power scenario of india-final -2012

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ISSUES & CHALLENGES IN INDIA’S POWER SECTOR

Power Shortage and Capacity Addition

Fuel Choice

Improving Efficiency

Promoting Competition

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ELECTRICITY AS PRIVATE ENTERPRISE

Pre-1948, all generation privately-owned. Total

installed capacity:1300 MW

• Retail distribution only around generating stations.

• No transmission.

Licensed & regulated by Govt. under Indian

Electricity Act, 1910.

Govt’s role as regulator only.

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ELECTRICITY NATIONALIZED• Post–Independence, Electricity( Supply) Act, 1948, aimed

to increase access to electricity.

• Transmission to wider hinterland of generating stations – creation of grid.

• All privately-owned generating stations nationalized with some exceptions.

• Creation of vertically-integrated SEBs as quasi-commercial entities.

• Govt.becomes owner and operator in addition to being regulator. Conflict of interest.

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DOWNWARD SLIDE• Large demand-supply gap (2009-10) -

Energy shortage:10% Peak shortage:12.7%• Low per capita consumption: 672 kwh per annum• By early 90’s, State Electricity Boards were bankrupt. • Accumulated losses of the SEBs exceeded Rs.26,000

crores in 2000-01. • Unpaid dues to central power generating companies

alone exceeded Rs. 40,000 crores.• Total return of SEBs in 2005-06 was (-) 26%.• Financial collapse leading to operational collapse

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INDIA’S INSTALLED CAPACITY BY FUEL(as on 30 APRIL 2012)

INDIA'S INSTALLED CAPACITY

Fuel MW % age

TOTAL THERMAL 131703.36 65.86

COAL 112022.38 56.02

GAS 18481.05 9.24

DIESEL 1199.93 0.60

NUCLEAR 4780 2.39

HYDRO 38990.4 19.50

RES 24503.46 12.25

199977.22 100.00

INDIA’S INSTALLED CAPACITY FUEL WISE AS ON 30 APRIL 2012

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ELECTRICITY GENERATION IN SELECTED COUNTRIES 2007 & 2009

COUNTRY GENERATION

2007 (in Twh)

%age of total

GENERATION

2009 (in Twh)

%age of total

U.S.A 4367.0 22.0 4149.6 20.7

China 3277.7 16.5 3725.1 18.5

Japan 1160.0 5.8 1115.1 5.5

Russian Fed.

1014.9 5.1 993.1

4.9

India 774.7 3.9 869.8 4.3

Germany 636.5 3.2 596.8

3.0

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PER CAPITA CONSUMPTION OF ELECTRICITY (in Kwh per annum)

World Average

OECD countries

Middle East

Latin America

China

2596

8365

2980

1695

1802

Asia

Africa

India

646

563

612

SOURCE : WEC WORLD ENERGY STATISTICS,2007

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PER CAPITA CONSUMPTION OF ELECTRICITY IN INDIA

YEAR PER CAPITA CONSUMPTION

1950 15 KWh / per year

2007 672 KWh / per year

2012 - Target 1000 KWh / per year

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ELECTRICITY & GROWTH

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PAYING FOR POWER IS KEY Poor metering - only 40% of total sale metered. Billing on presumptive / assessed consumption.

Poor billing & collection – only 55% of energy generated is billed & only 41% realised.

High T&D losses( 40- 50 % approx ) – No serious attempt to address issue.

Tariff recovers on an average 69% of the cost of supply. Domestic recovery : 56%. Agriculture recovery : 15%

Distribution segment losing Rs. 47,000 crores annually. ( MoP estimates )

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POWER FOR ALL BY 2012

Required capacity addition–from 100,000 MW in 2000 to 200,000 MW and per capita consumption to go up from 672 KWh to 1000 KWh by 2012.

From 1300 MW in 1947 to 100,000 MW in 2000 – 53 years. Only 12 years for another 100,000 MW. Is it feasible?

