The power sector outlook has changed a lot in the last couple of years. From coal based power generation now the move is more towards harnessing renewable energy. The Government of India has mainly focussed on Solar based power generation in the last couple of years. The country is expected to reach a total of 20 GW of installed solar capacity by end of the current financial year. India installed 7.5 GW in the last four quarters. Out of this around 57% of the installed capacity is from Telangana, Karnataka and Andhra Pradesh. The country is targeting 100 GW by 2022 from solar energy. Solar tariffs have fallen drastically in the last couple of years to a low of Rs 2.42/ kWh level. Due to fall in Solar tariff and rise in the cost of imported coal, the conventional coal based power generation is fast becoming financially unviable. Renewable rising is on the fast lane and likely to change the way the country operates. Battery based devices and systems are likely to get a booster. Electric vehicles are likely to become the norm in future with the Government targeting to allow manufacturing of only electric vehicles by 2030. Sandeep Sharma takes a look at the power sector….
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According to Index of Eight Core Industries (Base: 2011-12=100) July, 2017, the electricity generation increased by 5.4 % in July, 2017 compared to the same month in the previous year. Its cumulative index increased by 5.4 % during April to July, 2017-18 over the corresponding period of previous year.
National Energy Policy (NEP)
The National Energy Policy (NEP) 2017 aims to chart out the future course of action for meeting the energy requirement of the country. The policy aims to provide broad framework for the overall energy sector, considering the various energy mix and demand scenarios. The policy outlines how the electricity sector is envisaged by the government to develop over the next five years and beyond up to 2027. According to a draft of the third National Electricity Plan (NEP3), the renewable, nuclear and large hydroelectric power plants would account for 56.5 per cent of India's installed power capacity by 2027. The Government aims to achieve 100% village electrification by 2018 and Power for All by 2022. The share of manufacturing in India’s GDP is expected to go up from 16% to 25%, Oil imports is targeted to reduce by 10% from 2014-15 levels, both by 2022. Energy efficiency measures aims to use less energy for the same service. The initiative taken by the Government to replace incandescent bulbs by LED bulbs has the potential to reduce energy load by 20 GW. It’s likely to save nearly 100 billion kWh worth of energy each year.
Challenges Critical Coal
Instead of having a buffer stock of 30-40 days, most power stations in the country are having coal stock for only two to three days according to N Srinivasan, President, Indo-American Chamber of Commerce. The acute coal shortage condition is putting the private sector thermal power generating companies under tremendous pressure while it is blamed that the public sector companies are getting undue favour. Coal ministry is addressing the issue of the depleting stock of coal at power stations on a high priority. The shortage is being attributed to decline in coal production by Coal India Ltd. Media has reported in the first week of September that around 36 plants around the country including private players like Reliance Power, GMR and Hindustan Power have coal stock of less than four days. According to Ministry of Coal, as on 16th September 2017, the number of power plants in critical and supercritical category was 4 & 12, respectively. Coal Minister Piyush Goyal has recently assured all the stakeholders that the supply of coal will be resolved soon as the government is taking urgent measures to resolve the supply side issues.
Electrical Equipment Pricing
Due to increase in price of commodities like copper in the global market, the producers of the low-voltage electrical equipment such as circuit breakers, switching and control and metering products are forced to revise price upward. This electrical equipment is used extensively in industrial, commercial and residential segments, with a significant chunk used in the power sector.
Problem of Plenty
Days of power deficit and load shedding have become things of the past in many a places in India. Punjab, a power surplus state is facing the problem of plenty. To attract private sector investment in the power generation sector, the state has released its power generation policy in June 2010 which guaranteed power take off and other incentives. Thermal power plants were allowed to be set up through MOU route and not through competitive bidding. Punjab State Power Corporation Ltd (PSPCL) has signed power purchase agreements with private players for using 100 per cent power available with them. Fixed charges were agreed in case of non utilisation. According to media reports, this policy is causing a financial burden of more than Rs 2750 crore as fixed charges on PSPCL even without supply any power. Due to this each plant addition by private sector companies is leading to dip in the plant load factor (PLF) of state sector thermal power plants. The policy needs to be amended to safeguard the interest of the state run power plant and the exchequer.
