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PIINSIDER POWER

A S I A’ S L E A D I N G P O W E R R E P O R T

WHO ARE YOU CALLING BRIC?

VOLUME 2, ISSUE 1

AN IN-DEPTH REVIEW OF INDIAN ENERGY DEVELOPMENTS

PLUS • Shale Gas in China • Coal and thermal Combustion India • The complete Indian market review

FEATURES INSIDE: Interview with Dr Farooq Abdullah | India’s Hydro market developments | Coal market overview India | The Asian Gas Market | News and regional reviews PI_JanFeb_Cover.indd 1

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welcome With a population of over one billion people living in 28 states, 27 populous country in the world. Based India is the second most on India’s current population growth rate of 1.4% per annum, many predict that India will surpass China as the world’s most populous country by the mid twenty-first century. It is clear that demands on the electricity sector will increase at a dramatic rate.

Contact us: Editor: Charles Fox Journalist: Robin Samuels Creative Director: Colin Halliday Sales Director: Jacob Gold Business Sales Manager: Sam Thomas Account Manager: Daniel Rogers Accounts & Customer Service Manager: Katherine Stinchcombe Managing Director: Sean Stinchcombe SKS Global Limited Kingswood House South Road Kingswood Bristol UK BS15 8JF E: info@sks-global.com W: www.pimagazine-asia.com W: www.sks-global.com T: +44 (0) 1179 606452 F: +44 (0) 1179 608126

SKS Global Power Insider Asia magazine is published bi-monthly and is distributed to senior decision makers throughout Asia and the Pacific. The publishers do not sponsor or otherwise support any substance or service advertised or mentioned in this book; nor is the publisher responsible for the accuracy of any statement in this publication. Copyright: the entire content of this publication is protected by copyright, full details of which are available from the publisher. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electric, mechanical, photocopying, recording or otherwise without the prior permission of the copyright owner.

India has a land area of approximately 3 million square kilometers (slightly more than one third of the United States’ land area) and has recently made progress toward linking its 28 states through a national transmission grid. The country has ports on the Arabian Sea to the west, the Bay of Bengal to the east, and Indian Ocean to the south, providing it with port access to natural gas being shipped from the Persian Gulf region. India’s GDP, based on purchasing power parity, is estimated at US$ $3.03 trillion currently one of the highest in the world. This month we take a look at India, its hydro and renewable potential and delve into the coal sector. Also in this edition we take some time to have a look at Shale in China and pay some attention to the gas markets of Asia. We have been busy over the last few months adopting our ‘social media’ strategy. We have gone from no followers to over 15,000! Phenomenal, but then so is the growth of the market and what we are all about. If you 78 aren’t following, add @pimagazineasia Enjoy this issue guys, and questions please send them to me at Charles@pimagazine-asia.com

56Fox Charles Editor

power insider january/february 2012 3

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Solutions for Optimal Combustion and Emission Monitoring Igniters/Pilots/ Burners

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● On-line/real-time video imaging of the combustion process (Furnace Camera) ● On-line/real-time analysis and display of the temperature distribution in the combustion area (Thermography)

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Dust (dry)

D-R 800

D-RX 250

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DeNOX

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D-R 290

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Igniters D-HG 400 Retraction Units D-VE 500 Ignition Burners, Warm-up Guns HEGWEIN

Flame Monitoring D-UG 660 D-LE 603 D-LX 200

Internet D-EFUE.www

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D-EMS 2000 Environmental Data Management

Emission Monitoring

Environmental Data Management

● Dust Concentration Meters ● Wet Stack Dust Concentration Meters ● Opacity Meters ● Ambient Particulate Monitors ● Volume Flow Meters ● Filter Monitors ● Total Mercury Analyzers

● Capturing, storing and evaluating of environmental data ● Emission data, immission data, waste water data, meteorological data, process conditions, time diagrams, correlation diagrams

www.durag.de Kollaustrasse 105, 22453 Hamburg, Germany · Tel. +49 40 55 42 18-0 · email: info@durag.de Companies and Branch Offices in Brazil, China, France, India, Italy, Japan, Korea, Netherlands, United Kingdom and USA

PI_JanFeb_Durag_Group.indd 22

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CONTENTS 6

News Interview 27 With Dr Farooq Abdullah

12

India 2011 And Beyond!

22

India Coal - Uncertain Times

20

India Hydro Power

26

China’s New Super Energy Ministry

30

China Shale

34

Crestchic - Taking the Load

36

Energy For The Masses

38

Hydrogenics

40

Optimal Combustion

42

Asia’s Gas Market Heating Up

44

78

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NEWS DESK CHINA BEGINS EFFORT TO COME CLEAN ON POLLUTANTS Chinese officials are starting to post new data about air quality on the Internet, but already there are questions about the reliability of the information. The effort by the Beijing Municipal Environmental Monitoring Center comes in response to repeated calls from the public for better information about what exactly is in Beijing’s smog-filled air. The new readings are for PM2.5 - particles that measure 2.5 micrometers or less, smaller even than the average width of a single human hair. Scientists say despite their tiny size, the particles are among the most dangerous because they are able to lodge themselves into the lungs. Saturday’s initial reading, taken from a single monitoring station in the capital, registered between 0.003 and 0.062 micrograms per cubic meter, classifying the air quality as good. But some environmental experts are suspicious. Consultant Steven Andrews, who has studied Beijing’s pollution data since 2006, told the Associated Press that a similar monitor placed at the U.S. embassy in Beijing registered such low levels of pollution only 18 times in the past two years. Earlier this week, the embassy classified Beijing’s air quality as hazardous after it found the level of PM2.5 exceeded its monitor’s maximum reading of 500 micrograms per cubic meter. Chinese officials say they plan to install additional air quality monitors around the city. Until now, officials had based their air pollution readings on the prevalence of particles that measures at least 10 micrometers.

COMPANY NEWS FROM AROUND THE WORLD

Und Appeal

U.N. climate talks in South Africa in December made headway on the design of a green climate fund to channel up to $100 billion a year by 2020 to poorer nations but achieved little on establishing where the money will come from to fill it. “I see the green bond being an important part of that

contribution,” Flensborg said. Flensborg said banks are working with investors and environmental groups to develop international certification standards on the environmental credibility of green debt issues. He also expects to see green bonds issued by corporations and governments this year. Flensborg said fund

managers are becoming more aware of climate-related risks, such as severe drought or flooding. “Investing in a green bond is not only about being good, it’s about being a prudent manager,” he said. Buyers of green bonds have ranged from private investors and banks to large pension funds such The New York

State Common Retirement Fund, the California State Teachers’ Retirement System and the United Nations Joint Staff Pension Fund. Nikko Asset Management Europe manages two World Bank Green Funds for investors in Japan, Europe and the Middle East. Other notable green bond investors include Calvert

Asset Management, Cazenove Capital Management and Rathbone Greenbank Investments, according to the World Bank’s website. In addition to the World Bank, green bonds have been issued by the European Investment Bank, the Asian Development Bank, the Nordic Investment Bank, and the African Development Bank.

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World Bank to issue larger green bonds The World Bank is likely to increase the size of its green bond issues to a range of $300 million to $500 million this year to attract large bond funds to the environmental debt market, said an official at one of its lead managing banks. The World Bank so far has issued more than $3 billion of triple-A rated green bonds and has used the proceeds to support its projects in areas such as renewable energy, flood protection and watershed management in developing nations. Most of the bank’s 46 green bond transactions have been under $100 million, which fall off the radar of many large bond fund managers. “We expect to see bigger issues coming out in 2012,” Christopher Flensborg, head of sustainable products at Skandinaviska Enskilda Banken (SEB), told Reuters. According to the OECD, environmental bonds could raise hundreds of billions of dollars a year to help finance a shift to cleaner economic growth if

governments set strong goals such as for slowing climate change. SEB, a top lead manager for World Bank green bonds, in December increased the size of a World Bank green bond to $510 million. Flensborg said SEB is likely to work together with other banks to scale up the size of future issues. Multilateral development banks have issued just over $7 billion in green bonds in varying currencies so far. The market, including some private sector bonds, totals around $12 billion, a small fraction of the more than $90 trillion held in global bond markets. Bigger green bond issues are likely to appeal to large bond fund managers such as State Street Global Advisers, one of the world’s biggest fixed income managers with $306 billion in assets, he said. Last October, State Street announced a green bond strategy to enable its investors a way to direct fixed income investments to climate solutions.

Accenture Opens R&D Lab In Beijing To Develop Smart-Grid Technology Management consulting company Accenture is expanding its global research and development capabilities by opening a new R&D lab in Beijing, China. Led by Accenture Chief Scientist Dr. Kishore Swaminathan, the focus of the new lab is to conduct research on emerging technologies and explore innovative ways to address the market needs and challenges of businesses and governments in the region. “Innovation has been a key theme in China’s five-year plan and we look forward to serving as a long-term technology partner in support of the country’s development,” said Gong Li, chairman of Accenture Greater China. “Accenture is well-positioned to help lead innovations that address local market challenges in areas such as energy, health, education, urbanization, logistics and other critical issues,” he said. With a government mandate to reduce carbon emission levels by developing low carbon technologies, one of the initial areas of focus for the Beijing lab is to explore how smart grid technologies can be applied to help address China’s growing energy demands. Beijing is the newest location in the Accenture global network of Technology Labs, which also includes labs in San Jose, California; Bangalore, India; Sophia Antipolis, France; and, Washington, D.C. The Beijing lab also joins more than 80 Accenture innovation centers around the world, which include co-innovation centers with partners such as SAP AG, Oracle, and Cisco. Accenture has also created a product innovation lab with Telstra in Australia, which is designed to develop cloud computing solutions.

Banks that have distributed World Bank green bonds include Bank of America Merrill Lynch, Daiwa Securities , HSBC, JP Morgan, Mitsubishi UFJ Securities and TD Securities.

Siemens Pumps $1.3 Billion Into Gas Turbines to Fend Off GE

Siemens AG has earmarked more than 1 billion euros ($1.3 billion) to expand production

of gas- turbines and fend off General Electric Co. as they jostle for share of the expanding market. A “genuine boom” is under way in some regions, with the gas-turbine market growing more than 9 percent annually in the Commonwealth of Independent States, Roland Fischer, the head of Munichbased Siemens’ Fossil Power Division, said in an interview. The division generated 14

percent of Siemens’s total 74 billion euros in revenue last year. Siemens, which claims the No. 1 spot in larger, flexible turbines, is betting rising U.S. shale-gas output and its focus on gas-turbines will help it outflank GE and Alstom SA, which focused more on steamturbines. U.S. spending on upgrading power plants to meet tighter emission rules may touch $100 billion, and falling gas prices will likely

tempt utilities away from coal, said Peter Reilly, an analyst at Deutsche Bank. “We believe our technology is two to three years ahead of the competition,” Fischer said by phone on Jan. 17. “Competition is tough. It’s been hard work to get where we are today. Our rivals are surely not happy. We will do our utmost not to allow anyone to take that position from us.” Fossil power-generation,

the largest of Siemens’ 10 main divisions, has long been an earnings driver and a swelling order book will help offset sluggish demand in areas such as health- care equipment. Under Fischer, sales last year rose 6.8 percent to 10.2 billion euros and earnings jumped 85 percent to 2.83 billion euros, eclipsing the entire profit produced by the Munich-based company’s health-care operation.

