6Consumer Expectations Reliable & Quality PowerFaster Fault RemovalConsumer RelationshipEasy Mechanism of Attribute ChangeQuick Grievance RedressalCorrect BillingPaymentsConvenienceEasy New ConnectionTransparent MetersReadingWe Interact, We Listen, We Learn, We Act….
7SHORTAGE / ROSTERING (IN MW) SHORTAGE / ROSTERING (IN MW)Unrestricted DrawlScheduleRosteringRosteringOverdrawl7891011118192021Gross ShortageGross Shortage
8POWER CUT Date: 06-04-06 & 07-04-06 Power Cut Unrestricted Demand Demand Met(Total Availability)Hydro Gen.Net Import from GridTime in Hrs.
9KING COAL ! Reserves Proven 91 billion Tons Indicated 116 billion Tons Inferred 37 billion TonsTOTAL 245 billion TonsCoal reserves: > 250 years at present levels of consumptionConcentrated in Eastern India
10CAPACITY ADDITION DURING XIITH PLAN (2012 - 2017) TOTALCAPACITYADDITIONPLANNED(MW)THERMALHYDRONUCLEARXIITH82200402003000012000
11Coal Units in 12th Plan It is estimated to commission 12 Nos. units of 660MW (XIIth Plan)31 Nos. units of 800MW (XIIth Plan)
12UMPP on Imported CoalPPP 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 2012Problem due to increase in cost of Imported Coal.
13Hydro-Electricity Inferred potential > 120 GW Installed capacity 30 GWMost big projects are in North-Eastern states of Arunachal Pradesh, Sikkim, Uttaranchal and J&KProblems of rehabilitation and resettlement with large projectsEnvironmental issuesWater sharing agreements with neighborsNational Hydro Power Corporation, Government of India
18Impact of Enabling Environment 30 number of Case-1 and Case-2 bids have been concludedPPA’s have been executed for an aggregate capacity of 41,059 MW including Ultra Mega Power ProjectsCase 1- 14,819 MWCase 2- 10,240 MWUMPP – 16,000 MWHowever, 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.
19What are the Challenges Tariff Adjustment – A Necessary Evil?What Needs to be DoneWhy It Needs to be DoneWhat are the ChallengesOne Time Tariff HikeTariff hikes critical to avoid contagion – risk of loan defaults, worsening of power deficit etcHigher tariffs for existing Case I/II PPAs may still be cheaper than tariffs discovered in a fresh bid processWhy should Discoms pay for poor fuel risk assessment by IPPsHow to identify which projects need bailout – even sound projects would want a tariff hikeOpposition from losing bidders in a projectWould tantamount to favoring the private sector – politically sensitiveComprehensive Tariff PolicyExisting tariff policies, although sound, have not accounted for uncertainties such as short supply by Coal India or changes in international regulationsAn “all-weather” tariff policy critical to attract long term investor interest in power generationSource: IDFC Presentation on Power, March 2012
20Coal 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.
22Summary of Mercados Report on Feasibility of Large Scale Coal Imports DescriptionTotal Domestic Thermal Coal Requirement (MT)526584634701839Total Coal Supply including from Captive Blocks (MT)387422457492579Total Coal Shortage (MT)139161176209260Key AssumptionsCoal 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 byThe 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.
23As 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.
24Coal Issues Being Faced by Power Producers in the Country
25Today the major challenge before the power developer is to arrange adequate quantity and appropriately priced fuel for power generation
26Shortage of Domestic Coal – Current Situation FSAs for 305 MT have been signed for ~ 68,000 MW capacity commissioned prior to 31 March 2009A total capacity of 25,500 MW expected to be commissioned after March 2009 and before March 2012 have LOAs executed but are pending FSAs68,000 MW11,500 MW14,000 MWTOTAL93,000 MW411 MTDeficit of 64 MT coal due to which 22,000 MW capacity is not operating at optimal capacityShortage 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.
