[2024]Digital Global Overview Report 2024 Meltwater.pdf
ENSURING AFFORDABLE FUEL SECURITY FOR NTPC
1. NTPC OPEN COMPETITION
FOR
EXECUTIVE TALENT
ENSURING
AFFORDABLE FUEL
SECURITY FOR NTPC
Itee Aggarwal (Team Leader)
Anoop Kumar Sharma
Santosh Kumar Verma
Saroj Yadava
NTPC Rihand
No. of Words:
Date of Submission:
Sign:
2. INDEX
TOPIC
PAGE NO.
OVERVIEW
ENERGY SECURITY
INDIAN POWER SECTOR AND NTPC
1
1
3
FUEL SCENARIO
INDIAN STAND
NTPC’S STAND
6
6
9
ANALYSIS
COAL
INDIAN ISSUES
NTPC ISSUES
SOLUTIONS
11
11
11
15
17
OIL AND GAS
INDIAN ISSUES
NTPC ISSUES
SOLUTIONS
20
20
24
25
NUCLEAR
INDAIN SCENARIO
NTPC PLANS
KEY CHALLENGES IN DEVELOPMENT OF NUCLEAR ENERGY
27
27
28
29
RENEWABLE
INDAIN SCEANRIO
NTPC’S FORAY INTO RENEWABLE ENERGY
KEY PROBLEMS
SOLUTIONS
30
30
33
33
34
RECOMMENDATION AND ANALYSIS
EXECUTIONAL FRAMEWORK
35
36
INTEGRATED GASIFICATION COMBINED CYCLE(IGCC)
38
CONCLUSION - THE WAY FORWARD
41
REFERENCES
43
3. OVERVIEW
ENERGY SECURITY
Energy security has been an important global policy issue for over four decades now,
since the first oil crisis in the 1970s. According to the International Energy Agency’s
(IEA’s) World Energy Outlook (WEO-2012) published in November 2012, the global
energy demand is likely to grow by more than one-third over the period to 2035, with
China, India and the Middle East accounting for 60% of the increase. Thereby, Energy
security becomes a pertinent issue for a country like India where the dependence on
import is increasing steadily.
Energy Security, as defined by the Integrated Energy Policy of India,
encompasses three critical dimensions:
a) meeting India’s large energy demand to sustain an annual economic growth rate
of 8 to 9 percent through 2031-32,
b) meeting lifeline energy needs of all citizens to address social development,
health and safety of the energy poor, and
c) to ensuring sustainability in energy supply and use. In the current context energy
security also encompasses an overlapping element of energy efficiency across
all aspects related to energy security. Energy Security thus entails a complex set
of coordinated initiatives and the need for energy strategies, policies and
regulations to align in making specific choices for the country in charting a lowcarbon and energy-secure growth path for the country.
India is the fourth largest primary energy consumer, after China, USA and Russia
and it accounts for more than 4.6 % of total global annual energy consumption. In
the last five years, India has averaged a growth rate of 8% and the demand for
energy has been putting pressure on its supply sources. It is an established fact that
if India continues to grow at 8% or so in the coming years a higher than average
demand for energy will persist.
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5. INDIAN POWER SECTOR AND NTPC
The Indian power sector consists of a mix of power plants depending on different
primary fuels, including conventional sources like coal, lignite, natural gas and oil, hydro
and nuclear power as well as nonconventional sources like wind and solar power, and
agricultural and domestic waste. However, coal remains the dominant primary energy
source used in power generation accounting for 67 per cent of total generation.
According to the Planning Commission (Government of India), an important gain in the
11th Plan was the ramping up of the pace of capacity addition. The 11th Plan aimed at
an additional capacity of 78,700 MW but the actual achievement during the plan was
54,964 MW. This was 30 per cent lower than the original target but more than twice the
addition achieved in the 10th Plan.
Table 1: Installed Capacity Addition during the 11th Plan (MW)
Type
Target
Actual
Central
State
Private
Total
Central
State
Private
Total
Hydro
8,654
3,482
3,491
15,627
1,550
2,702
1,292
5,544
Thermal
24,840
23,301
11,552
59,693
12,790
14,030
21,720
48,540
Nuclear
3,380
—
—
3,380
880
—
—
880
Total
36,874
26,783
15,043
78,700
15,220
16,732
23,012
54,964
Source: Central Electricity Authority
Table 2: Total Generation Capacity As On March 31, 2012 (MW)
Hydro
Thermal
Nuclear
Renewables
Total
Centre
9,085.40
45,817.23
4,780.00
0.00
59,682.63
State/UTs
27,380.00
55,024.93
–
3,513.72
85,918.65
Private
2,525.00
30,761.02
–
20,989.73
54,275.75
Total
38,990.40
131,603.18
4,780.00
24,503.45
199,877.03
Source: Central Electricity Authority
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6. The actual cumulative power capacity as on March 31, 2012, was 199,877 MW which
included 24,503 MW of renewable sources of energy.
More importantly, the pace of capacity addition picked up in the 11th Plan and there is,
at present, about 90,000 MW of generation capacity under construction which would
achieve commercial production in the ongoing 12th Plan (2012-2017).
If these projects proceed to completion as scheduled, and a strong effort is made to
initiate new projects in the first year of the 12th Plan (2012-13), India could reasonably
expect to achieve capacity addition of 80,000-100,000 MW in the entire 12th Five-Year
Plan.
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7. NTPC Limited, India’s largest power generating company having an installed capacity of
41184 MW, after having declared a capacity addition of 4170 MW and an addition of
4830 MW in its commercial capacity in the financial year 2012-13, comprises of 23
NTPC Stations (16 Coal based stations, 7 combined cycle gas/liquid fuel based
stations), 7 Joint Venture stations (6 coal based and one gas based) and 2 renewable
energy projects.
