generation company which owns and operates hydro9 and thermal power plants. The figures in FY2012-13 increased much due to the commissioning of Unit 5 at Khaperkheda Thermal Power Plant (500MW) and Unit 4 of Bhusawal Thermal Power Plant (500MW). Their income is relatively stable, but the increase of employee cost and depreciation cost brought drop in profit in FY2013-14.

Return on Equity (ROE) varies year by year: 3.50 %, 7.03 % and 1.35 %; and Profit after Tax: 200, 488 and 111 Crores, from 2011/12 to 2013/14. The total income exceeds the total expenditure. This represents that the business structure of the company has a potential of profit making, therefore, it is desired to have a stabilized financial structure.

Table 4.1.3-2 shows financial situation of MAHAGENCO.

Table 4.1.3-2 Financial Situation of MAHAGENCO 2011-12 2012-13 2013-14 Total Income (Crore) 12,922 --- 16,641 28.8% 16,620 -0.1% Total Expenditure 12,723 --- 15,715 23.5% 16,302 3.7% Profit beforeTax 200 --- 928 364.0% 320 -65.5% Profit after Tax 200 --- 488 144.0% 111 -77.3% Cost Structure (Crore) Power purchase 0 0.0% 0 0.0% 0 0.0% Generation cost 9,673 76.0% 11,063 70.4% 10,888 66.8% Employee cost 793 6.2% 910 5.8% 1,116 6.8% O&M cost 529 4.2% 597 3.8% 673 4.1% Interest cost 854 6.7% 1,361 8.7% 1,711 10.5% Depreciation 404 3.2% 557 3.5% 1,163 7.1% Admin & Gen Exp 458 3.6% 1,065 6.8% 910 5.6% Other Expenses 12 0.1% 163 1.0% -160 -1.0% Total 12,723 15,716 16,301 Return on Equity (%) 3.50 7.03 1.35 Return on Networth (%) 2.95 5.71 1.11 Retuｒn on Capital Employed (Crore) 4.01 5.41 4.63 Debt Equity Ratio 2.87 3.00 2.95 source: Report on "The Performance of State Power Utilities for the years 2011-12 to 2013-14", 2015 PFC10

9 hydro projects were handed over on long term lease from GOMWRD to MAHAGENCO for Operation and Maintenance 10 http://www.pfcindia.com/Content/PerformanceReport.aspx

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4.1.4 Power Sector Overview

Power supply in Maharashtra is going to improve drastically from 2015-16. However, the State will fall into a tight supply position again in FY2019. The State proceeds to introduce a large amount of solar energy; 14,400MW generating capacity by FY19.

Currently, hydro power has been utilized to stabilize T&D system and the State has been seeking for the possibilities of Pumped Storage Projects for the future.

Figure 4.1.4-1 Maharashtra state power sector feature

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4.1.5 Power Supply Structure

(1) Institutions Policy Maharashtra Power Department Regulation Maharashtra State Electricity Regulatory Commission (MSERC) Power Maharashtra State Power Generation Corporation Ltd. (MSPGCL) generation Transmission Maharashtra State Electricity Transmission Company Ltd. (MSETCL) Dispatch State Load Dispatch Centre (SLDC) Distribution Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) Reliance Infrastructure Limited (Rinfra), Bombay Electric Supply & Transport Undertaking (BEST) Tata Power Corporation (TPC)

(2) Power Supply Structure

The State undertook structural reforms in 2005 wherein the erstwhile Maharashtra State Electricity Board (MSEB) was unbundled into MSEB Holding Company Limited, Maharashtra State Power Generation Corporation Limited (MSPGCL – Genco), Maharashtra State Electricity Transmission Company Limited (MSETCL – Transco) and Maharashtra State Electricity Distribution Company Limited (MSEDCL – Discom).

There are 4 licensees responsible for distribution of electricity in Maharashtra namely MSEDCL, Reliance Infra, BEST (Brihanmumbai Electricity Supply and Transport) and TPC (Tata Power Co. Ltd.’s Distribution Business) of which the latter three operate in Mumbai and its suburbs.

As for the developments of generation plants in the state, Power Department is responsible for thermal plants, and Water Resource Department is in charge of planning and constructing for hydro plants, including PSP.

Reliance MSPGCL IPP Tata Power Infra

MSETCL Tata Power Reliance Infra

MSEDCL BEST Tata Power Reliance Infra

consumer consumer consumer consumer

Physical flow Commercial flow

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.5-1 Electricity Supply Structure

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Tata Power, 2% BEST, 4% R-Infra, 9%

27 million

MSEDCL, 86%

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.5-2 Share of Distribution Companies by Number of Household Customers

(3) The State’s Original Power Policy

Renewables ・ Maharashtra Renewable Energy Policy 2015

 MERC Generic Tariff for Renewable Energy Sources for FY 2014-15  MERC (MULTI YEAR TARIFF) REGULATIONS, 2011, amendments, 2015  MERC (RENEWABLE PURCHASE OBLIGATION, ITS COMPLIANCE AND IMPLEMENTATION OF RENEWABLE ENERGY CERTIFICATE FRAMEWORK) REGULATIONS, 2016,

(4) Executing Agencies

Executing agency of pumped storage projects in Maharashtra State is the government of Maharashtra (Water Resources Department) for construction, and MAHAGENCO for operation and maintenance.

4.1.6 Power Supply/Demand Scenario

In line with the rising demand for power in the State, MSPGCL has planned to expand its current generating capacity by 3,480 MW by the end of FY19. It is also pursuing R&M of existing plants with the objective of improving PLF and availability. MSPGCL has proposed to undertake/ initiate capital investments totaling over Rs. 47,162 crores during FY15 to FY19, The financial closure for all projects proposed for commissioning by FY19 has already been achieved and MSPGCL plans to initiate necessary steps for achieving financial closure of future projects in due course of time.11

11 Power for All Maharashtra, MOP, Feb., 2016. (Appendix 4-16) Unless otherwise noted, the information and figures in this section are from the websites and documents from the related ministries and agencies including MOP, GOM, etc.

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Energy Reqirement MU % Energy Availability 18.6 250,000 18.8 20.0 Surplus/Deficit 200,000 Surplus/Deficit (%) 15.0

150,000 10.0 8.9 100,000 5.0 50,000 2.7 2.4 0.0 0 FY13-14-2.1 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -50,000 -5.0

sources: Generation Balance Report 2016-17, CEA, May,2016 (Appendix 4-3), Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.6-1 Energy Supply FY2013-2019

MW Peak Demand Peak Availability % 30,000 Surplus/Deficit 10.0 Surplus/Deficit 8.0 25,000 7.4 6.0 20,000 4.0 3.2 3.8 15,000 2.0 0.2 0.0 10,000 -1.7 -2.0 -8.6 5,000 -4.0 -6.0 0 -8.0 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -5,000 -10.0

sources: Generation Balance Report, CEA, May,2016 (Appendix 4-3) , Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.6-2 Peak Demand FY2013-FY2019

(1) Features of Peak Load

As for month-wise, demand peak is in October, and it has been increasing in late years. According to time of the day, hourly peak demand appears in the afternoon, between noon and 3 p.m. The demand difference between maximum and minimum is about 5,150MW, in October 2015.

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source: Western Regional Load Dispatch Center (Appendix 4-18) Figure 4.1.6-3 Monthly Demand Curve

source: Western Regional Load Dispatch Center (Appendix 4-18) Figure 4.1.6-4 Hourly Demand Curve on Peak Day (19.10.2015 AT 15:00 HRS)

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source: Western Regional Load Dispatch Center Figure 4.1.6-5 Seasonal Demand Load Pattern

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.6-6 MSEDCL Typical Load Curve Vs. Full Generation Availability (FY2015)

Maximum Solar generation of 245MW was observed on 20th March 2016. The hourly Solar generation graph for the same day is the below.

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source: Western Regional Load Dispatch Center (Appendix 4-18) Figure 4.1.6-7 Solar Generation Pattern

Maximum wind generation of 2320MW was observed on 29th July 2015. The hourly wind generation graph for the same day is the below.

source: Western Regional Load Dispatch Center (Appendix 4-18) Figure 4.1.6-8 Wind Generation Pattern

(2) Frequency Profile in western region

The frequency profile of the region for the year 2015-16 as per the IEGC Band is mentioned hereunder. 60-70% falls within 49.5-50.5Hz range. Max Frequency in the year 2015-16 was 50.55 Hz on 25th Apr15 at 11:47 hrs due to Earthquake in the country (Demand dropped majorly in UP, Delhi, Bihar, West Bengal). Min Frequency in this year was 49.5 Hz, observed on 7th Apr15 at 21:04 hrs.

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Frequency deference has been decreasing yearly.

source: Western Regional Load Dispatch Center, 2015-16 Annual Reeport (Appendix 4-18) Figure 4.1.6-9 frequency profile 2015-16

source: Western Regional Load Dispatch Center, 2015-16 Annual Reeport (Appendix 4-18) Figure 4.1.6-10 Max. Vs Min. Frequency since Apr. 2004

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(3) Load Factor in Maharashtra

Load factor data in Maharashtra shows that the average annual load tends to be stable in recent years. It shows slight decrease from 2008-09 but slight increase from 2013-14.

Western Region annual load factor has a decreasing trend i.e. 81% in year 2008-09 to 79% in year 2014-15. Also variation in daily load factor between seasons through-out the year is about 8-10%. Western Region has industrial and agriculture load.

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source : POSOCO Electricity Load Factor in Indian Power System (Appendix 4-7) Figure 4.1.6-11 Load factor data in Maharashtra

Figure 4.1.6-12 Change in Yearly Load Factor (%) for Western Region from 2008-2015

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4.1.7 Generation

(1) Installed Capacity

In line with the rising demand for power in the State, MSPGCL has planned to expand its current generating capacity by 3,480 MW by the end of FY19. It is also pursuing R&M of existing plants with the objective of improving PLF and availability. MSPGCL has proposed to undertake/ initiate capital investments totaling over Rs. 47,162 crores during FY15 to FY19, The financial closure for all projects proposed for commissioning by FY19 has already been achieved and MSPGCL plans to initiate necessary steps for achieving financial closure of future projects in due course of time.

Central, 6,627 State, RE, 15% 13,444 Hydro, 9% 37,797MW Thermal, 76%

Private, 17,726

source: Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.7-1 Installed Capacity by Ownership & by Fuel in 2015

The history of the Maharashtra state installed capacity is given below. It shows coal thermal sources contribute 75%, most of the capacity and grows 10% annually. Hydro occupies 8% and hasn’t grown at all. Renewable used to grow 10-40% in the past, but now 8% annually. It holds 16 % of the total capacity. The state holds 36 % of whole capacity from state utilities, central 17%, privates 46%.

The private powers contribute largely in the growth of Maharashtra installed capacity.

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source : JICA team, from CEA monthly report Figure 4.1.7-2 Installed Capacity History by Fuel

source : JICA team, from CEA monthly report Figure 4.1.7-3 Installed Capacity History by Ownership

The State owned and Private owned Power capacities are shown below. (Central allocation is omitted). (Appendix 4-18)

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source: Western Regional Load Dispatch Center, 2015-16 Annual Reeport

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(2) Power Generation

In terms of energy, coal thermal is vast dominant in generated electricity in Maharashtra. State Hydro amounts small. There is some nuclear energy. The state energy depends on Private plants.

(GWh) 140,000 Central- Nuclear Central- Hydro 120,000 Central- Natural gas 100,000 Central- Coal 80,000 Private- Hydro Private-Natural gas 60,000 Private- Oil 40,000 Private- Coal 20,000 State- Hydro State- Natural gas 0 State- Oil State- Coal

source : CEA Monthly Report Figure 4.1.7-4 Generation

Central Nuclear 12% Hydro 9% Natural 4% gas FY2015 State 4% FY2015 Power 40% Power Generation Generation 117.2TWh 117.2TWh (by Sector) (by Fuel) Private 48% Coal 83%

source: CEA Monthly Report Figure 4.1.7-5 Generation by Ownership & by Fuel

(3) Plant Load Factor

The Plant Load Factors (PLFs) of state thermal plants have been 50-60 % and has been decreasing. The CGU shows even lower. The State was not able to realize the full generation potential due to various reasons like poor quality of coal and non- availability of gas leading to forced outages. All 7 plants faced loss of PLF due to shortage of coal ranging from 2% to 19%. Gas station faced 28% loss of generation due to non-availability of gas.

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No new gas-based power plant is allowed to be set up till 2015-16 by CEA order.

RGPPL (Ratnagiri Gas And Power Pvt. Ltd.) has stopped gas plants of 1,697MW since 2013. However, RGPPL has requested Discoms to disburse capacity charges. If paid, it is said to put additional debts of Discoms worse by 1,900 Crores annually.

(%) 100 90 80 70

60 State- Coal 50 Private- Coal 40 Central- Coal 30 20 10 0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

source: CEA Plant load factor of Coal-fired power Figure 4.1.7-6 Plant load factor of Coal-fired power

source : Maharashtra, Power for All (Appendix 4-16) Figure 4.1.7-7 PLF Achieved & PLF Loss Due to Various Reasons – FY2015

(4) Cost of Power Generation

The figure shows the 2015 purchase cost of each Discom in Maharashtra. The cost average ranges 3-4 INR/U for MSEDCL but higher for Private Discoms. In the case of MSEDCL, which had adequate tied-up Long Term PPA’s for 98 % of its energy has little reliance on Short Term sources of power. The LT PPA cost are cheaper than power available under ST arrangements.

As for R-Infra, BEST, TPC D, the LT cost is higher than ST price. They have to rely on LT purchase

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to secure the supply, but they are required to procure the power more from ST market to compensate the higher purchase LT power. The state government reportedly has been encouraging Discoms to pursue more ST power purchase.

In the financial projection of Maharashtra Discoms, the state assumed the average power purchase cost in the next 5 years at 4.5 INR/U.12

source : Maharashtra, Power for All (Appendix 4-16) Figure 4.1.7-8 Purchase Cost (INR/ U) for Distribution Licensees (FY2015)

source : Maharashtra, Power for All (Appendix 4-16) Figure 4.1.7-9 LT vs. ST Energy Mix (%) of Distribution Licensees

(5) Power Development Plan

In order to meet the rising demand of power and to achieve the PFA objectives, MSPGCL has planned to expand its current generating capacity by an additional 3,840 MW by the end of FY2019.

The available capacities from central sector generating stations is expected to increase from 4,356

12 From Maharashtra Power for All, Feb., 2016 (Appendix 4-16)

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MW in FY2015 to 6,423 MW in FY2019 as per the envisaged commissioning schedule of the allocations to the State from upcoming projects.13

The below tables show the upcoming state thermal projects and central sector projects.

MW 6,000

5,000 Central sector 1,920 4,000 State Sector 3,000 149 2,000 3,480 2,570 1,000 942

660 579 0 250 0 250 FY2016 FY2017 FY2018 FY2019 Total

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.7-10 Planned Generation Capacity Addition FY16-19

Table 4.1.7-1 Proposed New Thermal Projects by MSPGCL

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16)

13 These estimate from Maharashtra Power for All was made at the timing of March, 2015 though published at Feb.,2016.

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Table 4.1.7-2 Planned Generation Capacity addition

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16)

(6) Renewable Energy

1) Existing and Additional capacity

The Government of Maharashtra in July, 2015 has declared a composite policy for development of generation of electricity from Renewable Energy (RE) sources. The policy aims at a capacity addition to 14,400 MW in the next 5 years.

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(MW) 7,000 379 6,000 337 249 5,000 327 Solar 4,000 300100 20 281 4,638 Small hydro 3,000 4 4,100 275 Wind 211 245 3,022 2,000 2,733 2,317 Wastes 1,939 2,078 1,000 Biomass 604 757 940 1,033 0 186 219 403

source : CEA Monthly Report Figure 4.1.7-11 Renewable generation capacity in Maharashtra

15,000 MW 14,400

Solar 7,500 10,000 Waste Power 6,706 Biomass

330 Bagass 5,000 Small Hydro Wind 4,442 5,000

0 End of FY2014 FY2019

source : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.7-12 RE Capacity Addition from FY2015 to FY2019

2) Renewable Purchase Obligation

Table 4.1.7-3 RPO (2015)

Year Captive Open Access Solar Non Solar 2015 Y Y 0.5％ 8.5％ source : Indian Renewable Energy & Energy Efficiency Database (IREEED)14

14 http://ireeed.gov.in/

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The RPO has been enhanced in MSERC in 2016 (Renewable Purchase Obligation, its Compliance and Implementation of Renewable Energy Certificate Framework) Regulations, March 30, 2016).

15 Table 4.1.7-4 RPO (2016)

3) Purchase Price

The MERC adopts the tariff for a RE Power Project where such tariff has been determined through a transparent process of competitive bidding. Based on the RE Tariff regulations 2010, the MERC provides Terms and Conditions and the Procedure for determination of “generic tariff” on Suo-Motu basis for the following Renewable Energy (RE) generating stations, for FY2014-15, and which is effective until new fresh order is issued.

(a) Wind Power Projects; (b) Small Hydro Projects, Mini and Micro Hydro Projects; (c) Biomass Power Projects; (d) Qualifying and Non-Qualifying Non-fossil fuel-based co-generation Plants; (e) Solar Photo Voltaic (PV) Projects, (f) Solar Rooftop PV and other small Solar Power Projects.

15 MERC/Tariff/Regulation/2016/01743, http://biomasspower.gov.in/document/programme-regulatory/Mahrarashtra/MERC%20RPO-REC%20RPO%20Regulations %202016.pdf

Electric Power Development Co., Ltd. 4-27 Data Collection Survey on Power Sector in India Final Report

Table 4.1.7-5 Feed-in Tariff

Tariff Without Tariff With year Technology Category Accelerated Accelerated Depreciation Depreciation 2015 Bagasse/Biom Fixed Cost 2.46 ass Variable Cost 3.81 Tariff 6.27 5.99 2015 Non-Fossil Tariff 2.33 5.99 Fuel Based Cogeneration 2015 Small Hydro 5-25MW 4.33 3.76 Power 500kW and below 6.06 5.44 Above 500kW and 5.56 4.94 upto and including 1MW Above 1MW and 5.06 4.44 upto and including 5MW 2015 Small Solar Small Solar 8.45 7.29 2015 Solar PV Solar PV 7.95 6.79 2015 Wind WPD 200-250 5.7 5.33 WPD 250-300 5.01 4.69 WPD 300-400 4.18 3.91 WPD >400 3.92 3.67 source : Indian Renewable Energy & Energy Efficiency Database16

(7) Countermeasures for Variable Renewable Energy

The supply and demand adjustment reaches by gas thermal and hydro power. However, the State cannot but depend on hydro power for most of adjustment because of natural gas shortage. The state government pushes forward a plan to introduce 14,400MW into with a renewable energy including 5,000MW by wind, 7,500MW by solar, for the next five years. The state does not have a definite policy for the system stability when its renewable targets are realized.

1) Standpoint of Pumped Storage Projects

The state operates Ghatghar (125MW *2) as a pumping power station. Water Resource Department (WRD) takes the plan of the hydroelectric power station including the pumped storage projects (PSP). As for PSPs, Warasgaon is in the stage of DPR in progress.

WRD wants to build the pumped storage power station, but MSPGCL, is negative against PSP because generation cost of the PSP is more expensive than thermal power generation. Power

16 http://ireeed.gov.in/

Electric Power Development Co., Ltd. 4-28 Data Collection Survey on Power Sector in India Final Report

Department also takes the viewpoint PSP to be unnecessary. (i.e. existing Ghatghar PSP:7 INR/kWh, thermal: 2 INR/kWh)17.

MSETCL promotes thermal power generation not PSPs from a point of view to supply the electricity of cheapness.

Both WRD and SLDC insist on introduction of the PSPs, but state government and MSPGCL haveill not recognized the need of the PSPs to consider large-scale introduction of VRE and the state’s rapid growth of the demand in future.

Table 4.1.7-6 Current Status of PSPs in Maharashtra Location Capacity Stage Warasgaon 1,200MW DPR is in progress Panshet 1,600MW The work of investigation of the lower dam could not started Varandhghat 800MW The work of investigation of the lower dam could not started

2) The current status of Ghatghar PSP (Appendix 4-17)

i) Plant Details

Unit 1 (125MW) Commissioned on 08.04.2008 Unit 2 (125MW) Commissioned on 21.06.2008 a) Capacity : 2 units ( 250 MW) Reversible Francis Turbine Pumps & Generator b) Rated Head : 410 m ( Generation Mode ) & 430 m ( Pumping Mode ) c) Rated Discharge 37.40 m3/sec d) Max yearly generation possible : 469.5 Mus ( Running 2x125MW , Daily 6 hrs for 313 days for year ) e) Max yearly energy required for pumping : 645.372 Mus.( Running 2 x 150MW Daily 7 hrs for 313 days for year ) f) Power House Type : Under Ground g) Black start facility : 2 x 1250 KVA, 11 KV Diesel Generating sets. h) Generator speed:- 500 R.P.M. ii) Routine Operation

a) Generation mode operation in the following conditions • Morning peak hours and Evening peak hours ( 2 x 125 MW) or whenever required • To reduce over drawl from central grid at low frequency. • Units are available within 15 min from giving instruction • Once taken as generator unit is operated for minimum 1 hour.

17 Interview with GOMWRD, 2016/6/15

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• Injection supporting to Nasik and Padghe Bus. b) Pumping mode operation in the following conditions • Generally during night off peak hours or between reduction of day demand and before evening peak • The pumping demand is 2x150 MW • Pumping operation to reduce under drawl from Central grid at high frequency. • Pumping/generation mode is also taken for controlling network loading in adjacent area. • Once taken as Pump unit is operated for minimum 1 hour

20500 20000 State Demand 19500 State Demand 19000 18500 18000 17500 17000 16500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

300 250 Ghatghar Generation 200 Ghatghar Pumping 150 100 50 0 -50 -100 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 -150 -200 -250 -300 -350 -400 source : MAHATRANSCO Figure 4.1.7-13 Ghatghar Pumped Storage Operation Pattern

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Table 4.1.7-7 Generation & Pumping Date for FY2015-16

source : MAHATRANSCO

4.1.8 Transmission

(1) Transmission Network

Intra-state transmission of power is primarily handled by the State Transmission Utility (STU) – MSETCL and is complemented by 6 private transmission licensees. Presently, MSTECL has 608 EHV sub-stations with a total transformation capacity of 103,603 MVA and 45,513 ckt kms of EHV lines with about 360 ckt kms at 765 kV class. The other transmission licensees in the State have a total of 30 EHV sub-stations with transformation capacity of 14,847 MVA.

The ongoing/ proposed projects for capacity additions and augmentation will be adequate to cater to the projected increase in load and also improve reliability of the system by building in redundancies.

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Table 4.1.8-1 Current Infrastructure As on March 2015

source : MAHATRANSCO

Transformation Capacity MVA Line Length ckm 250000 63340 70000 60144 56359 53107 60000 200000 48834 178629 162104 168094 50000 152784 134841 150000 40000

100000 30000 20000 50000 10000

0 0 FY15 FY16 FY17 FY18 F19

sources : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.8-1 Augmentation of Intra Transmission FY15-FY19

(2) Transmission Loss

MSETCL’s transmission system availability for HVAC systems is over 99.68% against MERC benchmark of 98% and over 97.10% for HVDC systems against MERC benchmark of 95% and transmission losses are at 3.98% which are at par with other leading inter and intra-State transmission utilities in the country.

4.1.9 Distribution

In order to ensure that Maharashtra achieves 24x7 power for all consumers, the State distribution utility, MSEDCL, has proposed a total investment of 28,394 Crores from FY2016 to FY2019, while 9,691 Crores is expected to be invested beyond FY2019. The proposed capital expenditure shall be funded through a mix of external borrowings, equity and grants (6,899 Crores) under various State and Central schemes including DDUGJY and IPDS.

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(1) Rural Electrification

With the proposed investments in distribution infrastructure and various other initiatives being undertaken by the licensees, it is expected that electricity access and 24x7 reliable power supply to all the consumers will be achieved by the end of FY2019.

1) Village Electrification (Nos.)

Total inhabited villages 40956 Balance Un-electrified Villages as on 31.05.2016 0

2) Household Electrification (Nos. in Lalhs)

Tatal Rural Households 130.16 Balance Un-electrified as on 21.05.2016 18.73 source : Ministry of Power

MVA DT Transformation ckm km 644,747 644,747 60,000 650,000 LT Feeders 636,077 622,236 55,580 55,580 607,656 54,490 55,000

51,828 600,000

50,000 49,030

550,000 45,000

40,000 500,000 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 sources : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.9-1 Augmentation of Distribution System for MSEDCL

(2) Cost and Price of Electricity

There has been the gap between the Average Cost of Supply (ACS) and Average Billing Rate (ABR). In case of MSEDCL, the gap between ACS and ABR has increased from 0.31 INR/U in FY2011 to 0.14 INR/U in FY2015. This shows the tariff realized & tariff revision is not sufficient to match the cost of supply of electricity. The unrecovered gap, and the delay in recovery of gap (tariff revision) has adversely affected the working capital position of MSEDCL as MSEDCL has to avail short-term loans and incur interest repayment. MERC approves the interest on working capital based on regulatory norms only, resulting in widening of the gap between ACS and ABR.

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Rs/kWh

7.00 Average Cost of Supply 6.50 6.56 Average Billing Rate 6.21 6.22 6.00 6.08 5.79 5.50 5.54 5.12 5.00 5.00 4.97 4.69 4.50

4.00 FY11 FY12 FY13 FY14 FY15

sources : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.9-2 ACS & ABR for MSEDCL

(Rupee/kWh) 16 14 12 10 8 6 4 2 0

Max (All India) Min (All India) Maharashtra (State DISCOM)

source : Electricity Tariff & Duty and Average rates of electricity supply in India, CEA, March 2015 Figure 4.1.9-3 Average electricity prices by sector (comparison)

(3) AT & C Loss

The operational performance of MSEDCL has improved with losses declining from 31% in FY2007 to 14.17% in FY2015. Thus, AT&C losses is projected to improve from 18.71%% in FY2015 to 14.39% in FY2019.

Table 4.1.9-1 Distribution Lossin FY 2009-10 to FY 2015-16, as submitted by MSEDCL

source: MYT Order of MSEDCL for the period from FY 2016-17 to FY 2019-20, MERC, Nov., 2016

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(%) 20.0

18.0 18.05

16.0 15.92 16.05 15.47 15.10 15.26 14.29 14.50 14.0 T&D Losses AT&C Losses 13.31

12.0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

sources : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.9-4 AT&C Losses , T&D Losses

(4) Financial Position of Discoms

1) Financial Situation

In Maharashtra, Multi Year Tariff has been regulated in 2011 and has been revised in 2015 (MERC (Multi Year Tariff) Regulations, 2011 and MERC (Multi Year Tariff) Regulations, 2015), which has been understood to reflect Discom’s petitions.

Over the last few years, MSEDCL’s performance has improved owing to a significant increase in revenue growing at a CAGR of 14.1% from FY08 to FY14. However, it was during FY2008 that MSEDCL had last booked profit of 117 Crores. Despite the 36.6% share of industrial consumption of its energy sold in FY2015, the utility has been making financial losses since last 8 years. The persistent gap between ACS and ABR with additional financing cost has accumulated financial losses to the tune of 5,947 Crores in FY2014.

Although the AT&C losses have been declining, the tariff revision with subsidy improvement are necessary in Maharashtra.

Cr 0 -1,000 -2,000 -3,000 -4,000 -5,000 -6,000 -7,000 FY10 FY11 FY12 FY13 FY14 Accumulated Loss -2,259 -3,793 -4,649 -5,584 -5,947 Loss -1,086 -1,505 -808 -871 -280

sources : Power for All Maharashtra, MOP, Feb., 2016 (Appendix 4-16) Figure 4.1.9-5 Financial Losses

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2) State Subsidy or Discoms

Agriculture and domestic households are supplied power at cheaper rates. The guideline of the National Tariff Policy requires subsidies and surcharges to be within 20% (plus or minus) of the actual cost of power. But in Maharashtra, subsidized power is criticized to be one-third its cost, and Industry Sector pays almost double the cost. It was argued that the average purchase price was 3-4 INR/U, the Average Cost of Supply (ACS) was around 5.34 INR/U, but power to households sells for a higher 6 INR/U or more, Industry pays an average tariff of 8 INR/U or more, and power for domestic/agriculture can be as low as 1.20 INR/U.18

Though the total amount of subsidy was not large in Maharashtra, smaller than other states, it was argued that Power Regulators were urged to decrease cross subsidies.

Nov., 2016, MERC issued the Tariff Order for FY2016-17 to FY2019-20. In the Order, MERC defines the tariff for LT Domestic consumers as low as 1.48 INR/U, for Agricultural consumers 3.40 INR/U, LT Industrial consumers 6.53-7.62 INR/U, HT Industrial consumers 8.57 INR/U. It made certain hikes but still lower than the MSEDCL petition.

Table 4.1.9-2 MSEDCL revised Tariff effective from Nov.2016

Average Billing Category No. of Consumers Rate (INR/U) HT I - Industry (Sub-Total) 13,485 8.57 Total HT Category 20,445 8.68 LT I(A): LT - Residential-BPL Category (0-30 units) 265,058 1.48 LT I(B): LT - Residential 17,398,846 6.43 LT I: LT - Residential (Sub-Total) 17,663,904 6.41 LT II(A): LT - Non-Residential (0-20 kW) (Sub-Total) 1,624,357 10.25 LT II: LT - Non-Residential (Sub-Total) 1,647,597 11.23 LT III: LT - Public Water Works (Sub-Total) 50,411 3.83 LT IV(A): LT - AG Un-metered-Pumpsets (Sub-Total 1,390,617 3.77 LT IV - LT - Agriculture (Sub-Total) 4,165,332 3.4 LT V(A) - Industry - Powerlooms (Sub-Total) 35,312 6.53 LT V(B) - Industry - General (Sub-Total) 309,400 7.99 LT V - Industry (Sub-Total) 344,712 7.62 LT VI Street Light (Sub-Total) 90,651 5.75 LT VII - Temporary Supply 2,596 12.23 LT X (A) Public Services-Government (Sub-Total) 13,350 8.62 LT X (B) Public Services-Others 66,839 8.95 LT X Public Services 80,189 8.95 Sub-Total LT Category 24,061,679 5.62 MSEDCL Total Revenue 24,082,124 6.43

source: JICA team, from MYT Order of MSEDCL for the period from FY 2016-17 to FY 2019-20, MERC, Nov., 2016

18 A Panel discussion “will tariff goes up”, Indian Merchants’ Chamber, Jan., 2016. Note that 1.20 INR/U may indicate variable charge only., http://www.freepressjournal.in/wp-content/uploads/2016/02/Will-Power-Tariffs-Go-Up.pdf

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3) Application of UDAY Scheme

Discom has been accumulating the debt to the tune of 6,000 Crores as at FY2014. According to Maharashtra announcement on Oct., 2016, Maharashtra has decided to join UDAY scheme. It reports to provide the benefit to the tune of 9,725 Crores. The announcement indicates the increased Discom’s debt has reached as much as 8,800 Crores at present.

(5) Power Market and Trade

The approved purchase price for MSEDCL from Nov.2016 is shown below. As seen in the table, almost the entire power procurement of MSEDCL is done at regulated Tariffs or competitive rates as approved by MERC. The additional power if required is purchased through Power Exchanges or through competitive bidding on a transparent E-Tendering basis, on round-the-clock (RTC) basis or for a specific period, but is minimum.

The approved purchase cost from MSPGCL is more than 4 INR/U, from central 2.6-3 INR/U, while ample power is scheduled to obtain in the market at lower than 3.0 INR/U.

As the short market exchange price is cheaper than 3.5 INR/U at the current circumstances, Industrial consumers strongly criticize that “MSEDCL should look at other sources such as the Power Exchanges, short-term power purchase, Traders, Captive Power Plants (CPPs), etc., instead of buying expensive power from MSPGCL”. This criticism has reflected that industrial consumers suffer the very high retail tariffs due to cross-subsidy-surcharge (as high as 8 INR/U or higher). They claim that the power purchase should be strictly as per the MOD (Merit Order Dispatch) as defined by the Commission.

This hasn’t been changed for years. MSEDCL has to secure Long Term PPA and LTPPA requires MSEDCL to pay fixed charge to low PLF units of MSPGCL even if MSEDCL is not receiving power from them.

But recently it is reported “For cost optimization, MSEDCL has decided to procure power from the most efficient units and to shut down units with higher cost from its power purchase in such a way that no fixed cost obligation arises in case the Plant is shut down.” Certain generation units of MSPGCL are proposed to be shut down.

Electric Power Development Co., Ltd. 4-37 Data Collection Survey on Power Sector in India Final Report

Table 4.1.9-3 Power Purchase Expenses for 2015-16 by MSEDCL approved by MERC

Entity Quantum (MU) Cost (Crores) Unit Cost (INR/U) Long Term MSPGCL 43,776 18,132 4.14 NTPC 23,889 6,651 2.78 NPCIL 4,537 1,181 2.60 Privates 41,767 15,582 3.73 Long Term total 113,969 41,546 3.65 Short Term CPP 825 168 2.04 PXIL 255 76 2.98 IEX 732 215 2.93 Sai Wardha 291 83 2.83 Short Term total 2,104 541 2.57

Total 116,073 44,034 3.79 source: JICA team, from MYT Order of MSEDCL for the period from FY 2016-17 to FY 2019-20, MERC, Nov., 2016

source: JICA team, from MYT Order of MSEDCL for the period from FY 2016-17 to FY 2019-20, MERC, Nov., 2016 Figure 4.1.9-6 Power Purchase Expenses for 2015-16 by MSEDCL approved by MERC

As the surplus of energy arises, the MERC projects a large quantum of surplus energy of around 25,000 MU in the near future. In view of this expected surplus, MSEDCL may consider selling the surplus power through short-term/ medium-term bilateral contracts or through Power Exchanges in an optimal and efficient combination and manner, so that its net power procurement costs are reduced and increase revenue.

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4.2 ODISHA STATE (OD)

4.2.1 Political Situation

The Odisha legislative assembly election was held in 2014. The ruling party, Biju Janata Dal gained majority with 117 seats out of 147, and incumbent Chief Minister Naveen Patnaik once again took oath as Chief Minister. Indian National Congress and Bharatiya Janata Party (BJP) had to settle for 16 and 10 seats respectively. Result of assembly election is shown in Table 4.2.1-1.

Table 4.2.1-1 Result of Assembly Election in Odisha Party Seats won Vote % Biju Janata Dal 117 43.4 % Indian National Congress 16 25.7 % Bharatiya Janata Party 10 18.0 % Others 4 12.9 % Total 147 100% source: Election Commission of India19

19 http://eci.nic.in/eci/eci.html, etc.

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4.2.2 Economic Situation

(1) General

Odisha’s industries are based mainly on the natural resources available in the state. It carries more than 35 per cent of country’s natural resources. The state has significant reserves of iron ore, bauxite, nickel, coal, etc. Hence, it is an attractive destination for mineral-based industries. The state is one of the top producers of aluminum in the country, both in terms of production capacity as well as actual production.

Forest-based products provide livelihood to a large section of the population of the state. Agriculture and allied sectors have provided employment, directly or indirectly, to more than 60.0 per cent of the state's total workforce.

Key industries in Odisha - Iron and steel, and ferroalloy - Aluminum - Handloom - Agro-based industry - Mining - IT/ITeS - Electronics - Tourism

1) Gross State Domestic Product (GSDP)

GSDP of Odisha State occupies 2.4 % of total GSDP in 33 states in India in 2013-14 and ranked as the 16th largest economy in all states. The economy of Odisha is one the fastest growing state economies in India. According to 2014-15 economic survey, Odisha's GSDP was expected to grow at 8.78% in the 2014-15 fiscal year. Odisha has an agriculture-based economy which is in transition towards an industry and service-based economy. In 2013-14, the GSDP growth rate dropped to 1.8 %. This was attributed to the Phailin cyclone, which caused a negative growth of 9.78% in the agricultural sector and also affected several other sectors. GSDP at factor cost is shown in Table 4.2.2-1.

Table 4.2.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 12,513,105 13,011,301 13,501,017 13,746,828 14,857,608 Increase --- 4.0 % 3.8 % 1.8 % 8.78 % source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India20

20 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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2) Structure of industry (against GSDP)

Over 2015, the tertiary sector contributed 45.28 % to SGDP at current prices, followed by the secondary sector (27.48 %). There is a growing trend in the tertiary sector, while the primary sector is decreasing. There is very little fluctuation in the secondary sector. Percentage distribution of GSDP is shown in Table 4.2.2-2.

Table 4.2.2-2 Percentage Distribution of GSDP for 2013-2016 Item 2013-14 2014-15 2015-16 Tertiary 41.57 42.92 45.28 % Secondary 27.37 27.26 27.48 % Primary 31.06 29.83 27.24 % source: Annual Budgets 2016-17, Finance Department

(2) Economic Policy / Development Policy

The State has been laying emphasis on higher investment in physical, social and human capital to foster inclusive economic growth. It has also created an investor friendly environment to attract private investment through the Industrial Policy Resolution-2015 in industrial sector. Emphasis for this budget is consolidation and completion of the on-going projects so that the desired socio-economic benefits reach the common people. According to the Budget speech, thrust areas of this Budget are as follows:

- Irrigation, Agriculture, Rural Development and related livelihood opportunities. - Development schemes in the energy sector: Addition to the generation capacity for energy security, provision of electricity for all, and improvement of quality of power supply through strengthening of the distribution backbone - Provision of health security to the people residing in rural and remote areas of the State, social security to vulnerable groups of the society and education for all. In addition, Odisha State has elaborated the following development policies:

Industrial Policy Resolution (IPR) 2015 - To revolutionize the state of Odisha into a dynamic industrialized territory. - To attract investments and promote economic growth in the state of Odisha. Special Economic Zones Policy 2015 - To encourage domestic as well as foreign investments in the state of Odisha. - To promote economic activities in the state and increase exports from SEZs in Odisha. The State Reservoir Fishery Policy 2014 - Tapping the potential of aquaculture to contribute to food and nutritional security. - Boosting the public-private partnership investment across the sector.

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Information & Communication Technology (ICT) Policy 2014 - Development of new IT/ITeS locations across the state through upgradation of the IT infrastructure by setting up IT parks.

(3) Financial Situation

The State enacted Odisha Fiscal Responsibility and Budget Management Act, 2005 during the year 2005-06. Since then, the State has been able to achieve all the fiscal parameters prescribed in the Act. FRBM Targets for 2016-17 is as follows:

- The estimated Revenue Surplus is 0.96 per cent of GSDP is adhered to the FRBM limit of zero Revenue Deficit. - The Fiscal Deficit is projected 3.79 per cent of GSDP. However, if the impact of UDAY scheme for Rs.1196.18 Crores is taken out, the deficit comes down to 3.48 per cent of GSDP which is below the proposed FRBM limit of 3.5 percent. - The outstanding debt to GSDP ratio at the end of FY 2016-17 is estimated at 16.96 per cent of GSDP which is below the FRBM limit of 25%. Transition of fiscal management is shown in Table 4.2.2-3.

Table 4.2.2-3 Transition of Fiscal Management (Percent) Item 2014-15 2015-16 2016-17 Target(16-17) Revenue deficit / GDP 1.89 2.05 0.96 0.00 Fiscal deficit / GDP -1.77 -2.99 -3.79 -3.50 Total debt stock / GDP 13.97 15.75 16.96 19.58 source: Statements presented along with the annual budget 2016-17 21 (4) Foreign Investment

1) Transition of Foreign Direct Inflow (FDI)

Foreign Direct Inflow (FDI) equity inflow received by RBI’s regional office in Bhubaneshwar, which covers states of Odisha, is in Table 4.2.2-4. The amount has been increasing steadily.

Table 4.2.2-4 Transition of DFI Unit: Crores Rupees (US$M) Year 2013-14 2014-15 2015-16 Cumulative Percentage of (2000-2016) total inflow Amount 288 (48) 56 (9) 36 (6) 1,997 (403) 0.1 % source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion22

21 http://www.odisha.gov.in/finance/Budgets/2016-17/Annual_Budget/FRBM.pdf 22 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf

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2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.2.2-5.

