Feb 28, 2022

India's Power Play: Analysing the Dynamics of India's Power Sector

India's power sector sees rapid growth with significant investments and private sector dominance.

Pink Flower

India’s power sector is set for high growth, driven by large investments and plans to expand capacity. As of Feb 2024, the power capacity stands at 183.5 GW. A steady 7% CAGR growth for capacity expansion is projected for FY23-30E. The power sector is slated to receive a sum of ₹17 lakh cr. in investments over the next 5-7 years. The private sector has emerged as a driving force, generating 51.3% of the country's electricity, showcasing its increasing involvement in the industry's growth.

Key Industry Trends and Dynamics

Surge in Investment: The power sector is poised to receive ₹17 lakh cr. in investments over the next 5-7 years, building upon the ₹20 lakh cr. invested in the past nine years. This influx of capital underscores the sector's growth potential.

Private Sector Dominance: As of 2023, the private sector generates 51.3% of India's electricity, surpassing the contributions of state governments (24.8%) and the central government (23.9%).

Diversified Energy Mix: India's power landscape is diversified, with a thermal power capacity of 243.21 GW including gas-powered and a renewable capacity of 183.48 GW as of FY23. The country's hydropower potential remains largely untapped, with only 29% of the 42.1 GW planned capacity completed so far. However, an additional 10.3% (15.02GW) is currently under construction. The nuclear power sector with an installed capacity is expected to reach 22.8 GW by 2031-32, up from the current 7.48 GW.

Thermal to stay: India maintains the second-largest coal plant capacity in the world, with its 237 GW of operating coal plant capacity representing more than a tenth of the world’s operating coal pants. As of FY23, thermal power accounts for 57% of the total power generation in India. According to Jefferies' estimates, the thermal capacity is expected to reach 303.2 GW in FY30 which will account for 46% of the total estimated capacity of 665.7 GW. In terms of power generation, thermal will dominate with a 70% contribution in FY30 and generate 1,824 BU (billion units) out of the FY30E total generation of 2,621 BU.

Emerging Power Hubs: While Chhattisgarh currently leads the country in operating coal capacity at 26.7 GW, Uttar Pradesh (25 GW) is making a strong push to overtake its counterpart, with 5.6 GW of proposed coal capacity  as of end 2024.

 

Figure: Coal Plant Tracker as of January 2024

 

Key Players in the Power Generation Industry

NTPC Limited

NTPC, India's largest power generator, achieved its highest-ever generation of 400 BU in FY23, demonstrating its contribution to meeting the nation's energy needs. NTPC recorded an 83% increase in coal production from its captive mines in H1 FY24 compared to H1 FY23, indicating efforts to secure fuel supply and reduce dependence on external sources. The company aims for 50% of its installed capacity to be based on renewable energy by 2032, aligning with the national goal of expanding clean energy sources.

Adani Power Limited

Adani Power Limited with an installed capacity of 15.25 GW is the largest private thermal power producer in the country. The company's 9 power plants are strategically located across the states of Gujarat, Maharashtra, Rajasthan, Karnataka, Chhattisgarh, Madhya Pradesh, and Jharkhand, highlighting its extensive operational footprint. Mahan Energen Limited (MEL), a subsidiary of Adani Power Limited, has proposed the expansion of its existing 1200 MW (2x600 MW) power plant situated in Singrauli, Madhya Pradesh. The proposed expansion will add 1600 MW (2X800 MW) to the plant's capacity, further strengthening APL's position as a leading player in the Indian energy sector.

Tata Power Limited

Tata Power has an installed generation capacity of 14.29 GW across the globe (13.62 GW domestic, 487 MW International). The thermal power generation capacity stands at 8.86 GW Domestic + International, while generation through clean sources such as hydro, solar, and wind stands at 5.4 GW. With over 4.5 GW of renewable energy under construction, Tata Power has a portfolio of 2.99 GW of solar generation capacity as of FY23. The company commissioned India’s largest natural ester-filled 110 /33 / 22 kV, 125 MVA power transformer in the Mumbai Transmission network at the BKC receiving station in collaboration with Hitachi ABB Power Grids and Cargil.

Torrent Power Limited

Torrent Power has a thermal power generation capacity of 3.09 GW with a unique mix of coal and gas-based power plants that use the latest power generation technologies to ensure high thermal efficiency. It also operates in the renewable energy segment with 787 MW capacity taking the aggregate installed generation capacity to 4.11 GW. The company aims for a capex of INR ~9,000 Crs. over the next 5 years. The company possesses a solar energy capacity of 263 MW and a wind energy capacity of 920 MW, which it aims to be double in the next 5-7 years.