Indian Power Demand Analysis

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Copyright @ 2019, Masterfox Consulting Group(MCG)
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Will Demand for Power Slowdown in India ?
Indian Power Market Demand Analysis & Forecast
November, 2019

01. Introduction
02. Indian Power Demand Drivers at A Glance
03. Indian Power Demand Will Continue to Grow
04. Indian Power Market Drivers-Analytical view
05. Conclusion
What’s Inside
Copyright @ 2019, Masterfox Consulting Group(MCG)

3
Introduction
• The Demand for Power will not slowdown in India due to increasing penetration of per capita electric
consumption, increasing industrialization, growing middle class and consumer base in India.
• It is expected that the Demand for electricity will increase at a CAGR of 7% to 1,894.7 TWh over FY07–22 in India.
• Moreover, the Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the
country. At the same time, the competitive intensity is increasing at both the demand and supply sides.
• As of February;2017, total installed capacity of power stations in India stood at 315,426.32 Megawatt (MW). And
the Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial
year 2017-18, which is 50 BU’s higher than the target for 2016-17. The annual growth rate in renewable energy
generation has been estimated to be 27% and 18% for conventional energy.
• The FY 2015-16 is turning out to be a phenomenal year for the Indian power sector with the record Renewable
Power capacity addition, power generation and even a record domestic coal production. Thus the present
government’s emphasis on improving the power situation towards overcome the electricity demand supply gap of
the nation would definitely promulgating the demand for power in India.

4
Indian Power Demand Drivers at A Glance
Growing Demand
• Increasing economic
growth, urbanization
and Per Capita Electric
Consumption
• Increase in industrial
activities.
• Growing middle class
and consumer base.
Inviting Policy Support
• Electricity Act-2003:
highly liberal
framework for
generation
• Fuel supply agreement
of power companies
with Coal India Ltd.
• Development of UMPPs
• National Tariff Policy
(2016): focus on
renewable energy &
private investment
through competitive
bidding
Resulting Increasing Investments
• Rising FDI inflows: FDI
of USD8547 million was
made till FY15, which
increased to
USD11,437.34 million
till December’16
• Growing M&A activity
• Large investments in
equipment
manufacture & power
generation

5
Indian Power Demand Will Continue to Grow
690.59
1174.07
1348.4
1894.7
FY07 FY15 FY17E FY22F
Source: International Energy Agency (IEA),
CEA, Demand estimates based on IEA
forecasts, MCG Analysis
•Demand for electricity is expected to increase at a CAGR of 7 per cent to
1,894.7 TWh over FY07–22
•Current production levels are not enough to meet demand; annual demand
outstrips supply by about 7.5%
•All India per capita consumption of electricity is expected to reach 1348 TWh
by FY17
•Various reforms being undertaken by the government are positively
impacting India's power sector. In wake of the surging domestic coal
production, the country’s power sector is becoming increasingly stable.
Figure 1: Electricity Demand Forecast(TWh)

6
Industry remains the largest consumer of electricity in India. In the New Policies Scenario, electricity demand become more than triples
over the period to 2040, rising by 4.9% per year on average from 900 terawatt-hours (TWh) in 2013 to almost 3300 TWh by the end of
the projection period. India accounts for almost 17% of the increase in global electricity demand from 2013 to 2040, an amount roughly.
0
500
1000
1500
2000
2500
3000
3500
2000 2010 2020 2030 2040
TWh
Agriculture
Service
Residential
Transportation
Industry
Figure 2: Electricity demand in India, by sector, 2000-2040
Source: International Energy Agency, CEA, MCG Analysis

7
16.42 19.01 21.13
54.96
88.54
100
8th 9th 10th 11th 12th 13th
•The government is targeting capacity addition of around Five-Year Plans
(GW) 88.54 GW under the 12th (2012–17) & around 100 GW under the
13th (2017–22) Five-Year Plan
•The expected investments in the power sector during the 12th Plan
(2012–17) is USD250 billion
•There is a tangible shift in policy focus on the sources of power. The
government is keen on promotion of hydro, renewable & gas-based
projects, as well as adoption of clean coal technology.
Source: CEA, Business Standard, MCG Analysis
Figure 3 : Power Generation capacity under five
year plan

