The Evolving Energy Landscape in India - Opportunities for investments April 2018 For Private Circulation Only
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The Evolving Energy Landscape in India Opportunities for investments April 2018 For Private Circulation Only
The Evolving Energy Landscape in India |
Opportunities for investments
Contents
Executive Summary 01
India: Energy Landscape 02
Economic Overview 03
Energy Landscape 05
Megatrends Shaping the Energy Landscape 08
India Sectoral Trends 18
Power Sector Outlook 19
Oil & Gas 35
Renewables 44
India Investment Opportunities 50
Investment Themes Across the Key Energy Sectors 51
Enabling Mechanism Required for Investments 56
The Evolving Energy Landscape in India |
Opportunities for investments
The Evolving Energy Landscape in India |
Opportunities for investmentsThe Evolving Energy Landscape in India |
Opportunities for investmentsThe Evolving Energy Landscape in India |
Opportunities for investments
Executive Summary
India, home to 18% of the world’s most populous country. India’s energy
population, uses only 6% of the world’s consumption has almost doubled since
primary energy. This, however, is rapidly 2000 and the potential for further rapid
changing and the energy landscape in growth is enormous.
India is evolving like never before.
Given the huge opportunity for growth in
Energy, today, is considered crucial to the sector, an overall investment of close
achieve India’s development ambitions, to $750 Bn could potentially come in over
to support an expanding economy, the next decade.
to bring electricity to rural areas, to
fuel the demand for greater mobility The paradigm shift in the Indian energy
and to develop the infrastructure sector will increasingly influence and
needed to meet the demands of what shape the global energy economy.
is soon expected to be the world’s
Power Oil & Gas
•• One of the most diversified sectors; •• India is largely import dependent;
sources of power generation range GoI plans to reduce crude imports
from conventional sources to viable by 10% by 2022
non-conventional sources
•• Digital innovation and
•• Most of the states in India have transformation will drive growth in
transcended from power deficit to the industry
surplus power conditions
Renewable Energy Megatrends
•• Sector at the forefront of growth •• Energy efficiency is envisaged
in capacity addition as an affordable imperative for
sustainability
•• India targets to add renewable
energy capacity to 175 GW by •• India plans to shift to 100% of
2022 and 275 GW by 2027 the car sales to Electric Vehicles
by 2030
•• India to reduce the emissions
intensity of its GDP by 33 – 35%
by 2030 from the 2005 level
Source: International Energy Agency, India Energy Outlook (2015); UNFCCC; MoPNG, Government of India; Deloitte Analysis
01The Evolving Energy Landscape in India |
Opportunities for investments
India: Energy
landscape
The India opportunity; India’s current footprint
on the world energy map and how it is likely to
emerge as one of the most prominent energy
consumers over the next decade
02The Evolving Energy Landscape in India |
Opportunities for investments
Economic Overview
Systemic reforms, focus on growth and a consumption driven
economy – a compelling case for investments
Economic growth of around 6-7% investment. However, investments are
annually since 1991 makes India one of still held back in some cases due to high
the fastest-growing economies globally. corporate tax, land acquisition issues,
The acceleration of structural reforms, high non-performing loans which weigh
the move towards a rule-based policy on banks’ lending, and infrastructure
framework and relatively low commodity bottlenecks. Policy measures to iron
prices have provided a strong growth out these issues, and strengthen
impetus. Recent deregulation measures macroeconomic resilience, are being
and efforts to improve the ease of designed to propel the next leg of growth.
doing business have boosted foreign
Key economic indicators
GDP Policy Foreign
Growth Rates Direct
Investment
GDP growth at 6.3% Repo and reverse FDI at USD2,212
in 2QFY18 compared repo rate kept million in Oct’17, an
to 5.7% in 1QFY18 unchanged at 6% and increase of 1.14%
5.75% in Feb’18 from Sep’17
Fiscal Index of Exports
Deficit Industrial
Production (IIP)
Reached 96% of 7.5% in Jan’18 as Exports increased to
FY18 target in Oct’17 compared to 7.1% USD27.01 billion in
(compared to 79% growth in Dec’17 Dec’17 from USD26.1
last year) billion in Nov’17
Source: MOSPI, Deloitte Analysis
03The Evolving Energy Landscape in India |
Opportunities for investments
GDP and Consumption Expenditure Growth (y-o-y, %)
12 11.10
9.31
10 8.28 8.56 8.41
7.64
8 7.85 6.96 7.93 6.66 6.50
7.01 7.33
6.69
6 6.06
5.22
4
2.78
2 1.99
0
03/2013
06/2013
09/2013
12/2013
03/2014
06/2014
09/2014
12/2014
03/2015
06/2015
09/2015
12/2015
03/2016
06/2016
09/2016
12/2016
03/2017
06/2017
09/2017
12/2017
GDP Consumption Expenditure
Source: CEIC, Deloitte Analysis
India
Top FDI Reforms on Robust Sound fiscal Banking Biggest tax Infrastructure
destination Ease of doing GDP growth discipline Reforms reform since development
business independence
USD 60.1 Bn in Jump of 30 Expected to Achieved fiscal Bankruptcy Goods and Swachh Bharat
FY 2016-17 ranks in ‘Ease exceed 7.5% in deficit target of code, Services Mission,
of Doing FY18 and 8% in 3.5% of GDP in Re-capitalization Tax (GST) Affordable
business’ study FY19 FY’17; targeting of banks, implemented Housing,
by World Bank 3.5% for FY18 Jan-Dhan (One Nation, Sagarmala,
accounts One tax, One Make in India,
large market) Smart City, etc.
Democracy Legal/Regulatory Large Demographic Stable
Framework Market Dividend Government
Source: Commerce & Industries Ministry
The positive outlook on the economic inflection point. That is typically when
growth no longer hinges on market the productivity benefits kick in, there
sentiment, but is backed by strong is a higher GDP per capita as the cities
fundamentals. The growth over the next get better connectivity to the markets.
decade will be driven by factors such as Going forward, the urbanization rate
urbanization, evolving demographics and will cross this threshold and may reach
a favourable policy regime backed by an approximately 50% for many of the states.
investor friendly and stable government.
On the governance aspect, the policy
The trend towards urbanization, which framework increasingly leans towards
is going to increase consumption power empowering the states more and
massively, as well as lend economic decentralizing the decision making for
leverage, is one of the growth engines. funding etc. Urbanization coupled with
Current urbanization rates across most dynamic and vibrant states competing
states cross tethers at around 35%, with each other for resources, will result in
which is widely considered to be the an exponential economic growth.
