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Power sector In India to quadruple nuclear power generation by 2020

The Government of India aims to achieve 175 GW capacity in renewable energy by 2022, supported by 100 GW of solar power and 60 GW of wind power. The Government of India visions to provide 24*7 affordable and quality power for all by March 2019.

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Definition / Scope

Power industry is the industry involved in the process of producing electric energy by transforming other forms of energy into electric energy. The power industry includes petroleum industry, gas industry, electrical power industry, coal industry, nuclear power industry, the renewable energy industry and traditional energy industry.

Market Overview

Before 1956, Electricity Supply Act 1948 was introduced. Semi-autonomous, State Electricity Boards was also established. Between 1956 to 1991, Industrial Policy Resolution was introduced and power under state ownership was generated and distributed. However, there was problem like power losses, subsidies, infrastructure bottleneck and resource constraints during this period. Later, in 1991, legislation and policy were initiated.

The private sector showed interest in participation in generation. Electricity Regulatory Commissions Act 1998 was inaugurated for establishing Central and Sate Electricity Regulatory Commissions and rationalization of tariffs. Post 2003, there has been enormous growth in power sector. Electricity Act 2003 was formulated. Policies like Deen Dayal Upadhyay Gram Jyoti Yojana and Integrated Power Development Sceheme for rural and urban areas were implemented. In May 2018, India grabbed 4th position in the Asia Pacific Region out of 2 nations on an index that measures their overall power.

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Top Market Opportunities

  • The current production level of power is not enough to meet the demand. The annual demand exceeds supply by about 7.5 per cent. Further the demand for electricity is expected to increase at a CAGR of 7 per cent to 1,894.7 TWH over FY07-22.
  • India is expected to be a power surplus country by FY19 with peak power surplus at 2.5 per cent. The peak power demand stood at 172.95 GW as of October 2018.
  • The Ministry of New and Renewable Energy commissioned India’s first interstate transmission system auction with wind power capacity of 126 MW, as of August 2018. Further, the Ministry has proposed wind power capacity addition of 10 GW each to be awarded in FY19 and FY20.
  • The GOI aims to quadruple India’s nuclear power generation capacity to 20 GW by 2020. Nuclear Power Corporation of India Ltd plans to construct 5 nuclear energy parks with a capacity of 10,000 MW.
  • The per capita electricity consumption reached 1,149 KWh in FY18, growing at a CAGR of 4.96 per cent during FY11-FY18.
Per capita cons.PNG

Market Drivers

Policy Support

100 per cent FDI is allowed under the automatic route in the power segment and renewable energy. The schemes of government like Deen Dayal Upadhyay Gram Jyoti Yojana and Integrated Power Development Scheme has helped in turning all un-electrified inhabited census villages in to electrified.

FDI

The FDI inflows in the power sector reached US$ 14.18 billion during April 2000 to June 2018. This represents 3.64 per cent of total FDI inflows in India. Further, this sector is expected to attract investments worth US$ 128.24-135.37 billion between FY19-23. The private equity investments in August 2018 were US$ 532 million.

Growing Demand

The electricity generation in India increased from 1,155.085 billion units in FY17 to 1,201.543 billion units in FY18. Further, electricity generation witnessed a growth of 4.02 per cent y-o-y in FY18. Growing per capita income and industrial expansion are leading to growth in power demand. India’s power demand is expected to increase to 1,905 TWh by FY22.

Electricity demand foreacst.PNG

Industry Challenges

  • 39 million households or over 200 million people in India do not have access to electricity. People who have access to electricity find it unreliable and irregular. There are many idle power stations which has the potential to supply nearly 80 billion KWh electricity.
  • There is lack of clean and reliable energy sources in India. As a result, 20 per cent of people in India depends upon biomass energy sources such as dung, agricultural waste and fuel wood. Using such energy sources leads to air pollution, causing between 300,000 and 400,000 deaths per year.
  • Due to the theft of power, financial loss amount to around US$ 16 billion annually. On the other hand, legal users are forced to pay more. Consequently, villagers have to undergo huge cut of power.
  • India has abundant reserves of coal. Despite this, it is not producing enough to meet the demand. The state-controlled Coal India is India’s monopoly coal producer. But the company uses primeval mining techniques, and theft and corruption are rampant.
  • The inadequate last mile connectivity has been the main constraint in supplying electricity to all the users. Though the country has enough generation and transmission capacity to meet the demand, due to the lack of last mile connectivity, consumers rely on DG sets using expensive diesel for meeting inescapable power necessity.

Technology Trends

Automated Meter Reading

Before this technology, in order to read the meter, physically going to the customer was necessary. But with the introduction of this technology, reading of the meter can be done from central location by dialing remote modem. The modem is placed at the customer end. The data taken from meter can be used for billing and analyzing load survey. This technology helps in saving the cost and reducing the power theft.

Online Mobile Cash Collection

In order to make the payment, customer had to go to power company's office. As this was time consuming process, government started sending mobile vans to collect payments and update payments to central system. In order to connect mobile vans with central offices, the online cash collection vans uses CDMA technology. This not helps in updating all the transactions in real time but tracking complaints and logging complaints.

SCADA

It stands for Supervisory Control and Data Acquisition System. This technology is used to solve problems of power sector such as poor visibility of network operations, inadequate information of customers and absence of real time information. SCADA is used as real time system to supervise and control power system network.

