Infraline Plus Nov2013

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Illustrative List of Clients

November 2013Volume 2 | Issue 7 | `100

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The ComPleTe eNergy SeCTor magazINe for PolICy aNd deCISIoN makerS

Africa is better source of coal than Indonesia and

Australia said Mr John Smelcer, Director, Webber

Wentzel

With new reforms & de-bottlenecking, transparency has

increased, says Satchidananda Rath, Director, Oil India Limited

India is our number one

market and we are very optimistic

about it, says Patrick Plas, Senior VP, Alstom

Water needs to be moved towards deficit areas - S K Jain, MD Ground Water & Mineral Investigation Centre

ON the MAt OVeR GAS

Government, RIL

NOTICE

sale of surplus coal to CIL

COAL AuCtION pOLICy tO puSh

Anne Mcentee, CeO, Renewable energy, Ge

Well make wind power predictable for the grid

Transmission Segment Distribution Segment1.InadequateTransmission

InfrastructureandNationalGridIntegration

1.PowerQuality,ReliabilityandAffordability

2.IndependentTransmissionRegulatorStatustoPowerSystemOperationCorporation(POSOCO)

2.DemarcatingPowerDistributionBusinessandRetailSupplyBusiness

3.PointofConnection(POC)MechanismandAncillaryServicesMarketinIndia

3.ElectricityDistributionFranchisee:IdealWaytoEnhancePrivateParticipationtowardsanefficientsystem

4.Growthin765kV,1200kVandHVDCTransmissionSysteminIndia

4.OpenAccessinDistributionFarfromReality

5.RoleofUnifiedRealTimeDynamicStateMeasurement(URTDSM)andDynamicCompensationinSystemOperations

5.StatusofIntraandInterStateOpenAccessandFormulationofNationalRegistryforOpenAccess

6.CompetitiveBiddingandPPPFrameworkinPowerTransmission

6.ViabilityGapFundinginPowerDistributionSegment

7.ProjectfinancingofEHVTransmissionProjectsandFinancingforNationalGrid,IPTCsandHCPTCs

7.TODTariffsandDemandSideManagementInitiativesinPowerDistributionSpace

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1Editors LetterAs the Centre and state governments of Delhi, Chhattisgarh, Madhya Pradesh, Rajasthan and Mizoram get into election mode, the trouble for the government from all fronts seems to be growing. First it was a spate of Controller and Auditor General (CAG) reports in telecom licence case and coal allocations, then came the damning directives from the Supreme Court in coal case and now it is the Reliance Industries and KG D-6 basin case where the Supreme Court has sent notice to the government. Corporate world too has been at the receiving end of this activisim for the past several months and its latest victim is Chairman of Aditya Birla Group, Kumar Manglam Birla. He has been named in a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI) which states that he influenced the governments decision to award a coal mine in Odisha in 2005 to his company Hindalco. According to CBI, Hindalco was not qualified to receive stake in the coal block. The fact that not only is the entire corporate world rallying behind Birla in this case but the Prime Minister himself has defended the allocation saying there was nothing wrong in his decision, shows the extent to which the investigating agencies have got it wrong and everybody is just trying to save their own skin at the cost of others. Read our detailed coverage of who says what in support of Birla group chief.

Our cover story focuses on the Apex Court notice to the government and Mukesh Ambanis Reliance Industries Ltd on a public interest litigation (PIL) seeking cancellation of contract for exploration of oil and gas in KG basins D-6 block. The bench, headed by Chief Justice P Sathasivam, had earlier issued notice to the Centre on a PIL filed by CPI MP Gurudas Dasgupta, asking the parties to submit their response within four weeks. Even as RIL braces for this new challenge, it created history by becoming the first private sector company to clock a turnover of Rs 1 lakh crore in just three months. We bring you a separate story on that.

Do read our In-Depth on coal trading companies making a beeline for their share of coal supplies to Indias growing power generation sector. It is ironical to see that chunk of overseas funds are available only for clean energy, while on the services and delivery side interest is coming from firms which operate in traditional fuels.

In power sector the entire chain is struggling with some issues or the other. While power utilities are crying for assured fuel supplies both quantitatively and qualitatively, distribution and transmission sectors have their challenges on the financial front. They are not allowed to pass on the higher input costs to the consumer and there is also dearth of land to lay wires for transmission. At least on the fuel front power minister Jyotiraditya Scindias promise, on completion of his 300 days in office, that he would ensure supply of gas at reduced rates to power companies augurs well for the sector.

Besides other issues, the uncertainty of exchange rate too adds on to the woes of companies in energy space. Vice-President of GE Renewable Energy, Anne M. McEntee shares how original equipment manufacturers are going through a rough patch on account of rupee depreciation. May they all be able to fight it out like GE.

Our Off-Beat this time is on something which has been discussed on several occasions in the country--privatisation of Air India. Read our analysis of why 2014 might be that year when the new government may bite the bullet and give the national carrier back into private hands to run. A bevy of foreign airlines as competitors, which are light, smart and market savvy, may not leave it with any choice but to do that.

In our Photo Essay we bring you glimpses of Bharat Heavy Electricals Ltds contribution in transmission sector. Since 1984 the PSU has been engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors. It has bagged numerous projects both within and outside the country and has started venturing out to new areas to sustain its growth.

SHASHI GARGManaging Director and Editor InfralineEnergy Research and Information Services

Editorial

Shashi Garg, EditorAlok Sharma, Assistant EditorDeepak Sahu, Special CorrespondentNeeraj Dhankher, Principal CorrespondentShakeb Ayaz, Business EditorAnkita Sharma, Business Editor

News TeamPankaj Bhagat Ankit Bhatnagar

Analysts Prapti Dutta Naveenta Gautam Piyush Arora Himanshu Verma

Design Team Gopal Thakur, Art Director

November 2013 | Volume 2 | Issue 7

Business Development

Manoj Narang, DirectorTel.: +91 11 4625 0038Email: [email protected]

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InfralinePlusTHE COMPLETE ENERGy SECTOR MAGAzINE FOR POLICy AND DECISION MAKERS

Registered Office

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2November 2013 www.InfralinePlus.com

ContentsEditors Letter 1

Cover Story 40

News Brief p4In Depth: Scindia pitches for cap on gas price for power plants p6In Depth: Its all haywire in transmission with little land to lay the wires p8In Conversation: Patrick Plas, Senior Vice President - Grid Power Electronics & Automation, Alstom p12In Depth: Reliance Power chief Chalasani quits p16Expert Speak: Alok Gupta , Member, MPERC p17 Statistics p20

Topics Covered:

Power transmissionReliance PowerGas prices

News Brief p22In Depth: Exclusive power for coal producing states p24In Depth: Captive mines may have to sell surplus coal only to CIL p28In Conversation: Mr John Smelcer, Director, African Mining and Energy Projects and Mr Manus Booysen, Partner & Head Mining, Energy and Natural Resources, Webber Wentzel p30In Depth: Coal soot on Birla now p32Expert Speak: Abhinav Kumar Shrivastava, Research scholar p36Statistics p38

Topics Covered:

South African coal marketCoal scam Surplus coal

Power Coal4 22

InfralinePlus

40

COVER DESIGN By : GOPAL THAKUR

Second notice to govt on gas price issueSupreme Court sends notice to government to cancel production sharing contract of RILs D-6 block.

InDepth: RIL only private firm to clock 1 lakh crore profit in a quarter RIL has been slapped with a notice by the Supreme Court (SC) for failing on its production sharing contract for gas supply from Krishna-Godavari D-6 block. p45


News Brief p48

In Depth: Barmer refinery remains a rose with several thorns p50

In Conversation: Satchidananda Rath, Director - Operations, Oil India Limited p52

Expert Speak: Rajeev Khanna, COO, Infraline Technologies p54

Statistics p56

Topics Covered:

Barmer refinery

Shale gas

Deep water exploration

News Brief p58

In Conversation: Anne McEntee, CEO, Renewable Energy, GE Power & Water p60

In Depth: Even the sun needs more funds to glow p62

In Conversation: S K Jain, Managing Director, Ground Water & Mineral Investigation Consultancy Centre p65

Statistics p66

Topics Covered:

Solar financing

Generation-based incentives

Water crisis

InfraWatch: 9 projects cleared for phase-1 of Delhi-Mumbai Corridor p74

Oil and Gas Renewable48 58

78Plus - Photo Essay

68Off BeatInterviews

BHEL: Powering Indias economic growth

78Patrick Plas, Senior Vice President - Grid Power Electronics & Automation, Alstom

Satchidananda Rath, Director - Operations, Oil India Limited

Anne McEntee, CEO, Renewable Energy, GE Power & Water

Air India inches closer to moving in private

Mr John Smelcer, Director, African Mining and Energy Projects, Webber Wentzel

NewsBriefs | Power

4

November 2013 www.InfralinePlus.com

Myanmar dumps 2080 MwHydro power initiative with India

Six years after India and Myanmar decided to jointly develop two hydro power projects of 2,080 Mw capacity in that nation, the Myanmar government has shot down the proposal on grounds of the likely collateral damage from the projects. The two projects, including 1,200 Mw Tamanthi and 880 Mw Shwezaye hydro power plants, involved a total expenditure of an estimated `25,000 crore and were to be developed as a key plank of bilateral engagement between the two neighbors.

