Thermal Power Plants in India Business Opportunities & Capacity Additions Outlook Till 2027

Thermal Power Plants in India: Business
Opportunities & Capacity Additions Outlook till 2027
Thermal Power Plants in India: Business Opportunities &

Capacity Additions Outlook till 2027
Industry Practice : Power
Geography : India
Thermal Power Plants Generation in India - Overview
Currently, (as on June 30, 2016) thermal power plants (coal based) generation in India is 180 GW i.e. 60% of the countrys total
installed capacity of 300 GW and 76% of electricity generation (CEA Daily Generation Report for June 30, 2016). However, still Indias
per capita electricity consumption is just over 1000 kWh which is one-third of the global average and hence the country has massive
additions to be made in electricity supply situation and the major source shall be thermal power plants. To assess the future capacity
of thermal power plants (coal based) generation enincon consulting llp has conducted analysis basis different scenarios for which
certain assumptions were quintessential which are listed as below.
Exhibit 01: Assumption for Projecting Thermal Power Plant Capacity Additions Pace in India
The capacities mentioned include utility and captive power plants fired by coal or lignite, though a lower PLF is assumed for
them as they would be used less often
ILLUSTRATIVE
Captive power plants do not use efficient technologies as they are mostly small sized while newer technologies (e.g.
supercritical technology) need larger capacities
The efficiency of thermal power plants play an important role in terms of actual generation & hence to assess future of
generation capacity in unit terms is pivotal
Average life of a power plant is assumed to be 40 years. This is assumed factoring good O&M and LE projects undertaken
by developers in India
Source: enincon research
ENINCON CONSULTING LLP 2016
01
Thermal Power Plants in India: Business Opportunities & Capacity Additions Outlook till 2027
Growth Scenarios Considered for Projections

For doing the projections we have built following possible and realistic scenarios factoring the role of coal efficiency which would be
driving parameter as the type of technology adapted by developers shall also play an important role. Though, it is proposed that
from 13th FYP plan period.
The fact that the rate of adaptation of super critical technology in India is pretty sluggish reason being the quality of domestic coal
with high ash content and low calorific value.
Scenario 1: High Renewables, average ecnomic growth @ 6% on CAGR basis from 2016 to 2027 and Low rate of new technology
deployment, with low private players interests in Thermal Power Plants SUBDUED GROWTH SCENARIO (SGS)
In this scenario we have assumed that the rate of GDP growth rate witnessed by India would be a normative one from 2016 to 2027
at the rate of 6%. Coupled with this the focus of the Indian Government in adding more renewable energy capacity for power
generation will see less capacities from thermal power plants (coal based) generation. Also, under the scenario we have assumed
that sub-critical capacity addition will stop only after 2022 and ultra-super critical technology shall witness more acceptance post
2022 and IGCC shall also witness pace in capacity addition around 2025. Further, we have also assumed that market sentiments will
not drive enhanced interests from the private developers to set thermal power plants, as the current state of market will most likely
prevail with funding institutions being circumspect in terms of lending for thermal power plant projects, owing to bad debts.
Scenario 1: SUBDUED GROWTH SCENARIO (SGS) Numbers
Currently as on June 30, 2016 the installed capacity of India is 300 GW, with the share of thermal power plants capacity being close
to 70% at 211 GW. Undoubtedly coal has been the leading source in thermal power plant capacity additions with 180 GW of
installed capacity. With around 88 GW of capacity additions planned for 12th FYP, India seems on course to achieve the same as
close to 86 GW is already added till May 2016 from April 2012. However, this capacity addition certainly will also factor the spilled
over capacity from 11th Plan of 23 GW.
02
Thermal Power: At the end of 11th FYP the thermal power plant (coal based) installed capacity was 112 GW which as on June 2016
rose to 186 GW. This means over a span of close 4 years and 3 months the capacity added was 74 GW. On a rationalised term and on
year on year basis the capacity added comes close to 18 GW per annum. If we subtract the spilled over capacity of 11th FYP from 74
GW the capacity added on yoy basis it will come close to 13 GW per annum.
As depicted in the previous slide the economic growth is considered to be 6% on annual basis, with focused renewable power
capacity additions and low technology adaptations and low interests by private investors likely to prevail till 2022 (or till 13th FYP)
the coal based thermal power plant capacity is anticipated to grow at 4% on CAGR basis till 2022 and 3% post 2022 till 2027. This
would mean by 2022 the installed thermal power capacity of coal based generation will rise to 235 GW and by 2027 shall be 272 GW.
This is also, as close to 40 GW capacity by 2027 would be out of service due to ageing. The fresh capacities which will be added in
this span of 11 years from 2016 to 2027 shall be 86GW . The graph for same is shown as below:
Exhibit 02: Thermal Power Plant (Coal based) Capacity Additions Outlook from 2016 till 2027 Under SGS
ILLUSTRATIVE
Capacity (GW)
300
250
GW
200
193
209
186
201
218
2016
2017
2018
2019
2020
226
235
242
249
2021
2022
2023
2024
257
264
272
2025
2026
2027
150
100
50
0
Source: enincon analysis, Planning commission, MoP, & CEA
03
Market Opportunity on Y-o-Y basis under SGS for Boiler, Turbine & Generator (BTG) Original Equipment Manufacturer (OEM)
Exhibit 03: BTG Opportunity in Thermal Power Plants Capacity Additions on YoY Basis till 2027 Under SGS
ILLUSTRATIVE
GW
Capacity (GW)
10
9
8
7
6
5
4
3
2
1
0
9
8
9
8
8
7
8
7
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27
Scenario 2: Medium Renewables, slightly above current ecnomic growth @ 8% on CAGR basis from 2016 to 2027 and average rate of
new technology deployment, with mid level of private players interests in thermal power plants BAU (Business - as Usual)
Growth Scenario (BGS)
In this scenario we have assumed that the rate of GDP growth rate witnessed by India would be a slightly better from the current
levels from 2016 to 2027 and shall be at the rate of 8%. Coupled with this the capacities which is planned to be added through
renewable sources shall see a mediocre achievement leading to more thermal power plant (coal based) additions grow at BAU pace
on yoy basis.
04
Also, under the scenario we have assumed that sub-critical capacity addition will stop in 2017 as per the planned initiative of GoI for
13th FYP onwards and ultra-super critical technology shall witness more acceptance post 2020 and IGCC shall also witness pace in
capacity addition around 2022. Further, we have also assumed that market sentiments will derive moderate interests from the
independent power plant developers, and private investments in thermal power plants in India shall see an increase though in a
controlled and calculated manner with PPA security, FSA security etc. being in place. Also role the PMP policy might be contemplated
by the private players and under such circumstances the competitiveness of the market shall go even higher leading foreign original
equipment manufacturers evaluating setting of manufacturing base in India.
Scenario 2: BAU GROWTH SCENARIO (BGS) Numbers
As depicted earlier currently as on June 30 2016 the installed capacity of India is 300 GW, with the share of thermal power plant
capacity being close to 70% at 211 GW. Undoubtedly coal has been the leading source in thermal power plant capacity additions
with 180 GW of installed capacity. We shall evaluate the thermal power plant (coal based) capacity additions under the BGS scenario
as under.
Thermal Power: As depicted in the previous segment the economic growth is considered to be 8% on annual basis, with moderate
renewable capacity additions and moderate technology adaptations with mid level interests by private investors in thermal power
plant capacity additions likely to prevail till 2022 (or till 13th FYP) the coal based thermal capacity is anticipated to grow at 6% on
CAGR basis till 2022 and 5% post 2022 till 2027. This would mean by 2022 the installed capacity of thermal power plants (coal based
generation) will rise to 264 GW and by 2027 shall be 337 GW. This is also as close to 40 GW capacity by 2027 would be out of service
due to ageing. The fresh capacities which will be added in this span of 11 years from 2016 to 2027 shall be 151 GW . This would
mean on an average on year on year basis the capacity additions shall be of 14 GW approximately. The graph for same is shown as
below
05
Exhibit 04: Thermal Power Plant (Coal based) Capacity Additions Outlook from 2016 till 2027 Under BGS
ILLUSTRATIVE
Capacity (GW)
400
350
300
186
209
235
197
222
249
2016
2017
2018
2019
2020
2021
GW
250
200
264
277
291
306
2022
2023
2024
2025
321
337
2026
2027
150
100
50
0
Market Opportunity on Y-o-Y basis under BGS for Boiler, Turbine & Generator (BTG) Original Equipment Manufacturer (OEM)
Exhibit 05: BTG Opportunity in Thermal Power Plants Capacity Additions on YoY Basis till 2027 Under BGS
ILLUSTRATIVE
Capacity (GW)
20
GW
15
11
12
13
13
14
15
13
14
15
15
16
10
5
0
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27
06
Scenario 3: REVVED UP GROWTH SCENARIO (RUGS)

