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Interaction | February 2012

Load-shedding: Not a positive way of energy management

A more progressive way would be to introduce differential tariffs to help even power consumption patterns and also generate additional revenue, Rajiv Mishra, Managing Director, CLP India, informs R Srinivasan.

The company’s MD spoke to us about the Gujarat Paguthan Energy Corporation 655 MW gas-fired, combined cycle power plant, peaking power plants, penalty clause for state electricity boards that resort to load-shedding during peak hours and differential tariffs for peak hours. Excerpts of the interview:

Kindly give us details of the gas-based power plant in terms of running costs, energy efficiency, low emissions and issues and challenges in setting up and operating such a plant?
Gas turbine-based combined cycle power plants (CCGTs) are the most energy-efficient amongst thermal power plants. The new design of CCGTs achieve close to 62 per cent efficiency as against 33-38 per cent in the case of coal-based plants. Also on emissions, a CCGT plant scores better than a coal-based plant with a handsome margin across parameters listed in the table above.

Paucity of domestic natural gas and non-competitive price of LNG is a key issue in the setting up and running of a CCGT plant. CCGTs also have a very high cost of installation since most OEMs are Europe/US-based and there are no cheaper and credible alternatives available, which makes them unattractive for many developers.

Ensuring sustainable power generation has become a key issue in the power industry. We (at CLP India) have been at the forefront of supporting sustainable power generation in all our plants in India and across geographies. Aligning with our global vision to reduce carbon emissions, we have been using superior technology across all our assets. For example, our 1,320 MW coal-based power plant in Jhajjar, Haryana, which is very close to commissioning is equipped with super-critical technology and flue gas desulphurisation (FGD) will minimise emissions to the lowest extent possible. These were built into the project by us voluntarily, making a huge impact to our bottom line.

The country faces a peak power shortage of 10 per cent last year and this year it may be around 6 per cent. The 1,000 MW gas-based power plant in Gujarat may get fuel allocation in the 12th Five Year Plan. To what extent can such gas-based power stations help stem the current power shortfall?
The Central Electricity Authority has projected an energy shortfall of 10.3 per cent and a peak shortage of 12.9 per cent in the country during 2011-12. Delays in power projects due to environmental concerns and fuel shortages are some of the key factors impeding capacity addition plans. Currently, gas accounts for only about 10 per cent of total installed capacity while coal contributes around 54 per cent. Although gas is the most environment-friendly fossil fuel for power plants, coal will remain the dominant fuel for the Indian power sector, given the lower-than-expected gas production from existing fields and no new major gas discoveries.

Renewable energy can contribute significantly towards tackling the power deficit. India’s current installed capacity from renewable sources - RES (aggregate of small hydro projects, biomass gasifiers, biomass power and urban and industrial waste power) with an installed capacity of less than or equal to 25 MW constitutes over 11 per cent of total generation capacity. Additionally, hydro contributes another 21 per cent to the installed capacity. India has planned aggressive capacity addition targets on this front in the coming years.

Gujarat Paguthan Energy Corporation (GPEC) has set a benchmark for complying with the highest national and international standards. So what factors prevent other companies from setting up such plants?
Our 655 MW gas-fired combined cycle power plant, GPEC, has undoubtedly set national and international benchmarks in terms of operational parameters, safety measures and environmental practices. The plant is one of the largest independent power projects (IPP) to have been set up in India following the government’s 1992 policy of facilitating private investment in power generation.

We are seeking to expand the capacity of this plant by another 1,000-1,200 MW with an added investment of Rs 4,000-5,000 crore. We have already received environment clearance and land for the expansion project and now await gas allocation. Gas availability and tariff costs are the two key factors that prevent companies from setting up such plants although the low land and water requirements make it a viable option. Unless cheaper domestic gas is made available, the new gas-based generation will find it difficult to beat coal-based generation plants, which are now its strongest competition.

Central Electricity Regulatory Commission proposed the setting up of ‘peaking power plants’ to produce electricity only during peak hours. Some welcome the proposal but the per unit cost from such a plant is double that of the cost of power from a base-load plant (it may be in the range of Rs 5-6 per unit depending on the fuel of the power plant). Is it feasible and if not, then what should be done to make it so?
Base load capacity in India comes largely from coal, hydro and to some extent nuclear. However base load plants lack flexibility and cannot economically meet varying demand through the day. Gas-fired plants can help meet peak demand and enable the base load plants to achieve a higher PLF, thereby operating more economically. The most common type of peaking power plants prevalent worldwide are the combustion turbine or simple cycle turbine, fuelled by natural gas with fuel oil as a backup source of fuel. The next most common type of power plant would be the internal combustion engine fuelled by natural gas. Although gas turbine plants dominate the peaking plant category, there are cheaper and efficient alternatives too - such as setting up hydro-electric plants in which storage technologies like pumped storage can be used to provide peak load power. Flexible generation technology in the form of peaking power plants will also contribute to reduction in costs on backup power.
Your views on a penalty clause for state electricity boards that resort to load-shedding during peak hours and differential tariffs for peak hours so that customers pay more for costly power that is supplied to them during that time of the day. Load-shedding is not a positive way of energy management. Also, it sends a negative signal to industries or agriculture. A more progressive way based on market forces would be to introduce differential tariffs to help even power consumption patterns and also generate additional revenue. Such revenue can be re-invested into energy management systems to serve customers better.

Differential tariffs would also require the introduction of smart grids for better consumer metering. Smart grids would in turn bring with them a host of benefits, including reduction in T&D losses which is one of the key challenges facing the Indian power sector today.

We believe there should be a consistent pan-India approach (though the rates may differ based on actual cost) and access to reliable power must be treated as a basic need. Load-shedding if unavoidable should be used only in a shortage situation or technical snag.

About GPEC

Gujarat Paguthan Energy Corporation (GPEC) is a 655 MW gas-fired combined cycle power plant at Paguthan, near Bharuch in Gujarat. Apart from its consistent year-on-year plant performance, it has set a benchmark in the industry for complying with the highest level of safety and environmental standards, nationally and internationally. It had won the Prime Minister’s award for best performing CCGT in 2006 and achieved NOSA 5-Star accreditation for complying with the highest level of internationally accepted safety standards and is a 1SO 14001 certified company complying with the highest standards of environment conservation. It was developed soon after the Indian government opened the power sector to foreign investment in 1992. GPEC started operation in 1998 and is now wholly owned by CLP. Gas supply to it has been difficult at times due to depleting gas fields and high demand from other users, but the units can run on naphtha as a backup fuel even though the cost is higher. It now seems that new gas supplies from the eastern offshore fields may improve the position. GPEC has one of the best safety records in the CLP portfolio, having operated since 1998 without a lost time injury to any of its staff there.
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