Funds required – Rs. 9,00,000 crores including transmission systems at 2002-03 prices ( CEA estimates ).

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CHALLENGE OF CAPACITY ADDITION

Plan Period Addition

(in MW)

Percentage of Plan target

Eighth Plan 16,422 53.8

Ninth Plan 19,015 < 50

Tenth Plan 23,250 56.6

Eleventh Plan

(target)

78,530 Thermal– 58,597Hydro – 16,553Nuclear – 3,380

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FUEL CHOICE - COAL• Coal reserves, at current level of consumption, can

last some 80 years.

• If all inferred reserves materialize, coal & lignite can last for more than 140 years.

• If domestic coal production continues to grow at 5 percent per year, total extractable reserves would run out in about 40 years.

• In-situ coal gasification can increase energy from domestic resources significantly.

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FUEL CHOICE - GAS

• Poor natural gas reserves till discovery in Krishna-

Godavari basin by Reliance

• Recent large discovery by GSPC also in Krishna-

Godavari basin

• Coal Bed Methane reserves estimated to be between

1400 BCM (1260 mtoe) to 2600 BCM (2540 mtoe).

• Proved gas and CBM together can last for some 50

years.

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FUEL CHOICE - HYDRO

• Present installed capacity is 36,877 MW.

• At the last 5 years’ average of 30% load factor,

1,50,000 MW of installed capacity justified.

Accelerated hydro development plan aims to add

50,000 MW of new capacity.

• Problems of environment and ecology and social

problems of resettlement of project affected people are

barriers to large-scale exploitation of hydro resources.

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FUEL CHOICE - NUCLEAR• India poorly endowed with uranium, just enough to fuel

10,000 MW.

• India’s uranium reserves are of low grade, extraction

percentage being 0.1% compared to 12-14% abroad.

Therefore 3-4 times costlier than international supplies.

• Substantial thorium reserves has to be converted to fissile

material through Fast Breeder Reactors.

• India has to import uranium fuel and FBR technology.

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POWER PURCHASE COST AS %AGE OF COST OF SUPPLY

357

469

365 349

Power purchase cost►

Other cost►

Power purchase cost as %age of cost

of supply 62 77 73 66

Maharashtra Delhi Gujarat All India

Paise per kwH

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COST-PLUS FALL-OUT

While differences in power cost of generating stations

can be due to differences in fuel type, technology, location

and vintage, most differences are attributable to differing

generation efficiencies

Cost-plus tariff system does not adequately encourage /

incentivise generators to improve operational efficiencies

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PURCHASE PRICE DIFFERENCES

Power plant Type MUs Rs/Kwh

•Salal

•Baira Siul

•Tanakpur

•Singrauli

•Chamera

•Rihand

•Anta

•Auraiya

•Unchahar-I

•Dadri

•Badarpur BTPS

•Hydro

•Hydro

•Hydro

•Thermal

•Hydro

•Hydro

•Thermal

•Thermal

•Thermal

•Thermal

•Thermal

358

86

58

1,370

132

850

375

0.59

0.63

1.04

1.09

1.32

1.47

1.61

1.62

1.88

2.27

600

190

4,6005,065

2.37

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POWER PURCHASE CONTRACTS

•Upto one year duration contracts form small part of total power procured. SEBs propose power purchase from third parties in their ARRs, prior to actual contract

Long term

Short term

•Real time power requirement (in excess or deficit of scheduled drawls) drawn directly from grid without any prior permission from regulator

Real time/day to day

•No clear process for bridging medium term requirements (more than a year and less than 15 years

–Self generation (SEB owned generators);

–capacity cleared by SERC

–Allocation from central generating stations ; CERC

determines tariffs

–Independent power producers; Bid/MOU route for projects;

CERC/SERC vets the tariff

Medium term

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LEGISLATIVE FRAMEWORK FOR COMPETITION

Gencos free to supply electricity to any licensee or to any consumer

Non-discriminatory open access to Gencos, licensees & consumers in transmission & distribution.

