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Spotlight | June 2011

Time to focus on peaking power plants

Based on the company's study on the optimal power generation mix for India, Rakesh Sarin, MD, Wartsila India, informs R Srinivasan that these plants should be given a special place in the 12th Five Year Plan.

Countries with well-developed electricity markets have realised that over-reliance on inflexible, base-load generation can lead to collapse of the system. What is required is a judicious mix of base-load generation and peaking plants, the former to provide ‘bulk power' at low cost, and the latter to top up flexibly, to suit the variation. So the company had commissioned a study to arrive at the judicious mix in the Indian context and Maharashtra was chosen for the case study since it has a high peaking load, a good mix of consumers – industrial, commercial and rural – and a range of issues that are representative of the problems facing the Indian power sector. In over all terms, the proposed model showed a potential revenue savings of Rs 13,050 crore/ year and capex savings of upto Rs 38,900 crore in the 12th Plan period.

In view of all these developments, Rakesh Sarin, MD, Wartsila India, spoke to us about the optimal generation mix, the company and the barge-mounted power plants. Excerpts of the interview:

The company's study titled ‘Optimal power generation mix for India: Addressing sustainability and peak power demand management' to determine the generation mix for India where large coal-based power plants can be supplemented with gas-based power plants. A) What were the findings in terms of such an energy mix and B) What would you suggest to combat the peak power demand problem?
The energy industry in India is in the midst of an era of rapid evolution. Strong growth in alternative sources of energy such as wind, solar and biomass are introducing diversity into the power generation mix. However, the in-firm nature of output from these new resources are placing significantly higher demands on the reserve-generating capacity required to manage the grid efficiently. The company has a lot of experience worldwide with operations in 160 locations in 70 countries around the world. We have seen how various countries manage and participated in bringing 24x7 reliable power supply. We commissioned a study in 2010 on the 'Optimal power generation mix for India', addressing sustainability and peak demand management. Maharashtra was chosen for this study and we looked at an ‘As is ‘ scenario where growth in generation capacity is planned predominantly through addition of base load plants and an alternate scenario based on a mix of baseload generation and peaking plants with their inherent feature of high efficiency and flexibility of operation.

Today, the country's biggest focus is on base load power capacity addition, which is good as it forms the foundation of energy system and brings economy. In India, we have coal, nuclear and hydro which provide bulk power at an economical price. While coal and nuclear plants provide low cost baseload generation, they lack flexibility and cannot economically meet varying load requirements during the course of the day.

The country's need to have electricity for all consumers which is reliable, economical and with the lowest carbon footprint will essentially require an optimal mix of various type generation technologies which are broadly classified into base load and peaking power plants. While the 11th Five Year Plan has brought a good addition of base load capacity, it is high time peaking power plants are given sharp focus and a special place in the 12th Five Year plan. Based on our study, which has been further validated by the Centre for Energy Studies of IIT, Delhi, addition of approximately 28,000 MWs of gas-based peaking plants distributed in the load centres can offer the following benefits at the country level:

• Higher efficiency leading to savings of over 6 per cent of primary energy in the power sector
• Carbon emission reduction by 101 MTPA, which could be in the order of around 10 per cent of overall emissions from the power sector
• Reduction in water consumption by over 410 million cubic meters per annum - enough to meet the water needs of a city like Mumbai
• Reduction in land requirement by over 14,200 acres, meaning saving in deforestation and displacement of people of a mid-sized town
• Reduction in investment of transmission networks to the tune of Rs 15,900 crore in the 12th Plan period
• In overall terms, a potential revenue savings of the order of Rs 14,850 crore per year and capital investment saving of up to Rs 47,330 crore in the 12th Plan period.

As for reducing T&D losses, the very nature of suggested peaking plants stationed near the load centre vis-à-vis a large centralised plant at a far-off place will reduce technical losses in the transmission system – which could be in the range of 4 – 5 per cent. There would be additional benefits on commercial losses as well.

So why is that not happening?

The biggest challenge is to develop an integrated policy where the various aspects to fulfill the national electricity vision are optimally integrated. Some facts emerging as of now are:

• Based on current estimates, India maybe base load energy surplus in the next 2-3 years time frame and this is happening fast with the increased participation of private IPP developers. While this is good news, on the other hand it will pose a threat of lowering peak load factor (PLF), which will adversely impact investment IRRs even for coal-based plants.
• Further, 24x7 full load operation of gas-based power plants will be an even bigger challenge, especially in non-peak hours on account of electricity demand and merit order dispatch constraints. Coal based generation being lower in cost will get regulatory priority for despatch, which will result in gas-based generation curtailment for larger amount of time. Considering the merit order of dispatch gas power plants like combined cycle gas turbines (CCGTs), even though designed for continuous operation, may actually have to operate on an intermittent basis to take care of seasonal and time of day power deficits. This leads to inefficiencies as part load operation of CCGTs results in wastage of expensive fuel and under recovery of fixed costs. The latest CEA report on ‘Operation performance of generating stations – 2010-11' substantiates this view quite well.
• However, peak deficit in the range of 15 per cent is expected to continue on a long-term basis, which really is a big dichotomy in current planning. So the need of the hour is to put the peaking capacity in place.

