Professional Documents
Culture Documents
JANUARY 2016
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POWER
Executive Summary. 3
Advantage India 4
Market Overview and Trends..6
Porter Five Forces Model..........................16
Strategies Adopted.....18
Growth Drivers.....20
Opportunities31
Success Stories.......38
Useful Information.. 46
JANUARY 2016
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POWER
EXECUTIVE SUMMARY
Large-scale government The government targets capacity addition of 88.5 GW under the 12th Five-Year Plan
(201217) and around 100 GW under the 13th Five-Year Plan (201722)
initiated expansion
Investments of around USD250 billion are planned for the power sector during the 12th
plans Plan Five-Year Plan
Favourable policy 100 per cent FDI is allowed under the automatic route in the power segment and
environment renewable energy
Source: Make in India website, Ministry of New and Renewable Energy, IEA,
CEA (Central Electricity Authority), TechSci Research, Assorted articles
Notes: TWh - Terawatt Hours, GW Gigawatt,
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POWER
ADVANTAGE INDIA
JANUARY 2016
POWER
ADVANTAGE INDIA
FY15 Growing
Growing demand
demand Attractive opportunities FY22E
Expansion in industrial activity to Ambitious projects and increasing
Total boost demand for electricity investments across the value chain Total
demand demand
(TWh): Growing population and increasing Diversification into renewable (TWh):
penetration and per-capita usage to sources increasing growth avenues 1,894.7
1174.07
provide further impetus
Source: CEA, DIPP (Department of Industrial Policy and Promotion), TechSci Research
Notes: FY - Indian Financial Year (April March), FDI - Foreign Direct Investment,
JANUARY 2016 E - Estimates, TWh - Terawatt-Hour, FY22 estimates as per IEA forecasts
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POWER
JANUARY 2016
POWER
EVOLUTION OF THE INDIAN POWER SECTOR
2003 onwards
Growth Era
19912003
Liberalisation Era
19561991
Nationalisation
Stage
Electricity Act (2003)
With a production of 1,031 TWh, India is the third largest Worlds leading electricity producers in 2014 (TWh)
producer and fourth largest consumer of electricity in the
world
5649.6
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POWER
POWER GENERATION HAS GROWN RAPIDLY OVER THE YEARS
JANUARY 2016
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POWER
SOURCES OF POWER WITH SHARES IN TOTAL INSTALLED CAPACITY (1/2)
India has large reserves of coal. At the end of 2014, total coal
Coal reserves stood at 301.56 billion tonnes; of which, 60.6 billion tonnes
was proven reserves
69.8%
Thermal
Indias proven natural gas reserves measure about 1.4 trillion cubic
Gas metres
15.2% With a large swathe of rivers and water bodies, India has enormous potential for hydropower; the
Hydro 12th Five-Year Plan (201217) includes additional 30GW of hydroelectric power generation. In FY16
(till October 2015), India has 42.47 GW of hydro power generating capacity
Wind energy is the largest renewable energy source in India; projects like the Jawaharlal Nehru
13.0% National Solar Mission (aims to generate 20,000 MW of solar power by 2022) are creating a positive
Renewable
environment among investors keen to exploit Indias potential. There are plans to set up four solar
power plants of 1GW each
2.1% Currently, India has 5.78 GW of net electricity generation capacity using nuclear fuels (across 20
Nuclear reactors) and aims to increase it to 45 GW by 2020; with one of the worlds largest reserves of
thorium, India has a huge potential in nuclear energy
Source: Ministry of Coal, NHPC, CEA, BP Statistical Review 2015, Corporate Catalyst India, Indian Power Sector, Ministry of Power, TechSci Research
Notes: MW - Megawatt, GW - Gigawatt
JANUARY 2016
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POWER
SOURCES OF POWER WITH SHARES IN TOTAL INSTALLED CAPACITY (2/2)