Table 3: Installed Capacity of NTPC Plants (30 March, 2013)
NTPC Owned (+ Owned By JVs)
No. Of Plants
Capacity (MW)
Coal
16 (+ 6)
37,219
Gas/Liquid Fuel
7 (+ 1)
3,955
Renewable energy projects
2
10
Total
32
41,184
Table 4: Generation of NTPC Plants (2011-12)
Fuel
Generation (MW)
Coal
28,695
Gas
3,657
Liquid Fuel
360
Renewable energy projects
0
Total
32,712
Figure 2: Growth in Generation of NTPC Plants
225
220
215
210
205
200
195
190
2007-08
2008-09
2009-10
Page 5
2010-11
2011-12
8. FUEL SCENARIO
INDIAN STAND
Coal is the mainstay of India’s energy sector and accounts for over 50% of primary
commercial energy supply and of the total power generated in the country,69% comes
from coal based thermal power stations. Next big share of energy portfolio in India is
dominated by hydrocarbons and less than 10 percent of energy is accounted by other
sources like hydro, renewables and nuclear.
While the pace of capacity addition is commendable, there has not been comparable
progress in delivering fuel and the availability of both coal and gas to the new power
plants is not assured. Demand for conventional energy in the past five years has
demonstrated an increased pace with natural gas growing at highest rate of over 10%
CAGR. While it is certain that India will see an increased escalation of energy demand,
the question that surrounds India is at what scale and speed India’s energy demand will
expand and which fuels and technologies it will use. Resolution of this problem must
have high priority in the 12th Plan, the Planning Commission observed.
The UMPP programme, which brings in private investment into power generation, was a
major initiative of the 11th Plan. Twelve more supercritical UMPP are being planned
covering Chhattisgarh, Gujarat, Tamil Nadu, Andhra Pradesh, Odisha, Maharashtra and
Karnataka.
―Unfortunately, some of these projects are plagued with uncertainties regarding fuel
supply because they were based on imported coal and changes in government policies
in the countries where the coal mines were located have raised the cost of coal whereas
the power tariff is based on a competitive bid which does not contain a provision for
passing on such increases,‖ the draft document noted.
Soaring Naphtha prices and poor supply because of low production has affected a
number of power generators. Sand ingress and consequently decline in gas production
Page 6
9. in KG-D6 basin has forced an array of gas plants to either reduce generation or shut
down.
Because of human life hazard associated with nuclear radiation and accidents like
Chernobyl and Fukushima, nuclear power plants have attracted very strong reactions
from general masses. After a lot protests, finally Supreme Court has given a go to the
Kudankulam Nuclear Power Plant.
Also, huge investments requirement and red tapism has put a number of solar and
wind, and other renewable energy projects in backstage.
The projected capacity addition in non-fossil fuel plants covers addition of hydro
capacity of 10,897 MW and nuclear capacity of 5,300 MW. Besides, 1,200 MW import of
hydropower from Bhutan has also been considered.
In addition, it is planned to add a grid interactive renewable capacity addition of about
30,000 MW during the 12th Five-Year Plan comprising 15,000 MW wind, 10,000 MW
solar, 2,100 small hydro and the balance primarily from biomass.
Figure 3: Change in Fuel Mix for Generation of Electricity
6% 3%
Coal
Oil
12%
14%
16%
7%
11%
70%
0%
Gas
58%
Hydro
Renewables
3%
2012
Nuclear
0%
2030
Page 7
10. With the increased consumption of energy, demand side management through
increased efficiency has also gained prominence in the country. Energy conservation
potential in India is estimated at ~ 23% and various initiatives have been taken to
explore this potential, in order to enhance energy efficiency of the nation and make
energy sector economically as well as environmentally sustainable.
Page 8
11. NTPC’s STAND
Currently, around 90 per cent of the company's fuel requirement is met domestically via
its long-term contract with Coal India and imported coal meets 10 percent of its annual
fuel requirement.
Coal India is under pressure from the government and power producers to ease fuel
shortages at home but has struggled for years to raise output due to problems in
obtaining environmental and regulatory approval.
There are disputes between NTPC and CIL relating to some issues that need to be
considered in a fuel supply agreement, which are:
1. Quality of the fuel - what happens if it does not meet the specification?
2. Quantity of the fuel - what happens if the fuel supplier does not supply the fuel in
accordance with the agreement? Is the fuel supplier obliged to provide a
substitute fuel or fuel from other sources, if coal is not available in adequate
quantities?
3. What is the deemed point of delivery? Delivery of coal can be problematic as
there may be issues of safety of the fuel in transit, and the temperature at which
it is stored is important in order to preserve its efficacy.
Soaring Naphtha prices and poor supply because of low production has also affected
NTPC’s Kayamkulam plant in past several times.
To deal with the problem, NTPC will have to utilize all the sources of energy for
generating electricity to reduce its dependence on one particular raw material. A
strategic mix of options will ensure fuel security for its fleet of power stations.
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13. ANALYSIS
COAL
INDIAN ISSUES
Coal is India's primary source of energy. The country has the fifth largest coal reserves
in the world. At the same time, the coal sector is one of the most centralized and
inefficient sectors in India. Two state-owned companies have a near-monopoly on
production and distribution. The coal sector has been facing challenges both in terms of
domestic as well as imported supplies.
Table 5: Top 10 Coal Producers*
Country
Million Tonnes
PR China
3,471
USA
1,004
India
585
Australia
414
Indonesia
376
Russia
334
South Africa
253
Germany
189
Poland
139
Kazakhstan
117
World Total
7,678
*Data for 2011
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11
14. The domestic production is stagnating in the coal sector as India’s coal demand
increased at CAGR of 8.5% while CIL’s domestic production increased at a CAGR 4.6%
only in 11th five year plan. Any additional coal requirement for new power plants would
be unlikely met through FSAs with CIL; hence finding alternative sources is
unavoidable. The country also faces a growing gap between demand and supply.
Producers failed to reach the government's latest production target in 2012, while
demand has grown by more than 7 percent per year over the last decade. Because of
this gap, India's coal imports have grown by more than 13 percent per year since 2001.
