CRISIL RESEARCH POWER ANNUAL REVIEW
CRISIL Research expects India’s power deficit to decline to around 5 per cent by 2014-15, following the additionof 82 GW of power generation capacities over the next 5 years. The sizeable capacity additions have encouraged several private players to enter the boiler, turbine, generator (BTG) segment. However, with the domestic BTGcapacity expected to cross 30 GW by 2013, an overcapacity scenario is likely. On the balance of plant (BoP) front, CRISIL Research expects Rs 1.6 trillion of projects to be executed by 2014-15. Severe competition in the segment and player preference for awarding projects on turnkey basis is driving component manufacturers toexecute the entire BoP project.
Capacity additions and high growth in GDP to boost power demand
CRISIL Research expects 82 GW of power capacities to be added between 2009-10 and 2014-15 as compared to amere 33 GW added during the previous 5 years. This translates to a supply increase of 9.1 per cent CAGR over the next 5 years. During the same period, GDP growth is likely to average 8.0-8.5 per cent. This growth together with the increased supply of power is expected to boost power demand at a compounded rate of 7.8 per centduring 2009-10 to 2014-15 vis-à-vis the previous 5-year CAGR of 7.0 per cent.High growth in supply is expected to reduce the power deficit to around 5 per cent by 2014-15 from 10.1 per centin 2009-10. As per CRISIL Research’s region-wise analysis, the southern region is likely to inch closer to a balanced scenario whereas the eastern region is expected to have a surplus situation. However, the western andnorthern regions are likely to continue to reel under high deficits.
Investments of Rs 9.3 trillion expected during the next 5 years
The sizeable capacity additions [inclusive of generation (utilities and captives) and concomitant transmission anddistribution] over the next 5 years will require an investment outlay Rs 9.3 trillion, according to CRISIL Research.Of this, the generation segment would constitute a lion’s share at Rs 5.8 trillion, mainly driven by private sector players.
Power generation equipment – BTG capacity to exceed demand
CRISIL Research expects the huge generation capacity additions to spur players like Larsen & Toubro, JSWEnergy, Bharat Forge, BGR Energy, amongst others, to install boiler, turbine, generator (BTG) capacities of morethan 15 GW in joint venture with foreign players; currently, Bharat Heavy Electricals Ltd is the only domestic player in the BTG segment with an operational capacity of 15 GW. Hence, by 2013, the BTG capacity in thecountry is likely to exceed 30 GW while capacity additions in the power sector would be 15-20 GW per year,thus, leading to an overcapacity situation.[Power generation equipment are divided in two broad categories: (i) BTG and (ii) balance of plant (BoP), withthe BTG segment accounting for around 50 per cent of the total cost involved in setting up a power plant.]