"We have made our India business broad-based than earlier"

Even as the role of renewables progressively increases India’s overall energy mix, the policymakers must not lose sight of the very significant role that coal plays in the country's economy, avers Andrew DeLeone, Managing Director, GE Power India. He recommends that the country must leverage its cost competitiveness to set-up low emission thermal power plants overseas by offering attractive financing options.

Coal remains an important part of India's fuel mix owing to the improvements in emission control and plant efficiency. But at a time when coal is perceived to be as not a very desirable source of energy, how do you propose to change that perception?
As a sector, we have to do a better job with a few things. We need to articulate to all stakeholders including citizens, NGOs and governments that coal can be a responsible fuel to power India's growth. When you look at what the country has done on emission standards on NOx, SOx and Particulate Matter (PM), once these plants are outfitted with new systems, we are going to have clean coal-fired plants here as anywhere else in the world, with emission level nearly as low as a gas plant. India has 1.25 billion people and more than 55 per cent of the power is generated from coal. This powers modern life and we should never forget that. We need to be more proactive on two things: one, driving efficiency improvements of the fleet and two, outfitting our current fleet to be more flexible.

The country will have 175 GW of renewables by 2022, and that's outstanding. The government must be praised for its stance on renewables. But that's also going to require about 80 GW flexibility requirements from other sources of power. By our estimation, 50 GW will be from coal and that essentially means coal will enable renewables.

And lastly, there is a lot of good research done on this; at a minimum, 10-15 million jobs are dependent on coal in India, which is more than 10 million people working directly in the coal sector, whether it is equipment manufacturers like GE, generating companies like NTPC, mining companies like Coal India or transporters like the Indian Railways. We need to make sure that as we transition, we do not forget that coal plays an enormous role in the economy. When you look at the development of renewable, it is not happening in the traditional coal belts. We, therefore, need to do a better job on talking about the implications on people to change the narrative around coal.

Do you see a demand for thermal power plants reviving in the short and medium-term, and how?
We see a demand from a pure consumption and generation standpoint, clearly increasing at a little less than 1:1 of the GDP growth. And as the country continues to get traction on the industry and manufacturing, it has the possibility to go even above 1:1 ratio of the GDP. When you look at the global demand for power, you see a lot of interesting things like there being more electric vehicles around or Bitcoin mining consuming more power than the entire nation of Austria. In India, the household penetration of microwaves, refrigerators, TVs and ACs are way below per capita than even China. As more and more houses are electrified, the consumption of these things is going to go up. We are, therefore, fully confident of the Indian demand story.

But the real question for India is what fuels are going to drive the demand? The National Electricity Plan states that coal is a big part of that. We agree. And when you take a five-year window, we are very confident that the country will order 30 GW of new coal-fired power stations. That will be a mix of increase in demand and more importantly, the country replacing the old power stations with new ultra-supercritical ones.

How does your order book look like at this point of time?
Our order book is very strong. And when you complement what's happening now in Flue Gas Desulphurisation (FGD) with all the orders we have taken historically on turbines, boilers, etc., what we like is that we were predominantly generating our business from the new thermal power stations. Now, you also have new nuclear plants coming into the country where we provide our steam turbines. So, with emission control, an upgrade for efficiency and flexibility and servicing of plants, our business is far more broad-based today with more pillars than it was 18 months ago.

What are the parts of a thermal plant you are looking at servicing with your latest technology?
That number is on the lower side. It could be much more than USD 3 billion. To drive efficiency improvements, our primary recommendation is to upgrade steam turbine modules in older thermal power plants. To drive flexibility improvements, a big opportunity exists for cost savings in mills, boilers and control systems, especially digital applications in power stations. When you do these two things, you can change the operating regime of India's coal-fired power stations. Run lower cost coal plants more and run less efficient higher cost coal plants less by reducing technical minimum loads of those from 55 per cent today to levels as low as 30 per cent in the future.

How many plants have you successfully overhauled so far and what have been some of the interesting learnings from those projects?
Number one, every time we have done one of these upgrades, our technologies have outperformed. Number two, we have seen a tremendous satisfaction and pride from our customers in what they have been able to achieve through modernisation of assets. The most significant case studies are with the Gujarat State Electricity Corporation (GSECL), which has seen enormous improvements in plant efficiency and turbine heat rate in both Ukai and Wanakbori. We are executing projects right now with NTPC to do the same thing. On flexibility, we are on the verge of moving with some very interesting projects to prove how low the plant part load can go in this country.

What kind of growth do you see for yourself in the nuclear power space?
As a part of its 12X700 MW domestic programme, the Nuclear Power Corporation of India (NPCIL) is already ordering for the parts of those plants. We expect the conventional turbine island ordering to begin sometime later this year. We will be a key participant in that programme and I expect that to be exciting for GE Power's growth in the country. Then, there are the international programmes like those with Russia's Rosatom, France's EDF, America's Westinghouse Electric Corp.

All of these have been very productive government-to-government discussions and there is no reason to believe that these projects won’t take shape. When you look at the government’s own projections on nuclear power additions in the country’s electricity mix over the next 10 to 20 years, it’s substantial. We have taken a relatively conservative case and you are going to see 30 to 40 GW of new nuclear power to enter the grid. That will help develop an incredible supply chain industry across the country and has a huge potential for localisation.

Are you simultaneously looking at utilising your manufacturing capacity and human expertise to service overseas markets? 

There is no doubt in my mind that our Indian team is ready and able to compete internationally. We don’t base our long-term business plans on short-term fluctuations on interest rates. When you see rupee hit new lows against the dollar, that makes us cost competitive. Now, what do I need to turn our operation into a big export base? I have had these conversations with the members of the Ministry of Power. We need the country to contemplate actively financing high-efficiency and low-emission coal plants in other countries. There is a good example of Maitree Super Thermal Power Project in Bangladesh, which was done through the Bangladesh-India Friendship Power, a joint venture between NTPC and Bangladesh Power Development Board (BPDB). But I would really like the country to find ways to attractively finance coal projects in other parts of the world. If you really want exports to go on an overdrive, we need to see financing come more on the forefront. 

But India’s known reserves of coal are expected to last for another three to four decades. What happens thereafter?

By most estimations, the coal reserves will last longer than that. When you partner that with efficiency improvements and all the other power that is going to enter the grid, I don’t believe that to be a long-term bottleneck to the sector. The attractive part about coal as a power generation fuel is its availability and the supply price stability vis-à-vis fuels like natural gas.

Being an avid baseball fan, you had told POWER TODAY in an earlier interview, that you are at early innings of the digital transformation of the power of sector. Where do you see the sector towards the end of the first half of the game?

This is going to be one of the things that will take time to fully realise the potential. When our customers – and we have hosted several customers inside GE plants and laboratories – get to see the digital at work with industrial assets, their eyes light up. That is because instantly, digital becomes less of a buzzword or a concept, and they see standing next to a boiler or sitting in the control room of a power plant, information that they have on their assets in real time. And they recognise the value that it could bring for them to run their plants more efficiently and at a lower cost point. The job of a company like GE is to help educate the sector on the value that digital can bring. Importantly, this is something that can only be done when you marry the industrial assets of boiler, turbine and mill with the digital component. And that cannot be done by a digital company alone without a sound industrial background.

- Manish Pant