A growing economy needs power, both for domestic and industrial use. India is highly energy deficient. The power consumed by an average US citizen per day is equal to that consumed by an Indian in more than 20 days. This, coupled with the fact that the affluent Indian middle class is spending a lot on domestic appliances, and a growing manufacturing industry needs more power to meet its energy needs, provides tremendous growth potential for companies in the power sector.

Even China has a per capita electricity usage rate of 1,684 Kwh — almost thrice that of India. This means that if Indians aspire to achieve the same standard of living as that of an average Chinese, power generation in India should triple from its current level. Assuming an average capital cost of Rs 4 crore to generate one mw of power, the estimated investment works out to over ~$250 bn over the next few years. Around 30% of this will go to EPC contractors (such as L&T, HCC and IVRCL). The bulk of the balance $165 billion will be spent on buying equipment from suppliers (such as Bhel, Siemens and Alstom). This amount is over10 times the current turnover of the industry. Read More

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