Power Distribution Outlook in India 2018 Evaluating Current Dynamics Amid Implementation of UDAY Scheme and Examining Sector s Outlook Basis Changing Power Procurement dynamics of Discoms E-REP Trends & Outlook Series July 2018 enincon consulting llp, 2018 Visit: httpss://enincon.com
Why enincon s report upon Power Distribution Outlook in India 2018 POSITIVE HEAD WINDS FOR DISCOMs AMIDST VARIOUS REFORMS AND LOWERING POWER TARIFF The distribution segment is in the most precarious situation in the electricity supply chain due to its interface with the public at large with different needs, expectations and varying degrees of capability to pay. The need to develop the segment was realised in the X Plan with emphasis on interventions to reduce the huge aggregate technical and commercial (AT&C) losses. Most important schemes, such as Accelerated Power Development and Reform Programme (APDRP) for urban areas and Rajiv Gandhi Grameen Vidyuthikaran Yojana (RGGVY) for rural areas, were initiated in the X Plan which aimed at bringing in investment and creating an efficient distribution infrastructure throughout the country. Further, Ministry of Power, GoI launched Ujwal DISCOM Assurance Yojana (UDAY) (which was approved by Union Cabinet on 5th November, 2015), envisaging Financial & Operational Turn around of Power Distribution Utilities (DISCOMs) of the country. The scheme of UDAY, arguably is turning out to be a saviour for most of the DISCOMs signed under it, with early signs of financial recovery being noticed. However, it won t be easy for the DISCOMs to absorb the mandate under the new PPA norms, which binds them not to abandon any PPA irrespective of the falling power tariff witnessed in the auctions of the renewable energy on the country. Although, to strike a balance between the arms of generation and distribution, this change in the PPA norm was quintessential but, it might further lead to financial constraints of the DISCOMs specially for the states like Bihar, Jharkhand, Jammu & Kashmir, Haryana and the North Eastern States. Further, with India s generation portfolio turning gradually to renewable preferred one, the existence of very business case for efficient operational and financial performance remains to be the biggest challenge addressable. Honouring the power purchase agreement based upon long term may evolve as the biggest risk for the discoms owing to the falling tariff observed in renewable portfolio and gaining parity with thermal sources.
In this regard the pace of network capacity addition track and the billing & metering efficiency track and holistic approach to uncover the other key operations and finances for the discoms for each state with an imperative of outlook assessment was long felt industry need. Metering Status Progress (Domestic Consumer Category) in Numbers and in Terms of Targeted & Achieved Growth (%age) for FY 16-17 For Northern Region Growth in Number of Consumers (Lakhs) NR- Total 334 Lakhs NR-Avg. Jammu & Kashmir Uttarakhand Haryana Rajasthan Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Uttar Pradesh Rajasthan 35.32% Haryana 18.73% Jammu & Kashmir 17.17% Uttar Pradesh 12.58% Uttarakhand 10.74% Exhibit Metering Status Progress in Northern Region in Terms of Targeted & Achieved Growth (%age) FY 16-17 Delhi being managed by private entities in terms of power distribution is being completed metered as of now, also in future it is anticipated it shall be able to achieve 100% metering in the said consumer category. Himachal Pradesh also witnesses 100% metering as per it s state level targets. However, Punjab lagged robustness in terms of data availability hence the exact metering status is not depicted here. Source: enincon research & analysis, MoP, State Discoms
Southern Region States Power Distribution Sector Performance Overview Best Performing States Average Performing States Poor Performing States TSSPDCL TSNPDCL HESCOM BESCOM MESCOM CESC KSEBL APSPDCL GESCOM APEPDCL TANGEDCO Exhibit* Tariff Revenue State Wise Performance & Contribution in National Mix by Southern Region *Note: Based on enincon s exclusive D2I model for True Power Assessment Rest of India Share 81.19% Southern Region State s Share 18.81% Tamil Nadu 5.47% Karnataka 4.87% Telangana 3.22% Andhra Pradesh 3.75% Kerala 1.47% Source: enincon research & analysis