Open access enables non-discriminatory sale/purchase of electric power/energy between two parties utilizing the system of an in-between (third party), and latter not blocking it on unreasonable grounds.

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FRAMEWORK FOR COMPETITION Section 63 of the Act moves away from the

existing regulated cost-plus tariff to tariff determination through competitive bidding route.

“Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.”(Section 63 of the Electricity Act, 2003)

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COMPETITION IN GENERATION The Central Government guidelines issued

for tariff-based bidding process for procurement of electricity by DISCOMS for medium term (one to seven years) and for long-term (for more than seven years).

Section 66 of the Act provides for development of electricity market for price determination/price discovery.

A well functioning power market leading to free competition provides national-level access to all buyers and sellers for transparent price discovery, rewards more efficient generators and reduces power procurement cost.

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TOWARDS A COMPETITIVE MARKET STRUCTURE

Electricity Act 2003

Electricity Act 2003

Comp. Bidding Guidelines -2004/5

Comp. Bidding Guidelines -2004/5

National ‘Tariff’ Policy

-2006

National ‘Tariff’ Policy

-2006

Open Access Open Access

Competitive & Contestable Price Discovery in New

Generation

Competitive & Contestable Price Discovery in New

Generation

•Open access•Competitive bidding•Separating wires•Enforcing USO

•Open access•Competitive bidding•Separating wires•Enforcing USO

Wholesale andRetail Competition

Wholesale andRetail Competition

R. Raghuttama Rao

Changes in regulation underway1) Policy on MPP underway2) Amendment of EA in 07: Surcharge shall not be eliminated any more3) Private sector participation in in Transmission underway

R. Raghuttama Rao

Full wholesale and retail competition ?Supply constraints?Market mechanisms?Transmission infrastructure?Regulatory capacity?

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A NEW STRUCTUREWholesale power purchase model

Reformed structure for power purchase

•Single buyer model - SEB/TRANSCO pools

distribution utility requirements to procure

power

•Multiple buyer model (e.g., each distribution

company procuring for its own requirements)

•Primarily long duration contracts 15 -25 years or

more

•Suitable mix of long, medium and short term

contracts

•Limited incentives to improve efficiency

•Market rewards players with lower costs and higher efficiencies

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COMPETITIVE BIDDING

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COMPETITIVE BIDDING

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SEB MODEL

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FIRST STAGE REFORM MODEL

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PRESENT REFORM MODEL

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FINAL REFORM MODEL

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POWER SUPPLY REGIONS

INDIA IS ADMINISTRATIVELY DIVIDED INTO FIVE REGIONS FOR SUPPLY OF ELECTRICITY.

1. NORTHERN REGION2. SOUTHERN REGION 3. EASTERN REGION4. WESTERN REGION5. NORTH EASTERN REGION

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NORTHERN REGION•Largest in geographical area amongst the five regions covering 30.7% of the area and 28% of the country’s population.

•Largest number of constituents (9 states/UT’s, 3 Central Generating Companies, one Central Transmission Utility and Bhakra Beas Management Board).

•Largest sized hydro unit (250 MW at Nathpa Jhakri) in the country.

•Establishment of the first super thermal power station (Singrauli STPS) and 400 kV transmission system in the country.

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NORTHERN REGION•Establishment of the first High Voltage Direct Current (HVDC) long distance transmission system in the country (2x750 MW, + 500 kV Rihand-Dadri HVDC bipole).

•First HVDC back-to-back interconnection with Western Region (2x250 MW back-to-back HVDC station at Vindhyachal).

•First 400 kV Static Var Compensators (SVC’s) in the country (2x + 140 MVAR SVC at Kanpur).

•Largest capacity of combined cycle gas power stations amongst the five regions (2939.50 MW) located along the 700 Kms. long Hazira-Bijaipur-Jagdishpur (HBJ) natural gas pipeline of GAIL.

