NATURAL GAS AS AN ALTERNATE FUELFOR ELECTRICITY GENERATION IN INDIA Summer Project Report ...
AcknowledgementI express my profound gratitude to my supervisors, Professor A.P Dash and B. P Rath sir whosebenign guidanc...
Table of Contents 1. Executive Summery - ...................................................................................
7.7.2 Iran–Pakistan–India pipeline- ................................................................................
1 Executive Summery -In India installed capacity for power generation is 199.87 Gigawatt (GW) as of March 2012; theworld’s...
2 NTPC PROFILE:-NTPC Limited (formerly National Thermal Power Corporation) is the largest state-owned power generating com...
17.75% and it generated 27.4% of the power generation of the country in 2010–11. NTPC islighting every third bulb in India...
Diversified GrowthAs per new corporate plan, NTPC plans to become a 75 GW company by the year 2017and envisages to have an...
in the vicinity of NTPC stations.  Power Distribution: ‘NTPC Electric Supply Company Ltd.’ (NESCL), a wholly ...
The company was formed on November 1, 2002, as a wholly owned subsidiary company ofNTPC. The company’s objective is to und...
3 Project Objective-To find out viable option for fuel supply to set new power plant on India. Study of power sectorin Ind...
4 Introduction- 4.1 Electricity is prime mover of Indian economy: Electricity is the prime mover of growth and is vital to...
Indias electricity sector is amongst the worlds most active players in renewable energyutilization, especially wind energy...
4.2 Electricity demand in India-Electricity demand at peak load and at normal load is mentioned below in table. In past te...
Electricity demand projection as mentioned in above table was done on basis falling elasticity ofelectricity, data source-...
Chart-As per data in Annexure -2 1000000 ...
4.4 Major available resources for electricity generation- Major power ...
Sector wise power generation in 2012 in India Oil Neclear ...
5 Coal as a fuel for electricity generation-5.1 Predominant Position of Coal-  -In terms of fuel, coal-fired plants a...
5.3 Type and category-wise coal resources of India- The Type and Category-wise coal resources of India as on 1.4.2011 are ...
5.4 Consumption pattern of coal- By analyzing past 30 years data, shows that coal consumption is increasing year by y...
Significant demand from China and India is increasingly accounting for the bulk of worldwidecoal usage. Hence, coal demand...
5.5.1 Domestic coal production and demand:Domestic coal production is not meeting demand. Currently around 37,000 MW capac...
Table:-Coal import (Fig. in million tonnes) 2005-06 2006-07 2007-08 2008-09 2009-10 ...
5.5.4 Quantity of Coal to be sold at market price:- Coal distribution through e-auction was re-introduced in the new coal ...
140 Relationship Between Crude oil and coal prices ...
9000 ...
1. Strategic purposes: e.g., armed forces, national security;2. Infrastructure and Industry: where benefits largely accrue...
6 Renewable resources in India:-Status of renewable energy resources in India- New & Renewabl...
lakhs) Solar Water Heating - Coll. 0.60 - - 5.46 Areas (Million m2)Solar Ener...
branches, particularly in rural areas of South India where the electricity grid does not yetextend.Launched in 2003, the I...
Suzlon, an Indian-owned company, emerged on the global scene in the past decade, and by2006 had captured almost 7.7 percen...
Tidal Energy- • Tides generated by the combination of the moon and sun’s gravitational forces • Greatest affect in...
Late last year, Atlantis became the turbine supplier to the largest planned marine powerproject in the world, MeyGen, a 37...
their nuclear expertise and know-how and identify business opportunities in the Indianmarket.Presently Nuclear ...
Every year there is an estimated 30 million tons of solid waste and 4,400 million cubicmeters of liquid waste generated in...
7 Natural Gas in India:-7.1 Current Natural Gas Scenario in India-India is the world’s seventh largest energy producer, ac...
7.2 Demand and Forecasts for India-The demand of natural gas has sharply increased in the last two decades at the globalle...
Natural Gas Demand ProjectionReference- http://ebookbrowse.com/rr07-23-india-natural-gas-indd-pdf-d1327341477.3 Competitiv...
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
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Natural gas as allternate fuel for electricity generation final report
Natural gas as allternate fuel for electricity generation final report
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Natural gas as allternate fuel for electricity generation final report

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  • 1. NATURAL GAS AS AN ALTERNATE FUELFOR ELECTRICITY GENERATION IN INDIA Summer Project Report Presented To The Academic Faculty By Varun Kumar Choudhary Roll no.- 11BM60019 Industry Guide- Dr. A. P. Dash Senior Faculty, Project Management Institute, NTPC Ltd. New Delhi. Mr. B. P. Rath Manager, New Project Development NTPC Ltd. Faculty Guide- Dr. Kalyan Kumar Guine Professor, Vinod Gupta School of Management, IIT Kharagpur. Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur 1
  • 2. AcknowledgementI express my profound gratitude to my supervisors, Professor A.P Dash and B. P Rath sir whosebenign guidance has enlightened my path through the course of this work. Besides theirdedication to academic life, their disciplined and austere habits have been a source of constantinspiration to me. They are humane with willingness to help others, care for everyone, andalways being concerned about the progress. It was an enriching experience to work and learnunder them. Varun Kumar Choudhary 2
  • 3. Table of Contents 1. Executive Summery - ........................................................................................................ 5 2. NTPC PROFILE:- ............................................................................................................ 6 3. Project Objective- ........................................................................................................... 11 4. Introduction- ................................................................................................................... 12 4.1 Electricity is prime mover of Indian economy: ............................................................................. 12 4.2 Electricity demand in India-........................................................................................................... 14 4.3 Dependence of Electricity demand on GDP growth rate-.............................................................. 15 4.4 Major available resources for electricity generation-..................................................................... 17 5. Coal as a fuel for electricity generation- ....................................................................... 19 5.1 Predominant Position of Coal- ....................................................................................................... 19 5.2 Inventory of geological resources of coal in India- ....................................................................... 19 5.3 Type and category-wise coal resources of India-........................................................................... 20 5.4 Consumption pattern of coal-......................................................................................................... 21 5.5 Factors Affecting Coal Prices in India-.......................................................................................... 21 5.5.1 Domestic coal production and demand: .............................................................................. 23 5.5.2 Coal Import- ........................................................................................................................ 23 5.5.3 Domestic Coal Price Fixation- .................................................................................. 24 5.5.4 Quantity of Coal to be sold at market price:- ...................................................................... 25 5.5.5 Impact of crude oil price on Thermal coal prices:- ............................................................. 25 5.5.6 Impact of Exchange rate on coal prices:- ............................................................................ 26 5.5.7 Impact of availability of land on coal prices-...................................................................... 27 6. Renewable resources in India:-...................................................................................... 29 7. Natural Gas in India:- .................................................................................................... 37 7.1 Current Natural Gas Scenario in India-.......................................................................................... 37 7.2 Demand and Forecasts for India- ................................................................................................... 38 7.3 Competitive demand from Fertilizer & City Gas Sector- .............................................................. 39 7.4 Structure of the natural gas sector in India- ................................................................................... 40 7.5 Domestic Natural Gas in India- ..................................................................................................... 41 7.6 Domestic Gas pipe lines network in India- .................................................................................... 43 7.7 Trance-national gas pipe lines- ...................................................................................................... 44 7.7.1 TAPI- pipeline- ................................................................................................................... 45 3
