India Power EPC Market - Growth, Trends, and Forecasts (2020 - 2025)
The market is segmented by Power Generation (Thermal, Hydro, Nuclear, and Non-Hydro Renewables) and Power Transmission and Distribution
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Key Market Trends
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The India power EPC market is expected to rise at a CAGR of more than 3% during the forecast period of 2020-2025. Factors such as the increase in industrial operations and several government initiatives to provide electricity to all people in the country are likely to drive the India power EPC market. However, the low domestic investments and slow processing of projects are expected to restrain the India power EPC market.
The conventional thermal segment, which comprises of power from coal, natural gas, and oil and contributes about 62.2% of the country's total energy generation capacity, is likely to dominate the India power EPC market during the forecast period.
New and efficient technologies like supercritical and ultra-supercritical coal power plants, along with the government initiative to increase renewable energy share is likely going to create several opportunities for the India power EPC market in the future.
The increasing power-related projects in the country are expected to drive the India power EPC market during the forecast period.
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Key Market Trends
Conventional Thermal Segment Expected to Dominate the Market
Conventional thermal power plants generate energy from fossil fuels' combustion, such as coal, oil, and natural gas. In 2019, about 78.05% of the total electricity produced in the country was from the above sources.
The country's significant share of energy, i.e., 72.97% comes from coal-fired power plants, and factors such as rapidly increasing industrialization and urbanization are expected to drive the conventional thermal power in the country during the forecast period. Moreover, different government schemes such as "Power For All" are expected to increase the country's power surge and likely to drive the country's power EPC market.
As of July 2020, the total power generation installed capacityin India was 371.97 Gigawatts (GW), out of which 231.45 GW is conventional thermal power capacity, which is about 62.2% of the total capacity in the country’s power generation mix.
In 2019, India’s state-owned National Thermal Power Corporation (NTPC) commissioned unit-1 of Khargone Super Thermal Power Station in Madhya Pradesh. Khargone thermal power station is India's first coal-fired ultra-supercritical plant that operates at an efficiency of 41.5% and an installed capacity of 660 megawatts (MW). The principal contractors of the projects include Larsen & Toubro Limited (L&T) and Sterlite Power Grid Ventures Limited.
Patratu Super Thermal Power Project, Jharkhand in India, started in 2018 and is expected to be complete in 2022. The project is expected to have the capacity of 4000 megawatts (MW) of power and is coal-fired. In 2018, Bharat Heavy Electricals Limited (BHEL) won an INR 11,700 crore order for setting up phase 1(3x800 MW) of a supercritical thermal power plant in Jharkhand. For India, coal has been a significant energy source in the past and still holds a considerable share in the country's energy generation sources. This is expected to have a positive impact on the power EPC market in the country.
Hence, owing to the above points, the conventional thermal segment is likely going to dominate the India power EPC market during the forecast period.
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Increasing Power Related Projects Expected to Drive the Market
India's power sector is undergoing a wide-scale transformation, owing to the country facing steep electricity demand growth rates. Several parts of India witness high power cuts due to the growing demand for electricity and the supply gap. To address the issue of electricity reliability, the government has implemented policies to increase electricity generation, transmission, and distribution.
India has the second-largest population, because of which there is a constant increase in the energy demand that requires an increasing number of industrial operations and continually growing demand for power supply in the residential regions of the country are expected to drive the power EPC market.
In June 2020, Adani Green Energy Limited (AGEL, NSE: ADANIGREEN) has won the first of its kind manufacturing linked solar agreement from the Solar Energy Corporation of India (SECI). Based on the award agreement, the 8 GW of solar development projects is going to be implemented over the next five years. The first 2 GW of generation capacity is expected to come online by 2022, and the subsequent 6 GW capacity is likely to be added in 2 GW annual increments by 2025.
In 2019, the total electricity generated in India was 1558.7 Terawatt-Hours (TWh), higher than the electricity production of 2018, 1551.4 TWh. In 2019, the country saw a significant increase in renewable and nuclear energy generation.
As of 2019, a nuclear power station Gorakhpur Haryana Anu Vidyut Pariyojana (GHAVP) Units -1&2 (2X700 MW), was in the advanced stage. Orders were placed last year for long delivery equipment like end-shields and steam generators. The main plant civil work and several other packages are at various stages of tendering. The first phase of the project comprising of two units, GHAVP-1&2 (2X700 MW), is expected to be completed in 2025.
In 2019, Sterlite Power received a letter of award for two key inter-state projects worth over INR 3000 crore for Udupi-Kasargode and WRSS 21 (Part B) involving lines and GIS substations. The Udupi-Kasargode project is required to decongest the ISTS transmission corridor and to facilitate smoother power flow within the Southern Region States of Karnataka to Kerala. The GEC project of Lakadia-Vadodara (WRSS 21 – Part B) located in Gujarat, on the other hand, is likely to connect the wind energy zones of the Bhuj region to the load centers of Gujarat and Maharashtra.
Hence, owing to the above points, increasing power-related projects are expected to drive the India power EPC market during the forecast period.
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The India power EPC market is fragmented. Some of the key players in this market include Bharat Heavy Electricals Limited, Larsen & Toubro Limited, Tata Group, Sterlite Power Transmission Limited, and Doosan Corporation.