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Monday, November 9, 2009

INDIA needs HUGE Funding

Monday, 09 Nov 2009

USD 250 billion investments needed in power sector - Study
Monday, 09 Nov 2009
According to a CII AT Kearney Study on Sustaining Growth Future of Indian Power Sector, about USD 250 billion investments would be needed in the power sector over the next 8 to 9 years. The study highlights the emerging opportunities and challenges in the future power markets.The Indian power market is evolving rapidly from a nascent/ opening market phase to a developing phase. The power demand in the base case is expected to grow at a steady 7.5% to 8% CAGR till 2017. Further the low power penetration levels indicate large latent/unmet demand. The power markets will have to achieve consistent high growth rates to bring our per capita consumption to comparable levels of some of the other developing countries like China and Brazil.Mr Sudhir Trehan chairman of CII India Energy Conclave & Energy Expo and MD of Crompton Greaves said that "The emerging dynamics of the Indian power market would require industry players to realign their strategies and operating models to the changing sectoral trends". He added that "The focus would need to be both on project execution as well as efficient operations, in line with the 'growth' characteristics of the sector.”Mr Kaustav Mukherjee AT Kearney Partner said that "A new era of Power on Power competition will emerge by the year 2014 that will bring in at least 80 to 85 GW of new capacity 80% to 90% of them thermal units targeting high PLF of 80% to 95% reducing the base load deficit to a low of 1% to 2%.”Mr Mukherjee added that "Accordingly, we expect pricing pressures in the generation space and a 40% to 50% decline in average short term/merchant prices by 2014-15.”The Report highlights new business opportunities will arise across the value chain. Gas, Hydro and Nuclear energy will renewed interests and growth in addition to coal, which will continue to be the dominant generation fuel.Renewables will strengthen its role in the sector: Wind energy will continue to grow at 15% to 20% pa with new opportunities in offshore capacities and large capacity turbines. Government incentives will open up opportunities for solar farms/distributed generation as well as PV manufacturing.However constrained fuel supplies present a major threat to the sector's growth As per current trajectory, India, in spite of substantial reserves, is expected to confront a supply deficit of ~25% of domestic coal by 2014. Similarly, there will be a seven fold increase in uranium requirement for meeting nuclear power ambitions of India.Distribution, financing and manpower are other concerns that require immediate attention High AT&C losses and slow rate of discom reforms will hurt the industry in the last mile. Financing may also present a challenge to industry growth. About USD 250 billion investments will need to be undertaken in the power sector in the next 8 to 9 years to fuel the planned growth. Similarly, over 150,000 additional skilled and semi skilled personnel required over the next 5 to 7 years.(Sourced from


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