India Power Report Q4 2009

This new India Power Report forecasts that the country will account for 12.26% of Asia Pacific regional power generation by 2013, with a potentially growing generation surplus. However, power wastage and system inefficiencies may require imports. BMI's Asia Pacific power generation assumption for 2008 is 7,116 terawatt hours (TWh), representing an increase of 3.2% over the previous year. We are forecasting an increase in regional generation to 9,149TWh by 2013, representing a rise of 28.6%.

Thermal power generation in 2008 totalled an estimated 5,590TWh, accounting for 78.6% of the total electricity supplied in the Asia Pacific region. Our forecast for 2013 is 7,046TWh, implying 26.0% growth that reduces the market share of thermal generation to 77.0%. This is thanks largely to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. India's thermal generation in 2008 was around 700TWh, or 12.52% of the regional total. By 2013, India is expected to account for 13.47% of regional thermal generation.

For India, coal is the dominant fuel, in 2008 accounting for 53.4% of primary energy demand (PED), followed by oil at 31.2%, gas at 8.6% and hydro-power at 6.0%. Regional energy demand is forecast to reach 4,862mn total oil estimate (toe) by 2013, representing 25.1% growth from the 2008 level. India's 2008 market share of 11.14% is set to rise to 12.21% by 2013. The country's 15.5TWh of nuclear demand in 2008 is forecast to reach 30.0TWh by 2013, with its share of the Asia Pacific nuclear market rising from 2.93% to 4.60% over the period.

India is ranked fourth behind Japan in BMI's enlarged and updated Power Business Environment rating, thanks to its vast market size and excellent growth prospects. The gap between the two countries is seven points, so an immediate assault on the region's most mature market is unlikely, but India should be able to close the gap appreciably over the coming quarters. Country risk factors offset some of the industry's strength, but the country seems destined over the longer term to challenge China near the top of the table.

BMI is now forecasting Indian real GDP growth averaging 6.70% per annum between 2009 and 2013, with the 2009 forecast being 6.10%. The population is expected to expand from 1.19bn to 1.27bn over the period, with GDP per capita and electricity consumption per capita forecast to increase by 59% and 27% respectively. The country's power consumption is expected to increase from an estimated 598TWh in 2008 to 816TWh by the end of the forecast period, theoretically meaning an excess in generation which we forecast to rise from 236TWh in 2008 to 306TWh in 2013 (assuming 5.6% average annual growth in electricity generation).

Between 2008 and 2018 we are forecasting an increase in Indian electricity generation of 88.0%, which is among the highest for the Asia Pacific region. This equates to 39.9% in the 2013-2018 period, up from 34.4% in 2008-2013. PED growth is set to rise from 37.0% in 2008-2013 to 39.6%, representing 91.2% for the entire forecast period. An increase of 63.0% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise by 88.9% between 2008 and 2018, with nuclear consumption up by 241.9%. More details of the long-term BMI power forecasts can be found at the end of this report.