BGR Energy Systems Signs $246 mn contract with Iraq

Indias BGR Energy Systems Ltd has signed a contract for engineering, procurement and construction of 4x125 MW gas-based power project at Nasiriya with the Ministry of Electricity, Iraq. The contract is valued at $246 million and includes the scope of engineering, procurement and construction services of BOP, civil works and erection, testing and commissioning of gas turbine-generator sets supplied by General Electric, as well as, operation and maintenance of power project for six months.

Tamil Nadu Transmission CorpKalpataru Power bags `6.2 bln orders

Kalpataru Power Transmission has secured orders worth about `620 crore. A major order is for the supply and installation of a 171-km 400 kV D/C transmission line worth `463 crore from the Tamil Nadu Transmission Corp. Another order, from HPCL, is for installation of a 160 km LPG pipeline worth `94 crore. Ranjit Singh, MD, Kalpataru Power, said, In the first half we won orders worth `1,750 crore and expect the momentum to continue in the second half as many projects are in the final stage of award.

NTPCs power generation capacityRises to 41,684 MW

State-owned NTPC said its installed power generation capacity has increased to 41,684 MW with the commissioning of another 500 MW unit at its Rihand project in Uttar Pradesh. Unit-VI, having generation capacity of 500 MW, of Rihand super thermal power project was commissioned on October 7, NTC said in regulatory filing. With this the total installed capacity of Rihand Super thermal power project has become 3,000 MW and the total installed capacity of NTPC group has become 41,684 MW, it said.

IL&FS Engineering bags`1.5 bn rural electrification project

IL&FS Engineering and Construction Company Ltd has received a Letter of Award from Paschimanchal Vidyut Vitran Nigam Ltd for execution of rural electrification works in Bulandshahr district of Uttar Pradesh. The `149.68-crore project is to be executed within 18 months on a turnkey basis. The project is funded by Rural Electrification Corporation. According to a statement, IL&FS Engineering Services recently won a rural electrification project from Madhyanchal Vidyut Vitran Nigam Ltd in Uttar Pradesh.

Neyveli Lignite CorpPlans to up power output by 4240 Mw

Neyveli Lignite plans to take its installed power generation capacity to 4,240 MW by the end of the current fiscal. The lignite miner has an installed capacity of 2,740 MW at present. With the implementation of 1,000 MW power project at Tuticorin and 500 MW of TPS-II expansion by the current year, the company shall have installed capacity of 4,240 MW, a company official said. The TPS-II expansion project, being implemented at a cost of `2,030 crore is likely to be functional by March 2014, the official added.

Avantha Power Raigarh projectSynchronises 600 MW first unit

Avantha Power and Infrastructure Ltd has synchronised the first unit of 600 MW in its Raigarh, Chhattisgarh project, through its wholly-owned subsidiary Korba West Power Company Ltd. The companys generation capacity stands at 626.19 MW with the commissioning. Avantha Power and Infrastructure Ltd is part of the `25,000-crore Avantha group. APIL began construction in August 2010 and executed the project within 38 months. BHEL supplied the boiler, turbine and generator for the plant.

Gujarat Industries Power Company Cancels LoIs for two 300 MW projects

Gujarat Industries Power Company said it has cancelled LoIs with Lanco Infratech for implementing two 300 MW projects as the EPC firm failed to furnish 10 percent contract performance bank guarantee. The Letter of Intents were issued to Lanco on June 1 for implementing 2 X 300 MW lignite-based projects adjacent to GIPCLs existing Surat Lignite Power Plant. Due to LITLs inability to furnish the required 10 percent contract performance bank guarantee, the company has cancelled LOIs, GIPCL said.

Surguja Ultra Mega Power ProjectPFC withdraws RFQ

The government has withdrawn the the tender inviting preliminary bids for the proposed 4,000 MW ultra mega power project at Surguja in Chhattisgarh. The Request for Qualification for 4,000 MW Chhattisgarh UMPP issued on March 15, 2010 is withdrawn, PFC said. PFC is the nodal agency for UMPPs. According to sources, the proposal to set up the UMPP in Chhattisgarh has been dropped as the coal blocks for the proposed project fall under dense forest area and will adversely impact the environment.

NCC Power stake saleSembcorp to purchase majority stake

Singapore global utility services company Sembcorp will purchase a majority stake in NCC Power Projects for roughly `500 crore. The deal, signed nearly at par of the investments made so far, signals foreign strategic investors renewed interest in Indian power companies with all regulatory clearances. Sembcorp, owned 49.5% by Singapores sovereign investor Temasek Holdings, however, has agreed to pay premium amounts based on milestones over the next few years.

`200 billion power projectsGovernment plans global bids

The government plans to invite global bids for a dozen interstate transmission projects worth over `20,000 crore in the next two months to connect power generation projects in states including Chhattisgarh, Haryana, Rajasthan and Tamil Nadu. The standing committee for power system planning has cleared the projects and just a nod from the empowered committee on transmission is awaited. The govt expects companies such as Power Grid Corp, L&T Infra, Tata Projects, to evince interest in the projects.

UP Power Corp banks consortiumAgrees to buy `130 billion bonds

The Uttar Pradesh governments efforts of to bail out the ailing Uttar Pradesh Power Corporation have finally borne fruit. The 20-bank consortium has agreed to buy bonds worth R13,097 crore from UPPCL under the Centres financial restructuring plan at a coupon rate of 9.68%. Senior UPPCL officials who were camping in New Delhi for last few days said the bonds were being allotted to the banks and financial institutions. Of the R13,097.32 crore, R8,060.95 crore will be used to pay the loan UPPCL had taken.

6InDepthNovember 2013 www.InfralinePlus.com

The country will enter a new gas regime from April next year when gas prices will go up from $4.2 per million metric British thermal units (mmbtu) to $8.4 per mmbtu but power minister Jyotiraditya Scindia has vowed to provide this essential raw material at a cheaper rate, than what it would cost next year onwards, to power plants. At a recent press meet on the occasion of completion of his 300 days in office as minister of state for power, he announced that he was working on mitigating the problems of the sector by approaching the Cabinet

with a proposal to cap gas prices for power plants at $5 per mmbtu.

Besides problems on the price front, the sector also faces the challenge of shortage of gas. Though the government has recently decided to allot additional gas produced in the country to power sector after meeting the requirements of urea plants, at least 7,800 mw of generation capacity remains stranded for want of gas. The decision on additional allocation is also silent on the price front.

Explaining the rationale behind his move, Scindia has said that doubling

of gas prices to $8.4 per mmbtu would make power sector unviable. Anything beyond $5 per unit is unviable for the power sector and a mechanism to address this issue will have to be worked out by the government ...for which I will be taking this issue shortly to the Cabinet, he said.

While the government has already agreed that power projects should get surplus gas produced domestically until March 2016, the cost at which gas is supplied to this sector is of utmost importance, said an industry

While gas is set to cost $8.4 from April 2014, power minister seeks cap at $5 per mmbtu

Announces slew of measures to put power sector back on track

Scindia pitches for cap on gas price for power plants

by Alok Sharma


expert. Earlier, the power ministry had sought parity of power generating units with fertilizer units. The move was initiated when gas output had dropped from Reliance Industries KG-D6 block, which had resulted in reduced domestic supplies.

By March this year, power units seized to receive gas supplies from KG-D6. When the basin was producing, gas-based fertiliser plants had the topmost priority in the allocation of gas, followed by LPG-extraction units, power projects, city gas, steel and refineries.

Listing the achievements of his ministry, Scindia said he was confident that the revised Standard Bidding Documents (SBDs) will receive better response as fuel risks and land related issues had been taken care of. The government believes there would be a positive response from the companies for the upcoming ultra mega power projects (UMPPs) in Odisha and Tamil Nadu. As per 12th Five Year Plan (2012-17) targets, 88,000 mw of capacity addition is to be done in the current plan, of which 69,000 mw will take place in thermal sector.

Meanwhile, Power Finance Corp, which is the nodal agency for such projects, has started the process of inviting preliminary bids for setting up UMPPs of 4,000 mw at Bedabahal (Odisha) and Cheyyur (Tamil Nadu). By November 11 we will receive the initial bids for Odisha and Cheyyur UMPPs, Scindia said.