Southern States With Surplus Capacities
According to the Central Electricity Authority electricity demand supply projection for the state of Telangana, 56,307 million units is likely to be the demand while the availability from all sources is expected to be 59,847 million units, leaving surplus energy of 3,540 MU during the current year. Load Generation Balance Report (LGBR) 2017-18 projections puts Andhra Pradesh on the top of the table with 10.8% surplus, followed by Karnataka, Tamil Nadu and Telangana with 8.1%, 7.9% and 6.3% respectively. Kerala is yet to wipe out the power deficit. Telangana is on the verge of becoming power surplus state.
Coal Based Power Generation Going Out of Favour
Central Electricity Authority has predicted in one of its report that thermal power plants are likely to run at low plant load factor in future as high quantum of clean energy has to be accommodated into the grid. The capacity utilisation of coal-based thermal power plants will fall to as low as 48 per cent by 2022. Adani Power has already discontinued 1,250 MW of power supply from Mundra plant. The rise in cost of imported coal has made the project unviable. Coastal Gujarat Power Ltd (CGPL), the holding company for the Mundra plant, is struggling to keep Mundra power project afloat. The increase in cost of imported coal from Indonesia has made this project unviable at the current terms of contract.
Up Cancels Ppa of Stalled Projects
Coal based power projects are out of favour across the country. The state governments and independent power producers are finding ways to get rid out of the same. In one such move which points to this trend is of the Uttar Pradesh Government decision to cancel power purchase agreement (PPAs) with seven coal based power project developers totalling 7040 MW owing to not meeting the commissioning targets. These power projects were awarded through MOU route and the developers failed to duly perform and obtain long term coal linkage from Standing Linkage Committee, Government of India, despite number of extensions from the state government. Due to drastic fall in Solar tariff, the pricing is also playing in critical role in cancellation of PPAs. Uttar Pradesh government has also recently cancelled long term PPAs totalling 3800 MW due to higher cost compared to current spot market prices.
Demand Exceeds Supply in Meghalaya
Meghalaya Power Generation Corporation Ltd (MePGCL) is the state’s power generation agency in Meghalaya. The power corporation generates 900 million units (MU) annually on an average against the demand of around 1600 MU. It seems that the commissioning of two new hydro projects in March 2018 would not be able to meet the base load requirement.
Opportunities Demand Drivers
Programs like ‘Make in India’ are encouraging businesses to set up manufacturing units in India. Domestic and International companies are setting up units under this programme. Many more are on the verge of setting up manufacturing plants across the country. The development of manufacturing hubs, plans to build and provide modern transport systems like Metro rail and Bullet train, large scale real estate development, infrastructure development works including airport infrastructure, rail infrastructure, ports, roads, highways and expressways are all pointing towards the expected rise in the demand for electricity. The Government initiatives to build 100 Smart Cities are likely to boost the demand for Electricity from all walks of life. Rapid urbanisation and population growth leading to newer centres of growth across the country points to the expected growth in demand for electricity in India.
Public transport based on electricity is gaining ground in India. Nitin Gadkari, Minister for Road Transport and Highways, Shipping and Water Resources, River Development and Ganga Rejuvenation has recently flagged off a fleet of first batch of 1000 E-rickshaws from Huda City Centre metro station in Gurugram, Haryana. Government of India has also announced its intention to allow manufacture of only electric vehicles by 2030. To achieve this goal, power generation and storage solutions infrastructure needs to be developed on a mission mode. All this calls for a rising power sector fortunes in India. As part of its support for the electric vehicles, NTPC Ltd in the recent past has facilitated the installation of charging stations for electric vehicles at Delhi and Noida. Sooner this will be expanded to other location across the NCR region.
