Coal Plan for Power Sector During Thirteenth Five Year Plan

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Coal is considered as an indispensable fuel source for the Indian Power sector to grow in parallel to the Economy. Coal availability and requirement have always been a major concern for thermal power plants. The domestic coal production in the country is insufficient to fully meet the requirement of the sector and this necessitates for imported coal to meet the additional demand. 12th Five Year Plan is expected to end with a shortage of 190MT of shortage in domestic and needs to be imported. Keeping this in view the 13th Five Year Plan projects the following statements regarding the availability and requirement of coal. 
  1.   A planned capacity of 66,000 MW additional coal based capacity proposed to be added in the XIII Plan. Coal for 20,000 MW capacity will be met from the additional production of 100 million tonnes from captive blocks, coal linkages already exist for 20,000 MW and coal for the balance 26,000 MW would need to be met from both the incremental production from CIL as well as imports.
  2. Out of the envisaged incremental coal production of 180 million tonnes from CIL in the XIII Plan, 80% or 144 million tonnes is earmarked for power sector which would support about 32,000 MW additional capacity at the rate of 4.5 million tonnes per 1000 MW capacity. The existing linkages for the 20,000 MW capacity, include this additional availability and thus coal for about 14,000 MW capacities (46,000 MW - 32,000 MW) would need to be tied up.
  3.   As per the recent allocation of fourteen coal blocks to Government Companies/ Corporation for power generation, four large blocks namely Balumuda, Banai, Chandrabila and Kuda Nali Luburi have been allocated to NTPC for meeting the requirement of a capacity of 9,780 MW and exploration is ongoing in three of these blocks i.e. Balumuda, Banai and Chandrabila and the geological reports are expected to be available by January, 2016, June, 2015 and April, 2014 respectively for these three blocks. The exploration in Kuda Nali Luburi Block is yet to be commenced. Thus, NTPC should aim at expediting the exploration in these blocks such that these blocks can be brought into production latest by middle of XIII Plan and this would help in realising some 5000 MW to 8000 MW capacity. 
  4. Ministry of Coal is considering offering of four explored blocks for tariff based power plants through bidding and these four blocks can support an additional generation capacity of about 10,000 MW. With concerted efforts, these four blocks could be brought into production by the beginning of the XIII Plan as they are the explored blocks. In addition, there are couple of State utilities which have been allocated coal blocks in the recent past (Ten blocks) and there is scope for them to advance the production schedules such that some additional capacity is feasible to be added in the XIII Plan. This would also add up in meeting the gap of 26,000 MW as mentioned above.
  5. Ten blocks allocated to state government companies are unexplored. Coal production from these blocks could support 20,000 MW capacity. Considering the process of exploration and obtaining forest & environment clearance and land acquisition, none of the above mines are expected to commence production in XIII Plan period. Efforts must be made to get necessary clearances for at least few of the blocks to have additional coal production to support 5000 MW capacity from these blocks. Ministry of Power and Ministry of Coal agreed to the suggestion
Development of these coal blocks, advantages of enhanced efficiency by switching over to super-critical technology in case of all the future generation units and to build the same into the envisaged coal requirement, mechanism to incentivize state governments for soliciting their cooperation in expediting coal block development are few important notes that all the concerned ministries should take into account to keep the conventional fuel coal into a more stable position
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Analysed outcome on Design and Performance of Chinese Equipment by CEA

