 India is the third largest producer and the third largest consumer of electricity in

the world.
 It also has the fifth largest installed capacity in the world. India's power sector
has made significant inroads over the last decade, growing its installed
capacity from 200 GW in FY12 to 388 GW in FY21.
 In terms of ownership mix, the private sector contributes 48.1% of India’s
installed capacity. This proportion has increased from 27.2% in FY12 owing to
continued strong growth in demand and initiatives of the government to
encourage private sector participation in power generation.

INSTALLED GENERATION CAPACITY (SECTOR WISE) AS ON 31.08.2021

Sector MW % of Total

 A Central
l Sector
t h o 97,637
u g h 25.2% t h e

State Sector 1,03,921 26.8%

Private Sector 1,86,576 48.1%

Total 3,88,134 100 %

India still faces challenges to meet the growing demand for power as reliable
supply remains low in the country. The plant load factor (PLF) has declined
significantly from 78% in FY10 to 53% in FY20. Low PLF means the thermal
plants have been lying idle, which could be due to non-availability of fuel,
surplus capacity, or lower off-take.
 In terms of fuel mix, 52% of the total installed capacity, and 76% of the total
generation is thermal, indicating India’s dependence on conventional fuel
sources. Coal-fired (including lignite) thermal power plants account for more
than 55% of the total installed capacity. While new coal-based power plants
are more efficient, with higher flexibility and lower emissions, old coal-based
power plants are highly inefficient, requiring expensive retrofits to comply with
increasingly stringent environmental standards.
 In terms of ownership mix, the private sector contributes 46.8% of India’s
installed capacity. This proportion has increased from 27.2% in FY12 owing to
continued strong growth in demand and initiatives of the government to
encourage private sector participation in power generation.
 Demand for electricity is on the rise as India’s economy gains in global
importance. Various factors contributing to the rising per capita consumption,
include the improvement of electrification in villages, GDP growth and general
economic activity, and growth in consumer electronic device penetration.
 Over the past few years, India has made substantial progress in the renewable
energy sector on the back of conducive policy environment, government support,
steady inflow of capital, introduction of latest technologies and several fiscal
policy incentives. It has also taken positive strides towards meeting the United
Nations (UN) Sustainable Development Goals, especially Goal 7, of ensuring
that everyone has access to affordable and clean energy.
 The Government has allowed 100% FDI in the power segment and renewable
energy segment to facilitate easy transfer of capital and technology. Total FDI
inflows in the power sector reached US$ 15 billion during April 2000 to March
2020, accounting for 3.5% of total FDI inflows in India.

HOW TO RESEARCH THE POWER SECTOR (KEY POINTS)

 Supply
 Reliable supply remains low in the country. The energy deficit is significant in
union territories such as Jammu & Kashmir and the North-Eastern States. Also,
states like Chhattisgarh, Odisha, and Uttar Pradesh continue to face peak deficit
despite having significant energy generation capacity.
 Demand
 Demand for power has seen an upward trend in recent years. It is expected that
it will continue on the same trajectory due to economic development, rapid
urbanization, growing appliance ownership, and thrust towards rural
electrification.
 Barriers to entry
 Barriers to entry are high, especially in the transmission and distribution
segments, which are largely state monopolies. Barriers include high fixed costs,
fuel linkages and payment guarantees from state governments that buy power
and retail distribution license.
 Bargaining power of suppliers
 Small number of suppliers enjoy monopoly, thereby contributing to the supplier
power. However, bargaining power is not very high since the tariff structure is
mainly regulated.
 Bargaining Power of Buyers
 Low. Even though switching costs are low and electricity is an undifferentiated
product, customers don’t tend change their source of electricity often.
 Competition
 Low, as there are a smaller number of players. Shortage of inputs such as and
natural gas and regulatory hurdles has dissuaded new entrants.
 Threat of Substitutes
 Low. The cost of switching to substitutes like solar, wind energy etc. is high.