Railway Minister Piyush Goyal Goyal aims to go in for 100 per cent electrification of the Railways. This move is likely to save Rs 16,000 crore spent on diesel every year. Also focus would be on harnessing renewable energy mainly Solar by Railways. The plan is to use flexible lightweight solar panels on the rakes and stations. As part of the electrification drive, Indian Railways has offered General Electric an option to manufacture electric locomotives instead of diesel engines at its upcoming factory in Marhowrah in Bihar. In 2015, the railways had awarded the contract to GE to set up the diesel locomotive factory on 200 acre of railway land offering it as equity. The railways had planned to procure at least 1,000 engines in the next ten years from GE. Negotiations are on with GE to go in for the change in plans. Another agreement is already in place with Alstom to manufacture electric locomotives at Madhepura in Bihar.
Replacement of Worn Out Plants
NTPC has decided to replace old power plants located at Talcher and Singrauli. The existing plants with 5x200 MW capacities will be replaced with 2×660 MW at each location by building the new ones in the existing premises. Singrauli and Talcher would be commissioned by 2020 and 2021 respectively. Million dollar opportunity lies in replacement of old worn out coal based plants with the newer ones based on super critical technology across the length and breadth of the country.
Electricity Demand on the Rise
Considering the current and expected rise in demand for electricity, Maharashtra State Electricity Distribution Company Ltd (MSEDCL) plans to set up five Extra High Voltage (EHV) sub-stations in the city of Pune and Pimpri Chinchwad. The locations chosen include Khed city, Rasta Peth-Lulla Nagar, Bhugaon, EON IT Park, Kharadi and Marunje. In the next five years, the demand is expected to rise by another 1,000 MW.
Power Transmission and Distribution Network in Arunachal
The Cabinet Committee on Economic Affairs had approved the Comprehensive Scheme for Strengthening of Transmission and Distribution Systems (CSST&DS) in the state of Arunachal Pradesh and Sikkim, at an estimated cost of Rs 4754.42-crore. Power Grid Corporation of India (PGCIL) is implementing various projects in the T&D segment. Around 29 transmission lines covering 1,917 km and 70 distribution lines (1,923 km) were being laid by PGCIL across the State. Under the scheme, around 61 out of 94 sub-station contracts are awarded so far. Land for 33 sub-station are required on priority.
Renewable Energy Gaining Ground
Solar power projects are on the rise. With rooftop solar power projects, the decentralisation of power generation and consumption is happening. Need for smart metering and smart grid is being felt and being deployed. People and device connectivity is on the rise and paving way for growth of energy storage industry. The renewable energy potential of the country is about 900 GW from commercially exploitable sources viz. Wind – 102 GW (at 80 meter mast height); Small Hydro – 20 GW; Bio-energy – 25 GW; and 750 GW solar power, assuming 3% wasteland. India's draft "Ten Year Electricity Plan" calls for a staggering 275 GW of renewable energy by 2027, in addition to 72 GW of hydro and 15 GW of nuclear energy. The per capita electricity consumption is just one fifth of the global average. The present consumption is about 1150 BU which is likely to touch 1570 BU by 2022. Out of additional requirement of 420 BU by 2022, solar will add about 140 BU, Wind around 60 BU and the remaining 220 BU will be required from conventional power projects. The Government of India has set an ambitious target of 175 GW renewable power installed capacity by the end of 2022 comprising 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power. Green Energy Corridor is being set up to ensure evacuation of Renewable Energy at a cost of Rs.38,000 crore.