Table 4.2.2-5 Transition of Japanese Firms

Year 2011 2012 2013 2014 2015 Number 13 14 15 47 52 source: Embassy of India in Japan23

4.2.3 State Budget and Financial Situation of Executing Agency

(1) Power Sector Budget24

State Budget mentions that energy drives the growth engine and ensuring energy security is one of the biggest challenges of growing economies. Taking adequate cognizance of this reality and acting upon that, a sum of Rs.2800.92 Crores is provided for Energy Department both under plan and non-plan. Budget 2016-17 of Odisha State provides the following key highlights for the power sector:

- Construction of 550 numbers of 33/11 kV sub-stations for providing uninterrupted, reliable and quality power supply to consumers of the State even in remote areas. (Rs.600 Crores) - Provision of Electricity to all un-electrified villages/habitations having population of less than 100, under “Biju Gram Jyoti Yojana” (BGJY) scheme. (Rs.255 Crores) - State Capital Region Improvement of Power System (SCRIPS) (Rs.160 Crores). Additional equity of Rs.300 Crores over a period of 5 years to support OPTCL in taking up transmission Projects in areas such as KBK and Western Odisha. (Rs.50 Crores) - System Strengthening for Elephant Corridor (Rs.20 Crores) and Smart Grid scheme (Rs.20 Crores). - State matching contribution for the Centrally Sponsored Scheme Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) (Rs.100 Crores) and for the Centrally Sponsored Scheme Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) (Rs.100 Crores). - Integrated Power Development Scheme (IPDS). (Rs.50 Crores) Table 4.2.3-1 shows department-wise plan outlay for budget 2016-17.

Table 4.2.3-1 Department-wise Budget Allocation for Energy Department (Crores Rs.) Item 2012-13 2013-14 2014-15 2015-16 2016-17 Energy Dept. 436.00 1,149.82 752.20 1,612.84 2,800.92

source: Budget 2016-17

23 http://www.in.emb-japan.go.jp/Japanese/2015j_co_list.pdf 24 http://www.odisha.gov.in/finance/Budgets/2016-17/Annual_Budget/BUDGET_AT_A_GLANCE-FINAL.pdf

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(2) Financial Situation of Executing Agency

Executing agency of pumped storage projects in Odisha is Odisha Hydro Power Corporation (OHPC). OHPC is a power generation company which owns and operates hydropower plants, and their income largely depends on the climatic conditions.

In FY2013-14 there was a great increase in income and interest amount due to the payment by Ministry of Water Resources for the share of operation and maintenance cost of the multi- purpose dam for Upper Indravati Hydropower Plant, and the interest payment of government loan was made.

Return on Equity (ROE) varies year by year: 3.50 %, 7.03 % and 1.35 %; and Profit after Tax: 200, 488 and 111 Crores, from 2011/12 to 2013/14. The total income exceeds the total expenditure. This represents that the business structure of the company has a potential of profit making, however, due to the characteristic of hydropower generation, the income should inevitably depends on the weather condition. Table 4.2.3-2 shows financial situation of OHPC.

Table 4.2.3-2 Financial Situation of OHPC

2011-12 2012-13 2013-14 2014-15 Sale of Power (MU) 4,837 4,242 6,807 6,092 Total Income (Crore) 460 446 -3.0% 648 45.3% 625 -3.5% Total Expenditure 365 387 6.0% 637 64.6% 578 -9.3% Profit beforeTax 96 59 -38.5% 11 -81.4% 47 327.3% Profit after Tax 76 47 -38.2% 9 -80.9% 16 77.8% Cost Structure (Crore) Power purchase 0 0.0% 0 0.0% 0 0.0% 0 0.0% Generation cost 8 2.2% 9 2.5% 10 2.7% 10 2.7% Employee cost 145 39.6% 179 48.9% 154 42.1% 160 43.7% O&M cost 31 8.5% 44 12.0% 48 13.1% 62 16.9% Interest cost 17 4.6% 13 3.6% 293 80.1% 58 15.8% Depreciation 123 33.6% 124 33.9% 126 34.4% 295 80.6% Admin & Gen Exp 19 5.2% 17 4.6% 21 5.7% 19 5.2% Other Expenses 23 6.3% 0 0.0% -15 -4.1% -26 -7.1% Total 366 386 637 578 Return on Equity (%) 23.79 14.69 2.74 4.59 Return on Networth (%) 8.07 4.70 0.87 1.53 Retuｒn on Capital Employed (Crore) 3.35 2.13 9.78 n/a Debt Equity Ratio 1.95 1.80 2.06 n/a

source: Report on "The Performance of State Power Utilities for the years 2011-12 to 2013-14", 2015 PFC25; and Annual Report 2015 of OHPC

25 http://www.pfcindia.com/Content/PerformanceReport.aspx

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4.2.4 Power Sector Overview

Odisha is expected to become over supply condition in a near future. The state government’s policy to implement 3GW of renewable capacity may further deteriorate operations of coal-fired power plants. Despite of a necessity for peaking power, it seems taking some more time to form consensus among the stake holders.

Prospects

Energy Surpus/Deficit Peak Demand Surpus / Deficit

40% 35% 20% Surplus/Deficit … Surplus/Deficit (%) 16% 30% 15%

10% 20% 9% Supply/Demand 5% 10% 0% 8% 0% 0% 0% -2% -1% 2% -5% -2% -2% -2% -1% 0% -1% -1% -3% -2% -2% -7% -10% -10% FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Genaration Capacity Addition Prospect RE Capacity Addition Prospet

MW MW 3,500 9,000 Central, 1,196 8,000 3,000 7,000 State, 660 2,500 IPP/JV, 456 Solar 6,000 IPP/JV, 84 2,000 Generation Small hydro 5,000 1,500 Wind 4,000 1,000 Wastes 3,000 5,533 500 Biomass 2,000 0 1,000 0 Existing FY2015-16 FY2016-17 FY2017-18 FY2018-19

Hourly Load Curve for FY2014

MW 4000

3500

3000

Hourly Load Curve 2500 2000

1500

1000 max.-min. range 500 average

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Name/location Progress

Upper Indravati under preparation of DPR PSP Upper Kolab before preparation of DPR

n.a. before preparation of DPR

Figure 4.2.4-1 Odisha state power sector feature

Electric Power Development Co., Ltd. 4-45 Data Collection Survey on Power Sector in India Final Report

4.2.5 Power Supply Structure

(1) Institutions

Odisha State undertook structural reforms in 1995 wherein the erstwhile Orissa State Electricity Board (OSEB) was unbundled into GRID Corporation of Orissa Limited (GRIDCO) and Orissa Hydro Power Corporation Limited (OHPC) in 1996. As of 2016, the following organizations are in charge of each assignment:

Policy Department of Energy Regulation Odisha Electricity Regulatory Commission (OERC) Power Odisha Power Generation Corporation limited (OPGC) generation Odisha Hydro Power Corporation limited (OHPC) Transmission Odisha Power Transmission Corporation limited (OPTCL) Dispatch State Load Despatch Centre (SLDC) * Wholesale GRID Corporation of Orissa limited (GRIDCO) transaction Distribution Central Electricity Supply Utility of Orissa (CESU) North Eastern Electricity Supply Company of Odisha Limited (NESCO) Western Electricity Supply Company of Orissa Limited (WESCO) Southern Electricity Supply Company of Odisha Limited (SOUTHCO) Renewable Odisha Renewable Energy Development Agency (OREDA) energy Green Energy Development Corporation of Odisha Limited (GEDCOL) * Belong to OPTCL

(2) Power Supply structure

There are 2 state own power companies namely OPGC for coal-fired power and OHPC for hydro electric power. Transmission sector is dominated by OPTCL, and four regionally monopolistic distribution companies exist.

Uniqueness of Odisha power supply structure is in its wholesale transaction. The state of Odisha is employing so called single buyer model where GRIDCO is purchasing whole of generated electricity and re-distribute it to each distribution company. Therefore, there is no direct commercial transaction between power generators and distributors unlike other states.

Almost all of the electricity is transacted under a bilateral long-term PPA: Power Purchase Agreement. Some amount is procured through exchange, however its share to total demand is very small.

In terms of ownership, power generating company OHPC and OPGC, transmission company OPTCL, and wholesale trader GRIDCO are all wholly state own. Distribution companies (Discom) were also state own before adopted the Odisha Electricity Reform Act 1995. Under the act, 51% share of distribution companies were sold to private sector, to AES of USA in the case of CESCO (currently

Electric Power Development Co., Ltd. 4-46 Data Collection Survey on Power Sector in India Final Report

CESU), and to BSES Ltd. (currently Reliance Infrastructure Ltd.) in the case of NESCO, WESCO, and SOUTHCO26.

However in 2001, CESU was returned to 100% state own after AES sold the stake to OERC27. And for remaining NESCO, WESCO, and SOUTHCO, their distribution licensees were divested in March 2015 because of non-compliance of state requirement and now GRIDCO is charged to operate 3 Discoms28.

No further reform plan has been observed.

Central gov. OHPC OPGC allocation IPP

OPTCL

GRIDCO

CESU NESCO WESCO SOUTHCO

consumer consumer consumer consumer

Physical flow Commercial flow

source: 24×7 Power for All Odisha, MOP, 2016, web site of each organization Figure 4.2.5-1 Electricity Supply Structure

(3) The State’s Original Power Policy

Following policies can be identified as Odisha state’s own energy policy.

26 Remaining 49% belong to the state in the case of CESU, GRIDCO in the case of NESCO, WESCO, and SOUTHCO. 27 The Telegraph, 25 May 2015 28 The Indian/ Financial Express, 5 March 2015, other news articles, http://indianexpress.com/article/india/india-others/setback-for-reliance-infrastructure-orissa-power-regulator-cancels-distribu tion-licence-of-anil-ambanis-company/

Electric Power Development Co., Ltd. 4-47 Data Collection Survey on Power Sector in India Final Report

Table 4.2.5-1 State’s Original Power Policy Policy area Note Electrification ・ Promoting electrification through state original program BSVY (Biju Saharanchal Bidyutkaran Yojana) 29 and BGJY (Biju Gramjyoti Yojana) 30 , in addition to RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojana) and DDUGJY (Deendayal Upadhyaya Gram Jyoti Yojana) which are operated by central government. T&D investment ・ Prepare walk ways for elephants to prevent electrocution. 31 ・ Construct exclusive feeder for all the agricultural demand 32. It aims at fostering agriculture by enabling priority supply and to flatten electricity load by controlling electricity supply for the demand. ・ Prioritize school and Anganwadi premises areas for modernization and renovation of transformers. 33 Small/mini/micro ・ Encourage private entities to develop small hydro to maximize use hydro power of state hydro potential. 34 development

 The Government of Odisha (GoO) had issued Policy Guidelines on Power Generation from Non-Conventional Energy Sources, No.6971/ST, Bhubaneswar, STIV-RE-13/2005, dated, the 3 December, 2005  OERC (Renewable Purchase Obligation and its Compliance) Regulations, 2010  Odisha Renewable Energy Policy, 2015-22  OERC Procurement of Energy from Renewable Sources by Distribution Licensee, 2015  Retail Supply Tariff for the FY 2016-17  GRIDCO Tariff Order FY 2016-17,  OERC Terms and Condition of Open Access 2005.  OERC Determination of OA Charges, 2006. Etc.

(4) Executing Agency

Executing agency of pumped storage projects in Odisha is Odisha Hydro Power Corporation (OHPC).

4.2.6 Power Supply / Demand Scenario

Historically, both energy and peak demands exceeded supplied amount. However after 2013, supply

29 Biju Saharanchal Bidyutkaran Yojana start from 2010-2011, Department of Energy, Government of Odisha http://energy.odisha.gov.in/Schemes/Biju_Saharanchala_VidyutikaranYojana.pdf 30 Biju Gramjyoti Yojana start from 2007-2008 Department of Energy, Government of Odisha http://energy.odisha.gov.in/Schemes/BGJY.pdf 31 Department of Energy, Government of Odisha http://energy.odisha.gov.in/elephant_corridor.asp 32 Department of Energy, Government of Odisha http://energy.odisha.gov.in/separate_agrifeeder.asp 33 Department of Energy, Government of Odisha http://energy.odisha.gov.in/shifting.asp 34 Small / Mini / Micro hydro power development, Department of Energy, Government of Odisha http://energy.odisha.gov.in/Schemes/SmallMiniMicroHEP.pdf

Electric Power Development Co., Ltd. 4-48 Data Collection Survey on Power Sector in India Final Report shortage position has gradually improved thanks to increase of electricity supply from private sector coal-fired power plants. And in a near future, if planned capacity addition will become reality, the state is expected to hold large surplus of supply availability.

Although the state’s power supply-demand balance has been improved, there remain some challenges in actual operation. For instance in 2014, the state experienced 165 hours of load shedding because of un-planned stoppage of plant and in-sufficient transmission and distribution capacity. 35

MU Energy Reqirement 50,000 Energy Availability 50% Surplus/Deficit 40,000 Surplus/Deficit (%) 40% 35% 30,000 30%

20,000 20%

10,000 8% 10%

0 0% 2% -1% 0% -1% -2% -2% -1% -10,000 -3% -10%

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

source: Load Generation Balance Report, CEA for FY2009-2015(Appendix 4-1,2,3), 24×7 Power for All Odisha, MOP, 2016, for FY2016-18(Appendix 4-32) Figure 4.2.6-1 Energy Supply FY2009-2018

MW Peak Demand 6,000 Peak Availability 60% 5,000 Surplus/Deficit 50% Surplus/Deficit (%) 4,000 40%

3,000 30%

2,000 20% 16% 1,000 9%10% 0 0% 0% -1% 0% -1,000 -2% -2% -2% -7% -2% -10%

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 source: Load Generation Balance Report, CEA for FY2009-2015(Appendix 4-1,2,3), 24×7 Power for All Odisha, MOP, 2016, for FY2016-18(Appendix 4-32) Figure 4.2.6-2 Peak Demand FY2009-2018

35 SLDC, Performance of the Transmission System of OPTCL for 2014-2015

Electric Power Development Co., Ltd. 4-49 Data Collection Survey on Power Sector in India Final Report

Electricty demand, in terms of both peak and energy, is estimated to increase in a future as well. Peak demand is estimated to increase from 4,333MW in FY2015 (2015/16) to 5,268MW in FY2018 (2018/19). In terms of energy demand, the general purpose will show the fastest increase at an annual average growth rate of 21% to share around 60% of electricity demand in FY2018.

MW 1,969 MU 2,000 18,000 General CESU purpose 1,565 16,000 1,490 14,000 1,500 WESCO 1,231 12,000 999 NESCO 10,000 1,000 903 Industrial 810 8,000 SOUTHCO 634 6,000 500 4,000 Train 2,000 Public use 0 0 Irrigation FY2015 FY2016 FY2017 FY2018 FY2015 FY2016 FY2017 FY2018

source: 24×7 Power for All Odisha (Appendix 4-32) Figure 4.2.6-3 Peak & Energy Demand Outlook

(1) Features of Peak Load

1) Monthly Peak and Energy Demand

In general, monthly peak and energy demand is lower through November and December, and higher through March to May. The trend is similar to that of tempreture in the state, therefore presumably electricity demand for air condition has greater effect for demand.

MW MU 4500 3000 4000 2500 3500 3000 2000 2500 1500 2000

1500 FY2015 1000 FY2015 1000 FY2014 FY2014 500 500 FY2013 FY2013 0 0

source: SLDC, Performance of the Transmission System of OPTCL for 2014-2015, Eastern Regional Load Dispatch Center, Annual Grid Report 2015-16 (Appendix 4-5) Figure 4.2.6-4 Monthly Peak & Energy Demand

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source: World Weather & Climate Information Figure 4.2.6-5 Average Min. and Max. Temperature in Bhubaneswar

2) Hourly Demand

Deviations of daily peak demand differ by month but in general it is not so wide. In the case of FY 2014, minimum peak demand was observed in January and highest was though April to June. When looking at annual average value, small peak is observed around 8 am followed by the highest peak at around 8 pm. It is supposed that at the moment lighting demand in residential sector has larger share in total electricity consumption.

MW 4000

3500

3000

2500

2000

1500

1000 max.-min. range 500 average

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

source: SLDC, Performance of the Transmission System of OPTCL for 2014-2015 Figure 4.2.6-6 Hourly Demand in FY2014

3) Frequency Profile in eastern region

Frequency profile of the Eastern Region where the state of Odisha belongs is provided in the table below.

Electric Power Development Co., Ltd. 4-51 Data Collection Survey on Power Sector in India Final Report

Table 4.2.6-1 Frequency Profile of Eastern Region in 2015-16

source: Eastern Regional Load Dispatch Center, annual grid report 2015-16 (Appendix 4-5)

source: Eastern Regional Load Dispatch Center ,annual grid report 2015-16 (Appendix 4-5) Figure 4.2.6-7 Frequency Profile of Eastern Region in 2015-16

(2) Load Factor in Odisha

Load factor in Odisha shows gradual reduction trend (wider gap between peak load and annual average load), while the demand duration curve has been increased year by year. Meanwhile in the eastern region, which includes Odisha state, has also shown the slight increase in load factor of 2015-16 compared to 2014-15.

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sources: POSOCO, Electricity Load Factor in Indian Power System, Jan 2016 Figure 4.2.6-8 Load Factor

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sources: POSOCO, Electricity Load Factor in Indian Power System, Jan 2016 (Appendix 4-7) Figure 4.2.6-9 Load Factor (continued)

source: POSOCO, Electricity Load Factor in Indiana Power System (Appendix 4-7) Figure 4.2.6-10 Load Factor of eastern region

Electric Power Development Co., Ltd. 4-54 Data Collection Survey on Power Sector in India Final Report

4.2.7 Power Generation

(1) Installed Capacity

Total power generation capacity is 9422MW as of the end of March 2016. In terms of enterprise, while capacity addition of state Genco and allocation from central has stagnating, addition of private sector is greatly increasing to share more than half of existing capacity as of the end of March 2016.

In terms of type of energy, coal shares more than three quarter of total capacity and quarter come from hydro as of the end to March 2016. Share of renewable energy in only 2 % for the moment.

Renewables 2%

Central 19% State 26% Hydro 23% End of Mar 2016 End of Mar 2016 9.4GW 9.4GW

Coal Private 75% 55%

source: CEA, Executive Summary of CEA Monthly Report Figure 4.2.7-1 Power Generation Capacity by Fuel & Ownership

Table 4.2.7-1 Generation Capacity Details (for major state & central units)

source: Eastern Regional Load Despatch Center, Annual Grid Report 2015-16 (Appendix 4-5) note that it does not includesome CGU allocation plants

Electric Power Development Co., Ltd. 4-55 Data Collection Survey on Power Sector in India Final Report

The history of the Odisha state installed capacity is given below. It shows coal thermal sources contribute 75% of the capacity and grows 14-17% annually. It consists mainly from Privates plants growth. Hydro still occupies 23% and it is relatively large in states. But it was almost developed and no growths are observed for years. Renewable grows 13-14% annually but only holds 2 % of the total capacity yet. Privates holds 55 % of whole thermal, central 19%, states 26%. The state depends on rapid growth of Private coal thermal plants.

source : JICA team, from CEA monthly report Figure 4.2.7-2 Installed Capacity History by Fuel

source : JICA team, from CEA monthly report Figure 4.2.7-3 Installed Capacity History by Ownership

Electric Power Development Co., Ltd. 4-56 Data Collection Survey on Power Sector in India Final Report

(2) Power Generation

The total generation in Odisha exceeds 50,000MU in FY2015. But as the total demand of the state was 27,000 MU, not all the generation of IPPs and central generation units has been received in the state in 2015. From the comparison in the below table, it is understood 40% of IPPs and 30% of CGU thermal were consumed in the state, and the balance was allocated or traded to outside of the state.

Table 4.2.7-2 List of Additional Firm Availability

source: JICA team, from *1) OERC GRIDCO Tariff Order FY 2016-17 (Appendix 4-27), *2) CEA, Generation Review Report

In term of total generated energy in the state (57,200 MU), coal is dominant to share more than 90% of generated electricity in FY2015. In particular, energy from central is large to be around half of total electricity generated. Meanwhile, energy supply from private coal power plant is rapidly growing to almost balance with that from central. The generation of hydro is large in electricity supply from state Genco and whole was consumed in the state. However its amount vary much year by year.

(GWh) 70,000 Central- Nuclear Central- Hydro 60,000 Central- Natural gas 50,000 Central- Coal 40,000 Private- Hydro Private-Natural gas 30,000 Private- Oil 20,000 Private- Coal 10,000 State- Hydro State- Natural gas 0 State- Oil State- Coal

source: CEA, Generation Review Report Figure 4.2.7-4 Power Generation by Sector and Fuel in the State

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State Hydro 14% 9%

FY2015 FY2015 Power Power Central Generation 48% Generation 57.2TWh 57.2TWh (by Sector) Private (by Fuel) 38%

Coal 91%

source: CEA, Generation Review Report Figure 4.2.7-5 Power Generation in the State by Ownership & Fuel

(3) Plant Load Factor

Plant Load Factor (PLF) of coal power plant of central government was recorded as high as 85 to 90% though FY2009 to FY2015. State own coal power plant was recorded better PLF of 75 to 85% in the same period.

On the contrary, the highest PLF of private sector coal power plant in the past 5 year was only 50% which is well below of that of central and state. When comparing the year from FY 2012 to FY 2015, annual average capacity addition rate in private sector was 37% while demand growth rate in the same period was only 11%. In addition to it, when comparing an average power purchase cost, electricity generated from state hydro power plant is the lowest (0.8 INR/U in average) and central coal power plant is the highest (3.6 INR/U in average) except renewable sources36. These facts mean that lower PLF of private sector coal power plant is not due to its generating cost but because of excessive capacity addition or lower than expected demand growth. It is also meaning that there is sufficient supply capacity to meet with future demand if they can ensure coal supply.

36 24×7 Power for All Odisha

Electric Power Development Co., Ltd. 4-58 Data Collection Survey on Power Sector in India Final Report

(%) 95 90 85 80 75 70 State- Coal 65 60 Private- Coal 55 Central- Coal 50 45 40 35 30 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

source: CEA Figure 4.2.7-6 Plant Load Factor of Coal-fired Power

(4) Cost of Power Generation (Power Purchase Cost)

The electricity generated from state hydro power plant is the lowest (0.8 INR/U in average) and the central coal power plant is the highest (3.3-4.0 INR/U in average) The State hydro generating company provides 23-25% of the GRIDCO total energy needs at an average cost which is the cheapest source of power in the State. However, while central generating stations provide around 26% of the total energy need it is one of the expensive source of power. The State has to optimize the power purchase and sale planning as the state has surplus of available generation capacities with the state Genco and IPP.

Table 4.2.7-3 Approved GRIDCO Purchase Cost for FY 2016

source: JICA team, from OERC GRIDCO Tariff Order FY 2016-17, March, 2016 (Appendix 4-27)

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source: OERC 20160321 GRIDCO Tariff Order FY 2016-17, March, 2016 (Appendix 4-27) Figure 4.2.7-7 Approved GRIDCO Purchase Cost for FY 2016-17

(5) Power Development Plan

In the state of Odisha, GRIDCO is purchase all of generated electricity. Therefore, it is critically important to conclude an appropriate PPA with GRIDCO to make the development project successful.

It is planned to add total capacity of 2,396 MW between FY 2015 and FY 2019, except renewable sources. It account for 43 % of existing firm availability (5,533 MW). In terms of fuel, all of additional capacity will be fueled by coal. In terms of enterprise, the largest part comes from central allocation followed by state Genco, IPP and Joint Venture.

As described before, operation of private coal power plant is stagnating because of over supply capacity. Lower operation rate may possibly continue if further coal power plant capacity will be added in future and demand increase slows. Or some development project may possibly delay or be cancelled. This concern is obvious when comparing projected electricity demand and firm availability of supply in FY 2019.

MW 9,000 Central, 1,196 8,000 7,000 State, 660 IPP/JV, 456 6,000 IPP/JV, 84 5,000 4,000 3,000 5,533 2,000 1,000 0 Existing FY2015-16 FY2016-17 FY2017-18 FY2018-19 source: 24 × 7 Power for All Odisha (Appendix 4-32) Figure 4.2.7-8 Existing and Addition of Firm Availability of Generating Capacity

Electric Power Development Co., Ltd. 4-60 Data Collection Survey on Power Sector in India Final Report

Table 4.2.7-4 List of Additional Firm Availability

Installed Firm Source Sector Fuel Available year capacity entitlement Ind-Barath Energy (Utkal) Ltd., Jharsuguda IPP/JV Coal 700 84 FY2015-16 Monnet Power Company Ltd., Angul IPP/JV Coal 1,050 126 FY2016-17 Lanco Babandh Power Ltd., Dhenkanal IPP/JV Coal 1,320 330 FY2016-17 Ib Thermal Power Station, Jharsuguda State Coal 1,320 660 FY2017-18 North Karanpura STPS Central Coal 1,980 396 FY2018-19 Integrated Thermal Power Station, Darlipalli Central Coal 1,600 800 FY2018-19 Total - - - 2,396 - source: 24×7 Power for All Odisha (Appendix 4-32)

MU 50,000 Surplus of LT firm availability Projected demand 11,698 40,000

2,626 30,000 466 62

20,000

10,000

0 FY2015-16 FY2016-17 FY2017-18 FY2018-19

source: 24×7 Power for All Odisha (Appendix 4-32) Figure 4.2.7-9 Projected Demand and Surplus of Long-term Firm Availability

(6) Renewable Energy

1) Existing and Addition of Capacity

Small Hydro was the major mean of renewable energy in the initial stage of development. But after reached to capacity of 64 MW in FY 2009, its growth has almost stopped. After 2012, solar and biomass started to penetrate the market. Particularly, solar energy shows rapid growth among renewable energies to share the largest part of renewable energy mix at the end of FY2015.

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(MW) 160 140

120 67 100 31 Solar 13 13 80 Small hydro 60 Wind 64 64 65 65 40 Wastes 64 64 20 32 Biomass 20 20 20 20 0

source: Energy Statistics 2011-201637 Figure 4.2.7-10 Renewable Power Generation Capacity

Odisha state had issued Policy Guidelines on Power Generation from Non-Conventional Energy Sources in 2005, and with an objective to reduce dependence on conventional sources of power generation. Successively, OERC issued RPO (Renewable Purchase Obligation and its Compliance) Regulations in 2010.

Furthermore, in meeting the Indian Government’s enhanced target of 100GW solar by 2022, in 2015, Odisha state set the Renewable Energy Policy 2015-2022 (Appendix 4-28) planning to add total capacity of 3GW of grid connected renewable power generation by FY2022. Target of additional capacity is listed in the table below.

Table 4.2.7-5 Planned Addition of On-Grid Renewable Power Generation Capacity

Type Existing Addition by FY2022 Sale power to; Solar PV - 2,300 MW - Solar park n.a. 1,500 MW Captive power owner Land based 31.5 MW (Dec 2014) 500 MW Any entity Floating 0 MW 250 MW GRIDCO Roof top 500 kW 50 MW GRIDCO Wind 0 MW 350 MW GRIDCO Small scale hydro 64.3 MW 150 MW Any entity * Biomass 20 MW 180 MW Any entity Municipal solid waste 0 MW 20 MW GRIDCO * If the Project Developer is supplying power to other than GRIDCO, the project developer shall supply 12% of gross generation to the State Government at free of cost. source: Odisha Renewable Energy Policy 2015-2022, Odisha Energy dept., May, 2015

37 Appendix 2-20,21,22,23,24,25

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In addition to above mentioned capacities, the state government has a plan to implement off-grid solar PV for the sake of rural electrification.

Table 4.2.7-6 Target of Off-Grid Solar PV Installation

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Total

10 15 25 25 30 30 35 170MW

source: OERC, Odisha Renewable Energy Policy 2015-2022 (Appendix 4-28)

State government is planning to establish Odisha Renewable Energy Development Fund to support achieving the renewable power generation target.38

2) Renewable Purchase Obligation

The OERC (Procurement of Energy Renewable Sources and its Compliance) Regulations, 2015 defines the Renewable Purchase Obligation. There are 3 types of entities who are obliged to purchase renewable energy.

 Distribution licensee (or any entity procuring power on their behalf 39)  Entity consuming electricity generated from conventional Captive Generating Plant having capacity of 1 MW and above for his own use.  Entity procured electricity from conventional generation through open access and third party sale. Minimum quantum, percent share to total electricity consumption, of renewable electricity to be procured through RPO scheme is defined as the following table. In case when supply of solar energy is not sufficiently available, entity shall purchase additional non-Solar renewable energy to fulfill the RPO.

Table 4.2.7-7 RPO Target for FY2015 and Onward

Target year Solar Non-solar Total FY2015 0.5% 2.5% 3.0% FY2016 1.5% 3.0% 4.5% FY2017 3.0% 4.5% 7.5% FY2018 4.5% 5.0% 9.5% FY2019 5.5% 5.5% 11.0% source: OERC (Procurement of Energy Renewable Sources and its Compliance) Regulations, 201540

38 Creation of the fund cannot be confirmed as of Aug 2016. Media report said that total amount of the fund will be Rp. 5 billion for next 5 year. (Business Standard, 4 June 2015 http://www.business-standard.com/article/economy-policy/odisha-targets-3k-mw-green-energy-capacity-addition-115060401 332_1.html) 39 Under the current market structure, GRIDCO is the concerned entity. 40 http://mnre.gov.in/file-manager/Compendium/Final/Odisha%202.pdf

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3) Purchase price

Purchase price of renewable electricity is defined by OERC from time to time.

Table 4.2.7-8 OERC Approved Average Purchase Price of GRIDCO

Solar PV Wind Small hydro Biomass FY 2013 10.60 INR/kWh - 3.68 INR /kWh 5.16 INR /kWh FY 2014 8.70 INR /kWh - 3.68 INR /kWh 5.56 INR /kWh FY 2015 8.04 INR /kWh - 3.68 INR /kWh 5.76 INR /kWh FY 2016 7.10 INR /kWh - 3.69 INR /kWh 5.94 INR /kWh source: OERC, Annual Revenue Requirement and Tariff for the FY 2013-14, FY 2014-15, FY 2015-16, FY 2016-17 (M/s GRIDCO)41.

(7) Countermeasure for Variable Renewable Energy

There are various choices of balancing mechanism to deal with Variable Renewable Energy (VRE) in the state of Odisha.

1) TOD pricing

TOD (Time of Day) pricing is applied in the state. Following indicate examples of FY2014 tariff.42

 Off peak hours has been defined as 12 midnight to 6 AM of next day.  Three phase consumers (excluding public lighting and emergency supply for captive power generating plant) with static meters are allowed to apply for TOD rebate of 0.1 INR/kWh during off peak hours.  Industry can withdraw up to 120% of contract demand without levy of any penalty during off-peak hours 2) Control electricity supply for agriculture / irrigation demand

The state government is promoting developing exclusive feeder for all the agricultural demand. Its primary purpose is to administrate practice of allowing tariff below 50 % of average cost of supply and adjusting the revenue deficits by way of cross subsidy to these consumers. But at the same time, it can also utilize as load leveling tool by controlling time of electricity supply for these consumers. However an effect is limited as electricity demand for agriculture is not so large compared to the others.

3) Pumped Storage Power (PSP)

The state of Odisha has 3 plans to develop new PSP. One of them which is named Upper Indravati is the most advancing in preparation of Detailed Project Report (DPR).

41 http://www.orierc.org/GRIDCO%20Tariff%20Order%20FY%202016-17.pdf, http://www.orierc.org/orders/2015/GRIDCO_Tariff_Order_FY_2015-16.pdf, http://www.orierc.org/orders/2011/GRIDCOS_TARIFF_ORDER_2014_15.pdf 42 OERC (Terms and Conditions for Determination of Wheeling Tariff and Retail Supply Tariff ) Regulations, 2014

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Table 4.2.7-9 Possible Pumped Storage Power Plant Project

Name/location Progress Upper Indravati under preparation of DPR Upper Kolab before preparation of DPR Balimera before preparation of DPR source: Interview to OHPC

However, there are different views for PSP development depending on organization. The biggest challenge seems lie in how to persuade GRIDCO in terms of economics. Since the GRIDCO is a single buyer of electricity in the state, every power plant needs to sell electricity to her. Otherwise the power plant become non-performing asset, therefore project owner, in this case OHPC, cannot make final investment decision without consent of GRIDCO.

But on the other hand, a single buyer system can also become supportive element for developing PSP. This is because of a single buyer system will function as a cost pool of different power sources. In case of PSP, its relatively high cost nature will be levelised among other lower cost electricity from hydro and coal, thus cost impact for Discoms and consumers will be minimized or even un-recognizable.

Table 4.2.7-10 Views for PSP Development Organization View State Energy Necessity for PSP exist because of; Department - Need to supply balancing power (wider peak/off-peak gap, increasing VRE, lack of gas-fired power plant) - Central government policy to support PSP OERC Although a situation becomes better, the state is in a supply shortage position, thus addition of supply capacity is a priority (rather than balancing power) OHPC Plan to develop PSP. GRIDCO Careful consideration is required since the state is enjoying low power generation cost and PSPs is high cost supply source. Conventional type hydro power can work as sources of peak power supply.

source: Interview to each organization

(8) Land Acquisition

Legislation and process are the same to which instructed by the federal government.

4.2.8 Transmission

(1) Transmission Network

Transmission line is mainly owned and operated by OPTCL. OPTCL is planning to add total 12,649 MVA capacity of transformer and total 5,337 circuit km length of lines in their inter-state system by 2019 in line with peak demand growth.

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Besides the above mentioned intra-state system, there is total 575 ckm of 765 kV lines and 4,254 ckm of 400 kV lines which forms part of inter-state transmission system (ISTS) operated by central government company PGCIL. The ISTS is planned to add 23,230 MVA of transformer capacity within the state by FY2018.

MVA ckm 30,000 20,000 220/33kV 132kV 940 17,500 25,000 132/33kV 820 220kV 220/132kV 15,000 400kV 700 8,571 20,000 8,251 7,937 400/220kV 580 12,500 7,614 6,899 7,748 6,337 15,000 300 10,000 6,830 5,629 11,420 7,500 10,000 6,032 10,800 7,810 8,140 8,980 5,000 6,297 6,771 7,356 5,000 5,730 5,470 2,500 4,780 5,410 1,890 2,835 3,150 1,411 1,411 1,416 1,677 0 0 728 Existing FY2016 FY2017 FY2018 FY2019 Existing FY2016 FY2017 FY2018 FY2019

ckm = circuit kilo meter source: 24×7 Power for All Odisha (Appendix 4-32) Figure 4.2.8-1 Intra-state Transmission Capacity & Line Length

source: Eastern Regional Load Dispatch Center Figure 4.2.8-2 Power Map of Odisha

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OPTCL is implementing own special projects to improve intra-state system. The list is given in the table below.

Table 4.2.8-1 Project for Intra-state Transmission System

source: 24×7 Power for All Odisha (Appendix 4-32)

(2) Transmission loss

Transmission loss of OPTCL has gradually improved and further reduction is expected.

% 6

4.82 5 4.52 4.11 3.93 3.88 3.84 3.79 4 3.73 3.71

3

2

1

0 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 *

* Date for FY 2015 is from April to September. source: Annual Revenue Requirement and determination of Transmission Tariff for the year 2016-17 (M/s OPTCL)43 Figure 4.2.8-3 Transmission Loss

43 http://www.orierc.org/OPTCL%20Tariff%20Order%20FY%202016-17.pdf

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(3) Operational criteria

The state of Odisha belongs to the Eastern Region Grid which consists of West Bengal, Bihar, Jharkhand, Odisha, and Sikkim. Grid operation shall comply with the the Indian Grid Code (Second Amendment) Regulation, 2014 which was published by CEA.

Table 4.2.8-2 Allowance of Grid Operation Nominal Max. allowance Min. allowance Frequency 50Hz 50.05Hz 49.9Hz Voltage 765 kV 800 kV 728 kV 400 kV 420 kV 380 kV 220 kV 245 kV 195 kV 132 kV 145 kV 122 kV 110 kV 121 kV 99 kV 66 kV 72 kV 60 kV 33 kV 36 kV 30 kV source: CEA, Grid Standards) Regulations, 2010; CEA, The Indian Electricity Grid Code Second Amendment) Regulations, 2014 (Appendix 4-6)

(4) Open Access

Regulation with regard to open access was adopted in 2005 and 2006 by OERC. Threshold of eligible consumer is above 1MW and application will be processed by SLDC (State Load Dispatch Center).

Table 4.2.8-3 Relevant Regulations to Open Access

Name Effective data OERC (Term and Condition for Open Access) Regulation, 2005 21 June 2005 OERC (Determination of Open Access Charges) Regulation, 2006 18 July 2006 source: OERC, Annual Report 2013-1444

Table 4.2.8-4 Number of Application and Approval of Open Access Interstate Intrastate Application Approved Application Approved FY2009 315 301 n.a. 0 FY2010 132 101 n.a. 0 FY2011 127 104 n.a. 2 FY2012 332 308 n.a. 8 FY2013 739 664 22 19 source: OERC, Annual Report 2013-14 (5) Ancillary service

The Central Electricity Regulatory Commission submitted (Ancillary Service Operation) Regulation 2015. SLDC is defined as a nodal agency for intra state ancillary service.

The regional load dispatch center, the Eastern Regional Load Dispatch Center, ERLDC in case of

44 http://www.orierc.org/Annual_Report_2013_14.pdf

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Odisha, will play a key role in an actual operation of ancillary service. Major role of SLDC is to provide day-ahead load forecast to ERLDC every day.45

4.2.9 Distribution

There are four directly or indirectly state own distribution companies in Odisha. Each company has geographically divided designated supply area. The Central Electricity Supply Utility of Orissa (CESU) which supplies electricity to central part including capital city of the state has the largest customer base.

SOUTHCO, 24% CESU, 34% 5.4 million in 2011

WESCO, 20%

NESCO, 22%

source: 24×7 Power for All Odisha (Appendix 4-32) Figure 4.2.9-1 Share of Distribution Companies by Number of Household Customers

(1) Rural Electrification

The household electrification rate is gradually improving to reach around 53% (based on 2011 census) in 2015. Remaining un-electrified household is around 4.278 million. In-terms of village, un-electrified and partially electrified villages are 2,210 at the end of FY2015.

Table 4.2.9-1 Status of Rural Electrification Household Total rural household (census 2011) 8.144 million Un-electrified rural household (as of 31 Mar 2015) 4.278 million Village Total inhabited villages 47,677 Un-electrified villages (as of 31 Mar 2016) 2,210 Un-electrified villages as of 31 July 2016 2,033 of which; Villages to be electrified through grid 1,331 Villages to be electrified through off-grid 269 Uninhabited villages 433 source: DDUGJY web site, Status of Rural Electrification in Odisha http://www.ddugjy.gov.in/mis/portal/statewisesummary.jsp

45 NLDC, Detail Procedure of Ancillary Service Operations, March, 2016

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Central and state government has been implementing some programs to promote electrification namely RGGVY, DDUGYJ, BGYJ, and BSVY.

Table 4.2.9-2 Rural Electrification Programs

RGGVY Rajiv Gandhi Grameen Vidyutikaran Yojana

Central government program which was launched in April 2005 by merging ongoing schemes. Program is executed by state Discoms. Under the program, maximum 90% grant is provided by central government. Remaining comes as loan by Rural Electrification Corporation (REC) to the State Governments and Discom shall also contribute 5-10% of project cost depending on its type. It covers rural villages which has more than 100 population.

DDUGYJ Deendayal Upadhyaya Gram Jyoti Yojana

Central government program which aims at 1) separation of agricultural and non-agricultural feeder line, 2) strengthening distribution system including meter, and 3) supplement RGGVY program.

BGYJ Biju Gram Jyoti Yojana

State government program which was launched in FY2007 to electrify rural villages having less than 100 population those are not covered by RGGVY. 100% of budget is provided by state government. A total of 2 billion INR has been planned to be spent during FY 2015 to FY 2019 under this scheme.

BSVY Biju Saharanchala Vidyutikaran Yojana

State government program which was launched in FY2009 to electrify villages/wards/slums inside of the city. Originally it was targeted the area more than 100 population but amended to subject those population with less than 100. 100% of budget is provided by state government. A total of 800 million INR has been planned to be spent during FY 2015 to FY 2019 under this scheme.

source: 24×7 Power for All Odisha (Appendix 4-32)

In spite of strong state initiative and financial support from the central government, Odisha state is confronting various challenges in actual implementation. 46

 Dearth of local contractors who can take up large scale works on EPC basis  Multiple Subcontracting by large EPC contractors  Right of Way issues  Weak financial status of Discoms who are not in a position to mobilize counterpart funding or invest in backend infrastructure  Lack of skilled manpower

46 24×7 Power for All Odisha

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(2) Expansion of distribution network

The state government is planning to expand distribution network though investment programs given below.