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news desk Donauer Solartechnik opens branch in Oman Gilching, 23rd January 2012. Specialist distributor Donauer Solartechnik is opening a branch in Muscat, the capital of Oman, on 1 February. The solar company from Gilching near Munich is a partner in the joint venture with Saleh Ahmed Al Badi, who will direct the Donauer branch in Muscat. Previously, he was member of the executive board of Haya Water, one of the desert country’s largest companies. Donauer will build up a sales and service network in Oman and be the first German system houses to train the local customers and employees on site in its own solar academy. The product range of Donauer’s new branch includes mobile grid-independent solutions, which are suitable for example for rural areas and industrial or touristic use. A further focus is on turn-key solar power stations for grid feed-in with a performance of up to megawatts. Co-partner Al Badi values the technological

know-how and customer orientation of his partner: “Donauer Solartechnik can look back on years of experience and provides customer-specific, highquality solutions at an outstanding price.” Expansion in the Gulf region “The solar market in Oman is very promising”, explains Andreas Fornwald, who manages the business area International Large-Scale Projects at Donauer in Gilching. “Besides the outstanding climatic conditions, the convenient infrastructure and the stable political situation, awareness of the importance of climate protection is increasing in politics and society.” The sultanate is planning several large investments in the solar field for 2012. For the first trading year, Fornwald expects to build solar installations with a total performance of five megawatts. The branch in Oman is only the first step on the Arabian peninsula.”Oman is eminently suitable as a base for the expansion of our activities in further markets of the Gulf area”, says Fornwald.

indonesia’s economic fears Indonesia, with a strong economic growth of 6.5 percent in 2011, has cut its growth expectations for 2012, amid fears that the global economic downturn will bite into the exports of the largest economy in Southeast Asia. Deputy Finance Minister Anny Ratnawati said the government revised the growth target this year, down from 6.7 percent to a range of 6.5 to 6.6 percent, citing the global economic situation and the euro zone crisis. The statement came after Indonesian central bank, the Bank Indonesia, cut its economic growth forecast to a lower rate of 6.3 percent from its original estimate of 6.7 percent this year. Anny said due to the crisis, demand from the euro zone and the United States for Indonesian commodities may slow down. Besides, the impact of the crisis has rattled other economies that used to import Indonesia’s commodities. Indonesian Finance Minister Agus Martowardoyo said demand on Indonesia’s commodity from China, one of the largest importers of Indonesia’s commodities, also slowed. Indonesia has been exporting a great amount of coal, rubber and crude palm oil commodities to China in the last few years. Export growth started to shrink since December when it posted a tiny increase of 2.2

company news from around the world PLN to launch 3 geothermal plants in 2012

State power company PT PLN says it will open three geothermal power plants with a total production capacity of 135 megawatts (MW) this year. The plants were identified as the Lahendong Unit 4 plant in North Sulawesi, the Ulubelu Unit 3 and 4 plant in Lampung

and the Ulumbu plant in Kupang, East Nusa Tenggara. PLN renewable energy chief Muhammad Sofyan said that the Lahendong Unit 4 and Ulumbu plants would start commercial operation in February after completing testing that began in December. “The two plants are currently conducting reliability

tests for a month so that in February, the plants can begin commercial operation,” Sofyan said on Friday. The Ulumbu plant has a capacity of 2x2.5 MW. The geothermal potential at the site is estimated at 10 MW. Lahendong Unit 4 has a capacity of 20 MW. The fourth unit will complement

three currently operating units in the area, bringing total production at the site to 80 MW. Geothermal development in Lahendong is run by Pertamina Geothermal Energy (PGE). The cost of electricity from the plant has been pegged at 4 US cents per kilowatt-hour (kWh). PGE has committed to open

two more 20-MW units in Lahendong by 2013. Exploration for a geothermal energy supply for the planned units was underway since 2008, before officials settled on an area in South Lahendong with an estimated potential of 220 MW. When construction of the Unit 5 and 6 plant has been complete in 2014, PGE will

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IEA REPORT SEES NO LET-UP IN WORLD’S APPETITE FOR COAL OVER NEXT 5 YEARS

percent year-on-year after gaining a 10.2 percent growth in November. The December growth was the smallest since September 2009, when exports plunged by 19 percent. Indonesia saw 6.5 percent growth last year on the back of strong domestic demands and exports, making it grow higher than its peers in the region like Malaysia and Thailand. The growth that Indonesia recorded last year was the fastest since 1996. Despite its proven resilience in dealing with the financial crisis in the past, international agencies have revised their growth forecast for Indonesia. The IMF reduced its Indonesian growth estimation to 6.1 percent from the initial forecast of 6.3 percent this year. The Asian Development Bank (ADB) corrected its growth projection on Indonesia to 6.2 percent from an initial prediction at 6.8 percent. Bank Indonesia unexpectedly cut its benchmark interest rate by 25 basis points to 5.75 percent recently, following a decline of year-on-year inflation in January, to further drive the country’s economic growth. Increasing crude oil prices in international market and the country’s failure in complying with its oil production target, are also among the challenges for Indonesia’s long-term economic growth. Analysts said, by cutting its expenditure on fuel subsidies, the government can free up more funds for improving infrastructure and upgrading the education system, which will in the long run help the economy.

start construction on Unit 7 and 8. The geothermal energy supply for the plants is expected to come from Kotamobagu, which has a potential of 180 MW. In Lampung, the Ulubelu Unit 3 and 4 plant was expected to yield 110 MW, bringing the site’s total production to 220MW, Sofyan said.

Global demand for coal will continue to expand aggressively over the next five years despite public calls in many countries for reducing reliance on the high-carbon fuel as a primary energy source, the International Energy Agency www.iea.org/ (IEA) said in a new annual publication, Medium-Term Coal Market Report 2011. Coal is already the single-largest source of electricity generation globally, and the report says the main reason for the projected increase in coal demand over the next five years is surging power generation in emerging economies. The report, which presents a comprehensive analysis of recent trends in coal demand, supply and trade, as well as an IEA outlook for coal market fundamentals for the coming five years, serves as a reminder of the significant challenges facing efforts to transform the global energy system to one that is sustainable, secure and low-carbon. “For all of the talk about removing carbon from the energy system, the IEA projects average coal demand to grow by 600,000 tonnes every day over the next five years,” IEA Executive Director Maria van der Hoeven said during the launch of the book. “Policy makers must be aware of this when designing strategies to enhance energy security while tackling climate change.” The report also raises concerns about the global implications of China’s massive appetite for coal, noting that events and decisions in China could have an outsized effect on coal prices - and thus electricity prices - around the world over the next five years. To understand why, consider that China’s domestic coal market is more than three times the

“Unit 3 and 4 is expected to become operational in July or October,” he added. The price of electricity from the plant has been pegged at 4 cents per kWh. Despite holding 40 percent of the world’s geothermal reserves of around 28,543 megawatts, Indonesia’s geothermal project development has been minimal.

Although Indonesia began developing geothermal power 30 years ago, the nation currently produces 1,341 MW of geothermal power a year, about 4.6 percent of its potential.

Himachal to explore its geothermal potential

SHIMLA: Hinachal Pradesh known for its hydro-power

global coal trade: Only 15% of global coal demand is met through international trade, yet more than half of global coal demand during the outlook period is projected to come from China. “What happens in China over the medium term may impact the prices for electricity that consumers everywhere will have to pay,” said Ms. Van der Hoeven. Other key findings of the report include: * Growth in coal demand over the next five years will mostly occur in non-OECD countries, with China and India accounting for the majority. * Growing demand means poorer deposits will have to be exploited, which will likely lead to upward pressure on mining costs and therefore on coal prices. * Despite the rise of new exporting countries, like Mongolia and Mozambique, traditional exporters will meet the bulk of demand growth. * While coal has traditionally been considered a cheap and secure energy resource, this perception may be tested in the years ahead. Six countries account for more than 80% of global coal exports, and as demand surges markets could experience more of the infrastructure bottlenecks that in recent years caused coal prices to more than triple. Medium-Term Coal Market Report 2011 is available for sale at the IEA bookshop: www.iea.org/w/bookshop/b.aspx?

potential is now going to exploit its geothermal potential. State government has decided to prepare an action plan keeping in view the research work of an IIT Mandi scholar to explore the possibilities of exploiting geothermal resource potential of Himachal POWER INSIDER JANUARY/FEBRUARY 2012 9

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news desk Suzlon to develop 3,000 MW of wind energy in AP Mumbai: India’s largest wind turbine manufacturer Suzlon Energy will develop 3,000 MW in Andra Pradesh by 2016 with a potential investment of Rs.18,000 crore. The company signed a memorandum of understanding (MoU) with the state government during last week’s Partnership Summit 2012 in Hyderabad. Andra Pradesh is one of the

Canada looks to Asian markets after Keystone rejection U.S. President Barack Obama’s rejection of the Keystone XL pipeline is a “catalyst” for Canada to expand its oil export industry to other markets, Alberta’s Energy Minister Ted Morton says. “U.S. is the best energy market in the world … but it’s only one customer,” Morton told CTV’s Power Play on Thursday, a day after TransCanada Corp.’s pipeline permit application was denied. “The obvious new market is Asia,” Morton said. Prime Minister Stephen Harper has already told Obama the pipeline rejection reaffirms Canada’s need to diversify its energy exports. Obama said Wednesday he didn’t reject TransCanada’s application on its merits. Rather, the 60-day deadline imposed by Congressional Republicans did not give the State Department enough time to properly vet the permit and review the amended route that would avoid the sensitive Sands Hill region in Nebraska. Under the current proposal, the pipeline would traverse six U.S. states, transporting more than 100 million litres of bitumen from Alberta to the Texas Gulf Coast refining hub daily. TransCanada Corp. and the Canadian government are calling the Keystone rejection a “disappointing” delay, but say they’re not giving up on the $7-billion project. The company will re-file its application and Canada is “solidly behind it,” Minister of Foreign Affairs John Baird told Power Play on Thursday. “We’re going to fight hard for Canada’s interests. This is a really important project, not just for Alberta but for the entire country,” Baird said. “We’re frustrated, we’re disappointed,” Alex Pourbaix, TransCanada president, energy and oil division, told CTV News Channel. “They are the largest importer

of oil on the planet and Canada is sitting right above them with the third largest reserves on the planet.” Pourbaix says the new proposal with be similar to the previous one, with the exception of a “modest re-route” in Nebraska. The hope is that the pipeline would be in service by 2014. Baird insisted that the Keystone controversy won’t damage U.S.-Canada relations. His comments were echoed by David Jacobson, the United States Ambassador to Canada, who told Power Play that the two countries remain great trading partners and allies. TransCanada has said the Keystone project could create as many as 20,000 jobs in two years, but its opponents say that number is greatly overstated. Oil industry analyst Roger McKnight, appearing on Canada AM earlier Thursday, said the winners are Obama and environmentalists, while the losers will be American consumers. “In the long run, if this project does not get approved, it’s going to increase gasoline prices and diesel prices and it’s going to increase inflation as a result,” he said. McKnight said if he was in the oil sands business right now he would be getting nervous. “The problem is that there’s so much oil sands product trying to go to the Gulf, it’s creating a glut . . . so basically there’s nowhere for it to go,” McKnight said. The result will be lower return on investment for new oil sands projects in Alberta and potential investors will simply stay away, he said. To help solve the problem, Harper needs to push more aggressively to get the Northern Gateway pipeline project approved, which would carry Alberta oil to a shipping port in British Columbia where it could then be moved to Asian markets, he said.

company news from around the world Pradesh to generate alternate power in the state. A research scholar of IIT Mandi, Vijay Chauhan, had completed a research work on existing geothermal heat sources in Himachal Pradesh and its usage as a sustainable source of energy in the coming years to revolutionize energy

generation in the state. Heat recovery and energy efficiency, improves profitability and reduces CO footprint Using latest technology in combustion of oil and gas can provide significant savings in overall energy consumption. Modern oxygen control that compensates changes in

ambient temperature and fuel qualities can increase energy efficiency up to 3%. By adding the usage of hot combustion air another 2-3% can be saved. Modern burner technology without mechanical linkage, operating with accurate servomotors, can mean big savings in energy cost.

Boilers normally require huge fans for combustion air, which are often driven against closed air dampers in a condition where the boiler is not running on full power. 
These air dampers can be replaced with variable speed drive for the fan motor and the installation will have a payback

time of only a couple of years. 

 Ground source heat and other unused heat recourses, obtained by heat pumps is vastly available and has recently proven to be suitable also for industrial purposes and can be used as a fair alternative for oil and gas burn for heating. The driver

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fastest emerging wind energy destinations in the country. As per the MoU, the state government will help Suzlon in obtaining mandatory permissions, registrations, approvals and clearances necessary for developing wind-based energy farms, the company said in a filing to the Bombay Stock Exchange (BSE) on Monday. “Suzlon, in turn, will play the role of developer and facilitate the channelisation of investments into the state through its customers investing in wind energy,” it said. The MoU covers development of new capacity in wind farms across the state, with developments planned in the districts of Tallimadugula, Alankarayanipeta, Gandikota and other parts of Andra Pradesh.

