Power Sector Investors’ Meet

Ministry of Power, GoI

1
Outline of the presentation

 Socio Economic Trends and Power Sector

 Electricity Demand Outlook

 Drivers of Growth

 Myths Prevailing in the Sector

 Key Issues and GoI Interventions

2
 Socio Economic Trends
1 Rapid 2 Better 3 Adoption 4 Rising 5 Adoption
Urbanization to Utility- of Cleaner trend of of electricity
drive Energy Consumer Energy Electric ` for cooking
Demand Engagement Sources Mobility

 Increased  Higher demand for  Accelerated demand  E-mobility to create  Rural sector
Consumption will products & services for RES technologies additional demand consumers to
boost Manufacturing e.g. Smart Meters. and services. increasingly adopt
for appliances.
electricity as primary
Estimated No of  Rising trend of EV
 New Business fuel for cooking.
India: Appliance energy Smart/Prepaid meters adoption to boost
consumption projection required segments to help demand for EV
482 TWh/yr ~70 Million, immediately integrate VRE Subsystems.
penetration in grid.  Major contribution
380 TWh/yr Source: CEA, 2017 towards base
 EV Ancillary Services demand.
 Energy efficiency Estimated* annual Energy
Supply (BU) by RES such as battery
adoption to create
swapping, recycling to
new segments. 383 BU
2021 2026 receive major boost. Estimated Capacity
Source: World Bank, 2008 Estimated Investment requirement for HH cooking
124 BU
in EE, 2015-2040 Estimated No of @20% adoption
 Strong demand to $ 832 Bn. EVs by 2030 ~50 GW.
propel energy ~261 Million
Source: IEA 2015 2017 2022
intensive industries Source: MoP
e.g. steel and cement  New PPP ventures Source: MoP Source: NITI Ayog 2017,
*At Avg. PLF of 25% (Transformative Scenario)
with Utilities

“The largest contribution to demand growth (2017-2040)- almost 30% - comes from India, whose share of global energy use
rises to 11% by 2040 “(World Energy Demand 2040: 3305Mtoe) 3
-IEA World Energy Outlook, 2017
Power Sector is enabling Social and Economic Transformation….

Increasing Per Capita 818 kWh (FY ’11) to 1122 kWh (FY ’17)
Consumption Source: CEA 2017

Connecting the last Requirement of additional 28,000

household MW / 80,000 MUs per annum
Source: SAUBHAGYA portal

Making Utilities Efficient and 25% reduction in DISCOMs financial

Viable losses in last 1 year
Source: UDAY Portal

24X7 Affordable and Growth in energy billed by ~9% in

Reliable Power FY17 against ~6% in FY16
Source: CEA, UDAY Portal

Increasing transparency Portals/APPs launched along with

& Customer Inclusion a National Power Portal
4
Positive Electricity Demand Outlook
c
Significant demand Potential: Similar Socio-Economic Conditions Present Power Demand growth CAGR: 5%
but different Annual per capita Consumption Expected Power Demand growth CAGR (FY’17 –FY ‘22: 6%
1600 1,566 240
North Africa* 1687 226
220
Latin America* 2059 1400
200
East Asia * 3051
1200 1,160
1,108 180
World* 3126
1,049 160
153 160
All India 1122 1000 960 967 148
909
135 136
NE Region 392 130 140
800
Eastern Region 694 120

Southern Region 1432 600 100

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2021-22
Western Region 1533 EnergyDemand ('000 MU) Peak Demand ('000 MW)

Northern Region 1003 Source: CEA and 19th EPS

Source: WB analysis and CEA
0 500 1000 1500 2000 2500 3000

Electrification and Last Mile

Connectivity
24X7
Power Key Drivers of
Reliability of Supply
for All Key Drivers of
Demand
Demand Growth
Hours of Supply

Electrification of Transport
5
Drivers of Growth

6
Drivers of Growth

Increase in
the Supply
Base 4
24X7
Improvement in
2 Governance & Affordable and
Expansion of Transparency Reliable Power
Transmission
Network 5 Increased
Adoption of Investment
3 Emerging Trends
& Technology
Opportunities
Distribution
Reforms &
System
Strengthening
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 Increase
Increase in
in Supply
Supply Base
Base
Coal Sector Transformation: Shortage to Surplus to Superior
Coal Mines (Special
SHAKTI: Power Sector Provisions) Act, 2015:
Linkage Policy
Transparent Allocation
Coal Linkage through of coal blocks to
transparent auctions through E Auction

