Analysis Of Indian Power Industry
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ANALYSIS OF INDIAN POWER INDUSTRY
AGENDA 1. 2. 3. 4. 5. 6. 7. 8.
Industry Overview Industry Structure Industry Growth Competition Growth Drivers Regulations Issues and Concerns Outlook
INDUSTRY OVERVIEW •Industry Overview •Value Chain Analysis
INDUSTRY OVERVIEW
India is the third largest producer of electricity in Asia with a % per capita consumption of 6.6 Kwh.
1.5% growth in power sector contributes to 1% growth in GDP.
Power industry is highly organized industry
Recent Developments (Govt. initiatives): - Rajiv Gandhi Grameen Vidhyutikaran Yojana - Sasan and Mundra UMPPs awarded to Reliance Power Ltd and TATA Power Ltd respectively.
Employs more than 300000 people
Installed power capacity is 146000 Mw and expected to reach 213000 by 2012
Power shortage- 7% base load and 12% peak load
VALUE CHAIN ANALYSIS CONSUMER
SEBs
CPSUs
SEBs
PGCIL/CEA
Agriculture SEBs & EDs Discoms Pvt. Licensees
% 24
Domestic
24.9
Industries
34.5
Commercial 7.8 IPPs+ Private Licensees
Source: NTPC –MDA 2004-05
Private Utilities
Others
8.7
STRUCTURE
Source: powermin.nic.in
Source: powermin.nic.in
INDUSTRY GROWTH •Growth Pulse •Per Capita Consumption •11th Five Year Plan
GROWTH PULSE Potential for growth: •UMPP to fuel generation growth •Private players entry into transmission and distribution. Hurdles for growth: •Depleting coal reserves •Unable to import Uranium
Source: planning commission
PER CAPITA CONSUMPTION
•Depleting Coal Deposits •Increase in land purchase for industrial and commercial purposes
Source: www.powermin.nic.in
Source: www.powermin.nic.in
As per THE 11th FIVE YEAR PLAN ..….
Increase d fo thermal cus on pow generati er on
Source: Planning Commission
UMP APD Ps, “Po wer RP, unv for all” ei opp ortu ls nity
Source: Power Ministry
COMPETITION •Herfindahl Index •Michael Porter Analysis
HERFINDAHL INDEX
Source: bseindia.com
INTERPRETATION: Value of Herfindahl Index of Indian Power Industry is 3342.6. It implies moderate competition in the industry. The major players are NTPC, Suzlon, Reliance and TATA Power with market share of 54.79%, 10.24%, 9.34% and 8.75% respectively.
MICHAEL PORTER ANALYSIS Threat of New Entrant: Low
•High fund requirement •Strict Government policy regarding raw material and prices •Entry and Exit barrier
Bargaining power Of Supplier: HIGH •Number of companies - 40 •Brand image of major power companies
Competitive Rivalry: MODERATE •Demand and Supply gap •Creation of power exchanges •No product differentiation only manufacturing process is different
Bargaining Power Of buyer: LOW •No substitute •High Demand and Supply Gap
Product and Technology Development: HIGH •Other sources Wind energy, Bio fuel, Solar energy
GROWTH DRIVERS •Overview •UMPPs •Growth Trend
OVERVIEW
Big size generation capacity (4000Mw) through UMPPs Infrastructure projects- Railway, Airport and Road - Metro rail and sky bus in various cities Huge capacity addition plans on BOT basis “Power For All by 2012”- target increase in overall installed capacity to 85% (200000 Mw) Inter-regional transmission through Private Partnership with PGCIL APDRP to strengthen transmission and reduce AT&C loss CERC Approval for setting up power exchange to facilitate power trading
Source: Annual Report 2007-08 Funding Requirement - 2012
Source:
UMPPs – FUELLING GROWTH IN GENERATION
Source: Annual Report 2007-08
GROWTH TREND IN POWER INDUSTRYSource wise generation Ownership wise generation
Power Transmission
Source: www.powermin.nic.in
REGULATIONS •
CEA forms a committee for efficient land utilization
•
Revision of National Electricity Plan
•
Protection of consumer interests
•
Energy conservation
•
Electricity Act 2003: - Breaking of state monopolization
•
No license required for sale of electricity from captive units
•
100% FDI allowed in power industry
ISSUES AND CONCERNS
Rural Electrification- To provide uninterrupted power supply at reasonable rates. Supply deficit 70000 Mw- required investment of US$ 143 billion Power theft-3% Transmission and Distribution Loss-30% Hike in transformer raw material prices and scarcity of raw materials Socio-environmental hassles for hydro power generation Environment/Forest clearance for UMPPs Ash Disposal Delay in power equipment installation ; approximately 5 yrs.
OUTLOOK
Target of over 153000 Mw of capacity Growth in Installed Capacity addition over next 9-10 yrs Doubling of capacity every 10 yrs 11th and 12thFive Year Plan- to increase capacity by 66463Mw and 86500Mw 9 UMPP with capacity of 4000 Mw each to lower cost to consumers requiring an investment of Rs.16000 crore Power utilities shifting towards merchant power plants providing higher returns Expanding transmission capacity to reduce loss of power Encouraging private participation in transmission and distribution will accelerate growth.
