Power Generation Sector in India:Transformation of Power Generation Sector, Evolving Regulatory Framework, Tracking Opportunity & Changing Risks

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  • August, 2019
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Power sector being the key corner stone for infrastructure growth and sustainable development of country, Government of India has been bringing in policy amendment to facilitate investor confidence and stake holder satisfaction of all the facets of the power sector. As of September 2018, a draft amendment to Electricity Act, 2003 has been introduced. It discusses separation of
content & carriage, direct benefit transfer of subsidy, 24*7 Power supply is an obligation, penalisation on violation of PPA, setting up Smart Meter and Prepaid Meters along with regulations related to the same. Scheme like, SAUBHAGYA and SHAKTI have been introduced to strengthen Power Generation sector of India.

The Government of India has released its roadmap to achieve 175 GW capacity in renewable energy by 2022 and based on execution trend since last 4 year, industry is seeking to revise the target to around 227 GW. Further, it is anticipated that, coal-based power generation capacity
in India, which currently stands at 190.29GW is expected to reach around 400 GW by 2040. Energy deficit of the country ahs reduced to 0.7 percent in FY 18, from 4.2 percent in FY 14.
However, post RBI notification dated 12th February 2018, vis-à-vis resolution of stressed assets many large power projects might turn NPAs. Around 40 GW project capacity are stressed as of now, out of which around 15 GW are yet to be commissioned. While it poses a severe threat
to power as well as banking sector of the country, it also offers huge opportunity for new investments by FIIs and big corporate houses with deep pocket to acquire the stressed asset at lower costs and make it profitable in long run. In November 2018, Renascent Power Ventures
Pte Ltd acquired 75.01 per cent stake in Prayagraj Power Generation Company Limited (PPGCL) for US$ 854.94 million. With declining bid price in renewable projects also, merger and consolidation is the way forward. In August 2018, Kohlberg Kravis Roberts & Co (KKR) acquired
Ramky Enviro Engineers Limited for worth US$ 530 million. In April 2018 ReNew Power made the largest M&A deal by acquiring Ostro Energy for US$ 1,668.21 million.

SNP Infra Research has conducted exhaustive primary and secondary market surveys to project the inherent opportunity of power generation sector participants of India. In this report we aim to analyse the changing dynamics of conventional as well as renewable power generation sector as well as inherent opportunity it offers to the industry players at a large. We have forward looking view on power generation sectors in India to shape future business strategies and government enablement in the sector. This report also discusses about past trend of
investment in power segment and extrapolated future investment outlook in respective sectors. We have also tracked open access regulation amendments, State Wise Open access charges and losses applied to renewable developer and projected the potential (MWs and INR Crs)
of open access projects in renewable sector.

Key Takeaways
• Market Size and Business Opportunity in Indian Conventional Power Sector (Green Field Project and Modernisation and Expansion Plant)
• Stressed Power Project in India and InherentOpportunity (in INR Billion )
• Stressed Asset Categorization vis-à-vis PPA, FSA tie up status, Construction Status, Delay in Financial closure and insufficiency of equity and working capital
• Opportunity for Renewable Power project (227 GW) and Changing Dynamics 
• Introduction of GST and its Impact on Renewable Projects
• Opportunity of Open Access projects in Renewable Sector and State wise tracker of open access charge and losses
• Tune of Opportunity for EPC Contractor, Project Developer and Equipment Supplier.
• Best Investment Destination for Solar and Wind projects
• Financing Solution for Green Field Projects
• Financing Solution for Acquisition of Stressed Assets

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