COAL SECTOR
TRANSFORMATION

Linkage policy Non Coal production by

Regulated sector: CPSEs:
Transparent Allocation Sustained increase in
through E-Auction to production has led to
steel and cement fuel reliability and
sectors. lesser imports

Annual Domestic Coal Production Trend 2016-17

2015-16 659 MT
2014-15
2012-13 2013-14 639 MT
609 MT
2011-12 556 MT 566 MT
540 MT

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Source: CEA
 Increase in
Increase in Supply
Supply Base
Base
Opportunities in Generation: Catering future Base Load
180 Renewable Sources
19 EPS Predicts a sustained
th

growth in Energy and Peak RE

160 Installed Capacity
Demand CAGR (FY’10- FY‘18) : 22%
140
3500 500
448
Envisaged CAGR (FY’18- FY‘22) :22%
3049 120
3000 450

2531 100
370 400
2500 173
80
2047 350 149
2000 299 60 124
1566 300
100
1500 40 78
1160 226 250
57
1000 20
200
162 16
0
500 150 2009-10 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Source: Draft, NEP 2016
0 100
2016-17 2021-22 2026-27 2031-32 2036-37
Investment Line-up in next 5-10 Years
Energy Requirement (BU) Peak Load (GW)
Source: 19th EPS

266 GW
Sustained Growth in Demand is inclusive of Addition
increasing Adoption of Energy Efficiency Measure USD 310- 293 Global
19th EPS is rather conservative compared with 350 Bn. Firms
other credible sources. Enhancing
RE
Capacity
9
Source: IBEF
 Increase
IncreaseininSupply
SupplyBase
Base
Opportunities in Generation: Catering beyond Base Load
Expected India Duck Curve with 20,000 MW Solar Generation 200 Envisaged RE Capacity Entails 50%

180 higher Grid Penetration of 173

45%
160 Variable Sources
149
40%
140
124 34% 37%
35%
120
100
30%
100 30%
26%
78
80
22% 25%
57
60
18% 20%
40
15%
20

0 10%
2016-17* 2017-18 2018-19 2019-20 2020-21 2021-22

Installed Capacity RES (GW) RES as % of Total

Source: Draft, NEP 2016
Source: NLDC

Ancillary Services Smart Grid Technologies

Frequency Management Peak Load Management
Voltage Management Human Error Avoidance

RE Grid
Integration:
Opportunities

Storage Devices Capacity Market

Excess RE Generation Demand Supply Balance
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 Expansionof
Expansion ofTransmission
Transmission Network
Network
Transmission: Growing in cohorts with Generation
Target vs Actual Transmission Capacity Addition (‘000 ckm)
Target vs Actual Transformation Capacity Addition (‘000 MVA)
30 18%
17% 28
26 90
16% 16% 82
25 24 23 80
22 14%
13%
21 70
20 20 64 63
20 19 19 12% 57
60
17 17
17 51
15 10% 10% 50 45
15
8% 40 35
32
6% 10 10 30
10 6%
5% 20
4%
4% 11 9
5 10
0 2%
0
0
% 0%
FY '13 FY '14 FY '15 FY '16 FY '17
FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 Q2 '18
Target (MVA) Achievement (MVA) Source: CEA
Source: CEA
Target Achievement % Uncleared Vol

Projects Awarded Till Date through Tariff Based 3.2 Lakh Crore
Competitive Bidding (TBCB) 39 Investment Opportunity in
Transmission Sector FY ‘18-’22
Project Value awarded in FY 2016 21,000 Cr Source: CRISIL
Source: KPMG analysis

Intra state TBCB to fuel the next wave of Investments in

Transmission 11
 Distribution Reforms and System Strengthening
Electrification and Last Mile Connectivity: Outlay INR 42,561 Crores (DDUGJY)

 Segregation of Agriculture feeder  Access to Rural Households

Outlay: 15,190 Crore Outlay: 10,246 Crore
 Universal Metering  System Strengthening
Outlay: 3,859Crore Outlay: 9,997 Crore

Non
Paying Weak T&D
Consumers Infra Household Electrification Status
Village Electrification Status
Un electrified Initially DDUGJY Un electrified Initially
18,452 4,37,46,279

Un -Connected
Households
Electrified Till Now Electrified Till Now
15,981 2,79,18,695

 Intensive electrification to
Remaining
connect Villages Remaining
1,370
Outlay: 1,333 Crore 4,07,92,171