Private Sector Participation in Power Transmission Projects
Transmission projects with total investments of Rs 3.4 lakh crore have been awarded since April 2011, out of this only Rs 64,000 crore has been awarded through the tariff-based competitive bidding (TBCB) route. Power transmission projects implemented on TBCB allows private sector participation. More than Rs 515 crore worth of power transmission projects are being implemented through the TBCB route out of newly sanctioned projects of about Rs 1,500 crore. Private sector players are seeking clarity on certain conditions introduced in 2016 in the amended national tariff policy of 2011 which allows exemption of inter-state transmission projects from TBCB. The conditions include projects of “strategic importance”, “technical up gradation” and catering to “urgent situation”. The empowered committee on power transmission is likely to decide shortly whether the remaining projects out of Rs 1,500 crore will be implemented through TBCB route or directly allotted to PGCIL. As per industry news, the transmission sector is likely to see an investment of Rs 2.6 lakh crore by 2022, comprising close to 106,000 circuit km of transmission lines and 292,000 MVA of transformational capacity in the form of substations.
Nuclear energy is also fast emerging as one of the clean sources of power generation that can meet the growing energy requirements of the country with enhanced safety provisions in place. The advantage of using Nuclear energy is that it’s not affected by weather conditions unlike Solar and Wind. Nuclear power is the fourth-largest mode of electricity generation in India along with thermal, hydro and renewable. India generates about 6,800 MW of nuclear energy. As per 2016 figures, the installed capacity of 21 nuclear power reactors is 6780 MW and approximately constitutes 3 percent of total power generated in India. The country is targeting to produce 25 per cent of its electricity requirement from nuclear energy by 2050. The sector is largely indigenous and expects to have 63 GWe by 2032. Nuclear projects often face protests from the environmental groups and locals. Five out of the six reactors under construction are behind schedule in India due to various reasons.
At a time when the number of nuclear power units under construction are declining worldwide, from 68 reactors in 2013 to 53 reactors in mid-2017. The Government of India has recently approved 10 Pressurised Heavy Water Reactors with a capacity to generate 7000 MW. The work of four such reactors with a capacity of 1000 MW each is in progress, apart from seven domestic reactors. Sekhar Basu, Department of Atomic Energy (DAE) secretary and chairman of the Atomic Energy has recently said at the International Atomic Energy Agency (IAEA) general conference at Vienna that the country will now have 22 reactors in operation and 21 reactors under construction. This will increase the capacity to over 22,000 MWe by the end of next decade.
To ensure adequate fuel supply for its nuclear reactors, India has signed fuel supply agreement with certain countries like Namibia and Mongolia. Talks are on with Uzbekistan and Australia to procure uranium. Domestic production is happening at one end and nuclear fuel is being imported from Canada and Kazakhstan which is used to fuel indigenously built Pressurised Heavy Water Reactors. Recently a delegation from Canada had met Minister of State for Atomic Energy and Space Jitendra Singh to discuss about the various aspects of uranium and nuclear energy collaboration between the two countries. Russia supplies enriched uranium for two Boiling Water Reactors at Tarapur in Maharashtra and to fuel the two reactors at Kudankulam in Tamil Nadu.
Russian state-run atomic energy corporation ROSATOM is building and supplying equipment for the Kudankulam Nuclear Power Project in Tamil Nadu. ROSATOM First Deputy CEO Kirill Komarov has recently told Sky News channel of UK that nuclear option is much cheaper to Wind and Solar considering the fact about the additional cost being involved in connecting the grid.
Madhya Pradesh is gearing up to build 1000-MW nuclear power plant in East Singhbhum district. The project got a booster after the land was identified in Bahragora block of East Singhbhum. The area is spread across 160 acre.
Nuclear Power Corp. of India (NPCIL) plans to set up 6,000 MW nuclear power plant at Chhaya-Mithivirdi in the state of Gujarat. Land acquisition failed owing to locals protesting against the project. The area boasts of with green vegetation and mango orchards. The National Green Tribunal (NGT) in its order dated 18th May, 2017 has shifted this project to Kavvada in the state of Andhra Pradesh.
Power Finance Corp plans to raise Rs 70,000 crore debt in the current financial year through mix of external commercial bonds, rupee denominated masala bonds and other instruments. The corporation had raised at 7.47% average interest rate funds amounting to Rs 66,800 crore in the last financial year.
