No clear roadmap

Kameswara Rao, Partner, PwC

The equipment manufacturers still continue to be in a limbo as the thermal capacity addition has taken a back seat in India. In this scenario what is your take on the generation equipment market in India?
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. Once the market stabilises, I expect a healthy demand for thermal capacity set up to cater to growing base load power demand, maintain a safe reserve margin (25 per cent in New York, 30 per cent in Singapore) and to replace old units (18 per cent of coal-fired plants are over 25 years old and need replacement).

India has shifted its focus from the thermal to renewable energy, elaborate on the effect of this on the BTG market
India's power market is undergoing not one, but two major shifts v the first is primary growth of first time users, such as new rural connections, or new uses such as electrification of transport. The other shift is a change in energy mix from thermal to renewable energy. The size and impact of the former, in India, is much more than the latter (e.g., as the per capita income of rural households approaches that of urban areas, a base load generation capacity of 22 GW is needed).

Elaborate on the thermal capacity addition of the country for the next 10 years?
I expect the thermal power capacity to achieve a more stable and sustainable level that goes to meet our growing base load power demand, build a safe reserve margin and replace old units. In fact, with urbanisation, the pull from latter two will be stronger.

The challenge today is not a period of oversupply, which manufacturers are familiar with, but an uncertainty of next steps. The power equipment industry and utilities must work together with the government and regulators to frame and follow a clear and agreed power development plan.

What would be the key drivers of the BTG market in India?
The key drivers are the growing base load power demand, the need to build a safe reserve margin and equipment to replace old units.

What is the future outlook for the Indian BTG market over the next five years?
As India's power development plans are not adequately integrated with policy needs, they remain incremental. We will need a much larger power generation capacity if the plans are reoriented to supply the needs of s, the residential, commercial and industrial sectors. . This can be seen in case of China which added over 100 GW in each of last four years to supply its industries.

Would the Saubhagya Scheme revive the capacity addition in India? Or will it have more effect on the transmission and last mile capacity addition?
Saubhagya will require us to strengthen power generation capacity too. Rural households are switching from other fuels to electricity v for example, urban areas which spent 10 times more on electricity than rural areas in 1978, currently spend only 3.5 times more. As rural power supply becomes more reliable, with adequate generation, more people will switch to electricity, and y relying on thermal power generation.