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Central Electricity Authority has done two studies on Design and Performance of Chinese Equipments. The two studies made were, the first one included Design Features of Boilers and Auxiliaries being sourced from Chinese Manufacturers in year 2008. The second one was to Analyze the performance of Chinese equipment vis-a-vis Indian equipment in year 2013
Details of Study on Design Features of Boilers and Auxiliaries from Chinese sources.
  • The Study Covered 5 stations with 300/330 MW and 2 stations with 600 MW . units (All Sub-critical)
    • 300/330 MW Units - Yamunanagar- HPGCL, Durgapur- DPL, Sagardighi- WBPDCL, Lanco-Amarkantak, Mundra-Adani Power.
    • 600 MW Units- Lanco Anapara C, Hissar HPGCL.
  • Only 3 Commissioned Stations - Yamunanagar, Durgapur & Sagardighi.
  • Main Findings in this study.
    • The technical particulars relating to major design features of boiler and their auxiliaries found to be in line with good engineering practices- any generic design issues could be best known after these units operate for an initial period of about one to two years.
    • Initial 1-2 years of operation of any plant are critical and will bring out inherent generic deficiencies, if any.
    • Operational feed back then available indicated milling Constraints in some units
    • Secondary fuel oil consumption has been found to be high in all the three operational projects.
    • Layout constraints Found in some of the plants which may result in difficulties in attending to the equipment during maintenance.
    • Data Gaps- No information from Chinese manufacturers on design features, operational performance, Standards followed during manufacturing & testing procedures. Lack of Sufficient data with plant owners.
    • Some of the utilities did not have complete information about important technical particulars -During interaction with the project authorities of the three operating stations, it has emerged that there has been substantial lack of participation by the utilities in the areas of technical specifications, detailed engineering, quality inspection at works, erection supervision, training of O&M personnel, etc.
    • Important equipment drawings/ technical data/ documents were not available with the projects. Design data was also not available with some IPPs sourcing the equipment from Chinese manufacturers.
  • Recommendations - Need for due diligence
    • Due diligence required by the utilities during stage of specification finalization and detailed engineering, inspections/testing etc. to minimize O&M problems
    • Detailed comprehensive quality plans for ensuring quality at works and at site identifying customer hold points and test procedures and Standards needs to be defined and implemented for each major equipment/system. Some of the utilities were found lacking in this regard
Details of study to Analyse the performance of Chinese equipment vis-a-vis India Equipment.
  • A study to Analyse the performance of Chinese equipment vis-a-vis Indian equipment was taken up by CEA in 2011 - through a Committee of CEA and NTPC.
    • The Objective of the study was to analyse the performance of Chinese equipment vis-avis Indian equipment (BHEL) including coal consumption patterns, heat rate and efficiency achieved.
    • Areas Covered
      • Operating Load Factor (OLF), Outages/Downtime
      • Design Parameters- Turbine cycle Heat rate & Boiler Efficiency Flow Margins
      • Operating Efficiency - Heat Rate and Specific Fuel Oil Consumption
      • Problems in Erection & Commissioning
  • Units Considered in Study 2  
    • The Study covered Chinese Subcritical units of 300 and 600 MW and BHEL Sub-critical units of 250 and 500 MW units commissioned in 11th Plan (2007-08 to 2010-11)
    • Chinese capacity covered - 8200 MW
      • 22 Units across 11 stations
    • BHEL capacity Covered -12480 MW
      • 36 Units across 22 Stations
Chinese Make Units. Indigenous (BHEL) Units
Unit Size Units Stations Unit Size Units Stations
300 MW 13 7 250 MW 22 12
330 MW 4 1 500 MW 14 10
600 MW 5 3
  • Study-2: Details of Manufacturers
    • Manufacturers Wise Break up of Capacity
Supplier  Boiler Supplied TG Supplied
Nos. Capacity Nos. Capacity
Dongfang China 6 2100 8 3300
SEC China 10 3600 10 3600
Babcock Wilcox China 4 1320 0 0
Beijing Beizhong STG China 0 0 4 !320
Harbin China 2 1200 0 0
BHEL India 36 12480 36 12480
  • Thus Most Chinese Supplies from Dongfang and Shanghai (SEC).
  • Main Finding - Steam Parameters & Heat Rate
