Rs 100
POWERLINE Volume 18 ● No. 11 JULY 2014
INDIA’S FIRST POWER MAGAZINE
Bud ge
www.indiainfrastructure.com
ig th
hlights
Extension of 10-year tax holiday
Laun c sepa h of feed ration er sche me
Ad
r ultra ojects r tions fo Alloca olar power p s mega
Acce le ra tio n of G Energy Corrid reen ors Project
Infocus:
an cle ed nc ss ha ce En ergy en
to equ po ate we c r p oal lan su ts p
ply
Special story:
Fuelling Growth
Budget 2014-15 expected to drive investments in the sector
55
Diesel Engines and Gensets 20 PFC and REC register strong performance 22 Focus on ramping up coal transportation 44 Industry opinion on proposed reconstruction fund 46 Interview with Haryana government’s Devender Singh 82 Profile of Tata Power Solar’s Ajay Goel
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No. 11 July 2014
POWERLINE PUBLISHING Alok Brara EDITORS Nandita Sardana Kochhar Shubhra Puri EDITORIAL OPERATIONS Mudita Mehta (Director) Shyama Warner (Consultant) EDITORIAL Raka Sarkhel (Senior Sub-Editor) RESEARCH Tapas Bhowmik (Senior Analyst) Anchal Mittal (Senior Analyst) Reya Ramdev (Senior Analyst) Mandvi Singh (Analyst) Neha Bhatnagar (Analyst) Shruti Goel (Analyst) Jaspreet Kaur Anand (Associate) Shashank Shanker (Associate) BUSINESS DEVELOPMENT Raman Dev Narang (Sr. Vice-President) Natasha Kirti (Manager, Sales) DESIGN Joybroto Dass (Art Director) Jaison Jose (Graphic Designer)
Editorial A mid-month announcement by the power minister that 45 power generating plants in the country have coal stocks of less than seven days, together with NTPC’s revelation that six of its plants have coal stocks of less than two days, have made it clear that coal availability has hit an alarmingly low level. The one issue that the new government needs to address most urgently in the sector is coal supply. This alone will fix many related issues: operational and stranded capacities will get the optimum amount of coal and run well; the discoms that are currently resorting to load shedding will be able to meet the demand; new projects will come up; and power demand will grow, in turn boosting the country’s economy. In the budget and in general, the government has emphasised its keenness to tackle the coal supply issue. It has talked about rationalising linkages so that mines can supply coal to the nearest power plants and save freight costs. It has also talked about ramping up availability through additional mining of coal, improving supplies from Coal India Limited and reducing the e-auctioning of coal. It has urged the state governments to resolve local land issues so that railway lines can be built to transport coal. While these measures should yield results, the coal sector needs some major reforms to ensure that coal crises such as the one this month do not occur again. The crux of the problem is that while coal-based generation capacity has increased by 46 per cent in the past five years, domestic coal supply has increased by only 22.5 per cent, and the pressure is now beginning to show. Imported coal can only alleviate part of the pressure. To effectively resolve the issue, domestic coal supply has to be ramped up.
ADMINISTRATION Jose James Saroj Kumar
The other important matter is that of augmenting transmission capacity so that surplus power can be transmitted to deficit areas. Many discoms can identify sources outside their state where power is available in plenty and at cheaper rates to meet their demand. However, they are not able to execute transactions due to transmission bottlenecks, not just in the local grids but also in the central grid.
CIRCULATION Sumita Kanjilal
Unless these two basic issues are resolved, the sector will continue to struggle and will be unable to achieve its true potential to become the growth engine of the economy.
PHOTOGRAPHY Pallee OFFICE B-17, Qutab Institutional Area New Delhi 110 016 Phone: +91-11-4103 4600-01 Fax: +91-11-2653 1196 E-mail: info@indiainfrastructure.com Printed and processed at International Print-O-Pac Ltd © 2014 Power Line All rights reserved. Reproduction in whole or in part without permission is prohibited. Picture courtesy: shutterstock images
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July 2014
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CONTENTS
NEWS BRIEFS
4
FOCUS ON REGULATION
Road to growth
Positive role SPECIAL STORIES Fuelling growth
16
Budget 2014 is expected to drive
Bu dg
e
the demand-supply gap
performance
Key statistics
Rescue bid
44
Reconstruction fund proposed for
hlights
Extension of 10-year tax holiday
an cle ed nc ss ha ce En ergy en
r ultra ojects tions fo Alloca lar power pr so mega
Acceleration of Green Energy Corrido rs Project
Strong showing by PFC and REC 22
consumers with continuous, reliable power”
better billing and collection
50
Sterlite Technologies raises Financial briefs
52
Market overview
56
Demand drivers and key challenges Revival in demand
distribution segment
Growth expected after the slowdown
58
Cost considerations
84
Dr G. Prasad, MNRE
84
Venkatasiva Reddy, KPTCL
85
62
Sibir Roy, CESC Limited
86
Vinay Rustagi, BRIDGE TO INDIA
86
PHOTOGALLERY
87
COMPANY RELEASE
88
Private sector producers seek policy
Demand for diesel-based power
intervention
POWER DATA
despite high price of generation
Power trading
Coal crisis
30
Stocks plummet to six-month low Advantage AD
32
Choice of fuel
64
Key statistics
systems
Global gas production
Technology advances
toration of accelerated depreciation
Efficiency improvements in diesel
Torrent Power Limited
68
34
Environmental concerns
Power generation
92
Monthly statistics year over year 70
Plans for growth across the energy value chain
for DG sets
FORM IV Publisher Printer Owner Editor Printing Press
37
Exploring expansion opportunities ANDRITZ HYDRO India
90
engines reduce costs and emissions
Stricter emission norms proposed
India Power
89
At IEX and PXIL in June 2014
Diesel dominates in backup power
Industry pins its hopes on the res-
COMPANIES
40
Place of Publication
Strengthening its presence in the hydropower segment
2
82
S.K. Chaturvedi, Joint Electricity
Dr H.R. Sharma, Tractebel Engineering 85
World Bank report takes stock of 28
Ajay Goel, Tata Power Solar Regulatory Commission
foreign funds
INFOCUS: DIESEL ENGINES & GENSETS
Gas uncertainty
80
PEOPLE
transportation infrastructure 26
IT IN POWER Utilities focus on prepaid metering for
Need to ramp up coal Case for reforms
78
Payment security
FINANCE
20
Power savings
“Our goal is to serve all
Private equity push
Supply bottleneck
46
Devender Singh
Ad to equ po ate we c r p oal lan su ts pp ly
INDUSTRIAL POWER: SUGAR
conservation measures
Interview with
Laun ch separ of feed er ation schem e
74
Sugar manufacturers adopt energy
stressed projects
Promising performance
Rental energy plants help bridge
MPERC takes steps to improve sector
FORUM
investments in the sector ig th
42
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July 2014
Alok Brara Alok Brara India Infrastructure Publishing Pvt. Ltd. Alok Brara International Print-o-Pac Limited, C-4 to C-11, Hosiery Complex, Phase-II Extension, Noida 201305 B-17, Qutab Institutional Area New Delhi 110016
NEWS BRIEFS
National News Summary of key developments REFORMS AND REGULATIONS
adding significant interregional transmission capacity, which is expected to reach 66,000 MW by 2016-17.
The Central Electricity Regulatory Commission (CERC) has notified draft amendments to the Open Access in Interstate Transmission Regulations, 2008. The amendments attempt to make changes in the National Load Despatch Centre’s methodology for levying operating charges, among other provisions. The commission has also notified draft amendments in the Appointment of Consultants Regulations.
NHPC Limited’s 2,000 MW Lower Subansiri hydroelectric project in Arunachal Pradesh is reportedly incurring daily losses of Rs 100 million on account of depreciating capital assets (Rs 30 million) and loss in revenue (Rs 70 million) due to zero output. The plant was expected to be commissioned in March 2014, but development work has been stalled since December 2011 owing to environmental concerns raised by local activists as well as concerns regarding the possible impact on the downstream population. Around 55 per cent of construction work on the project has been completed, with commissioning targeted for 2018-19.
The CERC has rejected NTPC Limited’s petition for revising the tariff norms for 2014-19. The regulator had set the new norms with the notification of the Terms and Conditions of Tariff Regulations, 2014, in February 2014. According to NTPC, these norms, which introduce several modifications in the operational parameters for power projects, will adversely impact the economic viability of its plants, leading to a loss of about Rs 70 billion to the company. NTPC will take up the issue with the Delhi High Court, which had earlier this year directed it to approach the CERC for seeking amendments to the new tariff regulations.
CENTRAL SECTOR The Union Budget 2014-15 has announced a plan outlay of Rs 603.84 billion for the power sector, an 11.9 per cent increase over last year’s expenditure (revised) of Rs 539.63 billion. Several key policy measures that seek to revive the power sector and provide a fillip to renewable energy projects have also been notified in the budget. The Ministry of Power (MoP) has approved the construction of nine high voltage interstate transmission line projects entailing an investment of Rs 125 billion. These projects, for which bidding will take place soon, will facilitate power evacuation from major generation projects including NTPC’s 660 MW Sipat thermal power project (TPP) and 1,600 MW Gadarwara TPP, and Reliance Power’s 3,960 MW Sasan ultra mega power project (UMPP).These lines will form a part of the northern region transmission network and help reduce congestion by
P O W E R
N E W S
If you would like to receive up-tto-tthe-dday news briefs every Monday by email, contact Sumita Kanjilal at 4103 4600 or 4103 4601. Please note that each newsletter is priced at Rs 21,000 per year plus service tax of 12.36 percent. 4
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A technical committee under the purview of the Ministry of Coal (MoC) has identified eight coal mines for allocation to the power sector. The mines include the Pokharia Paharpur and GosaiPahari-Siulibani mines in Jharkhand, the Kuraloi (A) North mine and the Saradhpur (N) Sector-1 mine in Odisha, and the Kapsdanga-Bharkata coal mine in West Bengal. Meanwhile, four coal blocks have been identified for allocation on the basis of competitive tariff bids, applications for which were invited in December 2013. The MoP has sought the MoC’s intervention for securing tapering coal linkage for power plants aggregating 9,940 MW. These include projects totalling 5,845 MW that have been allocated captive blocks but where coal production has been delayed by more than a year, and another 4,095 MW of capacity that does not have captive blocks. The projects, however, are expected to be commissioned before March 31, 2015. The key projects in this category include Essar Power Limited’s Mahan TPP in Odisha, GVK Power and Infrastructure Limited’s Goindwal Sahib TPP in Punjab, the GMR Group’s Raikheda TPP in Chhattisgarh, and Monnet Ispat and Energy Limited’s Malibrahmani TPP in Odisha. The Ministry of Environment and Forests (MoEF) has granted environmental clearance to GAIL (India) Limited for setting up a 380 MW gas-based power plant in Guna district, Madhya Pradesh. Although the project was cleared by the expert appraisal committee in May 2014, it is yet to receive official clearance. The project entails a total investment of Rs 12.09 billion, and will be set up on 45 acres of land on the existing premises of GAIL’s liquefied petroleum gas manufacturing facility-cumcompressor station. The plant requires 530 million standard cubic feet per annum of gas, which will be transported through pipelines from the company’s compressor station. ●
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NEWS BRIEFS
The central government has postponed the proposed gas price hike, which was to come into effect from July 1, 2014 onwards, by three months. The government believes that the Rangarajan formula, on which the price hike is based, is limited in scope. For instance, it takes into account Japan’s import prices while reaching the end price, neglecting the fact that the same is susceptible to country-specific issues, as Japan is not a gas trading hub. Moreover, the formula overlooks the fact that the power sector is a major consumer of gas, and given the recommended hike, the sector will not be in a position to absorb the commodity. Currently, gas-based projects worth around Rs 1,000 billion are stranded on account of fuel scarcity. The central government has reportedly decided to do away with the proposal to split Coal India Limited (CIL) into seven regional companies. The move is directed at ensuring a quick and timely solution to the country’s coal deficit problem. The government feels that instead of restructuring the company, increasing output from individual mines and improving CIL’s operational processes would go a long way in ramping up domestic coal production. The central government has decided to restore the 4,000 MW Surguja UMPP in Chhattisgarh, which had been cancelled earlier on account of coal linkage issues. The two blocks linked to this project – the Pindrakhi and Putaparogia coal blocks located in the Hasdeo Arand coalfields, Chhattisgarh – were in the “nogo” area of the forest and hence, were not granted clearance. The central government is currently working on alternative coal linkages for the project. The Neyveli Lignite Corporation (NLC) has decided to undertake capacity expansion of its Mine-1 A from 3 million tonnes per annum (mtpa) to 7 mtpa at an investment of Rs 14.53 billion. The MoEF’s expert appraisal committee has recommended the project’s terms of reference, and directed the company to formulate the environmental impact assessment and environment management plan for obtaining various statutory clearances. NLC is also currently in the process of replacing its over fivedecade-old 600 MW Thermal Power Station-I, Neyveli, with the 1,000 MW New Neyveli Thermal Power Station, at a cost of Rs 59.07 billion. The plant is expected to be commissioned in 2015-16. NTPC has decided to set up a 300 MW solar park in Guntur district of Andhra Pradesh. It will award development contracts for the project through the international competitive bidding route. In a related development, the Andhra Pradesh government has requested NTPC to expedite construction of the upcoming 4,000 MW coal-based power plant at Pudimadaka in Visakhapatnam district of the state. The state government has further notified that a suitable site for the project will be handed over to NTPC within a month. NTPC has received around 34 proposals from independent power 6
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producers in response to an expression of interest floated by it earlier this year for acquiring TPPs aggregating 55,000 MW of capacity. Of these, around five projects have been ascertained as viable purchase options by NTPC, based on a preliminary assessment. The company will undertake a comprehensive evaluation of these plants for assessing their financial viability before acquiring the projects. Parameters such as coal linkage, power purchase agreement (PPAs) and clearances will be factored in for evaluating the projects.
STATE SECTOR Rajasthan Rajya Vidyut Utpadan Nigam Limited has commissioned a 250 MW unit of its coal-based Chhabra power plant. Following this, the total installed capacity of the plant has reached 1,000 MW, while that of the state genco has reached over 5,628 MW. The project was part of a Rs 9.9 billion contract that was awarded to Bharat Heavy Electricals Limited (BHEL) for setting up two units of 250 MW each as an expansion of the Chhabra power plant, the first of which was commissioned in December 2013. BHEL’s scope of work in the contract included design, engineering, manufacture, supply, erection and commissioning of steam generators and steam turbine generators, along with the associated auxiliaries and instrumentation system. The Telangana and Chhattisgarh governments have reportedly signed an agreement for transmitting 1,000 MW of power from the latter state to the former. The agreement, however, is conditional upon the availability of power evacuation infrastructure in Chhattisgarh. The West Bengal government plans to set up a 250 MW solar power project near the 900 MW Purulia pumped storage project (PPSP) at Baghmundi at an estimated cost of Rs 17 billion. A proposal for the same has been submitted to the Ministry of New and Renewable Energy, while the detailed project report is under preparation. The project, envisaged to be set up on 700 acres of land, will assist in pumping water for the PPSP, thereby resulting in a complete natural water pumping station harnessing solar and hydro energy. NTPC and the Telangana government have reached an agreement whereunder the former will set up a 4,000 MW coal-based power plant adjacent to the existing 2,600 MW Ramagundam power plant in the state. Issues of coal linkage, environmental clearances and land allocation for the project will be taken up by the state government on an urgent basis. The genco is ready to commence construction activities with immediate effect and targets to commission the plant’s first unit within a period of 39 months. The Andhra Pradesh government has directed the state discoms to sign PPAs with NTPC’s various TPPs. The discoms will procure 200 MW from NTPC’s Jhajjar TPP in Haryana and 100 MW from its Barh TPP in Bihar. The discoms will also sign a long●
July 2014
NEWS BRIEFS
term PPA with NTPC for tying up output from the Farakka TPP in West Bengal. The Delhi Electricity Regulatory Commission (DERC) has approved an average tariff hike of 8.32 per cent for the three state discoms for 2014-15. Under the revised tariff schedule, a hike of 2.5 per cent has been notified for domestic consumers consuming up to 400 units, while a hike of 7.5 per cent will be implemented for domestic users consuming between 400 and 800 units. The hike for domestic consumers with a monthly consumption of over 800 units will be 15 per cent. For commercial consumers, the tariff has been hiked by up to 11 per cent. Meanwhile, the commission has decided to withdraw the power purchase adjustment cost of 8 per cent for a period of three months (August-October 2014). In a separate development, the DERC has received a plea from Tata Power Delhi Distribution Limited for the termination of its PPAs for 340 MW of power procured from costly gas-based generators, including NTPC.
PRIVATE SECTOR Sterlite Energy Limited’s (SEL) first 660 MW unit of the 1,960 MW Talwandi Sabo supercritical power plant in Mansa district of Punjab has commenced generation. The plant is being implemented by Talwandi Sabo Power Limited, a special purpose vehicle and subsidiary of SEL. The remaining two units of the plant are expected to be commissioned by October 2014 and February 2015 respectively. The entire output of the plant has been tied up with Punjab State Power Corporation Limited through a PPA for a period of 25 years. Owing to a decrease in international coal prices, the compensatory tariff for Tata Power Company Limited’s 4,000 MW imported coalbased Mundra UMPP will reportedly be revised downwards. The CERC had notified a compensatory tariff of 52 paise per unit in February 2014. At present, the tariff works out to about 42 paise per unit and it could reduce further to 32 paise per unit as coal prices in the international market are expected to decline in the coming months. TBEA Energy (India) Private Limited, a subsidiary of the China-based TBEA Group, has commissioned a Rs 10 billion ultra high voltage power transformer manufacturing facility at Karjan, near Vadodara, Gujarat. The plant’s manufacturing capacity is 20 million kVA per annum. Going forward, the company plans to introduce the wind-solar complementary power station integration technology, solar energy core components manufacturing technology, wire and cable manufacturing technology, and power electronics integration technology in the plant’s operations. The facility will also be used as an exporting unit, targeting the Southeast Asia region. CG Lucy Switchgear Limited, a joint venture company of Crompton Greaves Limited and UK-based W Lucy & Company Limited, has 8
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commissioned a Rs 100 million ring main unit (RMU) production facility at Nashik, Maharashtra. Following this, the company’s RMU production capacity has more than doubled to over 1,000 units per month. The facility is also equipped with a partial discharge testing facility for voltage levels up to 33 kV. Crompton Greaves has commissioned a motor manufacturing facility in Bhopal, Madhya Pradesh. The facility, which includes a global design centre for high voltage motors, is equipped to manufacture motors of up to 15 MW, generators of up to 25 MVA and traction alternators. The plant will serve both the domestic and international markets including the Americas, the Middle East, Africa, Europe and Asia-Pacific. Tata Power Company Limited plans to invest Rs 18.79 billion during the four-year period 2014-15 to 2018-19, for developing a backbone distribution network in Mumbai and augmenting last mile connectivity in its licensed distribution area. The company has applied for renewal of its distribution licence term, which expires on August 15, 2014, with the Maharashtra Electricity Regulatory Commission (MERC). MERC is likely to pass an order in this context by August 10, 2014. During 2013-14, the company invested around Rs 3.51 billion in its Mumbai distribution business, and was able to capitalise assets worth Rs 3.02 billion during the year.
PROJECTS AND VENTURES Alstom T&D India Limited has received a Rs 277 million contract from Himachal Pradesh Power Transmission Company Limited for supplying one 66 kV gas-insulated switchgear (GIS) substation. The scope of works under the contract includes design, engineering, manufacture, supply, testing and commissioning of the 66 kV GIS, along with the substation automation and control system. The substation will facilitate transmission of power generated at upcoming hydropower projects to Kinnaur district in the state. L&T Construction has won orders worth Rs 3.92 billion in both the domestic and international markets in the power transmission business. The domestic order is from Bihar State Power Transmission Company Limited for turnkey construction of the Kanti-Motipur-Muzaffarpur-Bhikanpura 220/132 kV transmission line. NTPC has awarded a contract worth Euro 13 million to Alstom India Limited and NTPC Alstom Power Services Private Limited for undertaking the renovation and modernisation of electrostatic precipitators (ESPs) at its 2,000 MW coal-based Talcher power plant in Odisha. The scope of the contract includes engineering, supply, erection, commissioning and testing of new parallel passes installed for four ESPs, dry ash handling systems for new passes, and the associated civil, mechanical and electrical works. The works entailed in the contract are scheduled to be completed by 2018. ■ ●
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NEWS BRIEFS
International News Around the globe The State Grid Corporation of China (SGCC) has energised its 800 kV high voltage direct current electric power transmission project in south China. The project, estimated to be the largest of its kind, will transmit 40 billion kWh of electricity annually from the 13.86 GW Xiluodu hydropower station, built on the border of southwest China’s Sichuan and Yunnan provinces, to the power-deficit eastern region. As part of the project, SGCC has constructed a 1,680 km long transmission line from Yibin in Sichuan province to Jinhua in Zhejiang province. The line has a rated capacity of 8 GW and crosses the provinces of Sichuan, Guizhou, Jiangxi, Hunan and Zhejiang. The project has also entailed the construction of two converter stations, one at Ssangyong Yibin in Sichuan province and the other at Wuyi in Jinhua, Zhejiang province. Mitsubishi Hitachi Power Systems (MHPS) has signed an MoU with the Mitsubishi Corporation and two Indonesian power generation firms, PT Pembangkitan Jawa Bali (PJB) and PT Indonesia Power, to jointly provide operations and maintenance (O&M) services for gas and steam turbines. The agreement is an extension of MoUs that MHPS had individually signed with PJB and Indonesia Power in 2008. The new MoU extends the scope of services and has been converted to a joint MoU with the inclusion of the Mitsubishi Corporation as a signatory. As per the agreement, the four companies will partner on several activities related to gas and steam turbines, including technical training, technology seminars, joint research and field service. A consortium of Saudi Arabia-based ACWA Power and Vietnam-based Taekwang Power Holdings Company Limited has signed an agreement for the development of the 1,200 MW Nam Dinh 1 coal-fired power project in Vietnam. The power plant is a part of the 2,400 MW Nam Dinh thermal power complex. It will be located in Hai Hau district of Nam Dinh province in Vietnam and will entail an investment of $2 billion. Coal will be supplied to the plant by the government-owned coal mining company Vinacomin. The consortium will also be responsible for the O&M of the project. South Korea-based POSCO E&C has been selected as a preferred bidder for the engineering, procurement and construction (EPC) of the project. The construction of the Nam Dinh 1 power plant is scheduled to be completed in late 2016. A consortium of Germany-based Siemens and UK-based MMC Engineering Services has secured a contract from Malaysian oil and gas company Petroliam Nasional Berhad (Petronas) for construction of the 1,200 MW Pengerang cogeneration plant in Malaysia. Under the contract, Siemens will build the plant featuring four cogeneration units, each comprising a gas turbine and a waste heat recovery steam generator. The deal includes 10
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a long-term maintenance and services contract. On completion, the plant, being developed in Pengerang, southern Johor, will have the capacity to produce about 1,480 tonnes per hour of steam for the Petronas Pengerang Integrated Complex (PIC). The first unit of the power plant will supply power to the national grid while the remaining cogeneration units will supply energy to PIC’s facilities. MHPS has received a contract to supply a gas and a steam turbine for the 410 MW Bheramara gas turbine combined cycle power plant being constructed in Khulna district in Bangladesh. The plant is being developed by North-West Power Generation Company Limited, a regional power provider under the Government of Bangladesh. It will receive a loan from the Japanese government through the Japan International Cooperation Agency. The main contractor for the project is the Marubeni Corporation. MHPS will supply the turbines to India’s Larsen & Toubro, which has been awarded a contract for construction of the plant by the Marubeni Corporation on an EPC basis. The delivery of equipment will begin in September 2015. The Pakistan government has announced that it plans to privatise electricity transmission lines for improving the performance of its power sector. The Ministry of Water and Power is currently working on the draft plan for the same. The government also plans to develop new transmission lines, worth $6 billion-$7 billion, through the independent power producer (IPP) route. Pakistan’s National Electric Power Regulatory Authority will be the designated authority to fix tariffs for transmission projects that will be taken up in the IPP mode. Afghanistan may reduce the electricity transit fee it would levy on electricity imported from Tajikistan and Kyrgyzstan through the proposed Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000). Earlier, Afghanistan had demanded a transit fee of $0.025 per unit for the delivery of electricity from Tajikistan and the Kyrgyz Republic to Pakistan, while Pakistan had offered to pay $0.0056 per unit to Afghanistan, as per World Bank estimates. The move follows a sale purchase contract under which Pakistan had agreed to buy electricity at the rate of $0.051 per unit from Tajikistan. The project aims to facilitate trade of 1,300 MW of electricity among the four Central Asian countries – Tajikistan, the Kyrgyz Republic, Afghanistan and Pakistan. The CASA-1000 project involves the construction of over 1,200 km of electricity transmission lines and associated substations to transmit excess summer hydropower from the existing generating stations in Tajikistan and the Kyrgyz Republic to Pakistan and Afghanistan. ●
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BHI Co. a South Korea-based subsidiary of Swiss Foster Wheel Limited, has secured a contract from South Korea-based Samsung C&T Corporation to design and supply six heat recovery steam generators for the 2,100 MW Rabigh II combined cycle power plant in Saudi Arabia. The contract value and the terms of agreement have not been disclosed. The power plant is being developed near Jeddah and will supply electricity to Makkah. The project will deliver electricity to state-owned power utility Saudi Electricity Company (SEC) under a 20-year power purchase agreement (PPA). The plant is jointly owned by ACWA Power, Samsung C&T Corporation and SEC. Samsung C&T has been awarded the EPC contract for the plant, which is slated to start commercial operation in 2017. National Grid SA, the transmission subsidiary of Saudi Arabia’s SEC, has selected US-based Doble Engineering Company to strengthen the country’s transmission grid. The deal is a part of Saudi Arabia’s plans to invest $35.7 billion in water and power projects during 2014. However, the terms and details of the deal have not been disclosed. The scope of work will involve an asset health review of nearly 1,000 transmission transformers as well as a review of testing and maintenance practices undertaken by National Grid to analyse the root cause of historic failures, along with a comprehensive study of Saudi Arabia’s in-house electrical insulating oil laboratories. The move is aimed at strengthening the transmission network to support the country’s plans of increasing its generating capacity from 55 GW to 120 GW by 2020. GE Power & Water has secured a contract for the supply of four aeroderivative gas turbines to Jacobsen Elektro for a 150 MW natural gas turbine power plant in Kinyerezi, Tanzania. The plant is owned by Tanzania’s state-owned power company Tanzania Electric Supply Company Limited. Under the contract, GE will deliver four of its LM6000-PF dual-fuel aeroderivative gas turbines, which will provide around 44.5 MW of power each at about 40 per cent efficiency. The plant is anticipated to start commercial operation by early 2015. The Nigerian government has given the go-ahead to commence work on the 3,050 MW Mambilla hydropower plant. The plant, to be built in the state of Taraba, had been facing delays of over 30 years owing to lack of political support. It will be developed by the Power Construction Corporation of China, a conglomerate of Sinohydro, the HydroChina Corporation and the China Renewable Energy Engineering Institute. When complete, the project will be Nigeria’s largest hydropower installation, and will double the country’s installed capacity. The Zimbabwen government has terminated the contract awarded to China Machinery and Engineering (CMEC) for the expansion of the Hwange coal-fired power plant. The project involves building two 300 MW units, adding 600 MW to the present plant capacity of 920 MW. The decision has been taken due to CMEC’s failure to meet timelines. The government has now awarded the contract to Sinohydro Group Limited, China’s biggest 12
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builder of hydroelectric dams and the second highest bidder. In 2012, CMEC was awarded the $1.3 billion contract by the state-owned Zimbabwe Power Company to expand the plant. Japan-based Toshiba has secured a contract to deliver two 600 MW supercritical steam turbines and generators (STGs) for the Vinh Tan 4 thermal power plant in Vietnam. The order has been awarded by Doosan Heavy Industries and Construction of Korea and the Mitsubishi Corporation of Japan. The power plant is being built in Binh Thuan province. Toshiba expects to commence the delivery of equipment in 2015 and the plant’s first unit is scheduled to start operations in 2017. Malaysia’s state-owned power utility Tenaga Nasional Berhad (TNB) has signed a 25-year PPA with Jimah East Power Sdn Berhad for the 2,000 MW Track 3B power plant, being developed in Malaysia. Jimah East is a joint venture between 1Malaysia Development Berhad and Japan’s Mitsui & Company Limited. It is constructing the power plant under the MYR 11 billion contract awarded to it by Malaysia’s Energy Commission in February 2014. The company will design, construct, own, operate and maintain a coal-fired electricity generating facility, which will be located at Jimah in Port Dickson. The power plant is slated to be fully commissioned by April 2019. French engineering firm Alstom has supplied a high capacity power transformer to Bangladesh’s central transmission and distribution utility Power Grid Company of Bangladesh (PGCB). The 520 MVA, three-phase, 420/235/33 kV transformer will be installed at the 420 kV Bibiyana II substation, which is being developed by Bangladesh-based Summit Bibiyana II Power Company Limited. The substation will be operated and maintained by PGCB. The substation is the first 420 kV switchyard in Bangladesh and will evacuate power from the nearby 340 MW power plant. The Qatar General Electricity & Water Corporation (Kahramaa) has issued tenders for works on multiple packages under Phase XII of its transmission system expansion programme. The scope of work involves the supply and installation of substations, underground cables and overhead transmission lines for upgrading Qatar’s transmission and distribution infrastructure. For the substation packages, nine tenders have been launched, which involve the installation of new substations of voltages ranging from 66 kV to 400 kV and expansion of existing substations. The last date for submission of bids is September 25, 2014. The company has also issued six tenders for the supply and installation of underground extra high voltage power cables with voltages ranging from 66 kV to 400 kV. Interested parties can submit their bids till September 18, 2014. Contractors have also been invited to submit bids for the construction of a 400 kV overhead transmission line to connect the planned independent water and power project to the country’s transmission grid. The scope of work also involves the upgradation of an existing 132 kV overhead line (OHL) and dismantling another 132 kV OHL. The last date for the submission of bids is September 11, 2014. ■ ●
July 2014
Research Reports on Energy Sector India Infrastructure Research (a sister division of PowerLine magazine) publishes research reports in the areas of power, oil & gas, ports & shipping, roads & bridges, railways, urban transport, telecommunications, aviation, water and infrastructure finance. Our reports are acknowledged as high-quality, user-friendly, up-to-date, accurate and comprehensive sources of information. Here are some recent reports of most relevance for power sector professionals. New Report Investment and Market Opportunities in Southeast Asian Infrastructure (October 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 100,000** Releasing Soon Hydro Power Projects in India 2014: Project Pipeline and Economics; Sector Outlook and Opportunities (September 2014) . . . . . .Rs 50,000* Just Released Post-Election Infrastructure Project Pipeline and Outlook: Market and Investment Opportunities (July 2014) . . . . . . . . . . . . . . . . . . .Rs 60,000 LNG in India 2014 (July 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 50,000 City Gas Distribution in India 2014 (July 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 50,000 Oil and Gas Pipelines in India 2014 (July 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 50,000 E&P in Oil and Gas 2014 (July 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 50,000 Available Indian Power Sector and Equipment Market Outlook 2014-19 (June 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs.54,000 Investment and Market Opportunities in African Infrastructure (June 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs.100,000 Solar Power in India 2014 (May 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 50,000 Transmission in India 2014 (April 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 54,000 Distribution in India 2014 (April 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 54,000 Renewable Energy Finance in India: Needs and Requirements, Sources and Options (January 2014) . . . . . . . . . . . . . . . . . . . . . . .Rs 45,000 Solar Project Performance in India: Data Analysis, Trends and Insight (January 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rs 45,000 Infrastructure Financing in Current Environment(2013-14): Traditional Sources and Emerging Alternatives (January 2014) . . . . . . . .Rs 60,000 Cost of Power for Industrial Users: Electricity, Fuel, Equipment -Trends and Future Projections (December 2013) . . . . . . . . . . . . . . .Rs 45,000
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SPECIAL STORIES
Fuelling Growth Bu dg
Budget 2014-15 expected to drive investments in the power sector et
hlights h ig
Extension of 10-year tax holiday
Laun c sepa h of feed ration er sche me
r ultra ojects r tions fo Alloca olar power p s mega
Acceleration of G Energy Corrid reen ors Project
T
an cle ed nc ss ha ce En ergy en
Ad to equ po ate we c r p oal lan su ts p
he recently announced Union Budget is being largely seen as a “continuity budget” with no big surprises or U-turns on policies or programmes. It outlines the economic priorities and action plan of the new government. The fiscal deficit target has been set at 4.1 per cent for fiscal 2015, down from 4.6 per cent in the previous year. The government, moreover, hopes to increase revenues through indirect taxes and big-ticket PSU disinvestment worth Rs 584 billion. A GDP growth of 5.4-5.9 per cent has been estimated for the current fiscal. The budget lays emphasis on sectors such as agriculture, manufacturing, infrastructure and real estate. Liberalising the foreign direct investment norms for insurance and defence 16
The following are the key highlights of the budget pertaining to the power sector…
ply
(both from 26 per cent to 49 per cent) is also a progressive step. Infrastructure augmentation has been accorded top priority by the government. It has introduced innovative funding mechanisms such as infrastructure investment trusts and lowerered regulatory requirements on long-term infra lending, which is expected to encourage investments in the sector. The creation of 100 smart cities, strengthening of public-private partnerships (PPPs) and providing a larger allocation to sectors such as roads, irrigation and water should boost infrastructure growth. Infrastructure spending is budgeted to increase by 24 per cent over the previous fiscal to Rs 2.1 trillion. POWER LINE
For the power sector as well, the budget includes positive mechanisms that will help boost investments. No big schemes have been withdrawn. The government aims to focus on ensuring coal availability, rationalising coal linkages, easing financing of power projects, encouraging renewables and ensuring 24x7 power supply. The budget also seeks to revive investor sentiment in the renewable energy sector through budgetary allocations, incentives for domestic manufacturing of renewables and setting up of renewable power generation facilities.
