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Published:December 29, 2017 5:13 PM
The year 2018 is going to be a crucial year for the Indian Power Sector as the country moves forward in achieving 100% village electrification and providing “24*7 Power for All”. While the power deficit has substantially improved, much more needs to be done in making electricity available for all households 24*7. The current year witnessed coal stock dwindling at the power plants for a brief spell when around 19 non-pithead based power plants reached super-critical coal stock in the month of October, 2017. However, efforts on part of CIL have led to improvement in coal stock position. Currently only 3 non-pithead plants are facing critical coal stock (<7 days) and 7 non-pithead power plants are having super critical coal stock (<4 days). Transmission sector has emerged as the most attractive infra investment; improvement in the PLF of the power plants towards the end of year shows some improvement in power demand. The year 2018 is going to be a very crucial year for the Indian power sector when the improvements from the various Govt. schemes and policies (RAPDRP, IPDS, UDAY, Saubhagya) will actually begin to show. While the rating agencies Moody and ICRA have given a stable outlook rating for the Indian power sector in the next 12-18 months on the back of stable industry conditions and government policy initiatives like UDAY which will likely lead to improvements in the financial position of state-owned electricity distribution companies. Government has taken various initiatives to revive the distressed power assets, whose results are likely to come in the coming year. The coming year is also anticipated to bring the focus back on hydro energy, where revival of the stranded hydro assets and categorizing large hydro plants as renewables, can help provide the much needed energy security to the country, in the backdrop of large scale penetration of renewable energy sources in the grid. Indian Power Sector - Year 2017 in a Nutshell Drop in Capacity Addition due to subdued Demand In FY 2017-18, a generation capacity of 4765MW has been added in the period April’17-Nov’17, 13% less than the capacity addition of 5463 MW in the corresponding period last year. However, the capacity addition is only 29.39 % of the total target set of 16211 MW for the given period, which can be mainly attributed to low demand of power resulting in low capacity utilization of the power plants. The Private Sector, contributed with the majority of the Projects Commissioned amounting to 2730 MW (61.62%)in FY 2017-18 (Upto Nov’17). Saubhagya Scheme to provide last mile electricity connectivity Pradhan Mantri Sahaj Bijli Har Ghar Yojana or Saubhagya scheme is a 16,320 crore scheme aimed at providing electricity connections to over 40 million families in rural and urban areas by December 2018. The scheme funds the cost of last-mile connectivity to willing households to help achieve the goal of lighting every household by 31 December 2018. Under this scheme, Govt. is planning to provide power connections to 4 crore families by December, 2018. 85% Village Electrification Achieved Prime Minister Shri Narendra Modi’s ambitious programme to achieve 100% village electrification by 1st May 2018 has witnessed rapid progress in the current year. Out of the 18,452 un-electrified villages as on April 2015, a total of 15,667 villages have been electrified so far while 1,069 villages remain uninhabited and 1,694 villages remain to be electrified (As on 26.12.2017). Progress of UDAY So far 27 States and 4 UTs have signed the MOU under the UDAY Scheme (launched in November,2015 by Government of India) to improve their operational and financial performance. UDAY bonds worth 232163 Crore (86.29% of the total bonds to be issued of 269056.35 Crore) have been issued so far by the various State Governments and the Discoms. While Rajasthan Discoms have issued bonds to the tune of 72090 Crore, Uttar Pradesh Discoms have issued 49510 Crore of UDAY bonds. Energy Efficiency Schemes UJALA and SLNP schemes have resulted in energy savings of 39.25 Billion Units of electricity and help avoid peak demand of capacity 7766 MW. Transmission Sector is the most attractive Infra Investment The power transmission sector in India is the most attractive infra investment in India currently, followed by roads and highways, according to Infrastructure Investability Index, prepared by CRISIL. Investments to the tune of $3.5 billion are expected in the green energy corridor by FY’22 to match the massive renewable energy push in the country and the proposed implementation of general network access would boost the prospects of the sector. However, issues such as slow state-level planning and right-of-way issues could drag down growth. Sharp Increase in Power Tariffs by State ERCs in FY 2017-18 The average