Indian Power Sector Poised For Strong YoY Growth

We all understand that increased power generation is critical to the infrastructure and development of India. As you may know, India has one of the lowest per capita electricity consumption in the world. Despite generation capacity growing 100 times since 1947, the supply has continuously trailed behind demand, with an average gap of 9%.

The total power generation capacity of India is about 150,000 MW and the estimated capacity addition during the 11th Five Year Plan is 80,000 MW. The Ministry of Power, Central Electricity Authority and Power Finance Corporation are working together achieving this goal.

NTPC is the single largest power producer, by a big margin. The State Electricity Boards (SEBs) produce produce the next largest segment of power but they are running with old plants and are financially weak. Reliance Power, which did India’s biggest IPO in Jan 2008, aims to become the second largest power producer over the next 5 years but its projects have been running late. JSW Energy, Jindal Steel & Power, Adani Power and a few other private power generators are also likely to emerge are key players.

The Indian government has announced its intention of setting up five additional Ultra Mega Power Projects (UMPP) on Build Own Operate Maintain (BOOM) basis, besides four UMPPs already awarded.

As most power generating units are located near the source of raw materials, it is necessary to have a strong T&D system in place to help transfer power from generation sites to load centers, thereby strengthening and creating the National Grid.

The Transmission & Distribution (T&D) system in India is a three tier structure comprising distribution network, state grids and regional grids. The transmission plan focuses on adding 60,000 km of transmission line by 2012. Such an integrated grid system shall enable the evacuation of the additional 100,000 MW and carry about 60% of the power generated in the country.

The existing inter-regional power transfer stands at 9,000 MW, which is likely to grow to 37,150 MW through the creation of Transmission Super Highways requiring an investment of Rs 70,500 crores, of which the Powergrid will invest 70% and the remaining 30% will be contributed by the private sector

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