Mini Project-2 on

THE STUDY OF CHALLENGES AND TRENDS OF POWER SECTOR IN INDIA

Submitted in partial fulfillment of the requirements

for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

to

DR. A.P.J. ABDUL KALAM TECHNICAL

UNIVERSITY LUCKNOW

Under the Guidance of Submitted by

Name of Faculty Guide

Dr. Pooja Goel Sachin Sharma
MBA-II Sem
2101520700147
Name of the Project Coordinator
Dr. Mani Jindal

Session
2021-22
 Certificate

I Sachin Sharma, Enrolment No. 2101520700147 from MBA-II Sem, of Mangalmay

Institute of Management & Technology, U.P. hereby declare that the Mini Project-2
(KMBN 252) entitled The Study of challenges and trends of power sector in India is an
original work and the same has not been submitted to any other Institute for the award of any
other degree.

Date:15/07/2022 Sachin Sharma

Certified that the Mini Project-2 (KMBN 252) submitted in partial fulfillment of Master of
Business Administration (MBA) to be awarded by Dr. A.P.J. Abdul Kalam Technical
University Lucknow by
Sachin Sharma , Enrolment No.2101520700147 has been completed under my guidance
and is Satisfactory.

Date:15/07/2022 Signature of the Guide

Name of the Guide:

Signature & Name of the Project Coordinator

2
 Internal Guide Certificate

“This is to Certify that this Project Work Report Titled “THE STUDY OF
CHALLENGES & TRENDS OF POWER SECTOR IN INDIA” is the bonafide work of
Sachin Sharma 2101520700147, who has/have carried out his / her / their project under my
supervision. I also certify further, that to the best of my knowledge the work reported herein
does not form part of any other project report or dissertation on the basis of which a degree or
award was conferred on an earlier occasion on this or any other candidate. I have also
checked the plagiarism extent of this report which is 68% and it is below the prescribed
limit of 30%. The separate plagiarism report in the form of html /pdf file is enclosed
with this.

Rating of Project Report [A/B/C/D/E]: (A=Excellent; B=Good; C=Average;

D=Poor; E=Worst) (By Faculty Guide)

Dr. MANI JINDAL

3
 Student Declaration

I, SACHIN SHARMA being University of APJ University, Lucknow, enrolled as student of

MBA at Mangalmay Institute of Management & Technology, Greater Noida, solemnly
declare that the project report titled, “The Study Of Challenges And Trends Of Power Sector
In India” embodies the results of original research work carried out by me and the same has not
been submitted in any form partially or fully for the award of any diploma or degree of this or
any other University/Institute

Name: SACHIN SHARMA

Roll No: 2101520700147

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 PREFACE

This Mini Project report has been prepared as per AKTU Guidelines, as a part of MBA 1st year
Activity. This report is prepares with the view to include all the details regarding the project that
I carried out. Power is among the most critical components of infrastructure, crucial for the
economic growth and welfare of nations. The existence and development of adequate power
infrastructure is essential for sustained growth of the Indian economy.

India's power sector is one of the most diversified in the world. Sources of power generation
range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power
to viable non-conventional sources such as wind, solar, and agricultural and domestic waste.
Electricity demand in the country has increased rapidly and is expected to rise further in the
years to come. In order to meet the increasing demand for electricity in the country, massive
addition to the installed generating capacity is required.

Thank you

5
 Table of content

S.No Topics Page. No

1 Chapter 1: Introduction of topic 7-10

2 Chapter 2: Description of industry 11-12

3 Chapter 3: Methods and materials used by the industry 13-21

4 Chapter 4: Analysis & Interpretation 22-25

5 Chapter: 5 Conclusion and future scope of study 26-33

6 Bibliography 34

7 Annexure 35

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 LIST OF FIGURES

S.NO TOPIC PAGE.NO

1. Grid scale battery storage 14

2. NTPC in Indian thermal power sector 22

3. Market share analysis 23

4. Global flexibility need measurement 25

5. Sources of power system flexibility in the IEA’s outlook 25

2020

6. Total power generation in India FY22 29

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 CHAPTER: 1
INTRODUCTION OF TOPIC

The study is based on a survey of more than 600 leaders in the industry and has found that:
 New regulations are creating new dynamics – traditional methods of operating a
power utility with separate generation, transmission and distribution assets are giving
way to more integrated approaches.
 Electric vehicles (EVs) and electrified fleets are gaining traction as vehicle production
and delivery intensifies, requiring power providers to meet charging needs as
increasingly empowered consumers – both citizens and commercial and industrial
interests – test utilities’ business models.
 New power generation technologies harnessing green hydrogen produced through
renewable power and more advanced battery storage show growing promise in the
quest for decarburization.
 Climate change, COVID-19 and shifting demographics highlight an industry where
there’s no one-size-fits-all dynamic and management of the grid is becoming more
targeted and localized.

Mario Ajar, president of Black & Veatch’s power business, said: “After 130 years, the power
industry is being repowered as sweeping changes are guiding more focus on a consistent,
methodical adoption of innovative practices to ensure the sector’s relevance.
“Now more than ever, consumers expect their power providers to be progressive and proactive,
further emphasizing the need for reliable and resilient energy supplies.”