In this scenario we have assumed that the rate of GDP growth rate witnessed by India would be at best levels from 2016 to 2027 and
shall be at the rate of 9%. Coupled with this the capacities which is planned to be added through renewable sources shall see a low
achievement leading to thermal power plant (coal based) capacity additions to grow at higher pace on yoy basis. Also, under the
scenario we have assumed that sub-critical capacity addition will stop in 2017 as per the planned initiative of GoI for 13th FYP
onwards and ultra-super critical technology shall witness more acceptance post 2017 and IGCC shall also witness pace in capacity
addition around 2020 with rekindled gas supplies. Further, we have also assumed that market sentiments will derive high interests
from the private power plant developers to invest in thermal power plant assets amidst the planned distribution reforms achieving
success leading to better financial situation of such utilities which in turn would mean more power tie ups on long-term and thus
investments from private players shall witness similar trajectory as was in 2005-2009 regime. Also role the PMP policy might be
contemplated in this scenario too by the private players and under such circumstances the competitiveness of the market shall go
even higher leading foreign OEMs to focus on setting up manufacturing units in the country
Exhibit 06: Thermal Power Plant (Coal based) Capacity Additions Outlook from 2016 till 2027 Under RUGS
ILLUSTRATIVE
GW
Capacity (GW)
450
400
350
300
250
200
150
100
50
0
186
199
213
2016
2017
2018
228
244
261
279
2019
2020
2021
2022
297
2023
316
2024
337
2025
359
2026
382
2027
07
Market Opportunity on Y-o-Y basis under RUGS for Boiler, Turbine & Generator (BTG) Original Equipment Manufacturer (OEM)
Exhibit 07: BTG Opportunity in Thermal Power Plants Capacity Additions on YoY Basis till 2027 Under RUGS
ILLUSTRATIVE
Capacity (GW)
25
22
20
GW
15
13
14
15
16
17
18
18
2021-22
2022-23
19
19
2023-24
2024-25
23
10
0
2016-17
2017-18
2018-19
2019-20
2020-21
2025-26
2026-27
08
For a more detailed examination of the developments on Thermal Power Plants in India get in touch with the author and read more
related articles here
About the author

Ravi Shekhar is Co-founder of Enincon LLP and heads research & consulting division at India office.
The views expressed in this article are solely those of enincon perspectives and do not necessarily represent those of Enincon
Consulting LLP
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Opportunities & Capacity Additions Outlook till 2027