Power Scenario

IEX @ Rs 9.9 per unit? Lessons to learn

While the SHAKTI scheme of coal block reverse auction is likely to unlock the thermal generation potential, the so called "power surplus'' situation is challenged by unprecedented high prices of electricity being traded at the exchange. What gone wrong? Who erred? CEA ,POSOCO or State Utilities? Well this non-win situation has lessons that Indian Power Sector can learn. 

Even smart grid wont solve this problem if the bureaucratic approach of state utilities/TRANSCO/GENCOs misreporting to POSOCO.

GENCOs can take shutdown whenever they want, thermal power plants need investment to improve efficiency and cutting their generation will make them more inefficient. 

Levelised Cost of Energy (LCOE)

Its not correct if we talk just about the cost of energy.We should find out the LCOE.It is calculated by accounting for all of a system’s expected lifetime costs (including construction, financing, fuel, maintenance, taxes, insurance and incentives), which are then divided by the system’s lifetime expected power output (kWh). All cost and benefit estimates are adjusted for inflation and discounted to account for the time-value of money. As a financial tool, LCOE is very valuable for the comparison of various generation options. A relatively low LCOE means that electricity is being produced at a low cost, with higher likely returns for the investor. If the cost for a renewable technology is as low as current traditional costs, it is said to have reached “Grid Parity“. 

LCOE enables a comparison of different energy generating technologies of unequal life times and differing capacities and permits grid competiveness comparisons to be readily made for different locations. 

There are three ways one can calculate LCOe for a renewable energy project:
1. Target or Goal seeking approach:- based upon carrying charge rate.Simplest. You need to know the interest rate, carrying charge from EBIDTA/cost.
2. NPV :- based uponNPV of revenue and  NPV of generation
3. Cost based:- you dont need PPA price etc. Just get the NPV of OPEX, NPV of CAPEX and the NPV of cost and generation.

AT & C losses Buck has to stop now

Govt has very righty aimed at zero T&D loss regime by 2019.

Present is very gloomy, thanks to buleet not being bitten by successive administrations.

Power sector of states in India is marred by corruption.  As a result, if we give more electricity to people, more loss we make.


Some facts:

• India is world's 3rd largest producer and consumer of electricity.
• 28 Crore people have no access to electricity.
• Per capita consumption is just 1000 MW, China is 3000, US is 10,000.
• Peak Demand 165 GW, Capacity 270 GW :-)
• Distribution losses INR 4 lakh crore.
• Loss making states: Raj, UP,Haryana,JH,TN,AP,Telengana,Bihar.

Financial Restructuring Plans ( FRPs) have failed miserably.

Ironically, India has surplus power, but people in dark. Meanwhile, the country remains busy in elections.

Bharat Nirman in Power Sector ( Thanks to both Britishers and Indians)

1749:- Benjamin Franklin discovered that frictio generates electricity !

1947:- We had generating capacity of 1300 MWe

2013:- Capacity is reaching 2,00,000 MWe

1910:- Growth of power sector with the help of private licences.

1948:- SEBs were created.

1998:- CERC/State REC created.

Solar PV actually anti-green energy? Is the bubble going to burst?

Its official. The solar bubble has burst. The hype on solar PV is finally being realised. It takes more energy to make solar PV generation than it actually generates back !
EROI ( Energy return on investment ) on the solar PV has been found to be not even 5.0

In India it matters most.Why? Because in ther recent past much of the MNRE budget and state govts' inputs and subsidies have gone into solar. The catch here is theta in India resources are so few that prioritization becomes impractical. WE have pushed solar PV ahead at the cost of wind energy !

Whats happening is like this. We consume 1 unit of ffossil fuel to generate 1 unit of solar energy. Net result? Zero if not negative.

What's going on in Indian Power Sector?

• CERC has categorically mentioned that fuel risks should not be passed to consumers straight away and should be shared among Coal India and Power Companies.
• New Power Minister Mr. Scindia has already termed the task as "daunting'' s he ha rightly realized the challenges.
• "New inspector" of the power utility as proposed by Ministry to keep tab on Power Plant's fuel impact upon tariff, has been downplayed by CERC.
• The India Smart Grid Forum (ISGF) has come out with a smart grid vision and road map, covering three five-year plans from 2012 to 2027. The 12th Five Year Plan (2012-17), 13th (2017-22) and 14th Five-Year Plan (2022-27) respectively.  This will take roughly an investment of $100 billion in technologies for generation, distribution, transmission and monitoring. 
• Bharat Heavy Electricals Ltd's Rs 2,000 crore investment plan for manufacturing solar equipment might become unviable if measures against dumping of Chinese items in the sector are not in place.
• The Design Finance Build Operate and Transfer (DFBOT) model is opposed by Private Power Producers.Private power firms fear that in the proposed structure, the land continues to be owned by the utility, and there is no provision for the developer to create charge on the project assets. This results in banks treating such loans as unsecured loans, which reduces availability of bank financing.
• AN SBI Cap report says that unlike Odisha power sector privatisation, the Delhi privatisation has been a success.