BUSINESS CASE FOR POWER DISTRIBUTION OUTLOOK IN INDIA Attracted by proposed power sector reforms and India s potential, Italy s Enel Group is exploring the possibility of entering India s electricity distribution business Launch of USD 2.51 Billion Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) scheme for universal electricity access Government of India keen on promoting the separation of the carriage and content operations of existing discoms, with the onus now on the states to firm up their own road maps Focus on Direct Benefit Transfer (DBT) Scheme for better targeting of subsidies and separation of wire and supply operations India, likely to project an investment of USD 21.6 Billion in smart grid infrastructure within coming 9-10 years down the line REPORT INSIGHTS Evaluating opportunity for private players and franchising business into the Indian power distribution segment Examining state wise transformation capacity outlook in India till 2022 Intra state capacity expansion plans for states in India till 2022 Evaluating future case for power demand in India till 2022 Tracking open access transaction outlook in India till 2022 Studying impact and compatibility analysis of UDAY scheme on Indian power distribution sector Examining current dynamics of power distribution sector in India
KEY HIGHLIGHTS Structural overview of power distribution segment Parametric Evaluation of Operational Performance of Discoms Parametric Evaluation of Financial Performance of Discoms Tracking peak power demand-supply estimation and challenges thereof Tracking power distribution capacity trends Evaluating trends and outlook in distribution network, operations and financial set up for different states Tracking power distribution tariff structure of the states Tracking connected load and revenue breakup for discoms Tracking performance of discoms on the basis of implementation of various schemes
PRESS EXCERPTS The interest in the electricity distribution space has been picking up with India s clean energy firms such as ReNew Power Ventures Pvt. Ltd and Greenko Group looking at diversifying across the electricity value chain to derive better value Live mint To be sure, UDAY can smoothen the power offtake distribution process. But it cannot drive demand beyond a certain point. In fact, electricity generation continues to track the long-term trends generation till February this fiscal year (FY18) is up 4%, close to the 5%-plus growth seen in the decade from FY07 to FY17. Economic Times KEY QUERIES ADDRESSED What would be the impact of UDAY scheme on ailing DISCOM s situation in India? What is the status of power distribution tariff structure in India? What is the current status and trends in intra state network length? What would be the region wise status of capacity addition in the substations, transformation capacity in India? What would be the region wise status on metering and billing efficiency in India? What would be the region wise status of feeder segregation and demand & revenue breakup as per the consumers? What would be the outlook of power distribution sector in India till 2022?
MUST BUY FOR Government Power Distribution Companies Private Power Distribution Companies Power Distribution Franchisee State Electricity Boards Transmission Utilities Power Generation Companies Renewable Power Developers Power Research Institutes Other Research Firms Research Firms/Bodies/Institutes Industry Associations / Technical Consulting Group Financial Institutes Key Governing Bodies WHAT YOU CAN LEARN? A SNAPSHOT Power Distribution Sector in India An Overview Evaluating Current Dynamics of Power Distribution in India Power Distribution Capacity Track Network, Operations & Finances for Northern Region Power Distribution Capacity Track Network, Operations & Finances for Western Region Power Distribution Capacity Track Network, Operations & Finances for Eastern Region Power Distribution Capacity Track Network, Operations & Finances for Southern Region Power Distribution Capacity Track Network, Operations & Finances for North Eastern Region Power Distribution Sector Opportunity and Outlook Status Till 2022 For Northern Region Power Distribution Sector Opportunity and Outlook Status Till 2022 For Western Region Power Distribution Sector Opportunity and Outlook Status Till 2022 For Eastern Region Power Distribution Sector Opportunity and Outlook Status Till 2022 For Southern Region Power Distribution Sector Opportunity and Outlook Status Till 2022 For North Eastern Region Tariff Trends and Open Access Transaction Outlook in India Franchising Business Case & Privatization Outlook For Likely Discoms and States
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