The India Power market is undergoing a major transformation phase owing to the efforts taken by the government to improve electricity access in the country along with its plans to increase the share of renewables in the country’s power generation mix. Factors such as population growth in India which is expected to overtake China as the world’s most populous country by 2025 is a strong propeller for power market. The degree of urbanization in the country will also have significant implications on the trend of energy consumption because of increase in demand from industries that use energy for construction and manufacturing and in turn driving the power market in India during the forecast period. However, huge investment that is required for setting up and modernizing of power generation, transmission or distribution network and weak private sector investment is holding back the power market in India.

  • Thermal sources such as coal, oil and natural gas which constitute of 62.8% of the total power generated in India is likely to dominate the India Power Market with coal holding a major share of more than 50% as of 2019.
  • India has abundant availability of solar irradiance and receives solar energy throughout the year. This has created enormous opportunities to exploit solar energy from the sunniest sites in the country, especially, Rajasthan, Gujarat and Andhra Pradesh. The aforementioned factor clubbed with foreign investment and extensive R&D projects provides an opportunity for the growth of the power market in India.
  • The Indian government has planned an investment of USD 2.15 billion to electrify houses in rural areas during the forecast period, for which heavy investments in the transmission network is being done, further driving the power market in India.

Key Market Trends

Thermal Source for Power Generation to Dominate the Market

  • Power generation uses a variety of sources ranging from fossil fuels like coal and oil, to renewable sources like wind and solar. The energy mix for electricity generation is dominated by fossil fuels like coal, oil and natural gas, with the three constituting almost over 65% of the global energy mix.
  • The power generation mix is heavily skewed toward coal with major contribution, because of cheaper domestic fuel availability. Its share in the mix has increased over the years due to constraints in adding other conventional generation sources?hydro, nuclear and gas.
  • In Dahej, Gujarat, a 2640 MW coal-based thermal power plant is under construction by Adani Power Limited, along with several other projects underway, which in turn would drive the market in the near future.
  • Oil remains an essential energy source for India. It is the second-largest source in the country’s total primary energy supply (TPES) and the largest in its total final consumption (TFC). Oil demand has increased rapidly over the last several decades and India is now the third-largest oil-consuming country in the world.
  • Most of hard coal resources are located in seven States: Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Maharashtra and Telangana. And lignite resources are concentrated in three states: Tamil Nadu, which accounts for 80% of lignite resources, Rajasthan and Gujarat.
  • To support exploration of coal and lignite for power generation, India plans to spend USD 72 million in 2019 and hence promulgate the India power market.

India’s Need for Robust Power Transmission Network

  • Transmission system establishes the link between source of generation on one side and distribution system, which is connected to load / ultimate consumer, on the other side. Transmission planning is a continuous process of identification of transmission system addition requirements, their timing and need.
  • India has adequate power generation capacity, but it has some proportion of population having limited access to electricity because of lack of proper transmission network and infrastructure. To achieve the target of electricity for all, there is a demand for transmission network and hence driving the power market.
  • As of May 2019, India has 414,858 ckt kms transmission lines, POWERGRID (A listed company of Government of India) owns and operates around 85% of India’s transmission network, with a share of 40-50% of all transmitted electricity.
  • Similarly, in 2018, India was the third-largest electricity-generating nation in the world. This power is generated from both conventional and renewable sources. The country has made major strides in improving access to power among both rural and urban communities through various government-led schemes focused on Power for All.
  • Therefore, power transmission is vital and huge amount of power generated in power station is to be transported over a long distance to the load centers to cater to the consumers with the help of transmission lines and transmission towers, in turn driving the power market in India.

Competitive Landscape

The India power market is moderately consolidated. Some of key players in this market are NTPC Ltd., NLC India Ltd, SJVN Ltd, JSW Group and Power Grid Corporation India Ltd. among others.

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