MINISTRY OF WATER AND ELECTRICITY (MOWE) OF SAUDI ARABIA IMPLEMENTS ORACLE UTILITIES CUSTOMER CARE AND BILLING TO IMPROVE SERVICE DELIVERY The Ministry of Water and Electricity (MoWE) in Saudi Arabia has implemented Oracle Utilities Customer Care and Billing to provide a fully electronic billing system for increased business agility and customer management. MoWE replaced its legacy billing systems with a flexible, scalable and robust solution to better meet the changing needs of its customers. As a first phase of the project, the utility is currently implementing Oracle E-Business Suite, including Oracle Financials, at the Ministry’s head office in Riyadh. The solution is responsible for MoWE’s entire customer life-cycle management, including water billing and portable water and ancillary services. With Oracle Utilities Customer Care and Billing, MoWE users now have a uniform view of customers, real-time information and tools, enabling access to historical customer interactions across all touch points. They can also create audit trails and monitor systems for all queries and transactions for greatly improved customer management. The roll-out has been completed in Al-Madina AlMonawara Directorate by Oracle PartnerNetwork Gold level partner GTS Systems and contractor Arabic Computer Systems. The second phase of the project will include roll-outs for Qassim and Eastern Province Directorates. Oracle will demonstrate its leadership and vision at DistribuTECH 2012 in San Antonio, Tex., United States, January 24-26. Attendees can visit the Oracle booth (600) to learn more about Oracle Utilities’ broad applications and technology footprint. “Because of the rapidly changing water industry in Saudi Arabia, it was critical that our services evolved into something that our customers could rely upon now, and in the future. There is a requirement to serve the customer more efficiently. To this end, we migrated to an electronic billing system that was flexible, scalable and capable of handling information intelligently across our customer base. The new system from Oracle gives us a 360-degree view of our customer information from anywhere in the organization,” Sami Abu Hilal, IT General Manager, Ministry of Water and Electricity. “The Saudi water industry has recently undergone significant changes challenging customer service and billing in a region where water is scarce. With the Oracle solution MoWE can deliver consistent and superior customer service, with immediate visibility into consumer water consumption for increased water conservation and lower costs,” said Bastian Fischer, vice president, EMEA Utilities Industry Strategy, Oracle.

for investing in this technology may not be influenced only by the environmental perspective but also the economic viability. Initial investment returns in savings in fuel consumption and the long term advantages include guaranteed a stable heat source without price fluctuations. These are the main drivers for industries that have decided to make the investment. Many industry sites have added a heat

pump to reduce oil and gas consumption. They produce 40-60% of the heat demand by means of heat pumps and only when operating on full capacity, an additional oil and gas combustion is needed. Oilon, a privately owned Finnish company, operating in the field of environmental and energy technology for the last 50 years, has been strongly present in this market and is very committed to develop

solutions to support the growing needs of clean and renewable energy. Recent developments in clean energy include projects related to combustion of process gases, which before were wasted in industrial processes. Complex recovery systems are required to separate these low heating value gases for combustion, which has made it challenging to guarantee the return of investment. However,

these significant clean energy sources are available throughout the process industries and with current state-of-art burner technology it is possible to guarantee stable and clean burn. “Combustion of gases with low heating value demands special know-how in field, which Oilon has accumulated over several years. The secret of successful combustion of gases of this kind lies in the

correct phasing of gas and air feed, i.e., in the way the gas is mixed with air. If necessary, we add a special front chamber to the burner to stabilize the flame and facilitate efficient combustion”, explains Mr. Tero Tulokas, Engineering Manager at Oilon Energy.

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interview with dr abdullah

Renewable Energy is the future of Mankind Dr Farooq Abdullah, India’s Enigmatic Energy minister No review of the Indian market would be complete without an interview with the hard working and enigmatic energy minister Dr Farooq Abdullah!

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r Abdullah is the union minister for New and Renewable energy in the government of India. He is well known for his energetic leadership of the path breaking and transformational initiative in renewable energy-The Jawahar Lal Nehru National Solar Mission. He is also known for a number of other projects in the renewable energy space in Indianotably, renewable energy for energy access, the introduction of generation based incentives and the move towards the introduction of renewable energy certificates.

Power Insider: Hi Dr Abdullah, thank you for taking the time out of your schedule to speak with us today. India is a market where all international businesses are looking, tell me how important is renewable energy and clean technology to India? Dr Farroq Abdullah: My pleasure! When it comes to renewable energy, the challenge facing the World today is to meet its increasingly large energy needs while minimizing the damage to the environment. This is why, whilst striving to bridge its energy deficit, the world must necessarily increase the share of clean, sustainable, new and renewable energy sources. Therefore, we in India look at renewable energy and clean technologies as vehicles of sustainable development. We are now at the verge of a second transition as far as renewables are concerned. We have passed through the phase of research, development and small-scale deployments and now have an installed base of over 22,000 MW renewable based capacities, which is around 11% of India’s total power generation capacity. We have added over 11 GW capacity in the last 5 years and plan for another 30GW in the next 5 years. Power Insider: Do you think its realistic to expect renewable energy to meet the growing energy needs of these countries in the next few years? Dr Farroq Abdullah: I am personally confident that renewable energy is an idea whose time has come. There

is an unmistakable shift from the use of conventional energy to renewable sources of energy. While 10 years may be an ambitious time frame to aim for a total transformation, the role of renewables will continue to increase, not only in India but also globally. Whether or not renewable energy completely replaces fossil fuels I’m not certain yet, but we must all work together to develop renewable energy to its fullest potential. Power Insider: What initiatives is India undertaking to promote the growth of this sector? Dr Farroq Abdullah: India is perhaps the only country in the world to have an exclusive ministry devoted to the growth and development of renewable energies. We stand among the top five countries of the world in terms of renewable energy capacity. We have an installed base of over 22 GW, which is around 11% of our total power generation capacity and contributes over 5% in the electricity mix. This represents an almost 400% in the past 5 years alone. Our most recent initiative – The Jawaharlal Nehru National Solar Mission (JNNSM) envisages a capacity addition of 20,000 MW of solar grid power by 2022. A similar ambitious mission – the National Bio Energy Mission – aims to tap over 15 GW of bio-energy potential in our country. Our policy framework –

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generation based incentives for wind power projects, solar specific renewable purchase obligations, tradable renewable energy certificates – is extremely renewable friendly and supportive. Power Insider: What other areas do you feel renewable energy is an easy replacement for traditional sources? Dr Farroq Abdullah: Renewable energy has already created its space in grid connected power generation. Wind and small hydro are commercially viable options. We are working towards grid – parity in solar. However, what is amazing is the capacity of decentralized renewable applications to usher in energy access for all including the most disadvantaged and the remotest of our habitations. In its decentralized or stand alone version, renewable energy is the most appropriate, scalable and optimal solution for providing power to thousands of remote and hilly villages. By providing energy access to the most disadvantaged and remote communities, it becomes on of the biggest drivers of inclusive growth. Power Insider: How do you feel the National Solar mission fare’s compared to other emerging economies?

Dr Farooq Abdullah: The solar mission aims at adding 20,000 MW of solar power capacity by 2022. The phase – I of the mission is now complete and under implementation. In this year alone 186 MW are likely to be commissioned and another 300 MW are likely to be commissioned by March this year. We have succeeded in cutting solar-power costs by allotting projects through a tight international auction process. For instance, in the latest auction, the lowest bid came from Solairedirect SA, a French company at 7.490 a kWh. That’s about 38% below average for similar projects. Power Insider: What are the biggest challenges in the growth of renewable energy in India? Are these unique challenges? Dr Farooq Abdullah: Renewable energy has the inherent advantage of greater resource flexibility of a distributed energy system, but is also currently more costly than centralized power. Hence, there is continuous need to innovate to increase efficiencies and bring down costs. The challenge before us in the renewable energy sector, generally and, in India, particularly is to reduce the per unit cost of renewable energy. Besides the power generated through renewable energy is usually intermittent and sometimes difficult to predict. There are other challenges, like those relating to technology and financing. Like many other countries,

India too is facing these challenges through encouraging economies of scale, easy transfer of technology and indigenous research and development. I see the governments as active facilitators who will work to create an enabling ecosystem for promoting newer business models, technical as well as market innovations as well as promoting basic and applied research. Power Insider: India is well known for its established presence in R&D in industries like ICT; what contribution will India be making to the innovation of Renewable and Clean Technology in the foreseeable future? Dr Farooq Abdullah: India has a strong base in R&D in all areas of renewable energy. We see technology led R&D as a strong area for innovation and growth – for instance – managing the complexity of variable power generation through computer enabled power networks or smart grids. The efficiencies of smart grid management coupled with the sustainability of renewable energy could be win-win combination. India as the leading light of the IT world would have a natural advantage in this. Power Insider: Dr Abdullah, we would like to thank you for your time in this interesting issue! power insider january/february 2012 13

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POWER IN INDIA

INDIA 2011 AND B

INDIA IS A FAST GROWING EMERGING ECONOMY THAT IS PLACING A HUGE EMPHASIS ON ADDING RENEWABLE ENERGY TO BRING POWER TO ITS PEOPLE, HERE WE TAKE A LOOK AT WHAT HAS HAPPENED IN 2011 AND WHAT POTENTIALLY COULD BE FORTHCOMING IN 2012.

BY CHARLIE FOX

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he Year 2011 has seen a significant growth with a number of new initiatives in the renewable energy sector. The wind energy sector picked up momentum again by adding over 2800 MW capacity resulting in grid-connected renewable power capacity crossed the 22,000 MW milestone which is about 11% of the total power generation capacity of the country. During the year grid-connected solar power plants crossing the 100 MW milestone. In fact, SPV power plants of over 180 MW were set up in the country. Over 1000 remote villages were electrified through renewable energy systems during this year. Over 50 MW off-grid installations were completed. Another initiative of the Ministry was

to launch a comprehensive project to popularize renewable energy systems in the Ladakh JAWAHARLAL NEHRU NATIONAL SOLAR MISSION The Mission aims at adding 20,000 MW solar power capacity in the country by 2022. Implementation of the Phase – I of the Mission started during the year. One of the target areas is promotion of gridconnected solar power in a big way with the objective to bring cost of solar power generation to grid parity levels. In this year 180 MW of grid-connected solar power projects have been commissioned in the country and this figure will cross 400 MW by the end

of this financial year. Projects totaling 350 MW have been allotted in batch-II of phase–I in December, 2011 through competitive bidding. The tariff quoted are amongst lowest tariffs anywhere in the World with an average Rs.8.77 per kWh and a bid lowest of Rs.7.49 per kWh. If compared with the tariffs of over Rs.18 per kWh at the start of the Mission, this is a reduction of more than 50%. The Ministry is giving special focus on research in solar energy. 36 R&D projects in solar thermal and photovoltaic technologies are under implementation. A Centre for Solar Thermal Research has been set up at IIT Rajasthan, Jodhpur. Under R&D Projects sponsored to industries in public-private partnership

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D BEYOND!

mode, a 30 ton Solar air conditioning system using concentrating parabolic troughs and triple effect vapor absorption machine has been developed and demonstrated at Solar Energy Centre, MNRE. It is a stand-alone system for daytime use and can take care of intermittent clouds through small storage. The system once tested for its satisfactory performance could be useful for offices and institutions working during daytime when solar radiation is also available. In another project, a State of the Art fully automatically tracked parabolic dish of 90 sq. m. area has also been developed and demonstrated at Solar Energy Centre. The dish is expected to find good opportunity in industries for processed heat POWER INSIDER JANUARY/FEBRUARY 2012 15

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power in india applications as it is installed on a pillar and the space below dish could be utilized for other purposes. Grid Connected Renewable Power A capacity addition of 3815 MW has been achieved during 2011 from various renewable energy sources. This includes 2827 MW from wind, 310 MW from small hydro, 498 MW from biomass and 180 MW from solar energy. With this, the total installed capacity from renewable has reached 22,447 MW. Wind power is the fastest growing renewable energy option today. A total capacity of 15,880 MW of wind power has been installed in the country. The progress during the current year has been very good. A capacity of around 2827 MW has been installed during the year. It is expected that it will touch around 3500 MW up to March, 2012. It would be a significant improvement as compared to figures of 1485, 1565 and 2350 MW in 2008-09, 2009-10, 2010-11 respectively. As per the recommendations of Working Group for 12th Plan, a target of 15,000 MW has been proposed for 12th Plan. The Small hydro power program in India is now by and large private investment driven. 24 States have announced their policies to invite private sector to set up SHP projects. Since SHP projects have reasonably good economic viability, a number of financial institutions and banks are ready to finance these projects. Accordingly, a major part of capacity addition and exploitation of SHP potential in future is expected from private sector projects. With a capacity addition of 310 MW during 2011, the total installed capacity from SHP projects is 3210 MW. The Ministry is also focusing on developing micro hydel projects and watermills for electrification of remote areas. As per the recommendations of Working Group for 12th Plan, a target of 2,100 MW has been proposed for 12th Plan. The Biomass Power and Bagasse Co-generation Program is implemented with the main objective of promoting technologies for optimum use of country’s biomass resources for grid power generation and maximizing power generation from bagasse produced in sugar mills. During 2011 a capacity of 498 MW have been added. The cumulative biomass power/bagasse cogeneration based power

capacity has reached 3056 MW. During the year the Ministry has continued the existing scheme with two modification related to (a) Cogeneration projects through Build, Own, Operate, Transfer (BOOT) model in cooperative sugar mill (b) Boiler up gradation of cogeneration projects in cooperative sugar mills. A target of 2600 MW is proposed for the 12th Plan period. Off-Grid Renewable Energy applications Energy Access: Renewable power is now being extensively propagated and used to provide energy access to the remote, inaccessible and difficult areas of the country. Lakhs of solar lights, solar water heating systems, biogas plants have been installed in the country and so far over 9000 remote villages have been illuminated through solar photovoltaic systems and biomass gasifiers Biomass Gasifier: During the year, the Ministry has promoted multifaceted Biomass Gasifier with a view to utilize locally available surplus biomass resources such as rice husk, corn cab & stalks, arhar stalks, cotton stalks, small wood chips, other agroresidues available in surplus to meet the unmet demand of electricity for villages for lighting, water pumping and micro enterprises. In addition, it is promoting small biomass gasifier and combustion based power plants up to 2 MW capacities connected at the tail end of grid and captive power and thermal applications in rice mills and other industries. The Ministry is focusing on promoting rice husk based gasifier projects for decentralized and distributed power generation to provide unmet demand of electricity in villages. During 2011, about 70 remote villages/hamlets of Bihar in District East Champaran, West Champaran, Muzaffarpur and Sitamarhi benefited by installation of about 25 rice husk based gasifier systems for distributed power generation based on a sustainable model. In addition, about 120 rice husk gasifier systems are under installation in various villages of Bihar. In addition, about 30 rice mills have installed rice husk gasifier systems retrofitted with existing diesel generating sets saving about 13 lakh

liters of diesel annually and installation are underway in about 60 rice mills in different States. During the year, biomass gasifier based tail end grid connected projects of 1.20 MW in Gujarat and 500 kW in Tamil Nadu have been successfully installed. Biogas : The National Biogas and Manure Management Program of the Ministry mainly caters to setting up of family type biogas plants for meeting the cooking energy needs in rural areas of the country. During the year, about 45000 family type biogas plants have been installed. With this the cumulative installation of 4.44 million family type biogas plants, about 35.70% of the estimated potential has been realized so far. Apart from setting up family type biogas plants, the Ministry started a new initiative for demonstration of Integrated Technology package in entrepreneurial mode on medium size mixed feed Biogas-Fertilizer Plants (BGFP) for generation, purification/enrichment, bottling and piped distribution of biogas. 21 such projects with aggregate capacity of 37016 cum/day have been sanctioned, out of which 2 BGFP projects have been commissioned. Under Biogas based Distributed/Grid Power Generation Programme (BPGP) so far 158 projects have been commissioned with a total installed capacity of about 2 MW. Remote Village Electrification: The Ministry is implementing Remote Village Electrification

