According to Bratin Roy, VP - Industry Services, TÜV SÜD South Asia, setting up new plants without sustainable supply chain will again lead to the current situation, where we have close to 24,000 MW of power capacity idle due to inadequate fuel supply.
The Modi government has claimed several records in its first year. Do you agree with these claims?
Yes, I concur that the overall generation in the country has increased from 967.150 BU during 2013-14 to 1,048.673 BU during 2014-15. It can also be noted that, the thermal power sector has achieved a maximum growth rate of 10.83 per cent, which is the highest in a single year since 2008-09. Another important matrix to take into consideration is that India has witnessed lowest ever reduction of power deficit of 3.6 per cent during 2014-15. These are encouraging results reflected in the first year and I believe the coming years will be exciting for the private sector.
Now that fuel supply is arrested, what is the important worrying factor hurting the power sector?
We have witnessed the highest growth of coal production in 23 years due to efforts put by various authorities. However, two biggest worrying points for the sector would be to ensure coal and gas availability to revive stalled projects and increase efficiency of existing, old power plants.
The government hasn´t pointed out that 2014-15 also recorded the lowest PLF in over 15 years. Shall we hold them responsible?
There are various issues which are responsible for low PLF. The main reason is non-availability of continuous supply of fuel i.e. coal and gas. Factually, India´s annual production growth of coal was only 1.5 per cent from 2010 to 2014. Another contributing factor is the poor quality of coal, which reduces PLF of a plant quite significantly. Finally, note that we have many thermal power plants in India which were established in 1970-80, and most have crossed their economic life of 25 years and have high specific fuel consumption.
Any suggestions you would like to propose to the government, especially to increase the PLF?
The government has already initiated implementation of a few important steps. On the supply side, it plans to double coal production to one billion tonne by 2020. They have already proposed suggestions for improving the quality of coal, like using compulsory crushing, washing and third party sampling and measurement for old plant. A national plan for enovation and modernisation is already available. However, implementation of R&M needs to be monitored and enforced strongly, as this would be necessary to enhance life and increase efficiency of an old power plant. An old power plant can enhance their rated capacity by 4G-8 per cent and efficiency by 8-10 per cent by accurate implementation of R&M.
List out a few ´structural reforms´ to change the generation sector?
There are two important structural reforms necessary to change the sector. Transparent allocation and availability of resources like coal and gas, adaptation of a structural reform policy to upgrade an old power plant and setting up a new power plant along with the supply chain service. Only setting up a new plant without sustainable supply chain will again lead to the current situation, where we have close to 24,000 MW of capacity laying idle due to inadequate fuel supply.
Now, that the government has stepped into its second year, list out your agendas that will wake up this government from slumber?
It is imperative for the government to implement the initiatives and measures that have been announced in the first year. Priority would be to make resources available for long stranded projects. For example, many gas based power projects located in the southern region are stranded due to transmission constraints. Therefore, the importance of improving stability in the transmission line to prevent outages and implementing schemes of investment for discoms should be increased. On the renewable energy front, the government has increased the overall capacity target by more than five times from 32,000 MW to 1,75,000 MW by 2022. There is an urgent need now to ensure adequate land and grid availability to support this huge initiative from the current year onwards.
Lastly, by when can we expect a fresh set of power generation projects on the platter, as most EPC companies are complaining about the lack of order inflow from state-run power generation as well as from IPPs?
For conventional power sector, the most important step would be to revive the power plants that are either sitting idle or incomplete, or left unobstructed due to various issues related to resource availability and land/forest clearances. This would automatically increase the demand from both state owned power generation companies and IPPs.
Also, the government has already announced 5 new ultra mega power projects of 20,000 MW targeting investment of more than Rs 1 lakh core. So it´s expected that the issue of lack of order inflow would be resolved at the earliest. In the renewable sector, there were already plenty of new and upcoming projects, especially in solar and wind sector. In fact, in the recently concluded global investment meet (RE Invest 2015), a commitment of 2,73,000 MW generation was put together by all stakeholders. So it is definitely going to be an interesting phase for all EPC as well as manufacturers.
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