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FINANCIAL YEAR '20

 The installed power generation capacity in India as on FY20 stood at 370

Gigawatts (GW), marking an increase of 14 GW on a YoY basis. Continuing the
previous year’s trend, the capacity addition was led by Renewable Energy
Segment (RES), which added 9.4 GW capacity. The net capacity addition in
the Thermal segment witnessed a marginal pickup for FY20 at 4.3 GW
compared to 3.4 GW in FY19.
 Within the RES segment, solar energy contributed 6.5 GW of the capacity
addition, wind contributed 2.1 GW with others filling the rest. RES installed
capacity has seen a big leap in the past few years, with a CAGR of 17.3%
from FY16 to FY20.
 All-India Thermal plant load factor (PLF) for FY20 stood at 56%, down from
61.1% in FY19, primarily due to a decline in State and Central PLFs. Thermal
PLF for the Central sector stood at 64.2% compared to 72.6% in FY19.
Thermal PLF for the State sector stood at 50.2% compared to 57.8% in FY19.
Thermal PLF for the Private sector declined marginally YoY to 54.3% from
55% a year ago.
 Hydropower generation increased significantly by 15.7% YoY due to better
water availability, especially in the Northern region. RES power generation
increased 9.1% YoY to 138 BUs from 127 BUs in FY19, led by robust capacity
additions.
 In FY20, the demand for power in India grew by 1.3%YoY. The subdued power
demand growth was due to the twin headwinds of overall weakness in
economic activity and Covid-19 related impact towards the end of the year.
 Peak power demand touched an all-time high of 184 GW in FY20, an increase of
3.8% YoY. The Northern region saw the highest increase in demand by 3.2%
YoY, followed by the Southern region where demand rose by 1.5% on a YoY
 basis. The Eastern region witnessed a modest growth of 0.3% on a YoY basis,
while the North Eastern and Western regions saw a fall in demand by 0.4%
and 0.6%, respectively.
 In FY20, the Government issued guidelines to all States to convert all existing
consumer meters into Smart meters in prepaid mode, which would allow
consumers to pay as per their own convenience and consumption requirements,
to bring efficiency in power distribution by arresting high losses for DISCOMs.
 EESL (a joint venture of central PSUs) is pioneering this Smart Meter National
Programme to convert around 250 million conventional meters into smart
meters. By January 2020, more than 900,000 smart meters were installed in
Uttar Pradesh, Haryana, Bihar, NDMC-Delhi and Andhra Pradesh.
 Under the Ujjwal DISCOM Assurance Yojana (UDAY) scheme, 16 states issued
bonds covering approximately 86.3% of the total debt taken by them, resulting in
a significantly low cost of finance for those DISCOMs. As a result, Aggregate
Technical & Commercial (AT&C) losses reduced to 19% in FY20 as compared
to 20.7% in FY16.
 The volume of power traded at the Indian Energy Exchange (IEX) witnessed a
flattish trend in FY20. Volume on IEX for FY20 stood at 49 BUs compared to
50 BUs in FY19. The average merchant tariff fell 22% YoY to Rs 3 per
Kilowatt hour (kWh) from Rs 3.9 per kWh in the previous fiscal.
 India's domestic coal consumption from Coal India (CIL) and Singareni
Collieries Company (SCCL), India’s largest coal miners, stood at 644 MnT in
FY20, 5% lower than the previous year, with 80% being consumed by the
power sector.
 The total coal consumption in India stood at 972 million tonnes (MnT) in FY20,
with a growth rate of 0.3%YoY. Of the total coal consumption, 729 MnT came
through indigenous production, with the balance being imported.

