1. Indian Heat Rate Alliance (IHRA) Working Groups Meeting August 12, 2014

2. Background

3. Savings Annual coal costs: Rs. 5 bn Annual GHG emission reduction: 3 mmt+ CO 2 e Sustained heat rate improvement 10 kcal/kWh at 145 GW coal generation capacity at a PLF of 70% 3 Heat Rate Business Case In 2011-12, CEA found an average 11.49% deviation between operating heat rate with designed heat rate (ranging largely from 2-20%). PAT regulations under NMEEE expects144 thermal power plants (97 are coal- fired) designated consumers to save 3.1 mtoe (2.9 mtoe from coal-fired plants) during 2012-15

4. 4 Barriers to Heat Rate Improvement Ecosystem Barriers No long term plan and absence of technology road-map Lack of financial incentives through policies and regulations to reduce fuel costs and CO 2 emissions Lack of awareness about off- the-shelf services & solutions Absence of competitively priced solutions adapted to Indian context and skilled service providers Lack of financing mechanisms for capital investments to improve plant efficiency Insignificant research, training and knowledge sharing framework Corporate Level Barriers Need for board level commitment for efficiency improvements Lack of dedicated outlays for efficiency improvements in annual O&M budgets Utilities irrespective of their size are not willing to afford costs and risks associated with solution development Plant Level Barriers Absence of knowledge, skill- sets and dedicated teams to analyze and interpret the performance gaps Need for guidelines and tools to address performance gaps Indian utilities are aware of heat rate opportunities and are now beginning to appreciate the role of solution developers, service providers and skill/knowledge building

5. 5 Approaches to Address Barriers Pursue policy prescriptions and regulatory directives to incentivize efficiency improvements Facilitate market driven collaborative R&D to adapt & develop cost effective Heat Rate solutions Foster partnerships and establish an operative network between stakeholders Enlarge the support services market to meet the demand of an expanding sector through non-OEMs By establishing an industry organization to address the above barriers on an exclusive basis, a platform can be provided for a collective voice to all stakeholders

6. Indian Heat Rate Alliance

7. Encourage the idea and cause of improved heat rate of thermal power plants on a continual basis & help in achieving heat rate at par with global standards Offer an autonomous, independent platform for reflecting on policies, regulations and salient topics concerning heat rate improvement in utilities Provide technical assistance to utilities for acquiring appropriate technologies and solutions for their problems through collaborative research & development Act as a clearing-house of information and data bank Facilitate technical and business partnerships between stakeholders Engender a services sector to support the utilities and encourage tie-ups between international companies and Indian entrepreneurs 7 Proposed Aims/Objectives of IHRA

8. 8 Stakeholder/Members Utilities Central utilities like NTPC, Damodar Valley Corporation (DVC), Neyveli Lignite Corporation and new entrants like National Hydro Power Corporation (NHPC) State utilities/ generation companies Independent Power Producers like Tata Power, Reliance Energy, Adani Power, Jindal Power, CESC Original Equipment Manufacturers Boiler-Turbine-Generator (BTG) manufacturers like BHEL, L&T Power, Toshiba-JSW Turbine & Generators, BGR Energy Systems, Thermax Babcock & Wilcox Energy Solutions, Ansaldo Caldaie Boilers India, Bharat Forge, Alstom, GE Power, Power Machines, China Power & Lighting and Doosan Power Systems India., Siemens Plant Auxiliaries (Balance of Plant) Service Providers Asset management service providers like SKF, Bentley, Emerson, Alstom, Black & Veatch, Lloyd Register Process monitoring, analytics & optimization providers like BHEL, Honeywell, Steag, Emerson, General Physics, Smart Signal, Kalki Tech (PRISM), ABB, Siemens Technology InnovatorsSpecialist Service Providers Research & Educational Institutions Specialized institutions like Central Power Research Institute Educational institutions like IITs, NITs, Indian Institute of Science, National Power Training Institute (NPTI) Financial Institutions Banks as State Bank of India, ICICI Bank NBFCs like Tata Capital CleanTech Public financial institutions like Power Finance Corporation, India Infrastructure Finance Corporation Limited, IFCI