THANK YOU
AGENDA 1. 2. 3. 4. 5. 6. 7. 8.
Industry Overview Industry Structure Industry Growth Competition Growth Drivers Regulations Issues and Concerns Outlook
INDUSTRY OVERVIEW •Industry Overview •Value Chain Analysis
INDUSTRY OVERVIEW
India is the third largest producer of electricity in Asia with a % per capita consumption of 6.6 Kwh.
1.5% growth in power sector contributes to 1% growth in GDP.
Power industry is highly organized industry
Recent Developments (Govt. initiatives): - Rajiv Gandhi Grameen Vidhyutikaran Yojana - Sasan and Mundra UMPPs awarded to Reliance Power Ltd and TATA Power Ltd respectively.
Employs more than 300000 people
Installed power capacity is 146000 Mw and expected to reach 213000 by 2012
Power shortage- 7% base load and 12% peak load
VALUE CHAIN ANALYSIS CONSUMER
SEBs
CPSUs
SEBs
PGCIL/CEA
Agriculture SEBs & EDs Discoms Pvt. Licensees
% 24
Domestic
24.9
Industries
34.5
Commercial 7.8 IPPs+ Private Licensees
Source: NTPC –MDA 2004-05
Private Utilities
Others
8.7
STRUCTURE
Source: powermin.nic.in
Source: powermin.nic.in
INDUSTRY GROWTH •Growth Pulse •Per Capita Consumption •11th Five Year Plan
GROWTH PULSE Potential for growth: •UMPP to fuel generation growth •Private players entry into transmission and distribution. Hurdles for growth: •Depleting coal reserves •Unable to import Uranium
Source: planning commission
PER CAPITA CONSUMPTION
•Depleting Coal Deposits •Increase in land purchase for industrial and commercial purposes
Source: www.powermin.nic.in
Source: www.powermin.nic.in
As per THE 11th FIVE YEAR PLAN ..….
Increase d fo thermal cus on pow generati er on
Source: Planning Commission
UMP APD Ps, “Po wer RP, unv for all” ei opp ortu ls nity
Source: Power Ministry
COMPETITION •Herfindahl Index •Michael Porter Analysis
HERFINDAHL INDEX
Source: bseindia.com
INTERPRETATION: Value of Herfindahl Index of Indian Power Industry is 3342.6. It implies moderate competition in the industry. The major players are NTPC, Suzlon, Reliance and TATA Power with market share of 54.79%, 10.24%, 9.34% and 8.75% respectively.
MICHAEL PORTER ANALYSIS Threat of New Entrant: Low
•High fund requirement •Strict Government policy regarding raw material and prices •Entry and Exit barrier
Bargaining power Of Supplier: HIGH •Number of companies - 40 •Brand image of major power companies
Competitive Rivalry: MODERATE •Demand and Supply gap •Creation of power exchanges •No product differentiation only manufacturing process is different
Bargaining Power Of buyer: LOW •No substitute •High Demand and Supply Gap
Product and Technology Development: HIGH •Other sources Wind energy, Bio fuel, Solar energy
GROWTH DRIVERS •Overview •UMPPs •Growth Trend
OVERVIEW
Big size generation capacity (4000Mw) through UMPPs Infrastructure projects- Railway, Airport and Road - Metro rail and sky bus in various cities Huge capacity addition plans on BOT basis “Power For All by 2012”- target increase in overall installed capacity to 85% (200000 Mw) Inter-regional transmission through Private Partnership with PGCIL APDRP to strengthen transmission and reduce AT&C loss CERC Approval for setting up power exchange to facilitate power trading
Source: Annual Report 2007-08 Funding Requirement - 2012
Source:
UMPPs – FUELLING GROWTH IN GENERATION
Source: Annual Report 2007-08
GROWTH TREND IN POWER INDUSTRYSource wise generation Ownership wise generation
Power Transmission
Source: www.powermin.nic.in
REGULATIONS •
CEA forms a committee for efficient land utilization
•
Revision of National Electricity Plan
•
Protection of consumer interests
•
Energy conservation
•
Electricity Act 2003: - Breaking of state monopolization
•
No license required for sale of electricity from captive units
•
100% FDI allowed in power industry
ISSUES AND CONCERNS
Rural Electrification- To provide uninterrupted power supply at reasonable rates. Supply deficit 70000 Mw- required investment of US$ 143 billion Power theft-3% Transmission and Distribution Loss-30% Hike in transformer raw material prices and scarcity of raw materials Socio-environmental hassles for hydro power generation Environment/Forest clearance for UMPPs Ash Disposal Delay in power equipment installation ; approximately 5 yrs.
OUTLOOK
Target of over 153000 Mw of capacity Growth in Installed Capacity addition over next 9-10 yrs Doubling of capacity every 10 yrs 11th and 12thFive Year Plan- to increase capacity by 66463Mw and 86500Mw 9 UMPP with capacity of 4000 Mw each to lower cost to consumers requiring an investment of Rs.16000 crore Power utilities shifting towards merchant power plants providing higher returns Expanding transmission capacity to reduce loss of power Encouraging private participation in transmission and distribution will accelerate growth.
THANK YOU
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