04The Evolving Energy Landscape in India |
Opportunities for investments
Energy Landscape
India: World’s fastest growing energy market for the next two decades
India is the third largest energy consumer 325 Kb/d in 2016; further, India was the
in the world and accounted for ~5.5% of third largest oil consumer in the world
the global primary energy consumption in (4.6% of the global total).
2016.
While energy use has doubled since 2000,
India accounted for 11% of the global the energy consumption per capita is only
coal consumption in 2016; for the second around one-third of the global average
consecutive year, India remained the and ~240 million people still have no
second largest coal consumer in the access to electricity, indicating significant
world. The country experienced its largest growth opportunities.
increase in oil consumption, increasing by
Energy Generated 1,400
by Source (Billion KWH)
1,400 1,200 38
1,236 37
1.168 36
1,200 1,000 1,105 34 38
33 37
32 1,027 36
1,000 800923 26 965 34
845 33
32 1,076
800 26 600 940 1,009
858
759 818
704 1,076
600 400 940 1,009
858
759 818
704
400 200
114 131 114 135 129 121 122
200 0
FY10-11 FY11-12 FY12-13 FY13-14 FY14-15 FY15-16 FY16-17
114 131 114 135 129 121 122
0
FY10-11 FY11-12Nuclear
FY12-13 Thermal
FY13-14+ REFY14-15 FY15-16
Hydro FY16-17
Source: Ministry of Power, CEA
Nuclear Thermal + RE Hydro
Increasing consumption of oil, coal, gas, its largest increment ever. India is now the
and renewables in power far outweighs 7th largest renewable power generator in
the declines in hydro and nuclear. Oil the world.
consumption in 2016 increased by 325
Kb/d, a record high, increasing its share in India’s crude oil imports rose to 4.8 Mbpd
India’s primary energy consumption for in 2016, the highest level ever. Natural gas
the third successive year (to 29%). Coal imports rose from 21.4 BCM in 2015-16
remains the dominant fuel, accounting to 24.7 BCM in 2016-17. Meanwhile, there
for ~60% of India’s energy consumption. has been a sharp growth in India’s refining
India’s gas consumption rose in 2016 capacity and throughput, contributing
after three consecutive years of decline. 72% to the net growth in global refining
Renewables currently stands at by 29.2%, capacity.
05The Evolving Energy Landscape in India |
Opportunities for investments
“in a nutshell…”
Power Oil Environmental Energy for All
commitments
•• 3rd largest country by •• Witness fastest growth •• India to surpass COP21 •• Ujjwala - 80 million LPG
power generation (after in oil demand in the commitments through connections to Below
US and China) world; demand driven RE adoption, energy Poverty Line families
by personal mobility and efficiency measures and with subsidy as per the
•• Utilities undergoing
industrial growth; and use of clean fuels revised guidelines
transformation;
increased petrochemicals
adoption of technology, •• Targets to achieve all •• 15,000 km gas pipeline
demand
smart grids etc. India solar capacity of in India
•• $300 Bn investments 100 GW by 2022 and 175
•• One of the leading •• 300 city gas distribution
planned in the oil & gas GW by 2027
consumers of coal
sector •• Gas reforms being
today; the dependence •• Ujala - Program
initiated
on coal likely to •• HELP - Revenue sharing launched to promote
continue in the coming mechanism for E&P with use of energy efficient •• Power for All - A joint
years marketing and pricing appliances by residential initiative by central and
freedom users - distributed state governments to
about 770 million LED ensure 24x7 availability
•• Industry increasingly
bulbs, 20 million pump of power by 2019 – 40
adopting digital / tech
sets over last 2-3 years million new connections
innovations
•• India's energy
consumption is
expected to grow the
fastest among all major
economies by 2035,
according to the BP
Energy Outlook 2017
06The Evolving Energy Landscape in India |
Opportunities for investments
Key growth drivers
3rd largest
energy market globally
~723 MMTOE of primary energy;
accounting for 5.5% of global
External Factors energy consumption Internal Factors
Lower commodity prices
Lower commodity prices globally
over the last 2 years led to a
feedstock advantage for India
Evolving Demographics
Increasing disposable income among
the urban middle class, threefold
increase in vehicle ownership over
the last decade
Global geopolitics
Energy security and global political
scenario helped India negotiate
better rates for the imports
Urbanization
Current urbanization level hovering
at 33%; likely to surpass more than
50% by 2030
Stagnation in other markets
EU & NA still emerging from the
slowdown; bulk of investments
made in emerging economies
Regulatory Reforms
Implementation of GST - Biggest tax
reform since independence
Bilateral relations
Increase in trade activity,
improving bilateral relationships
also helped attract investments
Favourable Policies
Sector specific policies to incentivize
players and attract investments;
oil & gas, power sector driven by
favourable policies
Source: IEA, Deloitte Analysis
07The Evolving Energy Landscape in India |
Opportunities for investments
Megatrends Shaping the Energy Landscape
Rapid urbanization, evolving demographics and market dynamics
are going to shape the energy market going forward
Urbanization Demographic Market Dynamics
•• There has been considerable growth •• India is likely to account for more •• Over the past two decades, the
in urbanization over the last two than half of the increase in Asia’s energy market dynamics has evolved
decades and approximately 33% of the workforce in the coming decade, which considerably. Oil supply in the recent
population is currently urban consequently will have considerable past saw an unprecedented influx
impact on the already burgeoning driving the prices sharply down. Gas
•• With economic growth and increase
middle class disposable income. has been plentiful in supply, though
in employment opportunities across
With increase in income levels, limited by application areas, and
industrial corridors, the urbanization is
consumerism is also likely to grow remained a low priced commodity.
likely to increase in tandem
•• As white goods and vehicle •• Changing demand patterns which are
•• Power demand, vehicle penetration
penetration levels go up, the energy closely linked to prices, coupled with
and various consumption side factors
demand will largely be shaped by this climate change and global geopolitics
are closely linked to urbanization
evolution of working class population will dictate the market dynamics going
forward
Other Megatrends Shaping the Energy Landscape in India
Energy Efficiency Future of Mobility Geopolitics in Energy
08The Evolving Energy Landscape in India |
Opportunities for investments
Energy Efficiency
Envisaged as an affordable imperative for sustainability
Energy efficiency is key to ensuring a safe, market for energy efficiency by creating
reliable, affordable and sustainable energy conducive regulatory and policy regime
system for the future. It is the quickest and has envisaged fostering innovative
and least costly way of addressing energy and sustainable business model. This
security, environmental and economic section covers key regulations / policy
challenges. In view of this, the National measures indicating emerging trends
Mission for Enhanced Energy Efficiency specific to energy efficiency.
