Opportunities & Obstacles in India for Distributed Energy Generation by Pinaki Bhadury

Opportunities & Obstacles in Opportunities & Obstacles in IndiaIndia forfor Distributed Energy Distributed Energy

GenerationGeneration

byPinaki Bhadury

Thermax LimitedIndia

13th September 2007

New Energy Strategy New Energy Strategy of tof the Ehe EUU && C CRR within the framework of the world power supply &

development

13th September 2007 AEM Conference, Prague 2

Prozdravit ze Indie Greetings from India


TopicsTopics

• DE in India

• DE Opportunities

• Obstacles for DE

• Way forward

• Indian DE Market

Developments

• About Thermax


Distributed Energy (DE) in IndiaDistributed Energy (DE) in India

• Indian DE was born 107 years back!– 1899 CESC installed the 1st Power Plant of

1 MW for Calcutta (Kolkata) city– 1905 BEST installed 4.3 MW Power Plant

for Bombay (Mumbai) for supply to city & its tramways

– Soon followed other cities• Surat

• Ahmedabad

• With rapid increase in demand– Larger capacity power plants took birth

• Lead to decline of DE in India

Pics courtesy CESC & BESTCESC : Calcutta Electricity Supply CompanyBEST : Bombay Electricity Supply & Tramways Company


DE in IndiaDE in India

• Re-Emergence of DE– Captive Power Plants

• Sugar Cogen• Refineries• Cement• Textile

– Small hydro in the hilly regions

• Today, about 19% of India’s installed capacity is in DE

Share of CPPs in Installed Capacity

0

50

100

150

200

250

1980-81 1985-86 1990-91 1994-95 2000-01 2003-04 2005-06 2011-12*

in 1

000

MW

0%

5%

10%

15%

20%

25%

CPP Installed Capacity Utility Installed % of Total * Projected

Photograph courtesy : Arvind Mills Limited & Thermax Limited


DE OpportunitiesDE Opportunities

• Drivers for DE in India– Increasing Demand-Supply

Gap• Poor implementation of

projects• Inadequate capacity

addition– Poor availability & reliability

• Most of small cities & towns get electricity only for 5-6 hrs/day!

• Rural areas get electricity only for 3-4 hrs/day!

• Industries have to live with– Frequent interruptions– Frequencies between 48.5

– 51.5 Hz!

India China

Population 1.13 Billion 1.33 Billion

GDP $ 1000 Billion $ 2450 Billion

Installed Capacity 172 GW 606 GW

Cap Addition/Yr 6 GW 70 GW

Source : Ministry of Power, India, India Census,CIA Factbook, Xinhua New agency, Chinese State Regulatory Commission

Indian Power Supply Scenario

0

10

20

30

40

50

60

70

80

90

100

1994-95 1999-2000 2004-05 2005-06*

Pea

k D

eman

d G

W

5.6%

5.8%

6.0%

6.2%

6.4%

6.6%

6.8%

7.0%

7.2%

7.4%

7.6%

% E

ner

gy

Sh

ora

tge

Peak Demand (GW) Peak Met (GW) Shortage % (MU)

Presently in India the Peak Demand shortage is 20% average and Energy Supply shortage is 17%!



• Drivers for DE in India– Poor & inadequate T&D network

• Many areas do not have access to any grid• In parts of India, grid can not reach due to terrain• High T&D (ATC) loss – 35% national average!!• India will need to invest in transmission as much as in

generation in the next 20 years– High cost of electricity for Industries

• Average cost is US 10¢/kWH– Indian Electricity Act 2003

• Captive Power Plants delicensed– Excess capacity allowed to be sold to others

• For Rural Electrification, distributed generation has been planned for areas where grid can not reach

– Stand alone systems for supply to rural households



• Business opportunities– Captive Power Plants (On-site generation)

• Presently estimated to be at 40 GW– Addition at 3000 MW per year

• Estimated addition 12 GW by 2012 (conservative)• Commercial Complexes (CHPC / Trigen)

– Multiplexes– Malls & Recreation Centres

• Industries (Cogen & Stand-alone systems)– Cement Plants– Sugar Cogen Plants– Textiles– Chemical– Industrial Parks– IT Parks



• Business Opportunities– Rural Electrification

• 60% (600 million) of India’s population is Rural– They reside in about 630,000 villages & towns

• 44% (250 Million) of the Rural population have no access to electricity

– Target to electrify all villages– Provide electricity to every household by 2012– Remote villages will have DE, 18,000 villages to be electrified

– Rural Business Hubs• Increasing economic activity around a cluster of villages• Electricity generation using local resources

– Target to achieve 10000 MW in next 8 years


DE ObstaclesDE Obstacles

• Energy Planner’s Mindset – “Bigger, the Better”– “Small & Medium sized plants are sub-optimal”– Power should be generated at source

• Pit-heads• RLNG terminalsand distributed to consumers

• Regulatory– Though Electricity Act 2003 allows sale of excess

power to 3rd party• It requires distribution license• State Regulators do not permit 3rd party sale

– Supreme Court of India recently ruled in favour of a State Regulator

– Government has amended the Act so as to allow third party sale without a licence