Table 4.2.9-3 Existing and Planned Expansion of Distribution System

FY2000 FY2015 FY2019 (plan) High voltage line 60,107 km 129,305 km 180,911 km Low voltage line 54,155 km 142,854 km 228,436 km 33/11kV sub station - 6,147 MVA 11,402 MVA 11/0.4kV sub station - 8,010 MVA 11,844 MVA * High voltage line length in 2019 is sum of 33kV line and 11kV line. source: 24×7 Power for All Odisha (Appendix 4-32)

1) IPDS: Integrated Power Development Scheme

A central government program sanctioned in FY2014. It aims at 1) strengthening distribution network in urban area, 2) enhance metering in urban area, and 3) strengthening distribution network together with IT enablement. Necessary budget is provided by central government.

2) Restructured Accelerated Power Development & Reforms Programme

A state program for improving distribution network. Its activity consists of 1) Actual demonstrable performance in terms of sustained loss reduction, 2) Establishment of reliable and automated systems for sustained collection of accurate base line data, and 3) Adoption of Information Technology in the areas of energy accounting.

3) ODSSP: Odisha Distribution System Strengthening Project

A state program to construct 500 of 33/11kV substations during the period of 2014-2019 with total budget of 26 billion INR.

4) ODAFFP: Odisha Dedicated Agriculture & Fishery Feeder Project

A state program to construction 11 kV dedicated feeder for agriculture & fishery during the period of FY2014-FY2016 with total budget of 10 billion INR.

(3) Cost and Price of Electricity

OERC is determining electricity tariff for generation, transmission, bulk supply which are comply with relevant tariff policies and regulations adopted by the central government. In other word, there is no unique policy or regulation for Odisha state.47

GRIDCO is the single buyer from generation companies, and the selling price of GRIDCO to Discoms is determined as per the regulatory commission, as Bulk Supply Price. The trend of BSP is

47 Interview to OERC

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shown below. The average BSP of GRIDCO was reduced during earlier years i.e. from 270.24

P/U during FY 2012-13 to 265.27 P/U during FY 2013-14 and further to 263.21during FY 2014-15. This was possible because of normal availability of hydro power during such years.

Table 4.2.9-4 Bulk Supply Price (BSP) of GRIDCO

source: GRIDCO Tariff Order FY 2016-17 (Appendix 4-27)

Table 4.2.9-5 Bulk Supply Price to each Discom and Quantum of Energy for FY 2016-17

source: GRIDCO Tariff Order FY 2016-17 (Appendix 4-27)

The Commission obtains and analyses the annual revenue requirements of the licensees and determines charges to be levied on various categories of consumers. Tariff is designed to be more cost reflective and less cross subsidy.

Electricity rate rose from FY 2009 to FY2012 faster than average power purchase cost of GRIDCO, single buyer of electricity in the state. It can be explained by the policy to rationalize the tariff to cost reflective level. Since FY2002 to FY2009, there was almost no hike of electricity tariff while the whole sale price index rose constantly in the same period at the rate of around 5% per annum which means electricity rate was lagged behind cost inflation thus became cost un-recoverable range.

But in FY2013 and FY2014, the rate again stayed at the same level or even slightly declined. This is because of emergence of over supplied situation. GRIDCO didn’t necessarily procure high cost electricity in these years, thus supply cost itself was not increased.

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INR/kWh 6

5 4.6 4.7 4.6 Power purchase cost of GRIDCO (approved) 4.1 4 Power purchase cost 3.3 of GRIDCO (actual)

3 Avg. billing rate 2.6 2 Hjgh voltage

1 Low voltage

0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

source: OERC, Annual Report 2009-10, 2012-13, and 2013-1448 Figure 4.2.9-2 Power Purchase Cost of GRIDCO and Average Retail Billing Rate

When compare to other states, Odisha state is enjoying relatively lower rate in every sectors.

(INR/kWh) 16 14 12 10 8 6 4 2 0

Max (All India) Min (All India) Maharashtra (State DISCOM)

source: CEA, Electricity Tariff & Duty and Average rates of electricity supply in India, March 2015 Figure 4.2.9-3 Average Electricity Prices by Sector

(4) AT&C loss

AT&C loss has been a big issue for every state in India and Odhisha is not an exceptional. Even though the loss was largely reduced from 57% in FY2000 to 38% in FY2014, around one third of

48 http://www.orierc.org/Annual_Report_2013_14.pdf, http://www.odisha.gov.in/disaster/src/ANNUAL_REP_04-05/Annual_Report_2009-10.pdf, http://www.orierc.org/Annual_Report_2012_13.pdf

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electricity is still dismissed during supply chain.

The state government is trying further reduction of loss through two major means. Firstly, they plan to improve electricity rate collection efficiency to 100% by FY2018. In FY2014, collection efficiency is 91% to 97% depending on Discom. Each Discom will settle meter equipment to every each feeder, enhance collection activity, and strengthen anti-theft measures. Secondly, they will improve distribution network, in particular transformer, to reduce technical loss. By adopting these various measures, the government is expecting to reduce AT&C loss to around 20% by FY2018.

60% SOUTHCO 50% CESU 45%

40%WESCO 44% 38% NESCO 30% 33% 23%

20% 18% 10%

0%

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 source: 24×7 Power for All Odisha (Appendix 4-32) Figure 4.2.9-4 History and Prospect of AT & C loss

50% 100% 100% SOUTHCO

WESCO 39% 97% 40% CESU 39% WESCO 34% 95% 94% 30% NESCO NESCO 31% 92% 23% SOUTHCO

20% 19% 90% 91% CESU 10%

0% 85% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

source: 24×7 Power for All Odisha (Appendix 4-32) Figure 4.2.9-5 Distribution Loss & Collection Efficiency

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(5) Financial Position of Discom

1) Financial situation

Despite of progressive change of tariff to cost reflective structure, annual financial balance of Discoms are still in a net deficit position. In FY2014, loss of total Discoms was amount 14.14 billion INR which is equivalent to 17 % of total income. As a consequence, cumulative loss of total Discoms was increased 30 %.

Table 4.2.9-6 Status of Loss and Debt (as of Mar 2015, billion INR) Losses for FY2014 Cumulative loss Debt outstanding

CESU 5.09 26.41 24.96 NESCO 2.85 12.4 13.66 WESCO 5.17 13.22 13.73 SOUTHCO 1.03 9.18 8.61 total Discoms 14.14 61.21 60.96 GRIDCO 2.71 34.76 55.52 total State 16.85 95.97 116.48 source: 24×7 Power for All Odisha (Appendix 4-32)

State government conducted scenario analysis under the different conditions address this Discom deficit issue 49. It indicates that tariff hike is a critical and un-avoidable part of remedy. Combination of 11-12% of annual tariff hike and achievement of targeted AT&C loss reduction to 20% will result in net surplus of Discoms financial balance in FY2019.

2) State subsidy for Discom

The state government is not providing revenue subsidy to Discoms.50

Consumers below poverty line who consume below a specified level, say 30 units per month, may receive special support in terms of Tariff which are cross-subsidized. Tariff for such designated group of consumers will be at least 50% of the “average (overall) cost of supply”.

The retail supply tariff by Discoms is shown below.

49 24×7 Power for All Odisha 50 OERC, Case nos. 57,58,59 & 60 of 2015, 21 Mar 2016 , http://energy.odisha.gov.in/MAKE_IN_INDIA/TARIFF_NOTIFICATION.pdf

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Table 4.2.9-7 Retail Supply Tariff Effective from 1st April, 2016

source: Publication of Tariff Notification under Regulation 57 of OERC51

3) Application of UDAY scheme

Odisha state government agreed to join the UDAY scheme in January 2016. But discussion is continuing on how to implement the scheme. UDAY scheme defines Discom as an eligible entity while Odisha government is requesting to adopt the scheme through GRIDCO which is the single largest debt holder in the state power sector. 52 As at Nov., 2016, Odisha has made in principle agreement, but has not made MOU yet.

(6) Power Market and Trade

There is no power market in the state. Though the volume is small however, according to the ERLDC report, in the FY 2015, GRIDCO procured 287MU of electricity through power exchange in Short Term, and procured 1,072 MU in Short Term purchase from inter-state utilities, which is around 3% of total electricity demand of the state.53 According to OERC Tariff Order FY 2016-17, GRIDCO traded 975 MU during 2014-15, earning 448 Crores.

GRIDCO reportedly trade power wherever feasible and also exercises instant prudence / judgment by itself in order to avoid / minimize the physical and financial risks associated with Power Trading Activity especially during the present subdued Power Market where both low volumes and low prices are the order of the day.

Table 4.2.9-8 Power Trading by GRIDCO from 2008-09 to 2015-16

source: GRIDCO Tariff Order FY 2016-17 (Appendix 4-27)

51 http://energy.odisha.gov.in/MAKE_IN_INDIA/TARIFF_NOTIFICATION.pdf 52 Business Standard, 6 July 2016 http://www.business-standard.com/article/economy-policy/odisha-wants-uday-scheme-to-be-implemented-through-its-power -trading-firm-116070600658_1.html 53 Eastern Regional Load Dispatch Center, Annual Grid Report 2015-16

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4.3 TELANGANA STATE (TS)

Map source: Indian Renewable Energy & Energy Efficiency Database

4.3.1 Political Situation

The Telangana had got separated from Andhra Pradesh in 2014. The Telangana legislative assembly election was held in 2014. The ruling party, Telangana Rashtra Samithi gained majority with 63 seats out of 119. Indian National Congress and Telugu Desam Party had to settle for 21 and 15 seats respectively. Result of assembly election is shown in Table 4.3.1-1.

Table 4.3.1-1 Result of Assembly Election in Telangana

Party Seats won Vote % Telangana Rashtra Samithi 63 n/a Indian National Congress 21 n/a Telugu Desam Party 15 n/a AIMIM 7 n/a Others 13 n/a Total 119 100% source: Election Commission of India54

54 http://eci.nic.in/eci/eci.html, etc.

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4.3.2 Economic Situation

(1) General

The Economy of Telangana is mainly driven by agriculture. Rice is the major food crop. Other important crops are cotton, sugar cane; mango and tobacco are the local crops. Recently, crops used for vegetable oil production such as sunflower and peanuts have gained favor. The state has also started to focus on the fields of information technology and biotechnology. Telangana is one of top IT exporting states of India. There are 68 Special Economic Zones in the state. Telangana is a mineral-rich state, with coal reserves at Singareni Colleries.

Key industries in Telangana • Information technology • Pharmaceuticals manufacturing • Tourism • Textile • Mines and minerals

1) Gross State Domestic Product (GSDP)

GSDP of Telangana State occupies 3.7 % of total GSDP in 33 states in India in 2013-14 and ranked as the 12th largest economy in all states. Average growth of Telangana’s economy at constant prices witnessed a decline from 9.1% in 2005-10 to 5.7% in 2010-15.

Over 2005-15, agriculture witnessed a marginal increase in growth rate, whereas growth in the manufacturing and services sectors saw a decline.

- Agriculture growth increased from 1.8% in 2005-10 to 1.9% in 2010-15. - Growth rate in the manufacturing sector decreased from 10.3% to 1.4%. - Services sector growth decreased from 10.8% to 8.6%. GSDP at factor cost is shown in Table 4.3.2-1.

Table 4.3.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 17,418,546 18,926,867 19,705,584 20,642,724 21,743,200 Increase --- 8.7 % 4.1 % 4.8 % 5.3 % source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India55

2) Structure of industry (against GSDP)

In 2014-15, the services sector contributed 57.1 % to the state’s GSDP at current prices. It was followed by the industry sector (25.0 %) and agriculture sector (17.9 %). Services sector is the largest component of the state’s economy. Percentage distribution of GSDP is shown in Table

55 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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4.3.2-2.

Table 4.3.2-2 Percentage Distribution of GSDP for 2014-15

Item Distribution Service 57.1 % Industry 25.0 % Agriculture 17.9 % source: IBEF, 2015 (www.ibef.org)

(2) Economic Policy / Development Policy

Budget 2016-17 of Telangana State presents the following policy highlights:

- Irrigation: Rs 24,132 Crores to be spent on irrigation in the state, an increase of 169% over 2015-16. - Housing: Two lakh (200,000) two bed room houses to be built for eligible poor people. - Water Supply: Mission Bhagirath scheme to provide drinking water supply to all houses in the state. - Investment: Proposal to set up three aerospace parks in the state. Mega food park to be setup. Second phase of Technology-hub to be launched to support technology start-ups. In addition, Telangana State has elaborated the following development policies: The Telangana Solar Power Policy 2015 - To promote regionalized and dispersed generation of solar energy. - Effective energy conservation by the stimulation of connected grid and off-grid solar tenders. - Endorsement of all skills related to solar power generation. - Addition of solar parks The New Industrial Policy 2014 - To improve 6 industrial corridors with emphasis on main industrialized sectors, with life sciences, IT and hardware being the major benefactors. - To certify viable & comprehensive industrial development. Upcoming policies - Telangana IT Policy Telangana Policy for Innovation/Startups - Telangana Electronic System Design Manufacturing Policy - Telangana Innovation in Multimedia, Animation, Gaming and Entertainment Policy - Telangana Textile and Apparel Policy (T-TAP)

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(3) Financial Situation

Government of Telangana has not yet enacted upon its own Fiscal Responsibility and Budget Management (FRBM) Act. Therefore, the FRBM Act of Andhra Pradesh State is applicable to Telangana also, until a new enactment is made.

- Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities of the government. In 2016-17, fiscal deficit is estimated to be Rs 23,467 Crores, which is 3.50% of the state GDP. The estimate exceeds the 3% limit prescribed by the state’s FRBM Act and by the 14th Finance Commission. This additional 0.5 %, however, is granted by a special arrangement only for the revenue-surplus states such as Gujarat and Telangana. - Revenue deficit: It is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets. However, the budget estimates a revenue surplus of Rs 3,718 Crores (or 0.55 % of GSDP) in 2016-17. This implies that revenue receipts are expected to be higher than the revenue expenditure, resulting in a surplus. The estimate indicates that the state is within the target of eliminating revenue deficit, prescribed by the state’s FRBM Act and by the 14th Finance Commission. - Total debt stock: It is the accumulation of borrowings over the years. In 2016-17, the outstanding liabilities are expected at 18.46% of state GDP. Transition of fiscal management is shown in Table 4.3.2-3.

Table 4.3.2-3 Transition of Fiscal Management (Percent) Item 2014-15 2015-16 2016-17 Target (16-17) Revenue deficit / GDP 0.07 0.01 0.55 0.00 Fiscal deficit / GDP -1.78 -2.90 -3.50 -3.50 Total debt stock / GDP 16.06 17.27 18.46 22.23 source: Telangana Budget Analysis 2016-17, PRS

(4) Foreign Investment

1) Transition of Foreign Direct Inflow (FDI)

Foreign Direct Inflow (FDI) equity inflows received by RBI’s regional office in Hyderabad, which covers states of Andhra Pradesh and Telangana, is shown in Table 4.3.2-4. The amount has been increasing steadily.

Table 4.3.2-4 Transition of DFI Unit: Crores Rupees (US$M) Year 2013-14 2014-15 2015-16 Cumulative Percentage of (2000-2016) total inflow

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Amount 4,024 8,326 10,315 59,556 4 (678) (1,369) (1,556) (11,571) source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion56

2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.3.2-5.

Table 4.3.2-5 Transition of Japanese Firms

Year 2011 2012 2013 2014 2015 Number - - - - 149 source: Embassy of India in Japan

4.3.3 State Budget and Financial Situation of Executing Agency

(1) Power Sector Budget57

One of the main plan of Telangana State Government is to enlarge power generation from 6,000 MW to 20,000 MW by year 2020. Second Telangana Budget will be targeted on Welfare and Development.

State Budget includes “Allocation to important sectors in state budget”, which comprises of such sectors as “Health and Family Welfare”, “Power Sector”, and “Irrigation Sector”. Transition of budget for Power Sector (Support to TSTRANSCO/DISCOMS/ TSGENCO) is shown in Table 4.3.3-1.

Table 4.3.3-1 Budget for Power Sector (Crores Rs) Item 2014-15 2015-16 2016-17 Amount 3,493.84 5,199.52 5,115.86 source: Budget at a glance 2016-17

(2) Financial Situation of Executing Agency

Executing agency of pumped storage projects in Telangana is Telangana State Power Generation Corporation Limited (TSGENCO). TSGENCO is a generating company which owns and operates thermal and hydropower plants.

TSGENCO was established in 2014 resulting from the creation of a new state, and the financial statements have not yet been publicly available, therefore, the evaluation is omitted here.

4.3.4 Power Sector Overview

The Telangana State has been straggling for enough power supply and will eventually turn into a surplus position in FY 18-19.To secure the stability of the transmission system, the state has been

56 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf 57 http://www.telangana.gov.in/budget-finance

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utilizing a pumped storage power station. The state currently operates a PSP, Srisailam LB 900MW, and another PSP. Nagarjuna Sagar 705.6MW, is going to be operational in the near future.

Figure 4.3.4-1 Telangana state power sector feature

4.3.5 Power Supply Structure

(1) Institutions

In accordance with the provisions of the Andhra Pradesh Reorganization Act 2014 (Act 6 of 2014), the state of Telangana came into existence on 2nd June 2014, by carving out the north-western

Electric Power Development Co., Ltd. 4-82 Data Collection Survey on Power Sector in India Final Report hinterland of Andhra Pradesh.

As per the provisions of Electricity Act 2003, there are independent unbundled utilities operational in state namely:

Policy Telangana Power Department Regulation Tekengana State Electricity Regulatory Commission (KSERC) Power Telangana State Power Generation Corporation Ltd.(TSGENCO) generation Transmission Transmission Corporation of Telangana Ltd. (TSTRANSCO) Dispatch State Load Dispatch Centre (SLDC) Distribution Telangana State Northern Power Distribution Company Ltd. (TSNPDCL) Telangana State Southern Power Distribution Company Ltd. (TSSPDCL)

(2) Power Supply Structure

There are independent unbundled utilities operational in state namely:

• Generating Company - Telangana State Power Generation Corporation Limited (TSGENCO) • Transmission Company - Transmission Corporation of Telangana Limited (TSTRANSCO) • Distribution companies; -- Southern Power Distribution Company of Telangana Limited (TSSPDCL) -- Northern Power Distribution Company of Telangana Limited (TSNPDCL).

source: Web site of each organization Figure 4.3.5-1 Distribution Area for TSNPDCL and TTSSPDCL

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source: Power for All (Appendix 4-36),, web site of each organization Figure 4.3.5-2 Electricity Supply Structure

(3) The State’s Original Power Policy

Renewables ・ Telangana Solar Power Policy 2015 ・ Telangana Wind Power Policy 2016

 APERC RPO (Compliance by Purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2012  TSERC (Adoption) Regulation, 2014

 TSERC Tariff Order for Retail Supply Business 2016-17, June, 2016

Telangana is in the process to define its own regulations, and by then, those of Andhra Pradesh has been applied (TSERC (Adoption) Regulation, 2014).

(4) Executing Agency

Executing agency of pumped storage projects in Telangana is Telangana State Power Generation Corporation Limited (TSGENCO).

4.3.6 Power Supply / Demand Scenario

Energy requirement of Telangana is expected to nearly double from 50,916 MU in FY 2014-15 to 105,974 MU by FY 2018-19. The peak demand is also expected to increase three fold from 8,331 MW in FY 2014-15 to 19,053 MW in FY 2018-19. The demand ramp-up of such scale requires planning and readiness across the entire power sector value chain including power procurement/generation, transmission, distribution and financial health.

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Energy Reqirement MU Energy Availability % 8.1 140,000 Surplus/Deficit 10.0 Surplus/Deficit (%) 120,000 5.0 -4.2 100,000 0.0 -5.2 -4.2 -6.8 -4.7 80,000 -5.0 60,000 -10.0 40,000 -15.0 20,000 -20.0 0 -25.0 -20,000 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -30.0

source : CEA Load Generation Balance Report , Telangana Power for All (Appendix 4-45) Figure 4.3.6-1 Energy Supply FY2013-FY2018

Peak demand with the plan would be 13,645 MW. By FY 2018-19, all the schemes planned by the Telangana State would become operational resulting in a high peak demand of 19,053 MW. Demand from 9 hours agricultural supply would be around 8000 MW, Demand from Bayyaram Steel plant would be 750 MW, LI (Lift Irrigation) schemes would be around 6000 MW, 163 MW demand from HMR and 180 MW demand from the water project. 55% of energy requirement comes from agricultural consumptions. In order to flatten the load curve LI Schemes have been scheduled to be operational during 16:00 Hours to 07:00 Hours. The detailed analysis of the loads which contribute to the peak loads has been done.

MW Peak Demand % Peak Availability 25,000 0.0 Surplus/Deficit -5.0 20,000 Surplus/Deficit (%) -9.0 -10.0 15,000 -20.0 -15.0 10,000 -20.0

-25.0 5,000 -30.0 0 -35.0 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -5,000 -40.0

source : CEA Load Generation Balance Report (Appendix 4-1,2,3), Telangana Power for All(Appendix 4-36) Figure 4.3.6-2 Peak Demand FY2013-FY2018

(1) Features of Peak Load

Monthly peak demand appears in March. Hourly peak demand is expected to be at 3 p.m. in 2016-17. Agricultural demand during this period is expected to be 6,500MW to 7,000 MW. If 9 hours of

Electric Power Development Co., Ltd. 4-85 Data Collection Survey on Power Sector in India Final Report day-time agricultural supply were to be supplied, there is an overlap in supply hours from 9 am to 3 pm, so peak demand would be 13,645 MW. When looking at the southern region, its demand (southern demand) is relatively flat compared with other regions.

MW 9000

FY2016 FY2017

8000

7000

6000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source: CEA Load Generation Balance Report (Appendix 4-1,2,3) Figure 4.3.6-3 Monthly Peak Demand

source : Telangana Power for All (Appendix 4-36) Figure 4.3.6-4 Hourly Peak Load Curve in FY2016-17

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source : Southern Regional Load Dispatch Centre, Monthly report March 2016 Figure 4.3.6-5 Southern Region Hourly Demand Curve on Maximum Day (21.3.2016)

source POSOCO Large Scale Integration of Renewables at EEC Conference, 31 August 2015 Figure 4.3.6-6 Regional Geographical Diversity

(2) Peak Demand Projection for FY2018-19

By FY 2018-19, all the schemes planned by the Telangana State would become operational resulting in a high peak demand of 19,053 MW. Demand from 9 hours agricultural supply would be around

Electric Power Development Co., Ltd. 4-87 Data Collection Survey on Power Sector in India Final Report

8000 MW, Demand from Bayyaram Steel plant would be 750 MW, LI schemes would be around 6000 MW, 163 MW demand from HMR and 180 MW demand from the waterproject. In order to flatten the load curve LI Schemes have been scheduled to be operational during 16:00 Hours to 07:00 Hours.

source : Telangana Power for All (Appendix 4-36) Figure 4.3.6-7 Peak Load for FY 2018-19

source : Telangana Power for All (Appendix 4-36) Figure 4.3.6-8 Peak Load Break Up for FY 2018-19

(3) Frequency Profile of southern region

The Indian Electricity Grid Code (IEGC) has been set in 49.9Hz-50.05 Hz since February 2014. Looking at the frequency in the southern region in 2015-16, keeping the IEGC range is only 60-70 % of time through the year. The cases of more than 50.05 Hz are often observed from winter to spring, and the cases of less than 49.9Hz are conspicuously seen in September.

On the maximum demand day and the minimum demand day in 2014-15, the frequency greatly fluctuated.

Electric Power Development Co., Ltd. 4-88 Data Collection Survey on Power Sector in India Final Report

% time

100% 90% 80% 70% >50.05 60% 50% 49.9-50.05 40% <49.9 30% 20% 10% 0% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source : Southern Regional Load Dispatch Centre Quarterly Report (Appendix 4-11,12,13,14) Figure 4.3.6-9 Frequency of Southern Region in 2015-16

source : Southern Regional Power Committee Annual Report 2014-15 (Appendix 4-9) Figure 4.3.6-10 Load Curve and Frequency Curve of Southern Region on Maximum day in 2014-15

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source : Southern Regional Power Committee Annual Report 2014-15 (Appendix 4-9) Figure 4.3.6-11 Load Curve and Frequency Curve of Southern Region on Minimum day in 2014-15

source : Southern Regional Power Committee Annual Report 2014-15 (Appendix 4-9) Figure 4.3.6-12 Load Duration Curve for 2014-15

(4) Load Factor in Telangana

Load factor in Telangana has increased in recent years but decreased in 2015-16. The whole southern region has shown the similar trend and has continued slight increase in load factor of 2015-16 too, compared to 2014-15.

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source: POSOCO, Electricity Load Factor in Indiana Power System (Andhra Pradesh data is used) (Appendix 4-7) Figure 4.3.6-13 Load Factor of Telangana

source: POSOCO, Electricity Load Factor in Indiana Power System (Appendix 4-7) Figure 4.3.6-14 Load Factor of southern region

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4.3.7 Generation

(1) Installed Capacity

The state generation utility, TSGENCO is planning significant investments to the tune of 6,840 MW amounting to a total project cost of INR 42,491 Crs from its upcoming thermal power stations including Kakatiya, Kothagudem, Bhadradri and Damercherla Thermal Power Stations to meet the increasing demand through capacity additions by FY 2018-19. Also TSDISCOMS are planning to procure capacity from various sources including 4,733 MW of power from CGS sources, 4,819 MW of power from other long-term sources and 6,016 MW from Renewable Energy Sources. These capacity additions together sum up to 22,408 MW in installed capacity terms by end of FY 18-19.

In a realistic scenario taking into account manageable delays in COD of power sources and anticipated onset of demand from various major projects, the state estimates it will move from a deficit position till FY 2017-18 to a surplus position by FY 2018-1958.

Market Ohers, Nuclear Renewab Purchase, 911 1% les 900 1% Hydro State, 20% 9,894MW 4,808 Central, Gas, Oil 1,925 16% Coal 62% IPPs, 1,350

source : Telangana Power for All (Appendix 4-36) Figure 4.3.7-1 Installed Capacity by Ownership & Fuel (2014/15)

The history of the Telangana state installed capacity is given below. It shows coal, gas thermal sources contribute 76 % of the capacity and coal thermal grows 11 % annually. Hydro occupies 19 % but hasn’t grown much. Renewables only holds 5 % of the total capacity. Telangana owns some gas thermal (15 %). The state capacity is held mainly by the state owned plants (61 %). Privates do not contribute much (23 %).

The private powers contribute only 21% that so far the capacity wise the state does not rely upon the private capacity too much.

58 Power for All, Telangana

Electric Power Development Co., Ltd. 4-93 Data Collection Survey on Power Sector in India Final Report

source : JICA team, from CEA monthly report Figure 4.3.7-2 Installed Capacity History by Fuel

source : JICA team, from CEA monthly report, Solely Telangana from 2014 Figure 4.3.7-3 Installed Capacity History by Ownership

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Table 4.3.7-1 Generation Capacity Details

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source: Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9)

(2) Power Generation

The total generation produced in Telangana is 36,868 MU in FY201559. In term of total generated energy in the state (36,868 MU), coal thermal is dominant in generated electricity occupying 60 %. State Hydro amounts 20 %.

Hydro 4%

FY2015 FY2015 Power Power State Generation Generation 45% Central 36.9TWh 55% 36.9TWh (by Fuel) (by Sector)

Coal 96%

source: CEA Monthly Report Figure 4.3.7-4 Generation by Ownership & Fuel, generated in the state

But as the total demand of the state was 50,254 MU60, the state has to import energy from outside of the state. For the energy balance, the state has purchased as allocated energy and traded energy from outside of the state.

During 2016-17, the whole generation of 52,063 MU was met majorly by state owned thermal plants - 31%, CGS - 29%, market purchase - 23 %. The portion of supply from the each utility is shown below. As the price of market purchase is higher, it is required to decrease the volume.

59 CEA, generation review report. 60 CEA, monthly report,

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Table 4.3.7-2 Energy availability for Telangana State for FY 2015-16 and 2016-17

source: JICA team, from *1) Retail Tariff Order 2016-17 (Appendix 4-38), *2) CEA generation reiew

source : Telangana Power for All (Appendix 4-36) Figure 4.3.7-5 Actual energy availability for Telangana State for FY 2014-15

(3) Plant Load Factor

The Plant Load Factors (PLFs) of state thermal plants have been 75 % on average. Central TPS were much higher. TSGENCO stations are not able to generate to optimum limits due to fuel constraints. PLF of TSGENCOs for FY2015 has been 73.19%, whereas the central thermals has been 81.43%61.

61 CEA, generation review report.

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(%) 100 95 90 85 80 75 State- Coal 70 Central- Coal 65 60 55 50 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

source :CEA Plant Load Factor of Coal-fired Power note: figures do not exactly match with other documents. Figure 4.3.7-6 Plant Load Factor of Coal-fired power in Telangana

(4) Cost of Power Generation

According to the interview, the present average power purchase cost is 3.54 INR/U62. The average power purchase cost approved by TSERC for 2016-17 is 3.94 INR/U63.

According to the Telangana state, average power purchase cost in 2014-15 was 3.79 INR/U. Though the cost of state hydel was low as 1.73 INR/U, APGENCO and central thermal at 3.25 and 3.27 INR/U, state thermal was 3.70 INR/U and the cost of market purchase was far higher at 5.18 which pushed up the average purchase cost. Based on the state planned capacity additions by 2018-19, requirement for market purchases would become zero. Though it would decrease, the modest increase in average power purchase cost is anticipated from 3.79 INR/U in FY 2014-15 to 4.48 INR/U by FY 2018-19.64

62 Interview on June, 2016 63 Retail Tariff Order 2016-17 64 Power for All, Telangana

Electric Power Development Co., Ltd. 4-98 Data Collection Survey on Power Sector in India Final Report

Table 4.3.7-3 Power Purchase Cost Projections

source : Telangana Power for All (Appendix 4-36)

(5) Power Development Plan

TSGENCO is planning 6,840 MW of 42,491 Crores from upcoming thermal Kakatiya, Kothagudem, Bhadradri and Damercherla by FY 2018-19. Telangana State is expected to procure additional power of 4,733 MW from Central Generating Stations which are planned to be commissioned during next five years. In order to meet the growing demand, Telangana State also plans to procure power of 4,819 MW from other long-term sources from Privates.

TSDISCOMS are planning to procure 4,733 MW from CGS sources, 4,819 MW from long-term sources and 6,016 MW from Renewables. These sum 22,408 MW by FY 2018-19.

Electric Power Development Co., Ltd. 4-99 Data Collection Survey on Power Sector in India Final Report

MW 30000 Othes 5658 25000 NCE 20000 Central 6135 State Sector 15000 6658

10000 2498 5000 1925 11206 4808 0 FY14-15 FY18-19

source : Telangana Power for All (Appendix 4-36) Figure 4.3.7-7 Generation Capacity Prospect

Table 4.3.7-4 TSGENCO Capacity Additions planned by FY 2018-19

source : Telangana Power for All (Appendix 4-36)

(6) Renewable Energy

1) Existing and Additional capacity

As for solar, Telangana has an advantage of high solar insolation at 5.0 kWh/m2 and can easily exploit solar potential. Key measures taken by the state to attract solar capacities in the state are; The state plans to increase the installed capacity of solar projects from 119 MW in FY 2014-15 to 6,135 MW in FY 2018-19. The state has already concluded bid process for procurement of 515 MW of solar power through tariff-based competitive bidding and has received one of the tariffs

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with the least tariff being Rs 6.45/unit.

In addition, the state is planning to set-up GW scale solar parks/ solar zones over the next five years. A dedicated Green Energy Corridor with evacuation capacity of over 3,500 MW (of which about 3,100 MW of solar capacity is expected to come up in the next five years) is being planned by TSTRASNCO to provide evacuation infrastructure for these solar parks.

In the interviews, TSGENCO expressed that it would develop 4,000MW of solar, including Solar Park (2,000MW) plus small ones totaling 2,000MW. It stated it would not develop much winds as they do not have much resources, totaling 60MW of development.65

Others, 26

Bagasse, 72 Solar, 119 Biomass, 46 663MW

Wind, 400

source : Telangana Power for All (Appendix 4-36) Figure 4.3.7-8 RE Capacity in 2015

MW 7000 6085 6000

5000 4685

4000 2985 3000

2000

1000 619 119 0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source : Telangana Power for All (Appendix 4-36) Figure 4.3.7-9 Solar Energy Capacity Prospect

2) Renewable Purchase Obligation

The state utility is procuring renewable energy from other sources to fulfill its RPO requirements. TSERC has issued several policies and regulations for renewables energy. RPO target is to be

65 Interviewed in June, 2016

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revised.

 APERC RPO (Compliance by Purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2012

According to the above regulation, every Distribution licensee must purchase at the generic tariff rates not less than 5 % of its consumption of energy during 2012-13 to 2016-17. Minimum 0.25% out of the 5 % shall be from solar energy sources. Every captive consumer having generating plant of 1 MW must purchase REC for not less than 5 % of its consumption.

3) Purchase Price66

 Solar Tariff:

As for TSSPDCL, the recently concluded bid in FY 2015-16 is at a tariff of 5.49 INR/U. Regarding the tariff considered for solar energy in TSNPDCL, a tariff of 4.11 INR/U is considered since bundled power of NVVNL is proposed to be drawn by the Discom.

 Wind Tariff

The tariff for wind power plants has been considered at 4.70 INR/U as per the existing Wind Power Policy.

(7) Countermeasures for Variable Renewable Energy

To secure the stability of the transmission system, the state utilizes the pumped storage power stations. And the state is also going to enhance the stability in cooperation with other states in South Regional Grid.

For demand side, current supply for agricultural consumers is being given in 2-3 spells spread across day and night. Whereas, by 2018-19 DISCOMs intend to give 9 hours of supply by either giving 9 hours at a stretch during the day time or split into two spells with maximum time of supply during the day for 6/7 hours and remaining 3/2 hours during the night. Main objective of giving agricultural supply during the day is to reduce the fatalities due to electrocution in the State of Telangana. Telangana State plans to cater to this increase in demand especially during the day time, through 2000 MW Solar Generation. Lift Irrigation Schemes (LISs) in tune of about 5,700 MW are planned in the state of Telangana to supply water for irrigation, drinking water and industrial purpose. Major schemes planned in the region - Pranahita-Chevella, Kalwakurthy, Komaram Bheema are expected to be operational 16 hours every day during August to November every year

1) Standpoint of Pumped Storage

The State has already operated a PSP, Srisailam LB 900 MW, and another PSP,

Nagarjuna Sagar 705.6 MW, is going to be operational in the near future. Presently it was

66 Tariff data are obtained from the report created by DESEIN.

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operated as conventional hydropower as the construction of the lower reservoir is under progress. It will be operated as PSP after completion of lower reservoir (TSGENCO, June, 2016). At this point, there are no other PSP plans in the state.

With regard to the possibility of other pumped storage plants, water resources always compete with irrigation by the use of aquatic resources and irrigation is given priority to. In addition, Telangana became independent from Andra Pradesh, and the management of the electricity infrastructure including the hydraulic power generation still remains complicated. Such a thing can be an obstacle to promote pumped storage plants.

Table 4.3.7-5 PSP Prospects Location Capacity Stage Nagarjuna Sagar 705.6 MW Operational in the near future

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source : Southern Regional Power Committee Annual Report 2014-15 (Appendix 4-9) Figure 4.3.7-10 Srisailam Reservoir Particulars

(8) Ease of Land/ Right of Way Acquisition for power projects

Ease of land acquisition - state procedure for land acquisition such single window clearance does not seem to exist.

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source: Southern Regional Power Committee Figure 4.3.7-11 Power Map of Telangana

4.3.8 Transmission

(1) Transmission Network

The state transmission utility has planned significant investments to the tune of INR 17,803 Crores (excluding the investments for solar parks planned) by the end of FY 18-19 for ensuring adequacy of the system to provide reliable and quality power to the consumers in the state. The above proposed transmission system will be adequate in meeting the projected peak load of over 21,000 MW upto FY 2018-19 and RE power of about 6,016 MW which is mainly through solar generation. The additional transmission system (if required) for evacuation of anticipated RE power more than planned capacity shall also be identified, approved and implemented as per system requirement matching with the RE generation.

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Ckm 132KV 14000 220KV

12000 400KV 11177 11486 10262 11712 10000 9331 7469 8000 7189 7549 6210 5581 6000 5991 5473 4000 2873 2000 1683 2020 0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source Telangana Power for All (Appendix 4-36) Figure 4.3.8-1 Augmentation of Intra State Transmission Line Length

MVA 25000

20000 20375 17455 15000 13795

10000 132KV 7960 220KV 5335 5000 400KV

0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source : Telangana Power for All (Appendix 4-36) Figure 4.3.8-2 Augmentation of Intra State Transformation capacity

(2) Transmission Loss

The actual transmission loss for FY 2015-16 was less than that approved in the MYT Tariff Order. The actual loss was 3.12 % for FY 2015-16 whereas the approved loss was 4.02 % for the same period. The losses as per the filings of 2 Discoms for FY2016-17 are given in the table below.

Table 4.3.8-1 Voltage wise losses for FY 2016-17 as filed by Licensees

source: TSERC, Tariff Order, Retail Supply Tariffs for FY 2016-17 (Appendix 4-38)

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4.3.9 Distribution

Investments to the tune of Rs 23,817 Crs are planned in the distribution sector across the state of Telangana. Out of the above investments, Rs 9,973 Crs is towards Integrated Power Development Scheme (IPDS) and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) in which key priority is connecting the unconnected by putting in place a plan for electrifying all the un-electrified households in the state by FY 2017-18. The other key focus areas include reducing AT & C losses, improving the reliability and quality of supply and schemes have been formulated for feeder separation, HVDS roll out, metering etc. GoI intervention in the form of grants is required to the extent of 75% of the project cost under DDUJGY and IPDS schemes to meet the objectives of providing 24x7 Power For All in the state of Telangana.

(1) Rural Electrification

The state plans to complete its electrification of all households by the end of FY2017-18 under GoI Schemes like DDUGJY and IPDs.

Table 4.3.9-1 Household Electrification (Nos. in Lakhs) Total Rural Households 52.49 Balance Un-electrified as on 31.05.2016 7.17

source : Power of Ministry

MVA km 2500 50000

2000 40000

1500 30000

1000 20000

500 10000

0 0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 Capacity(MVA) 621 2162 1966 1490 1720 Feeder(km) 10934 38866 40630 33916 30773

source: Telangana Power for All (Appendix 4-36) Figure 4.3.9-1 Augmentation of Distribution Infrastructure Additions -Discoms

(2) Cost and Price of Electricity

According to the interview, the present average power purchase cost is 3.54 INR/U67. The average

67 Interview on June, 2016

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power purchase cost approved by TSERC for 2016-17 is 3.94 INR/U68.

The Discoms filed the average Cost of Supply (COS) as 6.44 INR/U as estimated and filed by the TS Licensees at state level, increased from 5.64 INR/U as approved by the Hon’ble Commission for FY2015-16.69 However, TSERC approved the average cost of supply for 2016-17 at 5.94 INR/U as the combined average cost of supply of 5.84 INR/U for TSSPDCL and 6.19 INR/U for TSNPDCL. TSERC determined the retail tariff based on the existing tariff slabs, increase in average cost of supply over the previous year.

It seems rather high in cost of power supply in Telangana.

It should be noted the “billing rate” projection estimated by Telangana state presented below figure as 4.27-4.46 INR/U is inconsistent to the above approved cost of supply as 5.94 INR/U. It isn’t verified if the balance implies cost balance filled by subsidies.

The approved subsidized retail tariff for 2016-17 is shown below. Time of Day tariff has been introduced to aid in flattening of the day load curve while incentivizing off-peak hour consumption for eligible customers. The new ToD charges introduced are: 06:00 AM to 10:00 AM +1 INR/U, 10:00 PM to 6:00 AM -1 INR/U.

Table 4.3.9-2 Retail Supply Tariff Schedule for FY 2016-17

source: JICA team, from TSERC, Tariff Order, Retail Supply Tariffs for FY 2016-17 (Appendix 4-38)

68 Retail Tariff Order 2016-17 69 Retail Tariff Order 2016-17

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Rs/kWh 6.00 Avarage billing cost

Power Purchase Cost 5.00 4.46 4.46 4.27

4.00 3.79 4.09 4.02 4.13

3.00 FY14-15 FY15-16 FY16-17 FY17-18

source: Telangana Power for All (Appendix 4-36) Figure 4.3.9-2 Average billing cost & Power purchase cost

source : CEA, Electricity Tariff & Duty and Average rates of electricity supply in India, March 2015 Figure 4.3.9-3 Average electricity prices by sector (comparison)

(3) AT & C Loss

According to SRLDC, in 2014-15 Telangana recorded T&D Loss at 12.69 %, which was relatively low in the southern grid. It was well below the average T&D Loss in India (25 %).