tariff hike, based on the orders of the State Electricity Regulatory Commissions (SERCs) has been on the higher side for FY 2017-18. While the States of Telangana, Gujarat, Himachal Pradesh & Rajasthan have witnessed no tariff hikes in the current fiscal, Bihar has affected the maximum tariff hike of 55% so far in the current fiscal and Uttar Pradesh has revised the tariffs for domestic consumers by ~12%. Amongst the other States, Karnataka Electricity Regulatory Commission (KERC) has announced an average tariff hike of 8%, while the average tariff hike for consumers in Madhya Pradesh and Punjab is 9.48% and 9.33% respectively for FY 2017-18. Andhra Pradesh and Chhattisgarh have announced moderate tariff hikes in the range of 3-6% and 1-3% respectively. For consumers in Delhi, there are no major changes in tariff schedule for 2017-18, but hike in fixed charges for consumers with 3-5 KW connections in the range of INR 5 - INR 75.Domestic consumers in Kerala are paying an average 10 to 50 paise per unit in power tariff more in the current year. Tata & Adani Mundra fail to get Compensatory Tariff relief The Supreme Court has set aside an earlier tribunal ruling that allowed the power producers (Tata Mundra & Adani Mundra) to charge compensatory tariff from consumers. Earlier, these producers were allowed to charge compensatory tariff due to increase in imported fuel costs. The case was being fought by Tata Power and Adani Power with state utilities of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana. Foreign Direct Investment During the Year 2017-18 (April-2017 to September-2017), Power Sector attracted FDI of INR 4,578 Crores while the Sector has attracted FDI of INR 64,665 Crores so far during the period April-2017 to September-2017. Launch of Online Portals/Mobile Applications To improve the transparency and accountability in the functioning of the various Government Departments, a number of Online Portals and Mobile Applications were launched in this year. InfralineEnergy Disclaimer: The views expressed here are solely those of the author in his private capacity and do not in any way represent the views of the InfralineEnergy (Technologies India Pvt. Ltd.). The organization is not liable for any use that may be made of the information contained therein and any direct/indirect consequences resulting therefrom.
The year 2018 is going to be a crucial year for the Indian Power Sector as the country moves forward in achieving 100% village electrification and providing “24*7 Power for All”. While the power deficit has substantially improved, much more needs to be done in making electricity available for all households 24*7.
The current year witnessed coal stock dwindling at the power plants for a brief spell when around 19 non-pithead based power plants reached super-critical coal stock in the month of October, 2017. However, efforts on part of CIL have led to improvement in coal stock position. Currently only 3 non-pithead plants are facing critical coal stock (<7 days) and 7 non-pithead power plants are having super critical coal stock (<4 days).
Transmission sector has emerged as the most attractive infra investment; improvement in the PLF of the power plants towards the end of year shows some improvement in power demand. The year 2018 is going to be a very crucial year for the Indian power sector when the improvements from the various Govt. schemes and policies (RAPDRP, IPDS, UDAY, Saubhagya) will actually begin to show.
While the rating agencies Moody and ICRA have given a stable outlook rating for the Indian power sector in the next 12-18 months on the back of stable industry conditions and government policy initiatives like UDAY which will likely lead to improvements in the financial position of state-owned electricity distribution companies.
Government has taken various initiatives to revive the distressed power assets, whose results are likely to come in the coming year. The coming year is also anticipated to bring the focus back on hydro energy, where revival of the stranded hydro assets and categorizing large hydro plants as renewables, can help provide the much needed energy security to the country, in the backdrop of large scale penetration of renewable energy sources in the grid.
Indian Power Sector - Year 2017 in a Nutshell
Drop in Capacity Addition due to subdued Demand
In FY 2017-18, a generation capacity of 4765MW has been added in the period April’17-Nov’17, 13% less than the capacity addition of 5463 MW in the corresponding period last year. However, the capacity addition is only 29.39 % of the total target set of 16211 MW for the given period, which can be mainly attributed to low demand of power resulting in low capacity utilization of the power plants. The Private Sector, contributed with the majority of the Projects Commissioned amounting to 2730 MW (61.62%)in FY 2017-18 (Upto Nov’17).
