Power Sector Analysis: Porters Five Forces Model

Power Sector Analysis: Porters Five Forces Model More than 63% of Indias total installed capacity is contributed by thermal power. Western region accounts for largest share (30.09%) of the installed power in India followed by Southern region with 27.76%. Unbalanced growth remains the cause of concern for the Indian power sector. Only about 56% of households have access to electricity, with the rural access being 44% and urban access about 82%. Southern region remains the dominant region in renewable energy source accounting for more than 57% of the total renewable energy installed capacity. Indias power generation has grown with nominal rate at 0.65% in 2008 compared with 3.90% increased in 2007. Thermal, hydro and nuclear and wind are the major sources of power generation. Thermal power generation recorded positive growth at 3.25% in December 2008 however hydro and nuclear were recorded negative growth rate at 12.41% and 21.62% respectively in December 2008 compared with December 2007. In April-December 2008 power generation were recorded 2.57% growth compared with April-December 2007. There has been significant improvement in the growth in actual generation over the last few years. As compared to annual growth rate of about 3.1% at the end of 9th Plan and initial years of 10th Plan, the growth in generation during 2006-07 and 2007-08 was of the order of 7.3% and 6.33% respectively. Power Generation is primarily owned by the government (close to 90%) and the rest of the generation capacity is controlled by the private sector. Energy deficit in India has increased over the years. During the year 2007-2008, average energy shortage was 9.0 percent and peak energy shortage was 15.2 percent. As India develops, it is expected that energy demand will increase by more than 8 percent over the medium term. Factors that have been plaguing Indias power sector are capacity shortages, frequent power failures, poor reliability and deteriorating physical and financial conditions. Since majority of power generation is through thermal sources which are dependent on fossil fuels and cause environmental degradation through carbon emissions. Off late the government is laying more emphasis on using hydro and wind energy sources for power generation which are environment-friendly. An analysis of the Power sector using Porters Five Forces model Buyer Power Based on the following parameters it can be said that Overall the buyer has weak power. Low Switching Cost switching cost for the buyers is low as of now but is supposed to increase when new players come in the market as the product in not differentiable i.e. electricity. Buyer size Very small. Oligopoly Threat Very Low. Undifferentiated product As the product i.e. electricity is undifferentiated product, so this increases buyer power. Tendency to switch Buyers will switch to the supplier who is efficient and cost effective. Price sensitivity Not much price sensitive Financial muscle Nothing as compared to PSEs. Buyer independence Low as of now but if more suppliers come into picture as Govt. has sought competition in this market, the buyer power will increase. Product dispensability Very Low. Supplier Power Based on the following parameters it can be assessed that the supplier Power in High. Supplier size Very Large as the suppliers are Large PSEs. Oligopoly threat Small number of suppliers enjoy monopoly, thereby contributing to the supplier power. Switching costs Very high, as only large govt. companies are the suppliers. Player independence Low Substitute inputs As no substitute inputs, so the firms have no choice. Player dispensability High Differentiated input- Inputs are same i.e. electricity in case of company buying electricity from wholesale market and selling to the end-users, and coal or gas in case the company is in power generation field. Threat of New Entrants The Threat of new entrants is moderate based on the following parameters. Low Switching Cost Switching cost for the end-user is low, so it increases opportunity for the new entrants. Undifferentiated product Product is not differentiable i.e. electricity, so the users have the incentive to switch to the low cost supplier. This increases the opportunity for the new efficient entrants. Fixed costs High fixed cost acts as a barrier to entry for new entrants. Little regulation Delicensed generation and multiple licenses in the distribution in the same area of supply acts as an opportunity for the new entrants. Distribution accessible Increasing the threat of new entrants. Suppliers accessible Increasing the threat of new entrants. Market growth High, leading to great opportunities for new entrants. Threat of Substitutes The Threat of substitutes is Weak as per the following parameters. Low Switching Cost The cost of switching to substitutes like gas, solar penal, etc. is high. Rivalry among existing firms The rivalry among existing firms is low as per the following parameters. Competitor size Very Few companies very large in size like NTPC, NLC, NHPC, NPCIL, PGCIL etc. Number of players Very few. Hard to exit Ease of expansion Difficult because of lack of investment and resources. Why should weather derivatives be introduced in India? Estimates suggest that the unutilized hydro power potential of India is in excess of 0.15 Million MW. This figure indicates that there is growing importance of weather dependent hydro and wind based power projects in India. Power generation through hydro and wind depends on a number of critical weather factors such as rainfall, snowfall, wind speed etc. Already weather derivative products based on