According to the Discoms, they recorded the reduction in losses over last 2 year as below.

TSSPDCL: 2014-15 – 12.92 % 、2015-16 (estimate) – 10.81% TSNPDCL: 2014-15 – 13.25 % 、2015-16 (estimate) – 11.33%

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Table 4.3.9-3 T&D Loss in southern states

2014-15 2015-16 Andhra Pradesh 12.82 10.85 Karnataka 14.93 14.6 Kerala 14.17 14.35 Tamil Nadu 22.02 - Telangana 12.92 12.69 Puducherry 12.09 11.05 source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

(4) Financial Position of Discom

1) Financial Situation

Telangana is one of the deficit states of Discoms’ constant debt. It was 6th worst state at the 2014 time. TSDISCOMs had made an accumulated cash loss in tune of 13,867 Crores at the end FY 2014-15 and the same is expected to be in the range of around 29,398 Crores by end of FY 2018-19 assuming no tariff increase and escalation in power purchase cost. In order to avoid losses in the year FY 2018-19, the Discoms will have to increase tariff to the extent of around 13% on an average in its analysis70.

source: JICA team, from 26th Sep., 2014, Hindustan Times Figure 4.3.9-4 Accumulated Loss of worst 10 states (Crores)

70 Power for All, Telangana

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Accumulated Loss Rs.Cr Loss 0 0 FY13-14 FY14-15 FY18-19 -5000 -500 Cr. -10000 -11342 -15000 -1000 -13846 -20000 -1500 -25000

-30000 -2000 -29398 source: Telangana Power for All (Appendix 4-36) Figure 4.3.9-5 Accumulated Loss of Discoms

2) State Subsidy or Discoms

The Telangana state has been providing subsidies to the Discoms. The two power distribution companies (Discoms) in the state file their aggregate revenue requirement (ARRs) each year by proposing an increase of tariff. However, it is often the case that TSERC reduces the petition and the total increase in tariff.

The table below captures the Revenue gap at the existing tariff as projected by the Licensees as well as determined by the Commission for the case of FY 2016-17 ARR petition. The filed gap by 2 Discoms reaches 8,789 Crores whereas the Commisson approves 6,149 Crores. Further the table below indicates the additional revenue required through tariff hike as well as Government subsidy to ensure full recovery of cost of the Licensees. The Discoms had pegged the revenue gap between the filed and the approved at 1.88 INR/U on the existing tariff. This gap shall be compensated by additional state subsidy. But the state government has not made any additional provision in the budget for meeting the revenue gap with additional subsidy.71

71 The Hindu, 21th June, 2016

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Table 4.3.9-4 Revenue gap at Existing Tariff as proposed by the Discoms and approved by the Commission for FY 2016-17

source: JICA team, from TSERC, Tariff Order, Retail Supply Tariffs for FY 2016-17 (Appendix 4-38)

3) Application of UDAY Scheme

Government of Telangana has given in principle approval to UDAY scheme. Though the in-principle approval has been given by Government of Telangana to join the UDAY scheme, the modalities of the debt takeover is yet to be finalized. It has not made MOU yet72.

(5) Power Market and Trade

As mentioned in the actual generation of the state, Telangana has been procuring more than 10,000 MU from short term market. It was also obvious in the trading history in the southern region. SRLDC reports the extensive trading volume (10,000 MU) from outside the Telangana state.

source; JICA team, from Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10) Figure 4.3.9-6 Details of Intra / Inter Regional Scheduled Bilateral Exchanges during 2015-16

72 Later on Jan./2017, Telangana made MOU on UDAY, becoming 20th state with Assam joining UDAY scheme. （Ex, Energy Infrapost, 5/Jan,2017, http://energyinfrapost.com/author/anupama-airy/）

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The short term trading volume and the cost of purchase were more than 10,000 MU.and 5.94 INR/U. It was explained by Discoms that price variation on IEX is very dynamic and it cannot be taken as an indicator for fixing the ceiling price of short term purchases. So, they have considered process for short-term procurement of power on RTC basis to secure the volume. For 2016-17, Discom projects the short market purchase at 6.12 INR/U.

However, in the retail tariff order 2016-17, TSERC decided to lower those cost and volume. The short term price considered by the Commission is 4.29 INR/U. The commission explains this price considered is as approved by Hon’ble APERC in Retail Supply Tariff Order FY 2016-17 for sale of surplus power by APDISCOMS. Under AP Reorganization Act 2014, for surplus power of APGENCO stations the first right of refusal is with TSDISCOMS. The approved volume is largely reduced to 292 MU from proposed 7,448 MU.

It is unknown whether this reduction is feasible.

Table 4.3.9-5 Filed Energy by Discoms and Approved Energy by Commission for 2016-17

source: TSERC, Tariff Order, Retail Supply Tariffs for FY 2016-17 (Appendix 4-38)

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4.4 KARNATAKA STATE (KN)

Map source: Indian Renewable Energy & Energy Efficiency Database

4.4.1 Political Situation

The Karnataka legislative assembly election was held in 2013. The ruling party, Indian National Congress gained majority with 122 seats out of 224. Jananta Dal and Bharatiya Janata Party had to settle both for 40 seats. Result of assembly election is shown in Table 4.4.1-1.

Table 4.4.1-1 Result of Assembly Election in Karnataka Party Seats won Vote % Indian National Congress 122 n/a Janata Dal (Secular) 40 n/a Bharatiya Janata Party 40 n/a Others 22 n/a Total 224 100% source: Election Commission of India73

Karnataka has 2 chamber system, Upper house has a seats of 75 and had an election on Dec. 2015, leaving INC 28 and BJP 29 seats.

73 http://eci.nic.in/eci/eci.html, etc.

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4.4.2 Economic Situation

(1) General

Karnataka has become the hub of IT industry with its growing presence in the city of Bangalore (Bengaluru). With one of the highest economic growth rates among all states, Karnataka has been a constant contributor to the progress of the country. The major contributors to the Karnataka economy are agriculture, mining, IT and tourism. It also has a number of small scale and cottage industries.

The natural resources, policy incentives and infrastructure in the state favor investments in the IT/ITeS, biotechnology, engineering, electronics, automotive, textiles, agri- and food-processing sectors.

Karnataka’s favorable policies have encouraged industries to set up their R&D centers in the state. Bangalore has about 401 R&D centers, the most in India.

Karnataka is making significant investments in industrial infrastructure, such as setting up industrial clusters and SEZs and PPP projects to provide an impetus to further industrial development.

Key industries in Karnataka - IT and ITeS - Agro and food processing (floriculture) - Biotechnology - Aerospace - Engineering - Animation - Electronics and telecom - Electronic hardware - Automotive - Tourism - Textiles and apparel - Renewable energy

1) Gross State Domestic Product (GSDP)

GSDP of Karnataka State occupies 5.7 % of total GSDP in 33 states in India in 2013-14 and ranked as the 6th largest economy in all states. The State’s Gross State Domestic Product (GSDP) in 2014-15 at constant prices was 344,105 Crores. In the years 2012-15, Karnataka’s GSDP growth rate at current prices was more than that of the nation’s average growth rate. GSDP at factor cost is shown in Table 4.4.2-1.

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Table 4.4.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 27,272,131 28,278,400 29,999,067 32,145,528 34,410,571 Increase --- 3.7 % 6.1 % 7.2 % 7.0 % source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India74

2) Structure of industry (against GSDP)

In 2014-15, the tertiary sector contributed 60.66 % to the state’s GSDP at current prices, followed by the secondary sector (24.63 %) and the primary sector (14.71 %).

The growth in the tertiary sector has been driven by trade, hotels, real estate, finance, insurance, transport, communications and other services. The growth in the secondary sector was driven by manufacturing, construction and electricity, gas & water supply. Percentage distribution of GSDP is shown in Table 4.4.2-2.

Table 4.4.2-2 Percentage Distribution of GSDP for 2014-15

Item Distribution Tertiary 60.66 % Secondary 24.63 % Primary 14.71 % source: IBEF, 2015 (www.ibef.org)

(2) Economic Policy / Development Policy

During 2014-15, the priority sectors identified by the Government in respect of economic services were agriculture, rural development, irrigation and flood control and transport, industries and minerals. Priorities of the Government reflected in the past three budgets are continued in this budget 2016-17 also. More emphasis has been provided for employment generation and infrastructure development with special focus on urban development, industrial development, infrastructure and tourism.

In addition, Karnataka State has elaborated the following development policies:

Solar Policy 2014-21 - To add solar generation of at least 2,000MW by 2021 in a phased manner. - To encourage PPP model and R&D and innovation in the sector. - To promote Roof Top Generation and Technologies. - To transform Karnataka into an investor friendly state. Karnataka Industrial Policy 2014-19 - To make Karnataka the most preferred investment destination through inclusive, sustainable

74 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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and balanced growth. Karnataka Tourism Policy 2014-19 - To develop Karnataka as a dynamic, sustainable and most-favoured tourism destination by increasing domestic & international visitations, offering high quality experience to visitors, facilitating and accelerating investments and improving livelihood opportunities at the local level. ESDM Policy 2013 - To facilitate, promote and develop the ESDM (Electronic System Design and Manufacturing) sector in Karnataka and make Karnataka a preferred destination for investment in this sector. Aerospace Policy 2012 - To position Karnataka as a vibrant aerospace hub of Asia and a globally recognized aerospace destination by enabling the environment for holistic and sustained growth of the aerospace sector. - Increase the contribution of the aerospace sector towards enhancing the share of industry in the state’s GSDP from 28.0 per cent to 32.0 per cent by 2022.

(3) Financial Situation

1) Fiscal Responsibility and Budget Management (FRBM)

The Government of Karnataka enacted ‘The Karnataka Fiscal Responsibility Act, 2002’ (KFRA, 2002) to provide for the responsibility of the State Government in ensuring fiscal stability, and sustainability, and to enhance the scope for improving social and physical infrastructure and human development by achieving sufficient revenue surplus, reducing fiscal deficit and removing impediments for effective conduct of fiscal policy through prudent debt management by limiting the borrowings, debt and deficit, achieving greater transparency in fiscal operations of the State Government and using a medium term fiscal framework. The Act came into effect from 1 April 2003, which was amended from time to time based on the directives of the Government of India (GOI) and the Finance Commission.

The Act prescribed the following fiscal targets for the State Government.

- Elimination of revenue deficit by the end of the financial year 2005-06. - Reduction of fiscal deficit to not more than three per cent of the estimated Gross State Domestic Product (GSDP) by the end of the financial year 2005-06. - Limiting the total liabilities to not more than 25 per cent of the estimated GSDP within a period of 13 financial years, i.e., by the end of the financial year 2014-15. - Maintaining outstanding guarantees within the limit stipulated under the Karnataka Ceiling to Government Guarantees Act, 1999. The State continued to maintain a Revenue Surplus at a level slightly higher than budgeted

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estimate. Fiscal Deficit of the state at 2.12 % in 2015-16 has been well within the prudential norm and is expected to be lower at 2.12 % in 2016-17.

Transition of fiscal management is shown in Table 4.4.2-3.

Table 4.4.2-3 Transition of Fiscal management (Percent) Item 2013-14 2014-15 2015-16 2016-17 Target (16-17) Revenue deficit / GSDP 0.1 0.0 0.1 0.1 0.0 Fiscal deficit / GSDP -2.8 -2.7 -2.7 -2.12 -3.0 Total debt stock / GSDP 22.6 22.5 24.1 17.22 24.8 source: State Finances A Study of Budgets of 2015-16, RBI for 2013-16; State budget 2016-17 for 2016-17;

(4) Foreign Investment

1) Transition of Foreign Direct Inflow (FDI)

A foreign Direct Inflow (FDI) equity inflow received by RBI’s regional office in Bangalore, which covers states of Karnataka, is shown in Table 4.4.2-4. The amount has been increasing steadily.

Table 4.4.2-4 Transition of DFI Unit: Crores Rupees (US$M) Year 2013-14 2014-15 2015-16 Cumulative Percentage of (2000-2016) total inflow Amount 11,422 21,255 26,791 108,912 7 % (1,892) (3,444) (4,121) (20,241) source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion75

2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.4.2-5.

Table 4.4.2-5 Transition of Japanese Firms

Year 2011 2012 2013 2014 2015 Number 182 228 297 387 451 source: Embassy of India in Japan76

4.4.3 State Budget and Financial Situation of Executing Agency

(1) Power Sector Budget77

In 2016-17, a total outlay of Rs.12,632 Crores is provided to Energy Department. Key highlights of

75 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf 76 http://www.in.emb-japan.go.jp/Japanese/2015j_co_list.pdf 77 http://finance.kar.nic.in/bud2016/bud2016.htm

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Budget 2016-17 for Energy Department are as follows:

- For the year ending 2015-16, 800 MWs from Yeramarus Unit-1 and 350 MWs from Renewable Energy Sources are expected to be added. - 2,655.40 MWs of generation capacity including 800 MWs from Yeramarus Unit II, 705.40 MWs from Central Generating Stations and 1,150 MWs from renewable sources of energy to be added during 2016-17. - The work of establishing Gas based power plant at Yelahanka will be started. - Kalaburagi Power Plant will start functioning this year. - KPCL has also planned to take up the work of establishing 200 MWs of solar power plant. - Establishment of 2,000 MWs of Solar park at Pavagada is taken up and production of 600 MWs is expected in the end of March 2017. - Establishment of 1,200 MWs of Solar power plants in 60 backward talukas at 20 MWs each and 77 sub-stations through KPTCL. - “Hosa belaku” scheme implemented under which 42 lakh LED bulbs distributed. - Infrastructure to regularize 50,000 pump sets will be created during 2016-17. - Web based modules for online submission of application for power sanctions, power evacuation, open access, clearance by Electrical Inspectorate, and approval for power projects will be developed and deployed. - Nirantara Jyothi III Phase Feeder bifurcation Scheme with the support of REC and GoI.

(2) Financial Situation of Executing Agency

Executing agency of pumped storage projects in Karnataka is Karnataka Power Corporation Ltd. (KPCL). KPCL is a power generation company which owns and operates thermal, hydro, wind and solar power plants. According to a report78 which analyzed the financial situation of KPCL for 2007-2011, KPCL enjoyed the sound financial performance during the period. There was a sharp fall in figures in 2012-13, however, it seems to be on its way to recovery. Table 4.4.3-1 shows Financial Situation of KPCL.

78 “An Analysis of Financial Statements of Karnataka Power Corporation Limited, Bangalore”, International Journal of Engineering and Management Research, June 2012.

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Table 4.4.3-1 Financial Situation of KPCL

2011-12 2012-13 2013-14 Total Income (Crore) 5742 6393 11.3% 7593 18.8% Total Expenditure 5580 6222 11.5% 7339 18.0% Profit beforeTax 162 171 5.6% 254 48.5% Profit after Tax 115 2 -98.3% n/a n/a Cost Structure (Crore) Power purchase 0 0.0% 0 0.0% 0 0.0% Generation cost 3453 61.9% 3831 61.6% 4622 63.0% Employee cost 631 11.3% 706 11.3% 698 9.5% O&M cost 197 3.5% 203 3.3% 215 2.9% Interest cost 771 13.8% 890 14.3% 1111 15.1% Depreciation 404 7.2% 566 9.1% 569 7.8% Admin & Gen Exp 60 1.1% 72 1.2% 91 1.2% Other Expenses 63 1.1% -47 -0.8% 32 0.4% Total 5579 6221 7338 Return on Equity 3.95 0.07 7.48 Return on Networth 1.76 0.03 3.76 Return on Capital Employed (Crore) 5.71 5.05 6.63 Debt Equity Ratio 1.38 1.56 1.74 source: Report on "The Performance of State Power Utilities for the years 2011-12 to 2013-14", 2015 PFC

4.4.4 Power Sector Overview

Power supply in Karunataka is going to turn into the surplus position in both energy and peak demand. Generation capacity will increase by 11,707 MW during FY16-FY19, including 8,490 MW addition of renewable energy.

To secure its T&D network, the State has taken up a feeder separation by agricultural load and regulated hours of supply to agricultural consumers. The State also considers introducing several Pumped Storage Projects down the road for the peak demand.

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DPR to be tendered

Figure 4.4.4-1 Karnataka state power sector feature

4.4.5 Power Supply Structure

(1) Institutions

Karnataka State undertook structural reforms in 1995 wherein the erstwhile Karnataka Electricity Board (KEB) was restructured and new entities viz, Karnataka Power Transmission Corporation Limited (KPTCL) and Visvesvaraiah Vidyut Nigam Limited (VVNL) were incorporated in August 1999.

As of 2016, the following organizations are in charge of each assignment:

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Policy Karnataka State Energy Department Regulation Karnataka Electricity Regulatory Commission (KERC) Power Karnataka Power Corporation Ltd. (KPCL) generation Karnataka Renewable Energy Development Ltd.(KREDL) Transmission Karnataka Power Transmission Corporation Ltd. (KPTCL) Dispatch State Load Dispatch Centre (SLDC) * Distribution Bengaluru Electricity Supply Company Ltd. (BESCOM) Mangalore Electricity Supply Company Ltd. (MESCOM) Hubli Electricity Supply Company Ltd. (HESCOM) Gulbarga Electricity Supply Company Ltd. (GESCOM) Chamundeshwari Electricity Supply Company Ltd. (CESE)

(2) Structure of Supply

Karnataka was the first state having separate entities for generation and distribution. Karnataka Power Corporation Ltd. (KPCL), was formed in 1970 owning generation plants while the transmission and distribution sectors were owned by Karnataka Electricity Board (KEB). In 1999, KEB corporatized Karnataka Power Transmission Corporation Ltd. (KPTCL). In 2002, KPTCL was further unbundled to form a transmission company and 4 distribution companies viz., BESCOM, HESCOM, GESCOM and MESCOM and in 2005 a 5th distribution company viz., CESC was formed with a mandate for power distribution and retail supply of electricity to consumers in the state.

Central KPCL KREDL gov. IPP

KPTCL

BESCOM MESCOM HESCOM GESCOM CESCOM KREDL

consumer consumer consumer consumer

Physical flow Commercial flow

source: Karnataka Power for All (Appendix 4-41) Figure 4.4.5-1 Electricity Supply Structure

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MESCOM, 10% GESCOM, 14%

HESCOM, 20% 17 million

CESCOM, 13% BESCOM, 43%

source: Karnataka Power for All (Appendix 4-41) Figure 4.4.5-2 Share of Distribution Companies by Number of Household Customers

The State’s Original Power Policy

Renewable ・Solar Policy 2014-2021 (May, 2014) (・Renewable Energy Policy 2014-20 (Jan., 2010), Solar Policy 2011-2016 were considered ineffective at present, as they were before 175 GW Renewable policy release) Energy Efficiency ・Karnataka Energy Efficiency and Conservation Policy 2015-19

Furthermore, the KERC defines those regulations referring those relevant regulations of CERC.

(with relevant amendments )

 KERC (Tariff) Regulations 2000 (with all Amendments)  KERC (Terms & Conditions for Determination of Transmission Tariff) (2nd Amendment) Regulations, 2015  KERC (Terms & Conditions for Determination of Tariff for Distribution and Retail Sale of Electricity) (Second Amendment) Regulation, 2015  KERC (Forcasting, Scheduling, Deviation settelment and Related Matters for Wind & Solar Generation Sources) Regulation, 2015  Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) (Third Amendment) Regulations, 2015, (First Amendment) 2006, 2004  Karnataka Electricity Regulatory Commission (Demand Side Management) Regulations, 2015  Procurement of Energy from Renewable Sources (First Amendment) Regulations, 2011  KERC (Power Procurement from Renewable Sources by Distribution Licensee and Renewable Energy Certificate Framework) Regulations, 2011 etc.

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(3) Executing agency

Executing agency of pumped storage projects in Karnataka is Karnataka Power Corporation Ltd. (KPCL).

4.4.6 Power Supply / Demand Scenario

The maximum demand of the state is projected to increase from 9,549 MW in FY 2015 to 14,710 MW in FY 2019. The maximum increase in demand is observed in MESCOM at 46 % from FY 2016 to FY 2019. However, BESCOM will have the maximum share at 7,022 MW in FY 2019 at 49 % of the total maximum demand of the state.

The independent generating company Karnataka Power Corporation Limited (KPCL) has has signed many PPAs and has planned to procure power from other states and construct own power plants in the state to meet this shortfall. Karnataka will have surplus power if every project planned is commissioned in time by FY 2019 which includes power plants from state, central and private generating companies.

The state will see power surplus position from FY 2017 if the projected plants are commissioned in time and hydro power is available to its full capacity. Surplus energy to an extent of 10% above the requirement will become available in FY2019 with the capacity addition and allocation from different central generating stations.

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Energy Reqirement MU % Energy Availability 120,000 15.0 Surplus/Deficit 11.0 9.6 10.0 100,000 Surplus/Deficit (%) 4.0 5.0 80,000 -4.3 -5.2 0.0 60,000 -5.0 40,000 -9.5 -10.0 -15.0 20,000 -20.0 0 -25.0 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -20,000 -30.0

source: CEA Load Generation Balance Report(Appendix 4-1,2,3), Karnataka Power for all (Appendix 4-41) Figure 4.4.6-1 Energy Supply FY13-19

MW Peak Demand % Peak Availability 28.5 27.1 20,000 25.4 30.0 Surplus/Deficit 25.0 Surplus/Deficit (%) 15,000 20.0

10,000 15.0 10.0

5,000 5.0

0.0 0 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -5.0 -5,000 -7.2 -4.5 -6.8 -10.0

source: CEA Load Generation Balance Report(Appendix 4-1,2,3), Karnataka Power for all(Appendix 4-41) Figure 4.4.6-2 Peak Demand FY13-19

(1) Demand Load Features

As for monthly, demand peak is from March to April and has been increasing in late years. According to time of the day, hourly peak demand appears in the evening, but is generally flattened. This is mainly because Government of Karnataka had taken up an ambitious feeder separation project under the scheme of “Niranthara Jyothi”, which aims to provide 24 hours power supply to non-agricultural loads like domestic, commercial, water supply, street light, rural industries, milk dairies etc., in rural areas by segregating the agricultural loads, which is a boon to the rural economy. This enables DISCOMs to give 24X7 supply to non-agricultural loads in rural areas and regulated hours of supply

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to agricultural consumers.

The DISCOMs have already completed 85 % of feeder segregation and remaining 15 % will be completed by the end of March 2018.

MW 12000 FY2015 11000 FY2016 FY2017 10000

9000

8000

7000

6000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source: CEA Load Generation Balance Report (Appendix 4-1,2,3) Figure 4.4.6-3 Monthly Peak Demand

sources :Karnataka SLDC Monthly Report Figure 4.4.6-4 Hourly Load Curve

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source: CSTEP Karnataka Power for All Strategy Figure 4.4.6-5 Observed seasonal peak demand on typical days in 2014 (MW)

(2) Frequency Profile

The Indian Electricity Grid Code (IEGC) has been set in 49.9Hz-50.05Hz since February 2014. Looking at the frequency in the southern region in 2015-16, keeping the IEGC range is only 60-70% of time through the year. The cases of more than 50.05HZz are often observed from winter to spring, and the cases of less than 49.9Hz are conspicuously seen in September. In terms of time-wise, frequency fluctuates especially in the morning peak time and the evening peak time.

On the maximum demand day and the minimum demand day in 2014-15, the frequency greatly fluctuated.

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source: Southern Regional Load Dispatch Centre Quarterly Report (Appendix 4-11,12,13,14) Figure 4.4.6-6 Frequency of Southern Region in 2015-16

source: Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9) Figure 4.4.6-7 Load Curve and Frequency Curve of Southern Region on Maximum day in 2014-15

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source: Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9) Figure 4.4.6-8 Load Curve and Frequency Curve of Southern Region on Minimum day in 2014-15

source: CSTEP Karnataka Power for All Strategy Figure 4.4.6-9 Morning and evening peak load frequency during 2011-2014

The Wind power capacity is 2,686 MW (as of July 2015) consisting 16% of the installed capacity. Solar power at the moment is just begun to be installed. The bulk of the power in Karnataka comes

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from Thermal sources and large hydroelectric power to the second. The wind power are much less reliable and variable compared to the conventional generation. The variability of the wind power in Karnataka in FY 2012 and 2013 is shown below.

source; Wind and Solar Energy for meeting Karnataka’s Future Electricity Demand, NIAS, March, 2015 Figure 4.4.6-10 Hourly and daily wind data for Karnataka from April 2011 to March 2013

In the non-monsoon period the wind energy generated does not vary much with slight increase towards the nights. In the monsoon period the wind energy reaches peak in the afternoons/evenings then beginning to decline.

source; Wind and Solar Energy for meeting Karnataka’s Future Electricity Demand, NIAS, March, 2015 Figure 4.4.6-11 Typical Daily Wind Curves for non-monsoon months in 2012

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source; Wind and Solar Energy for meeting Karnataka’s Future Electricity Demand, NIAS, March, 2015 Figure 4.4.6-12 Typical Daily Wind Curves for monsoon months in 2012

The Balancing needs for the wind generation and thermal and hydro generation are shown below. These show variability, intermittency and ramping with sudden onset or offset of wind generation whereas generation is being balanced by the conventional energy sources in Karnataka,

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source: POSOCO Presentation at EEC Conference, 31 August 2015 Figure 4.4.6-13 Balancing Renewable Generation

(3) Annual Load

Load factor data in Karnataka shows that the average annual load tends to be decreasing after 2012 (differences between yearly average demand and peak demand grow big). In addition, the demand has been bottom-raised every year judging by Demand Duration Curve.

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source: POSOCO ;Electricity Load Factor in Indian Power System (Appendix 4-7) Figure 4.4.6-14 Load Factor of Karnataka

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4.4.7 Generation

(1) Installed Capacity

The total installed capacity in Karnataka including firm share in CGS as on 31st March 2016 (allocated capacity in state, private, joint and CGS) is 17,324 MW (CEA, monthly report).

The state generating company provides 50 % of the total energy needs to the state at a cost of 2.38 INR/U while central generating stations provide around 29 % of the total energy need. The state is bestowed with ample hydro sources which makes them susceptible to any deficit in rainfall. The state has hydro capacity of 3,642 MW which is constitutes the cheapest source of power for the state at 0.59 INR/U.

The state has planned to build Bellary Thermal Power Station U-3, Yermarus Thermal Power Station U-1 and U-2, Yelahanka Gas Based Power Plant, Bidadi Gas and CGS Share from NLC New TPP 1 and 2 etc. for meeting the increasing demand in the state.

Central, RE Hydro 2,104 29% 21% State, 8,103 17,324MW

Private, Nuclear Themal 7,117 3% 47%

source: Karnataka Power for All Figure 4.4.7-1 Installed Capacity by Ownership & Fuel (as of March 2016)

The trend of the installed capacity is given below. Thermal and large-hydro sources contribute to nearly two thirds of this capacity but renewable capacity holds 30 % of thermal capacity in Karnataka. The growth of coal thermal power is 10-11 % annually but the private powers contribute the most of the growth. The hydro power has 20 % of the capacity but has stagnated for years. The Renewables only show the high growth of 13-14 % annum.

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source: CEA Figure 4.4.7-2 Installed Capacity by Fuel

source: CEA Figure 4.4.7-3 Installed Capacity by Ownership

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The state owned power stations as of March, 2016 are shown below.

source: South regional power committee Annual Report, SRLDC, March, 2016 (Appendix 4-10) Figure 4.4.7-4 The State owned Power Capacity

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(2) Power Generation

In term of energy, coal is dominant to share 2/3 of generated electricity in FY2015, comprising 37% from State Thermal and 31% from Private Thermal. There is no allotted energy from central. Energy supply from State thermal plant is gradually growing. Share of State Hydro amount varies year by year and occupies 16% in FY2015.

(GWh) 60,000 Central- Nuclear Central- Hydro 50,000 Central- Natural gas

40,000 Central- Coal Private- Hydro 30,000 Private-Natural gas

20,000 Private- Oil Private- Coal 10,000 State- Hydro State- Natural gas 0 State- Oil State- Coal

source: CEA Monthly Report Figure 4.4.7-5 Generation by sectors

Central Nuclear 16% 16%

FY2015 FY2015 Power Hydro Power Generation State 16% Generation 47.6TWh 53% 47.6TWh Private (by Sector) 31% (by Fuel) Coal 68%

source: CEA Monthly Report Figure 4.4.7-6 Generation by Ownership & Fuel

In Karnataka, short-term power purchases have accounted for a certain portion of supply in the previous years.

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source: CSTEP Karnataka Power for All Strategy Figure 4.4.7-7 Short-term Power Purchase

(3) Plant Load Factor

The Plant Load Factors (PLFs) of state thermal plants have been as low as 60-68 % in recent years in comparison to PLFs of Private thermal plants. The PLFs of state-owned thermal power plants in Karnataka, namely Raichur Thermal Power Station (RTPS) and Bellary Thermal Power Station (BTPS), have remained low over the years presumably due to the shift from washed coal to unwashed coal, reasons such as frequent equipment failure and coal availability challenges, etc. Among the projects scheduled for implementation, there are some for which clearances are delayed due to pending coal allocations or partial availability of coal linkages. Such factors have contributed to the energy shortfalls in the state.

(%) 100 95 90 85 80 75 State- Coal 70 Private- Coal 65 60 55 50 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

source : CEA Plant load factor of Coal-fired power plants Figure 4.4.7-8 Plant load factor of Coal-fired power plants

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(4) Cost of Power Generation

The high share of cheap hydel power in the state is the primary contributor of affordable power. The costs and generation from various sources are shown below. In FY2014, the state received some 20% of its electricity from hydroelectric plants at an average tariff of INR 0.59. However, the percentage or share of hydel power in total electricity generation has been declining steadily and is likely to reduce in the future.

As of FY 2014, Karnataka state thermal was as high as 3.73 INR/U accounting for the low performance of state-owned thermal powers, while the average cost from the CGS was 2.96 INR/U. The state also buys a high share of its thermal electricity from IPPs and short-term power purchases, both of which cost over 4 INR/U. on average.

source: CSTEP Karnataka Power for All Strategy Figure 4.4.7-9 Cost vs. Generation from Different Sources in Karnataka (FY2014)

According to the Tariff Petitions and approval by KERC, the ACS and ARR for ESCOMs for FY 2016-2018 is determined as below. The hydro is 0.94 INR/U. The Commission directed any short-term/ contingent power procurement over and above the approved rate 4.50 INR/U shall require prior approval of the Commission.

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Table 4.4.7-1 POWER PURCHASE APPROVED FOR ESCOMS FOR THE CONTROL PERIOD FY2017 to FY2019

(5) Power Development Plan

The availability of power from various sources up to FY2018 is summarized below State sector projects included following projects:

 Yaramarus Thermal Power Plant unit 1 & 2, 2 x 800 MW, commissioned in 2016,  Yelahanka Combined cycle Power Plant, 350 MW, construction commenced in 2016,

MW Other Private Sector 30000 Cantral Sector 971 25000 State Sector 971 20000 971 10390 8740 971 971 15000 6568 4186 5718 4903 4151 10000 3716 2611 2611 11007 5000 8707 6362 6377 7887 0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source: Karnataka Power for All (Appendix 4-41) Figure 4.4.7-10 Generation Capacity Prospect

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Table 4.4.7-2 Summary of Additional Firm Availability from Various Sources (projected as of FY 2015)

sources: Karnataka Power for all (Appendix 4-41)

However, the upcoming capacity is largely from renewable sources which inherently have low capacity utilization factor. The existing hydro stations also contribute low utilization. Thus in terms of the energy availability must count on the existing and upcoming thermal stations from both state owned and the central owned.

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Table 4.4.7-3 Projected Energy Availability and Surplus from Firm Share/Long Term Tie-Ups (in MU)

(6) Renewable Energy

1) Existing and Additional capacity

As of FY 2015, Karnataka has the wind power capacity of 2,916 MW (as of March, 2016) consisting 16 % of the installed capacity. Solar power at the moment is just begun to be installed (134 MW) and Co-gen is second to wind (1,252 MW). Commissioned Renewables totals 5,272 MW.

The nodal agency was established with an objective of development, propagation and promotion of renewable energy sources and technologies for promoting eco-friendly projects and harnessing of natural resources to avail green power in the state. Since inception 5,044 MW capacity has been commissioned and expecting additional more than 7,700 MW during the RE and solar Policy period 2014 to 2021.

MW

9000 290 8000 Bio Mass 7000 Solar 6000 Mini Hydro 5000 Wind 6050 4000 3000 65 75 75 75 2000 400 1500 1750 1750 1000 1050 1750 100 100 100 100 0 400 425 450 475 FY16 FY17 FY18 FY19 total

sources: Karnataka Power for all (Appendix 4-41) Figure 4.4.7-11 RE Generation Capacity Addition Prospect

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2) Renewable Purchase Obligation

Considering developments in technology and benefits of solar power, Government has issued the Revised Solar policy 2014-2021. As per new policy minimum of 2,000 MW of solar projects have to be established within policy period. Accordingly, 700 MW of solar power projects were allotted through bidding process. Solar projects can be established anywhere in the state. The government of Karnataka in its in endeavor to achieve minimum of 3% solar energy out of total projected consumption.

Table 4.4.7-4 Minimum Targets

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 % of total 1.5 1.75 2.0 2.25 2.5 2.75 3.0 consumption source: Karnataka Solar Policy 2014-21

Table 4.4.7-5 Capacity allocation for DICOMs

% of total energy consumption Capacity for 2014-20 BESCOM 48% 144 MW MESCOM 8% 24 MW HESCOM 20% 60 MW GESCOM 13% 39 MW CESC 11% 33 MW source: Karnataka Solar Policy 2014-21

However, the recent regulation defines the RPO amended as follows.

Table 4.4.7-6 Amended RPO Targets

KERC (Procurement of Energy from Renewable Sources) (Third Amendment) Regulations, 2015, Nov., 2015)

3) Purchase Price

The purchase price of renewables is defined by Feed-in-Tariff based or Competitive Bidding based. The Tariff defined by KREDL at the moment is as follows.

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Table 4.4.7-7 Tariff for Renewable Energy Projects

source: KREDL web site, as of July., 2016

(7) Countermeasure for Variable Renewable Energy

1) Demand Side Management

Apart from the scheme of “Niranthara Jyothi”, the state has taken many steps to flatten the load curve:

・ Making “Time of Day Tariff” compulsory for industrial consumers, which was hitherto optional ・ Energy efficient street lighting and installing “Electronic Time Switches” for street lights ・ Segregating agricultural loads from the existing 11kV feeders in the form of Niranthara Jyothi, a scheme to provide 24X7 uninterrupted power supply to nonagricultural loads in rural areas.(1500/1700 feeders) ・ Adoption of HVDS for agricultural loads wherever necessary. ・ Mandatory use of solar water heating systems for all residential buildings with a built up area of 600 Sq. feet and above falling within the limits of municipalities/corporations and Bengaluru Development Authority etc. ・ Adoption of energy conservation initiatives by using CFL and LED bulbs in Domestic consumers. ・ DSM initiatives in the form of using energy efficient pumps in place of conventional pumps in Irrigation.

2) Pumped Storage Hydro Power

 Standpoint of Pumped Storage Prime reason to develop PSPs is to stabilize the grid against large-scale installation of renewable energy such as wind and solar. Second reason is to secure peak power for some part. But,

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financial benefit isn’t reason to develop PSPs79.

 The current status of Pumped Storage Projects 1st priority is Sharavathi PSP because both reservoirs are existing so that obstacles to the development are less than other two PSPs. 2nd is Varahi PSP and 3rd is Kali PSP because Kali PSP has natural environmental issue80.

The public announcement hasn’t been unveiled as of September, 2016. The work is to prepare DPRs for Sharavathy and Varahi PSPs, which doesn’t include DPR for Kali PSP. The preparation of the DPRs is done by using KPCL’s budget, and environmental survey is included in the works.

Table 4.4.7-8 PSP Projects

Priority Location Capacity (tentative) Stage 1st Sharabathy 800 or 1000 MW DPRs tender under preparation 2nd Varahi 600 to 1,000 MW DPRs tender under preparation 3rd Kali 600 MW PFR completed

As for Sharavathy, the PSP is at the PFR stage now, so that there are some options. These matters will be consolidated in the DPR stage. The capacity is also to be determined in the DPR whether the maximum output reaches 1,000 MW or not.

As for Kali, the PSP is also at the PFR stage now, so that there are some options. These matters will be consolidated in the DPR stage.

Social and environmental issues of the locations as for Sharavathy, Varahi & Kali PSPs ・ There is no local ingenious peoples objections/status; ・ There is no castes/tribes ・ Any present or potential NGO issue is not to be arisen at present, but it is unclear in the future. ・ In terms of land procurement status, Sharavathy has no private land. Land expropriation or resettlement of small villages may be required for Varahi PSP. ・ There is no Interstate river water disputes/potentials on the PSPs. ・ Karnataka state government follows regulation/ acts/ rules of the central government without modification.

Other PSP projects

CEA listed up several sites, not KPCL as well as Karnataka Energy Department. All sites of the PSPs exist in eco-sensitive zone, and the PSPs are “green field project” that all facilities are constructed from scratch. KPCL & Energy Department currently focus on Sharavathy & Verahi PSPs. Both KPCL and the Energy Department think that “green field project” to construct all

79 From interview with KPCL, Energy dept., July, 2016. 80 From interview with KPCL, Energy dept., July, 2016.

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facilities from scratch, especially construction of new reservoir, is practically unfeasible. So, PSPs to utilize existing reservoirs like Sharavathy, Varahi & Kali are regarded as feasible.

3) Battery Energy Storage

According to KREDL, Central Government is now proceeding to introduce 120 MW battery energy charge system in Karnataka.

Solar Energy Corp. of India（SECI）, implementing agency for clean-energy projects, sought bids for 300 MW of solar power to be built in Andhra Pradesh and Karnataka. SECI is seeking bids for four projects of 50 MW each in Karnataka with a battery energy charge system of 5 MW/2.5 MWh attached. The last day for submitting bids for Karnataka is Sep.9.81

4.4.8 Transmission

(1) Transmission Network

The interstate transmission network in Karnataka consists of 3,996 ckt.km of 400 kV lines, 2,738 ckt.km HVDC lines with capacity of 2,000 MW and 918 ckt.km of 765 kV lines. By FY 2019 the quantum of power import will increase by ~200 MW which can be comfortably met by the transmission network with the planned augmentation to its capacity. However, while this is true for drawing power from plants in A.P, Telangana and Tamil Nadu, capacity constraints in inter-state transmissions system do not allow increase in drawal from other power surplus states like Chhattisgarh.

The state is expected to become power surplus from FY 2017 if power projects as planned are commissioned. Rise in maximum demand to 14,710 MW in 2018-19 from 10,000 MW in 2014-15 signifies an increase of 47%. Total transmission capacity is planned to be enhanced from 10,725 MVA to 16,595 MVA, an increase of 54% in the same period which is sufficient to meet the demand.

Inter State CKM 6000 Intra State 4908 4433 5000 4266 3996 3996

4000 3853

3000 3553 3233 2000 2650 2683

1000

0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source: Karnataka Power for All (Appendix 4-41) Figure 4.4.8-1 Augmentation of Transmission Lines Length

81 Bloomberg ; July 22 , 2016

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MVA Inter State(400kV) Intra State(400kV) 10000 9075 8075 7520 8000 7020 6650 6150 6150 6000 4575 4575 4575 4000

2000

0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source: Karnataka Power for All (Appendix 4-41) Figure 4.4.8-2 Augmentation of Transmisson Capacity

(2) Transmission Loss

According to KERC, Transmission Losses for FY 2015 for Karnataka, the Commission approved the annual average transmission loss of 3.92% for the KPTCL, where KPTCL in its filing, has reported the transmission loss of 3.667%.82 The transmission loss submitted by KPTCL for 2016-2018 is as follows.

Table 4.4.8-1 Transmission Losses by KPTCL’s Submission

82 KERC (Terms & Conditions for Determination of Transmission Tariff) (2nd Amendment) Regulations, 2015, March, 2016

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source: Southern Regional Power Committee Figure 4.4.8-3 Power Map of Karnataka

4.4.9 Distribution

Discoms in Karnataka are currently serving more than 2 crore consumers of the state and providing 20-22 hours supply in urban and 16-18 hours of supply to rural consumers. Under PFA programe for development of all the regions of the state, providing 24X7 power supply to all un-connected households will be achieved by FY2018-19.

The AT&C losses for Karnataka DISCOMs has reduced from 37 % in FY 2005-06 to 18 % in FY 2014-15, which is an overall reduction of more than 19 points in 10 years.

