Beruflich Dokumente
Kultur Dokumente
SCHOOL OF MANAGEMENT
PONDICHERRY UNIVERSITY
PROJECT REPORT
Submitted By
KAMALAKKANNAN G
Section – B
ACKNOWLEDGEMENT
1 Executive Summery
6 b) GE
c) ALSTOM
7 Conclusion
EXECUTIVE SUMMARY
This report gives an extensive study of Power Sector. Analysis of the power
sector by PORTER’s Five Force Model and through SWOT analysis gives the
direction of the sector. Environmental impact of the sector is discussed.
The PORTER’s five forces analysis, SWOT analysis are used to analyze the
industry of power sector. The various analyses show that there has been a
continuous growth in generation and consumption of power in India.
World electricity generation rose at an average annual rate of 3.7% from 1971
to 2004, greater than the 2.1% growth in total primary energy supply. Total world
consumption of marketed energy is projected to increase by 50 percent from 2005 to
2030.
For example, Americans make up less than 5 % of the world’s population yet
consume 26 % of the world’s energy. World electricity generation rose at an average
annual rate of 3.7% from 1971 to 2004, greater than the 2.1% growth in total primary
energy supply. This increase was largely due to more electrical appliances,
development of electrical heating in several developed countries and rural
electrification programmes in developing countries.
De-regulation in areas of the global energy markets has led to fierce competition.
Now more than ever electricity has to be produced at a lower cost with many
countries imposing ever tightening environmental legislation to reduce the impact
power generation has on the environment. The enormous challenges are recognised
in providing electricity as efficiently as possible and strive to develop technology to
meet your needs. Collectively, developing countries use 30% of the world's energy,
but with projected population and economic growth in those markets, energy
demands are expected to rise 95 %. Overall global consumption is expected to rise
50 % from 2005 to 2030.
World energy consumption is projected to expand by 50% from 2005 to 2030 in the
IEO2008 reference case projection. Although high prices for oil and natural gas,
which are expected to continue throughout the period, are likely to slow the growth of
energy demand in the long term, world energy consumption is projected to continue
increasing strongly as a result of robust economic growth and expanding populations
in the world’s developing countries.
Energy demand in the OECD economies is expected to grow slowly over the
projection period, at an average annual rate of 0.7%, whereas energy consumption
in the emerging economies of non-OECD countries is expected to expand by an
average of 2.5 % per year.
Legal provisions to support and regulate the sector were put in place through the
Indian Electricity Act, 1910. Shortly after independence, a second Act - The
Electricity (Supply) Act, 1948 was formulated, paving the way for establishing
Electricity Boards in the states of the Union.
In 1960s and 70s, enormous impetus was given for the expansion of distribution of
electricity in rural areas. It was thought by policy makers that as the private players
were small and did not have required resources for the massive expansion drive, the
production of power was reserved for the public sector in the Industrial Policy
Resolution of 1956. Since then, almost all new investment in power generation,
transmission and distribution has been made in the public sector. Most of the private
players were bought out by state electricity boards.
From the installed capacity of only 1,362mw in 1947, has increased to 97000 MW as
on March 2000 which has since crossed 100,000 MW mark India has become sixth
largest producer and consumer of electricity in the world equaling the capacities of
UK and France combined. The number of consumers connected to the Indian power
grid exceeds is 75 million.
However, the achievements of India's power sector growth looks phony on the face
of huge gaps in supply and demand on one side and antediluvian generation and
distribution system on the verge of collapse having plagued by inefficiencies,
mismanagement, political interference and corruption for decades, on the other.
Indian power sector is at the cross road today. A paradigm shift is in escapable- for
better or may be for worse.
Nuclear 6% 1%
Hydro 6% 5%
LOCAL IMPACTS
Large power sources can affect their surroundings through impacts such as
air pollution, submergence of land and waste accumulation, excessive resource use
and disruption of human activity.
Most of the existing thermal power plants in India use the traditional pulverized coal
combustion technology. As a result, they have to contend with gaseous emissions
including carbon dioxide, nitrogen oxides, carbon monoxide, sulphur dioxide,
mercury and particulate matter. Coal-burning thermal power plants in India are
responsible for about 40% of the country’s SO2 and 41% of its CO2 in 2000. Coal-
plant emissions far outweigh those from other fossil-fuel plants contributing to acid
rain, and air pollution and the consequent adverse effects on health.
When based on locally mined coal, the associated problems of mining accidents and
land degradation are serious. In some areas, the use of high ash coal results in
disposal problems, although ash does have productive uses such as brick-making.