    • Steam parameters and Design Turbine cycle heat rate
S. No Stations /Unit Size MS Pressure Temperature MST/RHT Turbine cycle heat rate Remarks
1 Chinese 300 MW units 1701 537/537 1910 The Design Heat rate for Chinese units do not correlate well with the steam flows indicated and large variations in design steam flows are seen for similar
2 Chinese 600 MW units 170 537/537 1954
3 BHEL 250 MW Units 150 537/537 1945
4 BHEL 500 MW Units 170 537/537
537/565		 1945
1936
The regenerative system configuration of Chinese machines is different from BHEL machines and Chinese 300 MW units have higher steam Pressure also. Thus on like to like comparison basis the BHEL machines indicate higher cylinder efficiency implying that their design/construction in terms of blading provided, sealing etc. renders higher efficiency
Expected THR of BHEL machine with similar configuration - 1890 (250 MW) and 1932/1920 (500 MW)
  • Main Findings - Flow Margins
Both, the Chinese 300 & 600 MW and BHEL 250 & 500 MW units have adequate flow margins - VWO and BMCR margins. However the Chinese 330 MW machines have a composite TMCR to BMCR margin of 5.34 % which is very low and not compliant to the CEA Technical Standards and may not meet IEGC provisions.
  • Main Findings -Outages and Load Factors
Operating Load factors and Outages
S. No Stations Operating Load Factor (%) Total Outages (%) Remarks
1 Chinese units -Domestic Coal 512 23.5 Chinese units based on domestic coal have higher outages and lower load factors than imported coal based units as well as BHEL units
2 Chinese units -Imported Coal 80.4 14.1
3 BHEL Units Domestic Coal 71.6 18.7
CEA Monitoring Data
PLF - 2011-12 (units in Study) - Chinese (D) -66.19, (I) 75.46, BHEL- 76.68
PLF - 2012-13 (units in Study) - Chinese (D) -52.27, (I) 81.57, BHEL- 78.13
  • Main Findings - Operating Heat Rate
S. No Stations Operations Heat Rate Remarks
kcal/kWh Dev. from Design (%)
1 Chinese units Domestic Coal 2719 23.29 Chinese units based on domestic coal. Have higher Operating Heat Rate than Chinese imported coal based units as well as BHEL units.
2 Chinese units Imported Coal 2275 4.71
3 BHEL Units Domestic Coal 2520 12.77
Chinese imported coal based units show much lower heat rate than indigenous coal based units - the difference is far higher than envisaged due to the boiler efficiency difference.
Variations in Operating Heat Rate of BHEL units are seen. Six stations show operating deviation (below 5%, four stations show deviation of around 10-11 %. Rest of the stations show very high deviations of 15-25 % and even higher.
Chinese indigenous coal based units generally show high operating deviations.
  • Main Finding - Specific Secondary Fuel Oil Consumption (SFC)
S. No Stations SFC Remarks
1 Chinese units Domestic Coal 6.13 BHEL Units show remarkably better SFC than Chinese indigenous coal based units
2 Chinese units Imported Coal 1.34
3 BHEL Units Domestic Coal 3.06
SFC for Chinese imported coal based stations is considerably lower than indigenous coal based stations. Indigenous - 2.5 to 5 ml/kWh. Best Yearly values Indigenous- 0.90, Imported- 0.53.
Large number of BHEL supplied stations show very low SFC of below one ml/kWh. The lowest overall (2007-11) SFC is 0.27 ml/kWh followed by 0.47, 0.52, 0.54 and 0.81 ml/kWh.
The yearly SFC for individual BHEL stations are even lower. The best yearly SFC is 0.16 ml/kWh followed by several instances of yearly SFCs in the range of 0.20 to 0.50 ml/kWh.
  • Station Visits
    • Visits to Stations
  • BHEL stations - Generally satisfied
  • Chinese Stations - Mixed Bag. Widely different feedback from two stations visited.
  • Main Finding - Turbine Control Systems
The level of automation in Chinese turbines is much less than the BHEL turbines The Chinese turbines do not have many analysis/diagnostic functions and equipment safety features such as Turbine Stress Evaluator (TSE) and Auto Turbine Run-up Systems (ATRS) in their control system. Thus, lot of manual interventions are envisaged during start up as well as during normal operation of Chinese machine contrary to philosophy of fully automated system with minimum manual intervention in BHEL machines.
Thus the control systems of Chinese turbines are not in line with the prevailing modern turbine design/technology. Manual intervention during critical operations gives rise to subjectivity with the possibility of mal-operation and accidents.
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Super Critical Technology in Power Sector a Long Way to Go