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Program for providing financial support for lighting/ basic electrification through various renewable sources, to those remote un-electrified census villages and un-electrified hamlets of electrified census villages where grid extension is found not feasible by the State Governments and hence are not covered under the Rajiv Gandhi Gramin Vidyutikaran Yojna. The program is implemented in States by the State notified implementing agencies. During the current year, 836 remote villages and hamlets have been completed. Electrification/illumination of border Villages of Arunachal Pradesh: Implementation of the project for electrification/ illumination of border Villages of Arunachal Pradesh further progressed and out of 1058 villages, 726 villages have been illuminated / electrified. These include, 523 villages, where all households have been provided with solar home lighting systems and balance villages are given electricity from small / micro hydel projects. Further, work in 107 new micro/ small hydro projects is in progress. The project is being monitored by a Steering committee and is targeted to be completed by March, 2012. Ladakh Renewable Energy Initiative: The Ministry has initiated the implementation of a Rs. 473 crore Special Project for the Ladakh region for large scale use of renewable energy systems in order to provide energy access and minimize use of diesel

in the most difficult part of the country and thereby open the doors for coverage of other similar areas. Solar PV lights and solar water heating systems have been intensively promoted in the last one year and 28 villages and 78 institutions in the district stand covered through solar power plants with over 90% house hold coverage. 930 households are using solar water heaters even at sub-zero temperature for their hot water needs. Over 1800 green houses have also been constructed for growing vegetables. Human Resource Development: In view of rapid growth of renewable energy sector in the country, Ministry has initiated the process to institutionalize the renewable energy education in the country to enable the existing educational institutions to introduce courses related to renewable energy in their regular curriculum. With this initiation, solar streetlights, solar hot water systems and small hydro have already been incorporated in the two-year ITI syllabus. Course material for this has been developed and faculty of it is now being trained. In addition, State Renewable Energy Agencies are being supported to organize short-term training program for installation, operation and maintenance and repair of renewable energy systems in such places where intensive RE program are being implemented. Renewable Energy Chairs have been established in IIT Roorkee and IIT Kharagpur. National Solar Science Fellowship Program has

been launched and process for selection for the National Solar Science Fellows initiated. These efforts, while generating pool of trained manpower at all levels, will also create a system, under which the ensuing requirement of qualified and trained personnel will be met in future. Solar Energy Centre of the Ministry in collaboration with the Ministry of External Affairs has been providing training to participants from different developing countries. Renewable Energy and Climate Change: Renewable energy is central to climate change mitigation efforts. Broad estimates indicate that mitigation from existing renewable energy portfolio is equivalent to around 4-5% of total energy related emissions in the country. Further, the vast market potential and well-developed industrial, financing and business infrastructure has made India a favorable destination for Clean Development Mechanism (CDM) projects, with renewable energy projects having the major share. National renewable energy plans offer ample opportunity for CDM projects and technological innovations. India had 727 registered CDM projects, which is around 21% of worldwide registered projects. With 520 projects, renewable constitute around 72% Indian CDM registered projects. Within renewable, wind has the maximum number of 225 projects followed by hydro 82 and 6 for solar energy. power insider january/february 2012 17

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power in india So far to collaborate with the above information please take a quick look at the graphs below; The Ministry of New and Renewable Energy is implementing Remote Village Electrification Programme for providing financial support for lighting / basic electrification using renewable energy sources in those remote unelectrified census villages and unelectrified hamlets of electrified census villages where grid extension is not found feasible by the state governments and hence are not covered under the Rajiv Gandhi Gramin Vidyutikaran Yojana. Details of such villages/hamlets covered through renewable energy sources in the country during the last five year are given below: Sl. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

State Andhra Pradesh Arunachal Pradesh Assam Chhattisgarh Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Nagaland Orissa Rajasthan Tripura Uttarakhand Uttar Pradesh West Bengal

No. of 13 867 1691 243 36 241 20 43 162 30 49 351 228 57 72 11 584 163 539 76 184 5

State-wise details of funds sanctioned and released to various states during the last five years under the programme are also given below: Sl. No.

State

1. 2. 3. 4. 5. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.

Andhra Pradesh Arunachal Pradesh Assam Chhattisgarh Delhi Goa Haryana Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Nagaland Orissa Rajasthan Sikkim Tamil Nadu Tripura Uttarakhand Uttar Pradesh West Bengal

Funds released (Rs. inLakh) 31.47 476.09 11050 1621.34 24.96 9.74 68.55 5954.69 4424.99 125.98 339.04 2792.14 2220.207 520.59 229.73 83.477 4878.44 2128 8.04 66.76 2295.57 619.43 1969.19 2785.24

Under the Off-grid Solar Applications Scheme of Jawaharlal Nehru National Solar Mission, the Ministry provides a subsidy of 30% of project cost subject to a maximum of Rs. 150/- per watt peak for installation of standalone rural SPV power plants

with battery storage in a micro grid mode/local distribution network. The Scheme is open to all the States and Union Territories. So far one project of 20kWp capacity standalone SPV micro grid project has been installed in the State of Jharkhand. The Ministry is also promoting distributed / off grid power program for meeting unmet demand of electricity in rural areas through biomass gasifier systems in association with state governments, NGOs, village level organizations, institutions, entrepreneurs etc. Central Financial Assistance of Rs. 15,000 per kilowatt is being provided for installation of biomass gasifier with 100% producer gas engines besides support for laying local distribution network after successful installation and commissioning of the system. So far, 60 gasifier systems of 32kWe with 100% producer gas engines using rice husk and other agriculture residues have been set up for providing unmet demand of electricity through local distribution network in various villages / hamlets in Bihar. So what now for India? Is India really a land of huge opportunity? India potentially is the country that will play a huge role in driving world growth, even more so than China. India is home to 1.2 billion people. To electrify all those houses, power the industries that keep all those people employed, and fuel the vehicles that more and more Indians own, India’s energy needs are shooting skyward. India encompasses significant reserves of coal, oil, and gas, but each year it has to import more and more to meet its rapidly rising demand. Domestic production increases have been hampered by land disputes; interminably slow permitting, and government-regulated pricing mechanisms that discourage development. That’s got to change if India wants to keep up, and its government knows it. Domestic supplies

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always come with better reliability, better prices, and other benefits that we can shorten into two words: energy security. So India is reaching out to foreign oil majors, quietly setting up deals to exchange stakes in giant, underexplored oil and gas fields for the technical expertise it needs to best develop these resources. These partnerships are working into place slowly. However, they show Delhi is serious about the welcome mat it rolled out in 2000, when it passed a policy that allows foreign companies to own 100% of any oil and gas assets they may want to acquire for exploration and development. And what we really like is that explorers are welcome in a democratic and reasonably friendly country that harbors none of the risk of asset nationalization that clings to other underexplored locales, like Venezuela. Oil demand in India is set to rise some 4% annually for the next decade; natural gas requirements are expected to climb 10% per year for the next five years. Put together, India is a place that desperately needs more energy, has resources and reserves to exploit, and is working to encourage foreign investment in them. Indian companies are also opening up to the notion of partnering with global firms, as we mentioned earlier. While no state-owned companies have inked major partnerships as yet, privately owned Reliance Industries Ltd signed a US$7.2 billion deal with BP in August. Reliance sold BP a 30% stake in 21 exploration blocks and is now using the British energy giant’s expertise in deepwater drilling to

revamp its plans around exploration and boosting production from its operational fields. This first major deal could well act as a model for future exploration partnerships in India. Companies know that international partners can bring valuable expertise, especially with respect to increasing output from mature fields. One aspect of India’s oil sector that needs adjustment is its subsidy system. The government subsidizes prices of domestic oil products to help disadvantaged Indian consumers. But requiring its national companies to sell their products at reduced prices regularly forces them into major financial losses – more than US$23 billion in fiscal 2010-2011 alone, according to the International Energy Agency. And the subsidy situation only gets worse as the rupee depreciates. Global oil costs have eased some 8% this year, but the rupee’s 9% slide against the dollar has wiped out any cost savings. The oil minister said recently that every one-rupee decline in the Indian currency against the dollar increases annual revenue loss for the three state-owned refiners by 80 billion rupees, or US$1.6 billion. No easy solution for this issue, unfortunately. Clearly, raising prices for Indian consumers would carry a heavy political price. But just as clearly, the Indian government cannot continue subsidizing oil prices at this level for long. India and Natural Gas When it comes to India and natural gas, the question is really one of keeping pace with electricity demand. The country was gas self-sufficient for years, but

‘India potentially is the country that will play a huge role in driving world growth, even more so than China. India is home to 1.2 billion people. To electrify all those houses, power the industries that keep all those people employed, and fuel the vehicles that more and more Indians own, India’s energy needs are shooting skyward.’ economic growth turned it into a net importer in 2004 despite steady increases in production. Even imports are not enough: According to the World Bank, roughly 40% of residences in India are without electricity, and blackouts are still common in main cities. Import needs have climbed by an average of 35% annually. Opportunities exist for all international companies that are willing to make the move and take India by the horns and go for a run, yes there are risks, but tell me a market where there isn’t at the moment? The important thing will be your contact network in the region, as it really does help to have a local, reliable contact on the ground. One thing is for sure, there is plenty of opportunities and plenty of money for the right technology in India, now where did I put my passport! power insider january/february 2012 19

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INDIA COAL

INDIA: UNCERTAIN TIMES FOR THE WORLD’S MOST AMBITIOUS COAL FIRED POWER PLANT DEVELOPER THE VAST GAP BETWEEN SUPPLY AND DEMAND IN INDIA CONTINUES TO SURGE, AS THE MINISTRY OF POWER COMMENCED THE YEAR WITH A STATEMENT OF INTENT ‘MISSION 2012 – POWER FOR ALL.’

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ndia is a country currently experiencing a high 8% GDP growth, arguably the most prominent from the BRIC economies, but that is a genuinely threatened by insufficient supply of electricity that is pre-dominantly coal-fired. Last month Prime Minister Manmohan Singh emphasized the growth-energy linkage. ``We have set for ourselves an ambitious target of 9% annual growth in GDP in the 12th Five Year Plan (2012-17). This high rate of economic growth would require our energy consumption also to increase rapidly.’’ The correlation between the two is clear, but nevertheless it is an ambitious vision as insecurities in fuel supply become ever more apparent and preventive towards the success of multiple ultra super critical power projects planned across the country. India has generally been considered a country well endowed with coal, the world’s fourth largest estimated reserves at approximately 276 billion tons, paints a deceiving picture. The tail end of 2011 saw a simultaneous number of difficulties come to light for Coal India Limited relating to heavy rainfall, strikes and delays in obtaining forestry and environmental clearances. The knock on effect for the power industry has been drastic, with a significant downward revision of coal production targets. In foresight of domestic deficiencies, leading generators have sought relief with investment into cost effective overseas coal mines in countries such as Indonesia and Africa. High profile projects such as Reliance’s Krishnapatnam UMPP in Andhra Pradesh and TATA’s Mundra have acquired mines in Indonesia but this alternative has also been dramatically hit when new regulations were announced by major exporting nations. The Indonesian Ministry of Energy and Mineral Resources made it mandatory for coal prices to be based on international market rate.

