New Delhi – The Indian energy sector is witnessing transformation and disruption simultaneously. Accomplishing a comprehensive vision for the sector will require thorough planning, sector re-organisation, creating enabling policies and regulations and every stakeholders’ needs to be prepared for such a transformation. KPMG in India, at its 8th annual energy conclave ‘ENRich 2017’, released four (Point of Views) POVs on critical and topical subjects like Transition of the energy sector in India, Electric Vehicles and what do stakeholders need to do to gear up for the disruption, Leveraging our resources advantage, and How to ‘thrive’ in the new normal, and had industry experts at the event delve into these through day-long sessions. The event was attended by Shri Dharmendra Pradhan, Minister of Petroleum and Natural Gas; Minister of Skill Development and Entrepreneurship, Government of India, who delivered the keynote speech in the inaugural session. Spread across 5 panel discussions, the event saw participation from eminent speakers such as Arun M. Kumar, Chairman & CEO, KPMG in India; Manish Aggarwal, Partner, Head – Corporate Finance – M&A, Debt Advisory – Infrastructure, Head – Energy and Natural Resources, KPMG in India; Gurdeep Singh, CMD, NTPC; Rakesh Misri, Executive Director – Corporate Strategy & Business Development, HPCL; Prabir Neogi, Chief Executive – Corporate Affairs, RP-Sanjiv Goenka Group, among others.
Speaking at the conclave, Arun M. Kumar, Chairman & CEO, KPMG in India said, “At KPMG, we recognise that infrastructure is paramount to India’s growth and development, and we can look at it as having three critical components – energy, transportation and urbanisation. Energy, without a doubt, is the most critical aspect of the three. Looking forward, the energy sector will see significant changes globally, and India is no different. With the advent of digitisation, Industry 4.0, decarbonisation and customer focus, the utilities of tomorrow are bound to be very different from those we know today. Amongst this, digitisation has been a dominant policy narrative, with several key interventions being introduced across sectors. However, digitisation in the energy sector is still at a nascent stage with minimal use cases such as smart meters visible in the market. There is a need for creating an enabling regulatory and policy framework that will shape the future use of digitalisation in India’s energy sector by 2050. ENRich provides an industry platform to deliberate and analyse solutions to overcome some of the governing challenges in the sector as well as leverage opportunities that the imminent transition offers.”
KPMG in India’s POV titled ‘Transition of the energy sector in India: Creating a vision for the future’ shares a snapshot of the sector’s evolution over the past three years and key trends reshaping the landscape. It also defines a comprehensive vision for the sector with key aspects to be considered to achieve it. Evolving a vision for the future will require the sector players to consider aspects such as structural changes, planning and design paradigms, future role of utility, contract structures, stressed assets resolution, creating new structures for the power, oil & gas markets, serving rural consumers, embedding obligation to serve within the regulatory framework, adopting technology, dealing with cybersecurity related challenges and re-skilling the sector in line with changing paradigm. The three key trends reshaping the energy landscape in India are Decarbonisation, Decentralisation and Digitalisation.
Sharing his views during the event, Manish Aggarwal, Partner, Head – Corporate Finance – M&A, Debt Advisory – Infrastructure, Head – Energy and Natural Resources, KPMG in India said, “It is critical that the vision for the future underlying policies and strategies, while taking note of the current state of the sector also take into account the evolving state. The GoI has demonstrated tremendous initiative and leadership in resolving current sector issues, and even as that remains in progress, it must lay clear pathways to ensure a well-functioning and vibrant energy sector in times to come.”
The second KPMG in India POV titled ‘Electric Vehicles: A case for a proactive approach’, analyses how real this force of disruption is, and recommends actionable insights to the government to help boost the sector aggressively.
It also shares KPMG’s 2030 Outlook for the electric vehicles (EV) scenario:
- A 100 per cent EV nation is estimated to contribute 12 per cent of the INDC emission intensity reduction targets (33-35 per cent)
- Oil imports saved due to 100 per cent incremental EV adoption by 2030 is USD 60-70 billion annually
- Due to 100 per cent incremental EV adoption by 2030, the Indian economy is expected to save INR56 lakh crores
- These savings are net of power costs incurred less the oil purchase costs
The third KPMG in India POV titled ‘Are we leveraging our resources advantage?’ throws light on global trends and challenges, key enablers. Some opportunities and threats that KPMG in India sees at play for coal, oil and gas shared in the POV are:
E-mobility to be a key demand driver of electricity; likely to be positive for coal-based generation but negative for oil and gas sector
India’s oil and gas potential has still not been sufficiently explored and much headroom exists for new discoveries
Increased thrust on rural electrification may lead to higher demand for power
Renewables and storage likely to emerge as key substitutes for fossil fuels
Energy efficiency to be another key substitute (of energy demand)
Regulatory environment to continue to get stricter, increasing the compliance cost
Change in the energy market structure will necessitate changes in the coal and oil sector
Various initiatives aimed at growth of infrastructure and manufacturing sector will continue to spur the development of steel, cement and other energy intensive industries.
The fourth POV titled ‘How to ‘thrive’ in the new normal?’, elaborates upon the disruptions reshaping the energy industry, global transitions in the energy mix and gives key focus strategy areas – cost and efficiency improvements, digitalisation and convergence of Information Technology and Operational Technology, innovative business models and value-added services, consumer centricity and convergence of energies – to thrive in the age of disruption.
ENRich 2017 saw participation of more than 200 clients of KPMG and about 15 eminent industry experts as speakers around the various sessions of the day. A number of solutions and suggestions came from the distinguished panelists and the learned participants on working towards overcoming the issues that are likely to impact the sector. KPMG in India looks forward towards working with the industry and concerned stakeholders to address this transformational journey.