The total production of coal in India in 2012-13 was 557.5 million tonnes, which was 97
per cent of the target production and a growth of 3.3 per cent over the previous year.
Table 6: Production, Demand and Dispatch of Coal in Last Three Years
Year
Demand*
Production
Dispatch (Sale)
2010-11
656.31
532.694
523.465
2011-12
696.03
539.95
535.299
2012-13 (P)
772.84
557.661
568.754
P = Provisional, *data in MT
Table 7: Demand and Supply Scenario of Coal
Year
XI FYP*
XII FYP (Projected)
XII FYP (Projected)
Demand
696.03
980.50
1373
Supply
554
715
950
Gap
142.03
265.5
423
*data in MT
Based on the recommendation of the Review Committee and the Inter-Ministerial
Group, the government had so far de-allocated 47 coal blocks mainly on account of lack
of progress in their development. Out of the 47 de-allocated bocks, two blocks were
allocated again, three blocks were assigned to Coal India Ltd and de-allocation letters
were withdrawn in respect of five blocks. The production of coal from captive blocks in
2012-13 was 36.8 million tonnes against the target of 42 million tonnes, which was only
7.3 per cent of the total target envisaged for India.
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12
15. In order to achieve the target production of 795 million tonnes by the terminal year of
the 12th Five-Year Plan (2016-17), the government has taken steps to expedite
environment and forest clearances, seek higher number of rakes with the Ministry of
Railways, and approach the state governments for necessary assistance in land
acquisition etc. In addition, Coal India Ltd and its subsidiaries have taken a series of
steps to augment coal production which include increasing the efficiency of equipment
and mechanisation, strict supervision of existing mines and ongoing projects, and
capacity addition from new projects.
India’s coal imports have more than doubled over the last five years. Also, different
characteristics of coal typically permit existing power plants to blend imported coal with
domestic coal only up to 10% to 15%. Meanwhile the import of coal during 2009-10,
2010-11 and 2011-12 was 73.26 million tonnes, 68.92 million tonnes and 102.85 million
tonnes, respectively. In 2012-13, 110.43 million tonnes of coal were imported up to
January 2013. The demand for 2013-14 is estimated at 769.69 million tonnes and the
total all-India coal production has been planned at 604.55 million tonnes. Thus, the
estimated gap of 165.14 million tonnes of coal would have to be met through imports.
Coal has been placed under Open General License and can be freely imported at
prevailing international prices by anyone after paying the applicable import duty. In
addition the dynamism in the regulations of the countries from where coal is being
imported pose further hurdles by way of political risks.
Figure 6: Increase in Demand of Imported Coal (MT)
80
70
60
50
40
30
20
10
0
2007-08
2008-09
2009-10
Page
13
2010-11
2011-12
16. The Indonesian government recently implemented the Indonesian Coal Price
Regulation, which requires prices for all transactions to be benchmarked against a set
of international and domestic indices and all sale contracts to be modified
retrospectively by September. Several developers have already entered into long term
PPA’s with distribution utilities based on fuel tied up from Indonesian mines which have
now been covered under the new law posing uncertainty over the operational viability of
the affected plants.
According to the Ministry of Coal, one of the ways to reduce the dependence on imports
is to devise a PPP policy framework with Coal India Ltd as one of the partners in order
to increase the production of coal for supply to power producers and other consumers.
This was announced in Budget 2013-14. Prior to the announcement, the ministry set up
a committee to devise the PPP policy framework with CIL and the committee has since
had its first meeting and deliberated on various models.
Some of the challenges in increasing the production capacity are as follows:
According to the data proved by CIL, 179 forestry proposals are awaiting
clearances and if all approvals are secured on time, it can more than double its
output to 1,132 MT, given that mines start production from 2016-17.
Majority of the coal projects have been halted and delayed due to issues in
acquiring land and strict rules and regulations (R&R).
Even subsidiaries of CIL, such as MCL in Angul, face issues pertaining to R&R.
Bottlenecks in domestic coal transportation and lack of proper road connectivity
further increase the challenge. Also, availability of railway wagons and mismatch
of demand and supply of wagons and coal off take affect production capacity.
Delay in mining activities at captive coal blocks and concerns relating to the
increasing ash content of run-of-mine (ROM) coal further hinder production.
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14
17. NTPC ISSUES
NTPC has an annual coal requirement of 160 million tonnes (MT), of which it will have
to import around 16 mt. The state utility has contracted to import 16.4 million tonnes of
coal in 2012/13, a third more than the previous year. Whether it is gas or coal, it is
always more viable to source fuel from the domestic market, if sourced from overseas, it
becomes expensive, which leads to higher electricity tariff. Thus, NTPC wants to trim its
overseas buys. Electricity produced from expensive fuel is finding few takers, which
may eventually affect NTPC’s revenues.
Figure 7: Coal Receipt by NTPC (2012-13)
45
40
35
30
Domestic
25
Imported
20
15
10
5
0
2QFY12
3QFY12
4QFY12
1QFY13
Projects for 2,600 MW are linked to three mines that were seized from NTPC due to a
lack of progress and then reallocated last year, but formal allotment has still not come.
In addition, delay in allocation of coal blocks is hurting power generation plans of NTPC,
as it expects 40 mln T coal from its own licensed mines by 2017.In spite of having
market value of $23 billion, is finding it difficult to acquire mines abroad, largely due to
state control that slows decision-making.
