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Total number of pages 56 Volume 1 | Issue 2 | March 2013 | `50

Electricals Today More power to the industry

focus

Is it time for a rethink on PPA conditions?

powerless DESPITE THE HYPE, P CHIDAMBARAM’S budget FAILED TO OFFER THE SECTOR ANY LIGHT AT THE END OF THE LONG, dark TUNNEL An ITP Publishing India Publication

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People

Contents 12

12 Cover Story

Despite the hype, Chidambaram’s budget has little to offer the power sector. Is there any hope at all at the end of the long, dark tunnel?

25 Column

Sanjeev Aggarwal, MD of Amplus Infrastructure, talks about green corridors to get rid of the power woes

30 Straight Talk

CCI MD and CEO Maadhav Digraskar wants the government to give the power sector special status

18

REPORTS

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18 Distribution

The country's peak demand-supply gap is ever widening. Are we looking at a likely catastrophe?

26 Finance

The power sector behemoth, Tata Power, reported a disappointing quarter with losses amounting to Rs329 crore

38 Generation

Fuel is on fire as additional capacity is getting stranded due to lack of coal supply

REGULARS 06 News, people & events

Industry round up, including new events and latest developments

50 Market data

A look at the key industry trends and statistics. And an analysis of what the numbers mean

54 Ten things about

“In today’s fiercely competitive environment it is challenging to retain our leadership in the extra high voltage segment."

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Maadhav Digraskar

Grid stored energy can be used to address peak power needs

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Comment

Power struggle One look at P Chidambaram’s budget, and one can easily tell that the finance minister – and the powers that be – are powerless to offset the dismal state of the sector. And you don’t have to be a power pundit to make out where the problems lie. Just check the stats: the number of rural households with no access to electricity in 2001 was 7.5 crore; in 2011, it increased to 7.8 crore. Similarly, in 2001, the number of urban households with no access to electricity was 0.6 crore; in 2011, it increased to 0.7 crore! Given these depressing figures, is there a solution in sight? The first thing that probably comes to mind is adding new generation projects, right? Well, think again. According to one study, electricity development should not be synonymous with setting up new projects. The argument is straightforward. The end product of electricity is different in different sectors. It is luminosity in lighting, lifting water in irrigation, turning the wheel in industry and so on and so forth. The energy required can come not just from a new generation project alone. It is one of the many options and, not necessarily, the most optimal from the point of view of cost and long-term sustainability. It can come from a new MW based on renewable or non-renewable resource or, for that matter, from a saved MW through efficiency improvement. And this, to me, poses the biggest challenge for the power industry: choosing the right power source, one that is both sustainable and affordable. It is here that we are faced with the larger problem. How does the fresh capacity of power reach the intended user? And therein lies the biggest failing for the sector: inefficiencies in transmission and distribution of power. On an average, more than one third of the generated electricity is lost in T&D. To make matters worse, the investment in T&D has failed to keep pace with the massive investment in generation. Enough said. You probably get the drift. But it is ironical that the government chooses to ignore the writing on the wall. Why else would the FM present such a lacklustre budget again – a budget that offers the sector no light at the end of the long, dark tunnel?

Shafquat Ali, Group editor, ITP Publishing FORM IV (Statement about ownership and other particulars about the newspaper/magazine Electricals Today to be published in the first issue every year after the last day of February) Name of the Publication: Electricals Today Periodicity of the publication/ Language: Monthly/English Printer’s Name: Saikumar Shanmugam Nationality: Indian (i) Whether Citizen of India: Yes (ii) If a foreigner, country of origin Not applicable Address: Notan Plaza, 3rd Floor, 898, Turner Road, Bandra (w), Mumbai- 400 050, Maharashtra Publisher’s Name: Saikumar Shanmugam Nationality: Indian (i) Whether Citizen of India: Yes (ii) If a foreigner, country of origin: Not applicable

Address: Notan Plaza, 3rd Floor, 898, Turner Road, Bandra (w), Mumbai- 400 050, Maharashtra. Editor’s Name: Shafquat Ali Nationality: Indian (i) Whether Citizen of India: Yes (ii) If a foreigner, country of origin: Not applicable Address : Notan Plaza, 3rd Floor, 898, Turner Road, Bandra (W), Mumbai- 400 050, Maharashtra. Name and address of the individuals who own the newspaper/magazine and partners or shareholders holding more than one percent of the total capital. ITP Publishing India Pvt.Ltd. ITP Holdings Inc, PO Box 500024, Dubai, U.A.E.

Electricals Today More power to the industry

Volume 1 | Issue 2 | March 2013

ITP Publishing India Pvt Ltd

Notan Plaza, 3rd floor, 898, Turner Road Bandra (West), Mumbai - 400050 T +91 22 6154 6000 Deputy managing director S Saikumar Publishing director Bibhor Srivastava Group editor Shafquat Ali

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T +91 22 6154 6032 james.dsouza@itp.com Disclaimer The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers’ particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review. Printed and Published by Sai Kumar Shanmugam, Flat no 903, Building 47, NRI Colony, Phase – 2, Part -1, Sector 54, 56, 58, Nerul, Navi Mumbai 400706, on behalf of ITP Publishing India Private Limited, printed at Indigo Press (India) Private Limited, Plot No.1C/716, Off Dadoji Konddeo Cross Road, Between Sussex And Retiwala Ind. Estate, Byculla (E) Mumbai- 400 027, India and published at Notan Plaza, 3rd floor, 898, Turner Road, Bandra (West), Mumbai - 400050 Editor Shafquat Ali

I, Saikumar Shanmugam, hereby declare that the particulars given above are true to the best of my knowledge and belief.

Date: February 28, 2013 Saikumar Shanmugam Signature of the publisher

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NEWS

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News & P

Shortcircuited: SEBs are increasingly resorting to power cuts to get over the power shortage

NTPC-CIL DEADLOCK TO END SOON

It looks like the face-off between NTPC and Coal India Limited (CIL) on the fuel supply agreement (FSA) issue is nearing closure. According to NTPC officials, most major issues with CIL have been resolved. The NTPC officials have informed the same to the CEA chairperson in a meeting held recently. A meeting to iron out the remaining differences was held between NTPC and CIL officials at CIL headquarters in Kolkata, towards the end of last month.

Lanco, R-Power cut off supply to UPPCL Power generating companies Reliance Power (R-Power) and Lanco Infratech have cut off supplies to Uttar Pradesh Power Corporation (UPPCL) for non-clearance of its dues. Reliance Power’s Rosa thermal power station and Lanco Infratech’s Anpara C thermal power station have stopped supplying power to UPPCL. "Both companies have shut down generation as we have not been able to make timely payments. While dues to Reliance amount to approximately Rs900 crore, Lanco’s dues are to the tune of approximately Rs400 crore,” an UPPCL official said. Rosa TPS in Shahjahanpur district has shut down one unit of 300 MW while Lanco Infratech’s Anpara C project in Sonebhadra district has shut down one unit of 600 MW. Rosa and Lanco have a total installed capacity of 1,200 MW each. While the former has four units, each Rs1,500cr of 300 MW, Lanco has two coal-fired units Approximate dues each of 600 MW. Reliance Power had got into of UPPCL a commercial dispute with the UPPCL last year after which it manually shut two of its four units. The power corporation expects the situation to improve once the Centre’s bailout package in the form of a financial restructuring package, comes through.

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Mine developer for FECPL Fatehpur East Coal Private Limited (FECPL) is planning to appoint a mine developer cum operator (MDO) to develop the Fatehpur East coal block, in the Mand Raigarh coalfield of Chhattisgarh. FECPL, a joint venture (JVC) of five independent power producers, has issued a request for proposal (RfP) that will include three different activities, development, operational and mine closure, to be carried out by the chosen MDO. The development activities primarily involve construction and maintenance of mining infrastructure as well as arrangement of manpower and water supply for the project. Bids are expected to be submitted by March 18, 2013, following which the proposals for qualification will be opened.

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& People >>> FSAs still hanging fire

There is still a long way to go for CIL and its subsidiaries to sign all the requisite Fuel Supply Agreements (FSAs). In a meeting held recently convened by AS Bakshi, chairman, CEA, the power utilities raised concerns regarding certain issues with Coal India Ltd (CIL) subsidiaries. Subsidiaries of CIL namely SECL and MCL in particular, have refused to consider medium term power purchase agreements (PPAs) necessary for the signing of FSAs. The companies have termed long term PPAs as a pre-requisite to ink the pact. The coal companies have also demanded written confirmation regarding supply of 5 per cent power to host states on variable charges.

MoP seeks Rs1,500 cr for discoms Determined to ensure its ambitious turnaround plan for ailing distribution companies, the power ministry had sought a Rs1,500crore budgetary support for funding the Transitional Finance Mechanism (TFM) under the scheme in 2013-14. It also wanted Rs4,500 crore for its rural electrification programme, the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), an 80 per cent jump over the revised estimate of Rs2,492 crore for this financial year. The Rs1,500-crore central allocation is to be available for states showing an accelerated reduction in commercial and line losses.

NEWS

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Major challenge is securing fuel supplies. Though India has the world's fourth largest reserves of coal and has recently made gas discoveries that are notable by global standards, inadequate fuel supplies are constraining the growth of power sector.” Jyotiraditya Scindia, Union power minister

Distribution companies cannot continuously go on making losses. State governments have no choice but to increase tariffs to make them viable.” NK Jain, vice-chairman, JSW Energy

Reintroduction of Generation Based Incentive is a timely intervention for the wind industry, which was suffering for over than a year. It will rejuvenate the sector with more investments. This assumes greater significance as the industry has an ambitious plan of capacity addition in the current plan period.” Ramesh Kymal, managing director, Gamesa India

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>>> at a glance TPC to invest Rs500 cr in Jharkhand TATA Power Co Ltd (TPC), which recently signed a power distribution franchise agreement with the Jharkhand State Electricity Board (JSEB), will invest Rs500 crore in the Jamshedpur circle of the state. TPC will upgrade existing infrastructure and distribution network there and hopes to reduce aggregate technical and commercial (ATC) losses to 13 per cent from the current 33 per cent in the new circle. This is TPC’s first power distribution franchise, although it has distribution operations in Mumbai and Delhi with its own licence. “We will be investing Rs500 crore in improving the distribution network,” said Tata Power’s executive director and chief financial officer S Ramakrishnan. Of this, Rs400 crore will be raised through loans under the Restructured Accelerated Power Development and Reform Programme (R-APDRP) and Rs100 crore from internal resources, he said. The company aims to reduce ATC losses to 13 per cent over the next five years. New national power grid to start operations by Jan 2014 While integrating the southern grid with the already formed New Grid is underway, the Planning Commission has made some important recommendations and said that systems should be loaded gradually as experience is gained. This national power grid is expected to be operational by January 2014. The commission has said that for an initial period of six months to one year, AC ties must be primarily used to build reliability. It has also contended that a right operating philosophy like frequency band tightening and tight control on drawals must be put in place for the synchronization to be a success. Experience of Turkey can be utilised in this regard, the commission noted. Turkey was synchronously connected to Continental Europe in September 2010. However, three phases of trial operation and stabilisation were conducted for almost two years till late 2012. WPI for power up in Jan’13 The wholesale price index (WPI) for “Fuel and Power” for the month of January, 2013 rose by 0.3 per cent to 189.5 (Provisional) from 188.9 (Provisional) for the previous month due to higher price of bitumen (6 per cent), light diesel oil and furnace oil (1 per cent each). However, the price of aviation turbine fuel (1 per cent) declined. The annual rate of inflation, based on monthly WPI, stood at 6.62 per cent (Provisional) for the month of January, 2013 (over January, 2012) as compared to 7.18 per cent (Provisional) for the previous month and 7.23 per cent during the corresponding month of the previous year. Build up inflation in the financial year so far was 5.09 per cent compared to a build-up of 6.15 per cent in the corresponding period of the previous year. TD Power Systems wins contracts worth Rs234 crore TD Power Systems Limited, a manufacturer of AC generators and solutions provider for captive and independent power projects, announced that its wholly-owned subsidiary DF Power Systems Private Limited (DFPS) has been awarded two separate contracts worth Rs234 crore. DFPS won a Rs225 crore order from an industrial conglomerate for setting up of a 45 MW captive power plant in the northeast. Additionally, it also won an order from a private sector steel giant for waste gas fired package boilers valued at about Rs9 crore. Best Stall award for ABB at ELASIA ABB participated in the 5th ELASIA 2013 at Bangalore International Exhibition Center (BIEC) as platinum sponsors where it displayed its low voltage switchgear portfolio through a live exhibiting stand of 90 square metrs. The stand consisted of segment-wise exhibit panels, live product demos, KNX living room automation with live demo automation and technical paper presentations on ‘Innovative and reliable systems in Low Voltage (LV) Networks.. It was an ideal platform, where major players from electrical industries like switchgear, lighting, cables and solutions for renewable energy displayed their products and solutions.

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AP GENCO TO COMMENCE WORK The Andhra Pradesh Chief Minister N Kiran Kumar Reddy approved the setting up of three new thermal stations in the state. AP Genco is expected to commence work on three projects with total installed capacity of 2,400 MW. These projects will be based on supercritical technology and have capacity of 800 MW each. Reddy has directed AP Genco to complete these thermal power stations in the state within three years. The total cost is expected to be about Rs13,200 crore. These power plants will be setup at Krishnapatnam in Nellore district, a green field plant and expansion at existing power plants at Vijayawada and Kothagudem Thermal Stations.

