ET
Total pages 44 Volume 1 | Issue 7| August 2013 | `50
ELECTRICALS TODAY
MANAGEMENT EXPERTISE FOR THE POWER INDUSTRY
DISTRIBUTION
IMPORTANCE OF CYBER SECURITY IN SMART GRIDS
ANALYSIS
DOMESTIC GAS PRICE HIKE TO HIT POWER SECTOR
THERMAX
FACTOR
THERMAX INDIA MANAGING DIRECTOR MS UNNIKRISHNAN IS OPTIMISTIC THAT THE CAPTIVE POWER SEGMENT WILL FLOURISH IN THE NEXT FIVE YEARS
CONTENTS
14 Cover Story MS Unnikrishnan, MD and CEO of Thermax India, expects double-digit growth in the captive power segment
20
26
31
36
Distribution
Analysis
Finance
Renewable
Cyber security plays a key role in smart grids
Domestic gas price hike to severely hit power sector
More investment from US in India's clean energy segment
Increasing role of batteries in solar energy AUGUST 2013 | Electricals Today
3
Editor's Note
Untimely move
ET Electricals Today
Management expertise for the power industry
Volume 1 | Issue 7 | August 2013
T
he government's decision to revise the price of domestic natural gas from the existing $4.20 per million metric British thermal unit (mmBtu) to $6.77 has created a flutter. On the surface, this should be no big deal as the revision comes after four years – and, in the interim, the government has done its bit to keep a lid on the prices, despite the fact that gas prices have soared internationally. So why the fuss? To put it bluntly, it is all about the timing. Questions are being raised not just about why the government took such a step in an election year but also about how Reliance Industries Ltd (RIL) stands to benefit from the move, despite the fact that output from KG basin is at an all-time low. (According to reports, KG-Basin is currently producing 14.01 million standard cubic metres per day [mmscmd] against a target of over 86 mmscmd.) The irony is not lost on the experts. Instead of holding RIL responsible for the dip in output, the government has rewarded it by taking a decision in its favour. Even though ONGC also stands to benefit from the revision, there is no doubt that RIL, being the largest gas supplier, is the prime beneficiary. The government argues that the revision will attract more investments into the otherwise laggard gas exploration segment. However, the reality is that this move could, in fact, prove to be detrimental as an increase in gas price will severely hit power generation because gas plants are already running at low plant load factor owing to fuel supply constrains. According to rating agencies, price increase will lead to 56 per cent hike in generation cost i.e. 10 paise increase per unit. Consequently, this move will compound the financial burden of discoms as their power purchase cost will shoot up. But that’s not all ! It will also increase the subsidy burden to the tune of Rs13,000 crore. (Currently, 10 per cent of the country’s power is produced from gas-based projects.) In light of the above, the power sector does not have anything to gain from the government’s decision. But, as elections draw closer, pleasing corporate fat cats seems to be a bigger priority.
ITP Publishing India Pvt Ltd Notan Plaza, 3rd floor, 898, Turner Road Bandra (West), Mumbai - 400050 T +91 22 6154 6000 Deputy managing director S Saikumar Publishing director Bibhor Srivastava Group editor Shafquat Ali
T +91 22 6154 6038 shafquat.ali@itp.com
Editorial Editor Renjini Liza Varghese
T +91 22 6154 6034 renjini.varghese@itp.com
Advertising Business head Hafeez Shaikh
T +91 98331 03611 hafeez.shaikh@itp.com
Studio Head of design Milind Patil
Production Deputy production manager Ramesh Kumar
ramesh.kumar@itp.com
Circulation Distribution manager James D’Souza
T +91 22 6154 6032 james.dsouza@itp.com Disclaimer The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers’ particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review. Printed and Published by Sai Kumar Shanmugam, Flat no 903, Building 47, NRI Colony, Phase – 2, Part -1, Sector 54, 56, 58, Nerul, Navi Mumbai 400706, on behalf of ITP Publishing India Private Limited, printed at Jasmine Art printers Pvt.Ltd., A-737/3, TTC Industrial Area, Mahape, MIDC, Navi Mumbai, India and published at Notan Plaza, 3rd floor, 898, Turner Road, Bandra (West), Mumbai - 400050 Editor Renjini Liza Varghese
Renjini Liza Varghese, Editor renjini.varghese@itp.com
4
Published by and © 2013 ITP Publishing India Pvt Ltd
Electricals Today | August 2013
04_ET_Aug13_Ed Letter.indd 4
26-07-2013 10:28:36
EMPOWER
YOURSELF ET
Volume 1 |
of pages 52 Total number ry 2013 | `50
Issue 1 | Janua
? Y A L E D WHY
S TODAY
ELECTRICAL
ST TH E IN DU WE R TO MO RE PO
RY
R U O Y R ORDE ODAY. COPY T
IENT GY-EFFIC ARE ENER REALLY PRODUC TS EFFICIENT? ID IS NO ‘SMART GR NCEPT, CO LONGER A SSITY’ CE IT’S A NE
EWPOINT
ia ditya Scind gh Jyotira Even thou ge as rrent char cu his s describe g power ’, the youn ‘daunting e on the ready to tak er? minister is can he deliv t Bu s. ge challen ishing India
An ITP Publ
07-01-2013
15:16:04
Publication
ver.indd
n2012_Co
01_ET_Ja
VI , ARUN MAIRA NNING MEMBER, PLA , ION ISS MM CO S ON WHAT AIL THE INDUSTRY
1
Subscription
Duration
You Pay
1 Year (12 Issues)
Rs 1000/-
Please use BOLD / CAPITAL LETTERS ONLY Mr/Ms: ________________________________________________________________________________________________ (First Name) (Middle Name) (Last Name)
Address1_______________________________________________________________________________________________ Address2_______________________________________________________________________________________________ Address3_______________________________________________________________________________________________
Email: _________________________________________________________________________________________________
Please use bold & capital letters only The mode of payment should be cheque/demand draft favouring ‘ITP Publishing India Pvt. Ltd’ Please write your name and address on the back of the cheque/demand draft Orders once placed will not be terminated or transferred Please allow a minimum of 4 weeks to process the order. Subscribe to ELECTRICALS TODAY by completing the form and sending it to: Subscription Department ITP Publishing India Pvt. Ltd, Notan Plaza, 3rd floor, 898, Turner Road, Bandra (W), Mumbai-400 050. For further queries write to: james.dsouza@itp.com | Tel:+91 22 6154 6032 / 6000
p8
Bulletin PK Sinha -takes over as the new power secretary Pradeep Kumar Sinha took over as secretary in the Ministry of Power from July. He succeeded P Uma Shanker, who retired in June. Sinha is a 1977 batch IAS officer from the UP cadre. Previously, he was secretary in the Ministry of Shipping. He also served as special secretary in the Ministry of Petroleum and Natural Gas. PK Sinha has held various important roles in his career in the departments of irrigation, urban development, finance and investment and planning in central government.
Jyotiraditya Scindia
Scindia Expects more US investments Power minister, Jyotiraditya Scindia, said that, “There are greater potential for US to invest in Indian power sector.” As part of the initiative in enhancing India-US partnership in power, he delivered a talk on 'Indian Energy Security in the context of the Power Sector' in the USin July. He highlighted power ministry’s initiatives to address existing challenges in generation, transmission, and distribution in the country. He elaborated on how these steps has impacted the framework of India-US co-operation in power sector in general and renewable energy in particular. Apart from meeting India’s energy requirement, it also drives capital investments. The country added 50,000 MW during 2007-2012 period, and expected to add another 1,18, 000 MW over the next five years. Out of which 30,000 MW will come from renewable to add in next five years energy segment. Country, now has a transmission capacity of 2,00,000 MW including 66,000 MW of inter-regional capacity connecting Northern, Western, and Eatern parts. It is expected that the Southern grid would get connected to the rest of the country by January 2014.
118 GW
6
KEC bags Rs1,300 CR orders KEC International, a leading engineering, procurement and construction (EPC) firm, has won orders worth Rs1,300 crore from different clients across the world. In a statement, the company said that its transmission business won Rs909 crore orders from various clients in India, Saudi Arabia, Afghanistan, Kenya, Americas, Kazakhastan and Laos, while other business segments like power systems, cable and water businesses bagged rest of the orders. "In the transmission business, the company has won new orders amounting to Rs909 crore," KEC International said, adding that of this, the largest order worth Rs318 crore, is from Power Grid Corporation of India. The flagship firm of the RPG Group, KEC said that its water division bagged two orders, worth Rs134 crore, from Madhya Pradesh, while the cable division secured Rs182 crore orders for supply of power and telecom cables. According to a company spokesperson, the company bagged these orders in last one month and KEC's total order book currently stands at about Rs 9,200 crore.
Electricals Today | August 2013
06-11_ET_Aug13_News bulletin.indd 6
26-07-2013 10:33:25
BULLETIN
P10
ALSTOM T&D WINS CONTRACT FROM BAJAJ
The plant is scheduled to be commissioned in 2015.
Alstom T&D India won a contract for 3x660 MW supercritical thermal power project (TPP) from Bajaj Infrastructure Development Company, to supply e-BoP (Electrical Balance of Plant).This is for an upcoming plant in Lalitpur, Uttar Pradesh. The plant is scheduled to be commissioned in 2015, and the contract is worth approximately Rs2,000 million. Under this contract, Alstom T&D will be responsible for the design, engineering,
supply and installation of the eBoP, which includes supply of station transformers, unit transformers and other electricals for the project. Commenting on this success, Rathin Basu, MD, Alstom T&D India said, “ We have won several e-BoP projects, particularly above 300 MW and for 600/660 MW. Around 9,000 MW of projects are under execution, which highlights our expertise and leadership within the e-BoP segment.�
ESSAR APPLIES FOR DISTRIBUTION LICENCE FOR GURGAON Essar group company Essar Projects has sought licence to distribute power in municipal area of Gurgaon in Haryana as the second energy supplier in the district, a government offi cial said. "Essar Projects (India) Limited has applied for electricity distribution licence in the area of Gurgaon municipal corporation for a period of 25 years," Haryana Electricity Regulatory Commission, director (tariff ), saisd Sanjay Varma. If the licence is granted to Essar Projects, then it will be the second distribution licence holder after Dakshin Haryana Bijli Vitran Nigam DHBVN for supplying power to energy consumers within municipal limits of Gurgaon. Pegging the capital outlay on this project at Rs1,519 crore, the company in its application has said that it would set up its own distribution network for supplying power to the consumers.
BGR ENERGY BAGS RS1,573 CR CONTRACT FROM OPGC Odisha Power Generation Corporation (OPGC) has awarded Rs1,573 crore contract for Balance of Plant, including ancillary and peripheral units, to BGR Energy Systems, as part of its expansion project. The order is for OPGC's 2X660 MW thermal power plant and the contract is for erection and commissioning of the BoP of the proposed 3 and 4 units. The project
includes development of a captive coal mine and railway transportation system. On 27 April this year, OPGC had awarded the contract of supply and erection of the main plant (Boiler, Turbine and Generator) of the proposed 3 and 4 units to BHEL at a contract value of Rs4,051 crore. The plant is expected to achieve commercial operation in the 12th five-year plan.