  • 4. 7.7.2 Iran–Pakistan–India pipeline- ............................................................................................. 46 7.7.3 Myanmar-Bangladesh-India Pipeline- ................................................................................ 477.8 Liquefied Natural Gas (LNG) – ..................................................................................................... 49 7.8.1 Regasification Capacity of India-........................................................................................ 497.9 Coal gasification in India-.............................................................................................................. 50 8. 8 Factors affecting Natural gas pricing:- ...................................................................... 518.1 Natural gas pricing in India- .......................................................................................................... 51 8.1.1 APM (Administered Pricing Mechanism) Gas Pricing:- ....................................................... 54 8.1.2 Pricing of Gas under Pre-NELP Production Sharing Contracts (PSC)................................... 55 8.1.3 Pricing of Gas with reference to NELP Provisions-.............................................................. 558.2 Imported Gas (LNG) Pricing- .......................................................................................................... 558.3 Pricing Issue:- ................................................................................................................................. 578.4 Framework of New Pool Pricing Mechanism:- .............................................................................. 59 8.4.1 Need for Pool Pricing:- ........................................................................................................ 59 8.4.2 Proposed Roadmap of Pool Pricing Mechanism:-............................................................... 608.5 Effect of Globalization of Gas market on gas prices:- .................................................................... 62 9. 9 Shale Gas:- .................................................................................................................... 669.1 Shale gas historical back ground and development:- .................................................................... 669.2 Shale Gas Reserve:- ........................................................................................................................ 689.3 Hydraulic fracking- breakthrough in shale gas:- ............................................................................ 699.4 Issues with Hydraulic fracking:- ..................................................................................................... 719.5 Implication of shale gas reserve on traditional gas producers in US:- .......................................... 719.6 Implication on Indian gas market:- ................................................................................................ 729.7 China planned for shale gas development:- .................................................................................. 72 10. Energy Security in India:- .............................................................................................. 74 11. Findings & Recommendations:- .................................................................................... 79 12. References:- ..................................................................................................................... 82 4
  • 5. 1 Executive Summery -In India installed capacity for power generation is 199.87 Gigawatt (GW) as of March 2012; theworld’s fifth largest, of which approximately 30,000 MW running idle due to shortage of fuelsupply. The International Energy Agency estimates that estimates India will add between 600GW to 1200 GW of additional new power generation capacity before 2050. Due to acuteshortfall in domestic coal production to meet demand and higher exchange rate is severelyaffecting power sector in India. Exploration of huge shale gas reserve of USA and China andnatural gas have changed prospective of fuel supply. Indian coal is of high ash content and lowsulfur content. Its contribution to power sector is around 56.4% and natural gas contribution topower sector is around 9.2% of total power generation. Our objective is the scope of natural gasas an alternate fuel for electricity in India. Due to higher prices of coal and petroleum,substitutively fuel demand can be met by natural gas. Natural gas demand is continuouslyincreasing and furcating is done at different scenarios of growth rate. There are three options fornatural gas- domestic natural gas, piped natural gas and imported liquefied natural gas. Domesticgas production in India is continuously falling down is not viable option. Presently we have acountry wide network of 12,000 km of gas pipeline and having capacity to transport 230 mmscmdof gas. Study of natural gas pricing method in India and factors affecting natural gas pricing andscope of new pricing method pool pricing in India. Demand from different sectors i.e. fertilizer,city gas sector and power sector. And scope of shale gas exploration and production.With a burgeoning population, we have to recognize that resources are scarce and planaccordingly. End use efficiency, reduction of wastage and accountability has great potential forimprovement. Investment in coal base electricity needs critical appraisal because of availability,land requirement, pollution, green house gas emission and ash disposal and increasing cost ofenvironment needs critical appraisal. Natural gas based electricity generator are generally notapproved because of lack of domestic availability of natural gas besides domestic gas sector hasreceived a thrust with shale gas and Hydraulic fracking technology in US. A relook into fuelimport i. e. import of coal vis a vis import of natural gas is a national imperative in view of theneed for electricity keeping in view all other collateral concerns. Diesel generator can bereplaced by natural gas plant- In India electricity generated by DG set- 1200 MW at cost of Rs.12/kwh and grid power at cost of Rs 3/kwh. This market will grow at the rate of 20% for comingyears. Natural gas can be used for distributed power generation-Due to heavy distribution andtransmission losses (around 30%) distributed generation by natural gas is better option as it canbe produced at cost of Rs. 6 to 7 per kwh. 5
  • 6. 2 NTPC PROFILE:-NTPC Limited (formerly National Thermal Power Corporation) is the largest state-owned power generating company in India. Forbes Global 2000 for 2010 ranked it 341th in theworld. It is an Indian public sector company listed on the Bombay Stock Exchange although atpresent the Government of India holds 84.5%(after divestment the stake by Indian governmenton 19october2009) of its equity. With a current generating capacity of 34194 MW, NTPC hasembarked on plans to become a 75,000 MW company by 2017. It was founded on November 7,1975.NTPCs core business is engineering, construction and operation of power generating plants andproviding consultancy to power utilities in India and abroad.The total installed capacity of the company is 34,194 MW (including JVs) with 15 coal basedand 7 gas based stations, located across the country. In addition under JVs, 5 stations are coalbased & another station uses naphtha/LNG as fuel. The company has set a target to have aninstalled power generating capacity of 1,28,000 MW by the year 2032. The capacity will have adiversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable EnergySources(RES) including hydro. By 2032, non fossil fuel based generation capacity shall make upnearly 28% of NTPC’s portfolio.NTPC has been operating its plants at high efficiency levels. Although the company has 18.79%of the total national capacity it contributes 28.60% of total power generation due to its focus onhigh efficiency. NTPC’s share at 31 Mar 2001 of the total installed capacity of the country was24.51% and it generated 29.68% of the power of the country in 2008–09. Every fourth home inIndia is lit by NTPC. As at 31 Mar 2011 NTPCs share of the countrys total installed capacity is 6