TPC RfP for Delhi power procurement To avoid the inconvenience of power cuts during the summers, Tata Power Delhi Distribution Limited (TPDDL) is planning to make short term power purchase agreements for the period from May 16 to September 15, 2013. Although Tata Power has not put a cap on the quantum of power to be supplied by the successful bidder, the distribution company (discom) has insisted on a minimum 25 MW for the entire period. In the request for proposal (RfP) document, it has been specified that the power requirement for the 15-day period in May will be 50 MW. This will further escalate to 200 MW and 300 MW in the months of June and July, respectively, and then drop to 150 MW during September 2013. Whatever amount the successful bidder agrees to supply, it has to ensure that the actual scheduling does not deviate by more than 15 per cent of the contracted power as per the approved open access on monthly basis. In case such a situation arises, the seller has to pay compensation to TPDDL at 20 per cent of contracted tariff per KWh for the shortfall in excess of permitted deviation of 15 per cent. Bidders were asked to submit their bids and supporting documents latest by February 27, 2013.

TN invites bids for imported coal Tamil Nadu PSU TANGEDCO has invited bids for procurement of 4.2 million tonnes (MT) of imported steam coal for its 1,200 MW North Chennai Thermal Power Project (Stage II) (NCTPP), which will commence operation after May 2013, and for its other thermal stations located in Ennore, Mettur and Tuticorin regions of Tamil Nadu. The selected bidder will have to supply coal for a six month period from June 2013 to November 2013. In case of any delay in commissioning of the NCTPP power plant, TANGEDCO has said that the time period will be extended upto a maximum of three months, beyond November 2013. As per the coal specifications mentioned by the utility, the successful bidder will be liable to supply imported coal with Gross calorific value (GCV) of 5400-6300 kcal/kg and the size of the coal should range between 0 to 50 mm. All bids need to be submitted latest by March 12, 2013.

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POSCO may become a CPSU The power ministry is actively considering the Planning Commission's proposal to categorise Power System Operation Corporation (POSOCO) as a Group-A central public sector undertaking (CPSU). Being categorised as a Group-A CPSU will lend an independent stature to POSOCO, established as a 100 per cent subsidiary of Powergrid in 2009. The Planning Commission has contended that this step is necessary as POSOCO performs statutory functions of national importance through RLDCs/NLDC. Central Electricity Regulatory Commission (CERC) has already conferred financial independence to POSCO. Classifying POSOCO as a 'Group-A' CPSU will not entail any financial implication as a revenue stream is already provided for by CERC in accordance with the provisions of the Electricity Act, 2003.

EAC defers forest clearances An estimated Rs22,000 crore investment continues to be at stake as the Expert Appraisal Committee (EAC) has deferred its decision on clearance-related issues for 4,100 MW of thermal and captive power plants. In the recently convened meeting of the re-constituted EAC on environmental impact assessment (EIA), the committee was taken aback by the developers' inability to bridge the missing gaps in project-specific documents despite being pulled up earlier for this very reason. If the developers fail to follow clear directions and furnish same old information for resolution of matters, there is nothing that the EAC can do except push its final decisions to the next meeting.

Odisha criticised for diverting forest land for power stations The EAC has raised a red flag over Odisha Thermal Power Corporation Limited's (OTPCL) proposal to divert 1,969.78 hactre of land for the upcoming 3x800 MW supercritical coal based TPP despite five reserve forests within a 10 km range of the project site. The committee expressed concern that the land for project and ash pond is too large for just one project and needs to be scaled down to the maximum extent possible. Moreover, OTPCL must make efforts to avoid using the 83.91 acres of forest land altogether. During the EAC meeting, the committee further directed OTPCL to strictly adhere to Central Electricity Authority (CEA) norms and accordingly present the revised layout along with the EIA Report.

Tata Power registers 50.4 MW wind project Carbon-friendly: Tata Power's Samana plant in Gujarat will reduce carbon footprints by 96,821 tonnes of CO2 Tata Power has successfully registered its 50.4 MW Wind power project at Samana, Gujarat under Clean Development Mechanism (CDM) programme by United Nations Framework Convention on Climate Change (UNFCCC). The 50.4 MW wind plant was commissioned in May 2009 and uses 63 wind turbine generators of 800 KW capacity each to harness wind energy for power generation. Speaking on the occasion, Anil Sardana, MD, Tata Power, said, “We have always established that clean and renewable energy is the need of the hour and Tata Power will continue its efforts towards this.� The Samana plant helps in reducing an annual average of 96,821 tons of Carbon Dioxide equivalent, by producing 104,970 MWh per year (average) equivalent amount of clean energy.

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DIARY

Events Save Power Show Venue: Le Meridien, Cochin Date: March 2-4

The show is an excellent networking and knowledge-sharing platform for the stakeholders in the renewable energy sector. Save Power Show will showcase renewable energy and energyefficient products and solutions under one roof, enabling visitors to acquire knowledge and information about the latest technology and the best solutions for their energy requirement.

12th Coaltrans India Venue: Grand Hyatt, Goa Date: March 12-13

The past 12 months have seen dramatic developments in the dynamics shaping India's coal sector. Yet amidst such difficulties, the power and steel demand remains strong and India's coal deficit continues to hold within it substantial exciting opportunities for growth and innovation. At this annual networking event, you can explore the new frontiers of India's rapidly expanding coal industry. A must-attend event for coal sellers, buyers and traders.

Indian Solar Summit 2013

Venue: Mahatma Mandir Convention Centre, Gandhinagar, Gujarat Date: April 18-19

With the aim to accelerate the number of solar installations in the country to reach a target capacity of 20 GW by 2022, India has established itself as one of the most attractive renewable investment markets in the world. In order to make this target a reality, India’s premier solar show – The Indian Solar Summit and Exhibition – is back this year. Learn about the latest technologies and development opportunities which are shaping the Indian solar market.

Renewable Energy World India 2013 Venue: Bombay Exhibition Centre, Goregaon, Mumbai Date: May 6-8

Renewable Energy World India 2013 shifts from New Delhi to India’s financial hub, Mumbai, where the event was last held in 2010. With this move, the high-level conference and exhibition aims to expand its coverage from the northern part of India, which has been its main focus, to include the west and south. Under the theme, Indian Power – Time to Deliver, the event brings together decision-makers and professionals from leading companies involved in renewable energy generation, transmission and distribution within India and around the world.

Power-Gen India & Central Asia 2013 Venue: Pragati Maidan, New Delhi Date: May 9-11

Power-Gen India & Central Asia 2013 aims to showcase the latest technologies and solutions in the power and energy sector as well as gather industry leaders and professionals together on a single platform. The show will provide immense opportunities for companies and industry experts to network, develop business relations and establish future business prospects. Keep up-to-date with the latest developments in the industry.

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Clearly, oblivious to the 25,000 volts line in the backdrop, a recluse prefers a quick nap under the sun to the vagaries of the Indian power sector. And why not? The government’s promises for the man on the street remain no more than a pipe dream.

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the big picture

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cover story

E

nergy demand in India is growing at a fast pace. Both domestic consumption and industrial consumption were at the upper curve of the growth trajectory in the 11th Plan period. This trend is expected to continue in the 12th Plan period as well. The average per capita electricity consumption in the country is pegged at 876 kwh, as opposed to that in China, which is close to 3000 kwh. According to the World Bank data, the consumption in India was 556 in 2008, 590 in 2009 and 616 in 2010 and climbing close to 800 kwh in 2012. It is imperative that the government takes the right steps to bridge the demand – supply gap, which is hovering at above 10 per cent. The power generators in the country, who are facing a number of issues, expected a budget that will go at least part of the way towards making the power sector financially viable. But Finance Minister P Chidambaram’s Budget 2013-2014 gave little cheer to the beleaguered sector. One market analyst put it succinctly. “The budget was neither populist nor reformist. It was actually feminist,” he said, reflecting the industry’s response to the budget. In contradiction to the expectation as the country heads into an election year, the budget was subtle with more concentration on women and children.

BUDGET HIGHLIGHTS  Policy on blending the prices of domestic and imported coal to be introduced.

 Proposal to executive coal mining projects in the Public Private Partnership (PPP) model through Coal India Limited to be floated.  5 LNG terminals at Dabhol plant to be cleared.  Shale gas exploration to be encouraged in the next fiscal.  Generation-based incentives to wind energy projects reintroduced; Rs800 crore provided for the purpose to Ministry of New & Renewable Energy.  The tax holidays enjoyed under Section 80-IA extended for another year (till March 31, 2014).  State governments urged to participate in the scheme announced earlier for financial restructuring of discoms.  Power transmission system from Srinagar to Leh to be constructed at a cost of Rs1,840 crore (Rs226 crore will be disbursed in next fiscal).  Zero customs duty levied for electrical plants and machinery.

MEDIUM-TERM SOLUTIONS The backbone of the economic infrastructure and energy sector, however, got a larger mention. The FM started with one of the major problems average per capita electricity faced by the thermal power consumption producers in the country: fuel supply constraint. “Coal imports, which crossed 100 million tonnes during April-Dec

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budget

Despite the hype, Finance Minister P Chidambaram’s budget has little to offer the power sector. Is there any hope at all at the end of the long, dark tunnel?

By LIZA V

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‘Corrective measures not taken’ JG Kulkarni, president, IEEMA, says the budget does little for the key electrical equipments industry We were hoping for some corrective measures to revive the downturn in the domestic electrical equipment industry, which is reeling under the twin onslaught of the slowdown in the country’s power sector that has depressed domestic demand, and the rapidly escalating imports of electrical equipment. This has resulted into under-utilisation of the manufacturing capacity for electrical equipment. Given the need to accelerate the Rural Electrification Programme, the fall in Central Plan allocation for Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) from Rs4,900 crore to Rs4,500 crore is a matter of concern. Further, the revised estimate of Rs2,492 crore against the budget estimate for 2012-13 shows that funds provided were not fully utilised. The Restructured Accelerated Power Development and Reforms Programme (RAPDRP), which is primarily focussed on reduction of AT&C losses, has also seen a sharp decline in Central Plan allocation from Rs3,114 crore (BE 2012-13) to Rs575 crore given the gross under-utilisation of funds allocated last year. Only Rs1,500 crore were utilised out of the total allocation of Rs3,114 crore. The financial health of the discoms is a critical success factor for the viability of the electrical manufacturing sector. Although a sum of Rs1,500 crore has been allocated for debt-restructuring of discoms, till date, only a handful of states have evinced interest in the debt-restructuring plan the central government announced some months ago. However, the budget did include some measures that would certainly provide relief to this sector. These include: Extension of the sunset date by one more year for the power sector for claiming 100 per cent deduction of profits under section 80 IA. Generation-based incentives for wind energy. Rs50,000 crore provision for tax free infrastructure bonds. For the growth of Micro, Small and Medium Enterprises (MSMEs), the continuation of the benefits for three more years, despite their growing out of their respective category. Impetus to investment in plant and machinery above Rs100 crore through investment allowance of 15 per cent to manufacturing companies. Funding and other incentives for the ambitious target of skilling 50 million people in the 12th Plan. This will enhance availability of skilled labour and talent. While the intent of the budget is to accelerate the GDP growth in the 12th Plan, it will be constrained by an absence of matching impetus to the electrical equipment manufacturing sector in particular and in the value chain of power covering generation, transmission and distribution, on the whole.

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2012, are expected to go up to 185 million tonnes in 2016-17,” Chidambaram said. For relief in the medium term, he announced the introduction of a policy on blending imported coal and domestic coal. He said that the government was working out a public private partnership (PPP) model for coal mining. Commercial coal mining is being considered as a possible solution to increase the output to meet the growing demand for coal from power producers. Another issue related to coal Coal is linkage, which may get sorted out, thanks to the railway budget, which earmarks Rs100 crore for coal linkage facility. Gautam Adani, chairman, Adani Group, pointed out, “The upward revision of import duty, from 1 per cent to over 4 per cent on steam coal imports will adversely impact the industry as it will lead to increase in the cost of power generation. This is a little amusing as the country has a huge deficit in coal and the government is trying to minimise cost by augmenting coal supply through various initiatives for domestic production as well as opting for price pooling of domestic and imported coal.” India Ratings, in its reaction on the budget announcement, said, “While it may be a little premature to form a definitive assessment, the government's plans to encourage public - private partnership projects along with the state-owned Coal India should, prima-facie, be deemed positive if it helps accelerate and supplement domestic coal production, particularly to meet the acute fuel scarcity facing power projects.” Anil Sardana, managing director, Tata Power, one of the country’s largest power producers, said, “We are thankful for the minister's announcement to equalise custom and CVD for steam and bituminous coal used in thermal power generation at 2 per cent each as this provides clarity to claims raised otherwise by the customs department.”