What should be done to address the peaking power shortage in Maharashtra?
We did a survey in 2009 titled 'Real Cost of Power', which brought out the extent of power cuts in 21 cities in India and the cost incurred by citizens in coping with the shortage. The installed cost of back-up mechanisms such as inverters, batteries and gensets was estimated at Rs 100,000 crore while the annual recurring cost for maintenance and fuel was calculated as
Rs 30,000 crore. A large part of this includes subsidised diesel. The report pointed out that a small 'reliability surcharge' on power will fund investments in ‘efficient peaking plants'. In the ultimate sense, 24x7 power availability will save costs to the end consumers by not spending money on coping mechanics/back up power and also by way of improving productivity.

Also, each state and load centre will have its load requirement, which varies with time of the day and season. Typically, a band between 60 to 70 per cent of total MW demand falls in the base load category, where as the balance 30 to 40 per cent is the variable demand which is best met with flexible generation technology.

How can 24x7 power supply be achieved in India and in what time frame could this be achieved?
In line with the National Electricity Policy, it is necessary to mandate on the state distribution companies, the obligation of universal access of power (by every section of society – rural, urban, agricultural) and unrestricted availability of power to all. This will facilitate the country's growth aspirations and reduce the value of lost load assessed at the level of 6 per cent of GDP arising due to load shedding.

• In view of realities of the current situation, an additional period of 5 years beyond 2012 (as provided in the National Electricity Policy) should be allowed to ensure such load-shedding free universal access of power.
• State regulators should be obligated to decide on an implementation plan and its phasing to reach the above objective and state discoms need to submit an action plan for achieving the result.
• A suggestion is to start with dedicated peaking power plants for some major cities or industrial load centres of the state and subsequently percolate to the district and village cluster level.

It is necessary to mandate regulators to implement a “load-shedding free system” by allowing a differential tariff at different times of day or for different users in a phased manner to recover the cost of power. This will necessitate an improved consumer metering system which will also facilitate movement towards “smart grids” in the country.

Plants specifically dedicated for peaking should be a part of planned capacity addition and like renewables, a target figure of 20 per cent of installed capacity by 2020 should be incorporated for peaking power plants. This will optimise the generation mix, where base load plants can run on high PLF and the peakers can meet the cycling requirement at different times of the day and also complement the infirm nature of renewable energy plants. This will result in a huge economical benefit in terms of operational and capital expenses.

For dedicated peaking power plants, which 10 cities would you suggest?
One way is to look at the economic barometer and pick cities where our GDP generation is maximum like Mumbai, NCR, Bangalore, Hyderabad and Pune among others. Next year we should commit to convert another 20 cities and in progression span the entire length and breadth of the country.

About Wartsila

The company is a global leader in complete lifecycle power solutions for the marine and energy markets. In 2010, its net sales totalled EUR 4.6 billion with 17,500 employees.

The company has operations in 160 locations in 70 countries around the world.

Wartsila India was formed in 1986 and a factory was set up at Khopoli in 1989. It has over 1,111 employees spread over six sales and service offices. In India, the company's name is synonymous with captive power for base load and peaking requirements. So far around 250 power plants have been delivered to India with a total output of around 3,500 MW. Over 55 power plants (including steam and wind turbines) with a total surpassing 1,000 MW are under O&M in India.

Financials and key figures (for Wartsila Corporation)

  • Net sales EUR 4,553 million
  • Operating result EUR 487 million
  • Order intake EUR 4,005 million
  • Order book (31 Dec 2010) EUR 3,795 million

Human Resources

The company's staff strength, attrition rates, demand for skilled manpower, HR policies followed for the benefit of employees and what policies the company intends to implement in the years to come?
The company recognises good performance and respects diversity. It encourages employees to be innovative by granting an annual technology and innovation award, either to an individual or to a team, for the best technical innovation of the year. The company also grants annually a customer care award for a team or individual who actively participated in initiatives leading to development of business operations, quality improvements in how we serve and partner with customers. Additionally innovation, value addition, process improvements and team work are encouraged through a structured rewards and recognition programme. People-friendly best practices like flexi-timing, working from home and support for higher education are practised. - Usha Venkatesh, Associate V-P, HR, Wärtsilä India

Advantages of Barge-mounted power plants

In floating power plants, our company has extensive experience with a total installed capacity of about 1,400 MW on 25 power barges in the Caribbean and in Asia. A barge-mounted power plant can be moved from one location to another when needed and connected to the grid to alleviate local shortages. They can also provide a rapid answer to an increase in power demand in advance of new, land-based plants coming online. Other advantages are fast supply of electricity to areas with limited infrastructure, installation is possible in areas with poor logistic infrastructure, provides additional safety in earthquake and flooding, where land space is limited, large sites are not required and it is a mobile asset for the owner.

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