India heading towards energy security: Survey
A new research reveals that India’s power sector is expected to enjoy a favorable regulatory environment. Complimented by private sector interest, this is expected to propel investment in high capacity power plants. Government and investor support is also likely to boost wind power capacity; however, the fuel exploration sector will continue to stall due to a blurred regulatory environment and weak infrastructure. The research is done by independent market analyst Datamonitor.
According to this pan-India energy survey, private as well as public investors in the country’s power sector are currently most interested in mega power plants and wind power generation. These two segments scored high on each of Datamonitor’s three benchmarks developed to assess investor preferences: market size and profitability; international versus domestic participation; and technology improvement and value chain development.
India’s government has planned a series of ambitious ‘ultra mega’ power projects and industry experts believe that the investments made in these developments will be a major creator of value in the industry. According to Datamonitor’s survey, about 85% of respondents feel that mega power plants will play a significant role in redefining the Indian electricity scenario. Interestingly, most of these infrastructure investments are taking shape through public-private partnerships (PPP). According to 60% of the respondents, PPP will help minimize the initial regulatory hurdles and ensure stable returns.
On the back of government support, wind energy is fast emerging as the favored non-conventional energy source, leaving behind other energy investment options, such as clean technology and nuclear power. According to the survey, wind energy is likely to witness equal participation from both domestic and international players.
Investments in upgrading technology will be the highlight in the fuel exploration industry, especially due to a sharp increase in private participation from both domestic and international players. Datamonitor believes the adoption of state-of-the-art technology within the exploration segment is highly likely, with more than two-thirds of respondents indicating that they expect a significant increase in international participation in the sector. Nevertheless, close to 80% of the respondents within the E&P service industry stated that supply-side constraints in raw material and machinery procurement will continue to be a problem.
The survey also revealed some of the post-recession business models being adopted by Indian energy players. According to respondents, value chain integration and optimization have been the most visible transitions in the past couple of quarters. Also, players are now eying long-term contracts and geographical diversification in an attempt to re-stabilize their revenue streams, with the latter being seen as a fairly likely long-term strategy to hedge against regional downturns.
With continued government support and an improved economic scenario, the Indian energy landscape is poised to lead the overall infrastructure growth in the global power sector, the report added. Industry players will play a key role in this growth amid intensifying competition and continued technology investments by domestic and international participants, it said.