The upward revision of import duty, from 1% to over 4 % on steam coal imports will adversely impact the industry as it will lead to increase in the cost of power.” Gautam Adani, chairman, Adani Group

The announcement to equalise custom and CVD for steam and bituminous coal used in thermal power generation at 2 per cent each provides clarity to claims that are raised otherwise by the customs department” Anil Sardana, managing director, Tata Power

LENDING TO THE SECTOR Cheaper loans and making lending to power projects priority have been long-pending demands of the country's power generators. This time, the finance minister has relented. Says Sabyasachi Majumdar, senior vice-president, corporate sector ratings, ICRA Ltd, “The government has proposed a number of measures for augmenting the availability of long-term funds at competitive rates. These include encouragement for creation of infrastructure debt funds (IDFs), fixation of limit for fund raising through tax-free bonds at Rs550 billion and credit enhancement mechanism through IIFCL.” The major cheer, however, was reserved for the wind sector with the re-introduction of Generation Based Incentive (GBI). Also, the tax holiday for wind projects under 80 IA has been extended for another year. In addition, the finance minister has announced an allocation of fund from the National Clean Energy Fund (NCEF) through IREDA with a life span of five years to make the renewable energy lending cheaper. Ramesh Kymal, chairman, Indian Wind Turbine Manufacturers’ Association (IWTMA) and managing director, Gamesa India, said, “The re-introduction of GBI is a timely intervention for the wind industry, which was suffering for more than a year. This would certainly rejuvenate and boost the sector with more investments. Reintroduction of GBI assumes greater significance as the industry has an ambitious plan of capacity addition in the current plan period. I am confident that the industry would bounce back by 2014-15 and may be able to cross the set target of 5,000 MW capacity every year.”

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cover STORY COVER story

RUNNING FOR COVER? The power generators in the country, who are facing a number of issues, expected a budget that will go at least part of the way towards making power sector financially viable. But Chidambaram’s budget gave little cheer to the beleaguered sector. TOO LITTLE, TOO LATE The most vital segment of the power sector – the electrical industry – is unhappy with the budget. JG Kulkarni, president, Indian Electrical and Electronics Manufacturing Association (IEEMA), said, “We were hoping for some corrective measures to revive the downturn in the domestic electrical equipment industry which is reeling under the twin onslaught of the slowdown in the country’s power sector, which has depressed domestic demand, and the rapidly escalating imports of electrical equipment. This has resulted in under utilisation of the manufacturing capacity for electrical equipment.” Looking at the mammoth problems faced by the sector and recalling the near-total blackouts last year, experts says these measures seem like small drops in the ocean. There should be a way to end the policy paralysis in the power sector with an investor-friendly policy environment. But that may have to await the next government as UPA gears up for elections in 2014. The question for the power sector is: will it be too late by then?

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Special report

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distribution

lights out! India’s peak hour demand-supply gap to widen to 22%. is there a way out? BY Liza V

T

he power situation is fast progressing from a ‘warning’ to a 'crisis' situation. While ‘Power for all’ is still a distant dream, the situation is fast becoming critical! Last year, during the summers, northern parts of the country faced a complete black out for 48 hours. The reason: Over-drawing by some utilities to meet demand owing to fuel supply issues. But the question that is staring us point blank right now is whether we are heading towards another crisis bigger with fast dwindling fuel supply. The ambitious plan of adding 75,000 MW to the grid in the 12th five year plan will remain a mirage, point out industry experts. For a country which added between 50,000- 60,000 MW in the 11th Plan period (2007-2012), 75,000 MW should be an easily attainable target. But that does not seem to be the case. Total installed capacity in the country stood at 2,11,766 MW with less than 1,000 MW addition from the December 2012 levels. Out of this, the contribution from the thermal sector is 738 MW. This too was achieved mainly because of the commissioning of one unit of 660 MW of the Mundra UMPP in January. During the 12th Plan period, according to the plan CEA document, the government plans to add a capacity of 72,330 MW from thermal power projects. But the plan is likely to hit a road-block with the fast changing fuel supply scenario, both domestic and internation.

The Problem The investment in the power sector by private players is expected to reach over 50 per cent by 2017. In 2011, during the last phase of the 11th Plan period this was below 30 per cent.

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Special report

Total installed capacity as on 31-12-2012

Fuel

MW

%

Total Thermal

140976.18

66.82

Coal

120,873.38

57.29

Gas

18,903.05

8.96

Oil

1,199.75

0.56

Hydro (Renewable)

39,339.40

18.64

Nuclear

4,780.00

2.26

RES** (MNRE)

25,856.14

12.25

Total

2,10,951.72

100.00

Source: CEA Details of Captive Coal Block Allocation to Power Sector

Utility

Coal Blocks

Geological Reserves (MT)

CPSU

13

6893

State Utilities

39

12717

UMPPs

7

2607

Private

32

6076

Total

91

28294

Source: CEA

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The private sector came into the picture when they proved that they have the ability to complete projects in an efficiently and timely manner. It was a smooth run both for the companies and the government till recently when the competitive bidding process started and projects were awarded. The scene took a U-turn when the fuel supply issue came to the fore with the rising prices of coal.

The beginning Under the competitive bidding Case I, the bids were awarded in two categories i) Projects awarded with domestic coal supply guarantee by Coal India Limited (CIL) ii) On 100 per cent imported coal. Under both categories large power projects were envisaged and awarded. As a result of the changed coal price scenario, power generators bidding for projects which were awarded in the second category (with 100 per cent imported coal), have appealed to the authorities to revisit the inked PPAs. These companies, while bidding for the projects, assumed that the coal prices will remain at the lower price bracket in the long term. However, the situation changed dramatically with coal prices going up globally and the Indonesian government, followed by the other major coal exporting countries, announc-

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distribution

Higher fuel cost will transpire into decreased returns from power projects. This will result in generators defaulting in loan payments to lenders and the spiraling effect would result non-performing assets for the banks.

ing that the export prices will have to follow either an index or a floor based on an index. Investors who assumed coal price at $40-45 per tonne while bidding for power supply are now witnessing the price shooting up to $100 a tonne. Those who have contracted projects by acquiring mines abroad under captive consumption are also facing challenges with the international price. Many of the generators have bought coal mines either in Australia, Indonesia and South Africa. Considering the proximity to the Indian coastline, majority of the companies went into contracts with Indonesia for captive mining. The lower price in Indonesia was attractive for the domestic companies. Companies like JSW Energy, Reliance ADAG, Adani Group, Tata Group, Lanco have over the years acquired mines in Indonesia. Over 50 per cent of the coal imports for the domestic power companies are from Indonesia. Indonesian companies have entered into agreement with the Indian companies to sell coal according to a price agreed between the two parties. This price was much lower than the coal indices which was being adopted by many countries for price bench marking. Realising the loss of revenue, the Indonesian government has imposed a royalty on coal exports. For the price calculation they have taken the average of four coal indices, which include the Indonesian coal price index, the

Globalcoal New Castle index, the New Castle Export index and the Platts-1 index. This pushed up the coal price higher than what was indicated in the purchase contract. Some of the available calculation shows that in money terms, the effect of this will be an increase equivalent to 0.70 paise per unit of electricity generated using imported coal. Indonesia is not alone, Australia has imposed a pollution tax. The projects which were contracted under the competitive bidding process with 85 per cent domestic coal supply guarantee from the CIL and 15 per cent imported coal, are facing the real challenge because of the short fall in supply. Owing to different issues including the environmental clearance and forest land, CIL is not able to meet demand. There is a marginal increase in CIL’s coal production, but the demand is much higher. There are coal blocks awarded domestically under the captive use category. Total installed capacity in The problems of green the country area/forest/ area markings has delayed mining by the private companies. In some cases the coal blocks have been taken back because of the delay in mining. In short, projects which are contracted either with domestic coal and international coal are put into a situation where the signed PPAs are falling flat. A higher fuel cost will transpire into decreased returns from the projects. This may result in the generators delaying/ defaulting in loan payments. The spiraling effect would be the non-performing-assets for the banks.

2,11,766 MW

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Special report

What the industry wants “In the current scenario, all PPAs will fall flat,” pointed out Ashok Khurana, Director General, Association of Power Producers. "The earlier PPAs had a commitment of 85 per cent supply from CIL which came down to 70 per cent in the previous year and now it is 60 per cent,” he points out. Bringing down the percentage of guaranteed coal by another 25 per cent is surely going to hit the profitability of the project. The government has to look at the ground reality and find out a solution to resolve the problem at the earliest, Khurana said. Other industry experts are of the opinion that this is purely a contractual issue. However, the fear of not being able to pay back the loan is a harsh reality both for the generation utilities and the banks. A senior member of a state regulatory commission, on condition of anonymity commented that “Change is possible if all the parties agree to it. Reopening PPAs is a possibility in long term contracts after 10 to 12 years, taking into consideration all the changed scenarios. However, in a competitive bidding scenario, the PPAs need to be verified.” The contracts which have been signed with fixed cost components are the ones which are taking the most hit. “On the face of it, fuel appears the major villain here. The risk component in the PPAs may differ from case to case. So before jumping to conclusion, the technical, commercial and legal aspects also required to be carefully examined,” he added. “The problems faced by the utilities are not unique. Globally unanticipated developments have triggered similar situations for utilities. While, fuel is one issue, in Europe it was the change in subsidies, while in other case it was a newer technology which created issues,” said, Kameshwar Rao, executive director, PricewaterhouseCooper, a consultancy firm. “This is not a dispute but a circumstance driven issue to look at a long term contract. Here the problem is big as fuel shortage or price hike was not envisaged in the contract,” he added.

Fuel Supply When the power producers slipped to acute fuel shortage last year, the Prime Minister’s Office intervened with the formula of CIL's coal supply commitement Fuel Supply Agreement or FSAs. On the face of it, the formula, appeared to be a surety card for fuel supply. The generation utilities are of the opinion that the FSA hasn’t made any change to the problems of fuel supply yet. Now, the government has suggested coal pooling prices to address the issue immediately. “The fuel price pass through shouldn’t be seen as a profit making formula. It should be reviewed from case to case. The suggestion is to constitute an independent committee to look into the problem,” said Khurana. “Further improvement in fuel (coal) supply can be possible. Government may look at more investment in coal sector which

60%

22

PROJECTS AWARDED THROUGH TARIFF BASED COMPETITIVE BIDDING ROUTE ULTRA MEGA POWER PROJECTS(UMPPs) ( as on 1st July,2012) Name of the Project and capacity as per LoI

Name of the Successful Bidder

Date of LoI

Levelised Tariff (Rs/KWH)

MUNDRA (5x800 MW) (Gujarat)

M/s Tata Power Ltd

28.12.2006

2.264

SASAN (6x660 MW) (Gujarat)

M/s Reliance Power Ltd

01.08.2007

1.196

KRISHNAPATNAM(6x660 MW) (Andhra Pradesh)

M/s Reliance Power Ltd

30.11.2007

2.333

TILAIYA(6x660 MW) (Jharkhand)

M/s Reliance Power Ltd

12.02.2009

1.770

Source: CEA

can ramp up production tremendously,” pointed out Kameshwar Rao . There is no doubt that the companies are getting affected. Third quarter results of Tata Power is a mirror to the existing situation, he added. According to Rao, the solution is not as easy. However, clarity in coal pool pricing can address the issue to a large extent in the short term.

Bailout The problems of fuel supply and utilities not being able to recover money is snowballing with each passing day. Some fear that this can grow to where the discoms financial conditions are now. “Everyone fears the current situation,” says Rao. A passthrough according to CERC guidelines which is viable with the tariff mechanism could be a possible answer. “Bailing out the generation utilities at this point is unfair. The post-bid change may indicate that the companies which lost the bid may have been more competitive. The companies have consciously decided to absorb the risk by bidding in this manner. Firms which won the bid should have had back to back coal supply agreement in place,” argued Shantanu Dixit of Prayas Energy Group, a Pune-based energy sector think tank. The country has a peak demand deficit of over 9 per cent. The stake holders are trying to bring down the T& D losses to the 15 per cent levels. With many of the projects on hold, the question which worries many is what will happen to the capacity addition plans? A power analyst from a leading financial lender is quick to say that, “the second half of the current plan period will see a huge slip in capacity addition. The first half will add the slippage from the last plan period, so it will be stable.” Kameshwar Rao quantifies it when he says “There will be an off the cliff slip which will be between 7-8 per cent. The demand supply gap will increase to 20-22 per cent by 2017 (end of the current plan period). This will result in even cities ending up with 4-5 hours of power cuts a day.” Experts believe that one should look at Case 2 bidding as fuel supply is the sole responsibility of the government and as a generator, the role of the utility will be limited. In that case the price of power will be stable. In the short term, government should clarify how it is going to incorporate the price pooling formula at the PPA level. Until and unless there is transparency in this, the solution will be as much an eye wash as the FSAs.

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distribution

'The basic problem facing the sector today is fuel cost' Hemant Joshi, CFO, CLP India, on the urgency to resolve PPA related issues Interviewed by Liza V Could you please explain the problems faced by thermal projects currently? Fuel shortages, both coal and gas shortage is the major problem facing thermal projects now. The shortfall in supply of domestic coal and a large increase in price of imported has resulted in such a scenario. Projects which were planned with 100 per cent domestic coal are facing the problem because Coal India Limited (CIL), the sole supplier of coal in India is unable to meet all the demand. Internationally, because of change in laws in countries like Indonesia and also because of the demand supply situation, coal prices have increased. The sudden changes in the prices are hitting the planned projects in a major way.