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NRLDC

NRLDC is the apex body to ensure integrated operation of the power system in the Northern Region. The main responsibilities of NRLDC are: •Monitoring of system parameters and security. •To ensure the integrated operation of the power system grid in the region. •System studies, planning and contingency analysis. •Analysis of tripping/disturbances and facilitating immediate remedial measures. •Daily scheduling and operational planning.

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NRLDC

•Facilitating bilateral and inter-regional exchanges. •Computation of energy dispatch and drawl values using SEMs. •Augmentation of telemetry, computing and communication facilities

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Brief details about the Northern Regional power system i) Northern regional grid is an electrical system comprising of over 10,00,000 sq. km of area with nine States/Union Territories namely Punjab, Haryana, Rajasthan, Delhi, Uttar Pradesh, Himachal Pradesh, Uttaranchal, Jammu Kashmir and Union territory of Chandigarh, Generating Stations at Central and State Sector Independent Power producing stations, State DISCOMS, STU etc.

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ii) The Northern region has an installed capacity of 33,785 MW as on 31.03.2006 with 16,295 MW in State Sector and 17,490 MW in Central Sector including BBMB.

iii) The States are inter-connected with each other through 400kV/220 kV network. Northern Region is connected to Western and Eastern regions through a few radial 220 kV/132 kV HVAC and HVDC Back to Back links to facilitate exchange of power from surplus to deficit region / State as well as wheeling of power.

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iv) Northern Region has catered a maximum peak demand of 25,362 MW on 19.08.2005 with an average energy consumption of 462.96 MU during the year 2005-06.

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INCREASE IN POWER GENERATION DUE TO INCREASE IN PLANT LOAD FACTOR

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INSTALLED CAPACITY OF NORTHERN GRID AS ON 30.04.12

DESCRIPTION UNIT TOTAL CAPACITY

THERMAL (INCL. GAS) MW 32791.75

NUCLEAR MW 1620

HYDRO MW 15122.75

RENEWABLE ENERGY SOURCES

MW

4391.4

TOTAL MW 53925.9

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INSTALLED CAPACITY OF WESTERN GRID AS ON 30.04.12


THERMAL (INCL. GAS) MW 47296.79NUCLEAR MW 1840HYDRO MW 7447.5RENEWABLE ENERGY SOURCES MW

7909.95TOTAL MW 64494.24

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INSTALLED CAPACITY OF SOUTHERN GRID AS ON 30.04.12


THERMAL (INCL. GAS) MW 28512.6NUCLEAR MW 1320HYDRO MW 11338.03RENEWABLE ENERGY SOURCES

MW

11569.3TOTAL MW 52739.93

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INSTALLED CAPACITY OF EASTERN GRID AS ON 30.04.12


THERMAL (INCL. GAS) MW 22005.08NUCLEAR MW 0HYDRO MW 3882.12RENEWABLE ENERGY SOURCES

MW

398.71TOTAL MW 26285.91

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INSTALLED CAPACITY OF NORTH EASTERN GRID AS ON 30.04.12


THERMAL (INCL. GAS) MW 1026.94NUCLEAR MW 0HYDRO MW 1200RENEWABLE ENERGY SOURCES

MW

228TOTAL MW 2454.94

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INSTALLED CAPACITY OF ISLANDS GRID AS ON 30.04.11


THERMAL (INCL. GAS) MW 70.2NUCLEAR MW 0HYDRO MW 0RENEWABLE ENERGY SOURCES

MW

6.1TOTAL MW 76.3

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INSTALLED CAPACITY OF INDIA AS ON 30.04.2011


THERMAL (INCL. GAS) MW 131703.4NUCLEAR MW 4780.0HYDRO MW 38990.4RENEWABLE ENERGY SOURCES

MW

24503.46TOTAL MW 199977.2

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FUEL WISE INSTALLED CAPACITY OF INDIA AS ON 30.04.12


COAL BASED MW 112022.4GAS MW 18481.05DIESEL MW 1199.93HYDRO MW 4780NUCLEAR MW 38990.4RENEWABLE ENERGY SOURCES MW

24503.46TOTAL MW 199977.2

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COST OF GENERATION FOR THE YEAR 2006-07

