Professional Documents
Culture Documents
Renovation, Modernization and Life Extension of Power Plants
Renovation, Modernization and Life Extension of Power Plants
Renovation, Modernization
and Life Extension of
Power Plants
Opportunities and challenges
Strictly Private
and Confidential
February 2013
Agenda
Page
1
2
3
R&M - opportunity
R&M - challenges
Way forward
Appendices
1 Sustainability of up gradation
2 Case Study
1
8
15
17
19
Section 1
R&M - opportunity
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
1
Indias growing energy requirements need solutions and options are few...
Highlights:
Total capacity for India is 203 GW
with thermal energy accounting for
73% of capacity as of Jan13.
Thermal power supplied 631 billion
kWh (83%) of Indias electricity in
April- Jan13.
Thermal power has seen a growth
of 9% over past year as compared
to 2% rise in nuclear energy and
decrease of 13% in hydro energy in
the same period
Key
drivers
for
electricity
consumption in India include: 1. Peak shortage of 14% and
ongoing growth
2. Per capita use growing (but <
1/4th global average)
3. 44% households have no access
to electricity
4. Continued rise of urbanization
from 28% to 41% (2030)
1292
2%
350
MW
20%
968
73%
Thermal
2011-12
2016-17
Nuclear
Hydro
RES
2021-22
R&M program provides cost and fuel efficient thermal power generation for India with lower gestation periods
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
February 2013
2
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
3
Objectives:
February 2013
4
Before
enactment of
the EA 2003
Current
Scenario
Presence of
power markets
Absent
Present
Private
Sector
Participation
Low
Medium
Equipment
vendors base
Small
Medium
Open market policy of GoI and increasing capacity expansion has attracted
many international players, particularly Chinese players against market
dominant players like BHEL
Focus on
Optimization
Low
High
Market
framework for
Environmental
Compliance
Absent
Present
Coal Constraint
No
Yes
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
February 2013
5
Key factors
Timelines
10-12 months
38-42 months
Rs 2-2.5 Crore/MW
Rs 4-5 Crore/MW
None
High
Negligible
High
Already present
To be developed
To be developed
Already present
To be developed
Costs
Land acquisition issues
Environmental Clearances
Fuel and water linkages
Emissions
Transmission Capacity
Labour costs
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
February 2013
6
R&M Works
LE Works
No. of Units
30
105
6501
21679
12000
32897
Estimated Cost (
Rs. Crores)
Expected Benefits
Life Extension
Generation
sustenance
only
6900
Number
Capacity(MW)
Central Sector
68
13953
State Sector
103
20982
Total
171
34835
15 Years
13199
4341
MW
Additional
Generation(MU/
annum)
8480
2160
Central
State
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
MW
Capacity(MW)
Particulars
Central
State
February 2013
7
Section 2
R&M - challenges
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
8
R&M Works ( @
Rs. 1 Cr./MW)
Total
( Rs. Crore)
With external
funding
950
2334
2356
450
6090
12th Plan
630
4640
8760
14030
Total
1580
2334
6996
9210
20120
316
467
1399
1842
4024
Fund requirement
from indigenous
institutions like
PFC/REC/ etc.
1240
1867
5597
8728
External Assistance
7368
7368
Out of above fund requirement for EE R&M during 11th & 12th Plan, funding from external agencies to the tune of 96
million Euro from KfW for 3 units (630MW) and 180 million USD from World Bank have been committed.
Combining the huge financial costs for R&M along with deteriorating financial health of distribution
utilities due to non cost of supply reflective tariffs and high demand-supply gap , R&M program would need a huge
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
February 2013
push from government policies to remain relevant in the present power situation in the country.