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Other key study findings include:
 Aging infrastructure remains the chief concern among one-third of respondents, down
13% points from a year ago. But renewable remained the secondary focal point,
relatively unchanged from 2019 at more than one-quarter of the survey-takers.
 More than three-quarters of respondents agree that they are devoting more of their
capital spending to clean energy.
 Eight of 10 respondents forecast that over the next five years, more of their spending
in new generation capacity will be directed at solar arrays on land, followed closely
by energy storage and eventually micro grids and other distributed energy resources
(DERs).
 Nearly one-quarter of respondents say they would consider hydrogen as a source of
peak generation.
 When asked which elements of DER are most challenging, two-thirds of respondents
cited the ability to forecast, monitor and manage utility-owned and third-party DER.
 68% of respondents are working to redesign their regulated rate and pricing structures
to accommodate increased penetration of DER.
 The percentage of respondents who consider electrified transportation as a big
opportunity to gain future load and revenue spiked 74% over 2019, to 21% from just
12%.

2021 POWER AND UTILITIES INDUSTRY OUTLOOK

Accelerating energy industry convergence
Pressure coming from a wide range of stakeholders, including citizens and shareholders alike,
intensified in the past year, hewing closely to the recommendations of the Paris Climate Accord.
Several utility companies, as well as their host municipalities and business customers, announced
plans to fully decarbonizes over the next three decades—even in the aftermath of pandemic-
driven shocks to electricity load. In fact, as intermittent renewable recorded record-high
penetration and peak oil demand came into focus, COVID-19 helped to crystallize the urgency of
the power and utilities industry transition and the convergence it entails.
In 2021, a new administration could usher in acceleration in the energy industry’s transition and
convergence. Biden’s campaign platform calls for national net-zero greenhouse gas emissions by

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2050 and a $2 trillion investment to help equitably achieve this target. The power and utilities
industry is expected to lead this transition, as the new plan envisions the industry achieving an
even more ambitious target of zero emissions by 2035. While a Republican-led Senate may
narrow the scope and/or extend the timeline of these plans, agreement on an infrastructural
stimulus could serve as a vehicle to advance the energy transition, as could executive authority
over emissions.
The broader energy industry could start to converge in the coming year, as many players seek to
serve a growing clean power industry in an economy increasingly moving toward electrification.
Within the energy industry, the oil majors’ diversification strategies will likely increase their
investment across the power industry’s value chain. Automakers’ increased shift toward electric
vehicles (EVs) could also help enhance the electric grid via charging infrastructure and battery
storage development. They might even seek to become renewable and electric service providers.
Technology companies may also do the same as they enable vehicles, homes, and businesses to
serve as distributed energy resources (DER) in addition to consuming them. The convergence of
the electric, transportation, and building sectors may witness companies with varying levels of
regulatory, technological, and capital constraints and opportunities partnering (or competing)
with power and utility industry companies. All these companies are looking to establish a
strategic foothold in a new energy landscape characterized by the following five trends.
FERC enables competition through regulation
The Federal Energy Regulatory Commission (FERC) issued a landmark ruling in September
2020 that could help consolidate the competitive landscape for the energy industry in 2021. By
leveling the playing field for DER to participate in a wholesale capacity, energy, and ancillary
services markets, Order 2222 could help spur innovative technologies and aggregations of
rooftop solar arrays, EVs, and smart building devices. In another move that may further
consolidate the competitive landscape in favor of clean energy, FERC recently took a position of
being open to carbon pricing.
Emerging DER aggregation platforms expand digital utility industry infrastructure
DER integration into the grid would require a new digital infrastructure to aggregate and manage
these resources in a way that enhances the grid. Following a pandemic-related dip in DER
capacity additions this year, growth is poised to recover in 2021, with a mix that is shifting from
mostly commercial to predominantly residential, solar, and EV load management.

10
The big question is to what extent utilities, third parties, and customers can cost-effectively
manage this DER digital infrastructure.
Decarburization and digital strategies to drive power and utilities industry convergence in 2021
In the coming year, the evolving energy industry landscape is expected to be characterized by
five trends: consolidation, new economies, new battery business models, increased scale, and
heightened disaster readiness. In this context, our postelection poll showed that most power and
utility industry executives surveyed think that utilities should primarily focus on decarburization
strategies (33%) and digital strategies (29%) over the next year. Key areas to watch amid a
change of administration include the uptake of distributed energy resources, EVs, and hydrogen.
Meanwhile, pending FERC decisions and new FERC appointments could shape the extent to
which this uptake will translate into market participation. These trends, in turn, would expedite
the process of convergence we are now seeing as new entrants and incumbents position to serve
a growing clean power industry in an economy that’s gradually electrifying. The recent uptick in
antitrust activity around big technology companies may also alter the competitive landscape by
limiting their penetration of the energy industry. Expanding to the international market, carbon
taxes could be a game-changer in both the energy and trade sectors as well.
Energy and industrials trends in 2021
Our industry outlook collection, covering oil, gas, and chemicals; power, utilities, and
renewables; and industrial products and construction, evaluates sector landscapes to help
executives better plan for success and unforeseen challenges.

11
 CHAPTER: 2
DESCRIPTION OF INDUSTRY

POWER SECTOR OF INDIA

Power is derived from various sources in India. These include thermal power, hydropower or
hydroelectricity, solar power, biogas energy, wind power etc. the distribution of the power
generated is undertaken by Rural Electrification Corporation for electricity power supply to the
rural areas, North Eastern Electric Power Corporation for electricity supply to the North East
India regions and the Power Grid Corporation of India Limited for an all India supply of
electrical power in India.
Thermal Power in India is mainly generated through coal, gas and oil. India coal power forms a
majority share of the source of power supply in India. The electric power in India is generated at
various thermal power stations in India. The power generated at these thermal power plants is
then distributed all over India through a network of power grid at regional and national levels.
The power ministry organization responsible for the thermal power management in India is the
NTPC.