The government is targeting January 2014 for selection of successful developers and award of projects, a senior power ministry official said. According to him, the new SBD is a complete document and should evoke positive response from the industry. Till date, four UMPPs have been awarded of which Reliance Power has bagged three projects -- Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand), while Tata Power is operating the Mundra UMPP in Gujarat.

On the transmission front, the For suggestions email at [email protected]

ministry targets to lay over 1-lakh circuit kilometre of transmission lines and erect over 2.8 megavolt ampere (MVA) capacity during the current

Plan period. The government is also considering extension of financial restructuring programme for electricity distribution utilities (discoms) of four more states Jharkhand, Bihar, Andhra Pradesh and Karnataka.

Peaking power policyConsidering the gap between demand and supply of power during peak time, the government is working on a peaking power policy whereby distribution companies would be encouraged to invite bids from generation utilities for bridging power demand and supply gap between peak hours. The policy aims at including all forms of fuel such as hydro, gas, coal and renewable, under the proposed policy.

We are working on a peaking power policy, and proposing that the gas plants should be used as peaking power plants The policy will be for all input sources. It will be an all-pervasive policy, Scindia said.

Independent PosocoWorking towards preventing a repeat of the massive grid failure which had left half of the country in darkness in July 2012, the power ministry is contemplating to offer independent regulatory status to Power System Operation Corporation Ltd (Posoco). The firm currently looks after the cross-country transmission grid and is a wholly-owned subsidiary of PGCIL. The autonomous status would help it take strong actions against over-drawal of electricity by the States.

The move is aimed at bringing grid discipline in the country. Besides giving independent regulatory status to Posoco, the ministry also plans to encourage private companies in the transmission sector. In order to maintain grid discipline there is a need to have greater private sector investment in building transmission systems, he said.

Doubling of gas prices to $8.4 per mmbtu would make power

sector unviable. Anything beyond $5

per unit is unviable for the power sector and a mechanism to address

this issue will have to be worked out by the government ...for which I will be taking this issue shortly to

the Cabinet, Scindia said.

Done in 300 days 1601 un-electrified villages

electrified Intensive electrification carried

out in 28,837 partially electrified villages

10,25,257 below poverty line households provided with free electricity connections

66 DDG projects based on solar photovoltaic technology commissioned

Award for additional 31 DDG projects placed

Another 49 DDG projects ready for award

Over 15,000 mw power generation capacity has been commissioned between 1st November, 2012 and 31st August 2013.Sector Fuel Capacity

(mw)Central Thermal 2863.3State Thermal 2832Private Thermal 8992.5A. Sub-total Thermal 14687.8Central Hydro 176.0State Hydro 72.0Private Hydro 99.0B. Sub-total Hydro 347.0Total (A+B) 15034.8

8InDepthNovember 2013 www.InfralinePlus.com

Power shortages in India accounted for a gross domestic product (GDP) loss of $68 billion (0.4 per cent of GDP) in 2012-13 which impacted agriculture, manufacturing and other services, according to a report by the Federation of Indian Chamber of Commerce and Industry (Ficci). Despite having an installed generation capacity of 225 gw and demand of only 135 gw, as of May 2013, India faced a peak power deficit of 12 gw which has adversely affected the countrys economy. The blame for this goes on the transmission sector, the critical triad in the power value chain along with generation and distribution.

Insufficient attention towards improving power transmission capacity threatens to jeopardize the countrys efforts to raise economic and manufacturing growth and improve the well-being of the people. In the past five years, power generation capacity has grown by more than 50 per cent but transmission capacity has increased by only 30 per cent. As per the 12th Five Year Plan, Indias generation capacity is expected to increase by about 88 gw. In order to be able to utilize this increased output, investment in the transmission sector also needs to be raised.

According to power consultants, Booz & Co, overall an addition of 90,000 ckm of 765-220kV lines, 154,000 mva of substation capacity and 27,350 mw of national grid capacity is required in order to meet the 12th Five

Procuring land for laying wires poses biggest challenge in transmitting power

Extra power generated going waste due to absence of corresponding transmission setup

Its all haywire in transmission with little land to lay the wires

by Ankita Sharma


Year Plan target. For this, an investment of $35 billion is planned in the power transmission sector of which about $19 billion is planned to come from the Power Grid Corporation of India and the remaining $16 billion, or 46 per cent of the total investments, need to be secured from private players.

Hurdles in laying wiresWhile investments are relatively easy to secure, procuring land for laying transmission wires is not. As many as 120 transmission projects face delays because of the inability of developers to acquire land and get timely clearances from all stakeholders. There have been instances of transmission lines being forced to take a different route than planned because of dispute over land, resulting in the entire project budget going out of control. Due to transmission constraints it is also difficult to evacuate excess power and channel it to regions that face shortages. Projects have had to purchase power from costlier sources while others remain under-utilized. Hence, there is an urgent need to address the underlying issues in the transmission sector to ensure that power demand is effectively met in the future.

According to Arbind Prasad, Director-General, Ficci, With a planned generation capacity addition estimated at 88 gw in the 12th Plan and improved generation with fuel issues getting sorted out for existing capacity, a corresponding increase in transmission capacity is needed to ensure that power generated reaches the end consumer. More than 46 per cent of the total investment required (in excess of `2 lakh crore) has to come from the private sector. Successful public private partnerships (PPP) in transmission would be vital to meet the huge investment and capacity enhancement target in transmission. The report highlights various reasons which affect the pace of private investments in the transmission sector along with measures to address them.

Mr. Pratik Agarwal, Chairman of the Ficci Task Force on Power Transmission says, Right planning can reduce time taken from concept to commissioning by over 30 per cent. It will also encourage the use of technology in project execution which will result in high capacity transmission corridors in much lesser time and resources.

India is one of the few countries where transmission sector has been opened up for private participation and has garnered significant interest from private players. The bidding framework is fairly comprehensive with provisions for majority of situations which may occur during the term.

Introduction of Point of Connection (PoC) regime is a step in the right direction and has been appreciated by lenders and investors alike. Still, the success of other sectors, like generation, is yet to be replicated. Key policy changes which can pave the way for robust capacity creation in the sector, based on experiences gained so far have to be incorporated into the agenda of the sector.

Lengthy processesIn India it takes five to six years for projects to go from conceptualisation to commissioning stage. This duration is much longer than global standards of about 40 months and needs optimization. Efficient planning can help reduce this duration and attract greater private investment in the sector. The regulatory process for award of projects needs to be streamlined. At the same time, incentives must be given to a developer for faster project execution. At present, even if a developer is able to commission lines before the contractual COD (commercial operation date) revenues are realized from the contractual COD only. To ensure faster execution, provision for early commissioning of incentives should be made in the Standard Bidding Documents.

Also, state owned utilities, such

as PGCIL, whose order book is of `120,000 crore, have reached a saturation point. There is a need to focus on fast track execution of projects during the next three-four years, and refrain from accepting new orders.

Innovation missingThe level of innovation and technology in the industry must be upgraded to improve quality, speed and health and safety standards. There are no guidelines on the use of technology at present and the focus is on lowest price for competitive bidding. This doesnt help incentivise developers to innovate and suggest new ways of working as they are at a disadvantage compared to a cheaper alternative. Policies need to be realigned to focus on output parameters

While investments are relatively easy to

secure, procuring land for laying transmission wires is not. As many as 120 transmission projects face delays

because of the inability of developers to

acquire land and get timely clearances from all stakeholders. There

have been instances of transmission lines being forced to take a different route than planned because of dispute over land,

resulting in the entire project budget going

out of control. Due to transmission

constraints it is also difficult to evacuate excess power and

channel it to regions that face shortages.

10

InDepth


rather than input factors in order to extract maximum results from projects. When new transmission systems are conceptualised by CTU and various standing committees, they must exhaust all possibilities to optimise existing transmission corridors by deploying best available technologies, before embarking on creating green-field lines and substations which occupy extremely valuable farm and forest land.

Qualifying criteria for biddersQualification requirements must be critically evaluated and reformed so as to screen out non-serious players from the bidding process. Due to inadequate due diligence at the pre-bid stage, projects end up getting awarded to bidders who place unviable bids. When they retrospectively realize the actual costs, projects get stalled. Only 50 per cent of the awarded projects so far have actually taken off. Qualification requirements must be tailored to attract only serious participants, which can be achieved by giving higher weightage to technical qualification rather than project cost and acknowledging same sector experience.

In addition, for projects that have already been awarded, it is recommended that concessionaire be allowed for players to completely exit the project at any point in time (before/after COD) by selling equity

to an equally qualified substitute concessionaire. Post-commissioning, the projects may even be sold to financial investors who are willing to provide adequate operation and maintenance (O&M) undertaking through third parties.

