et aug13 lowres

Total pages 44Volume 1 | Issue 7| August 2013 | `50

ETELECTRICALS TODAYMANAGEMENT EXPERTISE FOR THE POWER INDUSTRY

FACTORTHERMAX THERMAX INDIA

MANAGING DIRECTORMS UNNIKRISHNANIS OPTIMISTIC THAT THE CAPTIVE POWERSEGMENT WILL FLOURISHIN THE NEXT FIVE YEARS

IMPORTANCE OF CYBER SECURITY IN SMART GRIDS

DISTRIBUTION

ANALYSISDOMESTIC GAS PRICE HIKE TO HIT POWER SECTOR

3AUGUST 2013 | Electricals Today

CONTENTS

Cover StoryMS Unnikrishnan, MD and CEO of Thermax India, expects double-digit growth in the captive power segment

DistributionCyber security plays a key role in smart grids

AnalysisDomestic gas price hike to severely hit power sector

FinanceMore investment from US inIndia's clean energy segment

Renewable Increasing role of batteries in solar energy

14

20 26 31 36

Editor's NotE

Electricals today | August 2013 4

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Volume 1 | Issue 7 | August 2013

EtElEctricals today

ManageMent expertise for the power industry

The 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.

Untimely move

Renjini Liza Varghese, [email protected]

04_ET_Aug13_Ed Letter.indd 4 26-07-2013 10:28:36

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Total number of pages 52

Volume 1 | Issue 1 | January 2013 | `50

ETELECTRICALS TODAY

MORE POWER TO THE INDUSTRY

ARE ENERGY-EFFICIENT

PRODUCTS REALLY

EFFICIENT?

‘SMART GRID IS NO

LONGER A CONCEPT,

IT’S A NECESSITY’

Even though Jyotiraditya Scindia

describes his current charge as

‘daunting’, the young power

minister is ready to take on the

challenges. But can he deliver?

ARUN MAIRA,

MEMBER, PLANNING

COMMISSION,

ON WHAT AILS

THE INDUSTRY

VIEWPOINT

01_ET_Jan2012_Cover.indd 1

07-01-2013 15:16:04

Electricals Today | August 2013 6

BullETin

Scindia ExpEctS morE US invEStmEntS

PK Sinha -taKeS over aS the new Power Secretary

KEC bags Rs1,300 CR oRdERs

Power minister, Jyotiraditya Scindia, said that, “There are greater poten-tial 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 elabo-rated 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 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.

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 Min-istry 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.

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.

p8

to add in next five years

Jyotiraditya Scindia

118 GW

06-11_ET_Aug13_News bulletin.indd 6 26-07-2013 10:33:25


BULLETIN

INALSTOM T&D WINS CONTRACT FROM BAJAJ

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, par-ticularly 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.”

P 10

BGR ENERGY BAGS RS1,573 CR CONTRACT FROM OPGC

ESSAR APPLIES FORDISTRIBUTION LICENCEFOR GURGAON

Odisha Power Generation Corporation (OPGC) has awarded Rs1,573 crore con-tract for Balance of Plant, including ancil-lary and peripheral units, to BGR Energy Systems, as part of its expansion project. The order is for OPGC's 2X660 MW ther-mal 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 opera-tion in the 12th five-year plan.

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 o� cial said. "Essar Projects (India) Limited has applied for electricity distribution licence in the area of Gur-gaon municipal corporation for a period of 25 years," Haryana Electricity Regula-tory Commission, director (tari� ), 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 appli-cation has said that it would set up its own distribution network for supplying power to the consumers.

The plant is scheduled to be commissioned in 2015.

If the licence is granted, Essar will be the second distribution licence holder in that area.

Electricals Today | AUGUST 2013 8

BULLETIN

FUEL STOCK IMPROVES IN THERMAL PLANTS: CEAWith improvement in supply of coal clubbed with dip in demand for elec-tricity, coal stocks at thermal power stations in the country have shown improvement. According to Central Electricity Authority (CEA) data, as of June 27, only �ve 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 inven-tory in the month of May. "Largely, the fuel supplies have increased resulting in higher coal storage at plants. Andon the other hand the plant load factor

GVK POWER SEEKSTAPERING LINKAGES FOR POWER PROJECT IN PUNJABGVK Power has asked the govern-ment to consider its request for tapering linkages to meet the coal requirement of its 540 MW thermal power plant in Punjab. According to the o� 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 �rst unit of our 2x270 MW project by mid August 2013 and not only provide relief to the govern-ment but also the Northern Grid," Reddy said in the letter.

