Taral Manish Indian Power Sector,

INDIAN POWER SECTOR & TRANSFORMER DEMAND FORECAST

A PROJECT REPORT ON

INDIAN POWER SECTOR & TRANSFORMER DEMAND FORECAST TOWARDS THE PARTIAL FULFILLMENT OF

MASTERS OF BUSINESS ADMINISTRATION PROGRAMME

Submitted By: Tanish Dadhania (Roll No 13) Taral Dave (Roll No 14) Manish Vasava (Roll No 58)

AES Post Graduate Institute of Business Management Ahmedabad

ACKNOWLEDGEMENT

At the outset of this project we would like to extend our sincere thanks to the Human Resource Department of Transformer & Rectifiers (India) Ltd. for giving us a wonderful opportunity to work & in the due course to learn more. We would also like to thank our project guide Mr. Mehul Dave, for guiding us through the successful completion of the project. Without his suggestions and valuable inputs on the technicalities, this project couldn’t have been completed in such a short span of time. It was a great learning experience not only pertaining to this project, but also shaping a vision & philosophy towards life. Our heartfelt thanks to Dr. A. H. Kalro, Director AES PG IBM for giving us this opportunity to undertake summer training. We also sincerely thank Prof. Rajendra Sharma and Prof. Jinal Parikh, faculty AES PG IBM, for their valuable guidance. Last but not the least we would like to extend our gratitude to Mr. Jitu Mamtora, MD, Transformer & Rectifier (India) Ltd., Mr. Anirban Kapat, HRM Head, Mr. Kunal – HRD Mr. Devdatt Bhatt, Marketing Department and all the employees of the company for providing a helping hand whenever needed & in understanding the company’s work culture. Tanish Dadhania Taral Dave Manish Vasava

PREFACE Power and Infrastructure are the backbone of any nation. Growth of these sectors defines the development of country. India’s power market is the fifth largest in the world with an installed generation capacity of 124.8 GW, generation of more than 600 billion kWh, and a transmission & distribution network of more than 6.3 million circuit kilometers. With increase in GDP demand for power has also increased significantly. Our country is facing power deficit of 7% .It is very important to forecast the growth of power sector and its installed capacity in order to meet the demand. Electricity is produced by generators in which the conductors are made to rotate in the magnetic field. But the rotation of huge blades and turbines is produced by pressure of steam, water; wind etc. steam is produced by burning of coal or petroleum derivatives. Water is generally flowing from river water stored in dams, tides and ebbs in oceans. Transformers are needed for stepping up and stepping down the voltage so as to minimize the losses and transfer of power from generating complexes located at feasible but remote areas to load centers over vast geographical areas. Need for development of this project arise from need of increasing production capacity of the company. As power sector grows, to keep constant growth rate or grab higher, one need to find future demand for the same. Here we mainly focus to find transformer demand at the end of electricity forecast. In this project we have tried to quantify the growth of transformer Industry and future installed power capacity in India for next two five year plan. We also found the past trend of power sector growth to align it with past GDP growth. Along with that we have studied the power sector of other countries in order to evaluate the prospect for Indian companies in those countries. We have also studied the modes of advertisements for Industrial product. The data has been collected from secondary sources. Data has been processed by bench mark so as to get MVA required for transformer.

COMPANY PROFILE PRODUCT PORTFOLIO INDIAN POWER SECTOR SCENARIO SWOT ANALYSIS OF INDIAN POWER SECTOR THE TENTH PLAN

MODULE - I

SWOT ANALYSIS OF T & R

COMPANY PROFILE Established in 1981, Transformers & Rectifiers (I) Limited has consolidated its position in the Indian Transformer Industry as a manufacturer of a wide range of transformers, which conform to the quality expectations of both the domestic and the international market. An ISO 9001:2000 company today, T & R as it is more popularly known, is proud to have executed a number of prestigious orders from developed countries such as Canada and the United Kingdom. The capability to develop world class power, distribution, furnace and specialty transformers is credited to the creation of a world class infrastructure at Changodar, near Ahmedabad, one of the leading industrialized cities of India. This facility is equipped with world class state of the art equipment and managed by a high skilled and experienced team of production personnel who consistently ensure that each and every production activity factors in an adherence to the high quality benchmarks established by the organization. A Value Based Organization As one of India’s leading transformer manufacturing companies, and one that is held in high esteem even by our competitors, a great deal of relevance is attached to living up to our image as a value based organization. We are an ethically responsible company, operate with transparency, validate commitment and sincerity, both vertically and horizontally across the organization and inculcate a spirit of integrity. We also try and extend these values to our business associates, be it vendors or our valued customers.

Mission

Quality Policy We perceive ourselves as a world class manufacturer of Transformers by establishing stringent quality norms in a vibrant environment that Values Continuous Improvement Develops The Best Resource Partners Nurtures Employee Skills And Performance Inculcates A High Standard of Integrity Believes in Team Work In a Persistent Endeavour to ensure that each customer values their relationship with us.

Company History

1981

Transformers & Rectifiers (India) was incorporated.

1981-95 Manufactured Distribution & Power Transformers up to 15 MVA, 66 KV and Furnace transformers up to 13.75 MVA. 1996

Expanded up to 220 KV transformers at our new plant at Changodar, Ahmedabad.

1996–99 Manufactured transformers up to 30 MVA, up to 132 KV and received orders up to 50 MVA, 132 KV class. 2000-02 Manufactured transformers up to 100 MVA, up to 220 KV 2002-03 Re-Certified for ISO:9001:2000 Valid up to 14th August 2003-04 Single Order of 36 Transformers of 110 KV Class Delta Connected for TNEB. Single Order of 10 Transformers of 220 KV Class for GEB. 2004-05 Got PGCIL (Power Grid Corporation India Ltd.) Approval order for Engineering, Manufacturing, supply and Installation of Station, UAT, Station ATs for Sripad 2 x 500 MW, Super Thermal Power Station of NTPC (National Thermal Power Corporation 2 Nos. 75 MVA, 33/220 kV, Generator Transformers for Non Conventional Wind Power Energy Project from SUZLON Developers Power Perfect – A punch line given Successfully done Dynamic Short Circuit Test up to / on 50 MVA, 245 kV class Transformer 2005-06 18 Nos. 100 MVA, 245 kV class Transformers from various utility under execution. 2005-06 More than 120 Nos. 132kV class transformers under execution.

Manufacturing and testing facilities available for Ratings up to 200 MVA up to 245 KV Class •

Auto Cad and Inventor facility for designing/preparation of drawings.

•

Machinery includes: 4 Two EOT crane of 100-ton capacity. 4 Winding Machines for winding coils upto 3500 mm length and with soft start for better winding quality. 4 Auto clave and vacuum system to achieve vacuum of 0.05 torr.

With

facility to raise the Temperature at a predetermined rate to avoid thermal shock. Hydraulic press, for coil pressing, of 200-ton capacity. •

Testing facility:

The testing facilities enable us to perform

all routine, type and special tests,

including impulse test up to 1200 KVp (Impulse Generator of Haefely make, Switzerland) as per IS-2026, IEC-76

and other international standards. We can

conduct Heat Run Test up to 200 MVA Auto Transformer. Appraisals by leading Electricity Boards, PGCIL, NTPC, Public Sector Enterprises, Utilities and Contractors Domestic: •

National Thermal Power Corporation

•

Power Grid Corporation India Limited

•

Gujarat Electricity Board

•

Maharashtra State Electricity Board

•

Punjab State Electricity Board

•

Tamilnadu Electricity Board

•

Andrapradesh State Electricity Board

•

Rajasthan Rajya Vidyut Prasaran Nigam Limited

•

Meghalaya State Electricity Board

•

Karnataka Power Transmission Corporation Limited

•

Kerala State Electricity Board

•

Bombay Suburban Electricity Supply,

•

Ahmedabad Electricity Co. Limited,

•

Asea Brown Boveri Limited,

•

Surat Electricity Co. Limited,

•

Tata Consulting Engineers,

•

Tata Projects Limited

•

Siemens Limited

•

Larsen & Toubro Limited

•

Engineers India Limited

•

Udhe India Limited

Exports: •

Power and Distribution Transformers Ltd, Leeds, U.K

•

Steel Makers Zimbabe (Pvt) Ltd, Redcliff

•

FCN Trading, Philipines

•

Fluor Daniel Ltd, Kazakhistan

•

Linco Power Ltd, Canada

•

Mobile Source Industries INC, Canada

•

Quality Castings Ltd Corporartion, U.A.E

•

AL-Dahman Foundry, Dubai

•

Melbourn Metals Pvt Ltd, Sri-Lanka

•

Shameem Metal Industries Ltd, Bangladesh

•

Bright Son Export Pvt Ltd, Kenya

•

P.T Sumbermitra Sarijaya, Indonesia

•

Siemens Ltd-Saudi Arabia

•

Melbourne Metal-Sri Lanka

•

Woofer Industries Ltd., Saudi Arabia

•

M. N. Electro, Philippines

•

CONCO, South Africa

•

Active Power Projects, South Africa

•

DHT Metals, Azerbaijan

•

Sharq Sohar, Oman

Future Plans The Company already enjoys the privilege of being a well known supplier to all State Electricity Boards in the country and number of private industries. Also the Company has tasted the success in the Global Market and has exported products to various foreign utilities and industries. Export would continue to be the thrust area but with the greater accent on expanding the world market especially foraying into Europe, North America, Middle East, Africa countries and Asia. Being an engineering firm with more than 200 man years of experience, diversifying towards providing of total power solutions of Substations and Transmission up to 245 kV will be a major essence and core area where the company will be focusing on. The Company intends to continue the progress and intends to widen its base in manufacturing better Products-technically and economically. We assure that growth is the essence of life in here and to compete in 21st century, the company would continuously endeavors to remain in step with the times, positively responding to changes in and around the business world.

PRODUCT PORTFOLIO Transformer Transformer is static electrical equipment which transforms a.c. electrical power from one voltage two another voltages at the same frequency by electromagnetic induction Principle of operation A transformer has two or more separate winding placed on a common magnetic core. It works on induction principle. The primary winding is supplied with alternation current of supply frequency. There by alternating magnetic flux of the same frequency is produced in magnetic core. The flux linkage of the secondary winding also changes at the same frequency, resulting in induced e.m.f. of the same frequency in the secondary winding.

