No clear roadmap
The outlook for thermal power generation market is not negative as India is still hugely underserved on electricity. The current limbo is caused by a sudden addition of about 100 GW in a five year period, driven by a policy of coal block allocation i.e., a rush encouraged by the premium from fuel shortages.
Positive for coal, marginally negative for solar, wind
In terms of impact of GST on the power sector, it is a mixed bag with the effect being positive for some and marginally negative for others. The reduction in tax rate on domestic coal will provide a relief to coal based power plants in the cost of power generation even after accounting for an increase in capital cost (due to higher tax rates in boiler, turbine, generator segment).
Replacement Market to Drive BTG Demand
While the government is bullish on capacity additions to meet the rising energy demand, the focus is clearly shifting from thermal to renewable energy. On one hand, the government is harping on the excessive capacity addition during the 12th Plan Period, on the other, it is taking a giant leap in building renewable energy capacity.
The country cannot do without conventional fuels
Following the Paris Agreement for environment, GoI has stopped permitting new boilers of smaller size less than 500 MW for public utility and is reluctant about giving permissions to refurbish old boilers of less than 500 MW capacity. This has affected the BTG market adversely.
Land valuations hit green field power projects
The major blow to the sector was the governments inability to pass the Land Acquisition Bill. In the current scenario, it is impractical to put up a power plant as the land value is at a much higher level. In the urban area, it costs four times more and in the rural it is higher by two times.
Given the fact that a significant quantity of coal will continue to dominate India´s energy generation, energy efficiency becomes vital. As per the thumb rule: higher efficiency in the generation of electricity means, lower consumption of coal per unit of electricity generated.
Topics that Power Today has covered over the past one year
This issue analysed the causes that led to the coal shortage and what the government´s response to that has been and which remedies can be explored. In addition, the IT in Power section covered the Perform Achieve and Trade scheme being implemented by BEE.
India has sufficient BTG capacity for future orders
ABB has maintained that this is a very tough market environment. We don´t see new projects happening as the government is slowly dealing with land and coal issues. But, we are cautiously optimistic for this year and are here to take this new upturn in the economy and the power sector.
12 GW of orders up for grabs
Despite gradual reduction over time, India still has a significant electricity demand and supply gap. Government of India (GoI) has been taking various positive steps to cater to the increasing demand of power in the country.