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July 2014
Power projects • Extension of the income tax holiday under 80-IA for power projects (generation, transmission, distribution) to be commissioned till financial year 2016-17 is a big positive, as power projects have long gestation periods and many projects that have been held up due to fuel constraints or lack of environmental clearances will now have improved viability. • The proposal for the rationalisation of coal linkages to benefit projects that are already commissioned or are likely to be commissioned by March 2015 will positively impact coal-based project promoters. • Another positive is permitting banks to raise long-term financing for the infrastructure sector and lowering the regulatory requirements for long-term infra lending. • A hike has been announced in the clean coal cess for both domestic and imported coal, from Rs 50 per metric tonnes (mt) to Rs 100 per mt. There has also been an increase in basic customs duty on bituminous coal, from 2 per cent to 2.5 per cent. Both these developments are expected to increase the
SPECIAL STORIES
“
Dr Arup Roy Choudhury, Chairman and Managing
Industry reactions existing imported coal-based plants viable.
lyst in the evacuation of wind power.
We are hopeful that the introduction of innovative
All these measures are likely to boost investment
The budget clearly indicates exciting times for the power
schemes like Gujarat’s Jyotigram Yojana for feeder sep-
in the wind energy segment, which is likely to grow by
sector, besides encouraging mobilisation of resources by
aration would help in increasing efficiency and bringing
50 per cent in 2014-15.
PSUs. The finance minister has provided clarity on FDI,
down distribution losses. The Rs 2 billion fund allocat-
which was only getting extended year by year, and has
ed to distribution reforms in Delhi is a good step. We
Anil Chaudhry, Country President and Managing
now got a long-term push. This will definitely encourage
are hopeful that the positive announcements of the
Director, Schneider Electric India
investors. Further, the declaration for ensuring adequate
budget will be implemented effectively.
The budget has focused adequately on energy, in sync
Director, NTPC
with the new government’s vision, and announced var-
coal availability to all plants that have been commissioned or are likely to be commissioned by 2015 will
K.V.B. Reddy, Executive Director, Essar Power
ious measures that will ensure sustained growth. The
attract loans from banking and financial institutions. The
Easing of norms for bank lending to the infrastructure
power sector will get some respite, if the measures
finance minister has mentioned that coal will be crushed
sector and facilitating the setting up of infra trusts will
announced in the budget are implemented properly.
and supplied, thereby putting to rest disputes regarding
improve access to funding for a sector that needs a
There are measures to strengthen the entire power
the quality of coal. The budget also talks of the rational-
high quantum of long-term financing. Coal linkage
value chain. From the Rs 1 billion allocation for super-
isation of customs duty on all types of coal. A lot of
rationalisation, provision of coal for standing projects
critical ultramodern thermal power to the rationalisa-
encouragement has been given to the new and renew-
and easier mining laws are key for reviving the sector;
tion of coal linkages – these measures will help the
able energy sector, in addition to announcing financial
but steps on the ground are more important.
stranded power plants rebound. The government’s
support of Rs 500 crore to the solar mission in Jammu
Extension of the tax holiday is a positive, although
promise to resolve the existing deadlock in the coal
& Kashmir, Rajasthan, Tamil Nadu and Gujarat. The bud-
MAT (minimum alternate tax) relief would have been
sector and provide fuel to all projects coming up before
get also provides relief to solar equipment manufactur-
useful for the sector, which is going through financial
March 2015 will get the sector on course to meet the
ers, which will definitely incentivise indigenous produc-
stress. The continued focus on promoting renewables
Twelfth Plan target of 88,000 MW.
tion and reduce the cost of solar equipment.
is another step in the right direction.
The budget has also put emphasis on the solar energy sector. An allocation of Rs 5 billion for ultra-
18
Tata Power Company’s View
Tulsi Tanti, Chairman and Managing Director, Suzlon
modern solar power projects will provide the much-
The Union Budget 2014-15 has focused on policy and
This is a growth-oriented and futuristic budget. Key
needed push to solar power developers to increase
taxation reforms to provide an impetus to the economy.
announcements on investments in physical infrastruc-
generation capacity. Other measures that will increase
The finance minister has expressed the government’s
ture development, direct allowances for new invest-
the utilisation of solar energy and reduce the depen-
desire to move towards an annual growth of 8 per cent,
ments in plant and machinery, FDI, implementation of
dence on conventional energy resources are the allo-
which is possible only if the power sector grows at 11-
the gross sales tax and long-term financing options are
cation of Rs 1 billion for setting up 1 MW solar parks on
12 per cent per annum.
likely to boost manufacturing.
canal banks and Rs 4 billion for setting up solar
The government has rightly given high priority to the
Extension of the 10-year tax holiday for power
power–driven pump sets. Implementation of the Green
development of renewable sources of energy. The bud-
companies till March 31, 2017 provides the much-
Energy Corridors project will be a positive move for inte-
get seeks to boost the renewable energy sector with
required predictability for investors in the sector. The
grating channels for the evacuation of solar power.
incentives for domestic manufacturing and setting up of
new government aims to provide 24x7 power supply to
The removal of customs and excise duties on solar
renewable power generation facilities in the country.
all homes, which augurs well for the growth of the
equipment will also incentivise indigenous manufac-
Encouraging large-scale solar power generation as well
Indian energy sector.
turing and reduce the reliance on imports.
as providing fiscal incentives will help boost adoption,
Further, the budget proposal to increase the clean
revive investor confidence and increase capacity. With
energy cess from Rs 50 per metric tonne to Rs 100 per
Deepak Puri, Chairman and Managing Director,
Tata Power’s focus on renewable energy, we welcome
metric tonne for financing and promoting clean energy
Moser Baer India Limited
the government’s proposal to develop and allocate Rs
projects will give a major boost to the wind energy seg-
Overall, it is a good budget for the manufacturing and
500 crore for ultra mega solar power projects in
ment in particular. The Clean Energy Fund will now be
renewable energy sectors in general and solar PV
Rajasthan, Gujarat, Tamil Nadu and Jammu & Kashmir.
doubled annually from Rs 4,000 crore.
manufacturing in particular. There will be a scaling up
Power plants have a long gestation period and
Investment allowance along with the continuation
on the demand side through mega solar plants in
extending the 10-year tax holiday for power compa-
of additional depreciation (of -60 per cent) is also like-
Rajasthan, Tamil Nadu and Jammu & Kashmir. A
nies to March 31, 2017 will help achieve the capacity
ly to benefit small and medium enterprises that would
focused approach and the implementation of solar-
generation targets. Fuel security for domestic coal-
like to invest in the wind segment.
powered irrigation pumps can generate business
based plants could become a reality by providing coal
The budget has provided much-needed relief in
opportunities worth Rs 6 billion in the short run for
linkages, improving coal production and optimising
the form of waiving the special additional duty of 4 per
100,000 installations. Another positive development
coal transport. The budget has also made the basic
cent on parts and materials required for manufacturing
is doing away with the inverted duty structure. This will
customs duty on different varieties of coal imports uni-
wind-operated generators. Execution of the Green
drive competitiveness of local manufacturers and
form. However, a lot still needs to be done to make the
Energy Corridors project is also likely to act as a cata-
bring down costs of solar power. Reducing duties on
POWER LINE
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July 2014
SPECIAL STORIES
”
PV manufacturing equipment will bring down costs and drive local manufacturing and job creation. Improving power evacuation infrastructure will also help in solar energy development. Girish Kadam, Vice-President, Corporate Sector Ratings, ICRA Limited The stated intent of rationalisation of coal linkages for projects that have been commissioned or will be commissioned by the end of financial year 2015 will help ensure adequate coal availability and improve the viability of their operations. Further, the extension of the eligibility period for power projects to avail of tax holidays till financial year 2017 will benefit power projects that are scheduled to be commissioned by then. Moreover, the new rural power scheme announced is expected to improve power supplies for rural households as well as enable loss reduction for distribution utilities. However, the hike in the coal cess and the marginal increase in customs duty on steam coal would lead to a rise in power generation costs by about 2.5 paise per unit, which will put pressure on retail tariffs. Higher budgetary allocation and duty rationalisation
cost of electricity and be reflected in higher costs to the end-consumers. Transmission and distribution • The budget allocation for the transmission and distribution (T&D) segments has nearly doubled to Rs 80 billion. • Faster implementation of the Green Energy Corridors project, which involves the construction of transmission lines connecting green energy corridors to load centres, is to be ensured. • Another key initiative is the introduction of the Deen Dayal Upadhyay Gram Jyoti Yojana, which has an allocation of Rs 5 billion and is aimed at ensuring 24x7 power supply to rural households. • The Rs 5 billion Jyotigram Yojana for feeder separation in Gujarat will help augment power supply in rural areas and strengthen sub-transmission and distribution systems, thereby bringing down distribution losses. • The Rs 2 billion fund allocated for distribution reforms in Delhi is a good step.
• While the exemption of excise duty on solar and wind equipment will benefit domestic manufacturers, the reduction in customs duty on solar, biogas and wind equipment will increase foreign competition for domestic players. Gas • The budget proposes to build 15,000 km of gas transportation pipelines as a part of the national gas pipeline grid under the PPP model. While the finance minister talked about a reduction in fuel subsidies, there was no clarity with regard to the issues related to domestic gas pricing and the New Exploration Licensing Policy. Clean technologies • On the clean technology front, an allocation of Rs 1 billion has been announced for ultra modern supercritical coal-based thermal power technology.
for the clean energy sector are positive steps. The announcement of ultra mega solar projects is expected to facilitate large-sized solar capacity addition in the country and encourage domestic manufacturing of solar equipment. The duty measures announced for wind and compressed biogas projects are also a positive, which will help reduce capital costs and hence, tariffs. In addition, the focus on evacuation of renewable energy is expected to encourage capacity addition.
CRISIL’s View The 10-year tax holiday for power plants will benefit 1820 GW of competitively bid projects that are expected to be commissioned between 2014-15 and 2016-17. In the absence of this extension, the equity IRR (internal rate of return) would be lower by 150-200 basis points. Higher allocation of funds to the T&D segments will help reduce aggregate, technical and commercial losses (through investments in metering, feeder separation and grid modernisation) as well as improve demand, particularly from rural areas. Long-term financing for infrastructure by banks will help improve funding for the sector. On the renewable energy front, we believe that the impact of the customs duty cut on specific inputs used in solar and wind power equipment will be negligible given that these components account for only a small proportion of the overall capital costs. ■
Renewables • An allocation of Rs 1 billion has been made for the development of 1 MW solar parks on the banks of canals. • The government has proposed to develop and allocate Rs 5 billion for ultra mega solar power projects in Rajasthan, Gujarat, Tamil Nadu and Jammu & Kashmir. • There is an allocation of Rs 4 billion for launching schemes for solar power-driven agricultural pump sets and water pumping stations to energise 100,000 pumps. • There is a reduction in basic customs duty, from 10 per cent to 5 per cent, on forged steel rings used in the manufacture of wind generators, a concessional basic customs duty of 5 per cent for machinery and equipment required for setting up compressed biogas plants and a basic customs duty of 5 per cent on machinery and equipment required for setting up projects for solar energy production aside from exemption of customs duty on raw materials such as flat copper wire for photovoltaic (PV) ribbons. POWER LINE
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July 2014
Conclusion While the budget has been largely positive, critics feel that the government may not be able to contain the fiscal deficit as envisaged due to the sluggish growth expected this year as well. Further, it does not include a specific road map for the reduction of subsidies. That said, the budget should help boost investments for the power sector. While the concessions and budgetary allocations have the right intent and have found favour with industry stakeholders, effective implementation will be crucial. This includes ensuring the availability of coal for power projects, streamlining clearances, removing transmission bottlenecks and implementing the proposed programmes. ■ Shubhra Puri 19
SPECIAL STORIES
Promising Performance Strong showing by PFC and REC
D
espite the challenging economic environment and overall slowdown, state-owned power sector lenders Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), registered encouraging performance with good asset growth, strong asset quality and healthy margins during 2013-14. Power Line takes a look at the lending and borrowing patterns, and operational performance of PFC and REC… Lending patterns PFC achieved its business targets for 2013-14 despite the economic downturn and the subdued performance of the power sector. During the year, the company sanctioned loans aggregating Rs 607.29 billion compared to a targeted amount of Rs 590 billion. However, this was significantly lower than the Rs 751.15 billion sanctioned by PFC during 201213. As for disbursements, PFC disbursed loans aggregating Rs 471.62 billion during 2013-14 against the target of Rs 470 billion, which was 4 per cent higher than the Rs 451.51 billion disbursed during the previous year. In addition, PFC’s loan sanctions for the Restructured Accelerated Power Devel-
opment and Reforms Programme (RAPDRP) increased by 16 per cent to Rs 43.31 billion in 2013-14 from Rs 37.28 billion in 2012-13. Of the total R-APDRP sanctions, Rs 40.85 billion was for works to be undertaken under Part B of the scheme while the remaining Rs 2.46 billion was for Part A works. Power generation projects accounted for 69 per cent of loan sanctions (excluding the R-APDRP) and 67 per cent of disbursements in 2013-14. The share of power transmission projects in sanctions and disbursements was 5 per cent and 4 per cent respectively, and that of distribution sector projects was 8 per cent and 4 per cent respectively. Loans extended by PFC as transitional finance and shortterm loans as well as for funding of regulatory assets, buyer’s line of credit, decentralised management, computerisation works and studies accounted for 17 per cent of the sanctions and 25 per cent of the disbursements. Sector-wise, 76 per cent of the total loan sanctions were for state sector projects and 21 per cent were for private sector projects, while the share of joint sector and central sector projects remained marginal. In terms of disbursements, the state sector’s share remained at 70 per
cent, the private sector’s stood at 24 per cent, the joint sector’s at 5 per cent and the central sector’s at 2 per cent. As for the loan assets composition, of the gross outstanding assets of Rs 1,889 billion as of March 31, 2014, 77 per cent pertained to generation projects, 6 per cent to transmission, 4 per cent to distribution and 13 per cent to the “others” category. In terms of the sector-wise distribution of borrowers, 85 per cent of the loans were outstanding from state, central and joint sector borrowers, and the remaining 15 per cent from private sector borrowers. As for REC’s lending pattern, the loans sanctioned by the company during 2013-14 decreased to Rs 707.4 billion, compared to Rs 795.28 billion in 201213. During the given period, the loans disbursed by the company also decreased to Rs 355.46 billion compared to Rs 392.75 billion. In terms of composition, 56 per cent of the loans sanctioned during 2013-14 were for transmission and distribution (T&D) projects, and 41 per cent were for generation projects. The share of T&D and generation projects in total loan disbursements stood at 59 per cent and 37 per cent respectively. The share of shortterm loans in REC’s sanctions and disbursements during the year was 3 per cent and 4 per cent respectively. At the end of 2013-14, REC’s total outstanding loan amount stood at Rs 1,486.41 billion, which was up 17 per cent compared to Rs 1,273.56 billion outstanding at the end of the previous year. Sector-wise, the state sector accounted for 81 per cent of the outstanding loans, the private sector for 14 per cent, and the central sector for 5 per cent. Disciplinewise, the share of T&D projects and gen-
20
POWER LINE
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July 2014
SPECIAL STORIES
eration projects in the outstanding loans stood at 55 per cent and 44 per cent respectively, while other categories accounted for 1 per cent share. Resource profile In terms of PFC’s resource profile, 85 per cent of its funds are sourced from borrowings from financial institutions and the money markets, while the remaining 15 per cent is raised from equity shareholders. Of the company’s total borrowings of Rs 1,592 billion as of March 31, 2014, 80 per cent was raised through bonds, 19 per cent through term loans and 1 per cent through short-term loans. Currency-wise, rupee loans constituted 94 per cent of the borrowings. REC’s total borrowings as of March 31, 2014 stood at Rs 1,262.4 billion. Of this, 59 per cent was raised through subordinated and zero coupon bonds, 20 per cent was raised through tax-free and infra bonds, 14 per cent through foreign currency borrowings, 6 per cent through banks and other financial institution borrowings, and the remaining 1 per cent through commercial papers. Operational performance PFC registered a strong operational performance during 2013-14. It managed to reduce its non-performing asset (NPA) ratios despite the overall trend of rising NPAs in the power sector. As of March 31, 2014, PFC’s gross and net NPAs aggregated Rs 12.28 billion and Rs 9.85 billion respectively against loan assets of about Rs 1,900 billion. The company’s gross NPA decreased to 0.65 per cent as of March 31, 2014 from 0.71 per cent as of March 31, 2013, while the net NPAs decreased to 0.52 per cent from 0.63 per cent. PFC’s capital adequacy ratio at the end of March 2014 stood at 20.1 per cent, which was higher than the regulatory requirement of a minimum of 15 per cent. This provides adequate headroom for nearterm growth. During 2013-14, PFC managed to increase its capital adequacy ratio to 20.1 per cent from 17.64 per cent, primarily on account of raising subordinat-
Key performance indicators for PFC and REC Key indicators
PFC 2012-13
REC 2013-14
2012-13
2013-14
Sanctions (Rs billion)
751.47*
607.29*
794.28
707.40
Disbursements (Rs billion)
451.51*
471.62*
392.75
355.46
1,637.20*
1,563.90*
Outstanding sanctions (Rs billion) Yield on assets# (%)
1,273.56
1,486.41
11.94
12.31
11.62
12.81
Cost of funds# (%)
9.09
8.85
8.17
8.58
Interest spread# (%) Net interest margin# (%)
2.86
3.45
3.45
3.60
Return on average networth# (%)
4.41
4.94
4.55
4.90
21.64
23.07
23.85
24.57
* Excluding R-APDRP; # Quarterly ratios have been annualised Sources: PFC; REC
ed debt of Rs 38 billion at competitive rates (almost at the same rate at which the long-term senior debt was raised). As for the return on average assets, it increased marginally, by 8 basis points, to 2.98 per cent for 2013-14. The return on average net worth increased by 143 basis points to reach 23.07 per cent while the debt-equity ratio stood at 6.36 times. During the year, PFC also managed to keep the cost of borrowing competitive, despite volatile interest rates and foreign exchange markets. The cost of funds decreased 24 basis point to 8.85 per cent for 2013-14 from 9.09 per cent for 201213. During the year, the company raised about Rs 450 billion at a marginal cost of 8.96 per cent, which includes Rs 50 billion of tax-free bonds. In addition, the company made fresh disbursements at rates higher than the average yield during the previous year. PFC also saw the accrual of additional income of Rs 1,440 million due to the repricing of existing loan assets at higher rates. As a result, the company’s interest spread increased by 59 basis points from 2.86 per cent to 3.45 per cent, and the net interest margin registered an increase of 53 basis points to 4.94 per cent from 4.41 per cent. Accordingly, the company’s net interest income increased 34 per cent from Rs 63 billion in 201213 to Rs 85 billion in 2013-14. POWER LINE
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July 2014
REC also maintained a healthy operational performance during 2013-14 with its percentage of gross NPAs to outstanding loans decreasing to 0.33 per cent from 0.38 per cent in the previous year. Its percentage of net NPAs to outstanding loans also registered a decline to 0.24 per cent from 0.31 per cent during the same period. As for other performance indicators, REC’s yield on loans improved 56 basis points to 12.18 per cent in 2013-14 from 11.62 per cent in 2012-13. Its net interest margin also improved by 35 basis points to 4.9 per cent from 4.55 per cent, while its return on average net worth improved by 72 basis points to 24.57 per cent from 23.85 per cent. REC also managed to increase its interest spread to 3.6 per cent in 2013-14 from 3.45 per cent in 2012-13; however, its cost of funds increased to 8.58 per cent from 8.17 per cent previously. Conclusion PFC and REC play a crucial role as nonbanking finance institutions dedicated to the power sector. The strong performance registered by both companies despite the economic slowdown and subdued investor interest reflects the robustness of their respective business models. It is a good indicator of their ability to efficiently manage challenges in the power sector. ■ Mandvi Singh 21
SPECIAL STORIES
Supply Bottleneck Need to ramp up coal transportation infrastructure
T
he power sector’s problems may not be solved by merely ramping up coal production; a significant part of the problem is the country’s inadequate railway network, which is unable to transport the incremental coal production. Currently, the majority (40-50 per cent) of the coal movement takes place through the railways, while roads account for 30 per cent, and ports cater to imports as well as domestic coal movement along the eastern coast from Odisha to Andhra Pradesh, Tamil Nadu and West Bengal. Power plants are facing supply issues due to inadequate rail infrastructure, unavailability of rakes and wagons during high coal demand periods, congestion on existing routes and slow development of new railway links in coal corridors. The average rake availability for Coal India Limited (CIL) stood at 190 rakes per day in 2013-14, as against its requirement of 212 rakes per day. To meet the coal offtake target of 520 million tonnes (mt) during 2014-15, the company has projected the average requirement at 221 rakes per day. CIL has often cited its
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inability to increase production in high coal-bearing areas owing to the lack of adequate evacuation infrastructure. Taking these factors into consideration, the new government has initiated some steps to fast-track critical railway line projects, some of which have been delayed for over a decade. In addition, an exercise to rationalise coal linkages to power plants is under implementation. Further, in a bid to decongest the railways and develop alternative transportation modes, the government has announced the development of a key inland waterway transport (IWT) project in the Union Budget 2014-15. Expediting critical railway links CIL has significant coal reserves in the North Karanpura (Jharkhand), Ib Valley (Odisha) and Mand Raigarh (Chhattisgarh) regions. However, the progress of key railway line projects for coal evacuation from these areas has been slow due to delays in land acquisition and in the grant of environmental and forest clearances. As a result, the company has been unable to augment production or operationalise new mines in these regions. In a
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bid to facilitate coal evacuation, the railway and coal ministers held a joint meeting in June 2014 and decided to expedite the implementation of critical rail connectivity projects for coal movement. These railway line projects are as follows: • Tori-Shivpur (44 km) and ShivpurKathautia (53 km) railway lines in North Karanpura. • Jharsuguda-Barpalli-Sardega railway line (53 km) in lb Valley. • Bhupdevpuir-Korichapan-Dharamjaigarh (180 km) line in Mand-Raigarh. The completion of these three railway lines can increase the coal evacuation capacity by about 100 mt in the first phase and by 300 mt in the second phase. The projects are estimated to entail a total investment of Rs 100 billion and will be partly funded by CIL, considering the resource crunch faced by the Indian Railways. A project monitoring unit will be formed, with representatives from the railway and coal ministries, and the Department of Revenue and Forests of the concerned state government, for better coordination. The operations are likely to commence from 2016-17. Progress of DFC In order to cater to the projected increase in freight traffic, especially coal, and congestion on existing trunk routes, Indian Railways has envisaged the setting up of the Dedicated Freight Corridors (DFC) project. The project com-
SPECIAL STORIES
prises two corridors – Eastern and Western – and is being implemented by Dedicated Freight Corridor Corporation of India Limited (DFCCIL). The 1,839 km long Eastern DFC will pass through six states and will facilitate bulk transportation of coal for power plants in Uttar Pradesh, Delhi, Haryana, Punjab and Rajasthan from Eastern Coalfields Limited. It is projected that coal will account for about 68 per cent of the total traffic on the Eastern DFC. The Western DFC will cover 1,483 km from the Jawaharlal Nehru Port Trust in Mumbai to Dadri near New Delhi, and enable the transportation of imported coal from the ports to the hinterland. So far, of the 10,667 hectares of land required for the two corridors, the award of compensation has been declared for about 87 per cent. Civil contracts for the construction of a few sections of the DFC have already been awarded. The Western DFC is targeted to be commissioned in 2018 and the Eastern DFC in 2019. The DFC is expected to benefit coal transportation significantly. Inland waterways Constraints in the availability of adequate rail infrastructure have forced developers to look for alternative means of transportation for coal. For instance, NTPC started carrying imported coal by barges through inland waterways for its 2,100 MW Farakka thermal power project (TPP) in West Bengal in 2013. The first set of three barges carried about 1,500 tonnes each of imported coal, berthed near Farakka TPP, on November 13, 2013. In June 2014, the plant received a domestic coal shipment through inland waterways in the face of supply hurdles caused by the railways. NTPC will transport 3 mtpa of coal through inland waterways from Haldia to the Farakka TPP for seven years. In August 2011, a tripartite agreement was signed in this context between NTPC, the Inland Waterways Authority of India and Jindal ITF. NTPC also intends to transport coal for its upcoming Barh project in Bihar through a similar mechanism. 24
CIL’s rake requirement vs availability Year
Annual average requirement of rakes (No. of rakes/day)
Average availability of rakes (No. of rakes/day)
2010-11
185.0
161.9
2011-12
175.0
167.7
2012-13
193.3
184
2013-14
212.2
190
2014-15
221
–
Coal traffic projections for the DFC (mtpa) Commodity
2016-17
2020-21
54.46
61.96
0.61
0.95
6.30
9.40
Eastern DFC (up direction) Coal for power plants Coal for other uses Western DFC (down direction) Coal, cement, iron and steel Source: DFCCIL
The Union Budget 2014-15 has given a boost to IWT through the allocation of Rs 42 billion for the development of National Waterways-I. The project, called Jal Marg Vikas, will be developed on the Ganges between Allahabad and Haldia to cover a distance of 1,620 km. It will enable commercial navigation of about 1,500 tonne vessels. The project would involve the construction of permanent terminals at various places, including Varanasi and floating terminals at Allahabad and Ghazipur. It is anticipated to be completed over a period of six years. The project has the potential to transport imported coal from ports on the east coast to the northern hinterland. The way forward The government’s renewed focus on creating adequate coal transportation infrastructure is an important development for the sector. The timely completion of critical rail and waterway projects can help considerably to ease coal transportation constraints. Notably, IWT is a cost-competitive transportation solution as compared to rail and road transport. If the economic costs of carbon emissions and noise pollution are factored in, IWT is a better choice over rail and road transport. In the past, IWT had been used, albeit infrequently, to POWER LINE
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transport heavy power equipment for upcoming power projects. In order to meet the coal demand, which is expected to surge from about 720 mt in 2013-14 to 980.5 mt by 2016-17, domestic coal producers need to step up supply from the existing mines as well as operationalise new ones. Given that coal-based power generation capacity is set to increase in the coming years, there will be additional pressure on the existing transportation networks to deliver higher volumes of coal. Over 45,000 MW of coalbased capacity is expected to be added by 2016-17. Apart from the augmentation of railway networks, port infrastructure also needs to be strengthened to accommodate the expected rise in imports. To sum up, there is an urgent need to ramp up coal transport infrastructure. The domestic coal production targets for 2016-17 are about 715 mt in a business-as-usual scenario and 795 mt in an optimistic scenario. Even if the production targets are met, timely delivery to power plants will remain a cause for concern. Therefore, it is imperative that coal transportation projects are completed in a timely manner to ensure reliable supply to power generators. ■ Neha Bhatnagar
SPECIAL STORIES
Case for Reforms World Bank report takes stock of distribution segment
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he World Bank recently released the “More Power to India: The Challenge of Electricity Distribution” report, highlighting the need for major reforms in the distribution segment to meet the country’s goal of providing electricity access to all by 2019. The study analyses the achievements of the segment since the enactment of the Electricity Act, 2003 (EA, 2003) and the key challenges. Excerpts from the report… The agenda for addressing distribution performance must now be a priority Utility finances – critical to realizing sector goals – deteriorated sharply over 2003–11. Power sector after-tax losses, excluding state government support (subsidies) to the sector, were Rs 618 billion ($14 billion) in 2011, equivalent to nearly 17 percent of India’s gross fiscal deficit and around 0.7 percent of GDP. When subsidies are included as revenue, losses fall by more than half, to Rs 295 billion ($6.5 billion). Aggregating profits and losses over time, sector-wide accumulated losses stood at Rs 1,146 billion ($25 billion) in 2011, more than twice (in real terms) the amount in 2003. Accumulated losses grew at a compound annual growth rate of 9 percent in real terms from 2003, though the share of losses relative to GDP remained stable at about 1.3 percent, largely because the economy also grew strongly over this period. Discoms and bundled utilities are the largest contributors to accumulated losses, though their share has fluctuated from 90 percent in 2003 down to 79 percent in 2008 and back up to 86 percent in 2011. Sector losses have been financed by heavy borrowing by all sector segments, with total debt growing to Rs 3.5 trillion ($77 billion) in 2011, or 5 percent of GDP. Discoms are responsible for the largest share of this debt (36 percent in 2011),
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followed by generation companies. Many discoms have relied on short-term loans to meet operating expenses in recent years: long-term loans declined from 87 percent of total sector borrowing in 2007 to 77 percent in 2011. The interest burden on utilities from short-term borrowing is onerous, with debt-heavy capital structures becoming more common. Mounting debt and continuing losses have led to a precipitous decline in discom creditworthiness. In Uttar Pradesh, Rajasthan, Meghalaya, and Haryana, power sector debt exceeded 10 percent of state GDP in 2011. Facing the prospect of huge and increasing nonperforming assets and approaching their sector exposure limits, lenders pulled the plug on loss-making utilities by late 2011. As credit dried up, these discoms were unable to pay for power purchases, with a knockon effect on upstream (generation) investor sentiment. The flow of liquidity limited the pressure on discoms to improve performance and on state governments to permit tariff increases. Analyzing operational and financial performance of distribution Aggregate technical and commercial (AT&C) losses have fallen from 38 percent to 26 percent over 2003-11. Distribution losses have dropped from 32 percent in 2003 to around 21 percent on average in 2011. Distribution-utility revenue losses can be decomposed by source: from underpricing, undercollection, and from physical losses of energy. In 2011 the absolute amount lost was highest in Tamil Nadu, followed by Rajasthan and Andhra Pradesh; losses in five states were more than 100 percent of distribution revenues earned. Collection efficiency has generally remained stable, rising from 89 percent in 2003 to 94 percent in 2011. Average POWER LINE
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debtor days have come down from 213 days to around 170 over 2003–11. In 2003, in aggregate, states were charging an average billed tariff well above cost recovery, and losses that year were overwhelmingly driven by distribution losses. By contrast, in 2011, states were charging an average billed tariff below cost recovery. Thus, underpricing emerged as an important contributor to losses, though distribution inefficiencies continued to be the largest contributor to total losses. Calculated across all states, the margin of cost recovery declined over 2003–11 because tariff increases failed to keep pace with cost increases. The sector operating environment has contributed to discom financial difficulties While average revenue grew at a real compound annual growth rate of 6 percent over 2003–11, the average cost of supply rose at about 7 percent, growing by 70 percent in real terms over the period. The share of power purchases in total costs rose from 56 percent in 2003 to 74 percent in 2011. Power has become more expensive because of a decline in domestic fuel availability and because of poor procurement planning by discoms. A sharp increase in the use of imported coal and e-auctions to purchase coal have further pushed up the cost of power generation. Rising interest expenses, driven by discoms’ increased borrowing to meet cashflow needs, have also contributed to escalating costs. The escalation in cost is also not always permitted to be a passthrough, adding to the pressure on discoms. The expense of providing belowcost power to key consumer groups, such as agricultural and rural consumers has also weakened utility finances. The share of agriculture in total electricity consumption was 23 percent in 2011, while revenues from agriculture were only 7 percent of the total. The problem for utility finances arises because there is often a gap between the volume of subsidies booked by utilities as compensation and the amount received from the gov-
SPECIAL STORIES
ernment. The gap was Rs 119 billion ($2.6 billion) for all states in 2011. Since 2003 subsidies booked have grown 12 percent a year and subsidies received by 7 percent a year; the cumulative gap between them was $10 billion for 2003–11. State support to the power sector averaged 1.3 percent of state GDP in 2011 across the 16 Indian states in which distribution utilities received support, and was as high as 6 percent in Punjab and 5 percent in Uttarakhand. As a share of the state budget in 2011, state support averaged about 2 percent but was 15 percent in Bihar and 22 percent in Uttarakhand. Most states also subsidize a substantial portion of domestic consumption. Of all electricity consumed by domestic consumers in India, 87 percent was subsidized in 2010. As the domestic sector consumes almost a quarter of electricity sold, this is equivalent to 21 percent of all electricity consumed, with the average subsidy being Rs 1.5 per kWh. Institutional factors and governance shortcomings are other contributors Analysis for this report shows that achieving sector outcomes is linked closely to the degree to which each state has implemented the EA. An index of outcomes on objectives ranging from power availability and affordability, to access and reduction of fiscal burden, to openness and sector financial viability was used to measure overall sector performance. It shows that sector outcomes, in line with the implementation of reforms, have been uneven across states, with Gujarat and Punjab ranking highest in achievement of outcomes. The EA’s requirement for unbundling and corporatization of utilities was intended to limit state involvement in their operations, increase transparency and accountability, and bring a commercial orientation to their operations. But while unbundling the SEBs has progressed quite well on paper, actual separation and functional independence of the unbundled entities is considerably less than it appears. Corporatization has also been unable to insulate utilities
from state interference. Utility boards tend to have more government and executive directors than recommended and fewer independent directors. Only 16 percent of 69 utilities studied have the recommended share of independent directors, and several entirely lack independent directors.