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COST OF GENERATION FOR THE YEAR 2006-07

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NTPC INSTALLED CAPACITYCOAL BASED

(Owned by NTPC)STATE

COMMISSIONEDCAPACITY(MW)

1. SINGRAULI Uttar Pradesh 2,0002. Korba Chhattisgarh 2,6003. Ramagundam Andhra Pradesh 2,6004. Farakka West Bengal 2,1005. Vindhyachal Madhya Pradesh 3,2606. Rihand Uttar Pradesh 2,0007. Kahalgaon Bihar 2,340

8. NCTPP, Dadr Uttar Pradesh1,820

9. Talcher Kaniha Orissa 3,000

10. Feroze Gandhi, Unchahar Uttar Pradesh 1,050

11. Talcher Thermal Orissa 46012. Simhadri Andhra Pradesh 2,00013. Tanda Uttar Pradesh 44014. Badarpur Delhi 70515. Sipat Chhattisgarh 2,32016 Mauda Maharashtra 500

Total 29,195

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NTPC INSTALLED CAPACITY

Gas based State Commissioned

Capacity(MW)

16. Anta Rajasthan 413

17. Auraiya Uttar Pradesh 652

18. Kawas Gujarat 645

19. Dadri Uttar Pradesh 817

20. Jhanor-Gandhar Gujarat 648

21. Rajiv Gandhi CCPP Kayamkulam Kerala 350

22. Faridabad Haryana 430

Total (Gas) 3,955

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NTPC INSTALLED CAPACITYGAS Power Plants with Joint

Ventures COAL

BASED (Owned by

JVs)

STATE COMMISSIONED

CAPACITY

1. RGPPL Maharashtra 1940Total 1940

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NTPC INSTALLED CAPACITYPower Plants with Joint Ventures

COAL BASED (Owned by JVs)

STATE COMMISSIONED

CAPACITY

1. Durgapur West Bengal 120

2. Rourkela Orissa 120

3. Bhilai Chhattisgarh 574

4. Kanti Bihar 110

5. IGSTPP, Jhajjar Haryana 1000

6. Vallur Tamil Nadu 500

Total 2,424

FUTURE CAPACITY ADDITIONS

PROJECT STATE MW

Coal

1. Indira Gandhi STPP- JV with IPGCL & HPGCL (500) Haryana 500

2. Sipat I (660) Chhattisgarh 660

3. Simhadri II Unit - IV( 500) Andhra Pradesh 500

3. Vallur I -JV with TNEB ( 500) Tamilnadu 500

4. Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Tamilnadu 500

5. Bongaigaon(3 x 250) Assam 750

6. Mauda Maharashta 500

7. Rihand III(2X500) Uttar Pradesh 1000

8. Vindhyachal-IV (2X500) Madhya Pradesh 1000

9. Muzaffarpur Expansion (2x195) – JV with BSEB Bihar 390

10. Nabinagar TPP-JV with Railways (4 x 250) Bihar 1000

11. Barh II (2 X 660) Bihar 1320

12. Barh I (3 X 660) Bihar 1980

Hydro

1. Koldam HEPP ( 4 x 200) Himachal Pradesh 800

2. Tapovan Vishnugad HEPP (4 x 130) Uttarakhand 520

3. Singrauli CW Discharge(Small Hydre) Uttar Pradesh 8

Total 11,428

PERFORMANCE STATISTICS

YEARGeneration

(BU)PLF(%)

Availability Factor(%)

2011-12 222.07 85.00 89.73

2010-11 220.54 88.29 91.62

2009-10 218.84 90.81 91.76

2008-09 206.94 91.14 92.47

2007-08 200.86 92.24 92.12

2006-07 188.67 89.43 90.09

2005-06 170.88 87.52 89.91

Bulk Electricity Tariff in India

• ABT as Implemented (Beneficiary)– A true two part tariff with supplementary adjustment for Net Exchange

deviations from schedule• Fixed cost recovered from customers in proportion to capacity allocation • Energy Charges recovered against requisitioned (scheduled, ex-bus) energy at

normatively computed rates, on the respective drawal schedule– Actual Energy Generation (AG, measured ex-bus) would be different

from scheduled and the deviations positive or negative settled at a price linked to system sufficiency, in that time slice.