(NMEEE) aims to strengthen the Indian
Perform Achieve and Trade Scheme (PAT) for Industrial Energy Efficiency
PAT scheme is a regulatory Under this scheme, DCs, who will over achieve
instrument to reduce specific reductions in specific energy the targets will be issued with
energy consumption in saving targets are assigned to Energy Saving Certificates
energy intensive industries. Designated Consumers (DCs) (ESCerts) and those who
It is a market based approach based on their current levels will not meet the target will
to incentivize energy savings. of energy efficiency. buy ESCerts to meet their
shortfall to meet energy
saving target.
PAT Cycle I PAT Cycle II PAT Cycle III
Time line 2012-13 to 2014-15 2016-17 to 2018-19 2017-18 to 2019-20
Industry Sectors Aluminium, Cement, Chlor- PAT Cycle I + Railways, Electricity DISCOMs and Refineries
Alkali, Fertilizer, Iron & Steel,
Paper & Pulp, Thermal Power
Plant and Textile
Number of DCs 478 from eight sectors 621 from eleven sectors 737 from eleven sectors
Energy Saving Target 6.686 MTOE 8.869 MTOE 1.06 MTOE (for 116 DCs)
Source: BEE India, Deloitte Analysis
09The Evolving Energy Landscape in India |
Opportunities for investments
Outcome of PAT I
Energy Saving
•• 5,635 MW Investments
8.67 MTOE
•• Encouraged investments
•• 1.25% of India’s total for energy efficient
primary energy supply technologies
•• INR 24,517 Crores
Invested
Emission Reduction
Savings
•• 31 million tonnes of
CO2 •• INR 9,500 Crores
Saved due to reduced
•• 1.93% of India’s total
energy consumption
emissions
Capacity Building
•• 5,000+ Engineers and
operators trained and
certified for process
industries'
•• 13,718 Energy Auditors
& Managers
•• 219 accreditation
Source: www.beeindia.gov.in, accessed as on 5th March 2018
The state-run energy service company UJALA’s LED bulbs cost only INR 50 and 290 million LED Bulbs
(ESCO) of the Government of India’s UJALA allows the consumers to buy them
distributed under UJALA as on
LED bulk procurement under UJALA has for an initial payment of INR 10, and the
transformed the LED market in India. balance is paid through the consumer’s 5 March 2018 has led to:
electricity bills in equal monthly
Unnat Jyoti by Affordable LEDs for instalments of INR 10. ••38 billion of annual energy
All (UJALA), the world’s largest lighting savings;
replacement program, aims to replace
770 million old wasteful lamps by 2019 ••INR 15,102 crores cost
with modern, efficient and longer lasting savings per year;
LED lamps, without the need for any
government subsidies. ••7,559 MW of avoided peak
demand;
••30.6 million tonne CO2
reduction per year.
Source: www.ujala.gov.in/, accessed as on 5th March 2018
10The Evolving Energy Landscape in India |
Opportunities for investments
Increasing Demand for LED is Transforming the Energy Landscape
High Quality Is Priority
The state-run energy service company
(ESCO) of the Government of India’s
specifications, including the three year
warranty requirement, have ensured
that the LED bulbs procured meet high
quality standards with current failures at
only 0.3%. This is helping build market
confidence in the product.
Economies of Scale at Work
The state-run energy service company
(ESCO) of the Government of India’s LED
bulk procurement contributed to the
reduction in LED retail market prices from
approximately INR 400 per LED bulb in 2012
to INR 80 per LED bulb in 2016, leading
to one of the fastest LED price reductions
in the world. This has helped improve
acceptance and availability of LEDs in the
Indian market.
Domestic LED Market on the Rise
In 2014, LEDs had only a share of 0.1% of
the annual residential lighting market in
India. In 2016, the LED share of the market
jumped to a remarkable 25%.
Fastest Growing LED Market in the World
The Indian LED market value grew by 10
times in just five years and annual domestic
production increased from approximately
3 million LED bulbs in 2013 to 62 million in
2015 as the second largest LED market in
the world worth INR 21.4 billion in revenues.
Source: BEE India, Deloitte Analysis
11The Evolving Energy Landscape in India |
Opportunities for investments
On similar approach, the state-run energy of new energy efficiency initiatives to
service company (ESCO) continued to transform the markets for residential fans,
deliver multiple benefits to other Indian street lighting and agricultural pumps.
manufacturers with the introduction
Other Key Policies by Central Government
Policy Policy/ Program Type Policy Target Estimated Target / Impact
Energy Conservation Regulatory Instruments, Codes New buildings, Commercial/ Resulted in large energy
Building Code (ECBC) and standards, Strategic planning Industrial Equipment, Multi- savings for large corporates,
Sectoral Policy public sector, etc.
The Standards & Labelling Information and Education, Residential Appliances, 21 Equipments covered , with
Programme Performance & Comparison label, Energy Utilities-Demand- 8 mandatory appliances and
Regulatory Instruments- Codes side management/End-use 13 voluntary appliances
and standards, Policy Support services, Multi-Sectoral
-Strategic planning, Monitoring Policy, Commercial/ Industrial
& Verification with Obligation Equipment
schemes , Other mandatory
requirements
Procurement of energy Strategic planning, Policy Support Commercial/Industrial 250 MW Demand Reduction
efficient appliances for Equipment- Heating ventilation
Government Undertakings and air conditioning (HVAC),
Water & Refrigeration
Sample State level initiatives
Policy Implementing Agency Policy/ Program Type Policy Target
Scheme on Energy Department of Renewable Energy, Economic Instruments, with Agricultural Sector - Subsidy
Conservation in Agriculture Government of Haryana (HAREDA) Fiscal/financial incentives as to farmers on energy
Sector in Haryana Grants and subsidies integrated efficiency 4 star and above
with S&L program of Bureau of rated agricultural pump.