Different Types of Transformers POWER TRANSFORMERS

Three phase a.c. system at 50 Hz is used for generation, transmission, distribution and utilization of electrical power. Power transformers are necessary between consecutive voltage levels for raising or lowering a.c. voltage at the same frequency. As the transformation of voltage is carried out successively in generating stations, substations, distributions systems and near load points, the total cumulative installed MVA capacity of the power transformer is 8 to 10 times the cumulative installed MVA capacity of generators. The transformers are designed and built in several sizes from a few kVA to several hundred MVA, from low voltage to extra high voltages (EHV) and ultra high voltages (UHV) and also for converters in high voltage direct current transmission (HVDC). The kVA ratings of power transformers cover a wide range between 5kVA to 650 MVA. Very large transformers (250 MVA to 650 MVA) are installed in generating

stations. Very small transformers are used in low voltage circuits. The choice of kVA rating of transformers in a particular installation depends upon the kVA load. Types of power transformers GENERATOR TRANSFORMERS

Generator transformer LV terminals are connected to generator terminals via isolated phase bus system. HV terminals are connected to outdoor bus bars by flexible ACSR conductors via overhead flexible bus. The purpose of generator transformer is to feed generator grid. Generator transformers supplied by TNR uses Core Type technology. TNR manufactures up to 200MVA 220KV class. UNIT AUXILIARY TRANSFORMER (150MVA 220 KV class)

Purpose of unit auxiliary transformers is to feed power to generator auxiliaries of that unit. For each auxiliary unit one unit auxiliary transformer is provided. HV side of unit auxiliary transformer is rated at voltage corresponding to generator rated voltage. LV side corresponds to rated voltage corresponding to auxiliary bus voltage. It is rated at 15% of generator rating kVA. STATION AUXILIARY TRANSFORMER

It is provided for each group of generators. Rated voltage of HV corresponds to rated voltage of outer bus bars. Rated voltage on LV corresponds to auxiliary bus voltage. Rated kVA corresponds to load of common auxiliaries for the complete station flux load of one unit auxiliaries, approximately 20% of generator unit rating. TNR manufactures station auxiliary transformers up to 150 MVA, 220 kVA classes. INTERCONNECTING TRANSFORMERS

Auto transformers to Inter connect different transmission voltages. Up to 500 MVA, 500 KV class, three phase transformer. Up to 900 MVA, 500 KV class, bank of single phase transformer.

It uses single primary and secondary windings. It is useful when conversion rate is not so large. TRACTION TRANSFORMERS

These are useful for large varying load applications. These transformers have high surge and large number of secondary. These transformers are used in locomotive engines to step down the voltage collected from the overhead lines. These are also used for trackside railway substations for stepping down transmission voltage to the traction voltage. TNR manufactures traction transformers up to 11 MVA. FURNACE TRANSFORMERS

Furnace transformers have wide range applications for very demanding and cyclic a.c. steel furnace operations with frequent short circuit condition in the furnace, to the submerged arc operation in Ferro alloy and similar furnaces. It is protected against harmonics and frequent over voltage generated by the operation of the process and very high mechanical and thermal stress has to be contained by a rigid design. Types of furnace transformers AC ARC FURNACE/SUBMERGED ARC FURNACE/LADLE FURNACE TRANSFORMERS

Furnace transformer is the heart of the furnace installation. It is a power transformer with 11 or 33 kVA voltage primary and low voltage secondary. The secondary currents are very much high (between 1000 amps and 10000 amps) the secondary is frequently short circuited. Frequent current surges occur during the melting period. The furnace transformer is ruggedly built. The secondary is permanently delta connected. The secondary voltage is low in the range 70 to 550 volt. Te secondary voltage is changed by means of tap changers on HV side. The primary is provided with 6points tap changers. There is also a provision of delta star switches. Thus, 6 secondary voltages are available corresponding to the 6 tap positions of primary with delta connection and 6 more with star connection. The several secondary voltages are useful in controlling the rate of heat input to the furnace. During the initial melting

period higher secondary voltage is tapped to obtain higher rate of heat input. The tapes are subsequently changed to get lower secondary voltages, as the melting continues. DC ARC FURNACE TRANSFORMER

An electric arc furnace used for steelmaking consists of a refractory-lined vessel, usually water-cooled in larger sizes, covered with a retractable roof, and through which one or more graphite electrodes enter the furnace. A mid-sized modern steelmaking furnace would have a transformer rated about 60,000,000 volt-amperes (60 MVA), with a secondary voltage around 800 volts and a secondary current in excess of 44,000 amperes. In a modern shop such a furnace would be expected to produce a quantity of 55 metric tons of liquid steel in approximately 70 minutes from charging with cold scrap to tapping the furnace. To produce a ton of steel in an electric arc furnace requires on the close order of 400 kilowatt-hours per short ton or about 440 kWh per metric ton (1.5kJ/g). Electric arc furnace steelmaking is only economical where there is a plentiful supply of electric power, with a well-developed electrical grid. INDUCTION FURNACE TRANSFORMERS

An induction furnace is an electrical furnace in which the heat is applied by induction heating of a conductive medium (usually a metal) in a crucible around which watercooled magnetic coils are wound. The advantage of the induction furnace is a clean, energy-efficient and well-controllable melting process compared to most other means of metal melting. Induction furnace capacities range from one kilogram to one hundred tones capacity, and are used to melt iron and steel, copper, aluminum, and precious metals. Operating frequencies range from mains frequency (50 or 60 Hz) to 10 kHz, usually depending on the material being melted, the capacity of the furnace and the melting speed required - a higher frequency furnace is usually faster to melt a charge. Lower frequencies generate more turbulence in the metal, reducing the power that can be applied to the melt.

TNR provides wide range of transformers with following specifications and ratings

POWER TRANSFORMERS: Applicants/Load conditions

Range

voltage

Cooling

Up to 200 MVA

Up to 245 kV

ONAN/ONAF/OFAF

160 kVA and above

33 kV

ONAN/ONAF/OFAF

Generator Transformer Unit Auxiliary Transformer Station Auxiliary Transformer Interconnecting Transformer Distribution Transformer

LOCOMOTIVE TRANSFORMERS: Applicants/Load conditions Traction Transformer

Range

voltage

Cooling

7.5 MVA

25 kV

ONAN/ONAF/OFAF

FURNACE TRANSFORMERS: Applicants/Load conditions Arc Furnace transformer Submerged Arc Furnace Transformer Ladle Furnace Transformer

Range

Up to MVA

63

Up to MVA

63

voltage

Cooling

Up to 33 kV

OFWF

33 kV

ONAN/ONAF

DC Arc Furnace Transformer Induction Furnace Transformer

ONAF - Oil natural air forced cooling ONAN - Oil natural air natural cooling OFAF - Oil forced air forced cooling OFWF - Oil forced water forced cooling

INDIAN POWER SECTOR SCENARIO From the time of India’s independence in 1947, the demand for electricity has grown rapidly. India had 1,24,827 MW of generating capacity on 22nd May, 2006. In

addition to this utility owned capacity, a substantial amount of auto-production capacity exists mainly in the industrial sector. During 10th Plan (2002-2007) & 11th Plan (2007-2012), a total capacity addition of 1, 13,000 MW is envisaged. That entails an investment of Rs. 5750bn in power generation, transmission and distribution. Growth in power generation has increased rapidly in recent years,

with an average annual rate of growth of just over 5%. The International Energy Agency’s World Energy Outlook 2000 projects electricity demand in India to increase by 5.4% per year from 1997 to 2020, faster than the assumed GDP growth rate of 4.9% (IEA, 2000a). The Government has announced ambitious plan to add around 100GW of additional generation capacity by the year 2012. It is proposed to add this capacity through Central Power Utilities, State Power Utilities and private investors. The transmission system to evacuate the above quantum of power shall be taken up by Power Grid Corporation of India Ltd. (POWERGRID) - Central Transmission Utility (CTU), State Power/Transmission Utilities and private investors. An investment of about Rs. 71,000 crores is envisaged in transmission under central sector, out of which POWERGRID has planned to invest about Rs. 50,000 crores on its own and the remaining Rs. 21,000 crores is expected to be brought in by the private investors.

Indian Power Sector at a Glance Total Installed Capacity: Sector

MW

Percentage

State Sector

70,224

56.2

Central Sector

40,464

32.4

Private Sector

14,139

11.4

Total

1,24,827

As On 22nd May, 2006

Fuel

MW

Percentage

Total Thermal

82,410

66.0

Coal

68,519

54.8

Gas

12,690

10.2

1,201

1.0

Hydro

32,326

25.9

Nuclear

3,900

3.1

Renewable

6,191

5.0

Oil

Total

1,24,827

Installed Capacity, 22 May, 2006 3%

5%

26% Hydro Thermal Nuclear RES

66%

Installed Capacity By Ownership 32% State Private Central 57% 11%

High Voltage Transmission Capacity: Capacity

MVA

Circuit Km

765/800 KV

-----

1,323

400 KV

76,010

63,129

220 KV

1,42,242

1,07,625

HVDC

3,000

5,876

Per Capita Consumption of Electricity: Year (2004-05)

606 KWh / Year

Rural Electrification: No. of Villages (Census 1991) st

Villages Electrified (31

5,93,732

March 2004)

4,74,982

Electrification Percentage

80%

Rural Households (Census 2001)

138,271,559

Having Access

60,180,685

Electrification Percentage

44%

Power Situation: Demand

Met

Surplus/Deficit

Energy

575,384 MU

527,539 MU

-8.3%

Peak Demand

92,968 MW

81,370 MW

-12.5%

MVA : Mega Volt Ampere MW

: Mega Watt

MU

: Million Unit

Main Power Plants

Transmission & Distribution lines

THE TENTH PLAN Physical Performance Against the originally envisaged Tenth Plan target of 41,110 MW of capacity addition, the likely capacity addition will at most be 31,290 MW, a shortfall of at least 23.9 per cent. The likely capacity addition includes 4293 MW of capacity that was not part of the original Tenth Plan targets. If the unplanned capacity is excluded, the shortfall would rise to 34.4 per cent. Tenth Plan likely

Centre State/

Tenth

2002-

2003-

2004-

2005-

Plan

03

04

05

07

Target

Actual

Actual

22,823 11,157

1,210 1,114

3,035 819

Likely

3,630 1,443

9,222 7,727

UT Private Total

7,121 41,110

548 2,872

232 4,086

173 5,246

2,137 19,086

achievement In

Including

Respect of Projects Not Tenth Plan Included in Projects

Tenth Plan

14,847

17,097

(65.0%)

(74.9%)

9,483

11,103

(85.0%)

(99.5%)

2,667

3,090

(37.5%)

(43.4%)

26,997

31,290

(65.6%)

(76.1%)

Source: Planning commission of India

Above table indicates the actual achievement in capacity addition during the first four years, anticipated capacity addition in 2005-07 and likely achievement for the last year of the Tenth Plan period.