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15
18. Table 8: Import of Coal to NTPC Plants in 2012-13
Thermal Power Station
Capacity as on
31.3.2013 (MW)
Coal Imported
(million tonnes)
Average
landed cost
of
imported coal
(`/tonne)
Talcher Super
3,000
2.218
5,905
0.45
Farakka
2,100
1.048
6,578
0.19
Kahalgaon
2,340
1.075
7,008
0.24
Ramagundam I & II
2,100
0.339
6,293
0.05
Simhadri
2,000
1.479
5,082
0.09
Dadri
1,820
1.213
7,318
0.21
Rihand
2,500
0.104
7,551
0.03
Tanda
440
0.004
7,828
0.03
Unchahar
1,050
0.216
7,398
0.09
Vindhyachal
4,260
0.096
7,625
0.02
Korba
2,600
0.365
6,974
0.1
Sipat
2,980
0.983
6,917
0.28
Total
9.14
Page
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Indicative increase
in tariff (`/kWh)
due to
blending of
imported coal
19. SOLUTIONS
In the backdrop of increasing coal demand and reliance on coal for power generation,
collective effort of the government, power producers, coal miners and service providers
are necessary to ensure modern and sufficient infrastructure.
Figure 8: India’s Coal Reserves
As such, coal production depends on various factors such as the pace of land
acquisition, and obtaining environment and forest clearances, the government has
taken various steps to increase the production of coal during the 12th Plan in order to
meet the growing demand and to reduce dependency on imports. These steps include
emphasis on implementation of new projects and expansion of existing projects,
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17
20. improving coal evacuation and movement, involvement of private sector and achieving
close coordination with various line agencies for clearances of projects. However,
despite these measures, it is expected that there will remain a gap between domestic
demand and production by the terminal year of the 12th Plan (2016-17) which will need
to be met through imports.
Further, to reduce reliance on imported coal and boost the domestic supply,
development and expansion of coal mines in the country is necessary. To ensure timely
and smooth development of coal mines and for meeting coal demand, following steps
should be taken:
1. Establishing a single window clearance process for coal mines.
At present, all related subjects such as land, water, mineral, environment and
forest, etc. are administered by different independent departments and ministries
at the state and central levels. Since the functions of departments and ministries
are dependent and complimentary to each other with regard to the allocation and
regulation of minerals, it is suggested that a single window agency at the state
and central level may process the application. A single window committee will
help to streamline the entire approvals process and bring about speed and
consistency in decision-making.
2. Support in land acquisition and R&R related issues to ensure timely and
smooth completion. Offering projects with secured clearances will boost
timely development as well as increase the industry participation.
3. Currently, commercial sale of coal is allowed for government companies
only. To meet the growing coal demand, it is prudent to consider
commercial sales of coal by Private Developers though suitable framework
may need to be developed for coal pricing, balance profits to private
developers etc.
4. Measures to be imposed to improve productivity of the coal mines and
improve recovery from the coal mines.
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18
21. 5. Fund Raising
Exploration is a specialised job and is considered a risky venture. So investment
should be encouraged in this sector through proper incentive and security of
tenure. The government may consider creating funds to support overseas
acquisition to supplement domestic resources. This is required since mining is a
capital intensive industry. Further, mining projects often require investment in
supporting infrastructure which is more capital intensive than mining.
6. Steps need to be taken to promote research and exploration activities and
modern underground mass production technologies which will also help in
dealing with land acquisition related issues as land requirements for UG
mining will be lesser.
7. Indian Railways, port authority and the industry need to work in close
collaboration to plan development of infrastructural facilities as per
requirements.
8. Lack of incentives for exploration
The exploration and exploitation for minerals requiring huge capital should be
extended the same benefits and incentives which are available to the oil and gas
sector under the new exploration licensing policy (NELP)
9. Lack of policy support for transfer of mining concessions
A lot of mining leases have been provided in the past comprising small areas to
individuals. The mine owners are not able to mine scientifically while complying
to all the environmental norms and would like to dispose off these areas or
develop them through forming a joint venture. States may allow transferring
these assets at a premium so that these dormant assets can be developed to
increase supply in domestic market, leading to the utilisation of dormant
resources.
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22. OIL AND GAS
INDIAN ISSUES
Oil & gas resources form a major part of our primary energy mix and touch our lives in
more ways than one. The developing Indian economy has been constantly challenged
for sourcing primary energy. India is dependent on imported crude oil to the extent that
recently the US Energy Information Administration (EIA) has observed that India was
the world’s fifth largest net importer of oil in 2010, importing more than 2.2 million bbl.
/d, or about 70 percent of consumption.
Figure 9: Status of Exploration in the Indian Sedimentary Basins in 2010-11
22%
Poorly Explored
44%
Moderately to Well Explored
22%
Unexplored
Exploration Initiated
12%
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20
23. India has only 0.5% of world’s proven oil reserves and it houses more than 15 percent
of the world’s population; the current reserve to production ration is ~18 years. In terms
of Natural Gas, India has 1,241 billion cubic meters (bcm) of proven and indicated
reserves, which are 0.6 percent of the world's total proven gas reserves.
At existing production levels of 50.9 bcm per year, the country has a Gas R/P ratio of
about 26.9 years. There are 26 sedimentary basins in India covering 3.14 million sq. km
of area. Of these 26 basins, 22 basins fall into the three categories - of being
prospective, having identified prospectively and proven to be commercially productive.
Of the total area of 3.14 million sq. km, 22 percent can be categorized as moderately to
well explore. Exploration efforts have been initiated in 44 percent of the area and 34
percent remains poorly to completely unexplored (Figure 5). Currently, 1.06 mn sq. km
areas are under active petroleum Exploration Licenses in 18 basins and a total of
35,601 sq. km area is under Mining Lease.
Figure 10: India Oil and Gas R/P Ratio
70
60
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Gas (R/P)
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21
Oil (R/P)
24. All stakeholders, therefore, continue to remain engaged in quest for energy. This
provides immense opportunity to investors to develop business opportunities in a
country where demand exists. The opportunities are backed by a democratic
governance system and a powerful judiciary. However, these opportunities are not
without their share of unique challenges. This background paper aims to examine the
interplay of these opportunities and challenges and at the same time identify some of
the megatrends that will shape the future of the Indian oil & gas industry in the next
couple of decades.