DDUGJY
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 Distribution Reforms and System Strengthening
Electrification and Last Mile Connectivity

Last mile connectivity to all un-  Outlay : Rs. 16,320 Crore

electrified households in rural
SAUBHAGYA
areas and poor households in
urban areas
 About 4 crore households to
be electrified by March 2019
Source: MoP

Demand Potential to be realized through Electrification of Households

18.05
18
~4 Crore HHs
16 to be
14.05 Electrified
14

12
Demand ~28 GW
10
Implication Annual Demand to be realized
8
by connecting all Households
6
Source: MoP
4

0
Total Scope Electrified

Households in Crores
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 Distribution Reforms and System Strengthening

DISCOM Transformation and Strengthening

UDAY IPDS

24X7 Reliable & Commercially An integrated scheme for urban areas with
Affordable Supply Viable Discoms outlay Rs 27,052 Crores, targeting
Eliminate stress of Banking  IT Enablement (Quality and Reliability)
Sector from DISCOM exposure  System Strengthening

Key improvement under UDAY Achievements under IPDS

Target  IT enablement completed in 1367 towns;

Parameters FY16 FY17 fresh sanctions for 1932 towns amounting
FY18
to Rs 985 Crores.
ACS-ARR Gap  Old System strengthening projects
0.60 0.42 0.20
(Rs. / kWh)
completed in 970 towns; fresh sanctions for
3616 towns.
AT&C Losses (%) 21 20 17  Expected to boost industry performance,
as IPDS directs interventions in urban areas
Source: UDAY Portal
where most industrial hubs/ centres are
UDAY Performance IPDS Source: MoP 14
located
 Adoption of Emerging Trends and Technologies
Emerging trends: Indicative Opportunity Sizing

Decentralized Ancillary
Distributed Electric Vehicles Smart Meters Storage
Services
Generation
• Increase base- • Installation of 35 • Estimates on EV • High significance
•High prospects if
load demand, million by end of battery domestic with increased
initiated at the
higher PLF 2019 (envisaged manufacturing VRE
DISCOM level
under UDAY) under different
•In Solar Rooftop, • Effective channel • Total quantum of
stages as per report
40 GW capacity for renewable • EESL procuring 50 spinning reserves
by Niti Ayog
addition target by peak power lakh smart meters (primary,
2022 for 2 States -Battery pack1: secondary and
• EV Estimates** as Potential: 120 GWh tertiary) is more
through
• INR 23,450 Cr* per report by Niti than 13,500 MW#
competitive
central financial Ayog for 2030 - End to end
bidding • Currently, tertiary
assistant for solar manufacturing2:
- Business As Usual frequency control
roof top Potential: 2410 GWh
installations scenario: 26 • Going forward,
proposed by MNRE million market based
ancillary service
•States aggregating - Transformative framework
capacities and scenario: 261
inviting bids million
15
* Proposed Sristi Scheme, MNRE ; **GDP Growth rate @ 7.4% CAGR; Cell import Cathodes import, # CERC Estimates for 2015
1 2
Likely Investment Potential in Major Segments

Investment Potential b/w 2015-2040 as per India Energy Outlook, 2015

Investment (Approx.)
Areas
In INR In USD
Coal Generation INR 22 Lakh Cr $ 354 Billion
Nuclear Generation INR 6 Lakh Cr $ 96 Billion
Hydro INR 8.8 Lakh Cr $ 141 Billion
Renewables INR 38.4 Lakh Cr $ 611 Billion
Investment in Transmission & Distribution networks INR 53.2 Lakh Cr $ 845 Billion

Source: India Energy Outlook, 2015

On the Distribution side, new trends and emerging areas like Rooftop Solar, EVs, Smart
meter, Storage, Ancillary Services etc. to open additional avenues of investment

DISCOM turnaround through UDAY to improve the overall performance of power sector,
thereby making it more investment friendly
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Myths prevailing in the Sector

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Myths prevailing in the Sector
UDAY is not Performing
Reality:
• UDAY is a 3 year long programme where performance of the States is contingent to the
time spent under UDAY, as different states have joined UDAY at different points in time
• Early results under UDAY are encouraging, with some distinct benefits on operations.
Going forward, improvement in metering to enhance the performance
• Performance slack in some states may be attributed to interlinked factors like lead time
of interventions, data-lag and seasonality of operations etc.
UDAY Performance

