Power sector in India has always been in a state of flux and
if one analyzes sequence of events that shaped India's power sector since
1990s, one will see one common theme, i.e. struggle to reform the sector.
Change is the only constant is true for India's power sector but that change
seemingly never came in the sector wherein only constant was steady
deterioration of the overall economics associated with the power sector. Thanks
to state government interference in utility operations which generally have had
detrimental impact on utility operations.
Power demand and supply scenario in India has always
indicated a grim deficit situation and almost every 4-5 years the reason for
this situation has been changing. Till recent, fuel shortage was blamed to be
the core reason for power shortage as a result of which power generation plants
were unable to generate enough electricity to meet demand. The new government took
the task of transforming the overall coal sector and within one year of coming
into power, Prime Minister Narendra Modi led NDA government has led to turn
around in coal availability scenario in India. Since almost last 20 years,
focus was given to power generation sector, as it was felt that accelerated
capacity addition is the only solution to India's power shortages and problems
associated with transmission and distribution sector was getting completely
ignored. As a result, T&D sector has now brought the entire power
generation sector to its feet and if situation doesn't get fixed, one could
very well see next wave of stranded assets on the power generation side
triggering sooner than later, first signs of which has already started
emerging. While, transmission side related issues can still be fixed by fast
tracking the transmission projects but what cannot be fixed is the bad state of
financial health of distribution companies that are responsible for generating
revenue which than trickle backs to transmission and power generation. Now when
the push has come to shovel, thanks to severed financials, discoms are not
purchasing power to supply to its consumer. Discoms have now completely choked
the viability of entire power sector. If not fixed India could see tremendous
rise in stranded power assets across the power value chain.
Reasons related to power demand ~ supply deficit has evolved
in almost every decade:
1990 - 2000: Not enough power generation capacity available
to meet the demand for peak and base load power requirement & high level of
technical & commercial losses in the grid > this led to liberalization
in power generation sector which saw advent of IPPs and MPPs funded by private
sector.
2001 - 2010: Increasing levels of AT&C losses, Discoms
financials repaired by interim financial restructuring package
2010 - 2014: Coal, Gas unavailability, leading to power
plant not getting adequate fuel to generate power
2015 - Discoms severed financial not allowing them with
enough elbow room to meet power procurement requirement under constrained
revenue scenario.. country seeing demand collapse
Demand for power is collapsing has Discoms now operate under
restricted supply model, wherein owing to its stressed balance sheets it is
refraining from buying enough power to meet its supply commitment. Table below
indicates how industry went wrong in reading the ground reality associated with
power demand, however, the big question is, is it the real demand picture or
restricted demand picture?
From power shortage scenario, experts are predicting problem
of excesses in India's power sector, this triggered by following reasons:
Discoms adopting Restricted Power Supply Strategy: Discoms
not purchasing the power from different generation sources due to lack of financial
resources and resorting to restricted supply of power. Also, there are in a
mood to challenge the status quo on why buy expensive power under PPA when
cheaper power is available in the spot market.
Spot Market Power Prices have Dropped to Historical Lows:
Dip in Demand for Power is has led to significant drop in Power prices in the
spot market are at historical low levels as there are not many takers, historic
slump in power demand from bankrupt distribution utilities has dragged down spot
prices at India's largest power exchange, India Energy Exchange (IEX), to the
lowest ever in its seven-year history. Average prices crashed to Rs 2.80 per
unit last financial year - lower than even the average tariff of Rs 2.92 per
unit
Discoms have started clamour on costly power received from
NTPC under PPAs: Discoms do not want power from central allocation as the power
available in open market are cheaper than that available under PPA with NTPC
Power Evacuation related challenges: Congestion in Grid has
led to significant power generation loss in many states, specific to Tamil
Nadu, Renewable Capacities generated power couldn't be utilized due to
transmission constraints.
Record Power Generation Capacity Addition: Nearly 23 GW of
new capacity was added in FY14-15, a record of sought under the Modi
Government.