However, with the alternative fossil-fuel options, oil- and gas-based plants, too,
issues of waste disposal and possible drilling and pipeline accidents have to be
considered. The water use by some thermal plants constitutes a more serious
Although based on a clean and renewable source, large hydroelectric plants are not
impact free. Large dams can cause submergence of human settlements and natural
forests, adversely affecting or even destroying people’s livelihoods, particularly
traditional lifestyles, and also terrestrial ecosystems. However, the magnitude of
these impacts varies with the location and the height of the dams constructed.
With nuclear power plants, radiation hazards (not only through accidents), and
disposal of radioactive spent fuel must also be contended with. Thus far, no country
is sure of safe and permanent waste disposal. And, while clean in terms of carbon-
emissions, both ends of the nuclear fuel cycle – uranium mining and nuclear waste –
have harmful environmental impacts, if not very carefully managed.
REGIONAL IMPACTS
Regional pollution issues, for example the issue of acid rain and sulphur deposition,
have received attention in Northeast Asia. While the magnitude of coal-fired power
plants' contribution may be disputed, particularly during winter and spring, when
dominant high pressure systems sweep accumulated pollutants off the landmass
toward the eastern ocean mass.
GLOBAL IMPACTS
The Indian power sectors contribute about 52% of the carbon emissions in the
country. Due to the magnitude of its electricity generation, China’s total carbon
emissions are over three times those from India and even on a per capita basis are
over 2½ times. However, as emissions per capita are low by international standards
(EIA, 2003), and developing countries are not required to adopt greenhouse gas
Porter’s model is based on the insight that a corporate strategy should meet
the opportunities and threats in the organizations external environment. Especially,
competitive strategy should base on and understanding of industry structures and
the way they change.
Supply
Many projects have been planned but due to slow regulatory environment, the
supply is far lesser than demand. Currently, India needs to double its generation.
Many projects have been planned but due to slow regulatory environment, the
supply is far lesser than demand. Currently, India needs to double its generation
capacity to meet the potential demand.
Demand
The long-term average demand growth rate is 6%.
Barriers to Entry
Barriers to entry are high, as entering this business requires heavy investment
initially. The other barriers are fuel linkages, payment guarantees from State
Governments, Retail distribution licensed, etc.
SWOT ANALYSIS
STRENGHTS AND OPPORTUNITIES OF POWER SECTOR:
Well established and vast transmission and distribution network.
Highly qualified engineering and technical personnel.
Regulatory framework is further facilitated with enactment of Electricity Bill,
2003.
The Electricity Bill, 2003 holds promises for the power sector and certainly for
the consumer by way of competition reliability and rationalized tariff structure.
Emergence of strong and globally comparable central utilities (NTPC,
POWERGRID).
India has substantial non-conventional energy resource base and
technologies to meet growing power requirements by tapping this energy.
The company operates through 14 plants and 9 service centers. The major
inhibiting factor for the growth of BHEL in the past has been lack of access to large
fund base. The company is a candidate for disinvestment as the Central Government
has decided to offload atleast 20% of its stake towards a strategic partner. This could
help the company in the long run as the strategic partnership could bring in benefits
like access to new technologies and capital.
THERMAL POWER PLANTS GAS BASED POWER PLANTS HYDRO POWER PLANTS
DG POWER PLANTS INDUSTRIAL SETS BOILERS
HEAT EXCHANGERS AND
BOILER AUXILIARIES PUMPS
PRESSURE VESSELS
POWER STATION CONTROL
BUS DUCTS SWITCHGEAR
EQUIPMENT
COMPRESSORS SILICON RECTIFIERS CONTROL GEAR
OIL FIELD EQUIPMENT TRANSPORTATION EQUIPMENT POWER DEVICES
INDUSTRIAL ELECTRICAL
THYRISTOR EQUIPMENT ENERGY METERS
MACHINES
CAPACITORS SYSTEMS AND SERVICES AVIATION
NON-CONVENTIONAL ENERGY
TELECOMMUNICATION SEAMLESS STEEL TUBES
SYSTEMS
CASTINGS AND FORGINGS INSULATORS TRANSFORMERS
o ALSTOM, Mitsubishi
Technological Improvements
o Competitive Price
o Existing tactic in the market will not help in the current scenario
Suppliers
Substitutes
o With excellent customer satisfaction the order are booked for the next
two years (Information from the employee)
SWOT Analysis:
Strengths:
The company has 180 products under 30 major product groups that cater to
the needs of the core sector like power, industry, transmission, transportation,
defence, telecommunications and oil business.
BHEL's ability to acquire modern technology and make it suitable to Indian
conditions has been an exceptional strength of the company.
Strong relationship with NTPC is the strength, as NTPC is planning a capacity
expansion of Rs. 52 bn and based on the past, 85% of NTPC projects have
been bagged by BHEL. The company also enjoys purchase price preference.