8
59.80%
59%
61.12%
58%
56%
2012 2013 2014 2015 2022F
Source: ICFI, MCG Analysis
63%
10%
10%
7%
3%2%
Coal
Hydro
Solar
Wind
Nuclear
Other RE
Figure 4 : Coal in generation mix-2022
Coal continues to be the mainstay of power in India (63% of total mix), however average capacity factor reduces to 56%

9
58%
8%
8%
26%
Year 2030
67%
15%
2%
17%
Year 2016
Thermal
Hydro
Nuclear
Renewables
Hon'ble minister of State with Independent Charge for Power, Coal, New and Renewable Energy has said that the “Coal continues to be
the mainstay of power in India”
Figure 5 : Indian Energy Mix ; Present & Future, 2016-2030
Source; MNRE, ICFI

10
• India is currently facing a peculiar problem of demand-supply gap in power. The power scenario in India continues to be grim even as the country gears
up to expand its power supply to bridge the large demand- supply gap.
• All the Regions in the Country namely Northern, Western, Southern, Eastern and North-Eastern Regions continued to experience energy as well as peak
power shortage of varying magnitude on an overall basis, although there were short-term surpluses depending on the season or time of day. The
surplus power was sold to deficit states or consumers either through bilateral contracts, Power Exchanges or traders. The energy shortage varied from
0.2% in the Western Region to 5.2% in the North-Eastern Region.
Demand Supply Gap
0 10,000 20,000 30,000 40,000 50,000 60,000
Northern
Southern
North-Eastern
Northern Western Southern Eastern North-Eastern
Peak Demand Met(MW) 50,622 48,199 39,875 18,056 2,367
Peak Demand(MW) 54,474 48,640 40,030 18,169 2,573
Figure 6: Power Peak Demand and Peak Demand Met Gap, by Region (2015-16)
Source: CEA, MCG Analysis

11
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Northern
Western
Southern
Eastern
North-Eastern
Northern Western Southern Eastern North-Eastern
Availability (MU) 324,009 345,967 283,494 123,646 13,735
Energy Requirement (MU) 340,475 346,767 288,025 124,653 14,488
Figure 7: Energy Requirement and Availability Gap by Region, (2015-16)
Source: CEA, MCG Analysis

12
Executive Summary
Indian Power Market Drivers

13
Drivers: Power Demand in India
Per Capita Electric Consumption and Increasing Urbanization Would Promulgate the Power Demand in India
• The increasing population , urbanization would promulgate the per capita power consumption . In an indication of growing
appetite for electricity in India, the country’s per capita electricity consumption has reached 1010 kilowatt-hour (kWh) in
2014-15, compared with 957 kWh in 2013-14 and 914.41 kWh in 2012-13.
Figure 7: Per Capita Electric Consumption in India (2012-2022)
0
500
1000
1500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Per Capita Electricity Consumption(Kwh) Source: CEA

14
• GOI initiative of “Make In India” ,India is set to become a global manufacturing hub with investments across the value chain. India’s power demand is
expected to rise up to1,905 TWh by FY22
Figure 8: Share of electricity consumption in industrial sector
Increasing Industrialization Would Propel the Demand for Power in India
37.60% 37.70% 37.80% 38.60% 39.30%
44.90% 44.40% 43.80%
58.00%
44.00%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Source: Ministry of Statistics and Program Implementation, MCG Analysis

15
• Under Deen Dayal Upadhyay Gram Jyoti Yojana’s (DDUGJY) rural electrification package, measures were taken up in mission mode starting August 2015
with a target to electrify un-electrified villages of the country by May 2018, to fit into the grander plans of providing ’24×7 Power for All’ by 2019. As
per GARV dashboard, of the 18,452 villages to be electrified, electrification has already been done for 11,434 villages. Electrification needs to be
carried out in 6,320 villages and the remaining 698 villages are uninhabited.
‘Power For All’ and 100 per cent Rural Electrification – going on full throttle and may achieve targets sooner.
•Soft Loan
•Feed-in Tariff
•Fiscal incentive
•Production subsidies
Supply Side Drivers
•Renewable Purchase Obligation(RPO)
•RECs
•Net metering
Demand Side Drivers
Renewable Power Market Drivers in India:

