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Analysis | July 2011

Smart thinking

At the 'Smart power generation media meet' in Mumbai, Rakesh Sarin, MD, Wärtsilä India, said that the key to addressing power shortage lies in specifically targeting peak load shortfall in generation capacity.

The company organised the 'Smart power generation media meet' in Mumbai and highlighted how the company's power-based solutions could support in meeting challenges faced by the power sector. On the occasion, Rakesh Sarin, MD, Wärtsilä India, said, 'Besides being the fundamental right of every citizen, reliable and economical power availability is a key enabler to meet the country's growth aspirations.'

He said that the power shortage is primarily due to the inability of utilities to cater to peak hour demand in the mornings and evenings. So policy-makers need to address the issue through 'smart power generation' by encouraging flexible and decentralised power generation that can rapidly step up supply to the grid or step down at short notice.

Speaking of the vital need to differentiate between (baseload capacity) MW and (peak load capacity) MW, he said, 'One message for the 12th Five Year Plan is that when we are talking about so many thousands of MW to be installed in the country, it is important that we must differentiate between how much is for peaking capacity and how much is for the baseload. If the baseload capacity goes beyond a particular point, it will affect the plant load factor (PLF) of coal-plants, scaring away private investors. So in the 12th Five Year Plan we must put 60,000 MW of baseload capacity and 30,000 of peaking load or load-following capacity. The focus in the 10th and 11th Plan was rightly on baseload and now that the foundation is in place, it is high time to differentiate between MW and MW.'

A study conducted in association with IIT Delhi, indicates that smart power generation can provide solutions for some major issues such as:

a) Coal and natural gas availability: It can bring 6.9 per cent efficiency in the over-all fuel mix of the country which in turn also reduces problems of coal availability and saves Rs 4,500 crore/annum in primary fuel cost. The 6.9 per cent overall saving would mean a substantial plugging of the demand-supply gap envisaged for new coal-based plants. Further, the concept will provide almost 4 times the MW addition for gas-based plants to run as peaking plants with the same quantity of gas. This will be an important dimension in view of natural gas availability constraints and its relatively higher price.
b) T&D losses: Local generation for peak demand for 6 to 8 hours a day at the load centre and local consumption gives a saving of ~0,25 per cent of total energy consumption, which is valued at Rs 675 crore/annum.
c) Transmission de-bottleneck: Local generation for peak demand at load centres and local consumption releases >20 per cent of the HT transmission capacity, which is valued at Rs 15,900 crore investment, and can be saved.
d) Land acquisition and water crisis: Land requirement for such generation is less than 1/10th of a coal-based power plant thus savings of >24,000 acres of land (>Rs 6,000 crore) and negligible water consumption saves 410 million cubic metres of water, which is equivalent to the annual need of a city like Mumbai.  
e) Wind and solar power integration: It also supports wind and solar power plants that are infirm in nature of energy with power through its quick response plants.  
f) Load-shedding - An independent study shows that Rs 100,000 crore has been invested on power back-up equipment so far while an additional Rs 30,000 crore has been spent every year as operational expenses on generating back-up power. The value of lost load (VOLL) cost significant amount of money and inefficiencies in the country, for Maharashtra have been assessed at Rs 17,000 crore/annum. Peak-load management will ensure a continuous reliable supply of power at a minimal increase in the unit cost.
g) Environment - Optimisation of the power generation mix with baseload generation and peak load generation plants along with renewables generates CO2 savings of ~100 million tonne by the end of the 12th Five Year Plan, which is valued at ~ Rs 9,700 crore in the carbon market. This amounts to almost 10 per cent reduction in overall CO2 generation in the power sector.
h) Time to the market for capacity addition: With a modular design, it takes only 12 - 15 months from financial closure.

In overall terms, introduction of the concept in the generation mix has the potential to save about Rs 46,000 crore capex in the 12th Five Year Plan period and Rs 14,000 crore per annum in operating costs.

In conclusion, giving an example of 'eating the elephant bit-by-bit', he spoke of the need to start by converting 10 cities to 24x7 power and then spanning the entire nation, which would ultimately lead to lower tariffs. The briefing was a well-timed initiative to provide a perspective for the 12th Five Year Plan.
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