However, Karnataka DISCOMs have planned to reduce its losses from 18% in FY 2015 to 14.5 % by the end of FY 2019.

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sources: Karnataka Power for all (Appendix 4-41) Figure 4.4.9-1 Projection of households based on 2015 (from Census 2001 and 2011 actuals)

(1) Rural Electrification

To achieve 100% rural household electrification and to meet the AT&C losses targets, Karnataka DISCOMs have planned an investment of 10,945 crores which will be funded by central grant, state grant, equity from DISCOMs and debt from FIs. It is envisaged to cover t all un-connected households by FY 2018-19.

(1) Village Electrification (Nos.)

Total inhabited villages 27397 Balance Un-electrified Villages as on 31.05.2016 39

(2) Household Electrification (Nos. in Lalhs)

Tatal Rural Households 78.64 Balance Un-electrified as on 21.05.2016 10.13 source: Ministry of Power

(2) Expansion of Distribution Network

Year wise roll out plan for the State is summarized in the following figure. The Discoms determine annually the capital budget required for various systems strengthening/works. The State Discoms have planned to invest 5,044 Crores towards system strengthening. Further, under IPDS scheme the Discoms have planned to invest 1,139 Crores by the end of FY 2019.

BESCOM has planned to invest 459 Crores, CESC 170 Crores, GESCOM 184 Crores, MESCOM

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158 Crores and HESCOM 171 Crores under this scheme.83

CKT km 11kV Lines (left scale) LT Lines (right scale)

400,000 94,648 100,000 91,202 84,742 87,900 81,727 338,521 319,269 301,040 300,000 75,000 267,871 283,738

200,000 50,000

100,000 25,000

0 0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

sources: Karnataka Power for all (Appendix 4-41) Figure 4.4.9-2 Augmentation of Distribution Lines

MVA 30,000 33kV substation DT Capacity 28,245 26,110 25,000 24,088 22,149 20,282 20,000

15,000

9,574 10,000 8,507 9,041 7,439 7,973

5,000

0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 sources: Karnataka Power for all (Appendix 4-41) Figure 4.4.9-3 Augmentation of Distribution Capacities

(3) Cost and Price of Electricity

In the past four years, the average cost of 19 Preliminary estimation based on the methodology adopted by National Institute of Solar Energy of estimation of solar potential supply of the licensees were growing at a compounded rate of 5.0% per annum, which has resulted in the energy charges of HT Industry consumers growing at the rate of 4.4% and the energy charges of HT Commercial consumers growing at the rate of 4.0% .The financial sustainability of Discoms were computed. In

83 All estimates/ budgets are as of FY 2015 (from Power for All, Karnataka, 2015))

Electric Power Development Co., Ltd. 4-151 Data Collection Survey on Power Sector in India Final Report case tariff hike of 3%, 4% and 3% in each year from FY 2017 to FY 2019 on latest category-wise average billing rates as per the existing tariff are assumed it leads to recover its accumulated losses. In contrast, in no tariff hike case it is evident that utility will incur losses from FY 2016 and accumulated losses will increase to 8,797 Crores by FY 2019. (Note that this assumes the trajectory of AT& C Loss below, so that inability of steady loss improvement affects the computation)

Rs/kWh Avarage cost of supply

6.5 Average billing rate(no tariff hike)

Average billing rate(3-4% tariff hike)

6 5.97 5.76 5.88

5.57 5.68

5.5 5.38 5.47 5.38 5.31 5.17 5.35 5.33 5 FY16 FY17 FY18 FY19

source: Karnataka Power for All (Appendix 4-41) Figure 4.4.9-4 ACS & ABR

(Rupee/kWh) 16 14 12 10 8 6 4 2 0

Max (All India) Min (All India) Karnakata (State DISCOM)

source: CEA Electricity Tariff & Duty and Average rates of electricity supply in India, March 2015 Figure 4.4.9-5 Average electricity prices by sector (comparison)

(4) AT & C Loss

The AT&C losses for Karnataka DISCOMs has reduced from 37% in FY 2005-06 to 18% in FY 2014-15, which is an overall reduction of more than 19% in 10 years. Karnataka DISCOMs have

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planned to reduce its losses from 18% in FY 2015 to 14.5% by the end of FY 2019. To meet the AT&C losses targets, Karnataka DISCOMs have planned an investment of 10,945 crores.84 If the Transmission & Distribution (T&D) losses in the state reduced to 12%, resultant savings in terms of energy would be around 4,200 MUs costing about 1,470 Crores per year at an Average Power Purchase Cost (APPC) of 3.5 INR/U85.

(%) 20.0 20.0 18.2 18.1

16.00 15.90 15.9 15.5 15.1 15.0 14.5 15.20 14.21 12.76 13.74 13.32

10.0 T&D Loss

AT&C Losses

5.0 FY12-13 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 sources: Karnataka Power for all (Appendix 4-41) Figure 4.4.9-6 AT&C Losses, T&D Losses

From SRLDC, Karnataka T&D Loss at 2014-15 was 14.93 %, and 2015-16 was 14.6 %.

Table 4.4.9-1 T&D Loss in southern states

2014-15 2015-16 Andhra Pradesh 12.82 10.85 Karnataka 14.93 14.6 Kerala 14.17 14.35 Tamil Nadu 22.02 - Telangana 12.92 12.69 Puducherry 12.09 11.05

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

(5) Financial Position of Discoms

1) Financial Situation

The existing accumulated loss for the Karnataka Discoms as per the provisional financial accounts of FY 2014-15 stands at 2,561 Crores, which is ~10% of their revenue booked for the FY 2014-15. In contrast to its historical accumulated losses, in the FY 2014-15 the Discoms have booked a net profit of 169 Crores. However, it is important to note that the profit is on the account of government subsidy to the tune of 5,983 Crores.

84 Estimate as of FY 2015 (from Power for All, Karnataka) 85 24x7 Power for All, Strategies for Karnataka, STEP, March 2016

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2) State Subsidy or Discoms

The subsidy in Karnataka has been increasing. It is disadvantageous to Discom finance that the subsidized tariff to those agricultural sector has been continuing.

The Cross subsidy surcharge (CSS) in Karnataka has been high that it is applicable to all open access/wheeling transactions in the area coming under ESCOM. However, the above CSS shall not be applicable to the captive generating plant of a consumer and for those renewable energy generators who have been exempted from CSS by the specific orders of the Commission. These are disadvantageous to Discom finances.

sources: Karnataka Power for all (Appendix 4-41) Figure 4.4.9-7 Subsidy during last 6 years (Crores)

3) Application of UDAY Scheme

Karnataka has signed an agreement to join the UDAY scheme meant for the revival of Discoms that may result in a total gain of about 4,300 Crores over next 3 years.

The restructuring depends on improvement of high aggregated AT& C Loss, Subisidy dependant tariffs, high Cross Subsidy Surcharge, and non-delayed tariff orders for tariff hikes, etc.

According the latest ‘State Distribution Utilities Fourth Annual Integrated Rating: 2016 edition, each Discom has relatively gained positive rating from the central government reflecting AT&C loss level showing a declining trend and improvement in cost coverage ratio during FY2015 led by higher tariff realization.

Rating A BESCOM,MESCOM,CESE Rating B+ HESCOM Rating B GESCOM

(6) Power Market and Trade

Karnataka has been sourcing power on short term basis to meet the need with some high price. Short term power during FY 2016 has been considered at 4 INR/U, from other states through bilateral trade purchase and energy exchanges.

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The below is the actual fact of BESCOM in FY 2015. BESCOM has managed to meet 88% of its energy requirement through firm allocations/tie-ups and for the balance 12% through comprehensive power procurement on short term and medium term basis.

As Karnataka will be having projected energy availability of more than 100 % through firm share in FY 2019, the state has to optimize power purchase and sale planning. However, the availability is mostly from hydro and other renewable sources which inherently have low capacity utilization factor, for the purpose the adequacy of energy availability, it is considered that the state considers it should continue meeting 90 % of its projected energy through firm allocations/tie-ups but the 10 % from comprehensive power procurement on short term and medium term basis.

sources: TARIFF ORDER 2016 OF BESCOM, March, 2016 (Appendix 4-44) Figure 4.4.9-8 BESCOM’s POWER PURCHASE FOR FY15

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4.5 KERALA STATE (KR)

Map source: Indian Renewable Energy & Energy Efficiency Database

4.5.1 Political Situation

The Kerala legislative assembly elections were held in 2016. The Communist Party of India (Marxist)-led Left Democratic Front (LDF) emerged victorious with 91 seats. Congress-led United Democratic Front (UDF) was the runner-up with 47 seats. The centrist UDF and leftist LDF are the two main coalitions in the state with power alternating between the two at regular intervals. The UDF won by a narrow margin of four seats in 2011. The LDF clinched power this time with a resounding majority. The result of assembly election is shown in Table 4.5.1-1.

Table 4.5.1-1 Result of Assembly Election in Kerala Party Seats won Vote % Communist Party of India (Marxist) 58 26.5 % Indian National Congress 22 23.7 % Communist Party of India 19 8.1 % Indian Union Muslim League 18 7.4 % Others 23 34.3 % Total 140 100% source: Election Commission of India86

86 http://eci.nic.in/eci/eci.html, etc.

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4.5.2 Economic Situation

(1) General

Kerala’s strategic location on the trans-national trade corridor, rich natural resources, and simple and transparent procedures are favorably suited for investments in key sectors such as tourism, IT/ITeS, manufacturing and mining.

Kerala’s traditional industries include handloom, cashew, coir and handicrafts. Forming industrial clusters and developing infrastructure (such as rubber parks, electronic hardware park, coconut industrial park, organic industrial park and food processing parks) have been integral to the state’s strategies to attract investments in various industries.

Key industries in Kerala - Handlooms and power looms - Rubber - Bamboo - Coir - Khadi and village industry - Sericulture - Seafood and other marine products - Cashew - Mining - Tourism - Food processing - Spices and spice extracts - IT & electronics

1) Gross State Domestic Product (GSDP)

GSDP of Kerala State occupies 4.0 % of total GSDP in 33 states in India in 2013-14 and ranked as the 10th largest economy in all states. The State’s GSDP in 2013-14 at constant prices was 226,209 Crores. GSDP has been steadily increasing. The growth rate at factor cost (constant price) is around 6.0 %. GSDP at factor cost is shown in Table 4.5.2-1.

Table 4.5.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 18,985,071 20,095,773 21,285,953 22,620,850 n/a Increase -- 5.9 % 5.9 % 6.3 % --- source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India87

87 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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2) Structure of industry (against GSDP)

In 2014-15, the tertiary sector contributed 65.85 % to the state’s GSDP at current prices, followed by the secondary sector at 20.06 %. Growth in the tertiary sector was driven by storage, transport, financial and real estate segments. Growth in the secondary sector was led by manufacturing, construction, and electricity, gas & water supply segments, while the primary sector was grown with the agriculture and mining & quarrying segments. Percentage distribution of GSDP is shown in Table 4.5.2-2

Table 4.5.2-2 Percentage Distribution of GSDP for 2014-15

Item Distribution Tertiary 65.85 % Secondary 20.06 % Primary 14.09 % source: IBEF, 2015 (www.ibef.org)

(2) Economic Policy / Development Policy

Budget 2016-17 contemplates new and important developmental activities. Government has decided to provide a common pooled fund for 17 ongoing/new key infrastructure development projects. A lump sum amount of Rs.2536.07 Crores is provided for these projects, mainly to ensure flexibility and need based financing based on performance. The projects identified are mainly in the transportation sector, as follows:

Transportation - Light Metro Systems at Thiruvananthapuram and Kozhikode, - Vizhinjam International Container Transshipment Terminal, - Kochi Metro, - Kannur Airport, - Mobility Hub, Suburban Rail Corridor, - NH Bypass at Kollam and Alappuzha, - Setting up of Airstrip at Bekal. - Integrated Water Transport System-Kochi Industrial development - Land acquisition for Major Infrastructure Development projects under Industrial Development Zone, - New IIT Palakkad, - Mega Food Park, Palakkad, - Electronic Hardware Park-Kochi, - Petro chemical Park-Kochi, Others - Annuity Scheme on 35th National Games,

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- Transgrid 2.0, - Defense Park, Ottappalam/

In addition, Kerala State has elaborated the following development policies:

Kerala Industrial & Commercial Policy Amended 2015 - To promote Kerala as a prime destination for industrial investments with environmental protection. - Revamp Kerala into an entrepreneurial state by encouraging private investment in all sectors, particularly agro processing, services and commerce, and new emerging sectors. Kerala Agricultural Development Policy 2015 - The farm lands are to be protected and should not be put for any other use than farming activities. - The agriculturally potential land is to be identified and demarcated with the help of modern technologies such as remote sensing, satellite imagery, etc., and a database is to be made. Kerala Small Hydro Power Policy 2012 - To harness green and clean natural resources in the state for environmental benefits and energy security. Kerala IT Policy 2012 - To plan, develop and market the state as the most preferred IT/ITeS investment/business destination in India.

(3) Financial Situation

The State Government enacted the Kerala Fiscal Responsibility Act, 2003 to ensure prudence in fiscal management and fiscal stability by progressive elimination of revenue deficit and sustainable debt management consistent with fiscal stability, greater transparency in fiscal operations of the Government and conduct of fiscal policy in a medium term framework.

The revenue deficit has generally a decreasing trend although fluctuating, but it does not get to the target set by the 14th Financial Commission. The fiscal deficit, which represents the total borrowings of the Government and its total resource gap, decreased dramatically in 2015-16, but increased in budget estimate in 2016-17. This does not satisfy the target. Total debt stock stabilizes around 26 % and this is the only indicator which falls within the target. Trends for fiscal management is shown in Table 4.5.2-3.

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Table 4.5.2-3 Trends for Fiscal Management (Percent) Item 2013-14 2014-15 2015-16 2016-17 Target(16-17) Revenue deficit / GSDP -2.44 -2.65 -1.85 -1.98 0.00 Fiscal deficit / GSDP -3.66 -3.59 -3.02 -3.51 -3.00 Total debt stock / GSDP 26.71 26.05 26.31 26.82 30.84 note: 2015-17 Budget estimates; Target is set by 14th FC for 2016-17 source: Revised Budget 2016-2017 at a glance

(4) Foreign Investment

1) Transition of Foreign Direct Inflow (FDI)

Foreign Direct Inflow (FDI) equity inflows received by RBI’s regional office in Kochi, which covers states of Kerala and Lakshadweep, is as shown in Table 4.5.2-4. The amount has been increasing steadily.

Table 4.5.2-4 Transition of FDI Unit: Crores Rupees (US$M) Year 2013-14 2014-15 2015-16 Cumulative Percentage of (2000-2016) total inflow Amount 411 (70) 1,418 (230) 589 (90) 6,739 (1,301) 0.5 % source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion88

2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.5.2-5.

Table 4.5.2-5 Transition of Japanese Firms

Year 2011 2012 2013 2014 2015 Number 47 53 105 122 134 source: Embassy of India in Japan89

4.5.3 State Budget and Financial Situation of Executing Agency

(1) Power Sector Budget90

Kerala States earmarked the following budget for activities in Power Department. The amount is steadily increasing and the budget for the current year is 1,622.70 Crores. Gross plan outlay for power department is shown in Table 4.5.3-1.

88 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf 89 http://www.in.emb-japan.go.jp/Japanese/2015j_co_list.pdf 90 http://finance.kerala.gov.in/index.php?option=com_docman&task=cat_view&gid=253

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Table 4.5.3-1 Gross Plan Outlay for Power Department (Crores Rs.) Item 2014-15 2015-16 2016-17 Amount 1,011.77 1,276.69 1,622.70 source: Budget 2016-17

Budget 2016-17 includes the following expenditures among others for development in Energy sector:

- Construction of power generation from conventional energy sources. - Construction of 200 MW solar park at Kasaragod. - A mega project for installation of solar panels of 1,000 MW over rooftops of houses - Establishment of Energy Management Centre for coordinating energy conservation activities in various institutions, industrial centres, commercial establishments and houses. - A mega program for replacing all filaments, CFL bulbs with LED bulbs, as well as inefficient fans, home appliances and pumps. - Establishment of a major factory to make use of solar panels and LED bulbs on a large scale. - Extension of transmission corridor from Tamil Nadu to Madakkathara for reducing transmission loss, satisfying energy evacuation necessities and improving distribution and transmission network.

(2) Financial Situation of Executing Agency

Executing agency of pumped storage project in Kerala state is Kerala State Electricity Board (KSEBL). KSEBL is a power company having all segments of generation, transmission and distribution. The company owns and operates thermal and hydro power plants. Kerala State implemented power sector reform in 2014, and the state operated Kerala State Electricity Board (KSEB) was transformed into KSEBL, therefore, the figures in FY2013-14 do not necessarily comparable with the previous years. Anyway total income exceeds total expenditures in any year. Table 4.5.3-2 shows financial situation of KSEB.

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Table 4.5.3-2 Financial Situation of KSEB

2011-12 2012-13 2013-14 Sale of power (MU) 16182 16838 18868 Total Income (Crore) 7978 11658 46.1% 6013 -48.4% Total Expenditure 7737 11417 47.6% 5872 -48.6% Profit beforeTax 241 241 0.0% 140 -41.9% Profit after Tax 241 241 0.0% 140 -41.9% Cost Structure (Crore) Power purchase 4375 56.6% 7200 63.1% 3291 56.0% Generation cost 282 3.6% 565 4.9% 163 2.8% Employee cost 1782 23.0% 1958 17.1% 1364 23.2% O&M cost 252 3.3% 252 2.2% 133 2.3% Interest cost 310 4.0% 464 4.1% 451 7.7% Depreciation 466 6.0% 509 4.5% 330 5.6% Admin & Gen Exp 197 2.5% 197 1.7% 137 2.3% Other Expenses 72 0.9% 273 2.4% 5 0.1% Total 7736 11418 5874 Return on Equity 15.50 15.5 -0.84 Return on Networth 6.81 6.45 -0.85 Return on Capital Employed (Crore) 5.72 5.97 2.67 Debt Equity Ratio 0.70 1.09 1.52 source: Report on "The Performance of State Power Utilities for the years 2011-12 to 2013-14", 2015 PFC

4.5.4 Power Sector Overview

From Kerala Power for All, MOP, 2015, it is presumed that power supply in Kerala is going to improve drastically in 2016-17 and keep in surplus position till FY2019. Generation capacity will increase by 2,333 MW during FY2016-FY2019, including 822 MW addition of renewable energy.

To ensure its T&D network, the State takes the most of hydropower, occupying about 40 percent share of total generation capacity. The State (KSEBL) also considers introducing several Pumped Storage Projects down the road for addressing the peak demand.

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Figure 4.5.4-1 Kerala state power sector feature

4.5.5 Power Supply Structure

(1) Institutions

Kerala State Electricity Board (KSEB) was unbundled in October 2013, and Government of Kerala revested all the assets and liabilities of the Board in new company, Kerala State Electricity Board Limited (KSEBL) in charge of generation, transmission and distribution of power in Kerala. Power distribution in the State is also handled by nine other distribution Licensees in addition to KSEBL.

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Policy Kerala Power Department Regulation Kerala State Electricity Regulatory Commission (KSERC) Power Kerala State Electricity Board Ltd. (KSEBL) generation Transmission Kerala State Electricity Board Ltd. (KSEBL) Dispatch State Load Dispatch Centre (SLDC) * Distribution Kerala State Electricity Board Ltd. (KSEBL) Cochin Port Trust Kannan Devan Hills Plantation Company Ltd. Tochnopark Thrissur Corporation Cochin Special Economic Zone KINESCO Power and Utilities Private Limited Rubber Park India Ltd. Military Engineering Service Infopark * Belong to MSETCL

(2) Power Supply Structure

KSEBL is a combined entity for generation, transmission and distribution of power in whole of Kerala. After unbundling of the erstwhile Kerala State Electricity Board (KSEB) in October 2013, Govt. of Kerala revested all the assets & liabilities of the Board in new Company i.e KSEBL. Power distribution in the State is handled by KSEBL along with nine other distribution Licenses. KSEBL distributes electricity in the state of Kerala except in the Thrissur Municipal Corporation and Munnar (Kannan Devan Hills).

KSEBL IPP Central

KSEBL

KSEBL 9 Distributiors

consumer consumer consumer consumer

Physical flow Commercial flow source: Web site of each organization Figure 4.5.5-1 Electricity Supply Structure

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(3) The State’s Original Power Policy

Renewables ・ Kerala Renewable Policy 2002 ・ Kerala Solar Energy Policy 2013 Small hydro power ・ Kerala Small Hydro Policy 2012

(4) Executing Agency

Executing agency of pumped storage project in Kerala state is Kerala State Electricity Board (KSEBL).

4.5.6 Power Supply / Demand Scenario

As per the present power supply position in the state, Kerala had about 3.35% peak power shortage & 0.52% energy shortage during FY 2014-15. In order to achieve the objective of 24x7 power supply to all, As of March, 2016, the Kerala state has experienced the actual peak demand of FY 2015 was 3,977 MW and energy requirement 23,218 MU, whereas the peak met 3,856 MW and the energy availability was 23,194 MU. It was peak deficit of 3.0% and energy deficit 0.5%.91

In the end of FY2015, the state estimated to see an increase in peak demand 4,821 MW in FY 2018-19 with corresponding increase in energy requirement 29,620 MU in FY 2018-19. In order to meet the estimated increased demand for providing 24x7 power supply in the state, the state planned additional capacity availability of 2332.75 MW by FY 2018-19 through own generating stations, renewable energy sources, central generating stations and long term/medium term PPAs in a phased manner. The state estimated to have a surplus of about 10.4% to 2.43% in terms of peak demand during the period FY 2015-16 to FY 2018-19. During the same period, the state expects availability of surplus energy in the range of 1.37% to 3.39% except during FY 2015-16. The Kerala state estimates to be power surplus state from FY 2016-17 to FY 2018-19 having surplus in both peak power and energy availability.92

91 Monthly report, CEA 92 This estimate is from “A JOINT INITIATIVE OF GOVERNMENT OF INDIA AND GOVERNMENT OF KERALA”, Feb.2016.

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Energy Requirement MU % Energy Availability 3.4 35,000 Surplus/Deficit 4.0 3.2 2.7 3.0 30,000 Surplus/Deficit (%) 2.0 25,000 1.4 1.0 20,000 0.0 -0.5 15,000 -1.0 10,000 -2.0 -3.0 5,000 -4.9 -4.0 0 -5.0 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -5,000 -6.0

source: CEA Load Generation Balance Report (Appendix 4-1,2,3), Kerala Power for All (Appendix 4-45) Figure 4.5.6-1 Energy Supply FY2013-2019

MW Peak Demand Peak Availability % 6,000 Surplus/Deficit Surplus/Deficit (%) 12.0 10.4 10.0 5,000 8.1 8.0 4,000 6.7 6.0 3,000 4.0

2,000 2.4 2.0 0.0 1,000 -0.8 -3.4 -2.0 0 -4.0 FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 -1,000 -6.0

source: CEA Load Generation Balance Report (Appendix 4-1,2,3), Kelara Power for All (Appendix 4-45) Figure 4.5.6-2 Peak Demand FY2013-FY2019

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Railway Agricultural Traction etc 2% 1% 3% Public Lighting 2%

HT&EHT Industrial 23% Domestic 50%

LT LT Industiral Commercial 6% 13%

source: Kerala Power for All (Appendix 4-45) Figure 4.5.6-3 Category Wise Consumption FY2013-14

(1) Features of Peak Load

As for month-wise, demand peak is in Match and has been increasing in late years . According to time of the day, hourly peak demand appears at night, between 8 p.m. and 10 p.m. The demand difference between maximum and minimum is about 1, 200MW, in March 2016. When looking at the southern region, its demand is relatively flat compared with other regions.

4200

FY2015 FY2016 FY2017 4000

3800

3600

3400

3200 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source: CEA：Monthly Report、Load Generation Balance Report Figure 4.5.6-4 Monthly Peak Demand

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source : Southern Regional Load Dispatch Centre, Monthly Report March 2016 (Appendix 4-8) Figure 4.5.6-5 Hourly Load Curve for Peak Demand Day ;March 21,2016

source : Southern Regional Load Dispatch Centre, Monthly Report March 2016 (Appendix 4-8) Figure 4.5.6-6 Southern Region Hourly Demand Curve on Maximum Day (21.3.2016)

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source : POSOCO Large Scale Integration of Renewables at EEC Conference, 31 August 2015 Figure 4.5.6-7 Regional Geographical Diversity

(2) Frequency Profile in the southern region

The Indian Electricity Grid Code (IEGC) has been set in 49.9Hz-50.05Hz since February 2014. Looking at the frequency in the southern region in 2015-16, keeping the IEGC range is only 60-70% of time through the year. The cases of more than 50.05 Hz are often observed from winter to spring, and the cases of less than 49.9 Hz are conspicuously seen in September.

On the maximum demand day and the minimum demand day in 2014-15, the frequency greatly fluctuated.

% time

100% 10 18 18 13 16 18 90% 23 25 21 20 22 20 80% 70% >50.05 60% 58 49.9-50.05 50% 64 69 68 65 60 70 66 69 69 40% 64 71 <49.9 30% 20% 32 10% 17 18 17 17 10 12 15 13 11 11 0% 7 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source : Southern Regional Load Dispatch Centre Quarterly Report (Appendix 4-11,12,13,14) Figure 4.5.6-8 Frequency of Southern Region in 2015-16

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source : Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9) Figure 4.5.6-9 Load Curve and Frequency Curve of Southern Region on Maximum day in 2014-15

source : Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9) Figure 4.5.6-10 Load Curve and Frequency Curve of Southern Region on Minimum day in 2014-15

(3) Load Factor in Kerala

Load factor data in Kerala shows that the average annual load tends to stable in recent years. However, the demand has been bottom-raised every year judging by Demand Duration Curve.

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source : POSOCO Electricity Load Factor in Indiana Power System (Appendix 4-7) Figure 4.5.6-11 Load Factor of Kerala

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4.5.7 Generation

(1) Installed Capacity

According to Kerala state, total generation capacity / availability of power as on 31.03.2015 for the state of Kerala is 4,413 MW. Out of total 4,413 MW, 43.37 % is from Hydro, 24.89 % is from Coal based Thermal,12.20% is from Gas Based Thermal , 3.62% is Diesel Based Thermal, 5.21% from Nuclear and balance 3.89 % is from Renewable Energy Sources.

On contrary, CEA monthly report states less. As on 31.03.2016 it states 4,172 MW. Out of total 4,172 MW, 45.10 % is from Hydro, 38.99 % is from Coal based Thermal, 12.79 % is from Gas Based Thermal, 5.62 % is Diesel Based Thermal, 5.48 % from Nuclear and balance 6.12 % is from Renewable Energy Sources.

In either case, the state wise installed capacity Kerala stands at 16th position with only approx. 2 % of total installed capacity in whole India.

In terms of ownership, the State Sector has the largest share of 49.56 %, followed by share of Central Sector Allocation which is 44.84 %. The share of Private Sector / IPPs is 5.60%. As per generation plan of State of Kerala, capacity of around 2,332.75 MW93 is expected to be added by FY 2018-19 (from new projects as well as from allocation from Central Sector and IPP Projects). Out of this, 822.40 MW shall be added through non-conventional energy sources and balance 1510.35 MW through conventional sources. As such the total available capacity by FY 2018-19 is expected to be 6745.62 MW (5751.78 MW– conventional and 993.84 MW – renewable).

RE 4%

Coal 32% State, 2,187 Central, 4,413MW 1,979 Hydro 43% Gas 12%

Private/IPPs , 247 Nuclear Diesel 5% 4%

source : Kerala Power for All (Appendix 4-45) Figure 4.5.7-1 Installed Capacity by Ownership & Fuel (as of March, 2015)

93 However, out of 2,332.75 MW presented in Power for All Kerala, it should be noted that only 565 MW will be delivered by State development, and the balance is all purchases and allocations (from IPP (1,582.85 MW) and CGU (184.5 MW)). It is also noted that IPP at present only supplies 291 MW to Kerala as of March 2016. Kerala’s generation “surplus” plan meeting demand growth depends on purchases from outside.

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The trend of the Kerala state installed capacity is given below. There is few private entities. Large-hydro sources contribute to nearly half of this capacity. But for years it hasn’t grown at all. The coal thermal power grows 5% annually but all coal thermals are the central allocations. The private powers only contribute in gas (174 MW) and some part of renewables (117 MW). Renewable capacity holds 6 % of the total capacity in Kerala and show 8-12 % annual growth. But it remains small.

source : CEA monthly report Figure 4.5.7-2 Installed Capacity History by Fuel

source : CEA monthly report Figure 4.5.7-3 Installed Capacity History by Ownership

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The State owned Power capacity is shown below.

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source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

(2) Power Generation

In term of energy, Hydro is vast dominant in generated electricity in Kerala. There is no allotted energy from central. State Hydro amount varies year by year depending on monsoons. As shown in the exchange energy drawals, it indicates a large portion (16,073 MU) of the required energy (22,459 MU) in Kerala was from outside of the State. With regards to the hydro, even with the available storage, the actual generation from hydro plants have been regulated based on the energy and peak demand, availability of power from CGS, traders, energy exchange and short-term market.

(GWh) 12,000 Central- Nuclear Central- Hydro 10,000 Central- Natural gas

8,000 Central- Coal Private- Hydro 6,000 Private-Natural gas

4,000 Private- Oil Private- Coal 2,000 State- Hydro State- Natural gas 0 State- Oil State- Coal

source: CEA Monthly Report Figure 4.5.7-4 Power Generation by sectors

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Oil Natural Central 2% gas 2% 2%

FY2015 FY2015 Power Power Generation Generation 6.7TWh 6.7TWh (by Fuel) (by Sector)

Hydro State 96% 98%

source: CEA Monthly Report Figure 4.5.7-5 Generation by Ownership & Fuel

Table 4.5.7-1 Bilateral Exchanges and Drawals from the Grid, for the year 2015-16

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

(3) Plant Load Factor

As Kerala is typical hydro dominated state, the Plant Load Factors (PLFs) of state thermal plants have been as low as 10 %. The plant load factor of thermal power stations in Kerala, were 2.36 % in Brahmapuram (Diesel), 16.29 % in Kozhikode (Diesel), 26.00 % in RGCCP (Kayamkulam).

Table 4.5.7-2 Plant load factor of Kerala and southern states

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

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(4) Cost of Power Generation

The high share of cheap hydel power in the state is the primary contributor of affordable power.

We have got the purchase cost data from the state government through this research as follows94;

 Average power generating cost is, Conventional hydro power plant; 0.74 INR/U, Solar ; 7.04 INR/U, Wind ; Rs.5.27-6.58 INR/U,  Procurement cost of Discom during 2015-16 is Average; 3.99 INR/U, Peak Power ; 8.67 INR/U,

The ARR and ERC Petition by KSEBL for 2014-2015 revealed the cost of generation and power purchase for the year 2014-15. Though it was FY2014-2015 figures, It states CGU : 1.54-3.57 INR/U, Disel 11.7-12.7 INR/U, Renewables 2.00-3.54 INR/U. Trader short term was as high as 5.50-5.80 INR/U.

The Kerala state indicated that facing difficulty in developing more hydro power projects, the state was forced to experiment with liquid fuel/naphtha based stations to meet the soaring demand for power, but this also ended up underutilized due to the fuel costs. The per-unit cost of power from these projects is to the tune of 13 INR/U thus around 750 MW of power is not being scheduled to meet the power requirement of the state.

94 Interviews in July, 2016

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Table 4.5.7-3 Cost of Generation and Power Purchase for the Year 2014-15

Energy Produced Variable cost Source Fixed Cost Total Cost /Purchased /Unit

MU Rs. Cr Rs/kWh Rs. Cr KSEB Internal Hydel 6958.82 W ind -Kanjikode 1.70 BDPP (Diesel) 9.30 12.74 11.85 KDPP (Diesel) 235.25 11.65 274.07 Sub total 7205.07 285.91 Power purchase (a) CGS TALCHER - Stage II 3113.74 242.23 1.54 766.24 NLC- Exp- Stage-1 436.32 58.06 2.14 153.23 NLC-II- Stage-1 388.54 24.12 2.14 113.23 NLC-II- Stage-2 553.31 35.07 1.99 154.80 RSPTS Stage I & II 2359.28 150.05 2.14 674.68 MAPS 128.55 26.19 26.62 KAIGA Stg I 242.74 72.95 73.55 KAIGA Stg II 225.05 67.64 67.64 Simhadri Exp 609.87 104.09 2.09 233.40 Kudamkulam 718.27 251.40 251.40 NLC - II Exp 293.93 35.27 2.14 98.17 Vallur JV with 301.81 45.27 2.15 110.16 Tuticurin JV 82.77 12.42 2.15 30.21 Jhajjar 619.88 97.50 3.57 318.67 Sub total (CGS) 10074.07 1222.26 3072.01 Wind and Other IPPs W ind 70.43 3.14 22.12 Ullumkal (IPP Hydro) 34.00 2.00 6.80 MP Steel (IPP-Co gen) 40.80 2.31 9.42 Irukkikkanam SHP-stage-1 (IPP Hydro) 11.92 2.70 3.22 Irukkikkanam SHP-stage-2 (IPP Hydro) 3.60 2.96 1.07 PCBL (Co-gen) 36.00 3.50 12.60 Sub total 196.75 55.22 Traders Traders Firm 2995.33 5.80 1737.29 Traders & day ahead 1370.91 5.50 754.00 IPPS RGCCPP 217.80 237.22 12.89 517.96 BSES 0.00 88.54 88.54 KPCL 0.00 2.80 2.80 Sub total 217.80 328.56 609.30 Total 14854.86 1550.82 6227.83 Total 22059.93 1871.37 6861.29 source; JICA team, from ARR and ERC Petition by KSEBL for 2014-2015, KSEBL, May, 2014 (Appendix 4-47)

(5) Power Development Plan

The availability of power from various sources up to FY2018-19 is summarized below. The state has planned additional capacity availability of 2,332.75 MW by FY 2018-19 through own generating stations, renewable energy sources, central generating stations and long term/medium term PPAs in a phased manner. Out of this, 822.40 MW is planned be added through nonconventional energy sources and balance 1,510.35 MW through conventional sources. Also, it largely expects to depend on privates.

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MW Central 8000 Private/IPP 7000 State Sector 6000 2163 2061 5000 2061 4000 2305 1979 1783 1830 3000 1323 894 247 2000 2753 1000 2187 2208 2343 2516 0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source : Kerala Power for All (Appendix 4-45) Figure 4.5.7-6 Generation Capacity Prospect

Table 4.5.7-4 Generation plan

source : Kerala Power for All (Appendix 4-45)

(6) Renewable Energy

1) Existing and Additional capacity

As of FY 2015, Kerala has the wind power capacity of 255 MW (as of March, 2016) consisting only 6.1% of the installed capacity.

Government of Kerala is keen to tap renewable power potential of the state to meet the growing demand of power in an environmental friendly and sustainable manner. Kochi has already been selected as a Solar city under the MNRE program of Solar/ Green Cities. Union MNRE has approved nearly Rs. 696-crore master plan for the Kochi solar city project. The master plan has

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envisaged that the city will need 975 million units (MU) of power per year by 2021. It is estimated that the city can achieve an “aggregate reduction of 155.42 MU” in five years.

Year Wise Plan of proposed capacity addition is as follows. In its plan, Kerala has to ensure ambitious addition of renewable generating capacities of 822.4 MW reaching cumulative 993.84 MW in FY 2018.

(MW) 300

250 12 200 Solar 150 Small hydro 199 158 158 Wind 100 137 150 123 134 Wastes 50 Biomass 27 28 35 35 35 35 35 0

source: Energy Statistics 2011-201695 Figure 4.5.7-7 Renewable generation capacity in Kerala

MW 1000.0

313.2 800.0 Small Hydro

Wind 244.8 600.0 166.9 Solar 114.9 400.0

513.8 200.0 174.2 398.8 136.6 161.2 42.9 34.9 34.9 79.6 0.0 0.0 1.1 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source : Kelara Power for All (Appendix 4-45) Figure 4.5.7-8 RE Capacity Prospect

2) Renewable Purchase Obligation

Kerala state previously issued several policies for renewables energy.

95 Note that total Renewables in Kerala at Mar. 2015 inconsistent, differs as : 246MW in Energy Statistics (Appendix 2-20 ～25), (Min. of Statistics & Programme Implementation, GOI), 171.44MW in Power for All (KSEBL), 204 MW in Monthly Report (CEA)

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 “Kerala Renewable Energy Policy 2002”  “Development of wind power in Kerala through private developers modified”, 22.11.2008.  “Kerala State Electricity Regulatory Commission (Renewable Purchase Obligation and its compliance) Regulations, 2010”  “Kerala Small Hydro Power Policy 2012” “Allocation of Government land for setting up Solar / Wind power plants”  “Kerala Solar Energy Policy 2013”

But most recently, Kerala State Electricity Regulatory Commission (Renewable Energy) Regulations, 2015 has been issued. The state has defined and revised relevant issues of Renewables some times.

Table 4.5.7-5 RPO Year Captive Open Access Solar Non Solar 2015 Y Y 0.25% 4.25% FY2015-16 Non Solar-4.55% Solar-0.25% FY2016-17 Non Solar-4.85% Solar-0.25% Policy Summary FY2017-18 Non Solar-5.15% Solar-0.25% FY2018-19 Non Solar-5.45% Solar-0.25% FY2019-20 Non Solar-5.75% Solar-0.25% FY2020-21 Non Solar-6.05% Solar-0.25% FY2021-22 Non Solar-6.35% Solar-0.25%

source : Indian Renewable Energy & Energy Efficiency Database96

The most recent KERC (Renewable Energy) regulation, Nov, 2015 defines RPO as :

Every distribution licensee shall purchase renewable energy, not less than 4.5 percentage of the total energy supplied by it to the consumers within its area of licence, during the financial years commencing from 2015-16, with an annual increase of 0.5 percentage per year, until its renewable purchase obligation reaches 10 percentage of the total supply of energy to its consumers during a financial year.

Table 4.5.7-6 Revised RPO

source; KERC (Renewable Energy) regulation, Nov, 2015

96 http://ireeed.gov.in/

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3) Purchase Price

The purchase price of renewables is defined by Feed-in-Tariff based or Competitive Bidding based. The Tariff defined by KERC at the moment is as follows.

Table 4.5.7-7 Feed-in Tariff Year Technology Category Tariff Without Accelerated Depreciation 2014 Bagasse/Biomass Tariff 2.55 2014 Small Hydro Power Below 5 MW 4.88 5-25 MW 4.16 2014 Solar PV Solar PV 15.18 2014 Wind All 4.77 source : Indian Renewable Energy & Energy Efficiency Database 97

(7) Countermeasure for Variable Renewable Energy

The peak/off-peak demand is mainly balanced at present by the conventional hydro plants of KSEBL. In the future, gas fired plants and pumped storage plants would also be utilized for balancing of peak/off-peak demand.

TOD pricing is already implemented for industrial and other high voltage customers as a measure to restrict the peak demand. This is also being extended to other customers.

1) Standpoint of Pumped Storage

A National workshop on “Challenges and opportunities in pumped storage hydro electric plants” was conducted at College of Engineering, Trivandrum on 25th & 26th April 2016 jointly by KSEBL College of Engineering, Trivandrum. The objective of PSP is for peak power supply, storage of excess energy in off peak hours.

2) Current Status of PSP

KSEBL recently has focused on Idukki (300 MW) and Pallivasal (600 MW)98. Investigation for both schemes is under way. As for obstacle for PSPs, there is a difficulty in obtaining Environmental clearance and Forest Clearance.

Priority Location Capacity Stage 1st Idukki 300MW Under Investigation 2nd Pallivasal 600MW Under Investigation

3) Social and Environment of Idukki and Pallivasal

Involvement of forest and tribal land for the construction of PSPs can be ascertained only after conducting field level surveys. As the studies are only progressing at present, this aspect cannot be explained as of now.

97 http://ireeed.gov.in/ 98 From interviews on KSEBL, July, 2016.

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(8) Ease of Land/ Right of Way Acquisition for power projects

As discussed during meetings availability of land is an issue as most of the potential projects especially when PSPs are located in protected forest land for which clearance is problematic from MOEF point of view.

(9) Key state regulations on environmental & social issues

No such regulation are found for key state regulations on environmental & social issues which may have serious influence on PSP or hydro promotions both of quality and quantity as specified by state government level.

source : Southern Regional Power Committee Figure 4.5.7-9 Power Map of Kerala

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4.5.8 Transmission

(1) Transmission Network

The state is well served by a network of Interstate transmission lines at 400 kV, 220 kV levels and the existing ISTS transmission system capacity is adequate for meeting the present power requirement.