If the licence is granted, Essar will be the second distribution licence holder in that area.
AUGUST 2013 | Electricals Today
7
BULLETIN
COAL REGULATOR: POSITIVE FOR POWER SECTOR INDIA RATINGS
According to India Ratings & Research, the government’s recent decision to constitute an independent regulatory authority for the coal sector is a vital step for its much-needed overhaul. “It can potentially bring considerable relief to industries which depend on coal as a critical input, most notably, the beleaguered power sector.” Notwithstanding the reportedly large coal reserves in India, the sector is characterised by acute shortages, poor quality, ineffi cient mining practices and distorted pricing mechanisms. These factors have had a crippling effect on power generation, a vital component for scaling up the country’s undernourished infrastructure sector. Many of these issues have been ascribed to the virtual monopoly enjoyed by the state-owned Coal India Limited. It is yet unclear if price setting would also be included within the ambit of the proposed regulator. However, the proposed regulator is likely to determine the principles on the basis of which producers can price coal. Allocation of fresh coal mines will, however, continue to be the prerogative of the government.
Fuel supply will help mitigate the shortage of power in Punjab
GVK POWER SEEKS TAPERING LINKAGES FOR POWER PROJECT IN PUNJAB GVK Power has asked the government to consider its request for tapering linkages to meet the coal requirement of its 540 MW thermal power plant in Punjab. According to the offi cials, if allocation is done, the company will be in a position to begin electricity generation from next month. "We request your kind consideration for approval of our request for a tapering linkage which will enable the company to start generating power as soon as coal is available, so as to...mitigate the acute shortage of power in the state of Punjab," GVK Power vice chairman G V Sanjay Reddy said in a letter to coal secretary SK Srivastava. Tapering linkage is a short-term linkage, "Needless to add, if coal is allocated, we will be in a position to start generation from the first unit of our 2x270 MW project by mid August 2013 and not only provide relief to the government but also the Northern Grid," Reddy said in the letter.
8
Electricals Today | AUGUST 2013
The fuel supply constrains resulted in higher coal storage at plants.
FUEL STOCK IMPROVES IN THERMAL PLANTS: CEA With improvement in supply of coal clubbed with dip in demand for electricity, coal stocks at thermal power stations in the country have shown improvement. According to Central Electricity Authority (CEA) data, as of June 27, only five plants had less than four days of coal stocks at their disposal. As many as 13 power stations had less than four days of fuel inventory in the month of May. "Largely, the fuel supplies have increased resulting in higher coal storage at plants. And on the other hand the plant load factor
is declining due to less demand from the states," a Power Ministry offi cial told news agency. Three plants with less than four days of coal belong to NTPC, the country's largest power producer—2,980 MW Sipat project in Chhattisgarh, 2,600 MW Ramagundem and 2,000 MW Simhadri in Andhra Pradesh. The three plants also had supercritical stocks in May. However, as many as five power stations had fuel stocks for more than 40 days, according to the data. The normal requirement of plants ranges from 15 to 30 days of coal inventory.
BULLETIN
DARLIPALLI PROJECT TO BE COMMISSIONED NTPC Ltd, the country's biggest power producer, hopes to commission its 1,600 MW (2x800) Darlipalli super thermal power plant in Odisha by 2018. "We hope to complete the Darlipalli project in five years. The project has received environment clearance while forest clearance is expected soon,� said chairman and managing director, NTPC, Arup Roy Choudhury. Of 1,274.9
acres private land needed for the project's main plant, the state government has issued possession certificate for 1,205.79 acres. Alienation proposals for 339.49 acres of government land are in different stages of processing. The maharatna firm needed 1,652 acres for this power station, the cost of which has been estimated at Rs1,2850.07 crore.
PUNJ LLOYD TO DEVELOP 100 MW IN RWANDA Infrastructure firm Punj Lloyd has signed a pact with Rwanda to construct and operate 100 MW power plant from peat -a coal-like fossil fuel-with an estimated cost of over Rs1,000 crore, a senior company offi cial said.As per the agreement, Punj Lloyd will construct, finance, maintain and operate a 100 MW power plant in North Akanyaru of Eastern Province of Rwanda. "We have just signed a memorandum of agreement (MoA) for a 100 MW peat based power project in Rwanda in Africa. Now we have to submit the feasibility report, then the PPA (Power Purchase Agreement) and the concession agreement for peat will be signed," Punj Lloyd's director (corporate affairs) Luv Chhabra said. The construction period for the project is 42 months after securing finances. When asked about the project cost, he said that it will be decided after the detailed feasibility report is prepared and would include certain other factors including financing cost during the construction period. Construction of any power plan will take 4 years time.
The Odisha project has received environmental clearance.
GMR SYNCHRONISES UNIT II OF KAMALANGA PROJECT GMR Infrastructure Limited has announced that it has synchronised the second unit of 350 MW of the Langa thermal power plant at Kamalanga in Dhenkanal district of Odisha. The first unit of 350 MW was commercially operational from April this year. With this, the combined generation capacity of the GMR Group has increased to 1,836 MW. GMR’s energy
subsidiary, GMR Kamalanga Energy Limited (GKEL), is establishing the 4x350 MW in two phases of 3x350 MW and 1x350 MW respectively. Work on commissioning the third unit of 350 MW in the first phase is in advanced stages and is likely to be completed by August 2013. GKEL would supply power to Odisha, Bihar, Haryana and other parts of the country.
AUGUST 2013 | Electricals Today
9
BULLETIN
Renewable energy roundup IFC FINANCES AZURE'S ROOFTOP SOLAR PROJECT IFC, a member of World Bank, is providing US$3 million loan to independent energy producer Azure Power's rooftop solar project in Gujarat. IFC's investment in the subsidiary is expected to help avoid around 3,600 tons of carbon emissions a year, Azure Power said in a statement. The company is constructing a 2.5MW rooftop solar project in Gandhinagar that will be connected to the state electricity grid. "With this, Azure Power has forayed into distributed solar power generation. We are committed to driving down cost of energy for end consumers," Azure Power's CEO Inderpreet S Wadhwa said. Azure Power is an existing client of IFC and has a current portfolio of about 55 megawatt of solar power projects in India.
VIDHAN SOUDHA TO BE ILLUMINATED USING SOLAR IFC'S investment will help avoid 3,600 tonnes of carbon emissions a year.
DLF SELLS WINDMILL IN GUJARAT FOR RS325 CR Realty major DLF has completed the Rs325 crore deal to sell 150 MW wind turbine project in Gujarat to Bharat Light and Power. The company transferred the wind mills at Kutch in Gujarat to Bharat Light and Power's subsidiary BLP Vayu (Project 1), DLF said in a regulatory filing. As per the agreement executed with BLP Vayu (Project 1) DLF transferred the 150 MW wind turbines, including related assets and liabilities along with relevant long term loans, "for a lump sum consideration of Rs325.38 crore". The deal value is higher than original announcement of Rs282.3 crore made on January 31. "The size of the deal is based on the current valuation and not January," a company official explained. The transactions are in line with DLF's objective of divesting its noncore assets. DLF, the country's largest realty firm, had wind turbine projects in Gujarat, Rajasthan, Karnataka and Tamil Nadu with a total capacity of 227 MW.
According to chairman of the Legislative Council D H Shankar Murthy, Karnataka government intends to illuminate Vidhan Soudha, the seat of the State Legislature and a key Bengaluru landmark, using solar energy. Noting that tens of thousands of people visit Bengaluru every day, the minister argued that the structure should be a treat to watch for tourists. The plan is to light up Vidhan Soudha for one-and-half hours or two hours using solar energy and take advantage of LED and other modern technologies, said Murthy. He also added that it has been decided to install a bronze statue of a "meditating" Mahatma Gandhi between Vidhan Soudha, and Vikas Soudha, an annexe of the former housing some of the Ministerial and legislative offices.
JNPT TO SET UP 7 MW WIND MILL Largest container port, Jawaharlal Nehru Port Trust (JNPT) is investing Rs50 crore to install 7MW wind capacity. This will help JNPT save around 30 per cent on its energy costs, a top official has said. "We have invited bids from private parties to set up 7MW capacity and this will help us save up to 30 per cent on our power cost," acting chairman NN Kumar said. To be built at an investment of Rs50 crore, the capacity will take care of up to fourth of the JNPT port's annual power requirement. And JNPT is the first port to consider such an arrangement, he added. The project is expected to be awarded by November and should be operational by April next. Kumar said as per the plan, the port will outsource generation through a bidding process and the company that offers the lowest cost per unit will be awarded the project, feasibility studies for which have already been done. The winning company can set up the plant anywhere in the country.
10
Electricals Today | AUGUST 2013
The windmill will help JNPT save 30 per cent on energy costs.
EVENTS
Events
Lii 2013 to be held in Chennai
7th REI 2013 expo
Venue: India Expo Centre and Mart, Greater Noida Date: 12-14 September 2013 The seventh edition of Renewable Energy India Expo being held from 12-14 September 2013 at the India Expo Centre and Mart, Greater Noida (National Capital Region of Delhi) India. Organised by UBM India, the last edition of REI was held in November 2012. According to the organisers, the renewable energy sector is growing rapidly and the Cleantech sector has the potential to generate 10 million jobs in India by 2025.
ELECTRI EXPO
Venue: HITEX Exhibition Centre, Hyderabad Date: 3-5 October 2013 The Electri Expo will be the first-ever exposition in Hyderabad dedicated to low voltage electricity devices. Organised by Hitex Exhibition Centre, the event will bring under one roof, energy efficient, environment friendly and sustainable devices. This show will act as a unique platform for those stake holders who are looking for innovative products.
ELECRAMA-2014 Venue: BIEC, Bengaluru Date: 8-12 January 2014
Elecrama-2014, the 11th edition of the world’s largest power T&D confluence, will be hosted in Bengaluru this year. It is designed to maximise the participant experience by its multilateral approach to exhibitions and allied events. According to the organisers the highlights of the show are: international reverse buyer/seller meet, international conference on transformers, innovation day and students pavilion, CEO Nite with cross stakeholder debate and awards ceremony.
Indian Renewable Energy Summit Venue: Mahatma Mandir, Gandhinagar, Gujarat Date: 9-11 January 2014
The first Indian Renewable Energy Summit, hosted in partnership with the government of Gujarat, will be the leading force in delivering a platform for the renewable industry to meet, share information on the challenges facing the industry and discuss solutions for advancing India’s energy requirement for the future. For companies involved in the manufacture of equipment to the supply of products or services to the power generation industry, the summit provides the platform and opportunity to reach, meet and demonstrate to the renewable energy industry professionals and key industry buyers and influencers of India.