Figure 11: Natural Gas Demand and Supply
300
279.43
262.07
250
225.52
200
196.64
179.17
163.36
150
100
166.17
145.89
105.28
Demand
Supply
104.4
50
2007-08
2008-09
2009-10
2010-11
2011-12 *
The oil & gas sector in India continues to be dominated by the central public sector
undertakings. While the influence of private companies in the upstream sector is
increasing, state owned ONGC continues to be in possession of the largest acreage for
exploration and production. Reliance Industries Limited is the largest private sector
player in the upstream sector in India and has gained increasingly important role
especially in the gas sector. The gas transportation, distribution and marketing sector is
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22
25. dominated by the state owned Gas Authority of India Limited (GAIL) which enjoys a
virtual monopoly on the sector. However, the City Gas Distribution (CGD) sector may
see entry of private companies in the years to come. The downstream marketing sector
is also dominated by public sector refiners IOC, BPCL and HPCL, all of them
incidentally are integrated oil companies with each of them in refinery segment.
Reliance Industries Limited (RIL) is the largest refining company in India, though. Essar
Oil Limited with its own refinery on the West coast is another major private sector
company in the sector. The E&P services and equipment sector in India sees
participation from major international companies such as Schlumberger, Halliburton,
Baker Hughes, Transocean, Weatherford etc.
Some domestic companies having
invested in assets have also started playing key role in offshore services.
Figure 12: Projected Natural Gas Demand in Power Sector
250
200
150
100
50
0
2012-13
2013-14
2014-15
Page
23
2015-16
2016-17
26. NTPC ISSUES
NTPC’ s 6 gas and 1 liquid fuel based power plants were operational in the year 20122013.Plants based on gas are suffering from decline in supply. Sand ingress in the KGD6 basin has added to the problems. The company is looking forward for equity in oil
and gas field abroad. Also, it has shown interest in oil and gas exploration ventures.
NTPC is planning on expansion of its gas fired plants (e.g. Gandhar) to reduce the huge
dependency on coal for its thermal units. However, some its plans have been delayed
indefinitely following the Power Ministry of India's advice to not plan any gas-based
projects until 2015-2016 as a gas shortage looms for the power sector in the country.
Table 9: NTPC Gas Consumption 2008-09 (in mmscmd)
PMT
Requirement
Requirement
(90% PLF)
(85% PLF)
Anta
1.99
1.88
1.29
0.09
0.00
1.38
Auriya
3.15
2.98
2.05
0.12
0.00
2.17
Dadri
3.94
3.72
2.23
0.03
0.06
2.32
Faridabad
2.04
1.93
1.14
0.02
0.02
1.18
NCR
11.12
10.50
6.71
0.26
0.08
7.05
Kawas
3.11
2.94
0.54
0.83
0.00
1.37
Gandhar
3.12
2.95
1.44
0.90
0.00
2.34
WR
6.23
5.88
1.98
1.73
0.00
3.71
NTPC
17.35
16.39
8.69
1.99
0.08
10.76
Station
APM/PMT
Spot RLNG
Spot/Fallback
Total
RLNG
Page
24
27. SOLUTION
The sector is teeming with opportunities but at the same time its dealing with some
fundamental issues which can hinder its progress and thwart the achievement of its
growth objective. While some of these issues are specific to a sub-sector, other such as
infrastructure development is applicable to the entire sector. Some of these major
issues have been discussed below:
a) Limited participation by foreign companies in the Indian upstream
sector - Prospectively or Policy:
The nine rounds of NELP have seen enthusiastic participation by the state
owned companies, the participation by private players especially the
foreign majors has been limited. These companies bring a lot of
investment muscle required for development of capital intensive and high
risk upstream projects. More importantly however, these companies bring
technological expertise and diverse project experience.
b) Upstream skills, technology and equipment shortage:
Upstream talent shortage and ageing workforce is an issue being faced
the global as well as Indian upstream industry. The industry is especially
pressed with shortfall of labor with specialized skills such as reservoir
engineering or with experience of developing unconventional gas assets.
c) Enablers for acquisition of oil & gas assets abroad:
Indian Oil & Gas companies, especially the public sector companies have
been competing with aggressive Chinese counterparts and IOCs for
acquisitions of assets abroad. However, in many cases these companies
have to lose out to the competition due to the slow speed of clearances
and decision making process in place for making large investment
decisions.
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25
28. d) Ambiguity on policies relating to pricing and marketing of domestic
gas as well as the gas end-user segment policies creating hurdles to
gas market development
e) High import dependence for energy amounts to high vulnerability
and compromised energy security; The Arab spring in the recent
past was a significant cause of concern for India, owing to high
dependence on the region for energy supplies.
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26
29. NUCLEAR
INDAIN SCENARIO
India has well recognized the role of nuclear energy as a part of its long term energy
security measure. Nuclear power supplied 20 billion kWh (3.7%) of India electricity in
2011 from 4.4 GWe (of 180 GWe total) capacities and after a dip in 2008-09 this is
increasing as imported uranium becomes available and new plant come on line. Some
350 reactor-years of operation have been achieved by the end of 2011. The current
installed capacity of nuclear power plants in India stands at around 4780 MW. Nuclear
capacity additions in India have been relatively slow during the Eleventh Plan period.