Energy Efficiency (BEE) Subsidy @ INR 400/- per
horsepower (H.P.) of the
pumps with maximum limit
up to INR 5,000/-
Mandatory Public Street Rajasthan Renewable Energy Economic Instruments>Market- Public sector Lighting -
Lighting Systems in Corporation Limited (RRECL) based instruments, Policy Municipal Corporations,
Rajasthan Support, Regulatory Municipal Councils and
Instruments Municipal Boards for the
efficient use of energy and
its conservation in the Public
Street Lighting
Mandatory Use of Energy Science & Technology Department Regulatory Instruments, Codes Commercial/Industrial
Efficient Appliances in in Chandigarh Administration and standards Equipment, Residential
Chandigarh Appliances
Source: BEE India, Deloitte Analysis
12The Evolving Energy Landscape in India |
Opportunities for investments
Future of mobility
India has an ambitious target to shift to 100% of the car sales to EV by 2030
To maintain pace with India’s of the car sales to E-Vehicle by 2030.
commitments to COP21, India has set 2 and 3-wheelers to play a key role in the
an ambitious target to convert 100% E-Vehicle segment
2016-17 Vehicle Sales
99%
Conventional Vehicles
EV
1%
91%
2 & 3-wheeler EV market is
dominated by Battery Electric
Vehicles (BEVs) with more than 2 & 3-Wheelers
99% sales, while the 4-wheeler 4 Wheelers
market is mostly Hybrid
Vehicles only
9%
98% of the total EV 4-wheeler
sales were Hybrid electric Hybrid electric vehicle (HEV)
vehicle (HEV), while only 2% was Battery Electric Vehicles (BEV)
Battery Electric Vehicles (BEV)
98%
2 and 3-Wheelers hold 91% of EV market share in 2016-17 with a total sale of around 20,000 sales while 4-wheelers were only ~2,000
Source: RMI, Niti Aayog, SIAM
13The Evolving Energy Landscape in India |
Opportunities for investments
Going forward, the switch to EVs is expected across all category of vehicles to achieve India’s 2030 target of 100% EV Sales
2020 2025 2030
EV, Non-EV, EV,
Non-EV,
41% EV, 40% 100%
59%
60%
Two- Total EV sales Total EV sales Total EV sales
Wheelers 7,352,000 14,035,000 26,514,000
Non-EV,
EV, EV,
9%
100% 100%
EV, Total EV sales Total EV sales Total EV sales
Three 91% 646,000 2,364,000 4,072,000
Wheelers
EV,
1% Non-EV, EV, Non-EV, EV,
91% 29% 71% 100%
Four
Total EV sales Total EV sales Total EV sales
Wheelers
26,000 1,592,000 15,951,000
EV,
Non-EV, EV, Non-EV, EV, Non EV,
2%
98% 20% 80% 45% 55%
Total EV sales Total EV sales Total EV sales
Buses 1,000 18,000 52,000
Source: RMI, Niti Aayog, SIAM
Electric vehicles will dominate the It is estimated that there will be A major switch to EVs is also
new sales across all segments of around 15.91 million EV sales for expected in the 2 and 3-wheelers
automobiles by 2030 the 4-wheeler segment by 2030, segment
completely eliminating the need
for Internal combustion engine
(ICE) vehicles
14The Evolving Energy Landscape in India |
Opportunities for investments
India is leapfrogging in mobility space through central and state policy support
Policy support by Central Government
National Electric Mobility Mission Plan
(NEMMP) Total investment till 2021: ~ INR 23,000 crores
Unveiled by Government of India in 2013,
NEMMP involves development of mission
Covers demand incentives, R&D support and building charging infrastructure
plan and roadmap for promoting electric
mobility solutions in India with an aim to
deploy 6-7 million electric vehicles by 2020.
Faster Adoption and Manufacturing of Vehicle Segment Incentive in INR per vehicle (under FAME)
(Hybrid &) electric vehicles (FAME)
2W 7,900-25,000
Flagship scheme under the NEMMP 2020
mission plan (provided till FY 2020) 3W 11,000-61,000
Total support provided till date (INR 795
4W 76,000-1,38,000
crores)
LCV 1,02,000- 1,87,000
Includes GoI support for demand incentives
(purchase of 2,3 and 4-wheeler and buses), Source: NEMMP, FAME
charging infrastructure, pilot projects, etc.
Persuading to manufacture in India by
offering incentives under Make in India,
NEMMP
Vision set for electrifying vehicles till 2030
CERC framing guidelines and regulations
for setting of EV charging infrastructure
Amendments in Motor Vehicles Act to
support the electric vehicle ecosystem
NITI Aayog steering the EV adoption
in the country through policy and
Identification of cities for pilot Multi-Modal roadmap formulation
Electric Public Transport under FAME
scheme
Developing battery standardization
norms for facilitating charging
Single largest bulk procurement tender for
10,000 EVs and 2,000 chargers
Innovation and collaboration Financial incentives
•• Indo-German Joint Working Group (JWG) for development •• Reduced GST for EVs (12%)
of efficient automotive technologies and alternate fuels and
•• Exemption from Basic Custom Duty for the manufacture
drives
of lithium ion battery packs for supply to manufacturers of
•• Member country of EV initiative (a global forum of hybrid and EVs
governments for promoting clean energy)
•• Increasing PPP in R&D
Source: Make in India, Niti Ayog, Deloitte research
15The Evolving Energy Landscape in India |
Opportunities for investments
State level initiatives
Bengaluru
IT major company in Bengaluru
(Karnataka) along with automotive
major company is developing
charging infrastructure
3
New Delhi Karnataka
Real estate major company has
launched free charging and 50%
parking fee waiver spots in New Delhi,
2 4 Karnataka has become the
first state to come up with
EV policy giving incentives,
in a tie-up with the Delhi-based electric promoting manufacturing and
utility company supporting infrastructure
Odisha Maharashtra
Reduction in one time
registration tax on EV to 3% 1 5 Announced policy to promote
EV and waived off road tax
from earlier 6% in Odisha and registration fee on
purchase of electric vehicles
Source: Deloitte Research
There has been overwhelming progress at central and state level for
procurement of electric vehicles and charging infrastructure
Single largest tender for 10,000 electric There is increasing focus of government
vehicles and 250 chargers carried out on deploying charging stations on the
for replacement of ICE vehicles in back of successful pilot projects
Government departments Several large CPSUs who have
State run energy service company (ESCO) infrastructural access have forayed into
of the Government of India, in September EV Charging business and have set up
2017, placed an order for acquiring 10,000 charging stations in few locations in India.
electric four wheelers for leasing the same Many partnerships have also been forged
to various government departments. in this space to expand footprint and get
The purchase price per car has been access to infrastructure and technology.
discovered to be INR 11,87,595 through Car aggregators have also plans to set
open tendering. The procurement was up their own charging infrastructure to
done from automotive majors in the promote EV adoption.
country. Procurement was also carried out
for 200 AC and 50 DC chargers to be set up
at different locations.