COAL REGULATOR: POSITIVE FOR POWER SECTOR INDIA RATINGSAccording to India Ratings & Research, the government’s recent decision to con-stitute 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, ine� cient mining practices and distorted pricing mechanisms. These factors have had a crippling e�ect 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 deter-mine 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.

is declining due to less demand from the states," a Power Ministry o� cial told news agency. Three plants with less than four days of coal belong to NTPC, the country's largest power producer—2,980 MWSipat project in Chhattisgarh, 2,600 MWRamagundem and 2,000 MW Simhadri in Andhra Pradesh. The three plants also had supercritical stocks in May. However, as many as �ve 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.

The fuel supply constrains resulted in higher coal storage at plants.

Fuel supply will help mitigate the shortage of power in Punjab


BULLETIN

PUNJ LLOYD TO DEVELOP100 MW IN RWANDA

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 com-plete the Darlipalli project in �ve years. The project has received environment clear-ance while forest clearance is expected soon,” said chairman and managing direc-tor, NTPC, Arup Roy Choudhury. Of 1,274.9

acres private land needed for the project's main plant, the state government has issued possession certi�cate for 1,205.79 acres. Alienation proposals for 339.49 acres of government land are in di�erent stages of processing. The maharatna �rm needed 1,652 acres for this power station, the cost of which has been estimated at Rs1,2850.07 crore.

GMR SYNCHRONISES UNIT II OF KAMALANGA PROJECTGMR Infrastructure Limited has announced that it has synchronised the second unit of 350 MW of the Langa ther-mal power plant at Kamalanga in Dhenka-nal district of Odisha. The �rst 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 Lim-ited (GKEL), is establishing the 4x350 MWin two phases of 3x350 MW and 1x350 MW respectively. Work on commissioning the third unit of 350 MW in the �rst 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.

Infrastructure �rm 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 com-pany o� cial said. As per the agreement, Punj Lloyd will construct, �nance, main-tain and operate a 100 MW power plant in North Akanyaru of Eastern Province of Rwanda. "We have just signed a memo-randum 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 a�airs) Luv Chhabra said. The construction period for the project is 42 months after securing �nances. 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 �nancing cost during the con-struction period.

The Odisha project has received environmental clearance.

Construction of any power plan will take 4 years time.


BULLETIN

DLF SELLS WINDMILL IN GUJARAT FOR RS325 CRRealty 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, Karna-taka and Tamil Nadu with a total capacity of 227 MW.

JNPT TO SET UP 7 MW WIND MILLLargest container port, Jawaharlal Nehru Port Trust (JNPT) is invest-ing 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.

IFC FINANCES AZURE'S ROOFTOP SOLAR PROJECTIFC, 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 Wad-hwa 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 SOLARAccording to chairman of the Legislative Council D H Shankar Mur-thy, 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.

Renewable energy roundup

IFC'S investment will help avoid 3,600 tonnes of carbon emissions a year.

The windmill will help JNPT save 30 per cent on energy costs.

11August 2013 | Electricals Today

EVENTS

7Th REI 2013 ExpoVenue: India Expo Centre and Mart, Greater NoidaDate: 12-14 September 2013The 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 ExpoVenue: HITEX Exhibition Centre, HyderabadDate: 3-5 October 2013The 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-2014Venue: BIEC, BengaluruDate: 8-12 January 2014Elecrama-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 SuMMITVenue: Mahatma Mandir,Gandhinagar, Gujarat Date: 9-11 January 2014The first Indian Renewable Energy Summit, hosted in partner-ship 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.

EVENTS Lii 2013 to be held in Chennai

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 par-ticipants 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 previ-ous 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 sub-urbs 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 resi-dential, 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. Semi-nars 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.

Prominent speakers at Lii 2012.