In line with Indonesia’s plans, resource-rich African nations are also reported to be planning new mineral laws to take advantage of the boom in commodity prices. These include Mozambique, Namibia, South Africa and Zimbabwe, which were being viewed as a fallback option by Indian firms after Indonesia hiked coal prices sharply. A new carbon tax on Australian coal production further added to the woes of Indian developers planning projects on imported coal. DOMESTIC COAL SHORTAGES The domestic coal shortages were made worse on account of a debilitating coal crisis towards the end of the year. From the beginning of September, the number of key thermal power stations in the country facing dwindling coal stocks rose alarmingly, resulting in power disruptions across the country as key thermal stations such as the Ramagundam and Simhadri in Andra Pradesh were left high and dry without adequate fuel to maintain a maximum plant load factor. A strike by workers of Singareni Collieries, coming at a time when the country was yet to recover from the problem of flooded coal mines in the Eastern Region after the monsoons, triggered the disruptions. In all, nearly 8,000 MW of thermal capacity was out due to the coal strike, while a drop of another 100 million units in hydro generation due to the receding monsoon aggravated the problems further. Indications are that India’s domestic coal supply situation is not going to change in a hurry. Indian firms NTPC, JSW Steel and MMTC have recently issued tenders to import coal from South Africa and Indonesia. Reuters recently quoted a large Indian trade importer to say: “There are several quite large (Indian) tenders in the market now, seeking coal for the next fiscal year until March 2013.’’

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india coal In order to protect against price volatility India has recently sought co-operation from Indonesia to grant blocks to Indian firms under a ``special status.’’ This is even as India’s coal ministry recently projected that India’s annual coal demand could rise 41% in the year ending March 2017 from the current financial year. The coal requirement is estimated to surge to over 980 mt from the current 700 mt. Domestic output of coal, meanwhile, is estimated to rise only 28% in the period, widening the domestic demand-supply gap to over 265 mt that can create inflationary pressures. Ironically, even such as such a situation emerges, the state-owned Coal India Limited, that produces more than 80% of India’s coal output, has revealed in the annual plan that there are actions sought to lower its production target this financial year to 440 mt from 452 mt. The Indian Spot Market The one bright spot, though, was the growing share of the spot electricity market, riding mainly on the popularity of the two operational power exchanges. While the short-term power market currently accounts for a tenth of India’s total electricity generation, the significant point is that there has been a steady rise in the share of transactions being put through the two operational power exchanges (IEX and PXIL) – from hardly 8 per cent in 200809 to over 19 per cent in 2010-11 and well over 20 per cent this fiscal. The 800-odd participants on the bourses included electricity generators, distribution utilities and industrial buyers. The strong performance by the private sector, which has continued to shoulder much of the generation capacity addition burden, and the emerging popularity of the Power Exchanges as transparent platforms for striking spot market deals were among the positives for the electricity sector in 2011. However, the worsening finances of the State Electricity Boards that has translated into a string of payment defaults, combined with the increasing reluctance among lenders to fund new generation projects on account of viability concerns, threatened to douse the new found optimism in the sector. The fuel availability situation, both coal and gas, continues to remain grim.

Continued Development & Manufacturing Capacity What remains clear is that coal fired powered plants in India continue their phenomenal stream in construction, no other country globally is attempting as many simultaneous additions, and from a vendors perspective it really is a market that cannot be ignored. The developments have seen a preference for advanced supercritical technology; this also puts a demand on the delivery time because of the limited number of manufacturers that are adept and specialized in this area. Leading overseas technology providers have recognized the opportunity apparent with the Indian market and one positive development for the India power sector is the significant joint ventures that have been formed to manufacture super and subcritical boilers and turbines in India. Larsen & Toubro and Mitsubishi Heavy Industries is one of those. They recently inaugurated the country’s first private sector facilities for the manufacturing of supercritical boilers and turbine generators at Hazira, Surat. The Hazira works are among the largest of their kind in the world, with present capacity producing 5,000 MW of equipment annually, to be expanded up to 6,000 MW by 2012. The joint venture will be certain to make an impression given the heritage of both companies. Other major players are ambitious here and recognize the importance of having the domestic infrastructure to manufacture this specialist technology competitively in times of high demand. Alstom and Bharat Forge zeroed in on the Mundra port of Adanis to set up a manufacturing facility with an annual capacity of 5000 MW. This will be an important production base for a whole range of supercritical turbines and generators. The choice of Gujarat means that Andhra Pradesh, which was also a close contender, is no longer in the reckoning. The partners have also decided to explore joint forays into gas-based equipment as well as turbines and generators for nuclear applications. Toshiba JSW Turbine and Generator Pvt Ltd, a joint venture between Japan’s Toshiba group and India’s JSW group, is building a turbine and generator plant at Ennore in Tamil Nadu at an outlay

of around Rs.800 crore. A recent visit from a Japanese delegation and the Japanese Minister for Economy, Trade and Industry Yukio Edano met with Tamil Nadu’s Chief Minister Shri J Jayalalithaa, and raised concerns over the strength of the bridges and roads connecting the joint ventures plant and the Ennore Port. A power plant generator weighs around 450 tonnes and it could lead to a major problem if the bridges buckle under its weight. As per the memorandum of understanding (MoU) signed by the company with the state government, the latter should strengthen the roads and the bridges from the plant to the Ennore Port, and a detailed project report is being prepared to address the problem. However, the cost of road and bridge repairs is estimated to be around Rs.100 crore, which made the government procrastinate on the issue. Apparently the government has allocated around Rs.85 crore towards the repair of roads and bridges between Toshiba JSW’s plant and the Ennore Port. In assuring the delegation on improving the infrastructure, Jayalalithaa said the highways department was undertaking a study to form a separate road called the Northern Port Access Road. BGR Energy Systems last year inducted two firms of the Japanese Hitachi group as joint venture partners in the two subsidiaries, to form another heavyweight in the supercritical sector. BGR Energy gave a 26 percent stake in BGR Turbines Company to Hitachi Japan to design, build and commission super-critical steam turbines and generators for coalfired power plants. The Indian company also divested a 30 percent stakes in BGR Boilers to Hitachi. The two plants are coming up near Madurantakam in Tamil Nadu along the East Coast Road and around 90 percent of the land has been acquired. In a statement of intent and capability the joint venture recently emerged as the lowest bidder for NTPC’s bulk tender in purchasing supercritical turbine generator set for units of 800 megawatts each, beating rivals L&T-Mitsubishi and Alstom-Bharat Forge. NTPC had invited bids for bulk supply of boilers and turbine generators for four projects in Karnataka, Orissa and Chhattisgarh with a total capacity of 7,200 megawatts. In the financial bids for supercritical turbine generator, BGR Energy emerged the lowest bidder with a bid of 811 crore per turbine, followed by Larsen & Toubro -Mitsubishi Heavy Industries which quoted Rs 830 crore per turbine. The super-critical steam turbines for the contract would be supplied from a mix of imports from Hitachi, Japan, and components manufactured by the joint venture company, BGR Turbines, and systems by BGR Energy, commissioning of the first turbine would be expected in 42 months and the next turbine would be two months thereafter. New Bidding Regime From January 2011, the Government had mandated that all power to be procured by distribution utilities should be done via the competitive bidding route. The decision effectively disallowed future generation and transmission projects from entering into power purchase agreements based on the ‘cost-plus’, regulator-determined tariffs. The move was expected to bring in transparency in the award of projects and

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19-21 April 2012, prAgAti MAidAn, new delhi, indiA

SwitChing On INDIA’S POWER INvItAtION tO AttEND pOwer-gen india & Central Asia and co-located renewable energy world india & hydroVision india conference and exhibition, returns to new delhi from 19-21 April- 2012 at pragati Maidan exhbition Centre. this premier event dedicated to the conventional, renewable and hydro power sectors offers a high quality conference programme with informative multi-track conference sessions and influential speakers from around the globle, dedicated and diverse exhibition floor and unrivalled networking opportunities.

• Hear from world-class experts, regulators and investors about business solutions to help shape the future of energy production and usage • Uncover key challenges facing the power and energy sectors in the India & Central Asia region • Keep up to date with infrastructure development and investment opportunities • Network with peers and professionals and develop new business leads • View first hand state-of-the art products, technologies and systems

With a conference and exhibition that combines Indian an International expertise at the highest level, POWER-GEN India & Central Asia, Renewable Energy World India and HydroVision India 2012 is the place to turn knowledge into power.

POWER-GEN INdIA & CENtRAl AsIA ENquIRIEs: Kelvin Marlow | Exhibit sales Manager t: +44 1992 656 610 F: +44 1992 656 700 e: kelvinm@pennwell.com

RENEWAblE ENERGy WORld INdIA ENquIRIEs: Virginia Willis | Exhibit sales Manager t: +44 1992 656 663 F: +44 1992 656 700 e: virginiaw@pennwell.com

HydROVIsION INdIA ENquIRIEs: Amanda Kevan | Exhibit sales Manager t: +44 1992 656 645 F: +44 1992 656 700 e: amandak@pennwell.com

samantha Malcolm | Conference Manager t: +44 1992 656 619 F: +44 1992 656 700 e: samantham@pennwell.com

Amy Nash | Conference Manager t: +44 1992 656 621 F: +44 1992 656 700 e: amyn@pennwell.com

Amy Nash | Conference Manager t: +44 1992 656 621 F: +44 1992 656 700 e: amyn@pennwell.com

event Organisers

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drive down consumer tariffs. Subsequently, a rollback for transmission projects was announced midway through the year. Also, as the year progressed, an increasing number of private project developers across both the power generation and the transmission sectors threatened to go back on the tariffs they had quoted while bidding, forcing the Government and the regulators to re-examine the competitive bidding format implemented earlier this year. For instance, Reliance Infrastructure sought relief for two transmission links it had bagged through the competitive bidding route, citing delayed clearances and higher input costs. Reliance Power stopped work on the 4,000-MW Krishnapatnam Ultra Mega Power Project (UMPP) claiming higher fuel costs on account of revised imported coal prices. Tata Power has also sought higher tariffs for its Mundra UMPP, citing higher cost of coal sourced from Indonesia. TATA Power’s Executive Director of Finance, Shri S. Ramakrishnan, recently discussed the financial strain that has been apparent on the Mundra project. He mentioned that although the Mundra project was on schedule, it may be impacted by changed specifications and cost dynamics, since the law in Indonesia changed. He also revealed that the regulation had pulled them back by $500 million in those five years, in comparison to a situation where the contracts were honoured. In a philosophical approach he stated that has the coal price goes up, they benefit as owners, but lose as consumers. The last two years’ performance for TATA Power reflects the benefits of coal ownership, without consumption exposure, but from now on, the coal ownership benefit will be reduced to

the extent of consumption. Again touching on the issues surrounding mines in Indonesia, Shri S. Ramakrishnan mentioned that they have the hedge in terms of performance of the company, but Mundra, by itself, will lose money. Power developers have requested the government to look into the larger issue of dealing with imported fuels and evolve a mechanism to compensate producers, in rates. Repercussions It is a valid notion, and a very understandable perspective from the developer, but essentially as they try to bridge the gap and maintain profitability in coal hikes, the difference will be felt one way or another by the consumer. That will be through increased rates for electricity use, contradicting the ministries pledge for affordable power to all. Or it will be apparent in a few years time once the projects are live, with a reoccurrence of today’s power cuts through premature downtimes, as the developers have no option but to use substandard technology at a significantly reduced purchase and installation cost to that of proven vendors. Fuel shortages and funding woes notwithstanding, the private sector developers accounted for much of the power capacity addition that took place this fiscal. During April-October 2011, the private sector added 4,301 MW, more than what was added by the Central and State sector utilities put together. The continued hold-up at the near-complete Kudankulam nuclear power units, meant that the actual capacity added fell well short of the 17,716 MW target for the current fiscal, which is the terminal year of the fourth 12th year plan period. The financial stability of India’s electricity

generation sector, both power producers and distribution companies, is compromised, essentially due to supply side issues. Thus, protecting the consumer, both industrial and retail, from electricity price hikes is no longer sustainable. Incremental rise in tariffs will need to reflect the new paradigm of higher costs and adequate return to power generating firms. This will need to happen unless Coal India Limited are able to raise domestic coal output, unfortunately this does not look a likely proposition in the foreseeable future, and reliance on imported coal will only continue to increase.

‘The domestic coal shortages were made worse on account of a debilitating coal crisis towards the end of the year. From the beginning of September, the number of key thermal power stations in the country facing dwindling coal stocks rose alarmingly, resulting in power disruptions across the country as key thermal stations such as the Ramagundam and Simhadri in Andra Pradesh were left high and dry without adequate fuel to maintain a maximum plant load factor.’