subsidy for the capital cost of grid extension. But by January 2013 the amount sanctioned by the REC for all RGGVY projects, Rs 342 billion ($8 billion), covered only 58 percent of the estimated actual cost of Rs 590 billion ($13 billion), and the government had only disbursed 84 percent of the sanctioned amount.
The regulatory environment has not sufficiently pushed utilities to improve performance. SERCs have been established in all states but have generally struggled to achieve true autonomy from state governments. In addition, many SERCs lack the resources to perform their functions. Perhaps most important, there is no clear accountability mechanism to hold SERCs responsible for implementing their mandates. As a result, although most SERCs have notified the key regulations necessary to enact the EA 2003 mandates, many have yet to implement them fully. On average, states score 74 percent on an index measuring implementation of regulatory mandates. Andhra Pradesh, Himachal Pradesh, and Karnataka are the highest ranking SERCs.
A potentially transformative two-part central scheme to increase distribution efficiency, the R-APDRP, has not yet realized its potential. No state has completed even the first part of the scheme, largely because utilities were not informed of the extensive change management needed for implementation; this was made worse by limited resources, a lack of appropriate capacity, and the absence of a supportive IT ecosystem in the broader economy.
Mounting regulatory assets have added to the discoms’ cash-flow problems, jeopardizing routine operations. Although the Appellate Tribunal has ruled that regulatory assets must be recovered over three years, the sheer magnitude of current regulatory assets means this would cause a major tariff shock. So, recovery has been spread over a longer period with no relief to utility finances. Exacerbating the problem are delays in “truing up,” regulators assigning lower power-purchase costs than used by discoms. Another source of pressure on utility finances is the mandate to build and “power up” the vast network of lines laid across the country under the central government’s flagship access program, RGGVY. In 2011 utilities lost Rs 3 ($0.06)–Rs 4 ($0.08) per unit of power sold to rural consumers; the aggregate burden of serving rural consumers in 2010 was around Rs 200 billion ($4.4 billion) in 12 large states studied. Under RGGVY, the REC provides a 90 percent POWER LINE
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Way forward: priority areas for action Poor power sector performance has its roots in distribution inefficiencies and limited accountability, so fixing them will help improve service delivery and other metrics of sector performance, put the sector on a financially sustainable path, and ensure that power is no longer a bottleneck for growth. Priorities for action are as follows: • Implement fully the key EA mandates, especially those on competition and distribution (tariffs, open access, and standards of performance). • Ensure regulatory autonomy, effectiveness, and accountability. • Ensure that high-quality, updated data are publicly available and that these data are used for monitoring and benchmarking performance and for planning and decision making to incentivize improved utility performance • Use central programs and other support to incentivize operational and financial efficiency. • Learn from different models of service provision, including private sector participation through joint ventures (Delhi), franchising (Bhiwandi), management contracts, and so on. • Rationalize domestic tariff structures to improve targeting and reduce the fiscal burden. ■ 27
SPECIAL STORIES
Gas Uncertainty Private sector producers seek policy intervention
T
he lack of fuel linkages has virtually stalled gas-based power generation. The private sector is the worst hit as it grapples with stranded assets and rising debt servicing costs committed in anticipation of assured domestic gas availability. In Andhra Pradesh, independent power producers (IPPs) recently approached the government, seeking support for securing fuel supply for stranded power plants in the state. Present scenario Andhra Pradesh accounts for about onethird of the country’s gas-based power generation capacity that is dependent on the national gas grid for fuel. However, only 17 per cent of the total gas-based capacity is operational. The plants operate at an average plant load factor of 32 per cent. Gas availability for these projects is 3.28 mmscmd, against a demand of 14 mmscmd. Further, 2,233 MW of gasbased power capacity remains stranded for want of fuel. These plants are lying idle as they do not receive any gas supply. Some of these projects are Gautami (464 MW), Konaseema (445 MW), Vemagiri (370 MW), Kondapalli Extension (366 MW) and Kakinada (220 MW). Another 4,000 MW of capacity is ready to be commissioned but has no gas allocation. This includes major projects such as Reliance Power’s 2,400 MW Samalkot project. There are huge costs associated with the idle and suboptimal utilisation of assets. Plants running at a low capacity utilisation level entail high fixed costs, which are recovered by developers from the distribution utilities. For idle projects, developers are forced to undertake debt restructuring, while in some cases financiers also categorise them as non-performing assets. The stranded power plants in Andhra Pradesh entail an investment of about Rs 380 billion, of which the debt component is about Rs 270 billion.
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Private producers have emphasised that operationalisation of stranded plants can help mitigate the region’s peak deficit. As per the Central Electricity Authority, the southern region had a peak deficit of 2,967 MW (7.6 per cent) as of 2013-14. Also, as per the recent tariff order issued by the regulator, utilities can procure power from gas-fired plants at higher costs. In 2013-14, utilities procured 10 billion units of power at an average price of Rs 6 per unit and another 2.5 billion units at Rs 10 per unit. Therefore, industries feel that there is a strong case for gasbased power plants in the state. Assistance sought Power developers sought several measures to improve the gas-based power situation in the state. As per the developers, the state government should facilitate the setting up of a liquefied natural gas terminal in which private producers can take equity stakes. It was suggested that gas supply should be pooled for plants in the state and tariffs above the threshold of affordability should be shared amongst the stakeholders. In addition, the developers emphasised that the discoms should enter into power purchase agreements (PPAs) with the state’s gas-based power projects. Such PPAs, based on two-part tariffs, would be conditional upon the commencement of pooled gas for power projects. Further, transmission connec-
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tivity should be strengthened in order to enable power evacuation to major demand centres. In particular, the 1,000 km long 765 kV double-circuit VemagiriChilakaluripeta-Cuddapah-Salem line was highlighted as the most important. It was also suggested that private producers could take equity stake in the power transmission network. Further, IPPs have put forward key issues that the Andhra Pradesh government could take up with the central government. The most important of these relate to fuel supply and pricing. They suggested that at least 6 mmscmd of gas produced by the Krishna-Godavari (KG) basin should be allocated for Andhra Pradesh’s gas-based power plants. In addition, incremental gas supply expected from the KG basin should be allocated for the state’s power projects. As far as prices are concerned, it has been argued that the government should treat the power sector differently from other consumer segments, considering that a rise in gas prices would impact power offtake. It was also pointed out that the Ministry of Power should promote the case of gas-based power projects through steps such as mandating clean power purchase obligations and stipulating the use of gas-based power for ancillary services such as frequency support, voltage support and smoothening load curves. The way forward The central government is currently deliberating on the sensitive issue of gas pricing. There is a consensus that higher prices are important to incentivise natural gas exploration and production. Based on the Rangarajan committee’s methodology, domestic gas prices could reach $8.4 per mmBtu. This may entail subsidy support for utilities to enable power procurement in the short term. However, the allocation of gas for power plants is unclear. About 60 mmscmd-65 mmscmd of incremental supply is expected by 2018-19, a part of which needs to be allocated for stranded and idle gas-based power plants. ■ Tapas Bhowmik
SPECIAL STORIES
Coal Crisis
Limited, have also reported extremely low stock levels.
Stocks plummet to six-month low
C
oal inventories at power projects once again made headlines in July 2014, with nearly half of India’s thermal plants reporting coal stocks at critical levels. Data monitored by the Central Electricity Authority (CEA) for July 22, 2014 showed that coal inventories at 47 thermal power stations (out of the 100 monitored coal-based stations) were close to 11 mt, sufficient to meet requirements of only up to seven days. These included 30 power stations, where coal stocks had reached even more alarming levels of less than four days. As per the norms, coal stocks should be maintained at a minimum level of 21 to 30 days worth. While dwindling coal stocks have always been a challenge for thermal power plants, an analysis of data for the past six months shows that coal stocks declined sharply in July. A key reason affecting these plants is that the coal supplied by Coal India Limited’s subsidiaries has been much below their annual contracted capacities. In the last two fiscal years, the coal quantities despatched to power plants has only been 85-86 per cent of the contracted capacity.
Affected stations Of the 30 power stations that have coal stocks of less than four days, the majority (12) belong to the state sector. Another 11 stations belong to the central sector and the remaining are private projects. Developer-wise, the worst impacted is NTPC Limited. It has nine stations (including two operating under joint ventures) running on stocks of less than four days. These plants have an aggregate capacity of 18,560 MW, representing almost 43 per cent of the company’s total installed capacity of over 43,000 MW. The power major has reportedly asked the power ministry to ensure higher coal supplies at six of its coal plants where coal stocks are less than one day. Damodar Valley Corporation is the other central sector player to have been impacted by supercritical coal stocks. State sector plants with stocks of less than four days have an aggregate capacity of 15,770 MW and belong to the state utilities of Rajasthan, Chhattisgarh, Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh and Karnataka. Seven stations with a total capacity of 7,000 MW, owned by private sector companies Lanco Infratech, Sterlite Industries, Reliance Power and GVK Power and Infrastructure Limited, Nabha Power and Ind Barath Power
Outlook The problems are, however, not entirely on the coal availability side. Coal stocks at 15 power stations exceed the normative requirement of three weeks (with two plants reporting coal stocks as high as 57 days and 88 days). This highlights the poor transportation planning and distribution logistics in the coal distribution policy. Rationalising coal linkages and ensuring better transportation can help divert surplus coal from these plants to fuel-starved projects. Even though thermal power generation and plant load factor estimates for July, when the coal stocks dipped, are yet to be released by the CEA, data up to June 2014 does not indicate a significant concern. Also, hydropower generation in the country has exceeded targets, with generation in the first quarter of 2014-15 being about 8 per cent higher than in the same period of the previous year. Nonetheless, the scenario could worsen in the coming months as a deficient monsoon has been predicted, which would lead to additional pressure on thermal power plants to make up for the lower-than-expected hydro power output. Also, with the impending monsoons, coal despatches could suffer a setback, as rains in coalfields adversely impact production and transportation of coal from mines to railway sidings. The power ministry has already advised power utilities to import 54 mt in 2014-15 to bridge the shortfall in domestic coal (against 80.3 mt in 2013-14).
The current scenario is in complete contrast with what the coal supply situation was more than a year ago. Data from mid-August last year shows that stocks at as many as 30 power stations exceeded the normaCoal stocks at thermal power stations 50 tive requirements, while 42 only five stations reported a 40 31 30 coal stock position of less 26 30 23 than five days and one sta22 21 20 23 tion had supercritical stocks 18 18 18 of less than four days. This 10 14 13 10 was largely attributable to 0 good monsoons, a lower January 2014 February 2014 March 2014 April 2014 May 2014 June 2014 July 2014 power demand scenario and No of plants with critical coal stocks less than seven days No of plants with critical coal stocks less than four days improved coal production Source: CEA Note: Above graph shows values for 1st of each month levels at the time. 30
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Thus, it will be imperative for generators, coal producers and planners to institute a clear strategy that effectively addresses issues of coal production, transportation and allocation, to prevent the problem from snowballing into a major crisis. ■ Reya Ramdev
SPECIAL STORIES
Advantage AD Industry pins its hopes on the restoration of accelerated depreciation
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nvestments in the wind power segment have been impacted due to the non-availability of accelerated depreciation (AD) benefits for the past two years. In the year-ended March 2012, the tax incentive helped attract Rs 190 billion of investments to the wind segment, supporting the addition of 3,200 MW of capacity, of which about half was set up through the AD route. However, in 201213, investments declined to Rs 102 billion and only 1,700 MW of capacity was added during the year. While the scenario improved in 2013-14 (largely due to reinstatement of generation-based incentives [GBIs]), with the country witnessing a capacity addition of 2,100 MW, it was not close to the levels achieved in 2011-12. The AD scheme, if reinstated, will drive capacity addition and, in turn, investments in the wind power segment. The wind industry segment that was the most impacted by the withdrawal of the AD scheme was equipment manufacturing. According to Anish De, chief executive officer (CEO), Mercados EMI, “The growth in the wind power segment was aided by favourable fiscal policies (mainly AD for new build) and the standard feed-in tariff (FiT) procurement regime. With these two support mechanisms, investors dived into manufacturing, logistics, project development and technology development. However, the withdrawal of AD has led to a partial collapse of the wind market, and this can undo the gains from the past.” To a certain extent, De’s argument is correct because a large amount of domestic manufacturing capacity has been lying unutilised on account of lower demand and growing competition in the domestic market. While sub-MW scale turbine manufacturers like Pioneer Wincon and Leitwind Shriram have been the most hit as their businesses were dependent on
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as well as facilitating the creation of a strong manufacturing base in the country. As of March 2014, India ranked fifth in terms of the global wind power capacity, with an installed capacity of about 21,000 MW. Over 16,000 MW of this capacity comprises projects set up through the AD route, which gave a huge boost to the domestic turbine manufacturing industry, with the annual capacity reaching about 5,000 MW during the mid-2000s. clients availing of AD benefits, larger companies like Suzlon Energy, which have installed a majority of India’s wind power capacity set through the AD route, have also been adversely impacted. The combined share of only-kW-scale turbine manufacturers like Pioneer Wincon, Leitwind, Southern Wind Farms and Shriram EPC in the total capacity addition declined from 8 per cent in 2009-10 to almost negligible in 2013-14. The revival of AD may help these companies restore their market position. “There is a class of investors, including medium-sized enterprises, which would want to save on power costs by investing in wind power with their cash surplus. Such companies would drive the demand for sub-MW turbines after AD is reintroduced,” noted S. Rajendran, chief operating officer, Pioneer Wincon, in a media statement. The AD story The initial push for the wind energy market in India came in the form of fiscal incentives, primarily AD benefits. In 1992-93, the government introduced 100 per cent AD benefits for wind energy projects to provide fiscal incentives to counter the risks associated with the then unproven wind energy technology. The AD benefits were instrumental in driving large wind power capacity addition POWER LINE
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According to Chintan Shah, president, strategic business development, Suzlon Energy, AD also helped the SME sector to use relatively cheap electricity for their captive consumption. “We have seen these instances, particularly in the textile sector where at least 30 per cent of costs are energy related, but textile companies have been able to hedge these costs on a long-term basis by investing in wind projects, thereby becoming competitive in the global space.” Although the AD scheme significantly helped in the initial growth of the wind power market, the main purpose of generating power through wind was sidelined. Wind energy projects were being set up by companies and their subsidiaries as well as individuals to avail of AD to save corporate taxes. Therefore, once the key objective of wind turbine technology proving its efficacy was met, it became essential to replace the AD scheme with a mechanism that promoted higher efficiencies in the segment. The government decided to phase out AD by lowering these benefits to 80 per cent from 2005 onwards before completely withdrawing them by the end of the Eleventh Plan period (2007-12). In 2009, the government announced the introduction of GBI which led to the entry of independent power producers
SPECIAL STORIES
(IPPs) whose main objective was to ensure higher returns on investments through greater focus on turbine life and efficiency. Since then, the share of IPPs in the total capacity addition has witnessed a significant increase. Capacity addition by IPPs is estimated to have increased from less than 10 per cent in 2009-10 to over 70 per cent in 2013-14. However, it was not enough to meet the annual capacity addition targets in the first two years of the Twelfth Plan (2012-17).
Producers Association and CEO and executive director, Hero Future Energies, the revival of AD benefits will lead to an incremental capacity addition of only 500 MW-600 MW. He says, “The Twelfth Plan target cannot be achieved only by reviving AD and, for that matter, even through GBI. These incentives can only help attract new players into the segment but can not be used to drive large-scale capacity addition, which requires a strong policy and regulatory framework.”
Can AD help meet the Twelfth Plan targets? On a broader scale, the industry believes that the restoration of AD benefits, which attract a different class of investors, would help fill the current gap between the targeted and actual capacity addition. However, industry stakeholders differ on the amount of gap that can be filled owing to the AD scheme. In order to meet the Twelfth Plan target of 15,000 MW, 11,200 MW of wind power capacity needs to be set up during 201417 given that only 3,800 MW of wind power projects have been set up in the first two years. This translates into an average capacity addition of 3,700 MW per annum from 2014-15 onwards.
The wind power segment continues to be exposed to various risks and challenges, especially regulatory challenges and counterparty credit risks pertaining to distribution utilities. Inadequate power evacuation is also a hindrance to capacity addition. For instance, Tamil Nadu, which contributes about 35 per cent to the overall wind-based capacity in the country and offers one of the lowest wind power tariffs in the country, has witnessed a significant decline in capacity addition on account of continued payment delays by Tamil Nadu Power Generation and Distribution Company Limited, besides issues such as grid inadequacy and increased banking charges.
While most manufacturers that have been pushing for the restoration of AD benefits are highly optimistic that it will help achieve the targets, wind IPPs (which are neutral to the introduction of AD) are of the view that AD will only aid partial growth in the segment. Speaking to reporters at Renergy 2014, Madhusudan Khemka, chairman, Indian Wind Turbine Manufacturers Association, and managing director, ReGen Powertech, said, “At an all-India level, in 2014-15, we expect a capacity addition of around 3,000 MW. If the AD scheme is restored, it will lead to an increase of another 1,500 MW or more.” Also, according to K. Bharathy, CEO, Windar Renewable, a manufacturer of wind towers, “The restoration of the AD scheme will result in a capacity addition of 3,500 MW-5,000 MW in 2014-15.”
On the regulatory front, many developers are not satisfied with the FiTs that are currently being offered. According to Jain, the key challenge relates to difficulties in land acquisition and land costs, which are not adequately factored in while determining tariffs. In fact, the Maharashtra Electricity Regulatory Commission has recently issued a new tariff order, lowering the FiTs for wind power in the state. This move, along with the discoms’ hesitance in signing power purchase agreements with developers, has stalled the capacity addition plans of several IPPs in the state – to the extent that Maharashtra, which added over 1,000 MW of projects in 2013-14, may witness a capacity addition of only about 400 MW in 2014-15.
On the other hand, according to Sunil Jain, president, Wind Independent Power
Another example is that of Rajasthan, which witnessed a nominal capacity addition in 2013-14 due to policy paralysis related to the introduction of comPOWER LINE
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petitive bidding for wind power projects. Further, the state government recently announced that it would not be adding more than 400 MW-500 MW of wind power capacity in 2014-15. With states like Rajasthan and Maharashtra, which registered the highest capacity additions in 2012-13 and 201314 respectively, showing reluctance to add large-scale capacity, IPPs will be left with fewer options to expand their portfolio. However, some states, including Madhya Pradesh and Andhra Pradesh, are taking steps to drive growth in their wind power segments. Meanwhile, the entire renewable energy sector faces a major regulatory challenge with regard to renewable purchase obligation (RPO) compliance. RPO was believed to be the key driver for renewable capacity addition in the country, but has failed to make an impact so far. In fact, this has been the prime reason for the failure of the renewable energy certificate (REC) market. The majority of RECs offered on sale are currently lying unsold. Some of the other key challenges for the segment include inadequate power evacuation capacity, complying with forecasting and scheduling norms, difficulty in obtaining open access in many states and high interest rates. Future outlook Overall, the long-term demand outlook for the wind energy segment is expected to remain strong, supported by large wind energy requirements to meet the RPO targets. Also, given the fact that wind-based energy benefits from its increasing cost competitiveness against the conventional sources of energy due to spiralling fuel prices and persisting domestic fuel shortages, it can ensure higher returns on projects. As far as the reintroduction of AD is concerned, it may not be enough to help achieve a capacity addition of over 3,500 MW per annum, given the aforementioned challenges. However, it will help the manufacturing industry to support higher domestic capacity additions. ■ Dolly Khattar 33
COMPANIES
Torrent Power Limited Plans for growth across the energy value chain
T
orrent Power Limited (TPL), a part of the Ahmedabad-headquartered Torrent Group, is an integrated private power entity that has a marked presence in Gujarat’s power generation, transmission and distribution segments. The company came into existence in 2005, subsequent to the amalgamation of Torrent Power Ahmedabad (formerly Ahmedabad Electricity Company [AEC]), Torrent Power Surat (formerly Surat Electricity Company [SEC]) and Torrent Power Generation. The nearly century-old AEC and SEC were acquired by the Torrent Group in the 1990s. Recently, in May 2014, TPL decided to merge Torrent Energy Limited (TEL) and Torrent Cables Limited (TCL) with itself in order to achieve synergies in operations. The merger is yet to receive regulatory approval. Today, TPL has expanded its distribution footprint to Maharashtra and Uttar Pradesh through the franchise route, and has plans to augment its generation capacity, which currently stands at about 2,000 MW, by over 60 per cent. Notably, the company’s performance in turning around its distribution operations in Bhiwandi, Maharashtra, is considered a model for franchise-based public-private partnerships in the power sector.
prises the Sabarmati TPS in Ahmedabad. The plant, which was part of the erstwhile AEC, has been operational since 1934 and has undergone upgradation and modernisation on several occasions. Its entire output is supplied to TPL’s distribution arm in Ahmedabad. During 2013-14, the Sabarmati plant recorded a generation of 2,717 MUs, marking a 4.5 per cent decrease over the previous year’s generation of 2,846 MUs. It reported a plant load factor (PLF) of 76.55 per cent in 2013-14. The company’s gas-based power plants aggregate 1,630 MW of capacity. The largest among these in terms of capacity, the SUGEN plant located in Surat was commissioned in 2009-10 and supplies a major share (over 800 MW) of its output to TPL’s Ahmedabad, Gandhinagar and Surat distribution circles, while the rest is sold on an interstate and short-term basis. In April 2013, the company undertook brownfield expansion at this site by commissioning UNOSUGEN. Although SUGEN achieved a plant availability factor of 99.99 per cent, its capacity remained largely unutilised due to gas
Generation The company’s installed capacity is spread across five units in Gujarat – the 1,147.5 MW SUGEN combined cycle power plant (CCPP) along with its extension, the 382.5 MW UNOSUGEN project; the 422 MW coal-based Sabarmati thermal power station (TPS) along with the 100 MW Vatva CCPP (together referred to as the AMGEN power plant); and a 49.6 MW wind power plant. Around 84 per cent of the company’s installed capacity is based on gas, and the rest on coal. The company’s coal-based portfolio com34
unavailability and the procurer’s inability to buy power generated using costly liquefied natural gas. During 2013-14, the company’s gasbased plants reported a significantly low PLF on account of limited availability of domestic gas. In fact, in March 2013, supplies from Reliance Industries Limited’s Krishna Godavari-D6 block had stopped entirely. This led to a reduction in SUGEN’s PLF from 41.21 per cent in 2012-13 to 22.87 per cent in 2013-14. TPL’s gas-based plants reported a total output of 2,279.92 MUs in 2013-14, a decline of around 48 per cent over the previous year’s generation of 4,389.9 MUs. The company also operates a 49.6 MW wind power plant in Jamnagar, Gujarat. The plant was commissioned in March 2012 and despatched 89 MUs during 2013-14, achieving a plant availability factor of 97.39 per cent. Transmission TPL is present in the transmission sector through Torrent Power Grid Limited, a 74:26 joint venture (JV) of TPL and Power Grid Corporation of India Limited. The JV runs the evacuation system associated with the SUGEN CCPP on a build-ownoperate basis. The first phase of the project, which comprised the 28 km VapiJhanor line in line out (LILO), was commissioned in March 2009. The second phase of the 80 km double-circuit (D/C) 400 kV Jhanor-Dehgam LILO was completed in March 2010 while the final phase, involving the 144.5 km, 400 kV D/C line from SUGEN to Pirana and the LILO at the 400 kV substation at Pirana, was completed in February 2011. Distribution The company’s distribution activities in the state cover three major cities – Ahmedabad, Surat and Gandhinagar –
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COMPANIES
across an area of 408 square km. In 201314, the company sold 9,235 MUs to over 2.2 million consumers. During the year, it met an overall peak load demand of over 1,990 MW while maintaining distribution losses at 6.54 per cent. In May 2014, the Gujarat Electricity Regulatory Commission (GERC) approved a tariff hike of Re 0.44 per unit for the distribution areas covered by TPL. The tariff hike included an increase in fixed charges and energy charges by 7.5 per cent for all consumer categories. The hike, which has been in effect since May 1, 2014, will bring in additional revenues of Rs 4.49 billion for the company. TPL was awarded the country’s first input-based distribution franchise licence for Bhiwandi, in December 2006, by Maharashtra State Electricity Development Corporation Limited for a period of 10 years. Through its various network augmentation measures, IT initiatives and automated meter reading, TPL effectively reduced the area’s aggregate technical and commercial (AT&C) losses from over 50 per cent in 2006-07 to 22.68 per cent in 2013-14. In addition, the consumer base increased from 174,000 in 2006-07 to 258,000 in 2013-14, and collection efficiency from 59 per cent in 2006-07 to 97.3 per cent in 2013-14. However, during 2013-14, electricity sales decreased by 2.58 per cent to 2,760 MUs from 2,833 MUs in the previous year, mainly on account of a strike against tariff hike by the local powerloom industry. In spite of that, the peak system demand increased from 560 MVA to 571 MVA during this period. Besides Bhiwandi, the company is the distribution franchise licence holder for Agra, which was awarded to it by Uttar Pradesh Power Corporation Limited in April 2010. TPL performed satisfactorily in Agra, reducing AT&C losses in the region from 54.33 per cent in 2011-12 to 43.47 per cent in 2013-14. It registered aggregate sales of 1,283 MUs in 2013-14 as against 1,125 MUs in the previous year. The consumer base in Agra expanded from 304,000 to 336,000 and
TPL’s installed generation capacity Fuel
Plant
Capacity
Gas
SUGEN CCPP
1,147.50
UNOSUGEN
382.50
Vatva CCPP
100.00
Coal
Sabarmati TPS
422.00
Wind
Jamnagar Total
49.60 2,101.60
Source: TPL
the peak system demand decreased from 431 MVA to 409 MVA during the same period. The company was also awarded the distribution franchise for Kanpur in April 2010 but operations have been delayed owing to resistance from employees and consumers. Upcoming projects TPL is currently setting up the 1,200 MW DGEN gas-based power plant in the Dahej special economic zone through a special purpose vehicle, TEL, with an investment of about Rs 60 billion. The engineering, procurement and construction works for the project are being executed by Siemens under a contractual agreement executed in July 2010. The project is at an advanced stage of construction and is likely to be commissioned in 2014-15, subject to gas availability. The company has contracted the development, construction and maintenance of a 75 MW wind-based power plant in Sangli, Maharashtra, to ReGen Powertech Private Limited. Commissioning of the project, which was scheduled for February 2014, has been delayed to the second half of 2014-15. Financials The company reported total revenues of Rs 89.32 billion during 2013-14, a 6.78 per cent increase over the Rs 83.65 billion reported during 2012-13. The company’s net profit (after taxes and minority interest), however, declined by 72.87 per cent to Rs 1.05 billion from Rs 3.87 billion during the same period. This can be attributed to an increase in total expenses due to the purchase of POWER LINE
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short-term power for its distribution circles and of expensive liquefied natural gas for its generation units, as well as under-recovery of the fixed cost of the SUGEN extension plant in its tariff. Challenges and the way forward Securing gas for its power plants is amongst the prime targets of the company, going forward. In addition, managing fuel costs, especially after the proposed gas price hike comes into effect, would be a challenging task. Since the company is vertically integrated, fuel issues in the generation segment impact the power procurement strategy and costs of the distribution segment. Regulatory bottlenecks related to pass-through of fuel costs are also a concern. In addition, the anticipated upward revision of renewable purchase obligation (RPO) targets by GERC is a hurdle for the company as it was not able to meet its RPO target in the past fiscal. Land availability for constructing greenfield power projects and substations as well as right- of-way issues for developing the transmission and distribution network are also a cause of concern for the company. These challenges notwithstanding, TPL’s future outlook seems positive, given that domestic gas production is anticipated to increase in the next two to three years. Moreover, in light of the company’s long-standing experience in effectively managing distribution operations, it could be a serious competitor in upcoming franchise auctions. ■ Shashank Shanker 35
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COMPANIES
India Power
Significant infrastructure investments have been made in the Asansol network, including the installation of 100 per cent automated meter reading systems and ring main circuits for increased reliability and efficiency. Such measures have helped reduce AT&C losses to 3 per cent.
