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The market

  • Fifth largest electricity generation capacity in the world(as per Netscribes, ‘’Power Sector – India’’, March 2009)
  • Large transmission and distribution network
  • Per capita electricity consumption – 704 kWh during 2007-08(as perNetscribes, ‘’Power Sector – India’’, March 2009)
  • Electricity is the backbone of the nation and falls under the concurrent list where both the Union and State Government can regulate the sector(as per Netscribes, ‘’Power Sector – India’’, March 2009).
  • Estimated renewable energy potential in India – 84,776 MW(as per Planning Commission).

Opportunities
GENERATION
Ultra Mega Power Projects (UMPP):

  • Introduction of UMPP’s is likely to help achieve the Government plan of ‘Power for all’. The government targets to add 100000 MW of additional capacity in the XIIth Plan and UMPPs are likely to contribute over 36,000 MW power generation capacity in this Plan.(as per Economic Times, Two UMPP bids in April as govt plugs power gaps, March 15, 2010) The UMPP’s are being viewed as savior for the government’s power capacity addition programme. This is primarily due to its sheer size (4000 MW) since these projects have the capability to deliver power equivalent to several conventional sized power projects.

Transmission

  • Development of the National Grid is expected to meet energy demands of deficit regions. The program envisages addition of over 60,000 km of transmission network in a phased manner by 2012(as per Public Private Partnerships in India (www.pppindia.com)).

Distribution

  • Privatization of distribution circles is likely to unbundle the State Electricity Boards (SEBs). To the extent state utilities are privatized, the funds requirement will shift to private sector.

Rural electrification

  • The Government has plans to provide 100 percent rural electrification by the end of the XIth Plan. This provides great opportunity to investors and developers in creating a sound rural electricity infrastructure in the country.

Renewables

  • The inability to meet constant rise in power demand coupled with environment sustainability has pushed renewables to the forefront. The country has a much higher potential of approximately 45,000 MW of wind power, 18,000 MW from biomass-based sources and close to 15,000 MW of small hydro resources(as per 4th South Asia Renewable Energy Conference 2009 – Renewable Energy: An overview and a
    look at the potential, July 29, 2009). The Ministry of New and Renewable Energy (MNRE) has envisaged an increase in total renewable energy capacity to around 25,000 MW by 2012 and further to about 54,000 MW by the end of 13th Plan period (2022)(as per MNRE, Report on the Working Group on New and Renewable Energy for XIth Five Year Plan, XIth Plan Proposals for New and Renewable Energy, December 2006). Of this, pollution free generation methods such as wind-based generation is expected to retain its prominent position as the single largest contributor in the renewable portfolio mix. Solar energy is also expected to develop to a significant extent, particularly as the costs of solar power reduce from their current levels. Accordingly, a “National Mission on Solar Energy” has been launched, with a goal to generate 20,000 MW by 2022(as per Economic Times, National solar mission cleared; to generate 20,000 MW by 2012, November 19, 2009).

Industry Snapshot

Investments (Xth plan) USD 73 billion
Investments (XIth plan) Estimates USD 167 billion
Installed generating capacity (March, 2010) 159,398 MW
Inter-regional transmission capacity (September, 2009) 20,750 MW
Transmission network capacity (XIth plan) Estimates 37,150 MW
Peak demand deficit (March, 2010) 13.3 percent
Regulatory Hundred percent FDI is allowed in all segments of power sector including trading
Prominent players NTPC, Powergrid, ABB, Alstom, Siemens, Areva T & D, GMR, Adani group, CESC
Foreign players Marubeni Corporation, China Light & Power (CLP)
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