9. 9 Utilties Knowledge on advanced technologies and management practices to improve heat rate to meet PAT targets through issues of guidelines & newsletters and organization of workshops & seminars High returns despite low investment through collaborative R&D Access to state-of-the-art research & training Access to competitively priced state-of-the-art services from the local market Improved organizational expertise and capabilities OEMs & Service Providers Expand business opportunities to benefit from growing heat rate improvement market; demonstrate, test and adapt new technologies & practices Ability to offer knowledge and technology driven cost competitive quality services Participate in institutional alliances with utilities, OEMs, academia and research to deliver cost effective solutions Opportunities for international service providers to forge alliances with domestic entrepreneurs Research & Education Institutions Expanded and real-life R&D platform Larger portfolio of technical training courses Improved organizational expertise and capabilities Financial Institutions Opportunities to design & test new financing mechanisms Larger business development opportunities in the Indian market Improved organizational expertise and capabilities Value Proposition for Members

10. Governing Board Executive Director Applied Research & Technology Council Program Manager Assistant Program Manager(s) Business Development Council Program Manager Assistant Program Manager(s) Learning by Sharing Council Program Manager Assistant Program Manager(s) Administration & Accounts Manager Accountant Mentor 10 Organization Structure

11. Applied Research & Technology Council Launch & manage Solution Development Program and Model Power Plant Program to facilitate applied research & demonstration Collaborative research to develop/adapt solutions Promote interactions with international research institutes Demonstrate services & solutions in Model Power Plant(s) Business Development Council Launch & manage Service Provider Development Program to expand Indian network Facilitate joint ventures between international service/ solution providers and Indian entrepreneurs Promote Indian service/solution start-ups Organize service/solution providers workshop & showcase events Provide technical consulting & representative services Learning by Sharing Council Launch manage a Learning by Sharing Program to create a common platform to facilitate sharing of best practices Conduct missions to best performing thermal power plants globally Organize training programs, focused workshops & webinars Develop online information bank Develop/update best practices manuals Publish quarterly news letter Organize annual Power Plant Conference 11 Activities of Councils 1 or 2 Working Groups under each Council will provide policy guidance and technical leadership to the IHRA and its members in the selection, design and conduct of heat rate improvement strategies and solutions

12. 12 Targetted IHRA Deliverables as on Dec 31, 2016 Applied Research & Technology Council Facilitate collaborative research on 2-3 priority solutions Showcase solutions & services in at least 1 Model Power Plant Business Development Council Facilitate at least 3 partnerships between international service/ solution providers and Indian entrepreneurs Showcase at least 2 Indian technology start- ups Organize 4 regional technology/ service providers showcase events Provide consulting services valuing at least Rs 50 lacs Learning by Sharing Council Conduct 4 visits to Best Operating Power Plants Organize 7 training programs, focussed workshops & webinars Updating at least 1 best practices manual and technical manual Conduct 2 Annual Power Plant Conferences Publish 8 quarterly newsletters

13. Solution Development Program A Unique Revenue Stream for IHRA

14. IHRA’s flagship program Implementation through collaborative R&D Focus on creation of IPR for wide-scale deployment & commercialization generating revenues for IHRA in the long term 14

15. 15 S.NoKey Potential Areas Potential Quantum kCals/KWh at each plant National Coal Savings ( in million tonnes) National CO 2 Savings ( in million metric tonnes) National Cost Savings (in Rs) (assuming Coal costs Rs 2000/Tonne) 1Dry Flue Gas401012.5Rs. 2000 2 Condenser & Cooling Tower 2056.25Rs. 1000 3Combustion102.53.17Rs. 500 National coal savings and CO 2 mitigation potential Showcase  The CO 2 mitigation can also be achieved by introduction of advanced technologies like  IGCC  Oxy fuel combustion  Carbon Sequestration

16. 1.High Loss category (40-80 kcal/kWh)  Condenser and Cooling Tower  Dry Flue Gas Loss  HP / IP Turbine 2.Medium Loss category (20-40 kcal/kWh)  RH Spray  Unburnt Carbon Loss  Unaccountable (LPT Efficiency, Hi Energy drain passing, Insulation loss, etc) 3.Low Loss category (<20 kcal/kWh)  MS & HRH Temperature deviations  Feed water Temperature deviations 16 Key areas of efficiency improvement and cost saving potential at power utilities Source: Efficiency Improvement at State Utilities – Challenges and Opportunities, CII Power Plant Summit, 2013