these indices is being used in a number of countries. With the introduction of availability based tariff the spot market for electricity trading has come up where electricity is bought and sold by market participants like producers, consumers and intermediaries. These developments have taken the market for electricity closer to other normal markets in the economy where derivative trading has been successfully going on. Indian electricity market is still very much controlled by the government unlike the US market which is highly competitive. The Indian government offers a number of subsidies to the consumers thereby absorbing the cost of production and transmission and increasing the fiscal deficit. Introduction of weather derivatives will help in passing the cost to the consumer thereby reducing the burden on the government. Continuous supply of energy to agriculture and industrial sector is essential for the rapid growth of the economy. The government cannot afford to overlook this issue as this would act as a major deterrent to the foreign direct investment. Introduction of weather derivatives would bring in a lot of private participation in energy sector thereby making it more competitive, efficient and robust. Introduction of weather derivatives would serve as an effective risk hedging mechanism for Indian power sector in comparison to other alternatives such as long-term power purchasing agreements. Electricity Derivatives and long term power purchasing agreements: All commodities are being successfully traded on Indian stock exchanges but derivatives trading in power sector has not begun yet. Weather derivatives would be traded soon once the parliament approves the amendment in Forward Contract Regulation Act. Although the electricity derivatives market have not done that well worldwide analysts suggest that unless the spot market for the underlying commodity is well functioning, it is very difficult to have a feasible derivatives market. It would be a difficult task to promote electricity derivatives in India as the spot market in electricity is still in its growing stage and private participation is almost nil. Some of the requirements that should be met for a viable electricity derivative market: An active and competitive spot market with a large number of private participants Government should reduce its control over generation, transmission and distribution of power Availability of adequate number of power exchanges that would cater to the need of each of the geographically segmented electricity market. There should be sufficient surplus power generation capacity available so that power may be transmitted to desired destination without any loss of time. The above features are nonexistent in the Indian market with the majority of the control lying with the government thereby making the electricity market in India highly non-competitive. As per reports it is suggested that in a non-competitive market demand for power should be met by long term power purchasing agreements and a very small percentage should be traded in the spot market because of price volatility. Such agreements hedge the risk of power producing companies but the risk is transferred to the purchasing companies who have to pay the contracted rates. Most of the state electricity boards in India are purchasing power through long term contracts and continue to be in a state of financial bankruptcy. This long term agreements simply shift the price risk to the consumer. In India as of now there are no power exchanges where electricity derivatives are being traded. The above arguments indicate that risk hedging in Indian power sector through electricity derivatives and long term power purchasing agreements may not be a long term solution. Weather Derivatives and their effectiveness for Indian Power sector Weather derivatives are instruments used to hedge the weather dependent risk, which could be termed as financial gain or loss due to variability in daily climatic conditions. In the power sector the weather risk is huge both on demand and supply side as they are dependent on weather related factors. On the demand side the amount of energy required for both heating and cooling depends on the weather. Similarly on the supply side the hydro based power plants are dependent on annual rainfall and snowfall. If the rainfall is insufficient there would be less production and in that case the producers will have to buy from the costly spot markets to meet up the contractual obligation. This is highly risky and hence the hydro based power producers need a hedge against the weather risk. Variation in temperature, rainfall etc means that it would affect the power consumption. Indian electricity market is highly regulated with majority of control related to buying and selling of power is rested with the government therefore price risk in Indian context is not an issue but the volume risk is a major threat. Weather derivatives offer a feasible solution to overcome the volume related risk in Indian power sector as it can be implemented without disturbing the market structure or by making huge infrastructural investments. An essential requirement for trading weather derivatives is the availability of accurate historical and current weather data which is available at the Indian Meteorological Department. The financial market is well developed in India. One important requirement could be developing appropriate weather based indices, designing pricing mechanism for weather derivative contracts and educating the participants about the concept. Once regulatory roadblocks are cleared these contracts could be listed on major stock