Exploring expansion opportunities
K
olkata-based India Power Corporation (formerly known as DPSC Limited) is one of the oldest integrated power utilities in the country. It was founded in 1919 as a part of Andrew Yule and Co. by the British conglomerate with the objective of supplying electricity to coal mines in the Asansol-Ranigunj belt of West Bengal. Subsequently, the company distributed electricity to industries and commercial establishments as well. It continued to be a public undertaking until 2010, before it was taken over by India Power Corporation, a private sector company. The two companies were merged and rechristened India Power Corporation Limited in September 2013. Today, India Power owns a distribution licence in West Bengal for an area covering 618 sq. km. The aggregate technical and commercial (AT&C) losses in the area are less than 3 per cent as against the national average of 25 per cent and the system reliability is at an
impressive 99.5 per cent, one of the best in the industry. The generation portfolio of the company currently consists of around 100 MW of wind energy in Rajasthan, Gujarat and Karnataka. India Power is working on an ambitious expansion strategy. From June 1, 2014, it started operations under the distribution franchise it won in 2013 for power distribution in Gaya, Bodh Gaya and its adjoining towns in Bihar. It has chalked out significant investment plans for upgrading the existing distribution network, which suffers from extremely high AT&C losses. Operations Distribution India Power has a combined distribution area of around 1,700 sq. km in West Bengal and Bihar. It caters to a variety of consumer segments including critical industries such as underground coal mines, railways and large industries. It also serves retail consumers in its licensed area.
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July 2014
Investments are also being made in Gaya to reduce transmission and distribution losses, which are currently close to 70 per cent. The company is targeting to bring down the loss levels to around 15 per cent in the next four to five years. These areas have more than 100,000 customers across the agricultural, commercial and domestic segments. The operations of this franchise are being controlled by a special purpose vehicle, India Power Corporation (Bodh Gaya) Limited. Generation India Power boasts of a substantial renewable energy portfolio with around 100 MW of wind energy and 2 MW of solar energy. The wind portfolio constitutes a 60 MW plant in Jaisalmer, Rajasthan, a 25 MW plant in Samana, Gujarat, and an 11 MW plant in Chitradurga, Karnataka. The power generated by these is sold to the respective state discoms at varied rates as per the respective power purchase agreements.
37
COMPANIES
The company also has a 2 MW solar power plant at Seebpore, West Bengal, which has been set up in a joint venture with the West Bengal government. The plant commenced generation in 2009 and generates nearly 3.3 MUs of electricity annually, which is fed to India Power’s distribution network in Asansol. The company has around 2,000 MW of thermal capacity under development, of which the 450 MW Haldia Thermal Power Plant (TPP) is likely to be commissioned in 2015. Financial performance India Power has delivered a consistently sound financial performance. The total income of the firm has increased from Rs 4.17 billion in 2010-11 to Rs 6.97 billion in 2013-14. Net profit has grown from Rs 56.7 million in 2010-11 to Rs 292.4 million in 2013-14. Total income is likely to increase in the near future with the addition of revenues from the Gaya distribution circle and the operationalisation of the Haldia TPP. Future plans Going forward, the company plans to expand its distribution and generation businesses simultaneously. Currently, the company has a distribution network with 450 MVA of load and generation of around 100 MW. In the next three to four years, it aims to have a distribution portfolio of 1,500 MVA and a generation portfolio of 2,000 MW. While the company’s current generation asset base is dominated by renewable power, the share of conventional power is expected to go up in the next few years. India Power is setting up a 450 MW coal-based power plant in Haldia, expected to be commissioned by June 2015. The Rs 26.56 billion project is being financed at a debt-equity ratio of 70:30, with the loan component being provided by the Rural Electrification Corporation and Power Finance Corporation. Apart from this project, India Power is implementing a 540 MW thermal plant in Raghunathpur, West Bengal, and has other coal-based projects under development. It is also 38
India Power’s financials (Rs million) 292
7,000 6,900 6,800
290
Total income Net profit
288 286
6,700
284
6,600
282
6,500
280
6,400
278
6,300
276
6,200
274
2012-13
2013-14
Source: India Power
looking at inorganic opportunities to expand its generation portfolio. To ensure consistent fuel supply, the company had set up a wholly owned subsidiary, Swambhu Natural Resources Limited. In the distribution segment, several projects are under implementation to enhance capacity and system reliability. A 220/33 kV substation at JK Nagar in Asansol, West Bengal is under construction and is expected to be commissioned by September 2014. Also, two 33/11 kV substations are under construction to cater to the growing demand. The company also has robust plans to improve distribution efficiency, reduce transmission and distribution losses and increase collections in its Gaya distribution circle. The company plans to replace all existing meters with new meters that conform to regulatory standards and concentrate on customer support. A team of engineers, officers and support staff will monitor the voltage and frequency of the power supplied to consumers and will be on call to address customer issues at short notice. In addition, several 24x7 customer care centres are being set up for each of the zones covering the 1630 sq. km area. For rural areas of Manpur, doorstep services will be provided for issuing new connections. Further, India Power aims to expand its distribution portfolio and is looking at opportunities in the form of distribution franchises and public-private partnership opportunities throughout the POWER LINE
country. The company aims at being an integrated power utility on a national scale in the next three to four years.
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Challenges and the way forward India Power’s portfolio of upcoming generation projects is largely coal dominated. The company believes that the lack of adequate coal availability could be a challenge, but it is working on a strategy to ensure long-term availability of coal. “Our long-term fuel strategy includes domestic sourcing through linkages and imported coal sourcing through the acquisition of coal mines. We may need to adopt trading and eauctions in the short term to secure coal in case of shortages. With the new government and active policy measures in place, we feel that fuel availability from domestic mines will increase significantly and there will be an improvement in the domestic coal output,” says Hemant Kanoria, chairman, India Power Corporation Limited. Apart from fuel availability, Kanoria adds that there are other structural challenges that need to be dealt with, in areas such as financing of the power sector and distribution reforms. He emphasises that the government should promote more private participation in the distribution sector. He points out that private discoms should be allowed to take part in government schemes such as the R-APDRP, which will help the distribution franchisees reduce losses faster in high-loss areas. “Financing schemes should be available to a distribution franchisee keeping in mind that the franchisee is responsible for a portion of the overall licensed area and its compliance should be limited to its franchise area,” says Kanoria. Despite these challenges, India Power is well placed to deliver in its newly acquired distribution circles while offering reliable power supply in its existing licensed areas. The company’s investment plans in the generation segment augur well for the projected load growth in its licensed areas. ■ Jaspreet Kaur Anand
COMPANIES
ANDRITZ HYDRO India Strengthening its presence in the hydropower segment
A
NDRITZ HYDRO India, a subsidiary of the Austrian equipment major ANDRITZ HYDRO GmbH, is a key player in the electromechanical equipment market for hydropower stations. It has secured orders from major public and private developers and has invested in a strong manufacturing base in the country with facilities located in Madhya Pradesh and Haryana. In the last two years, it has also made inroads into other markets such as Vietnam, Malaysia and Indonesia. While the pace of capacity addition in the hydro segment has slowed down in recent times, the company continues to see the Indian market as a key contributor to its growth and expects business opportunities to open up once the order scenario improves. Meanwhile, the company plans to expand its manufacturing base, implement diversification strategies and strengthen its focus on its projects in India and overseas. Background ANDRITZ HYDRO GmbH, a group company under the international technology group ANDRITZ AG, is headquartered in Graz, Austria. The group also supplies equipment and services across other sectors, including paper and pulp, metal and steel, and separation technology. ANDRITZ HYDRO GmbH has an experience of over 170 years with global installations exceeding 30,000 turbines, aggregating 420,000 MW. Its product portfolio and offerings include turbines, generators and other equipment for small and large plants with an output of over 800 MW per turbine unit as well as maintenance, refurbishment and upgradation services for existing ones. Pumps for transport, irrigation and applications for various industries as well as turbo-generators for thermal power stations are other business areas of the company. 40
At a global level, hydro project contracts (worth Euro 1,865 million) accounted for about one-third of the group’s total order inflows in 2013. On a regional basis, the Asian market (excluding China) accounted for 14 per cent of its orders. Company operations ANDRITZ HYDRO was the first multinational company to set up shop in India at a time when BHEL was the dominant market player. It was established in India through a 50:50 joint venture between Elin GmbH and Crompton Greaves in November 1996. This entity was known as CG-Elin. In June 2001, VA Tech Hydro bought the entire equity of Crompton Greaves, which led to the formation of VA Tech Hydro. In July 2009, the Andritz Group acquired VA Tech Hydro and ANDRITZ HYDRO was formed. The company has two equipment manufacturing facilities – one at Prithla, Haryana for mechanical components and the other at Mandideep, Madhya Pradesh, for electrical components. The Mandideep facility manufactures hydro power generators for small and large projects, in addition to electric power systems and control and monitoring systems. In fact, Teesta Urja Limited’s Teesta Stage III project in Sikkim was supplied generators, with an output of 222 MVA, from this facility. The Prithla plant manufactures hydro turbines, main inlet valves, microprocessor-based governors and automation systems. In order to strengthen its competency, the company has been offering several advanced technology solutions. It offers a patented coating technology to reduce corrosion in underwater parts of plants, which is one of the key issues faced by developers. Other technology offerings include in-house automation systems for remote controlling of power plants. POWER LINE
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Key projects The company has completed/is executing several private and public sector projects in India including Jaiprakash Power Ventures Limited’s 1,000 MW Karcham Wangtoo project, Karnataka Power Corporation Limited’s Varahi underground power house Units 3 and 4 with a capacity of 230 MW, NHPC’s 132 MW Teesta Low Dam Stage III project, Meghalaya Energy Corporation Limited’s 126 MW Myntdu Leshka project, the Kerala State Electricity Board’s 25 MW Neriamangalam Extension project, Jammu & Kashmir State Power Development Corporation Limited’s 450 MW Baghlihar Stage II project, North Eastern Electric Power Corporation Limited’s 110 MW Pare project and Himachal Pradesh Power Corporation Limited’s 111 MW Sawra Kuddu and 195 MW Kashang hydro projects. It is also executing the largest independent power producer hydro project in the country – Teesta Urja Limited’s 1,200 MW Teesta III plant. In the overseas market, it is executing Nepal’s largest project, the 456 MW Upper Tamakoshi plant, and several others in Sri Lanka, Vietnam, Laos, Indonesia and Malaysia. Future plans The company expects the hydro segment to revive in the next two years and is expecting an order guidance of approximately Rs 20 billion by 2015-16. It plans to focus on compact projects in India and is looking to expand its manufacturing base in the near term. It will also focus on the turbo generator market and introduction of new technologies. However, the company faces several challenges in the current market environment. First, given that the market has few upcoming projects, the order situation has become very competitive. Second, there are sectoral issues such as delays in environmental clearances, project cost over-runs and erosion of investor interest. With industry optimism that the country’s GDP will increase from 4.5 per cent to 7 per cent by early 2015, the company is hopeful that the hydro sector will gain momentum in the next 1-2 years. ■
9th Annual Conference on
September 9-110, 2014, The Imperial, New Delhi Mission The mission of this conference is to provide a platform to discuss the steps needed to increase coal production in India, from government policy to business decisions to technology adoption. The conference will discuss key challenges and highlight emerging opportunities. It will also examine the global and Indian market scenario. Agenda/Structure
Key Trends and Outlook Government Perspective Coal India Limited's Perspective Captive Coal Mining Commercial Mining and Private Participation
Global Scenario and Sourcing Options Coal Washing Coal Transportation: Railways and Ports Managing Environmental Issues New Customer Requirements: Coal Pricing Trends and Outlook Coal Blending Mining Technology Trends Customer Perspective (Power, Steel, Cement, etc.)
Delegate Fee The delegate fee is Rs 22,500 for one participant, Rs 37,500 for two, Rs 52,500 for three and Rs 67,500 for four. There is a 20 per cent "early bird" discount for those registering before August 14, 2014. A service tax of 12.36 per cent is applicable on the registration fee. For registration and sponsorship opportunities, contact: Neha Gadi, Conference Cell India Infrastructure Publishing Private Limited, B-17, Qutab Institutional Area, New Delhi 110016 Tel: +91-11-41688861, +91-9911811123; Fax: +91-11-26531196, 46038149 Email: conferencecell@indiainfrastructure.com
FOCUS ON REGULATION
Positive Role MPERC takes steps to improve sector performance
M
adhya Pradesh has emerged as one of the fastest growing states in the country with a GDP growth of 11.08 per cent in 2013-14 as compared to the national GDP growth of 4.86 per cent. A similar course has been followed by the state’s power sector. From registering a power deficit of 18.5 per cent in 2004-05, Madhya Pradesh today is one of the few power-surplus states in the country, with a peak demand of 9,716 MW met during 2013-14. The state also recorded moderate transmission and distribution (T&D) losses of 3 per cent and 25 per cent respectively. The Madhya Pradesh Electricity Regulatory Commission (MPERC), which was constituted in August 1998, has played a key role in improving the performance of the state’s power sector. The commission oversees the functioning of its power utilities: MP Power Generating Company, MP Power Transmission Company, MP Poorv Kshetra Vidyut Vitran Company (distribution), MP Madhya Kshetra Vidyut Vitran Company (distribution), MP Paschim Kshetra Vidyut Vitran Company (distribution) and MP Power Management Company (trading). Apart from notifying key regulations related to tariff setting, open access and renewable energy, the regulator has encouraged the implementation of measures aimed at loss reduction and metering. “The state is surplus in power and the demand-supply gap is nil. It does not resort to power cuts in any area and there is no requirement for purchasing short-term power. This situation is envisaged to continue in the future,” says Rakesh Sahni, chairman, MPERC. Tariff rationalisation MPERC has been revising the retail tariff rates on an annual basis, even before the Appellate Tribunal for Electricity man42
a cross-subsidy road map on October 6, 2007 with the aim of bringing tariffs for various consumer categories within a range of ±20 per cent of the average cost of supply by 2010-11. However, in 201213, the approved gap between the tariffs and cost of supply for some consumer categories, like low-tension non-domestic and high-tension non-industrial, has been as high as 40 per cent.
dated this for the state regulators in November 2011. It notified the Terms and Conditions for Determination of Tariff for Distribution and Retail Supply of Electricity and Methods and Principles for Fixation of Charges Regulations, 2006 for tariff determination for the control period 2007-08 to 2009-10. For the next control period, 2010-11 to 2012-13, the regulator notified the tariff regulations in 2009. For the third control period, till 2015-16, MPERC notified the regulations in November 2012. For 2014-15, MPERC has not increased the tariffs. Also, it has been allowing revenue income equal to the annual revenue requirement (ARR) proposed by the discoms. In order to improve the efficiency of discoms, the regulator has set the loss level and distribution costs. A deviation from these levels is not considered as a pass-through at the time of truing-up of the ARR and the associated costs are borne by the utility. For tariff rationalisation, MPERC issued
Open access MPERC notified the Terms and Conditions for Intra-State Open Access in Madhya Pradesh Regulations in 2005. While the majority of the states face issues such as non-availability of sufficient transmission networks for allowing open access, MPERC sees no difficulty in the implementation of open access in Madhya Pradesh. The regulator allowed open access in the state in a phased manner between May 2005 and October 2007. All consumers with a power demand of 1 MW and above were allowed open access beginning October 1, 2007. MPERC also constituted the Open Access Monitoring Dispute Resolution and Decision Review Committee in December 2012 to ensure efficient implementation of open access in the state. As of March 31, 2014, MPERC had received 114 applications for grant of open access for an aggregate capacity of 352.52 MW. Of these, it has approved 101 applications aggregating 173.23 MW of capacity, rejected three applications for 6.15 MW while 10 applications for 173.14 MW of capacity are pending.
Proposed and approved tariff revenue for 2014-15 (Rs billion) Particulars
MP Poorv
MP Paschim
MP Madhya
State
Total ARR proposed for 2014-15
67.55
81.23
71.63
2,20.42
Revenue income from tariffs
67.55
81.23
71.63
2,20.42
0.00
0.00
0.00
0.00
Uncovered gap/Surplus Source: MPERC
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FOCUS ON REGULATION
Loss reduction Reduction in T&D losses is another focus area for MPERC. The regulator has been specifying a loss reduction trajectory for the state discoms since 2006-07. The aggregate technical and commercial losses in the state stood at around 25 per cent in 2013-14. Of this, collection effi- ciency has been almost 100 per cent. By 2015-16, the loss level of MP Poorv is expected to be 18 per cent, that of MP Paschim 16 per cent and that of MP Madhya 19 per cent. The regulator has also designed a mechanism to incentivise the discoms to achieve a faster rate of loss reduction. MPERC is encouraging the implementation of a scheme for agricultural feeder separation. Under this, the majority of feeders have been segregated. The regulator has approved capex plans worth Rs 50.48 billion for MP Poorv for 2012-16, Rs 39.88 billion for MP Paschim for 201216 and Rs 52.7 billion for MP Madhya for 2013-17. The planned works include system strengthening, feeder separation, and projects under the Restructured Accelerated Power Development and Reforms Programme, and the Rajiv Gandhi Grameen Vidyutikaran Yojana. MPERC has directed the utilities to augment the system capacity to reduce technical losses. It has encouraged the installation of aerial bunched cables, centralised monitoring systems, high voltage distribution systems and tamper-proof meter boxes. It has also suggested measures such as replacement of defective meters, installation of meters near the call bell location and replacement of service lines by armoured cable. Metering Metering is a key focus area for MPERC. As of 2013-14, almost 13.15 per cent of the total 8.07 million domestic connections in the state were unmetered. These unmetered connections are concentrated in the rural areas as the discoms have achieved 100 per cent metering for urban domestic connections. The number of unmetered connections has increased from 683,000 to over 1.06 million during
Average tariff realisation as a percentage of the average cost of supply (%) Consumer category
2007-08 2008-09
2009-10
2010-11 2011-12 2012-13 2013-14 2014-15
LT Domestic
95
91
93
95
95
97
98
100
Non-domestic
152
146
144
139
140
136
140
136
LT industry
121
121
127
124
123
123
122
122
Agricultural
67
69
67
75
73
77
75
77
HT Industrial
125
125
127
121
119
121
120
123
Non-industrial
138
136
136
126
129
119
137
137
97
97
103
100
97
99
99
99
Bulk residential users Source: MPERC
the past 10 years. However, the number of connections has increased from 4.58 million to 8.07 million. The regulator has directed the discoms to provide no new connection without a meter and to complete meter installation for the existing connections by 2014-15. MPERC has directed the discoms to step up the metering process for agriculturepredominant distribution transformers on an interim basis till meters for all individual agricultural connections are provided. “The commission is of the view that all consumers should be metered individually. Also, the current flat rate billing regime for unmetered connnections has no incentives for consumers who save energy,” says Sahni. On the positive side, the state has a high proportion of electronic meters installed. As of 2013-14, the central discom had electronic meters for all its consumers while the other two discoms had electronic meters installed for over 80 per cent of connections. Also, all the high tension (HT) consumers in the state have been provided with electronic meters with time-of-day features and automatic meter reading facility. The low tension (LT) industries with a load of 25 HP and above have electronic meters capable of recording the demand and storing past data. These consumers are also provided with AMR facility. Similar meters are being installed for other consumer categories with loads of 25 HP and above. In terms of feeder metering, MP Poorv POWER LINE
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has metered all its 11 kV feeders (totalling 3,684) and 33 kV feeders (totalling 1,575). MP Paschim has metered all its 33 kV feeders (2,342) while 529 feeders of the total 4,710 feeders at the 11 kV level are yet to be metered. MP Madhya has 135 feeders at the 33 kV level and 588 feeders at the 11 kV level for which installation of meters is in progress. Renewable energy With the aim of encouraging the absorption of renewable energy, MPERC notified the Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations, 2010. Under this, MPERC set renewable purchase obligation (RPO) targets for solar and non-solar energy for each year beginning 2010-11 till 2014-15. For 2014-15, the target for solar RPOs is 1 per cent and that for non-solar RPOs is 6 per cent. In order to ensure RPO compliance, the regulator has earmarked Rs 4.75 billion and Rs 13.78 billion in the retail tariff order for 2014-15 for the purchase of 590 MUs of solar power and 3,544 MUs of non-solar power respectively. Conclusion MPERC has played a proactive role in reviving the state’s power sector. While the sector is already successful in meeting the state’s power demand and is in a position to supply power to other states, the regulator needs to ensure a reduction in T&D losses as well as deployment of advanced IT systems. ■ Shruti Goel 43
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Rescue Bid Reconstruction fund proposed for stressed projects The country’s thermal power generation segment is facing several challenges including inadequate fuel availability, non-realisation of power sale revenues by discoms and delays in granting statutory clearances. This has resulted in many generation assets getting stranded at the operational or developmental stages. In order to address this problem, the Ministry of Power has proposed to float a reconstruction fund for acquiring stressed power projects. This will not only help in operationalising currently stranded assets, but will also provide a fillip to future investments in the power sector by stabilising its medium- to long-term outlook. That said, the valuation of these stressed assets is of primary importance, and a comprehensive policy is needed to undertake an unbiased evaluation. Sector experts share their views on the issue and elaborate on its possible implications… How can the proposed reconstruction fund for acquiring stressed assets help operationalise stranded assets? Rahul Agrawal There are currently four broad classes of stranded power generation assets. These are assets under operation, assets ready for operations, assets at the construction stage and assets that have been invested in but are yet to take off. For the proposed reconstruction fund, in order to set a target base, we need to understand the issues that are responsible for these stressed projects. Unless the issues are understood in a comprehensive manner, the fund’s objective of supporting the power sector will be limited. A major issue responsible for the operating stressed assets is the non-availability of fuel and non-realisation of power sale revenue from the buyer, mainly the discoms. Apart from these factors, projects under development are
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facing time and cost overruns, and hence require additional funds. For projects under construction, there are different issues like delays in clearances, lack of power purchase agreements (PPAs), no coal linkages, etc. This fund will be more suitable for projects that are facing financial issues. The projects that may receive support from this fund include those that are operational but are not able to run because their tariff proposal has not yet been approved by the regulatory authority. There are instances where the developer wants to exit the power projects. The fund would be useful for this category of stranded assets as well. For stranded projects in the other two categories, this fund will be of limited help. It will not help solve problems related to non-grant of clearances, fuel availability or finalisation of PPAs. The proposed reconstruction fund is not
Rahul Agrawal
Rajesh Mokashi
Nitin Zamre
Director, Technical, GVK Power and Infrastructure Limited
Deputy Managing Director, CARE Ratings
Managing Director, ICF International India
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going to serve the purpose of all categories of stranded projects. Rajesh Mokashi Power projects that have incurred significant cost overruns due to issues related to delays in obtaining the necessary clearances or acquisition of land have suffered primarily on account of unfunded interest costs and in a few cases where the main plant components were imported, due to adverse forex impact. These projects, if provided longer-tenor loans compared to the existing loans with back-ended or ballooning repayments, can still be operationalised as the effective life of power plants is 25-30 years, whereas the typical tenor of project finance loans extended by lenders is 10-12 years. However, power projects that have fundamental issues such as non-availability of fuel (gas-based power projects with an aggregate capacity of 12,000 MW or captive mine-based projects where coal mines are not developed but power projects are complete) will continue to face challenges until the key issues are resolved. Nitin Zamre The primary issues facing stranded power plants are fuel supply, power evacuation and offtake by utilities. There is no clarity on how the proposed fund can resolve these issues, which are more physical in nature than operational or financing related. It is still not known whether it will be a debt fund,
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“The fund will not help solve problems related to non-grant of clearances, fuel availability or finalisation of PPAs.” Rahul Agrawal
“Power projects that have fundamental issues such as non-availability of fuel will continue to face challenges until the key issues are resolved.” Rajesh Mokashi
equity fund, or both. However, something that the fund can probably do is provide cheaper finance over the long term (for instance, through takeout financing) that can bring down the financing cost of power projects. The overall power cost may come down to an acceptable level even with the use of alternative fuels. What are the key parameters that need to be considered in the valuation of stressed assets for sale? Rahul Agrawal There are a number of factors that could play a role in the valuation of stressed assets. The valuation depends on the stage at which the asset is. Aspects such as the type of PPA (long, medium or short term), fuel linkage, power evacuation facilities, quality of the plant (design, construction and manufacturing), manufacturers’ supply source (Indian or Chinese), and other parameters like heat rate and auxiliary power
“The primary issues facing the stranded power plants are fuel supply, power evacuation and offtake by utilities. There is no clarity on how the proposed fund can resolve these issues.” Nitin Zamre
consumption play an important role in reaching the final valuation of stressed assets. For coastal projects, port and coal jetty linkages are crucial. If the project is inland, adequate railway linkage is important. Rajesh Mokashi The key aspect would be to analyse the availability of major clearances, quality of equipment used in the projects and any possibility of extracting value through synergy or cost optimisation. Nitin Zamre The key aspects would be the ability of these assets to get access to fuel and evacuation networks, and their capability to tap key markets for long-term sales (as and when the other problems are resolved). How can this initiative ensure that irrational investments (that is, contracts based on irrationally low bids) are not unduly rewarded?