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For a country like India where major generation is based on thermal units and where coal is being used as a fuel source, the need to control the emissions is a necessary for future generations to sustain on the same technology. The control over emissions from burning coal can only be improved with use of better technologically sophisticated equipment that can improve operational efficiencies of power plants. In this view a brief of the supercritical technology implementation in India is detailed below.
The critical point of water is defined as 220.6 bar & 374°C. The power plants operating above this point are called Super Critical Power Plants and the power plants operating below this point are called Sub Critical Power Plants. At super critical parameters, the Latent heat of Vaporization is Zero, hence, water directly becomes steam without boiling.
Power Plants operating at Super Critical parameters have higher efficiency compared to that of Sub Critical plants and therefore have lower Emissions and lower specific Fuel consumption.Conventional sub critical steam power plants operate at a steam pressures in the range of 170 bar or below. The new generation Super Critical power plants of NTPC operate in the pressure range of 247 kg/cm2 and temperature of 565 to 593°C.
World Scenario in Implementaion of Super Critical Technology: Supercritical power plants first came into commercial operation in the US and they employed very ambitious steam parameters. (110 MW Philo 6 came online in 1957, retired in 1975 and had main steam turbine inlet pressure of 316.4 kg/cm2 (4500 psi) and Temperature of 621°C (1150°F). Eddystone 1 (in 1960), a 325 MW unit with main steam turbine inlet pressure of 352 kg/cm2 (5000 psi) , temperature of 649°C (1200° F). About 160 plus supercritical units came in the US during 1960s and 1970s. Commercially best available technology today employs temperature in the range of 600°C to 620°C with highest parameters for modern plant being used in Japan and Europe. Japan and Europe are the clear leaders in the material technology commercially available in the market. World leaders in adoption of super critical units are the US, Japan, China, Germany, countries of former USSR, South Korea and Italy. Former USSR constructed several units of 300 MW capacity with Supercritical parameters and had maximum total installed capacity of Supercritical units. Europe was developing materials suitable for 700°C class under AD 700 program - which has not been abandoned. US launched its own program (DOE, EPRI and Ohio Coal development office) to develop materials suitable up to 1400°F (760°C) class. Today majority of coal fired plants in the world are sub-critical, however by a rough estimate more than 500 units representing an estimated 300 GW (22% of total capacity) utilised super critical and Ultra Supercritical steam conditions by the end of 2007.
Power Plant Technology in India so far: Power generation in India is dominated by thermal power generation, which is predominantly based on sub-critical coal fired technology. Efficiency of a coal based unit strongly depends upon the steam parameters being used. With sufficient operating experience gained through operation of 500 MW sub-critical units in the country, newer units based on super critical parameters were commissioned in India during the XI plan.
Advantages of Super Critical Technology: Capital cost of a super critical plant is higher than that of sub-critical plant due to its higher operating pressure and also because of use of superior materials in boiler and turbine. This additional capital cost may be offset by saving in fuel cost. If the fuel cost is high, then saving due to efficiency improvement is more. This saving in operational expenses may compensate the increased capital expenditure of supercritical units. Further techno-economy for supercritical units may be achieved by increasing the unit size. Further, modern super-critical plants are also known tohavebetter load following capabilities as once-through design of these boilers have fewer thick section components than the conventional drum type boilers used for sub-critical plants. The cost of a super critical plant is approximately 2-3% higher than the cost of a conventional plant.
Supercritical Units in NTPC: Looking at the global concerns on CO2 emissions, NTPC took initiative to introduce supercritical technology for power plants in India. Under this effort NTPC ordered 660 MW super critical units for Sipat-I and Barh-I in 2003-04. The steam parameters adopted for these plants were 247 Kg/cm2 / 537°C / 565°C - as against 170 kg/cm2 / 537°C / 537°C. This resulted in turbine heat rate improvement of about 10% over that of Singrauli-I (5x200 MW).
NTPC has further raised the steam parameters for Barh-ll units and the upcoming supercritical units under 660 MW and 800 MW bulk tender to 247 Kg/cm2 / 565°C / 593 °C. This will result in turbine heat rate improvement by about 12% with reference to that of Singrauli-I (5x200 MW).
So far, NTPC has commissioned three super critical units of 660 MW at Sipat-I and synchronized first super critical unit of NTPC with higher steam parameters of 660 MW at Barh-ll (2x660 MW).
With abundant coal reserves, coal has been and is likely to remain mainstay fuel in India for power generation for many more years to come. Therefore, in order to further address the challenge of Global warming and fast capacity addition at affordable price, it is essential to install coal based plants with further elevated steam parameters leading to adoption of advanced and ultra supercritical units in the country.
Material Development for Ultra Supercritical: The main barrier or enabler for Supercritical and Ultra Supercritical plants has been development of high temperature materials. World wide research has resulted in numerous high strength steels and alloys for heavy section piping, boiler tubes, and steam turbine rotors.
Low alloy carbon steels have proved their worth for sub critical units with temperatures upto 540°C. Newly developed high creep strength martensitic 9% to 12% chromium steels such as P91, P92 (NF-616) and P122 (HCM 12A) used for thick section boiler components and steam pipes - are the key new materials that have enabled supercritical units to operate at temperatures approaching 1100°F (593°C). Research, development and demonstration programs underway in Europe and Japan aimed to produce materials capable of withstanding 1300°F (700°C).
Government of India also launched Mission 2017, a program to develop Advance Ultra Super Critical (Adv-USC) technology for power plants operating at 310 kg/cm2 and 700°C steam parameters with indigenously developed materials and equipment. Mission intends to utilize core strengths of organizations such as IGCAR (Indira Gandhi Centre for Atomic Research), NTPC and BHEL. Co-operation from other national/international consultants/institutions/laboratories will be sought, as required. After development of Adv-USC technology, mission proposes to establish an 800 MW Adv-USC Demo plant based on indigenous technology. Mission has a time frame of seven years (2.5 years for R&D and 4.5 years for setting up of Demo plant) from the time the funding for the project is cleared by the Government of India.
Indigenous Supercritical Manufacturing Capacity Building: Government of India envisaged Bulk Tendering of Steam Generator and Steam Turbine Generator of various projects with an objective to develop indigenous capability and capacity for manufacturing of supercritical units in the country. In this regard Ministry of Power conveyed to NTPC the approval of Government of India for induction of supercritical technology through bulk ordering of supercritical units.
The Gol directive outlines important eligibility criteria for the boiler and turbine bidders. As per the directive, setting up of manufacturing facility of supercritical units in India is a mandatory condition for the bidders desirous of participating in the tender. The directive puts great emphasis on creation of manufacturing facilities in India by the technology providers/Original Equipment Manufacturers (OEM), either through a Subsidiary/JV Company incorporated in India or through an Indian licensee. These efforts resulted in establishment of multiple players each in manufacturing of supercritical boiler and turbines in India based on above initiative of Gol, NTPC has so far issued tenders for 11 units of 660 MW and 9 units of 800 MW, out of this orders have been placed for 11 units of 660 MW (9 for NTPC and 2 for DVC) and 7 units of 800 MW (all for NTPC).
Issues relating to super critical technology: The challenge is not to install the super critical power plant but to operate and maintain it with high availability. About 160 plus supercritical units came in the US during 1960s and 1970s. After that the supercritical technology suffered the setback due to problems associated with material suitability for such high steam parameters.
With increase in coal cost and emphasis on climate issues, Super Critical technology is attracting renewed interest and adoption of super critical technology in India is also gaining momentum. Nearly 50% of the total capacity to be installed during XII plan and nearly 90% of the capacity addition during XIII plan is expected to be from supercritical. Bulk tendering of super critical units with an aim to develop indigenous manufacturing capacity for super critical units and Mission 2017 to develop indigenous advanced Ultra Supercritical technology are the steps taken towards the challenge of faster capacity addition and mitigating global warming concerns.