State run energy service company (ESCO)
further plans to procure additional 10,000
electric cars for various government
agencies during March-April 2018.
Source: Energy Efficiency Services Ltd.
Source: Press releases
16The Evolving Energy Landscape in India |
Opportunities for investments
Geopolitics in Energy
Energy geopolitics is increasingly shaping trade and market dynamics globally
Energy geopolitics refers to the •• The shipment is a two-pronged strategy
intersection of energy, security, and by Indian firms to improve energy
international politics; it involves policies security and bargain for a better deal
and interactions among different nations from OPEC. India has long complained
with a focus on development, sales and about paying a premium for its
acquisition of essential energy supplies. imported crude from OPEC members,
compared with the European and the
Some examples of the Geopolitical US importers.
issues related to oil and gas are:
Strategic Reserves
•• Physical shortage due to interruption of
supply chain or boycott by energy rich •• The GoI commissioned the strategic oil
states reserves to maintain nation’s energy as
well as economic security.
•• Political blackmail under the threat of
interruption of energy supplies •• The government has already built
three such reserves at Visakhapatnam,
•• Price spikes due to tight market
Mangalore and Padur in Kerala — with a
conditions or curtailment of energy
combined capacity of 5.33 MMT.
supplies
•• GoI announced that it will build two
•• Economic development fostering
more strategic oil reserves with a
wealth creation and jobs
combined capacity of 10 MMT — at
•• Environmental impact including climate Chandikhole in Odisha and at Bikaner in
change, global warming etc. Rajasthan.
Currently, India depends on imports for Global Investments
more than 80% of its crude oil needs
•• India has invested in several global
and around 86% of the crude and 70%
upstream assets under partnership
of its natural gas is imported from OPEC
with local companies e.g. ONGC Videsh
member states
has invested $2.2 billion in Russian
Vankor Cluster of oil fields
Diversifying Imports
•• It has also invested heavily in
•• US became India's latest oil supplier
neighboring countries - interested
with arrival of state-owned oil
in LNG terminals in Sri Lanka and
company’s 1.6 million barrels oil
Bangladesh, Supplying petroleum
requirement from the US.
products and electricity
•• Improving India's energy security by
diversifying sources of supply is a key
motivation for initiating crude imports
from the US.
17The Evolving Energy Landscape in India |
Opportunities for investments
India: Sectoral
Trends
Key insights on emerging trends across
the key energy sectors – oil & gas, power,
and renewables
18The Evolving Energy Landscape in India |
Opportunities for investments
A. Power sector outlook
Power Sector – Demand Supply Overview
India has transcended from an era of chronic power shortages
into an energy surplus scenario over the past 2-3 years
The major reason for this transformative generation, actual capacity addition
shift is the unprecedented addition of was close to 100 GW. While demand
conventional generation capacity under continued to be in line with the macro-
the 12th Five Year Plan period. As against economic trends, generation capacity
a target of 88.5 GW for conventional addition outpaced the demand growth.
Historical All India Energy Scenario
Units in MU
1,600,000
1,200,000
800,000 ~6% YoY growth in
energy available over
400,000
FY 10-17
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Energy demand (MU) Energy available (MU)
Source: Central Electricity Authority; MU = Million kWhr
Historical All India Peak Demand Scenario
Units in MW
200,000
160,000
~4.3% YoY growth
120,000
in peak demand
witnessed over FY 10-
80,000
17; ~6% YoY growth
in peak met over FY
40,000
10-17
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Peak demand (MW) Peak met(MW)
Source: Central Electricity Authority 19The Evolving Energy Landscape in India |
Opportunities for investments
Power supply position – FY 2016 - 17
Total energy
1,143 requirement
(‘000 MU)
Total peak
demand (GW) 160
1,135
Total energy
available
(‘000 MU)
157 Total peak
met (GW)
Highest deficit
18 States / UTs
with nil deficit
recorded by a
state in FY 17
6%
Percentage Percentage
energy
consumption 71% 75% peak
contribution by
by top 10 states top 10 states
20The Evolving Energy Landscape in India |
Opportunities for investments
Demand Supply Scenario in India situation where the average deficit has
Demand supply scenario has improved narrowed down significantly. Key states
considerably for most of the states across contributing the maximum amounts
India. From an era of deficits, the states of energy consumption are illustrated
have moved considerably towards a below:-
Percentage Share of India Consumption
••13 states (mainly in the
Western and Southern
region) contribute to
4% ~83% of the annual
energy consumption
4%
3%
••Most of the states
6% 9% have transcended
from power deficit to
surplus situations
9% 6% 4% ••States such as Uttar
Pradesh, Bihar,
Rajasthan, J&K and few
12% North Eastern regional
10%
states continue to reel
under energy / power
deficit situations
5%
6%
9%
Source: Ministry of Power
Boundaries shown in the map are representative and not authentic
21The Evolving Energy Landscape in India |
Opportunities for investments
Capacity Addition and Demand Increase situation over the years. Factors such
The country has witnessed a combination as policy clarity, political push as well
of unprecedented coal-based generation as administrative reforms have helped
capacity additions (led significantly by in aggressive addition of generation
the private sector) as well as lower than capacities (predominantly coal based) in
expected demand growth which has the recent years.
led to improvement in the power deficit
Targets and Achievements of Capacity Addition in Plan Periods (in MW)
120000 112% 120%
100000 88% 100%
80000 80%
112% achievement
of capacity addition
54% 52%
60000 60%
48% targets in 12th Five
40000 40% year plan
20000 20%
0 0%
8th plan 9th plan 10th plan 11th plan 12th plan
Target (MW) Achieved (MW) %
Source: Ministry of Power, Central Electricity Authority
While average demand increased by the first time and exported close to
~7,800 MW, the capacity addition was to 5,800 Million units to Nepal, Myanmar
the tune of ~25,000 MW, far outpacing and Bangladesh during 2016-17 (April-
the domestic demand. Moreover, India February).
became the net exporter of power for
Capacity Addition vs Demand Increase
35,000
35,000 35,000 30,000
30,000 30,000 25,000
25,000 25,000 20,000
20,000 20,000 15,000
15,000 15,000 10,000
10,000 10,000 5,000
5,000 5,000 0
0 0 FY12 FY13 FY14 FY15 FY16 FY1
FY12 FY12FY13 FY13FY14 FY14FY15 FY15FY16
FY17 FY16FY17
Incremental Peak Demand (MW) Incremental Peak met (MW)
Incremental Peak Demand
Incremental Peak Demand (MW) (MW) Incremental Peak met
Incremental Peak met (MW) (MW)
Capacity addition (MW)
Capacity Capacity
addition addition
(MW) (MW)
Source: CERC, Central Electricity Authority, Deloitte analysis
22The Evolving Energy Landscape in India |
Opportunities for investments
Peak and Energy Deficit deficit has reduced from ~10% in FY 2007-
Peak deficit for the country as a whole has 08 to ~1% in FY 2016-17. The system peak
thus reduced from ~17% in FY 2007-08 demand met by India during 2016-17 was
to ~1.6% in FY 2016-17. Similarly, energy ~159 GW.