Generating Capacity Anticipated at the End of Tenth Plan: Hydro

Thermal

Nuclear

Renewable

Total

32,325.77

82410.54

3900

6190.86

1,24,827.17

14,393

25,417

1,300

----

41,110

Likely Addition

10,800

19,190

1,300

----

31,290

During Tenth

(75%)

(75.5%)

(100%)

37,069

95,247

4,020

Capacity as on nd

22

May, 2006

Tenth Plan Target

(76.1%)

Plan Likely Installed

----

1,36,336

Capacity on 31st March, 2007 Source: Planning commission of India

The use of the larger and more efficient units was shifted to the Eleventh Five- Year Plan in order to realize higher physical performance based on the proven 500 MW units. The capacity addition target for nuclear plants will be realized in full. The Central sector is expected to have a shortfall of 23 per cent, while the state sector is likely to have a marginal shortfall of 0.5 per cent. The private sector shortfall will be as high as 57 per cent, which largely reflects the fact that the distribution segment of the power sector remains financially unviable. The financial closure of private sector projects remains difficult in the absence of a payment security mechanism and the difficulties of obtaining fuel linkage both in respect of coal and gas. Significant shortfalls in achieving Plan targets for capacity addition have been a consistent phenomenon, except during the Seventh Plan period. The inadequate creation of capacity has been partially addressed through higher plant load factor (PLF). But high PLFs lower both quality and reliability of supply. System operators have handled capacity shortfalls by shifting agricultural load to low peak night hours and through scheduled power cuts. Low reliability, poor quality of supply and high tariffs has pushed industrial and commercial units to resort increasingly to captive generation.

Large gaps remain in rural electrification. Out of 5,93,732 inhabited villages, an estimated 4,95,000 villages were electrified up to the end of 22nd May 2006 yielding an all-India village electrification level of 83.37 per cent. However, this is based on the earlier definition of village electrification, which states .a village will be deemed to be electrified if electricity is used in the inhabited locality within the revenue boundary of the village for any purpose whatsoever. The new definition of village electrification requires that: Basic infrastructure such as distribution transformer and distribution lines is to be provided. The number of households electrified should be at least 10 per cent of the total number of households in the village. If this new definition is applied, and if deelectrified villages are also included, the number of unelectrified villages is expected to at least double, thereby reducing village electrification to little less than 70 per cent. Villages Electrified (no.) 587000 494000 471000

1500 1947

3061 1950

74000 1970

1990

2003

2012

Year

The level of household electrification is, of course, much lower. The 2001 Census data indicates that only 44 per cent of the rural households are electrified, leaving 56 per cent of the households without electricity.

Reported Status of Rural Electrification: Better Electrified States States

Electrified

Electrified

household

villages

households

(%)

s (%)

(%)

(in %)

99.3

94.8

Rajasthan

98.3

54.7

Punjab

100.0

91.9

Chhattisgarh

94.0

53.1

Haryana

100.0

82.9

West Bengal

83.6

37.5

Gujarat

100.0

80.4

75.3

33.2

Maharashtra

100.0

77.5

Uttar Pradesh

58.7

31.9

97.4

70.0

Orrisa

80.1

26.9

Karnataka

98.9

78.5

Jharkhand

26.0

24.3

Tamilnadu

100.0

78.2

Bihar

50.0

10.3

Kerala

100.0

70.2

100.0

67.3

Himachal Pradesh

Madhya Pradesh

Andhra Pradesh

Electrified

Electrified

villages

Poorly Electrified States States

North-East Region

Development of National Power Grid The Power Grid Corporation of India Ltd. (PGCIL) has envisaged the establishment of an integrated National Power Grid by 2012 with an inter-regional power transfer capacity of 30,000 MW. The major considerations taken up while formulating such a perspective plan are creation of .transmission highways from potential surplus regions (mainly east and northeast) to load centres in the northern, southern and western regions. The inter-regional power transfer capacity had increased from 1,200 MW in 1997 to 8,000 MW by March 2004 and in terms of energy flow it has increased from 3600 MUs to 22,000 MUs during the same period. The performance of PGCIL in creating evacuation facilities and laying down the base for the National Grid is progressing as planned. Creation of such inter-regional transfer capacity augurs well for both system operation as well as promoting trading and open access.

Transmission Lines (ckm) 350000

km

250000 172000

2700 1950

67000 1970

1990

2004

2012

Year

The Tenth Plan approved outlay was fixed at Rs.96,041.19 crore at constant 200102 prices. The likely expenditure for the first four years of the Tenth Plan is Rs.73966.67 crore at constant prices of 2001-02. Based on the trend of expenditure during first four years, the likely expenditure for 2006-07 is assessed at Rs.22796.35 crore. Thus, the likely expenditure for the Tenth Plan is assessed at Rs.96763.02 crore at constant 2001-02 prices, which will be 100.75 per cent of the Tenth Plan approved outlay. However, it may be seen that expenditure on exploration and production activities will be higher than the approved outlays. Renewable Energy Resources The total commercially exploitable potential from renewables is estimated at about 47,000 MW: 20,000 MW from wind, 10,000 MW from small hydro, and 17,000 MW from biomass/bio-energy. The government is promoting renewables with increasing allocations in its five-year plans. But renewables still have only a negligible share of total commercial primary energy in India (2.5%, including hydro in 1998). Nonetheless, their share is growing and translates into large absolute numbers, given the size of the Indian energy sector. As a result, India is emerging as a world leader in the diffusion and development of several renewable energy technologies. Installed wind-power capacity, which totaled about 1,200 MW in 2000, is among the highest in the world. It increased rapidly in the 1990s, boosted by subsidies and financial incentives. Its projected rise to 4 GW by 2020 (IEA) will require an even stronger government commitment. One initiative is a proposal to introduce a fossilfuel levy to fund the development of renewables. India’s solar potential is also large

and is being tapped for heating and photovoltaic power. A 140 MW Integrated Solar Combined-Cycle power plant is under construction in Rajasthan.

Planwise Outlay for Power Sector 25

Percentage

20 15 10 5 0 1

2

3

4

5 6 Plan

7

8

9

10

Demand Supply Position and Expected Trends The per capita consumption presently stands at 606 kWh (2005), far below the world average of 2,429 kWh. At an 8 percent GDP growth, the per capita consumption of India in 2032 is estimated to be 2,643 kWh, which is just comparable to the present day world average. With an installed capacity of 123 GW, the country currently faces energy shortage of 8 percent and a peak demand shortage of 11.6 percent. In order to sustain a growth rate of 8 percent, it is estimated that the power generation capacity in India would have to increase to 306 GW in the next ten years which is 2.5 times current levels. Demand is expected to grow to 782 billion KWh by 2006-07. India has set itself an ambitious target of more than doubling per-capita electricity consumption by FY 2011 and the Ministry of Power projects an investment need of 9,000 billion Indian Rupees (INR), or US$ 200 billion to make it possible. The investment plan aims to expand the power infrastructure base for economic growth while making electricity accessible to all. Nobody is quite betting on its success just yet but it is clear that Government and policymakers are taking the problems of the sector seriously. Transforming the state-led bureaucratic Indian power sector into a competitive market attractive to private investors was never going to be easy. But economic liberalization of the nineties along with the pressures from the country’s

economic growth has forced open the sector. Previous reform efforts etched slowly into industry’s regulatory structure, ownership, investment, and management practices. Political will has gradually coalesced through the reform process of the nineties and the Electricity Act 2003 is now galvanizing change. With the implementation of the Electricity Act, progress on structural and regulatory reforms has achieved enough critical mass to become irreversible. The change has sparked renewed interest in private investment opportunities. What happens next in the sector will now depend critically on two things: (1) How India overcomes the remaining elements of restructuring that seek to sever the last few vestiges of political influence. (2) How India deals with the emerging challenges of fuel shortages that threaten to derail power capacity expansion plans. The remainder of this article discusses the two identified challenges to growth in the Indian power sector.

SWOT ANALYSIS OF INDIAN POWER SECTOR Strengths and opportunities in the sector •

Abundant coal reserves (enough to last at least 200 years)

•

Vast hydroelectric potential (150,000 MW). 78% Hydro potential to be harnessed

•

High opportunities in Generation, Transmission and Distribution

•

Shelf of generation projects identified

•

Large pool of highly skilled technical personnel.

•

Impressive power development in absolute terms (comparable in size to those of Germany and UK).

•

Expertise in integrated and coordinated planning (CEA and Planning Commission).

•

Emergence of strong and globally comparable central utilities (NTPC, POWERGRID,).

•

Wide outreach of state utilities.

•

Enabling framework for private investors.

•

Well laid out mechanisms for dispute resolution.

•

Political consensus on reforms.

•

Potentially, one of the largest power markets in the world.

•

Convergence of Transmission, Telecom and Information Technology

•

Renovation and Modernization

•

Cross Country Grids

•

Efficiency improvement in generation

•

Reduction of T&D losses: Energy Audit / metering

•

Energy Conservation and Demand Side Management

Problems confronting the sector The achievement of increasing installed power capacity from 1362 MW to over 124,000 MW since independence and electrification of more than 500,000 villages are impressive. However, it is a matter of concern that the annual per capita consumption, at about 606 kWh is among the lowest in the world. Still many households in a large number of villages have no access to electricity. The major reasons for inadequate, erratic and unreliable power supply are:

•

Inadequate power generation capacity;

•

Lack of optimum utilization of the existing generation capacity;

•

Inadequate inter-regional transmission links;

•

Inadequate and ageing sub-transmission & distribution network leading to power cuts and local failures/faults;

•

Large scale theft and skewed tariff structure;

•

Slow pace of rural electrification;

•

Inefficient use of electricity by the end consumer.

Key Issues Facing the Sector SOCIO-POLITICAL INFLUENCES

Over the decades, the power sector in India has become an instrument for implementation of State Government’s social policies. It is characterized by heavy subsidies, mostly poorly targeted and State Government’s involvement in functioning of the power utilities. The agricultural sector is a major consumer of electricity and together with other economically weaker sections of society has led to large costs for the utilities in serving these consumers. This combined with poor state of State Government finances led to inadequate compensation to the power utilities contributing to degradation of the financial position.

HIGH LEVEL OF NETWORK LOSSES

The power utilities in India suffer from a very high level of network losses of around 40 percent largely due to theft, pilferage and non-collection of dues and also due to the state of the network involving long low voltage lines. Non-realization of revenue for power generated has led to financial degradation and spiral of worsening performance. HIGH LEVEL OF FINANCIAL LOSSES

Due to the reasons mentioned above, the power sector in India suffers huge financial losses to the tune of USD 6 billion per annum. These losses have accumulated over time and resulted in inadequate financial resources for capacity augmentation. INADEQUATE GENERATION AND TRANSMISSION CAPACITY

Inadequate resource generation for investments has led to generation capacity shortfall of over 15 percent. Payment security mechanisms for private players have been difficult to provide on account of the financial situation. Likewise, inadequate transmission capacity in the country has led to a situation where regional surpluses remained unutilized to meet deficits elsewhere. POOR QUALITY OF SUPPLY

Inadequate generation capacity and the poor quality of the distribution network have resulted in poor quality of supply. Supply is characterized by planned and unplanned interruptions and deviations in voltage and frequency from prescribed parameters. There has been some improvement in these parameters in recent years owing to penalties and incentives for utilities for deviations. Lately, availability of fuel for power generation is becoming a significant constraint. Coal shortages are increasing and gas shortages are leading to a situation where plants are not able to operate to full capacity.