  • 7. 17.75% and it generated 27.4% of the power generation of the country in 2010–11. NTPC islighting every third bulb in India. 170.88BU of electricity was produced by its stations in thefinancial year 2005–2006. The Net Profit after Tax on March 31, 2006 was INR 58,202 million.Net Profit after Tax for the quarter ended June 30, 2006 was INR 15528 million, which is18.65% more than for the same quarter in the previous financial year. 2005).In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as freshissue and 5.25% as offer for sale by Government of India. NTPC thus became a listed companyin November 2004 with the Government holding 89.5% of the equity share capital. In February2010, the Shareholding of Government of India was reduced from 89.5% to 84.5% throughFurther Public Offer. The rest is held by Institutional Investors and the Public.Pursuant to a special resolution passed by the Shareholders at the Company’s Annual GeneralMeeting on September 23, 2005 and the approval of the Central Government under section 21 ofthe Companies Act, 1956, the name of the Company "National Thermal Power CorporationLimited" has been changed to "NTPC Limited" with effect from October 28, 2005. The primaryreason for this is the companys foray into hydro and nuclear based power generation along withbackward integration by coal mining.(NTPC) is in the 138th position in Fortune 500 in 2009. 10 Indian companies make it to FTs top500.Vision“To be the world’s largest and best power producer, powering India’s growth.”Mission“Develop and provide reliable power, related products and services at competitive prices,integrating multiple energy sources with innovative and eco-friendly technologies andcontribute to society.”Core Values – BCOMIT  Business Ethics  Customer Focus  Organizational& Professional Pride  Mutual Respect & Trust  Innovation & Speed  Total Quality for Excellence 7
  • 8. Diversified GrowthAs per new corporate plan, NTPC plans to become a 75 GW company by the year 2017and envisages to have an installed capacity of 128 GW by the year 2032 with a well-diversified fuel mix comprising 56% coal, 16% gas, 11% nuclear energy, 9% renewableenergy and 8% hydro power based capacity.As such, by the year 2032, 28% of NTPC’s installed generating capacity will be based oncarbon free energy sources. Further, the coal based capacity will increasingly be based onhigh-efficient-low-emission technologies such as Super-critical and Ultra-Super-critical.Along with this growth, NTPC will utilize a strategic mix of options to ensure fuel securityfor its fleet of power stations.Looking at the opportunities coming its way, due to changes in the business environment,NTPC made changes in its strategy and diversified in the business adjacencies along theenergy value chain. In its pursuit of diversification NTPC has developed strategic alliancesand joint ventures with leading national and international companies. NTPC has also madelong strides in developing its Ash Utilization business.  Hydro Power: In order to give impetus to hydro power growth in the country and to have a balanced portfolio of power generation, NTPC entered hydro power business with the 800 MW Koldam hydro project in Himachal Pradesh. Two more projects have also been taken up in Uttarakhand. A wholly owned subsidiary, NTPC Hydro Ltd., is setting up hydro projects of capacities up to 250 MW.  Renewable Energy: In order to broad base its fuel mix NTPC has plan of capacity addition of about 1,000 MW through renewable resources by 2017.  Nuclear Power: A Joint Venture Company "AnushaktiVidhyut Nigam Ltd." has been formed (with 51% stake of NPCIL and 49% stake of NTPC) for development of nuclear power projects in the country.  Coal Mining: In a major backward integration move to create fuel security, NTPC has ventured into coal mining business with an aim to meet about 20% of its coal requirement from its captive mines by 2017. The Government of India has so far allotted 7 coal blocks to NTPC, including 2 blocks to be developed through joint venture route.  Power Trading: NTPC VidyutVyapar Nigam Ltd. (NVVN), a wholly owned subsidiary was created for trading power leading to optimal utilization of NTPC’s assets. It is the second largest power trading company in the country. In order to facilitate power trading in the country, ‘National Power Exchange Ltd.’, a JV of NTPC, NHPC, PFC and TCS has been formed for operating a Power Exchange.  Ash Business: NTPC has focused on the utilization of ash generated by its power stations to convert the challenge of ash disposal into an opportunity. Ash is being used as a raw material input by cement companies and brick manufacturers. NVVN is engaged in the business of Fly Ash export and sale to domestic customers. Joint ventures with cement companies are being planned to set up cement grinding units 8
  • 9. in the vicinity of NTPC stations.  Power Distribution: ‘NTPC Electric Supply Company Ltd.’ (NESCL), a wholly owned subsidiary of NTPC, was set up for distribution of power. NESCL is actively engaged in ‘Rajiv Gandhi GraminVidyutikaranYojana’programme for rural electrification.  Equipment Manufacturing: Enormous growth in power sector necessitates augmentation of power equipment manufacturing capacity. NTPC has formed JVs with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC has also acquired stake in Transformers and Electricals Kerala Ltd. (TELK) for manufacturing and repair of transformers. Future Capacity Additions NTPC has formulated a long term Corporate Plan upto 2032. In line with the Corporate Plan, the capacity addition under implementation stage is presented below: STATE MW PROJECT Coal 1. Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) Haryana 1000 2. Sipat I (3 x 660) Chhattisgarh 1980 3. Simhadri II Unit - IV( 500) Andhra Pradesh 500 4. Vallur I -JV with TNEB ( 2 x 500) Tamilnadu 1000 5. Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Tamilnadu 500 6. Bongaigaon(3 x 250) Assam 750 7. Mauda ( 2 x 500) Maharashta 1000 8. Rihand III(2X500) Uttar Pradesh 1000 9. Vindhyachal-IV (2X500) Madhya Pradesh 1000 10. Muzaffarpur Expansion (2x195) – JV with BSEB Bihar 390 11. Nabinagar TPP-JV with Railways (4 x 250) Bihar 1000 12. Barh II (2 X 660) Bihar 1320 13. Barh I (3 X 660) Bihar 1980 Hydro 1. Koldam HEPP ( 4 x 200) Himachal Pradesh 800 2. TapovanVishnugad HEPP (4 x 130) Uttarakhand 520 3. Singrauli CW Discharge(Small Hydre) Uttar Pradesh 8 Total 14748 SubsidiariesNTPC Electric Supply Company Ltd. (NESCL)The company was formed on August 21, 2002. It is a wholly owned subsidiary company ofNTPC with the objective of making a foray into the business of distribution and supply ofelectrical energy, as a sequel to reforms initiated in the power sector.NTPC Vidyut Vyapar Nigam Ltd. (NVVN) 9
  • 10. The company was formed on November 1, 2002, as a wholly owned subsidiary company ofNTPC. The company’s objective is to undertake sale and purchase of electric power, toeffectively utilise installed capacity and thus enable reduction in the cost of power. NVVNNTPC Hydro Ltd. (NHL)The company was formed on December 12, 2002, as a wholly owned subsidiary company ofNTPC with an objective to develop small and medium hydroelectric power projects of up to250 MW. More>>Pipavav Power Development Co. Ltd. (PPDCL)A memorandum of understanding was signed between NTPC, Gujarat Power CorporationLimited (GPCL) and Gujarat Electricity Board (GEB) in 2004 for development of a 1000 MWthermal power project at Pipavav in Gujarat by forming a new joint venture company betweenNTPC and GPCL with 50:50 equity participation. Pursuant to the decision of GujaratGovernment, NTPC Ltd. has dissociated itself from this company. PPDCL is under windingup.Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali Power GeneratingCompany Limited)To take over Muzaffarpur Thermal Power Station (2*110MW), a subsidiary company named‘Vaishali Power Generating Company Limited (VPGCL)’ was incorporated on September 6,2006 with NTPC contributing 51% of equity and balance equity was contributed by Bihar StateElectricity Board. This company was formed to renovate the existing unit and run the plant.The second unit has been successfully re-synchronized on October 17, 2007 after 4 years ofbeing idle. Renovation and modernization of the first unit is under progress. The company wasrechristened as ‘Kanti Bijlee Utpadan Nigam Limited’ on April 10, 2008. Bharatiya Rail Bijlee Company Limited (BRBCL)A subsidiary of NTPC under the name of ‘Bharatiya Rail Bijlee Company Limited’ wasincorporated on November 22, 2007 with 74:26 equity contribution from NTPC and Ministryof Railways, Govt. of India respectively for setting up of four units of 250 MW each of coalbased power plant at Nabinagar, Bihar. Investment approval of the project was accorded inJanuary, 2008. 10
  • 11. 3 Project Objective-To find out viable option for fuel supply to set new power plant on India. Study of power sectorin India and all available fuel supply option for electricity generation in India to find out scopeof natural gas as an alternate fuel for electricity generation. Electricity demand projection inIndia at different growth rate scenarios. Natural gas supply option as domestic natural gasreserve and natural gas import. Study of piped natural gas and LNG import. To find out viablenatural gas supply option while keeping in mind price, gas reserve, infrastructure requirementand time period required to be operational. Natural gas as a fuel for distributed powergeneration to reduce transmission losses and replacement of DG sets by natural gas basedturbines. Natural gas price mechanism in India and in different regional gas market and impactof globalization of gas market. Scope of shale gas exploration and impact of it on India andtraditional natural gas producer. 11
