Contents 30 Steam coal prices up in December 32 Met coal remains weak in Dec 34 Government puts on hold CIL’s FPO, claims union 36 CIL projects worth `12,600 crore delayed 37 India’s power generation falls 2.76% in November 38 India’s cement production slips 1.48% in October 39 MRPL defers commissioning of pet coke refinery to Jan 40 Sponge iron sector struggling to stay afloat 46 Key to business lies in correct sampling 48 Efficient screening media can save on cost, time 50 BCCL rolls out 3 new washery projects 51 MBE CMT executes first Pak washery order 52 Coal mining to be phased out in Germany by ’17-18 54 US coal consumption expected to rise to 928 MMst in 2013 57 CMPDI must be proactive 58 IWAI navigates into coal transport route 59 Traffic handling by major ports up 1.43% in Apr-Nov 60 Railways’ coal handling up 5.64% m-o-m in Nov 61 Washery rejects create a buzz in coal industry 62 e-auction data 64 Port data
4 Coal Insights, December 2013
6 | Cover Story
Power transmission: The missing links Low voltage lines, land hurdles, Chinese imports may ground India’s power engine.
22 | Interview
Transmission capacity a major bottleneck in India Transmission congestion led to skewed price discovery on power exchanges, says Ashok Khurana.
41 | FEATURE
The year that was: 2013 If 2012 was the year of the coal scam, 2013 will be remembered for Coal India disinvestment fiasco.
44 | SPECIAL FEATURE
We can meet country’s coking coal demand if JAP implemented: BCCL The miner has chalked out a plan keeping in view the 300 million tons of steel capacity by 2020.
55 | EXPERT SPEAK
Solving the coal conundrum Partha S Bhattacharyya, India’s ‘coal man’, prescribes entry of global miners into India.
The Missing Links
in India’s power sector expansion Arindam Bandyopadhyay
n the summer of 2012, a massive grid failure brought life in half of India to a grinding halt. There was complete chaos during the Monday morning rush hour. More than 300 intercity passenger trains were stranded. The Metro Rail suspended its services and passengers were stuck in trains that stopped mid-way. Hospital services were severely impaired. Water treatment plants were shut down. About 200 miners were trapped underground as the lifts stopped working. All these…while the country had a substantial surplus generation capacity as compared to a modest average demand for 135 GW! “That, precisely, is what a weak arterial system can do to a robust body,” warns a power transmission expert; or in other words, what a weak transmission system can do to a country where the peak load supply (141 GW) is much below its generation capacity (around 235 GW).
6 Coal Insights, December 2013
Cover Story Even as India goes the whole hog with new generation capacity additions, the power transmission industry points to this gross “imbalance” and fears that an insufficient circulatory system, if not upgraded, may cut to size ambitious power sector expansion plans, sooner or later! Power-breaks
The power sector, it is said, is like a oneway circulatory system of the human body. If generation is the oxygenation of the blood in the lungs, the transmission represents the blood vessels and distribution, the lymphatic system. In India, as in most other countries, the fuel resources (read coal) and power plants are largely concentrated in a few pockets. But these surplus regions do not have proper evacuation facility and the deficit areas lack access to fuel and/or power. This disparity brings transmission into the picture. “Take the case of the massive blackout of July 2012,” said an official from a central power utility, “the origin of the power failure was, essentially, a weak transmission system.” As per media reports, two key transmission lines – Agra-Gwalior-Bina and Kankrauli-Zerda – were down due to repair work and were unable to carry the burden of excess drawing by some states, and this led to a massive tripping. A weak transmission infrastructure indicates both low transmission capacity and reliability of the transmission lines, the last factor partly depending on the quality of equipment used. In the absence of a strong and stable transmission system, the official noted, the purpose of expanding the generation capacity gets defeated. In fact, much of the power-cut in the country is caused by the inadequacy of the transmission network. As of May 2013, according to data released by the Central Electricity Authority (CEA), the country had a generation of 235 GW and power demand of 135 GW, and still suffered from a peak power deficit of nine percent (12 GW). This power shortage, government estimates show, accounted for a GDP loss of $68 billion in 2012-13. Glaring gaps
In India, the primary concern about the electricity sector has always been the inadequacy of generation capacity.
