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Trends and Forecast on Merchant Power Market in India
     Published : December  - 2013  | Format : Electronic PDF  | Pages : 80
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Trends and Forecast on Merchant Power Market in India

"Trends and Outlook on Merchant Power Market in India" is an indispensable source of information on the evolution of merchant power plant and its market in India and how it is expected to change in the times to come. The structural changes that was announced in the Electricity Act 2003, made setting up Merchant Power Plant in India as an attractive business proposition but ever since CERC intervened to cap the prices of spot electricity, the overall business risk - reward scenario of the sector has tilted towards risk side for the merchant power plant. Report does a status check on the overall capacity that was planned and the actual capacity of merchant power that got commissioned till date, structural changes that was suppose to push growth in the sector and overall outlook on the merchant power sector in India. The report provide statistics, policy analysis, case studies on successful MPP projects, provides projection on planned MPP projects and merchant power prices.

  • In India, Electricity Act 2003 paved the way for greater private participation in the power sector. Since then the share of private players in India's power sector has risen significantly. During the 8th  Five Year plan (FYP), private players share was mere 8.7%, which rose considerable to about 31% during the Eleventh FYP. This again is further expected to rise in 12th FYP. Notwithstanding the positive demand outlook, the risk profile of IPPs have also increased appreciably over the last one year period. Especially for those operating under MPP model.

  • Merchant Power Plants in India are braving tough times in India where falling merchant prices are challenging the business viability and fuel crunch and escalating cost of operations are acting as a non avoidable trap for the merchant power investors. Recently GMR, Lanco were pushed by Andhra Pradesh Government to go PPA route as they were using regulated price of $4.2 per mmbtu from the K-G basin which is falling drastically leading to speculations that these plants would come to almost grinding halt. This can be called more of an arm twisting tactics wherein developers may to give in for surviving.

  • The Government seems to be doing a step brotherly treatment to these private investments that came to save the sinking power situation in India; government recently ruled out coal and gas supplies to MPPs at a time when spot rates that have touched extremes of Rs 1.20 and Rs 19 per unit. CAG also expressed its reservation on companies with captive coal block using cheaper coal to gain wind fall profit through merchant sale and advised that captive coal block owner to sign PPA for power generated using the captive coal. The coal ministry has barred companies from selling cheaper captive coal-generated electricity in the merchant market at arbitrary prices and mandated these companies enter into long-term power purchase agreements (PPAs) with distribution companies. The ministry’s move is likely to companies, including Jindal Power and its parent company, Jindal Steel and Power, Tata Power, GVK Power, Adani Power, JSW Steels, Hindalco Industries, Bhushan Power and Steels and Balco, which have been allocated captive coal blocks to meet fuel requirements of their independent power projects that has sizeable merchant power projects.

  • To understand the current and future industry dynamics, report “Trends And Forecast on Merchant Power Plants In India” aims to capture key trends that shaped the MPP market in India. Report will analyze key capacity additions trends upto 2013 by technology, year, state and player wise. Dynamics of open electricity market in India, trend in spot electricity market price trends, impact of seasonal variations, role of trading licensees and power exchanges. Key issues and challenges including fuel shortage, volatility in merchant tariffs, risk to viability of business models, weak financial position of discoms are also discussed and various strategies to de-risk  these issues are also analyzed. The report will forecast likely future capacity addition trends of MPPs till 2017, emerging market structure that may act as a savior and revive sluggish MPP market, including open access policies and future trends expected in spot electricity prices. Lastly risk profiling of key upcoming coal plants of all IPP and MPPs will be done basis three parameter: fuel linkage, technology used and water availability. This report will infer on whether MPPs will flourish in India or will the model hit a dead end soon given the slow pace of power reforms that will pave way to total open market where price is discovered through market mechanism and consumer are empowered to choose their desired supplier for power.
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