Outlooks on the Power Sector

1. India is the third-largest producer and second-largest consumer of power in the world. The average per-person consumption is 1327 kwh which is very low compared to international standards even after the low cost per unit.
2. Govt Targeting capacity of 777GW by 2030 versus 416 GW as of 31/03/2023 out of which 500 GW will come from Renewal Energy with contribution of 350GW from Solar energy. India faces 4% power deficts  FY 22-23 in Peak Hours even after overall deficit in only -0.5% current peak demand is 221 GW which will be 335GW by 2030.
3. Current Power Consumption break-up
   • 25% from Resident
   • 10% from Commercial
   • 45% from Industrial
   • 20% from Agricultural
4. In 10 years average power demand increased by 5.5% which is expected to grow further and can reach 7% as the main reasons as mentioned below :
   • Big Capex cycle in India
   • Setting up of Data Center (one data center power consumption is equal to city Consumption)
   • Increase Demand for AC from households.
   • Railway electrification is the use of electric power for the propulsion of rail transport
   • Green hydrogen is needed for reducing carbon emissions by Steel and Manufacturing units.
5. Current Breakup of Power Production Breakup as of 31/03/2023
   • Fossil Fuel ( Mainly coal base) 57.7%
   • Non-Fossil Fuel 43%
   • Target for 2026-2027 Non-Fossil Fuel 57.70%
   • 2031-32 Non-Fossil Fuel  shared 68.40%
6. Govt Targeting capacity of 777GW by 2030 versus 416 GW as of 31/03/2023 out of which 500 GW will come from Renewal Energy with contribution of 350GW from Solar energy. Summary: Govt will be looking at 32lakhs crore investments in this sector over a 10-year time frame which will include
   • Grid: Govt will invest in the automation of the Grid due to the complex multiple sources of energy instead of the earlier source being thermal.
   • We are adding 15GW from Renewal till 2026 and 2027 onward targeting 30 GW to 50GW per annual as our MODUEL MANUFACTURER UNITS will start and dependence on China will reduce.
   • Storgae: This will be a sector that will require more research as we  are investing heavily in Renewal, we are dependent on two major storage
     • Pump Storage: Currently India has 4GW pump storage which we are targeting 60GW by 2027. This can store power for up to 12 to 15 hours at less cost.
     • Battery Storage: Storage time is 5 hours and a lot of Research is happening in this segment. Govt is planning PLI for the battery storage project.

India has not increased its capacity since 2016 in thermal power as a result we will face a demand and supply gap for 2-3 years. The Renewal Sector is not regulated so we can expect higher ROE in segment. 

Beneficiary: The sector can benefit from Producers, Grid, Automation, Contractors, Cable suppliers, and equipment suppliers.

Disclaimer: Goyama Financial Services provides this information for informational purposes only. It is not intended to be used as financial advice.

Source: CEA publication 2022-23

             Data from Power minister