In the recent past many private power generators who have signed PPAs have approached different agencies highlighting the projects become unviable in the changed scenario. Your comment Many of PPAs signed earlier either were relying on procuring 100 per cent domestic coal or cheap international coal. Since then domestic coal availability has decreased and internationally, coal prices have increased. Further PPAs were signed in two broad categories first, on fixed tariff basis where the fuel risk in borne by the electricity producer and secondly with the fuel price changes as a 100 per cent pass through. The ones which are signed with fixed tariff are facing a major problem as their cost of

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Special report

For many fixed tariff PPAs, this is an issue that needs to be addressed urgently as cash flow from such projects can no longer support debt payments. Many of these projects have been financed by public sector banks. Thus, a power sector problem has the potential of becoming a much larger financial sector problem." production is now sometimes higher than the quoted PPA tariff. For many fixed tariff PPAs, the issue needs to be addressed as the cash flow from many such projects can no longer support the debt payments. Many of these projects have been financed by public sector banks. In such a scenario, a power sector problem has the potential of being converted in to a much larger financial sector problem. Something similar can also happen with the large amount of public debts that are supporting the discom losses. Overall, lending to power sector projects will be extremely difficult for the banks Last year after the PMO intervention we saw FSAs being signed between the power producers and CIL. In the current scenario, it is coal pooling which is being talked about. How effective will that be? The basic problem facing the sector today is fuel costs. Due to shortage in domestic coal and increase in price of international coal, the cost of fuel has increased. These costs have to be allocated across the system which consists of IPP’s, state and central generators, coal India and the discoms. Who will absorb this price gap is the question which needs to be addressed? Coal pooling is one solution in which the cost increase is uniformly spread across the system. But this is zero sum game in the sense that if cost for one particular set of people goes down, then someone else in the system is faced with the higher cost. The question about who shares the cost in what proportion is very difficult and something the government needs to decide quickly and move forward. Given the nature of the problem, it is going to be very difficult to please everyone with any single solution. If these PPAs are reopened and given a revision in tariff, don’t you think it will be completely against the structure of competitive bidding? What you are saying is essentially correct but a pragmatic and timely solution needs to be found. Thousands of megawatts of capacity are currently stranded as it is not viable under the existing PPA’s. New capacity additions have slowed down and demand continues to grow. Further, if these problems are not corrected now, payment defaults can happen and a power

24

sector problem will be quickly converted in to a banking sector problem. Given all this background, some sort of concessions can be considered. I think that the sector has learned some lessons and we might not see that type of aggressive bidding done earlier. I also think that banks will be more cautious and only good projects will be able to raise money. What is the kind of dip we anticipate in capacity addition in the current Five Year Plan considering we are in the first year of the Plan Period battling a huge crisis? Could you quantify the effect? The effect of the current problems will be felt in the second half of the Twelfth Plan Period. The projects which were started at the end of the last Five year Plan will be the ones which will be coming on-stream in the near future. However, very few new coal based projects are being taken up. The story is even worse for new gas projects as the availability of gas has dipped to alarming levels. Hydro continues to be plagued by tremendous delays whereas even wind additions have slowed down recently due to regulatory uncertainty. Overall, I think that meeting Twelfth Plan targets will be challenging unless the fuel issues are urgently resolved. By the end of 12th Five Year Plan it was envisaged that electricity will be in an affordable bracket with all the capacity addition plans coming on stream. Do you think cheaper electricity will be a reality? I think cheaper and affordable are two different things. On one hand, both coal and gas costs are going up. Depreciation in the value of rupee means that cost of imported fuel has also increased. Overall, we should consider cost of producing power to go up. On the other hand, the national income is also increasing and India’s middle class and the commercial and industrial users can absorb the higher costs if they are assured of a reliable source of electricity. This issue gets caught up in politics where the difference between costs and affordability is often lost. As they say in basic economics, if you don’t pay a fair price for a commodity, it will be in short supply which in this case means blackouts.

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transmission

Plan for green corridors Creating large transmission projects to evacuate RE power is the need of the hour Sanjeev Aggarwal Managing Director, Amplus Infrastructure

F

rom the current installed renewable capacity of approx. 27,000 MW, 18,500 MW is contributed by wind and 1,250 MW by solar. No mean achievement for a sector that has consistently been at the margin of capacity addition in India – renewable power was always considered as a me-too in the larger context of thermal and hydro plants. Last few years of volatile fuel prices and availability has pushed the Indian power sector as well as the global market towards focus on wind and solar technologies. In the next 5 years, India expects to add 30 GW of wind and 10 GW of solar, not an unrealistic target if one goes by global examples, and that gets coupled with the lack of alternate power capacities that can be planned in India in this timeframe. With wind power achieving ‘grid parity’ and solar achieving ‘socket-parity’ vis a vis the alternatives that the consumers have, it is likely that large investments will continue to flow in these segments. This is where the problems arise for wind and solar power. They perform best in certain areas and for optimal capital utilisation; we ought to plan it that way. Renewable energy facilities where fuel is costless, operating costs are typically lower than fossil generation facilities, but the capital cost, including transmission line cost, are often a significant component of total project costs. Because renewable energy resources are often located in remote locations, greater reliance on renewable electricity generation will also result in a geographic shift in the location of generation capacity, and in turn have repercussions for the new transmission investments required to address transmission congestion. As a result, adequate existing transmission access is also likely to be a driver of early large-scale, grid-connected renewable energy development. There have been reports in the last couple of years about plants facing evacuation constraints in specific areas of the country. This is obvious considering that so much capacity comes on line during specific times of the year and can create problems for grid stability. As examples, it is becoming obvious that wind capacity that can

potentially come up in Tamil Nadu or solar that can come up in Rajasthan cannot be absorbed in those states; we need to provide a proper outlet for this capacity if we intend to use nature’s gift to us. Creating large-scale transmission lines that can serve multiple states is one answer. We should be thankful to Powergrid that it has already started working on this idea and has developed a detailed plan for intra-state and inter-state system strengthening, requiring an investment of more than Rs42,000 crore. About Rs20,000 crore would be for intra-state strengthening and Rs22,000 crore for interstate grid integration. This would also include other work such as energy storage, real time monitoring system and setting up of a renewable energy management centre. However, financing of such a large amount is not the only challenge that faces the industry today. Just like other infrastructure, it is the implementation challenges on land, right of way, and forest clearances that can significantly delay the projects.

Powergrid has already begun system strengthening proejcts worth Rs42,000 crore. Any large scale transmission projects will take 2 to 4 years to be implemented while wind and solar projects are delivered in 3 to 9 months of starting work. This creates a mismatch in our expectations and what can be actually delivered on the ground. If we really want to push our renewable programme, we have to create larger transmission capacities that can provide sufficient evacuation. We do not want to create infrastructure investments that do not deliver the results we expect because of avoidable bottlenecks. Not after what is happening to gas and coal projects in the coutry!

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Analysis

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finance

Tata Power reported a loss of Rs329 crore, compared to a profit of Rs298 crore YoY. What ails the company? BY Gargi Banerjee

T

he head honchos of country’s largest private power producer, Tata Power Company Limited (TPC), seemed visibly worried at a recent analyst meet. Announcement of the third quarter results was not a happy occasion as the power sector behemoth reported a net loss of Rs329 crore compared to a profit of Rs298 crore in the corresponding quarter last year. However, there was some solace for the Tata Power management, with consolidated net sales rising to Rs8991.7 crore, registering a 35 per cent increase in the 12-month period. Commenting on the third quarter performance of Tata Power and the prospect of the stock, Rupa Shah, power sector analyst at brokerage firm Prabhudas Lilladher said “Coastal Gujrat Power (SPV set up for Mundra ultra mega power project) has been the major drag on its profitability, and will continue to remain an overhang on the stock.” She adds that an overdependence on imported coal and additional forex losses of Rs86 crore (due to rupee depreciation) has crimped the bottom line of the company considerably in the third quarter.“The only trigger that the stock might witness will come if there is a revision in tariff rates as per the proposal of Tata Power to CERC, but we do not see it happening in the immediate future,” Shah adds.

The impaired quarter The bottomline losses of Tata Power are largely on account of the impairment charges of Rs600 crore that it has had to pay on account of its ambitious 4000 MW ultra mega power project (UMPP) at Mundra, Gujarat. It has already taken a Rs250-crore loss on account of impairment provision in the first quarter of the financial year. This is in addition to the massive hit of Rs1,800 crore on its bottom line in the last fiscal. At this rate, Tata Power has enough reason to worry as it grapples with low tariff realization on the one hand, and escalating costs of fuel on the other. The Mundra UMPP (India’s first such project) has become a bane for the company due to the rising prices of imported

35% Rise in consolidated sales YoY for the 3rd quarter

coal. This is due to the change in Indonesian government regulations with regards to price benchmarks. Indonesia remains the major exporter of coal worldwide and India and China are the largest importers of coal. Power generation in India is critically

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Analysis dependent on imported coal, the price of which has been rising steadily over the past couple of years. The dependence of UMPPs on imported coal is unavoidable, because economically viable domestic coal sources remain unavailable to Indian companies. “The trend of India’s chronic power deficit continues unabated,” mentions Pankaj Pandey, head of research ICICI Securities.“Domestic coal production is stagnant because of the delays that are being caused in the development of captive coal blocks that is to be allocated to power sector generators in India. Till such time as coal blocks are allocated to domestic power generators they will have to depend on imported coal,” Pandey explains.

behind at 49 crore tones. This will further increase the need for imported coal and in turn, spike global prices in the long term.

Way out The simple answer to the problem that Tata Power is facing now is to hike tariffs. The company representatives have stated time and again in media reports that tariffs need to go up 80 paise per kw. The company has over the last couple of years left no stone unturned to negotiate tariffs with its buyers who are mainly state-owned distribution companies (discoms). These discoms see no logic in paying more to the power generator or renegotiate the PPAs which are currently to their advantage. This tug-of-war between power generators and discoms has reached the Central Electricity Regulation Commission (CERC) and Tata Power and other troubled generators are eagerly awaiting CERC’s decision in order to protect their bottomlines from being crimped due to escalating fuel costs and low tariffs that are unable to compensate. In hindsight, analysts mention that Tata Power was a little rash in the bidding process in order to lay its hands on the prestigious UMPP. That’s possibly the reason why when participants in the bidding process were free to decide upon what would be the fixed and the variable component in the cost of coal, Tata Power chose to stick its neck out and stated that 45 per cent of the cost of coal would be variable. This meant that more than half the cost of coal would be non-escalable in its bid. This overconfidence of sorts is what has landed them in the current soup! Tata Power has already has had issues with important breaches of covenants relating to the debt-equity ratio, although it has not defaulted on the repayment schedule as yet. However, given the fact that these covenants have been breached noted rating agencies have revised their outlook on the power generator downwards. S&P which downgraded the company's rating from stable

Fuel woes The reason why Tata Power finds itself in a quandary now is because power purchase agreements (PPAs) for the UMPP were signed back in 2005. At that time, Tata Power had bid tariff based on assumptions that it would be able to procure coal on long term contracts from Indonesia. It did not anticipate the Indonesian government would put in a new benchmark for coal prices of coal that prevents miners from selling coal to their international affiliates at lower prices on long term contracts to evade taxes. The new regulations make the purchase of coal costlier by $30-35 per tonne, that has made economies of this project unfavorable for the power generator. With such regulations kicking in from mid-2010 onwards, Tata Power has found itself in a spot and the bad news is that the prices are not going to temper down anytime soon to make imported coal based plants viable in Indian conditions. In fact, with the acute crisis in the power sector and UMPPs underway the demand for coal is estimated to rise up to 68.21 crore tonnes whereas supply projection is lagging

Coal dependence Domestic coal production growth stagnating over the past five years

dependence of generators on imported coal over the past five years

Year

Coal production (in metric tonnes MT)

Year

Share of imported coal in incremental consumption of coal (%)

Fy 08

362

FY 08

21

Fy 09

397

FY 09

6

Fy 10

419

FY 10

7

Fy 11

431

FY 11

43

Fy 12

436

FY 12

95

Source: Tata Power annual report FY 12

Source: Tata Power annual report FY 12

The impact on the numbers of Tata Power

Q3FY 13

Q2FY13

Q3FY12

Q-0-Q (% change)

Y-o-Y (% change)

Cost of power purchase (Rs/cr)

2199.8

1792.6

1285

22.7

71

Cost of fuel

2695.8

2432.8

1757.4

10

53

Coal processing charges

701.1

631.7

470.5

11

49

Provision for impairment

600

250

NA

NA

270

Depriciation

587.3

542

346.9

8.4

69

PAT

-328.9

-83.8

298.7

NA

NA

1.14

70

1.79

NA

NA

Adjusted EPS (Rs) Source: company, brokerage reports

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finance

International opportunities are shaping up for Tata Power and we have identified seven countries in Africa and Middle East that will be key to our power generation business." Anil Sardana, CEO, Tata Power

to negative stated that it had expected that the ratio of funds from operation (FFO) to adjusted debt improve to 13-15 per cent between 2011-2013, but given the current woes on rising fuel costs they revised their expectations to 10-12 per cent in the same period. S&P has cautioned that the rating may be downgraded further if the ratio of FFO to adjusted debt drops below 10 per cent. This would essentially mean that the financial profile of the company has worsened even further. This could happen if the company undertakes any capex programme that would require the company to make a substantial cash outlay.

