DATAMONITOR VIEW 1
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
List of Tables
Table 1: State-wise possible village electrification solutions 32
Table 2: India LNG terminals 41
Table 3: Key power projects likely to achieve financial closures by the beginning of 2010 48
Table 4: IPO by the private players 50
Table 5: Key private equity transactions in the power sector concluded during the period 51
Table 6: Key projects bagged by the T&D players 55
List of Figures
Figure 1: Electricity demand supply scenario, 2009?15 6
Figure 2: Electricity demand between 2009 and 2015 7
Figure 3: Electricity generation capacity by fuel type, 2009?15 8
Figure 4: Private power generation and distribution market, 2009?15 10
Figure 5: Contribution by the private sector towards installed capacity by fuel type 11
Figure 6: India's power trading value chain 16
Figure 7: Yearly average spot prices forecast between 2009 and 2015 19
Figure 8: Monthly average spot prices forecasted between 2009 and 2011 20
Figure 9: Hourly sport price variations for the peak months (March-May) 21
Figure 10: Spot price comparisons with and without caps for the peak months 23
Figure 11: Status of non-electrified villages in India as of October 2009 28
Figure 12: India power generation capacity by fuel type, 2009, 2012 and 2015 34
Figure 13: Coal reserves of India and region wise demand by coal based power plants, 2009 35
Figure 14: Coal production trend and supply to power sector by CIL, 1991?2009 37
Figure 15: Coal supply sources for the Indian power plants, 2009 38
Figure 16: Coal import sources for Indian power plants during 2009 39
Figure 17: Fuel stability for coal fired power plants during 2009 and expected scenario for 2010 40
Figure 18: Fuel stability for gas fired power plants during 2009 and expected scenario for 2010 42
Figure 19: India's infrastructure plan 44
Figure 20: Average debt to equity ratio for the listed power companies 46
Figure 21: Debt to equity ratio for the listed power companies 47
Figure 22: Listed power sector companies 49
Figure 23: The size of market for the EPC players between 2009 and 2015 52
Figure 24: The size of market for the OEM players between 2009 and 2015 53
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