Starting in the late 1980s many nations began to reform their electric power markets away from state-dominated systems to those with a greater role for market forces. In developing countries, especially, these reforms have proved challenging. Successful reform requires a complex set of institutions and complementary reforms, such as in public finance and corporate governance. State-dominated systems typically create their own powerful constituencies that block or redirect the reform process. In an earlier detailed study of reform in five key developing countries, the Program on Energy and Sustainable Development (PESD) found that the result of these pressures, in most cases, is a “hybrid” outcome—an electric power system that is partly reformed and partly dominated by the state 2. Almost always the first step in hybrid reform is the encouragement of private investors to build independent power projects (IPPs)—generators that are hooked to the main power system and, typically, supply electricity according to long-term power purchase agreements (PPAs).

In India, in the last few years, the installed capacity of the Captive Power Plants (CPPs) has grown at a faster rate compared to the utilities. This study examines the factors responsible for the growth of the CPPs. For this purpose the case study of the CPPs of Gujarat is undertaken. In 2002, Gujarat had 2.44 GW installed capacity of captive power plants, which represent almost 22% of the total installed capacity. The factors which caused the CPPs in Gujarat grow at a faster rate compared to the utilities are unreliable power supply by the utilities, poor quality of power, higher industrial tariffs, multiple benefits like cogeneration of steam and electricity and lower internal transaction costs for running the CPPs. Due to these varied reasons the CPPs are not a homogeneous group of plants, but are categorized into various segments. These are back-up type CPPs, CPPs for reducing production cost, CPPs for multiple benefits, and CPPs for quality power.

The study examines the impact of the power sector reforms on the electricity generation industry at the state level in India through a case study of the state of Gujarat. The state has been selected as a unit of study to bring out the regional variances that are not captured at a more aggregate or country level study. The study finds that the reforms have led to the emergence of various ownership structures with associated changes in fuel mix and technology. There has been a steady improvement in the efficiency of generation with reduction in carbon intensities. The carbon intensities so obtained are then used for construction of a baseline for the state, which is then projected up to the year 2010. The study reports a considerable decline in the baseline, which is expected to touch 0.18 Kg per kWh in 2010.. With the projected growth in the share of imported coal and natural gas, the dominance of domestic coal based generation is projected to decline and the state is expected to proceed along a path of declining carbon intensities.

The study traces the pattern of development of the electricity sector in India through a case study of the state of Andhra Pradesh. The main objective of the study is to assess the impact of reforms on the electricity generation industry at the state level. The state is selected as a unit of study to bring out the regional variances that may not be captured at a more aggregate or country level study. The study finds that there has been a steady improvement in the efficiency of generation from coal and gas. However, generation from clean sources like hydro has been declining. This changing generation mix has led to a steady increase in emission intensities. The carbon intensities so obtained is used for construction of a baseline for the state. The study reports an increase in the baseline intensity and explores the causes for such an increase.

This paper relates to significant medium and long-term planning for the Indian power sector. Given the very high losses, both technical as well as theft, and lack of reliable data (stemming from lack of metering for millions of pumpsets, among other reasons), the use of IT offers a significant opportunity for leapfrogging to a "smart" distribution system. Such a system might reduce losses, improve sustainability, and free up electricity for rural consumption - which today is throttled due to lack of supply. However, as the paper indicates, IT is not a silver bullet, and its optimum use requires significant analysis, consensus, and R&D.