06-11_ET_Aug13_News bulletin.indd 11 26-07-2013 10:37:32


column / Policy

The government has to intervene with policy support in the form of incentives to accelerate growth in renewable energy Sanjeev AggarwalManaging director, Amplus Infrastructure

strong steps needed

The 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. Com-panies 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 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-

PLF for wind energy22-24 %

Renewable energy sector requires subsidy support for some more time.

12_13_ET_Aug13_Sanjeev AgarwalJR.indd 12 26-07-2013 10:38:32


column / Policy

bying hard for reintroduction of AD. Maybe the government will help out the beleaguered wind equipment manufactur-ers. 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.

But 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.

EXISTING REGULATORY SUPPORT FOR RENEWABLES

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.

Renewable energy sector requires subsidy support for some more time.

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.

12_13_ET_Aug13_Sanjeev AgarwalJR.indd 13 26-07-2013 10:38:32

Electricals Today | august 2013 14

covEr sTory / EquipmEnT

ThermaxMS Unnikrishnan, Thermax India MD and CEO, is optimistic that the captive power segment will flourish in the next five yearsBY RENJINI LIZA VARGHESE

facTor

The power sector is in a state of limbo as it con-tinues 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 equip-ment 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 manufac-turer. 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.

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 Bro-king, “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

14-19_ET_Aug13_cover story.indd 14 26-07-2013 10:45:07

15august 2013 | Electricals Today


15




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 privatisa-tion. Ten years have passed; there is gradual privatisation. It is like one has given the first standard exam and is expecting a gradua-tion 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 avail-able, 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-

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

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 uneconomi-cal to extend the grid to the remote areas. Having a local gird or

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.

The captive segment is to see double-digit growth.




for power supply and so they will have to opt for captive power. Instead of running gensets and generating electricity at Rs18-Rs20, 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 KG- Basin, 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 security. So, if you are devel-oping 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.

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 treat-ments and air pollution control. Of late, we have also got into EPC

6,000 mWorders for BTG in 2012-13

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, how-ever, 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 solu-tion 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

The captive segment is to see double-digit growth.




and larger size boilers for captive power but not at the IPP level. Initially, we were supplying equipment, and supervising construc-tion but, currently, we are doing the entire process including con-struction. 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 con-tract 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 interna-tionalise 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,

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.

Thermax is looking beyond India to sustain growth. Cement, steel, and energy intense companiesset to opt for captive plants.




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 restruc-turing 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 pro-jects 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 percent-age. 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 mouth-watering.

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 instabil-ity 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 stabil-ity 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 govern-ance 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 yesterday. But, in reality, it will take longer time than expected. India cannot go down any further. Then we will be on our knees. How-ever, 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.

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.

required growth in power sector

12-13%



disTribuTion / smarT grid

Smart and

Secure20-24_ET_Aug13_Smart_grid.indd 20 26-07-2013 10:52:47



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

Virus 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) integrity- through 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 vulner-able 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

BY RENJINI LIZA VARGHESE

20-24_ET_Aug13_Smart_grid.indd 21 26-07-2013 10:52:48

Source: National Institute for St andards and Technology, NISR Framework and Road map for smart Grid Interoperability Stan-dards, Release 1.0, special publication 1108 (Washington, DC: U.S. Department of Commerce, 2010), 35, http://www.nist.gov/pub-lic_affairs/releases/upload/smartgrid_interoperability_final.pdf.Note: ISO/RTO - independent system operator/regional transmission organisation; EMS- energy management system; SCADA- supervisory 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.