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CONFERENCE & EXHIBITION IMPACT EXHIBITION & CONVENTION CENTRE, BANGKOK, THAILAND 3 – 5 OCTOBER 2012

A n n ive r s a r y

CO-LOCATED WITH:

TOWARDS A SECURE ENERGY FUTURE INVITATION TO EXHIBIT Celebrating its 20th Anniversary in 2012, POWER-GEN Asia has established itself as the premier conference and exhibition dedicated to the power generation and transmission and distribution industries. Attracting 7,000 delegates and attendees from over 60 countries from across South East Asia and around the world, it is the leading industry event to meet and network with senior executive and industry leaders. Thailand’s GDP is predicted to see a 5.6% growth, leading to a 6% growth in peak power demand between 2012-2016 to 35,600 MW and 44,200 MW by 2021. With current capacity of around 28,500 MW, and despite current energy imports from neighbouring countries, Thailand will see a shortfall in capacity in the next few years. To gain access to the opportunities within the power industry of Thailand and wider region, you should ensure your presence at POWER-GEN Asia 2012. We invite you to celebrate 20 years of POWER-GEN Asia with us in Bangkok, Thailand from 3-5 October 2012. For exhibition and sponsorship opportunities contact:

For information about participating at the conference contact:

Kelvin Marlow Exhibit Sales Manager T: +44 (0) 1992 656 610 C: +44 (0) 7808 587 764 F: +44 (0) 1992 656 700 E: exhibitpga@pennwell.com

Mathilde Sueur Conference Manager T: +44 (0) 1992 656 634 F: +44 (0) 1992 656 700 E: paperspga@pennwell.com

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INDIA HYDRO

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IMPACTS AND QUESTIONS FOR CONTROVERSIAL HYDRO PLANS ON INDIA’S BORDERS THE WATER SHARING AGREEMENT; INDUS WATER TREATY OF 1960, HAS FOR MANY YEARS ENSURED THAT CHANCES OF FAMINES AND DROUGHTS WERE GREATLY LOWERED FOR THE PEOPLE OF PAKISTAN LIVING CLOSE TO THE INDUS SYSTEM OF RIVERS.

H

owever, with increasing technology enhancements, the need to ensure more produced electricity, as well as seeking ways to do so from renewable sources has meant these river systems have become increasingly attractive as a source for Hydropower Projects. With plans laid out by Indian developers and government alike to utilise these sources, Pakistan has challenged India over its construction of such dams. Alarm and concern have been in the air along with efforts to quash India’s water plans. The Kishanganga dam project for example will divert waters from Jhelum into India’s own fields, making 5.6 million acres of Pakistani lands barren, i.e. rubbishing the keep-safe plans of the 1960 Treaty. Taking this to international agencies for arbitration has not proved fruitful as India is proceeding with its 330-megawatt hydro-electric project which is scheduled to be completed within a 7 year time scale. Mirroring these concerns of Pakistan, the Tipaimukh venture is a multipurpose hydropower plan initiated by the Government of India to be located on the border of Kolashib district of Mizoram and Churachandpur district of Manipur directly linked with the border between Bangladesh and India. The Bangladesh foreign ministry in November informed the Indian authorities that Bangladesh, as a co-riparian country, had underscored for prior consultation before initiating any intervention on common rivers like Barak. “This would be critical in avoiding any gap in understanding or allay concerns in Bangladesh,” the foreign ministry had said. Despite this, Manipur’s government had secretly struck an investment deal with a number of state-run organisations for setting up the controversial hydroelectric power plant and Tipaimukh dam. The Foreign ministry have since urged the government of India to share all relevant details of

the proposed project in full transparency. India in November through a statement reiterated that its controversial 1500 MW Tipaimukh Hydro-Electric (Multi-Purpose) Project would not involve diversion of water and hence would not have any adverse downstream impact on Bangladesh. New Delhi said that it still stood by its assurance to Dhaka that it would not take steps on the proposed hydro-power plant that would adversely impact Bangladesh. Their plans state how this run-of-the-river project and water stored in the dam will be discharged continuously to enable electricity generation and regulated to mediate flood in the plains. A sign of confidence in these plans, the Prime Minster of India has offered a joint stake to Bangladesh to invest in the project and to share the power generated. However this controversial move brings in to play a time old controversial question of whether India will indeed be able to share its electricity with Bangladesh? The proposed project site in the upstream area of the Barak River has a catchment of 1200 sq km. Compare this to the Kaptai Dam in Bangladesh with double the catchment area, higher rainfall intensity, and larger storage capacity, which only manages to produce 450 MW. The obvious question hence arises of how with this localised comparison to draw from, is the Tipaimukh dam expected to generate 1500 MW of electricity? Along with these controversial and questionable statistics, many Bangladeshis are concerned that despite the agreement signed between the Government of Manipur and National Power Corporation of India Limited (NPCIL) stating that no barrage or diversion of water flow on the Barak River will be built, the Government of India and Government of Assam have established an

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india hydro understanding to build a barrage at Fulertal in the Cachar district. This will divert the water flow and have a major impact on the irrigation and agricultural production of Bangladesh’s lower riparian areas such as Sylhlet and Maulvi Bazar. Such leads to concern of the operation of the dam itself and if it will increase the water flow during summer seasons causing flash floods during the Boro harvesting in Sylhet. Along with this, another major concern is that the dam site and the adjoining areas are fragile geo-tectonic regions which lie in an active seismic zone and has experienced a significant number of Earthquakes of magnitudes higher than 8, leading to even more concerns about the placement and safety of the overall completion of the project. Coinciding with these concerns, environmentalists both in Bangladesh and India are opposed to the Tipaimukh Project. They believe that the dam over Barak would significantly bring down flow of water in its tributaries Surma and Kurshiara in Bangladesh. As hundreds of canals and major rivers, which are lifelines for people in greater Sylhet, are totally dependent on the water flow. In Surma there are apprehensions that the Tipaimukh project could spell doom for a large part of the country. Outlining once more that The Tipaimukh Project is much more than simply a major political issue in Bangladesh. The opposition in Bangladesh, the Bangladesh National Party have been raising this repeatedly to question the rationale of the efforts of the Awami League led government in Dhaka, and presume these movements as a means to simply strengthen bilateral ties with New Delhi. Summarizing these varying debates, it can be understood that joint in-depth evaluations and more realistic discourse between Dhaka and New Delhi will not only reduce the bilateral contention but also the domestic one and is not only needed to ensure feelings on both sides are supported, voiced and listened to, but will also mean the longevity and safety of the project can be diligently addressed. The government of India are making headways with this respect in terms of offering joint stakes, ensuring this

is done by benefitting both nations, in reality though, this is required more than ever. The importance of informationsharing and in-depth surveys before constructing a hydropower project over a shared river is clearly paramount to its success. The potential benefits this project posses is unquestionable. Ensuring planning procedures and all issues are raised and ironed out before finalising plans will help irradiate many of the foreseeable highlighted problems. It is also important to note that for Bangladesh, environmental concerns and energy security are equally as imperative. Besides benefitting the Indian states, the project, if outlined correctly, should also enhance power capacity in the Sylhet region and irrigation in Maulvi Bazar. An example of positive moves, seemingly pleasing both sides of borders can be that of Nepal’s and India’s recent Hydro movements. Both nations have recently signed the bilateral investment promotion and protection agreement and the double taxation avoidance agreement. India is the largest foreign investor in Nepal and the effort of the Joint Economic Council ( JEC) is to encourage more Indian investments in Nepal. Mr. Suraj Vaidya, president of the Federation of Nepalese Chambers of Commerce & Industry (FNCCI) said “I am strongly hopeful that there would be more Indian investments in Nepal in near future in the selected sectors of hydropower, infrastructure, tourism, education and healthcare.” A special focus on Nepal’s economic progress was in the development of hydropower resources in which several Indian Companies are interested to participate. This matter has assumed urgency as Nepal is suffering from huge power shortages. Mr Padma Jyoti, the co-chairman of JEC from FNCCI side said “I appeal to government of India

India Hydro Installation

to consider making available an additional 100 MW of power to partly overcome the current demand supply gap of Nepal which resulted in 15 hours of load shedding in winter months”. This could be possible because in winter months demand of electricity in India comes down while in Nepal it goes up. Mr Jyoti also requested Indian government’s intervention in early completion of the Dhalkebar: Muzaffarpur transmission line. Progress is clearly happening between these two nations and with agreements as listed above and realisation of cooperation beginning to come to light, working alongside rather than against neighbouring/ bordering counties can clearly help the people, business and governments of both Nepal and India. If the hydropower projects currently being developed by Indian companies in Nepal can get license to construct these projects, it can bring over $15 billion foreign direct investment in a 4-5 year period which can transform Nepal economically, Mr. Jyoti pointed out. Indian Ambassador to Nepal Jayant Prasad, has said India has long been a partner of Nepal and is committed to deepening and diversifying its development partnership. “We hope to do so with respect to each other’s concern, each others sensitivity and each others’ interest,” he said.

Nepal

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Planning and operating hydropower plants means taking on responsibility. Deciding on VAG valves is deciding on maximum safety. Because VAG valves stand reliably.

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CHINA ENERGY

CHINA’S NEW SUPER ENERGY MINISTRY AN OVERARCHING GOVERNMENT AGENCY HAS BEEN SET UP TO TAKE CHARGE OF THE COUNTRY’S ENERGY POLICY FOR BETTER COORDINATION IN FORMULATING STRATEGY AND PLANNING DEVELOPMENT.

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R

T

he purpose of this new commission is to draft a new energy development strategy, evaluate energy security and coordinate international cooperation on climate change, carbon reduction and energy efficiency Premier Wen Jiabao will head the agency, called the National Energy Commission (NEC), and Vice-Premier Li Keqiang will be the deputy, the State Council, or the Cabinet, announced yesterday. The NEC has 23 members, including ministers from various organizations such as the National Development and Reform Commission (NDRC), and the Ministry of

Finance, as well as a representative from the central bank. Industry insiders said the move means energy has been identified as key to the future development of the country, which is now the world’s second-largest energy consumer. “The establishment of the NEC shows the government has raised energy issues to an unprecedented level,” said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. “Such a super ministry, which centralizes the powers of different ministries, can help China make better use of its energy resources.”

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china energy

Energy has become a complex issue and cannot be managed by one single ministry, said Lin, citing domestic energy companies’ overseas development as an example. Chinese oil companies have stepped up their overseas profile in recent years but the issue has to be dealt with by different ministries such as the NDRC and foreign affairs. “We need to pool all our efforts to achieve sustainable development in the energy sector,” he said. Lin’ views were echoed by Zhang Jianyu, China

‘Since becoming a net importer of petroleum after 1993, China is becoming increasingly dependent on foreign energy and natural sources to fuel its insatiable demand created by industrialization and urbanization. A mixture of political and national security concerns has repeatedly thwarted its overseas acquisition and expansion plans.’

program manager of the US Environmental Defense Fund, who said energy will be the top priority in China’s future strategies. “The establishment of the NEC will provide a better mechanism for China’s energy sector, optimizing the country’s energy portfolio as well as coordinating supply and demand,” said Zhang. The government last year set a hefty target of reducing the intensity of carbon dioxide emissions per unit of GDP by 2020 by 40 to 45 percent from the 2005 levels; and Zhang said the NEC could coordinate with different ministries to exchange ideas and expertise to achieve the target. “Some analysts say the 45 percent plan is ambitious, and some even think it could be a constraint on economic development. But I believe with the NEC, we can turn the target into a new opportunity for the economy,” he said. The setting up of the NEC is part of continuous efforts in administrative reform, which are aimed at orienting various functions of different departments toward higher efficiency, said analysts. A Ministry of Energy was established in 1988 but it was disbanded five years later because its administrative functions overlapped with other departments. Facing increasing energy shortages, the government set up an Energy Bureau under the NDRC during administrative reforms in 2003. The National Energy Administration (NEA) was set up in 2008 but it lacks the power to carry out many of its assigned tasks as responsibility for the energy sector is currently spread among a number of departments.

For instance, prices of petroleum products and electricity are still decided by the NDRC. The inclusion of senior intelligence, foreign affairs and military figures in the commission is perhaps the clearest indication that Beijing is elevating energy policy to the level of a national security concern. A more hawkish pursuit of China’s energy needs can be expected. With the benefit of hindsight, the arrest of Australian mining executive Stern Hu, initially on an espionage charge, could be attributed to the influence of senior intelligence and military figures on the highest policy coordination body in Beijing. Since becoming a net importer of petroleum after 1993, China is becoming increasingly dependent on foreign energy and natural sources to fuel its insatiable demand created by industrialization and urbanization. A mixture of political and national security concerns has repeatedly thwarted its overseas acquisition and expansion plans. The creation of this coordination body at the highest policy level could help China to craft a better and more disciplined ‘Go Abroad’ strategy. The fragmented nature of Chinese energy sector and blurred line of supervisory authority is one of the key hurdles in the policy coordination. Since the abolition of the Ministry of Energy and Industry in 1993, there has been no centralized authority on energy policy over the past 16 years. At the moment, a host of state-owned energy giants such as PetroChina, Sinopec and others and a myriad of administrative and supervisory bodies that jealously guard their own turf are dominating the Chinese energy sector.