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PROSPECTS

 While India’s population comprises of 20% of the global population, the energy
consumption is mere 6% of the world’s primary energy consumption. Even
though the energy consumption in India has more than doubled since 2000, the
potential for further growth in the consumption of power is significant.
 As per the IMF forecast, India is expected to remain one of the fastest-growing
major economies in the world in the near future. With overall socioeconomic
 development and ambitious plan of electrification of every household, demand
for power is expected to rise consequently.
 Rapid urbanization, infrastructure development and need for power assurance
for all will continue to drive the demand for power. While the power deficit of
the country continues its declining trend, the power generation business is
expected to grow owing to the government’s significant emphasis on key
segments such as healthcare, infrastructure and commercial real estate.
 The Central Electricity Authority (CEA) expects India’s electricity requirement
(demand plus transmission and distribution losses) to reach 1,566 TWh (peak
demand 226 GW) by FY22 and increase to more than 2,047 TWh in FY27 (peak
demand 299 GW). This would require investment in capacity additions of more
than US$ 304 billion.
 On the policy and regulatory front, the Government and Regulatory bodies
continue the reform process for improvement in efficiency in various aspects
of power supply. The Government of India announced that Ujjwal DISCOM
Assurance Yojana (UDAY) scheme in November 2015 to financially turnaround
and revive electricity distribution companies (DISCOMs) of India with an intent
to find a permanent solution to the financial stress that the power distribution
sector was facing.
 The NEF (Interest Subsidy) Scheme was also approved by the Government to
promote capital investment in the distribution sector. NEF Scheme has the
provision to provide interest subsidy for a period of 14 years on loans availed
by distribution utilities in both the public and private sectors.
 With respect to ensuring supply across the country, the government launched the
“Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA)” in 2017 to
achieve universal household electrification in the country.
 It also announced the SHAKTI Scheme to centralize the process of allocating coal
to thermal power plants. According to the policy, power companies will have to
get their Power Purchase Agreement (PPAs) amended within 45 days to
factor in the lowered cost of coal attained after bids.
 Technological advances and reducing capital costs have progressively made
Renewable Energy commercially attractive and more affordable than Thermal
power. Power capacity addition in India is expected to be primarily driven by the
Renewable Energy Segment. The Government of India has targeted to achieve
175 GW capacity by 2022, comprising of 100 GW Solar, 60 GW Wind, 5 GW
Small Hydro and 10 GW Bio-power (including biomass).
 The Green Energy Corridor Project aims to facilitate the integration of large
scale renewable energy capacity addition in the power grid. Under the Union
Budget 2019-20, the Government of India has allocated Rs 5 billion to
increase the capacity of the Green Energy Corridor Project along with Rs 9.2
billion for wind and Rs 30 billion for solar power projects.
 To overcome land acquisition and connectivity issues, solar parks have been
designed as a crucial tool for ensuring continued solar PV deployment. While
these have experienced some delays compared to the original schedules,
their smooth implementation will be critical for a ramp-up in solar power
capacity in India.
 The Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) has also
been launched by the Government of India in 2019 under which farmers can
install solar panels to power water pumps and also sell the excess power
generated to DISCOMs. The scheme entails setting-up of about 26 GW of solar
capacity by 2022 with a total central financial support of Rs 344 billion.
 With many bilateral nuclear agreements in place, India is expected to become a
major hub for manufacturing nuclear reactors and associated
components. Foreign participation in the development and financing of
generation and transmission assets, equipment supply and technology
collaboration in nuclear and clean coal technologies is also expected to
increase.

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FAQS ON THE POWER SECTOR

How has the power sector performed in the past decade and when is a good time to
invest in the sector?

The power (utilities) sector has provided investors healthy returns in certain time
periods during the past decade but overall, the performance of the sector has been
underwhelming.

As the demand for power is closely linked to the economy, power stocks are usually
riskier - their fortunes are prone to economic booms and busts. For this reason, they
are often called cyclical stocks. Generally considered an offensive tactic in investing,
cyclical stocks can be used to generate high returns when the economy is doing
well.
Therefore, the best time to buy such stocks (power stocks) is at the start of an
economic expansion, when capacities are undervalued and the best time to sell
them is just before the economy begins to slow down.

To know more about the sector's past and ongoing performance, have a look at the
performance of the NIFTY Energy Index and BSE Utilities Index
Where can I find a list of power stocks?

The details of listed power companies can be found on the NSE and BSE website.
However, the overload of financial information on these websites can be
overwhelming.

For a more direct and concise view of this information, you can check out our list of
power stocks.
Which power stocks were the top performers over the last 5 years?

Power Grid Corporation of India was one of the top performers over the last 5 years
in terms of sales and profit growth.
Power Grid Corporation of India' performance derives strength from the majority
ownership by the Government of India (GoI), the company's pivotal role in the Indian
power transmission sector and its low-risk business having a cost-plus-tariff structure
for majority of its projects. The company's high operating efficiency, strong project
execution skills, and adequate liquidity position have also boosted its performance.

