With India’s exponential growth comes the exponential need for energy. Demand for electricity has far outstripped supply, and now, with the coming of the Electricity Act 2003, these demands are within reach. The government’s plan of “power for all” will require an additional capacity creation of nearly 100,000 MW by 2012. And, it seems, that India has made steps in this regard with two new successful bids for ultra-mega power projects (UMPPs) in Sasan and Mundra and the recent January 2006 nod to set up nine coal-based UMPPS of 4,000MW each.
The competitive bidding process has fomented effective reforms in the energy sector and the benefits are two-fold:
1. The Indian government shifts from closed-door negotiations of the past to more transparent operations.
2. India procures power at cost-effective rates.
However, the new policy to promote UMPP coal-fired power will have adverse effects on climate change and the environment. While the competitive bidding process is an important step forward, more needs to be done in terms of including environmental considerations in energy policies.