  • 12. 4 Introduction- 4.1 Electricity is prime mover of Indian economy: Electricity is the prime mover of growth and is vital to the sustenance of a modern economy. The projected growth of the Indian economy depends heavily on the performance and growth of the power sector. It is the endeavor of the Government to ensure that agriculture, industry, commercial establishments and all households receive uninterrupted supply of electricity at affordable rates. The electricity sector in India had an installed capacity of 199.87 Gigawatt (GW) as of March 2012, the worlds fifth largest. Captive power plants generate an additional 31.5 GW. Thermal power plants constitute 66% of the installed capacity, hydroelectric about 19% and rest being a combination of wind, small hydro, biomass, waste-to- electricity, and nuclear. India generated 855 BU electricity during 2011-12 fiscal year. In terms of fuel, coal-fired plants account for 57% of Indias installed electricity capacity, compared to South Africas 92%; Chinas 77%; and Australias 76%. After coal, renewal hydropower accounts for 19%, and natural gas for about 9%. In December 2011, over 300 million Indian citizens had no access to electricity. Over one third of Indias rural population lacked electricity, as did 6% of the urban population. Of those who did have access to electricity in India, the supply was intermittent and unreliable. In 2010, blackouts and power shedding interrupted irrigation and manufacturing across the country. The per capita average annual domestic electricity consumption in India in 2009 was 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity, in contrast to the worldwide per capita annual average of 2600 kWh and 6200 kWh in the European Union. Indias total domestic, agricultural and industrial per capita energy consumption estimate vary depending on the source. Two sources place it between 400 to 700kWh in 2008–2009. As of January 2012, one report found the per capita total consumption in India to be 778 kWh. India currently suffers from a major shortage of electricity generation capacity, even though it is the worlds fourth largest energy consumer after United States, China and Russia.The International Energy Agency estimates India needs an investment of at least $135 billion to provide universal access of electricity to its population. The International Energy Agency estimates India will add between 600 GW to 1200 GW of additional new power generation capacity before 2050.This added new capacity is equivalent to the 740 GW of total power generation capacity of European Union (EU-27) in 2005. The technologies and fuel sources India adopts, as it adds this electricity generation capacity, may make significant impact to global resource usage and environmental issues. 12
  • 13. Indias electricity sector is amongst the worlds most active players in renewable energyutilization, especially wind energy. As of December 2011, India had an installed capacity ofabout 22.4 GW of renewal technologies-based electricity, exceeding the total installed electricitycapacity in Austria by all technologies.Indias network losses exceeded 32% in 2010 including non-technical losses, compared to worldaverage of less than 15%. Both technical and non-technical factors contribute to these losses, butquantifying their proportions is difficult. Some experts estimate that technical losses are about15% to 20%, A high proportion of non‐technical losses are caused by illegal tapping of lines, butfaulty electric meters that underestimate actual consumption also contribute to reduced paymentcollection. A case study in Kerala estimated that replacing faulty meters could reducedistribution losses from 34% to 29%.Key implementation challenges for Indias electricity sector include new project managementand execution, ensuring availability of fuel quantities and qualities, lack of initiative to developlarge coal and natural gas resources present in India, land acquisition, environmental clearancesat state and central government level, and training of skilled manpower to prevent talentshortages for operating latest technology plants.For the past two decades, India has had to face increasing deficit in power supply, both formeeting its normal energy requirements as well as its peak load demand. The problem is acuteduring peak hours and summers, and necessitates planned load shedding by many utilities tomaintain the grid in a healthy state. The average all-India shortages in 2009-10 were at 10 percent in terms of normal energy requirement and about 13 per cent in terms of peak load.With the shortage at both the normal and the peak levels, Indian power industry does not exhibitmuch cyclicality. Further, with assured returns, the margins of players and their profitability isalmost independent of the economic cycles. Electricity is the most important component ofprimary energy. India’s electricity consumption has grown at an average rate of 7.3 per centduring the period 2002-07 to about 577.9 TWh. Consumption has increased at a faster rate since2002-03, reflecting buoyant industrial demand. Industrial consumers are the largest group ofelectricity consumers, followed by the domestic, agricultural and commercial consumers, in thatorder. India’s per capita electricity consumption increased from 178 kWh in 1985-86 to 704.4kWh in 2007-08. Over the period, 2001-08, per capita consumption has increased at an averagerate of 4.45 per cent. It is still much lower compared to the international standards. 13
  • 14. 4.2 Electricity demand in India-Electricity demand at peak load and at normal load is mentioned below in table. In past ten yearsnormal energy shortfall is regularly increasing, in 2003-04 it was 7.1 % and in 2008-09 it was11.1% of demand. Peak load energy shortage is also high. Indian economy is one of fastestgrowing economy of world. As economy is growing energy demand is also growing to meetindustrial demand. Table- Electricity Demand and Supply FY Energy Peak Demand (MU) (MW) Demand Availability Shortage % Demand Met Shortage %2002-03 545,983 497,890 48,093 8.8 81,492 71,547 9,945 12.22003-04 559,264 519,398 39,866 7.1 84,574 75,066 9,508 11.22004-05 591,373 548,115 43,258 7.3 87,906 77,652 10,254 11.72005-06 631,024 578,511 52,513 8.3 93,214 81,792 11,422 12.32006-07 693,057 624,716 68,341 9.9 100,715 86,818 13,897 13.82007-08 737,052 664,660 72,392 9.8 108,866 90,793 18,073 16.62008-09 777,039 691,038 86,001 11.1 109,809 96,785 13,024 11.92009-10 830,594 746,644 83,950 10.1 118,472 102,725 15,747 13.32010-11 861,591 811,100 50,491 5.9 152746 137013.2 15732.84 10.3Table- Electricity demand projection at different growth rate- Installed Capacity Energy Requirement Peak Demand Required (Billion kWh) (GW) (GW) GDP 6.00% 8.00% 9.00% 6.00% 8.00% 9.00% 6.00% 8.00% 9.00% growth at 2011-12 1097 1,097 1,097 158 158 158 199 199 199 2016-17 1407 1,524 1,586 203 220 228 255 276 288 2021-22 1804 2,118 2,293 260 305 330 327 384 416 2026-27 2267 2,866 3,219 327 413 464 411 520 584 2031-32 2850 3,880 4,518 411 560 651 517 704 820 14
  • 15. Electricity demand projection as mentioned in above table was done on basis falling elasticity ofelectricity, data source- report of planning commission of India.Table- Elasticity used for projection-Year Electricity (falling Elasticity)2011-12 to 2021-22 0.852021-22 to 2031-32 0.784.3 Dependence of Electricity demand on GDP growth rate-Electricity is prime mover of growth rate. As industrialization grows power demand also growsto maintain higher production rate. By analyzing past 20 years data, shows that growth inelectricity demand is varies as per GDP growth rate and we got following relationship betweenelectricity demand and growth rate-Y = 29167X + 227827 Where Y= Electricity Demand X= GDP growth rateAlso electricity demand projection was done for GDP growth rate of 6%, 8% and 9% for next20 years at falling elasticity of electricity. 15
  • 16. Chart-As per data in Annexure -2 1000000 12 Electricity Demand and GDP Growth Rate 900000 10 800000 E % 700000 l 8 e 600000 G c D 500000 6 t P r 400000 i 4 G 300000 c r i 200000 o 2 t w 100000 y t 0 0 hMU Year Electricity Demand(Mus) GDP Growth Rate(%) Electricity Demand and GDP 1000000 E D 900000 l e 800000 c m 700000 t a 600000 r n 500000 i d 400000 c 300000 i ( M 200000 t U 100000 y ) 0 5.5 4.8 6.7 7.6 7.6 4.1 6.2 7.4 4 5.2 3.8 8.4 8.3 9.3 9.3 9.8 7.6 9.1 8.8 6.9 GDP growth rate y = 29167x + 227827 R² = 0.9736 Electricity Demand and GDP Linear (Electricity Demand and GDP) 16
  • 17. 4.4 Major available resources for electricity generation- Major power resources option NuclearHydro Energy Coal Wind Energy Solar Energy Natural gas Energy Domestic coal Domestic gas Piped Natural Imported coal gas Blended Coal LNG Legnite 17
  • 18. Sector wise power generation in 2012 in India Oil Neclear 1% 2% gas RES 9% 12% hydro 19% coal 57%The 17th electric power survey of India report claims-  Over 2010–11, Indias industrial demand accounted for 35% of electrical power requirement, domestic household use accounted for 28%, agriculture 21%, commercial 9%, public lighting and other miscellaneous applications accounted for the rest.  The electrical energy demand for 2016–17 is expected to be at least 1392 Tera Watt Hours, with a peak electric demand of 218 GW.  The electrical energy demand for 2021–22 is expected to be at least 1915 Tera Watt Hours, with a peak electric demand of 298 GW. 18