Hydropower in India is one of the mega power generators in India. Various hydropower
projects and hydro power plants have been set up by the ministry of power for generation of
hydro power in India. Various dams and reservoirs are constructed on major rivers and the
kinetic energy of the flowing water is utilized to generate hydroelectricity. The power generator
here is the running water. The hydroelectric power plants and the hydro power generation
companies are managed by the National Hydro Electric Power Corporation (NHPC).

Wind Power in India is available in plenty as India witnesses high intensity winds in various
regions due to the topographical diversity in India. Efforts have been made to utilize this natural
source of energy available free of cost for wind power generation. Huge wind energy farms have
been set up by the government for tapping the wind energy by using gigantic windmills and them

12
Converting the kinetic energy of the wind into electricity by the use of power converters. The
wind power advantages start with the very fact that a wind energy power plant does not require
much infrastructure input and the raw material i.e. wind itself is available free of cost.

Solar Power in India is being utilized to generate electricity on smaller scale by setting up
massive solar panels and capturing the solar power. Solar power India is also being utilized by
the power companies in India to generate solar energy for domestic and small industrial uses.

Nuclear Power in India is generated at huge nuclear power plants and nuclear power stations in
India. A nuclear power plant generates the electricity using nuclear energy. All the nuclear power
plants in India are managed by the Nuclear Power Corp of India Ltd (NPCL). The electricity
from all India nuclear plants is distributed by the NPCL as per the nuclear power project scheme.

13
 CHAPTER: 3

METHODS AND MATERIALS USED BY THE INDUSTRY

FIVE KEY TRENDS SET TO IMPACT THE POWER SECTOR IN 2020

Digitalization
Power utilities, which have traditionally been averse to the adoption of new technologies, are
now starting to realize their benefits and offering heavy investment for them, according to Singh.
He said a survey on emerging technology trends by Global Data revealed cyber security, big
data, cloud computing, robotics, and the Internet of Things (IOT) are viewed as the top five
technologies that will have the maximum impact on the sector over the next three years.
“Cyber security is receiving the maximum attention from power companies in order to protect
grids from cyber-attacks,” he added.
“Power utilities realize the crippling effect such attacks can have on the grid, so they are willing
to invest heavily to protect against them.
“With more data coming out of customers’ meters, utilities are focusing on data analytics for
load forecasting, generation planning, managing peaks and increasing customers’ awareness
regarding energy efficiency.
“Big data and cloud computing are useful tools that are aiding these initiatives.
“Cloud models are helping utilities to lower their IT capital expenditure and offer unlimited
computing and advanced analytics, while IOT is helping power companies to remotely monitor
and manage their assets.
“Utilities are also able to conduct predictive maintenance of their assets with the assistance of
IOT.”

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Grid-scale battery storage
Singh also said energy storage installation among end-users — such as renewable energy
generators, grid operators and distributed generation — is projected to witness larger growth due
to smart grid development.
“The battery energy storage system market, which was estimated at 4.9 gigawatts (GW) in 2018,
is forecasted to reach 22.2GW by 2023,” he added.
“The economies of energy storage in a wide range of applications, coupled with the falling cost
of systems, will likely result in the rapid growth of battery energy storage solutions.
“Lithium-ion batteries are emerging as crucial components for energy storage, and the increasing
growth of EVs has resulted in advancements in lithium-ion technologies and a steady decline in
the prices of lithium-based batteries.

Fig.1. Grid scale battery storage.

15
The battery energy storage system market, which was estimated at 4.9GW in 2018, is forecasted
to reach 22.2GW by 2023 (Credit: Wikimedia Commons/Ysc usc)
“Several energy storage projects in the pipeline have been accelerated by incentive programmes.
“The deployment is expected to grow, due to a large number of countries opting for storage
utilization to support their power sector transformation.
“The US introduced several bills and policies related to energy storage, and the country has
comprehensive incentive programmes supporting battery utilization.
“In the meantime, India published a national energy storage mission, outlining the country’s
ambition to become a market leader in the manufacture of batteries.
“Similarly, China and Germany are exploring opportunities to capitalize on the growing market
for batteries.”

Microgrids
Singh believes microgrids will continue to make inroads in the power sector, driven by the need
for resiliency, energy security and the electrification of remote areas.
“Last year saw a number of microgrid projects being announced by companies across the world,”
he said.
“Utilities such as Duke Energy, EDF, Engine and AusNet have been involved in the
development of microgrid projects, the scale of which has also been increasing with projects as
large as the 100MW Armenia Microgrid Project in Palau that’s being developed.
“Policy developments have been encouraging. For example, Hawaii has become the first state to
initiate microgrid tariffs.
“California is also following close behind, trying to enact legislation in this direction.”

Corporate power purchase agreements (PPAs)

Large corporate are increasingly signing power purchase agreements (PPAs) with generators to
meet their energy requirements, according to Singh.
He added: “Most of these are signed with renewable energy generators, enabling them to
increase the share of renewable energy in their total consumption.