Government Capacity Addition Plans are discounting current
ground realities - 175,000 MW by 2022, five ultra-mega power plants totalling
20,000 MW, overall government plans 180 GW of fresh capacity addition by 2022
Is there a silver line indicating initiatives that will see
power demand revved up?
Separate "Carriage & Content" in Electricity
Distribution: Reforms in power distribution, government aims to separate
'carriage and content'. The proposal is based on a recent Central Electricity
Authority recommendation that the distribution system be separated from the
supply of electricity, with two separate licences to two separate legal
entities.The electricity sector will become viable through commercialization of
the distribution sector, which can only be feasible if content is separated
from the carrier whereby the distribution network can be assigned to a licensee
on similar lines as the central transmission utility and state transmission
utility have been assigned for the development of transmission network. The
content (sale of power) may be opened to competition at the Taluka and district
levels, while in towns and cities, there could be multiple players.
Government Flagship Programmes: 100 Smart Cities, Power for
All, Housing for All, Make in India, Dedicated Freight Corridors etc.
Increase in Capex across energy intensive Industries
Publisher firmly believes that understanding India's power
sector is not easy, especially its dynamic state as well as steady state, no
power market will have both the characteristic. On one hand power sector in
India has always been in state of flux, every 2-3 years there are developments
that positively impact the sector but immediately fizzle out due to emergence
of another problem; there are enough anecdotal evidences to prove the same. On
the other one thing that hasn't changed since decades is the financial
situation of discoms that continues to drag the entire sector from pinnacle to
deep cervix and the viscious cycle continues undeterred. It will only be safe
to say that there is no easy solution to the myriad of problems that surrounds
power sector in India and the inevitable is that government will have to dilute
its control over the sector which can be regarded as one of the prime reasons
for the condition of sector which seems to be becoming irreversible with every
passing day. There is serious need to better understand what is the reality
vis-à-vis what is projected by the government and atleast a true picture on
likely power demand in the country over immediate short to medium term is what
investors deserve to know before taking multi-billion dollar investment bet on
the country's power sector.
Publisher through this multi-client report "Discovering
the True Emerging Demand for Power in India by 2022" will provide 360
degree critical evaluation of the sector to throw what will be the likely
demand for power in two scenarios, "Restricted" and
"Unrestricted". This report is indispensable for all stakeholders in
power sector that will take investment decision across the power value chain
basis the emerging demand environment. Report will cover all the leading states
like Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh, Bihar,
Uttarakhand, Telangana, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Punjab,
Haryana, NCR, J&K, Himachal Pradesh, Assam etc, essentially all states that
cumulatively form over 80% of the all total demand for power in India.
Publisher will use all publicly available data and also conduct extensive
primary research with stakeholders related to the power sector. The primary
intent of the report is to clearly equip every market participant with a report
that provides them with details view on whats the emerging power demand scenario
and is it prudent to invest in power generation & transmission projects.
Publisher will do detailed excel modeling, regression analysis to project the
future demand.
Spanning over 541 pages “Discovering the True
Demand for Power in India by 2025: Should you invest in Power Generation
Projects when Discoms Bankruptcy threatens to create Demand Blackout?” report covers Executive
Summary, Research Coverage, Research Approach & Methodology, Power Sector
in India, Power Tariffs analysis across different states, Power procurement
analysis of different discoms, Emerging Trends that are creating confusion
amongst investor community, 5 Year Trend - PowerDemand ~ Supply Scenario across
key States, Projected, medium to long term Demand for Power by 2025, Projected
Supply of Power by 2025 - Business as Usual, Constrained Demand Growth
Scenario, Most Optimistic Scenario, Demand ~ Supply Gap Analysis by 2025, Top
States to Supply Power to by 2025, Review of state distribution companies
operational & financial performance, Market Participants Voices on Future
of Power Sector in India.
For
more information Visit at: http://mrr.cm/UNJ
Find all Energy and Utilities Reports at: http://www.marketresearchreports.com/energy-utilities
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