Prominent speakers at Lii 2012. India’s largest lighting fair, Lii 2013 (Light India International 2013), will be organised by the Indian Society of Lighting Engineers (ISLE) from 13-16 September 2013. The show will be held in Chennai Trade Centre. The show is expected to host more than 250 manufacturers, including 100 from overseas. This include 100 plus international participants mainly from China, Taiwan, Korea, Italy, Germany and USA. ISLE had earlier organised six lighting speciality trade shows in different regions including New Delhi, Mumbai, Indore, Bengaluru and Chennai. With the overwhelming response during the previous fair and the other shows in Chennai, the organisers find the city a key platform to conduct the fair. Chennai has been chosen for the second time as venue as the southern state and its suburbs are registering a rapid growth in lighting segment. The fair will provide the exhibitors and the visitors to explore its potential growth opportunities. The exhibition will showcase a wide range of products over the 16,500 sq-m exhibition area, covering residential, commercial and retail lighting, industrial lighting, street lighting, security lighting, environmental/landscape lighting, city beautification lighting, architectural lighting, railway/metro lighting, airport and runway lighting, refineries/mines lighting, LED lighting, intelligent lighting, lighting with non-conventional energy, speciality lighting, lighting accessories and controls, power saving solutions, and testing and measuring instruments. Seminars and technical sessions; theme pavilion and special outdoor lighting will be the other salient features of the fair. Mainly a B2B event, however, the fair will be open to public in the evenings from 3pm to 7pm.
August 2013 | Electricals Today
06-11_ET_Aug13_News bulletin.indd 11
11
26-07-2013 10:37:32
column / Policy
strong steps needed The government has to intervene with policy support in the form of incentives to accelerate growth in renewable energy Sanjeev Aggarwal Managing director, Amplus Infrastructure
T
he debate over what is the right model for promotion of renewable energy, like wind and solar, has been continuing for a long time in India and even across the world. Many models like generation linked credits, tax benefits, capital subsidy, etc. have been tried in different markets. The initial push for the wind energy market in India came in the form of fiscal incentives. Government provided benefits like Accelerated Depreciation (AD) and customs duty exemptions on import of certain components. Companies and individuals that bought these machines always considered them a great way to save on taxes, and wind plant was always considered excellent ‘financial products’ with demand zooming every September and March. The main purpose of generating power through wind got relegated to the background, which is quite reflective in the average plant load factor (PLF) of wind plants prior to 2008 – anywhere from 8 per cent to 15 per cent in most of the projects. Then we saw the wave of IPPs (Independent Power Producers) along with the demand for Generation Based Incentives (GBI). In 2008-09, the government complied and rightly so. Larger wind farms became the norm with better efficiency, better execution, and better PLFs – this time anywhere in the north of 20 per cent. But loss of AD and GBI led to the loss of sales for the wind industry. The sales reduced by almost 40 per cent in 2012-13 PLF for wind energy from the high of 3,000 plus MW in 2011-12. GBI was reinstated after a gap of one year from April 2013. Industry has been lob-
22-24 % 12
Renewable energy sector requires subsidy support for some more time.
Electricals Today | August 2013
12_13_ET_Aug13_Sanjeev AgarwalJR.indd 12
26-07-2013 10:38:32
column / policy
EXISTING REGULATORY SUPPORT FOR RENEWABLES
A better way is to consider production tax credits (PTC) on the lines of he incentive structure in vogue in USA since 1992. The PTCs can be sold by the IPPs to the tax investors without the tax investor actually getting into the hassles of developing the project, constructing and operating.
Renewable energy generation, with the launch of National Solar Mission in 2010, had gained momentum. Though wind energy still leads the pack as the highest contributor, solar is catching up fast. By 2020, it is expected that solar would equalise wind energy in capacity. To support growth, Renewable Purchase Obligations (RPO) was introduced and is being implemented through the electricity distribution utilities. The aim of RPO is to make the distribution utilities buy electricity from renewable energy sources. It is mandated that the utilities should buy 5 per cent of the total energy from renewables and increase it by one per cent every year till it attains the target of 15 per cent. Target of 15 per cent in set according to the National Action Plan for Climate Change (NAPCC) Introduction of Renewable Energy Certificate (REC) mechanism, which is traded in two categories viz. solar and non-solar, had changed the face of power sector in a major way. The objective of the traded certificate is to enhance those utilities to compensate the RPO obligations through REC mechanism. Unfortunately, the REC market, which is traded in both the power exchanges in the country, has not evolved the way it has been envisaged.
bying hard for reintroduction of AD. Maybe the government will help out the beleaguered wind equipment manufacturers. For the government, the equation is almost equal in financial terms with both AD and GBI, but the least that can be done is a demand for certain minimum generation from these machines, for best utilisation of tax breaks extended to investors.
B
ut why is there an uneven field in the solar business? Again the companies looking for just fiscal benefits are not worried about the actual generation from the panels and are edging out the real utility companies/IPPs by bidding at much lower tariffs. This creates unreasonable pressures on the IPPs to cut corners and implement projects that may not be able to give the desired output over the life of the project. A better way is to consider production tax credits (PTC) on the lines of the incentive structure, in vogue in USA since 1992. The PTCs can be sold by the IPP to the tax investors without the tax investor actually getting into the hassles of developing the project, constructing it and operating it. The project also does better with an experienced operator selecting the technology, constructing it well, and operating it efficiently. The benefits for the economy are clearly there, while expanding the investor base at the same time. It is time for the Indian government to think about the real purpose of these tax incentives and create favourable fiscal incentive structures that will lead to the growth of the renewable energy industry. Let us not create the AD focused industry in solar that will be difficult to unwind at a later stage. Focus on MWh and not MW.
August 2013 | Electricals Today
12_13_ET_Aug13_Sanjeev AgarwalJR.indd 13
13
26-07-2013 10:38:32
cover story / Equipment
Thermax factor
MS Unnikrishnan, Thermax India MD and CEO, is optimistic that the captive power segment will flourish in the next five years BY RENJINI LIZA VARGHESE
T
he power sector is in a state of limbo as it continues to be surrounded by myriad problems ranging from shortage in equipment supply, fuel constraints, challenges in fund raising, etc. — all of which have added to the woes of independent power producers (IPP). It is true that equipment problems had taken a backseat as no projects were getting off the ground but equipment manufacturers are feeling the heat as their order books have gone down drastically. However, state-owned Bharat Heavy Electricals Limited (BHEL), the largest equipment manufacturer, and Thermax, which supplies sub-critical boilers to the captive segment, are finding new ways of tacking these problems. BHEL, in 2010, had ramped up its capacity from 10,000 MW to 20,000 MW owing to higher demands. However, the demand dipped with orders dropping to less than 50 per cent in the recent past. The story is no different with Themax, the Pune-headquartered equipment manufacturer. It is ready with a boiler factory in the sub 400 MW segment but there are no orders. These companies invested in capacities when the power sector was looking upbeat but the scene changed owing to the policy paralysis in power sector.
14
The private sector entered the generation segment with much fanfare but it could not sustain the momentum. According to Rupesh Sankhe, power analyst with Karvy Broking,“60 per cent of the higher orders in 2010 went to China (the total order was 55,000 MW). No incremental increase has been seen in orders in the last three years. And, to make matters worse, no orders are coming from the private sector now. The current orders are either from the state or from the central segment.” However, the situation is expected to improve in FY2015 when the capex plans for the 13th Five Year Plan starts taking shape. Against this backdrop, ET caught up with MS Unnikrishanan, managing director and chief executive officer of Thermax India. Excerpts from an interview: In 2010, the BTG companies have ramped up capacities to meet demands. Now, there is huge dip in orders. Could you throw some light on this? Electricity demand has only gone up. What we see is a forced deprivation. Power outages are not new but the situation is worsening. For example, in the summer of 2012, there were 1,87,000 MW of power committed by various generation utilities but the consumption was only
Electricals Today | august 2013
14-19_ET_Aug13_cover story.indd 14
26-07-2013 10:45:07
cover story / equipment
august 2013 | Electricals Today
14-19_ET_Aug13_cover story.indd 15
15
26-07-2013 10:45:09
cover story / Equipment 1,10,000 MW i.e. people were deprived of 77,000 MW of available power. The price of electricity at that time was between Rs6-7 and recovery was only Rs3 per unit, so a gap of Rs4 was made up by the government. That is not a sustainable model. Enacting Electricity Act (EA) in 2003 was a stepping stone towards public-private partnership in electricity and not privatisation. Ten years have passed; there is gradual privatisation. It is like one has given the first standard exam and is expecting a graduation degree. Open access is not a reality yet. If the central electricity authority has enacted certain things, then it should be mandatory for the state electricity boards to follow it. The other major issue is related to fuel. Though there is coal available, we are net importers. According to the Planning Commission, by 2020, India be importing half-a-billion tonne of coal i.e. 500 million tonnes. For all the expense put together, including capital investments to get paid back, the average cost of electricity should be around Rs4. Commercial establishments are paying between Rs7 and Rs11.5 and industry between Rs6 and Rs8 on an average. Who are not pay-
The power sector is in the ICU right now, then it has to undergo surgery, then convalesce and, after that, get on the path to recovery. We are possibly talking about four to five years from now.
to undergo surgery, then convalesce and, after that, get on the path to recovery. We are possibly talking about four to five years from now. That means we will see a recovery in the next Plan period? See, what a Five Year Plan means to a country if it is not able to meet the targets. There will be a calamitous kind of a situation in the country any time soon. We will go back to the situation where the industry had to fully depend on captive generation and people on gensets for their power needs. The people who are running the country are not realising what kind of trouble they are going to be creating. People can’t live without electricity as the society has got used to extended hours of quality life. Distributed generation through renewables and micro grids are the latest initiatives along with extending the grid to the remote areas. Will the two complement each other? In any distributed populated country like India, it is uneconomical to extend the grid to the remote areas. Having a local gird or The captive segment is to see double-digit growth.