During the five year period, against a target of 3380 MW, only around 880 MW of
capacity was added. The draft 12th Five Year Plan has targeted a capacity addition
target of around 5,300 MW from nuclear energy. In the long term, the various scenarios
under the Integrated Energy Policy (IEP) envisage the nuclear capacity to be 48 GW to
63 GW by year 2030.
Figure 13: Share of Nuclear Power in India (In Terms Of Fuel Source for Electricity Generation)
15
10
5
0
2012
2017
Page
27
2030
30. Figure 10: Nuclear Power Installed Capacity of India
Power Station
State
Type
Units
Capacity
Kaiga
Karnataka
PHWR
4 x 220
880
Kakrapar
Gujarat
PHWR
2 x 220
440
Kalpakkam
Tamil Nadu
PHWR
2 x 220
440
Narora
Uttar Pradesh
PHWR
2 x 220
440
Rawatbhata
Rajasthan
PHWR
1 x 100, 1 x 200, 4 x 220
1, 180
Tarapur
Maharashtra
BWR(PHWR)
2 x 160, 2 x 540
1,400
Total
20
4, 780
NTPC PLANS
National Thermal Power Corporation (NTPC) in 2007 proposed building a 2000 MWe
nuclear power plant to be in operation by 2017. It would be the utility's first nuclear
plant and also the first conventional nuclear plant not built by the government-owned
NPCIL. This proposal became a joint venture set up in April 2010 with NPCIL holding
51%, and possibly extending to multiple projects utilising local and imported technology.
One of the sites earmarked for a pair of 700 MWe PHWR units in Haryana or Madhya
Pradesh may be allocated to the joint venture.
NTPC said it aimed by 2014 to have demonstrated progress in "setting up nuclear
power generation capacity", and that the initial "planned nuclear portfolio of 2000 MWe
by 2017" may be greater. However in 2012 it indicated a downgrading of its nuclear
plans. NTPC, now 89.5% government-owned, planned to increase its total installed
capacity from 30 GWe in about 2007 to 50 GWe by 2012 (72% of its coal) and 75 GWe
by 2017. It is also forming joint ventures in heavy engineering.
NTPC is reported to be establishing a joint venture with NPCIL and BHEL to sell India's
largely indigenous 220 MWe heavy water power reactor units abroad, possibly in contra
deals involving uranium supply from countries such as Namibia and Mongolia.
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28
31. KEY CHALLENGES IN DEVELOPMENT OF NUCLEAR ENERGY
Safety aspect:
The recent disasters at the Fukushima NPP in Japan have raised concerns
regarding the safety of nuclear power projects. The need is to revive the
confidence in the technology & safety aspects w.r.t. installation of nuclear power
projects and ensuring that the highest & most robust levels of nuclear safety are
in place.
Fuel supply:
While India has developed indigenous technological capability in all aspects of
nuclear power, the ability to develop nuclear power is restricted by the very
limited availability of Uranium. India is poorly endowed with Uranium. Available
Uranium supply can fuel only 10,000 MW of the Pressurised Heavy Water
Reactors (PHWR). Further, India is extracting Uranium from extremely low grade
ores (as low as 0.1% Uranium) compared to ores with up to 12-14% Uranium in
certain resources abroad. This makes Indian nuclear fuel 2-3 times costlier than
international supplies. The substantial Thorium reserves can be used but that
requires that the fertile Thorium be converted to fissile material. The pace at
which we can expand nuclear power generation using indigenous fuel sources is
thus severely limited even though the eventual potential for nuclear power
generation is vast.
Social & environmental concerns:
Issues related to social & environmental impacts needs to be addressed to
encourage acceptance of the nuclear power project by all stakeholders.
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29
32. RENEWABLE
INDIAN SCENARIO
The country possesses vast renewable energy potential. In the early 80s, India was
estimated to have renewable energy potential of about 85 GW from commercially
exploitable sources, namely in wind, bio-energy and small hydro. These estimates have
since been revised to reflect technological advancements. Initial estimates from Centre
for Wind Energy Technology (C-WET) suggest that wind energy potential at 80 meters
height (with 2 per cent land availability) could be over 100 GW. Some studies have
estimated even higher potential ranges up to 300 GW.
Figure 14: Renewable Energy Potential in India Renewable Potential (GW)
50
20
15
Sufficient to
generate 50
MW/sq. Km
Wind
Bio-energy
Small Hydro
Solar
Source: Ministry of New and Renewable Energy (MNRE)
The MNRE has initiated an exercise for realistic reassessment of the wind power
potential, whose results are expected by the end of 2013. A very significant part of the
Page
30
33. total Renewable Energy (RE) potential still remains to be exploited. The current installed
capacity of renewable energy sources stands at around 26,368 MW (as on Nov-2012).
Figure 15: Renewable Energy Installed Capacity Renewable Capacity (MW)
Small Hydro,
3464
Biomass,
1242
Cogeneratio
n, 2199
Solar, 1047
Wind, 18321
Waste to
energy, 93
Source: Ministry of New and Renewable Energy (MNRE)
The key drivers for renewable energy are the following:
The demand-supply gap, especially as population increases
A large untapped potential
Concern for the environment
The need to strengthen India’s energy security
Pressure on high-emission industry sectors from their shareholders
A viable solution for rural electrification
Page
31
34. Given the overall policy & regulatory push, renewable energy is envisaged to play an
important role in the long term. The projected change in the mix of installed capacity &
electricity generation by fuel type by the end of 2030 is shown in the figure below.
Figure 16: Renewable Sector - Eleventh Plan Period Performance
Fuel Mix – Installed Capacity basis
100%
2
12
4
100%
9
17
20
75%
Fuel Mix – Generation Basis
3
6
5
9
12
14
75%
33
12
16
9
1
13
3
0
57
56
11
30
50%
58
25%
42
0%
0%
2012
Coal
69
0
6
1
50%
25%
5
70
15
7
0
Oil
Gas
2017
Hydro
Renewable
2030
2012
Nuclear
Page
32
Coal
Oil
2017
Gas
Hydro
2030
Renewable
Nuclear
35. NTPC’S FORAY INTO RENEWABLE ENERGY
Figure 17: NTPC Into Renewable Energy
Wind
Capacity (MW)
Plant/Location
500
Karnataka
200
Kerala
200
Gujarat
15
NTPC- Anta in Rajasthan
5
Andaman & Nicobar
5
NTPC-Dadri (Uttar Pradesh)
5
NTPC-Faridabad (Haryana)
10 (Phase-1)
NTPC-Ramagundam (Andhra Pradesh)
10
NTPC-Unchahar (Uttar Pradesh)
10
NTPC-Talcher Kaniha (Orissa)
50
Madhya Pradesh
15 (Phase-2)
NTPC-Ramagundam (Andhra Pradesh)
25
NTPC-Singrauli (Uttar Pradesh)
8
NTPC-Singrauli (Uttar Pradesh)
3
NTPC-Rihand (Uttar Pradesh)
-
Tapovan (Uttarakhand)
-
Tattapani (Chhattisgarh)
Solar
Small Hydro
Geothermal
KEY PROBLEMS:
High initial investment cost
High tariff of generated energy
Grid connectivity and variable generation issue
Slow pace from installation to generation
Page
33
36. SOLUTIONS
It is well recognized globally that early commercialization of Renewable Energy (RE)
technologies is highly dependent on support from the government through mix of policy
and regulatory instruments. Over the years, the Government of India has introduced a
number of policy and regulatory initiatives for promoting RE.
