1. 2nd Coal Conference
By: B.M.VERMA Advisor- Essar Power (M.P.) Limited Ex- Chairman Jharkhand State Electricity Board Ex- Chairman & Managing Director Uttarakhand Power Corporation Limited Contact: /

5. DEMAND
AND SUPPLY

6. Consumer Expectations
Reliable & Quality Power
Faster Fault Removal
Consumer Relationship
Easy Mechanism of Attribute Change
Quick Grievance Redressal
Correct Billing
Payments
Convenience
Easy New Connection
Transparent Meters
Reading
We Interact, We Listen, We Learn, We Act….

7. SHORTAGE / ROSTERING (IN MW)
SHORTAGE / ROSTERING (IN MW)
Unrestricted Drawl
Schedule
Rostering
Rostering
Overdrawl 7 8 9 10 11 1 18 19 20 21
Gross Shortage
Gross Shortage

8. POWER CUT Date: 06-04-06 & 07-04-06 Power Cut Unrestricted Demand
Demand Met
(Total Availability)
Hydro Gen.
Net Import from Grid
Time in Hrs.

9. KING COAL ! Reserves Proven 91 billion Tons Indicated 116 billion Tons
Inferred 37 billion Tons
TOTAL 245 billion Tons
Coal reserves: > 250 years at present levels of consumption
Concentrated in Eastern India

10. CAPACITY ADDITION DURING XIITH PLAN (2012 - 2017)
TOTAL
CAPACITY
ADDITION
PLANNED
(MW)
THERMAL
HYDRO
NUCLEAR
XIITH
82200
40200
30000
12000

11. Coal Units in 12th Plan It is estimated to commission
12 Nos. units of 660MW (XIIth Plan)
31 Nos. units of 800MW (XIIth Plan)

12. UMPP on Imported Coal
PPP PROJECTS:
Ultra Mega Power Projects: Three Ultra Mega Power Projects awarded through tariff based bidding only Mundra is progressing fast
–Project: 4000 MW Power Project in Mundra, Gujarat
–Cost: USD4 billion
–Status: 1st. Unit Commissioned in February 2012
Problem due to increase in cost of Imported Coal.

13. Hydro-Electricity Inferred potential > 120 GW
Installed capacity 30 GW
Most big projects are in North-Eastern states of Arunachal Pradesh, Sikkim, Uttaranchal and J&K
Problems of rehabilitation and resettlement with large projects
Environmental issues
Water sharing agreements with neighbors
National Hydro Power Corporation, Government of India

15. Other OPTIONS

16. Indian power sector is passing through a very critical phase .

17. Capacity Addition Scenario

18. Impact of Enabling Environment
30 number of Case-1 and Case-2 bids have been concluded
PPA’s have been executed for an aggregate capacity of 41,059 MW including Ultra Mega Power Projects
Case 1- 14,819 MW
Case 2- 10,240 MW
UMPP – 16,000 MW
However, conditions and premises under which the bidding documents were prepared and under which the bids were submitted have changed drastically over the last 5-6 years, necessitating a relook.

19. What are the Challenges
Tariff Adjustment – A Necessary Evil?
What Needs to be Done
Why It Needs to be Done
What are the Challenges
One Time Tariff Hike
Tariff hikes critical to avoid contagion – risk of loan defaults, worsening of power deficit etc
Higher tariffs for existing Case I/II PPAs may still be cheaper than tariffs discovered in a fresh bid process
Why should Discoms pay for poor fuel risk assessment by IPPs
How to identify which projects need bailout – even sound projects would want a tariff hike
Opposition from losing bidders in a project
Would tantamount to favoring the private sector – politically sensitive
Comprehensive Tariff Policy
Existing tariff policies, although sound, have not accounted for uncertainties such as short supply by Coal India or changes in international regulations
An “all-weather” tariff policy critical to attract long term investor interest in power generation
Source: IDFC Presentation on Power, March 2012

20. Coal Balance for the XIIth Plan
In order to meet this shortage of 238 MT for domestic coal based plants, the Working Group on Power for 12th Plan estimates an import requirement of 159 MT after adjusting for GCV.
An additional 54 MT is likely to be imported for plants based on imported coal, thus bringing the total import requirement to 213 MT.