ing? We need to make them pay so that the average recovery will be Rs4, then only the generation, transmission and distribution will be viable in this country. The average industrial growth for providing jobs needs to grow on an average of 7 to 8 per cent. For a 7 to 8 per cent growth in industry, it will be needing an energy growth of 11-12 per cent. But, here, the demand is taken care of by alternative methods like captive power plants. Do you mean to say that the policy paralysis is responsible for the demand dip in the boiler segment? Absolutely, in year 2010-11, orders worth 42,000 MW were fianlised. And in 2011-12, we finalised 9,000 MW of orders and in 2012-13, as per my calculation, we have finalised only 6,000 MW orders. On the other side, initially, the Planning Commission was talking about a 1,00,000 MW of which 75,000 MW would be thermal. But I don’t know how we are going to meet the target if this is the kind of order realisation. How are we going to tackle problems starting from the bankruptcy of the SEBs and private companies? Many companies like Tata Power, Adani Power, Lanco, GVK Power, GMR Power, etc. are facing difficulties. There needs to be lot more of correction than it appears to be. The power sector in the country is in the ICU right now, then it has
16
Electricals Today | august 2013
14-19_ET_Aug13_cover story.indd 16
26-07-2013 10:45:12
cover story / equipment
islanding is a must. The large grid started happening in the past 70-80 years only. That will continue. Renewable energy, including biomass, solar or wind, are the best options for micro girds, however, these are infirm power except biomass. If you have to create an economical model then you need to bring the economy back to the villages. That means it requires firm power. Then the solution is not solar, unless you have storage facility or technology created for it. However, biomass is a temporary phenomenon. In the long run, it will be unviable for India. Going forward, how do you see the captive segment in India? It will be a good growth story, particularly for companies like Thermax. I would expect a shift from the larger capacity power plants to smaller capacity captive segment because the industry has got to grow. In steel factories, there is waste gas that can be converted to power, and in cement companies, heat recovery can be used to produce electricity. However, when it comes to heavy chemical factories, they cannot afford to depend on grid alone
for power supply and so they will have to opt for captive power. Instead of running gensets and generating electricity at Rs18Rs20, it is economical for them to set up captive plants. So I am expecting the segment to flourish for the next five to seven years with double-digit growth rate. You spoke about more people opting out from diesel to thermal. Are we seeing the shift from coal- to gas-based power plants? I wish could see the shift happen for the good of the country. Gas-based plants are pollution free but, unfortunately, we are gas deficit. If the country had conceived the national gas grid 10 years back as we planned it now, then we could have expected a partial gas-based economy created along with it. The expectation was to have 5 per cent of the total energy consumption from imported gas. I don’t think we created the infrastructure for it, barring the HBJ pipeline. Kochi should be ready by this September. It will run up to Mangalore and Coimbatore in Tamil Nadu. But no further planning has been done. We were supposed to be having six or seven LNG terminals on both sides of the peninsula. And a crisscrossing grid, like the way you have the Euro-grid gas grid or in the Middle East. But nothing has moved in this regard. In the domestic front, there is another gas find by RIL in the KGBasin, this is called the D65, which is 6 km below the D6. But that is not going to make any difference as the domestic prices are going to be almost at international price levels. But making the people pay for energy is a daunting task. But there is an increase in awareness, especially in the urban areas? Yes, sections of people are ready to pay for it. But that section is neither the decision maker nor the influencer. Unless, there is an attitude change, it will be difficult. Energy is a national resource, and every country has a decision to make as to what they want to do with their resources. Seventeen per cent of the world’s populations are Indians and 8.1 per cent of global known resources of coal is here, and 0.9 per cent of the oil and gas resources are also available in the country but these resources are insufficient to meet India’s energy orders for BTG in 2012-13 security. So, if you are developing beyond a point, then people have to pay for it on a global price level. Governments don’t have such a treasury to subsidise. Do you thing a nascent democracy system like India can pay for its citizen’s energy requirements and provide electricity for free of charge? No. That is the reality.
6,000 MW
Elaborate on Thermax’s overseas power business, plans and the investments in pipeline? Overseas, we are predominantly into the conventional side of our business — heating, cooling, chemicals, small size water treatments and air pollution control. Of late, we have also got into EPC
august 2013 | Electricals Today
14-19_ET_Aug13_cover story.indd 17
17
26-07-2013 10:45:15
cover story / Equipment
Thermax is looking beyond India to sustain growth.
and larger size boilers for captive power but not at the IPP level. Initially, we were supplying equipment, and supervising construction but, currently, we are doing the entire process including construction. So, we are creating the entire infrastructure for doing business in South East Asia, Middle East and Africa as we believe that these markets will offer opportunities going forward. Is it because of the sluggishness in the domestic market that Thermax was forced to look beyond India? No, we did it even before the Lehman collapse; the first EPC contract was in 2006. For a billion-dollar company like ours, we need to look beyond India to grow further. So it was necessity that forced us to go out and that is a strategic move. The purpose of this strategy is to de-risk our company. It would put pressure on the company in the short term if we were to depend on one single geo polity. We need to internationalise the company to securitise it. What is your plans in solar, heat recovery, etc. What kind of market are you looking for? Substantial, I would say, because the global prices of energy sources are going to be remaining upward, oil at say $100 plus per barrel. That itself is a steep price. Along with that, coal price,
18
Cement, steel, and energy intense companiesset to opt for captive plants.
gas price, will have higher pricing. Waste to energy is a viable proposition. It is only a matter of availability of funds and the rate at which you are getting it. If you are talking about 14-15 per cent interest rate then pay back will take more time. If we can get funds in single-digit rate, may be 6 or 7 per cent, five to six years will be sufficient for pay back. There are two barriers for waste to energy a) technology availability b) money availability. If technology is available then money will come from some-
We will go back to the situation where the industry had to fully depend on captive generation and people on gensets for their power needs. The people who are running the country are not realising what kind of trouble they are going to be creating.
Electricals Today | august 2013
14-19_ET_Aug13_cover story.indd 18
26-07-2013 10:45:20
cover story / equipment
where. Availability of money doesn’t mean anything if there is no technology. So, our target is to create technology where waste can be converted into usable energy. We are working on technology which will help the world to generate heat even from low-quality heat. You spoke about making funds available in single-digit rate. However, that is far from reality... See, the banking system has got sectoral lending limits. They have exhausted the lending limit. And the money is not coming back. It is getting restructured. It is sitting over there. Unless the restructuring is completed and the government also makes good for it — may be some regulatory changes are made to the banking regulation to increase the sector funding for power — it will not go up. But funding is readily available around the world. But whenever we are talking about a power project, the first challenge people talk about is raising funds? There are two components in funds. Equity and debt, fund in the form of debt is available in the world provided you can have a matching equity. Now, in India, they talk about project 2x660 MW size that is 1,320 MW capacity. Such projects at the current rate requires funds to the tune of Rs7,000 to Rs8,000 crore. A devel-
oper has got to bring in 25 per cent of the equity. That means you are talking about putting in Rs 2,000 to Rs3,000 crore in may be three to four year time as the gestation period for large projects is a minimum four years. How many companies in India got the guts or capabilities to put in that kind of equity in multiple projects in the country? So it is equity which is the problem and not the debt. Get the equity, debt will follow. The world has developed a concept of electricity generation. It is a proven concept and anybody is willing to put money. There is surplus money in the world and investors are only looking for avenues where there is a good return available in certain percentage. In India, the return may be 18-19 per cent. Globally, 10 per cent is considered as good return. You talk to a larger electrical or Gas De’ France, they will say more than 10 per cent mouthwatering. Other than ROI, investors needing stability of the destination. That means they require the assurance that the political system will not reverse anything which was agreed upon. And, lastly, investors also consider the repatriation of the money that they bring in. These are the three main conditions that need to be in place for anybody to investing in. In India, thankfully, the IRRs are more; but currency instability will make the IRRs insufficient as you need to take a forward cover for the currency fluctuations. I think in the long term that will settle down. There had been a scare which was created by GAAR related to the reversal of policy in the recent past. For that they owe an apology; there is nothing wrong in admitting the mistake by a developing county. As a country, what is important is that there should be clarity on long term plans. India can afford to be taxing people more, as we are one of the countries with low tax regimes. And then comes the stability of the country. Who can challenge the stability of India? Whatever is being spoken about India, it is a strong country and will remain as one strong country. So, for an investor, India is a better choice than the so-called singular governance countries which don’t have democracy. So, according to me, money will come. When do expect to see a revival of the sector equipment segment? All of us wanted it to happen day before required growth in yesterday. But, in reality, power sector it will take longer time than expected. India cannot go down any further. Then we will be on our knees. However, the growth rate of 4.8 percent is alarming. So whosoever is going to come to power, whether it is a BJP, Congress or any other coalition, will have to kickstart the investment cycle in the country.
12-13%
Do you see any movement in the power sector in the next six months before the country goes to polls? No, I do not foresee any movement. Having said that, Thermax will put money. We put money in capacities despite all negatives. We haven’t stalled a single project till date.
august 2013 | Electricals Today
14-19_ET_Aug13_cover story.indd 19
19
26-07-2013 10:45:51
distribution / smart grid
t r a m S nd a ecure s 20
Electricals Today | August 2013
20-24_ET_Aug13_Smart_grid.indd 20
26-07-2013 10:52:47
Distribution / smart grid
Cyber security plays a key role in the implementation of smart grids. The question isn't about how to install a 'security system', but how to set up a system securely and subsequently maintain its level of security by adhering to best practices BY RENJINI LIZA VARGHESE
V
irus attacks, intrusions and fraudulent use of one’s account are the challenges of cyber world. For urban Indians, a fraudulent transaction news item will naturally flash in their minds when they hear about automation and cyber related up gradation plans. All these were taken into consideration, when India Smart Grid Forum (ISGF) formulated the working group on Cyber security. The main three points which the Working Group (WG) aims to attain is a) availability of service –by which the service will be accessible to authorised officials at any given point, b) integritythrough this, the working groups wants to ensure that the data is not altered in transit or later, and c) confidentiality- which plays a key role in smart grid application as the data can be accessed by multiple people at different levels. A smart grid is an interconnected system of information and communication technologies, used in the entire gamut of the power sector, encompassing electricity generation, transmission and distribution. The transformation of today’s electricity system into a smart grid is both revolutionary and evolutionary. In such a scenario, it is absolutely critical for various resources to interact with each other in a secured manner to maintain the integrity of the overall system. A security incident can have a severe effect considering the fact that a problem in one part of the system can spread rapidly to other parts and can cause cascading failures. It is of utmost importance that security be built into the architecture of such a complex system at the initial design stage itself. Utilities must consider smart grid security, including vulnerable areas, strategic issues, the layered security approach, data management and privacy concerns, and scenario planning and threat profiling. India is at a nascent stage regarding the implementation of smart grids. The pilot project in Puducherry, implemented by Power Grid Corporation and launched in last September, is the
August 2013 | Electricals Today
20-24_ET_Aug13_Smart_grid.indd 21
21
26-07-2013 10:52:48
distribution / smart grid
Conceptual reference diagram for smart grid information network Markets
Operations
Retailer/ Wholesaler
RTO/ISO Ops
Transmission Ops
EMS
Aggregator
EMS WAMS
Energy Market Clearing house
Enterprise Bus
ISO/RTO Participant
Enterprise Bus
Transmission SCADA
RTO SCADA
Service Providers Distribution Ops DMS
Asset Mgmt
Demand Response
Wide-area Networks
Plant Control System
Substation LANs
Data Collector Substation controller
Generators Bulk Generation
Substation Device
Domain Network Actor Gateway Actor Comms Path Comms Path Changes Owner/Domain
Electric Storage
Transmission
Third-Party Provider
CIS
MDMS
Retail Energy Provider
Billing
Enterprise Bus
CIS Billing
Home/Building Manager Aggregator
Meeting System
Distribution SCADA
Internet/ e-Business
Market Services Interface
Utility Provider
Field-area Networks
Others
Internet/ e-Business
Energy Services Interface
Electric Vehicle
Distributed Generation Electric Storage
Field Device Distributed Generation
Distribution
Meter
Premises Networks Appliances
Customer Equipment Customer EMS
Thermostat
Customer
Source: National Institute for St andards and Technology, NISR Framework and Road map for smart Grid Interoperability Standards, Release 1.0, special publication 1108 (Washington, DC: U.S. Department of Commerce, 2010), 35, http://www.nist.gov/public_affairs/releases/upload/smartgrid_interoperability_final.pdf. Note: ISO/RTO - independent system operator/regional transmission organisation; EMS- energy management system; SCADAsupervisory control and data acquisition; WAMS-wide-area management system; DMS- distribution management system; MDMS-meter data management system; CIS- customer information system; LAN-local-area network.