Damage control Tata Power is working hard on some damage control measures at the moment. Recent media reports suggest that the company has managed to get an extension from lenders to the Mundra SPV. The lenders have decided that the company will be given an extension till mid-June 2013 to make a repayment and till then the assets would continue to be accounted as standard. Tata bosses including the recently anointed head of the group, Cyrus Mistry, is in talks with International Finance Corporation and the State Bank of India to provide them with an opportunity to make remedies for the covenant breaches that have occured. On the other hand, the company is in process of making a transfer of 75 per cent of its stake in mining companies to the Mundra SPV which ought to placate the lenders, but is subject to the approval of CERC. Meanwhile, the company has also proposed that the project at Mundra be expanded so that the additional capacity can be sold at market rates to compensate for some of its existing losses. But all of this is subject to regulatory approvals. The management seems gung-ho about the CERC process and is expecting

positive response on tariff hikes, but as of now it is unable to give any timelines for the process of redressal. From the looks of it, it promises to be a long wait as CERC is not in favour of passing on hikes to consumers, who are the end users of power.

The road ahead All is not bleak for Tata Power just as yet. Although domestic opportunities continue to elude the power generator and the company has little choice but to await a CERC response to its plea on tariff hike, international opportunities seem The hike in coal price (per to be beckoning. In a recent tonne) after the Indonesian interview Anil Sardana, Tata Powregulation er's CEO, mentioned that international opportunities are shaping up for them and they have identified seven geographies including Africa, Middle East, Turkey, Vietnam and Indonesia that will be key to their generation business. This, perhaps, is the saving grace for the Tata Power stock. Though the Mundra saga continues to have a negative bearing on the company's financial profile, analysts draw solace from the fact that the core business of distribution continues to earn steady returns and the company is well diversified in its business model which is expected to drive its growth. At the current market price, the stock of Tata Power is trading at 7.4xFY14E EV/EBIDTA and most negatives have been factored into the price. Though there may not be much upside in the stock till there are tariff revisions the stock still gets a positive rating from most brokerage houses.

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PHOTOGRAPHS: Mukeswaran V

straight talk

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T&D equipment

give power sector special status A fresh look at import duties can give a fillip to the Indian cable business, says Maadhav Digraskar, managing director and chief executive officer, Cable Corporation of India BY NIRANJAN MUDHOLKAR

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ower industry veteran, Maadhav Digraskar, who recently joined the country's oldest cable maker, Cable Corporation of India (CCI), says the company's leadership in the EHV segment will give it a distinctive edge over its competitors.

How would you describe the Indian cable industry with regards to the structure, size and key players? Indian cable industry is a mature industry and has adequate manufacturing capacity to the meet the requirement of cables for the transmission and distribution network of the country. Presently, the industry is very much crowded in low voltage and high voltage cable segment, with both local and international players. There are around 8-10 large scale cable manufacturers who are collectively meeting most of the country’s requirement. We in India have adequate capacity to meet the country’s cable needs for industry and utility requirement and it is a fairly competitive environment. There is the pressure of margins as some manufacturers are willing to go for volumes at the cost of profitability. In case of the extra high voltage segment, there are presently only a few players. Going forward, we see good demand for extra high voltage (EHV) cables. In this area, we see a rise in local as well as global players. How would describe CCI’s position in the market and what is your market share?

CCI has been the leader in the Indian cable industry serving the needs of the industry for over 55 years. CCI has been the pioneer in many areas like providing new technologies and along the way meeting special needs of utility and industry, taking up imports substitution needs, and having to its credit many of firsts in the Indian market. CCI has been a forerunner in the EHV segment providing cables up to 230kV indigenously manufactured. The first cable produced by CCI was way back in 1993, much ahead of the evolution of EHV cable market. Up to FY11, CCI had the highest market share in the EHV segment in India. The company also has excellent collaboration with cable accessories suppliers to meet the complete requirement of cabling solutions. CCI has also taken up and executed the job on term key basis up to 230kV covering design, supply, erection testing and commissioning. CCI is one of the leading quality manufacturers in the country in HV, LV and EHV segment. How happy are you with regards to the government policies related to your industry directly and indirectly? What are your expectations from the government on this front? We expect the government to focus on power sector growth and give the sector special industry status. Considering the manufacturing capacities and competence of the cable Industry, the government should revisit the present import duty and taxes on the import of cables as imports of cables and accesso-

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straight talk

In today’s fiercely competitive environment it is challenging to retain our leadership in the extra high voltage segment. To be able to do so, we at CCI have planned to strengthen our research and development activities.�

ries from China and Korea on rise. The government also should protect the Indian cable business by initiating anti-dumping activities against some of foreign manufacturers. The power sector has been going through a tough time. What needs to be done to improve the situation particularly in the T&D segment? Presently the capacity in the cable manufacturing industry far exceeds the demand. This Large scale cable makers are is creating fierce meeting the country's total competition and pressure on demand margins, making the operations increasingly less profitable. Today, the power sector is facing challenges and across all product lines we see a negative growth. However, going forward we see the surge in demand for power equipments including cables as we address open issues being faced by power sector impacting decision making process on various project. There is a widening gap between the demand and supply of power which will also propel the growth for power equipment in the country. The capacities in the country for manufacturing power equipment were created keeping in mind the government

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policies to grow the power sector, GDP growth forecasted. The focus on quality of power to consumer and Industry will generate demand for power equipment from SEBs and other central utilities. What is your idea of leadership? In today’s fiercely competitive environment it is challenging to retain our leadership in the extra high voltage segment. To be able to do so, CCI has planned to strengthen the research and development activities. We are also working towards improving production processes in our world-class factories built in Nashik to produce quality products matching international standards. We are also working on offering complete cabling solutions from concept to execution to our customers. We will continue to strive to maintain our leadership in this segment by upgrading the technology, innovation, research and development, and quality assurance measures. Tell us about your forays into the international markets. We have been in the export segment in the past and now we are trying to re-enter the market in select countries. Most of the countries have policies to protect local manufacturers and we are finding it difficult to enter these countries. We are working on new business models to penetrate international markets.

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forecastsing models

Unplugged?

It is another holy grail in the energy sector - accurate demand forecasting that can lead to better service delivery. But there's still many a miss between the cup and the lip BY Ratan Mani Lal

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ndia is among the very few countries in the world that has been steadily moving ahead with its economic development targets amid fears of a global slowdown. Besides other factors, it is the people’s eagerness to adopt new global trends that has so far helped us keep up with the global Joneses. Like other countries, India too faces a big challenge of ensuring production and availability of energy to meet the burgeoning demand in the coming years. While most of mature markets have already reached the peak of their conventional energy production and consumption, the majority of emerging economies are moving up the energy consumption ladder now. At the same time, while the emerging economies have already reached a saturation point in terms of exploiting energy sources, the younger economies are about to begin using many of those sources. Is it possible to have a model to forecast energy demand and supply to help in proper perspective planning? Such a model needs to simulate the energy demand and supply for major developing and developed countries, with focus on main energy demand areas such as industries, transport, residential and service sectors, and the technologies for power production – both conventional and non-conventional. The ambit would, of course include coal, oil, gas, hydro and nuclear, in addition to solar, wind and biomass. To maintain the right perspective for future development planning, plans are now underway to develop a forecasting model for energy demand and supply in India. The need for such a model, according top government officials, has been felt in order to make appropriate policy decisions. According to Anil Jain, advisor (Energy) in the Planning Commission, “This will be the government’s own energy model, which will provide energy pathways for four decades. This will provide effective tool for taking energy related policy decisions in an integrated manner.” The model is said to be on the lines of Britain’s Energy

Calculator 2050 which, incidentally, was the culmination of an unprecedented collaboration between energy planners in Britain and China. Britain’s Department of Energy and Climate Change (DECC) and China’s Energy Research Institute (ERI) had worked for months to create the 2050 Calculator, an online tool which will be available to the public. At the end of it, China’s ERI came out with the Chinese 2050 Calculator. The collaboration showed the extent to which the concern over future energy availability is shared by the two countries. The 2050 Calculator is described as tool to help countries better plan their future energy strategy, in a transparent and evidence-based way. The DECC has now successfully bid for up to £2.1m of funding from the UK’s International Climate Fund to support work on a 2050 Calculator in 10 more developing countries over the next two years. The tool covers the entire energy sector, provides a comprehensive analysis of plausible pathways to a secure, low carbon energy system in the UK to 2050. An online userfriendly web application, ‘My2050’, is also available in the UK. India’s proposal to design an energy forecast tool was approved in-principle by the Prime Minister and the Planning Commission was entrusted with the task of formulating it. The model, Coal import bill like the UK tool, is expected to provide energy pathways for four decades (effectively till 2050). We have separate ministries and departments for different types of energy such as coal, power, petroleum, nuclear and renewable energy. This is why the Planning Commission has been given the task so that it can coordinate better with different arms. The Center for Study of Science, Technology and Policy (CSTEP), Bangalore, is assisting the Planning Commission in setting up the model.

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spotlight

We ranks fifth in the world in terms of primary energy consumption. Despite the overall increase in energy demand, per capita energy consumption in India is still very low compared to other developing countries.

A long-term forcasting model for energy demand and supply in Indias is prepared for accurate assessment of energy needs." Ajit Pathak of Indian Oil Corporation

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In the recent years, India’s energy consumption has been increasing at one of the fastest rates in the world due to population growth and economic development. Primary commercial energy demand grew at the rate of 6 per cent between 1981 and 2001, according to Planning Commission records. However, India ranks fifth in the world in terms of primary energy consumption. Despite the overall increase in energy demand, per capita energy consumption in India is still very low compared to other developing countries. In the recent years, the government has rightly recognized the energy security concerns of the nation and more importance is being placed on energy independence. India’s primary energy mix has been changing over a period of time.

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forecastsing models

The variables are so many that nothing can be ignored. Production of coal, natural gas, import of crude oil, etc. will keep varying from year to year, and will have to be included in preparing the perspective plan. The model, therefore, has to include all aspects in order to be useful for all stakeholders.

Despite increasing dependency on commercial fuels, a sizeable quantum of energy requirements (up to 40 per cent of total energy requirement), especially in the rural household sector, is met by non-commercial energy sources, which include wood, crop residue and animal waste. India now ranks third amongst the coal producing countries in the world. Yet, India currently faces a huge coal shortage - the country's coal import bill stood at $29 billion, importing around 245-million tonnes of coal over the past three years, according to a government statement in Parliament in November 2012. Amarendra Shankar, a geologist formerly with Coal India Limited, says that the database required for preparing such a model has to be extensive with even the smallest source of energy being included in it. “The variables are so many that nothing can be ignored. Production of coal, natural gas, import of crude oil, etc., will keep varying from year to year, and will have to be included in preparing the perspective plan. The model, therefore, has to include all aspects in order to be useful for all stake-holders,” he says. The Indian government’s concerns over the future energy scenario in India are justified in view of the International Energy Agency's forecasts in its World Energy Outlook that India will become the world's third largest net oil importer before 2025. The country's primary energy demand will more than double by 2030, growing an average 3.6 percent every year, due to strong economic growth. Net oil imports will rise to 6 million barrels a day in 2030 and about 96 percent of the population will have access to electricity by 2030. Says Ajit Pathak of Indian Oil Corporation, the petroleum ministry has prepared a Vision Plan 2025 that incorporates the production and demand estimates of petroleum products up to the year 2025. “It is in order that a long-term forecasting model for energy demand and supply in India is prepared for accurate assessment of energy needs,” he said.

Incidentally, Prime Minister Manmohan Singh is a strong advocate of nuclear energy. It is felt by a strong section of planners that the use of a judicious mix of conventional and renewable sources of energy is the only way for India to remain ahead in its continuing story of economic success. While the International Energy Agency has consistently demonstrated India’s continued status of being a key consumer of fossil fuels, both now and in the future, the contribution of nuclear energy is now being recognized as one of the answers to India’s energy demand. By 2050, nearly 50% of the country's baseload demand is expected to be met by nuclear power. Having realized the need for augmenting the availability of its energy sources, India had joined the select club of nuclear power producing countries way back in 1969. The decision was a wise one as today nuclear power is a much greater part of the global energy infrastructure now than in the past. Approximately 14 per cent of the world’s electricity is generated using uranium as a fuel source. The debate on whether or not to have nuclear power in India is going on for the last thirty years. With 20 nuclear power plants already operating and six under construction in India, it appears too late and rather redundant to ask this question. The huge subsidy in the fuel bill that the government is burdened with, is a cause of worry to the Prime Minister and Finance Minister. The government has decided on a gradual withdrawal of subsidy – a move that is fraught with serious political fall-outs. It is in this context that India is keen to have its own energy calculator so that planning for the next three to four decades takes into account the available resources, prospective consumption and the demand-supply gap. Incidentally, the Planning Commission had undertaken an exercise in the 90s to create a model of energy production and consumption for a future projection of energy demand. It was headed by Prof Rama Prasad Sengupta, a professor in economics at Jawaharlal Nehru University, New Delhi. The final report was presented to the stake-holders in various sectors of energy – coal, petroleum, oil, gas etc – but was termed as having assumptions that were “too simplistic.” The report was consequently consigned to the archives.