Threats THE RACE FOR THE FUELS:

While India’s reforms have attained enough critical mass and are slowly winding their way through the states, a more immediate concern on fuel shortages threatens to derail short-term growth prospects in the power sector. At the end of February, 24 plants (23,000 MW, 35% of total coal capacity) had coal stock of less than 7 days out of which about 8,000 MW had stock of less than 4 days. The failure to activate fuel supplies has threatened the operation of some plants and postponed the building of several others. In January, NTPC had to begin seeking alternate fuel supply options because the mines supporting its new pit head plants (Talcher –II and Rihand-II, total 2,000 MW) had yet to receive clearance. Of the 4,300 MW planned capacity additions off-track in the Xth Plan, almost 65% had slipped for fuel supply reasons10. The 100,000 MW of capacity additions needed through FY 2011 is unlikely to materialize unless India can find the fuel supply sources and distribution networks to support the projected growth.

Objectives

•

To provide 'Power on Demand by 2012'.

•

To make the sector commercially sound and self sustaining.

•

To provide reliable and quality power at an economic price.

•

To achieve environmentally sustainable power development.

•

To promote general awareness to achieve consensus on the need for reforms.

Strategies The strategies to realize above objectives have been evolved after a comprehensive, integrated and realistic assessment of the strengths of the sector and of the challenges confronting it. The process has led to a range of mutually interdependent and complementary strategies to counter the challenges and exploit the strengths/opportunities. The strategies integrate the supply side imperatives with demand side management, short and medium term measures with long-term action plans, operational measures with institutional and structural changes. The laid down objectives can be realized only if the plan is effectively implemented by all stake-holders in the power sector. Power is a concurrent subject under the Constitution. The states have the greater share of generation and transmission assets and almost the entire distribution under their control. They would need to play a very proactive role in effecting institutional and result oriented changes.

SWOT ANALYSIS OF T&R Strengths •

New plant with installed capacity of 6000MVA is under construction which will be functional by 2007 that will increase market share of TNR

•

Monopoly in induction furnace transformer range

•

ISO 9001:2000 certificate for adherence of international standards in design, development, procurement, production, installation & servicing. It also has BVQi certification.

•

Good corporate image

•

Overheads are less

•

On time deliveries

•

Established since 1981 so years of experience down the line rendering high techno-commercial excellence

•

Manufacturing shop floor and the corporate office at the same location renders better coordination of all the departments

•

One of the few national producers in the 220kv transformer segment

Weakness •

Traction transformer segment remains largely unexplored for T&R.

•

Power transformer segment requires still greater penetration both nationally and internationally.

•

Not having zonal corporate at strategic locations causes loss of market due to lack of vicinity with potential customers of different zones.

•

The installed capacity is 5500MVA but only 4000MVA is manufactured yearly(72% capacity utilization)

Opportunities •

Very few national producers in 220kv transformer segment

•

The whole of national power sector is expanding under the program ‘Power for all by 2012’. Almost around 100000MW of capacity addition is planned by 2012 in various small, medium and large different power plants.

•

With increase in infrastructural facility and growth of power sector future prospect for T&R are good

Threats •

Entry of global players of transformer manufacturing in India poses a major threat for TNR.

•

Under Utilization of capacity causes the organization to suffer losses on depreciation and other fronts that could cumulate to bigger amounts in long run.

Critical Issues •

Paradigm shift to efficiency based designs.

•

Innovations and developments through continuous R&D.

•

Time schedules and deadlines meet every time.

•

Perfect positioning of the product by selection of an appropriate method (using technology, cost, quality, service, either as them as a tool for that).

•

Identification suitable and aggressive marketing strategy.

•

Complete and continuous compliance to global standards.

•

To compete with global players the company has to find ways to provide transformers at the lowest cost.

DEMAND FORECAST FOR ELECTRICITY BASIS OF DEMAND FORECAST OF TRANSFORMERS GROWTH TREND OF INDIAN POWER SECTOR DEMAND FOR TRANSFORMER ELECTRICITY FORECAST UPTO 2030

MODULE - II

SUGGESTIONS

DEMAND FORECAST FOR ELECTRICITY Forecasting demand is both a science and an art. Econometric methods of forecasting, in the context of energy demand forecasting, can be described as ‘the science and art of specification, estimation, testing and evaluation of models of economic processes’ that drive the demand for fuels. The need and relevance of forecasting demand for an electric utility has become a much-discussed issue in the recent past. This has led to the development of various new tools and methods for forecasting. Need for good forecast There is an urgent need for precision in the demand forecasts. An underestimate could lead to under capacity, which would result in poor quality of service including localized brownouts, or even blackouts. An overestimate could lead to the authorization of a plant that may not be needed for several years. In view of the ongoing reform process, with associated unbundling of electricity supply services, tariff reforms and rising role of the private sector, a realistic assessment of demand assumes ever-greater importance. These are required not merely for ensuring optimal phasing of investments, a long term consideration, but also rationalizing pricing structure. The gestation period for power plants, which are set up to meet consumer demand, typically varies between 7 to12 years in the case of thermal and hydro plants and 3 to 5 years for gas-based plants. As a result, utilities must forecast demand for the long run (10 to 20 years), make plans to construct facilities and begin development well before the indices of forecast growth reverse or slowdown. The forecast further drives various plans and decisions on investment, construction and conservation.

Existing methods There is an array of methods that are available today for forecasting demand. An appropriate method is chosen based on the nature of the data available and the desired nature and level of detail of the forecasts. TREND METHOD

This method falls under the category of the non-causal models of demand forecasting that do not explain how the values of the variable being projected are determined. Here, we express the variable to be predicted purely as a function of time, rather than by relating it to other economic, demographic, policy and technological variables. This function of time is obtained as the function that best explains the available data. This method has been used by the 16th Electric Power Survey (EPS) of the Central Electricity Authority to forecast the consumption of most consumer categories except HT Industries. The Base Paper of the EPS, detailing the methodological issues, states that in the domestic, commercial and miscellaneous categories, the observed time series in the number of consumers and consumption per capita have been projected into the future, with adjustments for increase in appliance ownership. It is only for the HT industries that an end-use method is used. It also mentions that adjustments have been made to account for unmet demands due to the presence of power cuts, though the specific assumptions have not been elaborated upon. Thus, unrestricted demands were worked out for the future. The trend method has the advantage of its simplicity and ease of use. However, the main disadvantage of this approach lies in the fact that it ignores possible interaction of the variable under study with other economic factors. For example, the role of incomes, prices, population growth and urbanization, policy changes etc., are all ignored by the method. The underlying notion of trend analysis

is that time is the factor determining the value of the variable under study, or in other words, the pattern of the variable in the past will continue into the future. END-USE METHOD

The end-use approach attempts to capture the impact of energy usage patterns of various devices and systems. The end-use models for electricity demand focus on its various uses in the residential, commercial, agriculture and industrial sectors of the economy. E=SxNxPxH E = energy consumption of an appliance in kWh S = penetration level in terms of number of such appliances per customer N = number of customers P = power required by the appliance in kW H = hours of appliance use. This, when summed over different end-uses in a sector, gives the aggregate energy demand. The end-use approach is most effective when new technologies and fuels have to be introduced and when there is lack of adequate time-series data on trends in consumption and other variables. However, the approach demands a high level of detail on each of the end-uses. ECONOMETRIC APPROACH

This approach combines economic theory with statistical methods to produce a system of equations for forecasting energy demand. ED = f (Y, Pi, Pj, POP, T) Where ED = electricity demand Y = output or income Pi = own price Pj = price of related fuels

POP = population T = technology Several functional forms and combinations of these and other variables may have to be tried till the basic assumptions of the model are met and the relationship is found statistically significant. The econometric methods require a consistent set of information over a reasonably long duration. This requirement forms a pre-requisite for establishing both short-term and long-term relationships between the variables involved. Thus, for instance, if one were interested in knowing the price elasticity of demand, it is hard to arrive at any meaningful estimates, given the long period of administered tariffs and supply bottlenecks. However, the price effect will have an important role to play in the years to come. In such a case, one may have to broaden the set of explanatory variables apart from relying on more rigorous econometric techniques to get around the problem. Another criticism of this method is that during the process of forecasting it is incorrect to assume a particular growth rate for the explanatory variables. Further, the approach fails to incorporate or capture, in any way, the role of certain policy measures/ economic shocks that might otherwise result in a change in the behavior of the variable being explained. TIME SERIES METHODS

A time series is defined to be an ordered set of data values of a certain variable. Time series models are, essentially, econometric models where the only explanatory variables used are lagged values of the variable to be explained and predicted. The intuition underlying time-series processes is that the future behavior of variables is related

to

its

past

values,

both

actual

and

predicted,

with

some

adaptation/adjustment built-in to take care of how past realizations deviated from those expected. Thus, the essential prerequisite for a time series forecasting technique is data for the last 20 to30 time periods. In an econometric model, the explanatory variables (such as incomes, prices, population etc.) are used as causal factors while in the case of time series models only lagged (or previous) values of the same variable are used in the prediction.

Econometric models are usually preferred for long term forecasts. Another advantage of time series models is their structural simplicity. They do not require collection of data on multiple variables. Observations on the variable under study are completely sufficient. A disadvantage of these models, however, is that they do not describe a cause-and-effect relationship. Thus, a time series does not provide insights into why changes occurred in the variable. Method used for Electricity Demand Forecasting in report We have used the Trend analysis approach for forecasting the demand of transformers (Electricity) because it is a simple method and considers the effect of few economic variables. It is not possible to evaluate all the variables which affect the growth of power sector. While studying the past data on increase in installed capacity in India, we found that the installed capacity has increased at a compounded growth rate of 5.5% in last 15 years in spite of different variations in different variables. Hence, we analyze that the same trend will continue in future. The same approach was used by the 16th electric power survey (EPS) of the central electricity authority (CEA) to forecast the electricity consumption pattern.

BASIS OF DEMAND FORECAST OF TRANSFORMERS Transformer is an industrial product whose growth has remained parallel with the growth in the power sector. So to forecast the demand of transformers we need to forecast the growth of power sector. Study of Transformers Demand Demand forecast for Generation, Transmission & Distribution. Generation:Transformers for Generating Station, different norms are followed as detailed under For Thermal, Hydel, Nuclear & Gas based Power Stations Power Station Transformer Requirements for each 1 MW Addition Thermal

1.625 : 1

Hydro

1.30 : 1

Nuclear

1.55 : 1

Gas

1.30 : 1

Average

1.5 times

Replacement Demand A

Power Transformer

1% of Installed Capacity

Either by Aging or Failure Distribution Transformer B

3% of Installed Capacity

Standby Demand OR Demand for Expansion Demand

Key Parameters used for Projecting the Transformation Demand for each 1MVA Addition of Generation MVA of G. T. 1

Transmission Capacity v/s Installed Generating Capacity i.e. (T.C./I.G.C.)

1.2 (800/400kV) +1.2 (400/220kV) 2.4

2

System Peak Demand to Installed Generating Capacity i.e. (S.P.D./I.G.C.)

