BMI's Executive Summary

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The new India Power Report from BMI forecasts that the country will account for 11.9% of Asia/Pacific regional power generation by 2011, with a growing generation shortfall that requires rising imports. BMI's Asia/Pacific power generation estimate for 2006 is 6,167 terawatt hours (twh), representing an increase of 7% over the previous year. We are forecasting an increase in regional generation to 9,041twh by 2011, representing a rise of 46.6%.

Asia/Pacific thermal power generation in 2006 is estimated by BMI at 4,644twh, accounting for 69.9% of the total electricity supplied in the region. Our forecast for 2011 is 6,455twh, implying 39% growth that raises the market share of thermal generation to 71% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. India's thermal generation in 2006 is estimated at 597twh, or 12.9% of the regional total. By 2011, the country is expected to still account for 12.9% of regional thermal generation.

For India, coal is the dominant fuel, accounting for an estimated 56.5% of 2006 PED, followed by oil at 29.2%, gas at 8.7% and hydro-power with a 5.9% share of PED. Regional energy demand is forecast to reach 5,258mn toe by 2011, representing 47% growth over the period. India's estimated 2006 market share of 11.6% is set to fall to 11.0% by 2011. India's estimated 19.5twh of nuclear demand last year is forecast to reach 45twh by 2011, with its share of the Asia/Pacific nuclear market rising from 3.4% to 6.2% over the period.

India's overall business environment can be considered fairly attractive in a regional context, with moderate levels of long-term political and economic risk. The weakest suit is the limited extent of progress in power market deregulation, considerable state ownership and few steps toward liberalisation. Growth in energy demand and power generation is better than the regional average, as is the degree of energy import dependence – although this position is set to weaken as oil, gas and coal demand growth expands more quickly than domestic supply. In the BMI Business Environment Ranking matrix, India receives a composite score of 28, which ranks the country equal fourth out of 11 states included in the Asia/Pacific region, alongside Indonesia.

BMI is forecasting Indian real GDP growth averaging 7.9% per annum between 2006 and 2011, with this year's forecast at 8.7%. Population is expected to expand from 1.11bn to 1.19bn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly. The country's power consumption is expected to increase from an estimated 780twh last year to 1,499twh by the end of the forecast period, leaving a shortfall in generation rising from 47twh in 2006 to 422twh in 2011, assuming 8.0% annual growth in generating capacity.