Plant ControlSystem

SubstationDevice Electric

Storage

ElectricStorage

ElectricVehicle

Substationcontroller

DistributedGeneration

DistributedGeneration

CustomerEquipment

CustomerEMS

DataCollector

FieldDevice

Bulk Generation

Transmission Distribution Customer

Markets Operations

RTO/ISOOps

TransmissionOps

Distribution OpsRetailer/Wholesaler

DemandResponse

MeetingSystem

ISO/RTOParticipant

TransmissionSCADA

Energy Market

Clearing house

AggregatorEMS EMS

DMS

WAMS

Meter

Internet/e-Business

Field-areaNetworks

PremisesNetworks

SubstationLANs

RTOSCADA

EnterpriseBus

EnterpriseBus

EnterpriseBus

AssetMgmt

MDMS

Service Providers

UtilityProvider

Third-PartyProvider

CIS

Billing

CIS

Billing

RetailEnergy

Provider

Home/BuildingManager

Aggregator

OthersInternet/

e-Business

Generators

Appliances

Thermostat

EnergyServicesInterface

Wide-areaNetworks

DistributionSCADA

DomainNetworkActorGateway ActorComms PathComms Path Changes Owner/Domain

MarketServicesInterface

There are no 'standard laws'- there are only best practices-

however, the industry as a whole is not mature enough on security to adopt these best practices without any regulatory pressure,” said Abraham Samson.

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.”

conceptual reference diagram for Smart grid information network




challenges in cyber security1. 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 imple-

ment cyber security standards.

3. Operation of the power system must continue 24×7 with high availability regard-

less 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.

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 ini-tial 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 main-tained. 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 imple-mentation 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 identi-fication, b) Security management controls, c) Personnel and training, d) Electronic security perimeter, e) Physical security of critical cyber assets, f ) Systems security management, g) Inci-dent reporting and response planning, and h) Recovery plans for critical cyber assets.

While talking about implementation of smart grids, dis-tribution segment finds prominence in the discussions.

According to Samson, “Generation has traditionally been the most technologically advance sector in the power delivery sys-tem followed by transmission. Generation facilities are relatively isolated from an information exchange perspective, with inter-connections 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 largest Wide Area Monitor-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 Transmis-sion 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 imple-mentation of smart grids. However, Samson brushed away the concerns by saying, “Yes, we have already begun to adopt tech-nologies 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 million revenue from smart grid

security segment

India is yet to have a clear roadmap for smart grids.




Incidentally, revenue for cyber security products and services in smart grid was approximately $350 million in 2012. Research-ers 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 oper-ating 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-

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 utili-ties also is not ready in terms of infrastructure needed, example, strong communication backbone, smart meters, software applica-tions, 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 comprehen-sive 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 utili-ties, 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.

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.

Smart grid cyber security should be foolproof. zzzzzzzzzzzzzzzzzzzzzzz



ANALYSIS / GAS PRICE

OUT OF GAS



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

OUT OF GAS


AnAlysis / gAs pricE

Cost of gas-based power production to go up by 56%.

BY RENJINI LIZA VARGHESE

Fuel 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 revi-sion. 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 Min-istry of Petroleum and Natural Gas (MoPNG) puts the revision at $6.77 per mmBtu. (The Rangarajan Panel has suggested a sim-ple 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 genera-tors, 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-

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, prima-facie 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, account-ing 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 gen-erated 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 pass-through 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 sec-retary 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 produc-tion to 19 per cent in KG-Basin (D6). We urge you to reconsider and withdraw this decision." Terming this as a ‘strange’ govern-ment'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 imported-gas in a longer horizon. The prices shall be determined by their free market gas-on-gas competition,” said Ashu Sagar.

26-30_ET_Aug13_Gas pricing story.indd 28 26-07-2013 10:55:28


AnAlysis / gAs pricE

However, government argues that the decision to hike price in domestic gas could attract more investments into explora-tion, 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 explora-tion and production (E&P) sector, both by domestic and inter-national 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 discov-ered 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).

Indian 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

10% of power in India is from gas-based plants.

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

Crisil Research expects the upward revision in price to increase the vari-able 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 genera-tion 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.”

26-30_ET_Aug13_Gas pricing story.indd 29 26-07-2013 10:55:31



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 dur-ing 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 indus-tries 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 play-ers 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.

Domestic gas output is expected to improve soon. Iran-Pakistan-India gas pipelineThe 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 geo-

political 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.