22. Summary of Mercados Report on Feasibility of Large Scale Coal Imports
Description
Total Domestic Thermal Coal Requirement (MT)
526
584
634
701
839
Total Coal Supply including from Captive Blocks (MT)
387
422
457
492
579
Total Coal Shortage (MT)
139
161
176
209
260
Key Assumptions
Coal requirement of existing linkage based plants (99,436 MW as of Jan CV of 3000 kcal/kg is 487 MT. Captive mine linked projects (5800 MW) is 28 MT, thus total of 515 MT. Plant by plant analysis performed to estimate future requirements.
Linkage coal supply estimates by based on 90% of ACQ for plants commissioned before Mar 2009 and 80% of ACQ for plants commissioned after Mar 2009 (based on Prime Minister/President directive)
However, the domestic coal shortfall of 260 MT cannot be directly met by imports due to technical constraints on blending of imported coal.
By considering average blending limit of 15% for existing plants and 30% for upcoming plants, imported coal requirement works out to be 111 MT (including the demand for imported coal based projects). This indicates ~26,000 MW coal based capacity is expected to remain stranded by
The XII Plan Working Group Report’ import estimation of 213 MT does not seem practically possible under current blending constraints. Nevertheless, if such a scenario arises where the country needs to import ~213 MT coal, capacity constraints in inland transport infrastructure would not permit this to happen.

23. As power, coal and gas are regulated sectors the government has to make the power sector in sync with the ground realities of fuel availability and its pricing and bring about necessary measures to improve the financial condition of the distribution utilities so that they have the ability to procure power for the end consumers.

24. Coal Issues Being Faced by Power Producers in the Country

25. Today the major challenge before the power developer is to arrange adequate quantity and appropriately priced fuel for power generation

26. Shortage of Domestic Coal – Current Situation
FSAs for 305 MT have been signed for ~ 68,000 MW capacity commissioned prior to 31 March 2009
A total capacity of 25,500 MW expected to be commissioned after March 2009 and before March 2012 have LOAs executed but are pending FSAs
68,000 MW
11,500 MW
14,000 MW
TOTAL
93,000 MW
411 MT
Deficit of 64 MT coal due to which 22,000 MW capacity is not operating at optimal capacity
Shortage of domestic coal has led to unwillingness of CIL to provide firm commitment for supply of 100% of normative requirements (as mandated under NCDP). Thus 33 thermal plants commissioned between FY09 and FY10 do not have FSA signed.

27. Shortage of Domestic Coal – XIIth Plan
Linkage coal based plants where activities have been initiated and likely to be commissioned during 12th Plan period = 40,000 MW requiring 167 MT
Plants where LOA has been issued but no construction activities initiated = 31,000 MW requiring 144 MT
Requirement of linkage coal by end of 12th Plan period = 722 MT
Looking at the fact that 83% of the 12th Plan capacity addition is based on coal, it is estimated that the total coal deficit will be 238 MT by the end of 2017
As per R.K. Pachauri (Director General, TERI), India will be importing 1400 MT of coal and 750 MT of oil by 2030, which will cost the nation 20% of the GDP

28. Reasons for the Shortage (1/4)
Unprecedented growth in Private Sector generation capacity addition
Delays in Environmental Clearances
Stagnant Production by Coal India

29. Reasons for the Shortage (2/4)
Unprecedented growth in Private Sector generation capacity addition
Original overall capacity addition target was 78,700 MW out of which private sector target was 15,043.
Private sector target was revised to 19,800 MW as per Mid Term Appraisal (MTA) of Planning Commission
Out of ~ 54,300 MW capacity commissioned during XIth Plan till , private sector contribution has been a massive 28,280 MW
Increasing contribution of private sector in the total capacity addition
M W
Source: CEA

30. Reasons for the Shortage (3/4)
Environmental Clearances
Critical coal bearing areas stuck under MoEF notification on Jan 2010 dealing with Comprehensive Environment Pollution Index (CEPI) led to critical coal bearing areas stuck. Out of 43 areas with a CEPI score of more than 70, seven coalfields – Chandrapur, Korba, Dhanbad, Talcher, Singrauli, IB Valley and Asansol were impacted and had a moratorium on mining placed on them.
MoEF classified some coal mining areas as ‘No-go’ based on their location with respect to dense forest areas. 203 coal blocks were identified as No-go areas thus having a serious impact on coal production
Total coal bearing area in India (sq km)
17,300
Total no. of coal blocks in India
602
No. of blocks identified in No-Go
203
Spread over in area (sq km)
3,039
Annual Production Potential (MT)
660

31. Reasons for the Shortage (4/4)
Stagnant Production by Coal India
CIL production has remained static ~ 535 MT in last two years.
Monopolistic market design and lack of competition has kept productivity and efficiency much below global norms.
Dominance of open cast mining due to short term and cost benefits – deeper coal reserves remain inaccessible.

