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Future Of Power Sector In India

Switching on India: what’s next?

The power supplying system of India has undergone a massive transformation. The significant reforms brought in by the Government of India are solely responsible for this evolution. These reforms have led to creation of a single national power grid that boosted access to electricity in the sub-continent & promoted the dynamic growth of RenewableEnergy.

By 2040 the IEA predicts that India’s Power System will reach an installed capacity of ~1500 GW (World Energy Outlook 2019 Stated Policies Scenario). This will push the scale of India’s power market beyond the size of the EU’s synchronized grid, which connects around 1000 GW of installed generation across 27 countries. It as well brings it much closer to the size of China’s grid, which handled 2000 GW in 2019. The growth can be vouched on with the fact that the Power sector has seen around 64 billion dollars INR investment in India over the last 6 years. In fact, by 2030, India targets to reap 450 GW through renewable energy.

Question arises as to how close to practical is the goal?

Some of the Indian companies that contributed predominantly to this process are:

1. Tata Power
In January 2021, Tata Power received a letter of award (LOA) from Kerala State Electricity Board Limited (KSEBL) to develop a 110 MW solar project.

2. TOTAL
In January 2021, TOTAL acquired a 20% stake in Adani Green Energy. In addition, as a part of this deal, TOTAL undertook 50% of the 2.35 GW portfolio of operating solar assets in Adani Energy Limited. The combined deal amount was worth US $ 2.5 billion.

3. NTPC
In July 2021, NTPC announced that it would invest Rs. 2-2.5 crore (US$ 0.27-0.34 million) over the next 10 years to expand renewable capacity.

4. Adani Group
In September 2021, Adani Group announced to invest US$ 20 billion over the next 10 years in renewable energy generation and component manufacturing.

The industry is awaiting an affirmative nod for the Electricity Amendment Bill 2020, which the government announced in April to carry out fundamental reforms and improve the future visibility of the sector for potential investors. The creation of an Electricity Contract Enforcement Authority (ECEA), National Renewable Energy Policy, and privatization of DISCOMs by sub-licensing & franchisees are the important moves that the policy has proposed.

The Indian power sector is forecasted to attract investments worth $ 128.24-135.37 billion between FY19-23. The industry’s future looks bright since by 2026-27, the country’s power generation installed capacity will be close to 620 GW, of which 38% will be from coal and 44 percent from renewable energy sources.

While we at Lakewater Advisors are vouching on the positive inertia of the Power Supplying System of India in the upcoming years, let us know what are your views on the same in the comments section.

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