18

15

12

9

6

3

0

(in $/mmBtu) (in $/mmBtu)

Henry Hub APM gas: Priority RIL gas PMT gas LNG contracted LNG spot

Source: Crisil Research Source: Crisil Research

UK NBP Japan Import prices

International gas prices Current price of domestic gas from various sources

18

15

12

9

6

3

0

(in $/mmBtu) (in $/mmBtu)

0

Henry HubHenry HubHenry HubHenry HubHenry Hub UK NBPUK NBPUK NBPUK NBPUK NBP Japan Import pricesJapan Import pricesJapan Import pricesJapan Import pricesJapan Import pricesJapan Import pricesJapan Import prices

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

APM gas: Priority LNG contractedLNG contractedLNG contracted LNG spot

FY

09

FY

09

FY

09

FY

09

FY

09

FY

10

FY

10

FY

10

FY

10

FY

10

FY

11

FY

11

FY

11

FY

11

FY

11

FY

12

FY

12

FY

12

FY

12

FY

12

FY

13

FY

13

FY

13

FY

13

FY

13

20

16

12

8

4

0


FInancE / EnErgy sEcurITy

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

any natural disaster triggers off a debate on climate change. It happened post the Uttarakhand cloud-burst, 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

Clean sweep

BY KaustuBh KulKarni

31-35_ET_August13_ClimateChange.indd 31 26-07-2013 11:04:33



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 energy through REC market,

c) stricter implementation of renewable purchase obliga-

tion, 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 Inter-national Development (USAID) will partner with US-based

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.

$100 millionus investments in India's clean

energy segment

US secretary of state John Kerry with Dr RK Pachauri, chairman, TERI.




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 invest-ment, through the Agency’s Development Credit Authority, is expected to create hundreds of additional megawatts of capac-ity and will also help India’s burgeoning clean energy industry. In order to meet the latent demand and address energy short-falls, India has set a target of 30,000 MW renewable capacities in the next five years.

However, there are questions being raised about the pro-gress 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 cli-mate 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 energy-efficient 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.”

In 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.

Missions under NAPCCNational Solar Mission National Mission for Green IndiaNational mission for Enhanced Energy Efficiency National Mission for Sustaining the Himalayan EcosystemNational Mission on Sustainable Habitat National Mission on Strategic Knowledge for Climate Change National Water MissionNational Mission for Sustainable Agriculture

StepS taken by india to attain energy Security

Power sector leads the chart of Co2

emitters in India.




According to Rajesh Menon, deputy director general, Confed-eration 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 issue has taken centre stage.

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 ever-

changing policies in solar, one gets a sense of experi-ments 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 invest-ment targets this year. A report published by Mercom Capital

co2 crossed the threshold of

400parts per million

1,200

1,000

2010

Thermal

Source: Mercom Capital Group, IIc

Thermal

PV

0

35

5.5

184.5

0

980

50

1,050

PV

35

2011

190

2012

980

2013F

1,100

800

600

400

200

0

India Solar Installations (MW)

Sola

r Ins

talla

tions

(MW

)

1,000

Gujrat Solar Policy

JNNSM - Phase I Batch IIJNNSM - Phase I Batch I

JNNSM - Rooftop Projects

JNNSM - Migration Scheme

Maharashtra Solar Policy

Karnataka Solar Policy

Andhra Pradesh Solar Policy

Rajasthan Solar Policy

MNRE - Demonstation Program

NTPC Bundling Scheme Projects

Others

REC Mechanism

Source: Mercom Capital Group, IIc (as on May 10, 2013)

800600400200

All India Solar Installations By Policy Type (MW)

856.81300

130125

115.27

91.8

48

4020.85

109.0695

0

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 disappoint-ing. 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




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.”

Apart from the JNNSM, the states too have their own poli-cies 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.

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 work-able 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 respon-sibility 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



RENEWABLES / BATTERIES

Electricals Today | Electricals Today | Electricals Today36

S / BA S

READY TO TAKE OFF



37 | Electricals Today

S / BA

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

READY TO TAKE OFF BY ET TEAM

Globally, 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 avail-able 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 under-estimated. In a country where more than 400 million people do not have access to elec-tricity 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.



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 resi-dential applications of energy storage with solar installation. However, experts are not ruling out deployment of larger storage facilities within the transmission/distribution segment to over-come 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 intermit-tently. 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 electric-ity. 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 sys-tems 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

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.