As on October 2015, total thermal installed capacity stood at Installed capacity for different sources of power
195.6 GW, while hydro and renewable energy installed 2016* (GW)
capacity totalled 42.5 GW and 36.5 GW, respectively. At 5.8
GW, nuclear energy capacity had increased considerably
which otherwise remained the same from 2010 - 15
195.6
42.5 36.5
5.8
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POWER
GENERATION CAPACITY HAS INCREASED AT A HEALTHY PACE (1/2)
Indias installed power generation capacity was 280.3 GW Installed electricity generation capacity (GW)
as on FY16 (April-October 2015)
Installed capacity increased steadily over the years, posting 272.5 280.3
a CAGR of 8.7 per cent in FY0916* CAGR: 8.7%
237.7
223.3
199.9
173.6
159.4
143.1 148
132.3
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
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POWER
GENERATION CAPACITY HAS INCREASED AT A HEALTHY PACE (2/2)
Among the different sources of power in India, the CAGR in Comparison of installed capacity (GW)
installed capacity over FY0716* was
195.6
9.6 per cent for thermal power
131.6
18.7 per cent for renewable energy, the fastest
among all sources of power
86
2.3 per cent for hydro power
42.47
36.5
34.7
24.5
39
4.5 per cent for nuclear power
7.8
5.8
3.9
4.8
Thermal Hydro Renewable Nuclear
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POWER
MAJOR PLAYERS IN THE POWER SECTOR (1/2)
NTPC is Indias largest power producer and the sixth-largest thermal power producer in the world, with installed
capacity of 45.05 GW (including JVs). By 2032, NTPC plans to reach 128,000 MW of power capacity. Coal-based
power accounts for more than 84.7 per cent of the total capacity
It has also diversified into hydro power, coal mining, power equipment manufacturing, oil and gas exploration,
power trading and distribution
Tata Power is Indias largest integrated power company, with significant presence in solar, hydro, wind and
geothermal energy space. The company accounts for 52 per cent of total generation capacity in the private sector,
with an installed capacity of 8.7 GW. By 2022, the company plans to increase the generating capacity to 18 GW,
distribution networks by 4 GW and energy resources by 25 million tonnes per annum.
The company has more than 35,000 MW of power generation capacity, both operational and under development.
Reliance Power has an operational power generation capacity of 6 GW. FY13 saw the development of 3,960-MW
Sasan UMPP in Madhya Pradesh
CESC Limited is a vertically integrated player engaged in coal mining, and generation and distribution of power. It
owns and operates three thermal power plants generating 1225 MW of power. These are Budge Budge
Generating Station (750 MW), Southern Generating Station (135 MW), and Titagarh Generating Station (240 MW)
NHPC is the largest hydro power utility in India, with an installed capacity of 6.5 GW; it has drawn up a massive
capacity expansion plan of adding 6.7 GW by 2017
NHPC is constructing nine projects, aggregating an installed capacity of 4.2 GW. NHPC added 1.9 GW and 1.1
GW during the 10th and 11th Plan periods, respectively
Power Finance Corporation Limited (PFC) is an NBFC engaged in financing and development activities within the
Indian power sector
Major products and services include project term loans, lease financing, direct discounting of bills, short-term loans
and consultancy services
Adani Power is one of Indias largest private thermal power producers, with total capacity set to reach 10.4 GW;
the company aims to generate 20 GW of power by 2020
The company is one of the worlds largest single-location thermal power plants in Mundra, Gujarat
Power Grid Corporation of India Limited (PGCIL) is the single largest transmission utility in India; it is responsible
for planning, co-ordination, supervision and control over inter-state transmission systems
Target to enhance inter-regional capacity to about 72.25 GW at the end of XII Plan. In 2014, inter-regional capacity
is 37.95 GW.