In ISTS system, Power Grid Corporation of India Limited (PGCIL) & KSEBL have already undertaken/planned a number of transmission works for further strengthening & augmenting the capacity and to ensure better connectivity of Kerala Grid with National Grid for meeting the projected power demand of Kerala by FY 2018-19 for 24x7 Power For All (PFA) in the state. The existing combined Transformation capacity of PGCIL & KSEBL at 400/220 kV level is 3,150 MVA and the same shall be increased to 6,355 MVA by FY 2018-19. Keeping in view the power evacuation of about 3,200 MW by FY 2018-19 at 220 kV and below level within the state, the capacity addition plan as envisaged is adequate to meet the projected power demand of 4,821 MW by FY 2018-19.

The total existing Intra state transmission capacity at 220 kV level is 5,732 MVA which can comfortably cater to the maximum demand of 3,760 MW of the state during FY 2014-15. The same shall be increased to 11,632 MVA which would be adequate to take care of maximum power demand of 4,821 MW of the state by FY 2018-19 to cater 24x7 PFA requirements.

source Kerala Power for All (Appendix 4-45) Figure 4.5.8-1 Augmentation of Transmission System

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source : Kerala Power for All (Appendix 4-45) Figure 4.5.8-2 400kV and 200kV Network

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(2) Transmission Loss

KSEBL has assessed the month-wise transmission losses at individual voltage levels (400 kV, 220 kV, 110 kV, 66 kV and 33 kV) for the monthly peak demand from April-2012 to March-2013. It is seen the average transmission losses for providing supply at 110 kV is about 3.51 % and the same for providing supply at 66 kV is about 5.52%.

Table 4.5.8-1 Voltage level wise transmission losses for the monthly peak demand

source; ARR and ERC Petition by KSEBL for 2014-2015, KSEBL, May, 2014 (Appendix 4-47)

According to KSEBL, the state has made the intra-state transmission loss trajectory for the FY 2016-17 to FY 2018-19 of 5.50 % declining to 5.00 %.

Table 4.5.8-2 Transmission Loss Trajectory

source : Kerala Power for All (Appendix 4-45)

4.5.9 Distribution

Distribution sector in the state is being augmented through RAPDRP/ RGGVY schemes of GOI and other state schemes. R-APDRP, Part-A is under implementation in 43 Towns with total outlay of 214.38 Crores. R-APDRP, Part-B, with total estimated cost of 1,078.30 Crores is under implementation in 43 towns. The state has proposed a requirement of capital expenditure of 1,720.90 Crores in DDUGJY against which DPR cost approved by Monitoring Committee is 485.37 Crores for

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connecting the unconnected households, metering, System Strengthening & Sansad Adarsh Gram Yojana (SAGY) scheme, and under IPDS scheme 597.46 Crores for metering, 24x7 power supply, Reduction of AT & C losses, roof top solar & miscellaneous items. The DPR sanctioned cost of project for IPDS is 597.46 Crores. Keeping in view the existing & proposed capacities at sub-transmission and distribution level, the system would be adequate to meet the projected load of the state by FY 2018-19. AT&C losses in the state are targeted to be decreased to 10% in FY 2018-19 from 10.80% in FY 2014-15 as per loss trajectory committed to MoP by the state.

(1) Rural Electrification

The state has planned to electrify them completely by FY 2016-17 under the DDUGJY/ IPDS scheme of GoI and through off-grid solutions.

1) Village Electrification (Nos.)

Total inhabited villages 1017 Balance Un-electrified Villages as on 31.05.2016 0

2) Household Electrification (Nos. in Lakhs)

Tatal Rural Households 40.95 Balance Un-electrified as on 21.05.2016 3.18

source: Ministry of Power

(2) Expansion of Distribution Network

The distribution network growth as planned by KSEBL under ongoing and forthcoming schemes is as follows. Based on the present conditions, the projected load of 11 kV consumers and below in FY 2018-19 would be about 1,000 MW and 3,821 MW. The distribution transformation capacity at 11/0.415 kV level is projected to grow from 8,329.11 MVA in FY2013-14 to 9,938.11 MVA in FY 2018-19. The installed capacity 11/0.415 kV level would be adequate for meeting the projected demand by FY 2018-19 and Average loading of DTs would be around 42.7%.

The KSEBL considers the immediate state government and GOI Intervention including making arrangement for approval of proposed schemes of DDUGJY and IPDS are required.99

99 Power for All, Kerala, KSEBL, Feb., 2016

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MVA Transformer Capacity(11/0.415kV) ckt.km 9,938 10,000 9,638 300,000 LT Lines Length 9,338 9,028 8,708 8,329 284,177 8,000 283,777 280,000 279,777 275,677 271,677 267,355 6,000 260,000

4,000 240,000 FY1３-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source: Power for All, Kerala, KSEBL, Feb., 2016 (Appendix 4-45) Figure 4.5.9-1 Augmentation of Distribution System

(3) Cost and Price of Electricity

There are several data for sales costs of KSEBL. The average cost of supply significantly varies in Kerala on account of increased/decreased hydro generation due to good monsoon, and related increase/decrease in power purchase cost.

Based on the previous ARR petition made, KSEBL submitted and projected an average cost of supply of 6.66, 5.63 and 6.27 INR/U for FY 2012, 2013, and 2014.

Table 4.5.9-1 Average Cost of Supply for FY 2012-2014

source; ARR and ERC Petition by KSEBL for 2014-2015, KSEBL, May, 2014 (Appendix 4-47)

In 2016, KSEBL has analyzed the billing cost for FY2014 and FY2015 as 5.03 INR/U and 4.98 INR/U (Domestic 3.39 INR/U and others 6.72 INR/U) with projected cost for FY 2016-2018 as 4.93- 4.89 INR/U.

Table 4.5.9-2 Average Billing Cost for FY 2015-2018

source: Power for All, Kerala, KSEBL, Feb., 2016 (Appendix 4-45)

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Rs/kWh 4.98 4.93 4.91 5.00 4.89

4.50 4.05 3.90 4.00 3.84 3.85

3.50 Avarage billing rate Power purchase cost 3.00 FY15-16 FY16-17 FY17-18 FY18-19

source: Kerala Power for All (Appendix 4-45) Figure 4.5.9-2 Average billing rate, Power purchase cost

Furthermore, we get the replies from the State government through this research as follows;

 The average cost of supply during 2015-16 was Rs.5.85/kWh and the average realization is Rs.5.41/kWh.

(Rupee/kWh) 16 14 12 10 8 6 4 2 0

Max (All India) Min (All India) Kerala (State DISCOM) source: CEA, Electricity Tariff & Duty and Average rates of electricity supply in India, March 2015 Figure 4.5.9-3 Average electricity prices by sector (comparison)

(4) AT & C Loss

KSEBL has been consistently reducing Transmission and Distribution losses in the Kerala power system. KSEBL has been able to reduce T&D losses by half from 30.76 % in FY 2001-02 to 15.30 % in FY 2012-13. A 0.35 percent reduction during the 2012 allowed the savings over 1,500 Crore.

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Table 4.5.9-3 Reduction in cost of Generation and Power Purchase due to T&D loss reduction

source; ARR and ERC Petition by KSEBL for 2014-2015, KSEBL, May, 2014 (Appendix 4-47)

From SRLDC, Kerala T&D Loss at 2014-15 was 14.17 %, and 2015-16 was 14.35%, which was relatively low in the southern grid.

Table 4.5.9-4 T&D Loss in southern states

2014-15 2015-16 Andhra Pradesh 12.82 10.85 Karnataka 14.93 14.6 Kerala 14.17 14.35 Tamil Nadu 22.02 - Telangana 12.92 12.69 Puducherry 12.09 11.05

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

KSEBL targets T&D losses in the state to be decreased to 10.00 % in FY 2018- 19 from 10.80 % in FY 2014.

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Table 4.5.9-5 Distribution Loss Trajectory

(%) 16.0 15.60 15.30 15.00 14.50 14.0 T&D Losses

AT&C Losses 12.0 10.80 10.50 10.25 10.00 10.0 10.00

8.0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source: Kerala Power for All (Appendix 4-45) Figure 4.5.9-4 AT&C Losses, T&D Losses

(5) Financial Position of Discom, KSEBL

1) Financial Situation

KSEBL is a combined entity for generation and distribution in whole Kerala. After unbundling of the erstwhile Kerala State Electricity Board (KSEB) in October 2013, Govt. of Kerala revested all the assets & liabilities of the Board in new Company i.e KSEBL. The Govt of Kerala issued the final transfer scheme by issuing a new balance sheet for KSEBL as on 01.11.2013. The last reported profit as per provisional financial statements of the Board (from 01.04.2013 to 31.10.2013) was 140.41 Crores with accumulated profit of 2,348.74 Crores. However after taking over the assets & liabilities of the board by KSEBL with a revised value, KSEBL reported loss of 29.46 Crores for the period 01.11.2013 to 31.03.2014 making its accumulated loss of 32.73 Crores as on 31.03.2014 (as per provisional accounts of 2013-14).

However, against above, according to the KSEBL petition, KSEBL estimated the actual

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un-bridged revenue gap upto 2016 amount to 5,975.36 Crores.100 KSEBL has been complaining considerable revenue gap, as lesser tariff has been approved by KSERC and levied.

Table 4.5.9-6 ARR & ERC Trajectory by KSEBL

source: suo-motu determination of tariff for 2016-17, June, 2016 (Appendix 4-48)

2) State Subsidy or Discoms

KSERC vide order dated 30-09-2014 had approved the transmission charges, wheeling charges, cross subsidy surcharge payable by open access consumers as follows. KSEBL requested KSERC to review the cross subsidy surcharge and to allow additional surcharge to be recovered from open access consumers.

100 (source; suo-motu determination of tariff for 2016-17, June, 2016) (Appendix 4-48)

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Table 4.5.9-7 Suo-motu determination of tariff for 2016-17

source: suo-motu determination of tariff for 2016-17, June, 2016 (Appendix 4-48)

3) Application of UDAY Scheme

Kerala has decided to join the UDAY scheme in July 2016. Kerala presumes with UDAY scheme the interest rate on balance 25.0% to be charged at 9.0%. However, in the scenario Kerala has made exhibits that even after substantial cleaning up of the accumulated loans under UDAY scheme, there would be need of tariff hike of 4.6% in each year from FY 2016-17 to FY 2018-19 in order to have a deficit turnaround by FY 2018-19.

(6) Power Market and Trade

In the KSEBL petition, about 85% to 90 % of total power purchase is done on long term power purchase contracts based on the tariffs fixed by KSERC. The quantity of power purchased on short term basis is only 10% to 15% of the requirement. KSEBL considers at present the price in short term market is highly fluctuating and does not indicate long term firm market and cannot be relied for assessing future power purchase cost.

Power procurement through traders and long term contract /medium Term contract/short term contract for the year 2016-17 is summarized below.

KSEBL contracted 200 MW RTC through traders at 3.406 INR/U from 01.03.2017 to 30.06.2017 on short term basis from PTC, for the high demand during summer months.

KSEBL also procured 100 MW evening peak power (from 18.30 hrs to 22.30 hrs) and 50 MW from 05.00 hrs to 18.30 hrs and 22.30 hrs to 24.00 hrs for the month of May-2016.

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Table 4.5.9-8 Power procurement through traders and long term contract /medium Term contract/short term contract for the year 2016-17

source: Public notice for the purpose of determination of tariff for electricity for the financial year 2016-17 in suomoto proceedings, KSEBL, July, 2016

KSEBL is power surplus during monsoon months (June to December). The open access consumers generally avail open access facility during that period when the energy prices in the short-term market is less than the prevailing tariff. The energy demand in the state is usually less by 15 to 20% during monsoon, summer months.

During monsoon months, KSEBL schedules to maximize 750 to 800 MW run-off the river plants as base load plants since the variable cost of hydel is practically nil. However, about 1,550 MW power may be available from CGS during monsoon months and about 1,315 MW long term/medium term contract with traders are in effect, KSEBL is liable to pay fixed cost in the event of non-scheduling of power when consumers pursue open access. During the year 2015-16, about 135.25 MU was availed through open access from outside by embedded consumers and KSEBL had to surrender this much power with revenue loss 35.94 Crores. The fixed cost liable to the existing PPA commitment for non-scheduled power was 17.31 Crores.

Thus, KESBL requests it appropriate that an additional cross subsidy surcharge may be applicable to open access consumers.

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4.6 TAMIL NADU STATE (TN)

Map source: Indian Renewable Energy & Energy Efficiency Database

4.6.1 Political Situation

The Tamil Nadu legislative assembly election was held in Tamil Nadu in 2016. Jayaram Jayalalitha created history by being the first incumbent chief minister since 1989 to return to power in the state. She now holds the record for being the chief minister of the state for six times. Jayalalitha's AIADMK (All India Anna Dravida Munnetra Kazhagam) won 134 seats and main opposition party DMK (Dravida Munnetra Kazhagam) bagged 89 seats. Result of assembly election is shown in Table 4.6.1-1. (This should be noted the chief minister passed away in December 2016.)

Table 4.6.1-1 Result of Assembly Election in 2016

Party Seats won Vote % All India Anna Dravida Munnetra Kazhagam 134 40.8 % Dravida Munnetra Kazhagam 89 31.6 % Indian National Congress 8 6.4 % Others 1 21.2 % Total 232 100% source: Election Commission of India101

101 http://eci.nic.in/eci/eci.html, etc.

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4.6.2 Economic Situation

(1) General

Tamil Nadu Industrial Guidance & Export Promotion Bureau has been set up with the objective of attracting major investment proposals into Tamil Nadu.

Tamil Nadu is an important IT hub. It is one of the largest software exporters by value in India. IT exports from Tamil Nadu increased from US$ 7.1 billion in 2007-08 to US$ 13.4 billion in 2014-15, at a growth rate of 9.5 %.

A large number of textile mills and engineering units are present around the city of Coimbatore. The districts of Coimbatore, Tirupur and Erode are referred to as the ‘Textile Valley of India’.

Over the decades, Tamil Nadu has seen major investments in the automotive industry, particularly in cars, railway coaches, tractors, motorcycles, automobile spare parts and accessories, tyres and heavy vehicles. The automotive industry plays a crucial role in driving the state’s economy.

Key industries in Tamil Nadu

- Textiles - Heavy commercial vehicles - Automobile and auto components - Engineering - IT and ITeS - Cement - Banking and financial services - Drugs and pharmaceuticals - Agro and food processing - Leather tanning industries - Electronic hardware - Tourism

1) Gross State Domestic Product (GSDP)

GSDP of Tamil Nadu State occupies 8.5 % of total GSDP in 33 states in India in 2013-14 and ranked as the second largest economy, following Maharashtra State. The State’s GSDP in 2014-15 at constant prices was 515,457 Crores. Growth of GSDP at factor cost is shown in Table 4.6.2-1.

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Table 4.6.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 40,341,573 43,323,803 44,794,362 48,061,805 51,545,756 Increase --- 7.4 % 3.4 % 7.3 % 7.2 % source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India102

2) Structure of industry (against GSDP)

In 2014-15, the tertiary sector contributed 63.7 % to the state’s GSDP at current prices, followed by the secondary sector at 29 %. Growth of the tertiary sector was driven by trade, hotels, real estate, finance, insurance, transport, communications and other services, while the secondary sector growth mainly driven by manufacturing and construction. Percentage distribution of GSDP is shown in Table 4.6.2-2.

Table 4.6.2-2 Percentage Distribution of GSDP for 2014-15

Item Distribution Tertiary 63.7 % Secondary 29.0 % Primary 7.3 % source: IBEF, 2015 (www.ibef.org)

(2) Economic Policy / Development Policy

The State Government has formulated Five State Missions and Eleven Special Focus Areas of Development for achieving through multi-disciplinary and multi-departmental co-ordination. The Five State Missions are:

- Mission for water resource management and revival of Kudimaramath - Mission for housing to achieve hut-free villages and slum-free cities - Mission for poverty reduction and economic empowerment of poor - Mission for clean Tamil Nadu - Mission for skill development The Eleven Special Focus Areas of Development are: - Agriculture and allied sector development - Strengthening urban infrastructure - Tourism promotion - Promote Micro, Small and Medium Enterprises - Infrastructure development including roads, power, minor ports, irrigation and drinking water - Industrial investment through corridor based development and improving ease of doing business - Education to all with focus on quality

102 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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- Health for all - Social security with focus on women and children - Strengthening urban transportation - Governance and transparency In addition, Tamil Nadu State has elaborated the following development policies:

Highways and Minor Ports Policy 2014-15 - To develop infrastructure for the overall improvement of the economy of the state. - To augment the traffic capacity of state roads, widening works of all Intermediate Lane State Highways to Double Lane and all Single Lane Major District Roads to Intermediate Lane - To avoid traffic congestion

Tamil Nadu Industrial Policy 2014 - To improve industries of high technology including aerospace, nanotechnology etc., in Tamil Nadu. - Work for speedy industrialization of districts in the southern part of Tamil Nadu. - To attain comprehensive and maintainable industrial growth in Tamil Nadu

Tamil Nadu Information Technology Policy 2014-2015 - To raise the exports of software from Tamil Nadu and provision of cable TV services at reasonable rates to all Tamil Nadu households; - To provide Tamil education through the web and take computing in Tamil to a higher level; - To enhance the quality of life of citizens through information and communication technology.

Micro, Small and Medium Industries Policy 2014-15 - To develop MSMEs in the state. - To enhance joint ventures of private industries with new industrial estates such as SIDCO to encourage the export of products of MSMEs in the state.

Tamil Nadu Biotechnology Policy 2014 - Thorough record of bio-resources to be engaged in the state. - To invite R&D institutions and manufacturing firms.

Tamil Nadu Disaster Management Policy - To develop a new culture of prevention, preparedness and quick response to disasters. - To reduce the vulnerability of the community through proper risk assessment.

Tamil Nadu Automobile and Auto Components Policy 2014 - To promote competitiveness and cut costs for the industry. - To address the specific organizational gaps and scarcities. - To develop the talent pool to meet the skilled manpower requirements of this industry

(3) Financial Situation

The state enacted the Tamil Nadu Fiscal Responsibility Act, 2003. The main provisions of the Act are:

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- To reduce the ratio of fiscal deficit to Gross State Domestic Product every year by 0.25 per cent to 0.30 per cent beginning from financial year 2002-2003 with medium term goal of not being more than 3 % of fiscal deficit to Gross State Domestic Product to be attained by 31st March 2012 and adhere to it thereafter. - The State Government shall take suitable measures to ensure greater transparency in its fiscal operations, in public interest, in the preparation of the Budget. - The Budget and policies announced at the time of the budget, shall be consistent with objectives and targets specified in the Medium Term Fiscal Plan for the coming and future years. Trend for fiscal management is shown in Table 4.6.2-3.

Table 4.6.2-3 Trend for Fiscal Management (Percent) Item 2013-14 2014-15 2015-16 2016-17 Target(16-17) Revenue deficit / GSDP -0.2 -0.4 -0.4 -0.7 0.0 Fiscal deficit / GSDP -2.4 -2.8 -2.9 -2.92 -3.5 Total debt stock / GSDP 21.0 21.0 21.2 19.6 21.72 source: State Finances A Study of Budget of 2015-16, RBI; Interim Budget 2016-2017

(4) Foreign Investment

1) Transition of Foreign Direct Inflow (FDI)

Foreign Direct Inflow (FDI) equity inflows received by RBI’s regional office in Chennai, which covers states of Tamil Nadu and Pondicherry, is as shown in Table 4.6.2-4. The amount has been increasing steadily.

Table 4.6.2-4 Transition of FDI Unit: Crores Rupees (US$M) Cumulative Percentage of Year 2013-14 2014-15 2015-16 (2000-2016) total inflow Amount 12,595 23,361 29,781 118,547 7 % (2,116) (3,818) (4,528) (21,542) source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion103

2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.6.2-5.

103 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf

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Table 4.6.2-5 Transition of Japanese Firms Year 2011 2012 2013 2014 2015 Number 286 344 498 541 577

source: Embassy of India in Japan104

4.6.3 State Budget and Financial Situation of Executing Agency

(1) Power Sector Budget105

The following provisions have been made for energy sector, according to the Revised Budget 2016-2017 highlights:

- 13,000 MW of thermal power, 2,500 MW of hydel power and 3,000 MW of solar energy will be added to the existing power generation capacity in the State in the next five years. - An amount of Rs.1,738 Crores has been included for various works taken up under the JICA assisted Tamil Nadu Transmission System and KfW assisted Green Energy Corridor Project in the Revised Budget 2016-2017. - The announcement of free power up to 100 units to all 191 lakh domestic consumers will cause an additional commitment of Rs.1,607 Crores every year to the State Government. - Free power to Handloom and Powerloom weavers has been enhanced to 200 units and 750 units respectively. The power subsidy has increased to Rs.9,007 Crores in the current financial year. - An amount of Rs.2,000 Crores has been provided in the Revised Budget 2016-2017 for repayment of TANGEDCO’s debt takeover under the Financial Restructuring Plan.

(2) Financial Situation of Executing Agency

Executing agency of pumped storage projects is Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO). TANGEDCO is a power generation and distribution company which owns and operates both thermal and hydro power plants. As with the cases of typical power distribution companies in India, the tariff is not enough to cover the cost, therefore, it is obliged to operate at a loss. A tariff hike of 37 % was admitted in FY 2012-13, however, it was not enough to erase its chronic deficits. Financial situation of TANGEDCO is shown in Table 4.6.3-1.

104 http://www.in.emb-japan.go.jp/Japanese/2015j_co_list.pdf 105 http://www.tnbudget.tn.gov.in/budgethighlights.pdf

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Table 4.6.3-1 Financial Situation of TANGEDCO 2011-12 2012-13 2013-14 Sale of Power (MU) 54,338 53,238 60,867 Total Income (Crore) 20,827 27,010 29.7% 31,611 17.0% Total Expenditure 36,220 43,147 19.1% 50,581 17.2% Profit beforeTax -13,321 -11,679 -12.3% -13,985 19.7% Profit after Tax -13,321 -11,679 -12.3% -13,985 19.7% Cost Structure (Crore) Power purchase 21,035 58.1% 25,741 59.7% 30,529 60.4% Generation cost 6,102 16.8% 6,397 14.8% 7,546 14.9% Employee cost 3,764 10.4% 3,599 8.3% 4,183 8.3% O&M cost 310 0.9% 378 0.9% 524 1.0% Interest cost 3,588 9.9% 4,462 10.3% 6,780 13.4% Depreciation 616 1.7% 647 1.5% 723 1.4% Admin & Gen Exp 189 0.5% 211 0.5% 238 0.5% Other Expenses 615 1.7% 1,711 4.0% 58 0.1% Total 36,219 43,146 50,581 Return on Equity -292.06 -180.70 -174.20 Return on Networth -60.30 -36.80 -31.75 Return on Capital Employed (Crore) -70.69 -49.13 -30.41 Debt Equity Ratio -1.56 -1.42 -1.50 source: Report on "The Performance of State Power Utilities for the years 2011-12 to 2013-14", 2015 PFC

4.6.4 Power Sector Overview

The Tamil Nadu government has estimated power supply in Tamil Nadu eventually turns to a surplus position in FY2016-17.

The State has a huge potential for Renewables, and MNRE has allotted a large amount of additional renewables to the State106.

The State is willing to introduce pump storage projects to balance the excess power available during off peak hours and to tide over the peak hour shortage, in the coming years. Three Pumped storage schemes are on the cutting board of the plan.

106 8,884 MW in solar, 11,900 MW in wind (Report of the Expert Group on 175GW RE by 2022, NITI Aayog, Dec., 2015)

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2000MW

Figure 4.6.4-1 Tamil Nadu state power sector feature

4.6.5 Power Supply Structure

(1) Institutions

Tamil Nadu Electricity Board (TNEB) was restructured in 2008 by establishing a holding company with the name "TNEB Ltd" and two subsidiary companies namely "Tamil Nadu Transmission Corporation Ltd." (TANTRANSCO) and "Tamil Nadu Generation and Distribution Corporation Ltd." (TANGEDCO).

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Policy Tamil Nadu Department of Energy Regulation Tamil Nadu Electricity Regulatory Commission (TNERC) Power Tamil Nadu Electricity Board Ltd.(TNEB) is a parent company Generation of TANGEDCO and TNTRANSCO Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) Transmission Tamil Nadu Transmission Corporation Ltd. (TNTRASCO) Dispatch State Load Dispatch Centre (SLDC) Distribution Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO)

(2) Supply Structure

On 1st July 1957, Tamil Nadu Electricity Board came into being and has remained the energy provider and distributor all these years. After 53 years of journey the Tamil Nadu Electricity Board was restructured as per G.O.114 dated 08.10.2008 by establishing a holding company with the name "TNEB Ltd" and two subsidiary companies namely "Tamil Nadu Transmission Corporation Ltd.," (TANTRANSCO) and "Tamil Nadu Generation and Distribution Corporation Ltd.," (TANGEDCO) as per the mandatory requirements of the Electricity Act 2003. Accordingly TNEB Ltd., was formed on 01.11.2010.

TANGEDCO IPP Central

TANTRANSCO

TANGEDCO

consumer consumer consumer consumer

Physical flow Commercial flow

source: Web site of each organization Figure 4.6.5-1 Electricity Supply Structure

(3) The State’s Original Power Policy

RE Tamil Nadu Solar Energy Policy 2012 Tamil Nadu Industrial Policy 2014 In additions, there are several regulations, policies in Tamil Nadu,

 TNERC (Terms and Conditions for Determination of Tariff) Regulations, 2005 Vision Tamil

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Nadu, 2023, Gov. of TN, Mar., 2012, with its amendments,  Twelfth Five Year Plan Tamil Nadu, Nov., 2012,  “TNERC (Renewable Energy Purchase Obligation) Regulations, 2010, Dec., 2010”  “TNERC, Suo-Motu Determination of Tariff for Generation and Distribution, Dec., 2014”  “Order on Pooled Cost of Power Purchase payable by TANGEDCO for the year 2015-16, March, 2016”  “TNERC, Renewable Energy Purchase Obligation Regulations, 2010 (amendment), March, 2016”  “TNERC, Comprehensive Tariff Order on Solar Power, March, 2016”  “TNERC, Comprehensive Tariff Order on Wind Energy, March, 2016”

(4) Executing agency

Executing agency of pumped storage projects is Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO).

4.6.6 Power Supply /Demand Scenario

As of FY 2015, the Tamil Nadu state has experienced the actual peak demand 14,190 MW and energy requirement 97,277 MU, whereas the peak met 14,171 MW and the energy availability was 96,586 MU. It was peak deficit of 0.1% and energy deficit 0.7%.107 CEA shows the state was in the deficit in FY 2015 still, but has been improving. Since June 2015, no power restriction has been imposed on the industry.

In Feb., 2016, the state government announced that they transformed to power surplus state. The state announced that they had added 4,455.5 MW to the grid by commissioning new power projects (note: as shown below) and procured 3,030 MW through medium and long term Power Purchase Agreements in the last five years, and reached an all-time high peak energy consumption of 303.04 MU met on 8th July, 2015.

On supply side management, a massive capacity addition programme has been undertaken by expediting the completion of ongoing projects and starting new projects.

At the time of the commencement of the Twelfth Plan period the capacity addition of 2,039.5 MW was expected from the ongoing State projects viz., Small and Mini Hydro Projects-56.5 MW, North Chennai Thermal Power (NCTPS) Stage II (Units 1 and 2) – 1200 MW, Mettur Thermal Power Stage III – 600 MW. Other than the projects under State sector, two joint venture projects, one with Neyveli Lignite Corporation (NLC) (2x500 MW) at Tuticorin and another with National Thermal Power Corporation (NTPC) (3x500 MW) at Vallur were taken up.

107 Load Generation Balance Report 2016-2017, CEA, May, 2016, (Appendix 4-3)

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Energy Reqirement MU Energy Availability % 100,000 Surplus/Deficit 20 Surplus/Deficit (%) 90,000 15 80,000 11.2 10 70,000 5 60,000 -6.5 -3.1 50,000 -0.7 0 -6.2 -5.9 40,000 -5 30,000 -10 20,000 -10.5 -17.5 10,000 -15 0 -20 FY2009-10 FY2010-11 FY2011-12 FY2012-13 FY2013-14 FY2014-15 FY2015-16 FY2016-17 source : CEA Load Generation Balance Report (Appendix 4-1,2,3) Figure 4.6.6-1 Energy Supply

Peak Demand MW % Peak Availability 4.8 18,000 Surplus/Deficit 5.0 16,000 Surplus/Deficit (%) 14,000 -1.5 -0.1 0.0 12,000 10,000 -5.0 8,000 -11.0 -7.6 6,000 -11.8 -10.0 4,000 2,000 -13.2 0 -15.0 -2,000 FY2009-10 FY2010-11 FY2011-12 FY2012-13 FY2013-14 FY2014-15 FY2015-16 FY2016-17 -4,000 -17.5 -20.0

source : CEA Load Generation Balance Report (Appendix 4-1,2,3) Figure 4.6.6-2 Peak Demand

The below was the demand prospect in Tamil Nadu made in 2011 in the 18th Electricity Power Survey.

It is attached as there is no up to date demand prospect of Tamil Nadu, however, it is worthwhile to some extent as it assumed the growing population and the prevailing industry projections then.

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Table 4.6.6-1 Energy and Demand Projection

(Forecast on constant CAGR figure of 4%) source : the 18th Electric Power Survey, CEA, Dec., 2011)

(1) Features of Peak Load

As for month-wise, demand peak is in March and has been increasing in late years. According to time of the day, hourly peak demand appears in the evening, at 8 p.m. The demand difference between maximum and minimum is about 3,000MW, in March 2016.

Southern regional demand is relatively flat compared with other regions. The demand gap in the southern region was about 6,000MW.

MW 15000

14000

13000

12000

11000 FY2015 FY2016 FY2017

10000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source : CEA Load Generation Balance Report (Appendix 4-1,2,3) Figure 4.6.6-3 Monthly Peak Demand

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source: Southern Regional Load Despatch Center Monthly Report March 2016 (Appendix 4-8) Figure 4.6.6-4 Tamil Nadu Hourly Demand Curve on Maximum Regional Demand Day (21.3.2016)

source: Southern Regional Load Despatch Center Monthly Report March 2016 (Appendix 4-8) Figure 4.6.6-5 Southern Region Hourly Demand Curve on Maximum Day (21.3.2016)

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source: POSOCO Large Scale Integration of Renewables at EEC Conference, 31 August 2015 Figure 4.6.6-6 Regional Geographical Diversity

(2) Frequency Profile in southern region

The Indian Electricity Grid Code (IEGC) has been set in 49.9 Hz-50.05 Hz since February 2014. Looking at the frequency in the southern region in 2015-16, keeping the IEGC range is only 60-7 0% of time through the year. The cases of more than 50.05 Hz are often observed from winter to spring, and the cases of less than 49.9 Hz are conspicuously seen in September.

On the maximum demand day and the minimum demand day in 2014-15, the frequency greatly fluctuated.

% time

100% 90% 80% 70% >50.05 60% 50% 49.9-50.05 40% <49.9 30% 20% 10% 0% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source : Southern Regional Load Despatch Center Quarterly Report in 2015-16 (Appendix 4-11,12,13,14) Figure 4.6.6-7 Frequency of Southern Region in 2015-16

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source : Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9) Figure 4.6.6-8 Load Curve and Frequency Curve of Southern Region on Maximum day in 2014-15

source : Southern Regional Power Committee Annual Report in 2014-15 (Appendix 4-9) Figure 4.6.6-9 Load Curve and Frequency Curve of Southern Region on Minimum day in 2014-15

(3) Load Factor in Tamil Nadu

Load factor data shows that the average annual load tends to be increasing after 2012 (differences between yearly average demand and peak demand grow less). In addition, the demand has been bottom-raised every year judging by Demand Duration Curve. The whole southern region has also shown the same trend, the slight increase in load factor of 2015-16 compared to 2014-15

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source : POSOCO Electricity Load Factor in Indian Power System Figure 4.6.6-10 Load Factor of Tamil Nadu

source: POSOCO, Electricity Load Factor in Indiana Power System Figure 4.6.6-11 Load Factor of southern region

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4.6.7 Generation

(1) Installed Capacity

According to CEA, total generation capacity / availability of power as on March, 2016 for the state of Tamil Nadu is 25,394 MW. Out of total 25,394 MW, 44.40 % is from Coal based Thermal, 8.59 % Hydro, 4.04 % is from Gas Based Thermal, 1.62 % is Diesel Based Thermal, 3.88 % from Nuclear and as large as 37.46 % is from Renewable Energy Sources.

To satisfy the energy needs of the State, Tamil Nadu Generation and Distribution Corporation Limited has installed capacity of 7,599 MW, Central share 5,142 MW, and Private Power Projects 12,653 MW (as of March, 2016).

As of July, 2016, total generation capacity has increased 26,259 MW, but only added 266 MW of renewables from March, 2016 (below).

Main IPPs are as follows;

1. PPN Power Generating Company Private Limited - Largest Independent Power Project in the State of Tamil Nadu, supplying, under a long term Power Purchase Agreement, its entire generation, reliably and consistently for more than a decade, to TANGEDCO. The company owns and operates a 330.5 MW Gas cum Naphtha fired, Combined Cycle Power Plant at Villages Pillaiperumalnallur and Manickapangu, Tharangambadi Taluk, Nagapattinam District, Tamil Nadu. The plant has been in operations since April 2001.

2. Periyar Energy Limited - established under the Energo Group to develop 2x300 MW Thermal Power Project in Thoothukudi, Tamil Nadu, based on Group Captive Model as set forth by the extant policies of the Ministry of Power, GOI. The Project will derive its revenue by selling power to captive consumers whereas the surplus power from the power plant will be fed to the Grid in Tamil Nadu.

Central, 5,142 State, RE 7,599 37% Coal 45% 26,259MW

Hydro Private/I 8% Nuclear Gas PPs, 4% Diesel 4% 13,519 2%

source: CEA Monthly Report Figure 4.6.7-1 Installed Capacity by Owners and Fuel

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The trend of the Tamil Nadu state installed capacity is given below. Coal thermal sources contribute to nearly half of the capacity, and grow 12% annually. Hydro occupies 10% but for years hasn’t grown at all. Renewable capacity holds a large portion, 37% of the total capacity in Tamil Nadu and show 8-10 % annual growth.

The private powers contribute most of the capacity growth consisting coal thermal (2,350MW), gas (503 MW), and most of the part, in renewables (9,389 MW) in Tamil Nadu.

source : JICA team, from CEA monthly report Figure 4.6.7-2 Installed Capacity History by Fuel

source : JICA team, from CEA monthly report Figure 4.6.7-3 Installed Capacity History by Ownership

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The State owned Power capacity is shown below.

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(2) Power Generation

In term of energy, coal thermal is vast dominant in generated electricity in Tamil Nadu. State Hydro amounts only 6 %. As shown in the exchange energy drawals, it indicates a large portion (41,079 MU) was procured from the southern grid (ie. indicating outside of the state) for meeting the state demand. Furthermore, the southern region itself has increased imports of power from outside regions greatly (38,000 MU in 2015-16).

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(GWh) 90,000 Central- Nuclear 80,000 Central- Hydro 70,000 Central- Natural gas 60,000 Central- Coal 50,000 Private- Hydro 40,000 Private-Natural gas 30,000 Private- Oil Private- Coal 20,000 State- Hydro 10,000 State- Natural gas 0 State- Oil State- Coal

source : CEA Monthly Report Figure 4.6.7-4 Power generation in Tamil Nadu

source: CEA Monthly Report Figure 4.6.7-5 Generation by Owners and Fuel

Table 4.6.7-1 Bilateral Exchanges and Drawals from the (southern) grid, for the year 2015-16

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

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source: Load Generation Balance Report, CEA (Appendix 4-1,2,3), OPERATIONAL PERFORMANCE REPORT THE MONTH OF MARCH 2016, POSOCO) Figure 4.6.7-6 Regional Export/Import

(3) Plant Load Factor

The Plant Load Factors (PLFs) of state thermal plants have been 70 % or less on average. Private TPS were lower. The thermal power stations of TANGEDCO were 14.81 % in Ennore TPS (450 MW), 76.79 % in Tuticorin TPS (1,050 MW), 81.01 % in Mettur (stage-I, II, 840MW), 74.49 % in Mettur stage-III (600 MW), 80.39 % in North Chennai (stage-I, 630 MW), 61.65 % in (stage-II, 1,200 MW) 59.98% in Neyveli TPS (600 MW). Privates merchant plants located in Tamil Nadu were, 31.45 - 44.68 % in Coastal Energen, Mutiara B(600 MW x 2), 57.55% in IL & FS, Cuddalore(600 MW).

Table 4.6.7-2 Plant load factor of Tamil Nadu and southern states

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

(%) 100 95 90 85 80 75 State- Coal 70 Private- Coal 65 Central- Coal 60 55 50 45 40 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

source : CEA Plant load factor of Coal-fired power Figure 4.6.7-7 Plant load factor of Coal-fired power in Tamil Nadu

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(4) Cost of Power Generation

On Dec., 2014, TNERC issued the Determination of Tariff based on Multi Year Tariff petition for 2013-14 to 2015-16 along with tariff revision for 2014-15. It is considered to cover Control Period i.e. 2013-14 to 2015-16.

It defines average State Generation cost as 4.12 INR/U, CGU as 3.34 INR/U, Renewables 3.48 INR/U, IPP as 7.16 INR/U, totaling 3.82 INR/U as an average approved cost.

However, in the interview with TNERC, they commented the FY2014-15 purchase cost was 5.77 INR/U, and billing price as 5.74 INR/U, incurring 0.03 INR/U deficits.108

The approved purchase cost by TANGEDCO for 2014-15 is summarized below.

Table 4.6.7-3 Cost of Generation Determined by TNERC for FY 2014-15 (summary)

Fixed Cost Variable Cost Total Cost State Thermal 1.01 3.42 4.43 State Gas 1.63 2.86 4.50 State Hydro 1.82 0.00 1.82 State Wind 2.75 0.00 2.75 Total State 1.15 2.96 4.12 Total Centrals 0.96 2.38 3.34 Non-Conventional Energy (NCE) Wind 3.41 3.41 Biomass 4.25 4.25 Cogen 3.59 3.59 Captive 3.75 3.75 Solar 5.37 5.37 Total NCE 3.48 3.48 Total IPPs 1.43 5.73 7.16 Case-I biddings 2.03 2.91 4.94 Total Purchase Cost 0.98 2.96 4.13 ALLOWED TOTAL COST (disallowance corre cte d from 1.04 2.58 3.82 Me rit Orde r De spatch) source : JICA team, from Summary of ARR determination of TANGEDCO for 2014-15, TNERC, Dec. 2015 (Appendix 4-52)

108 Interviews with TNERC, at July, 2016

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Table 4.6.7-4 Cost of Generation Determined by TNERC for FY 2014-15

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source : Summary of ARR determination of TANGEDCO for 2014-15, TNERC, Dec., 2015 (Appendix 4-52)

TANGEDCO had been purchasing high cost of private IPP generations, against Merit Order Dispatch, against TNERC Orders. TANGEDCO claimed that state is preventing load shedding. However, it reportedly decided to discontinue short-term power purchase agreements expiring on May 31, 2016. The decision was taken due to the availability of surplus power and wind power increase. It reportedly

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stated the price of electricity from the power exchange would be in the range of 4 and 4.50 INR/U at its highest during peak hours, and cheaper than ST power.

The state government had applied the norms that powers produced by private players in the state must be sold only to the government. But with the additional supply of powers, the state also relaxed it and allowed private players can sell outside Tamil Nadu.109

(5) Power Development Plan

Currently, the government has commenced work on the following projects.

a. 1 x 660 MW Ennore Expansion Power Project, b. 2 x 660 MW Ennore SEZ Power Project and c. 1 x 800 MW NCTPS Stage-III Power Project And initiated action to establish new projects such as d. 2 x 800 MW Uppur Thermal Power Project and e. 5 x 800 MW Kadaladi Thermal Power Project in Ramanathapuram District, f. 2 x 660 MW Udangudi Thermal Power Project in 32 Tuticorin District, g. 1 x 660 MW Ennore Replacement Thermal Power Project, h. 4 x 125 MW Kundah Pumped Storage Hydro Power Project and i. 4 x 500 MW Sillahalla Hydroelectric Project. Only with above projects, projects with 2,780MW are ongoing, and projects with 10,080 MW are planned coming up. TANGEDCO commented that the state intends to develop 13,000 MW in 5 years.