  • 19. 5 Coal as a fuel for electricity generation-5.1 Predominant Position of Coal-  -In terms of fuel, coal-fired plants account for 57% of Indias installed electricity capacity, compared to South Africas 92%; Chinas 77%; and Australias 76%. After coal, renewal hydropower accounts for 19%, and natural gas for about 9%.  -A cumulative total of 285862.21 Million Tonnes of Geological Resources of Coal have so far been estimated in India as on 1.4.2011.  -Coal is likely to remain our mainstay of fuel for power generation till 2030-31. However, current shortage is cause of concern.5.2 Inventory of geological resources of coal in India-As a result of exploration carried out up to the maximum depth of 1200m by the GSI, CMPDI,SCCL and MECL etc, a cumulative total of 285862.21 Million Tonnes of Geological Resourcesof Coal have so far been estimated in the country as on 1.4.2011. The details of state-wisegeological resources of coal are given as under:GONDWANA COAL FIELDS: - Annexure -2TERTIARY COAL FIELDS- Annexure- 3Categorization of coal resources- The coal resources of India are available in older Gondwana Formations of peninsular India andyounger Tertiary formations of north-eastern region. Based on the results of Regional/Promotional Exploration, where the boreholes are normally placed 1-2 Km apart, the resourcesare classified into ‘Indicated’ or ‘Inferred’ category. Subsequent Detailed Exploration in selectedblocks, where boreholes are less than 400 meter apart, upgrades the resources into more reliable‘Proved’ category. The Formation-wise and Category-wise coal resources of India as on1.4.2010 are given in table below: (in Million Tonnes) Proved Indicated Inferred Total Formation Gondwana Coals 113407.79 137371.76 33590.02 284369.57 Tertiary Coals 593.81 99.34 799.49 1492.64 Total 114001.60 137471.10 34389.51 285862.21* Includes 749.92 M.T. of Inferred resources established through mapping in North-Eastern region. 19
  • 20. 5.3 Type and category-wise coal resources of India- The Type and Category-wise coal resources of India as on 1.4.2011 are given intable below:- (in Million Tonnes) Proved Indicated Inferred Total Type of Coal (A) Coking :- -Prime Coking 4614.35 698.71 0 5313.06 -Medium Coking 12572.52 12001.32 1880.23 26454.07 -Semi-Coking 482.16 1003.29 221.68 1707.13 Sub-Total Coking 17669.03 13703.32 2101.91 33474.26 (B) Non-Coking:- 95738.76 12368.44 31488.11 250895.31 (C) Tertiary Coal 593.81 99.34 799.49* 1492.64 Grand Total 114001.60 137471.10 34389.51 285862.21* Includes 749.92 M.T. of Inferred resources established through mapping in North-Eastern region.Status of Coal Resources in India during Last Five Years: As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and SCCL etc, theestimation of coal resources of India has reached to 267.21 Bt. The estimates of coal resources in thecountry during last 5 years are given below:(in Million tonnes) Geological Resources of CoalAs on Proved Indicated Inferred Total1.1.2006 95866 119769 37666 2533011.4.2007 99060 120177 38144 2573811.4.2008 101829 124216 38490 2645351.4.2009 105820 123470 37920 2672101.4.2010 109798 130654 36358 276810 20
  • 21. 5.4 Consumption pattern of coal- By analyzing past 30 years data, shows that coal consumption is increasing year by yearas power demand increasing in India. Due to limited coal reserves, if coal consumption keep growing at same rate as per past trend, all economic coal reserve will be extracted within 30 years.we got following relationship for coal consumption pattern in India. Y = 18035X + 41974 Where Y= Coal consumption X= Year Annexure- 4 900000 0.2C y = 18035x + 41974 800000o R² = 0.9425a 700000 0.15l 600000 0.1T 500000o 400000n 0.05n 300000e 200000 0s 100000 0 -0.05 1990 1995 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1991 1992 1993 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Consumption Year % Change 5.5 Factors Affecting Coal Prices in India- 21
  • 22. Significant demand from China and India is increasingly accounting for the bulk of worldwidecoal usage. Hence, coal demand and consequently coal prices will depend on the strength of theeconomic recovery in the emerging markets, particularly China and India as mentioned. Asseveral of coal commodity currencies (Aussie Dollar, SA Rand and the Columbian Peso) havefloating exchange rates, any appreciation in the value of these currencies consequently increasesthe prices for holders of non-commodity currencies. Coal price Coal Coal to Domestic Cost of Crude oil Demand Coal sold at Exchange coal Land prices and Import market rate pricing Production price 22
  • 23. 5.5.1 Domestic coal production and demand:Domestic coal production is not meeting demand. Currently around 37,000 MW capacities ofpower plants running idle due to shortage of fuel supply. Coal India is also not meeting coalproduction target. Due to coal supply shortage prices are going up. Due to industrialization,power demand is growing. It is estimated that at the end of terminal year of 11th Five YearPlan (2011-12), the coal demand would be about 713 Million Tonnes, whereas the indigenousavailabilitywould be about 630 Million Tonnes. Therefore, there is likely to be a gap of 83Million Tonnes, which is required to be met through imports. The details are given below:- (Fig. in million tonnes) XI Plan Source 2008-09 2009-10 2010-11 2010-11 Proj. Actual Actual BE RE 2011-12 4 4 4 4 4 CIL 01.44 15.88 60.5 33.5 86.5 4 4 4 5 4 SCCL 4.54 9.37 7.05 0.5 7 4 4 6 5 9 Others 4.03 9.25 5.87 2.05 6.41 Total 4 5 5 5 6 indigenous 90.01 14.5 73.42 36.05 29.91 supply 5 5 6 6 7 Demand 50 97.98 56.31 24.78 13.24 Gap to be met 5 8 8 8 8 through imports 9.98 3.48 2.89 8.73 3.33 Total Import 5 7 8 8 8 (a+b) 9 3.25 2.89 8.73 3.335.5.2 Coal Import- As per the present Import Policy, coal can be freely imported (under Open General License) by the consumers themselves, considering their needs and exercising their own commercial prudence. Due to higher international coal prices and regularly depreciating rupees value, import of coal is not economical option for power generation. Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel sector manufacturing unites mainly to bridge the gap between the requirement and indigenous availability and to improve the quality. Coal based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders import non- coking coal. Coke is imported mainly by Pig-Iron manufacturers and Iron &Steel Sector consumers using mini-blast furnace. Details of import of coal and products during the last five years are as under: 23
  • 24. Table:-Coal import (Fig. in million tonnes) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Coking Coal 16.89 17.88 22.03 21.08 23.46 27.6 Non Coking coal 21.7 25.2 27.76 37.92 44.28 52.02 Coke 2.62 4.69 4.25 1.88 2.2 4.63 Total Import 41.21 47.77 54.04 60.88 69.94 84.055.5.3 Domestic Coal Price Fixation- Government of India deregulated the prices of Non-Coking Coal of grades A,B&C, Coking coal and Semi/Weakly coking coal on 22.03.1996. Subsequently, on12.03.1997, Government of India deregulated the prices of non-coking coal of grade D, Hard Coke and Soft Coke and also allowed Coal India Ltd to fix coal prices for grades E,F&G till Jan2000 on every six months by updating cost indices as per escalation formula contained in the 1987 report of the Bureau of Industrial Cost & Prices. With effect from 01.01.2000, CIL was free to fix the prices of all grades of coal in relation to the market prices. Pursuant of the above, CIL fixed the prices of coal from time to time and last such revision has been made on26.02.2011, to be effective w.e.f 00 hrs of 27-02-11. Grade wise Basic Price of coal at the Pit-head prices of all varieties of Run of Mine Coal have been given in Table I to V applicable to the Power Utilities (including IPPs), Fertilizers and Defense and in Table VI to X applicable to consumers other than the Power Utilities, (including IPPs), Fertilizers and Defense excluding statutory levies for Run-of-mine (ROM) Non-Long- Flame Coal ,Long flame Coal, Coking Coal, Semi Coking Coal & Weakly Coking Coal, direct feed Coal, Assam Coal for various subsidiaries of CIL as shown below: COMPANYWISEGRADEWISECOALPRICESOFCILFORPOWER UTILITIES (INCLUDINGIPPs), FERTILIZERSANDDEFENCE  Basic Price of Run of Mine Non-Long-Flame Non-Coking Coal- Annexure- 5  Basic Price of Run of Mine of Other Non-Coking Coal- Annexure- 6  Basic Price of Run of Mine Long-Flame Non-Coking Coal- Annexure- 7  Coking Coal (Run of Mine) Annexure- 8  Semi Coking & Weakly Coking Coal (Run Of Mine) Annexure- 9  Direct feed Coking Coal (Run of Mine) Annexure- 10  Assam Coal (Run of Mine) Annexure- 11 24
  • 25. 5.5.4 Quantity of Coal to be sold at market price:- Coal distribution through e-auction was re-introduced in the new coal distribution policy in 2007 mainly to provide access to companies that do not have regular sources of supply. Most of the through e-auction is transported through roads. Only 10% of total coal production of Coal India Ltd is being sold by e-auctioning and prices for remaining are being administered by Government of India. Coal India is being asked to sign fuel supply agreement with power sector companies and not increase supplies to other sectors. Present spot market prices are at least 60% higher than notified prices of coal. Coal prices in domestic spot market have risen by 50% over past three years. As mentioned below in table Coal India may cut e-auctioning 10 to 7% by 2016-17. Diversion of coal from e-auction is expected to enable CIL to offer 47 MT more coal to power sector. Table- Coal e-auction plan for Coal India Ltd. up to 2016-17 Year 2012-13 2013-14 2014-15 2015-16 2016-17 Production(MT) 464 486 508 530 556 e-auction% 10 10 9 8 7 Amount(MT) 46 49 46 42 395.5.5 Impact of crude oil price on Thermal coal prices:- The coal demand revived upon the energy price surges during the two oil crises. The primary factor having spurred the revival was that coal was priced much cheaper than the- then skyrocketing oil and gas prices. Then such demerits as handling difficulties and environmental load, if taken into account, can undermine utility of coal unless it should be priced cheap, the greatest merit. In short, the oil price sets the ceiling of coal prices. Particularly up to first half of the 2008, coal has demonstrated price advantages over crude oil. After that at the time of uncertainty during global recession, crude oil prices fall abruptly while not in case of coal. Again in 2009 prices of both coal and crude oil started rising, and from January, 2011 coal again demonstrated advantages over crude oil. As it is clearly shown in graph coal prices are directly related to crude oil prices, varies according to crude prices change. Namely price ratio of steaming coal to crude oil has been as small as staying within the 0.38 – 0.45 range. For these reasons, the ceiling on of coal prices can be put at around 75% of the crude oil price equivalent heat value. 25