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update

Achievements in the 1st year of the12th plan are already way behind target

SHORT BY ET TEAM

A

t the end of the 3rd quarter, in line with past trends, most of the generation capacity addition came from the thermal sector. Of the anticipated addition of 11,050.3 MW in 2012-13, 10,668.3 MW will be thermal, which is 96 per cent of total capacity addition. The hydro sector will also be unable to meet its target of 802 MW for FY13, adding only 382 MW of capacity. Neither will capacity addition targets be met by the nuclear sector – of the planned 2,000 MW, none will come on stream on account of delays in commissioning the Kudankulam nuclear power plant in Tamil Nadu. The target of adding 75,785 MW capacity in the 12th five-year plan has already begun to dwindle with an anticipated shortfall of 6,906 MW in the first year of the plan. According to power ministry estimates, only 61.5 per cent or 11,050.3 MW of the current year's capacity addition target, set at 17,956.3 MW, will be achieved by March 2013. For the first three quarters of 2012-13, power sector has managed to add only 9,854 MW capacity against the target of 12,628.3 MW. The performance of the central and state sector units has been worrisome during this period with only 44 per cent of the targeted capacity being added from April 2012 to December 2012. Private sector has put up a much better show and achieved 86 per cent of its target till December 2012. It is also anticipated that the private sector will comfortably achieve its target of 795 MW for the present quarter while central and state sector are together expected add only 396.3 MW.

Transmission The performance of the transmission sector has not been up to the mark for the current fiscal and will add to the power woes in the country. The

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12th plan

Even though 3,196 MW of capacity is expected to be synchronised (but not commissioned) during the year, there is still a large gap that is unlikely to be met in the remaining few months of the current fiscal. It’s the central and the state sector utilities that have mainly faltered on their annual targets.

sector will lag behind its current fiscal target as only 10,799 circuit kilometers (ckm) will be achieved against the target of 17,429 ckm for 2012-13, a shortfall of 38 per cent. Even though 3,196 MW of capacity is expected to be synchronised (not commissioned) during the year, there is still a large gap that is unlikely to be met in the remaining few months of the current fiscal. It’s the central and the state sector utilities that have mainly faltered on their annual targets. The central sector has achieved only 64 per cent of its target commissioning 4,742 ckm of transmission lines against the targeted 7,333 ckm. The performance of the state utilities has been much worse. The state sector has managed to commission only 49 per cent of its targeted 8,695 ckm of transmission lines. The private sector has again emerged as a star performer. It has not only managed to meet its target for the current fiscal but also far exceeded it. The private sector commissioned a total of 1,831 ckm of transmission lines against the target of 1,398 ckm. The growing coal shortage problem in the country has pushed the coal stock at power plants to abysmally low levels. In the span of one year, the coal stock position at power station has worsened from critical level (coal stocks available for less than 7 days) to super critical level (coal stock expected to last less than 4 days). As on December 31, 2012 coal stock for 90 power plants, on an average, had dwindled to the level barely enough to survive three days of operations for power plants. On the same day in 2011, the situation was a notch better as the coal stocks for 89 power plants, on an average, was enough to operate the power plants for seven days.

The coal stock situation for 20 TPPs was super critical while that for 34 TPPs was super critical on December 31, 2012. The normative standard for coal stocks ranges from 21 to 30 days.

Expenditure The power sector has managed to spend only 43 per cent of the current fiscal budget. The question is with only few months remaining for the fiscal to end will the sector be able to spend the remaining 57 per cent? Unlikely, given that during the first eight months of the current fiscal, the sector has been able to spend only 19.1 per cent of its gross budgetary support. The sector has however managed to spend 47.53 Of the total budgetary per cent of its Internal and Extra support has been spent till end of December 2012 Budgetary Resource (IEBR) allocations. Pertinently, the total budget estimate for the power sector for 2012-13 has been pegged at Rs62,424.50 crore of which the sector has only utilised Rs26,930.71 crore. Moreover, the budget estimate for the central PSUs has been revised down by approximately Rs2,800 crore from Rs53,296.87 crore to Rs50,481.83 crore. It is unlikely that the central PSUs will be able to meet this revised budget estimate as the utilities have spent only Rs25,529.94 crore till November 2012. However, the spending by the government sector are always low initially and later the speed picks up.

19%

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Focus

Widening

Gap

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generation

With about 20,000 MW of capacity being stranded by non-availability of coal and gas, the country's power plans have been hit by a fuel shortage that is here to stay for the foreseeable future BY Ratan Mani Lal

I

ndia’s dream of self-reliance in power is being hit by a factor that has been overlooked for long – shortage of fuel for electricity generation. Even as recent data showed that as many as 32 thermal power stations in India had critical coal stocks – meaning stocks for less than seven days - as on January 31, 2013, news came in that the Ratnagiri Gas and Power Company had completely shut down generation for want of gas .“ We have stopped generation from all the three units as we are not receiving gas from any of our sources," said a company spokes person. On September 30, 2012, as many as 35 thermal power plants (TPS) had coal stock for less than 7 days. During the financial year 2012-13, the anticipated gap between the requirement and availability of domestic coal was estimated around 70 million tonnes (MT). Out of 70 MT, 46 MT of coal was to be met through imported coal. During September 2012, only 89 per cent of the total coal requirement was available. The Central Electricity Authority (CEA) has acknowledged that low schedules for gas-based generation coupled with the problem of gas supply shortages to various stations has caused a setback to gas based generation. It had a negative growth rate of 34.42 per cent and 21.26 per cent during September 2012 and April-September 2012, respectively. The situation prevailed even as top decision makers in the government – from the Prime Minister and finance minister to top bureaucrats in the power and coal ministry claimed they were working in tandem to deal with the issue.

We have stopped generation from all the three units as we are not receiving gas from any of our sources.” Spokesperson RGPPL

About 35 per cent of all coal production is relayed to the power plants through the merry-go-round and the rest is transported through road. The movement of coal rakes is vulnerable to pilferage by organised gangs in many parts of India." AS Sinha Former consultant, Coal India Limited

We can generate more power if domestic coal and gas were available. The power ministry is trying to arrive at a solution with the oil ministry to provide gas for at least the existing plants to function at full capacity." icp kESHARI Joint secretary, ministry of power

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Focus

Govt concerns Interestingly, only 48 power producers had signed fuel supply agreements (FSAs) with Coal India Ltd (CIL) by mid-January when the second deadline set by the PMO for signing these agreements ended. Principal secretary to Prime Minister, Pulok Chatterjee, had in a meeting on December 17 directed that the remaining FSAs should be signed within a month’s time, and that directive came after the November deadline for FSAs was missed. CIL was directed to expedite the signing FSAs even in the absence of power purchase agreements (PPAs). Even those power producers who have not signed a PPA with any electricity distributor, can sign the FSA, but they will be required to produce the PPA before lifting coal. On the other hand, the impasse over the price pooling mechanism for imported coal remains unresolved. To offset the impact of high import costs, the Planning Commission said that CIL should adopt a pooling formula on prices by combining prices of imported and domestic coal. While a number of private power producers have agreed to the price pooling for coal, some state governments like West Bengal have said that such a mechanism is not acceptable to them. Finance Minister P. Chidambaram had in November 2012, expressed concern over erratic fuel supply to power plants across India. Reflecting the power sector’s concerns, he said the affected power plants needed to be assured of fuel supply. “About 8,000 MW capacity is stranded for want of gas and 12,000 MW capacity for want of coal. If we can get this 20,000 MW up and running, it equals one year’s target,” Chidambaram noted. On gas, he commented that the

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CIL was directed to expedite the signing FSAs even in the absence of power purchase agreements (PPAs). Even those power producers who have not signed a PPA with any electricity distributor, can sign the FSA, but they will be required to produce the PPA before lifting coal. government was “pushing for more production of gas but that is a little more complicated...” AS Sinha, a mineral resources consultant having formerly been associated with CIL, says that coal supplies get disrupted mainly because of factors at the production and transportation ends. According to him, it could be possible that optimal production is not achieved because of reasons including minor or major accidents, wall collapse, mining disruptions and so on. Sinha, who has supervised coal mining projects across India, says the movement of coal is another area of possible disruption.“If it is via the merry-go-round (MGR) system involving rakes of railway wagons, there could be problems in rake placement, timely availability of rake, or timely loading, problems in the diesel/electric locomotive driving the rake and late arrival of rake at the plant,” he added. Inclement weather is also a major reason for delayed movement of coal rake, as happened in 2011 and 2012. Heavy rains led to flooding of track and some power plants in Uttar Pradesh and Madhya Pradesh panicked, admitted Rakesh Kumar, an official at NTPC (Northern Region.) “About 35 per cent of all coal production is relayed to the plant through MGR and the rest is transported through road. The movement of coal rake is also vulnerable to pilferage by organized gangs in some parts of India,” adds Sinha. At the user's (power plant) end, the problems range from poor or delayed maintenance, mechanical problems in any part of the plant, accidents or breakdowns, labour problems. As far as the quality of coal is concerned, in India the worst quality of coal goes to government owned power plants which produce the maximum electricity. Often much stone goes along with coal to the plants. This, however, is exaggerated

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generation

Shortfall: RGPPL has generated only 50 per cent of its capacity for the last couple of years due to gas shortage

by the power plants and issues of coal quality often snowball into major controversy, says Sinha.

Why this situation Signing FSAs between power companies and Coal India has been pending for long. Power Minister Jyotiraditya Scindia told the Association of Power Producers (APP) that the government was making all efforts for early signing of FSAs and ensuring a “fair and equitable” framework acceptable to the coal ministry, power ministry and all other stakeholders in both the sectors. The association, worried over the situation, had recently submitted a long list of demands, including 100 per cent assured fuel supplies from CIL and pass through of imported coal prices into tariffs, to ease the situation. ICP Keshari, joint secretary, power ministry, said the ministry was in discussions with the oil ministry for supply of gas to the existing plants. “We can generate more power if domestic coal and gas is available,” he said, adding that the ministry was trying to "arrive at a solution with the Oil Ministry to provide enough gas for at least the existing plants to function". The lack of a comprehensive plan led to what happened in the summer of 2012 in Delhi. In the summer of 2012, the situation had become so critical in Delhi with power production plummeting by almost 50 per cent at Bawana, Rithala and Aravalli power plants. Bawana gas-based plant with a capacity of 1,500 MW, could produce only 300 MW without enough gas. The plant requires 2.8 million metric standard cubic meter per day (mmscmd) of gas to generate 750 MW of power. The Centre had earmarked 0.93 mmscmd of gas from KG-D6 gas field of Reliance Industries for the plant for 2009-10 and 2010-11. However, the state-run Pragati Power Corporation Ltd (PPCL), entrusted with the task of running the plant, could not sign the gas sale-purchase agreement with the company on time to get gas to manage the summer demand.

Affected plants As per CEA records, 32 thermal power plants (TPPs) had critical stock (for less than seven days) as on January 31, 2013. The reasons for this situation were given out as less receipt of coal (18 plants), inadequate coal allocation or availability (6 plants), less import (4 plants) and higher generation (4 plants). Due to less receipt or inadequate availability of coal (mostly from CIL or affiliated companies such as Mahanadi Coalfields Ltd, Singareni Collieries Company Ltd, Eastern Coalfields Limited and South Eastern Coalfields Limited) Badarpur, Suratgarh, Sabarmati, Satpura, Koradi, Khaperkheda, Chandrapur, Simhadri, Rayalseema, Raichur, Bellary, Ennore, Kahalgaon, Farakka, Sipat, Anpara-C. Plants affected by less import include Kota, Wardha, Talcher, Meja while Dadri, Korba, Dhanu, Sagardighi have been . Plants affected by higher generation. The Ratnagiri plant in Maharashtra has managed to generate only half the installed capacity of 1,967 mw for more than two years now because of gas shortage. To run the project at full capacity, the company needs 8.5 mmscmd of gas, of which 7.6 mmscmd should come from Reliance Industries and the remaining from ONGC through GAIL. But the company spokesman claimed that for the last two years, the company was facing the issue of gas shortage. In the year financial year 2012, the plant received only 6.6 mmscmd gas and in year 2013 till January, it received only 3.2 mmscmd. “This has resulted in a generation loss of around 7,500 million units,” the spokesman added. In the year 2012, more than 34 TPS faced shortage of coal at different times of the year. In the northern region comprising Delhi, Haryana, Punjab, Uttar Pradesh and Rajasthan, eight TPS faced severe fuel scarcity, mainly availability of domestic coal. In the western region -Chhattisgarh, Gujarat, Madhya Pradesh and Maharashtra - 13 power stations suffered on account of fuel shortage with Maharashtra being the worst hit with 10 power stations facing fuel shortage. In the southern region comprising Andhra Pradesh, Tamil Nadu, Karnataka and Kerala, five power plants faced scarcity mainly on account of less receipt from Mahanadi Coalfields, a unit of Coal India Limited (CIL.) In the eastern region (Bihar, Jharkhand, Odisha and West Bengal), power generation in eight power stations was affected. Six major TPS of NTPC – Rihand (2500 MW), Singrauli (2000 MW), Vindhyachal (3,760 MW), Ramagundam (2600 MW), Simhadri (2000 MW) and Talcher (3000 MW) – faced a serious coal shortage in October last year, leading to a peak power deficit of 10 per cent in September alone.