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Pooling of Gas Prices - An Optimistic approach to Keep Gas Based Power Plants under Optimal PLF

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Power sector is facing acute shortage of gas and many plants are either stranded or operating at very low PLF, whereas Fertilizer sector is getting almost its complete requirement of gas. Therefore, Ministry of Power had proposed the Empowered Group of Ministers (EGoM) on pricing & commercial utilization on NELP gas for allocation/ supply of gas to Power sector on equal priority with Fertilizer sector or if not equal priority, then it was proposed to cap allocation/ supply to Fertilizer at 31.5 MMSCMD and allocate entire additional domestic gas coming into the system to (after meeting shrinkage requirements) power sector till its full requirements are met.

EGoM have decided that the total domestic gas supply to fertilizer sector be capped at their present level of 31.5 MMSCMD as their full demand is being met. The EGoM further decided that all additional domestic gas from the year 2013-14, 2014-15 and 2015-16 will be allotted to power sector to help improve generation. EGoM will review the gas production scenario thereafter for deciding supply of additional domestic gas that would be available from 2016-17 onwards to Fertilizer and Power sectors.

Additional Domestic Gas that can be made available to Power Sector for the years 2013-14, 2014-15 and 2015-16, if Allocation/ Supply to Fertilizer capped at 31.5 MMSCMD is 1.125, 3.980 and 6.895 mmscmd respectively. This entails a net shortfall of 70.515, 66.54, 59.64 mmscmd during the same same period respectively and this is calculated based on the PLF of 70/75.

Analysis on Pooling of Domestic gas with RLNG for Power sector
Even after considering capping of allocation/ supply to Fertilizer at 31.5 MMSCMD and allocating the entire additional domestic gas to Power sector, there will be a net shortfall for Power sector. This shortfall can only be met by importing RLNG and pooling this with the price of the domestic gas and providing subsidy to Power sector to make gas based generation viable at operating the plants at technically sustainable PLF. At present, 12,561 MW of APM based plants (i.e. plants that have been getting domestic gas other than KG D6 gas) are getting 17.26 MMSCMD domestic gas and are operating at average PLF of 27.7 percent (29 percent if Spot RLNG is included). 4,842.5 MW predominantly dependent on KG D6 (2,478 MW fully dependent) but are badly affected due to nil supply of gas from KG-D6. Further, 1334 MW newly commissioned gas based capacities are lying idle without any gas allocation. The present price level of Domestic gas is around US$ 4.2 / MMBtu, which shall almost double in April, 2014 as per the recent CCEA approval of the new gas price formula.