There are no 'standard laws'there are only best practiceshowever, the industry as a whole is not mature enough on security to adopt these best practices without any regulatory pressure,” said Abraham Samson. 22
only project running in the country. Rest of the sanctioned 13 pilot projects are yet to take off. Abraham Samson, chair of the WG 10 on Cyber Security, who is also the joint general manager, head- IT, engineering and software services, L&T, points out the challenges in putting in a standardisation for smart grids, “There are no 'standard laws' but there are best practices. However, the industry as a whole isn't mature enough on security to adopt these best practices without any regulatory pressure. The Indian Electricity Grid Code (IEGC) makes the following provisions. In 4.6.5 of the IEGC, on Cyber Security- all utilities shall have in place, a cyber security framework to identify the critical cyber assets and protect them so as to support reliable operation of the grid.”
Electricals Today | August 2013
20-24_ET_Aug13_Smart_grid.indd 22
26-07-2013 10:52:49
Distribution / smart grid
There are several concerns that need to be addressed to ensure effective implementation, mainly pertaining to privacy, trade-offs between levels of security and budgets/performance, capacity and awareness and hand holding of utility during initial stages of implementation to ensure successful transition. The question isn't about how to install a 'security system', but how to set up a system securely and subsequently maintain its level of security by adhering the best practices and procedures. Samson added, “My point is that, one shouldn't look at security as standalone, but consider it as part of the system. This can be done if adequate attention is given to security while the system is being designed and subsequently implemented and maintained. These steps can be executed in an evolutionary fashion so that security improves over time. Security programs should go through an evolutionary process that allows them to mature. While bolting-on, security measures can give temporary respite but they are not a sustainable solution.” Currently, India is figuring out a clear road map for implementation of smart grids and discussions are on at various levels to finalise a standard practice norms. Fixing the possible loop holes in the security system even before they role out the pilot projects, seems to be the priority of Cyber Security WG. It is expected that once the 14 pilot projects are implemented, the learning from these would pave a stronger foundation for a pan-India role of smart grids. Generic steps to comply with cyber security would be the definition of security policy, standards, controls, guidelines, risk assessment, gap analysis, remediation, implementation and periodic audits. Most standards for cyber security specify the security requirements to cover: a) Critical cyber asset identification, b) Security management controls, c) Personnel and training, d) Electronic security perimeter, e) Physical security of critical cyber assets, f ) Systems security management, g) Incident reporting and response planning, and h) Recovery plans for critical cyber assets.
India is yet to have a clear roadmap for smart grids.
Challenges in cyber security 1. Lack of understanding of the importance of security among the stakeholders - this includes technology as well as risk aspects. Most Indian utilities do not have a CISO (Chief Information Security Officer) position. 2. RoIe for security is difficult to justify till an incident happens or regulation forces compliance. Today there is no regulation in place to force Indian utilities to implement cyber security standards. 3. Operation of the power system must continue 24×7 with high availability regardless of incidents. And implementation of security measures should not hinder normal or emergency power system operations. 4. Balance is needed between risk and the cost of implementing the security measures. 5. Human element/social engineering, which has become ubiquitous, poses a risk.
W
hile talking about implementation of smart grids, distribution segment finds prominence in the discussions. According to Samson, “Generation has traditionally been the most technologically advance sector in the power delivery system followed by transmission. Generation facilities are relatively isolated from an information exchange perspective, with interconnections mainly with the transmission companies/energy exchanges. However, the distribution segment has normally been neglected, not only in India but also elsewhere. In order to engage the customer, it is essential to improve this part of the system. Also, with distributed generation (solar and wind) at the low voltage levels, it is an urgent need that the distribution network is strengthened. There are several other reasons for the significant focus on this part of the system, including losses, lack of visibility and the scale of growth. “However it would be wrong to say that other parts of the network are being neglected from the smart grid perspective. In India, PGCIL has initiated the process to lay the world's million revenue from smart grid largest Wide Area Monitorsecurity segment ing System (WAMS). This will eventually monitor more than 1,800 critical substations in the country and will be able to take corrective actions even before a serious fault in the grid threatens to cascade to other parts and cause a widespread blackout. Other projects are also being carried out to strengthen our transmission system which include several projects on FACTS (Flexible AC Transmission Technology) and laying a backbone power network for renewables.” Any new technology/system comes with a price attached to it. And Indian market being price sensitive, some sect feels that the country may have to wait further before the implementation of smart grids. However, Samson brushed away the concerns by saying, “Yes, we have already begun to adopt technologies like FACTS and WAMS. At the same time, a lot of work is happening at the metering levels too. " This means the Cyber Security WG is taking all possible steps to make sure that Indian companies adopt technology which are economically viable for a country like this.”
$350
August 2013 | Electricals Today
20-24_ET_Aug13_Smart_grid.indd 23
23
26-07-2013 10:52:50
distribution / smart grid
Smart grid cyber security should be foolproof. zzzzzzzzzzzzzzzzzzzzzzz
Security programs should go through an evolutionary process that allows them to mature. While bolting-on, security measures can give temporary respite but they are not a sustainable solution," said Samson. Incidentally, revenue for cyber security products and services in smart grid was approximately $350 million in 2012. Researchers forecast that this will touch $650 million by 2020. This reflects the huge growth potential in smart grid cyber security market. “In a normal course, IT security budgets for a company are typically in the range of 2 to 3 per cent of the total IT operating budgets,” added Samson. Globally implementation of smart grid hasn’t taken off the way it was anticipated. Several experts are of the opinion that con-
24
cerns in cyber security played a major role in this. Cyber Security WG chair also agrees to this point. He elaborated,“While security and privacy concerns have certainly been one of the causes why the smart grid concept hasn't taken off the way it was envisaged, I don't think it would be appropriate to say that security played a 'major' role. One of the reasons for the slower take off of smart grid projects is primarily the lack of standards for inter-operability and concerns on return of investment. The infrastructure in utilities also is not ready in terms of infrastructure needed, example, strong communication backbone, smart meters, software applications, trading exchanges, etc. There is also an urgent need for awareness and capacity building in the sector.” There are best practices in the world which can be easily replicated in India, however, the security architecture can not be copy-pasted since each system is unique in terms of technology as well as applications. “The industry is now converging on the IEC 62433 standard. This standard will provide a very comprehensive set of frame work for industrial cyber security that includes benchmarking for organisations, control systems, components, and deployment/maintenance,” pointed out Samson. To make it viable and easily adoptable by all distribution utilities, technologies like FACTS and WAMS are put in place. At the same time, a lot of work is happening at the metering levels as well. This, all stake holders believe, will cumulatively create a safe and secure cyber backbone for smart grid, which is reliable.
Electricals Today | August 2013
20-24_ET_Aug13_Smart_grid.indd 24
26-07-2013 10:52:53
ANALYSIS / GAS PRICE
OUT OF GAS
26
Electricals Today | AUGUST 2013
ANALYSIS / GAS PRICE
The otherwise hit power sector will be severely affected as the domestic gas prices have been revised recently. The change is 60 per cent higher from the existing levels of $4.2 per mmBtu. This translates to an additional subsidy burden of Rs7,800 crore
AUGUST 2013 | Electricals Today
27
Analysis / gas price
BY RENJINI LIZA VARGHESE
F
uel constraints in power generation seem to have no end in India, the latest being the hike in domestic gas pricing. After a gap of four years, the central government has given its approval for price revision. From the current price of $4.2 per mmBtu, it is revised to $8.4 per mmBtu (million metric British thermal units) effective from April 2014. However, a clarification from the Ministry of Petroleum and Natural Gas (MoPNG) puts the revision at $6.77 per mmBtu. (The Rangarajan Panel has suggested a simple average of producers’ net back price for Indian imports and world average producers’ net back price thus arriving at a price of $8.8 per mmBtu. The Planning Commission has suggested a price of $10.8 per mmBtu). This translates to an increase of 50 paisa hike in every dollar increase in gas price for the generators, and for the discoms an additional burden of 0.12 to 0.15 paisa per unit in power purchase cost. According to India Ratings (A Fitch group company), a rating agency, “It is estimated that the fuel cost per unit for natural gas-
Cost of gas-based power production to go up by 56%.
28
based power generation will increase by 56 per cent—Rs3.41/ kWh—if domestic gas prices are revised at $6.77 per mmBtu from the current $4.2 per mmBtu. This is likely to manifest itself as an increase of 9 paisa/kwh on the total power generation of 912 billion kwh, leading to an additional burden of Rs78 billion towards fuel cost on the gas-based power generation. The burden, also contributed by the fall in rupee, would ultimately have to be either recovered from consumers or borne by state power utilities.” Ashok Srinivasan of Pune -based think tank Prayas Energy said, “We have not studied the government recommendation or the Rangarajan committee report in detail. However, primafacie it appears that the suggested pricing formula is targeted more towards explorers and producers to attract investment, and does not seem to have taken into consideration consumer interests or larger issues such as power and fertiliser prices, or fiscal deficit.” Power sector is the largest consumer of natural gas, accounting for close to 35 per cent of the country's total consumption in 2012-13. As on May 2013, 10 per cent of the total power generated was gas-based. While the increase in price will be positive for upstream companies, it will add on to the financial burden of discoms, which are already in deep red. The discoms can opt for a pass through of fuel price impact on power purchase. However, keeping the latest development of allowing a passthrough of imported coal-based power projects, the option seems not exists for gas based power projects. The gas price hike has invited resistance from political parties as it will affect the discoms and the consumers. CPI general secretary S Sudhakar Reddy in a letter to prime minister Manmohan Singh, alleged that, " the government has taken the decision to satisfy RIL gas company which wilfully reduced the gas production to 19 per cent in KG-Basin (D6). We urge you to reconsider and withdraw this decision." Terming this as a ‘strange’ government's argument that the move would boost investment in gas extraction, he said "The price increase will be a burden on people to pay Rs16,000 crore for every additional dollar increase of gas price every year in fertilisers and power sectors alone."
Indian gas market shall be a mix of RLNG and domestic gas, and maybe a cheaper pipeline importedgas in a longer horizon. The prices shall be determined by their free market gas-on-gas competition,” said Ashu Sagar.