16
“Companies such as Amazon, Face book Google, and Microsoft continued to sign PPAs in 2019,
and this trend is expected to continue in the future due to the expansion of the data centre market
increasing their power requirements.
“Retailers, such as Tesco and Wal-Mart, have also been involved in signing PPAs in 2019.
“The rise in corporate PPAs is fuelled by the withdrawal of feed-in-tariffs and other incentives
for wind and solar power coupled with the move towards auction mechanisms.
“Under these circumstances, corporate PPAs offer an opportunity for developers to sell their
power profitably.”

EIGHT INTERNATIONAL POWER SECTOR TRENDS TO WATCH IN 2021 AND

BEYOND
Roiled over 2020 by the COVID-19 pandemic, two much-watched international power market
outlooks surveying short-term and long-term implications caution the road ahead will be ridden
by complexity.
The International Energy Agency’s (IEA’s) assessment of 2020 trends and 2021 forecasts,
contained in its Dec. 14–released Electricity Market Report (EMR2020), warns of lax electricity
demand in all major economies over the next year, with the notable exception of China,
accompanied by a general plummet in wholesale power prices. The report—which is the
agency’s inaugural electricity-focused analysis and which it plans to follow with future editions
on a half-yearly basis—also suggests coal is expected to bounce back. But in the IEA’s
annual World Energy Outlook 2020 (WEO2020), which it released in late October to provide an
outlook through 2040, coal’s share in energy demand could dip below 20% for the first time in
modern energy history while renewable are predicted to meet 90% of strong growth in global
electricity demand. The projection is based on the IEA’s “Stated Policies Scenario” (STEPS),
which considers stated ambitions, including energy components of announced stimulus packages
and climate goals, but which does not consider the recent surge in net-zero emissions targets,
which the IEA incorporates in its legacy report for the first time under a “Net Zero Emissions by
2050 case” (NZE2050).
Although both reports caution that much uncertainty remains owing to the pandemic, power
sector experts from around the world told POWER in November that their assessments are

17
generally aligned with expectations from the world’s diverse power markets. Here’s a list of the
biggest insights these sources offered.

1. Global Electricity Demand Hinges on Pandemic Recovery. Over the past 15 years,
electricity demand has almost stagnated in developed economies despite economic growth, and,
in total, 93% of worldwide net growth in power demand originated in emerging and developing
economies—58% in China alone. In 2021, after a sluggish year owing to the pandemic, demand
could surge 3% to levels even higher than 2019, the EMR2020 suggests. However, two-thirds of
additional demand is centered in the Asia Pacific region—mostly in China and India, but also in
Southeast Asia.
One significant effect of the pandemic’s lockdowns was a drop in electricity consumption in both
the industrial and commercial sectors, which have led sector use. Between 2005 and 2018,
industry consumed 29%, followed by residential (22%), and the commercial and services sector
(15%). Looking ahead to 2040, the WEO2020 suggests electrification of light industry will
become the largest driver of demand growth to 2025.
New commitments to develop electrolytic hydrogen production could also significantly increase
demand. In the STEPS, about 10 TWh could be used to produce 0.4 million tones of oil
equivalent (Mtoe) of hydrogen by 2030. Residential demand is also set to increase under STEPS
owing to electrification of heating and cooling—and particularly due to a surge in air conditioner
sales in emerging markets. Under STEPS, electricity demand in the transport sector could also
soar by 2030, when a fleet of 110 million electric cars and other vehicles could account for more
than 500 TWh of demand. By 2040, the WEO2020 suggests transportation’s share of global
power demand will rise to 6%, well above 2,000 TWh.

2. Solar Is Generation’s New King. Despite the pandemic, net additions of renewable capacity
reached a new record of 200 GW in 2020, and total capacity will surge to about 218 GW in
2021, growth that is driven by projects delayed by lockdowns and lapses in investment. In 2025,
renewable are expected to overtake coal as the primary means of producing global electricity, the
WEO2020 suggests. “In particular, solar PV is now the cheapest source of electricity in most
countries and it has been the most-built power technology over the past three years,” noted IEA

18
analyst Yasmine Arsalane. “We are definitely entering a new era and solar PV is becoming the
new king.”
Most growth will be supported by cheap financing availability. “In the leading solar market,
financing costs are extremely low, and it reflects very low revenue risk under prevailing policy
frameworks,” she explained.
Uptake of wind turbines is also driving short-term growth, with about 68 GW—89% of which is
onshore—set to be installed in 2021. Offshore wind capacity will also soar to a record level of 7
GW in 2021, with more than half in China, starting with the installation of its first large-scale
offshore project in Chinese Taipei.