32. Logistical Issues Is Imported Coal a Viable Option? (1/4)
Energy Security
Resource Nationalization – Indonesia, Australia, South Africa
Forex Outgo – Coal Import Bill could touch Rs 150,000 Cr
Price Volatility – Global Coal Markets
Technical Limitations – Equipment design
Restrictions on export,
additional customs
and duties etc
Almost 1/3rd of current crude import bill
Most plants can take up to 28% imported coal max
Distribution utilities to get exposed to fluctuating price risks
Logistical Issues
Port-rail connectivity is a serious constraint in coal evacuation from ports

34. Is Imported Coal a Viable Option? (2/4)
Increasing Coal Prices due to Resource Nationalism
Indonesia introduced regulations on Price Fixing of Coal and Minerals Selling Price in 2010, according to which all coal mining licence holders are obliged to sell coal at a rate higher than a determined reference price. Indonesia’s Mining Law additionally imposed a Domestic Market Obligation under which coal mining companies are required to allocate coal as per Government decree for the domestic market prior to any export deals
Australia has imposed a fixed carbon tax of A$23 a tonne from July 2012 onwards. A Mineral Resources and Rent Tax (MRRT) has also been made applicable to iron ore and coal mining business whose annual profits exceed $50 million.
Forex Outgo
Coal import bill for FY12 (uptil Oct 2011) was ~ Rs 40,000 Crores, almost 40% more than the imports during the same period of the previous fiscal and almost 1/3rd of the current crude oil import bill. Unless domestic coal production is augmented, the coal import bill could rise to Rs 150,000 Crores

35. Is Imported Coal a Viable Option? (3/4)
Price Volatility
Volatility in internationally traded coal prices has increased significantly since 2008 as compared to and recent coal price index movements have been highly volatile on a month to month basis.
US$/T

36. Is Imported Coal a Viable Option? (4/4)
Logistical Constraints
Port-Rail Connectivity – railways account for the inland haulage of only 24% of port cargo (with large chunk linked to the major ports) indicating the weak rail connectivity to ports other than the major ports
Inland Rail Infrastructure – Transportation of imported coal to the consumption centers is a major road block. There are seven major trunk routes via which coal is transported in the country. These routes cater to more than 90% of the total coal requirement and are already operating at 100% capacity utilisation.
Technical Constraints in Blending
While domestic coal shortfall is expected to reach 260 MT by the end of the 12th Plan, technical constraints in blending will limit the use of imported coal to a maximum of 30% in plants set up on the assurance of domestic coal. Thus blending possibility will be restricted and there will be a risk of ~ 30,000 MW capacity getting stranded.

37. Other Issues related to Coal Shortage
Non Adherence to New Coal Distribution Policy (NCDP)
FSA documents as proposed by CIL is not in consonance with the NCDP
NCDP mandated FSA for Power
Valid for 20 years from Apr 09 OR life of the facility, whichever earlier
Provision for review of terms of FSA every 5 years
ACQ level typically 90%
Penalties in case of shortfall
85-90% - 10% penalty
80-85% - 20% penalty
<80% - 40% penalty
CIL Proposed FSA for Power
Valid for period of 5 years from date of execution
Provision for review after 3 years of completion
ACQ levels sought to be set at 50%
<50% - 10% penalty
Impact of the above documents
Complete uncertainties regarding fuel supply – projects will not be bankable
Projects under competitive bidding will not know on what basis to bid for fuel cost
Very serious cost push for retail tariff
Technical limitations to designing boilers which can run efficiently with such varied and uncertain coal parameters

38. Suggested Measures to Increase Domestic Coal for 11th Plan Projects
Divert E-auction coal to supply under FSAs/LOAs
Coal India sold 45 MT under e-auction route in , just over 10% of its total production
Diversion of 50% of E-auction coal could potentially add ~22 MT of coal to coal supplies under linkages (FSAs/LOAs)
Reduce normative quantity under FSAs for projects already commissioned
A 10% reduction in normative quantities under FSA for projects already commissioned before 31st March 2009 can add ~ 30 MT of coal for supplies under linkages
Above measures will increase coal supply under linkage by ~ 52 MT thus reducing the coal import requirement for the 11th Plan projects to ~ 12 MT. This will reduce the cost impact of imports as well as relieve the pressure of blending constraints.