Peak & Energy Deficit
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Peak deficit Energy deficit
Source: CERC, Central Electricity Authority, Deloitte analysis
Regulatory Landscape
The sector is prominently guided by
the Electricity Act 2003 (EA 2003) or (the
Act), National Electricity Policy 2005 and
National Tariff Policy 2006 and 2016. The
Government of India (GoI) has emphasized
that an efficient, resilient, and financially
robust power sector is essential for
growth of the Indian economy. Series of
reforms in the 1990s and the EA 2003 have
moved the power sector towards its vision
of a competitive market with multiple
buyers, sellers supported by regulatory,
and oversight bodies. In context to this,
organizations have been formed both at
the central and state government levels to
facilitate development of the power sector.
23The Evolving Energy Landscape in India |
Opportunities for investments
Power Sector – Generation Growth
The share of thermal generation capacity has been considerably stable
at ~70%. RE capacity has increased steadily to reach ~18% share
Thermal generation capacity accounts for the coming years. In line with the same,
almost 67% of installed capacity of the India is running one of the largest and
country. Coal based power generation most ambitious renewable capacity
contributes to around 35% of the total expansion programs in the world.
all India CO2 emission. Reliance on coal- Newer renewable electricity sources are
based power is expected to continue in projected to grow massively by 2022.
~10% YoY Growth in Installed Capacity over FY17
350
300
250
200
150
100
50
-
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Installed capacity (GW)
Increasing Share of Renewables in the Overall Capacity Mix
Installed capacity mix
6% 8% 9% 10% 11% 12% 12% 14% 14% 15% 18%
26% 25% 25% 23% 22% 18%
20% 16% 15% 14% 14%
9% 9% 8% 8% 8%
10% 10% 11% 10% 9%
10%
56% 58% 58% 60% 61% 59%
54% 53% 52% 53% 54%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Coal Gas Diesel Nuclear Hydro RE
Source: Ministry of Power, Central Electricity Authority
24The Evolving Energy Landscape in India |
Opportunities for investments
Private sector leads installed distribution utilities to tie up with several
generation capacity with 44% share generators through power purchase
Unprecedented private sector investments agreements (PPAs). Private sector has
in power generation coupled with contributed ~55% of the total capacity
projected growth in industrialization and addition in the 12th five year plan.
economic activity has encouraged power
Generation Capacity Addition (GW)
350
300
FY17 market share CAGR
250
44% 20%
200
150
32% 3%
100
50
24% 7%
0
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Central State Private
Source: Ministry of Power, Central Electricity Authority
25The Evolving Energy Landscape in India |
Opportunities for investments
Power Sector – Transmission
India has become an integrated grid with large investments
in high voltage (HV) lines and substations
The Indian transmission sector has an investment of INR 2.6 lakh crore will In 2013, Southern Region
seen a robust growth in the last 5 years. be made between FY 18 and FY 22. The
The sector is largely dominated by the investment will be used for the 100,000
was connected to Central
state utilities while the private sector circuit km of transmission lines and Grid, thereby achieving 'ONE
currently accounts for only 3-4% of the 2,00,000 MVA transformer capacity of NATION'-'ONE GRID'-'ONE
total transmission capacity. The Central substations at 220 kV and above voltage
Electricity Authority (CEA) estimates that by the end of 13th five year plan.
FREQUENCY'
6% CAGR Growth in EHV lines, 13% CAGR Growth in EHV Substations
800 741
659
596
600 532
475
411
400 368
286 303 313 342
269
200
-
FY12 FY13 FY14 FY15 FY16 FY17
Transmission Lines ('000 CKM) EHV Substations ('000 MVA)
Source: Central Electricity Authority
26The Evolving Energy Landscape in India |
Opportunities for investments
In 2015, the Ministry of Power (MoP) based competitive bidding, thereby
announced the mandatory procurement attracting private investments in the
of transmission services through tariff recent past.
•• In collaboration with CTU and STU
Joint Ventures
•• CTU and STU to hold minimum 26%
Models for PPP
•• 100% holding by private company
IPTC
•• To be bid out under a competitive framework
Government is also planning to set up •• These projects are aimed at bulk
high capacity transmission corridors to evacuation of power from independent
ensure un-interrupted evacuation of power producers (IPPs)
power
•• Total transmission capacity to be
•• 11 high capacity corridors have been constructed at around 34,000 MW
planned at an estimated cost of INR 750
•• Likely to be commissioned by 2021
billion
27The Evolving Energy Landscape in India |
Opportunities for investments
Power Sector – Distribution
Power distribution in India has shown considerable improvement,
though there is significant scope for future interventions
The power distribution segment is similarly distribution through distribution franchise
dominated by state utilities with presence model and sub-contracting of non-core
of private players only in few cities across operations.
India.
However the sector still remains inefficient
Recently the government has tried to with high AT&C losses and poor financial
increase private participation in electricity health of distribution utilities.
Financial Performance of Utilities
All India Gap between Average Cost of Supply and Average Revenue Realization
INR
6 0.94 1.00
0.83 0.90
5 0.77
0.80
0.68
0.63 0.70
4 0.56
0.60
3 0.50
0.40
2
0.30
0.20
1
0.10
0 0.00
FY11 FY12 FY13 FY14 FY15 FY16
ACS ARR with subsidy Gap
Aggregate Technical and Commercial (AT&C) Losses
30% 26% 27%
25% 26%
24%
25% 23% 22%
20%
15%
10%
5%
0%
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
Source: PFC report on Performance of State Power Utilities
28The Evolving Energy Landscape in India |
Opportunities for investments
There has been a substantial reduction AT&C Loss levels
in the gap between the average cost of
supply and the average revenue realized
due to the tariff revision carried out for
25/27 States and Union Territories (UT).