8 Coal Insights, December 2013
India’s power grid The Indian power transmission network is primarily maintained by Power Grid Corporation of India Limited (PGCIL), a Navratna company and one of the world’s largest transmission utilities. The power transmission sector is divided into five regions, namely Northern, Eastern, Western, Southern and North-Eastern. The Northern, Eastern, Western and North-Eastern regions have been synchronously interconnected and operate as a single grid called the National Grid. The Southern region is asynchronously connected to the National Grid through high voltage (HV) direct current (DC) links. By January 2014, the Southern grid is also expected to be connected to the existing national link synchronously. Each of the five regions has a Regional Load Despatch Centre (RLDC). As per the Electricity Act 2003, RLDC is the apex body which ensures integrated operation of the power system in the concerned region. At the national level, the apex body called the National Load Despatch Centre (NLDC) ensures integrated power system operation throughout the country. The NLDC and RLDCs together form a part of the Power System Operation Corporation Limited (POSOCO), which is a wholly-owned subsidiary of PGCIL. It was generally believed, and rightly so, at the governmental level that generation capacity is what India needed, first and foremost. This has been reflected in the budgeting for the Five Year Plans. In the Eleventh Plan period (2007-12) too, the focus was on expanding generation capacity by leaps and bounds. This pre-eminence of generation was reflected in the budget allocations for generation and transmission & distribution (T&D) projects in successive Five Year Plans, with the former accounting for almost the entire allocation. “Only lately, realisation has dawned that eletricity generated is half the job done. You also need proper transmission lines to take that power to the consumer,” said Bhaskar Sen, Director, Transformers & Rectifiers (India) Ltd. As a result of the skewed segmental growth, the development in transmission infrastructure has traditionally lagged behind the generation growth. This gap became gaping during the Eleventh Plan when the government went all out to expand the installed capacity through large scale participation of the private sector. According to Planning Commission estimates, the generation capacity in India increased
by 50 percent in the last five years while transmission capacity was up only 30 percent. However, the grid failure of 2012 came as a wake-up call. Currently, the shortfall in the transmission capacity is manifested in three forms: a) low voltage lines, b) length of circuit kilometres (km), and c) shortage in domestic electrical equipment supply, especially in sophisticated inputs which are mostly imported. Low voltage lines
The transmission and distribution lines have different voltage levels such as 11 kV, 33 kV, 66 kV, 132 kV, 220 kV, 400 kV and 765 kV. The voltages for transmission lines vary from 66 kV upwards. Lower voltages such as 33 kV, 11 kV and less come under the distribution sector. In India, as in many other countries, the transmission lines mostly carry alternating current (AC) which travels more efficiently at high voltages. Also, AC current can be easily changed from low voltage to high voltage and vice versa. The cost of transmission varies with the power handling capacities or voltage levels of different transmission lines. This is so because the power intensity varies for
Cover Story different voltages. High voltage lines help to reduce the energy lost in long-distance transmission. The existing network of transmission lines in India comprises mostly of 132 kV, 220 kV and 400 kV. “Only recently, during the Eleventh Plan, did the government take an initiative to lay down a network of 765 kV lines,” said Sen who is also the chairman of the eastern regional council (ERC) of the Indian Electrical & Electronics Manufacturers’ Association (IEEMA). Currently, there is major focus on it, but “fully loaded” 765 kV lines are still very limited, he added. Commenting on the issue, an industry source said, “The major concern, at this point, is the slow progress in laying high voltage transmission lines. While work for 765 kV lines has started during the Eleventh Plan, currently these lines are mostly carrying 400 kV power. In many cases, the sophisticated equipment required for laying those lines were not readily available. This is further delaying the projects.” Sen said, “High voltage transmission is an urgent requirement for a huge country such as India. There are teething problems, of course, but it has to be done anyway. There are huge opportunities in power transmission, but at the same time there are huge challenges.” However, even the 765 kV lines will not be adequate to match the immense growth in generation capacity, experts feel. In the long run, the Indian power sector has to put in place a network of 1,200 kV transmission lines.
Power intensity for different voltages Voltages (kV)
Power intensity (MW/mtr on land)
“The 1,200 kV lines will be economic but pose many challenges. For 1,200 kV, there is still no data available on how much of it will come by what time. We hope there will be some 1,200 kV lines ready by 2022, but we really don’t know. Perhaps, there is no data available with the government right now,” Sen informed. Land obstacles The benefits of having high voltage transmission lines stem from two factors: economic (transmission cost) and social (land requirement). The lower the voltage level, the bigger the transmission cost and land requirement. What this implies is that to transmit 6,000 MW through 132 kV lines, the country will need huge areas of land. In the current scenario, such massive land requirement for transmission poses a roadblock. Already, quite a few transmission projects have been stalled due to want of land, sources said. “In transmission projects, there is a concept called Right of Way (RoW). The long transmission lines may have to be
As of May 2013, according to data released by the Central Electricity Authority (CEA), the country had a generation of 235 GW and power demand of 135 GW, and still suffered from a peak power deficit of nine percent (12 GW). This power shortage, government estimates show, accounted for a GDP loss of $68 billion in 2012-13.
10 Coal Insights, December 2013
stretched for 500-600 km; so the transmission company needs to have RoW for that amount of land,” Sen said. According to a recent report, as many as 120 transmission projects have faced delays because of the developers’ inability to acquire land and get timely clearances from all stakeholders. Also, there have been instances where transmission lines were forced to take a different route than planned due to the same hurdles. This resulted in cost-overrun for the entire project budget. Along with new lines, the transmission sector also needs to increase sub-station capacity. Even this sub-sector is facing challenges in the form of land acquisition. Recently, a number of sub-station projects were reportedly halted in West Bengal due to land issues. In this context, some countries with high population density (such as the Netherlands) had decided to cap overhead transmission and distribution network and instead opt for underground lines. In fact, underground cables take up less RoW than overhead lines, have lower visibility, and are less affected by bad weather. In India, the Noida Authority has recently planned to shift about 6 km of overhead power transmission lines underground for a better view of the city’s skyline. However, costs of insulated cable and excavation are found to be much higher than overhead construction. Also, faults in buried transmission lines take longer to locate and repair. Therefore, underground lines are strictly limited by their thermal capacity, which permits less overload or re-rating than overhead lines. Long underground cables have significant capacitance, which may reduce their ability to provide useful power to loads. “In India, underground transmission lines are not an option, at least not in any significant scale. The technical limitations will keep its use limited to some urban pockets only,” said an official from Damodar Valley Corporation, a state-sector power utility. Circuit kilometres
Under the Twelfth Ministry of Power ambitious target of largest transmission
Five Year Plan, the (MoP) has set an building the world’s network in India by
Tear along the dotted line
66 Coal Insights, December 2013 Tear along the dotted line