Rahul Agrawal This is the case for projects that are either under construction or are yet to take off. When a project is under development, you are not sure of the end quality. Developers executing projects awarded through tariff bidding always construct the project within the quoted rate. Moreover, due to intense competition in the bidding process, bidders quoting really low rates are chosen, resulting in a reduction in the capital cost, which impacts the quality of the finished asset. Some of the power plants that are stressed quoted a very low rate at the bidding stage, which was unviable and, therefore, the developers are deciding to exit the power projects. Due diligence of the project needs to be carried out to evaluate the asset’s quality and other aspects. Rajesh Mokashi As with the recent Central Electricity Regulatory Commission order for imported coal-based projects, the main consideration for the reconstruction fund should be to make the projects operational/viable during a period of hardship and to safeguard lender interests. Equity returns should only be allowed after a reasonable period for recovery to prevent incentivising irrational bids. Nitin Zamre It is likely that the criteria for accessing this fund will have conditions to deter such irrational investments in the future. However, it is too early to definitively say how this scheme will benefit the sector, as its details have not been defined yet. ■
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FORUM
Interview with Devender Singh “Our goal is to serve all consumers with continuous, reliable power” Haryana’s power sector is growing at a fast pace, backed by dedicated efforts by the state government. The state has more than tripled its installed generation capacity in the past eight years. Since 2005, about 21,532 MVA of transmission capacity has been added with system availability of over 99.7 per cent. The revenue on energy purchased by discoms increased to Rs 3.63 per unit during 2013-14, about 14 per cent higher than the previous year, indicating a reduction in distribution losses. In a recent interview with Power Line, Devender Singh, principal secretary, power, Haryana government, outlined the achievements of the state’s power sector, its future plans and key challenges. Excerpts… What are your top priorities for Haryana’s power sector in the next few years? Our top priorities are to: • Provide uninterrupted, 24x7 reliable and affordable power supply to all. • Create sufficient generation capacity through own assets and contractual capacities. • Strengthen the transmission system in view of the load growth. • Strengthen the distribution network through coordinated transmission and distribution (T&D) planning and extensive use of information and communication technology, including smart grids and supervisory control and data acquisition systems. • Institutionalise energy auditing and accounting. • Offer comprehensive customer care on a digital platform. What were the significant achievements of the state’s power generation, and T&D segments in 2013-14? During 2004-05, the installed generation capacity in Haryana was 1,587.7 MW; this has now increased to 5,300.50 MW. During 2013-14, Haryana Power Generation Corporation Limited (HPGCL) achieved its lowest ever auxiliary consumption of 8.49 per cent, station heat rate of 2,447 kCal per kWh and oil consumption of 0.85 ml per kWh. In the transmission segment, Haryana Vidyut Prasaran Nigam Limited (HVPNL) constructed 14 new (66 kV and above) substations, augmented 63 exist46
pering. About 95 per cent of the feeder indexing work was completed. The amount recovered from theft cases increased by 33 per cent (Rs 400 million) in 2013-14 compared to 2012-13 (Rs 309.6 million). What measures are being taken to manage the demand-supply gap?
ing substations and laid 211.38 km of transmission lines, along with the addition of 1,740.30 MVA of transmission capacity at an investment of Rs 4.85 billion. During March 2005 to January 2014, 257 new 33 kV substations were commissioned, 363 existing 33 kV substations augmented and 2,000 km of new 33 kV lines added to the system. In the distribution segment, due to the persistent efforts of the discoms (Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam) to improve operational efficiency, the revenue received in banks increased to Rs 149.1 billion in 2013-14, a 30 per cent increase over the previous year. As of March 2014, around 1.45 million energy meters (about 63.5 per cent of the total connections) were relocated outside premises in urban areas to avoid tamPOWER LINE
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The total installed and contracted generation capacity available to Haryana is 10,635.72 MW. The highest daily power supply of 190.2 MUs was on July 16, 2014, when the record maximum demand of 8,752 MW was met. Haryana’s utilities constantly monitor load projections vis-à-vis generation capacity likely to be made available in the future. In case of excess or idle generation capacity, utilities sell surplus power on the exchanges. The process of releasing new and pending connections is also being streamlined, so that it may lead to load growth and higher power consumption. What are some of the new initiatives being taken by the state’s power sector? The concept of circle-wise long- and short-term coordination planning between T&D utilities has been introduced for the first time in Haryana. A three-year plan for strengthening the infrastructure was completed based on load growth, 70 per cent loading of transformers and 250 ampere loading of 11 kV feeders. A capital investment plan of Rs 117.25 billion for T&D companies has been finalised for the period 2014-15 to 2016-17. During
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this period, 173 new 33 kV substations and 95 new substations of 66 kV and above are proposed to be built. A major step has been taken towards corporate governance by appointing independent directors on the boards of the utilities. Performance management systems (PMSs) have also been introduced. PMSs in discoms are based primarily on loss reduction, revenue-inbank achievements and customer services; the PMS in HVPNL is based on reliable and uninterrupted power supply with minimum transmission losses; the PMS in HPGCL is essentially focused on the reduction of generation cost and minimum forced outages. In the transmission segment, gas-insulated switchgear (GIS) substations have been introduced to optimise the use of land resources for substations. The state’s first 66 kV GIS substation was commissioned in Sector 43, Gurgaon, in November 2009. The use of multicircuit towers and underground cabling has been taken up in high population density areas such as Gurgaon. A 220/33 kV distribution system with underground cabling has been planned in the Gurgaon-Faridabad region. A number of initiatives have been taken to minimise distribution losses and improve the financial position of discoms. These include comprehensive energy audit of meters; introduction of village supply improvement schemes in Singhran and Chirod villages in Hissar on a pilot basis; implementation of the meter pillar box scheme and automated meter reading (AMR); introduction of special design transformers for better supply to the Dera/Dhanis; and implementation of the financial restructuring plan (FRP). Further, a smart grid pilot project will be implemented in Panipat, at an estimated cost of Rs 460 billion with a grant from the New Energy and Industrial Technology Development Organisation, the only Indian project to be funded by a grant from the Japanese government.
What is the expected capacity addition in Haryana across fuel sources? HPGCL proposed to set up Unit 9 of 660 MW capacity based on supercritical technology on the available land at the Panipat thermal power station (PTPS), by way of simultaneous phasing out of the old and less efficient Units 1-4 (each of 110 MW capacity). Of the total domestic coal requirement of 2.24 million tonnes per annum (mtpa) for the proposed unit, 1.6 (mtpa) will be made available by transferring the existing coal linkage of Units 1-4 and the balance will be arranged from the Mara IIMahan coal block allocated jointly to HPGCL and the Delhi government. The engineering, procurement and construction contract for the unit is expected to be awarded in 2014-15 and the unit is likely to be commissioned by 2019-20. HPGCL has planned to set up a 660 MW supercritical unit at the 600 MW Deenbandhu Chhotu Ram Thermal Power Plant (DCRTPP) in Yamunanagar. The Ministry of Coal (MoC) has allocated the Kalyanpur-Badalpara coal block in Jharkhand, which will partially meet the fuel requirement of the project. The project is expected to be commissioned during the Thirteenth Plan period. The total domestic coal requirement for the project is 2.24 mtpa, of which 1.5 mtpa will be met from the KalyanpurBadalpara coal block and the balance will be arranged from the Mara IIMahan coal block. Another supercritical unit of 660/800 MW capacity is proposed to be set up by HPGCL on the available land at the Rajiv Gandhi thermal power plant, Khedar.
“A high priority for us is encouraging competition and offering an enabling environment for private sector participation in the power industry through a solid policy framework.” POWER LINE
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The feasibility report for this unit is under preparation and it is expected to be commissioned after July-August 2019. The total coal requirement is 2.24 mtpa, which is proposed to be met from the Mara II-Mahan coal block. HPGCL plans to set up a 2x750 MW (+5 per cent) gas-based power plant in Faridabad. Around 91 acres of land has been purchased by HPGCL for setting up the project in village Mothuka/Arwa in Faridabad district, and the purchase of another 41 acres is in process. The gas requirement for the project is assessed at 7.5 million standard cubic metres per day (mmscmd). The Ministry of Power (MoP) has recommended an allocation of 2.8 mmscmd of natural gas, which is sufficient for the operation of only one unit at a plant load factor of 70 per cent. The project is expected to be commissioned during the Thirteenth Plan. HPGCL is the nodal agency for facilitating the setting up of the 2,800 MW (4x700 MW ) nuclear power plant by Nuclear Power Corporation of India Limited. The process of land acquisition has been completed. In the first phase of this project, two 700 MW units (1,400 MW) are proposed to be set up by 202021, at an estimated cost of Rs 206 billion. The foundation stone of the project was laid on January 13, 2014. The development of the Mara II-Mahan coal block has been held up for want of forest clearance from the Ministry of Environment and Forests. The Kalyanpur-Badalpara coal block in Jharkhand with coal reserves of about 102 million tonnes has been allocated jointly to HPGCL and Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited in a 50:50 ratio. Coal production from both blocks is expected to start during April-October 2021. What steps are being taken to strengthen the state’s T&D network? Haryana’s discoms have been witnessing substantial growth in their consumer base over the past few years and the trend is expected to continue in the coming 47
FORUM
years. Our primary goal is to serve all consumers with continuous, reliable power. New substations are being taken up with the objective of catering to the additional load, to provide better quality supply and better consumer service. After the creation of new substations, a few original overloaded feeders will be shifted from the original substations to new substations, or the load of a few feeders from the original substation will be shifted to a new substation. For ensuring proper power evacuation, the utilities have drawn up capital investment plans till 2016-17, under which an investment of Rs 47.89 billion will be made with the help of funding agencies like the Rural Electrification Corporation, the Power Finance Corporation and the Japan International Cooperation Agency. The major activities that will be undertaken till 2016-17 are the creation of 76 new 33 kV substations, augmentation of 119 existing 33 kV substations, erection of 600 km of 33 kV lines, erection of 800 km of new 11 kV lines, implementation of AMR for all consumers with usage of over 10 kW, and execution of a smart grid pilot project at Panipat, etc. How have the state discoms benefited from the central government’s FRP scheme? The FRP for the state discoms was approved by the state government. Under this, the discoms are projected to become profit positive in three to four years and cash positive in five to six years. As mandated under the FRP scheme, bonds of Rs 73.66 billion have been issued to banks towards 50 per cent of the short-term liabilities to be taken over by the state government. A competitive interest rate of 9.8 per cent has been finalised on the bonds.
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was one of the pioneers in inviting independent power producers (IPPs) to set up projects through tariff-based competitive bidding under the Case 2 mechanism. The 2x660 MW Mahatma Gandhi Super Thermal Power Plant in Jhajjar, was set up in 2012 by CLP India Power Private Limited under the same mechanism. Further, the state government plans to set up two coal-based power plants through tariff-based competitive bidding under the Case 2 mechanism. The preliminary survey of a few sites in Sirsa and Bhiwani districts has been carried out for this purpose by HPGCL.
state. In the coming years we will be in a position to efficiently arrange for 24x7 supply of electricity throughout the state, including pockets with inadequate supply. Round-the-clock, quality power supply to industries is another shortterm goal for us. Another high-priority goal for us is encouraging competition and offering an enabling environment for the participation of the private sector in the power industry through a solid policy framework.
Discoms are planning to implement distribution franchises on a pilot basis in various urban towns to promote private sector participation and competition in power distribution. The utilities are also mooting a proposal to implement 11 kV feeder-wise retail supply franchises on such feeders having a loss of more than 50 per cent.
The quality of coal supplied to HPGCL through various Coal India Limited (CIL) subsidiary companies is an issue. Payments are made to CIL on the basis of coal quality grade, which is tested and declared at the loading (colliery) end. The quality of coal tested at the loading end is normally found to differ widely from the quality of the same coal when tested at the receiving (power station) end. This results in heavy financial losses for the generation utility. Therefore, joint testing of the supplied coal should be implemented.
What initiatives are being taken to promote the development of renewable energy in Haryana? Haryana has created an enabling environment for investments in renewable energy. Six biomass power projects aggregating 63 MW are being set up by IPPs. Of these, two projects totalling about 20 MW of capacity are at the final stage of completion. For power generation from industrial waste, 11 cogeneration projects of 24.95 MW capacity have been set up in industries and four projects of 12.6 MW capacity are under installation. Haryana’s state nodal agency emerged as the best in the country for the installation of solar water heating systems for 2011-12. Allocation of 80-90 MW of solar power under the Jawaharlal Nehru National Solar Mission at a tariff of Rs 5.50 per unit has been assured.
What steps are being taken by the state government to encourage private participation in the power sector?
What is your vision for the state’s power sector five years from now?
To ensure energy security, the Haryana government is encouraging private participation in the power sector. Haryana
Our aim is to make the utilities efficient and economically viable so as to boost social and economic development in the POWER LINE
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What are the key challenges that the state’s power sector needs to overcome?
The delay in granting forest clearance for the Mara II-Mahan coal block is also an issue. Further, gas allocation for the proposed power plant in Faridabad is also a concern. The issues relating to the expansion of DCRTPP include the nonavailability of long-term coal linkages and extending the validity of the terms of reference. Also, a policy needs to be put in place for transferring the coal linkage of old units to new units for the proposed supercritical Unit 9 at PTPS. The consumer base of Haryana’s discoms predominantly comprises rural and agricultural consumers. Supplying continuous power to these consumers is a challenge. Mitigating the high network and commercial losses in the low tension network is a key constraint. Another area of concern for us is ensuring commercial viability of discom operations while meeting our social responsibilities and improving our books. ■
New Report
Hydro Power Projects in India 2014 Project Pipeline and Economics; Sector Outlook and Opportunities India Infrastructure Research (publishers of RenewableWatch and PowerLine magazine) is currently developing and will soon release the report on “Hydro Power Projects in India 2014”, the most up-to-date information on the hydro power sector in India. The fourth edition of the report will be in two sections with 16 distinct chapters: Section A: Overall Sector Overview z
Executive Summary
z
Focus on Northeast States
z
Size and Growth
z
Opportunities in Neighbouring Countries
z
Recent Developments (2013-14)
z
Project Economics
z
Project Pipeline Analysis
z
Tariffs
z
Analysis of Project Delays
z
Financing
z
Ecological Impact and Environmental Issues
z
Equipment Market Outlook
z
Opportunity in Key States
z
Future Outlook
Section B: Project Profiles z
Projects under Construction This chapter will cover around 50 projects including Subansiri Lower, Teesta III, Parbati II Kol Dam, Ratle, Tapovan, Vishnugad, Kameng, Baglihar II, Teesta VI, etc. Each profile will have detailed information on developer, capacity, location, EPC/ equipment providers, project cost, financing, expected commissioning, status, etc.
z
Projects under Survey and Investigation This chapter will cover around 75 projects. Each profile will have key data on developer, capacity, location, type, status, etc.
The report is priced at Rs 50,000 (plus 12.36 per cent service tax) for a Site Licence and Rs 75,000 (plus 12.36 per cent service tax) for an Enterprise Licence. There is also a special pre-publication “early bird” discount. The report is priced at Rs 45,000 (plus 12.36 per cent service tax) for a Site Licence and Rs 67,500 (plus 12.36 per cent service tax) for an Enterprise Licence for orders and payments received on or before August 8, 2014. The report will be accompanied by a presentation in PDF format and will be ready in September 2014.
To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to: Raktima Majumdar Manager - Information Products India Infrastructure Publishing Pvt. Ltd. B-17, Qutab Institutional Area, New Delhi - 110016. India Tel: +91-11-46078365(D), 41034600/01; Fax: +91-11-26531196 Mobile: +91-8826127521 E-Mail: raktima.majumdar@indiainfrastructure.com
FINANCE
Private Equity Push Sterlite Technologies raises foreign funds
I
n a significant development, Sterlite Technologies Limited is set to raise Rs 5 billion from Standard Chartered Private Equity. This will be the first foreign investment in India’s power transmission segment. As per the agreement signed between the two companies, Standard Chartered Private Equity will invest the amount in Sterlite Power Grid Ventures Limited (SPGVL), a subsidiary of Sterlite Technologies focusing on the development of inter-state transmission projects. In a press statement, Pravin Agarwal, chairman, SPGVL, and director, Sterlite Technologies Limited, said, “We look forward to a long-term partnership with Standard Chartered Private Equity in our power transmission infrastructure business. Through our initiatives in transmission, we endeavour to contribute to the new government’s stated vision of providing 24x7 power to every Indian household.” On his part, Udai Dhawan, managing director and India head, Standard Chartered Private Equity, stated, “We are extremely excited to partner with Sterlite, which has established itself as a leading player in the power transmission sector. We believe that our partnership with the Sterlite Group will help in the buildout and strengthening of transmission infrastructure in India.” Standard Chartered Private Equity has invested more than $5 billion in over 100 companies across Asia, Africa and the Middle East since 2002. Though the financial terms of the deal have not been disclosed, SPGVL will issue convertible securities to Standard Chartered Private Equity for a minority share. The proceeds will be utilised as equity contribution for existing and new transmission projects of the company.
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Project portfolio Sterlite Technologies has a portfolio of six inter-state transmission projects on a build-own-operate-maintain basis – the largest among private sector developers. The company will design, finance and construct transmission systems and maintain them for a period of 25-35 years. The projects have been awarded by the Ministry of Power on the basis of competitive bidding. These include the East-North Interconnection transmission project, the Jabalpur transmission project, the Bhopal-Dhule transmission project, the transmission system associated with the Rajasthan Atomic Power Project (RAPP), the Eastern Region System Strengthening Scheme-VII (ERSS-VII), and the Northern Region System Strengthening SchemeXXIX (NRSS-XXIX). These inter-state transmission projects entail the setting up of about 5,000 circuit km (ckt. km) of extra high voltage lines and associated substations. Once commissioned, the projects will cumulatively earn about Rs 11 billion in tariffs annually. As of March 2014, Sterlite Technologies had incurred a total capex of Rs 35 billion for the interstate transmission projects. In September 2013, the company commissioned the 400 kV double-circuit (D/C) Purnia-Biharsharif line, a part of the East-North Interconnection project. The line recorded transmission system availability of 99 per cent and earned revenues of about Rs 350 million in 2013-14. Other lines of the East-North InterconPOWER LINE
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nection, and the Jabalpur and BhopalDhule transmission projects are likely to be commissioned during 2014-15. These projects were won by the company in February 2010, January 2011 and February 2011 respectively, and are being executed by project-specific special purpose vehicles . Further, the transmission project for RAPP (Units 7 and 8) and the ERSSS-VII were awarded in September 2013. The latest inter-state transmission project won by the company is the NRSS-XXIX, which was awarded in May 2014. The project entails the setting up of 800 ckt. km of transmission lines, which would carry over 1,000 MW of power from Punjab to Jammu & Kashmir. The company had quoted an annual tariff of about Rs 4.4 billion for the project, about 5 per cent lower than the next highest bid. This will be Sterlite Technologies’ largest project in terms of revenues and scale. Financial closure for these three projects (RAPP, ERSS-VII and NRSSXXIX) is expected in the next two years and operations are likely to commence from by 2016-17. Summing up Standard Chartered Private Equity’s investment in SPGVL augurs well for the company and the power sector as a whole. While the generation segment has attracted foreign investors in the past, the transmission segment has failed to do so. This is mainly because the power sector has so far focused mainly on increasing generation capacity while the transmission and distribution (T&D) segments have been lagging behind, leading to issues such as transmission network congestion and high T&D losses. With growing private participation in the transmission segment through the setting up of inter-state transmission projects, the scenario is likely to improve in the coming years. Given Sterlite Technologies’ impressive track record in winning interstate inter-state transmission projects amidst tough competition, it is poised to emerge as a leading private sector developer in the transmission segment. ■ Neha Bhatnagar
13th Annual Conference on
Progress & Potential; Issues & Opportunities September 1-2, 2014, The Grand, Vasant Kunj, New Delhi
Sponso rship opportu nities are ope n
Plenary Sessions: The conference will have eight general/plenary sessions: Key Trends and Outlook
Interoperability
Technology Integration
Update on Smart Grids
Utility Perspective
Cyber Security Issues in the Power Sector
Communication Technologies
Cloud Computing
Etc.
The conference will also focus on the R-APDRP experience and its impact on the distribution sector. It will provide a platform for sharing of best practices, challenges, early successes, etc. It will be an extended session and may have sub-sessions including: Key Achievements
Government Perspective
Case Histories
Lessons Learnt
Key Challenges
The Way Forward
Tracks: There will be dedicated segment-specific tracks on generation, transmission and distribution. These will cover areas such as communications, data analytics, real-time monitoring, asset management, regulatory compliance, management information systems, smart grid, etc. The dedicated tracks will also cover focused areas including:
DISTRIBUTION
TRANSMISSION
GENERATION
Advanced Metering Infrastructure
Wide Area Monitoring Systems
Power Plant Automation
SCADA
Load Flow Studies
Plant Monitoring and Diagnostics
Distribution Management System
Unmanned Substations
Optimising Asset Management
Outage Management System
Structural Analysis and Design Software
Performance Analysis Diagnostics &
Substation Automation
GIS-based Applications in Transmission
Optimisation
Load Forecasting and Analysis
Planning
Inventory and Fuel Management
GIS-based Consumer Indexing
Occurrence Reporting System
Project Planning and Execution
Customer Relationship Management
IT Applications to Enable Open Access
E-procurement
Renewable Energy Integration
Data Centres
Delegate Fee The delegate fee is Rs 22,500 for one participant, Rs 37,500 for two, Rs 52,500 for three and Rs 67,500 for four. There is also a 20 per cent “early bird� discount for those registering before August 8, 2014. There is a special low fee of Rs 5,000 per participant for the state electricity boards and their successor units (state-owned gencos, transcos and discoms), regulatory authorities, research organisations and academic institutions. Service tax of 12.36 per cent is applicable on the registration fee.
For sponsorship opportunities, contact: Varun Thomson Boyle
For registrations, contact: Richa Jhamnani
Tel: +91-11-41034600, 41034610(D), 9999430 521
Tel: +91-11-41034616, +91-9971992998, 9311217271
India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi 110016. Fax: +91-11-26531196, 46038149. E-mail: conferencecell@indiainfrastructure.com Organisers:
Smart Utilities
FINANCE
Financial Briefs India and overseas ■ REC, PFC approve Rs 78.42 billion loan for two power plants (India) The Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) have accorded in-principle approval for providing a loan of Rs 78.42 billion for two upcoming supercritical power projects in Andhra Pradesh. The projects have a capacity of 800 MW each and will be set up by Andhra Pradesh Power Generation Corporation Limited at its existing plant sites: the 1,260 MW coal-based Vijayawada station and the 1,600 MW Krishnapatnam supercritical power station respectively. The estimated aggregate cost of setting up these two units is Rs 104.26 billion. ■ SPGVL to receive Rs 5 billion equity investment Standard Chartered Private Equity Limited has decided to invest Rs 5 billion in Sterlite Power Grid Ventures Limited (SPGVL) in the form of equity. An agreement to this effect has been signed between Standard Chartered and Sterlite Technologies Limited, the holding company of SPGVL. SPGVL will issue convertible securities to Standard Chartered Private Equity for a minority share in the company. The amount invested is planned to be utilised for funding the equity portion of existing as well as upcoming transmission projects of SPGVL. Reportedly, this will be the first foreign institutional investment in the country’s power transmission sector. SPGVL has a portfolio of six independent transmission projects on a buildown-operate-maintain basis. ■ ReNew Power Ventures receives $140 million equity investment ReNew Power Ventures Private Limited has received an equity infusion amounting to $140 million (Rs 8.35 billion) from three financial institutions – Goldman Sachs, the Asian Development Bank 52
(ADB) and the GEF South Asia Clean Energy Fund (SACEF) India. While Goldman Sachs has injected $70 million into the company, ADB and GEF SACEF have invested $50 million and $20 million respectively. Following this, the total equity investment in ReNew Power has reached $390 million. This is the second instance of Goldman Sachs injecting equity in ReNew Power, the first being a $135 million investment in 2011. ■ Powergrid board approves investments of over Rs 55 billion for two projects Power Grid Corporation of India Limited’s (Powergrid) board has approved investments of over Rs 55.5 billion in two power transmission projects, to be implemented over the next four years. The first is the Transmission System Strengthening in Western Region-Northern Region Transmission Corridor for Independent Power Producers in Chhattisgarh, which entails a cost of about Rs 51.51 billion and has a commissioning schedule of 45 months from the date of investment approval. The other project, the Transmission System Associated with NTPC’s Lara Super Thermal Power Station I (1,600 MW), entails a cost of about Rs 4 billion and has a commissioning schedule of 34 months from the date of investment approval. ■ PFC receives shareholders’ approval to raise up to Rs 440 billion PFC’s shareholders have approved the company’s plan to raise up to Rs 440 billion through a private placement of nonconvertible debentures during 2014-15. They have also approved a proposal to double the company’s borrowings to Rs 4,000 billion (in rupees) and to $8 billion (in any foreign currency equivalent). ■ ADB approves $300 million loan to strengthen Assam’s power infrastructure ADB has approved a multi-tranche loan facility amounting to $300 million for POWER LINE
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the Assam government to augment the state’s power infrastructure. The loan is part of ADB’s broader 10-year, $3.5 billion state investment programme and will fund the upgradation of the generation and distribution infrastructure, including construction of a 120 MW hydropower plant. It will also finance the deployment of new energy efficient generating equipment at the existing plants and the setting up of new distribution lines and substations. The funds will be disbursed in three tranches of $50 million, $50 million and $200 million respectively, with the first installment planned to be utilised for the replacement of ageing gas turbines at the 60 MW gas-based Lakwa power plant. ■ Alstom accepts GE’s acquisition offer (France, USA) France-based Alstom’s board has approved the Euro 23.75 billion purchase offer made by US-based General Electric (GE) for acquiring the former’s energy business. As per the deal, GE will acquire Alstom’s thermal power, renewable power and grid businesses for an equity value of Euro 12.35 billion and an enterprise value of Euro 11.4 billion. Under the deal, the two companies will form 50:50 joint venture companies for the grid and renewable power segments. Alstom will get 100 per cent ownership of GE’s rail signalling operations. ■ World Bank signs $600 million loan for Bangladesh’s rural T&D sector (Bangladesh) The World Bank has signed a loan agreement worth $600 million with the Bangladeshi government for the country’s Rural Electricity Transmission and Distribution (T&D) Project. The project aims to improve the access and quality of power supply in the rural areas in the eastern part of the country. The state-run Power Grid Company of Bangladesh and the Bangladesh Rural Electrification Board will set up new power T&D lines and substations. The loan proceeds will support the construction of new lines and substations as well as upgradation of the existing lines in the rural areas of Dhaka, Chittagong and Sylhet. ■
Indian Power Sector and Equipment Market Outlook (2014-19) India Infrastructure Research (a sister division of Power Line and Indian Infrastructure magazines) has recently released “Indian Power Sector and Equipment Market Outlook (2014-19)” report. The “Indian Power Sector and Equipment Market Outlook (2014-19)” report provides realistic projections for power demand and supply in the country, as well as for the various segments of the power equipment market for the period 2014-19. The outlook and projections are based on the recent trends and developments in the sector; external factors such as economic growth; sector issues like fuel availability, deceleration of demand and worsening discom finances; status of current projects; etc. The report has two elements:
able
– 159-Slide Presentation
avail
– 113-Page Written Report The “Indian Power Sector and Equipment Market Outlook (2014-19)” report has two distinct sections: Section A: Power Sector Outlook z
Key Trends and Drivers
z
z
Power Demand Outlook
z
Power Supply Projections Fuel Outlook
Section B: Power Equipment Market Outlook z
Boiler, Turbine and Generator Market
z
T&D Equipment Market
z
Balance of Plant Equipment Market
z
Renewable Energy Equipment Market
The report is priced at Rs 54,000 (plus 12.36% service tax) for a Site Licence and Rs 81,000 (plus 12.36% service tax) for an Enterprise Licence. The report (write-up and presentation) is available in PDF format.
To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to: Deepali Sharma Manager, Information Products India Infrastructure Publishing Pvt. Ltd. B-17, Qutab Institutional Area, New Delhi - 110016. India Tel: +91-11-46038153, 41034600/01; Fax: +91-11-26531196 Mobile: +91-9971407082 E-Mail: deepali.sharma@indiainfrastructure.com
DIESEL ENGINES & GENSETS
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Infocus
Diesel Engines & Gensets
Market overview: Demand drivers and key challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Revival in demand: Growth expected after the slowdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Cost considerations: Demand for diesel-based power despite high price of generation . . . . . . 62 Choice of fuel: Diesel dominates in backup power systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Technology advances: Efficiency improvements in diesel engines reduce costs and emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Environmental concerns: Stricter emission norms proposed for DG sets . . . . . . . . . . . . . . . . . . . 70 Road to growth: Rental energy plants help bridge the electricity gap . . . . . . . . . . . . . . . . . . . . . . . 72 Key statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
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DIESEL ENGINES & GENSETS
Market Overview Demand drivers and key challenges
D
iesel engines and generator sets are among the most preferred options for decentralised power generation across industries. A samplebased survey of captive power units of 1 MW and above by India Infrastructure Research indicates that as of 2012-13, about 2,600 MW of capacity was based on diesel and liquid fuels. Increasingly, the demand for diesel generator (DG) sets is being driven by service sector enterprises such as information technology, hospitality and commercial buildings. It is also facilitated by the need to maintain performance reliability of sensitive electronic equipment such as data centres as well as servers across organisations. Current status Over the years, the market for diesel engines and gensets has become more organised and competitive. Broadly, the product offerings are categorised under small DG sets (15-75 kVA), medium DG sets (75.1-375 kVA) and large DG sets (375.1-2,000 kVA). Domestic manufacturers supply DG sets with ratings ranging from 4 HP to 11,000 HP for meeting backup power and continuous power needs. An efficient distribution network with reliable product support services is essential for companies looking to capture this market. This is particularly required by industries opt-
ing for high rating baseload gensets. The capital costs of diesel gensets vary according to engine speeds. High speed engines with 1,500 revolutions per minute (rpm) cost Rs 15 million-Rs 18 million per MW while intermediatespeed engines (1,000 rpm) cost Rs 20 million-Rs 25 million per MW, and lowspeed engines (600-750 rpm) cost over Rs 35 million per MW. The operating expenditure of DG sets varies from Rs 10 per unit to Rs 14 per unit. To manage operational costs, industries are exploring options such as dual-fuel systems, in which 70 per cent of the fuel requirement is met by producer gas or natural gas. In some cases, gas-based generators based on liquefied natural gas have replaced diesel-based units due to their cost competitiveness. Another component of cost is servicing. DG sets typically require servicing after 300-500 hours of operation. Regulatory developments such as emission norms also have an impact on the cost economics. Central Pollution Control Board’s revised emission norms are awaited. Most of the leading players in this market are already geared to adhere to these norms. While this would result in higher product costs, it would differentiate their offerings from the competition. Also important in this con-
text are technology improvements such as greater use of electronics to control fuel consumption, which ensures overall efficiency in power generation. For equipment manufacturers, the key challenge is to provide cleaner diesel engines and gensets. Over the years, there has been a growing emphasis on dual-fuel systems, which use alternative fuels such as natural gas and producer gas based on biomass resources, biodiesel, etc. along with diesel. Also, there is a strong business case for the deployment of cogeneration solutions based on diesel engines and gensets in industries where diesel-based baseload captive power units are required. Such systems offer higher efficiencies in terms of rationalisation of operational costs. Efficiency is also one of the factors driving the growth of rental solutions for diesel gensets. A frequently cited reason for choosing rental solutions for generators is the project’s time sensitivity. Rentals ensure speedy supply of equipment, thus providing users with power supply within a short time. Fast delivery is critical in situations where there has been an unplanned power outage or when reliability of power is critical for production processes. Long lead times are often encountered when companies opt for permanent equipment for power generation. The rental route, moreover, offers flexibility to industries to increase or decrease the generation capacity based on immediate need and ensures minimum equipment downtime. That said, the power rental market in India is quite fragmented in terms of services and offerings. Many companies offering rental power are small, familyowned businesses with a limited fleet. In addition, the business model for offering turnkey rental power services is still relatively underdeveloped in India but is being introduced by a few companies. Key demand segments Telecom tower companies are the largest users of diesel gensets as towers
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DIESEL ENGINES & GENSETS
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Fuel-wise distribution comparison of captive capacity in 2010-11 vis-à-vis 2012-13 2010-11
2012-13 Bagasse: 9
Diesel/liquid fuels: 5 Cogeneration/ WHR: 7
Bagasse: 10 Diesel/liquid Wind: 9 fuels: 12
Gas: 13
Wind: 8
Cogeneration/ WHR: 5
Biomass: 2 Gas: 12
Biomass: 2
Others: 1
Others: 1 Coal: 47
Coal: 57
require backup power facilities for uninterrupted operations. The role of gensets is particularly critical in rural areas where grid power supply is highly unreliable and inadequate. The average genset run-time for telecom towers in these areas is as high as 16-20 hours per day. Irregular and unreliable power supply often requires tower companies to provide for redundancy in capacity by installing gensets of 10-15 kVA capacity.
construction segments. Even with large captive power generation capacities for baseload energy requirements, mining companies frequently deploy portable gensets for their remote mining sites. Mining companies have been procuring generator sets mainly as outright purchases. However, of late, a slowdown in the mining and construction sectors has contributed to an overall decline in the offtake of DG sets.