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CHINA SHALE GAS

SHALE GAS DEVELOPMENTS IN CHINA BY CHARLIE FOX C

hinese energy companies have spent billions joint-venturing North American energy assets in the last two years. But the money pipeline could reverse under a new Chinese law - North American companies are now being allowed to develop shale gas in China - where natural gas prices are a LOT higher than in the EU and US. China recently designated Shale Gas as an independent resource, which means that smaller energy companies – possibly including some from outside of China – will be able to develop the resource in the country. As yet, China has NO commercial shale gas – but big reserves. China’s Ministry of Land and Resources did this to bring more firms into the sector, according to Reuters. Massive Chinese companies like PetroChina currently dominate the Asian country’s energy sector.

The Xinhua News Agency cited a government official as saying China would seek to launch a second round of shale gas tenders in early 2012 – i.e NOW. China only uses clean burning natural gas for 4% of its energy supply, compared to 20% + for most of the modern world—and it is already the third largest consumer of natural gas in the world (after USA and Russia). They have a goal of getting to 10% by 2020. China is increasing their gas supply now via pipelines from foreign countries like Turkmenistan, Kazakhstan, Uzbekistan, Myanmar and Russia. Natural gas prices vary widely across the country, as they are subsidized in some areas to keep inflation low. But in Shanghai you can now get $12+ per mcf and I have heard as high as $22/mcf – one of the best prices in the world (North American LNG

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export terminal proponents are salivating…). Price liberalization is increasing. But there is a downside, firms from outside of China will not be allowed to participate in the tenders but will be able to partner with the Chinese companies that win them. This move could have major implications for any companies that partner with the winning Chinese firms as the Asian nation has an incredible amount of shale gas reserves. The U.S. Energy Information Administration estimated that there was 1.275-QUADRILLIONcubic-feet-worth of “technically recoverable” shale gas in China. By comparison, the U.S. – which has led the way with the development of shale gas – has “only” 862 trillion cubic feet. China has shown it’s eager to develop its energy resources – they’re on the record saying they want to increase oil and gas output by 23% by 2015 to 360 million tons equivalent – and to 450 million tons by 2030. In terms of just shale gas, China says it hopes to produce 229.5 billion cubic feet of the resource by 2015. By 2020, the country is targeting 2.82 trillion cubic feet of shale gas production, according to Reuters – almost a ten-fold increase in just five years. Due to these enormous reserves, whatever foreign companies are able to partner with the winning Chinese firms will be in a strong position. So far only the large Chinese firms have been winning bids to develop shale gas. Earlier this month it was reported that China National Offshore Oil Corp, which is the biggest Chinese offshore energy producer, began drilling its first shale gas project in the country. Neil Beveridge, an energy analyst at Sanford C. Bernstein & Co. based in Hong Kong, said that this was a significant move for CNOOC.

“It may take more than five years for CNOOC to turn this exploration into real production, but the key message here is CNOOC signals a new direction on where the company will move in the future,” he said. “CNOOC will count heavily on unconventional oil and gas for growth down the road.” Large companies dominated the first round of tenders in June. This second auction will likely see smaller companies get involved in shale gas, due to the resource’s new designation. Because of the challenges posed by recovering these unconventional resources, Chinese companies have been attempting to gain technical expertise by partnering with foreign firms to develop shale gas abroad. One of the most prominent such ventures was Sinopec’s acquisition of one-third of Devon Energy Corp. (DVN:NYSE) for $900 million in cash. Bloomberg also reports that the deal could include the Chinese firm paying up to $1.6 billion in Devon’s future drilling costs. “In these joint ventures, the partner does typically get some education on drilling,” Scott Hanold, an analyst for RBC Capital Markets said. The news provider reports that Chinese firms spent over $18 billion in 2011 buying oil and gas companies around the world. China’s shale gas reserves are massive, as the profits for any company that is able to partner with a firm developing the resource in the country could potentially be. Whatever we look at things, Shale gas is being touted as the next big thing all over the World, but as lessons from the US and UK can be seen, without proper regulation, environmental protection and the right companies following contracts, major problems can very easily occur.

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case study

taking the load C

restchic Loadbanks have been providing the means to test and commission power plants around the world for the last 25 years, Crestchic Loadbanks and transformers are available to purchase or rent from Crestchic offices located worldwide. Crestchic Loadbanks is considered to be the largest load bank manufacturer and rental supplier in the world. Crestchic has a current capability of providing load bank rental packages up to 150MW, at voltages varying from 380V up to 15kV, 50/60Hz and 10MVA, 700/690/660/600V, 60Hz. There is a potential requirement for load banks wherever an electricity generating plant is utilized, Efficient power generation testing and system proving is essential, and loadbanks provide the stable, continuous and variable loads necessary to imitate real loads in real time, thus enabling confirmation as to whether or not the generating plant and associated electrical supply system is ‘fit for purpose’. Loadbanks are manufactured as resistive only, reactive (inductive) only, and resistive / reactive. The purely resistive loadbank provides power at unity power factor, whilst the reactive types allow for the power factor, hence kVA load to be varied. The standard design is for 50 / 60Hz, but specialised types can also be provided to suit the customer specification, e.g. suitable for operation at 400Hz, for testing aircraft ground power units. Crestchic have supplied loadbank packages from 5MVA to 50MVA to the oil and gas industry for testing & commissioning power plants installed in platforms, FPSO’s and terminals. Crestchic have supplied loadbank equipment on a rental basis for such companies as Saipem – Petrobras – BP – Shell – MCCI - AIOC-Dolphin Drilling – Exxon – Samsung - Hyundai – AMEC – BAE- Keppel Fels and many more.

Crestchic Manufacture small 5kW loadbanks up to 6.25MVA @ 480V/60HZ Resistive Reactive containerised units. These loadbanks are scalable up to large capacities and can be controlled with Crestchic’s Eclipse computer control allowing sophisticated load control and data capture from the load test.

WEST AZERI Platform, constructed in Baku. Rental of 12.5MVA 11kV resistive reactive load test commissioning the permanently installed gas Turbines. Loadbanks and transformers are stacked to save space. All 11kV and Low Voltage cables connecting the Crestchic Transformers to the customers switchboard and from the transformers to the Crestchic Loadbanks are all supplied on a rental basis.

Sakhalin Island 50MVA 10.5kV loadbank package rented to enable commissioning of Large Gas Turbines at a new facility on Sakhalin Island . 32 ISO style containerise loadbanks and transformers supplied to site.

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INDIA HUSK POWER

ENERGY FOR THE MASSES:

HUSK POWER HELPS FUEL INDIA BY CHARLIE FOX

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ndia offers huge opportunities throughout the region, here we take a look at some of the developments and interesting ways the Indian government are moving forward to develop energy for their people. In Bihar, one of the poorest states in India, 85 percent of people are not connected to the electricity grid. Households use kerosene lamps when they can afford it, and businesses use expensive and dirty diesel generators, this is far from India’s vision of power for all! However, their motto is tamaso ma jyotir gamaya - which means ‘from darkness to light.’ Some view this “energy poverty” as a development problem. Others view it as an environmental problem. The founders of Bihar-based Husk Power Systems view it as an opportunity to build a social enterprise, absolutely, we at Power Insider couldn’t agree more! The company realized that one waste product in Bihar - rice husks - could be used to power a small biomass gasifier. Along with rice husks, they also use mustard stems, corncobs, grasses, and other agricultural residue. After five months of R&D, they developed a 32-kW system by burning 50 kilograms of rice husk per hour. In the last four years, they’ve installed over 80 biomass mini-plants across Bihar, bringing power to more than 32,000 rural households, a great and at present successful model. This is just a fraction of the potential market. According to Salman Zafar, CEO of BioEnergy Consult and a renewable energy expert in India, the potential demand for biomass power generation in India exceeds 30,000 megawatts (MW). This is more than 1,000 times Husk Power’s current installed capacity.

Despite the large potential market, Husk has limited competition. THE TECHNOLOGY IS JUST THE BEGINNING Though it is not as clean as energy sources such as solar and wind, biomass power generation from rice husks and waste materials is still cleaner than fossil fuels, or biofuels such as ethanol. Each of Husk’s mini-plants saves 125 to 150 tons of CO2per year as compared to a fossil-fuel powered plant. What’s more, plants become profitable within two to three months after installation, which when you look at the bottom line everyone is of course interested in. Husk’s biomass generation technology is proprietary, but it is based on a decades-old gasifier system that uses a combination of rice husks and diesel fuel to generate power. These “dual fuel” systems were once used by rice millers to power their mills, but were not economically feasible for household electrification. Husk co-founder Gyanesh Pandey, working with Dr. S.K. Singh from India’s Ministry of New and Renewable Energy, reimagined the antiquated system and developed a “single fuel” gasifier that’s designed for ease of operation and maintenance. It is “so simple that even a person who cannot read and write can operate it with a little bit of training,” says Husk co-founder Ratnesh Kumar. The simplicity of the gasifier is just one way in which Husk has tailored its operations to address the challenges of profitably providing off-grid power to rural villages. Now, the company is focused on its biggest challenge yet: “human capital.” CREATING A PROFESSIONAL WORKFORCE Husk has the ambitious goal of reaching 2,500 mini-power plants in the next five years. In order to reach its goal, it will need about 7,000 trained employees who are willing to work in rural India, an area that urban Indians call “the

darkness.” Their motto is tamaso ma jyotir gamaya - “from darkness to light.” In early 2011, Husk set up Husk Power University in partnership with the Shell Foundation and the International Finance Corporation (IFC). The university is a training program for mechanics and mid-level managers. A power company does not have a core business to open a university, but it is essential for us to do it. The university currently offers several different training programs. One three-month program teaches a rural villager with limited schooling how to operate a mini-plant. From this level, an operator can take additional courses to become an engineering mechanic. Promising engineering mechanics can train to become Husk-certified engineers, who oversee the operations of 30 – 40 plants. Another training program develops cluster

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managers, who oversee five to six plants that are in close proximity. Cluster managers need to be able to successfully manage 15 – 20 employees. Training a talented pool of cluster managers will create a pipeline of upper-level management talent to help the company scale efficiently and rapidly. Husk employs about 360 full-time staff, and plans to grow to nearly 20 times its current size in the next five years. It’s a model that many international generators will be looking at closely, as many installed rural electrification projects always end up maintenance issues in the end. FUNDING RAPID GROWTH In tandem with the recruitment of thousands of employees, Husk will need to raise about $30 million in debt and equity capital, according to Sinha. Identifying funders who are interested in a social enterprise that serves the rural poor is not easy. In 2009,

Husk received a pre-Series A round of financing from Acumen Fund, Bamboo Finance, LGT Philanthropy, Draper Fisher Jurvetson, and the International Finance Corporation (IFC). The Asian energy Investment Counicl also reportedly expressed interest. Its ability to reach its five-year target will hinge on its success at attracting new funding sources. Husk will also have to address the persistent misconception that people at the bottom of the pyramid are not willing to pay for electricity. To do so, Husk will have to prove that its operating model works just as effectively in East Africa as it does in India. Husk’s founders know Bihar well - one of them grew up in Bihar - but it’s unclear whether they will be able to operate successfully in Tanzania and Uganda, two planned expansion countries where they are not familiar with the local context.

Husk will also have to address the persistent misconception that people at the bottom of the pyramid are not willing to pay for electricity and prove that there is reliable demand for their product. Their current operations have already convinced some investors. “Bihar is the poorest of the poorest states in India. These are the bottom of the bottom of the pyramid consumers. These consumers are not only willing but desperately able to pay for this service,” says Desjardins of the Shell Foundation. Time will tell for the residents of Bihar and of course the expansion countries, however, Power Insider feel that this model needs to be embraced and copied for many new technologies in India. Once locals see the benefits of paying for electricity and have te ability to turn on a light bulb, then it will be something they will find the money for as the quality of life for all will no doubt be increased.

Charlie Fox

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hydrogen supply

HYDROGEN ONSITE THANKS TO WATER ELECTROLYSIS

Varna Powerplant in Bulgaria: 2 x 10Nm3 fully redundant indoor systems

HySTAT® 10 Nm³/h with 150 bar compressor and bottle fueling station, offering bottled backup hydrogen at the Shuaibah power plant in Saudi-Arabia.

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powerplant requires a vast array of different utility supply. In many cases one of the critical utilities is Hydrogen, acting both as a corrosion inhibitor and a cooling agent for the electrical generators. Getting good quality grade hydrogen on site is often a real challenge, especially in remote areas. To ensure a safe and reliable supply of hydrogen, instantaneous production onsite is considered to be the best choice. Over the last decade, many power plants all over the world have chosen for the HySTAT® water electrolyser, manufactured by Hydrogenics Europe NV Depending on the Powerplant setup, the produced hydrogen is either produced at 10bar or 25bar pressure, without any need for mechanical compression, and stored in large buffer vessels, to have sufficient quantities available for purging. The standard production quantities are 10 or 15Nm3/h. Most of the time, redundant systems are installed in order to prevent any possible shortage of hydrogen and have an increased availability of hydrogen production close to 100%. In other situations, the hydrogen is directly compressed to 150 or 200bar with a conventional hydrogen piston compressor. Large capacity storage is than possible in standard industrial bottles, often grouped in racks. The HySTAT®, with or without compressor, can be supplied as an ‘indoor’ skid, or integrated in an ‘outdoor’ housing, in which case the design criteria meet meet the often extreme weather conditions (from -40°C in Siberia to +55°C in Saudi Arabia).