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events

Lighting up the

environment In a transition mode from CFL to more environment-friendly LED lighting, the sector per se is expected to grow at 15 per cent BY Liza V

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lighting

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events

R

ising temperature, visible changes in the climate world over and the increase in carbon emissions put together has initiated the call for more environment friendly lighting solutions. As the human race races towards the future, environment remains a key issue that could not just impact us at an individual level but the entire human race as we see it today. While concern is high, the time for action is now. A very small way in which each one of us can contribute towards a better environment can begin from our home. And why not, after all charity begins at home, so does clean up of the enviornment! A small step in this regard can be as simple as switching to compact fluorescent lamp or CFL lights. The high electricity consuming, higher heat producing incandescent light bulbs were replaced by the CFL lamps in the recent past. It is a proven fact that the CFL lamps consumes one third to one fifth less power compared to that of the traditional incandescent lamps. And how are CFL lamps better than the traditional incandescent light bulbs? Here is how. To begin with according to a report, in 2010, close to 70 per cent of the global lighting market was dominated by incandescent lights, which if replaced completely could save more than 3 per cent of the global electricity consumption. Not only this, an annual reduction of 230 (Mt) million tonnes of carbon emission is what the change to CFL transpires to if replaced globally. According to website HowStuffWorks.com, LED bulbs are lit solely by the movement of electrons. Unlike incandescents, they have no filament that will burn out; and unlike CFLs, they contain no mercury or other toxic substances. Proponents say LEDs can last some 60 times longer than incandescents and 10 times longer than CFLs. And unlike incandescents, which generate a lot of waste heat, LEDs don’t get especially hot and use a much higher percentage of electricity for directly generating light. The green lighting push has also got itself a nod from the Government. The Central Government took an active role in this programme by launching replacement of bulbs to CFL through dicoms or state electricity board offices in every state. The transition from CFL lamps to the technology advanced LED lights will happen soon, said Dilip Kumbhat, chairman of HOW they compare

Incandescent bulbs

Halogen

Fluorescent

LED (Generic)

Electric Usage

60W

42 W

13 W

9W

Lumens

860

570

660

900

Lumens/Watt

14.3

13.6

50.8

100

Colour Temperature Kelvin

2700

3100

2700

3000

CRI

100

100

82

>75

Lifespan (hrs)

2000

3500

8000

25000

44

High electricity consuming, higher heat producing incandescent light bulbs were replaced by CFLs in the recent past. CFLs consume a third to a fifth less power compared to the traditional incandescent lamps.

K-Lite industries and chairman of Indian Society of Lighting Engineers in his inaugural address in a seminar on Lighting Design –Prospects and Perspectives in Chennai. He continued that the new designs in lighting solutions provided by companies including his also give an added advantage in energy savings. Light is a combination both art and science. Light when channelized or directed properly is a treat to human senses. Light in its primary role makes to show what should be visible. It removes darkness. “Talking green won’t make it green,” said, Dr Prakash Barjatia, director, Centre for Lighting Technology Management Pune. While speaking at the seminar, he highlighted the need for a higher involvement of the government with stricter rules to make the energy efficient initiatives a success.

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lighting

Growth factor Lighting sector is set to register a high growth rate of 16-18 per cent, says B S Praveen, CEO and MD BAG Electronics Interviewed by Liza V What are the trends we see in lighting segment? Lighting solution segment has seen many changes in the past. The highlights would be in terms of designs and energy efficiency. Design catering towards maximizing lighting while sleek model solutions which occupies lesser space. A paradigm shift towards a more energy efficient lighting solutions is the newest trend. This means, while in one segment we see the shift from traditional bulbs to CFL lamps and in another segment we see the migration from CFL to LED. At what pace do you see this shift happening? We cannot say it is really fast. But in the urban areas, because of more awareness I would say, the movement is faster. In one word, for urban it is sooner. However, it may be much slower in the rural parts of the country. India a price sensitive market. LED lighting solutions are tagged at high prices. In this scenario, how do you see the market shaping up? As you rightly said, we are a very price sensitive market. However, the life span of the LED lights in the long run gives better return to the consumer. People are becoming more aware of the need for energy conservation by using more energy efficient products. What is the expected growth rate in lighting solution segment? Lighting solutions is a high growth segment. In the past few years, the market has registering a growth of over 15 per cent. This segment, according to me, will grow between 16 and 18 per cent at the least for the next four to five years. Wherever you travel in India, you see construction happening. So the major demand is from the infrastructure segment, be it street lights, commercial properties, parks, malls, hospital and office space.

What are the challenges you face in this segment? Getting good quality and reliable product is the biggest challenge in the market. The market has a large quantity of lower priced, under quality products available. As a price sensitive market, the consumer often opts for the low quality products. I am not saying it won’t work, but the longevity and reliability is not there. Take for instance, the case of CFL lamps, majority still use magnetic ballasts in place of electronic ballasts, which is 25 per cent less efficient. But looking at the affordability factor, manufactures also gives into magnetic ballasts. This scenario could repeat in case of LED lights as well. What according to you is the best way to control the above said scenario? Stricter implementation of uniform standards by the authority is the best solution. It is not that there is a lack of benchmark standards in the country, standards do exists, but the mandate is not there. Mandating of standards can cause a marginal increase in pricing. But in the long run it will be useful. How much competition is there due to Chinese goods in this segment? They are visible threats with cheaper products in the market. We should analyse how Chinese products come at such low pricing. It is not because the goods are cheaper in China, but the kind of government support they get in the country is conducive for any industry. Lower land rate, lower interest rates, tax rebates from the Chinese government all put together brings down the price drastically. Our government should ensure the import of quality goods from China like what US, UK and other countries did.

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events

Lighting and Sustainability Solar street lighting makes sense in India given the amount of sunlight we get Dr Prakash Barjatia Director, MITSAT Centre for Lighting Technology & Management

Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, directly or indirectly, on our natural environment. Sustainability creates and maintains the conditions under which humans and nature can coexist in harmony, that permits fulfilling the social, economic and other requirements of present and future generations. Sustainability is important to make sure that we have and will continue to have, the water, materials, and resources to protect human health and our environment. Sustainability has emerged as a result of significant concerns about the unintended social, environmental, and economic consequences of rapid population growth, economic growth and consumption of our natural resources. It requires co-ordinated efforts in different spheres of life. But what is observed is that different agencies are working in different directions. Let us take a very small segment of Rural Street Lighting.

Solar Street Lighting Systems Increasingly, solar power is being used for street lighting around the world. The long term power saving, conservation of precious natural resources and elimination of the need for generating additional power are leading to the fast adoption of solar lighting systems on the streets around the world. In a tropical country like India, solar lighting makes all the more sense, given the abundance of solar energy round the year. Solar panel collection systems using photovoltaic (PV) technology are a direct current (DC) energy source, which for most applications, including standard lighting, must be converted to alternating current (AC). However, since LED technology is inherently DC driven, it is more suitable for integration with solar power systems. The potential low power requirement for many LED applications also makes LED more suitable because solar power capacity is currently more limited in comparison to typical electrical grid AC power. Solar panel or PV systems are being paired with LED exterior lighting systems to leverage renewable energy benefits and

46

off-grid flexibility. Solar driven lighting systems generally consist of a lamp, fixture, solar panels, inverter and/or converter, battery, support structure, and foundation. A PV-powered LED lighting system application provides an opportunity to save energy by using a renewable resource and more efficient technology. PV panel size and cost are directly related to power capability. As systems become more efficacious and draw less power, the panel size is reduced, making the system more cost effective and often easier to implement on limited roof areas or landscapes. Solar power systems can also provide illumination that is not powered by the grid and is therefore free from the issues of grid wiring connection.

The potential low power requirement for many LED applications also makes LED more suitable because solar power capacity is currently more limited in comparison to typical electrical grid AC power Present Status Although state governments are spending considerable amount on this project under rural electrification, but what is the result? A study revealed that almost 70-80 per cent street lights don’t function. And the reason for that is simple. The complete system consists of solar panel, charge controller, battery and finally LED. Light must be of good quality and must be compatible with each other and must work in consensus to produce desirable results. But due to the failure of any one of the constituent, complete system becomes ineffective. If we

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lighting

An integrating approach is therefore required to promote and form a consortium of solar, battery & LED professionals/MSMEs.

go to the root cause of the problem, it is seen that for each of these items there are different forums / associations who deal individually, and are not able to get the benefit required for the purpose. For instance, let’s take the example of two important factors namely skilled manpower and testing & evaluation facilities, which are essential for all these constituents. Although lot of funds are available with the government, for providing these resources, but since they are not organis\ed together, nobody is able to get the benefits. When this subject was discussed during LED Summit 2012 held at Delhi, which was addressed by Dr Ajay Kumar, secretary DoEITY, everybody felt a need of integration of all these subjects. Further Dr N Narendran director research, Lighting Research Centre, New York who was specially invited to the summit to share the US experience for the benefit of Indian

lighting industry, clearly mentioned a huge scope in luminiares based on LED as a light source as it is clearly an electronics system which can benefit under the ESDM manufacturing scheme. It is further felt that there is a huge potential for the unemployed rural youth to train them for operation and maintenance of these solar systems empowering them to solve their problems at the community level. Tremendous scope and potential exists, but considering the present status of MSMEs/solar, LED and battery professionals which includes manufacturers, assemblers, designers, academicians and students, nothing much has been done in this direction to develop infrastructural facilities specifically in the areas of skill development and quality monitoring. An integrating approach is therefore required to promote and form a consortium of solar, battery & LED professionals/MSMEs.

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The University of California, Davis established the Western Cooling Challenge in 2008.

Trane(d) for efficiency HVAC manufacturer Trane won University of California's Davis challenge to build a more energy-efficient AC 48

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energy efficiency

Coolcat: The Voyager DC was said to be 40 per cent more energy-efficient in tests.

T

rane, a global manufacturer of heating, ventilating and air conditioning (AC) systems, has won a University of California, Davis challenge to build more energy-efficient air conditioning systems, according to a statement from the educational institution. The manufacturer built a rooftop air conditioner – the Voyager DC – that is 40 per cent more energy-efficient than conventional units, becoming the second manufacturer to achieve Western Cooling Challenge certification.“Since air -conditioning is the largest portion of electricity used during hot weather, the poten-

tial for 40 per cent savings is enormous,” said UC Davis Western Cooling Efficiency Center associate engineer, Jonathan Woolley. “Many are not yet aware that new electric utility rates will saddle commercial building owners with large additional charges for power used during peak periods. Trane’s Voyager DC met our performance goals on the mark, and promises to be one of the most cost effective, climate-appropriate cooling technologies available for commercial buildings,” he added. The Western Cooling Challenge was established in 2008 by the University of California Davis Western Cooling Efficiency Centre and is the most demanding certification of its kind, according to the university. It aims to help manufacturers develop more efficient cooling technologies, particularly for hot, arid climates. The programme also helps building owners install and use those products. The Voyager DC winning design is a hybrid rooftop AC system that uses indirect, evaporative cooling to increase cooling capacity and reduce peak electrical demand. Following laboratory testing, the equipment was verified by the UC Davis Western Cooling Efficiency Centre. Much as sweat cools the human body, the Voyager DC is said to use water evaporation to cool outside air for the condenser on an otherwise conventional air-conditioning system. The air-conditioner then uses the water chilled by evaporation to cool the hot outside air used for building ventilation. Such techniques are said to increase the number of hours a system can use “free cooling” to cool a space, and dramatically reduces the amount of time a system has to operate at full speed. In addition, the Trane Voyager DC claims to incorporate variable speed fans, staged compressors, and other measures to maintain high efficiency rates. For a product to be Western Cooling Challenge certified, it must be at least 40 per cent more efficient than Department of Energy 2010 standards.Entries must also be market-ready. Trane is the first major manufacturer to enter the challenge, reflecting an industry interest in marketing air-conditioning systems that are designed for specific climates, according to the university.

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market data

disturbing trends

We looked at decadal data and noticed some interesting trends- while average cost of supply rose steadily, average realisations lagged behind; agricultural consumption has dropped while industrial and commercial consumption has not risen significantly

Power Price

Prices IEX INR / MWh Daily prices are simple average of non-zero prices in (24*4) no of 15 minutes time block of respective day. 80000

Higher volumes The month saw higher volumes and lower prices compared to the previous month with demand picking up and greater generation availability. Average prices ranged around Rs2.90 per unit with peak reaching Rs3.37 a unit and non-peak at Rs2.87.