3

Transmission Capacity to System Peak Demand

1.2

4

5

Connected Load to Installed Generating

2.4 (132/33kV)

Capacity

(66/11-22kV)

i.e. (C.L. /I.G.C.)

(33/11kV)

Power Transformer Capacity to Distribution Load

1.2 (11/0.433kV) (11/0.230kV)

i.e. (P.T. /D.T.) Total Transmission & Distribution Demand /

7.2 times

Generating Capacity

Total (1+2+3) = 7.2(Transmission + Distribution) + 1.5(Generation) + 1(Replacement) = 9.7 time of Generation Capacity The above standards are followed in Industry. Formulae used for calculation of electricity demand Compounded Growth Rate: Expected Growth Rate = (Current Year/ Base Year) ^ (No. of years between current year and base year) – 1 Flat Growth Rate: Annual Growth Rate =

(Current Year – Base Year) / Base Year *100/No. of years between current and base year

GROWTH TREND OF INDIAN POWER SECTOR GROWTH BASED ON GENERATION CAPACITY

Generating Capacity of India: Year

Thermal

Hydro & Wind

Nuclear

RES

Total

1991-92

48086

19194

1785

----

69065

1995-96

60083

20985

2225

----

83293

1999-00

70493

25012

2680

----

98185

2003-04

77974

31995

2720

----

112689

2005-06

82410

32326

3900

6191

Source: Ministry of Power

Energy Generation Pattern

Electricity (MW)

90000 75000 60000 45000 30000 15000 0

1991-92

1995-96

1999-00

2003-04

2005-06

Year

Compounded Growth Rate Taking 1991-92 as base year: Year

Growth Rate

Percentage

1995-96

1.0382

3.82

1999-00

1.0399

3.99

2003-04

1.0384

3.84

2005-06

1.0402

4.02

Average

3.92

Annual Growth Rate Taking 1991-92 as base year: Year

Percentage

1995-96

4.12

1999-00

4.68

2003-04

4.86

2005-06

5.38

Average

4.76

124827

Compounded Growth Rate Taking 1995-96 as Base Year: Year

Growth Rate

Percentage

1999-00

1.0420

4.2

2003-04

1.0385

3.85

2005-06

1.0413

4.13

Average

4.06

Annual Growth Rate taking 1995-96 as base year: Year

Percentage

1999-00

4.47

2003-04

4.41

2005-06

4.99

Average 4.62

Compounded Growth Rate taking 1999-00 as base year: Year

Growth Rate

Percentage

2003-04

1.0350

3.50

2005-06

1.0408

4.08

Average 3.79

Annual Growth Rate taking 1999-00 as base year: Year

Percentage

2003-04

3.693

2005-06

4.522

Average 4.11

Compounded Growth Rate taking 2003-04 as base year Year 2005-06

Growth Rate 1.0525

Percentage 5.25

Annual Growth Rate taking 2003-04 as base year Year 2005-06

Percentage 5.386

Growth rate in 1991 to 2000 has remained low because of various issues related to the sector( these reasons have already been discussed in SWOT analysis of Indian Power Sector).The increase in growth rate from 2001 to 2006 is as a result of power sector reforms (Electricity Act 2003) and increase in GDP of the country.

GROWTH BASED ON ELECTRICITY GENERATED

No. of units Generated (in Billion KWh)

1992-93

301

1998-99

451

2002-03

531.6

2003-04

558.6

2004-05

583.8

2005-06

610

Electricity (Bn KWh)

Year

Electricity Generated 700 600 500 400 300 200 100 0 1992-93 1998-99 2002-03 2003-04 2004-05 2005-06 Year

Compounded Growth Rate taking 1992-93 as base year Year

Growth Rate

Percentage

1998-99

1.0697

6.97

2002-03

1.0585

5.85

2003-04

1.0578

5.78

2004-05

1.0568

5.68

2005-06

1.0558

5.58

Average

5.97

Annual Growth Rate Taking 1991-92 as base year Year

Percentage

1998-99

8.31

2002-03

7.66

2003-04

7.78

2004-05

7.83

2005-06

7.90

Average

7.89

Compounded Growth Rate taking 1998-99 as base year Year

Growth Rate

Percentage

2002-03

1.0420

4.20

2003-04

1.0437

4.37

2004-05

1.0440

4.40

2005-06

1.0441

4.41

Average

4.35

Annual Growth Rate Taking 1998-99 as base year Year

Percentage

2002-03

4.47

2003-04

4.77

2004-05

4.91

2005-06

5.04

Average

4.8

Compounded Growth Rate taking 2002-03 as base year Year

Growth Rate

Percentage

2003-04

1.0508

5.08

2004-05

1.0479

4.79

2005-06

1.0469

4.69

Average 4.85

Annual Growth Rate Taking 1998-99 as base year Year

Percentage

2003-04

5.08

2004-05

4.91

2005-06

4.92

Average 4.97

Compounded Growth Rate taking 2003-04 as base year Year

Growth Rate

Percentage

2004-05

1.0451

4.51

2005-06

1.0450

4.50

Average 4.51

Annual Growth Rate Taking 2003-04 as base year Year

Percentage

2004-05

4.51

2005-06

4.60

Average 4.56

Compounded Growth Rate taking 2004-05 as base year Year 2005-06

Growth Rate 1.0449

Percentage 4.49

Annual Growth Rate Taking 2004-05 as base year Year 2005-06

Percentage 4.49

DEMAND FOR TRANSFORMER Because of renovation and modernization of power plants, efficiency improvement in generation, reduction of T & D losses, energy generated has increased at the rate of 7% though the installed capacity has increased at the rate of 5-5.5%. Ministry of power has projected capacity addition of 100 GW by 2012. That means total capacity in 2012 will be 212 GW but, past trend shows that only 60-65% of the projected capacity has actually been implemented. Hence, capacity addition till 2012 will be 0.65*Projected = 0.6*100 = 60 GW, this is actually feasible. Total installed capacity in 2012 will be 124.827 + 60 = 172.827 GW. Therefore compounded growth rate = (172.627 / 124.827)1/6 – 1 = 5.57% Taking GDP growth rate nearly 6%, the Electricity-GDP elasticity would be 0.95 for the tenth plan. Electricity-GDP elasticity in India Plan

Year

Elasticity

I

1951-1956

3.14

II

1956-1961

3.38

III

1961-1966

5.04

IV

1969-1974

1.85

V

1974-1979

1.88

VI

1980-1985

1.39

VII

1985-1990

1.5

VIII

1992-1997

0.97

IX

1997-2002

0.75

X

2002-2007

0.95

Source: calculated and compiled from data from the planning commission and ministry of finance (economic surveys)

Looking at the above table we see that rapid growth occurred in earlier decades, and current growth in electricity capacity has been less than that of GDP. While some of this might be due to sectoral changes in the economy (For Example, increased role of the service sector), this also highlights the difficulties for planners when attempting

to interpret correlation versus causality. Nonetheless, given the shortfall of today (energy deficit of 8.3% and peak deficit of 12.5%), we can safely forecast that 8% economic growth will require 8000-10000 MW increase in capacity per annum, if not more. Looking at the relation between growth in demand of transformers with respect to growth in power sector we found that, Demand of transformer (MVA) = 9.7 * installed generating capacity Therefore, demand of transformer will be = 100000 MW (Projected addition) * 0.6(Expected implementation of plan) * 9.7 = 582000 MVA (for next 6 Years) That calls for a yearly demand of 582000 / 6 = 97000 MVA Hence for next 6 years average demand of power transformers will be 97000 MVA yearly. This excludes the demand of transformers being used for industrial purpose in captive power plants. Energy Consumption Pattern in India in 2006 We have an installed capacity of about 1,24,827 MW of electricity, which is only 3% of world capacity. Forecasts of our Energy requirements by 2030, when our population may touch 1.4 billion people, indicate that demand from power sector will increase from the existing capacity to about 450,000 MW. This assumes an energy growth rate of 5.5% per annum.

ELECTRICITY FORECAST UP TO 2030 Based on our calculations we forecast a growth rate of 5.57% for power sector, we have forecasted installed generating capacity up to the year 2030.

Energy Generation Pattern

Units Installed (MW)

500000

Year 2004 2006 2010 2015 2020 2025 2030

400000 300000 200000 100000 0

2004

2006

2010

2015

2020

2025

Electricity (MW) 112000 124827 154639 202107 264145 345227 451198

2030

Year

Calculations: Electricity generation in current year= Electricity generation in previous year* (1.0557)^ (Number of years between Current year and previous year)

DEMAND FORECAST FOR POWER AND DISTRIBUTION TRANSFORMER FOR T&R Year (1)

Capacity Addition (2)

Transformer Requirement (3)

2006

12824

2010

Share of TNR5% (5)

124.42

Yearly requirement of Transformer (4) 62210

3110.54

Required capacity for TNR – Utilized capacity 72% (6) 4320

29812

289.18

72295

3615

5021

2015

47468

460.44

92087.92

4604.4

6395

2020

62038

610.77

120353.72

6018

8358

2025

81082

786.5

157300

7865

10924

2030

105971

1027.92

205584

10279

14276

Formulae used: 1. Capacity Addition = installed capacity in present year – installed capacity in previous year 2. Yearly requirement = capacity addition / no. of years 3. Yearly requirement of transformer = 9.7 * Yearly addition in installed capacity 4. Share of TNR = 0.05 * yearly requirement of transformers 5. Required manufacturing capacity for TNR = share of TNR / 0.72 At present T&R’s market share is 5%. Out of the total manufacturing capacity of 5500 MVA T&R is utilizing 72% only. So by taking the constant capacity utilization of 72% we have found the required manufacturing capacity in order to maintain constant market share of 5%. The above data takes into account only the power transformer requirement of the country. So the required installed capacity has been forecasted considering the requirement of power transformers only. Furnace transformer is an industrial product and its demand is highly industry specific. So it is merely impossible to forecast the demand of furnace transformers. That’s why we have forecasted the capacity based on the demand of power transformers only. MARKET SCENARIO FOR T&R UP TO 2010 Financial

Total

Capacity

Requirement

Projected

Market

year

Generating

addition -

of

production of

Share

Capacity

Country

transformer

T&R

– T&R

2004-05

118238

----

----

----

----

2005-06

124827

6589

63913.3

4600

7.1

2006-07

131780

6953

67444.1

5800

8.6

2007-08

139120

7340

71198

7000

9.83

2008-09

146870

7750

75175

7200

9.58

2009-10

155050

8180

79346

7200

9.07

Formulae used: •

Total generating capacity is taken 5.5% growth in installed generating capacity in the country

•

Capacity addition = generating capacity in current year – generating capacity in previous year

•

Requirement of transformers = 9.7 * capacity addition

•

Projected production of T&R – Data taken from company’s future plans

•

Market share = projected production / requirement of transformer * 100

CONCLUSIONS With the efforts of government of India to harness the power sector, it is bound to grow. And as seen earlier the growth in demand of transformer is directly proportional to the growth of power sector. Hence transformer industry as a whole has great future. Transformer is basically a capital intensive product. Its life span expectation is 20-25 years normally. It operates with an efficiently of 90-97% due to absence of rotating parts. However due to continuous and high voltage operation it is highly prone to faults, deterioration of oil, puncturing of insulators etc. Transformers are bought through open bids and tenders. So the company from who to purchase is decided depending on price, quality, after sales service, and company’s reputation and last but not the least relations. Looking at T&R’s present market position and past sales it holds around 5% of the total transformer market. It is going to expand its operation by opening a new plant with capacity of 6000MVA (which will be functional from January 2007) that will increase the market share of the company. The company’s main product is power transformer which contributes 65% of the total revenue and it has monopoly in furnace transformer which contributes 35% of the revenue. We can say that it is well established in furnace transformer segment. It is doing well in 220 & 132 kV class transformers. In order to sustain competition T&R has to expand its areas of operation. Demand of 440kV class transformer is high, so it should enter into this segment. Marketing is only factor in attracting and keeping customers. Best marketing departments in the world cannot sell product that are poorly made or fail to meet a need. Marketing department is made effectively only in companies whose employees have implemented a comparatively superior Customer Value Delivery System. A high performance companies generally focus on cross functional skill rather than functional strengths.