Analysis for the balance period 2013-14
For the balance period of 2013-14, it is proposed to allocate the additionally available 1.125 MMSCMD gas (as indicated by MoP&NG) to the 4,842.5 MW predominantly dependent on KG D6 (2,478 MW fully dependent/ substantially dependent) & 1334 MW newly commissioned gas based capacities which are without any gas allocation. Further, by adding 6 MMSCMD of RLNG to these plants, the weighted average price of gas would be US$ 11.43/ MMBtu and the average PLF of around 25.54 percent can be achieved. However, the indicative total cost of Generation would increase to INR 10.47/ unit, which would be extremely high. Considering a viable level of maximum Total tariff of INR 5.50/ unit that may be despatchable, the indicative Subsidy to be borne by Government would be INR 3788 Crore for the balance 6 months period of 2013-14.

Analysis for the period 2014-15
From April, 2014, the domestic gas prices will be revised as per the CCEA approved new gas price formula. The new gas price will be computed every quarter and will be dependent on international LNG prices and the trading hubs like Henery Hub and NBP, thus will be quite high and volatile. For analysis purpose, an indicative price of US$ 8.0/ MMBtu has been considered.

For 2014-15 and 2015-16, it is proposed not to change the allocation/ supply of domestic gas to APM based plants. However, additional RLNG may be added into the pool to increase their average PLF. It is proposed to allocate the additionally available domestic gas to the plants which are fully & substantially dependent on KG D6 gas, newly commissioned plants without gas allocation and some plants which can be commissioned. For 2014-15, it is proposed to allocate the additionally available domestic gas 5.11 MMSCMD (1.125 + 3.98, as indicated by MoP&NG) to 4,842.5 MW predominantly dependent on KG D6 (2,478 MW fully dependent/ substantially dependent) & 1334 MW newly commissioned gas based capacities that are without any gas allocation and 3000 MW of new power plants that are ready for commissioning. Further, by pooling with around 7 MMSCMD RLNG to these plants, the pooled price of gas would be US$ 10.32/ MMBtu and the average PLF can be achieved around 25.82 percent. However, the indicative total cost of Generation would increase to INR 10.32/ unit, which would be extremely high. Considering a Total tariff of INR 7.0/ unit, the indicative Subsidy to be borne by Government would be INR 7379 Crore.

For the APM based plants, the present supplies under their existing agreements will continue. Along with the supplies of existing Long term RLNG quantities of 1.98 MMSCMD, additional 8 MMSCMD of RLNG may be pooled in this group. Thus, the Pooled price becomes US$ 10.14/ MMBtu and the PLF levels can be improved to 40.03 percent. However, the Total cost of generation would increase to INR 8.46/ unit, which is quite high. Considering a Total tariff of INR 7.0/ unit, the indicative Subsidy to be borne by Government would be INR 6435 Crore. Thus, the Total subsidy in the Year 2014-15 to be borne by Government would be INR 11098 Crore.

Analysis for the period 2015-16
For 2015-16, it is proposed to allocate the additional available domestic gas of 12 MMSCMD (1.125 + 3.98 + 6.895, as indicated by MoP&NG) to 4,842.5 MW predominantly dependent on KG D6 (2,478 MW fully dependent/ substantially dependent) and 1,334 MW newly commissioned gas based capacities that are without any gas allocation and all 7,815 MW of new power plants that will get commissioned. Further, by pooling it with around 12 MMSCMD of RLNG for these plants, the Pooled price of gas would be US$ 10.96/ MMBtu and the average PLF of around 31.79 percent can be achieved. However, the indicative Total cost of Generation would increase to INR 9.53/ unit, which would be extremely high. Considering a Total tariff of INR 7.50/ unit, the indicative Subsidy to be borne by Government would be INR 8265 Crore.

For the APM based plants, the present supplies under their existing agreements will continue. Along with the supplies of existing Long term RLNG quantities of 1.98 MMCSMD, additional 8 MMSCMD of RLNG may be pooled in this group. Thus, the Pooled price becomes US$ 10.24/ MMBtu and the PLF levels can be improved to 48.3 percent. However, the Total cost of generation would increase to INR 8.52/ unit, which is quite high. Considering a Total tariff of INR 7.5/ unit, the indicative Subsidy to be borne by Government would be INR 2658 Crore. Thus, the Total subsidy in the Year 2015-16 to be borne by Government would be INR 10924 Crore.

