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Decommissioning Thermal Power Plants in India Evaluating New Industry Segment & Estimating USD 5 Billion Opportunity
the coal requirement in order to continue generation for such plants increases by huge quantum which means the cost of operations being on rise consistently and the return is limited. This means dismantling such power plants and utilizing the same land area for creating fresh capacities by utilizing super critical/ultra-super critical technology would make more sense in order to support less polluting thermal generation with better efficiencies. Facilitating decommissioning services requires in depth acumen which is quintessential to firstly dismantle the thermal power plants and secondly utilizing the defunct units scrap to obtain the salvage value. This in itself will open up a new industry segment in the country which demands better understanding of the opportunities involved and a yard stick to measure them on both , integrated basis as well as on bifurcated terms across for each state.
Opportunity in Open Access Transaction and Short Term Power Purchase Agreements for Developers, Consumers and Traders in Solar Power Business of India
Which region is most suitable for affecting the open access transactions through solar having the largest cluster of industries, corporates and bulk consumers? Which state has least regulatory barriers or least cross-subsidy surcharge (CSS) applicable to bulk buyers? Whether the tariff discovered in third-party power sales agreements sustainable for long-term i.e. for a period of 10-15 years? What kind of transactions i.e. Bilateral or Collective transactions are favorable through solar? What is the penetration level of short term transactions through solar in different pockets of the country? Queries like these and many more demanded an in-depth research to unearth the very reason as to why essentially open access is fast gaining popularity in India, which transformed into the research base for the report for enincon consulting llp.
By 2020 enincon believes that thermal power is destined to roll back into generation mix of the country and in all possibilities fresh UMPPs which have hit a road block may witness announcements sooner than later. Hence, preparedness for OEMs shall be of pinnacle importance which will be discovered through an in-depth research in this dossier. Queries like what be the region wise business case for BoP players, opportunity in terms of replacing the old thermal units, futuristic market size for BoP package wise OEMs and many more apart from the mentioned will find answers in this collective and holistic market research.
Since falling PLFs of thermal power plants in the current scenario raise a serious concern over maintaining the power demand-supply equilibrium of the country, especially addressing peak power requirements. There exists a strong business case for the renewable energy sources (RES) in India. For clearing all the myths and presenting a clear picture of what would be the likely fate of all renewable energy sources (solar, wind, biomass and small hydro) in India, enincon consulting llp attempts to come up with a research study on the future outlook of non-conventional sector in India and associated opportunity tune for the related value chain players.
Over past few years there has been a consistent spurt observed in the M&A drive by larger players neutralizing the effect of unstructured participants in the business. This marks the evolution of the industry into more matured structure wishing away from lower price dynamics of the unstructured portfolio. With the rise in demand expected at both local and export levels tracking the supply dynamics in this phase of evolution of the industry holds pinnacle importance. Also, the suppliers shall increase in number given the performance of capacity utilization of existing cement plants in the country.
With fresh order due to come only from CPSUs or the respective SEBs, the opportunity stands limited for the key value chain players. Following this scenario, modernizing the infrastructure, presence huge opportunity even if we consider 11 GW out of 40 GW of capacity. However, challenges are intermittent like land area availability and inclusive R&R implications , the capex in modernization , potential fuel supply security and obviously the power off take.
As, the dynamics of Indian power generation sector is shifting at large towards green power hydro inadvertently qualifies for a preferred source of generation courtesy withdrawal of fringe benefits offered to other major peaking power solution i.e. gas based generation. In this milieu, there are many queries which evolve to seek a resolute like what is the business case for hydro power and what Opportunites does it offer for EPC contractor, OEMs and last but not the least the power distribution utilities. Similarly, what quantum India should generate from small hydro and what mix of opportunities does these power plants offer amidst the potential for sustainable capex, queries like this and many more finds an answer from this dossier
With power distribution reforms gained momentum soon after the application of EA 2003 (where it was believed to be coined in mid 90’s) , Indian power distribution utilities came along way since then. With, introduction of reforms and multiple cognitive steps undoubtedly the power distribution sector stands improved by leaps from the erstwhile levels. Having said that, it indeed still represents the weakest link of the power generation, transmission and distribution chain. With, India having most of the discoms run as state authorities the pedigree for operational efficiencies and achievement of targeted revenue remains a seldom site. Barring Gujarat and few discoms of southern states the degree of AT&C loss levels decline over the past decade remains elusive. For sure, states like Rajasthan , Madhya Pradesh and Maharashtra have depicted remarkable improvement but still owing to the large area of operations and the consumer handled thereof consistently tests the revenue cycle for the utilities.
Determining business case for the domestic & international OEMs , tracking degree of competition & way out for sustenance
India’s current installed capacity of 315 GW has still a fair share of thermal power plants based on coal which accounts for sufficing the base load of the country. Although, India is cognitive of the global trend of gradually wishing away with polluting source of coal based electricity generation , but completely stripping of these capacities shall not be possible for one of the fastest growing economies of the world. Given, the estimate even if we consider India to grow by a normative 7% as an economy, the need of growth in infrastructural development shall also be of the same order. Hence, despite country’s Paris commitment to reduce carbon influx, India has to be dependent on coal till 2030 for meeting of its consistent base load .
Analysing Futuristic Business Potential for Domestic & Global Players
India has limited natural gas reserves. Development of unconventional natural gas resources is also on cards in India with ample weightage on CBM and Shale gas development but the lack of data and technology is hitting the same. Hence, domestic production of natural gas in India is highly unlikely to keep up with the demand and the country has to rely on imports to meet its demand. Moreover, the domestic production in India has been concentrated over western and southern region of the country and in absence of adequate natural gas pipeline infrastructure the northern and eastern region of the country are gas starved.
Tracking Segment Wise Business Prospects for Value Chain Players
As far as India is concerned an evaluation of just gone by 11th plan depicts that it has been an inflection point in “Infrastructure Investments”, with contributions of up to 9 percent from India’s GDP. The 12th plan is also replicating a similar trend with an envisaged investment of approximately USD 1 trillion, which means contributions of up to 10 percent of India’s GDP. The sectors which are expected to have massive investments include oil & gas sector, power sector, metals & mining sector and telecom sector. Thus, this mammoth and fast build out of industrial and plant infrastructure demonstrates the need of a robust and growing engineering, procurement and construction services industry for spreading and management of risks, efficiency and productivity in engineering and construction and supplementing the management bandwidth of project developers.
Analysing Business Case and Evaluating a USD 50 Billion Opportunity
Although, India is among the top ten military spenders in the world. However, unlike other geographies which have large defence industries to support their domestic needs , Indian requirements are primarily met by government players into the domain and imports. With importing nearly USD 5.5 Billion worth of military hardware, India has emerged as the largest arms importer in the globe accounting nearly 15% of such imports internationally. Hence self-reliance to sustain the needs of Indian defence sector is of vital importance for strategic and economic reasons. Since the government has been assiduously working upon building the defence manufacturing capabilities over the years. But to look beyond the customary curve , “Make in India” has triggered the positive sentiments for making India to stand at par with its global counterparts with respect to its in house defence manufacturing competencies.