Advertisement strategy plays vital role in increasing the market share of company. Past data shows that T&R is spending too little in advertisements. In order to increase its customer base it should give more weightage to advertisements. It should adopt recent modes of advertisements like industrial magazines, online advertisements, sponsorships, trade fairs, industrial directories, online directories, easy access from search engines, and institutional memberships. .

MODES OF ADVERTISEMENT T & R IN DIFFERENT SEARCH ENGINES

MODULE - III

ANALYSIS AND RECOMMENDATIONS

MODES OF ADVERTISEMENT For different kind of products, different modes of advertising are suitable. Transformer is a customized and specialty product and it is having a special class of industrial customers. Advertising on Television or by hoarding would not target to the specific audience. Advertisement for T&R should be targeted to the Industrial customers, specially purchasing departments of an industry. The best modes of advertisement for industrial product could be industrial magazines, online advertisements, sponsorships, trade fairs, industrial directories, online directories, easy access from search engines, and institutional memberships. There are many national and international magazines available for electrical industrial information. Subscription of many of these magazines is free so circulation copies are generally large in number. Some of the magazines are: CHIP, Electronics for U, Electrical Engineer. Internet advertisement which includes online directories and CD version of the same data. Some of online directories also include hard copy. 1. Kompass: It is the world’s largest online directory with presence in 75 global markets, listing of 19lakh companies and available in 25 international languages. It includes online directory with CD and Hard copy (Country wise). 2. Trade India and IndiaMart: These are leading Indian online directories. It contains over a million companies listed online. 3. TRIM: It is Indian industrial directory in CD and hard copy format. As the Web is growing exponentially, online marketing has been changed by the newly provided technological capacities and digital channels of sales. Online marketing or e-marketing is the adaptation and development of marketing strategies in the Web environment and includes all factors that affect a Web site's efficiency, like the idea, the content, the structure, the interface, the implementation, the maintenance, the promotion and the advertising. Since more and more businesses are using the Web to conduct their activities, issues like interface usability, easy navigation and effective supporting services become critical and influence its visiting

success dramatically. However, one important problem that arises is that Web users are confronted with too many options. Currently, Web personalization is the most promising approach to alleviate this information overload and to provide users with tailored experiences. It improves user interaction with Web sites and offers them the ability to establish long-term and loyal relationships. As customers gain Web site-specific skills they come to perceive the Web site differently and more favorably than inexperienced customers. This is not only due to familiarity, emotional attachment, liking, trust, etc. Often, it is the result of an objective change in the utility of the interface as a result of skill acquisition. The degree of international Internet access has increased with amazing speed in recent years (How Many Online, 1999). In fact, some sources indicate that the number of global Internet users grew from 563 million to 580 million in the last half of 2002 alone, with much of this growth occurring outside of North America ('Nielsen Net Ratings,' 2003). In industrialized nations, Internet access is expanding at an impressive pace. Western Europe has experienced rapid growth in online business transactions. As a report in The Economist notes, nearly 466 Swedes, 685 Brits, and 1,800 Germans open a new online brokerage account every day ('Going for Brokers,' 2000). Moreover, the 'UK Market Overview' for the Internet Marketing Hotlist (2000) claims that one in three households in Europe will have Internet access by 2005. In Japan, over 50% of the adult population is online, and the total number of Japanese Internet users increased by some 13.5 million in 2002 ('AsiaBizTech,' 2003). As a result of these trends, e-commerce in Western Europe is expected to account for 22.6% of the global online market in 2004 ('Forrester Projects $6.8 Trillion for 2004,' 2001). Similarly, Japan is expected to account for 8.4% of e-commerce sales in 2004 (compared with 12.8% in North America) and Japanese has become the third most prevalent language in online exchanges ('Forrester Projects $6.8 Trillion for 2004,' 2001; 'Global Internet Statistics,' 2003). Such growth brings with it a new group of online consumers companies can tap. The most astounding international growth, however, is taking place in developing nations, due in part to a mix of public and private sector projects.

It is increasingly important that marketers develop effective international e-marketing materials now, while much of the world is only starting to get online. By taking advantage of such opportunities, organizations can gain online orders in relatively untapped overseas markets at a time when the online marketplace in these regions remains relatively open. Taking advantage of such an international opportunity, however, is more complicated than one might think. Increased access to international markets does not necessarily mean increased acceptance of ideas or products. Rather, differing expectations of how concepts should be presented affect cross-cultural transfers of information. Cultural differences in presentation expectations, moreover, can be pronounced in relation to visual design. As Web sites are essentially visual media, these expectations can have an important effect on the success of e-marketing materials. People across the world generally access the information about the different business from search engines. It is the gateway for all required information on internet. Most popular search engines are Google, MSN and Yahoo. And others which are being popular are altavista, vivisimo, ask etc. Click on the website through search engines depends on the place in different search engines. Search algorithm is set in search engine such that each search keyword gives different results.

T & R RANK IN DIFFERENT SEARCH ENGINES Company and product specific keywords which could be used for general business purpose and important for T&R and place of the link in three search engines are found as below:

Place in search engine Search Key Word Google MSN Yahoo! st st st rd st 1 page 3 1 page 1st place 1 Transformers and 1 page 1 place Rectifiers India Ltd place 2 Transformer India

1st page 1st place

3 Transformer

Not found in first Not found in 30 pages first 15 pages

Not found in first 5 pages

4 Transformer manufacturers India

1st page 2nd place Pages from India- not in first 5 pages Not found in first 10 pages

Not found In first 15 pages

Not found in first 5 pages

1st page 8th place

JMTRIL-2nd page 5th place

5 Power Transformer India

6th page 3rd place

JMTRIL-2nd page 1st place Transformerindia3rd page 5th place

Transformerindia2nd page 9th place -

As on 06th June, 2006.

Google found 37300000 results for transformer as search key word. T&R has two domains, transformerindia.com and jmtril.com.

ANALYSIS & RECOMMENDATIONS Survey reveals most search engine users do not look further than the third page of results and of them 70% will look only from first page and most of others will turn back from third page. We can see that for company specific name search, key word search gives result on the first page only. But by generalized words the results could not be seen in 1st page in MSN and Yahoo! search engines. And for product specific search like Power transformer or Furnace transformer the results are not satisfactory in any of the search engines. Optimization in Google is satisfactory, but product name specific optimization is required which are the most potential keywords. Also MSN and Yahoo! are the search engines which are widely used in US, UK and many other countries. So Optimization for these search engines is also necessary. Another way to increase rank in search engine is to add material (catalogues, technical information etc.) in website itself which give clicks on the link and the rank will automatically come within popular range. Voting through other websites could also be used. This facility is generally paid. Some SEO (Search Engine Optimization) service provider companies, whose website’s rank in search engine is high, provides votes (Attracts the customer’s company link click by putting it on their website). They also put company links in different websites whose click rate is high so its clicks would automatically increase and rank goes higher. A SEO provider charge for such facility is generally $500$2000 per year. But it keeps top rank in almost all search engines which are widely used.

POWER SECTOR STUDY FOR DEVELOPING COUNTRIES VIETNAM PHILIPPINES SOUTH AFRICA

MODULE - IV

GHANA

VIETNAM Vietnam presently has 28 operational power stations having total capacity of 11,200 MW. Per capita electricity consumption remained at a modest 400kWh last year. Vietnam's electric power industry supplied 53 billion kWh in 2005 and predicts to rise to 100 billion in 2010. During the period from 2001 – 2005, demand for electricity grew faster than projected, achieving average annual growth of 14.7 percent. Based on continuing strong energy demand, combined with forecasted annual GDP growth rates of about 7–8 percent over the period of 2005 – 2010, Vietnam’s Ministry of Industry estimates the demand for electricity will grow annually by 15-17 percent over the next five years (2010). The Government of Vietnam is seeking to encourage foreign investment in electric generation projects, although the sector remains largely under the control of Electricity of Vietnam (EVN), a state-owned monopoly with 52 subsidiaries, which is in turn overseen by the Ministry of Industry (MOI). Economic expansion, rising living standards, increasing consumerism, accelerating industrialization, and Vietnam's plan to increase the electrification rate in rural areas from the current 91.25 percent to nearly 100 percent by 2020 is fueling strong energy demand. Demand in the power sector was acute. For example, electricity consumption was growing on average by 12.6% annually between 1990 and 1995, almost double the average GDP growth rate of 7.8% during this period. Nevertheless, the World Bank's projections to the year 2010 estimate that electricity supply would need to increase 70% faster than GDP in order to meet demand under planned economic growth targets of 4-5% (World Bank 1999). EVN plans to develop a national electricity grid by 2020 by patching together several regional grids. The country’s distribution infrastructure is poorly maintained.

The $56 million project was funded by the World Bank. Vietnam is considering the construction of a 500-KV, 188-mile power line from Pleiku to Danang city at a cost of $130 million. In September 2004, EVN announced plans to invest $330 million over five years to upgrade transmission lines surrounding Hanoi. Vietnam plans to complete its first nuclear power plant by 2020 as an alternate means on meeting demand. In December 2004, the Vietnamese Ministry of Science and Technology submitted a pre-feasibility study for the 2,000-MW nuclear plant to the National Assembly. The state power company, Electricity of Vietnam (EVN), plans to commission 16 hydropower plants by 2010. Vinacoal also has plans to construct eight additional coal-fired power plants. Vietnam currently has five hydroelectric expansions underway. The country’s Son La project, which began construction in late 2005, is anticipated to have a generating capacity of 2,400 MW by 2012, will be the largest hydroelectric project in Vietnam when completed. Electricity Demand (base case scenario 4-5% GDP growth)

Annual Demand Growth (base case scenario)

Source: World Bank, 1999

According to the Vietnamese Government’s Power Development Master Plan V, to meet the growing demand for power estimated at 61 billion kWh in 2006, 89-93 billion kWh in 2010, and 160-220 billion kWh in 2020, an investment of $19-20 billion from 2005–2010 will be needed. Achieving this goal would require development of approximately 32 to 37 new power generation projects, totaling 12,400 MW in capacity, including up to 20 hydroelectric plants with 4,000 MW in generating capacity; eight gas or oil power plants (5,200 MW); and seven coal-fired plants (3,200 MW). Implementation of these projects would also require construction of about 400 km of 500kV transmission lines; 2,639 km of 220 kV transmission line; eight 500 kV substations with a total capacity of 4.200 MVA; 43 220 kV substations with a combined capacity of 7,689 kVA; together with 300,000 km of low and medium voltage distribution lines.

