. the power sector. Even the government is finding it very difficult to get the required land for allotting to power projects. and forest clearances. was deregulated to an extent. But things are still happening very slowly on ground.CURRENT SCENARIO • With the coming of Electricity Act 2003. environment. The Eleventh Five-Year Plan (2007-12) target of setting up 78. The sector is facing serious delays in terms of capacity expansion. And even the revised target seems unattainable given the current progress. where a large number of projects are being planned owing to abundance of fuel resources. • The key problems hindering the growth of the power sector are land. One of the key problems in getting land is Naxalism in the eastern and central states.000 MW of new generation capacity has already been lowered by around 25%. fuel.

substantial energy sold at low voltage. viz. The T&D losses are due to a variety of reasons. India has adopted a blend of thermal. This is followed by hydro-electricity (22% share.• Central institutions like NTPC and the State Electricity Boards (SEBs) continue to dominate the power sector in India.367 MW). . improper billing and high pilferage. 37. inadequate investment in distribution system. The rest comes from nuclear and wind energy. hydel and nuclear sources with a view to increasing the availability of electricity.. sparsely distributed loads over large rural areas. • Average transmission and distribution losses (T&D) exceed 25% of total power generation compared to less than 15% for developing economies.650 MW) of the total power generation capacity in India. Thermal plants at present account for 65% (115.

.OBJECTIVE  To highlight the concepts of Michael E. Porters five forces that shape strategy of with respect to Power sector(as I have work experience in Power) especially focussing on Adani Power Limited.  Thus helping a company understand the structure of the industry and stake out a position that is more profitable and less vulnerable to attack.

Gujarat) • But as many companies are entering into power industry Adani Power has to keep the price per unit low and to boost investments to deter new enterants .THREAT OF NEW ENTRANTS • For Adani Power threat of new entrant is medium because it has already set up functional power plants(Eg: 4620 MW thermal power plant in Mundra.

entering the power generation business requires heavy investment initially. • The other barriers are fuel linkages. which are largely state monopolies. especially in the transmission and distribution segments. • Also. payment guarantees from state governments that buy power and retail distribution license. .BARRIERS TO ENTRY • Barriers to entry are high.

BARGAINING POWER OF SUPPLIERS • Not very high as government controls tariff structure. . • The bargaining power of suppliers is low for the fully integrated power plants as in case of Adani power as they have their own mines of key raw materials(coal.oil). those who are non-integrated or semi integrated has to depend on suppliers. this may change in the future. However. • However.

. • However government is a big buyer and payments from it can be erratic. as has been seen in the past.BARGAINING POWER OF CUSTOMERS • Bargaining power of retail customers is low. as power is in short supply.

thereby increasing competition.COMPETITION • High: Getting intense. • Adani power can’t afford to digress from it’s future plans of generating 20. • The Electricity Act 2003 aims to encourage investments.000 MW by 2020 if it has to remain in the race. . but there is enough room for many players.

Shortfall of coal in India is expected to go up to 100 MMT (m metric tonnes) by FY14. As per government reports. Availability of coal from domestic linkages would suffice only 55 to 60% of the PLF equivalent. Hence. • Coal costs from both domestic linkages and imported sources are expected to be on the rise. Hence purchase of coal by way of Coal India's e-auction would only become more expensive. about 36% of the households did not have access to electricity. .FUTURE PROSPECTS • Recognising that electricity is one of the key drivers for rapid economic growth and poverty alleviation. the industry has set itself the target of providing access to all households over the next few years. meeting the target of providing universal access is a daunting task requiring significant addition to generation capacity and expansion of the transmission and distribution network.

• Trading in electricity has brought a sea change in the structure of the industry because some parts of country are power surplus and some are deficient. the investment in transmission and distribution networking is expected to improve. . But with the privatization coming in.• On an overall basis. A power trading company(Adani Power) buys power from surplus area and sells it in a power deficit area through transmission lines. the regulator has to play a key role in removing all discrepancies that occur in terms of electricity pricing across trading regions. While the potential for power trading is huge. power distribution has been loss-making business in India.

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