Will the power sector survive in India?

After two back to back grid collapse and domestic power industries pushed to wall , will the constrained Indian Power Sector survive?
Looking into this big question  following routes lead to answer:-

• DISCOMs running with over 2,50,000 Crore losses are getting debt restruction from GoI.
• CIL or private miners or the imports. Get it from anywhere, the sector needs lots of coal.
• Private distributors like Torrent in Agra may not succeed due to typical Indian Law and Order scenario.
• Regulatory framework is a silver lining. Its because of CERC that power trading through two Exchanges has begun.Currently, the two exchanges -- Indian Energy Exchange Ltd (IEX) and Power Exchange India Ltd (PXIL) – trade about 35-40 million units a day.

More Rapid fire on Power Sector

• Who regulates hydrocarnons in India? Ans)Petroleum and Natural Gas Regulatory Board (PNGRB) is the regulator for hydrocarbon sector.
• Who is implementing REC in India? Ans)NLDC is the agency for implementing REC mechanism in India.
• What is CIL coal production? Ans)CIL production of about 500 mt falls short of 100 mt. ( 267 billion tones reserves) .
• What is NVVN? Ans) NVVN is the power trading arm of NTPC.
• What are "regional Postage Stamps" and "Point of Connection"? Ans) they are CERC mechanisms for open access.
• How meuch electricty is produced in India in a month? Ans) around 80 billion units.
• What are 3 methods of PoC ( point of connection) type transmission pricing? Ans) Marginal participation, Avg participation and Zone to zone. 
• How much natural gas India produces? Ans) About 40 billion cubic meters (BCM). about 15 bcm is imported in a year.
• How much MNRE spends in year ? Ans ) Rs 13 Billion
• What are direct tax benefits for renewable? Ans) Under section 80-IA tax holiday , Surcharge reduction of corporate tax.
• What are Indirect Tax benefits ? Ans) reduced customs duty and excise duty.
• Who supplies 1.5 MW gearless Wind Energy converters PM generator? Ans ) ReGen. ( 85 m tall V70, V77 models manufactured at Tada, AP)

Some advancements in Power Sector

• Flexisheet solar panels have come. up. M/S Power Film of Iowa is one such manufacturer. Imagine the immense possibilities !
• We need to help the coal linkages and CIL production to keep running thermal power plants in India. Renewables have capacity contribution of 10% but generation contribution of just 3%. ( capacity utlisation only 30 %).
• Gujrat has the pride of India's largest IPP: Torrent. already generating 600 MW , some 1000 MW works are in pipeline.
• Reliance(Sasan), JSW ( Ratnagiri) and GMR(Orissa) are upcoming UMPPs.
• Other than NTPC and NHPC central sector power producers  are: NPC, Neyveli, DVC, BBMB,NEEPCO

Power Tariff in India

Over the period, tariff structure in India has undergone lots of changes.

Some samples:-

APSEB tariff

Domestic tariff ( BMC)

These days all bulk consumers file tariff petritions with SERC or CERC.

NTPC plants in India

Himachal ( Koldam Hydel), Haryana ( Faridabad gas, Badarpur ), UP ( Dadri Coal , NCTPP, Unchahar, Tanda, Singruali, Rihand), Rajasthan ( Anta), Gujarat ( Kawas Gas, Gandhar), MP ( Auraiya, Vindhyanchal ), Bihar ( Kahalgaon, Barh ), Chhatisgarh ( Korba, Sipat), WB( Farakka, Durgapur), Odisha ( Talcher, Rourkela, Bhilai), Andhra Pradesh ( Simhadri , Ramagundam) , Kerala ( Kayamkulam).

Some facts about power sector tagets in India

In a five year plant India targets to add about 40,000 MW.
'Power to all ' target is deadlined for 2012.
Intergrid capacity planned by 2012 is 30,000 MW.
Peaking shortage is estimated to be 11 %.
PLF is estimated to be 72 %
From 1700 MW in 1947, power sector has come up to 130,000 MW today.
Still 80 million rural households are in dark.
Till Aug 06, 44% of rural India had electricity. ( out of 14 Crore households, 6 Crore were electrified).
Cogeneration potential of sugar Industry is estimated to be 5000 MW ( tapped at present: 850 MW).

Thoughts on Electricity Tariff

Industrial , Domestic and Agriculture. Which sector to be billed dearest? World over, domestic tariffs have been highest and Industrial tariffs are lowset. Moreover, Tariff is different for Paek, Normal and Off-peak period.
We know that scenario in India is different.

An interesting fact about agriculture load is that therre are about 15 million pumpsets and they consume 30 billion kwh in a year (most of which is unmetered).