  • 26. 140 Relationship Between Crude oil and coal prices 250 120 U 200 S 100 U $ / S 150 b 80 $ a / r 60 t 100 r o e 40 n l 50 20 0 0 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Oct-11 Jan-12 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11Table- Crude oil prices and coal prices per month Crude oil Price per barrel Coal price per metric tonAnnexure- 125.5.6 Impact of Exchange rate on coal prices:-A sharp decline in the value of the rupee is bound to affect the power generation capabilityof power plants that are heavily dependent upon imported coal for electricity generation.This would mean an increase in the level of energy deficit in the country. Moreover, a fallwitnessed in power generation capacity is likely to have an adverse effect on all the threesectors of the economy namely agriculture, industry and services.Another dimension to the rupee depreciation episode is that not only has the expenditure onimports increased but this coupled with an inflexible tariff structure means that the powercompanies are going to suffer huge losses.The global prices of thermal coal in November 2011 were lower than that in May 2011.Yet, the depreciation of rupee has meant that the importer has to pay an additional Rs.684.6 per tonne to import the same quantity of coal.Please refer to table below:Table: Impact of Rupee Depreciation on Thermal Coal Price- Month Price $ Exchange rate Price Rs May 127.6 45.05 5739.5 November 121.9 52.7 6424.1 Difference -5.7 7.7 684.6Annexure- 13 26
  • 27. 9000 250 8000 7000 200 R 6000 u 150 U p 5000 S e 4000 100 e $ 3000 s 2000 50 1000 0 0 7-Jul 8-Apr 8-Jul 9-Apr 9-Jul 10-Apr 11-Apr 12-Apr 0.00 10-Jul 11-Jul 7-Oct 8-Oct 9-Oct 10-Oct 11-Oct 8-Jan 9-Jan 10-Jan 11-Jan 12-Jan coal price in RS per MT coal price in US& per MT Exchange rate5.5.7 Impact of availability of land on coal prices-Due to soaring up of land prices and compensation to land owner as per new landacquisition policy hues amount of money is paid for coal mining lease and that cost furtherincreasing coal prices. New land pricing policy detail is given bellow-Land Acquisition Policy in India:-The Indian Ministry of Rural Development introduces its new draft Land Acquisition andRehabilitation & Resettlement Bill which is a policy framework to balancebetween land acquisitions for industrialization with the concerns of those who depend onthat land for livelihood.The new draft Land Acquisition and Rehabilitation & Resettlement Bill of 2011 which willgo through a cabinet vote very soon, has been designed to address the concern of balancingthe need for land to support rapid industrialization on one hand, and the needs of the peoplewho depend on it for their livelihood.India is the third largest economy in the world today, but it faces an urgent need for growththrough industrialization, especially through manufacturing. This puts the nation in needfor land for a number of purposes from fuelling the inevitable process of urbanization andgreater industrialization, to a variety of public purposes.The nation has had a land acquisition act since 1894 which as over the time, seen quite afew amendments. But the recent heightening of public concern over land acquisition issuesand the absence of a comprehensive law covering the issues of resettlement, rehabilitationand compensation of livelihoods, has highlighted the need for a wholesome law.The bill states the legitimate reasons for land acquisition as the above mentioned ones andadditionally defines the purview of the term ‘public purposes’ as the following: 27
  • 28. 1. Strategic purposes: e.g., armed forces, national security;2. Infrastructure and Industry: where benefits largely accrue to the general public3. Land acquired for R&R purposes4. Village or urban sites: planned development -residential purpose for the poor andeducational and health schemes5. Land for private companies for public purpose;6. needs arising from natural calamities.Rehabilitation and ResettlementIt has been observed in the past that the rehabilitation and resettlement aspect is frequentlyneglected once the acquisition is over, leading to widespread resentment and rebellion fromthe ‘affected families’, who are basically those people who either lose the and that theyown, or livelihood that they had derived from the acquired land. The current draftnecessitates the application of its rehabilitation and resettlement requirements ifthe land acquired by private companies exceeds 100 acres.The new bill states that the Government can either acquire land for its own use or for theuse of private companies for stated public purpose. But the draft makes it clear thatno acquisition can take place until 80% of the project affected families give their consent tothe acquisition. Also, the government can make no acquisition of multi-cropped or irrigatedlands or even land for the private purposes of private companies.The rehabilitation and resettlement requirements which are a major highlight of thisdraft included a number of minimum entitlements making a special provision of scheduledcastes and scheduled tribes.Compensation and benefitsAs per the compensation package, the award amount paid for the land acquired in case ofurban areas should be not less than double the market value determined, and not less thansix times in case of rural areas.For landowners the entitlements include a subsistence allowance of Rs. 3000 per month perfamily for 12 months along with Rs. 2000 per family as annuity for 20 years, with the useof appropriate indexes for inflation. The loss of a house has to be compensated with thebuilding of a new one adhering to some minimum size requirements. Entitlements fortransportation and employment provisions also need to be guaranteed. An unemploymentbenefit has to be paid if not even a single member of the family is given employmentopportunities. For those who lose their livelihood, the bill states similar entitlements. 28
  • 29. 6 Renewable resources in India:-Status of renewable energy resources in India- New & Renewable EnergyCumulative deployment of various Renewable Energy Systems/ Devices in the country as on 30/04/2012 Renewable Energy Program/ Target for Achievement Total Cumulative Systems 2012-13 during achievement achievement u April,2012 during 2012- p to 30.04.2012 13I. POWER FROM RENEWABLES: A. GRID-INTERACTIVE POWER (CAPACITIES IN MW)Wind Power 2500 36.65 36.65 17389.31Small Hydro Power 350 5.75 5.75 3401.06Biomass Power 455 16.00 16.00 1166.10Bagasse Cogeneration 7.50 7.50 1992.73Waste to Power -Urban - - 89.68 20-Industrial - - -Solar Power (SPV) 800 37.72 37.72 979.00Total 4125.00 103.62 103.62 25017.88 B. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ)Waste to Energy - 20.00 1.20 1.20 102.95Urban-IndustrialBiomass(non-bagasse) 60.00 2.50 2.50 385.00CogenerationBiomass Gasifiers - 1.50 - - 16.12Rural- Industrial 10.00 - - 134.09Aero-Genrators/Hybrid 0.50 - - 1.64systemsSPV Systems (>1kW) 30.00 - - 85.21Water mills/micro hydel 2.00(500 -. - 1877 Nos. Nos.)Total 126.00 3.70 3.70 725.01II. REMOTE VILLAGE ELECTRIFICATION No. of Remote Village/Hamlets - - - - provided with RE SystemsIII. OTHER RENEWABLE ENERGY SYSTEMS Family Biogas Plants (No. in 1.25 - - 45.09 29
  • 30. lakhs) Solar Water Heating - Coll. 0.60 - - 5.46 Areas (Million m2)Solar Energy in India:-Solar water heaters have proved the most popular so far and solar photovoltaic fordecentralized power supply is fast becoming popular in rural and remote areas. More than700000 PV systems generating 44 MW have been installed all over India. Under the waterpumping program more than 3000 systems have been installed so far and the market forsolar lighting and solar pumping is far from saturated. Solar drying is one area which offersvery good prospects in food, agricultural and chemical products drying applications.The Jawaharlal Nehru National Solar Mission (JNNSM) has set ambitious targets forpower generation from solar energy in India. The Mission aims to have about 10 GW ofgrid-connected solar power plants by 2022. The mission is divided into 3 phases and thetargets for grid-connected solar PV plants for each phase are- Phase 1 2010-2013 500 MW Phase 2 2013-2017 1,500 MW Phase 3 2017-2022 7,000 MW Total 10,000MWIn addition to the JNNSM, several state governments have separate solar policies(Rajasthan, Gujarat and Karnataka) and many other state governments (Tamil Nadu,Maharashtra, Andhra Pradesh etc) are drafting solar policies on their own. Apart from this,the Renewable Purchase Obligation (RPO) is expected to drive the growth of the solar PVpower generation sector.India is densely populated and has high solar insulation, an ideal combination forusing solar power in India. Much of the country does not have an electrical grid grid, soone of the first applications of solar power has been for water pumping; to begin replacingIndias four to five million diesel powered water pumps, each consuming about3.5 kilowatts, and off-grid lighting. Some large projects have been proposed, and a35,000 km² area of the Thar desert has been set aside for solar power projects, sufficient togenerate 700 to 2,10 Gigawatts.The Indian Solar Loan Program, supported by the United Nations EnvironmentProgram has won the prestigious Energy Globe World award for Sustainability for helpingto establish a consumer financing program for solar home power systems. Over the span ofthree years more than 16,000 solar home systems have been financed through 2,000 bank 30