Electricals Today | August 2013
26-30_ET_Aug13_Gas pricing story.indd 28
26-07-2013 10:55:28
Analysis / gas price
Crisil Research expects the upward revision in price to increase the variable cost of generation for utilities by around Rs2 per unit in 2014-15. “As per our calculation, every $1 per mmBtu increase in gas prices would result in Rs0.5 per unit rise in generation costs. However, this would not have an adverse impact on the profitability of generating utilities as domestic gas price increases are allowed to be completely passed through for fixed return as well as competitively bid out projects. This would increase power purchase costs for distribution utilities, which could impact power off take, particularly in low power deficit states such as Gujarat, Delhi and Maharashtra.” Crisil’s report continued with the analysis of impact on the power purchase cost. “We expect the average power purchase cost of discoms rise by Rs0.12-0.15 per unit in 2014-15. Despite the sharp rise in gas prices, the impact is limited since gas-based generation is expected to account for close to six per cent of total generation. However, the impact on few states such as Andhra Pradesh, Delhi, Gujarat, Tamil Nadu and Uttar Pradesh would be higher since the share of gas-based generation is relatively high. We believe that distribution companies would need to put in place a mechanism to pass on the increase in power purchase costs to end consumers, given that gas prices are expected to be revised quarterly from 2014-15.”
10% of power in India is from gas-based plants.
However, government argues that the decision to hike price in domestic gas could attract more investments into exploration, therein boosting the domestic gas output. Another rating agency, Crisil Research believes that an upward revision in domestic gas prices will lead to higher investments in exploration and production (E&P) sector, both by domestic and international players. Over the long-term, this would result in higher domestic production, which in turn would reduce dependence on imports. “It (price hike) shall immediately release the discovered fields like Deendayal , KG/D2 , Sohagpur for development. At old prices government has been unable to approve these developments. This shall make gas available within two-three years. It shall also mean likely inflow on the bids for new blocks that shall become biddable. These can be as high as 30 per cent,” pointed Ashu Sagar, secretary general, Association of Oil and Gas Operators (AOGO).
Impact of gas price hike on average power generation cost (paisa/kwh) $- Rs rate
50
55
60
65
Gas price - $4.2/mmBtu
-2
-1
0
1
Gas price - $6.775/mmBtu
5
7
9
11
Gas price - $8.8/mmBtu
11
13
16
18
Gas price - $10.8/mmBtu
16
19
22
25
Impact calculated with respect to base case assumptions of $/Rs60 and gas price USD4.2/mmBtu and all India generation of 912bnKwh Source: India-Ratings
I
ndian power sector companies were facing the heat of fuel supply constrains for a long time now. Sagar is of the opinion that the Indian gas markets shall be a mix of RLNG (regasified liquefied natural gas) and domestic gas in the medium term. And he continued, “In the future, along with the two above said, a cheaper pipeline imported-gas in a longer horizon could be part of India’s gas mix. The prices shall be determined by their
August 2013 | Electricals Today
26-30_ET_Aug13_Gas pricing story.indd 29
29
26-07-2013 10:55:31
ANALYSIS / GAS PRICE Iran-Pakistan-India gas pipeline
Domestic gas output is expected to improve soon.
The Iran-Pakistan-India (IPI) ,otherwise referred as the peace pipeline, was one of the projects India was keen on, when announced in 2002. The line will be of 2,700 km in length and the first leg of 1,100 km will be in Iran, 1,000 km in Pakistan and the rest 600 km in India. After US imposed blanket sanctions on Iran, India faced setback in crude imports from Iran since 2011. In 2011-2012, India imported 18.1 million tonnes (MT) of crude from Iran alone, which dipped by 27 per cent to 13.3 MT. For India the IPI would have helped in a major way, however, the geopolitical issues in Pakistan made India go on a slow on IPI. A decade later, though Iran and Pakistan made headway in constructing their quota of pipelines, India is yet to make commitments. The supply to Pakistan is expected to start by the end of 2014. According to the Pakistan officials, they will import 750 (millions of cubic feet per day) mmcfd of gas. The target is to generate 4,000 MW of power using this. Though there was series of discussion with Iranian leaders, India has not made any concrete decision in this regard. Iran at one point has committed even to look at a pipeline avoiding the Pakistan route. Considering the progress made by the Pakistan government in the recent years in Iran pipeline, India now is reconsidering the option at a serious level. If this becomes reality, then India will have access to natural gas at a cheaper rate.
International gas prices
Current price of domestic gas from various sources
(in $/mmBtu) 18
(in $/mmBtu) 20
15
16
12
12
9
Henry Hub
UK NBP
Japan Import prices
APM gas: Priority
RIL gas
PMT gas
LNG contracted
FY 12
FY 13
FY 11
FY 10
FY 09
FY 12
FY 13
FY 11
FY 10
FY 09
FY 12
FY 13
FY 11
FY 10
FY 09
FY 12
FY 13
FY 11
FY 10
FY 09
FY 12
FY 13
FY 11
FY 10
FY 13
FY 12
FY 11
FY 10
FY 09
FY 13
FY 12
FY 11
FY 10
FY 09
FY 13
FY 12
FY 11
0 FY 10
4
0 FY 09
3
FY 09
8
6
LNG spot
Source: Crisil Research
Source: Crisil Research
free market gas-on-gas competition. India is gas deficit, and RLNG is the only firm source of supply right now. However, with the availability of additional domestic gas which is cheaper than RLNG as explained above, average price of all consumers in a few years shall be lower, if no price change was made right now, and dependence on RLNG kept increasing.” As demand for energy continued its climb consistently during the last decade, the country looked at greener and cheaper energy source to bring down the pollution factor. Gas-based power was a better option with KG-Basin coming on-stream. The major impact of the current price revision, Sagar says,“Limits the positive impacts to switch over to cheaper and greener fuel.” However, Crisil in its report, along with the negatives, highlighted the positive effect of price hike as well. According to their analysis, “Because of the hike in price, the weighted
average gas price with LNG blending would rise significantly. Its impact on LNG imports would depend upon the ability of the downstream sectors to pass on the price increase. We believe that there is no major downside risk to LNG imports in the near term. However, LNG imports from the power producers, especially those supplying to low power deficit states, could be impacted due to inability to pass on higher generation cost. In fact, over the long term, market linked pricing in end user industries coupled with shrinking gap between LNG and domestic gas prices would provide an upside to imports of LNG.” Sagar concluded by saying, “Make it attractive for private players to participate, which in the immediate future shall depend on larger RLNG imports over spread out locations.” It resonates the power voice of power developers in the country who are desperately seeking an answer for country’s power woes.
30
Electricals Today | AUGUST 2013
FInance / Energy security
Clean sweep One more MoU has been signed between India and US to ensure energy security and fight climate change. This time, there is an assurance from the US for an investment of $100 million to India’s clean energy segment BY Kaustubh Kulkarni
A
ny natural disaster triggers off a debate on climate change. It happened post the Uttarakhand cloudburst, which washed away part of the state and left a large number of pilgrims and villagers dead. But interestingly, within less than 10 days of the disaster, yet another Memorandum of Understanding (MoU) was signed between the US and India to attain energy security and fight climate change. In the last week of June, visiting US secretary of state, John Kerry met external affairs minister, Salman Khurshid and reaffirmed their countries’ strong commitment to work collaboratively to help each other, recalling the 2009 US-India (MoU) on clean energy, energy efficiency, energy security, and climate change. On one hand, some experts linked the Uttarakhand disaster to the global climate change and, on the other hand, some believe it has nothing to do with the man-made changes to the environment. Whether one believes it or not, it is evident from the magnitude that the excess man-made changes did contribute to the calamity. If we go along with the experts’ view, then the latest signed MoU attains greater significance, as India
August 2013 | Electricals Today
31-35_ET_August13_ClimateChange.indd 31
31
26-07-2013 11:04:33
Finance / Energy Security
US secretary of state John Kerry with Dr RK Pachauri, chairman, TERI.
is struggling to reach set target in climate change and acquiring energy security. If we take stock of the past four years, then India failed miserably in meeting its targets, a) power for all by 2012, b) promoting renewable million energy through REC market, US investments in India's clean c) stricter implementation energy segment of renewable purchase obligation, etc. The second and third was introduced in the year 2009 with the aim of curtailing the greenhouse gas (GHC) emissions, but failed in attaining the desired result. However, the latest MoU brings in a fresh set of investments to the country. This is expected to change the face of the renewable energy business, as new investments will accelerate the growth momentum. As per the MoU signed this time, the US Agency for International Development (USAID) will partner with US-based
$100
32
The latest MoU strengthens an important partnership that can benefit both countries to address climate change. Countries can learn from each other and look for appropriate actions for more energy-efficient ways and utilise renewable energy,� says Mark Ginsberg, former senior executive, US Department of Energy.
Electricals Today | august 2013
31-35_ET_August13_ClimateChange.indd 32
26-07-2013 11:04:34
FInance / Energy security
institutional investor Northern Lights Capital Group and facilitate a $100 million investment in India’s clean energy sector via Nereus Capital. (This is the first time a private investment body is involved in routing the funds to India). This investment, through the Agency’s Development Credit Authority, is expected to create hundreds of additional megawatts of capacity and will also help India’s burgeoning clean energy industry. In order to meet the latent demand and address energy shortfalls, India has set a target of 30,000 MW renewable capacities in the next five years. However, there are questions being raised about the progress of various MoUs signed earlier in this regard. Majority feels that India is not doing enough to achieve targets, though there are many steps taken to tackle energy security and climate change. International expert and former senior executive, US Department of Energy, Mark Ginsberg says, “The latest MoU strengthens an important partnership that can benefit both countries to address climate change. Countries can learn from each other and look for appropriate actions for more energyefficient ways and utilise renewable energy. No country, no company, no single person has all the answers. We need to put more ‘eyes on the problem’, as former secretary of energy Steven Chu would say.” The latest MoU would provide India with much more resources than in the past. But one needs to look into the past MoUs and their progress till date. The recent MoU and the earlier agreements do show a commitment in moving forward. Ginsberg says, “None of this will be easy, but they are important
programmes. If implemented properly, they can move India forward a long way.”
I
n India, the power sector leads the chart of Co2 emitters, as 57 per cent of the country’s energy is produced by burning coal. This puts pressure on the country to look for greener energy sources to meet its power needs. Presently, we are facing a crisis that is irreversible in nature. The climate change phenomenon has unleashed many challenges. The concentration of carbon dioxide in the earth’s atmosphere has passed the significant threshold: 400 parts of greenhouse gases per million. While India presently contributes less to the greenhouse gases compared to the rest of the world. It now appears that, in the next five years, our country could be the third largest emitter. Hence, the Indian government has chalked out a path to control emissions by adopting a mix of conventional and non-conventional energy. Steps taken by india to attain energy security
Missions under NAPCC National Solar Mission National Mission for Green India National mission for Enhanced Energy Efficiency National Mission for Sustaining the Himalayan Ecosystem National Mission on Sustainable Habitat National Mission on Strategic Knowledge for Climate Change National Water Mission National Mission for Sustainable Agriculture
Power sector leads the chart of Co2 emitters in India.