Clearances and redressalsAnother crucial factor is handling eventualities in clearance process and redressal mechanisms available thereafter. Current clearance and redressal policies have not been able to get private players to actively participate in the power transmission sector. The Planning Commission Transmission Services Agreement (TSA) and the TSA specified by the ministry of power have different clauses with respect to force majeure events. The TSA, as notified by the ministry of power, has a clause in addition to that specified by the Planning Commission. It restricts consideration of any revocation or refusal to renew consents, clearances and permits as a force majeure event. The additional clause mandates approval of force majeure claims by a competent court of law. Dealing with the judiciary system in India makes the process time consuming and deters private players from participating. Considering the number of risks assumed by a developer during project execution, robust redressal mechanisms should be available to developers in case of unforeseen events. It is recommended that a material adverse effect clause be inserted allowing parties to seek relief, as opposed to choosing to terminate the agreement.

Level playing fieldAn independent nodal body should be set up to facilitate clearances, address grievances, track project status and enforce quality standards. In order to promote greater private participation in the power transmission sector to meet capacity requirements, it is important

that private players be given a level playing field along with state owned players such as PGCIL. Power Grid currently plays a dual role transmission planning (as CTU) and executing inter-state transmission projects; thereby becoming privy to commercially sensitive information. In the course of discharging above duties, as a CTU and as a member of Empowered Committee (EC), CTU is privy to certain material non-public & cost-sensitive information apart from having rights to influence decision making in EC. It is recommended that CTU be hived off from PGCIL in order to ensure fairness in the bidding process. An independent and impartial Empowered Committee without any representation from PGCIL should decide whether projects should be done by tariff based bidding or under the cost-plus route.

State entities and private players should be treated at par with similar land acquisition requirements for securing forest clearances. PGCIL and private players should both be entitled to similar commercial benefits such as custom duty benefits etc.

All this requires immediate policy action from the ministry of power and the Central Electricity Authority (CEA) for reinvigorating the transmission sector. There is an urgent need to synchronise the policy framework with a new reality of wider participation by private players under competitive bidding regime. Earlier rules were designed to only cater to government companies under the cost plus regime. PPPs are a much needed catalyst in reviving this sector and in order to make this successful, policy reforms are necessary. Once PPPs are able to thrive successfully, India will be able to achieve the common objective of building the grid, meeting demand requirements and optimally utilizing generation capacity.

For suggestions email at [email protected]

An investment of $35 billion is

planned in the power transmission sector of which about $19 billion

is planned to come from the Power Grid Corporation of India and the remaining $16 billion, or 46

per cent of the total investments, need to be secured from

private players.

InConversation

12


Grid in the coming years. So, there is going to be extension in Champaproject as well as other projects. Our pioneering technologies in the field of HVDC transmission systems and Network Management Solutions (NMS) have been playing a vital role in addressing the new challenges related to the growing complexity and volatility of the grid.India has started installing HVDC projects and more such projects are being planned. The country is also revamping its control systems. Last

years blackout caused by a

grid failure has given the country additional impetus to make sure that the best technology is

available. We are going to execute

several of these projects and

then

Can you just brief about your India plans, be it power or infrastructure amidst the policy roadblocks here.India is our number one market and we are very optimistic about it. The Indian market accounts for 15 per cent of Alstom Grids global sales, the largest among all countries. With the inauguration of the Digital Substation Automation Competence Centre we are convinced that we are seizing a new opportunity for participating in the development of Indias future energy landscape. This Competence Centre is another cornerstone that showcases Alstoms continued commitment to participating in the development of the Smart Grid in India.

Some of the key words are digital and competency centre. It is digital because this is the new version of the substation which offers more compact footprint, safer because it is based on fiber optics and also offersmore complexity in terms of automation but

simplicity in terms of wiring. So, this is going to help the grid in India and we will continue to add sub stations and more intelligence into the network.

So that is the first important work. Second work is linked to competence. In Chennai it is not only a factory but a place where we have built a group of dedicated team members trained in Digital Substation Technology to impart training at the local level. This group comprises of experts from NCIT (Non-conventional Instrument Transformer), Automation & Protection and Solutions.

Secondly we will continue to develop additional lines for Power

Bullish on prospects about the domestic power sector, transmission solutions provider Alstom T&D plans to secure a major share in the Indian market. The company plans to increase the investment in the coming years to meet increasing demand in the country. Moreover, entry of Chinese and Korean companies in this sector makes no difference to the French transmission major. Alok Sharma and Deepak Sahu of InfralinePlus spoke to Patrick Plas, Senior Vice President - Grid Power Electronics & Automation, Alstom and companys India President and Managing Director Rathin Basu. Excerpts.

We will transform the technology here, says Alstom India chief

Patrick Plas, Senior Vice President - Grid Power Electronics & Automation, Alstom

We have been partnering in Indias

growth story by providing a range of products

13


we will hop on to the next phasei.e. Statcoms, which is a kind of technical evolution beyond HVDC. In future we expect around 13 Statcom projects. Statcoms are highly dynamic voltage source converter-based compensators which, compared to SVCs, offer improved range of operational voltage, a faster response and a smaller site area.

In view of the anticipated growth and evolution in Indian power sector and infrastructure, there is huge potential for adopting Smart Grid Technologies and designs in big way. Our endeavor is to continue pushing all the players in India, SEBs towards faster smart grid development.

Has the technology been tested elsewhere or this is the first time you are using it in India. Is there any tailor made or specific changes in these technologies taking into account the Indian market.If we talk of specific technologies for India, we are using the same technologies that we are using outside. We have a worldwide portfolio and we are using this portfolio in India as well as to other countries. We have been partnering in Indias growth story by providing a range of most comprehensive offerings suited for all industries: from utilities and large electro-intensive industries (such as railway) to O&G and M&M.

Our Chennai factory is producing exactly the same products as the ones manufactured in the Stafford, UK. Our teams collaborate with each other across the globe and work hand in hand with our customers to develop pioneering tailored and competitive solutions. So, I am not having specific products for India. That is not our approach. And the technologies that we provide to India are our latest technologies. So, for me there is no difference in the way we manage our customers in India.

In another example of Alstoms

technological leadership, we are working with Power Grid for its network management system that will help monitor and control Indias electricity supply network and provide a foundation for the evolution of a smart grid. These projects are modernization of Southern Region and Western Region Load dispatch Systems. The system will provide a better visibility of power system to operators, and in turn improve reliability, fault analysis capabilities. This will also be a strong platform for future SMART Grid Applications in Transmission.We are also pursuing few SVC (Static Var Compensator) tenders worth 60 million Euro by Power Grid for Wanpoh, Kankaroli and Ludhiana. SVCs manage dynamically variable sources of reactive power to stabilize the voltage, damp system instabilities and reduce flicker for both transmission and industrial applications.

And I would say that Powergrid is probably one of the advanced customers we have in the world in terms of software, in terms of SCADA and the various tools they are using to manage the sub stations. I think that there is not much difference. Yes, India is sometimes complex. It is a big country. At the end of the day these are same technologies and solutions that we offer in other parts of the world.

States were overdrawing from the grid despite repeated alert. So how will you ensure that states would not overdraw despite restrictions on it.We do not operate the grid. We are just providing the tools in this case to Power Grid to operate the grid. And maybe it is the lack of discipline, that some states make the requirement of drawing more. For this Power Grid needs more software and mechanism to compensate the lack of discipline. But we as a company can provide only tools to Power Grid. No doubt the states are not disciplined, but in Europe it

is a collection of very small grids and they are inter-connected. So, no need to complain, there are ways out.

Your views on power generation side and various other issues like fuel issues which is impacting the power scenario in the country. How do you see the entire scenario.Yes, India needs more power. I am not going to object to this. I am using the example of wind power in Tamil Nadu. If there is too much wind available in this region then maybeit can be distributed to some other place once the grid is fully connected. The more the grid is connected, the better you circulate the flows from one place to another. And it helps to compensate the lack of power because you dont need power at the same time at the same place and at the same moment. India is a big enough country, so building and reinforcing the grid and allowing more exchanges is the right answer. And this is why we are pushing for the development of smart grid. For doing this we need to have better quality grid management, peak load management

Rathin Basu,President & Managing Director, Alstom India

InConversation

14


and all these software tools will help making better use of the existing infrastructure.

Any plans to employ more such sub stations in the near future in the country.We are participating in building a smart city pilot project. The Smart Grid pilot project at Puducherry, first such kind of Project in the country has made significant progress. Power grid has successfully implemented smart grid control centre integrating various smart grid technologies. Some of the components are already in this project like better quality management, distribution management, peak load management and demand response.We are obviously impatient to go beyond that to roll out this commercially. But at the end of the day, we need to make it sure that SEBs are ready to buy these kind of tools.