and commodity exchanges of the country where users, producers and other participants may trade them. State electricity boards and government owned power p roducers would benefit from weather derivatives. Trading in weather derivatives would also bring in a lot of foreign direct investment in power sector as this would be an effective way to hedge volume related risk in power sector. The government needs to open the power distribution to private players to bring in more liquidity and improve efficiency. From above argument it is evident that the weather derivatives are a much better risk hedging alternative as compared to electricity derivatives and long term power purchasing contracts. Selection of Appropriate Weather Derivative Contract A suitable weather derivative contract depends upon the risk tolerance of buyer and the seller weather they are risk averse or risk loving and what their expectations are about the future. Few basic rules before selecting a weather derivative contract: If the parties are risk averse and wish to avoid paying contract premium then variable weather risk can be fixed with a swap contract. If the parties are willing to take risk by paying a moderate to high premium and the probability of price hike is very high then a cap contract can be considered.. If the parties prefer protection from losses due to price decline or lower production more than the benefits from the price rise or increased production then a collar contract is the most suitable one. Swap Contract A weather swap can be constructed for a hypothetical power producer Hydel ltd. if it wants earnings stability from lower rainfall, but would also like to benefit from cold winter conditions without paying a premium. Swap payout structure Cap Contract Assume that a power starves state electricity board wishes to hedge peak load requirement during the summer season. Further, it is assumed that past 20 years data reveals that during the five-month summer season there are 5,000 cumulative cooling degree days (CDDs), on average. After analyzing the relationship between power consumption and historical weather conditions, it is determined that for each CDD above 5,020, SEBs earnings are affected by Rs. 50,000. Therefore, a weather cap contract is structured with a strike value of 5,020 and premium of Rs. 5 million. Cap Contract payout structure Collar Contract Collar contract restricts the natural outcome to upper and lower put boundaries. It is a combination of put and call options. Consider the case of a hypothetical Counterparty Hydel Ltd. The possible payout profile would be: Counterparty: Hydel Ltd. Term: June 2005-May 2006. Index: cumulative inches of rainfall per year, as measured at Station X. Put strike: 40 inches (Hydel Ltd. receives below). Call strike: 60 inches (Hydel Ltd. pays above). Payment: Rs. 10,000 per 1/10 inch. Put limit: 25 inches. Call limit: 80 inches. Premium: No premium. Collar payout structure

The Different Types of Discrimination Essay -- Prejudice, Racism, Cult

Discrimination Religion, national origin, race, and social status are the suspect classifications of discrimination, but are these the only categories that should not be discriminated against? People today are searching for equal rights and opportunities. No one should be suffering from any type of discrimination, but they are. Discrimination is an unfair treatment of a person or group based on prejudice, therefore sex, disability, and age should be included in the suspect classifications of discrimination (â€Å"Discrimination†). Sex discrimination is the differential treatment based on sex (â€Å"Answer†). Traditionally in American culture higher value has been given to males, this is why sex discrimination is commonly found in the work place among women. Focus in a workplace where sex discrimination is prevalent; the choices are not made based on the ability of the person, but their gender. The reason why gender is a big issue for women in the workplace is because women are looked at as part of the household committee instead of in the economical world. Women are not seen as capable entities, but solely as â€Å"baby-makers†. This method of conducting business has deterred many women that are far more capable than the men who were given the job. Sex discrimination in the employment world is not a new issue, but one that stems from the past. The Fair Labor Standard Act of 1938 established a minimum wage for both men and women providing equality (â€Å"Answer†). Even though this act was passed, many women are still paid less than men for the same job. In 1963, the Equal Pay Act acknowledged women as workers and not just homemakers (â€Å"Answer†). Now in 2007, sex discrimination is still being done in some occupations, but they are making progress. ... ...en booking a hotel room you are required to be at least 18 years of age. At 18 years old you are required to provide a deposit just incase you break hotel property, while older adults are not required to provide a deposit. We live in a country where youth is full of energy, while old is worthless, but we all should be treated equally. Discrimination has been a big issue in society for a long time. National origin, religion, social status, and race are the suspect classifications that are not allowed to be discriminated against. Are these the only categories that are worthy of protection? Not as long as America is the home of the free. Sex, Disability, and Age discrimination are categories that are being over looked everyday. By not acknowledging these other, very significant types of discrimination not only are the business world losing out, but America as a whole.