To know which other companies performed well over the last 5 years, check out
our entire list of top performers.
What kind of dividend yields do power stocks offer?

There is no consistent trend of dividends across the industry, with different

companies having different dividend policies.

For more details, check out our list of top power stocks offering high dividend yields.
Which are the power stocks with the highest return on capital employed (RoCE)?

Return on capital employed (ROCE) is a financial ratio that can be used in assessing
a company's profitability and capital efficiency by determining how well the
management is able to allocate capital for future growth. An RoCE of above 15% is
considered decent for companies that are in an expansionary phase.

Tata Power is one of the top power stocks right now on the Return on Capital
Employed (RoCE) parameter.
To know which other power stocks offer great return on capital employed, you can
check out the top power stocks offering the best RoCE here.
Which are the best power stocks to invest in currently?

Investing in stocks requires careful analysis of financial data to find out a company's
true worth. However, an easier way to find out about a company's performance is to
look at its financial ratios.

Two commonly used financial ratios used in the valuation of stocks are -

 Price to Earnings Ratio (P/E) - It compares the company's stock price with its
earnings per share. The higher the P/E ratio, the more expensive the stock.
To find stocks with favorable P/E Ratios, check out our list of power stocks
according to their P/E Ratios
 Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to
its book value. A high P/BV indicates markets believe the company's assets to
be undervalued and vice versa.
To find stocks with favorable P/BV Ratios, check out our list of power stocks
according to their P/BV Ratios

Resources on the Power sector

 Identifying a Power stock: Do's and Don'ts

 List of Power Stocks
 Power Sector - Over The Years
 Power Company Quarterly Results

Power Sector at a Glance ALL INDIA

Updated on 20-09-2021
Source: OM SECTION

1.Total Installed Capacity  (As on 31.08.2021) - Source : Central Electricity Authority (CEA)

Sector MW % of Total
INSTALLED GENERATION CAPACITY (SECTOR WISE) AS ON 31.08.2021

Central Sector 97,637 25.2%  

 
State Sector 1,03,921 26.8%

Private Sector 1,86,576 48.1%

Total 3,88,134  100 %

 

Installed GENERATION CAPACITY(FUELWISE) AS ON 31.08.2021

CATAGORY INSTALLED % of SHARE IN Total

GENERATION
CAPACITY(MW)

Fossil Fuel 2,34,858 60.9%

Coal 2,02,805 52.6%

Lignite                        6,620                              1.7%

Gas 24,924 6.5%

Diesel 510 0.1%

Total Fossil Fuel 2,34,258 60.4%

Non-Fossil Fuel    

Hydro 46,412 12.0 %

Wind, Solar & Other RE 1,00,683 25.9 %

Nuclear 6,780 1.7%

Total Non-Fossil Fuel 1,53,876 39.6%

Total Installed Capacity 3,88,134 100%

(Fossil Fuel & Non-Fossil Fuel)

Policy Initiatives / Decision Taken

Electricity Act 2003 has been enacted and came into force from 15.06.2003. The objective is to
introduce competition, protect consumer’s interests and provide power for all. The Act provides for
National Electricity Policy, Rural Electrification, Open access in transmission, phased open access in
distribution, mandatory SERCs, license free generation and distribution, power trading, mandatory
metering and stringent penalties for theft of electricity.
It is a comprehensive legislation replacing Electricity Act 1910, Electricity Supply Act 1948 and
Electricity Regulatory Commission Act 1998.The Electricity Act, 2003 has been amended on two
occasions by the Electricity (Amendment) Act, 2003 and the Electricity (Amendment) Act, 2007. The
aim is to push the sector onto a trajectory of sound commercial growth and to enable the States and
the Centre to move in harmony and coordination.

Performance of Generation from All Sources

1.0 PERFORMANCE OF GENERATION FROM THERMAL, HYDRO, NUCLEAR & BHUTAN

IMPORT

1.1 The electricity generation target of thermal, hydro, nuclear & Bhutan import for the year 2021-
22 has been fixed as 1356 Billion Unit (BU). i.e. growth of around 9.83% over actual generation
of 1234.608 BU for the previous year (2020-21). The generation from above categories during
2020-21 was 1234.608 BU as compared to 1250.784 BU generated during 2019-20,
representing a negative growth of about 1.29%.