But we know the financials of many of the SEBs, would they be in a position to buy these tools.

for two years or a short period. So whenever we invest we are here to stay. For example we are here in this country since 1911 - partnering in nation building by providing the most advanced electrical grid solutions to meet the electricity demands.We are developing many innovative solutions for projects in India, the most notable being the National Transmission Asset Management Centre (NTAMC) project of Power Grid. Through this project a total of 192 Power Grid substations will be managed and controlled from 9 Regional and one National Asset Management Centre. We have also delivered the Advanced Visualization and situational awareness software for monitoring and control of Maharashtra Grid. It will help operators to take quicker decisions and enhance the grid stability and security.

Can you share about your financials. How have been your revenues growing in the Indian market over the Last two- three years.

Well we have invested in these technologies and I am selling it successfully in other parts of the world. I am participating in the smart city pilot project in Puducherry, but now I am waiting for clear signals from the utilities to buy these. With rising demand of power in the country, I am confident that utilities will buy this product. We are the provider of technologies and they have to make use of them.

Whatever you will manufacture from two plants here in India, will it cater to domestic market or other markets as well.Its obviously used for India, but it is also used for other markets as well. So, I am using them for Asia, some countries of Middle East.

Does it make financial benefits to introduce technologies when economy is slow.Not per say, but every business has a business. You always invest on a longer frame. You dont invest

15


For full version of the interview, visit www.infraline.com For suggestions email at [email protected]

Well we have improved our market share significantly over the last six years. We continue to retain our leadership position for fifth year in a row. We became market leader in 2008 and have grown consistently. The company continued to maintain a healthy backlog of 63 BINR by winning 7 BINR orders during the last quarter.Despite the challenging economic environment, the company succeeded in winning new Orders at better margins during Q1 of this fiscal. It is good enough for almost two years of our operation in a market which is already struggling. Yes, the margins are not good because the economy is depressed and overall demand is depressed. Not so much in Power Grid and NTPC but it is depressed in the industry and in certain SEBs because of lack of money. So, we believe the financial restructuring of electricity boards plan which is on the plate is happening in some states would bring life to the SEBs. So therefore they badly need to invest in the grid infrastructure because as you know Power Grid has been the solid grid backbone at 765 kV but the states backbone is at 220 kV. So they need to be upgraded to at least 400 kV to match the power flow and for power exchanges when the grid is connected. So the states are five years behind in my opinion in grid T&D infrastructure. So they need to invest and we have all our technologies in automation as well as switchgear to support this.

With Alstom so much bullish in the Indian market, how much investments lined up in next couple of years.We have followed our investments since 2007. We invested roughly around 1000 crores during 2007-2008 None of our competitor did that. On a continuous basis we do investments as needed. Of course, we dont invest if there is no market. Ongoing investment is on the HVDC transformer at Baroda. Because

we are into 2600 crore HVDC contract, so we will build several transformers over there. For digital automation and digital sub stations as you know we did couple of projects recently. We strongly believe post the black out the digital automation and digital sub stations would be the theme of tomorrow for the security and safety of our sub stations and to run it more reliably and more efficiently. We are also investing in people, finding them and training them for our digital automation centres. Out of the 19,000 employees globally, 4,000 are based in India. We are building our control systems for high-voltage, direct current (HVDC) in India. We are also building additional capabilities in India, which will be deployed across the world. We have started hiring team last year for HVDC technology here and increasing their skills. We plan to invest in Product R&D in India as part of Product Line Strategy after good response from R&D Centre at NOIDA for System Activity. A team of 50 people have been developed to provide local engineering support for power electronics. A back office engineering support team at Noida has been also formed to provide global engineering support on automation.

What are your plans regarding R&D over here in India.We continueto invest inseveral

R&D programs across the product categories from time to time.ALSTOM T&D India benefits from Global R&D effort of Alstom worldwide.The Company derives the benefit of global value engineering efforts,which among others helps in reduced lead time and is adaptive ofspecific customer requirement.

How is China factor coming into play.If I touch the generation side, then I believe, as per CII study, 28 power power stations are with Chinese equipment and 30 power stations with BHEL equipment. The study is very negative on Chinese machines. Whether this will influence buyers mind is to be seen, because Chinese definitely bring two advantages, they are cheaper by 15 pc and they can deliver in three years or even less than three years. On the T&D domain we have seen invasion from Korea and China over the last three years. China and Korea were predominantly on the 765 kV transformers. Koreans went too aggressive on prices, so over the last two years both Korean companies have reported significant losses not only because of India, but I guess rest of the world. So the net result is that in the last 18 months they do not quote anymore in India. Among the Chinese there were actually three or four very active. All of them had the guarantee that they would produce locally a transformer or will have a set up locally to do local repair. They failed in both. Consequently they could not collect the last 25 percent of the payment from the Power Grid. So, imagine they own a transformer order with 10 to 15 percent lower prices than ours. So, again these companies are out. Only company that has stayed and is seen in India is TBA who hasbuilt a factory here.

We strongly believe post the black out the digital automation and

digital sub stations would be the theme of tomorrow for the

security and safety of our sub stations and to run it more reliably and

more efficiently.

16

InDepthNovember 2013 www.InfralinePlus.com

The Chief Executive Officer (CEO) of Reliance Power JP Chalasani has quit the company. The company comes under the fold of Reliance Anil Dhirubhai Ambani Group and Chalasani was one of Chairman Anil Ambanis major troubleshooters. He has reportedly quit to pursue his entrepreneurial ambitions.

Spearheading the companys aggressive plans in the power generation sector, Chalasani played a pivotal role in the company bagging three of the four ultra mega power projects (UMPPs) awarded to private sector players under the tariff-based competitive bidding route over the past five years. According to industry experts, his decision to leave could have been partly due to project delays related to fuel availability, land acquisition and environment clearances, among others. The junior Ambani is said to be unhappy over several of the companys mega projects such as the ultra mega power projects in Tilaiya and Krishnapatnam and the gas-based power project in Samalkot being stranded.

The CEOs exit is a blow to the company as he has been the mouthpiece and face of the company at investor and analyst interactions over the past several quarters, JP Morgan said in a recent report. He was a man Friday and a key regulatory expert for

his promoter. After Ashwin (Kumar) left the company to join L&Ts power development arm in January, there will be a big void with Chalasani also deciding to walk away from R-Power. No one can fill that place, an industry executive close to him said. He was a key person for the growth of the company, he added.

Chalasanis exit comes at a time when R-Power is planning to expand its generation capacity. Analysts say one of his achievements at the company was to build its operational capacity to 2,500 mw despite various challenges faced by the sector. R-Power has been trying to recruit a person in the leadership role for the company for more than three months now. This is not a surprise exit, said a top power sector executive on condition of anonymity.

Ambanis Man FridayChalasani played a major role during the gas controversy between the two Ambani brothers some years back. As a representative of the RNRL board, on January 11, 2006, he had objected to the draft gas sales agreement approved by the RIL board. From then on, the engineering graduate from Nagpur had kept up a steady supply of ammunition in Anil Ambanis gas battle. While Anil Ambani and his close associate Amitabh Jhunjhunwala formulated

strategies, Chalasani worked closely with in-house legal experts like Venkatarao Ponnada to compile documents that would support the case. Chalasani also led the privatisation of Delhi distribution and was CEO for the early period of Reliance distribution companies.

Formerly with National Thermal Power Corporation (NTPC), Chalasani joined the Reliance group in 1995 with over 27 years of experience in the power sector. After the group was split by Mukesh and Anil Ambani, Chalasani chose to go to with the Anil Dhirubhai Ambani group, where he became the director of business development of Reliance Energy (now called Reliance Infrastructure).

Delay in implementation of mega projects said to be the reason behind exit

Search has been on for a head of the organization for past three months, say experts

Reliance Power chief Chalasani quits

For suggestions email at [email protected]

by Deepak Sahu

JP Chalasani

ExpertSpeak

17


of renewable with the grid on an urgent basis.Grid connectivity: CEA is coming out with a regulation on technical standards on grid

connectivity for both larger systems to be connected to 33KV

and above (amendment to their original regulations) and for smaller systems to be connected to below 33KV level. These regulations deal with technical aspects like under / over voltage protection, under / over frequency protection, anti-islanding features, faults ride-through characteristics for wind turbines, harmonics, voltage fluctuations, unbalance, reconnection and safety. Optimising generation: Better forecasting of renewable generation and monitoring of load and grid performance would enable grid operators to dispatch a better mix of generation that could be optimized to reduce cost. The coordinated operation of energy storage, distributed generation, or plug-in electrical

Alok Gupta Member, MPERC

Renewable sources of energy are being promoted all across the globe, as they are in India, but still the sale of Renewable Energy Certificates (REC) by various electricity regulatory commissions to meet the Renewable Purchase Obligations (RPO) has not been on expected lines due to low priority accorded by distribution companies. In April this year the sluggish buy side environment prevailed. Clearance ratios for non-solar stood at 1.6 per cent and 4.2 per cent at Indian Energy Exchange (IEX) and Power Exchange Indian Limited (PXIL) and prices softened in solar REC. Strict enforcement still remains an area of concern.