The telecom sector’s demand for diesel gensets is expected to grow in the coming years. There are about 400,000 telecom towers in the country and the tower base is expected to grow to 450,000 by 2015 and 550,000 by 2020. However, steps are being taken to optimise the use of diesel gensets in this segment. Tower operators are increasingly seeking hybrid solutions such as a combination of solar power and diesel gensets to minimise operational costs. Off-grid solar power solutions are being actively considered to reduce the dependence on gensets, especially since the cost of solar power generation is becoming more competitive as compared to the latter. By 2015, about 100,000 telecom towers are expected to be equipped with solar-powered backup solutions.
Meanwhile, turnkey solutions are being sought for competitive options in equipment planning, sourcing as well as operations and maintenance. The construction sector opts for diesel gensets to source flexible temporary power, not only for sites in remote areas and difficult terrain but also to tide over frequent power interruptions.
The industrial demand for DG sets is also being driven by the mining and
The incremental demand for gensets is also being driven by service sector enterprises such as information technology-enabled service companies, business process outsourcing units, data centres, commercial complexes and hospitality businesses, which need backup units for round-the-clock power supply. In fact, with greater use of sensitive electronic equipment by organisations, backup power will be crucial to ensure minimum disruption in operations. In this context, the POWER LINE
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demand for DG sets appears robust despite the power supply scenario prevailing in the country. The way ahead Although diesel continues to be the preferred fuel for most industries, the associated costs may increasingly force users to consider other alternatives. This is due to the rising diesel prices driven by the government’s steps to deregulate prices and eventually ensure import parity prices. Industries can, thus, look at alternatives such as natural gas, which may become a preferred fuel option with the growing reach of gas pipeline connectivity in the country. Environmental concerns are also resulting in active policy encouragement for industries to reduce their dependence on DG sets. The Telecom Regulatory Authority of India has stipulated that at least 50 per cent of all rural towers and 20 per cent of urban towers are to be powered by hybrid power by 2015. For other industries too, off-grid renewable energy solutions are emerging as competitive alternatives to DG sets in select segments of their business and production processes. While this may not seriously impact the long-term demand for diesel-based generators, it highlights the increase in competitive options for industrial power requirements. ■ 57
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Revival in Demand Growth expected after the slowdown
D
espite an overall reduction in the power deficit in the past one year, erratic supply, delayed power generation projects and the lack of adequate transmission and distribution infrastructure in remote areas have been the key drivers for the use of diesel generator (DG) sets for power generation. Higher reliability, easy availability of fuel due to a wide distribution network and ease of installation make DG sets an ideal choice for meeting industries’ power needs. A look at the key demand segments for DG sets, the factors impacting demand as well as the challenges ahead‌ Key segments One of the key demand segments for DG sets used for power generation is infrastructure and construction. DG sets are used for powering construction machinery and material handling equipment such as crawler excavators, wheel loaders, compactors, backhoe loaders, drills, stone crushers and heavy cranes. The key
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customer segments for DG sets within the construction segment include roads, bridges, railways, ports, airports, irrigation and power. Oilfield activities are another related demand segment for the DG set market. DG sets are increasingly being used for drilling operations in oil and gas rigs, as well as for meeting lighting requirements at drill sites. Another key demand segment for DG sets is mining, especially companies that are engaged in the production of coal, lignite, steel, cement and other minerals. DG sets are used to power earthmoving equipment such as dumpers, shovels and excavators, aside from supporting equipment such as surface miners, loaders, blast hole rigs, dozers and graders. In recent years, the telecom industry too has emerged as an important consumer segment for DG sets. The increase in the number of telecom subscribers is resulting in the growing installation of base
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station antennas across the country. These require continuous power supply, which can be effectively provided by DG sets. As per industry estimates, the average DG run-time in rural areas is as high as 16-20 hours per day. The resulting electricity and DG fuel costs account for nearly one-third of the network opex. Telecom towers usually deploy DG sets ranging from 10 kVA to 15 kVA at sites, depending on factors such as geographical location, power outage pattern and the equipment used. Larger DG sets of 25-62.5 kVA are used for base transceiver station controllers and 200-750 kVA units are used for switching centres. Large- and small-scale commercial enterprises also significantly rely on DG sets for their power requirements. For these users, investment in DG sets is critical for maintaining their productivity and competitiveness, as frequent power shortages impact their production, resulting in losses. The hospitality sector and institutional users like malls, office complexes and schools are other major consumers of DG sets. DG sets are also used in the banking and retail sectors. The most commonly used DG sets in these sectors are of 200-1,500 kVA. In recent years,
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DIESEL ENGINES & GENSETS
there has also been a growing demand for DG sets from the IT industry, in order to meet the need for reliable electricity supply at data centres.
denting the demand for DG sets. The competition has also intensified as foreign DG set manufacturers from China have entered the market.
The demand from residential complexes has also witnessed a rise due to the growing population and higher standards of living. In fact, the provision of backup power through DG sets has become a norm rather than an exception in larger cities, owing to the lack of consistent grid power supply, as well as for emergency requirements like elevators.
Rising fuel costs and the deregulation of diesel prices are other factors that have impacted the demand for DG sets. Industry estimates show that the average cost of generation from DG sets is Rs 16-Rs 17 per kWh. The cost of dieselbased generation has been increasing in tandem with the increase in diesel costs, which rose by Rs 8.50 per litre on an average during 2012-13. This is significantly higher than the average cost of generation from coal-based power plants, which stands at Rs 3.20-Rs 4.00 per unit, and that from gas-based plants, which is around Rs 6 per unit.
A model that is gaining widespread importance across these consumer segments is the rental option. Suppliers are offering a wide range of temporary rental power units with easy-to-operate customer interfaces for improving flexibility, lowering set-up time and reducing capital requirements, including operations and maintenance and repair services. This benefits customers by allowing them to focus on their core business activities, in addition to being more cost effective. Issues and challenges In the recent past, the demand for DG sets has been adversely impacted due to the slowdown in the infrastructure sector. Further, the low entry barrier has allowed automobile manufacturers to enter the DG set market and offer engines at competitive prices, thus 60
Environmental concerns are another key consideration. A growing number of telecom companies are adopting various practices to build green sites and lower their carbon footprint. Using renewable energy sources like solar power instead of DG sets for powering base stations is a major step in this regard. Currently, Bharti Infratel has 1,500 solar sites and Indus Towers owns about 1,000. Further, the government has advocated the use of renewable energy sources. The Department of Telecommunications has issued a directive that stipulates that at least 50 per cent of all rural towers and 20 per POWER LINE
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cent of urban towers are to be run using hybrid power (renewable energy technologies and grid power) by 2015; and by 2020, 75 per cent of rural towers and 33 per cent of urban towers are to be operated on hybrid power. Outlook Demand from all sectors is likely to revive with the expected economic recovery, which will in turn lead to a spurt in infrastructure investments. The huge $1 trillion investment outlay for the infrastructure sector for the Twelfth Plan will provide a significant boost to the demand for DG sets, especially from the construction business. The government’s emphasis on setting up new industrial clusters in the 2014-15 budget, coupled with the overall increase in investments in the infrastructure segments, is expected to help kick-start the capex cycle in various industries. In the telecom industry, the launch of 3G and 4G services is likely to increase power demand at tower sites, which will provide a major opportunity to DG set manufacturers. Solar power still poses certain deployment challenges at telecom sites, in terms of its high capex and local issues such as the security of photovoltaic installations at project sites. Thus, despite the shift to renewable energy sources, it is likely that DG sets will continue to be an important source of power for the industry. â–
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Cost Considerations Demand for diesel-based power despite high price of generation
D
iesel and allied liquid fuels are widely preferred for use in backup power units by small- and medium-scale industries, primarily due to their ease of availability and handling. In addition, diesel generator (DG) sets come with benefits such as low capital costs, quick start-up, speedy installation, and low space and cooling requirements. However, the unit size of dieselbased power units is restricted to up to 30 MW. Frequent power cuts and unreliable supply from the grid are the key drivers for industrial and commercial consumers to install DG sets. It is ironic that on the one hand, industrial consumers do not receive adequate power supply, and on the other, they are charged the highest tariffs among all consumer segments. Industrial and commercial consumers continue to cross-subsidise other consumer categories and pay more than the cost of supply. Also, the incomplete operationalisation of open access restricts these consumers from exploring competing alternative power procurement options. Cost structure Fuel costs constitute 75-80 per cent of the total lifetime costs of a DG set, while capex on equipment accounts for 12-15 per cent and the remaining is accounted for by spares, maintenance costs, etc.
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Between 2009-10 and 2013-14, the price of crude oil (Indian basket) increased at a compound annual growth rate (CAGR) of over 10 per cent, from $70 per barrel to $105.5 per barrel. The average retail selling price (RSP) of high speed diesel grew at a CAGR of over 12 per cent between 2008-09 and 2012-13, from Rs 33 per litre to Rs 52 per litre. As of July 2014, the average RSP of diesel stood at about Rs 61 per litre. sources (coal and domestic gas) at Rs 16-Rs 17 per unit. In comparison, the average tariff for industrial and commercial consumers stood at Rs 6.26 per unit and Rs 7.64 per unit respectively in 2013-14. Despite the wide difference in cost, industrial and commercial consumers invest in DG sets as frequent power outages severely impact their manufacturing processes/businesses and, in turn, affect revenues. Diesel price trend The high cost of generation from DG sets can be attributed to the high price of the input fuel – diesel. In line with crude oil prices, diesel prices have followed an increasing trend over the years.
DG-based generation cost of select companies Company
Units generated Cost of via DG sets generation (MUs) (Rs/kWh)
United Phosphorous Limited
0.49
24.7
As per industry estimates, the average capital cost of DG set-based captive power plants (CPPs) is Rs 35 millionRs 36 million per MW. In comparison, the capital cost of a coal-based CPP (capacity: 0-50 MW, technology: subcritical) is Rs 43 million-Rs 44 million per MW, and that of a gas-based CPP is Rs 39 million-Rs 40 million per MW.
Essar Steel Limited
1.40
20.9
However, the cost of generation from DG sets is the highest among all fuel
Sources: Companies’ annual reports
Jaypee Cement
7.84
19.1
Hindalco
1.62
17.8
Jindal Steel and Power Limited
0.81
16.8
Shree Cement
0.51
16.7
Grasim Cement
0.14
16.2
Monet Ispat and Energy Limited 14.10
15.6
Madras Fertilisers Limited
3.16
14.7
61.84
13.9
UltraTech Cement
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A key development was the introduction of a dual-pricing policy for diesel in January 2013, wherein bulk users were required to pay market prices and retail users subsidised prices. In addition, oil marketing companies (OMCs) were allowed to raise the price of diesel for retail consumers by 40-50 paise per litre per month. As a result, the under-recoveries of OMCs on diesel came down from about Rs 10.40 per litre in 2011-12 to Rs 8.40 per litre in 2013-14. Outlook The government is likely to continue fuel price deregulation in order to reduce the subsidy burden and fiscal deficit. Reportedly, diesel prices may be completely deregulated from December 2014, if the global crude supply and price trends remain stable. Further, the capital costs of DG sets are expected to rise as manufacturers make design modifications to meet the stringent emission norms introduced by the Central Pollution Control Board (CPCB). With effect from July 1, 2014, new DG sets of up to 800 kW are required to comply with CPCB-II norms, which mandate a reduction in engine exhaust emissions. As the economy recovers and the industrial sector gets back on the growth track, the demand for reliable power supply and, therefore, for DG set generation is bound to increase. ■
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Choice of Fuel
$105.52 per barrel respectively.
Diesel dominates in backup power systems
D
iesel generator (DG) sets have been a traditional source of power backup for commercial and industrial applications. As per the Petroleum Planning and Analysis Cell (PPAC), DG sets account for over 1.15 per cent of the total retail consumption of diesel and around 4.34 per cent of the total diesel consumption by the non-transport sector in India. Some benefits that have popularised the deployment of DG sets include their small size, ease of installation, quick start and shutdown, higher efficiency and lower maintenance.
consumption of furnace oil (FO) was 6.19 mt and that of light diesel oil (LDO) was 0.39 mt. Over the past five years, the consumption of HSD has increased at a compound annual growth rate (CAGR) of 5 per cent. In contrast, the consumption of FO and LDO has witnessed a decline during this period, with a CAGR of 14.57 per cent and 4.15 per cent respectively. The major reason for this is the subsidised price of HSD, which makes it a more attractive option when compared to FO and LDO, which are sold at import parity prices.
Fuel costs comprise about four-fifths of the total DG generation cost, which makes the choice of fuel a major consideration for users. Though various types of fuel can be used to run DG sets, diesel is the most common. However, the rising prices of diesel and environmental concerns have encouraged industries to consider other fuel options.
The price of petroleum products depends largely on international crude oil prices. During the past five years, the international prices of the Indian basket of crude oil have been highly volatile. The average price of crude oil was recorded at $111.89 per barrel in 201112, touching the highest mark of $123.61 per barrel in March 2012. However, prices have eased during the last two years, mainly due to the global economic slowdown and a subsequent fall in demand. The price of crude oil in 201213 and 2013-14 stood at $107.97 and
Fuel market trends In 2013-14, the consumption of high speed diesel (HSD) stood at 68.4 million tonnes (mt). During the same year, the
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In tandem, the international prices of refined fuels witnessed a similar trend. For instance, the international prices of diesel stood at $125.38 per barrel in 2011-12, before dropping to $121.97 per barrel in 2012-13 and further to $119.41 per barrel in 2013-14. The international prices of FO and naphtha stood at $595.79 and $881.3 per tonne in 2013-14. In rupee terms, the retail prices of diesel as of July 1, 2014 ranged from Rs 56.22 to Rs 66.01 per litre across states. While Maharashtra recorded the highest diesel prices, the lowest prices were recorded by Haryana. Diesel prices in Delhi stood at Rs 57.84 per litre. Diesel is sold at subsidised rates to retail consumers while to bulk consumers, it is sold at market prices. Currently, the difference between the retail rates and bulk rates ranges from Rs 1.80 to Rs 2.50 per litre. As a result of the government’s drive to deregulate diesel prices, this gap is expected to reduce going forward. Fuel options DG sets can operate on a variety of fuels including HSD, heavy fuel oil (HFO), producer gas, LDO, FO, biodiesel and blended fuels. Fertiliser and petrochemical units use naphtha while small industrial units prefer LDO and FO. HSD is the preferred choice for DG sets due to its price differential compared with other fuels.
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Diesel is the most commonly used fuel for DG sets due to several advantages including high thermal efficiency which can yield a low per unit capital cost in large applications – typically 150 kW or more. In addition, diesel-fuelled DG sets can provide power backup in remote areas that do not have natural gas infrastructure. Historically, one of the major reasons behind the extensive use of diesel in DG sets in India is that it is cheaper as compared to other fuels. Diesel is being sold at a subsidised price in the country. However, prices are now witnessing an upward trend as a result of deregulation of diesel prices. This, along with rising environmental concerns, has encouraged industries to use alternative fuels. Biodiesel is emerging as an important alternative to diesel for running DG sets. It is a clean burning alternative fuel, produced by the chemical reaction of vegetable oil or animal fat with alcohol in the presence of a catalyst like sodium or potassium hydroxide. Biodiesel is simple to use, biodegradable and non-toxic. It can be used alone or blended with diesel in any proportion to create a biodiesel blend, which can be used to operate conventional petro-diesel generators with slight modifications at a low cost. There has been an increasing emphasis
Production trend of liquid fuels and naphtha (‘000 tonnes) Year
HSD
Naphtha
LDO
2004-05
46,081
15,796
1,385
10,580
2005-06
47,730
16,016
944
10,314
2006-07
53,676
18,176
803
12,259
2007-08
58,482
17,983
713
12,642
2008-09
64,139
16,797
609
14,714
2009-10
73,249
18,782
472
15,257
2010-11
77,684
19,309
597
18,672
2011-12
82,929
18,707
502
17,722
2012-13
91,090
18,851
400
14,514
2013-14*
93,749
18,420
423
12,951
* Provisional Source: PPAC
on dual-fuel systems, which use alternative fuels such as biodiesel, natural gas and producer gas based on biomass resources along with diesel, thereby leveraging the benefits of each. These options are being widely adopted by industries to rationalise fuel costs. Producer gas, which is obtained by the gasification of biomass, is another fuel option available for DG set users. Like biodiesel, producer gas is also environmentally friendly and entails lower costs. However, DG sets cannot be operated solely on producer gas. To over-
International price trend of Indian basket of crude oil ($ per barrel) Month
2009-10
2010-11
2011-12
2012-13
2013-14
April
50.14
84.08
118.64
117.97
101.57
May
58.00
76.16
110.80
108.05
101.10
June
69.12
74.33
109.99
94.51
101.11
July
64.82
73.54
112.53
100.34
104.86
August
71.98
75.13
106.94
110.07
108.45
September
67.70
76.09
108.79
111.77
109.47
October
73.06
81.11
106.11
109.79
107.37
November
77.39
84.26
109.62
107.87
106.55
December
75.02
89.77
107.19
107.28
108.72
January
76.61
93.87
110.47
109.55
105.29
February
73.69
101.62
117.67
112.68
106.19
March
78.02
110.71
123.61
106.45
105.30
Average
69.76
85.09
111.89
107.97
105.52
Source: PPAC
66
FO
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July 2014
come this issue, dual-fuel generator sets are now available in the market, wherein the modifications are confined to a special induction manifold and gas airmixer. Apart from producer gas, other gaseous fuels, such as natural gas or propane vapour, are gaining wider acceptance. A combination of these fuels in a definite proportion also provides additional fuel options. Another fuel option is gasoline; although it is considered to be a poor fuel choice, it is extremely volatile as compared to diesel or gaseous fuels and has a significantly lower thermal density. Conclusion Diesel remains a popular choice for DG sets and this trend is likely to continue going forward. According to the PPAC, the demand for HSD is expected to increase to 72.6 mt in 2014-15 and to 81.6 mt by 2016-17. The demand for naphtha, LDO and FO is likely to be around 11.42 mt, 400,000 tonnes and 7.9 mt respectively. However, rising fuel prices and growing environmental awareness have encouraged industries to adopt other fuel choices such as biodiesel, producer gas and dual fuel. The majority of these fuels can be used by making minor modifications in the existing DG sets. However, owing to the ease of availability and use of diesel, there is a long way to go until alternative fuels become as popular as diesel. ■
INFOCUS
DIESEL ENGINES & GENSETS
Technology Advances Efficiency improvements in diesel engines reduce costs and emissions
T
he deployment of diesel engines in the industrial sector has been on the rise owing to the enhanced efficiency it offers in comparison to gas-based ones (up to 30 per cent more efficient). This is due to the inherent characteristics of diesel that make it a high power density fuel source, hence reducing its usage in terms of specific quantity used per unit of power generated. Of the total diesel consumed in India in 2012-13, industrial genset applications accounted for nearly 4.34 per cent. Efficiency improvements in diesel engines are of paramount importance for industries as they not only reduce operational costs but also ensure uninterrupted power during instances of grid failure, natural calamities, etc. Given the government’s growing focus on deregulating diesel prices and introducing stringent emission norms, engine/genset manufacturers’ need to develop technologies that offer fuel consumption optimisation and effective emission control. A look at some of these technologies…
Reducing NOx emissions A major challenge for diesel engine manufacturers lies in optimal allocation of the inherent trade-off between NOx and particulate matter emissions. In order to minimise the first, diesel must not be burnt entirely, which results in accumulation of the latter component present in the unburnt fuel. Currently, available technologies for reducing NOx emissions include delayed fuel injection, water injection, fuel water emulsification, inlet air cooling, intake air humidification and changes in the compression ratio or turbocharger. A widely used method for reducing NOx concentration is treating the emissions with hydrocarbons (HC) through a process called selective catalytic reduction. NOx reacts with HC to form nitrogen, carbon dioxide and water. Selection of the 68
appropriate catalyst is of paramount importance as some HCs reduce NOx to harmful nitrogen dioxide rather than to nitrogen. This process is capable of over 80 per cent cutback in NOx emissions. Exhaust gas recirculation is another technology that has delivered impressive results with regard to reducing NOx emissions. The basic working principle behind this technology is that it reduces the combustibility of diesel by decreasing its oxygen content through the mixing of fuel with the exhaust gas. This process lowers the temperature at which the fuel is burnt, hence reducing NOx emissions. Enhancing efficiency Several energy efficiency technologies have been developed in the diesel engine space. These technological advancements have introduced additional avenues in the diesel generator (DG) sets that are capable of capturing the entire heat present in the fuel. Complementing DG sets with a waste heat recovery (WHR) system is finding applications as industries seek to maximise energy utilisation from scarce fuel resources. This is particularly the case for industries meeting most of their captive needs through DG sets. The process involved in WHR starts with diesel energy generation, which produces an accessible source of waste heat. The waste heat is released through exhausts and captured by recovery systems such as regenerators, recuperators and economisers, and then fed into a turbine generator. Energy consumption can potentially be reduced by 5-30 per cent by utilising a WHR system. Another commercially viable way of POWER LINE
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July 2014
increasing efficiency is through the usage of dual fuel-based diesel engines that offer increased fuel efficiency with minimal changes in the engine design. Besides improving system efficiency, they facilitate reduction in emissions owing to the use of alternative fuels such as natural gas or liquefied natural gas instead of diesel for around 80 per cent of operations. Diesel is only used to ignite the premixed air and alternative fuel. A noteworthy development in this context is the use of producer gas, derived from biomass resources such as rice husk, as the alternative fuel. The producer gas replaces around 70 per cent of the diesel consumed, translating into considerable savings due to lesser raw material costs. Studies have shown that such a system can generate power at around half the cost entailed during diesel-based generation. This sort of a dual-fuel system is suitable for application in the agricultural sector as a substitute for generation through diesel engines, given the vast biomass resources generated during agricultural processes. The recent past has witnessed considerable development in silent DG set technology. Among other factors, this has been driven by the Ministry of Environment and Forests’ mandate allowing maximum permissible sound pressure level for new DG sets with a rated capacity of up to 1,000 kVA, manufactured on or after July 1, 2003 at not more than 75 decibels at 1 metre from the enclosure surface. The technologies utilised for reducing DG noise include acoustic barriers and insulation, exhaust silencers and cooling air attenuation techniques. ■
INFOCUS
DIESEL ENGINES & GENSETS
Environmental Concerns Stricter emission norms proposed for DG sets
T
he growth in the market for diesel generator (DG) sets is accompanied by increasing environmental toxicity, owing to the emissions produced by diesel fuel usage entails. Diesel exhaust contains more than 40 toxic air contaminants, including many cancer-causing substances such as benzene, arsenic and formaldehyde. Diesel particulate matter (PM) has been classified by several government agencies as either “human carcinogen” or “probable human carcinogen”. Thus, stringent diesel emission norms have assumed paramount importance. Currently, DG sets conform to emission standards stipulated by the Ministry of Environment and Forests (MoEF), which have not been revised since 2005. The Central Pollution Control Board (CPCB) is the nodal agency for the implementation of these rules. The CPCB-II norms, which have been formulated recently but have not been implemented yet, mandate a significant reduction in the engine exhaust emission requirements for diesel generators of up to 800 kW in India. These conditions will apply to all new engines for genset applications and products manufactured and assembled in or imported into India. As per an MoEF notification dated December 11, 2013, these emission limits were to be effective from April 1, 2014. This date was later extended to July 1, 2014; however, currently there is no update on its implementation status. Reducing emissions The proposed norms are a stringent revision of the existing norms, in line with the Euro Stage III A (EU III A) and United States Environment Protection Agency norms. In fact, the Indian norms are more stringent than the European Union (EU) norms in that they are applicable for all power generation systems up to 800 kW, unlike the EU norms, which are applicable to up to 560 kW for mobile
70
Existing and proposed emission norms for DG sets Category
Existing norms (gm per kWh)
Proposed norms (gm per kWh)
NOx+HC
CO
PM
NOx+HC
CO
PM
Up to 19 kW
10.5
3.5
0.3
7.5
3.5
0.3
19-75 kW
10.5
3.5
0.3
4.7
3.5
0.3
75-176 kW
10.5
3.5
0.3
4.0
3.5
0.2
176-800 kW
10.5
3.5
0.3
4.0
3.5
0.2
Source: CPCB
sets. Also, since these norms have come after a gap of eight years, they demand a quantum jump in emission reduction. Compared to the existing standards (CPCB-I), the permissible levels of nitrogen oxide (NOx) and PM have been reduced significantly in CPCB-II. As per the previous norms, the permissible emission limit for NOx and hydrocarbons was 10.5 gm per kWh, which has been revised down considerably, to a range of 4.0 to 7.5 gm per kWh. The limit of PM emissions, which was previously at 0.3 gm per kWh, has been scaled down to a range of 0.2 to 0.3 gm per kWh. However, the carbon monoxide (CO) emission limit has remained unchanged at 3.5 gm per kWh. No changes have been suggested in the norms for power gensets above 800 kVA either since they are already technologically compliant with the revised CPCB norms. Impact of the new norms With the tightening of the regulatory norms, new and advanced technological solutions will need to be adopted for combustion optimisation. This change in technology and material will impact genset prices, which are likely to go up by 15-20 per cent, since upgrading engines would entail some capital expenditure for setting up new or additional facilities and infrastructure. While the CPCB-II norms are similar to POWER LINE
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international standards in general, the difference lies in the fact that the EU III A is applicable for rental (mobile) gensets of up to 560 kW only, which typically contribute to 5 per cent of the EU market. However, CPCB-II is applicable to all gensets of up to 800 kW, increasing the challenge for the Indian genset industry. Industry experts feel that PM and NOx, the two most significant diesel engine exhaust constituents, are two ends of a see-saw. High temperatures and excess oxygen are conducive to the formation of NOx and lowering the in-cylinder temperatures and oxygen content reduces it. However, it also decreases the fuel conversion efficiency and increases soot (or PM) production. Placing limits on both these constituents at the same time is bound to challenge engine manufacturers to develop alternative solutions. Large-scale genset manufacturers like Cummins and Kirloskar have commenced production of a new series of generator sets and engines at their manufacturing plants. Given the criticality associated with the usage of diesel-backed power as a reliable power supply alternative, the demand for such gensets is only likely to pick up in the future, with the rapid urbanisation of the economy. Hence, these norms hold great value in terms of promoting a cleaner and safer environment. However, the exact benefits can be assessed only on their implementation. ■
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INFOCUS
DIESEL ENGINES & GENSETS
Road to Growth Rental energy plants help bridge the demand-supply gap Robert Bagatsing, Marketing Manager, Altaaqa Global; and Arvind Murali, India Sub-Continent Territory Manager, Altaaqa Global
E
conomic excitement is back in many countries in the world. Construction activities have picked up, investment is flowing and manufacturing has once again gained momentum. India’s economy, for instance, is expected to reflect a buoyant growth rate of around 5.3 per cent in 2014 and 5.8 per cent in 2015, riding high on intense government and private sector funding and on an aggressive push to build new and improve on existing public and industrial facilities. India’s newfound economic vitality has attracted entities and professionals from all over the world to set up shop and work in the country, respectively. From information technology to industrial manufacturing to consumer goods, the best global brands are flocking to India as a safe bet for investment. While the foregoing bodes well for the future of the country and its people, the frenetic pace of economic and social
72
activities in India is taking a toll on the country’s power supply. A study conducted by the Central Electricity Authority reported that the energy deficit would be felt across the country and that the surplus power capacity of the northern regions would gradually recede. This situation has actually been looming for some time now. Recorded data in recent years showed that demand for energy in India had consistently outstripped supply, both in terms of baseload energy and peak availability. India, the data suggested, registered an 8.5 per cent deficit in baseload requirement and a 9.8 per cent shortfall in peak load requirement. The government, in recognition of the above, had initiated rural and urban electrification projects that comprised power plants that run on traditional and alternative energy sources. The discrepancy between the rates of addition of electric power supply and the growth in
POWER LINE
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July 2014
demand is, however, too wide for the available energy to fulfil the requirement. This gap is observed to be growing continuously, whether in generation, transmission or distribution. The repercussions of the power shortage are clearly visible. In 2012, a massive blackout left 700 million people in India without electricity. In what is touted to be one of the worst blackouts in its history, 20 of India’s 28 states suffered the effects of the power interruption that almost incited social unrest amongst citizens. With the feverish growth rate of economic and social activities in India, the country’s demand for electricity should not show any signs of slowing down. How can energy be sustained? Permanent power plant projects cannot be completed in days or months. The facilities may take decades to complete, as planning, designing, approving, constructing and commissioning involve
DIESEL ENGINES & GENSETS