Justification for the Proposal
In view of the severe gas shortages and resulting techno-commercially unviable PLF, EGoM has approved allocation of additional domestic gas to Power sector for the years 2013-14, 2014-15 and 2015-16 by capping supplies to Fertilizer sector. However, even with this additional gas, there will be significant shortfall in power sector. This shortfall can only be met by importing RLNG and pooling this with the price of the domestic gas and providing subsidy to Power sector to make gas based generation viable and achieve technically sustainable level PLF. However, the Total cost of generation will increase significantly because of the Pooling of domestic gas with RLNG. This will make Gas based generation totally unviable in the merit order dispatch. In Power sector, there are hardly any takers of electricity at more than INR 4.50- 5.00/ Kwh in recent times. To bail out the financially sick Discoms, Government of India has recently approved financial restructuring plan. Hence, the gas based power stations would need to be supported by Government through appropriate Subsidy mechanism in the gas pool.

This will prevent the stranded Gas based capacities and the new Gas based projects to become NPAs. The investment sentiments in the Power sector and the confidence of the bankers will be restored. The PLF of 12,561 MW of APM based plants would increase from present avg. PLF of 27.7 percent to 42.53 percent in the year 2014-15 and beyond. This will help increase power generation from present level of 27 BUs to ...BUs. It will also enable RGPPL to be functional so that the assets restructured in 2009 under the aegis of Gol may avoid being classified as NPA. The power requirement of the country can be immediately met by utilizing the already created 24,189 MW gas based assets. Moreover, the demand of Southern region, which is yet to be connected to the National grid, can be met immediately. Gas based power generation is a preferred mode worldwide because of various benefits mainly its environmental friendliness.

Pool Operation Mechanism:
Regarding the pool operation mechanism, it is proposed to appoint GAIL as 'Pool Operator' in view of the following reasons:
  • GAIL is a public sector company and is well established in global market as a LNG Buyer and has already finalised LNG Contracts of about 7-8 MMTPA based on JCC / Brent and Henry Hub indexation.
  • Being a Central PSU, Government guidelines can be implemented.
  • Government nominee from MoPNG/ MoP can also be made a part of the Empowered Committee that approves procurement of LNG from international sources.
GAIL can act as the aggregator wherein, monthly pooled price for the proposed pools during the years 2014-15 and 2015-16 shall be declared by GAIL (as per guidelines of MoPNG/ MoP) in its capacity as the pool operator. The existing domestic gas suppliers may continue to sell gas to the contracted power plants. However, the payment to all such sellers shall be made as per contracted price by GAIL as the pool operator and the existing contracts of power plants will need to be modified only to this extent. The subsidy of the Government will also be channelised through the Pool operator. In turn, GAIL shall make the RLNG available to the power plants at competitive prices so as to limit the Total cost of power generation within the proposed reference limits. All gas based power plants shall make payments to the pool operator to enable it to make payment to individual gas suppliers. However, the legal implications of appointing GAIL as 'Pool Operator' in view of the existing Gas/ RLNG Sale & Purchase Agreement (GSPAs) and Gas Transportation Agreement (GTAs) amongst various entities will need to be examined and settled.

Financial Implication
In case Pooling of gas/ RLNG is implemented, there will be an out go of Government subsidy. If we consider limiting the Total tariff of power to INR 5.50/ unit in 2013-14, INR 7.0/ unit in 2014-15 and INR 7.50/ unit in 2015-16, the amount of Subsidy to be borne by the Government shall be INR 3788 Crore (for balance 6 month period of 2013-14), INR 11045 Crore and INR 10924 Crore, respectively during these years. These Subsidy calculations are estimates only based on projections and the actual Subsidy in a year will depend upon the actual supply of gas/ RLNG at prevailing level of prices during that year. The actual Subsidy may be even less depending upon the consumption of costlier RLNG. However, Government, if so desires, may limit the subsidy in the respective years to the proposed subsidy levels in this proposal.

During the years of 2013-14, 2014-15 and 2015-16, by pooling with the additionally available domestic gas with RLNG, gradually all the power plants can be run, thus avoiding their present stranded situation. However, the average PLF levels are still not technically viable for individual power plants. Hence, it will be important to optimize the operation of the power plants by clubbing/diversion of gas and rostering the gas, as is being done till the time the domestic gas availability is sufficient enough.