Only 13 per cent of Indias installed power generation capacity of 223.62 gw, excluding 34 gw from captive power plants, comes from renewable sources. As on 31 March 2013 the grid-interactive renewable power in India was 28 gw. Out of this wind is 67.87per cent, small hydro 12.94 per cent, bagasse cogeneration 8.32 per cent, solar 6 per cent and biomass is 4.5 per cent.

The challenges faced in integration of renewables are metering, formulation of standards for grid interface, Central Electricity Authority (CEA) regulations on technical

standards on grid connectivity, normal voltage variation and control, optimizing generation operation, market for ancillary services, volt / var management, grid congestion and the role of aggregator. The variability in solar and wind creates distinct challenges of integration such as non-dispatchability and their abundance in various parts of the country. Metering: For measuring generation and consumption from renewables either one meter or two meter scheme can be used. CEA is revising its regulation on installation and operation of meters to cover renewable generation metering. Standards for grid interface: Countries like Japan, Korea and China are formulating their own standards for integration of renewables with the grid. There are no comprehensive standards available except for series of IEEE-1547 documents. In India, there has recently been a communication from the Ministry of New and Renewable Energy Sources (MNRE) to the Bureau of Indian Standards (BIS) for formulation of standard for integration

Integration challenges in renewables big concern

The variability in solar and wind power

creates distinct challenges of integration.

Till two years back the concerns in renewable energy sector were largely to do with grid connected issues of photovoltaic (PV) roof-top system. Today a number of developments have taken place in not only solar PV but also in other renewables and the challenges are of a different nature now. Alok Gupta, member of Madhya Pradesh Electricity Regulatory Commission (MPERC) discusses the issues in creating market for ancillary services, operational aspects, policy and standards.

18

ExpertSpeak


vehicles could also result in completely avoiding central generation dispatch.Operations: Operations (day-ahead) planning has to account for variability of renewable resources and demand-responsive loads. Accuracy can be maintained if good forecasting techniques are used. Market designs must assure adequate business incentives for new generation while providing sufficient opportunities for compensation of embedded generation owners. Dynamic load control for balancing generation with load will require much higher levels of demand-responsive loads. There is no market for large energy storage devices due to their high cost. There is need to carry out R&D in this direction. For plug-in vehicles the market has not picked up, so the grid interconnectivity is not there at all. Ancillary services: At present there is no market for ancillary services, which needs to be created. To begin with, pre-defined generators can be run on say 85 per cent load and leave 15 per cent for meeting any contingency of fall in frequency. There is need to bring regulation for pricing of such power for various ancillary services. Operating reserves: Operating reserves are, in some respects, the supply-side analog of load-following service. While load following matches generation to load based on the time-varying nature of demand, operating reserves balance generation to load in response to unexpected generation or transmission outages. In practice, the spinning portion of reliability reserve also includes the load-following service. Black start services: When there is large system collapse, it is not possible to draw power from the grid. Some generating units can restart on their own without taking power from the grid. Once these black start units start, they can be used to start other units and to energize the complete transmission grid gradually. These units should be

appropriately located on the grid. Black start is a vital but inexpensive service. Its cost is primarily the capital cost of the equipment used to start the unit, the cost of the operators, the routine maintenance and testing of equipment, and the cost of fuel when the service is required. Because the system requires this service to be viable, all customers require this service. It can be included in the basic transmission charge and not itemized. However, generators should be compensated explicitly for this service.

Volt / var management: In power system, the network is divided into several nodes. At each node the reactive import and export must be balanced to maintain the voltage at that node. Any drawl of reactive power from the node would reduce the node voltage. On the other hand, reactive injection in node would lead to higher voltage.

Variable output from renewable energy generation can impact supply voltage levels for utility customers, and in turn affect power quality. Volt / var optimization technology can help address such voltage swings in real time by optimizing voltage profiles for all distribution feeders served by a sub-station. Such solutions also incorporate sensing that can give utilities greater

visibility into how renewable distributed generation is impacting the grid, so utilities can better manage its effects. Enough reactive power (capacitive) must be available to avert a system collapse.

Utilities in developed countries deploy high quality capacitor banks, highly reliable and safe vacuum capacitor switches with advance software tools which facilitate the system to maintain a predefined voltage profile in order to manage transmission and distribution system var flow to minimize technical losses. In India also some of the utilities are using automatic power factor controller (APFC) to control the distribution voltage.

Under smart grid, conservation voltage reduction (CVR) strategies which reduce demand and energy consumption while maintaining customer voltage power quality as per established standards shall be adopted. The benefits are a greater percentage of energy delivered to paying customers, deferment in investment in peaking generation plants and charges, and a reduction in the environmental impact of energy delivery.

Grid congestionThe least-cost dispatch may not be possible because of transmission constraints (i.e., voltage, thermal, or stability limits), sometimes referred to as congestion. Least-cost production may come from a remote plant whose energy must be imported into the load center over long-distance transmission lines. If the transmission system is composed of a few high capacity lines, loss of one of these lines may limit the import capacity to the point that service reliability may be unacceptable. To resolve this problem, a utility may reduce output from low-cost but remote generation units (said to be constrained off) and, instead, operate more expensive units near the load center (said to be constrained on) to provide

Black start is a vital but inexpensive

service. Its cost is primarily the capital

cost of the equipment used to start the

unit, the cost of the operators, the routine

maintenance and testing of equipment, and the cost of fuel when the service

is required.

19


backup for the transmission system. Capacity addition does not

always mean energy generation has increased. Even after record number of new generation plants added in 2013, power crises in the country has worsened due to combination of factors like transmission bottlenecks in southern states, inability of distribution companies to purchase power and shortage of coal and gas which has left large number of power plants idle.

In some parts of country, over-burdened power lines make it difficult to transmit the entire energy. There could be cases where wind generation could be forced to shut down even when the wind is blowing. Smart technologies such as HVDC, FACT, sensor and controls to switch power to other lines can help provide maximum energy to flow in the lines and alleviate congestion.

Role of aggregatorIn a competitive market, customers may entrust the responsibility of sale, purchase of electricity to an agent known as an aggregator. An aggregator represents a group of customers who have banded together through their resident welfare associations,

Views expressed in this article are personal. For suggestions email at [email protected]

neighborhood association, or employer. By managing groups of people and their electricity loads, aggregators can provide a valuable service. They compare offers and contract terms and negotiate rates with power producers / retail service providers / distribution licensees.

An aggregator joins two or more customers into a single purchasing unit to negotiate the purchase of electricity. They conduct research on electricity prices, contract terms and conditions and other services which their customers want. The potential

benefits of aggregation as a public policy tool, therefore, extend beyond bringing savings to residential and small business consumers. It can in fact stimulate the residential market, by making it more attractive to retail electric suppliers.

Energy storageStorage is an essential part of the solution for renewable energy integration. It can address problems such as smoothing rapid variations in output from renewable energy generation, leveling output from renewable energy plants to align actual output with scheduled output, and storing electricity for use.

In some countries, integration of zigbee certified electrical vehicle (EV) charger with the grid vis-a-vis smart meter has been demonstrated using zigbee home area network and the charging cost has been reduced to half. The drivers were provided information through the web/smart phone and via e-mail/text message. In India since only few electrical vehicles are on road the concept is pre-mature but in a few years from now the EV charging infrastructure would be required to be in place at shopping malls, spacious petrol pumps and industrial complexes.

The challenges of integrating renewables are not unique for India. System-wide analysis of how the deployment of large-scale renewables physically affects conventional thermal power plants, the limits of their capabilities for such accommodation and the degree to which such integration is changing the physical and economic operation of power system, needs to be carried out in detail. Large amount of intermittent generation from wind and solar would have to be compensated with large-scale economical energy storage capacity and demand responsive loads.

In some parts of country, over-burdened

power lines make it difficult to transmit the

entire energy. There could be cases where wind generation could

be forced to shut down even when the

wind is blowing. Smart technologies can help provide maximum flow to prevent congestion.

