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Power Distribution Market in India 2018 Global Analysis, Opportunities and Forecast To 2023

Power Distribution -Market Demand, Growth, Opportunities and Analysis Of Top Key Player Forecast To 2022

PUNE, MAHARASHTRA, INDIA, April 20, 2018 / -- Power Distribution Industry


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Distribution infrastructure growth
• As of 2015-16, the aggregate distribution line length estimated by India Infrastructure Research stands at 9.28 million circuit km. Meanwhile, the transformer capacity stood at 633,190 MVA.
• The aggregate energy sales by the discoms is expected to be about 807,506 MUs.
• Besides, the year 2015-16 witnessed the lowest ever energy deficit of 2.1 per cent in over two decades.
• The peak deficit also mirrored a similar trend and stood at 3.2 per cent in 2015-16 as against 4.7 per cent in the previous year.
• The declining trend was fuelled by increasing generation and transmission capacity, a slump in industrial power demand and the subsequent poor offtake by discoms.

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Some improvement in discom finances
• Distribution utilities continue to reel in losses, though the amount of losses has reduced from Rs 696 billion in 2011-12 to Rs 534 billion (estimated) in 2015-16.
• Out of 52 discoms, 35 discoms were running into losses as of March 2015. Private discoms continue to fare better than their state-owned counterparts thereby highlighting the need to run discoms on commercial principles.
• Meanwhile, total income of discoms increased from Rs 2,816 billion in 2011-12 to Rs 4,613 billion in 2015-16 (estimated) – recording a CAGR of over 13 per cent. The year-on-year growth rate of total income stood at 7.7 per cent in 2015-16.
• Total expenditure too increased significantly from about Rs 3,814 billion in 2011-12 to Rs 5,428 billion in 2015-16 – recording a CAGR of over 9 per cent.
• Increase in expenditure is mainly due to a corresponding increase in’ power purchase costs which grew from Rs 2,684 billion to Rs 3,914 billion.
• Launched in November 2015, UDAY marked a promising start to rescue debt-laden state power discoms. Power discoms reported losses of Rs 600 billion and accumulated debt of Rs 4.5 trillion as of September 2015. During 2015-16, UDAY bonds aggregating Rs 1 trillion were issued by Uttar Pradesh, Rajasthan, Chhattisgarh, Punjab, Jammu & Kashmir, Jharkhand, Bihar and Haryana.

Government programmes provide necessary impetus
• The union government’s flagship programmes – the Integrated Power Development Scheme (IPDS) and the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) have provided the much needed impetus to the distribution sector.
• Under IPDS, which focuses on strengthening of sub-transmission and distribution networks, Rs 258.8 billion were sanctioned for 3,597 towns in 30 states and UTs as of September 2016.
• Go-live status has been achieved by 1,226 towns out of 1,405 towns covered under the “IT enablement” component, formerly known as the Restructured Accelerated Power Development and Reforms Programme of IPDS.
• Meanwhile, under DDUGJY, which focuses on quality power supply to rural areas through feeder separation, xx funds have been sanctioned and xx disbursed as of xxxx.
• Also, the increase in the pace of rural electrification under DDUGJY was a key positive during the year. Of the 18,452 un-electrified villages as of April 2015, 55 per cent have been electrified under the scheme and the remaining 7,692 villages are targeted to be electrified by May 2018.

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Tariffs rise but competitive bidding scenario still bleak
• Although retail supply tariff revisions have been more regular since 2011 following the Appellate Tribunal of Electricity’s directive, political interference still affects tariff determination process as poll-bound states refrain from increasing tariffs.
• In the year 2016-17, the average tariff hike o discoms ranged around 5 per cent. Notably, most states did not increase their tariffs as specified under UDAY MoU, casting a shadow over the scheme’s ability to turnaround discom finances.
• The gap between average cost of supply (ACS) and average revenue realised (ARR) stod at Rs 1.08 per kWh in 2014-15, down from Rs 1.27 per kWh in 2012-13.
• Also, In the wake of increasing generation and low demand, the pace of long term power procurement through competitive bidding has slowed down.
• While no new Case-II bids have been invited since the scrapping of Cheyyur and Bedabahal ultra mega power project’s bidding process in January 2015, only three states including Kerala (KSEB Limited), Andhra Pradesh and Delhi (TPDDL) finalised case-I bids since December 2014.

Operational performance and metering
• The aggregate technical and commercial (AT&C) losses of discoms have increased from 22.58 per cent in 2013-14 to.24.62 per cent in 2014-15.
• For 2015-16, AT&C losses of 49 discoms tracked by India Infrastructure Research ranged from 2.31 per cent (India Power) to 58.82 per cent (JKPDD).
• Accounting of sold energy through metering is the first step to arrest these losses. Though metering coverage across industrial, domestic and commercial categories stands over 90 per cent in most states, agricultural metering lags at 40-50 per cent.
• Meanwhile, certain utilities like Tata Power Delhi Distribution Limited have adopted smart metering initiatives, many other utilitiesh have planned the same.
• Other metering options such as pre-paid and net metering initiatives have also picked pace in many states.

Future outlook
• As per India Infrastructure Research estimates, distribution line length is expected grow from 9.78 million ct km in 2016-17 to 11.68 million ct km in 2020-21.
• During the same period, transformer capacity is likely to increase from 718,924 MVA to 1,127,076 68 MVA.
• The number of meters required is expected to grow from 14.89 million in this period.
• Meanwhile, a capex of Rs 594 billion is planned by 39 discoms tracked by India Infrastructure Research.
• Also, the roll out of National Smart Grid Mission and launch of new pilot projects were key developments on the smart grid front. The discoms are slowly yet steadily towards implementation of advanced metering infrastructure, distribution management system, demand response, etc.

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Norah Trent
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