Ethnicity and Religion Essay

This compared with around 45% of Hindus and Sikhs. In contrast, only 11% of white people described themselves as belonging to the Church of England. Amongst Muslim men over the age of 35, four in five reported that they visit mosque at least once every week. Data from the 1991 census demonstrates that Britain is ethnically diverse, there is a wide range of ethnic groups with different religious affiliations, and there are more ethnic groups than identified in the census data Modood and Berthoud (1997) analysed the 1991 Census data on ethnicity they suggest that ethnicity comprises: 1. Subjective identification: with which ethnicity do I and my group identify? 2. Religious identification; to what extent does it help construct ethnicity? A number of general points can be made about religious affiliation among ethnic minority groups; that is, those people comprising the 5. 49% of the population identified in the Census as non-white. Most ethnic groups are more religious than the majority of the population. The table below shows the results of a survey conducted in Britain which asked respondents to state their religious affiliation

Fitness For Older Adults - Free Essay Example

Sample details Pages: 4 Words: 1294 Downloads: 9 Date added: 2019/05/07 Category Sports Essay Level High school Topics: Fitness Essay Did you like this example? This paper explores published results and findings that include the older generation and the possibility of them using fitness for a better lifestyle. Aging is inevitable and a process that we will all go through at some point. In order to maintain an active and healthy life, active aging can be key factors due to physical activity and physical fitness. The research shown incorporates an older generation over sixty-five years of age that are still mobile and somewhat active in their daily routines but do not participate in a fitness program that could show positive results in muscle tone, strength, agility, flexibility, or endurance that could further their life, and have many other benefits. A decrease in the above mentioned can lead to difficulties in functioning normally and carrying out activities of daily living. As we get older, many things in life seem to get harder and we even notice some changes to how we used to feel and do certain things in our daily activities. If you ever spent any time in a retirement setting with your loved ones, you too will see the changes. But why do we seem to do less as we age? If you visit these retirement communities, you will see lots of fun activities for the older population like pools, shuffleboard, Ping-Pong tables, and many other activities that try to incorporate social and physical wellbeing but are never in use. Many older people even think that they are always tired, too old, sick, or just to out of shape to exercise. Some rarely leave their residence because they suffer from depression as they do not have family nearby and do not have a stable social outlet. Aging can result from a shift of independence to a more dependent lifestyle due to a decline in physical function and cognitive performance (Ramneth, Rauch, Lambert, Kolbe-Alexander, 2018). Due to low birth rates and people living longer, the proportion of people aged over sixty years of age is growing faster than any other age group worldwide (NIH.gov, 2016). Challenges There are some challenges as to why older generations are not getting enough exercise. First, they are on a fixed income and think that they are not able to pay for gym memberships. This can be alleviated in a few ways. Some insurance groups will pay their gym membership. One other way is the local YMCA that is in almost every city and have very affordable rates no matter what your age is. As they are low on monetary funds, they may also be unable to pay for a fitness coach or personal trainer. They will want someone to show them what exercises to do as they may not be sure what exercises they can do or how a certain exercise can be done. Some may not want to exercise as they do have aches and pains and no not feel as though exercise is attainable through their discomfort. Some may also feel that exercise is impossible due to their medical conditions. If you have diabetes do you run a risk of becoming hypoglycemic? If you have a heart condition is it safe to exercise or will a coronary even be caused by an increase in fitness. No matter what your worry may be, their