20

StatisticsPowerNovember 2013 www.InfralinePlus.com

State-wise Achievement of Electrification under RGGVY (September 2013)

Sr. No. State Revised Coverage Cumulative total (up to September 15, 2013)

UEV PEV BPL connec-tions

Un-electri-fied

PEV BPL connec-tions

1 Andhra Pradesh 0 26628 2766614 0 26628 27666142 Arunachal Pradesh 2081 1526 53337 1825 1094 432973 Assam 8234 12907 1229992 8051 12393 10124644 Bihar 24894 18717 5552867 22876 5320 24334765 Chhattisgarh 1736 16099 1220281 1127 12923 10007066 Gujarat 0 16337 834495 0 16269 8344957 Haryana 0 6593 250409 0 4676 1992798 Himachai Pradesh 95 12734 17215 83 10534 163739 Jammu & Kashmir 234 3247 79991 190 2978 6296710 Jharkhand 18912 6368 1473109 18110 5749 130682311 Karnataka 62 25288 917153 62 24708 86257512 Kerala 0 1272 117504 0 181 8997013 Madhya Pradesh 886 49327 1840904 614 25850 101787614 Maharashtra 0 41921 1218140 0 36763 120301315 Manipur 882 1378 107369 616 585 2965816 Meghalaya 1866 3239 109697 1682 2394 9017717 Mizoram 137 570 30917 94 346 1864418 Nagaland 105 1168 72861 89 1075 4169419 Odisha 14725 29329 3047561 14391 25512 283957120 Punjab 0 6454 102176 0 5904 10040421 Rajasthan 4238 34403 1435167 4150 33386 115423322 Sikkim 25 413 12108 25 383 983223 Tamil Nadu 0 10402 525571 0 9673 50120224 Tripura 148 658 117163 143 622 11254125 Uttar Pradesh 28006 22973 1988574 27750 2982 104493326 Uttarakhand 1512 9263 269560 1511 9221 26956027 West Bengal 4202 24256 2286122 4185 23112 2178051Total 112980 383470 27676857 107574 301261 21240428

21


Status of State-wise Funds Released under R- APDRP

Sr. No State/UTs Projects sanctioned under Part-A

Projects sanctioned under Part-B

Funds released for Part-A & Part-B (INR Crore)

1 Andhra Pr. 505.62 1294.67 406.512 Arunachal Pr. 37.68 0 11.33 Assam 195.6 644.05 251.894 Bihar 216.62 1155.21 140.95 Chhattisgarh 163.51 710.24 155.586 Chandigarh 33.34 0 07 Goa 110.74 0 31.478 Gujarat 369.23 954.02 343.019 Haryana 165.63 673.58 49.6810 Himachal Pr. 96.41 338.97 155.1611 J&K 204.88 1665.27 561.0512 Jharkhand 160.61 0 48.1813 Karnataka 391.14 786.59 327.9214 Kerala 297.55 1078.3 25115 Madhya Pradesh 378.57 2034.6 456.9416 Maharashtra 486.04 3468.74 763.4617 Manipur 31.55 398.87 129.1318 Meghalaya 33.98 0 10.1919 Mizoram 35.12 0 10.5420 Nagaland 34.58 0 10.3721 Puducherry 41.42 84.78 4.522 Punjab 325.21 1509.73 381.5623 Rajasthan 466.83 1536.07 406.5224 Sikkim 26.3 68.46 28.4325 Tamil Nadu 599.17 2190.88 671.726 Tripura 35.18 165.09 60.0927 Uttar Pradesh 931.49 5093.77 911.9228 Uttarakhand 142.37 584.09 189.1329 West Bengal 196.71 683.11 231.78Total 6713.08 27119.09 6999.91

NewsBriefs | Coal

22


US coal miner offers ICVL stake In three operating mines

Southern Coal Corporation, the largest privately held coking coal producer in the US, has offered ICVL equity participation in three operating mines. A confidentiality agreement has already been signed between the two parties and detailed due diligence has been commenced, a source in the know said. Southern Coal Corporation, owned by The Greenbrier Resort owner Jim Justice, operates mines in Alabama, Kentucky, Tennessee, Virginia and West Virginia.

ICVL eyes Rio Tintos stakeIn Riversdale Mining

International Coal Ventures Ltd has evinced interests in buying Rio Tinto-owned Riversdale Minings coal mines in Mozambique. ICVL is also open to acquire some stake in the Africa-focused miner, an official said. Rio Tinto took over Riversdale Mining in 2011 for USD 4 billion by buying out Tata Steels over 24 per cent stake and Brazilian Companhia Siderurgica Nacionals entire 19.35 per cent holding in Riversdale. ICVL had hired Citigroup to assess the potential of a counter bid.

`3 bln project of Bharat Coking CoalSadbhav Eng emerges as the bidder

Sadbhav Engineering said it has been declared the successful bidder (L1) by Bharat Coking Coal, a subsidiary of Coal India, Dhanbad for contract value of `3.02 billion. Hiring of HEMM for removal of OB and extraction and transportation of coal from IV (B), III,II l(T) & |(B) seams of Patch-J of Dhansar Colliery of Kusunda Area, it said. The total quantity for the removal of over burden (OB) is 265.39 LCM and extraction of coal is 70.14 LM I, it added.

De-allocated coal blocksNTPC knocks on Power Ministrys door

NTPC has requested Ministry of Power to work in tandem with Ministry of Coal for reviewing the decision of de-allocation of Brahmini & Chichro-Patsimal coal block and restoring to JV Company of CIL and NTPC i.e. CIL-NTPC Urja Pvt. Ltd. NTPC had earmarked coal produced from these mines for expansion of Kahalgaon (1500 MW) and Farakka (500 MW) Power stations, which have already been commissioned but are running at lower capacity (PLF of around 65%) for paucity of coal.

Gujarat NRE Coking CoalJSPL to acquire majority stake

Jindal Steel and Power (JSPL) will acquire a majority stake of 53.63% in Gujarat NRE Cokes loss-making Australian subsidiary through a complex deal, which involves issue of convertible notes, placement of shares and option to acquire shares at a later stage. The deal, announced last month, by the shareholders of Gujarat NRE Coking Coal Ltd -- the Australian subsidiary of Kolkata-based Gujarat NRE Coke-- in a general body meeting held in New South Wales.

Overseas coal assetsNeyveli shortlists 18 proposals

Neyveli Lignite has shortlisted 18 odd proposals - out of 89 it has received from companies in various nations such as Indonesia, Australia, Mozambique and the US - for buying coal assets overseas. The company is looking to acquire 2-3 assets for supply of 2-10 million tonne (MT) of coal in a year to secure long- term fuel linkages to its upcoming power projects. The 89 proposals are under five different categories, including joint ventures, he said.

Coal-bed methane explorationCoal India is not an expert: Moily

Oil minister Veerappa Moily has rejected a draft note for the Cabinet proposing exploration of coal-bed methane (CBM) rights to state-run Coal India without auction and directed bureaucrats to re-draft it to encourage competition and efficiency, officials said. Moily rejected the proposal saying Coal India should not get automatic rights of over CBM exploration only because most of coal blocks are held by the public sector firm, which is the single largest coal producing company in the world.

Govt delaying allocation approvalsForced to sell CBM gas at $13/unit: RIL

Reliance Industries has told the government it would start selling gas from its coal bed methane (CBM) blocks at $13 a unit, and will not wait endlessly for official approval because the contract says the market-discovered price is deemed to be approved in 60 days. It has accused the oil ministry of trying to delay the approval of the price of CBM blocks in Madhya Pradesh although the company had invited bids in February 2012 and discovered the price of $12.93 per unit.

Use of coal from captive mines Flexible norms on course

The government will relax the rules on the use of coal from captive mines as it prepares to auction 22 blocks by December. On the agenda is a mechanism allowing firms to divert coal from captive mines used in a particular steel or power unit to another owned by the same group. At present, this is not allowed under rules framed during the tightly controlled era of the 1970s over fears of coal being sold in the black market. With coal being available in the open market, such rules have become irrelevant.

Blocks allotted may be scrapped JSPL, Tata Power at risk

Within days of the CBI naming Aditya Birla Group chief KM Birla and former coal secretary PC Parakh in its 14th FIR in the blocks allocation case, the coal ministry is preparing to cancel the allotment of some mega blocks including those of JSPL, Tata Power, NTPC and SAIL. The inter-ministerial group (IMG) looking into the case has shortlisted 30 blocks. Show cause notices have already been served a month ago to the allottees of each block pointing to the defaults in meeting milestones.

CIL to import coal Through PSU agencies

Coal India has decided not to take on the responsibility of importing coal itself but use the services of state-owned cross-border trading corporations (public sector undertakings). Under the current plan for import of coal for meeting the FSA commitments, CIL has decided that such import of coal will be made through PSU agencies like MMTC, STC, PEC and MSTC. Selected agencies will be required to import through international competitive bidding as per Govt of India guidelines.