Regulatory Trends

  • A draft amendment to Electricity Act, 2003 has been introduced as of September 2018. It discusses direct benefit transfer of subsidy, 24*7 power supply is an obligation, separation of content and carriage, penalization on violation of PPA, etc.
  • The GOI launched Ujwal Discoms Assurance Yojana to encourage operational and financial turnaround of state-owned power distribution companies. The aim of such initiative is to reduce Aggregare Technical and Commercial losses to 15 per cent by FY19.
  • The GOI approved National Policy on Biofuels-2018. This advantage of this policy is numerous such as health benefits, employment generation, cleaner environment, declined import dependency and boost to infrastructural investment is rural areas.
  • The Ministry of New and Renewable Energy has also set solar power tariff caps at US$ 0.04 unit for developers using domestic and imported solar cells modules, as of August 2018.

Other Key Market Trends

Thermal

  • India has large reserve of coal and the total coal thermal power capacity stood at 190.29 GW, by the end of November 2018.
  • The gas thermal power capacity stood about 24.94 GW as on November 2018
  • The diesel thermal power capacity stood about 0.84 GW as on November 2018.

Renewable

  • Wind energy is the largest renewable energy source in India. As of November 2018, India has 72.01 GW of renewable energy capacity.

Hydro

  • India has enormous potential for hydropower. As of November 2018, India has 45.40 GW of hydro power generating capacity.

Nuclear

  • India has one the world’s largest reserves of thorium. As of November 2018, India has 6.78 GW of installed nuclear capacity.

Market Size and Forecast

  • A total of 207.9 million households have been electrified out of 217.3 million households as of November 2018. The rest 9.4 million households are expected to be electrified by March 2019.
  • The electricity production reached 1,201.543 BU in FY18. Over FY10-FY18, electricity production grew at a CAGR of 5.69 per cent.
  • In FY19*, total thermal, renewable, hydro and nuclear energy installed capacity stood at 222.43 GW, 72.01 GW, 45.40 GW and 6.78 GW, respectively.
  • The installed capacity has increased at a CAGR of 9.08 per cent in FY09-18. The total installed capacity was 346.62 GW in FY19.
  • Out of the total electricity consumption, industrial sector had a share of 40 per cent in FY16-17P.
Installed capacity for different sources.PNGElectricity production.PNGHydro power generation.PNGNuclear energy.PNGPower supply position.PNGInstalled electricity generation capacity.PNGShare in industrial sector.PNG

Market Outlook

  • Renewable energy, wind energy and solar power are estimated to contribute 175 GW, 60 GW and 100 GW by 2022.
  • The power consumption is forecasted to reach 1,894.7 TWh in 2022.
  • The coal based power generation is expected to increase at a CAGR of 6.5 per cent during FY18-23.
  • The power demand in India is expected to increase up to 1,905 TWh by FY22.

Competitive Factors

  • India is the 3rd largest producer and 3rd largest consumer of electricity in the world with a generation of 1,497 TWh.
  • India has the fifth largest installed capacity in the world.
  • India is expected to become the world’s first country to use LEDs for all lightning needs by 2019.
  • According to the latest S&P Global Platts Top 250 Global Energy Rankings, 10 out of 14 Indian energy companies made it to the list and RIL and IOC ranked third and seventh respectively.
  • India ranked 4th in the Asia Pacific region out of 25 nations on an index that measures their oveall power in May 2018.
  • India ranked jumped from 137 in 2014 to 24 in 2018 on World Bank’s Ease of Doing business – “Getting Electricity” ranking.
Leading electricity generation.PNG

Key Market Players

NTPC

NTPC is the largest power producer in India and sixth largest thermal power producer in the world. As of August, 2018, it has installed capacity of 53.65 GW. By 2020, NTPC plans to reach 128,000 MW of power capacity. The company has about 9 joint ventures stations which are coal based.

Adani Power Ltd.

The company is involved in providing electric power generation by coal based thermal power plants and coal trading. It is the first company to use super critical technology in India. The company has 10,480 MW power generation capacity comprising of over 4,620 MW at Mundra; 3,300 MW at Tiroda, over 1.320 MW at Kawai, 1,200 MW at Udupi and over 40 MW at Kutch.

Power Grid Corporation of India Ltd.

It is a transmission company engaged in the power transmission business. It is responsible for planning, co-ordination, supervision and control over inter-state transmission systems. In FY18, the company has 41,620 Mega Volt Ampere transformation capacity. The company is also awarded with the Best Performing Power Transmission Utility Award by CBIP.

TATA Power

It is India’s largest integrated power company with presence in solar, wind, hydro and geothermal energy space. The company holds 52 per cent of total generation capacity in the private sector. In FY18, the company has an installed capacity of 10,757 MW in FY18.

Reliance Power

Reliance Power has more than 35,000 MW of power generation capacity, both operational and under development. In FY18, the company has an operational power generation capacity of nearly 6 GW.

Other key players are NHPC, Power Finance Corporation Ltd, Adani Power, Damodar Valley Corporation and SJVN Ltd.

Strategic Conclusion

The sources of power generation in India range from conventional sources such as coal, natural gas, oil, lignite to non-conventional sources such as solar, wind and domestic waste. The electricity production reached 1,201.543 BU during FY18, growing at A CAGR OF 5.69 per cent over FY10-FY18. The sustained economic growth, growing population, development of infrastructure, Government of India’s focus on “Power for all” and competitive intensity are driving the power sector in India.

Further Reading

Appendix

BU – Billion Units

CAGR – Compound Annual Growth Rate

FDI – Foreign Direct Investment

FY – Indian Financial Year (April to March)

GOI – Government of India

GW – Gigawatt

TWh – Terawatt Hour

US$ - US Dollar


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