The project status as of July, 2016 is shown below.

Table 4.6.7-5 Project Status of Tamil Nadu

Programme of Name Capacity Estimate cost (in INR) Funding Agency commissioning Thermal Power Projects Financial tie up is 2,475 Crores Commercial Operation NCTPS-Stage-II Unit-1 1x600 MW made with REC by (EPC cost) Declaration on 20.3.2014 M/s. BHEL 2,211.105 Crores Commercial Operation NCTPS-Stage-II Unit-2 1x600 MW M/s.REC (EPC cost) Declaration on 08.05.2014 3,114.71 Crores Commercial Operation MTPS Stage-III 1x600 MW M/s.PFC (EPC cost) Declaration on 12.10.2013 The project is expected to

ENNORE SEZ 2x660 MW 7,688 Crores M/s PFC be commissioned in March 2018. project is expected to be ETPS Expansion project 1x660 MW 3,921.55 Crores M/s PFC mmissioned in January 2018. project is expected to be NCTPS Stage-III 1X800 MW 6,376 Crores M/sBHEL mmissioned in July 2019.

109 Hindu Chennai, 24, June, 2016, http://www.thehindu.com/news/cities/chennai/Private-players-get-nod-to-sell-power-outside-Tamil-Nadu/article14398796.ec e

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project is expected to be M/sBHEL UPPUR 2X800 MW 12,778 Crores mmissioned in Sptember (For BTG) 2019. Hydro Power Projects Unit I & II synchronised on

Periyar Vaigai 3 SHEP 2X2 MW 75 Crores M/s.PFC 11-09-2013 & 09-10-2013 respectively

Periyar Vaigai 4 SHEP 2x1.25 MW 57.07 Crores M/s.PFC October 2014 Bhavani Barrage 1 HEP 2x5 MW 185.81 Crores TANGEDCO September 2014 Unit I & II synchronised on Bhavani Barrage 2 HEP 2x5 MW 187.61 Crores TANGEDCO 26.10.2012 & 29-10-2012 respectively. Joint Venture Projects 29/11/2012, unit-1 NTPC TNEB Energy Co. 3x500 MW 10080.50 Crores M/s.REC 25/08/2013, unit-2 Ltd.(NTPC-TNEB joint venture) 26/02/2015, unit-3 NLC Tamil Nadu Power Bank of Baroda 18/06/2015, Unit-1 2x500 MW 6602.74 Crores Ltd(NLC- TNEB joint venture) consortium 29/08/2015, Unit-2

New Projects- Thermal

New Projects- Hydro source; Gov. TN, interim budget speech, Feb, 2016

The status summary of the projects listed in the TANGEDCO websites is summarized below.

1) New Project for Thermal plants

Table 4.6.7-6 New Thermal Project

source: TANGEDCO

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2) New Project for Hydro

source: TANGEDCO

3) New Project for Nuclear Plants

The second unit of Kudankulam Nuclear Power Plant (capacity:1,000MW) is scheduled to begin commercial operation in December this year. The units 3 and 4 will begin power production by 2022-2023.110

(6) Renewable Energy

1) Existing and Additional capacity

Of the total renewable energy capacity of about 32,730MW installed all over India, Tamil Nadu alone has about 8326.86MW, thus about 25.44% of the total installed capacity. In the important sector of wind energy, this number is even more dominant, with Tamil Nadu having about 34.31% of the total wind energy installed capacity in India. 111

In the last two years, the solar power sector has grown in significance across India reaching 6,7762 MW (as of March, 2016). Tamil Nadu has set the Tamil Nadu Solar Policy 2012. Through these schemes, Tamil Nadu aims solar power at 3,000 MW in 5 years.112 However it had been the same target of solar as at 2015 in the Tamil Nadu Solar Policy 2012. The Solar power has not grown in Tamil Nadu so far. As of March, 2015, it has only 420MW of solar capacity.

110 The Economics Time of India 2016.9.5 111 This statement derived from TEDA website. From the CEA data March, 2016 it is TN Renewable 9,512 MW, 22.2 % of total Renewables installed 42,849 MW. 112 Gov. TN, interim budget speech, Feb, 2016.

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(MW) 10,000 9,000 419 17 98 8,000 123 12315 123 123 7,000 97 5 6,000 Solar 5,000 90 Small hydro 90 7,515 4,000 6,988 7,162 7,270 5,904 Wind 3,000 4,907 4,305 Wastes 2,000 1,000 Biomass 0 334 396 488 533 539 571 662

source: CEA Monthly Report Figure 4.6.7-8 Generation Capacity of Renewables

source: MNRE Annual Report 2015-16 Figure 4.6.7-9 Tentative State-Wise RE targets by 2022

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2) Renewable Purchase Obligation

Tamil Nadu has issued several policies and regulations for renewables energy.

 “TNERC (Renewable Energy Purchase Obligation) Regulations, 2010, Dec., 2010”  “Tamil Nadu Solar Policy 2012”  “TNERC, Suo-Motu Determination of Tariff for Generation and Distribution, Dec., 2014”  “Order on Pooled Cost of Power Purchase payable by TANGEDCO for the year 2015-16, March, 2016”  “TNERC, Renewable Energy Purchase Obligation Regulations, 2010 (amendment), March, 2016”  “TNERC, Comprehensive Tariff Order on Solar Power, March, 2016”  “TNERC, Comprehensive Tariff Order on Wind Energy, March, 2016”

TNERC has revised RPO and increased its values. TNERC, Renewable Energy Purchase Obligation Regulations, 2010 (amendment), March, 2016 has defined RPO as follows.

Table 4.6.7-7 RPO (as of 2015)

Year Captive Open Access Solar Non Solar 2015 Y Y 2% 9% Policy Summary 2015-16 9.00%(Non Solar), 2.00%(Solar) source: Indian Renewable & Energy Efficiency Database 113

Table 4.6.7-8 RPO (2015-2018)

Year Solar Total RE 2015/16 0.5% 9.5% 2016/17 2.5% 11.5% 2017/18 5.0% 14.0% source: Renewable Energy Purchase Obligation Regulations, 2010 (amendment), 7th March, 2016

3) Purchase Price

TNERC (Renewable Energy Purchase Obligation) Regulations, 2010 defines that “generating company of renewable energy can sell the electricity generated either.

(i) to the Discoms in the TN at a price not exceeding the ‘pooled cost’ of power purchase, or (ii) to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price. ‘Pooled cost of power purchase’ means the weighted average pooled price at which the distribution licensee has purchased power, but subject to the maximum of 75% of the preferential tariff fixed by the Commission.

TNERC had announced in Dec., 2014 that the generator can sell generators power at 3.35 INR/U

113 http://ireeed.gov.in/

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or 75 % of the preferential tariff fixed by the TNERC from the 1st April 2015, as it had released the Pooled Cost of Power Purchase for the year 2015-16 as 3.35 INR/U. Since then the revised Pooled Cost seems not released.

As for the preferential tariffs, TNERC has been revising them time to time. The Tariff defined by TNERC at the moment is as follows.

Table 4.6.7-9 Feed-in Tariff (2013-2015)

Year Technology Tariff Without Accelerated Tariff With Depreciation Accelerated Depreciation 2013 Solar Thermal 15.51 12.16 2013 Wind 3.51 2015 Solar PV 7.01 6.28 2015 Solar Thermal 11.03 9.88 source: Indian Renewable & Energy Efficiency Database

Table 4.6.7-10 Feed-in Tariff (2016)

Year Technology Tariff Without Accelerated Tariff With Depreciation Accelerated Depreciation 2016 Wind 4.16 3.70 2016 Solar PV 5.10 4.56 2016 Solar Thermal 11.12 9.95 source: Comprehensive Tariff Order on Wind Energy, March, 2016, “TNERC, Comprehensive Tariff Order on Solar Power, March, 2016

(7) Countermeasures for Variable Renewable Energy

There is widespread popular support for using renewable energy, particularly solar and wind energy, which provide electricity without giving rise to any carbon dioxide emissions.

Harnessing these for electricity depends on the cost and efficiency of the technology, which is constantly improving, thus reducing costs per peak kW. Utilizing electricity from solar and wind in a grid requires some back-up generating capacity due to their intermittent nature. Policy settings to support renewables are also generally required to confer priority in grid systems and also subsidize them.

Utilizing solar and wind-generated electricity in a stand-alone system requires corresponding battery or other storage capacity. The possibility of large-scale use of hydrogen in the future as a transport fuel increases the potential for both renewables and base-load electricity supply.

1) Standpoint of Pumped Storage

State of Tamil Nadu is willing to introduce pump storage project to balance the excess power available during off peak hours and to tide over the peak hour shortage in the coming years.

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TNEB has proposed new generation projects for the next 5 years. TNEB has fully exploited the hydroelectric potential available in the state. Three Pumped storage schemes are on the cutting board of the plan.

Table 4.6.7-11 Pump Storage Projects

Priority Location Capacity Stage 1st Kundah 500 MW DPR Completed ICB Preparation for phase 1 2nd Shillahalla 2,000 MW DPR (phase 1) ongoing (almost completed)

(8) Ease of Land/ Right of Way Acquisition for power projects

According to the Revenue department policy note 2015-2016 subsequent to The Government of India recently enacted Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (No.30/2013) (RFCTLARR Act), repealing the erstwhile Land Acquisition Act, 1894, the Government of Tamil Nadu has passed the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Tamil Nadu Amendment) Act, 2014 (Act No.1 of 2015) to continue land acquisition under the earlier Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997 and hence streamline the adoption of the central act along with the existing state act but providing for better compensation as per the central act.

(9) Key state regulations on environmental & social issues

No such regulation are found for key state regulations on environmental & social issues which may have serious influence on PSP or hydro promotions both of quality and quantity as specified by state government level.

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source : Southern Regional Power Committee Figure 4.6.7-10 Power Map of Tamil Nadu

4.6.8 Transmission

(1) Transmission Network

Transmission sector of TANTRANSCO consists of the following network infrastructure:

 EHT for a total length of 30,387 ckt.kms.  A total of 915 substations. More than 95 Substations in and around Chennai have been provided with SCADA and have been integrated into Chennai Distribution and control center (DCC)

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 One State Load Dispatch Centre at Chennai and 3 Sub LDCs at Chennai, Madurai and Erode. In 2016, the state government has given budget to add 252 new sub-stations along with 7,452 circuit kilometers of High Tension lines at a total cost of 4,010 Crores.

source: JICA team, from Policy Note of Energy Department - 2016-2017 Figure 4.6.8-1 Augmentation of Transmission System

Table 4.6.8-1 Substations 66kV & above and EHT lines in the existing network as on 30.06.2016

No.of Sl.No Rating EHT lines substations 1 400 kV 6 Nos. 2 230 kV 90 Nos. 3 110 kV 813 Nos. 4 66 kV 6 Nos. Total 915 Nos. 5 EHT lines 30,387.916 ckt.kms

source: Policy Note of Energy Department - 2016-2017

KfW the Green Energy Corridor Project has been taken up at an outlay of 1,593 Crores and the JICA assists ‘Tamil Nadu Transmission System Improvement Project’ with an outlay of 5,014 Crores. The state has spent 9,639.36 Crores in last five years for strengthening transmission infrastructure in the State.114

The transmission network expansion is aimed at evolving a national power grid to facilitate free flow of power across regional boundaries, raising the transmission voltage from 230 kV to 400 kV level. In order to evacuate bulk power from one region to another region, there is scope for enhancing the transmission capability to 765 KV level. Tamil Nadu Electricity Board has taken up the indigenous

114 Source: State Finances A Study of Budget of 2015-16, RBI; Interim Budget 2016-2017

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erection of 400 KV substations and lines. Establishment of 765 KV transmission lines is also under investigation.

The Government of India has approved nondiscriminatory open access to the transmission system to all generators for injecting power and to any consumer to carry the power from the point of injection to his load. To augment the power supply, the Government of Tamil Nadu has also permitted third party sale of power produced by IPPs, CPPs & other private power producers through short term Intra-State open access to HT consumers within Tamil Nadu as it will provide an incentive to the generators within the State to produce to their full capacity.

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Table 4.6.8-2 400 kV Transmisson Lines

source : TANTRANSCO

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source : Southern Regional Power Committee Figure 4.6.8-2 765kV / 400kV Power Map of Southern Region

(2) Transmission Loss

Tamil Nadu is one of the few states in the country with lower T&D losses as compared to the national average figures (25 %). The AT&C losses have been in the region of 18 -20 percent on an average over the last 20 years in the state.

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Table 4.6.8-3 T&D Loss in Tamil Nadu

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

In 2014-15 Tamil Nadu recorded T&D Loss at 22.02%, which was relatively high in the southern grid. However, it was well below the average T&D Loss in India (25%).

Table 4.6.8-4 T&D Loss in southern states

2014-15 2015-16 Andhra Pradesh 12.82 10.85 Karnataka 14.93 14.6 Kerala 14.17 14.35 Tamil Nadu 22.02 - Telangana 12.92 12.69 Puducherry 12.09 11.05

source; Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10)

4.6.9 Distribution

An efficient network is needed for effectively utilizing the energy that is generated. TANGEDCO has an efficient network that has grown over the years.

Growth from 1957 : ・ Consumer base 4.3 lakhs to about 264.67 lakhs ・ Number of Distribution transformers from 3773 to 2,46,748 nos. ・ Length of LT lines from 13,055 kms to 5.98 lakh kilometers ・ Peak demand from 172 MW to 13,775 MW ・ Per capita consumption from 21 units to 1,228 units

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Others Industrial 9% 3%

Commercial 13% 24.4 million Agriculture 8% Domestic 67%

source : Energy Department Policy Note 2013-14 Figure 4.6.9-1 Total Number of Customers

(1) Rural Electrification

1) Village Electrification (Nos.)

Total inhabited villages 15049 Balance Un-electrified Villages as on 31.05.2016 0

2) Household Electrification (Nos. in Lalhs)

Tatal Rural Households 95.63 Balance Un-electrified as on 21.05.2016 0.16

source : Power of Ministry

(2) Expansion of Distribution Network

During the year 2015, 1,633nos. 33 kV substations have been erected at a cost of 75.51 Crores, 11,121 kms of LT lines and 3,548 kms of HT lines have been energized. TANGEDCO had also effected service connections to 8.23 lakhs new consumers in the year 2015-16.

During 2016-17, upto June 2016, 1 no. 33kV substation at a cost of 3.19 Crores, 1,865 kms of LT lines and 678 kms of HT lines have been energized and effected 1.93 lakhs new service connections.

Actual most recent number of consumers as of June 2016 was 27.219 Mil, from 24.4 Mil on 2013-14.

TANGEDCO has taken the following measures to strengthen the distribution infrastructure.

 Re-conductoring : TANGEDCO replaces the existing aged HT/LT lines at 1,054.22 Crores. Works under progress and will be completed by March 2018.  Conversion of overhead lines into underground cables TANGEDCO converts HT and LT overhead lines into HT and LT underground cables in

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cyclone prone coastal towns by loan of 360 Crores.  Strengthening of distribution network through R-APDRP Part-A (IT) has been implemented in 100 towns out of 110 towns. Data acquisition (SCADA)/Distribution Management System (DMS) Control Centres commissioned in 7 towns. Part-B (new substations, HVDS, RMUs, APFC panels) was installed to reduce the AT&C losses to the target 15% in 100 towns for 3,445.10 Crores.  Integrated Power Development Scheme (IPDS) IPDS was funded by MoP/GoI. It is implemented with the objectives (i) 24x7 Power supply for all, (ii) AT&C Losses reduction, (iii) Electrification of all urban households. The works approved for an amount of 1,561.31 Crores.  Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) Government of India has launched DDUGJY for the rural areas with following components (i) Strengthening and augmentation of subtransmission & distribution (ST&D), (ii) Rural electrification. MOP, Government of India has approved 924.12 Crores.

(3) Cost and Price of Electricity

Verbally, TNERC commented the FY2014-15 purchase cost was 5.77 INR/U, and billing price as 5.74 INR/U, incurring 0.03 INR/U deficits.115

The 2016 Tariff Order was defined for the Tariff of each consumer categories as under the table below.

Chief Minister made new promise during the election campaign of provision of free 100 units of power for all domestic consumers in the State. This free tariff (Tariff I-A in the below table) for less than 100 units was not in the former 2014-15 tariff order. It is estimated that the state government would have to pay an additional subsidy of 1,637.05 116Crores to TANGEDCO.

It is noticeable that there contains large subsidies to small domestic livings and agricultural categories. There are consistent huge revenue gaps in Tamil Nadu for Distribution companies.

115 Interviews with TNERC, at July, 2016 116 http://www.tnerc.gov.in/orders/Tariff%20Order%202009/2016/SUBSIDY%20ORDER%202016-17.pdf

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Table 4.6.9-1 Determined Tariff by TNERC for 2016 until issue of the next order

TARIFF FIXED BY TNERC TARIFF PAID BY THE CONSUMER

Demand Charge Demand Charge Tariff cate gory Consumers Ene rgy Charge Ene rgy Charge (INR/kVA/mont (INR/kVA/mont Subsidy (INR/U) (INR/U) h) h)

High Tension Supply Consumers Tariff IA Industries, Registered factories, Textiles,Tea estates, IT services etc., 350 6.35 350 6.35 Tariff IB Railway Traction 300 6.35 300 6.35 Govt. and Govt. aided Educational Institutions and hostels, Government Hospitals, Tariff IIA 350 6.35 350 6.35 Public Lighting and Water supply, Actual places of public worship etc.,

Tariff IIB Private Educational Institutions & Hostels 350 6.35 350 6.35 All other categories of consumers not covered under HT-I-A, I-B, II-A, II-B, IV Tariff III 350 8.00 350 8.00 and V Lift Irrigation societies for Agriculture registered under Co-op Societies Tariff IV Nil 6.35 Nil Nil fully subsidized by state or under any other Act.(Fully subsidised by the Govt.) HT Temporary Supply for construction and other temporary purposes and start Tariff V 350 11.00 350 11.00 up power provided to generators.

TARIFF FIXED BY TNERC TARIFF PAID BY THE CONSUMER

Tariff cate gory Consumers Fixed Charge Ene rgy Charge Fixed Charge Ene rgy Charge Subsidy (INR/month) (INR/U) (INR/month) (INR/U)

Low Tension Supply Consumers Consumption Domestic/Residential purposes upto 100 units 30 3.00 0 0.00 fully subsidized by state*) (100 units free scheme) Tariff I-A bi-monthly Domestic , Handloom, Old age homes, Consulting rooms, Nutritious Meals 30-50 3.25-6.60 20-50 0.00-6.60 some subsidized by state Centres etc. This tariff is applicable to livings in Village (Fully w/o meter 290 Nil Nil Nil Tariff I-B fully subsidized by state subsidised by the Govt.) w/t meter Nil 4.95 Nil Nil L.T. Bulk supply to residential Colonies of Railway, Defence , Police quarters Tariff I-C 120 4.60 120 4.60 etc.

Tariff II-A Public lighting by Govt./Local bodies, Public water supply, Sewerage etc., 120 6.35 120 6.35 Govt and Govt. aided Educational Institutions, Govt. Hospitals and Research labs, Tariff II-B(1) 120 5.75 120 5.75 etc Tariff II-B(2) Private Educational Institutions & Hostels 120 7.50 120 7.50 0-120 120 5.75 120 2.85 Tariff II-C Actual Places of Public worship(Bi-monthly) some subsidized by state 60-120 120 5.75 120 5.75

Cottage and Tiny Industries, Agricultural and allied activities, Sericulture, 0-500 40 4.00 40 4.00 Tariff III-A(1) Floriculture, Horticulture and Fish/Prawn culture etc. (upto 10HP)(Bi-monthly)

251-501 40 4.60 40 4.60 0-500 120 5.20 0 0.00 fully subsidized by state 501-750 120 5.75 0 0.00 Tariff III-A(2) The tariff is applicable to Power looms 751-1000 120 5.75 79 2.30 1001-1500 120 5.75 70 3.45 1501- 120 5.75 79 4.60 Industries(Not covered under LT-III-A(1) & III-A(2) ) , If the connected load of Tariff III-B all industries in LT-III-A(1) & III-A(2) exceeds 10HP, welding sets and IT 6.35 70 6.35 services etc., Agricultural, sericulture, floriculture, horticulture and fish/prawn culture w/o meter 2875 Nil Nil Nil Tariff IV fully subsidized by state etc., Till installation of meters (Fully subsidised by the Govt.) w/t meter Nil 3.22 Nil Nil 50-100 140 5.00 140 5.00 Tariff V Commercial 50->100 140 8.05 140 8.05 For temporary activities, construction of buildings and Lavish illumination, Tariff VI additional construction of beyond 2000 square feet in the premises of an existing 690 12.00 690 12.00 consumer. (*) N l i t d d i th El ti i 2016

source: JICA team, from TANGEDCO website

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Rs/kWh Avarage Cost of Supply 7.00 Average Revenue Realized 6.82 5.68 6.00 5.96 5.04 4.79 5.00 4.95 3.98 4.00 3.31 3.32 3.26 3.51 3.80

3.00

2.00 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

source: India Energy Forum, 5th September 2014 Figure 4.6.9-2 ACS Vs ARR Gap

(Rupee/kWh) 16 14 12 10 8 6 4 2 0

Max (All India) Min (All India) Tamil Nadu (State DISCOM)

source : CEA Electricity Tariff & Duty and Average rates of electricity supply in India, March 2015 Figure 4.6.9-3 Power purchase rate & Average Billing Costas

(4) AT & C Loss

AT&C Loss of Tamil Nadu was summarized in the Transmission Loss category. The AT&C losses have been in the region of 18 -20 percent on an average over the last 20 years in the state. In order to reduce it, energy auditing should be made compulsory for all electricity consumers with a connected load (for example, of more than 10 kW by 2017-2020).

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(%) 25

20

15

10 TANGEDCO

5

0 FY2013 FY2014 FY2015 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2012 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 source: Ministry of Power Integrated Power Development Scheme Figure 4.6.9-4 AT&C Losses Target

(5) Financial Position of Discom, KSEBL

1) Financial Situation

With a debt of 80,000 Crores TANGEDCO is among the top three debt-laden Discoms in the country.

The state has emphasized the revenue deficit of TANGEDCO in 2014-15 was 12,756.59 Crores and it has been reduced to 8,542.12 Crores during 2015-16, subsequent to the implementation of revenue augmentation and cost control measures by TANGEDCO. 117 But it was criticized the reduction was due to coal price reduction. While the state government has been helping it out by taking over loans, it is only recent year that the power utility has slowly begun to clean up its act.

TANGEDCO has revised tariffs and managed to bring down its revenue gap to zero. Lack of agricultural metering is a cause of concern on the revenue front since subsidies will be dependent on that parameter and also on accurate estimation of AT&C Losses. Along with revenue realization, however, power procurement cost optimization will be crucial for the state to keep the power purchase costs under control and achieve its financial gap targets. 118

The gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR) per unit produced is still unsustainably high (see the above figure). To ensure commercial viability of TANGEDCO, TN state government should either ensure tariff hike required for full recovery of costs or should make good the shortfall in projected turnover as per Financial Restructuring Program like UDAY (as for UDAY, TN joined as on Jan. 9th, 2017). The FRP should also be backed with strengthening of institutional capacity and empowerment of the state owned

117 ENERGY DEPARTMENT POLICY NOTE 2016-2017. 118 Power Sector Operations and Impact on State Finances; August 2014, Presented by AF-MERCADDOS ENERGY MARKETS INDIA PVT.LTD

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utilities.119

2) State Subsidy for Discoms

As the revenue loss becomes large the smooth tariff revision is vital in Tamil Nadu. Though the revision has been made, the gap of realized tariff and cost of supply has been arisen. From the gaps it is obvious that the TANGEDCO is making loss for every unit of sale.

Yet, free supply to agriculture and hut consumers have been and will be continued and electricity charges be paid by the state government of Tamil Nadu as subsidies. Further, from 2016, below poverty line consumers who consume below 100 units bi-monthly will be subsidized fully for that amount. It has been criticized as the measures of “election campaigns”.

TANGEDCO in their letter dated 13-06-2016 stated that the Government of Tamil Nadu has provided 7,370.33 Crores in the Budget Estimate for FY2016-17 towards tariff subsidy payable to TANGEDCO. As mentioned, the new free tariff (Tariff I-A) for less than 100 units reportedly would require further additional subsidy of 1,637.05 Crores120.

3) Application of UDAY Scheme

Although Tamil Nadu holds huge Discom debts it has not entered the UDAY scheme as of Oct., 2016. Previously, the Chief Minister had kept requested that the government of India should consider the request of Tamil Nadu government "positively" over the Uday scheme. She had requested REC and PFC, Central PSUs to provide loans for revenue and capital expenditure, and also for new power projects proposed by the state. The Chief Minister requested the Prime Minister Modi that to ensure that Tamil Nadu finances are not adversely affected while taking over TANGEDCO's debt and that “not a single provision of Uday will adversely affect Tamil Nadu”.

The central Power Ministry Goyal had said in Delhi that Central will not be in a position to accede to the state's demand for special concessions to join UD AY.

As such, the “tug of war” over UDAY between the Central government and Tamil Nadu has been continuing for many months (as of Dec. 2016)121

(6) Power Market and Trade

Tamil Nadu has merely export power outside of the state, and import amount of generation power outside of the state. It imported 4,072 MU from within the southern region (Intra-region), and 9,731 MU from outside the southern region (Inter-region). But the state TANGEDCO merely utilized short term exchange market (IEX, PIX) with purchase of 307 MU. The major trade

119 India Energy Forum , 5th September 2014 ; Power sector: Status , challenges and way ahead presented by ICRA Management Consulting Services Ltd. (Appendix 4-49) 120 http://www.tnerc.gov.in/orders/Tariff%20Order%202009/2016/SUBSIDY%20ORDER%202016-17.pdf 121 As on Jan 9th, 2017, MOP released Tamil Nadu joined the UDAY as 21th state. It may suggest the changes in the state after Chief secretary had passed away., Press Information Bureau, GOI, MOP, http://pib.nic.in/newsite/PrintRelease.aspx?relid=156231

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(4,072 MU, 9,731 MU) were made through Bilateral Short Term Open Access. The number of Open Access consumers in IEX counts 805, the largest among all the states in India.

It may imply the trade has been mostly bound by bilateral trade, though IEX trends fluctuate or get low. At the same time, it also indicates TANGEDCO is not able to purchase sufficient quantity of power from IEX, PIX in view of non-availability of Inter-State Transmission Corridors. The IEX market price in the southern market (S1 and S2) has fallen drastically since Jan. 2016 by 2 INR/U (thanks to the synchronization of 5 regions) but still contains price gap against the other 4 regions prices.

As shown in the Purchase Cost of power, the allowed cost of purchase for 2016 is in average 3.82 INR/U. TANGEDCO had been criticized to have been purchasing high short term OA power such as captive power plant at 5.05 INR/U not adhering to the Merit Order system. But due to the availability of surplus power, the state government has allowed private players can sell outside Tamil Nadu and has reportedly decided to discontinue short-term power purchase.122 Therefore the traded price may change in coming future.

source; JICA team, from Southern regional Power Committee Annual Report, March, 2016 (Appendix 4-10) Figure 4.6.9-5 Details of Intra / Inter Regional Scheduled Bilateral Exchanges during 2015-16

122 Hindu Chennai, 24, June, 2016

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(20160331 Report on Short-term Power Market in India 2015-2016, CERC, March, 2016) (Appendix 2-83) Please note that before Jan. 2016 S1, S2 price were even higher by 2 INR/U than the other grid markets Figure 4.6.9-6 Region-wise and Block-wise Price of Electricity Transacted through IEX, 2015-16

(20160331 Report on Short-term Power Market in India 2015-2016, CERC, March, 2016) (Appendix 2-83) Figure 4.6.9-7 State-wise Number of Open Access Consumers in IEX as on March 2016

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4.7 WEST BENGAL STATE (WB)

Map source: Indian Renewable Energy & Energy Efficiency Database

4.7.1 Political Situation

The West Bengal assembly election was held in 2016. Incumbent chief minister Mamata Banerjee and her party Trinamool Congress emerged victorious with a resounding majority. Having toppled the 34-year old Left Front government in the historic 2011 Assembly elections, Mamata's party managed to replicate its success with a better performance in 2016. Unlike 2011, when the TMC contested in alliance with the Congress and won 184 seats, it fought alone against the Left-Congress combine this time and bagged 211 seats out of the total 294 assembly seats. The Congress was a distant second with just 44 seats while the Left got 33. Result of assembly election is shown in Table 4.7.1-1.

Table 4.7.1-1 Result of Assembly Election in 2016 Party Seats won Vote % All India Trinamool Congress 211 n/a Indian National Congress 44 n/a Communist Party of India (Marxist) 26 n/a Others 12 n/a Total 293 100% source: Election Commission of India123

123 http://eci.nic.in/eci/eci.html, etc.

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4.7.2 Economic Situation

(1) General

The natural resources, policy incentives and infrastructure in the state support investments in major sectors such as iron and steel, biotechnology, coal, leather, jute products, tea, IT, gems and jewelry. The state has 3,000 acres of land at its disposal to set up industries. Climatic conditions suitable for cultivation of tea and jute have made West Bengal a major center for these products and related industries. West Bengal occupies a predominant position in the development of micro and small scale enterprises. The state has 3.5 million working micro, small & medium enterprises (both registered & unregistered) providing employment to around 8.6 million persons.

Key industries in West Bengal - Tea - Petroleum and petrochemicals - Leather - Iron and steel - IT - Mineral resources - Automobile and auto components - Biotechnology - Fisheries - Agriculture and horticulture - Livestock and dairy products - Chemicals - Textiles - Jute products - Vegetable oils - Electronics - Engineering goods

1) Gross State Domestic Product (GSDP)

GSDP in 2014-15 at constant prices was 398,387 Crores. GSDP of West Bengal State occupies 6.6 % of total GSDP in 33 states in India in 2013-14 and ranked as the 5th largest economy in all states. Table 4.7.2-1 shows transition of GSDP at factor cost.

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Table 4.7.2-1 Gross State Domestic Product at Factor Cost (Constant Price) (unit: Lakh Rs) State 2010-11 2011-12 2012-13 2013-14 2014-15 GSDP 30,883,705 32,341,698 34,777,383 37,179,504 39,838,651 Increase --- 4.7 % 7.5 % 6.9 % 7.2 % source: Handbook of Statistics on Indian States, 2016, Reserve Bank of India124

2) Structure of industry (against GSDP)

The percentage share in GSDP in 2015-16 is dominated by Services sector with 63.84% whereas, Industry and Agriculture sectors followed up with 22.08 % and 14.08 % respectively. Services sector therefore grew marginally from 62.79 % and Industry sector declined marginally from 22.20 % from 2014-15 to 2015-16. Sector share of GSDP is shown in Table 4.7.2-2.

Table 4.7.2-2 Sectoral Share of GSDP (Percent) Item 2011-12 2012-13 2013-14 2014-15 2015-16 Agriculture, Forestry & Fishery 16.79 16.16 15.60 15.01 14.08 (annual growth) --- 4.00 5.78 6.49 5.58 Industry 22.31 22.24 22.17 22.20 22.08 (annual growth) --- 7.72 9.17 10.85 11.99 Services 60.90 61.60 62.23 62.79 63.84 (annual growth) --- 9.31 9.54 10.69 12.59 Total annual growth --- 8.07 9.54 10.69 12.59 note: Provisional for 2013-14; Quick for 2014-15; Advance for 2015-16 source: Finance Department, WB

(2) Economic Policy / Development Policy

State Budge 2016-17 has a priority in Panchayat and Rural development department, the agriculture and agricultural marketing department and the irrigation & waterways department. The State had set a record in terms of expenditure in the social sector, increasing rural development budget four times, health budget three times, minority development budget five times and agricultural budget three times, and creating planned expenditure for women and child welfare.

In addition, West Bengal State has elaborated the following development policies:

Micro, Small and Medium Enterprises Policy 2013 - To create a sustainable ecosystem in the MSME sector which can maximize the utilisation of resources, and to widen the area of operation to make the state emerge as the MSME leader in the country in the next ten years.

124 https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20States

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Investment Industrial Policy West Bengal 2013 - To eliminate systemic bottlenecks in the process of Industrialization in the state.

- To improve the ease of doing business.

West Bengal Policy on Information & Communication Technology 2012 - To become one of the leading states in India in the IT & ITeS and Electronic System Design and Manufacturing (ESDM) sectors and to enable West Bengal to transform into a knowledge-driven welfare society with extensive use of IT & ITeS in governance and in the daily lives of the people of the state.

West Bengal ICT Incentive Scheme 2012 - To promote IT/ITeS projects of large, medium, small, and micro units to be set up in the state.

West Bengal Biotechnology Policy 2013 - To bring in related industries and services of this growth industry, geared to revenue streams and payback, and appropriate business model.

- To map, conserve and sustainably use bio-resources, particularly those which are unique to the state.

(3) Financial Situation

West Bengal Fiscal Responsibility and Budget Management (FRBM) Act, 2000 prescribes that the State government shall progressively reduce the debt stock, revenue deficit and fiscal deficit to specified targets by financial year 2014-15. Since such figures were yet to be met by 2014-15, the targets may be put in extension for future years without bringing any necessary amendment to the Act. Thus, the target for fiscal management is expected to be complied with the figures estimated for the latest budget.

Table 4.7.2-3 Transition of Fiscal Management (Percent) Item 2013-14 2014-15 2015-16 2016-17 Target (16-17) Revenue deficit / GSDP -2.70 -2.14 -1.03 0.00 0.00 Fiscal deficit / GSDP -3.62 -3.41 -2.68 -1.96 -3.00 Total debt stock / GSDP 35.99 34.66 32.46 33.72 36.24 note: Revised estimate for 2015-16; Budget estimate for 2016-17 source: Finance Department, WB125

125 http://www.wbfin.nic.in/Page/budget.aspx

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(4) Foreign Investment

1) Transition of Foreign Direct Inflow (FDI)

Foreign Direct Inflow (FDI) equity inflows received by RBI’s regional office in Kolkata, which covers states of West Bengal, Sikkim, Andaman & Nicobar Islands, is shown in Table 4.7.2-4. The amount has been increasing steadily.

Table 4.7.2-4 Transition of FDI Unit: Crores Rupees (US$M) Year 2013-14 2014-15 2015-16 Cumulative Percentage of (2000-2016) total inflow Amount 2,659 (436) 1,464 (239) 6,220 (955) 20,847 (3,936) 1 % source: Fact Sheet on Foreign Direct Investment, Dept. of Industry Policy and Promotion126

2) Transition of Japanese Firm in the state

Number of office established by Japanese firms in the state is shown in Table 4.7.2-5.

Table 4.7.2-5 Transition of Japanese Firms

Year 2011 2012 2013 2014 2015 Number 67 75 96 168 189 source: Embassy of India in Japan127

4.7.3 State Budget and Financial Situation of Executing Agency

(1) Power Sector Budget128

West Bengal Finance Minister presented a limited deficit budget for 2016-17, which did not impose any new taxes, even as it announced administrative reforms to step up ease of business, while announcing relief measures for the salaried class and development initiatives in the education sector.

The Finance Minister also announced significant allocations to the Panchayat and Rural development department (the highest amount), the agriculture and agricultural marketing department and the irrigation & waterways department.

Minority Affairs & Madrasha Education, school education, health and family welfare, women and social welfare have also been allocated large sums in the budget.

As to the power sector, allocated amount is shown in Table 4.7.3-1.

126 http://dipp.nic.in/English/Publications/FDI_Statistics/2016/FDI_FactSheet_JanuaryFebruaryMarch2016.pdf 127 http://www.in.emb-japan.go.jp/Japanese/2015j_co_list.pdf 128 http://www.wbfin.nic.in/Page/budget.aspx

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Table 4.7.3-1 State Plan Expenditure (Crores Rs) Item 2014-15 2015-16 2016-17 (Actual) (Revised) (Budget) Power & Non-Conventional Energy Sources 1,275.35 1,552.64 1,498.00

source: State Budget 2016-17

(2) Financial Situation of Executing Agency

Executing agency of pumped storage projects in West Bengal State is West Bengal State Electricity Distribution Company Limited (WBSEDCL). WBSEDCL is a power generation and distribution company which owns and operates hydropower plants. Their total income barely exceeds total expenditure. This represents that the business structure of the company has a potential of profit making, however, due to the characteristic of hydropower generation, the income should inevitably depends on the weather condition. On the other hand, figures for loan management indicate acceptable results, though not excellent: Interest coverage ratio of 1.46 to 1.68, fluctuating around 1.5, which is generally considered to be a bare minimum acceptable ratio. Debt Service Coverage Ratio of 1.21 to 1.33. A DSCR greater than 1 means the entity has sufficient income to pay its current debt obligations. Table 4.7.3-2 shows financial situation, and Table 4.7.3-3 shows financial index of WBSEDCL.

Table 4.7.3-2 Financial Situation of WBSEDCL

2011-12 2012-13 2013-14 2014-15 2015-16 Sale of Power (MU) 22,201 25,069 12.9% 25,396 1.3% Total Income (Crore) 14,173 17,500 23.5% 17,880 2.2% 19,583 9.5% 18,548 -5.3% Total Expenditure 14,070 17,391 23.6% 17,850 2.6% 19,553 9.5% 17,140 -12.3% Profit beforeTax 103 108 4.9% 30 -72.2% 30 0.0% 30 0.0% Profit after Tax 73 82 12.3% 19 -76.8% 20 5.3% 22 10.0%

Cost Structure (Crore) Power purchase 11,568 82.2% 14,495 83.3% 14,316 80.2% 15,529 79.4% n/a n/a Generation cost 1 0.0% 0 0.0% 0 0.0% 0 0.0% n/a n/a Employee cost 1,097 7.8% 1,247 7.2% 1,171 6.6% 1,139 5.8% n/a n/a O&M cost 212 1.5% 239 1.4% 272 1.5% 290 1.5% n/a n/a Interest cost 687 4.9% 813 4.7% 1,078 6.0% 1,362 7.0% n/a n/a Depreciation 341 2.4% 396 2.3% 471 2.6% 619 3.2% n/a n/a Admin & Gen Exp 128 0.9% 133 0.8% 542 3.0% 606 3.1% n/a n/a Other Expenses 36 0.3% 68 0.4% 0 0.0% 8 0.0% n/a n/a Total 14,070 17,391 17,850 19,553 source: Report on "The Performance of State Power Utilities for the years 2011-12 to 2013-14", 2015 PFC; and WBSEDCL Annual Report 2011-2015 (Appendix 4-61)

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Table 4.7.3-3 Financial Index of WBSEDCL

2011-12 2012-13 2013-14 2014-15 Debt Equity Ratio 2.10 6.23 7.06 7.53 Current Ratio 1.41 0.99 1.18 1.05 Quick Ratio 1.32 0.93 1.12 1.01 Assets Turn over ratio 121 153 116 117 Interest coverage Ratio 1.68 1.64 1.46 1.48 Debe Service Coverage Ratio 1.26 1.33 1.21 1.23 Return on capital employed 2.73 2.91 2.33 2.77 Return on net worth 1.36 1.47 0.33 0.28 Net worth (crores) 5317 2096 2131 2126 source: WBSEDCL Annual Report 2011-2015 (Appendix 4-61)

4.7.4 Power Sector Overview

Power supply in West Bengal expects to be in a surplus position from FY2016-17129 and is going to keep this position till FY2019 (note that there is a counter prospect).130 The State Government is scheduled to set new renewable targets because the State’ s current targets have not reached to the Central targets. To stabilize its T&D network, the State takes the most of the existing PSP. The State is also going to introduce several Pumped Storage Projects down the line for the peak demand. One project has its DPR completed.

129 Power for All, 2016 130 CEA projects WB at 8,439 MU requirement against a peak availability of 8,138 MU in 2016-17. This puts the state to a 13.7% and 3.6% deficits for energy and peak demand respectively. from Load Generation Balance Report 2016-17, CEA, May, 2016

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2014-2015: CEA, 2016-2019: Power for All

Figure 4.7.4-1 West Bengal state power sector feature

4.7.5 Power Supply Structure

(1) Institutions

The process of reforms in power sector in West Bengal began in 2005, with restructuring of erstwhile West Bengal State Electricity Board (WBSEB) into the following Transmission and Distribution utilities in 2007:

a) West Bengal State Electricity Distribution Company Ltd. (WBSEDCL) b) West Bengal State Electricity Transmission Company Ltd. (WBSETCL)

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The generation function of erstwhile state utility has been organized under a separate entity, West Bengal Power Development Corporation Ltd. (WBPDCL), which is responsible for thermal power generation in the State, while hydro generation was being undertaken by the then WBSEB till the time of unbundling and currently transferred of hydro assets to WBSEDCL. Power distribution is also carried out by 4 other licensees in the State, apart from WBSEDCL.