DE ObstaclesDE Obstacles

• Financial Restraints– Imposition of unrealistic taxes & duties on DE generation

• 10 – 37% of generation cost even if for own consumption• Cross subsidy charges on sale to third party as high as 50% of power price

(as much as US 5¢/kWH)

– Higher duties on capital equipment• DE plants are imposed 22% more duties than Mega Power Plants

– Sales Tax (VAT) on inputs like fuel, lubricants• Not applicable on Utility Large & Mega Power Plants

• Fuel Constraints– Non-availability of fuels

• Natural Gas• Coal

– Poor Distribution system• Absence of a National Gas Grid• High cost of coal transportation


Way Forward for DE in IndiaWay Forward for DE in India

• What needs to be done1. Need to influence policy makers about advantages of DE for

India in its generation mix– Study India’s long term generation & distribution needs– Design the generation mix based on Central & Distributed

Generation– Lobby through International agencies

2. Create ‘Buy-in’ for DE at– Central level– State levelThrough seminars, conferences & references for DE

India urgently needs to look at DE proactively as one of the options for meeting its burgeoning energy needs. Now is the time, or it will be too late

India urgently needs to look at DE proactively as one of the options for meeting its burgeoning energy needs. Now is the time, or it will be too late


Indian DE Market DevelopmentsIndian DE Market Developments

• On-site Industrial Power Plants (Captive Power Plants)– Encouragement from the government to sale extra capacity

• Grid / Transcos / Power Traders

• Direct Users

– Capacity augmentation to National Generation capacity

• Distributed Generation in Rural markets– Use of local resources

– Hybrid systems of Solar / Biomass / Wind / Micro Hydro systems

– Owned & operated by the village people

– Quick to implement & start

– No need of complicated and expensive distribution network


About ThermaxAbout Thermax

• Thermax Limited– A major Energy & Environment Indian engineering

company– Turnover of Rs 23.62* Billion (US$ 583 Million)– Addresses all the Utility requirements of the Industry– Three Manufacturing locations in India– One Manufacturing location in China

*As of 31st March 2007


Our VisionOur Vision

To be a globally respected high performance To be a globally respected high performance organisationorganisation offering sustainable solutions in offering sustainable solutions in

energy & environmentenergy & environment


Our BusinessesOur Businesses

Boilers & Heaters Vapour Absorption Chillers

Speciality Chemicals Turnkey Power Plants

Air Pollution Control

Waste & Waste Water Solutions


Our Business PurposeOur Business Purpose


Our LocationOur Location

Works : Chinchwad, Pune, 160 kms south of Mumbai (Bombay)H.O. : Thermax House, 4, Mumbai-Pune Road, Shivajinagar, Pune


Overseas LocationsOverseas Locations

Thermax Inc. Detroit, USA

Thermax doBrazil Sau Paulo, Brazil

Thermax Europe Ltd. Luton, UK

Thermax (Zhejiang) Cooling & Heating Engineering Co. Limited

Thermax Ltd. Nairobi, Kenya

Thermax Ltd. Jebel Ali, UAE

Thermax Ltd. Kuala Lumpur, Malaysia

Thermax Ltd. Moscow, Russia


Thermax GroupThermax Group

ThermaxThermax CorporationCorporationThermaxThermax CorporationCorporation

Thermax LimitedThermax Limited Wholly Owned SubsidiariesWholly Owned Subsidiaries

Boiler & Heater ProductsBoiler & Heater Products

Water & Waster WaterSolutions

Water & Waster WaterSolutions

EnviroEnviro

Absorption CoolingAbsorption Cooling

Chemical BusinessChemical Business

Thermax Inc. , USA Thermax Inc. , USA

Thermax doBrazil, BrazilThermax doBrazil, BrazilBoiler & Heater ProjectsBoiler & Heater Projects

Power Generation BusinessPower Generation Business

Thermax Europe Limited, UKThermax Europe Limited, UK

Thermax Hong Kong Limited, Hong KongThermax Hong Kong Limited, Hong Kong

Thermax Engineering Construction Company

Thermax Engineering Construction Company

Thermax Instrumentation LimitedThermax Instrumentation Limited

Thermax (Zhejiang) Cooling & Heating Engineering Co. Limited, China

Thermax (Zhejiang) Cooling & Heating Engineering Co. Limited, China


Thermax & Indian Power SectorThermax & Indian Power Sector

• Offers unique solutions for Distributed Generation– Biomass based power generation– Waste Heat based power generation– Combined cycle plants

• Has a dedicated turnkey power plant design, manufacturing and commissioning business– Have commissioned up to now 277 MW plants– Further 300 MW capacity under execution


For further information & clarifications, contact:Pinaki Bhadury, Head – Business Analysis, Research & StrategyThermax LimitedD-13, MIDC, R D Aga Road, ChinchwadPune 411019 INDIAPhone : +91 20 27475941, 66122802 (Direct)Fax : +91 20 27470648 email : [email protected]

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Opportunities & Obstacles in India for Distributed Energy Generation by Pinaki Bhadury