  • 31. branches, particularly in rural areas of South India where the electricity grid does not yetextend.Launched in 2003, the Indian Solar Loan Programme was a four-year partnership betweenUNEP, the UNEP Risoe Centre, and two of Indias largest banks, the Canara Bank andSyndicate Bank.Announced in November 2009, the Government of India proposed to launch its JawaharlalNehru National Solar Mission under the National Action Plan on Climate Change withplans to generate 1,000 MW of power by 2013 and up to 20,000 MW grid-based solarpower, 2,000 MW of off-grid solar power and cover 20 million sq. meters with collectorsby the end of the final phase of the mission in 2020.Also, TERIs Lighting a Billion Lives Campaign started in 2008 aims to replace keroseneand paraffin lamps with CFLs to provide off-the-grid lighting to villages and thus ease theload on the power grid while at the same time provide the people with safe, non-pollutinglight at night. So far, it has provided 35,000 CFLs to 640 villages in 16 states in India andalso about 500 CFLs in Myanmar. This campaign has reportedly benefited 175,000 people.Indias largest photovoltaic (PV) power plants- Annexure -2Wind Energy:-In progress are wind resource assessment programme, wind monitoring, wind mapping,covering 800 stations in 24 states with 193 wind monitoring stations in operations.Altogether 13 states of India have a net potential of about 45000 MW.The development of wind power in India began in the 1990s, and has significantlyincreased in the last few years. Although a relative newcomer to the wind industrycompared with Denmark or the United States, India has the fifth largest installed windpower capacity in the world. In 2009-10 Indias growth rate was highest among the othertop four countries.As of 31 March 2011 the installed capacity of wind power in India was 16078 MW, mainlyspread across Tamil Nadu (6007 MW), Maharashtra (2310.70 MW), Gujarat (2175.60MW), Karnataka(1730.10 MW), Rajasthan (1524.70 MW), Madhya Pradesh (275.50MW), Andhra Pradesh (200.20 MW), Kerala (32.8 MW), Orissa (2MW), West Bengal (1.1MW) and other states (3.20 MW). It is estimated that 6,000 MW of additional wind powercapacity will be installed in India by 2012. Wind power accounts for 6% of Indias totalinstalled power capacity, and it generates 1.6% of the countrys power. Indias wind atlas isavailable.The worldwide installed capacity of wind power reached 197 GW by the end of 2010.China (44,733 MW), US (40,180 MW), Germany (27,215 MW) and Spain (20,676 MW)are ahead of India in fifth position. The short gestation periods for installing wind turbines,and the increasing reliability and performance of wind energy machines has made windpower a favored choice for capacity addition in India. 31
  • 32. Suzlon, an Indian-owned company, emerged on the global scene in the past decade, and by2006 had captured almost 7.7 percent of market share in global wind turbine sales. Suzlonis currently the leading manufacturer of wind turbines for the Indian market, holding some52 percent of market share in India. Suzlon’s success has made India the developingcountry leader in advanced wind turbine technology.Wind Power projects in India- Power Plant Producer Location State Total CapacityVankusawade Wind Suzlon Energy Ltd. Satara Dist. Maharashtra 259 (MWe)ParkCape Comorin AbanLoyd Chiles Offshore Kanyakumari Tamil Nadu 33 Ltd.KayatharSubhash Subhash Ltd. Kayathar Tamil Nadu 30Ramakkalmedu Subhash Ltd. Ramakkalmedu Kerala 25Muppandal Wind Muppandal Wind Farm Muppandal Tamil Nadu 22Gudimangalam Gudimangalam Wind Farm Gudimangalam Tamil Nadu 21Puthlur RCI Wescare (India) Ltd. Puthlur Andhra 20 PradeshLamdaDanida Danida India Ltd. Lamda Gujarat 15Chennai Mohan Mohan Breweries & Chennai Tamil Nadu 15 Distilleries Ltd.Jamgudrani MP MP Windfarms Ltd. Dewas Madhya 14 PradeshJogmatti BSES BSES Ltd. ChitradurgaDist Karnataka 14PerungudiNewam Newam Power Company Perungudi Tamil Nadu 12 Ltd.Kethanur Wind Farm Kethanur Wind Farm Kethanur Tamil Nadu 11Hyderabad APSRTC Andhra Pradesh State Road Hyderabad Andhra 10 Transport Corp. PradeshMuppandal Madras Madras Cements Ltd. Muppandal Tamil Nadu 10PoolavadiChettinad Chettinad Cement Corp. Poolavadi Tamil Nadu 10 Ltd.Shalivahana Wind Shalivahana Green Energy. Tirupur Tamil Nadu 20.4 Ltd. 32
  • 33. Tidal Energy- • Tides generated by the combination of the moon and sun’s gravitational forces • Greatest affect in spring when moon and sun combine forces • Bays and inlets amplify the height of the tide • In order to be practical for energy production, the height difference needs to be at least 5 meters • Only 40 sites around the world of this magnitude • Overall potential of 3000 gigawatts from movement of tidesIndia set to get Asia’s first power plant-With the proposed commissioning of a 50-Mw tidal power project off the coast of Gujaratin 2013, India is ready to place its first “seamark” that will be a first for Asia as well.London-based marine energy developer Atlantis Resources Corporation, along withGujarat Power Corporation Ltd, has signed a memorandum of understanding (MoU) withthe Gujarat government to start this project.The cost for the plant is expected to be in the vicinity of Rs 750 crore. This plant is also isexpected to be scaled up to 250 Mw.Timothy Cornelius, CEO, Atlantis Resources Corporation, said with just about 2 giga wattof tidal power installations in the world today, this is a completely new and unchartedpower sources with immense potential. “Tidal power today is what wind energy was 10years back,” he said.Due to the high investment in setting up the project, a typical tidal power project isexpected to break even between 8 and 12 years after commissioning. Despite the longgestation period to make it commercially viable, tidal power has unparalleledenvironmental advantages.“Tidal current power uses turbines to harness the energy contained in the flow of oceantides. It is unique as like tidal movements, power output is highly predictable andsustainable with zero visual impact and the turbines are completely submerged. Tidalpower is like putting a wind turbine subsea and the turbine rotors rotate slowly, causingvery little environmental impact to marine flora and fauna,” said Cornelius.The power offtaker would be Gujarat Power Corporation. The final cost of power per unitwill be determined at the completion of front-end engineering and design (FEED) phase,but was expected to be competitive when compared to the large solar power projectsplanned for development in Gujarat, the company said.The project is currently owned by Atlantis and GPCL and project equity participants willbe sought at the completion of FEED phase. 33
  • 34. Late last year, Atlantis became the turbine supplier to the largest planned marine powerproject in the world, MeyGen, a 378-Mw tidal power project in the Pentland Firth inNorthern Scotland.Current estimates suggest 15 per cent of the world’s power demands can be met by tidalcurrent power sources, while the estimates for India are currently around 5 per cent of itsannual demand for power.“It is only an estimate, but it could be certainly more than 5 per cent, inclusive of wavepower and tidal power, from what we know now. However, resource investigation has justbegun and with so much coast line, I would expect this number to increase significantly,”said Cornelius.Sea water, which is 832 times denser than air, gives a 5 knot ocean current more kineticenergy than a 350-km an hour wind, thus allowing ocean currents to have a very highenergy density. Accurate predictions of tidal current movements also make this one of themost predictable and, therefore, reliable sources of renewable energy available today.Nuclear Energy-The global nuclear industry is moving forward at a brisk pace, only slightly slowed by theFukushima accident. The International Atomic Energy Agency’s most realistic estimate isthat 90 new nuclear plants will enter service by 2030. Ten new nuclear plants went onlineover the past two years.The home of more than one billion people, India has had one of the world’s fastest-growingeconomies over the past decade. During this same time frame, the country has made bigstrides in increasing its capacity for nuclear generation of electricity.India now envisages increasing the contribution of nuclear power to overall electricitygeneration capacity from 3.2% to 9% within 25 years. By 2020, Indias installed nuclearpower generation capacity will increase to 20,000 MW.India now ranks sixth in terms of production of nuclear energy, behind the U.S., France,Japan, Russia, and South Korea.There are now 439 nuclear reactors in operation around the world in over 30 countries,providing almost 16% of the world’s electricity.Given the emphasis on rapid expansions in the Indian nuclear power industry, it isimperative to bring the Indian know-how and resources together with global nuclear skillsand experience to introduce a new dimension to the upcoming nuclear power projects.Looking at all above important issues, UBM India is bringing its 4th InternationalExhibition and Conference from 25 to 27 September 2012 at Mumbai. The exhibition andthe concurrent summit will be an excellent global networking opportunity for theexhibitors, visitors and delegates. It will provide an opportunity for all companies showcase 34