Composition Forecast of Power Generation Capacity for 2004 Gas 40%

Hydro 41%

Others 2%

Coal 17%

Composition Forecast of Power Generation Capacity for 2010 Gas 27%

Hydro 56%

Coal 16% Others 1%

Specific Opportunities •

Sales opportunities in 33 ongoing and 28 upcoming power generation and transmission projects (a specific list of these projects will be provided upon request).

•

$327.8 million Second Transmission and Distribution Project II funded by the World Bank ($200 million) and the Vietnamese government (approved in July 2005 and to be completed in December 2010).

•

$380 million Northern Rural Power Project funded by ADB ($120 million), AFD (EUR0 40 million) and the Vietnamese government ($103 million). This project was approved in August 2005 and is to be completed in June 2009.

•

Vietnam Needs US$4 Bn for Power Sector Development in 2006-15

•

The Energy Institute June 5, 2006 submitted its complete supplement to the power development plan for the 2006-2015 period, through which Vietnam’s power sector will need some VND63,100 billion (roughly US$4 billion) a year to develop new power sources and works to serve power purchase from outside sources.

Under the supplemented plan, the northern region will build and operate four hydropower and nine thermal power plants with combined capacity of 5,500 megawatt, including 600MW to be bought from China in 2007-2010 period, whereas central Vietnam will construct 13 hydropower plants and one power works to purchase electricity from outside with a combined capacity of some 2,600MW. Meanwhile, seven hydroelectricity sources and five thermo-power plants with total capacity of 4,600MW will be built in the southern region. Southern Vietnam, which currently provides power to the northern and central regions, will receive some 8 billion kWh of electricity back from the northern and central regions from 2010. In the 2006-2010 alone, the investment capital for the power sector will account for 13.7 per cent of Vietnam’s total investment. In the 2006-2010, power growth rate for production activities is projected to rise 16.1 per cent; 11 per cent in 2011-2015; 9.1 per cent from 2016 to 2010 and down to 8 per cent from 2021 to 2025.

THE PHILIPPINES The Philippines is an archipelago of more than 7100 islands in South East Asia. The country is divided into three major island groups. The Luzon group, including Palawan, is the largest, representing about 35% of the total land area of the country. The Mindanao group in the south is the second largest and includes the islands of Sulu and Tawi-Tawi. The Visayas is the third major island group, and includes Cebu, Bohol, Panay, Samar, Negros and Leyte. In 2003, the Philippines generated a total of 52,863 Gigawatt-hours (GWh) of electric power. Coal-fired plants accounted for 27 percent of total power generated, followed by power plants running on indigenous energy sources such as natural gas (25 percent), geothermal (19 percent) and hydropower (15 percent). Oil-fired power plants constituted the remaining 14 percent of total power generated throughout the Philippines.

Installed Generating Capacity Hydro 15%

Oil 14%

Geothermal 19% Coal 27% Natural Gas 25%

The Philippine Energy Plan, or PEP (2005-2014), projects power demand will continue to grow strongly, at an estimated annual average of 7 to 9 percent. The Philippine Department of Energy (DOE) estimates that the country will need to add 9,228 MW of new capacity over the next ten years. The expected surge in electric power demand – due to such factors as population growth, increased agro-industrial activity, and growth in mining, telecommunications,

and commercial and residential construction – will necessitate the addition of new generating capacity. The Philippine government is providing fiscal and other incentives to encourage investment in the energy sector, notably energy sourcing, power generation and transmission, and rural electrification. To assist in more efficient market uptake, the Wholesale Electricity Spot Market (WESM) is currently being developed and is expected to become operational by this year. The WESM intends to pool electricity output for sale to end-users in real time. Significant opportunities await suppliers to projects that will tap the country's indigenous resources such as wind, geothermal, solar, hydro and biomass. Moreover, the National Transmission Corporation (TransCo) is expanding and improving the country's transmission infrastructure, creating further opportunity. Distribution companies and electric cooperatives are also interested in products and technology that will reduce system losses and provide more efficient servicing of their respective franchise areas. The Philippine power system consists of three major island grids, namely Luzon, Visayas and Mindanao; there are also several small island grids. The Luzon grid is the largest, accounting for 75% of total generation and installed capacity. The Visayas grid comprises the islands of Cebu, Leyte, Negros, Panay, Samar and (soon) Bohol. Together they amount to around 10% of total generation and installed capacity. The Mindanao grid accounts for about 15% of total generation and installed capacity. Luzon, which includes the capital Manila, has about 75% of national electricity demand. Prices are such that industrial and commercial customers subsidise residential customers, and the Luzon grid subsidises those of the Visayas and Mindanao. The power supply and demand situation In 2004, the Philippines had a total installed capacity of 15,763 MW of electric power (79.14% located in Luzon) of which 14,008 MW was considered dependable.

Forecasts of the Department of Energy (DOE) show that an additional 9,225 MW of new capacity is needed over the next 10 years to avert the projected power supply shortages up Mindanao by 2009, Visayas by 2010, and Luzon by 2012. Philippines

2005

2006

2009

2010

2012

Existing Demand

11086

11086

11086

10876

10226

Peak Demand

6953

7397

8948

9545

10870

Existing Capacity

1435

1435

1410

1410

1366

Peak Demand

1113

1170

1383

1463

1644

Existing Capacity

1515

1566

1681

1681

1681

Peak Demand

1371

1458

1697

1784

2110

Luzon

Visayas

Mindanao

Source: Power Development Plan, 2004-2014, Department of Energy

The government’s forecast is for an average growth in demand of about 9% over the next 10 years. This will require about 14 GW of plant construction and further funding of over US$20 billion. The requirement is therefore to create a market environment that encourages private investment to provide this additional capacity. The government wants to reduce its own financial risks by requiring the private sector to assume risks in the future generation market. This would mean doing without longterm contracts with the government or other government guarantees. Similarly, the government wishes to encourage investment in the distribution sector to connect some 10 000 villages to the main system. With the relatively recent power shortages in mind, together with high forecast growth and the country’s present low per capita GDP and electricity consumption, the government’s policy is focused on the requirement to deliver a reliable and secure supply of electrical power. To improve social conditions for the population, another, compatible, requirement is the total electrification of the country.

To deliver these requirements the government has the following enabling objectives: •

Increase the investment of private capital in the power industry, while

•

Minimizing the government’s financial commitment.

•

Create an environment of competition and accountability.

•

Deliver competitive and affordable prices.

•

Improve operational and economic efficiency.

•

Make transparent the social subsidies.

•

Share social and other costs among all users.

SOUTH AFRICA Parastatal company Eskom, one of the largest utilities in the world, generates nearly all of South Africa’s electricity. Eskom’s 35,060 megawatts (MW) of nominal generating capacity, which is primarily coal-fired (34,532 MW), includes one nuclear power station at Koeberg (1,930 MW), two gas turbine facilities (342 MW), six conventional hydroelectric plants (600 MW), and two hydroelectric pumped-storage stations (1,400 MW). Although Eskom has three mothballed coal-fired facilities (3,800 MW), it produces adequate electricity for domestic use and exports power to Botswana, Lesotho, Mozambique, Namibia, Swaziland, and Zimbabwe. Eskom has asked for government permission to sell three coal-fired plants (1,460 MW) that would otherwise be scrapped. Given the prospect of reaching its peak capacity in 2007, Eskom announced in June 2004 plans to bring its three mothballed power stations back into service at a cost of $1.96 billion. The company, which has little experience in the recommissioning of stations, is looking for a partner to assist in the effort. South African municipalities own and operate 2,436 MW of generating capacity, and an additional 836 MW of generating capacity is privately held.

South Africa’s excess electricity capacity will likely be exhausted by 2011; if the country’s economy grows at a higher rate than expected, capacity may be exhausted by 2007. In 2004, fears that electricity was becoming unaffordable for the poor forced the NER to stop charging inflated electricity rates to generate income into new generation initiatives. The 2004 tariff rate of 2.5% was set below the rate of inflation to ensure that electricity is affordable for everyone. Improvements are being made to the South African electricity infrastructure. In October 2004, the South African government announced that it would spend $26 billion on its power and transport sector over the next five years. In terms of transmission, the national, integrated grid comprises 26000 km of lines. Peak demand on the grid is about 28 000 MW.

On the demand side, in 1998, there were 5.8 million electricity customers. In terms of total electricity consumed, domestic consumers accounted for 19% manufacturing – 49%, mining – 19% and commercial transport and agricultural users the rest. South Africa sells electricity to neighboring countries (Swaziland, Botswana, Mozambique, Namibia and Zimbabwe) representing less than 2% of total sales. At first glance the South African Electricity Supply Industry has performed well. Eskom supplies electricity at amongst the lowest prices in the world. Reliability and quality of supply are good.

The national electricity utility is commercially run with no recourse to the national fiscal. The industry has accomplished an unprecedented national electrification Programme, connecting about 2.5 million additional households over the past 6 years, thereby increasing the proportion of the population with access to electricity from about one third of the population to about two thirds.

Electricity Demand Forecast Long term energy growth in SA is primarily driven by increased industrial and residential (electrification) load. In the medium term (i.e. between 1997 and 2002), natural electricity consumption growth is predicted between 4.2 % and 2.2 % per annum, with long term growth stabilizing between 3.5 % and 1.5 % per annum as shown in figure below. Fairly broad growth rate ranges are used in the planning process to account for a range of future economic growth scenarios. An average growth rate (moderate) is used in the ensuing discussion however to illustrate the relative contributions of end-uses to the system demand profile. The growth in residential (electrification) load significantly alters the type of capacity required to meet the demand. Annual load factor deterioration from almost 80 % to about 70 % is projected, with the average winter week peak to off peak differential ratio declining some 17 % between 1996 and 2016.

Eskom Sales Growth Forecast The Eskom generation capacity position is superimposed in Figure below, including a 15 % reserve margin and current interruptible load agreements (treated as supply side resources for modeling purposes).