Damodar Valley Corporation is engaged in power generation, distribution and transmission of electric power,
irrigation and flood control
*This list is indicative. Source: Company websites, News articles, TechSci Research
Note: NBFC - Non-Banking Financial Company
JANUARY 2016
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POWER
JANUARY 2016
POWER
PORTERS FIVE FORCES ANALYSIS
Competitive Rivalry
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POWER
STRATEGIES ADOPTED
JANUARY 2016
POWER
STRATEGIES ADOPTED
Companies are developing captive coal fields to reduce price volatility and ensure
Control generation uninterrupted supply of fuel to control generation cost
costs
Most of the power companies are now located near energy source. This helps minimise
costs of fuel transport
Power companies are now looking at securing adequate supplies of fuel by targeting not
only domestic but also overseas resources
Reliance Power already has coal reserves in Indonesia
Acquiring sources of Essar Power have captive coal mines in Indonesia from which it extracts coal for power
fuel supply plants in India
Government has enabled the power utilities for swapping their coal supplies with the
nearest sources so as to save miscellaneous costs and decongest the rail network
Additional revenue Most of the companies are now looking to sell their carbon credits to generate additional
streams revenue by employing supercritical technology
GROWTH DRIVERS
JANUARY 2016
POWER
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS
Multiple drivers (industrial expansion, growing per-capita Share of industry in electricity consumption
incomes) are leading to growth in power demand; this is set
to continue in the coming years
58%
During FY1015, GDP growth is likely to average
44.90%
44.40%
43.80%
8.08.5 per cent
39.30%
38.60%
37.80%
37.70%
37.60%
42%
India is set to become a global manufacturing hub
with investments across the value chain
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
Source: TechSci Research,
Ministry of Statistics and Program Implementation
Notes: TWh - Terawatt Hours,
RGGVY - Rajiv Gandhi Grameen Vidyutikaran Yojana, CEA
* - Data is for April-August 2015
JANUARY 2016
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POWER
INDUSTRIAL EXPANSION AND STRONG GDP GROWTH DRIVING POWER DEMAND (2/2)
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: CEA, TechSci Research
Notes: RGGVY - Rajiv Gandhi Grameen Vidyutikaran Yojana
JANUARY 2016
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POWER
POLICY SUPPORT AIDING GROWTH IN THE SECTOR
R-APDRP was launched by Ministry of Power with the purpose of reducing AT&T losses
up to 15 per cent by upgradation of transmission and distribution network
R-APDRP Linking disbursement of central government funds (to states), with actual reduction in
transmission and distribution losses. Sanctioned projects of more than USD5.8 billion
Fuel supply agreement with Coal India Ltd will ensure the availability of coal for power
Fuel Supply Agreement
companies over the long term
This Scheme used for promoting generation of electricity from renewable energy sources
Feed in Tariff Allows Power Producers to sell renewable energy generated electricity to an off taker at
a pre determined tariff for a given period of time
Public Private To reduce dependency on imported coal, a Public Private Partnership (PPP) policy framework
Partnership(PPP) would be devised with Coal India Limited to increase coal production
100 per cent FDI is allowed under automatic route for power sector except atomic energy
During FY13, the Government liberalised FDI policy for Power Trading Exchanges
Liberalised FDI policy
Foreign Investment in power exchanges registered under the CERC Regulations, 2010,
allowed up to 49 per cent (FDI-26 per cent and FII-23 per cent)
Low-interestbearing funds to be provided from National Clean Energy Fund (NCEF) to Indian
Low-interest funds Renewable Energy Development Agency Ltd (IREDA) for on-lending to viable renewable
energy projects
The total plan outlay for the power sector for FY16 is estimated at USD10.05 billion
Growing investments While the proportion of plan expenditure in the total outlay was 59 per cent in FY13, that for
FY14 is a whopping 96 per cent
Benefit under section 35 (2AA) of the Income Tax Act to industry/private sponsored research
Tax benefits programmers
Write off can be availed for expenditure to be made on R&D to in-house R&D centres
Further incentives are available for setting up of projects in notified areas
In order to meet the peak load shortages and grid stability, spinning reserves have been
Spinning Reserve
created
National Mission on In August 2014, Government had launched the policy with an investment of USD128
Enhanced Energy million
Efficiency Funds energy efficient electrical appliances
JANUARY 2016
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POWER
INCREASING INVESTMENTS: FDI INFLOWS AND KEY DEALS (1/3)
Power is one of the key sectors attracting FDI inflows into FDI inflows into the power sector (USD million)
India
100 per cent FDI allowed in the power sector has boosted
FDI inflows in this sector
FY10 FY11 FY12 FY13 FY14 FY15 FY16*
JANUARY 2016
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POWER
INCREASING INVESTMENTS: FDI INFLOWS AND KEY DEALS (2/3)
Asian Development Bank (ADB), Goldman Sachs and Global Environmental Fund have together invested USD140 million in
ReNew Wind Power Pvt Ltd on July 03, 2014
EIG Global Energy Partners made an investment of USD125 million in Greenko Group, which is planning to develop its wind
farms and hydropower assets in India by means of Greenfield projects and acquisitions
GE Energy Financial Services plans to invest USD24 million in a solar power project by Welspun Renewables Energy Pvt
Ltd.
