India’s power generation has touched 228 GW in September 2013, with contribution of 90 GW from the state government projects, 65 GW from the Central Government projects and 73 GW from private sector projects.
India could be among the world’s largest markets for supply of equipment & component for power generation, in near future. Most of these equipments & components are directly or indirectly related to steel industry.
Attractive opportunities are available for Indian suppliers in various areas for supply of key components of manufacturing. The areas includes heavy steel fabrication, typical iron castings, critical forging components, special steel pipes, alloy plates, balance of plant equipment, electrical grids, electrical instrumentation and other EPC services including civil constructions related power plant projects.
As on priority, Government eyes aggressively focuses on Power sector to meet the gap between the Power generation and their supply. Owing to policy paralysis on various fronts in past, Government plan seems to have taken a hit. Recent clearance of INR 1,850 billion projects by Prime Minister is the best example to get rid of such policy paralysis. Nevertheless, the indications are that good days are ahead.
Government’s efforts to improve Power generation capacity & related transmission, distribution facilities and fuel-handling capacities, will create substantial opportunities for equipment and EPC suppliers. This segment of the value chain will offer an annual boost up of around INR 600 billion. Striking opportunities will emerge across a range of products & services in four areas i.e. machinery, renewable energy, distribution & EPC.
Machinery: As new Power plants sets up, the shortage of significant components such as heavy castings & forgings, pressure parts and balance of plant equipment, will become even more distinct. Suppliers who can help bridge this shortfall in capacity by offering short delivery periods, precise quality and locking in customer contracts can grow rapidly. On the other hand, existing players can capture some value by improving asset productivity.
Renewable: Renewable energy has witnessed rapid growth in India from 7.8% in FY08 to 12.3% in FY13, particularly in wind power, solar power and biomass. Over the next 10 years, India will focus on developing & deploying its solar energy yields is likely to increase substantively. Manufacturers of solar technologies will get benefit from this, as their counterparts in the wind energy segment. India will offer a dual opportunity to solar players—as a market, and as a low-cost centre for technology development & manufacturing. Biomass is also an appropriate technology option for rural electrification. It can provide sustainable distributed generation, thereby reducing the need for investments in generation & transmission, and increasing community participation in collections. The growth in these segments is directly proportional to growth in the steel suppliers including rolling mills and fabricators.
Distribution: If India would like to have an efficient distribution of electricity to all segments of society then there is one unique need to carry changes in this sector. First step would be to separate agricultural feeder and allow metering of agricultural users. Supplier with critical equipment makers, feeder manufacturing facilities and project specialists who can support rapid execution of the subsequent services should consider making substantive plays, once a systematic distribution reform process sets in. This is challenging and Government shall keep focus on this sector as it involves networking of transmission towers and grids to various geography of India so that the generated power reached to society segments fueling much needed economic cycle. Conventional steel such as long steel, flat steel and wire products technically dominate transmission / distribution services. They play important role as major raw material supplier for transmission/distribution fabricators and service providers.
EPC: In near future, increase in power projects across India is leading to a stern shortage of capable work force. Besides the obvious prospect for EPC service providers given the number of projects under way, the shortage of work force in power sector alone indicates an opportunity for training & development services. As the need for manpower includes substantial numbers of skilled people like high-pressure welders, qualified fitters, heavy fabricators, turbine engineers, execution & services specialist, maintenance crews, machinery specialist, quality inspectors, industrial gear specialist, and project managers.