ANALYSIS

OF
INDIAN POWER INDUSTRY
AGENDA
1. Industry Overview
2. Industry Structure
3. Industry Growth
4. Competition
5. Growth Drivers
6. Regulations
7. Issues and Concerns
8. Outlook
 INDUSTRY OVERVIEW

•Industry Overview

•Value Chain Analysis

 INDUSTRY OVERVIEW
 India is the third largest producer of electricity in Asia with a % per capita consumption of
6.6 Kwh.

 1.5% growth in power sector contributes to 1% growth in GDP.

 Power industry is highly organized industry

 Recent Developments (Govt. initiatives):

- Rajiv Gandhi Grameen Vidhyutikaran Yojana
- Sasan and Mundra UMPPs awarded to Reliance Power Ltd and TATA Power Ltd
respectively.

 Employs more than 300000 people

 Installed power capacity is 146000 Mw and expected to reach 213000 by 2012

 Power shortage- 7% base load and 12% peak load

 VALUE CHAIN ANALYSIS

CONSUMER

%
SEBs SEBs Agriculture 24

Domestic 24.9
SEBs & EDs
Discoms
CPSUs PGCIL/CEA Industries 34.5
Pvt. Licensees
Commercial 7.8
IPPs+ Private Private
Licensees Utilities Others 8.7

Source: NTPC –MDA 2004-05

 STRUCTURE

Source: powermin.nic.in Source: powermin.nic.in

 INDUSTRY GROWTH

•Growth Pulse

•Per Capita Consumption

•11th Five Year Plan

 GROWTH PULSE

Potential for growth:

•UMPP to fuel generation growth
•Private players entry into
transmission and distribution.

Hurdles for growth:

Source: planning
•Depleting coal reserves commission
•Unable to import Uranium
 PER CAPITA CONSUMPTION

•Depleting Coal Deposits

•Increase in land
purchase for industrial
Source:
and commercial purposes www.powermin.nic.in

Source:
www.powermin.nic.in
As per THE 11th FIVE YEAR PLAN ..….
UMP
APD Ps,
“Po
wer RP,
unv for all”
opp ei
Increase
ortu ls
d fo nity
thermal cus on
pow
generati er
on

Source: Planning Commission Source: Power Ministry

 COMPETITION

•Herfindahl Index

•Michael Porter Analysis

 HERFINDAHL INDEX

Source: bseindia.com

INTERPRETATION:
Value of Herfindahl Index of Indian Power Industry is 3342.6.
It implies moderate competition in the industry.

The major players are NTPC, Suzlon, Reliance and TATA Power with
market share of 54.79%, 10.24%, 9.34% and 8.75% respectively.
 MICHAEL PORTER ANALYSIS
Bargaining power Of Supplier: HIGH
Threat of New Entrant: Low •Number of companies - 40
•High fund requirement •Brand image of major power companies
•Strict Government policy regarding raw
material and prices
•Entry and Exit barrier

Competitive Rivalry: MODERATE

•Demand and Supply gap
•Creation of power exchanges
•No product differentiation only
manufacturing process is different

Bargaining Power Of buyer: LOW Product and Technology

•No substitute Development: HIGH
•High Demand and Supply Gap •Other sources Wind energy, Bio fuel,
Solar energy
GROWTH DRIVERS

•Overview

•UMPPs

•Growth Trend
 OVERVIEW

 Big size generation capacity (4000Mw)

through UMPPs
 Infrastructure projects- Railway, Airport
and Road
- Metro rail and sky bus in various cities
 Huge capacity addition plans on BOT basis
 “Power For All by 2012”- target increase in
overall installed capacity to 85% (200000
Mw)
 Inter-regional transmission through Private
Partnership with PGCIL Source: Annual Report 2007-08
 APDRP to strengthen transmission and Funding Requirement - 2012

reduce AT&C loss

 CERC Approval for setting up power
exchange to facilitate power trading

Source:
UMPPs – FUELLING GROWTH IN GENERATION

Source: Annual Report 2007-08

 GROWTH TREND IN POWER
Ownership wise generation
INDUSTRYSource wise generation

Power Transmission

Source:
www.powermin.nic.in
 REGULATIONS
• CEA forms a committee for efficient land utilization

• Revision of National Electricity Plan

• Protection of consumer interests

• Energy conservation

• Electricity Act 2003:

- Breaking of state monopolization

• No license required for sale of electricity from captive units

• 100% FDI allowed in power industry

 ISSUES AND CONCERNS
 Rural Electrification- To provide uninterrupted power supply at reasonable
rates.
 Supply deficit 70000 Mw- required investment of US$ 143 billion
 Power theft-3%
 Transmission and Distribution Loss-30%
 Hike in transformer raw material prices and scarcity of raw materials
 Socio-environmental hassles for hydro power generation
 Environment/Forest clearance for UMPPs
 Ash Disposal
 Delay in power equipment installation ; approximately 5 yrs.
 OUTLOOK
 Target of over 153000 Mw of capacity
addition over next 9-10 yrs Growth in Installed Capacity

 Doubling of capacity every 10 yrs

 11th and 12thFive Year Plan- to increase
capacity by 66463Mw and 86500Mw
 9 UMPP with capacity of 4000 Mw
each to lower cost to consumers
requiring an investment of
Rs.16000 crore
 Power utilities shifting towards merchant
power plants providing higher returns
 Expanding transmission capacity to reduce loss of power
 Encouraging private participation in transmission and distribution will
accelerate growth.
THANK YOU