About Nuclear Power

It is said that one kilo of uranium = 25000 kg of coal.
There are bout 15 reactors installed in India.( mostly PHWR)
Major NPP are in Trombay, Kaiga, Kota, Narora, Kakrapar and Kalapakkam ( It has FBTR).
NPC is watched by AERB.
AEC governs DAE.
DAE has 4 parts:- R&D ( BARC Trombay, IGCAR Kalapakkam, CAT, Indore, VECC Kolkata,AMD)., Public Sector( NPCIL,ECIL,IRAL,UCil), Industrial Sector ( HWB,MUmbai,NFC Hyderabad,RAPTB Mumbai) and Servicing ( PS Directorate,CS Group, AMDir, GSO).
In addition to above there are many totally funded organisatios:-
TIFR,Tata Memorial Centre, Saha Inst of Nuc Physics Bhuvaneswar, Mehta research Inst of Maths Allahabad, Inst of Math Sciences Chennai, Atomic En Education Society, National Board of Higher Maths, Mumbai)
Kakrapar near Surat) was commissioned in 1992 . Has had some accidents in past.

Rural electrification ( as per 1991 census )

STATE No of Villages (Villages Electrified )

Arunachal 3600 ( 22000 )
Assam 25000 (20000 )
Bihar 70000 (50000 )
J&K 6500 (6400 )
MP 72000 (70000 )
Manipur 2200 (2000 )
Meghalaya 5500 (2500 )
Mizoram 700 (700 )
Odisha 50000 (35000 )
Rajasthan 38000 (35000 )
Tripura 900 (810 )
UP 1,15,000 (90,000 )
WB 38000 (30000 )

This means that out of total about 6 Lakh villages , 95 % are electrified.

A note on Energy Crisis

• Till 1960's coal was major contributor towards power, By 1970, Oil overtook coal. Production of crude oil rose from 1503 mT ( 1965) to 2850 mT ( 1973) . Then Arab embargo in 1973 Western multinatonal oil companies promoted a wasteful energy consumption pattern for sake of higher profits.
  World's known oil reserves of 700 billion barrel wont last more than 2030 . The developing countries pay an import bill of $150 billion.
  Known reserves of coal are 650 billion mT ( =3100 billion barrels of oil ).
  Known reserves of natural gas are 500 billion barrel. ( 72 % of proven oil reserves and 15 % of proven coal reserves ).
  Oil Shale is another energy resource, but not commercially exploited.
  Forests in developing countries are being consumed @ 1.3 % of total forest area of 15 million hectares a year.
  Dung being burnt annually is = 2 million tons of nitrogen and phosphorus.


• 1% saving in T&D loss is = 1000 MW capacity added.


• 80% of the power capacity is with states.


• By the inputs needed to produce 1 MW, it is possible to conserve 3 MW power.

Time Line of Power Sector Reforms in India

1991 Generation privatised.
1992 Electricity Regulatory Commission ( ERC) Act enacted.
1994 Accelerated Power Development Program launched.
1996 National Electricity Policy and National Tariff policy notified.
1998 Electricty Act , 1998 enacted.
1999 NTPC Tripartite Agreement to securitise SEB dues.
2000 Availability based tariff announced , APDRP launched.
2001 Electricity Act 2001 passed.
2003 New Electricity Act 2003, enacted.
2004 Multi year tariff announced.
2005 National Electricity Policy and National Tariff policy announced.
2006 Ultra Mega Power Projects launched.

Some more rapid fire

Q) This $3-billion, 2000 MW power plant , idle since 2001, was given life by NTPC in the name of Ratnagiri Power in 2008 . It fires Qatar LNG from Petronet . Name it.
Ans ) Dabhol.
Q) Who has promoted the 4000 MW Mundhra Power Project ( this is another UMPP, concieved after Sasan in MP) ?
Ans) Tata Power.

Q) What are Mahanadi, Magadh, Gevra, Dipka and Amrapali ?

Ans) Coalfields of Coal India Ltd.

Q) What are Kawas and Gandhar ?

Ans) NTPC projects.

Q) Where are Naying and Ketehr Hydel projects?

Ans) In Arunachal and Himachal respectively.
Q) Who are top 5 countries to use Nuclear Power for Electricity?

Ans) France ( 80%), Lithuania ( 70%), Slovakia ( 55%), Belgium ( 55%), Ukraine (50%).

Q) How much is energy growth rate in India?

Ans) 1.5 % p.a.

Q) Formed in 1975, this Rs 6000 Crore equity organisation earns a profit of 400 Crore produces 35 billion units of electricity employing 2000 people.Name the organisation.

Ans ) NTPC

Was AP able to turnaround in 2008?

AP transco claimed in 1998 that it has drastically reduced its AT&C losses ( from 37% in 1999-2000 to 15.8 % in 2005-06). demand of 12000 MW. Yet to analyse the situation today.

Other than Andhra Pradesh, Chhattisgarh, Himachal , Karnataka and Orissa have signifacntly reduced their AT&C losses.

Almost all states have unbundled utilities.