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Gas Based Thermal Capacity Addition Forced to a Bleak State

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Indian Power Generation is majorly based on the conventional fuel sources i.e, coal and gas, a fact that cannot be denied. Out of the total installed capacity of 229251.73 MW as on October 2013, thermal capacity accounts for 156468.99 MW which is close to 68%. Of the total thermal installed capacity Gas based capacity contributes 20380.85 MW which is close to 13% of thermal capacity and 8% of total installed capacity and supplements coal based power generation for the growth of Indian economy. Keeping these facts aside, the plant load factors have never seen a consistency owing to shortages in fuel supply for both coal and gas.
Coal based plants in the recent times have seen a measurable improvement in the coal stock position. But the gas supply scenario for the gas based based power plants still remains a serious concern keeping most of the plants under strandedness or with meagre PLF's. The scenario in the country for these plants most likely seem to end up with complete shutdown or operate only during peak hours if the existing supply scenario continues to persist. Additional capacity that is already planned seems to give a bleak support to the capacity addition.
Moving on to the facts of gas supply and requiremtns for these plants, with a total Gas based capacity of 18,714 MW as in June 2013, 16,374 MW are on the gas grid which require gas of 62.07 MMSCMD to operate at 75 / 70 percent PLF. Gas based capacity of about 2,340 MW, which are off the gas Grid, are operating at 56.4 percent PLF with the gas being supplied from the isolated/ local gas fields. Further, additional 7815 MW of new Gas based capacity could be commissioned in near future if gas is available.
Gas based generation in India got the impetus when HVJ (Hajira-Vijaypur-Jagdishpur) gas pipeline was commissioned by GAIL in the 80's after discovery of gas in the west coast of India. This led to number of Gas based CCGTs commissioned along the HVJ pipeline in the Western and Northern part of India. Apart from the major HVJ trunk pipeline, certain isolated gas fields like in North-East, Kaveri basin, Ravva basin etc. also helped in development of some gas based capacities in those areas but these are not connected to the main gas grid.
After the KG-D6 discovery of RIL and commissioning of East West pipeline by RGTIL, KG D6 gas got infused into the system in early 2009. MoP&NG has granted gas linkage to the existing Gas based plants. Against this requirement, the actual gas supply to these power plants in June, 2013 was about 20.70 MMSCMD (Domestic gas 17.26 MMSCMD, 1.98 MMSCMD Long term RLNG & 1.46 MMSCMD Spot RLNG), which is just sufficient to operate these power plants at 23.7 percent PLF. The power plants with high dependence on KG D6 gas are stranded and have potential of becoming Non-Performing Assets (NPAs) due to shortage of gas. These plants have been severely affected because of their total dependence on KG D6 gas.
As the production of KG D6 gas has nose-dived from the peak of around 63 MMSCMD in late 2011 to below 14 MMSCMD in June 2013, the supply to power sector has become zero since March, 2013. The shortage of domestic gas has resulted in significant gas based capacity getting stranded or operating at sub-optimal level of average PLF of 27.8 percent (total gas based capacity) and 23.7 percent PLF (Gas based capacity on the gas grid) as of June, 2013. Despite having power shortages in the country, these gas projects have remained grossly unutilized / stranded causing immense loss to the economy.
Besides the existing power plants, based on the projections of MoP&NG / DGH regarding the future KG D6 gas availability of 80 MMSCMD, many developers (both public and private) set up new plants on the gas grid out of which 1,335 MW has already been commissioned and a capacity of 7,815 MW is almost ready for commissioning. The dwindling gas supply from KG D6 has been a cause of alarm for Power sector and has upset the gas based capacity addition programme. The allocation of KG D6 gas for new gas based power projects was expected when the plants are ready to commence production. However, these  projects have not been allocated any gas, which puts the projected investment of around INR 40,000 Crore at risk. After commissioning of these projects, the total gas based project capacity will go up to 24,189 MW. MoP has already dimensioned not to plan any gased based capacity addition until 2015-16.
Shortage and Availability in the future: Against the requirement of 92.34 MMSCMD (@ 70/ 75 pwercent PLF) for the pipeline connected existing and new Gas based power plants, the actual supply in June, 2013 was only 20.70 MMSCMD (17.26 MMSCMD Domestic gas and 3.44 MMSCMD RLNG) leaving a huge shortage of 71.64 MMSCMD. Recently MoP&NG has given projections for the additional production of domestic gas from various sources stands out to be 56.34 mmscmd at the end of 2017-18 and the availability of RLNG as 174.6 mmscmd. So it is anticipated as per the projections that the gas capacities are available to meet the additional demand of Power Sector consumers.
These facts speak a lot about the current scenario of gas based plants in the country and demands for a complete overhaul in the existing allocation mechanism of gas to Power Plants and the clearances in setting up a power plant which pose a huge loss to the private and public developers financially. This poses a threat of reduction in participation of the private developers in power sector and may rule out the competitive factor on which the Electricity Act 2003 has laid a major emphasis on. A mechanism to improve gas supplies and control the prices of higher import costs of RLNG for power sector is the need of the hour to keep these plants in motion and improve the operational performance of the sector as a whole.

Source: Cerebral Business Research Pvt. Ltd.
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