16
Power Market Drivers in India
•The Government of India announced a massive renewable power production target of
175,000 MW by 2022; this comprises generation of 100,000 MW from solar power, 60,000
MW from wind energy, 10,000 MW from biomass, and 5,000 MW from small hydro power
projects.
175,000 MW Renewable Power by 2022
•This Scheme used for promoting generation of electricity from renewable energy sources.
•Allows Power Producers to sell renewable energy generated electricity to an off – taker at a
pre – determined tariff for a given period of time
Feed – in Tariff
•Government to reintroduce 'generation-based incentives' for wind power projects to boost
capacity addition in the sector; Cutting of excise duties by 2 per cent on capital goods
import
•USD147.3 million would be allocated to the Ministry of New & Renewable Energy
Generation-based
incentives
Government Policy & Initiatives

17
•Low-interest–bearing funds to be provided from National Clean Energy Fund (NCEF) to
Indian Renewable Energy Development Agency Ltd (IREDA) for on-lending to viable
renewable energy projects
Low-interest funds
•Benefit under section 35 (2AA) of the Income Tax Act to industry/private sponsored
research programmers
•Further incentives are available for setting up of projects in notified areas
Tax benefits
•The policy aims to achieve the objectives of UDAY scheme.
•Special focus on renewable energy has been laid. In order to promote use of renewable
energy, solar Renewable Purchase Obligation (RPO) is proposed to increase to 8 per cent
by 2022

18
•Special focus on renewable energy has been laid. In order to promote use of renewable
energy, solar Renewable Purchase Obligation (RPO) is proposed to increase to 8 per cent
by 2022
RPO Regulations
•A revival package for electricity distribution companies of India ( DISCOMs) initiated by the
GOI with the intent to fine a permanent solution to the mess which the power distribution
facing currently.
Ujwal Discoms
Assurance Yojana
(UDAY)

19
➢ The government of India plans to start as many as 10,000 solar, wind and biomass power projects in next five years, with an average capacity of 50
kilowatt per project, thereby adding 500 megawatt to the total installed capacity.
➢ The Ministry of Shipping plans to install 160.64 MW of solar and wind based power systems at all the major ports across the country by 2017, thereby
promoting the use of renewable energy sources and giving a fillip to government's Green Port Initiative.
➢ The Ministry of New and Renewable Energy (MNRE), which provides 30 per cent subsidy to most solar powered items such as solar lamps and solar
heating systems, has further extended its subsidy scheme to solar-powered refrigeration units with a view to boost the use of solar-powered cold
storage
➢ The Government of India plans to set up a US$ 400 million fund, sourced from The World Bank, which would be used to protect renewable energy
producers from payment delays by power distribution firms, while at the same time protecting the distribution firms from the shrinking market for
conventional grid-connected power, caused by wider adoption of roof-top solar power generation.
➢ The Government of India plans to introduce a scheme to encourage setting up of biomass plants across the country, which will generate electricity and
also help dispose of agricultural waste in a carbon-neutral manner to help tackle growing pollution.
Government Initiatives

20
Conclusion
✓ Well, the demand of power in India keep increasing in future period. The Renewable power (Solar, Wind, Bio-mass etc.)
power demand will increase at a rapid pace in upcoming period in India due to NAPCC and CO21 Action plan , and
agreement towards decreasing the air pollution and reduction of fissile fuel dependency by 30%.
✓ On the other hand, thermal power growth will be slowdown as compare to previous growth due to its carbon emission
and polluting nature. But the mainstay power will be generated by thermal power plants as usual in future period too.
✓ Implementation of energy efficient equipments would be reduce the power consumption in long term period of Indian
power sector. Also the IOT implementation in power system would reduce the power demand in long term future
period in India.
✓ Nevertheless, the increasing economic growth and urbanization, growth of industrialization ,rising population would
keep propel the demand for power in India. And the government policies and initiatives towards the renewable power
generation would definitely promulgate the demand of power in India.

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