1.2 Total Generation and growth over previous year in the country during 2009-10 to 2021-
22 :- 

Total Generation
Year % of growth
(Including Renewable
Sources) (BU)

2009-10 808.498 7.56

2010-11 850.387 5.59

2011-12 928.113 9.14

2012-13 969.506 4.46

2013-14 1,020.200 5.23

2014-15 1,110.392 8.84

2015-16 1,173.603 5.69

2016-17 1,241.689 5.80

2017-18 1,308.146 5.35

2018-19 1,376.095 5.19

2019-20 1,389.102 0.95

 Total Generation
Year % of growth
(Including Renewable
Sources) (BU)

2020-21 1,381.827 -2.49

2021-22 * 641.111 15.21

* Upto Aug 2021 (Provisional), Source : CEA

1.3 The electricity generation target of Conventional Sources for the year 2021-22 was fixed at
1356 BU comprising of 1155.200 BU Thermal; 149.544 BU Hydro; 43.020 Nuclear; and 8.236 BU
Import from Bhutan.

2.0 Plant Load Factor (PLF):

2.1 The PLF in the country (Coal & Lignite based) from 2009-10 to 2021-22 is as under:

PLF Sector-wise PLF (%)

Year
% Central State Privat

2009-10 77.5 85.5 70.9 83.9

2010-11 75.1 85.1 66.7 80.7

2011-12 73.3 82.1 68.0 69.5

2012-13 69.9 79.2 65.6 64.1

2013-14 65.60 76.10 59.10 62.10

2014-15 64.46 73.96 59.83 60.58

2015-16 62.29 72.52 55.41 60.49

2016-17 59.88 71.98 54.35 55.73

2017-18 60.67 72.35 56.83 55.32

2018-19 61.07 72.64 57.81 55.24

2019-20 55.99 64.21 50.24 54.64

2020-21 53.37 61.78 44.68 54.27

 2021-22* 58.42 68.95 50.74 56.53

* Upto Aug 2021 (Provisional), Source : CEA

3.0 Power Supply Position

The power supply position in the country during 2009-10 to 2021-22 : 

  Energy Peak

Requiremen Surplus(+)/ Peak

Availability Peak Met Surplus(+) / Deficts(-)
t Deficts(-) Demand
Year

(MU) (MU) (MU) (%) (MW) (MW) (MW) (%)

2009-
8,30,594 7,46,644 -83,950 -10.1 1,19,166 1,04,009 -15,157 -12.7
10

2010-
8,61,591 7,88,355 -73,236 -8.5 1,22,287 1,10,256 -12,031 -9.8
11

2011-
9,37,199 8,57,886 -79,313 -8.5 1,30,006 1,16,191 -13,815 -10.6
12

2012-
9,95,557 9,08,652 -86,905 -8.7 1,35,453 1,23,294 -12,159 -9.0
13

2013-
10,02,257 9,59,829 -42,428 -4.2 1,35,918 1,29,815 -6,103 -4.5
14

2014-
10,68,923 10,30,785 -38,138 -3.6 1,48,166 1,41,160 -7,006 -4.7
15

2015-
11,14,408 10,90,850 -23,558 -2.1 1,53,366 1,48,463 -4,903 -3.2
16

2016-
11,42,929 11,35,334 -7,595 -0.7 1,59,542 1,56,934 -2,608 -1.6
17 

2017-
12,13,326 12,04,697 -8,629 -0.7 1,64,066 1,60,752 -3,314 -2.0
18
   Energy Peak

2018-
12,74,595 12,67,526 -7,070 -0.6 1,77,022 1,75,528 -1,494 -0.8
19

2019-
12,91,010 12,84,444 -6,566 -0.5 1,83,804 1,82,533 -1,271 -0.7
20

2020-
12,75,534 12,70,663 -4,871 -0.4 1,90,198 1,89,395 -802 -0.4
21

2021-
4,66,241 4,64,800 -1,441 -0.3 2,00,931 2,00,570 -361 -0.2
22*

* Upto Aug 2021 (Provisional), Source : CEA

Generation (Billion Units)

Generation Growth (%)

   

https://powermin.gov.in/en/content/power-sector-glance-all-india

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