17. Technology Transfer, Adaption and Indigenization Identification and implementation of best practices. Reduction of air, steam and flue gas leakage. Optimization of combustion through understanding of coal quality and how it burns in the boiler, fine tuning operational parameters (air-to-fuel ratios), coal fineness, furnace cleanliness, etc. Use of low grade heat for coal drying. Co-firing of boilers with multiple fuels. Lowering of stack temperature. Enhancing fuel flexibility in Indian Boilers. New technology adaption in efficiency and performance improvements including carbon capture & sequestration O&M Practices & Technologies Optimization of processes using advanced computational tools. Conduct on-line, real time monitoring of performance. Standardization of performance metrics. Development of solutions for issues on seals on air heaters, condensers, boilers, tube components, etc. Use of variable speed motors, Use of flue gas conditioning heat exchangers. Implementation of intelligent soot blowing system. Upgrading turbines. Routine performance testing of critical equipment. Improved performance of condenser, cooling tower, boiler feed and CE pumps, FD&ID fans, ESP, etc. Proactive maintenance. Loading profile and impact on plant efficiency 17 Potential Priority Areas First solution with IHRA IPR to be developed by end 2016 and commercialized by 2020

18. 18 Aims of Working Groups Identify, prioritize and select operational and technological/ engineering solutions for development and implementation in select Indian utilities. Foster partnerships between utilities, service providers, OEMs and other stakeholders in the planning and implementation of utility solutions. Guide the design, development and pilot testing of the utility heat rate improvement measures, practices and technological solutions. Monitor and evaluate the impact of the pilot projects on the utility’s technical and financial performance. Authorize and certify the progress report on the impact of the operational and design solutions on the utility’s performance; disseminate widely the findings of the pilot projects, and Provide strategic guidance and direction to the IHRA and members of the utility solution project consortium (eg. Service providers, OEMs, Utilities, R&D labs, etc.) on issues related to licensing and ownership of the Intellectual Property Rights (IPR)

19. Model Power Plant Program Demonstrations and Skills

20. Efficiency interventions follow an one-off, unit by unit approach. –Lessons take time to disseminate across the sector and, –Inaccessible to plant and personnel due to diversity among utilities and the geographical expanse There is thus, a need for a common model demonstration unit located at a relatively easily accessible thermal power station with in-plant facilities for training, laboratory, communication and data-links as well as “on-line” demonstration of technologies. 20 Why Model Power Plants

21. Model Power Plants (MPP) –Monitoring & Diagnostic (M&D) Center at Philadelphia Electric Power Company (PEPCO) –Instrumentation and Controls (I&C) Center at TVA’s Kingston Plant, –Heat Rate Improvement Center at Potomac Electric Power Company 21 Functions of MPP –Venue for training and workshops –Showcase of innovative technologies and operational solutions; –Testing, standardization and certification of processes and products; –Site for market driven, collaborative R&D projects –Hardware/tool lending facilities EPRI Model

22. CEA estimated 490 thermal power plant units (as on Mar 31, 2012) –25 to 800 MW of capacity and have varied problems and solutions 46% of units producing 46% of national generation have 195-250 MW capacity 37% units producing only 15% of national generation have 25-150 MW capacity 17% of units producing 39% of national generation have a capacity of 500 MW or more 67.7% of the total operating coal based thermal units have exceeded their mid- life (> 15 years) while 46.2% have exceeded their operational life (> 25 years) 52.4% of the total capacity (MW) of coal based power has exceeded their mid- life (> 15 years) while 28.6% has exceeded the operational life (> 25 years) Utility members will be requested to offer and earmark representative units with capacities of 210 MW, 250 MW, 500 MW and 660 MW to serve as model power units 22 Profile of Power Plants in India