NTPC Ltd has announced the installation of an AC Microgrid test bed of 110 KWp Solar PV with demand side management at the NTPC Energy Technology Research Alliance (NETRA), the R&D arm of NTPC in Greater Noida.
India aims to achieve clean power generation capacity of 225 GW by 2022. Power Ministry aims to revive 40 hydro power projects of 11,639 MW and has finalised a policy to provide support of Rs 16,709 crore. The ministry has decided to do away with the distinction of large and small hydro projects for inclusion as renewable energy. Now all kinds of hydro projects will be termed as Renewable Energy projects. Hydro power generation constitute 44.59 GW out of the 329.20 GW installed power generation capacity, while 57.26 GW comes from other renewable power generation capacities.
Aalo-Pasighat-Roing-Tezu 132-kilovolt power transmission line got commissioned recently by the Arunachal Pradesh Power Department. The power transmission line project stretches from Aalo to Pasighat covering 77 km. The line further continues from Pasighat to Tezu via Roing (174-kilometers), which is built by PGCIL. As part of first phase, the line can transmit 150 MW of electricity.
Villagers are opposed to proposed 240 MW Umngot Hydro Power Project in the state of Meghalaya by MeCL. The project is likely to affect their livelihood and deprive them of the biodiversity resources.
NLC India Ltd has synchronised Thermal Power Station-II Expansion (2x250 MW), NTPL Thermal Power Station (2x500 MW) run by NLC Tamil Nadu Power Ltd during the last 3 years period. The company is also making strides in the clean energy production by installing Wind Turbine of 46.50 MW Capacity at Tirunelveli district of Tamil Nadu. Also the corporation has established 10 MW Solar Power Project at Neyveli. NLC is going ahead with its plans to set up 4000 MW Solar Power Projects in collaboration with the State Governments in line with Solar Mission. The work on 130 MW Solar Power Project at Neyveli and 500 MW Solar Power Project in different parts of Tamil Nadu has already started.
THDC India (THDCIL) has an installed capacity of 1513 MW comprising 1000 MW Tehri Dam Hydro power plant, 400 MW Koteshwar HEP and 50 MW of Wind Power Projects at Patan and 63 MW at Dwarka in Gujarat. The corporation has signed a pact with power ministry to generate 4,600 million units of electricity in the current financial year.
Chhattisgarh Energy department is hopeful to complete establishment of 32 new power sub stations comprising 132KV, 220KV and 400KV capacity in the State by March 2018. The state Chief Minister Raman Singh has directed the concerned officials to complete the construction of 400KV power substation in Jagdalpur soon. The 132KV power substations are coming up in districts of Kanker, Korba, Sarguja, Janjgir-Champa district, Bilaspur, Mungeli, Sukma, Balrampur, Jashpur, Raigarh, Rajnandgaon, Dhamtari, Bemetara, Bijapur, Mahasamund, Kabeerdham, Raipur, Narayanpur, and Bastar district.
India based AXISCADES Engineering Technologies, a leading technology solutions provider, has signed a pact with France-based Assystem Energy & Infrastructure to form a joint venture. The joint venture will focus on energy and nuclear sector in the country.
NEP3 proposes actions that would lead to India’s economy becoming ‘energy ready’ in the year 2040. Due to expected rise in the economic growth, the power demand scale is likely to attain new highs from industry, household, transport, and agriculture sector. NEP envisages rise in Urbanization touching 47% and doubling of manufacturing share in the GDP to 30% by 2040. The population of India is estimated to touch 1.6 billion marks by 2040 leading to increase in consumption of electricity. The energy demand is likely to increase by 2.7-3.2 times between years 2012 and 2040. The per capita electricity consumption figure of 1000 kWh/yr in 2014 is likely to double by 2020. Coal based power generation is likely to fade out drastically in the years to come. The rise of renewable is here to stay for decades combined with Nuclear power generation. Rooftop solar plants are likely to meet requirement of households, institutions, facilities and manufacturing units. Surplus power fed to the grid is likely to benefit the areas where there is a deficit. Overall the outlook of the power generation section seems to be heading in the right direction with immense potential to explore further. It won’t be surprising if someday India starts exporting surplus power to its neighbouring countries.