UDAY is not creating demand

Reality:
• UDAY is a supply side intervention which aims to release the latent demand, that exists
in the system due to short supply of power to the consumers.
• Under UDAY, total energy billed by DISCOMs increased by 9% in FY17* over FY16,
indicating a considerable growth in consumption, which in the past years had grown
around 5-6%.
Growth in Energy Sales 18
 Myths prevailing in the Sector

Increase in rural connection under SAUBHAGYA, will result in increase in losses

and low cost recovery
Reality:
• SAUBHAGYA scheme would ensure energy access to all households; expected increase in
demand of 28 GW.
• Increase in Demand would lead to lower fixed costs due to higher PLFs.
• 100% metering is integral to SAUBHAGYA ensuring theft control and revenue recovery

Losses are being camouflaged in Agriculture

Year wise total Input Energy, total Sales, Agriculture Sales in MUs and year wise Percentage Agriculture Sales
790207 823935
719222
621141 652233
570537
26.6% 26.6%
26.0%

148480 165355 173988

2013-14 2014-15 2015-16

Total Energy Input (MU) Total Sales (MU) Agriculture Sale (MU) Source: CEA

Above details are for 14 states contributing 95% of the Agriculture sales. Pecentage of Agricultural sales
have remained largely in the same range from FY14 to FY16. Therefore, there is no tell-tale sign of losses
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being loaded on the Agricultural category.
Key Issues and Ongoing
GoI Interventions

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 Key Issues and Ongoing GoI Interventions

Stressed Projects (coal based) in Power Sector

Current Major reasons for Action taken for resolution

Status stress of Stress
• Shakti Scheme: To provide assured supply
• Non-availability of fuel of coal through allocation and auctioning
• Commissioned
capacity: • No PPA tie-ups • Pilot scheme- to procure 2500 MW
24,405 MW • Amendment in Mega Power Policy:
• Delayed payments by Discoms
-Competitive bidding for future PPAs,
• Under
• Inability- infuse equity, service debt -Remove liquidity crunch with developers
construction
-Ensuring project competitiveness
capacity: • Aggressive tariffs by bidders in PPAs
15,725 MW
• Regulatory/ contractual disputes
• Total stressed Steps by Lenders
capacity: • Legal Issues- auctioned coal mines - Joint lender forum, Flexible restructuring
40,130 MW • Other financial issues like non- (5/25); invocation of SDR; Scheme for
Sustainable Structuring of Stressed Assets
• Comprises 34* compliance of Joint Lender Forum
(JLF) decisions, RBI restrictions on (S4A)
projects
funding of cost overrun, etc. - NCLT through IBC Act, 2016, SARFAESI,
DRT.
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* As per list provided by Dept of Financial Services
 Key Issues and Ongoing GoI Interventions
Revival of Hydro

Why hydro needs revival NEW HYDRO POLICY 2017

The following have been proposed:

• Revival of stalled projects, improving investor
confidence
• Tariff affordability and push for PPAs through
Hydropower Purchase Obligation
• Hydropower qualities critical for future-
Flexibility, Fastest ramping, Voltage regulation,
Reactive power absorption, Black start.
• Meeting peaking power and grid integration
requirement for 175 GW RE.
• Declaring all hydropower (irrespective of size)
as Renewable Energy.
• Providing hydropower purchase obligations
apart from solar RPO.
• Financial support in the form of interest
subvention/ equivalent support.
• Financial support for storage/ flood moderation
hydropower projects.

• Providing level playing field with Renewables

• Bringing discipline- Project Construction/ Mgmt.

• Water Storage- Flood moderation/Strategic

Needs
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Annexures

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UDAY

24
 UDAY Performance

UDAY has a clear impact towards improvement in operational efficiency

and decline in overall losses

Comparative Progress of H1
 S.  Base year Data Achievement
 Parameter  Unit
No. (31.03.2016) FY 2016-17 Achievement Achievement
H1 FY17 H1 FY18

AT&C
1 (In %) 21 20 24 23
Losses

ACS-ARR
2 (Rs./unit) 0.60 0.42 0.46 0.37
GAP

Energy
3 MUs 69,31,52* 75,77,88 3,76,287 4,21,192
Billed
Increase: 9.3%
*Data as per PFC report

Back to Myths UDAY snapshot

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Note: In all slides base year data of AT&C and GAP is as per PFC report (calculated as per revised methodology). Rest Data as per UDAY portal
 UDAY Performance