August 2013 | Electricals Today
31-35_ET_August13_ClimateChange.indd 33
33
26-07-2013 11:04:37
Finance / Energy Security All India Solar Installations By Policy Type (MW) Gujrat Solar Policy
856.81 300
JNNSM - Phase I Batch II JNNSM - Phase I Batch I
130 125 115.27
Maharashtra Solar Policy REC Mechanism
91.8
JNNSM - Rooftop Projects JNNSM - Migration Scheme
48 40 20.85
Rajasthan Solar Policy MNRE - Demonstation Program NTPC Bundling Scheme Projects
10 9.06 9 5
Others Karnataka Solar Policy Andhra Pradesh Solar Policy
0
200
400
600
800
Source: Mercom Capital Group, IIc
A
400
34
(as on May 10, 2013)
India Solar Installations (MW) 1,200
Solar Installations (MW)
ccording to Rajesh Menon, deputy director general, Confederation of Indian Industry (CII),“India should be a part of the solution for climate change and adopt a low carbon pathway. However, given our development imperatives, India will have to follow a different trajectory as compared to the developed world. The industry is concerned that the climate change issues should not impact its competitiveness and ability to compete globally. “Therefore, the following critical issues would need to be addressed through an appropriate policy framework: a) Access to low cost finance b) Technology transfers and intellectual property related issues. Undoubtedly, there is a need to take steps now, as climate change is a global issue. The two or three schemes that the government has introduced are already steps in the right direction. For instance, the Perform Achieve Trade (PAT) scheme will drive new technology, efficiencies and investment into the sector covered by the scheme.” Global warming has forced many countries to look for alternate energy sources. Thus, even at the policy making level in India, the climate change Co2 crossed the threshold of issue has taken centre stage. parts per million Since the last five years, the government has launched many programmes to fight climate change. At the same time, as we take a look at the everchanging policies in solar, one gets a sense of experiments being carried out and valuable resources being wasted. The 2010-launched Jawaharlal Nehru National Solar Mission (JNNSM) can be highlighted as the best example. JNNSM has caught the attention of many, but sector experts point out that the flaws in the policy could derail the investment targets this year. A report published by Mercom Capital
1,000
1,000 800
1,100 980
Thermal PV
600 400 200 0
190 35 2010
2011
2012
Thermal
0
5.5
0
50
PV
35
184.5
980
1,050
2013F
Source: Mercom Capital Group, IIc
Group says that India is still experimenting with the policy. The report which criticises the policy says, “Considering India is an emerging solar market, where the growth rate is expected to be much higher, installations in 2013 will likely end up disappointing. The current solar policy environment looks more like an experiment than a serious policy that will help solve the current power crisis.” Indian policy makers are fighting over the technology, solar photovoltaic (PV) and concentrated solar power (CSP). This is making it more difficult to achieve the targets. But these are problems that almost all countries face. It is difficult to take a single hurdles stand on this issue of providing solutions to climate change. Ginsberg pointed out that, “All countries face serious challenges in their climate change plans. I am convinced that India, like most countries of the world, is serious about addressing climate change. There is more that every country
Electricals Today | august 2013
31-35_ET_August13_ClimateChange.indd 34
26-07-2013 11:04:37
FInance / Energy security
Adding renewable energy capacity would help address climate change.
can do. Rather than focus on India, I would ask all countries to accelerate the dialogues and investment needed to find workable solutions.” Menon is more optimistic, “Going forward, India needs to aggressively pursue and market co-benefits based mitigation actions to get recognition as a major emitter with low responsibility and low capability. This will decrease risk of unilateral actions." He added, “Therefore, the following critical issues would need to be addressed through an appropriate policy
India should be a part of the solution for climate change and adopt a low carbon pathway. However, given our development imperatives, India will have to follow a different trajectory as compared to the developed world,” said Rajesh Menon, deputy director general, CII.
framework i.e. access to low cost finance, technology transfers and intellectual property related issues.”
A
part from the JNNSM, the states too have their own policies to attract investment in the non-conventional energy market. But, it seems, the policy paralysis at the central level has percolated even to the state levels–where solar projects are being termed ‘unviable’. For instance, Tamil Nadu, a state with severe power shortage, had proposed a goal of 3,000 MW of solar power by 2015 through utility-scale and rooftop projects. It announced a 1,000 MW tender in December 2012 for solar. However, qualifying bids only amounted to 494 MW. Out of that, only 266 MW of projects were issued a letter of intent; while the rest are pending. The state used a method whereby the lowest bid has to be met by all bidders. This resulted in a very low i.e. Rs5.47/kWh or $0.10 per unit bid, which was deemed unviable and prompted the state distribution company to fix the price. The government is not opting solar alone to tackle the issues of climate change and energy security. If the country could add 15,000 MW of wind energy, it would save Rs50,000 crore per annum in coal imports. Essentially, it is high time that the country gets its act together to reap the benefits of getting more investments in renewable energy through MoUs, so that the climate change action plan can pick up momentum while simultaneously addressing the power crisis.
August 2013 | Electricals Today
31-35_ET_August13_ClimateChange.indd 35
35
26-07-2013 11:05:21
RENEWABLES S / BA BATTERIES S
READY TO TAKE OFF
36
Electricals Today | AUGUST 2013
RENEWABLES S / BA BATTERIES
Emerging renewable energy economy in the country requires large capabilities of energy storage facilities. To overcome the infirm nature of renewables, the storage market is set to register 100% growth BY ET TEAM
G
lobally, the mix of renewable energy in energy basket has gone up signifi cantly. Take for instance, out of the total installed capacity in India, the contribution of renewable energy is 12.25 per cent. And in renewable energy, wind still dominates the pack as the largest contributor. However, there is a predictable change witnessed as the share of installed solar power is increasing. This also brings in the challenge of making the energy available at required times. The seasonal variations and natural fl uctuations in weather forces users to adopt energy storage systems. Batteries help the consumers to store electricity in case of intermittent producing sources like solar and wind. It also helps them to store the surplus energy for later consumption. The fact is that the importance of energy storage systems for India cannot be underestimated. In a country where more than 400 million people do not have access to electricity and a similar number don't have reliable and quality grid power, distributed and off-grid PV systems along with storage will prove extremely beneficial. As the country has given major thrust on developing distributed generation, to ensure electricity access to rural areas, storage facilities have become a necessity. The rural electrifi cation programme (where solar power has taken centre stage) invariably developed a market for batteries. When many in rural areas realised the impact electricity has on the quality of life, storage batteries became the way of life — even though large scale solar plants of 1MW and above capacity currently feeds the grid directly. The Boston Consulting Group, in its report, mentions that “it expects an annual global sale of storage technologies of Euro six billion by 2015, Euro 15 billion by 2020 and Euro 26 billion by 2030. With North America, China, Japan and Europe leading the chart.” The global market segment is a matured one especially in Europe where some of the countries even export renewable energy.
AUGUST 2013 | Electricals Today
37
RENEWABLES / BATTERIES
STORAGE POTENTIAL MARKET - TOTAL OF 20 GW FROM DIFFERENT SEGMENTS (in MW)
Rural—grid connected
Transportation sector
0
1,08
Industrial emergency backup
Grid ancillary services
Utility application (Peaker replacement)
1,110
Townships
Hotels
370 420
SEZs
510
560
Solar integration
1,13
0
60
1,3
870
1,000
770
Telecom industry
520
230
1, Agricultural sector
Hospitals
1,0
00
Shopping malls
750
1,430
1,070 Others (defence, etc.)
Data centres Rural—micro grid
Realising the importance of storage, MNRE through National Solar Misson is offering higher subsidy for PV systems with energy storage than those without storage," says Madhavan Nampoothiri.
E
nergy storage market related to solar energy is in a nascent stage in India, and has picked up well in the last few years. Though the numbers available with different agencies are showing healthy growth, but it is diffi cult to cull of the number of batteries sold for energy storage alone, as the data include sales of automotive batteries as well. However, leading companies in the segment point out that the market is slowly shifting to the rural areas, especially after the solar programme kick started in 2010. All thanks to the efforts of the Ministry of New and Renewable Energy (MNRE) through policy support in deploying solar and wind energy. In the beginning the investment to set up storage facility may look as a costly proposition, since the country is price sensitive.
38
Electricals Today | AUGUST 2013
Wind integration
However, one soon realises that consuming electricity from the individual generation units (in this case solar) are in fact cost effective in the long run. The economical support in the form of subsidies in solar has also helped in nurturing the new market. The market is driven, in the short to medium term, to residential applications of energy storage with solar installation. However, experts are not ruling out deployment of larger storage facilities within the transmission/distribution segment to overcome the challenges of infi rmity of electricity produced from solar. This, experts feel, will take a longer time to realise in India. Madhavan Nampoothiri, a Chennai-based solar expert, pointed out, “Many parts of the country face power cuts for up to 16 hours per day, and the power is available only intermittently. This has prompted many households who could afford these storage systems, to deploy them at their homes and use them during the long hours of power cuts. Almost none of these storage systems have so far been connected to a PV system. The energy stored in these systems is usually the grid electricity. However, there are no major storage systems either in the industrial or commercial sectors, mainly owing to the high cost of storage devices.” He continued, “Realising the importance of off-grid PV systems with storage, MNRE through the Jawaharlal Nehru National Solar Mission (JNNSM) is offering a higher capital subsidy for PV systems with energy storage, than those without storage. This
Renewables / batteries
different types of storage system Existing
Revised
benchmark cost (Rs/Wp)
benchmark cost (Rs/Wp)
210 Wp to 1 kWp
270
240
1 kWp to 10kWp
270
220
10 kWp to 10kWp
270
200
upto 5 kWp
190
160
5 kWp to 100 kWp
190
140
---
130
Type of system
Power plants/packs (with battery)
Power plants/packs (without battery)
100 kWp to 500 kWp
Large storage facility can address the infirmity issues of renewables.
will surely boost the energy storage market.” According to Luminous Power Technologies, one of the leading battery producers in the country, “The solar storage battery segment is expected to register a growth rate of 100 per cent every year for at least next five years.” This reflects what the industry anticipates for the battery segment market in the near future. The basic lighting solution of solar energy consists of solar panel, storage battery, and normally a CFL lamp. By adding high capacity solar panels, more electrical equipment like fans, plug points, etc., could get connected as well. There are varieties of
products available in battery market, but people usually select them according to the hours of output and life span. There are two different types of technologies available across the world; electromechanical and non-electromechanical storage. Under electro-mechanical there are four categories viz. a) Molten salt technology, b) Lithium-ion, c) Advanced lead-acid, and d) Flow batteries. Efficiency of these batteries ranges from 75 per cent to 89 per cent depending on the category. Molten salt technology batteries give the maximum efficiency close to 90 per cent. Non-electro mechanical category batteries include: a) Compressed air energy storage (CAES), b) Thermal energy storage, and c) Flywheels. The efficiency in this segment ranges between 65 to 85 per cent. It is important to select the right technology such that it fits in to the geographical and grid conditions of the area. The technologies are still expensive, but choosing the right category product will optimise the efficiency to the fullest. Globally, the current prices of batteries are ranged between $800- $1,000 levels per kWh. Sector experts are of the view that the price range has to come down to $200 levels so that it will be more economical for the consumer. The main challenge in the segment is understanding the impact of the various applications on the cycle life of batteries. The cycle life of batteries is very critical for the overall economical viability, and it depends a lot on operational parameters such as depth of discharge, operating temperature, charge – discharge rate, etc. The role of batteries in solar energy segment is on the rise as storage is necessity. However, because of the complexity and cost factor involved, consumer should take utmost care while choosing the product.
