The most visible form of energy which is often identified with progress in modern civilization is power commonly called electricity. It is one of the most critical components of Infrastructure that discover the economic development of a country. The growth rate of demand for power is generally higher than the GDP growth rate. Studies point that in order to have GDP growth of 8 percent per annually. Power supply needs to grow around 12 percent annually electricity is a secondary form of energy produced from primary energy resources including coal, hydrocarbons, hydro energy etc. Primary energy consumption takes into account the direct and indirect consumption of fuel. It cannot give a complete picture in respect of the ultimate consumption of energy by consumers. In India The secondary sources consist of coal oil, electricity and natural gas.
Electricity generated by various power stations is not consumed entirely by ultimate consumers a part is consumed station auxiliaries Also while transmitting power a portion is lost in transmission what we get in our houses. Offices and factories is the net availability. Some of the major challenges that India`s power sector faces today are India`s installed capacity to generate electricity is not sufficient to feed an annual economic growth of 7 Percent. In order to meet the growing a demand of electricity between 2000 and 2012. India needs to add only 20000 MW a year even the Installed capacity is under utilized because plants are not run properly (ii) state electricity boards (SEBs) which distribute electricity, incur losses which exceed Rs 500 billion. This is due to transmission and distribution losses.