Take the following quotes
Ravichandran Purushothaman, President, Danfoss Industries Pvt Ltd
We have solutions ready for all upcoming eco-friendly refrigerants and we are working on many solutions on controls side which helps improve energy efficiency for all applications, be it chiller units or cold storages or HVAC solutions for commercial buildings. Urban efficiency is the most cost-efficient and smart way to decarbonise the economy. The present state of the planet requires individuals and industries to be responsible for their actions that contribute to the well-being/detriment to the planet.
Vimal Kejriwal, MD & CEO – KEC International Ltd shares his view with Sandeep Sharma
The Industry is faced with several issues related to smooth and timely project execution. Challenges such as early resolution of Right of Way, Land Acquisition, Environment & Forest clearances, end users (like power plants) not being ready, etc. impact project completion timelines. This creates an additional burden on EPC companies by way of time and cost overruns and mobilisation issues. In addition to this, we need to streamline the process of Reverse Auction to ensure the health of the industry.
Raghavendra Mirji, Associate Vice President & Business Head – Power Infrastructure & Renewable Energy Business, Godrej | Electricals & Electronics Division, Godrej & Boyce Mfg. Co. Ltd
India is endowed with vast solar energy potential. Solar is today an emerging business in Power segment. We are very much there in this clean energy space. We have developed our competencies to handle large scale solar projects and are already operating in MW scale projects. We are ramping up our solar business in both Rooftop & Ground mounting solar segment & will be one of the significant players in solar industry in coming years.
Rahul Gupta, Managing Director, Rays Power Experts Pvt Ltd
I like to think of Rooftop Segment as a sleeping beast. While today, there are difficulties that make the rooftop market unattractive for business potential, I believe that in the years to come the companies that are able to solve financial or logistical problems related to rapid scaling of Rooftop Business will not just survive, but will also lead. The opportunity is a massive 100Bn$ opportunity and there is plenty of room for many players to grow simultaneously. While the push from government has created a larger than ever awareness about rooftop business, we still are waiting for the day when challenges related to project financing, project logistics & project maintenance will be solved.
Karunesh Chaturvedi, Head Corporate Affairs, Vikram Solar
Rooftop segment has surpassed the 1 GW mark, achieving more than 113 per cent growth rate in the last 12 months. Statistics show that rooftop potential of the country stands up to 1,24,000 MW. And more than 30 per cent of which can be easily covered if only 1.3% of the total household in India is made solar compatible. Tamil Nadu (132 MW), Maharashtra (89 MW) and Gujarat (69 MW rooftop capacity) are leading India in terms of total installed rooftop solar capacity. Mumbai, Chennai, and Delhi have also shown promise in becoming favourable environments for rooftop solar growth.
Alexey Pimenov, CEO, ROSATOM South Asia (Regional Centre of ROSATOM State Atomic Energy Corporation in South Asia, based in Mumbai)
Nuclear and renewable cannot be opposed to each other. Quite the opposite, they are allies rather than rivals, and complement each other very well.
Nuclear power plants provide base load and don`t depend of weather conditions, generating power 24/7. Renewable are strongly dependent on weather conditions. A good example is India. There are around 300 sunny days a year. In Moscow, for example, solar generation is not that efficient. The same is with wind power. There are areas where winds are strong and those where they are weak. Besides, the wind does not reliably blow 24 hours a day, but power is always needed.
Tomohiko Okada, Managing Director, Toshiba India Pvt Ltd
Although there is very little recurring cost, the hydropower generation is highly capital-intensive mode of electricity generation, requiring high initial expenditure. Furthermore, the economic viability of hydroelectric projects also depends on the geology, topography, hydrology and accessibility to project area. Difficult terrain, hostile weather coupled with lack of adequate Transmission & Distribution (T&D) System, adversely affects developments of Hydroelectric Projects (HEPs).