NAPCC provides guidance for promotion of renewable energy NAPCC provides
guidance on enhancements in the policy & regulatory regime to help mainstream
renewables based sources in the national power system.
Jawaharlal Nehru National Solar Mission (JNNSM): Targets 20,000 MW of
grid-connected solar power capacity and 2,000 MW of off-grid solar power
capacity by 2022.
National Tariff Policy: Directed SERCs to fix a minimum percentage of
purchase of energy consumption from RE sources (RPO). This created a
demand side stimulus for RE development.
Introduction of Generation Based Incentives (GBI) for solar and wind
energy: This scheme offers fiscal incentives along with tariff on power generation
from solar and wind. It shifted investment interest from installation to generation.
Creation
of
Department
of
Non-conventional
Energy
Sources:
An
independent department for development, demonstration and application of RE.
RE sources were recognized as potential alternative energy sources and
received special consideration.
Page
34
37. RECOMMENDATIONS & ANALYSIS
By looking at various approaches we will be opting a solution which will not only solve
NTPC’s fuel security problem but help NTPC develop as an integrated major. Being a
leader NTPC will also be showing path to other organizations also.
Few developments which are underway include:
FY14 would see two crucial developments on fuel security for NTPC –
(1) Commencement of production from its first captive mine, Pakri Barwadhi.
(2) Installation of jetty and in-land water transport system for Farakka and
Kahalgaon (F&K) project.
NTPC plans to commission 15GW of capacity in 12 th plan (11.9GW remaining).
Similar capacity is planned for 13th plan at 14.7GW; total capacity under
construction is 20GW and balance under project award. This provides strong
visibility on growth option.
Our solution is integrated approach in which we will be focusing on:
Developing coal mines in INDIA with help of JV’s and man power training.
Forming an association for import of coal with other power producers.
Acquiring coal mines abroad and signing MOU’s.
Addition of capacity in Renewable resources and nuclear arena.
Page
35
38. EXECUTIONAL FRAMEWORK
Step 1:
By Opting For Coal Based Development Only Approach 1 & 2
Figure 18: Scenario in 2017
Coal Demand Supply Scenario forecast
FY 14
FY 15
FY 16
FY 17
Coal Demand
187
198
205
218
On date supply
119
119
119
119
LoA / New Supply
22
25
32
38
Total Linkages
141
144
151
157
%age Demand
75
74
73
72
Captive Production
3
8.5
19.5
37
E-auction
3
3
3
3
Total Domestic(A+B)
147
155.5
173.5
197
%age of Demand
79
79
85
90
Imports (Domestic equiv.)
40
42.5
31.5
21
Actual Imports
23.5
25
18.5
12.4
Balance to be Met(B)
The 12.4 million tons demand from foreign will be met by acquiring coal mines in
Nigeria or Indonesia and some by import from Australia etc.
To reduce formation of cartels and hike in prices by demand supply gap we will
form an association in India that will be importing total coal on countries behalf
for all by negotiation, will be important part of strategy.
Step 2:
In
Adding 3rd Approach of Renewable sector.
renewable
sector
NTPC
is
increasing
If we make a target of 1000 MW addition each year in combined area’s :
Solar(250 MW per year)
Wind (500MW per year)
Biomass(200 MW per year)
Small hydro(50 MW per year)
We will be accumulating further 5,000 MW by 2017.
Reducing domestic equiv. import to around 7 MT in place of 21 MT.
Page
36
its
foray.
39. Step 3:
Adding 4th Approach of Nuclear sector.
NTPC is expected to invest around Rs. 1,000 crore for setting up nuclear power plants
of at least 2,000 MW capacities. If we come up by 2,000 MW addition with the help of
NPCIL for which we have set a up a JV with it.Then our Import will reduce to 2MT of
domestic equiv. coal.
This is equivalent to just 0.75 MT of imported coal.
Figure 19: NTPC’s revised target portfolio for 2017
6000
2000
2000
Coal
6000
Renewable
Nuclear
49000
Gas
Hydro
Indicative Data
Page
37
40. INTEGRATED GASIFICATION COMBINED CYCLE (IGCC)
IGCC combines gasification technology with combined cycle technology. The first step
in the IGCC process is gasification. Gasification converts any hydrocarbon into a
synthesis gas comprised mainly of hydrogen (H2) and carbon monoxide (CO) at high
temperature and pressure. The gasification process allows the separation of the
pollutants from the synthetic gas. With CO2 capture option, syngas passes through a
Water Gas Shifter (WGS) and converts the syngas to primarily CO 2 and H2. Next the
syngas is ―cleaned-up‖ by removing the acid gases (such as hydrogen sulphide),
particulate matter, Hg and other pollutants. After the CO2 separation unit, CO2 can be
stored and hydrogen is combusted in a combined cycle gas turbine that produces
electricity. Both the syngas production process and the gas turbine combustion
processes generate steam that is utilized to produce electricity.