STORAGE POTENTIAL MARKET - TOTAL OF 20 GW FROM DIFFERENT SEGMENTS (in MW)Utility application

(Peaker replacement)

Hotels SEZs

Townships

Hospitals

Telecom industry

Shopping malls

Others (defence, etc.)

Wind integrationRural—micro grid

Data centres

Agricultural sector

Grid ancillary services

Industrial emergency backup

Rural—grid connected

Transportation sector

Solarintegration

SEZs

Telecom industry

Shopping malls

370 420 510

870

770

520

5601,130

1,000

1,0701,430

1,230

1,000

1,360

1,0801,110

750

Others (defence, etc.)

connected

Industrial emergency backup

Grid ancillary

Agricultural sector

Data centres

Rural—micro grid Wind integration

Hospitals

integration1,130

Energy 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.


rEnEwablEs / baTTEriEs

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 stor-age. 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 economi-cal 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.

diffeRent types of stoRage system

Existing Revised

Type of system benchmark cost

(Rs/Wp)

benchmark

cost (Rs/Wp)

Power plants/packs (with battery)

210 Wp to 1 kWp 270 240

1 kWp to 10kWp 270 220

10 kWp to 10kWp 270 200

Power plants/packs (without battery)

upto 5 kWp 190 160

5 kWp to 100 kWp 190 140

100 kWp to 500 kWp --- 130

will surely boost the energy storage market.”According to Luminous Power Technologies, one of the lead-

ing 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

Large storage facility can address the infirmity issues of renewables.

36_40_ET_Aug13_Battries.indd 39 26-07-2013 14:34:41


markET daTa

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

progress in CapaCity addition

Capacity addition summary Period : June 2013 vis - a -vis June 2012

Category / regions

Monitored Capacity (MW)

target apr 2013 to Mar 2014

generation (gWH)

Jun-13 april 2013 - June -2013

program actual * actual same month 2012 - 13

% of program (4/3)

% of last year (4/5) program actual* actual same

period 2012 - 13

% of program (9/8)

% of last year (9/10)

1 2 3 4 5 6 7 8 9 10 11 12

Northern Region

thermal 34624.26 207657.00 17353.00 14876.50 15875.73 85.73 93.71 50837.00 47745.94 46845.90 93.92 101.92

nuclear 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

Western Region

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

Southern Region

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

Eastern Region

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

North Eatern Region

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

Bhutan Imp. Region

0.00 4800.00 535.00 327.30 491.70 61.18 66.56 1021.00 938.76 942.77 91.95 99.57

All Indian Region

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

* provisional based on actual -cum -assessment

40-41_ET_Aug13_Market data.indd 40 26-07-2013 14:35:33


markET daTa

progress in CapaCity addition Thermal PLF decreasesWhile plant load factor of nuclear improved, thermal were below the planned levels

Category / regions

Plant Load Factor (%)Jun-13 april 2013 - June -2013

program actual* actual same month 2012 - 13 program actual* actual same month 2012 - 13

northern region

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

Western region

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

southern region

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

eastern region

thermal 64.54 61.60 63.80 64.50 61.99 67.50

all indian region

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

Total capacity 2,22,446.50 MW

1,25,32539,623

4,780

26, 718

26,000

Thermal Hydro

OthersNuclear

Renewable energy

demand dips owing to good monsoonmonsoon broughT chEEr To ELEc-TriciTy sEgmEnT as dEmand dE-crEasEd

Early 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 pro-jects in states like Maharashtra, Kerala and Uttara-khand. 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 dur-ing 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.

(As on July 2, 2013)

40-41_ET_Aug13_Market data.indd 41 26-07-2013 14:35:33


MarkET ColuMn

Rising population and living standards are resultingin energy demand to touch double digits

Rajeev R. DarjiSr. Research Analyst, xDirect Global Solution Pvt. Ltd

Big opportunity

India’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 giv-ing 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.

India, 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

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.

Generation capacity assitions by fuel type. 2010-2035 in GW

50

40

30

20

10

02010 - 2015 2016 - 2020 2021 - 2025 2026 - 2030 2031 - 2035

NuclearCoal

Natural gasRenewables

42_ET_Aug13_Market Data Column.indd 42 26-07-2013 11:19:42

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