Energy has become essential in
modern lifestyle. We cannot think of our household or lives without modern
electrical gadgets and appliances like laptops, refrigerators, microwaves, air
conditioners, induction stoves, washing machines, cars and two-wheelers. This
increased dependency on electrical devices has led to increased energy demand. Energy
is not only restricted to households but also plays a key role in diverse
segments and is a important driver for industrial growth. Beyond homes, industries
like healthcare, FMCG, textiles, chemicals, agriculture, financial services, oil
and gas and so on rely heavily on energy.
Energy supports vital functions like internet services, data
transmission, telecommunication and broadcasting stations.
Industries within the Energy
Sector
The Energy sector has three main
components – Oil and gas industry, power industry and renewable energy industry.
Oil and Gas Value Chain - It
consists of upstream, midstream and downstream companies. Upstream explores and
extracts oil and gas. Midstream processes, transports, and stores. Downstream
refines and markets.
Power Value Chain – It
consists of companies involved in generation, transmission and distribution of power. Power generation uses
thermal, gas, hydro, nuclear, and other methods. Transmission moves energy to
substations; distribution delivers energy to consumers
Renewable Energy/Green Energy -
Renewable energy sources such as solar and wind are becoming increasingly important.
Solar involves engineering, procurement and construction (EPC) services,
ancillary equipment, and development. Wind includes blade production, towers
and nacelles, which house gearboxes, shafts, generators, and brakes.
Further, Energy ancillary firms
offer vital services like EPC, operations, maintenance, and automation
technologies.
So where does the Opportunity
Lie?
India's energy sector continues
to be pivotal in its growth narrative, bolstered by robust structural growth
and with energy playing a key role in achieving economic targets. With anticipated
increase in energy demand over the next decade, fueled by climate change,
expanding manufacturing capabilities, and rising per capita income, underscore
its potential as a compelling long-term investment opportunity.
For investors interested in the
energy sector, ICICI Prudential Mutual Fund currently has a New Fund Offer
(NFO) underway, focused on the energy sector, open from July 02 to July 16,
2024. The scheme’s investment universe includes companies involved in green
energy, oil and gas sector, power and related sectors.
