A policy assessment: Import of Gas to Fuel starved Power Stations

Farhan Beg NIT Srinagar, India

G. Behari Director (OM) CEA

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)

Indian Power Sector

Central Electricity Regularity Commission

Department of Atomic Energy

Ministry of Power

Central Electricity Authority

State Electricity Regularity Commission

Inside Indias Electrical Power System:

Generation Transmission Distribution

Centrally owned Generation:

Power-Grid Corporation
National Power System Desk (POSOCO)

State Owned TX
National Load Dispatch Center (NLDC) Regional Load Dispatch Centers-5 (RLDC) State Load Dispatch Centers-34 Sub state- Load Dispatch Centers-51

State Electricity Boards

State owned generators

State Owned Distribution Companies

Regional Power Committee-5

Private Generators

Private Distribution Companies

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.
Actual Power Supply Position During 2011-12
1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0
Energy(MU) Peak(MW)

Requiremrnt 937,199 130,006

Availability 857,886 116,191

Shortage 79,313 13,815

% 8.5 10.6

Source: CEA

Power supply position:

(MW) All India (2011-12): Requirement Availability Shortage (%) Energy (MU) 937,199 857,886 79,313 8.5% Peak 130,006 116,191 13,815 10.6%

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

Energy (MU) Peak

Requirement 937,199 130,006

Availability 857,886 116,191

Shortage 79,313 13,815

Regional power supply position(2011-2012):

350,000

300,000 250,000 200,000 150,000 100,000

50,000 0 Requirement( MU) 276,121 290,421 260,302 99,344 Availability(M U) Energy 258,382 257,403 237,480 94,657 Requirement (MU) 40248 42,352 37,599 14707 Availability (MU) Peak 37117 36,509 32,188 13,999

Northern Western Southern Eastern

Population Growth/ Electricity Production/ Electricity 1400 Consumption

1200

Millions

1000 800 600

Population Growth:

400
200 0 1998 900 800 700 2000 2002 2004 2006 2008 2010 2012 2014

MW

Electricity Production

600 500 400 300 200 100 0 700 1998 2000 2002 2004 2006 2008 2010 2012 2014

Electricity Consumption

600 500 400 300 200 100 0 1998 2000 2002 2004 2006 2008 2010 2012 2014

Power Generation Capacity:

Coal Gas Nuclear
2% 12%

Diesel Hydro Non renewables

As on 31.03.2012

19% 57% 9%

1%

Coal accounts for nearly 57 % of the total power generation Abundant coal reserves Power 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.

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

Million Tonnes

Projected demand-supply of coal by 2025

3000 2000 1000 0 Years Demand by power sector Supply to power sector

Source: Observer Research Foundation

Coal Scenario for 2011-12

All Figures in MT S NO 1.1 1.2 1.3 2. 2.1 2.2 2.3 2.4 3. Description Coal requirement for plants designed on indigenous coal Coal requirements for plants designed on imported coal Total Coal availability from indigenous Sources From CIL Sources From SCCL From Captive Mines Total coal availability from indigenous sources Shortfall of indigenous coal 347 33 22 402 53 2011-12 455 20 475

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:

Indias 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-potential Hydro electric potential in India is 84000 MW at 60 % load factor which is equivalent to 1,48,700 MW installed capacity

Basin Wise Assessment:

Basin/Rivers Indus Basin Ganga Basin Central Indian River system Western flowing Rivers of Southern India Eastern flowing rivers of Southern India Brahmaputra Basin Total Installed Capacity(MW) 33,832 20,711 4,152 9,430 14,511 66,065 1,48,701

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 1998 Main 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 projects Increasing private investments for development of hydropower in India

Issues Impeding Development of Hydro Power:

Difficult/In-accessible locations Land acquisition problems Resettlement and Rehabilitation issues Law And Order Situation Geological surprises Inter-State Disputes Cumbersome process for obtaining the clearances from various national bodies

Limitations of Hydro Projects:

Away from load centers; evacuation of power is a big problem Lack of availability of long term finance Production risks since the project is planned based in the historical data which may not occur in future Difficulty in Investigations/Implementations due to remoteness of the area Long 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.

Supply And Demand Scenario of Gas In the country:

Cubic Trillion Feet

6 5 4 3 2 1 0
2003 2008 2013 2018 2023 2028 2033 Year

Supply Demand

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)

Progressive Renewable Sector 2012

Small hydro, 3395.31
Biomass,

1150

Small Hydro, 4995.31

Solar, 4741.28

2017

Biomass, 3250

Solar, 941.28

Wind, 17352. 65

Wind, 28352. 65

Contd

Installed capacity Type SHP 2012 3395.31 2017 4995.31 CAGR 10%

Financial requirement Rupees(CR) 8000

Biomass
Solar

1150
941.28

3250
9941

30%
80%

10500
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 India
60 GW 50 GW 10.6 GW 34.9 GW

Present Installed Capacity

(Nov12) 17.62 GW 941 MW 220 MW 1150 MW

Wind Solar Geothermal Biomass

Issues with large scale deployment of Renewable Energy

Renewable energys are classified into three generations each presenting their own issues:
Mature Generation (Hydro power, Biomass, Solar thermal hot water, geothermal) High up-front costs Local Site Issues

Developing Generation (Wind, Bio Energy, Solar PV) R&D Generation (Concentrating Solar power, Ocean Energy, Advanced forms of Bio energy)

Technological advancements needed. Need substantial cost reduction through market experience (Need to be deployed)

Still require substantial RD&D to be deployed Need to be deployed and tested in pilot projects

Capacity Addition in the 12th plan with 9% GDP GR & 0.9 Elasticity (All Values in MW)
Type of Capacity Thermal Coal Gas Capacity Addition Base Case 63781 62695 1086 High Gas 63886 50600 13086
High Gas + high renewable Scenario

60486 47400 13086

Hydro Nuclear
Total Renewables Imports
Coal Requirement(MT)

9204 2800
75785 18500 1200

9204 2800
75690 18500 1200

9204 2800
72490 30000 1200 Source: CEA

842

772

764

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

Figures in MW

Type of Capacity Thermal Coal Gas Hydro Nuclear Total

Demand Corresponding to 9% GDP GR & .9 Elasticity 63,781 62,695 1,086 9,204 2,800 75,785 Source: CEA

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

Coal Demand and Availability: Coal Requirement during the year 2016-17 Coal Availability from : a: CIL b: SCCl c:Captive blocks allocated to power utilities 418 MT 35 MT 100 MT 842MT

d: Coal to be imported by TPSs designed imported Coal

Total Coal availability Shortfall

54 MT
604 MT 238 MT

Source: Working group on power-12th plan

Capacity Addition Hindrances:

Thermal: Even though accounting for nearly 80% of Indias 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 plants Capacity enhancement of existing hydro power stations Reduction of technical and commercial losses through the introduction of Smart Grid Import 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 Region Imported Gas supplied(In addition to gas already being supplied): Power Stations in Gujarat & Maharashtra (Gas Based) Study Month November 2012 Feasible additional generation from these stations. Cost of fuel for this additional generation Sale 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 Million Cost of fuel =$19.6 Million Additional O&M expenses (to be worked out):would not be substantial Revenue 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.

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

Issues to be addressed:
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