Indian Power Sector

- December 07, 2020

INTRODUCTION

Power sector is one of the important factors for economic growth and nation growth. This helps in good infrastructure which ultimately is essential for the growth of the Indian economy.

India’s power sector is one of the most diversified and 5th in the world. Coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste are the sources of Power generation in India

Among all these Electricity demand in India is going to increase a lot and Renewable energy is the fast growing sector and Wind energy is the largest in India accounting 52.27 % of totaled installed capacity.

As on March 31st the total power generation capacity of India 2018 was 344 GW of which 45 % was contributed by the private sector.

By seeing the future demand Government thrust renewable energy with core focus on solar power dominated the power sector in the fiscal year 2018.

Although, solar power tariffs continue to trade at levels higher than thermal power tariffs.

SUPPLY

The total installed capacity in the country as on 31 March 2017 was 344 GW (Gigawatt) as on 31 March 2018, out of this 64.8% is accounted by the thermal power stations. With this the whole capability addition throughout the twelfth set up amount is 99,209.5 MW (excluding renewable) that is concerning 112.1% of the planned capability addition of 88,537 MW for the set up. To meet the demand requirements, sufficient capacity has been built.

MARKET SIZE and DEMAND

As so many new inventions like E-Vehicle and start-ups are coming to the Indian industry, the demand for Power sector is increasing and is undergoing a significant change that has redefined the industry outlook which ultimately increases the demand for electricity demand in India. After the new Government, it focuses on “Power for all” which is also a factor for demand increase.
At a similar time, the competitive intensity is increasing at each the market and provides sides (fuel, logistics, finances, and manpower).
Total installed capacity of power stations in India stood at 356.82 Gigawatt (GW) as of May 2019.
Not solely this, the poor monetary state of SEBs might probably result in lower demand for power going ahead.

Investment Scenario

Source: https://www.iea.org/reports/world-energy-investment-2019/power-sector

The industry attracted FDI(Foreign Direct Investment) due to the increasing demand of Power in India of US$ 14.32 billion.

Some major investments are as follows:

In November 2018, Renascent Power Ventures Pte Ltd acquired 75.01 per cent stake in Prayagraj Power Generation Company Limited (PPGCL) for US$ 854.94 million
In August 2018, Kohlberg Kravis Roberts & Co (KKR) acquired Ramky Enviro Engineers Limited for worth US$ 530 million.
In April 2018 ReNew Power made the largest M&A deal by acquiring Ostro Energy for US$ 1,668.21 million.

Barriers to entry

It is very difficult to get an entry in Power generation sector as it need huge investment.

The other barriers are as fuel linkages, payment from the state government that buy power.

Many state monopolies are also one of the important barriers of FDI.

Government Initiatives

As Government has understood the Power sector is one of the growing sector it started focusing more on it and has taken few initiatives to boost the Indian Power Sector.

As of September 2018, a draft amendment to Electricity Act, 2003 has been introduced. It discusses separation of content & carriage, direct profit transfer of subsidy, 24*7 Power offer is obligation, punishment on violation of PPA and fitting sensible Meter or Smart Meter.
As of August 2018, the Ministry of New and Renewable Energy set solar power tariff caps at Rs 2.50 (US$ 0.04) and Rs 2.68 (US$ 0.04) unit for developers using domestic and foreign solar cells and modules, respectively.
The Government of Republic of India approved National Policy on Bio fuels – 2018, the expected advantages of this policy square measure health advantages, cleaner atmosphere, employment generation, reduced import dependency, boost to infrastructural investment in rural areas and extra financial gain to farmers.

Competition

There are so many industries/companies which are eagerly investing in this sector which gives a tough competition. Due to high competition many companies backed out from investing.

Achievements

There are many achievements of government of India in the past few years:

India ranking jumped to 24th in the world on World Bank’s Ease of doing business - "Getting Electricity" ranking.
Energy deficit also reduced to 0.7 from 4.2 per cent
100 per cent village electricity is also a huge success

SOURCES

OPINION

I believe Power sector is the most crucial thing to be focused on this industrial era, where everything needs energy to run. Whether it’s the state or central government or the private sector, they should focus more on this as this is the backbone of everything and invest more.

It should attract more FDI so that this particular industry can grow and focus more on Renewable energy and try to save the non-renewable as that is limited. Ultimately through FDI the Indian economy will grow and the government can focus on some other things through this money invested.