physician could answer their questions and relieve their worries. This also leads to the possibility of new injuries. As we age our balance is not what it used to be and have some functional decline. Now that they are at a higher risk for falls, a new injury and hip fracture are always in the back of their mind. Lastly is our social decline. As we age our social outlook with peers and others is at its lowest point in life. Older people are less likely to exercise alone and having a partner with similar goals would be optimal. Risk factors to improve Normal aging changes our body and its systems. Some of these changes include our cardiovascular, nervous system, musculoskeletal system, and other systems (Haripriya, 2018). With exercise we can improve our health on many levels. Although we have certain risk factors such as hypertension, cardiovascular disease, diabet es, osteoporosis and the list go on. By improving ones fitness, you can improve your health, lessen symptoms of a disease, or may even avoid them all together. Cardiorespiratory endurance will improve the heart with better blood and oxygen supply, stronger heart contractions, increased blood volume, and lower blood pressure (Fahey, 2001). This also reduces cardiovascular disease by maintaining healthy lipids, lowers inflammation, helps prevent diabetes and obesity by maintaining proper fat percentages (Fahey, 2001). None of the examples above is new news to most but a reminder may be order. Maybe the more important think to know is maybe what can older generations do to improve their health through fitness. Exercises A slow start to a better healthier is within reach. The American College of Sports Medicine calls for moderate intensity aerobic exercise a total of 150 minutes five days a week, thats only thirty minutes a day for cardiovascular health (Baechle, 2010). As you progre ss and meet your goals, you can then increase intensity and /or duration for even more benefits to your health. Most people start off with a bit lower intensity or low impact type exercises. Some good examples would be walking, swimming, water aerobics, or even mild floor exercises like body weight leg raises or chair to toe stands. After you feel a bit more confident, you may increase your intensity to a faster or longer duration of the above exercises or do some aerobics or yoga. You will see results rather quickly as your body adapts then you may want to incorporate a bit more advanced resistance strength training such as Pilates or the machines and light weights at a gym. To keep yourself motivated, try some tools to track your progress. This can be a simple notebook to journal your routine or exercises. If your more tech savvy, you may track your progress and workouts with pedometers during your walking sessions, heart rate monitors you can wear on your chest or wrist to sta y within a certain heart rate range, or even our phones and smartwatches can act at both a step counter and a heart rate monitor to track progress for you. Make it stick The most challenging part is to keep up with your new good habits for a better functional life. Try to find a walking community, there may be one in your area since the 2015 Surgeon Generals call to action promoted walking communities in many cities (Rich, 2017). Make a commitment to yourself. One good way is to make an easy self-contract that you will sign. This is a great way to motivate yourself. Some even make a contract with a friend to get a workout buddy. You are more likely to stick to a new lifestyle when two or more people count on another. Set small attainable goals. Large unattainable goals are harder to reach and take longer. This can make you more impatient with your progress and this will make it easier to give up. Start slowly as you may get sore and may even have some bad days. Be aware of your b ody as it will talk to you. If a certain exercise doesnt feel right, dont do it or get some help. Safety comes first. When you get in your daily exercise routine, be sure to reward yourself. You are now a better healthier person. By sticking to your new exercise plan. You have greatly decreased your mortality rate. Your balance will be improved and less likely to encounter an injury form a fall. You will sleep better, feel better, and have more self esteem as part of your increased cognitive benefits. Don’t waste time! Our writers will create an original "Fitness For Older Adults" essay for you Create order