Advantages of IGCC include the reduction of CO2 emissions, increased efficiency, and
flexible fuel supply. IGCC technology with CO2 capture also results in superior
environmental performance by reducing emission of pollutants (e.g., SO 2, NOx,
particulate matter, and mercury). The collection of sulphur and gasification slag obtained
from the process has by-product value, which avoids the cost of by-product disposal,
and easier CO2 removal. The energy consumption for CO2 capture is lowest in
comparison with conventional power plant and NGCC plant.
The main disadvantage of IGCC is the capital cost. In addition, IGCC is a complex
process that requires a high degree of component integration.
Page
38
41. Table 19: Calculation results of IGCC system combined with different CO capture technology
2
IGCC with precombustion CO
CO capture
2
IGCC with postcombustion CO
2
capture
3
Coal, 10 kg per day
3017
3843
4128
3
95% O , 10 kg per day
2
3620
4612
4953
Gross Power, MWe
875
1115
799
Auxiliary Power, MWe
375
615
279
3
CO produced, 10 kg per day
2
9292
11838
10733
3
CO emission, 10 kg per day
2
9292
2368
~0
Thermal-to-Electric Efficiency based on HHV
48.5%
38.1%
35.4%
IGCC without
Feeds
capture
Performance
Figure 20: IGCC Configuration
Page
39
2
42. Figure 21: Baseline IGCC Configuration
Studies indicate that coal-based IGCC has the capability for combined reduction of CO2
emissions and increased efficiency compared to conventional power
Page
40
43. CONCLUSIONS - THE WAY FORWARD
To achieve fuel security we have to devise certain options in domestic and international
front. Country’s power generation plans are at the cross roads of growth and poised for
a quantum leap. Matching progress required in the coal sector through creation of
enabling policy environment.
In the deficit scenario of coal, Government would have to create an enabling
policy environment to facilitate:
Greater domestic/captive production, IL/SCCL to ensure total coal requirement
(including import) for the power sector as per NCDP.
Encouragement of setting up new power plant at coastal area with imported coal.
Ports to be identified with power project for import/coastal cum riverine transport.
There must be some integrated clearance for both coal linkages as well as
movement clearance to power utilities.
Supply of sized coal to power utilities.
Incorporation of rapid loading system at each and every siding/mines of the coal
company.
From existing mines we can increase the production by:
Adaptation of modern technology to increase productivity.
To increase the availability of the major HEMM (Shovel, Dumper, Dragline, Dozer
etc.).
The rapid depletion of shallow reserves calls for exploitation of deep seated
reserves through efficient technology. This can be done by inviting international
players with state-of-the-art technologies.
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41
44. From Upcoming Mining Project:
Time frame clearance of coal mining projects. Up front forest and environment
clearance
Allocation of more coal blocks to private players/ end users with strict deadlines
and steep penalties for failure.
A special purpose vehicle (SPV) may be set up initially to take care of all
regulatory clearances, which is then transferred to the Mine developer.
For fulfilling the dire necessity in short term we can for:
Import of coal
E-Auction
Tie up through MOU at premium price.
To take up with CIL for finalization of FSA for new units at 90% commitment level
Transportation of coal through Inland Waterways at Farakka/Kahalgaon/Barh
NTPC may contemplate handing over their own fleet of wagons to Railways for
increased coal movement
In long term we can go for:
Development of captive mines allotted.
Acquisition of assets (Domestic and abroad).
Go for port based plants.
Re designing the boilers for high GCV coal.
Enablers for coal solvency
Sourcing of coal by optimizing portfolio mix, Domestic /Import/Captive/Acquiring
Mines abroad etc.
Uninterrupted Transportation System (MGR/IR).
Well-equipped unloading system at station end with sufficient redundancy.
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42
45. REFRENCES
The Economic Times, http://economictimes.indiatimes.com/
The Hindu, http://www.thehindu.com/
Business Standard, http://www.business-standard.com/
The Indian Express, http://www.indianexpress.com/
The Hindu Business Line, http://www.thehindubusinessline.com
Business World, http://www.businessworld.in
Live Mint, http://www.livemint.com
KPMG KBuzz Sector Insights, India Energy Conclave 2007 India Energy Inc. –
Emerging Opportunities and Challenges, December 2007, http://www.kpmg.com
Pricing Policy, http://www.coalindia.in/
Power Line, http://www.tatapower.com
Ministry of Coal,GOI, http://www.coal.nic.in/
India Infrastructure, http://www.indiainfrastructure.com/
Infraline Energy, http://www.infraline.com/
Central Electricity Authority, GOI, http://www.cea.nic.in
Ministry of Power- Northern Regional Power Committee, GOI ,
http://www.nrpc.gov.in/
Planning Commission, GOI, http://planningcommission.gov.in/
The Singareni Collieries Company Limited' (SCCL), GOI, http://scclmines.com/
International Energy Association, http://www.iea.org/
Oil India Ltd., http://www.oil-india.com/
U.S. Energy Information Administration, http://www.eia.gov/
Page
43
46.
Indian Energy Congress, http://indiaenergycongress.in/
Bureau of Ocean Energy Management, http://www.boem.gov/
NTPC Ltd. Annual Reports, http://www.ntpc.co.in/
PricewaterhouseCoopers India, http://www.pwc.in/
Coal Controller, GOI, http://www.coalcontroller.gov.in/
Motilal Oswal NTPC Financial Reports, http://www.motilaloswal.com/
Industrial
Research
and
Consultancy
Centre,
IIT
http://www.ircc.iitb.ac.in/
Central Electricity Regulatory Commission, http://www.cercind.gov.in
Project Monitor, http://www.projectsmonitor.com/
EDF Energy, http://www.edfenergy.com/
The Telegraph India, http://www.telegraphindia.com
Reuters India, http://in.reuters.com/
CMR Research, http://cmrindia.com/
Indian Power Sector.Com, http://indianpowersector.com
Infochange, http://infochangeindia.org/
The Statesman, http://www.thestatesman.net
The Guardian, http://www.guardian.co.uk/
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44
Bombay,
