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Mapping Regulation, Identifying Key Regulatory Gaps and Estimating Opportunities for Value Chain Players in Power Sector of India
Deep thinking on various aspects of policy and regulatory interventions and their long-term implications will help in taking informed decisions and contribute in developing the sector. Hence, for enabling the stakeholders to better understand the existing policy offering of the states for solar, wind, small hydro , biomass and thermal power segment , enincon has attempted to come with a fact pack on regulatory regime. The report is framed to study the power sector policies of major states in the northern, southern, western & eastern regions and to determine their impact on state’s overall power sector growth till FY 2022. The report also aims to find out the underlying investment opportunity & business potential in the states from conventional & RE power generation till FY 2022.
Catalysing State wise business Opportunity for Developers, Funding Bodies & OEM’s with Project Player Profiles
Allotment of priority to wind power in terms of inter-state transmission shall see the stranded assets in the sector a silver lining and the sale through OA mechanism may also gain pace especially in the state’s where demand outshines supply in the country. This shall be of pinnacle interest for investors under the changing paradigm and change of winds experienced by the sector.
UDAY scheme was touted as the next paladin to bail out the struggling Discoms, in order to turn them green in a time horizon of 3-4 years from 2015/16. Though was optional for the states, as of now 27 States/UTs are on board and INR 2,32,163 Crore of bonds have been issued which accounts for 85% of the debt to be restructured under this scheme. The cumulative AT&C* Loss stands at 20.42% with ACS-ARR Gap of INR 0.45/kWh. Also, tariff revision of 25 states have been done out of participating states.
Determining Plug-in Opportunity for Value Chain Players
Although, the India’s EV market is at very nascent stage as of now, but the enablers given by the government are quite enough for it to grow for taking its first step. Glimpse of which can be very clearly seen with Tata’s of the world all set to reveal its first ever EV for Indian market during 2017 itself. However, with all the glaring opportunities, there still exist certain challenges for the growth of Indian EV market, one such being lack of lithium deposits. While this does present a challenge to setting up a viable battery manufacturing plant in India, it also means that companies must look for other options to power such vehicles. Although , currently the challenges seem to outweigh the opportunities in India but the right steps from government in sprucing up the support dynamics for EVs in India at distinct levels is anticipated to transform into a gripping opportunity galore in future.
Gauging Support Matrix for Power Trading & Open Access Transactions with Regional Surplus/ Shortage Tracks
Since the current power transaction dynamics in the country is shaping up in favour of more open access transactions meaning a continued need for enabling power transmission infrastructure to felicitate what could be termed as “ True Open Access ” . In this milieu the role of not only the CTU and STU shall be important but also the participation on PPP basis by IPTCs shall be equally pivotal. Thus, there was an ardent need of a comprehensive analysis covering all the facets which offer opportunities in relation to the identified growth engine of current power sector in the country i.e. transmission segment.
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.
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 Domestic and International Coal Outlook
India is in the early stages of major transformation, and country’s GDP is expected to grow by 7.9% in 2016 (as per World Bank), more than twice the global average. Economic growth and modernization will turn drive energy demand, especially coal. In this dossier, enincon carried out most exhaustive and qualitative research accompanied by in depth analysis to find out future market scenario for steel, sponge iron, power and other coal consuming sectors in order to find out coking and non coking coal demand in the country by 2022. Further, by meticulously examining the dynamics involved in coal imports, best coal rich destinations have been benchmarked taking into consideration prevailing and upcoming infrastructure, regulatory and policy environment, investment scenario etc. This dossier shall help in strategic decision making for all the key value chain players and stakeholders
Consumer & Distribution Utility Wise Comprehensive Track
Against the background of many positive changes in power sector, this dossier attempts to make a few analytical observations that are relevant for the states, their regulators and other stake holders