• In India, Electricity Act 2003 paved the way for greater private participation in the power sector. Since then the share of private players in India's power sector has risen significantly. During the 8th  Five Year plan (FYP), private players share was mere 8.7%, which rose considerable to about 31% during the Eleventh FYP. This again is further expected to rise in 12th FYP. Notwithstanding the positive demand outlook, the risk profile of IPPs have also increased appreciably over the last one year period. Especially for those operating under MPP model.
  • Merchant Power Plants in India are braving tough times in India where falling merchant prices are challenging the business viability and fuel crunch and escalating cost of operations are acting as a non avoidable trap for the merchant power investors. Recently GMR, Lanco were pushed by Andhra Pradesh Government to go PPA route as they were using regulated price of $4.2 per mmbtu from the K-G basin which is falling drastically leading to speculations that these plants would come to almost grinding halt. This can be called more of an arm twisting tactics wherein developers may to give in for surviving.
  • The Government seems to be doing a step brotherly treatment to these private investments that came to save the sinking power situation in India; government recently ruled out coal and gas supplies to MPPs at a time when spot rates that have touched extremes of Rs 1.20 and Rs 19 per unit. CAG also expressed its reservation on companies with captive coal block using cheaper coal to gain wind fall profit through merchant sale and advised that captive coal block owner to sign PPA for power generated using the captive coal. The coal ministry has barred companies from selling cheaper captive coal-generated electricity in the merchant market at arbitrary prices and mandated these companies enter into long-term power purchase agreements (PPAs) with distribution companies. The ministry’s move is likely to companies, including Jindal Power and its parent company, Jindal Steel and Power, Tata Power, GVK Power, Adani Power, JSW Steels, Hindalco Industries, Bhushan Power and Steels and Balco, which have been allocated captive coal blocks to meet fuel requirements of their independent power projects that has sizeable merchant power projects.
  • To understand the current and future industry dynamics, InfraInsights in its report “Trends And Forecast on Merchant Power Plants In India” aims to capture key trends that shaped the MPP market in India. Report will analyze key capacity additions trends upto 2013 by technology, year, state and player wise. Dynamics of open electricity market in India, trend in spot electricity market price trends, impact of seasonal variations, role of trading licensees and power exchanges. Key issues and challenges including fuel shortage, volatility in merchant tariffs, risk to viability of business models, weak financial position of discoms are also discussed and various strategies to de-risk  these issues are also analyzed. The report will forecast likely future capacity addition trends of MPPs till 2017, emerging market structure that may act as a savior and revive sluggish MPP market, including open access policies and future trends expected in spot electricity prices. Lastly risk profiling of key upcoming coal plants of all IPP and MPPs will be done basis three parameter: fuel linkage, technology used and water availability. InfraInsights through this report will infer on whether MPPs will flourish in India or will the model hit a dead end soon given the slow pace of power reforms that will pave way to total open market where price is discovered through market mechanism and consumer are empowered to choose their desired supplier for power.
  1. Executive Summary
  2. Research – Approach and Methodology
  3. Trends Analysis from upto 2012
    1. Overall MPP market evolution
    2. MPP Capacity addition (Planned Vs Actuals)
      • Year wise
      • State Wise
      • Player Wise
      • Technology Wise
    3. Cost of Generation
    4. Policy & Regulations Evolution
      • Status of open electricity market
      • Case I Vs. Case II bidding
      • Policy Flip Flop
    5. Market Structure & Competitiveness
      • Power Trading
      • Power Exchanges
    6. Competitiveness Landscape
    7. M&A
  4. Trends in Spot Electricity Market Price upto 2012
    1. Total Short-term Transactions of Electricity with Respect to Total Electricity Generation
    2. Electricity Transacted through Trading Licensees and Power Exchanges
    3. Price of Short-term Transactions of Electricity
    4. Seasonal variations in spot market prices
  5. Trends in Issues and Challenges faced by MPPs
    1. Fuel Shortage
    2. Volatility in Merchant Tariffs
    3. Weak financial Position of Discoms
    4. Risk to viability of business models
    5. Others
  6. Trends in De-risking Strategy taken by MPPs to mitigate business risks
    1. Cost Related
    2. Revenue Related
      • Sales to Third Party
      • Sales to Discoms
      • MPP going PPA way
    3. Operations Related
    4. Fuel Related
    5. Grid Connection Related
  7. Forecast upto 2017
    1. Capacity Addition till 2017
      • Year Wise
      • State Wise
      • Technology Wise
      • Ownership
    2. Emerging Policy & Regulations Regime
      • Open Access
    3. Emerging Market Structure
    4. Spot Electricity Prices
  8. Risk Profiling of Existing and Upcoming MPPs
    1. Fuel Linkage
    2. Technology Used
    3. Water Availability
  9. PESTEL Analysis

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