Uncertainty over fuel supplies for thermal power projects as well as poor financial health of distribution utilities are among major risks faced by the fast growing Indian power sector, says global consultancy Deloitte.
The country, grappling with severe power deficit, is expected to see a capacity addition of over 50,000 MW in the 11th five-year plan (2007-12).
"Major issues faced by the Indian power sector are related to fuel side issues for thermal power projects and worsening financial health of distribution firms," Deloitte Touche & Tohmatsu India's Senior Director Consulting (Energy & Resources) Shubhranshu Patnaik said.
Apart from uncertainties in fuel supply under existing coal linkages, planned investments on coal import are likely to be hit, especially due to regulatory changes in countries such as Indonesia and Australia.
The mismatch between power tariffs and the cost of generating electricity is hurting the financial health of power distribution companies (Discoms).
Estimates show that electricity distribution losses touched about Rs 70,000 crore in 2010-11.
Going by Central Electricity Authority (CEA) projections peaking shortage of electricity in 2011-12 is expected to be 12.9%.
India saw a power shortage of 8.5% in 2010-11, which is estimated to further rise to 10.3% this fiscal.
Patnaik noted that there is caution among investors planning to put money in the power sector and there could be an adverse impact in the short-term.
The power sector is expected to see billions of dollars worth investments in the 12th plan (2012-17).
According to a Deloitte report, India and Brazil, are projected to be among the top 10 countries for smart grid investments by 2030. The US alone is anticipated to spend about USD 60 billion on intelligent smart grid infrastructure during the same period.
The basic aim of having smart grid is to improve overall efficiency of the power sector, especially in transmission and distribution segments, with the help of information technology.
The India Smart Grid Task Force, an inter-ministerial group focused on smart grid technologies for the power sector, plans to spend up to Rs 600 crore for pilot projects.
As per estimates, there is more than 30% leakage during electricity transmission and distribution, mainly on account of poor billing systems.
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