Underground coal gasificationGovt to come out with a policy soon

The govt is likely to come out with a policy on underground coal gasification soon, according to a top Coal Ministry official. We are working on it and very shortly we will be coming forward with a policy on underground coal gasification, the official said. There have been so many things which have been happening that somehow we could not carry this policy forward. Underground coal gasification is definitely an area we need to work upon it as open cast mining is becoming difficult, he added.

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InDepthNovember 2013 www.InfralinePlus.com

The Centre has stepped up efforts to address concerns regarding power supply to coal producing states and is making exclusive allocation from National Thermal Power Corporation (NTPC)-run power stations to Andhra Pradesh, Chhattisgarh, Madhya Pradesh, Odisha and Bihar, according to sources. The government will allocate 40-50 per cent power from ultra mega power projects (UMPP) to the respective coal producing

Corp. Ltd (APgenco) and NTPC, will invest `10,360 crore over the 12th Plan period (2012-17). The investment will lead to expansion of production, opening of new mines and building a 1200 mw coal-based power plant in the states Adilabad district.

In Madhya Pradesh, the power capacity of NTPC is 4260 mw and the government has allocated 2600 mw exclusively for the state which is rich

states to check power shortages there. Besides this the government has planned massive revamp of state electricity boards (SEBs) in the country.

In Andhra Pradesh, NTPC has an installed power capacity of 4600 megawatt (mw), out of which 2646 mw has been exclusively allocated to the state. Singareni Collieries in the state, which supplies most of its coal to the state-owned Andhra Pradesh Generation

Exclusive power for coal producing states

NTPCs ultra-mega projects to ensure 50 per cent power for home state

Competitive bidding being encouraged for procurement of power

by Shakeb Ayaz

25


in coal and has mines in Singrauli and other regions.

In Chhattisgarh, NTPCs capacity is 5580 mw out of which 1029 mw has been allocated to the coal-rich state for its exclusive use. In West Bengal, the capacity of NTPC is 2100 mw and substantial allocation has been made for exclusive use of the state, which boasts of Raniganj coal fields.

In Bihar, the capacity of NTPC is 2340 mw and 1500 mw has been allocated for the exclusive use of the power-starved state. NTPCs power capacity in Odisha is 3460 mw out of which exclusive allocation for the state is 1508 mw. In Jharkhand, NTPCs power capacity of 1,980 mw is yet to come up at North Karanpura but substantial allocation will be made for the coal-rich state to take care of its power woes.

In Maharashtra, the capacity of NTPC is 1000 mw but the state is getting substantial share of power3847 mwunder Gadgil Formula. Under the formula, 10 per cent of power goes to the home state, 15 per cent remains un-allotted while 75 per cent is distributed to other states.

The nodal agency for UMPPs, Power Finance Corporation (PFC) has awarded four such projects. Reliance Power has bagged three - Krishnapatnam in Andhra Pradesh, Tilaiya (3960 mw) and Sasan (3960 mw). Tata Power has set up a 4000 mw plant at Mundra in Gujarat. Another UMPP is likely to come up in coal producing state of Odisha but the project is stuck because of land acquisition issues and usage of surplus coal.

The government has come up with the concept of UMPPs in order to meet the growing gap between demand and supply of power. The main feature of UMPPs is that they are low cost projects but with large capacities. They are awarded to developers on tariff-based competitive bidding on a build-own-operate basis.

Tilaiya UMPP is a pit-head power project and has been allocated two captive coal blocks Kerandari B and C having reserves of almost 1.3

billion tonne. To push for improving energy supplies to the home state and the surrounding region, authorities plan to mine 40 million tonne of coal annually from these mines for the Tilaiya power project.

Recast of SEBsBesides ensuring power to coal-producing states from the nation grid, the Central government is also working on a major overhaul of SEBs. In Uttar Pradesh, Rajasthan, Haryana and Himachal Pradesh, the restructuring is almost complete. To be done at a cost of `98,000 crore, half of the restructuring amount will be taken over by the state government while the rest will be made by the utility, according to sources.

Special dispensation has been taken

up for another four statesJharkhand, Bihar, Andhra Pradesh and Karnatakato extend the benefit of financial restructuring plan (FRP), the power ministry said in a statement recently. As a part of the conditions of FRP, Model State Electricity Distribution Responsibility Bill is under finalization in the ministry of power. The objective of the Bill is to provide for responsibilities of the state government to ensure financial and operational turnaround and long-term sustainability of the state-owned distribution licensee to enable adequate and affordable electricity supply to consumers through financial restructuring, according to an official.

The government is also working on a model for power tariff rationalization. It is facing a challenge on this issue as the private sector is pitching for increasing the cost of power while the public is against it. Most of the states in the country had increased electricity tariffs last fiscal. Five Union territories and 23 states had increased power rates ranging from a 2 per cent to 73 per cent. There was a 2 per cent increase in tariff in Karnataka while Tripura had seen a jump of 73 per cent. Punjab, Gujarat and Bihar are among the eight states which have hiked power tariff in the current year.

Procurement of powerThe government has stepped up efforts to ensure competitive procurement

Sr. No. Project (Thermal coal based) State Inst.Capacity1 NTPC Korba Chhattisgarh 2,600 mw2 NTPC Ramagundam Andhra Pradesh 2,600 mw3 Farakka Super Thermal Power

StationWest Bengal 2,100 mw

4 NTPC Vindhyachal Madhya Pradesh 4,260 mw5 Kahalgaon Super Thermal

Power StationBihar 2,340 mw

6 NTPC Talcher Kaniha Odisha 3,000 mw7 Talcher Thermal Power Station Odisha 460 mw8 Simhadri Super Thermal Power

PlantAndhra Pradesh 2,000 mw

9 Sipat Thermal Power Plant Chhattisgarh 2,980 mw

10 NTPC Mouda (1 unit 500 mw is commissioned in April 2012)

Maharashtra 1,000 mw

Source: NTPC

The government has come up with the

concept of UMPPs to meet the gap between

demand and supply of power. They are

low cost projects but with large capacities. They are awarded to developers on tariff-based competitive

bidding basis.

26

InDepth


of power. Case 2 bidding has already been finalized. The ministry of power has observed that even while there is requirement of power in the states, distribution utilities are not coming up with tenders for procurement even though uncontracted capacity is available with the developers. Based on the latest report by Central Electricity Authority (CEA), out of the 80 gw capacity required to be tied up through bids, about 63.5 gw is to be tied up by states like Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. Even though some of the states have signed many power purchase agreements (PPAs), they may not fructify during the 12th Plan as they have issues with input tie-up, especially fuel and land. States must make informed procurement planning and tie up available power, according to an official of the power ministry.

The state governments should ask their discoms to take steps for long-term procurement of power by inviting bids and refrain from buying short-term power at exorbitant rates. Discoms of Rajasthan have come out with 1,000 mw Case I bidding and discoms of Uttar Pradesh with 6,000 mw Case I bidding

which have been partly finalised. Additional generation target during

12th Plan is 88537 mw comprising 26182 mw in central sector, 15530 mw in state sector and 46825 mw in private sector. With this level of capacity addition, the projected demand for power on an all-India basis is likely to be met by the terminal year of 12th Plan. To meet the power requirement, state governments / discoms need to tie up procurement of power through tariff-based bidding, depending upon their anticipated demand-supply scenario. While the private sector has tied up 25129 mw capacity with state discoms, about 21696 mw remains to be tied up. States must make informed procurement planning and tie up available power.

Revamp of infrastructure For suggestions email at [email protected]

As the government has planned massive overhaul of power infrastructure, there would be a need for electric power equipment such as transformers, power stations and state-of-the-art machinery. The government had at one point imposed high tariffs on imports as local manufacturing units were suffering. But this had led to slowing down of quality electric products from the international market in the Indian market, hitting the distribution sector hard.

To improve the flow now, the government wants investment in the sector and is encouraging international giants to tie up with Indian firms for production of such equipment in the country. Several companies (international manufacturers forming joint ventures with Indian companies) have already set up or are in the process of setting up manufacturing facilities in India. These include L&T with Mitsubishi Heavy Industries, Japan; BGR with Hitachi, Japan; Alstom France with Bharat Forge; Toshiba Japan with Jindal Steel; Thermax with Babcock; Ansaldo of Italy with Gammon and Doosan of South Korea.

Third party samplingNTPC and state electricity boards have been grappling with the problem of allegedly poor quality of coal supplied by government-run monopoly Coal India Limited. To check the problem, the Central government has introduced the concept of third party sampling from October 1 in which the coal will be tested by a third party after it comes out of CI

Infraline Plus Nov2013

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