27Shortage 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 MTPlants where LOA has been issued but no construction activities initiated = 31,000 MW requiring 144 MTRequirement of linkage coal by end of 12th Plan period = 722 MTLooking 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 2017As 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
28Reasons for the Shortage (1/4) Unprecedented growth in Private Sector generation capacity additionDelays in Environmental ClearancesStagnant Production by Coal India
29Reasons for the Shortage (2/4) Unprecedented growth in Private Sector generation capacity additionOriginal 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 CommissionOut of ~ 54,300 MW capacity commissioned during XIth Plan till , private sector contribution has been a massive 28,280 MWIncreasing contribution of private sector in the total capacity additionM WSource: CEA
30Reasons for the Shortage (3/4) Environmental ClearancesCritical 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 productionTotal coal bearing area in India (sq km)17,300Total no. of coal blocks in India602No. of blocks identified in No-Go203Spread over in area (sq km)3,039Annual Production Potential (MT)660
31Reasons for the Shortage (4/4) Stagnant Production by Coal IndiaCIL 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.
32Logistical Issues Is Imported Coal a Viable Option? (1/4) Energy SecurityResource Nationalization – Indonesia, Australia, South AfricaForex Outgo – Coal Import Bill could touch Rs 150,000 CrPrice Volatility – Global Coal MarketsTechnical Limitations – Equipment designRestrictions on export,additional customsand duties etcAlmost 1/3rd of current crude import billMost plants can take up to 28% imported coal maxDistribution utilities to get exposed to fluctuating price risksLogistical IssuesPort-rail connectivity is a serious constraint in coal evacuation from ports
34Is Imported Coal a Viable Option? (2/4) Increasing Coal Prices due to Resource NationalismIndonesia 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 dealsAustralia 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 $50 million.Forex OutgoCoal import bill for FY12 (uptil Oct 2011) was ~ Rs 40,000 Crores, almost 40% more than the imports during the same period of the previous fiscal and almost 1/3rd of the current crude oil import bill. Unless domestic coal production is augmented, the coal import bill could rise to Rs 150,000 Crores
35Is Imported Coal a Viable Option? (3/4) Price VolatilityVolatility in internationally traded coal prices has increased significantly since 2008 as compared to and recent coal price index movements have been highly volatile on a month to month basis.US$/T
36Is Imported Coal a Viable Option? (4/4) Logistical ConstraintsPort-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 portsInland 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 BlendingWhile 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.
37Other 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 NCDPNCDP mandated FSA for PowerValid for 20 years from Apr 09 OR life of the facility, whichever earlierProvision for review of terms of FSA every 5 yearsACQ level typically 90%Penalties in case of shortfall85-90% - 10% penalty80-85% - 20% penalty<80% - 40% penaltyCIL Proposed FSA for PowerValid for period of 5 years from date of executionProvision for review after 3 years of completionACQ levels sought to be set at 50%<50% - 10% penaltyImpact of the above documentsComplete uncertainties regarding fuel supply – projects will not be bankableProjects under competitive bidding will not know on what basis to bid for fuel costVery serious cost push for retail tariffTechnical limitations to designing boilers which can run efficiently with such varied and uncertain coal parameters
38Suggested Measures to Increase Domestic Coal for 11th Plan Projects Divert E-auction coal to supply under FSAs/LOAsCoal India sold 45 MT under e-auction route in , just over 10% of its total productionDiversion 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 commissionedA 10% reduction in normative quantities under FSA for projects already commissioned before 31st March 2009 can add ~ 30 MT of coal for supplies under linkagesAbove 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.
39Suggested Measures to Increase Domestic Coal for 12th Plan Projects Increasing Coal India’s production outputAdopting MDO (Mine Developer and Operator) systemIntroducing Competition in Coal SectorOther related sectors such as power generation, oil & gas etc have benefited from an increase in competition through private sector participation.Accelerating Captive Coal Block DevelopmentIncentivize surplus coal production from captive mines through appropriate pricing clarityExpedite e-auctioning of coal blocks in a manner to ensure a level playing field while minimizing impact on tariffsReserving coal blocks for the regulated sectorsEnvironmental ClearancesExpedite E&F clearances for coal bearing areas by cutting down procedural delays while keeping safeguards intactAllow 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 Sector12th Plan coal linkage policy should give weightage to best performing projects , irrespective of their belonging to Central, State or Private sector.
