Trade Analytics
Power
The share of solar capacity in the renewable energy sector is likely to increase to 11 per cent in FY16.

Power Sector in India

Latest update: March, 2018

  • For the 12th Five-Year Plan, a total of 88.5 GW of power capacity addition is targeted; of which, 72.3 GW constitutes thermal power, 10.8GW hydro power & 5.3 GW nuclear power
  • In January 2017, the 2nd unit of Kundankulam Nuclear Power Project, attained a capacity of 1000Mwe & this is anticipated to strengthen the overall power generation capacity in India.
  • In February 2017, a 40-killowatt solar power plant was inaugurated at Don Bosco Higher Secondary School in Johrat City, Assam.
  • In May 2017, the government approved the raising of bonds worth US$351.03 million for renewable energy through the Indian Renewable Energy Development Agency (IREDA).
  • As of June 2017, total thermal installed capacity in the country stood at 220.58 GW, while hydro & renewable energy installed capacity totalled to 44.61 GW & 58.3 GW, respectively.

Notes: MW - Megawatt, GW – Gigawatt
Source:Ministry of Coal, NHPC,Central Electricity Authority (CEA), Corporate Catalyst India

Growth
  • With electricity production of 1,160.1 BU in India in FY17, the country witnessed growth of around 4.72 per cent over the previous fiscal year.
  • Over FY10–FY17, electricity production in India grew at a CAGR of 7.03 per cent.
  • The 12th Five Year Plan projects that, total domestic energy production would reach 844 million tonnes of oil equivalent (MTOE) by 2021–22.

Notes: FY - Indian Financial Year (April-March), BU – Billion Unit
Source:BP Statistical Review, Ministry of Power

Growth

 

Last Updated: March, 2018

POWER SECTOR REPORT | March, 2018

Introduction

Power is one of the most critical components of infrastructure crucial for the economic growth and welfare of nations. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy.

India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on back of strong focus by the government on promoting renewable energy and implementation of projects in a time bound manner.

India has moved up 73 spots to rank 26th in the World Bank's list of electricity accessibility in 2017, according to Mr Piyush Goyal, Minister of State (Independent Charge) for Power, Coal, Renewable Energy and Mines, Government of India.

In September 2017, the Government of India launched the Saubhagya scheme to provide electricity connections to over 40 million families in rural and urban areas by December 2018 at a cost of US$ 2.5 billion.

Market Size

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower).

Total installed capacity of power stations in India stood at 334,146.91 Megawatt (MW) as on February, 2018.

The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU’s higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 per cent and 18 per cent for conventional energy.

The Indian solar industry has installed a total of 2,247 megawatts (MW) in the third quarter of 2017, from 1,947 MW in the second quarter of 2017. The cumulative installed capacity reached 7,149 MW in the first nine months of 2017, covering more than one-third of total new power capacity addition in 2017.

Two under-construction hydro projects of NHPC in Himachal Pradesh and Jammu & Kashmir (J&K), expected to be commissioned in 2018, will produce 4,458.69 million units of additional power, according to the Ministry of Power, Government of India.

The total estimated potential of tidal energy in India is about 8,000 megawatt (MW), of which 7,000 MW is in the Gulf of Kambhat, 1,200 MW is in the Gulf of Kutch and 100 MW in the Gangetic Delta.

The number of small hydro power projects set up in India stood at 1,085 with total installed capacity of 4,399.355 megawatt (MW) as of November 30, 2017.

Investment Scenario

Around 293 global and domestic companies have committed to generate 266 GW of solar, wind, mini-hydel and biomass-based power in India over the next 5–10 years. The initiative would entail an investment of about US$ 310–350 billion.

Between April 2000 and September 2017, the industry attracted US$ 12.3 billion in Foreign Direct Investment (FDI), accounting for 3.44 per cent of total FDI inflows in India.

Some major investments and developments in the Indian power sector are as follows:

  • Energy Efficiency Services Ltd (EESL) has raised US$ 454 million from Global Environment Facility (GEF) for its energy-efficiency projects in an attempt to boost India's move towards becoming a low carbon economy.
  • IL&FS Financial Services Ltd has partnered with Jammu and Kashmir (J&K) Bank Ltd to finance nine hydropower projects in J&K with a total capacity of 2,000 MW, which require financing of around Rs 20,000 crore (US$ 3.12 billion).
  • Sterlite Power has won one of the largest 1,800 km power transmission project worth US$ 800 million in Brazil, the company's third project in Brazil and the largest ever project won by an Indian company in Latin America.
  • With the aim of giving a boost to renewable energy, the State Bank of India (SBI) and the World Bank have decided to sanction credit worth Rs 2,317 crore (US$ 356.82 million) to seven corporates towards solar rooftop projects to generate a total of 575 megawatt (MW) of solar energy.
  • India added 467 MW of grid interactive wind power capacity between January-November 2017, while wind power projects with cumulative capacity of 9,500 MW are expected to be bid out by March 2018, according to Mr R K Singh, Minister of State (Independent Charge) for Power and New & Renewable Energy, Government of India.
  • A total of 26.3 million households which are below poverty line (BPL) have been electrified under the Rural Electrification component of Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), according to the Ministry of Power, Government of India.
  • In April 2018 ReNew Power made the largest M&A deal by acquiring Ostro Energy for US$ 1,668.21 million.

Government Initiatives

The Government of India has identified power sector as a key sector of focus so as to promote sustained industrial growth. Some initiatives by the Government of India to boost the Indian power sector:

  • "Saubhagya Yojana" programme was launched by Mr Raghubar Das, Chief Minister, Jharkhand to provide electricity to all 29,376 villages.
  • The companies within the solar power industry in India, specifically the ones involved in the operation and maintenance (O&M) of solar power plants have welcomed the Government of India's move to introduce regulations for operating drones by February 2017.
  • Over 280 million LED bulbs were distributed to consumers in India by Energy Efficiency Services Limited (EESL) under Unnati Jyoti by Affordable LEDs for All (UJALA) as on December 19, 2017 and 524.3 million LED bulbs were sold by private players till October 2017.
  • In order to lower India's crude oil imports, the Government of India is going to promote coal gasification to convert high ash coal into methanol that can be used as cooking gas and transportation fuels^, according to Mr V K Saraswat, Member of NITI Aayog.
  • Initiatives taken by the Energy Efficiency Services (EESL) have resulted in energy savings of 37 billion kWh and reduction in greenhouse gas (GHG) emissions by 30 million tonnes.
  • The Union and state governments have agreed to implement the Direct Benefit Transfer (DBT) scheme in the electricity sector for better targeting of subsidies, according to Mr Raj Kumar Singh, Minister of State for Power (Independent Charge).
  • All the states and union territories of India are on board to fulfil the Government of India's vision of ensuring 24x7 affordable and quality power for all by March 2019, stated Mr Raj Kumar Singh, Union Minister of State (IC) for Power and New & Renewable Energy, Government of India.
  • Uttar Pradesh Electricity Regulatory Commission, regulator of power sector in Uttar Pradesh, has approved several steps to strengthen the financial position of state utilities and increase opportunities for companies in the transmission and distribution (T&D) EPC business.
  • The Department of Economic Affairs, Government of India, signed a guarantee agreement for IBRD/CTF loan worth US$ 98 million and grant agreement for US$ 2 million with the World Bank for 'shared infrastructure for solar parks project'.

The Road Ahead

The Government of India has released its roadmap to achieve 175 GW capacity in renewable energy by 2022, which includes 100 GW of solar power and 60 GW of wind power.The Union Government of India is preparing a 'rent a roof' policy for supporting its target of generating 40 gigawatts (GW) of power through solar rooftop projects by 2022.

Coal-based power generation capacity in India, which currently stands at 192 GW is expected to reach 330-441 GW by 2040##.

The 2026 forecast for India's non-hydro renewable energy capacity has been increased to 155 GW from 130 GW on the back of more than expected solar installation rates and successful wind energy auctions#.

India could become the world's first country to use LEDs for all lighting needs by 2019, thereby saving Rs 40,000 crore (US$ 6.23 billion) on an annual basis.

India’s installed solar power capacity reached 14,771.69 as of September 2017.

The government’s immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24x7electricity for residential, industrial, commercial and agriculture use. A total of 16,064 villages out of 18,452 un-electrified villages in India have been electrified up to December 2017 as part of the target to electrify all villages by May 1, 2018.

The Government of India is taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc., in order to achieve India's ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022. The government has also sought to restart the stalled hydro power projects and increase the wind energy production target to 60 GW by 2022 from the current 20 GW.

Exchange Rate Used: INR 1 = US$ 0.015 as on January 04, 2018

References: Media Reports, Press Releases, Press Information Bureau (PIB)

Note: # - BMI Research, ## - according to Mr Gopal Singh, CMD, Coal India Limited, ^ - according to Mr V K Saraswat, Member of NITI Aayog

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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