Saubhagya Scheme to provide last mile electricity connectivity
Pradhan Mantri Sahaj Bijli Har Ghar Yojana or Saubhagya scheme is a 16,320 crore scheme aimed at providing electricity connections to over 40 million families in rural and urban areas by December 2018. The scheme funds the cost of last-mile connectivity to willing households to help achieve the goal of lighting every household by 31 December 2018. Under this scheme, Govt. is planning to provide power connections to 4 crore families by December, 2018.
85% Village Electrification Achieved
Prime Minister Shri Narendra Modi’s ambitious programme to achieve 100% village electrification by 1st May 2018 has witnessed rapid progress in the current year. Out of the 18,452 un-electrified villages as on April 2015, a total of 15,667 villages have been electrified so far while 1,069 villages remain uninhabited and 1,694 villages remain to be electrified (As on 26.12.2017).
Progress of UDAY
So far 27 States and 4 UTs have signed the MOU under the UDAY Scheme (launched in November,2015 by Government of India) to improve their operational and financial performance. UDAY bonds worth 232163 Crore (86.29% of the total bonds to be issued of 269056.35 Crore) have been issued so far by the various State Governments and the Discoms. While Rajasthan Discoms have issued bonds to the tune of 72090 Crore, Uttar Pradesh Discoms have issued 49510 Crore of UDAY bonds.
Energy Efficiency Schemes
UJALA and SLNP schemes have resulted in energy savings of 39.25 Billion Units of electricity and help avoid peak demand of capacity 7766 MW.
Transmission Sector is the most attractive Infra Investment
The power transmission sector in India is the most attractive infra investment in India currently, followed by roads and highways, according to Infrastructure Investability Index, prepared by CRISIL.
Investments to the tune of $3.5 billion are expected in the green energy corridor by FY’22 to match the massive renewable energy push in the country and the proposed implementation of general network access would boost the prospects of the sector. However, issues such as slow state-level planning and right-of-way issues could drag down growth.
Sharp Increase in Power Tariffs by State ERCs in FY 2017-18
The average tariff hike, based on the orders of the State Electricity Regulatory Commissions (SERCs) has been on the higher side for FY 2017-18. While the States of Telangana, Gujarat, Himachal Pradesh & Rajasthan have witnessed no tariff hikes in the current fiscal, Bihar has affected the maximum tariff hike of 55% so far in the current fiscal and Uttar Pradesh has revised the tariffs for domestic consumers by ~12%.
Amongst the other States, Karnataka Electricity Regulatory Commission (KERC) has announced an average tariff hike of 8%, while the average tariff hike for consumers in Madhya Pradesh and Punjab is 9.48% and 9.33% respectively for FY 2017-18. Andhra Pradesh and Chhattisgarh have announced moderate tariff hikes in the range of 3-6% and 1-3% respectively. For consumers in Delhi, there are no major changes in tariff schedule for 2017-18, but hike in fixed charges for consumers with 3-5 KW connections in the range of INR 5 - INR 75.Domestic consumers in Kerala are paying an average 10 to 50 paise per unit in power tariff more in the current year.
Tata & Adani Mundra fail to get Compensatory Tariff relief
The Supreme Court has set aside an earlier tribunal ruling that allowed the power producers (Tata Mundra & Adani Mundra) to charge compensatory tariff from consumers. Earlier, these producers were allowed to charge compensatory tariff due to increase in imported fuel costs. The case was being fought by Tata Power and Adani Power with state utilities of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana.
Foreign Direct Investment
During the Year 2017-18 (April-2017 to September-2017), Power Sector attracted FDI of INR 4,578 Crores while the Sector has attracted FDI of INR 64,665 Crores so far during the period April-2017 to September-2017.
Launch of Online Portals/Mobile Applications
To improve the transparency and accountability in the functioning of the various Government Departments, a number of Online Portals and Mobile Applications were launched in this year.
InfralineEnergy Disclaimer:
The views expressed here are solely those of the author in his private capacity and do not in any way represent the views of the InfralineEnergy (Technologies India Pvt. Ltd.). The organization is not liable for any use that may be made of the information contained therein and any direct/indirect consequences resulting therefrom.
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