3. Coal, Nuclear, and Gas Face a Squeeze. Outlooks for coal, nuclear, gas, and even oil, are
notable owing to stiff competition they face from renewable. About 13 GW of new nuclear are
set to begin operation in 2021—and many units are advanced reactors. China is set to begin
operations at Shidawowan, a high-temperature reactor; Fuqing 6, the first Hualong one design;
and two other ACPR-1000s. India is targeting operation of its Bhavini, its first fast reactor, as
well as a domestically designed 700-MW heavy-water reactor at Kakrapar. Meanwhile,
Argentina is expected to begin running the 29-MW Care, a small modular reactor; the United
Arab Emirates (UAE) is scheduled to put Baraka 2 online; Finland was scheduled to finally
commission Olkiluoto 3 (though a recent update suggests the plant will likely start operations in
March 2022); and Southern Co. plans to begin operations at Vogtle 3. Other reactors include
Ostrovets 2 in Belarus, an APR1400 in South Korea, and an ACP1000 in Pakistan. The U.S.,
however, is set to retire 5.5 GW of nuclear capacity, and three of the remaining six units in
Germany are slated to go offline before the country fully phases out nuclear in 2022.
Global coal capacity, meanwhile, is set to soar to 2,140 GW in 2021, driven by 30 GW of new
capacity in China, with minor additions in India, Japan, Indonesia, Vietnam, and Bangladesh.
Also notable: the UAE is expected to commission Hassyan 1, the first coal unit in the Middle
East outside of Israel. Coal retirements will proliferate, however, with the U.S. set to
decommission 3 GW in 2021 (in addition to about 10 GW in 2020), as well as 12 GW in Europe.
Closures slated in Portugal, Belgium, Austria, and Sweden over 2021 will complete phase-outs
in those countries.

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Natural gas capacity, meanwhile, is slated to rise by 30 GW. About 7 GW is in the U.S.—in
Texas and Ohio—and another 7 GW is in the Middle East, in Iran, Saudi Arabia, and the UAE.
Additionally, 10 GW is in Asia, mostly in China and Malaysia.

4. Flexibility Is Now a Cornerstone of Electricity Security. Owing to shifting power

profiles—mainly an increase in variable capacity—wavering demand, and pandemic-related fuel
supply disruptions, 2020 showed how important flexibility is and will be to electricity security.
“One point of consistency across all WEO2020 scenarios is that flexibility needs are set to rise,”
noted IEA analyst Tim Goodson.
In the STEPS, flexibility needs are set to double globally out to 2040 (Figure 1). “The good news
is that there are many flexibility sources available from power plants to electricity networks,
storage technologies, and demand response measures,” Goodson said. “Today, coal and gas-fired
power plants are the main source of flexibility in many systems, with additional major
contributions from low-carbon sources like hydro and nuclear power. Looking ahead, storage
and demand-side response could play central roles in flexibility with the right policies and
regulations.”

5. Market Forces Are a Wildcard. While the IEA has noted a general decline in wholesale
power prices since 2019, the trend accelerated in 2020, owing partly to a COVID-driven fall in
spot natural gas prices of between 20% and 50%, and a decline in power demand. The decline
was especially prominent in Nordic countries.
Separately, COVID’s effect on utility finances could have repercussions for continued
investment in technologies direly needed to ensure electricity security, said IEA’s Arsalane.
Because the grid will serve as a “bedrock of [a] clean and secure electricity future,” enabling
adequate flexibility could require grid extensions totaling “16 million kilometers in the STEPS.
It’s an increase of 80% compared to the past decade,” she said (Figure 2). “The problem is—and
we see this in 2020—that depressed revenues for grid operators due to the pandemic are creating
risks for this step-up of investment and the timing of these investments.” Regulatory reforms
may be needed to ensure sufficient cash flow for timely grid investment, which if unaddressed,
will pose risks to electricity security as well as slow the pace of the clean energy transition, she
said.

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6. Low-Carbon Policies, Ambitions Are on the Rise. The EMR2020 highlights a dramatic
increase in national policy objectives, alongside local power market structures, fuel taxes, and
efficiency and renewable support measures to enable decarburization of the power sector.
Carbon pricing, which introduces a price signal for the cost of carbon emissions, has been
implemented in several regions to provide investment signals and sway electricity dispatch merit
orders. In 2021, joining 31 regional emissions trading systems (ETSs), China will start a national
ETS to initially cover power and heat generation from coal and gas plants. “When operational it
will be by far the world’s largest emissions trading system, alone covering more than 14% of
global CO 2 emissions from fossil-fuel combustion,” the IEA noted.
Several countries have meanwhile announced net-zero targets, including China, Japan, South
Korea, and European Union members. A number of major power companies have also declared
net-zero ambitions, although long-term strategies to achieve them remain murky. In the U.S.,
despite the lack of federal mandates to meet climate goals, as of December, 70% of the 30 largest
electric and gas utilities had net-zero equivalent targets.
While government targets are laudable, long-term vision on how they can be achieved
sustainably must be a priority, suggested Karthik Ganesan, Power Sector Lead for India’s
Council for Energy, Environment and Water, during an IEA panel discussion on Nov. 17. India,
which has set a target to install 175 GW of renewable energy by 2022, for example, has
“auctioned out a lot of capacity, especially in the last two years in phenomenal numbers,” but at
least 20 GW of capacity contracted to developers by government intermediary Solar Energy
Corp. have no off-takers from distribution companies (DISCOMs). Part of the issue stems from
declining utility finances, which have suffered more owing to pandemic-related payment
waivers, he said. Effecting real change will require “ultimate innovation of moving the Indian
bulk procurement system or market to a true market. It’s still going to be through [power
purchase agreements (PPAs)], bilaterally contracted [deals], which I think precludes us from
getting the efficiencies that we see in the rest of the world, and I think that is ultimately the
biggest challenge that India sees.”
Yet another issue that will emerge is how governments deal with legacy power systems. India’s
coal fleet, which is already paid for, is relatively new, noted Ganesan. Operators are still
“holding on to earlier PPAs they’ve signed even if the variable costs are high.