  • 35. their nuclear expertise and know-how and identify business opportunities in the Indianmarket.Presently Nuclear power is the fourth-largest sourceof electricity in India after thermal, hydroelectric and renewable sources of electricity.As of2010, India has 20 nuclear reactors in operation in six nuclear power plants, generating4,780 MW while seven other reactors are under construction and are expected to generatean additional 5,300 MW.In October 2010, India drew up "an ambitious plan to reach a nuclear power capacity of63,000 MW in 2032", but "populations around proposed Indian NPP sites have launchedprotests, raising questions about atomic energy as a clean and safe alternative to fossilfuels". There have been mass protests against the French-backed 9900 MW JaitapurNuclear Power Project in Maharashtra and the 2000 MW Koodankulam Nuclear PowerPlant in Tamil Nadu. The state government of West Bengal state has also refusedpermission to a proposed 6000 MW facility near the town of Haripur that intended to hostsix Russian reactors. A Public Interest Litigation (PIL) has also been filed against thegovernment’s civil nuclear program at the Supreme Court. Despite these impediments thecapacity factor of Indian reactors was at 79% in the year 2011-12 as against 71% in 2010-11. Nine out of Twenty Indian reactors recorded an unprecedented 97% Capacity factorduring 2011-12. With the imported Uranium from France, the 220 MW Kakrapar 2 PHWRreactors recorded 99% capacity factor during 2011-12. The Availability factor for the year2011-12 was at 89%.Bio-mass Energy-Bio-energy contribution to the total primary energy consumption in India is over 27%.Indeed, this is the case for many other countries, because biomass is used in a significantway in rural areas in many countries. However, the contribution of biomass to powerproduction is much smaller than this - currently, biomass comprises only about 2650 MWof installed capacity, out of a total of about 172000 MW of total electricity installedcapacity in the country (May 2011).India is the pioneer in biomass gasification based power production. While gasification as atechnology has been prevalent elsewhere in the world, India pioneered the use of biomassgasification for power production. As a result, prominent Indian solution providers inbiomass gasification are implementing their solutions in other parts of the world.EAI estimates the total installed capacity of biomass gasification based power productionin India will be about 140 MW, out of a total of about 2600 MW of biomass based power(cumulative of grid connected and off grid). Of the total, biogas based power generationhas the share (about 1400 MW), followed by combustion-based biomass power production(about 875 MW). While biomass gasification currently contributes little to powerproduction, EAI foresees significant growth for this sector in future.Waste Resource- 35
  • 36. Every year there is an estimated 30 million tons of solid waste and 4,400 million cubicmeters of liquid waste generated in urban areas of India alone. The problems caused bysolid and liquid wastes can be significantly mitigated through adoption of environment-friendly waste-to-energy technologies. These technologies hold the promise of reducingquantity of wastes and in addition, generate a substantial quantity of energy from them, andgreatly reduce pollution of water and air. In spite of the unquantifiable level of benefits,they are still not seen as an attractive business opportunity. The reason for this is the lack ofunderstanding about the various (technology/process) options available and long termviability of the waste to energy projects.We at EAI have been researching the waste to energy industry for the past few years andhave developed a thorough understanding of the various technology options and theirviabilities. Diverse business opportunities along the value chain, the global scenario and themarket segment for each of the waste to energy technologies are well known to us and weare poised to provide a balanced opinion about waste to energy industry.can provide extensive research and consulting assistance for value generation from thefollowing types of waste:  Industrial solid waste  Municipal solid waste  Hazardous waste  Industrial liquid waste  Sewage and Fecal Waste  Agro and crop wasteWe can also provide customized inputs for value and energy generation based on thefollowing processes:  Anaerobic digestion  Pyrolysis  Gasification  Combustion  FermentatioLimitation of Renewable energy resources in India-  Renewable energy often relies on the weather for its source of power that is unpredictable and intermittent.  Solar power is dependent on availability of sunlight. Thus the availability of power fluctuates from zero to maximum every day.  The current cost of renewable energy technology is also far in excess of traditional fossil fuel generation. 36
  • 37. 7 Natural Gas in India:-7.1 Current Natural Gas Scenario in India-India is the world’s seventh largest energy producer, accounting for 2.49% of the worlds total annual energy production. It is the fifth largest energy consumer, accounting forabout3.45 % of total energy consumption in 2004, which has been increasing by an average of4.8 % percent a year since 1990. The share of commercial energy in total primary energyconsumption increased from 59.7 % in 1980-81 to 79.3 % in 2008-09. India’s GDP hasgrown at more than 8-8.5 % during the last few years, and is expected to grow minimum atthe rate of 7.5-9 % in the coming few years. The growth has taken place despite the hugedeficit in energy infrastructure and infrastructure. Even today, half of the country’spopulation does not have access to electricity or any other form of commercial energy, andstill use non- commercial fuels such as firewood, crop residues end during cakes as aprimary source of energy for cooking in over two-thirds of households.Major gas projects in India- Project State Commissioned Capacity (MW) RGPPL, Anjanvel Maharashtra 1480 Dadri Uttar Pradesh 817 Paguthan Gujarat 654.73 Auraiya Uttar Pradesh 652 Jhanor-Gandhar Gujarat 648 Kawas Gujarat 645 Faridabad Haryana 430 Anta Rajasthan 413 Vemagiri Power Generation Ltd. Andhra Pradesh 388.5 Rajiv Gandhi CCPP Kayamkulam Kerala 350 37
  • 38. 7.2 Demand and Forecasts for India-The demand of natural gas has sharply increased in the last two decades at the globallevel. In India natural gas was first discovered off the west coast in 1970s, and today, itconstitutes 10 % of India’s total energy consumption. Over the last decade it has gainedimportance as a source of energy and its share is slated to increase to about 25 % of thetotal energy basket by 2025-2030. In its Reference Scenario, the IEA expects Indian gasdemand to increase to 94 billion cubic meters by 2020 and to 132 billion cubic meters by2030, driven by the industrial and power generation sectors. This means anannualincrease of 5.4 % – one of the highest in the world. In the 450 Scenario, demand by 2020would be slightly lower (89 billion cubic meters), but by 2030 would almost remain atthe same level as in the Reference Scenario –132 billion cubic meters– as gas would be needed to displace coal. The latest available thIndian demand forecasts for the 11 Five- year plan (2007-12) show gas demandincreasing by between 37 % and 58 % over that period and the power sector being themain driver for incremental gas demand (see Table below). 38
  • 39. Natural Gas Demand ProjectionReference- http://ebookbrowse.com/rr07-23-india-natural-gas-indd-pdf-d1327341477.3 Competitive demand from Fertilizer & City Gas Sector-Further, ICRA expects the prospects for the CGD business to remain good in the long term,given the under-penetration of city gas in India in the absence of adequate gas andtransmission pipeline capacity. Natural gas allocation will invite Expression of Interest(EOI) from those interested, henceforth called applicant, in the use of the gas as advertised.It will also indicate the compression/transportation charges, as applicable, to each field inadvance and clarify that these shall have to be borne by the applicant (s).EOIs shall be submitted in a sealed cover super scribing the priority sector they belong to.The sectors have been prioritized as given below.a. Gas-Based Urea fertilizer plantsb. LPG Plantsc. Power Plants supplying power to the grid/state utilities at regulated rates under PPA.d. CGD systems for domestic and transport sectorse. Steel/Refineries/Petrochemicals for feedstock purposes.f. CGD for industrial and Commercial Consumers.g. Any other customers for captive and merchant power, feedstock or fuel purpose.Allocation shall start from applicants highest in the priority as mentioned above. Further,only if the full gas demands of all applicants in the preceding sector are met, will thesucceeding priority sector be taken up for allocation in that sector.Reference- http://www.petroleum.nic.in/ 39

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