• Time slice of 15 minutes each in use• Average Frequency of operation in the time slice used as an index of system

sufficiency• Settlement through a UI pool account

– Promotes better market perception• Encourages Economy in Dispatch• Avoided cost of service by rogue beneficiary is prevented.

COMPONENTS OF ABT

1. CAPACITY CHARGE2. ENERGY CHARGE3. UI CHARGE

4. INCENTIVE

5. TAXES & CESS

FUELS BEING USEDTYPE SOURCE

APM ONGC GAS FROM MUMBAI HIGH, UNDER GOI ADMINISTERED PRICE.

PMT JV OF ONGC+RELIANCE+BRITISH GAS, PRESENTLY UNDER GOI ADMINISTERED PRICE.

GAIL SPOT-RLNG

LIQUIFIED NATURAL GAS PURCHASED FROM SPOT MARKET BY GAIL.

GSPCL-RLNG LIQUIFIED NATURAL GAS PURCHASED FROM SPOT MARKET BY GSPCL.

NAPHTHA LIQUID FUEL PURCHASED FROM MAJOR OIL COMPANIES & GAIL

DAILY DC DECLARATION AT ANTA

DAILY DC DECLARATION STARTS WITH THE FOLLOWING ASSUMPTIONS:-

1. GAS ALLOCATION SHALL BE SAME AS YESTERDAY.2. AMBIENT TEMPERATURE SHALL BE SAME AS YESTERDAY.3. OTHER LOSSES SHALL BE SAME AS PREVIOUS DAY.4. GCV OF GAS SHALL BE SAME AS PREVIOUS DAY.

KNOWING THE GAS ALLOCATION AND AMBIENT TEMPERATURE, THE MAX EX-BUS CAPABILITY FOR THE NEXT DAY, BOTH ON GAS FUEL AND NAPHTHA FUEL SEPARATELY IS ESTIMATED FOR 96 TIME BLOCKS AND SENT TO RCC AT NCR-HQ FOR ONWARD TRANSMISSION TO RLDC AT 09:00 HRS.

FOR ANY CHANGE IN THE ASSUMED CONDITIONS, REVISIONS IN DC ARE SENT AS PER ABT.

Rs/Unit Gen.Cost (ECR)LANDED COST(RS/SMC)&

Rs/Ltr.

APM/PMT 1.899 8.303

NAPHTHA 8.036 31.08

GAIL1-(RLNG) 3.809 16.674

GAIL2-(SPOT) 5.955 26.070

RELIANCE 2.748 12.018

APM+PMT+RIL 2.485 10.837

RLNG+NEW SPOT 4.015 17.575

Remarks:- 1.The APM/PMT price was hiked by GOI to $4.2/MMBTU in June 2010

2.Dut to above the ECR of APM/PMT became almost double.

3.RIL gas was started from 01st Nov'09.

4.Additional RIL Gas Was started from Feb'10 & equivalent amount of APM/PMT is diverted from NCR to WR as per NTPC Management decision.

BREAK EVEN FREQUENCY

BREAK EVEN FREQUENCY ON ANY FUEL IS THE FREQUENCY AT WHICH;VARIABLE CHARGE = UI CHARGE.

PRESENT BREAK EVEN FREQUENCY :NATURAL GAS :- HZNAPHTHA :- HZ

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power scenario of india-final -2012

Documents

goi administered

generating

hvdc back

competitive

installed

total capacity

ambient temperature

time slice