time, effort and processes that go through different channels. What, then, can be done? Is there anything that can possibly support the permanent infrastructure while new additions are being built? Temporary power generation companies have technologies that have the capacity to support the existing power generation infrastructure, bridging the gap between electricity demand and supply where and when the necessity arises. In times when the power demand heavily outstrips the supply, rental power generators, running on diesel for example, can prove to be a viable and affordable source of energy to avoid disastrous power interruptions, unscheduled load shedding and widespread blackouts. Though some parts of the country may have occasional surplus power capacity, its availability may be periodic and can be severely affected by a disrupted seasonal pattern. For instance, some parts of the country where hydroelectric power stations operate may experience drought or prolonged absence of rain, which, in turn, can drastically reduce the power generation capacity of the said plants. Solar or photovoltaic farms thrive during summer months but may experience a shortage in production on cloudy or rainy days. In these situations, rental power plants can support the power generation capacity of the current facilities to bridge the gap during the crucial months of seasonal change. With its booming industrial manufacturing sector, production facilities in India often need to double, even triple, their capacities to meet the international production requirement in certain months, say during Christmas or Diwali. The consequent spike in power consumption may usher in operational challenges. It is highly probable that during the peak months, utility companies will set caps for electricity consumption or will ask production facilities to pay an additional consumption premium during peak hours. In this case, based on the costbenefit studies conducted amongst industries within the arc of peak months,
it will be more economically viable for manufacturing facilities to hire temporary power plants than to pay an additional fee for every peak kilowatt used, or shut down parts of the production complex when power usage is at its peak or pay a hefty fine for using more power than what has been allocated. Peaker power plants are an ideal solution offered by energy rental companies to curb seasonal electricity demand during peak production months. Power partner checklist To capitalise on the advantages of temporary power technologies, the government and the utility companies in India need to be discerning in hiring an interim energy service provider. While selecting a temporary electricity partner, one should look at the provider’s experience, organisation, support system, rate of deployment and equipment reliability and sustainability before signing any agreement. One of the most important things to consider when entering into an agreement with a rental energy provider is its track record in delivering executable, measurable and sustainable solutions to a wide array of projects. If the mobile generator company cannot supply the required power, it may cause more delays in the project, eventually leading to legal disputes and further economic damage. The government and the utility companies should avoid dealing with backyard rental companies that promise but eventually do not deliver. One should ask, “Can we really trust mom-and-pop rental power companies when we are supplying power to airports, hospitals, mining facilities, telecommunication entities and petrochemical companies?” Though temporary power plants are engineered to endure the harshest conditions, they are by no means indestructible. The government and the utility companies in India must keep in mind that the service of a rental energy company should not end when the electric power generators are switched on. The company should have access to the spare parts and human resources to POWER LINE
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INFOCUS
carry out after-sales support for the installed and commissioned projects at any given location, at any given time. One should ask, “Do we stop a 100 MW power plant simply because there are no spare parts available?” The interim energy partner should have the capability to react, deploy, mobilise and commission the temporary power plants at a moment’s notice. This means that the provider should have the available equipment and manpower on the ground to carry out rapid delivery. If the power rental company has the available equipment to deploy and a team of professional logistics personnel that can deal with the complexities of ports, customs and transportation, it can immediately resolve the power crisis. Providing solutions for the power requirement of different entities does not follow any template nor is it governed by a rule of thumb. Each case should be carefully studied and evaluated in order for the rental power companies to suggest an optimal solution. The only way that an interim energy company can afford to meet the exact requirement of any client is for it to have adequate and state-of-the-art technologies available in its product line. There is now a solution The power supply scenario in India does not have to be a Catch-22 situation. The country cannot possibly turn its back on investors and professionals just because they consume a significant amount of electricity and thus put more pressure on the country’s power facilities. On the other hand, the country’s economy cannot continue growing at the expense of its limited power supply. In times of tough choices such as this, rental power plants can make a difference. With interim generators supporting the existing power infrastructure, India can take the road to economic growth without sacrificing its energy supply. While permanent power facilities are under way, rental energy plants can bridge the electricity gap, allowing India to power its way to a brighter future. ■ 73
INFOCUS
DIESEL ENGINES & GENSETS
Key Statistics Company-wise DG set-based generation Company
Total generation (kWh)
Cost of generation (Rs/kWh)
Aarti Industries Limited
2,352,646
14.61
Aditya Birla Nuvo Limited
8,170,000
Alicon Castalloy Limited Ambuja Cements Limited
Total generation (kWh)
Cost of generation (Rs/kWh)
Granules India Limited
7,348,833
14.63
14.98
Hetero Drugs Limited
2,619,000
11.82
2,986,092
11.76
Highway Industries Limited
2,269,000
12.84
12,800,000
12.04
Hind Industries Limited
2,272,942
14.44
Amtek India Limited
4,573,000
12.71
Hitech Plast Limited
2,145,000
13.30
Arch Pharmalabs Limited
5,798,915
12.83
IAL Construction & Agri Equipments
87,181,000
11.97
19,800,000
12.52
Private Limited
4,948,000
15.65
Indian Rare Earths Limited
3,523,000
11.38
Ardent Steel Limited Asahi Industries Limited Asian Paints Limited
12,393,870
17.15
Ipca Laboratories Limited
2,372,812
16.35
Astrix Laboratories Limited
2,344,600
13.57
Jaiprakash Associates Limited
7,838,045
19.07
Avanti Feeds Limited
2,680,732
16.96
Jaybharat Textiles & Real Estate Limited
18,429,000
14.64
Bajaj Motors Limited
10,279,016
11.36
Jindal Industries Limited
2,748,240
11.48
Balkrishna Industries Limited
22,161,287
13.47
Jubilant Life Sciences Limited
4,810,654
12.84
2,358,309
12.67
KG Denim Limited
3,171,000
15.16
Bhushan Power & Steel Limited
16,190,000
11.44
Kandagiri Spinning Mills Limited
8,548,000
13.01
Biocon Limited
15,621,000
16.38
Kansai Nerolac Paints Limited
8,143,000
15.51
Bright Autoplast Limited
11,281,000
12.17
K-Lifestyle & Industries Limited
26,831,000
14.64
Britannia Industries Limited
2,310,000
13.63
KPR Mill Limited
4,800,000
13.68
Capsugel Healthcare Limited
6,587,626
11.86
Krishna Maruti Limited
2,261,702
11.68
Cavinkare Private Limited
2,407,689
12.36
Lakshmi Precision Screws Limited
3,432,540
12.50
Chettinad Cement Corporation Limited
2,431,000
15.80
Lakshmiji Sugar Mills Company Limited
7,186,515
11.67
Dabur India Limited
2,168,729
17.06
Lambodhara Textiles Limited
4,372,852
11.35
DCW Limited
8,819,000
13.99
Loyal Textile Mills Limited
3,706,885
14.86
DLF Utilities Limited
15,969,834
11.01
LT Foods Limited
2,706,138
13.05
Dr Reddy’s Laboratories Limited
11,536,089
17.83
Lupin Limited
6,261,000
16.20
2,185,754
16.00
MM Forgings Limited
3,128,186
15.61
Eskay K’N’It (India) Limited
26,599,000
14.64
Madras Fertilizers Limited
3,160,700
14.74
Everest Industries Limited
3,391,000
17.25
Manali Petrochemicals Limited
2,587,382
13.52
Fertilisers and Chemicals
37,565,000
15.60
Mangalore Chemicals &
256,245,000
13.80
Bhilai Engineering Corporation Limited
EID-Parry (India) Limited
Travancore Limited Fertilizer Corporation of India Limited GlaxoSmithKline Consumer
Fertilizers Limited 50,042,888
11.03
Marico Limited
2,043,757
16.94
5,061,000
15.58
Maris Spinners Limited
3,067,778
14.06
Merchem Limited
4,290,080
13.48
11,820,000
13.50
Healthcare Limited Goodricke Group Limited
74
Company
2,270,525
18.75
POWER LINE
Mondelez India Foods Limited
●
July 2014
Solar Power in India 2014 India Infrastructure Research (a sister division of Power Line and Renewable Watch magazines) has recently released the fifth edition of “Solar Power in India” report, the most comprehensive and up-to-date study of the solar power sector in India. The “Solar Power in India 2014” package has two elements: - Annual Research Report - Quarterly Updates (July 2014, October 2014, January 2015) The report has 3 distinct sections: Section A: Overall Sector Scenario z z z z z
Executive Summary Size and Growth Key Recent Developments JNNSM Update State Programmes and Initiatives
z z z z z
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Section B: Segment Analysis z z
Market for Utility-scale Projects Market for Rooftop Projects
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Manufacturers’ Profiles
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Developers’ Profiles
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Update on JNNSM Summary of Key New Developments Analysis of Key Trends Status of Key Upcoming Projects
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INFOCUS
DIESEL ENGINES & GENSETS
Company
Total generation (kWh)
Monnet Ispat & Energy Limited
14,095,001
15.62
2,535,800
11.67
Mother Dairy Fruits & Vegetables
Cost of generation (Rs/kWh)
Private Limited MRF Limited
Total generation (kWh)
Cost of generation (Rs/kWh)
SEL Manufacturing Company Limited
3,053,000
11.65
Shasun Pharmaceuticals Limited
4,022,000
16.27
Shree Digvijay Cement Company Limited 27,700,000
11.04
12,929,677
17.99
Shri Govindaraja Mills Limited
9,381,712
11.12
Natco Pharma Limited
5,518,343
15.42
Simpson & Company Limited
2,296,209
16.46
Nikita Papers Private Limited
4,579,800
11.06
Somic ZF Components Limited
2,388,935
15.33
Orchid Chemicals &
3,486,523
11.56
Sona Okegawa Precision Forgings Limited 5,284,279
12.32
Sri Arumuga Cottspin Private Limited
2,132,781
12.11
4,065,550
11.94
Pharmaceuticals Limited Panacea Biotec Limited
4,438,000
12.40
Sri Karthikeya Spinning &
Pennar Industries Limited
2,540,826
14.40
Weaving Mills Private Limited
30,144,188
12.75
Sri Nachammai Cotton Mills Limited
7,385,714
13.56
9,464,449
13.00
Steel Strips Wheels Limited
5,259,000
12.99
16,958,000
13.48
Super Sales India Limited
8,913,480
13.26
3,979,387
13.79
Super Spinning Mills Limited
Pepsico India Holdings Private Limited Pochiraju Industries Limited Precot Meridian Limited Procter & Gamble Hygiene & Health Care Limited
10,860,000
13.20
Tanfac Industries Limited
3,291,155
13.98
PSL Limited
9,809,080
16.22
Tata Global Beverages Limited
2,483,000
14.88
Ramco Cements Limited
5,046,000
14.83
Tiruppur Textiles Private Limited
2,436,000
12.58
Ranbaxy Laboratories Limited
7,177,351
16.50
Torrent Pharmaceuticals Limited
3,121,000
16.76
Reckitt Benckiser (India) Limited
2,630,000
13.30
Triveni Engineering & Industries Limited
3,901,000
17.80
11,282,000
12.49
TVS Srichakra Limited
5,287,984
18.26
Roca Bathroom Products Private Limited
3,219,958
11.32
Unichem Laboratories Limited
2,933,000
14.90
Ruchi Infrastructure Limited
2,838,645
13.66
Universal Chemicals &
204,363,000
12.42
Ruchi Soya Industries Limited
6,465,683
15.62
Industries Private Limited
STL Global Limited
2,079,583
13.08
Vidyut Metallics Private Limited
5,925,283
13.10
Salona Cotspin Limited
3,351,856
12.01
Vivimed Labs Limited
3,000,000
13.82
11,587,000
13.96
Winsome International Limited
2,152,800
16.63
Sandhya Spinning Mill Limited
2,257,000
13.65
Wipro Limited
3,730,162
14.01
Sanghi Industries Limited
7,896,000
15.29
Source: Prowess database
Reliance Industries Limited
Sambandam Spinning Mills Limited
76
Company
POWER LINE
â—?
July 2014
Transmission in India 2014 and Distribution in India 2014 India Infrastructure Research (a sister division of PowerLine magazine) has just released the sixth edition of “Transmission in India 2014” and “Distribution in India 2014” reports. The 444-page Transmission in India report has three sections. Section A provides a macro analysis of the transmission sector in India with chapters such as: z
Executive Summary
z
High Capacity Power Transmission Corridors
z
Network Size and Growth
z
Integration of Renewable Energy
z
Recent Developments
z
Capital Expenditure
z
National Grid
z
Equipment Requirements and Projections
z
Interstate Comparison
z
Key Contracts and Orders
z
Private Sector Participation
z
Technology Trends
z
Regulatory Framework
z
Future Outlook
z
Transmission Tariffs
Section B provides a detailed analysis of transmission companies through company profiles (3 central transmission companies, 23 state transmission companies and 12+ private/Joint Venture transmission companies). Each profile includes key facts about the company, transmission network details (capacity, line length, substations and capacitors), transmission losses, expenditure, planned projects, key contact, etc. Section C provides analysis of transmission projects in the pipeline by scope, capacity, cost, location, current status and expected completion date. The 548-page of the Distribution in India report has two sections. Section A provides an overall analysis and overview of the power distribution sector in India with chapters such as: z
Executive Summary
z
Discoms’ Capex
z
Sector Size and Growth
z
Equipment Requirements
z
Recent Developments
z
Update on R-APDRP
z
Inter-Discom Comparison
z
Distribution Franchise Model
z
Discom Finances and FRP
z
Technology Trends
z
Tariff Trends
z
Smart Grids
z
Power Purchase Costs and Competitive Bidding
z
Future Outlook
le
ilab
va wa
no
Section B provides a detailed analysis of power distribution segment with profiles of over 50 distribution companies by state. Each profile includes operational area, current infrastructure, operating and financial performance, trend in AT&C losses, and future plans including projects and capex, etc. Each report is priced at Rs 54,000 (plus 12.36 per cent service tax) for a Site Licence and Rs 81,000 (plus 12.36 per cent service tax) for an Enterprise Licence. There is a 10 per cent discount on purchase of both reports. The two reports together cost Rs 97,200 (plus 12.36 per cent service tax) for a Site Licence and Rs 145,800 (plus 12.36 per cent service tax) for an Enterprise Licence.
To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to:
Contact details: Meha Anand Asst. Manager, Information Products India Infrastructure Publishing Pvt. Ltd. B-17, Qutab Institutional Area, New Delhi - 110 016, India Tel: +91 11 41688614, 41034600, 41034601; Fax: +91 11 2653 1196 Mobile: +91 9953572299 meha.anand@indiainfrastructure.com
INDUSTRIAL POWER
SUGAR
Power Savings Sugar manufacturers adopt energy conservation measures
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ith an annual production capacity of over 25 million tonnes, the Indian sugar industry ranks second in the world after Brazil. It produces nearly 15 per cent of the world’s sugar. Despite a long history of sugar production, the use of by-products obtained from the sugar manufacturing process for power and steam generation is a relatively recent phenomenon. Cogeneration holds significant potential in the present power-deficit scenario. Apart from catering to the needs of the manufacturing plant, the surplus power can be sold to discoms or third parties in order to create additional revenue streams. Also, the sugar industry has been facing challenges like declining availability and rising costs of sugarcane, increasing energy costs and stringent emission norms. All these issues necessitate cost optimisation, which can be achieved through simple energy conservation measures. Power Line takes a look at some of the initiatives undertaken by leading sugar manufacturers… Kothari Sugars and Chemicals Limited, Lalgudi, Trichy district, Tamil Nadu Kothari Sugars and Chemicals Limited, a flagship company of the HC Kothari
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Group, is a pioneer in the manufacturing of white crystal sugar in India. The company is also engaged in the cogeneration of power and production of ethanol, industrial alcohol and organic manure. Its first sugar manufacturing unit was established in 1961 at Kattur, near Lalgudi in Trichy district of Tamil Nadu. The other unit, the Sathamangalam unit in Ariyalur district of Tamil Nadu, was commissioned in 2007. The Lalgudi unit, which is among the earliest sugar facilities set up in Tamil Nadu, has been at the forefront in terms of energy conservation. It undertakes comprehensive energy audits every year and subsequently implements all viable recommendations. In addition, the unit has a comprehensive wastewater treatment and recycling system, thereby achieving zero liquid discharge. In an industry where energy consumption plays a vital role for the sustainability of production, the unit managed to reduce its specific thermal energy consumption from 3.69 kCal per tonne in 2011-12 to 2.83 kCal per tonne in 201213. Further, its specific electrical energy consumption reduced from 501.34 kWh per tonne in 2011-12 to 464.11 kWh per tonne in 2012-13.
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Various energy conservation initiatives were implemented by the company at its Lalgudi unit during 2012-13. The unit installed variable frequency drives (VFDs) with a low tension motor for all its three pumps to regulate the speed according to the required flow rate. The unit also replaced one of the direct current (DC) motors with a 200 kW alternating current motor with VFDs for the massecuite centrifugal machine. As a result, the machine’s specific power consumption came down from 1.24 kWh per tonne to 0.72 kWh per tonne of massecuite, besides achieving savings in the maintenance cost of DC motors. Since the 37 kW condensate extraction pump (CEP) was designed for maximum condensate (in fully condensing mode), the unit installed one 15 kW CEP to be operated during the cane-crushing season when the condensate volume is only about 25 per cent. Consequently, 45,216 kWh of electricity was saved during 2012-13. The unit also replaced the worm reduction gear system with a planetary gear and installed an input motor of lower rating, which saved 17,419 kWh of energy. In addition, the unit undertook several
SUGAR
measures for reducing thermal energy consumption in its various processes. For instance, the installation of a parallel set of evaporators helped mitigate the problem of frequent scale deposits, which affected heat transfer. This resulted in a reduction in average steam consumption, leading to higher power generation. The unit also installed a condensate flash recovery system, which helped in input steam savings. Other measures include the use of evaporator vapour for pan washing instead of low pressure steam, the installation of an E-Melt system (where electricity is used to generate steam and this steam is used for melting the sulphur) for the sulphur burner and the installation of a plate heat exchanger for the centrifugal superheated wash water system. While all these measures entailed an investment of Rs 62.5 million, they have led to monetary savings worth about Rs 37 million in the first year, through a reduction in electrical and thermal energy consumption. Bannari Amman Sugars Limited, Thandrampattu Unit, Tiruvannamalai district, Tamil Nadu The Bannari Amman Group is one of the largest industrial conglomerates in south India, which is engaged in a wide spectrum of activities including manufacturing, trading, distribution and financing. Currently, the group has five integrated sugar complexes, three of which are located in Tamil Nadu and the remaining two in Karnataka. The unit at Thandrampattu in Tiruvannamalai district of Tamil Nadu comprises a 5,000 tonnes of cane per day (tcd) sugar plant based on the phosphatation process and a 28.8 MW cogeneration plant. It also has a 500 tonne per day refined sugar production facility. The Thandrampattu unit has taken various energy conservation measures, which reduced the specific electrical and thermal energy consumption by 30.04 per cent and 25.19 per cent respectively in 2012-13 as compared to the previous year. In particular, specific
electrical energy consumption reduced from 30.13 units per tonne of cane in 2011-12 to 21.45 units per tonne of cane in 2012-13. The power thus saved was supplied to the grid, hence providing additional revenue. The major initiatives taken to reduce electrical energy consumption included the installation of VFDs at the mill house and the boiling house vapour absorbing machine and various pumps and motors. Further, a 62.5 kVA diesel generator set was modified to run on biogas fuel and was installed at the effluent treatment plant to generate power. The unit also replaced motors operating at below capacity level. It managed to save a significant amount of thermal energy by the recovery of flash steam from the short retention time (SRT) clarifier and modification of the SRT outlet line to avoid vapour leakage. The unit undertook an investment of Rs 3.62 million for energy conservation initiatives in 2012-13 and reported cost savings of nearly Rs 10.36 million in the first year itself. EID Parry (India) Limited, Pugalur Sugar Factory, Karur district, Tamil Nadu EID Parry (India) Limited is a member of the Murugappa Group, headquartered in Chennai. The group has business interests in diversified areas like engineering, abrasives, finance, general insurance, cycles, sugar, fertilisers, plantations, bio-products and nutraceuticals among others. EID Parry has five sugar factories with a combined capacity of 19,500 tcd at Nellikuppam, Pugalur, Pettavaithalai, Pudukkottai and Puducherry. All the units, except the Puducherry unit, have cogeneration facilities. The company is currently generating 64.5 MW of power at its Nellikuppam, Pugalur and Pudukkottai units, and is in the process of establishing a 20 MW cogeneration plant at Pettavaithalai. The company’s Pugalur unit was set up in 1939 and has a crushing capacity of POWER LINE
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INDUSTRIAL POWER
5,000 tcd. The facility also houses a 22.6 MW cogeneration plant that uses bagasse, a by-product of sugarcane crushing which is used as boiler fuel. Also, the exhaust obtained from the power turbines is used in the manufacturing process. Owing to the implementation of various energy conservation measures, the unit’s specific thermal consumption reduced from 3.17 million kCal per tonne of sugar in 2011-12 to 3.01 million kCal per tonne of sugar in 2012-13. Specific electrical consumption also reduced from 287 kWh per tonne of sugar in 2011-12 to 263 kWh per tonne of sugar in 2012-13. The Pugalur unit has installed VFDs for the auxiliary cooling water pump. Other measures include the usage of VFDs for the cogen instrument air compressor, brix-based evaporator automation, continuous pan and batch pan automation, and use of e-boilers for melting sulphur to eliminate excessive steam consumption. The unit also undertook the replacement of batch weighing scales with flow meters, inefficient worm gears with planetary gearboxes, and metal halide lighting with fourth-generation lighting solutions such as induction lamps. The unit installed auto star delta starters for motors, mechanical seals for pumps, effective cooling and condensing systems, regenerative-type DC drives with interlocking for batch centrifugal machines, and vapour generative transient heaters. Conclusion In an intensely competitive environment, energy conservation initiatives that translate into financial savings and better operational efficiency give sugar manufacturers an edge over their competitors. Energy conservation can be attained through simple measures such as installation of VFDs, replacement of conventional systems with more efficient ones, and design modifications in certain equipment. Going forward, these steps can provide significant benefits to sugar manufacturing facilities. ■ 79
IT IN POWER
Payment Security Utilities focus on prepaid metering for better billing and collection
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here is a growing focus on prepaid metering to improve revenue collection and billing efficiency. The recently unbundled utility of Manipur has taken up large-scale prepaid metering to reduce the state’s network losses of over 40 per cent. In Odisha, the state government directed utilities to install prepaid meters in government buildings, for temporary connections and for periodically defaulting consumers. High network losses also led to the Bihar Electricity Regulatory Commission (BERC) stipulating prepaid metering. Experience shows that utilities stand to gain from lower costs of billing and collection activities, and an overall improvement in revenue management. Features and benefits Prepaid metering is a metering and billing mechanism wherein the consumer pays in advance for the contracted power supply. For the most part, these metering systems are standardised in functionality. The meters have the facility to connect or disconnect supply based on the credit amount available. The meter trips if the connected load exceeds the sanctioned level. Consumers get recharge coupons from utilities for renewing their credit balance, and can monitor usage through an in-house display unit. Prepaid meters also have significant storage facilities. These meters can incorporate 64 different tariff structures, and any one of them can be activated by the utility, depending on the consumer category. They can record operational parameters such as phase currents, voltages, power factor, consumption in kWh and kVAh, and instantaneous load. Manufacturers also offer an MRI port in prepaid meters for data download.
electronic meters, prepaid meters offer key benefits. For the utility, they reduce the costs associated with meter reading, data collation and processing, as well as bill printing, distribution and collection. Further, they reduce the working capital requirements as payments are received in advance. In contrast, the usual billing cycle involves a credit period of over 40 days. The benefit of lower operational costs of prepaid meters is shared with consumers, in the form of a 3-5 per cent rebate. For consumers, the option of prepayment offers flexibility. Consumers can choose the frequency and amount of recharge on the prepaid meter. The prepaid option also enables them to moni-
Prepaid metering can be instrumental in the proposed smart grid power distribution framework. Such meters can be configured to operate as a two-way communication link between the distribution utilities and consumers, and enable features like time-of-use billing, real-time pricing and peak pricing. Implementation So far, prepaid meters have been deployed for select segments such as temporary connections, government buildings and rented premises to improve
Prepaid meters installed by major distribution utilities Distribution utility
No. of prepaid meters
CESC Limited
19,651
Maharashtra State Electricity Distribution Company Limited
12,437
West Bengal State Electricity Distribution Company Limited
10,131
BSES Rajdhani Power Limited
5,928
Tata Power Delhi Distribution Limited
4,259
Assam Power Distribution Company Limited
3,578
BSES Yamuna Power Limited
3,022
Madhya Gujarat Vij Company Limited
1,352
Uttar Gujarat Vij Company Limited
250
Himachal Pradesh State Electricity Board
250
Brihanmumbai Electric Supply and Transport
190
DPSC Limited
185
Noida Power Company Limited
112
Sources: Power distribution utilities
Even with higher costs than standard 80
tor and control their consumption, therefore acting as a demand-side management mechanism. In effect, the consumer’s relation with the distribution utility changes. The onus is on the consumer for the power consumed and timely recharge of coupons for continued supply. Consumers also tend to conserve energy in such cases. In Manipur, for instance, ongoing prepaid metering has reportedly reduced consumer load by 40-50 per cent.
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collection efficiency. However, distribution utilities are increasingly considering a broad-based deployment of prepaid meters, covering domestic and commercial consumers in the low tension network. This is because of the focus on network loss reduction and cost minimisation. Utilities such as the Manipur Power Development Corporation are deploying over 60,000 prepaid meters under the Restructured Accelerated Power Development and Reforms Programme (R-APDRP). Importantly, directives from the state government and regulatory authorities have played a key role. In Gujarat and Delhi, for instance, the governments had issued directives for prepaid metering. In West Bengal, the first state to have implemented prepaid meters, the directive came from the regulator. Recently BERC directed the state distribution utility to deploy prepaid meters for government and residential connections. A few other utilities implemented it of their own accord. Tata Power Delhi Distribution Limited undertook prepaid metering much before the government issued a directive. Maharashtra initiated it as a pilot scheme. The implementation experience reveals some of the common issues faced by utilities. The utilities point to the difficulties in raising a supplementary bill for recovering fuel surcharges or other subsequent tariff adjustments. This is often perceived by consumers as double-charging, while for the utilities the constraint is that once the prepaid metering card is logged in, no adjustment can be made till the amount on the card is exhausted. This is not a problem in states where fuel supply adjustment has not been implemented. However, with an increasing number of state electricity regulatory commissions (SERCs) allowing fuel adjustment in tariffs, this issue needs to be addressed. Complex tariff structures have also been cited as a factor hindering the implementation of prepaid metering. In West Bengal, the utility expressed its inability
Prepaid metering plans of select utilities State/Utility
No. of planned installations
Nagaland
715
Details Planned for Dimapur under Phase I; another 200 proposed under Phase II
Manipur
60,336
Meters to be installed in 13 towns under the R-APDRP by end-2014
North Bihar Power Distribution
5,000
Corporation Limited
Proposed in tariff petition for installation on government premises
North Eastern Electricity Supply Company
5,765
of Odisha
Proposed in tariff petition for 2014-15; implementation under government directive
Western Electricity Supply Company of Odisha 5,025 Southern Electricity Supply Company of Odisha 7,055 Sources: Tariff orders/petitions; News reports
to incorporate the tariff structure involving fuel costs, electricity duty, cess, etc., in addition to fixed and energy charges. This led the SERC to simplify the tariff structure and notify flat rates for the categories billed on prepaid meters. As such, the recovery of taxes and duties becomes difficult for the utility, especially when the charges are imposed with retrospective effect. It is all the more onerous as duties and taxes are based on recorded energy consumption, which in the case of prepaid meters is not known in advance. Prepaid metering has also been fraught with legal uncertainty. There are legislative provisions that specify norms for disconnecting power supply in the event of a payment default. Under the Electricity Act, 2003, prior notice needs to be given in case of a payment default. In a payment dispute, the act stipulates that the utilities should avoid disconnecting the line if a consumer deposits the claimed sum or a sum equivalent to the average of the past six months. But with prepaid metering, disconnection is automatically done after a consumer’s credit account is exhausted. This appears as a violation of the stipulations of the Electricity Act, 2003. To address this problem, the Forum of Regulators sought legal advice. It was held that the deployment of prepaid POWER LINE
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meters is not violative of the Electricity Act, 2003 and that the SERCs can authorise prepaid metering in any consumer category. Nevertheless, there is a need to make appropriate amendments to the act, so as to make an exception for prepaid metering systems. The way ahead The challenges notwithstanding, the demand for prepaid metering is on the rise. While some utilities are initiating this as part of their business strategy, others are being driven by policy stipulations. The government-sponsored debt restructuring plan for distribution utilities makes prepaid metering a precondition for the utilities. Similarly, the SERCs are stipulating the deployment of such systems in their tariff orders as part of the mandate for loss reduction by the utilities. Though it was introduced for select consumer segments, prepaid metering could set the stage for smart metering at a later stage. Consumers tend to conserve energy in a prepayment set-up, mainly due to the visibility of their consumption. This facility could be extended further with the two-way communication mechanism of smart metering. Some key functionalities like timeof-day tariffs are present in the existing prepaid meters and can be leveraged for the planned smart grid framework. â– 81
PEOPLE
Enabling Solar
larger, utility-scale plants, residential systems, etc. “I had to drive a lot of innovation. It wasn’t easy but it was satisfying,” he says. Goel found the new experience of running a company to be a smooth ride. As he explains: “At McKinsey, we don’t just offer advice but make sure it is implemented. I worked with clients who were very execution oriented, so my experience with them helped immensely as I knew the right things to do.” His five years at McKinsey involved looking at a company holistically – finance, operations, strategy, engineering, learning and applying best practices. All this came in handy, along with the habit of questioning conventional wisdom to arrive at a solution.
Ajay Goel, CEO, Tata Power Solar, envisions broadening the reach of solar to rapidly cover all of India – rural and urban, homes and businesses – to achieve its full potential as a power of change…
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anagement consultant McKinsey & Company often encourages its associates to leave the rarefied confines of their conference rooms and get down and dirty in the actual world of business. Many do not take the plunge. Ajay Goel is one of the few who decided to take the leap and move to the world of clean energy, one of the most challenging spaces.
business, owing to the 2008 slowdown, was passing through a slow phase. This, coupled with the fact that climate change was the topic du jour and a lot of solar businesses were taking off, made the decision to move somewhat easier than it might otherwise have been. As it turned out, Goel was not to be disappointed by the switch from consulting to managing.
The thought of making the transition originated whilst working with solar power companies alongside his other hitech clients at the McKinsey office in Silicon Valley in 2007. The choice was easy because of solar power’s potential, as he puts it, “to change the energy future of the world”.