JANUARY 2016
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POWER
INCREASING INVESTMENTS: FDI INFLOWS AND KEY DEALS (3/3)
Standard Chartered Private Equity Ltd Sterlite Power Grid Ventures Ltd 07 July 2014 83.4
ADB, Goldman Sachs, Global Environment Fund ReNew Wind Power Pvt Ltd 03 July 2014 140
GSPC Distribution Networks Ltd Gujarat Gas Co Ltd 3 October 2012 674.2
Foundation Capital; Helion Venture Partners Azure Power India Pvt Ltd 7 September 2012 8.0
OPPORTUNITIES
JANUARY 2016
POWER
POWER GENERATION: OVERALL FUNDAMENTALS WILL REMAIN STRONG (1/2)
Demand for electricity is expected to increase at a CAGR of Electricity demand forecast (TWh)
7 per cent to 1,894.7 TWh over FY0722
690.59
JANUARY 2016
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POWER
POWER GENERATION: OVERALL FUNDAMENTALS WILL REMAIN STRONG (2/2)
The government is targeting capacity addition of around Addition to generation capacity under
88.54 GW under the 12th (201217) and around 100 GW Five-Year Plans (GW)
under the 13th (201722) Five-Year Plan
19.01 21.13
16.42
JANUARY 2016
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POWER
INDIAN POWER SECTOR: MARKET WITH ENORMOUS GROWTH POTENTIAL
Peak power requirement in FY14 stood at 136 GW; of Addition to generation capacity under
which, a demand of 130 GW was met Five-Year Plans (GW)
180 14
The per-capita electricity consumption of India stood at
160 12
1000 in FY15 lower than the global average of 2,803,
140
representing huge potential for growth 10
120
100 8
The addition of approximately 106 GW to the existing
capacity is expected to boost GDP growth to 8 per cent by 80 6
FY17 60
4
40
2
109
110
104
119
110
122
116
130
123
135
130
136
141
148
148
153
20
91
97
0 0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
JANUARY 2016
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POWER
CURRENT TRENDS POINT TO OPPORTUNITIES ACROSS THE VALUE CHAIN
Estimated investment of USD6.6 billion for setting up 10,000
MW solar plant in Rajasthan
Adani Power
Company plans to increase capacity to 20 GW by 2020
Germac Energy and Coal-fired plant in Tamil Nadu; investment of USD1.3 billion
Sepco III (JV)
Generation
Nuclear power ambition; studying entry strategy with minimum
Tata Power
investment of USD3.0 billion
Plans to invest USD3.7 billion that would fuel its expansion plans
JANUARY 2016
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POWER
STRONG UPWARD MOMENTUM IN NUCLEAR ENERGY LIKELY IN MEDIUM TO LONG TERM
Currently, the country has net installed capacity of 5.8 GW, Nuclear energy installed capacity in India (GW)
using nuclear fuels, across 20 reactors. Of the 20 reactors,
18 are Pressurised Heavy Water Reactors (PHWR) and two
are Boiling Water Reactors (BWR)
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POWER
SUCCESS STORIES
JANUARY 2016
POWER
NTPC: A PUBLIC SECTOR SUCCESS (1/3)
During FY0915, NTPCs sales increased at a CAGR of Revenues and net profit (USD billion)
6.3 per cent; CAGR in profits was 6.3 per cent during FY
09 - 13
16 2.5
13.9
14 13 13.3
12.6 12.5
As on 31. 03. 2015, NTPC accounted for 16 per cent of the 2
countrys capacity, though it contributed 25 per cent of 12
10.2
total power generation 10 9.2
1.5
8
5.7 1
The company has an installed capacity of 45.05 GW. It 6
aims for 128 GW of capacity by 2032 4
0.5
2
Currently, 23.5 GW of additional capacity is under
0 0
construction FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
JANUARY 2016
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POWER
