A Snapshot on Power & Energy Sector in India

Sample Report

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1.              Overview

India’s power sector is one of the most diversified in the world. Power generation ranges from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. In recent years the Electricity demand in India has been increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, the electricity supply chain consisting of generation, transmission and distribution has undergone a phase of transformation to competitiveness.

2.             Current Scenario

 

India is the third largest producer and fourth largest consumer of electricity globally. The Indian power sector is undergoing a significant change that is redefining the industry outlook. Sustained economic growth continues to drive power demand in India. The Government of India’s (GoI) focus to attain ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing on both market side as well as supply side (fuel, logistics, finances and manpower).

 

As on December 2017, the peak demand for electricity in India was approx. 164.1 gigawatt (GW) while the installed capacity is approx. 330 GW. Additionally, In India approx. 240 million have no access of electricity which shows a demand supply disparity due to lack of proper transmission lines installed across the region of India.

 

2.1     Electricity Industry at the Glance

 

 

GHG*- stands for greenhouse gas.

2.2    Energy Classification

3.             Industry Structure and Market Size

 

3.1      Generation

India has the fifth largest power generation portfolio worldwide with total installed power capacity of 330 GW. Coal is the major energy source for electricity generation in India, which is contributes approx. 58 per cent of total electricity generation, followed by renewable energy source with contribution of 18 per cent, Hydro (14 per cent), Gas (8 per cent), Nuclear (2 per cent) and Diesel (0.2 per cent).

The total installed capacity of India has increased from approx. 1.3 GW in 1947, to 330 GW in 2017. Economic growth and increasing prosperity coupled with factors such as rate of urbanization, rising per capita energy consumption, and growing population are likely to push energy demand further in the country.

 

3.1.1          India’s energy mix breakup across region

 

Mode wise Breakup in MW (megawatt)

Region

Thermal

Nuclear

Hydro

RES *

Grand Total

Coal

Gas

Diesel

Total

Northern

52489

5781

0

58270

1620

19424

12279

91593

Western

68909

11059

0

79968

1840

7448

18825

108081

Southern

44382

6474

762

51617

3320

11808

27728

94474

Eastern

26672

100

0

26772

0

4942

1027

32741

North Eastern

520

1736

36

2292

0

1342

285

3919

Islands

0

0

40

40

0

0

12

52

ALL INDIA

192972

25150

838

218960

6780

44963

60158

330861

 

*RES (Renewable energy Sources) includes small hydro project (? 25 MW), Biomass Power, Urban & Industrial waste, Solar and Wind Energy.

 

3.1.2         Sector Contribution

 

As far as power generation is concern, Power and energy industry in India is mainly divided into three sectors these are central sector, state sector and private sector.

 

In recent years, Private sector enterprises are emerged and played a major role in generation, transmission and distribution of electricity. This sector is contributing approx. 45 percent (147 GW) of total installed capacity. Central sector or public sector undertaking (PSU’s) are contributes approx. 24 percent (80 GW) of overall generation. Besides PSU’s and private sector state level corporations are plays crucial role across the value chain of power and contributes approx. 31 per cent (103 GW) of total energy generation.

 

 

 

3.2    Transmission

 

In India, An extensive network of transmission lines has been developed over the years for evacuating power produced by different electricity generating stations and distributing the same to the consumers.

 

Power grid Corporation of India Limited (POWERGRID) and Central Transmission Utilities (CTU) are responsible for planning inter-state transmission system (ISTS). Similarly there are State Transmission Utilities (STU) (namely State Transco/ SEBs) responsible for the development of Intra State Transmission System.

 

In order to electrification of all regions, 13,820 circuit kilometers (ckm) of transmission lines have been commissioned during 2017-18 (April-November 2017) which is 59.9% of the annual target of 23,086 ckm fixed for 2017-18. Similarly, 50,805 MVA (Mega Volt Ampere) of transformation capacity of substations has been added during 2017-18 (April-November 2017) which constitutes 94.1% of the annual target of 53,978 MVA fixed for 2017-18.  

 

As on March 2017, the capacity of transmission line was 367851 ckm with an annual growth rate of 8 per cent. Similarly for substation transformation the capacity was stood at 721265 MVA with annual growth of 12 per cent.

Trans- mission System Type

AC Transmission lines
(ckm)

HVDC(ckm)

Total (AC+ HVDC) (ckm)

Annual Growth (%)

AC Substations Transformation Capacity (MVA)

Annual Growth (%)

Voltage (KV) level

765

400

220

Total

765

400

220

Total

FY 2012

5250

106819

135980

248049

9432

257481

–

25000

151027

223774

399801

–

FY 2013

6459

118180

140517

265156

9432

274588

7%

49000

167822

242894

459716

15%

FY 2014

11096

125957

144851

281904

9432

291336

6%

83000

177452

256594

517046

12%

FY 2015

18644

135949

149412

304005

9432

313437

8%

121500

192422

268678

582600

13%

FY 2016

24245

147130

157238

328613

12938

341551

9%

141000

209467

293482

643949

11%

FY 2017

31240

157787

163268

352295

15556

367851

8%

167500

240807

312958

721265

12%

Source: CEA, Monthly Reports

 

3.3    Distribution

Distribution is the most important link in the entire power sector value chain.  It is only interface between utilities and consumers and responsible for distribution and supply of power to rural and urban consumers which generates revenues for power sector.

