According to Multinational Investment Bank Morgan Stanley, power generation from gas-based plants is expected to grow at 9% CAGR vis-à-vis the overall demand growth of 4.5% for the next 5 years. A lot of it can be attributed to its low-cost & renewable trait and the fact that the gas-based power plant is bound to be more competitive than its coal-based counterpart.
Morgan Stanley, in its report that published last month, claims that there lies a strong expectation of share of gas-based generation in the power mix to go up by 80 basis points in the next 5 years. Key reasons why this type of generation will go up is due to the inclination of fulfilling environmental obligations, lessening of coal imports as the gas prices are very competitive and growth in renewables.
Gas & Hydro are alternatives that complement renewable sources of energy. Setting a new hydro based capacity takes a significant amount of time in India whereas gas plants not only take lesser time but also involve low technical minimum level for operations. Gas-based plants consume less fuel as compared to domestic coal-based plants and hence go easy on the pocket. Although it is well to be noted that the demand for gas by power generation companies has stagnated over the past few years due to unavailability of an adequate supply of gas which has, in turn, resulted in under utilized capacity.