India's Power Play: Analysing the Dynamics of India's Power Sector

Industry Trends and Dynamics

Surge in Investment: The power sector is poised to receive ₹17 lakh cr. in investments over the next 5-7 years, building upon the ₹20 lakh cr. invested in the past nine years. This influx of capital underscores the sector's growth potential.

Private Sector Dominance: As of 2023, the private sector generates 51.3% of India's electricity, surpassing the contributions of state governments (24.8%) and the central government (23.9%).

Diversified Energy Mix: India's power landscape is diversified, with a thermal power capacity of 243.21 GW including gas-powered and a renewable capacity of 183.48 GW as of FY23. The country's hydropower potential remains largely untapped, with only 29% of the 42.1 GW planned capacity completed so far. However, an additional 10.3% (15.02GW) is currently under construction. The nuclear power sector with an installed capacity is expected to reach 22.8 GW by 2031-32, up from the current 7.48 GW.

Thermal to stay: India maintains the second-largest coal plant capacity in the world, with its 237 GW of operating coal plant capacity representing more than a tenth of the world’s operating coal pants. As of FY23, thermal power accounts for 57% of the total power generation in India. According to Jefferies' estimates, the thermal capacity is expected to reach 303.2 GW in FY30 which will account for 46% of the total estimated capacity of 665.7 GW. In terms of power generation, thermal will dominate with a 70% contribution in FY30 and generate 1,824 BU (billion units) out of the FY30E total generation of 2,621 BU.

Emerging Power Hubs: While Chhattisgarh currently leads the country in operating coal capacity at 26.7 GW, Uttar Pradesh (25 GW) is making a strong push to overtake its counterpart, with 5.6 GW of proposed coal capacity  as of end 2024.

Figure: Coal Plant Tracker as of January 2024

Key Players in the Power Generation Industry

NTPC Limited: India's largest power generator, NTPC achieved its highest-ever generation of 400 BU in FY23. The company recorded an 83% increase in coal production from its captive mines in H1 FY24 compared to H1 FY23 and aims for 50% of its installed capacity to be based on renewable energy by 2032.

Adani Power Limited: With an installed capacity of 15.25 GW, Adani Power is the largest private thermal power producer in the country. Its subsidiary, Mahan Energen Limited (MEL), has proposed the expansion of its existing 1200 MW (2x600 MW) power plant in Singrauli, Madhya Pradesh, adding 1600 MW (2X800 MW) to the plant's capacity.

Tata Power Limited: Tata Power has an installed generation capacity of 14.29 GW across the globe (13.62 GW domestic, 487 MW international). The company's thermal power generation capacity stands at 8.86 GW (domestic + international), while generation through clean sources such as hydro, solar, and wind stands at 5.4 GW. Tata Power has a portfolio of 2.99 GW of solar generation capacity as of FY23 and over 4.5 GW of renewable energy under construction.

Torrent Power Limited: Torrent Power has a thermal power generation capacity of 3.09 GW and operates in the renewable energy segment with 787 MW capacity, taking the aggregate installed generation capacity to 4.11 GW. The company aims for a capex of INR ~9,000 Crs. over the next 5 years and plans to double its solar energy capacity of 263 MW and wind energy capacity of 920 MW in the next 5-7 years

Conclusion

India's power sector is poised for transformative growth, driven by a surge in investment, private sector dominance, and a diversified energy mix. The industry's robust thermal power capacity, ambitious renewable energy targets, and untapped potential in hydropower and nuclear power present a compelling investment outlook. Key industry players, such as Adani Power, NTPC, and Tata Power, are well-positioned to capitalize on these growth opportunities and shape the future of India's power landscape.