GoI has provides assistance to states through various central Sector/centrally sponsored schemes for improving the distribution sector which are as follows.

Scheme

Date of launch

Total Outlay

Key Objective

Integrated Power Development Scheme (IPDS)
 
*Also known as URJA Scheme

20.11.2014

USD 5 billion

1. Strengthening of sub-transmission and distribution networks in the urban area

2. Metering of distribution transformers/feeders/ consumers in the urban area

3. IT enablement of distribution sector and strengthening of distribution network

Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

20.11.2014

USD 6.8  billion

1. Separation of agriculture and non-agriculture feeders

2. Strengthening of sub-transmission and distribution networks in the rural areas;

3. Metering of distribution transformers/feeders/ consumers in the rural area.

4. Rural Electrification

 

3.4    Power Consumption – Sector (end user) wise

 

In FY 2017, Industrial sector has witnessed the major consumer of electricity in India with approx. 42 per cent of total market share. Followed by Domestic household (24 per cent and) and agriculture (17 per cent).

3.5    Foreign Direct Investment (FDI) Inflow (2010-2017)

 

In December 2012, The GoI has permitted FDI up to 100% in the power sector, under the automatic route, for:

 

1.    Generation and transmission of electric energy produced in hydro-electric, coal/lignite based thermal, oil based thermal and gas based thermal power plants;

 

2.    Non-Conventional Energy Generation and Distribution;

 

3.    Distribution of elective energy to households, industrial, commercial and other users;

 

4.    Power Trading

 

During 2016-2017, the Power sector of India attracts total FDI inflow worth of USD 1.1 billion with the growth rate of 22 per cent.  

 

 

4.             Government Initiatives and Policy Framework

 

4.1     Saubhagya

In September 2017, GoI has launched a scheme named “Saubhagya ‘”.Under this scheme GoI aims to provide electricity to all households by December 2018. The total proposed outlay for this scheme is USD 2.5 billion where the outlay for rural household is 2.1 USD billion and remaining outlay of USD 0.5 billion earmarked for urban household.

4.2    Rural Electrification

In November 2014, GoI has launched a scheme “Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)” for rural electrification; the previous scheme Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) which was launched in April 2005 for village electrification has been subsumed in the DDUGJY scheme as its rural electrification component.

Under DDUGJY scheme, GoI has sanctioned 921 projects to electrification of 121,225 un-electrified villages. Additionally, The Intensive electrification of 592,979 partially electrified villages and provide free electricity connections to 397.45 lakh poor households across the India.  

4.3    Ujala

In November 2015, the GoI has launched “National Program for Efficient Appliances” with aims to promote efficient lighting, enhance awareness on using efficient equipment which reduce electricity bills and emissions from inefficient lighting. Under this scheme GoI are distributing LED bulbs, 20W LED tube light and electricity fans at subsided rate. With the major focus on LED bulbs GoI has set a target of 770 Million LED’s by 2019 across 100 cities of India As of January 2018, 285 million LED bulbs are distributed across the India. And the glimpse of scheme is as follows.

 

4.4    UDAY (Ujwal DISCOM Assurance Yojana)

In November 2015, UDAY scheme was launched for a sustainable financial and operational turnaround of DISCOM (power distribution companies) which aims to provide permanent solutions to legacy debts of approximately USD 67 billion (by FY 2014-15) and address potential future losses. With support from state government this scheme allows state governments to own the DISCOM by take over 75 percent of their debt (as of September 2015) and pay back to lenders by selling financial bonds.

5.             Major Players           

Company

Sector

Segment

Revenues

NTPC

Central

Thermal

USD 12 billion

Tata Power

Private

Solar, hydro, wind & geothermal

USD 1 billion

Power Grid Corp

Central

Transmission & Distribution

USD 4 billion

NHPC

Central

Hydro Power

USD 1 billion

Reliance Power

Private

Thermal, Renewables, Hydro

USD 7.5 billion

 

6.             Business Opportunity & Operational Challenges

 

6.1     Business Opportunity

Renewable energy  

With the Strong Government and favorable policies support, renewable energy sector in India has emerged as one of the most sustainable and fastest growing sector. GoI set an ambitious target of 100GW by 2022 under the “National Solar Mission” which creates a positive environment among the investors keen to tap into India’s renewable energy potential.

Investment Opportunities across the Value Chain

The Indian power sector has an investment potential of USD 225 billion in next 5 years, which creates an immense opportunities in power generation, distribution, transmission, and power equipment.

Growth in Power Consumption

Due to Industrialization and urbanization, India’s per capita power consumption is expected to grow with growth rate of 63 per cent and reach to 1894 TWh by 2022.Thereby its creates an ample opportunity for power generation.

 

6.2    Operational Challenges

Electricity Supply

India has abundant power generation capacity despite this; 240 million people have no access of electricity yet. This shows a significant gap between electricity generation and distribution. To tackle this issue transmission line needs to be connected to the region where people are still facing electricity issue which also helps to balance demand and supply of power.

Deficiencies in revenue collection of utilities

In India, deficiencies in proper billing and revenue collection for the energy used seriously always remains a key hurdle for power sector meanwhile it is affecting the financial health of power sector. Thereby the DISCOM has suffering from huge revenues deficit. The proper financial management needs to be done to tackle such issues.

Coal Supply

Despite the abundant reserves of coal, India is not producing enough coal to feed its power plants. India’s monopoly coal producer, state-controlled “Coal India” has poor mining technique which affecting quality and supply of coal.