A policy assessment: Import of Gas to Fuel starved Power

Stations

G. BehariDirector (OM) CEA

Farhan BegNIT Srinagar, India

India Country Profile:

Area: 3.29 million sq. km. (1.27 million sq. mi.)

Population:1.2208 billion

Climate: Desert, Mountain, Subtropical, Semi Arid steppe, Moist subtropical

Purchasing Power Parity: 4735 $Billion (2012 est.)

All India Installed Capacity: 211766.22 MW (As on 31.01.2013)

Per Capita Consumption: 879.22 kWh (2011-2012)

Department of Atomic Energy

Ministry of Power

Central Electricity Authority

Central Electricity Regularity

Commission

State Electricity Regularity

Commission

Indian Power Sector

Inside India’s Electrical Power System:

Generation Transmission Distribution

Centrally owned

Generation:

State owned generators

Private Generators

Power-Grid Corporation

State Owned TX

State Electricity Boards

National Power System Desk (POSOCO)

National Load Dispatch

Center (NLDC)

Regional Load Dispatch Centers-5 (RLDC)

State Load Dispatch

Centers-34

State Owned Distribution Companies

Private Distribution Companies

Sub state- Load Dispatch

Centers-51

Regional Power

Committee-5

Acknowledging Supply and Demand:

Gap between demand and supply is wide and growing. Demographics and Economics are the reason for it. Growing economy and Massive urbanization putting more stress on energy and the environment.

Requiremrnt Availability Shortage %

Energy(MU) 937199 857886 79313 8.5

Peak(MW) 130006 116191 13815 10.6

50,000

250,000

450,000

650,000

850,000

Actual Power Supply Position During 2011-12

Source: CEA

Power supply position:

All India (2011-12):

(MW) Energy (MU) Peak

Requirement 937,199 130,006Availability 857,886 116,191Shortage 79,313 13,815 (%) 8.5% 10.6%

Requirement Availability Shortage

Energy (MU) 937199 857886 79313

Peak 130006 116191 13815

50,000

250,000

450,000

650,000

850,000

Energy Re-

quirement(MU)

Energy Avail-ability(MU)

Peak Re-quirement

(MU)

Peak Avail-ability (MU)

Northern 276121 258382 40248 37117

Western 290421 257403 42352 36509

Southern 260302 237480 37599 32188

Eastern 99344 94657 14707 13999

25,000

75,000

125,000

175,000

225,000

275,000

325,000

Regional power supply position(2011-2012):

Population Growth/ Electricity Production/ Electricity Consumption

Population Growth:

Electricity Production

Electricity Consumption

1998 2000 2002 2004 2006 2008 2010 2012 20140

200

400

600

800

1000

1200

1400

Mil

lion

s

1998 2000 2002 2004 2006 2008 2010 2012 20140

100

200

300

400

500

600

700

800

900

MW

1998 2000 2002 2004 2006 2008 2010 2012 20140

100

200

300

400

500

600

700

Power Generation Capacity:

57%

1%

9%

19%

2%12%

Coal Diesel Gas

Hydro Nuclear Non renewables

•Coal accounts for nearly 57 % of the total power generationAbundant coal reservesPower Generation using coal is cheaper•Even though abundant coal reserves are a reason for the monopolistic power generation using coal, yet India is facing huge coal supply and production issues.

As on 31.03.2012

Indian Coal Scenario:•Coal Mining started by Messrs Sumner & Heatly of the East India company way back in 1774 • Mines were nationalized in the country with the inception of CIL in 1970 to increase the influx of investments•Indian power delivery chain is highly dependent on coal with nearly 70 % of its generation and is experiencing perpetual fuel shortages•Fuel shortages are dominant even when India has 10% of the worlds coal reserves

2000

-01

2004

-05

2008

-09

2014

-15

2018

-19

2022

-23

0

2000

Projected demand-supply of coal by 2025

Demand by power sectorSupply to power sector

Years

Mil

lio

n T

on

nes

Source: Observer Research Foundation

All Figures in MT

S NO Description 2011-121.1 Coal requirement for plants designed

on indigenous coal455

1.2 Coal requirements for plants designed on imported coal

20

1.3 Total 475

2. Coal availability from indigenous Sources

2.1 From CIL Sources 347

2.2 From SCCL 33

2.3 From Captive Mines 22

2.4 Total coal availability from indigenous sources

402

3. Shortfall of indigenous coal 53

Coal Scenario for 2011-12

Energy Demands &Drivers for Alternate Sources of Energy:

1. High Growth Rate in Overall Energy needs:• Expansion of supply demand gap is due to

increase• Presently Supply-Demand gap is nearly 12.9%

2. Increasing reliance on imports of fossil fuels:• Country imported nearly 80% of its crude oil

consumption in 2009-10• Over 48% of the country's total imports bill

typically goes towards oil imports

Contd…

3. Need for a viable solution for rural electrification: • A program of grid strengthening and extension

was initiated in 2005• Benefits the 400 million Indians who lack access

to electricity

4. Electricity peak demand-supply :• The electricity shortfall for the fiscal year

(2011-2012) was 10.3% with a peak shortage of 12.9%.

5. Pressure on industry and policy to abate GHG emissions:

• India’s strategy for tackling climate change is set out in its ‘National Action Plan on Climate Change’ (NAPCC), released in 2008

Hydro: An Overview

Globally India ranks 5th in terms of total hydro-potentialHydro electric potential in India is 84000 MW at 60 % load factor which is equivalent to 1,48,700 MW installed capacity

Basin/Rivers Installed Capacity(MW)

Indus Basin 33,832Ganga Basin 20,711Central Indian River system 4,152Western flowing Rivers of Southern India

9,430

Eastern flowing rivers of Southern India

14,511

Brahmaputra Basin 66,065Total 1,48,701

Basin Wise Assessment:

Advantages of hydropower over thermal power:

Renewable and Non Polluting Cost of generation, operation and maintenance is lower than the other sources of energy. Cost of generation is free of the inflationary effects after the final installation.

National Policy on Hydropower introduced in 1998Main Points:

To ensure targeted capacity addition during 9th plan (and the subsequent plans) Exploitation of vast Hydro Electric Potential at faster pace Promotion of small and mini hydro projects especially in remote and hilly areas where extension of the grid is comparatively uneconomical Strengthening the role of PSUs and SEBs in taking up new hydro projectsIncreasing private investments for development of hydropower in India

Issues Impeding Development of Hydro Power:

Difficult/In-accessible locationsLand acquisition problemsResettlement and Rehabilitation issuesLaw And Order SituationGeological surprisesInter-State DisputesCumbersome process for obtaining the clearances from various national bodies  

Limitations of Hydro Projects: Away from load centers; evacuation of power is a big problemLack of availability of long term financeProduction risks since the project is planned based in the historical data which may not occur in futureDifficulty in Investigations/Implementations due to remoteness of the areaLong gestation period

Natural Gas Scope:

•Petroleum and Gas emerging as the most dynamic energy sectors in the country•Clean and an efficient choice for power generation.•Total Capacity of Gas Based power plants was 18,381 MW as on 31 March 2012.

2003 2008 2013 2018 2023 2028 20330123456

Supply

De-mand

Year

Cu

bic

Tri

llio

n F

eet

Supply And Demand Scenario of Gas In the country:

India Renewable Scenario:As on November 2012 12% of total installed capacity (210 GW) through renewable sources•WIND (18.3 GW)•Small hydro (3.4 GW) •Biomass (1.2 GW)•Solar (1 GW)

Wind, 17352.

65

Solar, 941.28

Small hydro,

3395.31

Biomass, 1150

Progressive Renewable Sector

Wind; 28352.649999999

9

Solar; 4741.28

Small Hydro; 4995.31

Biomass, 3250

2012 2017

Contd…

Installed capacity Financial requirement

Type 2012 2017 CAGR Rupees(CR)

SHP 3395.31 4995.31 10% 8000

Biomass 1150 3250 30% 10500

Solar 941.28 9941 80% 63000

Wind 17352.65 28352.65 13% 67200

•Large cash inflows required to bring about such change.•Financial Requirement of such a proposition very high.Source Potential in

IndiaPresent Installed Capacity (Nov‘12)

Wind 60 GW 17.62 GW

Solar 50 GW 941 MW

Geothermal 10.6 GW 220 MW

Biomass 34.9 GW 1150 MW

Issues with large scale deployment of Renewable Energy

•High up-front costs

•Local Site Issues

Mature Generation (Hydro power, Biomass,

Solar thermal hot water, geothermal)

•Technological advancements needed.