NTPC: A PUBLIC SECTOR SUCCESS (2/3)
NTPC has taken over and successfully turned around Impact of NTPC takeover of sub-optimal plants (PLF)
numerous sub-optimally performing stations
95% 93%
High operational efficiency (indicated by plant load factor 86%
and availability factor) is NTPCs trademark
67%
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POWER
NTPC: A PUBLIC SECTOR SUCCESS (3/3)
Capacity addition at a CAGR of 17.7 per cent during 1982 NTPC: Generation capacity over the years (GW)
2015
45.1 45.1
Highest ever capacity addition of 43.05 GW during FY15. 43.1
41.2
Average annual capacity addition of approximately 21 GW
37.0
required till 2017 34.2
30.6 31.7
JANUARY 2016
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POWER
TATA POWER: SURGING AHEAD IN THE PRIVATE SECTOR (1/2)
During FY0915, Tata Powers revenues increased at a Revenue (USD billion)
CAGR of 6.9 per cent to USD5.70 billion. Revenues for
FY16 (April-September 2015) stood at USD3 billion
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POWER
TATA POWER: SURGING AHEAD IN THE PRIVATE SECTOR (2/2)
The company estimates its installed capacity to expand Installed capacity in Mega Watts (MW)
fivefold in the next five years to 25 GW
JANUARY 2016
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POWER
RELIANCE POWER: ON A GROWTH TRAJECTORY (1/2)
Reliance Power has 6 GW of operational capacity and Revenues and net profit (USD million)
approximately 15 GW under implementation
1,136.82
It won three of the four Ultra Mega Power Projects (UMPPs)
awarded by Government of India so far. These three
907.12
848.07
projects are located in Sasan (Madhya Pradesh),
Krishnapatnam (Andhra Pradesh), and Tilaiya (Jharkhand)
453.31
430.72
Additional three units of 660 MW each at the 3,960 MW
Sasan project were commissioned in FY14
231.21
186.24
184.89
170.59
170.32
166.69
144.22
Sasan UMPP is the largest integrated power plant and coal
4.37
5.6
mining project globally
FY10 FY11 FY12 FY13 FY14 FY15 FY16*
The companys coal production capacity has reached ~100
MTPA. It is the largest private sector coal producer in India Revenue Net Profit
Source: Reliance Power website, Annual Reports,
TechSci Research
The companys ongoing projects would increase its Notes: -Decline due to negative translation effect,
production capacity to 20,000 MW of coal-fired capacity, MW Megawatt, MTPA - Million Tonnes Per Annum
2400 MW of gas-fired capacity and 5,292 MW of * - Data is for June ended 2015
hydroelectric capacity
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POWER
RELIANCE POWER: ON A GROWTH TRAJECTORY (2/2)
Both units of the 600-MW Butibori coal project in Generating capacity (million units)
Maharashtra are ready for production
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POWER
USEFUL INFORMATION
JANUARY 2016
POWER
INDUSTRY ASSOCIATIONS (1/2)
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POWER
INDUSTRY ASSOCIATIONS (2/2)
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POWER
GLOSSARY (1/2)
CAGR: Compound Annual Growth Rate
GW: Gigawatt
MW: Megawatt
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POWER
GLOSSARY (2/2)
R-APDRP: Restructured Accelerated Power Development and Reform Programme
TWh: Terawatt-Hour
USD: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
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POWER
EXCHANGE RATES
Year INR equivalent of one USD Year INR equivalent of one USD
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