The move resulted in increased realization
of cost of supply as well as increase in
operational efficiencies of discoms. Overall
Aggregate Technical and Commercial
(AT&C) losses stood at ~22% for the entire
country in 2017.
Ujwal DISCOM Assurance Yojna (UDAY)
was launched by GoI in order to improve
operational efficiency, reduce cost of
generation and for financial turnaround
of financial utilities. It envisaged several
initiatives to be undertaken by the utilities
to achieve these goals.
The state power distribution utilities
have made substantial amount of capital
investments in the following:
•• Feeder metering, metering of
distribution transformers, increasing
access to unconnected households, etc.
•• System strengthening schemes (these
have improved overall operational
efficiency as well as led to reduction of
overall system losses) Boundaries shown in the map are representative and not authentic
Progress made by Distribution Utilities on various operational / technical parameters under UDAY
Smart Metering (200 – 500 kwh) 1%
Smart Metering (above 500 kwh) 3%
Feeder Segregation 62%
DT Metering Urban 57%
DT Metering Rural 48%
Feeder Metering (Urban) 100%
Feeder Metering (Rural) 100%
Electricity access to unconnected HHs 82%
Source: UDAY dashboard
29The Evolving Energy Landscape in India |
Opportunities for investments
Power Sector – Key challenges
The Indian power sector, which plays a key role in the current
government’s ‘development plan’ is facing certain challenges
The power sector is facing challenges growth, poor quality of coal, availability of
around to fuel issues, statutory transmission corridors, low performance
obligations, emission levels, water of old power plants, and financial crisis of
scarcity, power theft, low power demand private power generators/IPP’s etc.
Generation
•• Coal based generation plant load factors (PLFs) have dropped from 75% to
60% in 5 years (2013-18)
•• Discoms not honoring high tariff renewable PPAs
•• Long gestation periods for hydro projects; slow pace of commissioning for
hydro plants due to environmental issues
T&D
•• Discoms are refraining from signing fresh thermal PPA’s due to subdued
demand growth •• Lack of state of the
art infrastructure with
state transmission and
distribution utilities
•• Around 25% of generated
power is lost in India
as against 5% in other
developed Asian
economies
•• Sharp increase in the
Fuels aggregate financial losses
Key of the utilities in the recent
•• Inadequate fuel supplies Challenges years
and dependence on
imported coal •• High level of T&D and
AT&C losses
•• Shortage of gas had
led to many gas based
thermal generation units
to become stranded
•• Issues in land acquisition
and resettlement and
rehabilitation (R&R)
affecting acquisition of Others
coal blocks
•• Increased environmental cess and stricter emission norms likely to
impact cost of production of thermal power plants
•• Stiff competition from international Original Equipment Manufacturer
(OEM) in the electrical equipment segment
•• Increase in stressed thermal assets due to non-availability of long term
PPAs and unviable tariffs
Source: Deloitte analysis
30The Evolving Energy Landscape in India |
Opportunities for investments
Power Sector – Government Initiatives
Government has undertaken several marquee initiatives to support
growth of the Power sector
Power System Development Fund (PSDF)
Operationalization of Power System Development Fund (PSDF): To be utilized for the projects proposed by state
utilities for
•• Create necessary transmission systems of strategic importance
•• Install shunt capacitors for improvement of voltage profile
•• Install standard and special protection schemes
•• Renovate and modernize T&D systems for relieving congestion, etc.
Fuel supply
•• Coal usage flexibility / coal swapping from inefficient plants to efficient •• Government of India (GoI)
plants targets to produce 1 Bn
tonnes of domestic coal by
•• Rationalization of coal linkages to optimize transportation cost and
2019-20
materialization of coal at thermal power plants
•• Introdction of a new and more Transparent Coal Allocation Policy for
Power Sector, 2017 - SHAKTI (Scheme for Harnessing and Allocating Koyala
(Coal) Transparently in India)
24 X 7 Power for ALL
•• Joint initiative by the Government of India (GoI) and the state governments, •• Total generation capacity by
aiming to achieve 24X7 availability of reliable power to all households, 2019: 389 GW
industrial, commercial and all other electricity consuming entities by the
•• Total investment in system
end of FY19
strengthening: INR 3,15,582
•• Preparation of state specific action plans for ‘24X7 Power for All’ covering crores
adequacy of generation, transmission capacity and distribution system.
•• No of household to be
‘24X7 Power for All’ documents have been signed for 35 States/UTs
provided access: 60.5 million
•• All states have been onboarded
Source: Official Website of Various Government Initiatives (Saubhagya, DDUGJY)
31The Evolving Energy Landscape in India |
Opportunities for investments
Ujwal Discom Assurance Yojna
•• Ministry of Power, GoI launched Ujwal DISCOM Assurance Yojana (UDAY) •• Financial Turnaround of
which was approved by the Union Cabinet on 5 November 2015 DISCOMs
•• Under UDAY schemes states will takeover 75% of the DISCOM debt as •• Operational improvement
on 30 September 2015 (50% in FY16 and 25% in FY17), in order to give a
•• Reduction in cost of
fresh opportunity to debt trapped DISCOMS to transform
generation of power
•• Till date, 32 states and union territories have joined this scheme for
•• Development of Renewable
financial and operational turnaround
Energy
•• About 97% of total outstanding debt of all state Discoms have been
•• Energy efficiency and
covered under this scheme, paving the way for financial turnaround
conservation
Integrated Power Development Scheme (IPDS)
•• Aims at providing quality and reliable power to urban households •• Projects worth INR 24,836
crore have been sanctioned
•• Financial assistance to strengthen urban infrastructure including sub-
for 3486 towns
transmission and distribution networks in urban areas and metering of
distribution transformers (DTs)/feeders/consumers •• Total outlay of INR 32,612
crore aimed at ensuring 24X7
•• IT enablement of distribution sector and strengthening of distribution
power for all
network component has been subsumed under IPDS
Deen Dayal Upadhyay Gram Jyoti Yojna (DDUGJY)
•• Launched in December 2014 with a goal to provide continuous supply of •• 590,791 villages (98.8%) in
electricity to rural India India have been electrified
•• Key areas include separation of agriculture and non-agriculture feeders, •• Free electricity connections
strengthening and augmentation of sub-transmission and distribution provided to 2.5 crore BPL
infrastructure including metering at distribution transformers, feeders households (Out of total 4.27
and consumers and rural household electrification crore connections sanctioned)