23. 23 Aims of Working Groups Identify, prioritize and select model power plants for heat rate technology and operational solutions demonstration. To assist in the program design and costing of the model power plant demonstration projects. Specifically, the WG will consult and deliberate on the following: –expectations from the proposed MPP unit as a site for pilots and for training & knowledge sharing –accrual of monetary benefits and resolution of IPR issues to the utility and its partners hosting the MPP. To advise on the methodology, criteria & number of selected stations and units. The Working Group will need to explore establishing multiple model units on the basis of capacity or choice of model units that have a functional focus similar to the approach followed in the US by EPRI. Discussions with utilities to secure buy-in for designating the identified units as MPPs; Selection of 3- 6 units based upon the agreed criteria Determination of broad budgetary requirements for designated MPPs and funding mechanisms Foster partnerships between utilities, service providers, OEMs, National Labs and other stakeholders in the design and conduct of market driven consortia R&D projects.. Guide the design, development and pilot testing of the utility heat rate improvement measures, practices and technological solutions. Monitor and evaluate the impact of the model power projects on the spread and dissemination of best practices in the country Provide strategic guidance and direction to the IHRA and members of the utility solution project consortium (eg. Service providers, OEMs, Utilities, R&D labs, etc.) on issues related to licensing and ownership of the Intellectual Property Rights (IPR)

24. Service Provider Development Program Wide-scaling Run & Repair Services

25. Potential –CEA estimates that “run-repair-replace’ for R&M/LE during 2012-22 will require investments of Rs. 555-855 bn –Compliance of Perform Achieve Trade Scheme Significant challenges –Non availability of competitively priced, modern, state of the art services and products services are available internationally usually through small and medium scale service providers at prices that are competitive in developed countries such service providers do not typically exist in India international service providers can be contracted by Indian utilities, the costs are exhorbitant and therefore not financially viable in the Indian context –BTG manufacturers/OEMs focus on on green-field capacity addition or replacements “Run and repair” market remains small with a huge un-estimated potential 25 Potential & Challenges

26. 26 Conclusions from Round-table for Service Providers and Original Equipment Manufacturers MSMEs provide a range of thermal efficiency related services in the developed markets. –Many MSMEs established by former employees. India has very few such service providers. They face significant barriers: Lack of recognition by utilities and misconstrued competition by OEMs Utility procurement practices that does not recognize start-ups/new enterprises or have entry barriers like financial creditworthiness and/or proven institutional track record Lack of dedicated budget lines in utilities for promotion of efficiency Expanding the pool of heat-rate service providers needs a nurturing eco-system –Encouraging former employees to turn entrepreneurs and establish enterprises –Facilitating partnerships or franchisee agreements between international service providers and Indian entrepreneurs –Creation of a platform that can assist service providers to network and market their skills and products

27. 27 In discussion with utilities, identify and prioritize solution areas for which service providers are immediately required Identify priority solutions areas for which service providers are not available in India but are available abroad Initiate discussions with 3-5 international service providers on their plans to establish a base in India. Foster partnerships between these international service providers and Indian entrepreneurs for establishing indigenous enterprises/franchisees Create awareness amongst utilities on availability of indigenous service providers and the need to develop procurement frameworks to contract them Guide IHRA to develop model/standard documents for procurement and contracting of various services Aims of Working Groups

28. Finance & Sustainability

29.  Membership fee  Seed money  Participation fees for training programs  Sponsorships for events  Management fee for collaborative/ consortia research,  Fees from consulting services, IPR and/or technology commercialization 29 Potential sources of revenue

30.  IHRA expected to break even in year 6  Activities of Learning by Sharing & Business Development Councils will start generating a surplus from year 1 itself  Risks: Low  Solutions developed by Applied Research & Technology Council expected to be commercialized with IHRA revenues from year 5  Risks: High  IHRA’s sustainability  Need for international collaboration and partnership for technology transfer  Capacity building for the IHRA team both in terms of technical and managerial capability through  Understanding the functioning & focus areas of EPRI, VGB, Jcoal & similar organizations internationally 30 Challenges & Support required for IHRA Needs gap funding of nearly Rs. 3 Crores in the first 5 years Will generate surplus of around Rs. 1 Crores in years 6-8

31. Thank You