Weaknesses:
PSU status is a big weakness for BHEL as it is subject to their rules and
regulations and is forced to carry a huge amount of labor force, which it is not
able to retrench.
The company offers very stringent credit facilities to the customers and this is
a weakness when compared in the face of rising competition. On the other
hand their customers in the power segment, SEBs, have a huge amount of
receivables standing against their name in the company's balance sheet. This
is a major weakness for the company.
The company is vertically integrated, which could have been avoided by
outsourcing its components for power generation and transmission. This could
have reduced the cost.
The power sector reforms are expected to pick up in the near future in India,
which would directly benefit BHEL.
Increase in defence budget will increase the topline for the company.
NTPC is planning additional capacities to the tune of 2,800 MW, at a cost of
Rs 52 bn. BHEL could benefit a lot as it has happened in the past that
significant portion of the project of NTPC is handled by BHEL. Nearly 85% of
the NTPC projects were assigned to BHEL only.
The business of modernization and renovations of power plants is expected to
grow in India.
The disinvestment plans of the government would bring in new resources and
experience into the company.
Joint Venture with Siemens in the name of Powerplant Performance
Improvement Ltd. (PPIL), is a major strength for the company. This tie-up will
be beneficial as there is a lot of scope for business. During FY00 the PPIL
received orders worth Rs. 320 crore.
Threats:
Introduction:
It all started with the flicker of a light bulb and soon enough GE was off and
running…
o At the same time Charles A. Coffin was growing his business, The
Thompson Company
Headquarters
o Fairfield, Connecticut
Number of Employees
o Over 315,000
Locations
o GE
Number of Shareholders
o 4 Million
Commitment:
GE is committed to serving the communities where we do business, providing our
customers with innovative, high-quality products and services and protecting the
health of our workers and our environment.
Integrity
GE’s reputation for honest and reliable business conduct, built by so many people
over so many decades, is tested and proved in each business transaction they
make.
Quality
GE employees embrace Six Sigma's customer-focused, data-driven philosophy and
apply it to everything they do.
o Does not pose too much of a threat to GE, ALSTOM or Siemens for
now
o Tough for new entrants to pinch a sizable chunk of market share from
GE, ALSTOM or Siemens
Suppliers
Substitutes
SWOT Analysis
Strengths
o Excellent management
Spreading the risk of failure in every market and not just one
o Better service
o Better technology
Weaknesses
o Flexibility
o Higher prices
Opportunities
Threats
o Competition
POWER GENERATION
Alstom power activities include the design, manufacturing, services and supply of
products and systems for the power generation sector and industrial markets. The
group covers all energy sources - gas, coal, nuclear, hydro, wind. Alstom supplies
and maintains all components of a power plant and provides complete turnkey
solutions. During the financial year 2007/08, Alstom Power sales amounted to 11.4
billion euros.
Products
Boilers
Steam turbines, gas turbines
Turbo generators and generators
Air quality control systems
Monitoring and control systems for power plants
Turnkey solutions
Services
Product retrofitting
Maintenance and services
Refurbishment of existing plants
Strengths
• Strong parental support gives ALSTOM a clear edge in integrated power and
hydroelectric projects.
• Strong order backlog (Rs30 bn+, >2.4XFY07 revenues) imparts earnings visibility.
• Strong references in India provide a definite advantage to ALSTOM for future
projects.
• ALSTOM is one of the few players to execute hi-end power projects in India.
Weaknesses
• ALSTOM has a longer execution cycle (Hydro projects >5 years, gas projects 2-
2.5 yrs & steam > 4 years)
• ALSTOM’s hydro projects carry various risks including on environmental issues
over which ALSTOM has no control.
• ALSTOM operates in a cyclical industry where business volumes are dependent
upon government plans.
Opportunities
• 11th & 12th Plans comprise 72%+ (coal & lignite) capacity addition in 660/800 Mw
unit size.
• Huge capex in generation (11th plan envisages 157% more than what was
achieved in the 10th plan).
Threats
• Competition with the likes of BHEL remains a key threat for ALSTOM.
• Problems with fuel (like gas) could lead to cancellation / delays in planned projects.
A huge capital investment is required to meet this target. This has welcomed
numerous power generation, transmission, and distribution companies across the
globe to establish their operations in the country under the famous PPP (public-
private partnership) programmes.
The power sector is still experiencing a large demand-supply gap. This has
called for an effective consideration of some of strategic initiatives. There are strong
opportunities in transmission network ventures - additional 60,000 circuit kilometres
of transmission network is expected by 2012 with a total investment opportunity of
about US$ 200 billion.