Operational Achievements in Key UDAY parameters till H1,FY18

Progress during UDAY period Overall Progress

Operational Base year Target Achievemen
Achievement
Overall
Overall Overall
(April’16 – achieveme %age
efficiency indicators Data (FY16) (April’16 t (April’16 - No. to be
June’17) in nt till achieveme
– June’17) June’17) achieved
%age June'17 nt

Urban Feeder
Metering (Nos) 40,302 2,027 5,006 100% 45,555 45,308 99%

Rural Feeder 1,03,68

Metering (Nos) 86,404 10,801 13,285 100% 99,689 96%
1

Domestic connections
(In Lakhs) 1,364 136 116 86% 1,867 1,480 80%

UJALA LED-bulb (In

Lakhs) 637 1,147 1,679 100% 2,146 2,315 100%
*Note: States have filled data till Q1 FY18

Back to Myths UDAY snapshot

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 UDAY Performance

Energy Billed by DISCOMs (MUs) in UDAY States increased at a relatively higher

rate 9% in FY17 against 6% in FY16
Quarterly
Annual Performance
Performance
757,788 MUs
201,903 MUs

9%
10%
693,152 MUs

6% 183,638 MUs
653,433 MUs

FY15 FY16 FY17 Q1FY17 Q1FY18

Source: PFC Report FY 2015-16
Back to Myths UDAY snapshot 27
 UDAY Performance
A total of 19 States have increased their tariff either in FY 16 or FY17. Tariff hikes have
resulted in an additional revenue of Rs. 10,009 Cr. in FY 16 and Rs. 20,427 Cr. in FY17

State wise Tariff Hike

14%
12% FY 2016-17 FY 2015-16

10% 9%
8% 8%
8% UDAY: Pre and Post
4% 4% 4% 4%
4%
2% Impact of tariff hike
Period on Total Income (%)
0% 0% 0%
Himachal Pr J&K Jharkhand Manipur Puducherry Telangana Sikkim Mizoram
Pre-UDAY FY 16 2.31%
20% FY 2017-18 FY 2015-16
Post-UDAY FY 17 4.35%

8% 8% 8%9% 9%
6% 5%5% 6%
5%
1% 0% 0% 0% 0% 0% 0%
Andhra Pr. Assam Bihar Kerala Karnataka Madhya Pr. Punjab Uttarakhand Meghalaya

Back to Myths UDAY snapshot 28

IPDS

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Integrated Power Development Scheme
• Rs 27,052 Cr sanctioned under IPDS - Rs 26,236 Cr System strengthening + Rs 985 Cr IT + Rs 69 Cr
Smart meters for Old Kashi Pilot
• System Strengthening projects for 3616 towns – Rs. 26,236 Cr sanctioned including Rs. 16,314 Cr
as GOI Grant, Rs. 4817 Cr released
• Quantum of work envisaged for System Strengthening in Urban sector :-

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Back
DDUGJY

31
Deen Dayal Upadhyay Gramin Jyoti Yojana (DDUGJY)
Rs.42561 Crore sanctioned including GoI Grant of Rs.32607 Crore. Component wise details are as follows:
Electrification of UE Villages through Grid Rs. 2,667 Crore
Metering Rs. 3,859 Crore
System Strengthening Rs. 9997.45 Crore
Feeder Separation Rs. 15190.89 Crore

% Physical
Sanctioned Awarded Completion as on Progress Achieved
Milestone Name Unit
Quantity Quantity 18.01.2018 w.r.t. awarded
Quantity
No. 1,825 1,591 168 11%
New
33/11 KV MVA 12,998 11,730 1,124 10%
Substation No. 2,145 1,537 414 27%
Augmentation
MVA 8,675 7,775 1,890 24%
LT Line CKm 123,653 159,981 31,794 20%
11 KV Line (Excluding
Lines CKm 111,412 98,252 14,986 15%
feeder segregation)
33&66 KV Line CKm 25,183 23,486 1,953 8%
Feeder Segregation
Feeder
(excluding 11 KV New CKm 159,571 147,703 11,679 8%
Segregation
Lines)
Distribution Distribution No. 385,638 360,849 31,108 9%
Transformers Transformers MVA 12,686 12,598 2,172 17%
Consumer Nos 15,160,243 10,371,200 3,242,446 31%
Energy Meters DTR Nos 377,120 331,082 32,665 10%
11 KV Feeder Nos 29,336 14,817 3,822 26%
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