India prepares for frenzied growth of power demand

India is aggressively pursuing plans to expand — dramatically — its power generation capacity. In September and October, the nation inked lucrative deals to obtain nuclear technology from France and the U.S. Indian media speculated that the country was poised to increase its nuclear power capacity 15 times, to over 60,000 MW from the existing 4,120 MW. This growth is achievable, says the Bangalore-based nonprofit group Centre for Study of Science, Technology, and Policy (CSTEP), but several conditions would have to be met.

For one, the nation would require an overall investment of about $160 billion over the next 20 years. Then, more than 100,000 trained personnel would be needed for construction and operation of the reactors and associated facilities — which could be done by immediately introducing nuclear science and engineering courses into India’s numerous universities, the group supposed. Finally, the Indian government would need to take several steps. These would include allowing the private sector to be allowed to participate in reactor building and addressing the management and disposal of radioactive waste.

But even if this growth were achieved, CSTEP cautioned, it would not nearly be enough. Nuclear power today makes up just 3% of India’s total capacity of 120 GW. Just to sustain its current economic growth of about 8%, the nation, whose inhabitants number 1.3 billion — roughly a sixth of the world’s population — would need to add between 650,000 MW and 950,000 MW of capacity by 2030. According to an estimate from international consultancy group McKinsey & Co., in the next 10 years alone, if India continues to grow at an average rate of 8%, its demand for power will soar to between 315 GW and 335 GW.

McKinsey suggested India focus on setting up peaking power sources like hydropower and gas power plants. The Indian government is pushing another ambitious alternative: In April this year, it made available for award on the basis of competitive bidding the development of nine "Ultra Mega Power projects" (UMPPs) — coal-fired facilities generating 4,000 MW or more. To jumpstart the initiative, it appointed a nodal agency to acquire land and to ensure fuel linkage and cooling water supply for the nine facilities. As an added incentive, it has promised to make over the country’s grid.

According to media reports, the government had been concerned that funding would be an issue, but so far, domestic power companies have responded with great interest. Reliance Power, the utility that last year announced it would build the country’s first integrated gasification combined-cycle plant in Gujarat state, has snapped up the Krishnapatnam UMPP in Andhra Pradesh, and the Sasan in Madhya Pradesh, while Tata Power will build the Mundra, in Gujarat. Reliance Power reported in mid-October that it had secured a $2 billion financing package for the Sasan project from the domestic debt market. The company now plans to commission two 660-MW units of the power project by March 2012 — ahead of schedule by 36 months.

The success of the three bids has prompted the government to begin preparations for bidding three more 4,000-MW UMPPs, in Tamil Nadu, Maharashtra, and Orissa. But knocked off course by the economic slowdown early this November, it was forced to delay — for the third time this year — a request for proposals for the fourth UMPP, the Tilaiya in Jharkhand state. Those delays are expected to "trickle down" to the other five UMPPs that the government intends to bid over the next few months, The Economic Times reported.