August 2013 | Electricals Today
36_40_ET_Aug13_Battries.indd 39
39
26-07-2013 14:34:41
market data
progress in Capacity addition Nuclear and hydro energy showed 112 and 106 per cent generation in the month of June. However, thermal generation was disappointing, with the segment touching only 92 per cent of the planned capacity Capacity addition summary Period : June 2013 vis - a -vis June 2012 Generation (GWH) Monitored Capacity (MW)
Target Apr 2013 to Mar 2014
1
Thermal Nuclear
Category / Regions
Jun-13
April 2013 - June -2013
Program
Actual *
Actual same % of program month 2012 - 13 (4/3)
% of last year Program (4/5)
Actual*
% of Actual same program period 2012 - 13 (9/8)
% of last year (9/10)
2
3
4
5
6
7
8
9
10
11
12
34624.26
207657.00
17353.00
14876.50
15875.73
85.73
93.71
50837.00
47745.94
46845.90
93.92
101.92
1620.00
10664.00
777.00
1005.04
814.14
129.35
123.45
2627.00
2972.93
2580.62
113.17
115.20
Hydro
15523.25
61597.00
7624.00
7796.20
7664.87
102.26
101.71
18318.00
18684.81
17875.85
102.00
104.53
Total
51767.51
279918.00
25754.00
23677.74
24354.74
91.94
97.22
71782.00
69403.68
67302.37
96.69
103.12
Thermal
59562.31
292416.00
23253.00
21226.62
21986.66
91.29
96.54
71246.00
71251.84
68668.14
100.01
103.76
Nuclear
1840.00
12363.00
986.00
1113.73
1222.85
112.95
91.08
2985.00
2624.71
3725.05
87.93
70.46
Hydro
7392.00
15843.00
757.00
1247.77
1058.19
164.83
117.92
2815.00
3824.24
3447.02
135.85
110.94
Total
68794.31
320622.00
24996.00
23588.12
24267.70
94.37
97.20
77046.00
77700.79
75840.21
100.85
102.45
Thermal
29252.80
157021.00
12461.00
12633.98
12931.45
101.39
97.70
39702.00
42816.99
41380.72
107.85
103.47
Nuclear
1320.00
12173.00
750.00
705.13
708.93
94.02
99.46
2268.00
2057.16
2106.29
90.70
97.67
Hydro
11387.45
29454.00
1485.00
1370.45
1603.95
92.29
85.44
5886.00
4617.73
5714.38
78.45
80.81
Total
41960.25
198648.00
14696.00
14709.56
15244.33
100.09
96.49
47856.00
49491.88
49201.39
103.42
100.59
Thermal
27345.05
150503.00
12154.00
11615.06
11046.12
95.57
105.15
36844.00
35181.62
34665.31
95.49
101.49
Hydro
4078.70
11191.00
935.00
1112.07
623.84
118.94
178.26
2782.00
3165.48
1691.39
113.78
187.15
Total
31423.75
161694.00
13089.00
12727.13
11669.96
97.24
109.06
39626.00
38347.10
36356.70
96.77
105.47
Thermal
1258.70
5140.00
375.00
346.64
348.62
92.44
99.43
1119.00
1197.94
1085.55
107.05
110.35
Hydro
1242.00
4178.00
447.00
469.86
426.21
105.11
110.24
921.00
986.44
768.04
107.11
128.44
Total
2500.70
9318.00
822.00
816.50
774.83
99.33
105.38
2040.00
2184.38
1853.59
107.08
117.85
0.00
4800.00
535.00
327.30
491.70
61.18
66.56
1021.00
938.76
942.77
91.95
99.57
Thermal
152043.12
812737.00
65596.00
60698.80
62188.58
92.53
97.60
199748.00
198194.33
192645.62
99.22
102.88
Nuclear
4780
35200.00
2513.00
2823.90
2745.92
112.37
102.84
7880.00
7654.80
8411.96
97.14
91.00
Hydro
39623.4
122263.00
11248.00
11996.35
11377.06
106.65
105.44
30722.00
31278.70
29496.68
101.81
106.04
Bhutan Imp
0
4800.00
535.00
327.30
491.70
61.18
66.56
1021.00
938.76
942.77
91.95
99.57
Total
196446.52
975000.00
79892.00
75846.35
76803.26
94.94
98.75
239371.00 238066.59 231497.03
99.46
102.84
Northern Region
Western Region
Southern Region
Eastern Region
North Eatern Region
Bhutan Imp. Region
All Indian Region
* Provisional based on actual -cum -assessment
40
Electricals Today | august 2013
40-41_ET_Aug13_Market data.indd 40
26-07-2013 14:35:33
market data
Thermal PLF decreases While plant load factor of nuclear improved, thermal were below the planned levels Plant Load Factor (%) Jun-13
Category / Regions
April 2013 - June -2013
Program
Actual*
Actual same month 2012 - 13
Program
Actual*
Actual same month 2012 - 13
Thermal
74.76
64.07
71.58
72.13
68.11
70.40
Nuclear
71.00
86.17
69.80
79.13
84.03
72.94
Thermal
68.35
61.18
72.39
69.24
66.38
74.15
Nuclear
74.43
84.07
92.30
74.28
65.31
92.70
Thermal
76.78
76.55
83.64
80.95
82.95
86.78
Nuclear
78.91
74.19
74.59
78.67
71.36
73.06
64.54
61.60
63.80
64.50
61.99
67.50
Thermal
70.45
64.63
72.21
70.85
68.75
73.93
Nuclear
74.58
82.05
79.79
77.10
73.33
80.58
Northern Region
Western Region
Southern Region
Eastern Region Thermal All Indian Region
Total capacity 2,22,446.50 MW (As on July 2, 2013)
Monsoon brought cheer to electricity segment as demand decreased
26,000
E
26, 718
1,25,325
4,7 80
39,623
Thermal Nuclear
Demand dips owing to good monsoon
Hydro
Renewable energy
arly monsoon, which lashed across the country was a nightmare for the generation companies. Over flowing dams forced the generators to shut down generators in many of the hydro electric projects in states like Maharashtra, Kerala and Uttarakhand. Chandrapur generation facility in Maharashtra was shut in the month of March-April due to scarcity of water. The irony is that, two months later it had a forced shutdown because of excess of water. In Kerala, including the Idukki facility has to scale down the production. It is normal for thermal facilities in the country to scale down production and do maintenance during the monsoon season. But this time, many of the facilities in the country had to shut down generators as flood water entered generator rooms. Now it is expected that this year, the intensity of power issues would not be as severe as the last year, as the quota from hydro will cover up significantly.
Others
August 2013 | Electricals Today
40-41_ET_Aug13_Market data.indd 41
41
26-07-2013 14:35:33
Market Column
Big opportunity Rising population and living standards are resulting in energy demand to touch double digits Rajeev R. Darji Sr. Research Analyst, xDirect Global Solution Pvt. Ltd
I
ndia’s ambition of higher capacity addition in energy was marred with fuel constraint for a while now. The latest being the hike in natural gas pricing. 10 per cent of the total generation of the country is from gas-based power plants, which is the cleanest form of fossil fuels. However, the non-availability of natural gas brought down the plant load factor (PLF) of gas-based power plant to below 60 per cent. It is equally important to choose cleaner energy source, while giving utmost importance in providing ‘electricity for all’. Keeping the target of cutting Co2 emissions, cleaner burning natural gas seems to be the cheapest and the best way going forward for many of the countries including India. The world’s fourth largest electricity generator, India, has an installed capacity of 225. 133 GW as on May 2013. While 87.55 per cent of energy comes from conventional energy sources, 12.45 per cent contribution is from renewable energy. In terms of fuel, coal-fired plants account for 57 per cent of installed electricity capacity, compared to South Africa's 92 per cent; China's 77 per cent; and Australia's 76 per cent. After coal, large hydro-power projects accounts for 19 per cent, renewable energy for 12 per cent and natural gas for about 9 per cent.
I
ndia, one of the fastest growing economies in the world is also one of the rapidly growing importers of Liquefied Natural gas (LNG). Import by US has seen a decline post the shale gas discovery. However, the rapid growth in LNG demand from Japan and China will, for sure, limit the ability of India to source LNG. Though India has long term contract with Qatar for supply, but the ever increasing demand is forcing the country to look at newer meadows. Australia and Russia are the potential two countries the Indian companies are hoping to sign long term LNG contracts. Currently, the shortfall is met by short term contracts from these countries. However, the rising gas prices in the international market dampens India’s quest for gas at a cheaper price range. Buyers often complain about the link of gas price with the ever climbing expensive oil in long
42
Generation capacity assitions by fuel type. 2010-2035 in GW 50 40
Natural gas Renewables Coal Nuclear
30 20 10 0 2010 - 2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2035
term Asian contract for LNG. Now, India will have no choice but to sign up contracts quickly, if it has to avoid beaten by supply contracts by Japan and China. Competition at this juncture seems to intensify. Japanese companies have had to increase import of gas, as generation from gas based plants spiraled up post the Fukhushima nuclear plant shut down. In the recent past what we witnessed was, Indian buyers had to outbid Japan in spot, or immediate delivery shipment of LNG from Qatar. For the last few years Indian companies are held back from signing up long term LNG contract hoping that the prices will come down. However, the prices seem to be on an upward trend. Lackluster domestic exploration gives little reason to expect a turnaround. Geopolitical hurdles to pipeline supply through fractious neighbours like Iran, Pakistan, and Afghanistan have made LNG a costlier commodity for the country. With the ambitious plan of capacity addition in power generation, India needs to overcome the price barriers and concentrate on getting long term LNG contract in place. Recent reports from various international agencies show that the natural gas in the international market will remain in the current levels of $9-15 dollars. This is unviable for Indian power generators. The solution seems to be lying with the country securing long term contracts before the prices touches new heights along with increasing the domestic gas output.
Electricals Today | august 2013
42_ET_Aug13_Market Data Column.indd 42
26-07-2013 11:19:42