Electricity consumption in India, currently at some 600 Tera Watt hour (TWh) annually, is set to double by next decade, surpassing the Russian levels in the process.
KPMG's Global Advisory Practice released a power industry research published under the title, "Think BRIC! reveals that in order to supply this extra electricity, total generating capacity should jump by 90 giga watt (GW) to 241 GW, with an increased emphasis on nuclear, clean coal and renewables, including solar and small-hydro.
The survey finds that while the state and federal governments have initiated reforms, legislation designed to supply electricity to all consumer groups, conservative elements and social programmes, the 'systemic weaknesses and contradictions within frequently combine to stifle progress.'
Additionally, factors like increasing economic activity, wealth and population, an improved standard of living and infrastructure developments are all expected to underline a continuous increase in demand for power in the next decade. Manish Agarwal, Executive Director, KPMG in India, said, "A rural electrification programme in the 1980s brought electricity to 200,000 villages for the first time."
"Generation capacity hit 150GW in 2006, a 40 per cent increase on the 2000 figure, after reforms in 2003 initiated a much needed restructuring of the power sector. However, one respondent of our survey estimated that at least 500 million Indians still have no access to electricity."
Agarwal said "With per capita GDP rising by about eight per cent per year during 2000-2008, the growth in energy demand is enormous".
As private sector investment in power generation was increasing, India could face challenges until 2020 to comfortably meet its demand. According to the study, country's peak power capacity deficit was expected to widen in 2010 to 12.6 per cent of total capacity, up from 11.9 per cent last year.
Besides generation deficit, there were inefficiencies in transmission and distribution systems and electricity theft. To combat this, some respondents expressed confidence in government assurances on formation of an independent regulatory system which would support growth in private investment and in public-private partnerships.
Private investors have already made a start in building independent power plants and the share of privately generated power currently was around 13 per cent of the total production, Agarwal said.
Coal, which already provides almost 70 per cent of India's power, would remain the dominant primary fuel, holding out commercial opportunities to those producers who are global leaders in high efficiency, clean-burn plant.
The respondents surveyed also felt that India is an attractive destination for foreign capital investment. The survey also reveals that as compared to other BRIC countries, India had the second highest growth rate between 2000 and 2008 with an electricity consumption of 5.7 per cent.
Despite this, the country has the lowest electricity consumption per capita out of the BRIC countries. India's power consumption per capita was expected to be roughly 841 kwh in 2020, it said.