39. Suggested Measures to Increase Domestic Coal for 12th Plan Projects
Increasing Coal India’s production output
Adopting MDO (Mine Developer and Operator) system
Introducing Competition in Coal Sector
Other related sectors such as power generation, oil & gas etc have benefited from an increase in competition through private sector participation.
Accelerating Captive Coal Block Development
Incentivize surplus coal production from captive mines through appropriate pricing clarity
Expedite e-auctioning of coal blocks in a manner to ensure a level playing field while minimizing impact on tariffs
Reserving coal blocks for the regulated sectors
Environmental Clearances
Expedite E&F clearances for coal bearing areas by cutting down procedural delays while keeping safeguards intact
Allow parallel processing of Forestry and Environmental clearances for both Coal block projects as well as end use projects such as power plants.
Creating Level Playing Field for Private Sector
12th Plan coal linkage policy should give weightage to best performing projects , irrespective of their belonging to Central, State or Private sector.

40. Conclusion
To conclude, generation capacity addition plans, currently on the anvil clearly point to a continued dominance of coal as a fuel source.
Growing demand – supply gap in the domestic coal sector; high price scenario, volatility and logistical challenges associated with the imported coal and consequent concerns on energy security, underscore the need for accelerated development of domestic coal resources.
Any delay in initiating steps for augmenting domestic coal production would jeopardize the capacity addition and adversely impact economic growth

41. Primary energy consumption per capita

42. ELECTRIC POWER REQUIREMENTS
Required for 8% economic growth by 2015:
Installed Capacity 250 GW
Generation billion kWh
Per Capita Consumption 1000 kWh

43. India’s Future Growth
India needs sustained economic growth > 8% to radically improve its Human Devp Index
Growth in last few years ~ 5%-7%
Growth hampered by infrastructure: electric power
Peak shortfall
Average shortfall
High T&D Losses:
Unscheduled black-outs, especially in rural areas
Supply to agriculture sector not metered and almost free

44. GROWTH AREAS
Present growth is skills or resource driven (exports: software, gems and jewels, garment manufacture)
Future Growth will have to be on value addition & engineering
Rural sector to play a major role (agricultural and dairy produce; minimizing wastage and improving efficiency)
Infrastructure building (roads, buildings, railroads etc.,)
Manufacturing The elasticity has to be greater than 1 for powering future growth

45. Elasticity and Electric Power Needs
Target economic growth ~ 8%
Elasticity of electricity with GDP stabilizing at ~ 1.2
Implications for future electric power requirements by 2015:
Capacity addition
Investments
Fuel mix
Pricing and Policies
T&D reforms

46. The Task Ahead Need To Add : 13.5 GW per annum
135 GW in ten years
13.5 GW per annum
One Power Plant (1.1 GW)/mth
Maximum added till now is 4,600 MW (One in four months)
( China adds one per week !! )

47. FUEL SUPPLY: OPTIONS FOR FUTURE
Coal
Conventional
Gasification
Natural Gas
Hydro
Nuclear
PHWR + FB + AHWR
PLWR
Wind
On-shore
Off-shore
Biomass
Solar
Photo voltaic
Concentrating Solar Power
Fuel
Present
In 2015
Coal
67,166 MW ?
Gas
11,840 MW
Hydro
30,135 MW
Nuclear
2,720 MW
Wind
2,488 MW
Biomass
1,000 MW
Solar -
TOTAL
115,035 MW
250,000 MW

48. ALL INDIA GENERATION CAPACITY (ALL FIG. IN MW)

49. Indian Energy Scenarios: 2015
Same Fuel Mix as now
Aggressive Nuclear Capacity Addition

50. Investment Opportunities
Coal Based 660/600 MW Sets
Jharkhand
Orissa
Chhattisgarh
Madhya Pradesh
All other states on linkage
Import Coal Based Power Station on the Coast Line

51. ULTRA MEGA POWER PROJECT

53. Hydro-Electricity Inferred potential > 120 GW
Installed capacity 30 GW
Most big projects are in North-Eastern states of Arunachal Pradesh, Sikkim, Uttaranchal and J&K
Problems of rehabilitation and resettlement with large projects
Environmental issues
Water sharing agreements with neighbors
National Hydro Power Corporation, Government of India

54. STATUS OF HYDRO POWER DEVELOPMENT FOR STATES HAVING POTENTIAL MORE THAN 5000 MW

55. STATUS OF HYDRO POTENTIAL DEVELOPMENT IN ARUNACHAL PRADESH (ALL FIG
STATUS OF HYDRO POTENTIAL DEVELOPMENT IN ARUNACHAL PRADESH (ALL FIG. IN MW)

56. Biomass India predominantly agricultural country.
Annual production of agro-forest and processing residues: 350 million tons
Power generation potential > 22,000 MW
Advantages:
Decentralized generation: close to rural load centers.
Technology reasonably well developed
Environmentally friendly: No net CO2 emissions
Feedstock
Examples
Potential
Installed
Agro-forest residues
Wood chips, mulberry, coconut shells
17,000 MW
50 MW
Processing residues
Rice husk, sugarcane bagasse
5,000 MW
1000 MW