Summary Current structure of the electricity market in SA electricity market in SA Generation - Eskom 96% Transmission - Eskom 100% Distribution – Eskom 50% Municipalities 50% No competition

GHANA Facts on Ghana’s Electric Power With a customer base of approximately 1.4 million, it has been estimated that 45- 47 percent of Ghanaians, including 15- 17 percent of the rural population, have access to grid electricity with a per capita electricity consumption of 358 kWh. All the regional capitals have been connected to the grid. Electricity usage in the rural areas is estimated to be higher in the coastal (27 percent) and forest (19 percent) ecological zones, than in the savannah (4.3 percent) areas of the country. In 2004, Ghanaians consumed 5,158 gigawatthours (GWh) of electricity. It is estimated that about half of this amount is consumed by domestic (or residential) consumers for household uses. Commercial and industrial users account for the rest. The majority of the customers are in service territories of the Electricity Company of Ghana (ECG) and the Northern Electrification Department (NED) and they are regulated. Current Power System Facilities The total installed generation capacity is 1,778 MW. Electricity and population growth In Ghana, electricity consumption has been growing at 10 to 15 percent per annum for the last two decades. It is projected that the average demand growth over the next decade will be about 6 percent per year. As a result, consumption of electricity will reach 9,300 GWh by 2010. The projected electricity growth assumption has profound economic, financial, social and environmental implications for the country. The aspirations of developing countries for higher living standards can only be satisfied through sustained development of their electric power markets as part of their basic infrastructure. Electricity demand will grow much faster than overall economic growth (4-5 percent per year) or than population growth (which is less than

two percent a year) because continuing urbanization will allow newly urbanized segments of the population to expand their electricity consumption manifold. Urbanization in Ghana is expected to increase from around 40 percent in 2000 to about 55 percent in 2012 and eventually to 60 percent by 2020. A little more than a third of the urban population lives in Greater Accra and is expected to reach around 40 percent by 2020. A considerable percentage of household expenditure goes into energy. Clearly, with the Ghanaian economy growing, increasing urban populations will consume more electricity. The Energy Commission (EC) estimates that residential demand may reach anywhere between 7,000 and 13,000 GWh by 2020 depending on the rate of economic growth and urbanization. The residential sector is not the only segment expected to grow; commercial and industrial consumption will grow as well to 3,000 to 10,000 GWh by 2020 according to the EC. If VALCO is fully operational, an additional 2,000 GWh should be expected. In order to meet this increasing demand, new power generation as well as transmission and distribution facilities will have to be built. Ghanaian governments have been pursuing a national electrification policy. Still, more than half of the population remains without access to grid-based electricity. 3 Nevertheless, rural electrification will continue to be a challenge for Ghana. Ghanaian generators have an installed capacity of more than 1,650 megawatts. About 1,100 MW is hydroelectric and 550 MW is thermal capacity burning light crude oil.

Capacity vs. Actual Generation In 2003, total demand was 8,500 gigawatthours (GWh). Electricity from hydroelectricity facilities provided 6,500 GWh. The rest of our electricity is generated from thermal power plants burning light crude oil, which is imported. Electricity is usually dispatched first from hydroelectricity stations because it is cheaper per kWh to generate power at these facilities as long as water is available. As of December 2003, •

The existing transmission network system comprised 36 substations and approximately 4000 circuit km of 161 kV and 69 kV lines. This includes 129 km of double circuit 161kV interconnection to Togo and Benin. There is also a single circuit, 220 km of 225 kV inertia with La Côte d’Ivoire's network.

•

The entire distribution system comprised 8,000 km of sub-transmission lines, 30,000 km of distribution networks with 22 bulk supply points and 1,800 MVA of installed transformer capacity.

Ghana is the second largest electricity market after Nigeria both in terms of generation capacity and consumption in the West African region.

Composition of Fuels in Final Energy Consumption, 2000 The electricity supply mix in the country is expected to change by the year 2010 from the largely hydro-based system to a largely thermal-based one relying on natural gas as the main source of fuel. This transition would be made possible by the West African Gas Pipeline Project, which is expected to transport natural gas from Nigeria through Benin and Togo to Ghana.

Installed electricity generation capacity and electricity generation in 2004

Installed

Akosombo Hydroelectric Power Plant Kpong Hydroelectric Power Plant

capacity Electricity

in MW (1)

in GWh (2)

1038

4404

160

876

330

536

220

222

1748

6038

generation

TAPCO Thermal Power Plant TAPCO = Takoradi Power Company TICO Thermal Power Plant TICO = Takoradi International Comp. Total

Sources: 1: Guide to Electric Power in Ghana, 1st Edition, University of Ghana, Legon, 2005. 2: VRA 2005. 3: Source: Energy Commission, Electricity Sector Overview, 2002

Need for Additional Generation Domestic electric energy consumption in 2004 was 6,004 GWh. An additional 660 GWh was supplied to CEB (Central Electricity Board). It is projected that the average local (Ghana) load growth over the next decade will be about six percent as a result of which local consumption of electricity will reach 9,300 GWh by 2010. There is also the potential for significant electricity exports and supply to VALCO when the smelter resumes operations. The firm capability of hydro system of about 4,800 GWh represents about half of the projected domestic consumption for 2010. This implies that at least 50 percent of Ghana’s electricity requirement will be provided from thermal sources by the year 2010. In the medium to long term, up to 600 MW of additional generating capacity will be required by 2012. It is planned that this additional capacity will be met through the establishment of thermal as well as hydro plants such as the Bui Hydroelectric Plant. An attractive candidate for generation expansion is the 300-MW combined cycle thermal power plant to be located at Tema. The operation of this plant is intended to

be synchronized with the delivery of natural gas through the West African Gas pipeline project.

APPENDIX - I The watt (W) represents the unit of measure of electric power or rate of doing work. Large amounts of electric power are denoted as follows: Kilowatt (kW): equal to 1,000 W Megawatt (MW): equal to 1,000,000 W or 1,000 kW Gigawatt (GW): equal to 1,000,000,000 W; 1,000,000 kW or 1,000 MW Terawatt (TW): equal to 1,000,000,000,000 W; 1,000,000,000 kW; 1,000,000 MW or 1,000 GW.

BIBLIOGRAPHY www.ciionline.nic.in www.ibef.org www.toshiba.com www.abb.com www.bharatbijlee.co.in http://leeh.ee.tut.fi/transformer/begin.html www.apdrp.com http://cesp.stanford.edu/ http://cesp.stanford.edu/events/electricity_reforms_in_india_firm_choices_emerging_ markets_and_externalities/ http://www.emcoindia.com/Html/brochure.htm http://www.eia.doe.gov/oiaf/ieo/index.html http://planningcommission.nic.in/midterm/english-pdf/chapter-10.pdf http://www.smenetwork.net/itma/Coming_Events.htm http://www.worldenergy.org/wecgeis/publications/default/tech_papers/17th_congress/1_4_28.asp http://www.poweringprogress.org/lao-energy/policies/pss.htm http://www.phaseconverter.com/tptransformer.html http://www.teriin.org/papers.php?num=5 http://www.tamini.com/tahome01.htm http://www.toroid.com/standard_transformers/auto_transformers/step_down_transfor mers.htm http://www.uneprisoe.org/RETs/Africa.htm http://www.chforum.org/library/papersindex.html http://www.iea.org/dbtw-wpd/Textbase/work/2004/eswg/05_weo.pdf http://nccr-ns.epfl.ch/autres_rech/UrbaNews/Urbanews8/UrbaNews_8_en.pdf http://www.cid.harvard.edu http://www.pwc.com/za/eng/pdf/pwc_oilandgaspublicationii.pdf http://www.worldenergyoutlook.org/2006.asp http://www.gnesd.org/Downloadables/2005_Regional_workshops/African Workshop report.pdf

http://www.ifc.org/ifcext/oeg.nsf/AttachmentsByTitle/psd_electric_power/$FILE/psd_e lectric_power.pdf http://www.powergenerationworld.com/2004/pow_ZA/confprog.asp?&T1=27/6/2006& T1=27/6/2006 http://www.transformerindia.com http://arjournals.annualreviews.org/doi/abs/10.1146/annurev.eg.15.110190.001425 http://allafrica.com/stories/200606200843.html http://www.adb.org/Documents/TARs/VIE/tar_vie34343.pdf http://www.nationsencyclopedia.com/Africa/index.html http://www.stanford.edu/home/atoz/letterp.html http://vibforum.vcci.com.vn/opport.asp?post_id=1243 www.powermin.nic.in www.presidentofindia.nic.in www.ntpc.com www.powergridindia.com www.relianceenergy.com www.nhpcindia.com www.neepco.com www.npcil.org www.gspcl.com www.cea.nic.in For Vietnam •

Electricity of Vietnam Corporation (EVN)

•

http://www.evn.com.vn

•

Ministry of Industry (MOI)

•

http://www.moi.gov.vn

•

www.vibforum.vicci.com.vn-- June 27, 2006

•

www.adb.org/Documents/Profiles/LOAN/32273013.ASP)

•

www.worldbank.org.am/external/default/main?pagePK=64027221&piPK=640 27220&theSitePK=301579&menuPK=301612&Projectid=P084871)

•

http://data.iea.org/ieastore/statslisting.asp

•

Power Sector Restructuring in Vietnam: The Construction and Transfer of Risk

•

Andrew B Wyatt

•

Asia Power Sector Reforms Workshop 2002

•

Vietnam & World Economy, VNA

For Ghana •

http://www.waterpowermagazine.com/storyprint.asp?sc=2034818

•

International Water Power and Dam Construction ©2005 Published by Wilmington Media Ltd.

•

Guide to Electric Power in Ghana-July 2005

•

RESOURCE CENTER FOR ENERGY ECONOMICS AND REGULATION Institute of Statistical, Social and Economic Research University of Ghana P. O. Box LG 74 Legon, Accra Ghana

For South Africa •

https://www.engineering.perdue.edu/IE/Research/PEMRG/PPDG/SAPP

•

http://www.eia.doe.gov/emeu/cabs/safrica.html

•

The World Energy Book Issue 1: Autumn 2005

•

The political-economy of power sector reform in South Africa

•

Prof Anton Eberhard, Graduate School of Business University of Cape Town University of Cape Town & Board of the National Electricity Regulatory

•

http://www.esi-africa.com/last/ESI_1_2003/031_44.htm

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http://www.ctech.ac.za/conf/due/SOURCE/Web/Surtees/Surtees.html

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World Energy Council 18th Congress, Buenos Aires, October 2001

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http://www.wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2006/01/ 24/000016406_20060124163745/Rendered/PDF/wps3829.pdf

For Philippines •

Impact of power sector reform on the poor: case-studies of South and SouthEast Asia

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A.R. Sihag, Neha Misra and Vivek Sharma The Energy and Resources Institute, Darbari Seth Block, Habitat Place, Lodhi Road, New Delhi-110 003, India E-mail (Sihag): [email protected]

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Energy for Sustainable Development, Volume VIII No. 4, December 2004

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Workshop on power sector restructuring in Asia held on 7— 10 October 2002 in Bangkok, Thailand organized by the Transnational Institute, Prayas India, and the Focus on the Global South.

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http://data.iea.org/ieastore/statslisting.asp

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IEA Energy Statistics