PwC
9
138%
113%
85%
Electricity
Flow
Money
Flow
70%
49%
54%
43%
33%
18%
27%
14%
22%
30%
27%
12%
41%
0%
Distribution Companies
11
10
14
6
18
15
20
11
FY 09
Profit making
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
FY 10
FY 11
February 2013
10
R&M phases
Pre Implementation
Identification of plant units
Plant Assessment based on RLA studies,
Energy Audit, Past history of plant
Selection of agencies for technical studies/
implementation support
Execution
Post Implementation
Sourcing of funds
Evaluation of alternatives
Bidders/Vendors, OEMs
Financer
Execution Agency/Consultant
Generating Company
Regulator
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
Regulator
February 2013
11
Pre
Implementation
phase
Bidder
Financer
Regulator
Gaps in evaluation
framework for
identifying plants
suitable for R&M
Poor baselining of
initial data makes it
difficult to provide
post R&M guarantees
Financing constraints
for undertaking the
program
Delay in decision of
undertaking R&M
post RLA studies
Low level of
transparency over data
baselining by utilities
leading to issues with
R&M expenditure
approvals by regulators
Lack of internal
expertise to evaluate
technically or
commercially
Concerns over
contracting clauses
including liquidated
damages
Limited agencies to
carry out R&M studies
end to end
Concern over
adequacy of regulatory
benefits
Low risk appetite of
utilities makes the
complex multi party
R&M exercise a
concern
Accuracy of estimated
costs and benefits for
R&M
Concern over
sustainability of
benefits achieved via
R&M works
Stringent
qualification
requirements for
bidders makes it
tough for parties to
qualify
Lack of
standardization of
tendering documents
for R&M works
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
February 2013
12
Bidder
Concern over
contractual
requirements for
providing power in
R&M phase
Execution phase
Financer
Concerns over
execution capability
within costs and
timelines planned by
utility
Regulator
Impact of cost and
time escalation
Cost of power
purchased during the
renovation and
modernization
Delay in
implementation
approvals for
procuring equipments
from state utilities
Lack of drawings and
historical data of
relevant plants make
the implementation
difficult
Weak dispute
resolution mechanism
constraining the
execution of work
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
February 2013
13
Bidder
Sustainability of up
gradations in the plant.
Some key areas are:
Sustainability of
project benefits
achieved from R&M
works
Post
Implementation
phase
Non existent
operational
documentation
Inefficient
organizational
structure
Lack of specialized
operational cells for
effective O&M
practises
Absence of ex-post
evaluation and
feedback loop in R&M
works
Financer
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
*Source: CEA Reports, PwC Research
Regulator
Sustainability of change
achieved in the plant
Concern over the
effectiveness of the
R&M program
Lack of post R&M
guarantees from
implementation
agencies
Justification of
additional cost on R&M
projects
February 2013
14
Section 3
Way forward
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
15
7.
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
16
Appendix 1
Sustainability of up gradation
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
17
Knowledge Management
Process:
Establishment of consumption
baseline
Establishment of robust
knowledge management
framework implemented
through department level
Information systems for
sharing all relevant data on a
proper knowledge sharing
platform
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
Preventive maintenance:
Presence of specialized cells like
O&E cell, Trip Committee,
Energy audit committee,
centralized maintenance
planning team, condition
monitoring cell for enabling
preventive maintenance
procedures
Appendix 2
Case Study
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
19
Overall cash crunch of the power sector in the state restricted adequate maintenance of the plants.
With the increase in age, effective expenditure on maintenance, rather than increasing has
practically gone down.
FY07
FY08
FY09
FY10
FY11
4.34
4.81
3.54
3.96
3.86
Liquidity issues have further constrained the timely availability of spares, adversely resulting in
the health of the units.
Action Plan to Improve
With availability of funds, healthier practice of preventive maintenance will also be adopted.
The alternate option of LROT is also being explored for these units.
Comprehensive R&M works, as per guidelines of CEA are also being planned for PH 1 of SGTPS
Birsinghpur.
Renovation, Modernization and Life Extension of Power Plants Opportunities and challenges
PwC
February 2013
20
It has done in unit 6 & 8 of STPS Sarni & SGTPS Unit 2 in FY 12, results are encouraging.
Performance Improvement in Satpura Unit No.6 (AOH From 29 -July to 29-Sept 11)
S. No.
Particular
Generation in MU
Before AOH
After AOH
Gain
Gain in Rs Lakh
304.3
681.5
225.06
2 PLF in %
52.0
77.6
25.62
3 Aux.Consumption in %
11.9
9.9
4.50
1.10
0.93
37052
712.5
8.4
1.4
1583
772.7
3534
3378
156
Total
48.9
1534.1
Particular
Generation in MU
Before AOH
After AOH
Gain
Gain in Rs Lakh
412.5
435.1
160.17
2 PLF in %
44.7
70.8
26.05
3 Aux.Consumption in %
12.5
11.0
3.39
1.1
0.9
44360
853.0
9.3
2.9
1438
701.7
3589
3396
193
Renovation,
TotalModernization and Life Extension of Power Plants Opportunities and challenges
PwC
34.8
February
1589.62013
21
Thank You
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the
information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Pvt. Ltd., its members,
employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act,
in reliance on the information contained in this publication or for any decision based on it.
2013, PricewaterhouseCoopers Pvt. Ltd.. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Pvt. Ltd. which is a member firm of
PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.