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7. Oil’s Notable Comeback. Oil, which still accounts for about 3% of global generation, in 2020
benefited from the OPEC+ agreement, which put significant pressure on associated gas
production for a number of OPEC producers in the Middle East. In Kuwait, owing to reduced gas
burn for power and desalination, the power sector’s use of crude oil surged 11% in the first nine
months. Saudi Arabia also increased direct crude and heavy fuel oil burning, as did the UAE,
Iraq, and Iran to meet record-high peak summer demand. Elsewhere in the world, coal and gas
competed fiercely for market share, according to the EMR2020, with gas gaining due to price
drops in the U.S. and Europe. “However, the sharp recovery in gas prices since the beginning of
June has started to erode the competitive position of gas-fired power plants since September,”
the report notes.

8. Sectoral Coupling Poised to Reshape Power. In a boost to flexibility efforts, global utility-
scale battery storage capacity is set for a 20-fold increase between 2019 and 2030, with 130 GW
of installed batteries globally projected in the STEPS by 2030, the WEO2020 says. Global
potential to tap into demand-side response, enabled by digitalization and automation, is also
expected to increase by another 1,500 TWh, mainly in the buildings sector, but also in the
residential and transportation sectors.
But according to Doug Arent, executive director of Strategic Public Private Partnerships at the
U.S. National Renewable Energy Laboratory (NREL), several other near-term innovations may
be poised to reshape how power is produced and consumed. Examples include hybrid resources,
black start from inverter-based resources, and advanced forecasting to enable sub-hourly
scheduling and dispatch. However, “It’s not just innovations within the [classic generator]
system, it’s innovations that interfaces with different sectors, which we have classically seen as
‘load sectors,’ but increasingly they also become sources of flexibility for us, and we have to
more holistically manage all of those,” Arent said. These include grid-efficient interactive
buildings, including an evolution of smart controls, building controls, and variable-speed motors.
Buildings are also adopting innovations in air conditioning—such as ice energy storage—and
smart hot water heaters, he noted, while mobility electrification is offering new opportunities for
visibility into distributed grids.

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 CHAPTER: 4
ANALYSIS AND INTERPRETATION

Growth in electricity generation has decelerated to 6.6 per cent from 7.5 per cent in the
corresponding period in 2008-09, the Economic Survey tabled in the Parliament by finance
minister P. Chidambaram said.
The government is expecting 9.5 per cent growth per annum in the power sector in the 11th Five
Year Plan.

Fig.2. NTPC in Indian Thermal Power Sector.

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MARKET SHARE

Fig.3. Market share analysis.

While the majority of capital invested in these countries is domestic, the sovereign risk
characteristics of these countries can differ significantly, which can influence the types of
international lenders that are willing to invest in these markets. This aspect of investment risk,
combined with the technological capacity of a country to deploy technologies, as well as the
local policies and measures that govern them, can influence technology investment flows to
Brazil, Russia, India, and China.

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PLAYERS

 Industry players and profile

The power sector reveals that it can be largely segregated into four different categories on the
basis of type of players in the industry. These include:

Central Government Corporations: which consist of corporations like the National Thermal
Power Corporation (NTPC), Nuclear Power Corporation, National Hydro Electric Power
Corporation (NHPC), and some other smaller players.

State Government Corporations. Which consist of the various state electricity boards and other
corporations that have been promoted by the respective governments? Poor management,
transmission and distribution (T&D) losses and poor recoveries of dues are some of the factors,
which are responsible for the plight of these corporations. Currently, the financial health of many
SEBs is precarious and their revenue-raising capabilities are more or less dependent on assured
guarantees from the respective governments.

Private Sector Licensees: In the private sector, some companies had been given licenses to
carry on generation and distribution activities. While some of these companies are generation
and distribution companies, others like Surat Electricity are just distribution companies.

Independent Power Producers: The Independent Power Producers (IPPs) are the companies
that have been given a nod to set up generation capacities.

Global flexibility needs, measured as hour-to-hour adjustments here, are set to double by 2040 in
the International Energy Agency’s (IEA’s) “Stated Policies Scenario” (STEPS). However,
“today’s market designs may not bring sufficient investment, for example, in power plants,
networks, demand-side response and energy storage, including batteries,” it said. Courtesy: IEA,
World Energy Outlook 2020

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 Fig.4. Global flexibility needs measurement.

Separately, COVID’s effect on utility finances could have repercussions for continued
investment in technologies direly needed to ensure electricity security, said IEA’s Arsalane.
Because the grid will serve as“bedrock of [a] clean and secure electricity future,” enabling
adequate flexibility could require grid extensions totaling “16 million kilometers in the STEPS.
It’s an increase of 80% compared to the past decade,” she said (Figure 2). “The problem is—and
we see this in 2020—that depressed revenues for grid operators due to the pandemic are creating
risks for this step-up of investment and the timing of these investments.” Regulatory reforms
may be needed to ensure sufficient cash flow for timely grid investment, which if unaddressed,
will pose risks to electricity security as well as slow the pace of the clean energy transition, she
said.

Fig.5. Source of power sector flexibility in the IEA’s outlook 2020.