UN MCP

4000

Buy

70000 60000 3500

50000 40000 30000

3000

20000 10000

PLFs remain high, beat targets

Generation sectorwise generation for JANUARY 2013

SUMMARY - REGIONWISE GENERATION (GWH) JAN. 2013

APRIL-JAN. 2013

PROGRAMme

ACTUAL

ACTUAL

NORTHERN REGION

21659

21148.69

222910.38

WESTERN REGION

27635

26716

250800.81

SOUTHERN REGION

18277

17416.78

157908.18

EASTERN REGION

13226

12371.26

118968.02

584

622.16

7369.93

NORTH EASTERN REGION

2500

19 Jan 13 20 Jan 13 21 Jan 13 22 Jan 13 23 Jan 13 24 Jan 13 25 Jan 13 26 Jan 13 27 Jan 13 28 Jan 13 29 Jan 13 30 Jan 13 31 Jan 13 01 Feb 13 02 Feb 13 03 Feb 13 04 Feb 13 05 Feb 13 06 Feb 13 07 Feb 13 08 Feb 13 09 Feb 13 10 Feb 13 11 Feb 13 12 Feb 13 13 Feb 13 14 Feb 13 15 Feb 13 16 Feb 13 17 Feb 13 18 Feb 13

0

During January 2013, generation fell short by around 2 per cent on account of various factors, mainly the continuing gas and coal shortages. Both the northern and western regions acheived over targets marginally, while the other regions fell behind narrowly. Thermal plants achieved over targets while nuclear and hydro fell back by small margins. Plant Load Factors (PLFs) generally remained high with nuclear overshooting targt both on month-wise and YTD basis. Plant Load Factor JAN 2013

SUMMARY- REGIONWISE PLANT LOAD FACTOR (per cent) JAN. 2013

ALL-INDIA REGION

PROGRAMmes

APRIL- JAN. 2013

ACTUAL

ACTUAL SAME MONTH 2011 - 12

PROGRAMmes

ACTUAL

ACTUAL SAME PERIOD 2011 - 12

THERMAL

70678

69045

631436.58

NUCLEAR

3315

2785.35

27449.76

HYDRO

7388

6444.66

99070.98

THERMAL

70.5 0

72.91

74.90

69.26

69.13

71.48

179

47.81

4710.24

NUCLEAR

73.34

83.30

92.85

76.41

82.77

84.14

81560

78323.02

762667.56

BHUTAN IMP TOTAL

50

Source: CEA

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market data

YTD Targets All India Energy Generation(MUs) FY 2013 Year to date Total generation on a year to date basis missed targets narrowly, achieving 98 per cent fo the revised target, generating 762668 MUs against a target of 771866 MUs. Of this, thermal exceeded expectations narrowly, while hydro and nuclear feel short. Hydro on account of lower rainfall and lesser hydro reservoir levels while nuclear power plants have continued to face fuel related issues.

900000

771866

Against an all India target of 771866 mus for FY 2012-13, scaled down from 930,000 MUs, 762667.56 MUs were generated throughout the year across all categories of generators, a shortfall of around 18 per cent. The January 2013 target 81,560 MUs, 96.03 per cent was achieved with 78323.02MUs being achieved. The overall target for the year was achieved up to 98.81per cent. Of this, the thermal exceeded target by 0.10 per cent generating 631437mus against a target of 630791 mus, while hydro and nuclear fell short. Generation by thermal power plants grew substantially on a YOY basis during January 2013 at 69045.20 MUs against 63676.32 MUs in the same period last year. This was against a target of 70678 MUs. However, other sectors such as nuclear and hydro fell behind both targets and on YOY comparison.

630791

700000

THERMAL

70678.00

69045.20

63966.00

63676.32

NUCLEAR

3315.00

2785.35

2126.00

2901.56

600000

HYDRO

7388.00

6444.66

7192.66

7264.82

500000

BHUTAN IMPORT

179.00

47.81

93.00

86.11

TOTAL

81560.00

78323.02

73377.66

73928.81

631437

800000

GENERATION (MU)

762668

Generation Target and Achievement

400000

Central Sector 381525.00

33066.00

31903.08

96.48

317233.00

315682.70

State Sector

372787.00

32894.00

30338.56

92.23

309379.00

290381.81

Pvt. Sector

170208.00

15421.00

16033.57

103.97

140083.00

151892.81

Total

930000.00

81560.00

78323.02

96.03

771866.00

762667.56

28713

100000

PROGRAMME AND ACHIEVEMEMT OF ENERGY GENERATION (MU) All India

27450

107191

200000

99071

300000

0 Thermal

Hydro

Nuclear

Programme

Total

Achievement­

* Provisional based on actual-cum-Assesment

Plant Load Factor

All India Thermal plfs

The central sector exceeded planned PLFs by 5.34 per cent in January, on a 12 month basis, the sector over performed by around 3%. The state sector fell short marginally on the 12-month basis, achieving 65.52% against a target of 65.98%, in January the sector exceeded targets marginally achieving 69.96 against 69.21%. The private sector overshot target marginally at 66.42% in January against falling short over the 12-month period by about 4%.

Considered at a decadal perspective, the PLFs of thermal power plants across the country has shown a marked improvement from 2003-04 onwards improving from 74.8% in 03-04 to 77.07% in 09-10 but in the last couple of years PLFS have fallen from 75.07 in 10-11 to 69.85 (till Jan 13) in 12-13. The remaining months on the financial year are not expected to shore up PLFs significantly. This is reflection of the fuel crisis both the coal and gas fired fronts with gas plants achieving barely 30-35% PLFs in the last couple of years and coal fired plants falling below 75%.

PLANT LOAD FACTOR Sector-wise PLF (%) Programme and Achievsments ( Thermal ) SECTOR Central Sector

Jan.'13

Apr, 12 -Jan.'13

PROG.(%)

ACH.(%)*

PROG.(%)

ACH.(%)*

79.57

84.91

76.47

79.28

State Sector

69.21

69.96

65.98

65.52

Total Pvt.Sector

65.18

66.42

67.47

63.64

All India

71.10

74.20

69.64

69.85

* Provisional based on actual-cum-Assesment PLF is based on coal / Lignite based Thermal Power Stations only

All India Thermal PLF (%) * 2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13 # upto Jan.’13

76.8

78.6

77.2

77.50

75.07

73.32

69.85

# provisional * PLF is based on coal / Lignite based Thermal Power Stations only

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market data

Distribution Power Supply Position in Jan 2013

Average Cost of Supply

Power supply position did not improve month on month in January 2013 and remained in the negative zone , with the southern region falling short the most at 15.6% energy deficit and 16.6% peak deficit, followed by the northern zone at 10.2 and 10.9% respectively for energy and peak demand. In the western region the gap between energy and peak deficit were the least at 0.01% (5.9 and 5.8 respectively for energy and peak) was the only are where peak deficit was less than energy deficit.

CEA’s decadal data showed that the average cost of supplying power has steadily increased - from 254 paise/unit in 2003-04 to 354 paise/unit in 2009-10 while the average realization lag behind – 209 paise/unit in 2003-04, rising to 268 paise/unit. While the gap in 2003-04 was 45 paise, it rose to 86 paise in 2009-10.

Average cost of power supply & average realization ( paise/kWh ) Year

cost of supply

Power supply position in January 2013* Region

Energy (MU)

Deficit

realization(paise/unit)

(paise/unit)

Peak Demand

Deficit

Including

Only

Agriculture

Agriculture

Requirement

%

(MW)

%

2004-05

254

209

75.68

Northern

24,875

-10.2

39,861

-10.9

2005-06

260

221

76.36

Western

25,561

-5.9

39,644

-5.8

2006-07

276

227

74.23

Southern

24,628

-15.6

35,648

-16.6

2007-08

293

239

77.27

Eastern

8,560

-3.7

13,905

-5.4

2008-09

341

262

85.26

992

-6.8

1,943

-6.6

2009-10

354

268

89.05

North Eastern * Provisional

Source:- PFC Reports on the performance of State Power Utilities

Hydro power progress

All India Installed Generation Capacity

A long term view of the growth of the hydro sector shows that the CEA has, on an average, approved between 3-7 projects each year between FY 2008 and 2013, adding up to 28 new project Peak deficit in north India approvals. The same period saw 51 projects being returned to developers for various reasons. Maximum projects were returned in 2007-08 and 2010-11, 10 and 20, respectively. Reasons include the terrain issues for projects proposed in the Himalayan region. However, projects accepted for detailed examination have been growing steadily with 24 projects being accepted in the last two years.

All India generation capacity in the last five years, i.e. The 11th 5 year plan has doubled from 107877.37 MW to 199877.03 MW. By January 2013, this number has touched 211766.22 MW. Of this, thermal capacity accounts for 141713.68 MW, of which coal alone is 121610.88 MW. Nuclear power accounts for 4780 MW, while hydro accounts for 39416.40 MW and RE sources for 25856.14 MW.

10.9%

25856.14

39416.40

Status of CEA Concurrence to Hydro Schemes Period

2007-08

Project

Carry forward

Under

Accepted

Concurence

Project report

Reports

from

Prelim.

for detailed

given by

returned to

received

previous year

Exam.

examination

CEA

eveloper

13

-

-

3

4

10

2008-09

8

3

-

1

4

5

2009-10

19

10

2

9

3

6

2010-11

22

20

3

7

7

20

2011-12

20

21

-

14

6

6

2012-13

14

31*

0

10

4

4

4780.00 121610.88

1199.75

18903.05

TOTAL 211766 Coal

52

Gas

Diesel

Nuclear

Hydro

RES

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market data

Consumption All India annual per capita consumption on electricity Once again decadal data shows that the per capita consumption of electricity has grown from 631.4 units in 2005-06 to 879.22 units in 2011-12, an impressive growth but well short of the 11th plan target of 1000 units per head. It is interesting to note that in no year has consumption jumped significantly despite generation jumping in the last years of the 11th Plan.

segment-wise PAttern of consumption Decadal data shows that the trend of consumtpion remains more or less the same - with domestic and industrial categories leading the pack followed by agriculture. Although there is drop in the per centage of agriculture's share, the slack has not been picked up by the growth in industrial and commercial consumption. 1.24 : PATTERN OF ELECTRICITY CONSUMPTION (UTILITIES) (Per cent) 2001-02

24.7

7.5

33.3

2.5

25.3

6.7

2002-03

24.6

7.5

33.9

2.6

24.9

6.5

Per Capita Consumption ( kWh)#

2003-04

24.9

7.8

34.5

2.6

24.1

6.1

# (Gross Gen.+Net import) / Mid year Population

2004-05

24.8

8.1

35.6

2.5

22.9

6.1

2005-06

631.4

2005-06

24.3

8.7

36.8

2.4

21.9

5.9

2006-07

671.9

2006-07

24.4

8.8

37.6

2.4

21.7

5.1

2007-08

717.1

2007-08

24.0

9.2

37.5

2.2

20.6

6.5

2008-09

733.5

2008-09

24.7

10.2

37.1

2.2

20.4

5.4

2009-10

778.6

2009-10

24.9

10.4

36.7

2.2

21.0

4.8

2010-11

818.8

2010-11

25.2

10.4

36.5

2.2

20.5

5.4

2011-12

879.22*

Year

Domestic

Commercial

Industry

Traction

Agriculture

Others

1

2

3

4

5

6

7

Annual per Capita consumption of Electricity Year

# provisional

T&D and AT&C Losses

Coal Consumption

Between 2004-05 and 2010-11, aggregate technical and commercial (AT&C) losses have fallen by a significant amount. From 34.33% in 2004-05 to 26.15% in 2010-11. In the same period, T& D losses fell from 31.25% in 2004-05 to 23.97% in 2010-11. This is the result of several measures taken to reduce theft and technical losses including a revamp of distribution infrastructure central schemes such as R-APRDRP.

Decadal data issued by CEA shows that cola consumption of power plants between 2004-05 and 2011-12 has gone up significantly from 278 million tones to 417.5 million tonnes during the said period on account of installed capacity which has practically doubled from 1 lakh MW to 2 lakh MW. But the bad news is even this is not enough to meet demand. Nearly 40% of the future demand will have to be imported, accounting for large part of the fuel import bill.

Coal Consumption for Power Generation

T&D and AT&C losses (in %) Year

T&D losses (All India)

AT&C Losses *

2004-05

31.25

34.33

2005-06

30.42

33.02

2006-07

28.65

30.62

2007-08

27.20

29.45

2008-09

25.47

27.37

2009-10

25.39

26.58

2010-11

23.97 #

26.15

# Provisional * As per PFC for utilities selling directly to consumers

Year

Coal Consumption (Million Tonnes)

2004-05

278

2005-06

281

2006-07

302

2007-08

330

2008-09

355

2009-10

367

2010-11

387

2011-12

417.56

ALL INDIA GENERATING INSTALLED CAPACITY ( MW ) (As on 31-01-13 )

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10 things about...

Grid stored energy A next-generation smart grid without energy storage is like a computer without a hard drive: Very limited! In the same way that computers and the infrastructure of the Internet have built up around storage as one of the key components, so will the power grid eventually rely on energy storage technology as its pivotal piece. Here's low down on some of them...

Energy stored on the grid can address peak power needs, making it more stable

Flywheels are discs that spin in a vacuum and are used as backup power for UPS. Amount of power delivered depends on the speed of the spin

Pumped hydro storage is the most widespread storage technology in use. With 90 GW in operation, it equals 3 per cent of worldwide generation capacity

Flow batteries convert chemical energy into electricity. Electrolytes are stored in external tanks and how much power is delivered to the grid can be managed

Besides batteries and ultra-capacitors, there is a wide variety of other technologies being tested for use in power grids, among them sodiumsulfur batteries, fuel cells, compressed air and flywheels!

Compared with lead acid batteries, lithium-ion batteries allow for faster charging, are much lighter and offer higher energy density

Compressed air is stored in underground containers under high pressure. When it is released, it powers a turbine, generating electricity Energy storage is crucial for making the most of variable renewable energy sources since the sun shines and wind blows only for limited periods in a day

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In Japan sodium-sulfur batteries store 270 MW in 190 cities

270

MW

Fuel cells have long been the holy grail of energy storage technology but have so far failed to make it to mainstream commercialisation

Electricals Today | MARCH 2013

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