Kirishi Powerplant in Russia: 2 x 10Nm3 fully containerized solution offering full redundancy

‘To ensure a safe and reliable supply of hydrogen, instantaneous production onsite is considered to be the best choice. Over the last decade, many power plants all over the world have chosen for the HySTAT® water electrolyser, manufactured by Hydrogenics Europe NV’.

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THE POWER OF EXPERTISE FOR HYDROGEN ONSITE Get to a reliable supply of hydrogen to ensure a continuous availability of hydrogen onsite thanks to water electrolysis. Since its inception in 1948, Hydrogenics has delivered more than a 1.700 units to a variety of customers worldwide and an average of 15 projects a year for powerplants to customers like GE, Siemens or Alstom. Today, HySTAT® water electrolysers are designed and built in Hydrogenics manufacturing facility in Belgium, Europe. A dedicated staff of 60 skilled personnel brings a common ideal to work every day: To design and manufacture the world’s best on-site hydrogen generator specially designed to perfectly match the needs of Powerplants. Our standard HySTAT® 10 or 15 (10 or 15Nm3/h), was first introduced to our customers more than a decade ago. Since then the HySTAT® has been subject to a continuous improvement process, increasing performance, capacity, quality and durability. By taking our customer’s feedback seriously, the result today is a product with no compromises at a reasonable cost. A basic HySTAT® unit consists of a hydrogen generating unit, a power rack, a control panel, remote monitoring and interconnection cables. The HySTAT® production capacity is continuously monitored and rapidly adjusted to meet any actual user requirements. Together with the best conversion efficiency in the industry, this makes the HySTAT® a flexible and economical source of hydrogen. The maximum working pressures can be selected to be 10 barg or 25 barg.

Specific requirements need specific solutions. Higher production capacities are achieved by installing HySTAT® generators in parallel. Higher pressure is obtained by adding a compressor. Extreme ambient temperature requirements are handled with different ventilation and air conditioning configurations. Local standards drive specific adaptations … with our world wide installation expertise we ensure full code compliance and hasslefree commissioning. We also developed a fully integrated turnkey solutions, including a water electrolyser, a compressor and all the needed peripherals to deliver Hydrogen at 150 or 200bar, in the right quantity, pressure and purity.

SAFETY, OUR MAIN CONCERN: With safety as a key priority every HySTAT® features: • A hydrogen in atmosphere detector • ‘Hydrogen in oxygen’ measurement • A UPS (uninterruptible power supply) • Complete risk assessment performed on the unit

GLOBAL SERVICING. After installation of the HySTAT® , our service team will come on-site for a final check and full commissioning of the plant (included in the offer). Many years of consolidated experience also makes our service team your best partner for longer term maintenance contract and support and an assurance of a reliable supply of hydrogen.

HySTAT®s are intended to be installed in dedicated premises and can be equipped with a variety of options (Gas tight ‘ATEX’ protective enclosure, Hydrogen Purification System (HPS), Closed loop cooling system, On line gas quality measurement, Reverse osmosis water purification system).

You need Hydrogen and don’t have a reliable source close to your powerplant?

Contact us right away: hydrogensales@hydrogenics.com, +32 14 462 110 PI_JanFeb_Hydrogenics.indd 41

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thermal analysis

Thermal Analysis to Reduce Maintenance By Frank Steffens & Roland Zepeck DURAG process & systems technology gmbh

Introduction: The quality and efficiency of firing systems and the associated operational availability of boiler plants and steam generators is essentially depending on the optimal mixture and dosing of fuel and combustion air in the entire combustion zone. Disturbances of the local fuel/air ratio can result in localised combustion areas with high combustion temperatures and high formation of thermal NOx. Other problems include the creation of localised combustion areas with incomplete combustion, associated with the production of high levels of CO. High flue gas losses can also result, along with high amounts of unburned carbon (UBC) or loss of ignition (LoI). Furthermore, variations in the fuel/air mix ratio can cause local displacement of the main combustion zone compared to the design position, local overheating of boiler construction material and finally, high temperature corrosion and thermal stress combined with boiler tube ruptures. Challenges: To achieve an optimal control of the combustion process, it must be possible to adjust two firing parameters individually. These are the uniform distribution of fuel according to the design data and secondly, control of the combustion air distribution over the entire combustion zone. Receiving good

Sensor 2

Boiler

Sensor 1

basic information from the actual situation inside the firing zone is essential in order to be able to achieve these targets. In most power stations

Control

Field Control Cabinet

Video Signal Digital Video- and Data Link (Fiber Optic Cable) Video Signal

Field Control Cabinet

Control

the operator only has a few tools (limited BIAS) available to get an idea of what is happening inside the combustion chamber. Only some operator can have a look inside the firing room, but often limited to a video image with almost no information about the temperature situation. To receive extended information about the combustion’s quality an online/real-time analysis of the actual firing situation is mandatory and has to deliver information regarding the local position of the main combustion zone, flame temperature distribution, local flame propagation, the ignition point of the flame, and the presence of any local fouling.

Digital Video- and Data Link (Fiber Optic Cable)

Control Room Video Monitor 1

Video Monitor 2

ThermographyMonitor

System PC

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Solution: The furnace CCD-camera sensor of the DURAG Video & Thermography System supplies online information directly from the combustion chamber to assist the operator in adjusting the complete combustion process optimally. The system provides a real-time colour video image as well as a real-time online thermographic analysis of the temperature distribution inside the combustion chamber. The DURAG Thermographic System is an optical spatial pyrometer based on advanced video data processing technology. A high quality colour picture with a wide angle of view (90°) and a small sensor diameter (43mm) is obtained with a boroscope lens or a video lens. The CCD camera is mounted in the cold part of the lance, thus allowing sensitive equipment to be mounted outside of the combustion chamber, allowing continuous use at high temperatures. An additional sapphire lens and air flushing are used to protect the sensor tip from slag and ash particles. In addition to the video image the system provides methods for the thermal analysis of the spatial temperature distribution inside the combustion chamber. It can determine the temperature within freely definable areas and lines (Region Of Interest ROI, and Line Of Interest - LOI). The system is also capable of continuous parallel temperature analysis in all ROI’s with continuous display of the absolute temperatures on screen. Other capabilities include the ability to perform continuous temperature analysis along all LOI’s with continuous display of the absolute temperature profile through the combustion chamber and the detection of the actual thermal position of the combustion zone. For automatic closed loop control measures, all the data generated by the thermographic systems can be transferred to the main process control system (DCS) at the customer site through a standardised data interface. To guarantee the largest and unobstructed observation range the sensors along with their optical systems are directly moved into the combustion chamber. To withstand high temperatures between 700°C and 1800°C (typical for these furnaces) the sensors are air and/or water cooled. All parts which are affected by the flue gas are made of special stainless steel to cope with the chemical reactions and high temperatures of the flue gas. The number and location of the places where they are installed

depends on the specific nature of the monitoring task (e.g. of single burner, elevations, combustion chambers), the measurements of the combustion chamber, the firing belt and plant specific options. Because of the large viewing angle typically one or two furnace sensors are fully capable of visualising and analysing the entire combustion chamber. The sensor is connected to a retraction unit. Sensors in that retraction system control the availability of air, water or power. In case of a loss of these supply medias, the sensor will get retracted automatically. To ensure that there is enough air to retract the sensor by air, the retracting unit stores three times the amount of air that is needed to drive the sensor pneumatically out of the combustion chamber. Close to the sensor will be a field control cabinet. This cabinet shows the status of the sensor and allows a manual handling of the sensor. The connection between the field control cabinet and the control room will be a fibre optical cable. A fibre optical cable has no interference with other electrical cables and insures a bright live image in the control room As far as the control room is concerned, the setup requires the installation of one optional video monitor for every sensor or for every sensor group for online visualisation of the combustion process and one PC with a graphic monitor (maximum processing of two sensors possible) for thermography and temperature analysis. Applications and results Online monitoring and thermal evaluation of the combustion situation in boiler plants is commonly used with the following firing systems: coal, fuel oil, gas (luminous flames), co-combustion of secondary fuels (e.g. waste water sludge), biomass boilers, tangential firing systems (corner or wall orientated), wall orientated firing systems and opposite burner orientated firing systems (‘boxing’ firing systems). The online data from the DURAG Video and Thermographic System supports the analysis of the combustion process; it provides the tools and ability to improve combustion quality by taking the necessary measures. This can include the correction of undefined and incorrect positioning of the main combustion zone through adjustment of the fuel/air ratio for individual burners. The system can also be used to minimise the amount of unburned carbon

in the ash (UBC/LOI). Furthermore, it can be used to minimise flue gas losses and can increase the efficiency level by adjusting the excess air at constant combustion. Using optimal furnace control reduces the maintenance requirements and furnace outof-service conditions due to local overheating and undefined situations in the water and steam systems (avoidingwater tube ruptures). It also has the benefit of minimising the boiler’s start-up time through a controlled temperature profile. Because of all these benefits, using the thermographic temperature analysis data to aid operation of the boiler typically results in a Return-of-Investment period of less than one year. Many installations all over the world, in coal, lignite, gas, and biomass fired boilers have proven that a relatively small investment in a Video & Thermography Analyzer System from DURAG process & system technology gmbh is resulting in big savings of primary fuel, reduction of maintenance, and extended travelling time.

‘The online data from the DURAG Video and Thermographic System supports the analysis of the combustion process; it provides the tools and ability to improve combustion quality by taking the necessary measures.’. power insider january/february 2012 43

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ASIA GAS MARKET

ASIAN GAS MARKET STARTING TO HEAT UP BY CHARLIE FOX

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s we are all already aware, Asia is one of the more interesting gas markets in the world. Places like Thailand and its Southeast Asian neighbors have seen phenomenal demand growth over the last several years. Total has said they’re in Thailand for gas. (Part of the reason I believe Thai shale gas may become an interesting play over the coming years.) Asian LNG demand has also been strong. Japan, China and Korea have helped pick up (a little of ) the slack in the LNG market created by booming U.S. shale gas production displacing LNG imports. But a developing gas market brings challenges. Especially when it comes to pricing. In parts of the world where gas demand is low, any company discovering natural gas is usually forced to sell on long-term contracts, often at relatively low prices. (Leading to the old oilman’s joke that the only thing in frontier exploration worse than a dry hole is a gas discovery. A dry hole you can plug and abandon. If you find gas, the host government usually wants you to foot the bill and test it. Even if there’s no hope of selling the gas profitably.) But in areas where significant amounts of gas are discovered, increased demand usually follows. Gas-fired power plants are built. Industrial facilities spring up. And as demand ramps up, pricing gets more complex. With more users vying for supply, prices become a key control on rationing and allocating supplies. Those who need the gas most are generally willing to pay more. Supply goes to the highest bidder. If people need it really badly, prices spike and exploration activity increases. Hopefully growing output. Today, we’re seeing signs of maturing in the Asian gas market. Pricing is becoming more complex as demand grows and different users jockey for supply. Just this month, the Asia-Pacific Economic Cooperation Business Advisory Council has urged Asian energy ministers to look at implementing an Asian gas futures market. APEC ministers are meeting next month (February 2012) in Japan. Futures are needed in complex markets. The introduction of such a system would allow Asian gas users to queue up for supplies months in advance, allowing for proper planning and coordination. Pricing evolution is also happening in India. Last week, the Indian government announced an unprecedented increase in the domestic sale price of gas. To around $4.20 per thousand cubic feet, up from a previous $2 per mcf. India has been struggling with pricing for some time. The government doesn’t want to upset consumers who’ve grown used to $2 gas. But at the same time, the nation needs new supply. Higher prices are necessary to encourage exploration. (As a side note, the government appears to be trying to play both sides of this coin. Although gas producers will now receive a higher price, it looks as if gas distribution companies will be barred from passing on the entire cost increase to end consumers. In effect, the government is simply shifting losses from one part of the supply chain to another.) Countries like Argentina are facing similar issues. Price controls have killed domestic gas exploration. Turning the nation from a gas exporter to an importer. Something will have to give here, sooner or later. These evolving markets can be great for investors. Using a little foresight, it’s easy to see areas ripe for price appreciation and liberalization. Buying in before the price increases makes for good returns. India’s Oil & Natural Gas Corp, for example, jumped 10% on news of the gas price hike. Keep an eye on Asia. This is a gas market just getting started.

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Exclusive LE Distributor for Indian Sub-Continent: Berkeley Petrochemicals Pvt Ltd, New Delhi www.berkeleypetrochemicals.com

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