POWER :DRIVING INDIA

BY

SUDIPTA SAR

AGENDA

1. Overview – observing industry

2. Industry structure

3. Sectorial overview

4. Industry Analysis

5. Conclusion

GLOBAL ENERGY CONSUMPTION

Correlation between GDP & Power generation

Correlations GDP POWER

GDP Pearson Correlation 1.000 o.396Sig. (2-tailed)

.958N 10.000 10

Power Pearson Correlation .396 1.000Sig. (2-tailed) .958

N 10 10.000

Indian Energy Scenarios: 2015

Coal60.44%

Gas14.49%

Diesel0.48%

Nuclear5.06%

Hydro15.96%

Solar thermal0.40%

Biomass1.19%

Wind1.99%

Gas14.49%

Diesel0.48%

Nuclear14.60%

Hydro15.96%

Solar thermal0.40%

Biomass1.19%

Wind1.99%

Coal50.90%

Same Fuel Mix as now

Aggressive Nuclear Capacity Addition

• Reduction in annual coal consumption ~ 100 Million Tons• Reduction in annual CO2 Emissions > 170 Million Tons

Primary energy consumption per capita

7

India - Low penetration and underserved market

• Low penetration providing significant opportunities for future growth

Over 400 million people without appropriate access to electricity

14

,24

0

8,2

31

8,4

59

7,4

42

6,7

56

6,4

25

2,3

40

1,6

84

61

8

18

,40

8

022

000

Ca

na

da

Un

ited

Sta

tes

Fra

nce

Jap

an

Ge

rma

ny

Un

ited

Kin

gd

om

Ru

ssia

nF

ed

era

tion

Bra

zil

Ch

ina

Ind

ia

(Kw

h/ye

ar)

Source: World Energy Outlook, 2006; Human Development Report 2007-08, Source: China Electricity Council, China Power Year Book, Government of India, Ministry of Statistics & Programme Implementation

Per Capita Consumption of Electricity

Large investment required to achieve Govt. target of per capita consumption of 1,000 KWh by 2012

India China

Installed capacity in 2006 (GW)

132 622

Per capita consumption (per kWh)

618 1,684

Capacity growth rate over the past 6 years

4.4% 11.8%

Capacity addition in past 6 years (GW)

30 303

Comparison with China

POWER DEMAND SUPPLY GAP (BU)

Effect of the gap:

1. Industries under utilised

2. Lac of irrigation –lower agriculture growth

↓↓ Lower GDP0

100

200

300

400

500

600

700

800

5 6 7 8 9 10 11

ENERGYDEMAND

ENERGYSUPPLY

Widening demand supply gap

Inability of Centre/ State to meet capacity addition

Power sector reforms

Huge opportunity for private sector participation

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

$2,300 Bn

$1,900 Bn

High Investment DemandScenario (3%)

Low InvestmentDemand Scenario (2%)

Historic Future

Private Capital Mobilized in Power Sector

Gap covered by public financing, self -financing, donor funding, and rationing.

Tot

al P

ower

In

vest

men

t ($

Bil

lion

)

Cumulative Sum ($Bn)

Source: : World Bank, IEA, Deloitte Touche Tohmatsu Emerging Markets Group

Financing required for the Power Sector in India 1990 - 2020

Indian market environment Indian market environment – – Demand for Power Investment - a large Demand for Power Investment - a large

Growing Gap? Growing Gap?

SOURCE : IDEAs workshop Delhi

Major Stages in Electricity Sector

NTPC 1975-90 Increased Access & Federal intervention

Growth 1950–75 Major Growth, Public Ownership

IPP Era 1991-98 Private Power Projects

E Act 2003 Competition

WB Model 1996-2002 Orissa & others

11

COMPLEX INDUSTRY STRUCTURE WITH MULTIPLE STAKEHOLDERS

Power is a concurrent subject Multiple stakeholders with different functions

• Sets the vision (Vision 2012)

• Frames laws (Electricity Act, 2003)

• Frames taxation policies

• Sets investment guidelines (FI sectoral limits etc)

• New National Electricity Policy

• New National Tariff Policy (Draft)• Owns and controls State Electricity

Boards

• Constitutes state regulatory body

• Determines extent of subsidies

• Significant presence across the system– National Thermal Power Corporation – Power Grid Corporation of India– National Hydro Power Corporation

Central government

30 State governments

Public utilities

SEB’s (30)

Central public utilities

*

*

* *

*

*

*

*

*

• Accounts for 11% of generation

• Present in distribution (e.g., Mumbai, Delhi, Kolkata, Orissa parts of Gujarat)

• Two large players – TPC and REL, several small players - IPPs (e.g., GMR, Torrent ) and Distcoms (e.g., AESC, CESC)

Private sector

20th Dec 2005 IDEAs workshop Delhi

Competition in Power (Bulk / Retail)

Regulator

Market

SOURCES

13

Conventional View of the Industry Structure

14

The Emerging View - anchored in competition

THERMAL POWERTHERMAL POWER

• Oldest sector in india • Contribution: -65% of total electricity

generation• Generates :-86015MW (as on March

31,2007), By 2011- expected 78000MW

• Key players:- NTPC, RPL,DVC,PGCL,TATA POWER

• GOVT. INITIATIVES: -• proposal of ten UMPPs each of capacity

4000MW (in 11th five year plan) ,projects awarded to Reliance Power & Tata Power

Hydro-Electricity

• Inferred potential > 120 GW

• Installed capacity 30 GW

• Most big projects are in North-Eastern states of Arunachal Pradesh, Sikkim, Uttaranchal and J&K

• Problems of rehabilitation and resettlement with large projects

• Environmental issues

• Water sharing agreements with neighbors

National Hydro Power Corporation, Government of India

Natural Gas

Indore

- onwards to India

TAPS

TAPS(across water)

CENTGAS

- to Pakistan

Indore

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KarachiGwadar

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Gas supplyConsumptioncenter

New Delhi

Multan

1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar1 Turkmenistan 2 Iran 3 Oman 4 Qatar

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Pakistan

Afghanistan

Iran

Turkmenistan

QatarIndia

Oman

Gas Authority of India Limited

India’s Gas Pipelines

Possible Gas Imports (Tongia & Arunachalam, 1999)

WIND ENERGY

Denmark

In general, wind speeds lower (~200W/m2) in India as compared to Europe (350 W/m2) and US US

Nuclear Power: The Present Status

0

2000

4000

6000

8000

10000

12000

14000

1969 1973 1981 1984 1986 1991 1992 1993 1995 2000 2005 2006 2015

Inst

alle

d C

apac

ity (M

W)

Planned

Presently installed

• 123 Agreement• 123 Agreement

India has been pursuing a 3-stage Nuclear Power Program. The first stage - Pressurized heavy water reactors (PHWRs) and associated fuel cycle facilities. The second stage - Fast breeder reactors (FBRs) backed by reprocessing plants and plutonium based fuel fabrication plants. The third stage - thorium-uranium-233 cycle. Utilization of thorium.

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