40ConclusionTo 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
42ELECTRIC POWER REQUIREMENTS Required for 8% economic growth by 2015:Installed Capacity 250 GWGeneration billion kWhPer Capita Consumption 1000 kWh
43India’s Future GrowthIndia needs sustained economic growth > 8% to radically improve its Human Devp IndexGrowth in last few years ~ 5%-7%Growth hampered by infrastructure: electric powerPeak shortfallAverage shortfallHigh T&D Losses:Unscheduled black-outs, especially in rural areasSupply to agriculture sector not metered and almost free
44GROWTH AREASPresent growth is skills or resource driven (exports: software, gems and jewels, garment manufacture)Future Growth will have to be on value addition & engineeringRural 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
45Elasticity and Electric Power Needs Target economic growth ~ 8%Elasticity of electricity with GDP stabilizing at ~ 1.2Implications for future electric power requirements by 2015:Capacity additionInvestmentsFuel mixPricing and PoliciesT&D reforms
46The Task Ahead Need To Add : 13.5 GW per annum 135 GW in ten years13.5 GW per annumOne Power Plant (1.1 GW)/mthMaximum added till now is 4,600 MW (One in four months)( China adds one per week !! )
53Hydro-Electricity Inferred potential > 120 GW Installed capacity 30 GWMost big projects are in North-Eastern states of Arunachal Pradesh, Sikkim, Uttaranchal and J&KProblems of rehabilitation and resettlement with large projectsEnvironmental issuesWater sharing agreements with neighborsNational Hydro Power Corporation, Government of India
54STATUS OF HYDRO POWER DEVELOPMENT FOR STATES HAVING POTENTIAL MORE THAN 5000 MW
55STATUS OF HYDRO POTENTIAL DEVELOPMENT IN ARUNACHAL PRADESH (ALL FIG STATUS OF HYDRO POTENTIAL DEVELOPMENT IN ARUNACHAL PRADESH (ALL FIG. IN MW)
56Biomass India predominantly agricultural country. Annual production of agro-forest and processing residues: 350 million tonsPower generation potential > 22,000 MWAdvantages:Decentralized generation: close to rural load centers.Technology reasonably well developedEnvironmentally friendly: No net CO2 emissionsFeedstockExamplesPotentialInstalledAgro-forest residuesWood chips, mulberry, coconut shells17,000 MW50 MWProcessing residuesRice husk, sugarcane bagasse5,000 MW1000 MW
57GENERATE CHEAPER, EFFICIENT AND RELIABLE POWER THROUGH SUSTAINABLE SOLUTIONGENERATE CHEAPER, EFFICIENT AND RELIABLE POWER THROUGHCO-GENERATION
58GLOBAL SCENARIOBIOMASS constitutes around 14% of the world energy and 38% of the energy consumed by the developing countriesBiomass conversion technologies for commercial energy production have attracted attention the world over in recent times especially on account of rapid rise in fossil fuel pricesAbout 10000mw of power generation capacity has been installed in USA and EuropeSporadic efforts in other countries including Phillippines, Thailand, Canada and China have been made.Multifuel cogeneration plants of higher capacities are established.
59Wind EnergyWorld 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 1990sIndia ranks 5th in the worldPresent installed capacity ~ 3000 MWSite selection issues:More from fiscal benefits than from powerMany plants not operatingLow average load factor~13%Global Wind Energy Council
65Nation 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 MWHeat WaveWay Forward Policy & Regulatory IssuesFuel ShortageSubsequent graphs show power cuts even at night
66Consumer Expectations Reliable & Quality PowerFaster Fault RemovalConsumer RelationshipEasy Mechanism of Attribute ChangeQuick Grievance RedressalCorrect BillingPaymentsConvenienceEasy New ConnectionTransparent MetersReadingWe Interact, We Listen, We Learn, We Act….
67Delhi Model Delhi has been divided into three distribution Companies BSES RajdhaniBSES YamunaNDPLDelhi has been reduce their AT&C lossesEstablishment of separate courts for ElectricitySpecial Powers to Distribution officersUse of Technology for services.
68FRANCHISEE MODELNumber of cities are being offered on Input based Franchiee . Bhiwandi is good exampleAgra has been given to Torrent. Improvement is already noticed.Urban Cities are of interest to many players, but what about Rural AreasUttarakhand had earlier handed over the Bill Reading , Bill Distribution , minor maintenance to Women Self Help Groups which improved the services in the rural areas.
80Clearances and Permissions Extremely Time ConsumingForest Clearance Concept of No/No GoForest Rights ActSecurity IssuesSubsequent Photographs show the security issues in one of the mines.Matching of Development of Coal Mine with Power Plant.
90Clearances and Permissions Extremely Time ConsumingForest Clearance Concept of No/No GoForest Rights ActSecurity IssuesSubsequent Photographs show the security issues in one of the mines.Matching of Development of Coal Mine with Power Plant.