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 CHAPTER: 5
CONCLUSIONS AND FUTURE SCOPE OF STUDY

Power is among the most critical components of infrastructure, crucial for the economic growth
and welfare of nations. The existence and development of adequate power infrastructure is
essential for sustained growth of the Indian economy.
India's power sector is one of the most diversified in the world. Sources of power generation
range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power
to viable non-conventional sources such as wind, solar, and agricultural and domestic waste.
Electricity demand in the country has increased rapidly and is expected to rise further in the
years to come. In order to meet the increasing demand for electricity in the country, massive
addition to the installed generating capacity is required.
India was ranked fourth in wind power, fifth in solar power and fourth in renewable power
installed capacity, as of 2020. India is the only country among the G20 nations that is on track to
achieve the targets under the Paris Agreement.

GROWING DEMAND

*India is the third-largest producer and second-largest consumer of electricity worldwide, with an
installed power capacity of 395.07 GW, as of January 2022.

*Growing population along with increasing electrification and per-capita usage will provide further
impetus. Power consumption is estimated to reach 1,894.7 TWh in 2022.

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 ATTRACTIVE OPPORTUNITIES

*Under the Union Budget 2022-23, the government announced the issuance of sovereign green bonds, as
well as conferring infrastructure status to energy storage systems, including grid-scale battery systems.

*In the same budget, Rs. 19,500 crore (US$ 2.57 billion) was allocated for a PLI scheme to boost
manufacturing of high-efficiency solar modules.

POLICY SUPPORT

*100% FDI allowed in the power sector has boosted FDI inflow in this sector.

*Schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) and Integrated Power
Development Scheme (IPDS) are expected to augment electrification across the country.

HIGHER INVESTMENTS

*As per the National Infrastructure Pipeline 2019-25, energy sector projects accounted for the highest
share (24%) out of the total expected capital expenditure of Rs. 111 lakh crore (US$ 1.4 trillion).

*Total FDI inflow in the power sector reached US$ 15.84 billion between April 2000 and December
2021.

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MARKET SIZE
Indian power sector is undergoing a significant change that has redefined the industry outlook.
Sustained economic growth continues to drive electricity demand in India. 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 market and supply sides (fuel,
logistics, finances, and manpower).
India is the third-largest producer and second-largest consumer of electricity worldwide, with an
installed power capacity of 395.07 GW, as of January 2022.
As of January 2022, India's installed renewable energy capacity stood at 152.36 GW,
representing 38.56% of the overall installed power capacity. Solar energy is estimated to
contribute 50.30 GW, followed by 40.1 GW from wind power, 10.17 GW from biomass and
46.51 GW from hydropower.
The renewable energy capacity addition stood at 8.2 GW for the first eight months of FY22
against 3.4 GW for the first eight months of FY21.
For FY21, electricity generation attained from conventional sources was at 1,234.44 BU,
comprising 1,032.39 BU of thermal energy; hydro energy (150.30 BU) and nuclear (42.94 BU).
Of this, 8.79 BU was imported from Bhutan.
Coal-based power installed capacity in India stood at 203.9 GW in January 2022 and is expected
to reach 330-441 GW by 2040.
The peak power demand in the country stood at 203.01 GW in 2021.

29
 Fig.6. Total power generation in India FY22.

INVESTMENT SCENARIO
Total FDI inflow in the power sector reached US$ 15.84 billion between April 2000-December
2021, accounting for 2.77% of the total FDI inflow in India.

Some major investments and developments in the Indian power sector are as follows:

In March 2022, NTPC announced that it was ready to start partial power generation of 10 GW
from a 92 MW floating solar energy plant being set up at NTPC's unit at Kayamkulam in Kerala.

In March 2022, NTPC announced that it will start commercial operations of 74.88 MW capacity
of its 296 MW Fatehgarh solar project in Rajasthan.

In March 2022, Adani Solar and Smart Power India (SPI), a subsidiary of Rockefeller
Foundation, signed a non-financial and non-commercial MOU to promote the usage of solar
rooftop panels in rural India.

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In February 2022, Kolkata-based Eminent Electricity Distribution Ltd., a subsidiary of CESC
Limited, bid Rs. 871 crore (US$ 113.24 million) to take over Chandigarh's power supply
department, which was approved and the transition will happen by the end of March.

SJVN Limited is looking to develop 10,000 MW solar power projects inviting an investment of
Rs. 50,000 crore (US$ 6.56 billion) in the next five years in Rajasthan.

In November 2021, the NTPC announced that its 80 MW solar power-generation capacity in
Jester (Rajasthan) has started commercial operations from October 22, 2021. The total capacity
of the project is 160 MW.

In November 2021, SJVN began the second unit work of the 1,320 MW Buxar thermal power
plant in Bihar.

In October 2021, the NTPC was awarded a contract to set up a 325MW solar power project in
Madhya Pradesh.

On September 29, 2021, NTPC Renewable Energy ltd (REL), a 100% subsidiary of NTPC ltd,
signed its first green term loan agreement with the Bank of India for Rs. 500 crore (US$ 67.28
million) at a competitive rate and a tenor of 15 years for its 470 MW solar projects in Rajasthan
and 200 MW solar projects in Gujarat.

In September 2021, Adani Group announced an investment of US$ 20 billion over the next 10
years in renewable energy generation and component manufacturing.

In July 2021, National Thermal Power Corporation Renewable Energy Ltd (NTPC REL),
NTPC's fully owned subsidiary, invited a domestic tender to build India's first green hydrogen
fueling station in Leh Ladakh.