57. GENERATE CHEAPER, EFFICIENT AND RELIABLE POWER THROUGH
SUSTAINABLE SOLUTION
GENERATE CHEAPER, EFFICIENT AND RELIABLE POWER THROUGH
CO-GENERATION

58. GLOBAL SCENARIO
BIOMASS constitutes around 14% of the world energy and 38% of the energy consumed by the developing countries
Biomass conversion technologies for commercial energy production have attracted attention the world over in recent times especially on account of rapid rise in fossil fuel prices
About 10000mw of power generation capacity has been installed in USA and Europe
Sporadic efforts in other countries including Phillippines, Thailand, Canada and China have been made.
Multifuel cogeneration plants of higher capacities are established.

59. Wind Energy
World Wind Installed Capacity (2005)
Gross potential : 45,000 MW (assuming 1% land availability in potential areas)
Technical potential : 13,000 MW (assuming 30% grid penetration in potential areas)
Rapid growth in installed capacity from 1990s
India ranks 5th in the world
Present installed capacity ~ 3000 MW
Site selection issues:
More from fiscal benefits than from power
Many plants not operating
Low average load factor~13%
Global Wind Energy Council

60. Transmission

61. Tramission lines in Private Sector
Number of Transmission lines are being offered to Private Sector.

62. Existing Transmission and Future Expansion (Ckt.km)
lines
E xis ting
(C kt.km)
Addition
Total
M arc h
765 kV
1704
5428
7132
HVDC 500 KV
5872
5206
11078
HVDC 200 KV
162 -
400 KV
75722
49278
125000
220 KV
114629
35371
150000
Total c km
198089
95283
293372

63. National Grid by 2012

64. Distribution

65. Nation without Electricity
The country is reeling under a severe power shortage that has forced people to suffer long power cuts as fuel scarcity has hit Generation and precarious health of utilities has Ravaged the finances and payment Schedules in the sector.
Deficit in North 3,000 MW
Heat Wave
Way Forward Policy & Regulatory Issues
Fuel Shortage
Subsequent graphs show power cuts even at night

66. Consumer Expectations
Reliable & Quality Power
Faster Fault Removal
Consumer Relationship
Easy Mechanism of Attribute Change
Quick Grievance Redressal
Correct Billing
Payments
Convenience
Easy New Connection
Transparent Meters
Reading
We Interact, We Listen, We Learn, We Act….

67. Delhi Model Delhi has been divided into three distribution Companies
BSES Rajdhani
BSES Yamuna
NDPL
Delhi has been reduce their AT&C losses
Establishment of separate courts for Electricity
Special Powers to Distribution officers
Use of Technology for services.

68. FRANCHISEE MODEL
Number of cities are being offered on Input based Franchiee . Bhiwandi is good example
Agra has been given to Torrent. Improvement is already noticed.
Urban Cities are of interest to many players, but what about Rural Areas
Uttarakhand had earlier handed over the Bill Reading , Bill Distribution , minor maintenance to Women Self Help Groups which improved the services in the rural areas.

69. AT & C Loss Reduction

70. ROSTERING

72. SHORTAGE / ROSTERING (IN MW)
SHORTAGE / ROSTERING (IN MW)
Unrestricted Drawl
Schedule
Rostering
Rostering
Overdrawl 7 8 9 10 11 1 18 19 20 21
Gross Shortage
Gross Shortage

73. POWER CUT Date: 06-04-06 & 07-04-06 Power Cut Unrestricted Demand
Demand Met
(Total Availability)
Hydro Gen.
Net Import from Grid
Time in Hrs.

76. Franchisee - Urban
Rural ?

79. Coal Mining

80. Clearances and Permissions
Extremely Time Consuming
Forest Clearance Concept of No/No Go
Forest Rights Act
Security Issues
Subsequent Photographs show the security issues in one of the mines.
Matching of Development of Coal Mine with Power Plant.

86. IN SHORT……………
NO POWER IS COSTLIER THAN
“NO POWER”

87. LET US JOIN TO KEEP THE BULB GLOWING

88. THANK YOU! This is not… THE END
It’s just a beginning of the NEW POWER ERA
THANK YOU!

90. Clearances and Permissions
Extremely Time Consuming
Forest Clearance Concept of No/No Go
Forest Rights Act
Security Issues
Subsequent Photographs show the security issues in one of the mines.
Matching of Development of Coal Mine with Power Plant.