Source: Official Website of Various Government Initiatives (PSDF, Ujwal Discom Assurance Yojna)
32The Evolving Energy Landscape in India |
Opportunities for investments
SAUBHAGYA
•• The Pradhan Mantri Sahaj Bijli Har Ghar Yojna (SAUBHAGYA) was •• Total cost of INR 16,320
launched by the Ministry of Power (MoP) to achieve universal households crores including Gross
electrification by providing last mile connectivity and electricity Budgetary support of INR
connections to all households in rural and urban areas 12,320 crores from the GoI
•• Solar photovoltaic based standalone systems to be provided for remote
and unaccessible villages
Demand Side Management (DSM) and Energy efficiency
•• There is significant push for increased adoption of energy efficient •• Over 18.5 lakh LED tube lights
products through schemes, directives/ regulations and policies distributed as of May 2017
•• National light-emitting diode (LED) programme was launched on 5 •• Over 20 lakh LED street lights
January 2015 installed under SLNP as of
May 2017
•• Domestic Efficient Lighting Programme (DELP) and Street Light National
Programme (SLNP) have been initiated through which household lighting
and street are being replaced with LEDs
Green Energy corridors
•• Launched by the GoI in 2013; envisages grid connected network for the •• Total expected investment:
transmission of renewable energy produced from various renewable ~ INR 43,000 crores in
energy projects intra-state and inter-state
transmission systems
•• Involves construction of the inter-state transmission network for
connecting 43 GW of RE capacity under Green Corridor-I
•• Green Corridors-II programme involves connectivity for 20 GW solar
parks in different states including Andhra Pradesh, Madhya Pradesh,
Karnataka, Rajasthan and Gujarat
Source: Official Website of Various Government Initiatives (Saubhagya, DDUGJY)
33The Evolving Energy Landscape in India |
Opportunities for investments
Smart Grids / Automation
•• National Smart Grid Mission (NSGM) established for planning and monitoring of implementation of
smart grid related activities
•• Provides capital subsidy support to larger implementation projects; 4 projects at bidding stage, 20+
Detailed Project Reports (DPRs) have been received for approval
•• Inclusion of Smart Grid / Smart Metering investments in IPDS, UDAY, other schemes and mandates of GoI
are accelerating early adoption of new technology solutions
Transparency and Monitoring initiatives
•• GARV (Rural Electrification) App: Provides updates related to the electrification of villages and
households in India
•• Ujala App: Provides real-time updates on the LED distribution
•• Vidyut Pravah: Gives real-time information on electricity price and availability
•• URJA (Urban Jyoti Abhiyaan) App: Helps enhance consumer connect by showing DISCOM's performance
in cities and gives data of the Integrated Power Development Scheme (IPDS)
•• TARANG (Transmission System Monitoring) App: To monitor the progress of Transmission System in
India
•• Ujwal DISCOM Assurance Yojana (UDAY): Gives the progress of the UDAY yojana
•• Urja Mitra APP: Enables consumers to access real time and historic outage information for DISCOMs
•• DEEP (Discovery of Efficient Electricity Price): e-Portal for short and medium term power procurement
through transparent bidding and e-reverse auction
Source: Deloitte analysis
34The Evolving Energy Landscape in India |
Opportunities for investments
B. Oil & Gas
Oil & Gas – Upstream Demand Supply Overview
Oil and gas consumption has grown at CAGR of ~6% over the last
decade, but India remains largely import dependent
India is the 3rd largest global consumer of India has become a regional leader in
oil and its energy requirement is expected the downstream refining sector, the
to grow at a CAGR of 4.6% through 2030, upstream and gas midstream sectors
making it the fastest growing energy have lagged behind, resulting in India
consumer in the world. Over the past importing approximately 80% of its crude
two decades, the Indian oil and gas oil requirement; and 49% of its natural gas
industry has had a major transformation requirement and gas accounting for only
triggered by liberalization and increasing 7% of the energy mix.
demand for oil and gas products. While
India - Crude Oil Consumption–Supply Scenario (kb/d)
‘000 bbl/ day
4,500 4,142
4,000 3,660
3,461
3,500 3,068
2,888
3,000
2,426 2,550
2,264
2,500 2,031
1,835
2,000 1,655
1,351
1,500 1,150 1,190
895 988
703 675 653 660 665 698 680 782 772 758
1,000 700 615 534 642
620 609
500
-
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
production consumption
Source: PPAC, MoPNG, Deloitte Analysis
1 2 3 4 5
Demand for oil is Crude production as GoI plans to reduce LNG share has inched Access to Gas as Clean
expected to grow at a % of consumption crude imports by 10% more than domestic Fuel has been a top
a CAGR of ~4% till FY has reduced from ~ by 2022 share and is expected priority post signing of
2030 69% in 1985 to ~ 18% to increase further COP21
in 2015
35The Evolving Energy Landscape in India |
Opportunities for investments
The Indian oil and gas sector continues have a higher market share across the
to be dominated by large public sector value chain upstream, midstream, and
undertakings (PSUs) as they continue to downstream.
Historical Oil & Gas Consumption and Supply
Indian Crude Oil Production and Imports, '000 bpod
6000 86%
5000 84%
4000 82%
3000 80%
2000 78%
1000 76%
0 74%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Crude Production Crude Imports % of imports
Indian Natural Gas Supply, bcm
Import growth for Crude Oil and Natural Gas has been more pronounced in the last
decade, though production has stagnated for oil and declined for natural gas
70 50%
60
40%
50
40 30%
30 20%
20
10%
10
0 0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Gas Production Gas Imports % of imports
Source: PPAC & DGH
•• There has been a decline in the •• The decline witnessed due to maturing
production from the domestic fields fields has been further exacerbated
in the recent years. Oil production by lower than expected outcome of
experienced a 4.4% decline post 2011 the New Exploration Licensing Policy
mainly due to the fact that major oil (NELP) rounds and limited exploration
fields are reaching their maturity stage activity in India. Currently, only 22.8% of
level and require enhanced oil recovery the Indian sedimentary basin has been
(EOR) technologies to boost and explored. Further, out of 360 blocks
maintain production. Further, there has offered under NELP 84 are active,
been a 39% decline in gas production 170 have been relinquished and 106
post-2010 due to sub-optimal were not awarded. In the NELP blocks,
performance of KG-D6 block and delays 152 discoveries have been made in
in development of other gas assets. 50 blocks, however, production has
commenced only in 11 fields in 4 blocks
over the last 10 years.
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