•Need substantial cost reduction through market experience (Need to be deployed)

Developing Generation (Wind, Bio Energy,

Solar PV)

•Still require substantial RD&D to be deployed

•Need to be deployed and tested in pilot projects

R&D Generation (Concentrating Solar power, Ocean Energy, Advanced

forms of Bio energy)

Renewable energy’s are classified into three generations each presenting their own issues:

Capacity Addition in the 12th plan with 9% GDP GR & 0.9 Elasticity (All Values in MW)

Type of Capacity

Capacity Addition

Base Case High Gas High Gas + high renewable Scenario

Thermal 63781 63886 60486

Coal 62695 50600 47400

Gas 1086 13086 13086

Hydro 9204 9204 9204

Nuclear 2800 2800 2800

Total 75785 75690 72490

Renewables 18500 18500 30000

Imports 1200 1200 1200

Coal Requirement(MT)

842 772 764

Source: CEA

Capacity Addition Requirement during 12th plan (MW) Base Case:

Type of Capacity Demand Corresponding to 9% GDP GR & .9 Elasticity

Thermal 63,781

Coal 62,695

Gas 1,086

Hydro 9,204

Nuclear 2,800

Total 75,785

Figures in MW

• Additionally, grid interactive renewable capacity addition of about 18500 MW has been projected.

Source: CEA

Coal Demand and Availability:

Coal Requirement during the year 2016-17

842MT

Coal Availability from :

a: CIL 418 MT

b: SCCl 35 MT

c:Captive blocks allocated to power utilities

100 MT

d: Coal to be imported by TPSs designed imported Coal

54 MT

Total Coal availability 604 MT

Shortfall 238 MT

Source: Working group on power-12th plan

Capacity Addition Hindrances:

Thermal: Even though accounting for nearly 80% of India’s total generation, the future seems grim. Fuel shortage is acute and supply demand gap of coal is increasing unabated.

Hydro: Nearly 9204 MW of power projected for hydro power in the 12th plan. Long gestation period and environmental ramifications continue to hold back the hydro power potential of the country to some extent . Renewables: Higher initial costs coupled with renewable technologies being in a developmental stage present issues for their large scale deployment. Renewable technologies need to be improved and cost effective deployments introduced to make renewable energy generation take over from the conventional fossil fuel generation.

Mitigating shortages: Options available

Renovation and modernization of existing thermal power plantsCapacity enhancement of existing hydro power stationsReduction of technical and commercial losses through the introduction of Smart GridImport of Gas to Fuel Starved Power Stations to enhance their electricity generation to be sold through ABT

Import of Gas to Fuel Starved Power Stations: Methodology

Sample Area Selected: Western RegionImported Gas supplied(In addition to gas already being supplied): Power Stations in Gujarat & Maharashtra (Gas Based) Study Month November 2012Feasible additional generation from these stations. Cost of fuel for this additional generationSale of this addition generation under ABT

Resultant Parameters

•Additional Generation = 1900 MU per day (Enhanced Efficiency & auxiliary losses are not considered for time being)•Cost of Imported gas= $13.627/MMSCMD(Report of the Committee on the production sharing contract mechanism in Petroleum industry- December 2012)Cost of Addition generation=$19.6 MillionCost of fuel =$19.6 MillionAdditional O&M expenses (to be worked out):would not be substantialRevenue Realization : additional electricity = Rs 162 crore(equivalent : $30.6 million ; 1$=53 INR)

Assumptions

•Efficiency of gas stations does not improve appreciably with higher generation (could be worked out at a later stage while carrying out detailed study) •O&M cost of gas station does not increase appreciably with enhanced generation (Need to be established, however the enhancement of O&M cost would not be substantial)•No backing down/Non scheduling of gas stations owing to higher cost of generation •Revenue realization is based on average cost of generation during the year 2010-11.

•Import of gas is economically viable if the additional electricity generation is sold under ABT

Issues to be addressed:

Conclusion

•Source of imported gas•Transportation of gas up to the Indian coast•Landing port of gas•Storage of gas at the port•Transportation of gas within India