In July 2021, Bharat Heavy Electricals Limited (BHEL) received a large contract from Nuclear
Power Corporation of India Limited (NPCIL) for the supply of 12 steam generators of India's
highest rated indigenously-developed 700 MW Pressurized Heavy Water Reactors (PHWR)
worth Rs. 1,405 crore (US$ 189.20 million).

In July 2021, NTPC announced that it would invest Rs. 2-2.5 crore (US$ 0.27-0.34 million) over
the next 10 years to expand renewable capacity.

31
In June 2021, NHPC signed a memorandum of understanding (MOU) with Bihar State Hydro-
Electric Power Corporation Limited (BSHPCL) to execute Dagmar HE Project (130.1 MW) in
the state.

In March 2021, Actis LLP, a private equity firm, announced plans to invest US$ 850 million to
build two green energy platforms in India.

According to the firm, the first platform will focus on setting up grid-connected solar and wind
power parks, while the second platform will tailor to the commercial and industrial segment.

In January 2021, TOTAL acquired a 20% stake in Adani Green Energy. In addition, as a part of
this deal, TOTAL undertook 50% in 2.35 GW portfolio of operating solar assets in Adani Energy
Limited. The combined deal amount was worth US$ 2.5 billion.

In January 2021, Tata Power received a letter of award (LOA) from Kerala State Electricity
Board Limited (KSEBL) to develop a 110 MW solar project. With this, Tata Power's renewable
capacity will increase to 4,032 MW, out of which 2,667 MW is operational and 1365 MW is
under implementation, including 110 MW won under this LOA.

GOVERNMENT INITIATIVES
The Government of India has identified power sector as a key sector of focus to promote
sustained industrial growth. Some initiatives by the Government to boost the Indian power sector
are as below:

Under the Union Budget 2022-23, the government announced the issuance of sovereign green
bonds, as well as conferring infrastructure status to energy storage systems, including grid-scale
battery systems.

In the Union Budget 2022-23, the government allocated Rs. 19,500 crore (US$ 2.57 billion) for a
PLI scheme to boost the manufacturing of high-efficiency solar modules.

Electrification in the country is increasing with support from schemes like Deen Dayal
Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and
Integrated Power Development Scheme (IPDS).

32
In February 2022, a parliamentary standing committee recommended the government take steps
to increase the loan limit for the renewable energy sector under priority sector lending. The
current limit stands at Rs. 30 crore (U$ 3.93 million).

In December 2021, West Bengal received a loan approval for US$ 135 million from the
International Bank for Reconstruction and Development (also called the World Bank) to improve
the operational efficiency and reliability of electricity supply in select regions in the state.

In November 2021, the government announced future plans to increase the funding under the
PLI scheme for domestic solar cells and module manufacturing to RS. 24,000 crore (US$ 3.17
billion) from the existing Rs. 4,500 crore (US$ 594.68 million) to make India an exporting
nation.

In November 2021, Energy Efficiency Services Limited (EESL) stated that it will partner with
private sector energy service companies to scale up its Building Energy Efficiency Programme
(BEEP).

In September 2021, the Government of the United Kingdom announced that it will invest US$
1.2 billion through public and private investments in green projects and renewable energy in
India to support the latter's target of 450 GW of renewable energy by 2030.

In September 2021, Mr. Raj Kumar Singh, Minister of Power, New and Renewable Energy, met
with his Danish colleague, Mr. Dan Jorgensen, and announced to expand their cooperation in
renewable energy, particularly offshore wind and green hydrogen.

In July 2021, Ministry of Petroleum and Natural Gas, Government of India owned GAIL lined
up Rs. 5,000 crore (US$ 671.14 million) for setting up two plants each for producing ethanol and
compressed biogas (CBG) from municipal waste.

In July 2021, India sent its first coal-laden rake (4,000 tones) to Bangladesh's Rampal Thermal
Power Station. The 1,320 MW power plants is a joint venture between National Thermal Power
Corporation (NTPC) and Bangladesh Power Development Board (BPDB).

The government has spent US$ 4.63 billion on hydroelectric projects to provide electricity to
villages in Jammu and Kashmir between 2018-21.

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In June 2021, India launched the Mission Innovation CleanTech Exchange, a global initiative
that will create a whole network of incubators across member countries to accelerate clean
energy innovation

In June 2021, the Export-Import Bank of India (Exim Bank) announced that it has extended a
line of credit (LOC) worth US$ 100 million to the Sri Lankan government for the purpose of
funding projects in the solar energy sector and assure that the country's 70% power requirements
are met by renewable energy sources by 2030.

ROAD AHEAD
The Government of India has released its roadmap to achieve 227 GW capacity in renewable
energy (including 114 GW of solar power and 67 GW of wind power) by 2022. The Union
Government of India is preparing a 'rent a roof' policy for supporting its target of generating 40
gigawatts (GW) of power through solar rooftop projects by 2022.
The Central Electricity Authority (CEA) estimates India's power requirement to grow to reach
817 GW by 2030. The government plans to establish renewable energy capacity of 500 GW by
2030.

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 BIBLIOGRAPHY

1. https://www.ibef.org/industry/power-sector-india
2. https://adamasuniversity.ac.in/future-scope-of-power-sector-with-
wind-energy/
3. https://powermin.gov.in/en/content/power-sector-glance-all-india
4. https://www.equitymaster.com/research-it/sector-
info/power/Power-Sector-Analysis-Report.asp
5. https://www.investindia.gov.in/sector/thermal-power

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