The company Goel joined was Brightsource Energy, the world’s leading solar thermal company. His last post, before coming to India two years ago to head Tata Power Solar, was with MEMC/ SunEdison as vice-president. In this role, he helped expand the company’s solar business globally tenfold in less than three years by increasing its presence in South America, Europe and India, and offering not just rooftop solar but also
His move was also favoured by the macro environment. The consulting 82
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On joining Tata Power Solar two years ago, he and his family had to decide not just about the job but also about moving back to India. His entire professional life had been spent in America. His wife of 21 years, Lalima, had to give up her job and their son Advik, at age 13, had to adjust to a new city and school. “We all had our doubts but, after a few challenges in the initial months, we settled down. It wasn’t an easy decision but once the family realised my commitment to the industry and how solar could impact lives in India, they fell in step with me. They wanted to support me and I’m grateful that my wife enabled this move and travelled halfway round the world to make it work,” he says. The challenge of working in India turned out to be a relatively smooth journey. Says Goel, “The Tata Group abides by the same set of core values as McKinsey, and honestly, it felt like coming home. Given that the Tata Group is a global conglomerate, with more than half its revenues coming from outside India and a very global workforce, the adjustment of moving from the US to India was minimal.” In fact, Goel’s first job after graduating in
PEOPLE
electrical engineering from IIT Delhi was with Tata Consultancy Services where he worked for two years before leaving for the US in 1993. (Later, he did his MBA at the University of Chicago.) “We are a company in transition,” says Goel. “The past few years have been difficult, for everyone in the industry. We have to make the business work, not just by focusing on short-term profitability but by looking at long-term growth. The biggest thing we have managed to achieve over the past two years is stem the tide in our top line. The year I joined Tata Power Solar was one of our worst years in recent history in terms of revenue, partly because our manufacturing business was affected by competing cheap Chinese imports and partly due to the exit of our main customer, BP Solar.” Losing a big customer in a highly competitive market was a big knock. If Goel was able to stop the revenue free fall, it was not so much through manufacturing but through upstream projects and off-grid products. “For us, the experience was a good morale booster, showing us that when we focus and work hard, we can make money in this business,” he says. Apart from staunching the losses, Goel drove the team to innovate on designs and engineering to bring project costs down below $1 per watt in large EPC projects; and in off-grid products, he has had the team work on innovative lowcost solutions that can be delivered subsidy-free to bring heat, light and power to the remotest areas of the world. Goel feels exhilarated when he thinks of solar energy’s power to be a “disruptive innovation” in the way the world produces energy, and how people can produce and consume electricity. The industry has lived up to its early expectations, he feels, as witnessed in the fact that electricity demand in some parts of the US and Europe is actually shrinking. Germany, not a sunny country, gets a third of its generation from solar, thanks to rooftop solar plants. What excites him
is the idea of extrapolating this kind of experience to India’s power-deficit economy and then watching the extraordinary benefits roll in. Among the things that India needs in order to exploit its solar potential is the same clarity of direction in execution that Germany possesses. “In the Jawaharlal Nehru National Solar Mission, which was launched in 2010, we have an admirable vision, but have had no consistent direction. Investors want to see a consistent policy so that they can make a strong business case,” he says. In policy, Goel believes that three big changes will help make solar viable. One is the need for more competitive financing, given that the initial costs for a plant are significantly higher than those for a conventional power plant. Banks should make solar a priority lending area, as it is actually a long-term hedge against coal and fossil fuels. “In the US, even though the cost of construction is higher than that in India, the cost of financing is lower, resulting in a lower cost per unit, which is a big driver for consumption,” he says. Second, the government needs to increase its support to the domestic manufacturing industry, to ensure India’s long-term energy security, given its heavy dependence on coal and oil imports. Goel says a clear policy is necessary to make India a global solar manufacturing hub. Third, he says, there needs to be consistent and streamlined funding of
“In the Jawaharlal Nehru National Solar Mission, we have an admirable vision, but have had no consistent direction. Investors want to see a consistent policy so that they can make a strong business case.” POWER LINE
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the programmes that have already been announced. Goel says that a number of programmes for solar water heaters, rooftop generation, etc. have been announced as well as deployed, with subsidies approved but not paid up. This tends to create an environment of uncertainty. At Tata Power Solar, the core mission of “Enabling Solar Everywhere” focuses on three areas: cost leadership in manufacturing, rapid growth in solar projects and a slate of affordable new products for the off-grid market. He is optimistic about India’s future. The recent election verdict of replacing the old guard in favour of a new team is, he says, a sign of a “maturing democracy” and a rejection of a whole set of ineffectual policies. Like many industrialists, Goel is hoping that the new government can restore the country’s interrupted growth trajectory to bring the prosperity that everyone desires. Tata Power Solar may be a 25-year-old company, but Goel likes to tell his team that it’s a “25-year-old start-up”. He says, “We feel young and now we’re starting from scratch, unlearning the bad habits of the past and learning new ones that will make us agile and nimble to meet the needs of the market. That is my primary focus and is going to keep my hands full for the next few years.” His motivation level is kept high, seeing the impact of solar on people’s lives, whether it is giving power to remote monasteries in Ladakh, solar irrigation pumps to farmers in Rajasthan or solar street lights for low-income housing communities in Tamil Nadu. The company has produced a coffeetable book to showcase its work over the past 25 years, illustrating 300 ways in which its solar power projects and products have brought cheer to households across the country. “We have a vision to enable solar everywhere, and the smiles on the faces of those we have impacted are my driving force,” he says. ■ 83
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S.K. Chaturvedi Chairman, Joint Electricity Regulatory Commission
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uring a professional career spanning over four decades, S.K. Chaturvedi has worked with and led several major public sector undertakings in the power sector. He has served in various roles in the regulatory, generation and transmission arenas of the sector. Chaturvedi started his career as a management trainee with NMDC in 1976. Five years later, he joined NTPC, where he was associated with the development of projects like Farakka and Vindhyachal. In 1991, he moved to Power Grid Corporation of India Limited and later joined NHPC as director, personnel, in 2004. “While I was with NHPC, I brought the company to the top in terms of HR practices and received many awards for these efforts,” he says. He rejoined Powergrid in 2008 as CMD and spearheaded several key pro-
jects, including the IndiaBangladesh transmission link. He also took steps to expand Powergrid’s business overseas, including in Kenya, Bhutan, Afghanistan, Dubai and Nigeria. In 2012, he joined the Joint Electricity Regulatory Commission as a member and was later promoted as chairperson. Chaturvedi pursued his graduation and postgraduation from Lucknow University in 1970 and 1972. He was a fellow at the Council for Scientific and Industrial Research and at the University Grants Commission. He also obtained a postgraduate diploma in personnel management and industrial relations from the Andhra Pradesh Productivity Council and an advanced management degree from the Administrative Staff College of India, Hyderabad.
According to Chaturvedi, the power sector has been hit hard by the lack of fuel and transmission infrastructure. “The sector needs urgent reforms in generation, transmission and distribution,” he says. Also, renewable energy needs to be given a boost and steps have to be taken to improve the financial health of utilities. Chaturvedi strives to maintain an arm’s length between his professional and personal commitments. He is a voracious reader and enjoys books on history and contemporary subjects. “I have a collection of around 4,000 books in my library,” he says. The latest book that he has read is Beyond the Lines by Kuldip Nayar. His other interests include gardening and floriculture. He also enjoys listening to music, especially classical songs and ghazals. In a few years, Chaturvedi plans to serve society by being an academician and teach children free of cost. ■
Dr G. Prasad Director, Ministry of New and Renewable Energy
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r G. Prasad has been a pioneer in promoting and developing solar energy during his long association with the Ministry of New and Renewable Energy. He joined the ministry in 1989 and worked in its regional offices at Lucknow, Chennai and Hyderabad till 2006. Thereafter, he worked at the Solar Energy Center, Gurgaon, till 2009. Prasad has been associated with the Jawaharlal Nehru National Solar Mission (JNNSM) since its inception and is currently heading the off-grid and decentralised solar applications programme under the mission. In this position, he has been looking into the deployment of several decentralised solar applications such as solar pumps, solar street lights, home lights and small solar plants for captive consumption. Commenting on the solar off-grid segment in the country, Prasad states, “A definite demand exists, and several 84
states have been increasingly looking at deploying these systems, as well as at the solar lighting programme and the pumping programme for irrigation in the rural areas.” According to him, “The primary problem being faced in this segment is funding for these decentralised solar power systems. The central government has its own set of limitations in providing funds and, therefore, it is important that the state governments should contribute to funding as well so as to help improve the reach of these programmes.” When Prasad joined the JNNSM offgrid programme, the scale of deployment was minuscule, about 4 MW per year. In 2012-13, it reached 130 MW-140 MW. Achieving such growth in a span of only four years represents a major POWER LINE
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accomplishment for him as well as for the ministry. Prasad has a postgraduate degree in physics from Banaras Hindu University as well as a Ph.D. in solar cells. He has also written a number of research papers. Prasad is happy to put in additional hours at work if required. He also enjoys reading and researching in this area for leisure and makes sure he is abreast of all the latest developments in the sector. He prefers spending time with his family on weekends instead of going on holidays. Prasad enjoys the cuisine of his home state, Andhra Pradesh. Although he has not given much thought to his retirement, he says he would like to settle down in Hyderabad eventually, while continuing to be associated with the solar power segment. ■
PEOPLE
Venkatasiva Reddy Director, KPTCL
V
enkatasiva Reddy considers electricity of primary importance for a country’s development. According to him, focusing on renewable energy development and encouraging private sector investments in power generation are, therefore, important steps that the central and state governments should take to improve the power scenario and promote economic growth. Further, he believes that the sector should move away from subsidy schemes and a change be brought in the public mindset of electricity being a free commodity. An engineering graduate from PES College of Engineering, Mandya, Reddy started his career in the power sector in 1978, joining the erstwhile Karnataka Electricity Board. During the course of his career spanning over three decades, he has served the state electricity department in various capacities. At present, he is director of Karnataka Power
Transmission Corporation Limited (KPTCL) as well as of all the discoms in the state. In this capacity, he enjoys the opportunity to directly engage with the senior management of KPTCL and all the discoms regarding technical, revenue-related and manpower matters, and take the companies forward. He has also been actively involved in human resource development and currently serves as president of the Karnataka Electricity Board Engineers Association. Commenting on his most memorable assignment, Reddy recalls the time he was a part of a special squad in the electric meter testing division of Bangalore Electricity Supply Company (BESCOM). At the time, he was an executive engineer and his team undertook a comprehensive analysis to recognise the pattern as
well as methods of power theft in the region, following which raids were arranged. The exercise, which resulted in a yield of nearly Rs 1 billion for BESCOM, was instrumental in putting an end to the city’s high volume of unlawful power consumption. A curious traveller, Reddy is always on the look-out to discover the latest technologies and learn the best practices from around the world, so that he can implement them in his state. On the personal front, Reddy says he has been an avid agriculturist since his childhood, which has made him a hardworking individual. Reddy enjoys reading books on science and technology, industry, and agriculture. His leisure time is spent watching Telugu and Kannada movies and plays. He also enjoys continental cuisine. ■
Dr H.R. Sharma Chief Technical Principal, Tractebel Engineering
W
ith over 55 years of experience as a hydropower engineer, Dr H.R. Sharma has been engaged in all aspects of hydropower development – from investigations, planning and feasibility studies to detailed engineering, construction and monitoring. Sharma holds multiple doctorates in engineering and technology from Germany and Norway. Prior to working with Tractebel Engineering as chief technical principal, he held key positions in various organisations, some of the notable ones being director, Central Water Commission; member, hydro, Central Electricity Authority and ex-officio additional secretary to the union government; chairman, Nathpa Jhakri Power Corporation (now SJVN Limited); adviser on water and energy, Mauritius government; and director, design and
engineering, GVK Technical and Consultancy Services. Sharma is optimistic about the outlook for hydro power. “Given the vast hydro potential, resources and expertise in the country, the future of hydro development is very bright,” he says. Every hydro project should aim to get the cooperation of the local people and improve their living standards, he suggests. Given his rich and diverse experience, Sharma finds it difficult to pick one memorable assignment. “I have always loved and enjoyed my assignments,” he remarks. He, however, recalls the designing of the Yamuna Hydel Scheme Stage II in the 1970s and the complex studies for the 900 MW tidal power project in the Gulf of Kachchh in the 1980s, as among his favourites. Sharma is credited with the developPOWER LINE
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ment of several innovations in the field of hydropower, water resources and tidal power engineering. He has also been involved in the preparation of various Indian standards. He has received several awards including the Central Board of Irrigation and Power’s Diamond Jubilee Shanti Yadav Mohan Award (1987), the Bharat Udyog Award (1993), the International Engineer of the Year 2008 Award, and the Leading Engineer of the World Award for 2007 and 2011. Sharma leads a simple life and derives pleasure from his work. He follows the teachings of the Gita: “Do your duty without aspiring for the fruit.” He enjoys reading, writing technical articles, spending leisure time with family, especially his grandchildren. He aspires to write a book on the advances in hydropower development and update his previous book, Integrated Water Resources Management. ■ 85
PEOPLE
Sibir Roy Deputy General Manager, Budge Budge Generating Station, CESC Limited
A
s deputy general manager with CESC Limited’s Budge Budge Generating Station in West Bengal, Sibir Roy is responsible for maximising process efficiency, minimising energy consumption as well as carrying out maintenance at an optimum cost. Prior to his current position, he was associated with the company’s electrical and instrumentation department. Commenting on the key challenges facing the power sector at present, he says, “The policy framework needs to be revisited in order to allow for greater private sector participation. Moreover, the issues that are hindering full utilisation of installed capacity need to be addressed. Apart from this, the provision of single-window clearance for projects and ensuring fuel linkages will
help fast-track stalled power projects.” He further emphasises, “The upgradation of old power plants to improve their efficiency and reliability along with technical enhancements is a must. Alongside, to enable power plants to operate at high plant load factors (PLFs), the demand side has to be managed effectively.” While he believes that the Perform Achieve Trade (PAT) regime is a positive step forward, he points out that slow domestic coal production, low average PLFs and interference from the state government in tariff determination are issues that need to be resolved on an urgent basis. Open communication, motivation and empowerment are the foundations of Roy’s management style. In his two
decades of experience in the operations and maintenance segment of coalbased power plants, he recalls dealing with post-commissioning challenges related to maintaining stability and reliability of Budge Budge’s third unit (250 MW) as one of his most memorable assignments till date. An electronics and telecommunication engineer from the Regional Engineering College, Silchar, Roy is also a certified boiler operations engineer and internal auditor for ISO 9001:2000 and ISO 14001:200. Despite having a packed schedule, he makes it a point to spend quality time with his family. He enjoys playing the guitar and reading self-help books and thrillers, his favourite being The Secret by Rhonda Byrne. Roy is also an avid traveller who enjoys reliving his childhood memories by visiting various hill stations. ■
Vinay Rustagi Managing Director, BRIDGE TO INDIA
V
inay Rustagi, managing director, BRIDGE TO INDIA has more than 15 years of experience in project advisory and financing of energy and infrastructure projects across India and Europe. Over the last few years, his work has been concentrated on large-scale solar and wind projects. This has given him a deep understanding of the solar power segment, including project development and related technical, operational and regulatory issues. According to Rustagi, solar power can play a critical role in resolving some of the energy challenges that the country faces today, while simultaneously improving energy access. Commenting on the current state of the segment, Rustagi says, “The Indian solar power market continues to disappoint, despite its huge potential. The new government needs to make solar central to India’s energy mix and give it strong impetus 86
through policy reforms.” In his current role, Rustagi advises companies, institutions and policy-makers on a wide range of strategic, policy, financial and business development challenges. Prior to this, he was working with Standard Chartered Bank as senior director, Project and Export Finance, South Asia, and was involved in the financing of a number of wind and solar projects. In the past, he has worked at the National Australia Bank, the Sumitomo Mitsui Banking Corporation and ICICI Securities. Among his most memorable transactions are the financing of a 240 MW rooftop solar portfolio and a 110 MW landfill gas project in Europe. A graduate in mechanical engineering from the Delhi College of Engineering, Rustagi also holds an MBA from the London Business School and from the POWER LINE
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Indian Institute of Management, Ahmedabad. His management style is informal, direct and performance-oriented. He believes in creating a positive, energetic environment that motivates people to deliver their best. He also recognises the importance of having strong and specific interests outside of work for relaxing and destressing. Rustagi likes to travel with his family. He has travelled all over Europe and Southeast Asia. In India, his favourite holiday destinations include Uttarkashi, Darjeeling and Kerala. A sports enthusiast, he plays golf and tennis and runs on a regular basis. Says Rustagi, “We spend a large part of our lives at work and it is important that we have a work culture where people not only work hard but also have a lot of fun. Office banter is very important.” ■
PHOTOGALLERY
Sector Snapshots Recent events and industry highlights
Piyush G oyal (rig ht), and New and Upendra Renewab Tripathi, le Energ equipme Secretary y, at an in nt manu , Ministr facturers teraction y of and inde with win pendent d power power pro ducers in Delhi
rnor, ra, Gove N.N. Voh ent i; d o p M e d ra n end r Narend f State (I te o r is te in e is M yal, Min rgy, at th ft) Prime able Ene iyush Go (From le ir; and P d Renew n m a h electric s w a ro e K d N & Uri II hy oal and C Jammu W r, M e 0 w 4 o for P ited's 2 Charge) HPC Lim Kashmir tion of N ra u g ammu & u J a in in plant
, ineering ubro Eng To & n r e e e Offic ent, Lars Executiv e-Presid re, Chief ram, Vic b ja m a O and o R E h . T C K . ft) emortier, ntracts; N D (From le o . C L ; d hairman d n e a tion . Dick, C ar Limit e R g ); h c G it Construc (C w lkarni, Greaves G Lucy S d J.G. Ku rompton (CEO), C e (MD), C d UK; an e r it to CG, at th c im e , L s ir y s gD r Busine Compan e & w Managin o y P ik c h u t, s L W. at Na Presiden and MD, U facility ent and gear's RM e-Presid h ic c V it e w v S ti Execu G Lucy tion of C inaugura
K. Biswa
l, Directo r, Financ Foreign e, NTPC Lenders Limited, Meet org addresse anised b s the Tw y the com elfth pany in M umbai
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87
COMPANY RELEASE
Company Release Astonfield and Solesa partner to deliver solar power solutions in India Astonfield Renewables and international engineering and project management firm Solesa have announced a strategic partnership to deliver solar power solutions to industrial businesses in India. Marketed as Astonfield Solesa Solar, the company will deploy customisable solutions that can save commercial and industrial businesses up to 30-40 per cent on their diesel fuel costs. The partnership also announced the commissioning of its first project, a 100 kW ground-mounted solar-diesel hybrid system, for iron manufacturer Indo Shell Cast Private Limited in Tamil Nadu. This system reduces costs by feeding uninterrupted power to the factory from a combination of three generation sources – solar, diesel gensets and the state power grid. It consists of 384 solar photovoltaic modules and two diesel gensets, all of which are controlled by the hybrid power controller to prioritise consumption of the most cost-effective power source at any given time. The system is expected to produce close to 150 MWh per year. Doosan Heavy Industries & Construction acquires safety milestone Doosan Heavy Industries & Construction’s Rabigh construction office in Saudi Arabia achieved 40 million hours of accidentfree operation, a world record among power plant construction projects worldwide, on April 23, 2014. The Rabigh 2 project calls for simultaneous construction of four power plants and involves more than 15,000 workers from 37 countries deployed daily, which makes the new record significant. Doosan Heavy Industries & Construction is implementing Environment, Health and Safety (EHS) programmes focused on education and hands-on experience, including repeated training of workers to prepare for real accident situations, operation of a daily safety patrol system by all staff members, and awarding prizes to exemplary workers. The Rabigh 2 project, which the company acquired in 2010, is 97.3 per cent complete and at present, Plants 1, 2 and 3 are concurrently operating to test output. Also, the company’s Mong Tung 2 construction office in Vietnam received the Golden Hard Hat Award to certify safety management capacity of the builder achieved through exemplary EHS activities, including application of a systematic safety management at work sites, and extensive efforts to establish safety awareness among its workers. SGS wins contract from Vale SA to source and supervise a manufacturing project in China Brazilian multinational diversified metals and mining corporation Vale SA has contracted SGS Industrial Services for providing extensive inspection and training expertise to oversee the sourcing, production and delivery of a conveyor belt, stacker, reclaimer and steel structure from China. As part of this project, SGS has provided a team of 45 experts who will manage 88
POWER LINE
and supervise the quality of service delivered to Vale. This team will assist Vale with the selection and evaluation of appropriate suppliers from China to enable it to make an informed selection. One of the most challenging issues for sourcing in China is the quality of raw materials. Since SGS has local material testing laboratories located in 13 cities across China, it can provide independent precise materials testing with fast turnaround time, according to international standards. Perkins launches updated 750 kVA engine Perkins has launched an updated 750 kVA engine, Perkins® 4006D-23TAG2, which uses a diesel oxidation catalyst after treatment system to meet India’s Central Pollution Control Board-II emission standards. The mechanical fuel injection diesel engine is specifically designed to meet customers’ critical requirements and ensures that they benefit from a competitive whole life cost. The new engine offers ease of packaging and, by drawing on the common architecture of the 4000 Series engine family, uses the same standard spare parts, thus reducing inventory requirements. Perkins is already taking orders for the 4006D-23TAG2, which will be available from August 2014. Honeywell launches Experion® Orion Console Honeywell Process Solutions unveiled the advanced display technology Experion® Orion Console at the 2014 Honeywell Users Group Symposium in San Antonio, Texas. The console has been built on Honeywell’s flagship Experion Process Knowledge System control platform and features an improved ergonomic design and better display to simplify control system management, reduce operator fatigue and improve situational awareness. It also includes a large, flexible, ultra-high definition display that provides clear status assessments of process operations at a single glance for more informed management. CG receives Euro 150 million order for wind project in the Netherlands Crompton Greaves (CG), along with consortium partners Fabricom and Iemants, has been selected by Van Oord for the Gemini offshore wind project in the Netherlands. The scope of the order, worth Euro 150 million, includes design, delivery and installation of two high voltage (HV) offshore substations and one HV onshore substation. Of this, CG’s scope covers design and engineering of the overall electrical HV system, manufacture and supply of all key equipment and connecting the onshore substation to the 400 kV Tennet HV grid. The Gemini project, which is located 85 km north of the island of Schiermonnikoog in the Dutch North Sea, will consist of two offshore wind farms – the 300 MW Buitengaats and the 300 MW ZeeEnergie. The project is expected to begin in 2014 and be completed by 2016. ■ ●
July 2014
POWER DATA
POWER DATA
Power Trading At the Indian Energy Exchange and Power Exchange India Limited in June 2014 The electricity traded in the day-ahead market at the IEX and PXIL in June 2014 was 2,617 MUs and 26 MUs respectively. The average market clearing price range at the IEX was Rs 2.85 per unit to Rs 4.67 per unit and at PXIL was Rs 2.09 per unit to Rs 4.30 per unit. Volume traded in day-ahead market 100
IEX
PXIL
MUs
80
60
40
20
0 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Prices in day-ahead market 5.00
IEX PXIL
Rs per unit
4.50
4.00
3.50
3.00
2.50
2.00 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Note: The IEX’s region-wise average clearing prices (minimum, maximum in Rs per unit): North 1&2 (2.48, 4.59); North 3 (2.70, 4.59); Northeast 1&2 (2.48, 4.59); East 1 &2 (2.48, 4.59); West 1&2 (2.47, 4.59); West 3 (2.47, 4.59); South 1 (4.19, 5.22); South 2 (4.35, 6.50) PXIL's region-wise average clearing prices (minimum, maximum in Rs per unit): North 1 (1.00, 6.17); North 2 (1.00, 6.17); North 3 (1.00, 6.17); East 1 (1.00, 6.10); East 2 (1.00, 6.10); South 1 (1.00, 6.10); South 2 (1.00, 6.10); West 1 (1.00, 6.10); West 2 (1.00, 6.10); West 3 (1.00, 6.10); Northeast 1 (1.00, 6.10); Northeast 2 (1.00, 6.10)
Week-ahead market IEX PXIL
Traded volume (MUs) 0.25 –
Average traded volume per day (MUs) 0.008 –
Maximum price (Rs per unit) 4.00 –
Minimum price (Rs per unit) 4.00 –
REC trading during June 2014 IEX
PXIL
Solar
Buy bids 636
Non-solar
50,743
3,166,863
50,743
1,500
1,018
88,520
1,018
9,300
88,711
3,809,585
88,711
1,500
Solar Non-solar
Sell bids 147,026
Total volume traded 636
Equilibrium price (Rs per REC) 9,300
Sources: IEX; PXIL POWER LINE
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89
POWER DATA
Key Statistics Global gas production (billion cubic metres) Country
2012
2013
Change in 2013 over 2012 (%)
USA
681.2
687.6
1.3
Canada
156.0
154.8
Mexico
56.9
2012
2013
Kuwait
15.5
15.6
0.7
(0.5)
Oman
30.0
30.9
3.3
56.6
(0.2)
Qatar
150.8
158.5
5.4
894.2
899.1
0.9
99.3
103.0
4.0
Argentina
37.7
35.5
(5.6)
Syria
5.3
4.5
(15.2)
Bolivia
18.3
20.8
14.4
UAE
54.3
56.0
3.3
Brazil
19.3
21.3
11.0
Yemen
7.6
10.3
36.5
Colombia
12.0
12.6
5.8
Other Middle East
2.6
6.5
148.5
Peru
11.9
12.2
3.1
Total Middle East
545.5
568.2
4.5
Trinidad & Tobago
42.7
42.8
0.5
Algeria
81.5
78.6
(3.3)
Venezuela
29.5
28.4
(3.2)
Egypt
60.9
56.1
(7.7)
Other South and Central America
2.9
2.5
(13.4)
Libya
12.2
12.0
(1.5)
Total South and Central America
174.3
176.4
1.5
Nigeria
43.3
36.1
(16.4)
Azerbaijan
15.6
16.2
3.8
Other Africa
18.5
21.6
17.2
Denmark
5.8
4.8
(15.6)
Total Africa
216.3
204.3
(5.3)
Germany
9.0
8.2
(8.8)
Australia
43.4
42.9
(0.9)
Italy
7.9
7.1
(9.9)
Bangladesh
21.1
21.9
4.2
Kazakhstan
18.4
18.5
0.8
Brunei
12.6
12.2
(2.6)
Netherlands
63.9
68.7
7.9
China
107.2
117.1
9.5
Norway
114.7
108.7
(5.0)
India
40.3
33.7
(16.3)
Poland
4.3
4.2
(1.4)
Indonesia
71.1
70.4
(0.7)
10.9
11.0
0.6
Malaysia
66.5
69.1
4.2
592.3
604.8
2.4
Myanmar
12.7
13.1
3.1
Turkmenistan
62.3
62.3
0.4
Pakistan
41.2
38.6
(6.2)
Ukraine
18.6
19.3
4.0
Thailand
41.4
41.8
1.2
UK
38.9
36.5
(5.9)
Vietnam
9.4
9.8
4.5
Uzbekistan
56.9
55.2
(2.8)
Other Asia Pacific
18.2
18.7
3.3
Other Europe and Eurasia
8.7
7.5
(13.8)
Total Asia Pacific
484.9
489
1.1
Total Europe and Eurasia
1,028.1
1,032.9
0.7
3,343.3
3,369.9
1.1
13.7
15.8
15.2
Iran
165.6
166.6
0.8
Iraq
0.7
0.6
(4.4)
Total North America
Romania Russian Federation
Bahrain
90
POWER LINE
Country
Saudi Arabia
Total world
Change in 2013 over 2012 (%)
Note: The above figures exclude gas flared or recycled; and include natural gas produced for gas-to-liquid transformation Source: BP Statistical Review of World Energy June 2014
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July 2014
POWER DATA
Key Statistics Global coal production (million tonnes) Country
2012
2013
Change in 2013 over 2012 (%)
USA
922.12
892.64
(3.07)
Canada
67.10
69.54
Mexico
15.74
2012
2013
Change in 2013 over 2012 (%)
Other Europe and Eurasia
91.44
93.85
4.25
3.91
Total Europe and Eurasia
1,281.63
1,221.56
(3.75)
16.65
6.03
Total Middle East
1.18
1.18
0.27
1,004.96
978.82
(2.50)
South Africa
258.27
256.70
(0.34)
6.62
7.37
11.75
Zimbabwe
1.59
1.59
0.27
Colombia
89.02
85.50
(3.70)
Other Africa
2.47
2.48
0.55
Venezuela
3.12
2.33
(25.20)
Total Africa
262.34
260.77
(0.32)
Other South and Central America
0.86
2.83
232.96
Australia
452.84
478.03
7.32
Total South and Central America
99.62
98.03
(1.70)
China
3,645.00
3,680.00
1.24
Bulgaria
33.43
28.62
(14.21)
India
606.51
605.13
0.12
Czech Republic
54.97
48.98
(13.17)
Indonesia
386.00
421.00
9.37
–
–
–
Japan
1.32
1.20
(8.64)
196.17
190.27
(5.51)
New Zealand
4.93
4.53
(6.58)
Greece
62.96
53.76
(14.37)
Pakistan
3.37
3.43
1.91
Hungary
9.29
9.55
3.03
South Korea
2.09
1.81
(13.13)
Kazakhstan
115.66
114.71
(0.11)
Thailand
18.07
17.98
(0.19)
Poland
144.09
142.87
(1.91)
Vietnam
41.90
41.19
(1.41)
33.90
24.72
(26.88)
Other Asia Pacific
81.58
81.74
0.65
356.10
347.10
(1.87)
Total Asia Pacific
5,243.60
5,336.05
2.41
6.34
4.43
(32.51)
Total world
7,893.32
7,896.40
0.77
Total North America Brazil
France Germany
Romania Russian Federation Spain Turkey
72.04
61.67
(13.51)
Ukraine
88.20
88.20
0.27
UK
17.05
12.84
(24.47)
POWER LINE
Country
Note: The above figures are for commercial solid fuels only, that is, bituminous coal and anthracite, and lignite and brown (sub-bituminous) coal; also include coal produced for coal-to-liquid and coal-to-gas transformation Source: BP Statistical Review of World Energy June 2014
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91
POWER DATA
Generation Power Generation May 2014
Monthly statistics year over year
Total power generation stood at 89.73 billion units. At around 35.09 billion units and 30.49 billion units respectively, the central and state sectors accounted for the major share of generation.
Total power generation increased by 6.91 per cent in May 2014 as compared to the same month last year, with an increase of 6.99 per cent in thermal generation and a 6.42 per cent increase in hydel generation.
State sector Andaman & Nicobar Islands Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Delhi Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Odisha Puducherry Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttarakhand Uttar Pradesh West Bengal Lakshadweep Total SEBs/EDs Central sector BBMB SJVNL NHDC DVC THDC RGPPL Neepco Neyveli NHPC NTPC NPC ONGC Total central Private sector Total generation Imports from Bhutan Total availability
92
91 90
MUs
89
2014 2013
88
15.46 3,337.77 – – – 1,321.54 290.28 2,266.95 655.10 187.96 442.43 283.99 2,457.79 673.47 1,690.90 4,476.76 – 57.57 – – 875.20 6.86 1,289.14 2,238.75 – 2,825.11 65.13 384.37 2,305.26 2,338.12 – 30,485.91 979.73 866.24 173.74 2,131.70 328.79 – 318.90 1,765.39 2,802.45 22,864.66 2,757.06 105.80 35,094.46 24,147.97 89,728.34 267.15 89,995.49
87 86 85 84
Power generation (BUs)
Sector
83 82 81 80 79 78 77 76 75 74 73 72 71 70 69 68
Jan
Month
Feb
Mar
May
Apr
Thermal and % nuclear (MUs) change
Jun
Jul
Aug
Sep
Hydel (MUs)
% change
Oct
Nov
Dec
Total % (MUs) change
2013 May
72,900
5.38
11,025
10.05
83,925
5.97
June
63,855
(1.66)
12,151
6.80
76,006
(0.40)
July
63,587
0.05
15,886
33.25
79,473
5.29
August
59,362
(0.02)
19,421
37.83
78,782
7.24
September
66,853
15.54
15,024
3.71
81,877
13.17
October
66,771
(2.95)
12,087
30.90
78,859
1.05
November
68,486
3.85
8,779
28.53
77,265
6.17
December
74,523
5.76
8,192
24.74
82,715
7.38
January
76,151
5.58
7,497
16.19
83,649
6.45
February
69,219
10.13
7,423
26.47
76,643
11.52
March
75,423
5.48
9,164
4.47
84,587
5.37
April
77,307
11.35
9,783
18.48
87,089
12.11
May
77,995
6.99
11,733
6.42
89,728
6.91
2014
POWER LINE
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