Trends and Developments in the Indian Power Market | Market Research Report On Aarkstore Enterprise

Trends and Developments in the Indian Power Market | Market Research Report On Aarkstore Enterprise

Introduction

The Indian power sector is going through a phase of organic growth, witnessing positive changes in terms of reforms and opportunities for the players across the value chain

Scope

*Power generation and distribution should continue to attract private investment. In turn, this should benefit OEM and EPC players

*The economy's recovery from the recent market downturn should ease the financing of these projects and help industry take a more dynamic growth path

Highlights

Power generation capacity addition is expected to grow in tandem with demand growth. However, due to historical lag this would not be sufficient and would call for a more pro-active generation capacity addition

Opening of power exchanges would help in managing peak load demand by providing platform for electricity trading. However, the fragile funding model for merchant power is expected to hamper trading volumes at exchanges, which requires further Government intervention in easing the overall trading process and encouraging private participation.

Reasons to Purchase

*First section gives a macro level overview of the Indian power market, highlighting the key opportunities across the value chain

*Next section analyzes some niche sectors that could further augment the opportunities briefed in the previous section

*Final section evaluates some fundamental feasibility concerns in India

Table of Contents :

CATALYST 1

SUMMARY 1

METHODOLOGY 1

Table of Contents 2

Table of figures 3

Table of TABLes 4

CHAPTER 1: DATAMONITOR VIEWPOINT 5

CHAPTER 2: INDIAN POWER MARKET OVERVIEW: DEMAND SUPPY IMBALANCE 6

Demand from the commercial and industrial sector would continue to grow 6

Power generation segment to drive the entire value chain 7

Coal to continue to be the dominant fuel for power generation 8

CHAPTER 3: EMERGING TRENDS AND FUTURE OUTLOOK 9

3.1 Increased participation from the private sector and emergence of power trading to play an instrumental role in bridging the demand supply gap 9

3.1.1 Increasing scope of private participation in the form of independent power plants 9

IPPs to develop coal based thermal and hydro power plants 11

3.1.2 Merchant and captive power producers to boost trading and meet peak power demand 12

Supportive Government policies to boost the growth of the Indian captive power market 12

Venturing into the IPP/MPP model could be the next step for the large captive power producers 13

A collaborative approach is needed for effective utilization of captive units with sub-mega capacities 13

Forming captive power plant clusters to create investment opportunities for distribution players 14

A focus on clean and renewable energy to help captive plants in attracting private and international participation 14

3.1.3 'Open access regime' to increase penetration of energy exchanges and boost private power trading activities 15

Power trading is predicted to benefit from the introduction of new trading products and growth in sustainable energy 17

Market dynamism, with given peak electricity shortages, would ensure an attractive rise in spot trading prices 18

Maturing trading models, rising spot prices and favorable Government policies to promote MPP development and captive power participation 21

Fragile funding model for MPPs and inadequate infrastructure to hamper trading volumes at exchanges 22

3.2 Public and private sector participation in grid expansion and modernization to reduce unaccounted losses and increase penetration 24

3.2.1 T&D infrastructure to witness growth in tandem with the generation sector 25

Government is keen to promote private participation to boost investments in the transmission sector 25

The PPP model is the key to execute ambitious expansion plans in the T&D sector 26

Improved technology and state of the art transmission infrastructure holds immense business potential 26

3.2.2 Regulatory support with multiple incentives for the private investors to increase rural electrification 27

Favorable Government policies to accelerate private investments in rural electrification schemes 29

High initial investments and low energy demand may affect overall private investment in the rural sector 30

Regional electrification strategies to cater to diversified demand and fuel availability across villages 31

3.2.3 Privatization of the distribution segment to increase accountability leading to minimization of losses 32

Rise in per capita electricity consumption to encourage private players interested in power distribution 32

Usage of advanced technology by the private players has increased efficiency 33

3.3 Power generation from gas based plants and wind farms to subsequently reduce dependence on coal 33

Fossil fuel continues to be the key input for power generation 33

Supply and quality concerns to hamper India's coal based energy security plans 34

Coal import concerns to grow and significantly stymie power generation plans 36

Indian gas sector has stabilized owing to an increase in indigenous production and consistent imports 40

Favorable gas allocation and import routes may help sustain gas based power generation 41

Adoption of advanced technologies to increase fuel efficiency 42

Ownership of domestic/international coal and gas blocks to secure fuel availability 42

3.4 Financing to be the key to meet capacity addition plans, and debt to continue as the primary source of funding 43

Improved debt financing to enhance financial closure rate for power projects 44

Mixed results for Indian power stocks and investor confidence 48

Alternative equity routes to supplement an exiguous domestic equity market 50

3.5 Planned investments and adoption of new technologies across the value chain to encourage the OEM and EPC segment 51

Mid and small size OEM/EPC players to benefit from investments in CPPs and MPPs 53

Renewables and high-end technology segments are to attract investments from OEM and EPC players 54

Private OEM and EPC players to create value by securing high worth projects through state and central Government utilities 55

APPENDIX 56

Further Reading 56

Definitions 56

Ask the Analyst 59

Datamonitor Consulting 59

Disclaimer 59

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