Policy West Bengal Department of Power Regulation West Bengal Electricity Regulatory Commission (WBERC) Power West Bengal Power Development Corporation Ltd. (WBPDCL) generation West Bengal State Electricity Distribution Company Ltd. (WBSEDCL) Calcutta Electricity Supply Company Ltd.(CESC) Durgapur Projects Ltd.（DPL） Dishergarh Power Supply Company Ltd. (DPSC Ltd.) Damodar Valley Corporation(DVC) Transmission West Bengal State Electricity Transmisson Company Ltd. (WBSETCL) Dispatch State Load Dispatch Centre (SLDC) Distribution WBSEDCL CESC DPL India Power Co. Ltd. (IPCL), ex-DPSC Ltd. DVC

As for Renewables, West Bengal Rural Energy Development Corporation and West Bengal Renewable Energy Development Agency（WBREDA）have been established.

(2) Supply Structure

WBPDCL and WBSEDCL, owned by the State, have generating power in the state, and other entities viz. CESC, IPCL and DVC also own and operate power generation projects in the state. The State has five distribution licensees viz. WBSEDCL, CESC, DPL, DPSC and DVC.

WBPDCL WBSEDCL CESC etc. Central

WBSETCL

WBSEDCL CESE DPL DPSC DPSC

consumer consumer consumer consumer

Physical flow Commercial flow source: West Bengal Power for All (Appendix 4-62), Web site of each organization Figure 4.7.5-1 Electricity Supply Structure

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DPSC, 0.1%

CESE, 20.0%

DPL, 0.3% 13 million

WBSEDCL, 79.7%

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.5-2 Share of Distribution Companies by Number of Household Customers

(3) The State’s Original Power Policy

Renewables West Bengal Policy on Co-generation and Generation of Electricity from Renewable Sources of Energy 2012

 West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2011  West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2007  West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) (Amendment) Regulations, 2012 and West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) (Amendment) Regulations, 2013  WBERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) Regulations, 2013. March, 2013,  WBERC (Procedure for Accreditation of a Renewable Generation Project for REC Mechanism) Regulations, 2013, April, 2013,  WBERC (Cogeneration and Generation of Electricity From Renewable Sources of Energy) Regulations, 2013, March, 2013,

(4) Executing agency

Executing agency of pumped storage projects in West Bengal State is West Bengal State Electricity Distribution Company Limited (WESEDCL).

4.7.6 Power Supply /Demand Scenario

West Bengal is the 10th largest consumer of electricity accounting for nearly 4.38 % of total energy consumption in India. Owing to significant improvement in power supply, the State witnessed only

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0.5 % energy shortfall in FY2015, which is considerably lower than the national average energy shortfall of 3.6 %. In terms of peak power requirement as well, the State has performed significantly better than the national average, as the peak deficit has been below 1 % over the last 4 years.

In the interview, West Bengal state expresses the surplus will be reached in FY 2016.131

Considering the State has already achieved significant level of electrification over the past 5 years, the remaining urban and rural consumers are likely to be connected by FY2017.

The energy sales for WBSEDCL are expected to increase by about 20%, from 22,509 MUs in FY2015 to 26,955 MUs in FY2019.

Similarly for other utilities the expected growth in sales varies from 5-8%. At the State level, the overall energy requirement is projected to grow from existing 52,358 MU in FY2015 to 62,926 MU in FY2019, representing an annual growth of 5 % during the period.

This translates into increase in peak demand from existing 7,544 MW in FY2015 to 11,172 MW in FY2019.

source : 2014-2015: CEA, 2016-2019: Power for All (Appendix 4-62) Figure 4.7.6-1 Energy Supply FY2014-FY2019

131 In the interview made in Aug., 2016,

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source: 2014-2015: CEA, 2016-2019: Power for All (Appendix 4-62) Figure 4.7.6-2 Peak Demand FY2014-FY2019

These surplus projections are presented by West Bengal state in Power for All (Sep., 2016). However, there is a contradictory assessment by CEA.

As has been well known, India is expected to achieve an historical record when it transforms itself from a power deficit to a power surplus country in 2016 for the first time in decades. This assessment is brought out in the annual Load Generation Balance Report 2016-17 by CEA (Appendix 4-1,2,3). The emergence of surplus power is a turnaround of power, as the deficit levels had touched double digit levels a decade back. However, it is not that all regions see a surplus of electricity. The estimate of CEA shows that the major surplus goes to the gains made by the western and southern states. The western India will have a power surplus of 26,283 MU in 2016-17, the south will be 10,381 MU. In contrast the north east, northern and eastern regions will have deficits of 1,339 MU, 6,450 MU and 15,622 MU. The largest surplus in quantitative terms will be in Tamil Nadu (11,649 MU), Maharashtra (11,333 MU), Madhya Pradesh (8,853 MU), Delhi (5,774 MU), Gujarat (4,380 MU), and Karnataka (3,240 MU). The highest energy deficit will include Uttar Pradesh (7,044 MU), Bihar (6,656 MU), West Bengal (5,257 MW), Andhra Pradesh (4,136), Jharkhand (2,796 MU), Jammu and Kashmir (2,438), and Assam (2,082).

This puts the West Bengal state to a 13.7% and 3.6% energy and peak deficits respectively again in FY2016-17. The eastern region will have energy deficit -10.3% and peak surplus 4.9% in 2016-17. It is bringing the state out of the much touted power surplus status. Although West Bengal chief minister (Mamata Banerjee) claimed to have started exporting power to power starved states considering Bengal(2,082).3 MU), Madhya Pr the CEA figures points out to the need of importing power both during the peak and off peak periods.

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(1) Features of Peak Load

As for month-wise, demand peak is in March and has been increasing in late years. According to time of the day, hourly peak demand appears in the evening, at 7 p.m. The demand difference between maximum and minimum is about 2,800 MW, in March 2016. The demand gap in the eastern region was about 4,700 MW.

MW 9000

8000

7000 FY2015 FY2016 6000 FY2017

5000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

source: CEA Load Generation Balance Report (Appendix 4-1,2,3) Figure 4.7.6-3 Monthly Demand

source: Eastern Regional Load Despatch Center, Monthly Report March 2016 Figure 4.7.6-4 West Bengal Hourly Demand Curve on Maximum Regional Demand Day (29.3.2016)

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source: Eastern Regional Load Despatch Center Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.6-5 Regional Hourly Demand Curve on Maximum Regional Demand Day (29.3.2016)

source: Eastern Regional Load Dispatch Center, annual Grid report 2015-16 (Appendix 4-57) Figure 4.7.6-6 Year-wise Peak Demand of Eastern Region

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source: Eastern Regional Load Dispatch Center, Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.6-7 Monthly Peak Demand of Eastern Region

(2) Frequency Profile in eastern region

The Indian Electricity Grid Code (IEGC) has been set in 49.9Hz-50.05Hz since February 2014. Looking at the frequency in the eastern region in 2015-16, the cases of more than 50.05HZz were often observed from winter to spring, and the cases of less than 49.9Hz were conspicuously seen in September. There were less grid disturbances in West Bengal among all eastern states.

It is to note that the whole eastern region recorded energy generation of 151,980 MU during FY 2015-16 (which is 5.95% growth to that in FY 2014-15), and out of which 5,450 MU imported from Bhutan, 3,690 MU exported to Bangladesh, and 1,283 MU exported to Nepal. The portion has been small. The Eastern Bhutan is synchronized to the eastern grid, Bangladesh is asyncronized.

Table 4.7.6-1 Frequency Profile of Eastern Region in 2015-16

source: Eastern Regional Load Dispatch Center, Annual Grid Report 2015-16 (Appendix 4-57)

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source: Eastern Regional Load Dispatch Center, Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.6-8 Frequency Profile of Eastern Region in 2015-16

source: Eastern Regional Load Dispatch Center Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.6-9 Frequency Distribution of Disturbances

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source: Eastern Regional Load Dispatch Center Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.6-10 Month-wise Distribution of Loads & Generation Affected in Grid Disturbances

source: Eastern Regional Load Dispatch Center Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.6-11 Area-wise Impact of Grid Disturbances

(3) Load Factor in West Bengal

Load factor in West Bengal has slightly increased in recent years. The eastern region has also shown the same trend, the slight increase in load factor of 2015-16 compared to 2014-15.

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Electric Power Development Co., Ltd. 4-260 Data Collection Survey on Power Sector in India Final Report

source: POSOCO, Electricity Load Factor in Indiana Power System (Appendix 4-7) Figure 4.7.6-12 Load Factor of West Bengal

source: POSOCO, Electricity Load Factor in Indiana Power System (Appendix 4-7) Figure 4.7.6-13 Load Factor of eastern region

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4.7.7 Generation

(1) Installed Capacity

West Bengal’s power demand is mostly met by the State’s own sources. The State’s own generation sources from WBPDCL, WBSEDCL and DPL contribute to more than 64% of the total installed capacity in the State. As of July 2015, WBPDCL with 4,364 MW of installed capacity contributes to bulk of the State’s generation capacity. WBSEDCL owns thirteen hydro power plants totaling 1,067 MW. Except Rammam (51 MW) and Purulia Pumped Storage Plant (900 MW), all the plants are under 25 MW capacity.

As of Dec., 2016, WBPDCL will increase its capacity to 4,865 MW by adding “Sagardighi Unit 4” 500 MW. The total generation capacity as on March, 2016 is 9,984 MW. 84.37 %, most of the capacity is from Coal based Thermal, 13.30 % Hydro, 1.32% is from Renewable Energy Sources. The state has 6,889 MW, Central share 1,274 MW, and Privates 1,822 MW.

Upcoming State Sector generation capacity addition mainly comprises of WBPDCL’s 2 x 660 MW Sagardighi power plant Unit 5 & 6. Unit 5 received a terms of reference in January 2015. In April 2016 WBPDCL applied for Unit 5 to be 660 MW to meet the MOP requirement that the 13th Plan Capacity Additions only be through supercritical units. Unit 6 if built would therefore also likely be 660 MW and supercritical.

Another 300 MW from hydro power plants (Punatsangchhu-I, II, Mangdechhu) in Bhutan and about 387 MW from Central Generating Stations are expected to be allocated to WBSEDCL by FY2019. These capacity additions would result in increase in allotted capacity to 10,131 MW by FY2019 which will increase peak power availability to 7,798 MW. As the peak demand of WBSEDCL in FY2019 is expected to be 6,351 MW, the projected availability shall be sufficient to meet the expected demand.132

Other utilities like CESV, DPL, DPSC and DVC have arranged for sufficient capacity to cater to the increase demand during the period FY2016 to FY2019.

132 Power for All, West Bengal

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source: West Bengal Power for All (Appendix 4-62) Figure 4.7.7-1 Installed Capacity by Ownership as on July 2015

RE 1% Hydro 13%

Thermal 86%

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.7-2 Installed Capacity by Ownership as on July 2015

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Table 4.7.7-1 Generation Capacity Details (for major state & central units)

source: Eastern Regional Load Despatch Center, Annual Grid Report 2015-16 (Appendix 4-57) note that it does not include Sagardighi (Unit 3 & 4, 2X500MW), nor DVC plants.

The history of the West Bengal state installed capacity is given below. It shows coal thermal sources contribute “practically” most of the capacity and grows 6% annually. Hydro occupies 13 % and almost PSP (900 MW) plus minor hydro. It hasn’t grown at all. Renewable grows 4-6 % annually but only holds 1 % of the total capacity.

The state holds 68 % of whole thermal, central 11 %, private 21 %. The private powers contribute only 21 % that so far the capacity wise the state does not rely upon the private capacity too much.

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source : JICA team, from CEA monthly report Figure 4.7.7-3 Installed Capacity History by Fuel

source : JICA team, from CEA monthly report Figure 4.7.7-4 Installed Capacity History by Ownership

(2) Power Generation

In term of energy, coal thermal is vast dominant in generated electricity in West Bengal. State Hydro amounts minimal. Although West Bengal and the eastern grid still are in energy deficit from CEA, but surplus from the state data (Power for All), the actual fact shows the exchange energy of the eastern region has been exporting large amount of power to the outside regions and has been increasing

Electric Power Development Co., Ltd. 4-265 Data Collection Survey on Power Sector in India Final Report

(43,000 MU in 2015-16).

It is noticeable that the whole inter-regional trade in India has grown 4 times as large in size during these 5 years.

(GWh) 60,000 Central- Nuclear Central- Hydro 50,000 Central- Natural gas

40,000 Central- Coal Private- Hydro 30,000 Private-Natural gas

20,000 Private- Oil Private- Coal 10,000 State- Hydro State- Natural gas 0 State- Oil State- Coal

source : CEA, Monthly Report Figure 4.7.7-5 Power generation in West Bengal

source: JICA team, from Load Generation Balance Report, CEA (Appendix 4-1,2,3), OPERATIONAL PERFORMANCE REPORT THE MONTH OF MARCH 2016, POSOCO) Figure 4.7.7-6 Regional Export/Import

(3) Plant Load Factor

The Plant Load Factors (PLFs) of state thermal plants have been 50 % or less on average. Private CES TPS were much higher. It is considered, while WBPDCL holds many older coal thermal plants as Bandel (450 MW), Kolaghat (1,200 MW), Santaldih (980 MW), except newer Sagardighi and Bakreswar, CES keeps newer Budge Budge (750 MW) at very high PLF 88-89% and also maintained Southern (135 MW) and Titagarh (240MW) at 80 % high. The reason CES has dropped PLF in 2015-16 was because the latter 2 plants dropped to 31-45 % while Budge Budge keeps 88 %.

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(%) 100 95 90 85 80 75 State- Coal 70 Private- Coal(CES-Coal) 65 Central- Coal 60 55 50 45 40 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

source : CEA, Plant Load Factor of Coal-fired power Plant Figure 4.7.7-7 Plant load factor of Coal-fired power in West Bengal

(4) Cost of Power Generation

According to the interview with WBERC, they comment that average coal thermal generation cost (variable cost only) is 2.2-2.5 INR/U, and the average hydro generation cost (fixed and variable) is 3.2-3.5 INR/U. The Solar PV purchase cost is 4.4 INR/U maximum.133

The West Bengal state mentioned in the report “for the last few years it has been varying between 3.83 and 4.12 INR/U during FY2013 to FY2015”. It also states “in order to reduce the purchase cost, it increases DAM (Day Ahead Market) rather than RTC (Round the Clock) so that it buy at cheapest price at time variant phase”.134

The average purchase cost of WBSEDCL in 2014-15 has been derived from the annual report by JICA team. The cost and the volume of the purchase are shown below.135 It is as old as the cost in March of 2015 if it shows most recent data. The range of purchase cost was around 3.3-3.9 INR/U. The purchase cost from CGU (central sectors) is higher at some 4.8 INR/U, from WBPDCL is cheaper at some 3.2 INR/U, from private sectors is even lower at 2.5-3.6 INR/U.

This may prove that WBSEDCL pursue as cheap short term exchange power as possible, and wishes to decrease comparably higher CGU power. But the volume of the short term exchange market is not large.

133 From the interview in Aug., 2016. 134 Power for All, West Bengal, 2016 135 WBSEDCL ANNUAL REPORT & ACCOUNTS 2014-15 (Appendix 4-61)

Electric Power Development Co., Ltd. 4-267 Data Collection Survey on Power Sector in India Final Report

source : JICA team, from WBSEDCL Annual Report 2014-15, Dec., 2015 (Appendix 4-61) Figure 4.7.7-8 Purchase cost and Volume of WBSEDCL for 2013-14 and 2014-15

The cost of power purchase from CGU by DVC is shown below. It also shows the consistent trend. The purchase cost from CGU is as high as 4-5 INR/U.

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Table 4.7.7-2 Tariff Order of DVC for 2014-2015 and 2015-2016

source : Tariff Order of DVC for the years 2014-2015 and 2015-2016, May, 2015

(5) Power Development Plan

As of now, the following plans are projected. Up to 2019, the main increase of power is expected to be sourced from the central allocations and privates. WPDCL will complete Sagardihi Unit 4 (500MW) soon, After completion of Sagardihi Unit 4, WBPDCL will go to Sagardihi Unit 5 & 6 (660 MW x 2). But those are planned in later the 13th plan at fastest.

DVC will have new projects totaling 2,520 MW. Those are Raghunathpur TPS (Phase-1: 2 x 600 MW & Phase -2: 2 x 660 MW), which are to be installed in West Bengal. Other than DVC, WBSEDCL will expect to receive 500 MW allocations from other IPP plants (IPPs include Maithon Power Plant, Adhunik Power, Bagliar HEP through PTC, IPCL’s Haldia).

As for central unit allocations, WBSEDCL has been allocated a share of 1,114 MW from the upcoming Central Generating Stations. Some PPAs were cancelled, but at least 995 MW allocations may be secured. The allocated capacity is listed below.

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Table 4.7.7-3 Allcoation from Upcoming Central Generating Stations

source: West Bengal Power for All (Appendix 4-62)

From the above anticipation, the increase of 3,955 MW would be sufficient for the increase demand by 2019. As for WBSEDCL, it turns to energy and peak requirement of 34,925MU and 6,351MWin 2019, and will be available to supply 38,113MU and 7,798MW.

As for the whole West Bengal state, the state will have requirement of 62,926 MU and 11,172MW in 2009, and will have availability to supply 66,114 MU and 12,619MW. 136

Table 4.7.7-4 Anticipated Power Availability Position for West Bengal

source: West Bengal Power for All (Appendix 4-62)

136 This is the estimate of West Bengal Power for All, which assumes power surplus in 2016. But note that as mentioned, CEA publishes power deficit prospect in 2016 in the Load Generation Balance Report 2016-17. (Appendix 4-3).

Electric Power Development Co., Ltd. 4-270 Data Collection Survey on Power Sector in India Final Report

(6) Renewable Energy

1) Existing and Additional capacity

Renewable Energy Policy was notified by the State in 2012. The policy aims to attain 2,706 MW of generation capacity from renewable energy sources including co-generation by the year 2022. It was released before the present Indian Government 175 GW Renewable policy that did not reflect the present central government policy, and set the target as 1,040MW in 2017 and 2,706MW in 2706, but even so it was much higher than the current REN capacity 132 MW (CEA, as of March, 2016).

As a part of the MNRE’s 175 GW REN addition plan for the country, West Bengal has been provided a target of 5,386 MW by 2022, as double of the 2012 policy target. In this context, the State Government may have to revise the above targets provided in RE policy of 2012 and prepare a roll out plan to include the revised.

However it seems unable to find the revised policy so far.

MW 6000

5000 MNRE goal Solar 4000 Waste

3000 Biomass Co-generation 2000 Mini & Small Hydro

1000 Wind

0 2015 2017 2022 2022(MNRE)

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.7-9 Generation Capacity Prospect

As of now, West Bengalllprenewable energy sources mostly comprise of Small and Mini Hydro power generation sources in the North Bengal region. In the publishes of West Bengal, A total of 500-1,500 MW of additional RE capacity is said to be expected through Ultra Mega Solar Parks in Purba Mednipur, Bankura and Paschim Mednipur. 137

There is uncertainty in how far Turga Solar project is on track. It was heard the land was not procured (210 MW land procured, the balance un-procured), DPR is in preparation stage.

 3 x 10 MW Grid Connected Solar Photo Voltaic Power Plants (2 in Purulia at Santaldih &

137 The Bengal Global Business Summit, Jan., 2016, Significant Achievements of Power & NES Department from May,2011 to May,2016, Gov. WB,

Electric Power Development Co., Ltd. 4-271 Data Collection Survey on Power Sector in India Final Report

Chharra and 1 in Bankura at Mejia) (There is an information that Bankura and other areas compose 500MW Ultra Mega Solar Project)138  Solar projects 10 MW x 4 work has been initiated to set up a 10 MW Canal Bank Solar PV power project along Teesta Canal Fall Stage II H.E. in Uttar Dinajpur District.  Turga link 1,200 MW Solar project : The state government is reportedly taking up an ambitious project of setting up 1,200 MW (4 x 300 MW) grid connected SPV power project which is proposed to be linked up with upcoming 1,000MW Turga Pump Storage project.

2) Renewable Purchase Obligation

The state utility, WBSEDCL is procuring renewable energy from other sources to fulfill its RPO requirements. Similarly, CESC is also procuring renewable energy to meet its RPO requirements.

West Bengal has issued several policies and regulations for renewables energy. RPO target has been revised as below.

 West Bengal Policy on Co-generation and Generation of Electricity from Renewable Sources of Energy,2012, June, 2012,  WBERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) Regulations, 2013. March, 2013,  WBERC (Procedure for Accreditation of a Renewable Generation Project for REC Mechanism) Regulations, 2013, April, 2013,  WBERC (Cogeneration and Generation of Electricity From Renewable Sources of Energy) Regulations, 2013, March, 2013,

Table 4.7.7-5 RPO target as of 2013

WBERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) Regulations, 2013. March, 2013

138 West Bengal Power for All,

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Table 4.7.7-6 RPO as of 2015

Year Captive Open Access Solar Non Solar 2015 Y Y 0.15% 4.35% FY2015-16 Non Solar-4.80% Solar-0.20% FY2016-17 Non Solar-5.25% Solar-0.25% Policy Summary FY2017-18 Non Solar-5.70% Solar-0.30% FY2018-19 Non Solar-6.60% Solar-0.40% FY2019-20 Non Solar-7.50% Solar-0.50% source : Indian Renewable & Energy Efficiency Database139

3) Purchase Price

WBERC defines that “generating company of renewable energy can sell the electricity generated.

As for the preferential tariffs, WBERC has been revising them time to time. The Tariff defined at the moment is as follows.

Table 4.7.7-7 Feed-in Tariff (Price Cap) Year Technology Category Tariff with Comments Accelerated Depreciation 2014 Bagasse/Biomass Tariff 3.34 2014 Municipal Solid New Projects 5.12 Waste Existing 5.12 Projests 2014 Small Hydro Tariff 4.42 Power 2014 Solar PV Solar PV 8.9 Capped at 8.90 INR/U 2014 Wind All 5.71 Price cap of 5.71 INR/U source : Indian Renewable & Energy Efficiency Database,140 WBERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) Regulations, 2013. March, 2013

(7) Countermeasures for Variable Renewable Energy

WBSEDCL owned 900 MW (4×225 MW) Purulia Pumped Storage Project (PPSP) is located in Purulia district of West Bengal to cater peak demand requirement. Pump mode have been shown as (-ve) & generator mode as (+ve). PPSP of WBSEDCL achieved a generation of 1,055MU in FY 2015-16, which have been 34.5 % lesser than the generation of 1,419 MU in FY 2014-15. Especially in 2014-15 Purulia recorded almost full operation (assuming 6hr/day it corresponds to 100% of operation).

Comparing whole hydropower generation in Eastern region, West Bengal contributes 2,062 MU in

139 http://ireeed.gov.in/ 140 http://ireeed.gov.in/

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2015-16, out of total 10,670 MU. Although it was second to Odisha, 4,761MU, and lesser than NHPC, 3,026 MU, PSPP contributes more than half of West Bengal hydro power output.

Table 4.7.7-8 Year Wise Performance for Purulia PSP

source: Eastern Regional Load Despatch Center , annual grid report 2015-16 (Appendix 4-57)

source: Eastern Regional Load Despatch Center, Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.7-10 Performance of Purulia PSP

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source : Injection of Renewable Power on a Large Scale, CEA, Sep, 2015, Figure 4.7.7-11 Purulia PS Generation/Pumping with Frequency

source: Eastern Regional Load Despatch Center , Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.7-12 Eastern Region Hydro Generation

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source: Eastern Regional Load Despatch Center, Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.7-13 Area / System wise Monthly Hydro Generation

1) Standpoint of Pumped Storage

The State considers pumped storage as most appropriate action at present. PSP is required for increasing necessity for peak power in the evening time and to balance the instability of the grid throughout the day.

The State has two pumped storage projects at present. As for Turga project, its DPR is approved by CEA. The detail design and preparation of the tender documents may start in last Quarter of 2016. expected commissioning is by December 2022. For another project Bandu, its DPR tender is planned.

These projects are all in Purulia Ajodhya Hill area. Monsoon condition in the recent year is adequate to run such closed loop pumped storage projects after catering the need of Farminng/Irrigation and drinking in the locality.

Table 4.7.7-9 The current status of PSPs

Priority Location Capacity Stage 1st Turga 1,000 MW DPR Completed 2nd Bandu 900 MW DPR tender under preparation 3rd Kulbera 1,100 MW Identified stage

4.7.8 Transmission

(1) Transmission Network

WBSETCL operates and maintains a transmission network of 12,042 ckt.kms of Extra High Voltage Transmission lines along with 113 sub stations, having total transmission capacity of 23,508 MVA as on March 2015, spread over the entire stretch of the State of West Bengal. In accordance with the 5

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year long term rolling transmission system investment plan, WBSETCL is working on a number of transmission projects. 42 new substations proposed for addition during the period FY2016 to FY2019.

With regard to the inter-state transmission systems connecting West Bengal to the ER and the rest of the country, expansion of network is under progress. PGCIL has proposed to add 3,863ckm of ISTS lines and augmentation of about 9,435 MVA transformation capacity and two new 400/220 kV substations. The proposed capacity additions are sufficient to cater to the requirement of the State.

The state government expressed 141 that WBSETCL has achieved 22 % growth in nos. of sub-station, 5 0% growth in transformation capacity and 1 8% growth in transmission line from 2011 to 2016, compared to previous 66 years development to meet the 8-10 % cumulative annual growth of system demand in West Bengal. WBSETCL is maintaining its Transmission System availability consistently over 99.5 % and Transmission system loss around 3 %.

MVA 16000

14000 1010

12000 220kV 10000 7910 400kV 8000

6000 765kV 890 4000 6000 2000 4595

0 0 FY15 FY19

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.8-1 Intra State Transformation Capacity

ckm 12000 1162 10000 132kV

8000 124 1162 220kV

6000 9843 400kV 4000 6980 765kV 2000

1000 0 0 FY15 FY19

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.8-2 Intra State Transmission Line Length

141 Significant Achievements of Power & NES Department from May,2011 to May,2016, Gov. WB,

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source: Eastern Regional Load Dispatch Center Figure 4.7.8-3 Power Map of West Bengal

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source: Eastern Regional Load Dispatch Center Figure 4.7.8-4 Eastern Region Power Map

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source: Eastern Regional Load Despatch Center, Annual Grid Report 2015-16 (Appendix 4-57) *Grid Standard 400kV: Maximum 420kV, Minimum 380kV Figure 4.7.8-5 Maximum and Minimum Voltage at Important 400kV Stations in Eastern Region, 2015-16

source: Eastern Regional Load Despatch Center, Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.8-6 Over Voltage related Outrage of Transmission Lines in 2015-16

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source: Eastern Regional Load Despatch Center, annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.8-7 Non-Over Voltage related Outrage of Transmission Lines in 2015-16

(2) Transmission Loss

The transmission loss of WBSETCL for 2013-14, 2014-15 has been the same 3.4%. The state anticipates 3.4 % for coming projections up to 2019 as well.142

The transmission loss for transmission of renewable and/or cogeneration energy through the asset of transmission licensee(s) in West Bengal will also be accounted for RPO of the licensee under whose area and through whose network the energy is drawn by the user of such energy.

4.7.9 Distribution

The distribution companies in the State have prepared plans for capacity addition to cater to the growing demand of the State. WBSEDCL has proposed to invest about 9,056 Crores during FY2016 to FY2019. This includes 7,108 Crores from IPDS and DDUGJY schemes. The proposed investments are targeted towards feeder segregation, reduction of technical and commercial losses etc.

CESC has proposed a capital expenditure of 4,046 Crores including 373.73 Crores proposed under IPDS for implementing reliability and strengthening works in its supply area.

DPL has proposed a capital expenditure plan of 58.26 Crores under IPDS for implementing reliability and strengthening works in its supply area. The utility expects the balance funds (40%) to be made available through State Government.

The proposed capacity additions by WBSEDCL will increase its PSS to 660 in FY2019 from 525 in FY2015. Similarly, the addition in lines is expected to improve the HT: LT ratio from existing 1: 1.78 to 1: 1.57. These investments along with actions to curb commercial losses will facilitate the utility to achieve the targeted AT&C loss of 22.5% by FY2019.

142 Annual report 2014-15, WBSEDCL(Appendix 4-61), West Bengal Power for All (Appendix 4-62),

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(1) Rural Electrification

Considering the State has already achieved significant level of electrification over the past 5 years, the remaining urban and rural consumers are likely to be connected by FY2017. As on Oct. 2015, the number of un-electrified HHs stands at 747,410. Further, the utilities in the State are already supplying 24x7 power to all categories of consumers.

1) Village Electrification (Nos.)

Total inhabited villages 37463 Balance Un-electrified Villages as on 31.05.2016 14

2) Household Electrification (Nos. in Lakhs)

Tatal Rural Households 137.17 Balance Un-electrified as on 21.05.2016 7.36

source : Ministry of Power

km 350,000 316,944 308,328 297,558 301,866 295,404 300,000 LT Lines 250,000 HT Lines 201,881 187,387 200,000 165,647 169,270 176,517

150,000

100,000 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source; West Bengal Power for All (Appendix 4-62) Figure 4.7.9-1 Augmentation of Distribution System for WBSEDCL

(2) Cost and Price of Electricity

WBSEDCL’s power purchase cost for the last few years has been varying between 3.83 INR/U to 4.12 INR/U during FY2013 to FY2015. The rise in average power purchase rate was partly driven by the rise in variable cost of generation. The utility has been able to reduce the cost by 26 paisa/U during FY2015.

For Retail Price side, the West Bengal state states “the Cost of Supply to consumers” and “ABR (average billing rate appoved by WBERC) “ in FY 2015 as under:

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 Cost of Supply : 7.5 INR/U, including Power Purchase cost 5.68 INR/U.  Average Billing Rate approved: 6.58 INR/U This discrepancy in the analysis of the West Bengal state was caused by the large AT & C loss. The loss in West Bengal has been in very high range of 28 % in 2015.

However, the details of the Power Purchase Cost of 5.68 INR/U were not disclosed. It is somewhat inconsistent to the state projection of 3.43-3.58 INR/U for 2016-2019 power purchase estimated cost.143

Rs/kWh 6.00

5.29 5.29 5.29 5.29

5.00 Avarage billing cost - Domestic

Power Purchase Cost 4.00 3.58 3.50 3.43 3.47

3.00 FY16 FY17 FY18 FY19

source : West Bengal Power for All (Appendix 4-62) Figure 4.7.9-2 Power purchase rate & Average Billing Costs

WBERC has determined the tariff for each class category of Consumers between 80-120% range of ACS except for lifeline consumers. For lifeline consumers the tariff has been kept at least of about 50% of average cost of supply in line with the guidelines of National Tariff Policy. Also, the TOD tariff is defined. For consumers tariff, it defines the peak time as 17:00-23:00.

For example, the DVC consumer tariff is described as below, thus TOD tariff is between 80 % and 120 % of 473.99 paise/U.

Table 4.7.9-1 Average Tariff for Consumers of DVC for 2014 – 2015 and 2015 – 2016

source: Tariff Order of DVC for the years 2014-2015 and 2015-2016

143 West Bengal Power for All

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As for WBSEDCL consumers, the main consumers are DOMESTIC 31 %, and INDUSTRY 28 %.

The largest consumers category “L&M domestic” occupies the 31% of all demand. But there is no TOD tariff in this category. The second largest consumers category “H&EH industry” occupies 26 % of all demand. It has TOD tariff setting as 4.42 to 9.52 INR/U for 11 kV, and 3.89 to 8.24 INR/U for 400 kV. There has the maximum 5 INR/U price gap.

In a way, the state acknowledges the value of Peak Power, whether it is sufficient or not.

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Table 4.7.9-2 Average Tariff for Consumers of WBSEDCL for 2014 – 2015 and 2015 – 2016 (for Domestic Consumers)

(for Industry Consumers)

source: Gist of the Tariff Order Dated 10.08.2015 for 201516

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Table 4.7.9-3 Consumer Wise Demand for WBEDCL MU sold HV&EHV L&MV total Demestic&Lok deep 24 8,439 8,463 31% Commercial &others 1,117 2,340 3,457 13% Irrigation 0 1,492 1,492 Public lighting 0 187 187 Industrial 5,895 1,259 7,154 26% Public water works etc. 182 141 323 Cold storage 383 0 383 Traction 1,050 0 1,050 sub total 8,651 13,858 22,509 83% Other Licensees 2,290 0 2,290 8% Sales to other than Licensee 1,905 0 1,905 7% Swap out 546 0 546 2% Total 13,392 13,858 27,251 100% source: JICA team, from 4-3 WBSEDCL ANNUAL REPORT & ACCOUNTS 2014-15 (Appendix 4-61)

(Rupee/kWh) 16 14 12 10 8 6 4 2 0

Max (All India) Min (All India) West Bengal (State DISCOM)

source : CEA, Electricity Tariff & Duty and Average rates of electricity supply in India, March 2015 Figure 4.7.9-3 Average Electricity Prices by Sector(comparison)

(3) AT & C Loss

WBSEDCL hit AT&C loss of 36.69 % as at Sep. 2015. WBSEDCL’s investment plans are targeted towards bringing AT&C loss to 22.5 % by FY2019. This includes shortening of lengthy HT feeders, introduction of AB Cables etc. WBSEDCL may need to focus on the achievement of loss reduction targets envisaged in the PFA Roadmap to meet its financial targets. If WBSEDCL reduces the AT&C losses from current level to 22.5 % by FY2019, the projected PAT for FY2019 is 40 Crores.

Adequate actions must be taken to monitor the AT&C losses.

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West Bengal has signed a MoU with Korea Electric Power Company to conduct a feasibility study to reduce As T&D loss of transmission and distribution companies in the state.144

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.9-4 Region wise AT&C Loss for WBSEDCL (Sep, 2015)

% 35.0

29.8 AT&C losses 30.0 28.0 T&D losses 27.60 25.8 25.80 25.0 23.5 23.50 22.5 21.10 20.0 20.10

15.0 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19

source: West Bengal Power for All (Appendix 4-62) Figure 4.7.9-5 AT&C losses, T&D losses

(4) Financial Position of Discom

1) Financial Situation

WBSEDCL has consistently recorded profits during the last few years and the accumulated losses have been brought down from 216 Crores in FY2011 to 131 Crores in FY2015. WBSEDCL has attempted to reduce these losses by undertaking measures such as installation of capacitor banks,

144 Businesstoday: July 8, 2016

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extension of LT mains, security and loss prevention cells in every region, monthly energy audits etc. In the prospect of West Bengal state145, it expects the progresses on achieving reduction in AT&C losses and also expects the gap between average cost of supply (ACS) and average realization (ARR) is expected to shrink. It expects a positive PAT for each year during FY 2016 to FY 2019, registering profits of 40 Crores in FY 2019.

In the state’s view, it states there exist no requirement of tariff increase as the utility has already achieved financial viability.

Cr. Accumulated Loss 150 95.13 Profit 100 73.48 81.72 50 19.07 19.82 0 FY11 FY12 FY13 FY14 FY15 -50

-100

-150 -126.18 -130.71 -200 -190.83 -250 -215.93 -212.32

source : Wesr Bengal Power for All (Appendix 4-62) Figure 4.7.9-6 Annual Profit & Accumulated Loss for WBSEDCL

2) State Subsidy or Discoms

After unbundling, WBSEDCL seems to be limited dependence on state government subsidy, although it has schemes to support the power sector through targeted capital subsidy schemes aimed at supporting the poor and marginal consumers.

PFC reported WBSEDCL did not occur any subsidies from the state 2011-12, 2013-14.146

This is because pass-through of increase in power purchase cost is made through Fuel and Power Purchase Adjustment Cost (FPPCA) through subsequent tariff is approved by WBERC. If this is approved timely, WBSEDCL needs no revenue subsidy/grant.

However, WBSEDCL is said to have received minor (400 Crores) from the state that the state reportedly decided not to make tariff hikes for the agriculture sector, middle class and below poverty line (BPL) consumers.147 Further, the tariff hike has reportedly been delayed as the

145 West Bengal Power for All, Aug., 2016 146 Report on the Performance of State Power Utilities 2011-12 to 2013-14, PFC, July, 2015, http://www.pfcindia.com/Content/PerformanceReport.aspx 147 Newspapers, 25th, Aug.,2016, http://www.indialivetoday.com/west-bengal-government-keeps-the-agriculture-sector-middle-class-and-below-poverty-line-c

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assembly elections led to delays in the tariff determination process for FY2017 in the states of West Bengal.148

3) Application of UDAY Scheme

Under the Ujjwal Discom Assurance Yojna (UDAY) scheme of the Govt. of India it is envisaged that the respective State Government will take over the debt of the State owned Discoms. This will reduce the interest cost of the utility. Further, with the impact of schemes aimed towards improving operational efficiency of the utilities, it is expected that the state Discoms will reduce their cost elements. Fiscal discipline along with the remedial actions for reducing Power Purchase cost and aligning the AT&C losses are a part of this scheme. This scenario evaluates the impact of this scheme on the financials of the utility. In this scenario it is assumed that the state will take over 75 % of the outstanding debt in two years (50 % and 25 %). This reduces interest cost for the Discoms.

However, WBSEDCL has been providing 24x7 service to its existing consumers and reporting book profit continuously since inception. Under the above circumstances participation in UDAY scheme is still under consideration by State Govt. for improvement of operational efficiency only.

The Discoms may pass on the benefits of higher profits by reducing the overall tariff. It is estimated that the incremental profit may be a reduction in tariff in the range of 0.11 INR/U to 0.20 INR/U as detailed below.

Table 4.7.9-4 Expected Tariff Impact of UDAY

source: West Bengal Power of All (Appendix 4-62)

(5) Power Market and Trade

As shown from WBSEDCL Annual Report, the short term trade volume has been small in WBSEDCL. However, the volume is rather comparably second largest in the eastern grid.

The volume of WBSEDCL own generation in the total sale/purchase volume is only 5 %. So it is important to reduce power purchase cost from WBSEDCL financial point of view.

onsumers-out-from-power-tariff-hike/23469.html 148 ICRA, June, 2016, http://www.icra.in/Files/ticker/SH-2016-Q2-3-ICRA-Power.pdf

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The average purchase price for short term has been same range as other procurement cost, but it is said WBSEDCL intends to procure the lowest market price as utilizing DAM at time variant, and avoiding RTC procurement. This may relate to the “economic utilization of Purulia PSP).

Table 4.7.9-5 Purchase Volume of WBESDCL WBSEDCL Power Purchase 2014-2015 2013-2014 1 Central Sectors (NTPC, NHPC, PTC, DVC, etc). 9,647.1 9,151.1 2 State Sectors (WBPDCL, DPL) 21,670.0 18,605.8 3 Short Term Bilateral 753.7 693.9 4 Short Term Exchange (IEX,PXIL) 1,044.2 319.0 5 Swap Power 1,129.8 1,172.7 6 Private Sectors 3,136.5 4,432.2 7 Renewables (WBREDA) 0.2 0.2 8 Power Drawn under UI mode (UI IN) 431.3 777.4

Total Energy 37,812.8 35,152.4 source : JICA team, from WBSEDCL Annual Report 2014-15, Dec., 2015 (Appendix 4-61)

source: Eastern Regional Load Dispatch Center , Annual Grid Report 2015-16 (Appendix 4-57) Figure 4.7.9-7 Energy Purchased through Power Exchanges in FY2015-16

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Table 4.7.9-6 Purchase Cost of WBESDCL

2014-2015 2013-2014 WBSEDCL Purchase Price INR/U INR/U i) Central Sectors DVC 4.8 6.7 Govt. of Sikkim 4.6 4.4 NTPC 4.0 4.5 NHPC 4.9 3.8 PTC 1.4 1.3 ii) State Sectors WBPDCL 3.2 3.5 iii) Short Term Power Exchange 4.2 3.1 Adani Exports 3.2 3.3 GMR Energy Trading Ltd 3.7 3.2 iv) Private Sectors ELECTO STEEL 2.5 2.5 NEORA HYDRO LIMITED 3.6 3.6 Nippon Power Limited 3.6 3.6 Tata Power Company Ltd 1.9 1.9 Shree Renuka Sugars Ltd 2.0 2.8 Rashmi Cement Ltd 1.8 1.6 Ennore Coke Ltd 2.1 2.1 Bengal Energy Limited 1.8 1.6 Concast Bengal Industries Ltd 3.2 3.2 source : JICA team, from WBSEDCL Annual Report 2014-15, Dec., 2015 (Appendix 4-61)

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