To find out the market potential of Renovation &

Modernization and Life extension in Power Plants

Piyush Sahu
18MB0017
 Table of Contents
• About The Company
• About Project
• Indian Power Sector
• Thermal Power
• National Electricity Plan
• National Electricity Policy
• Why R&M?
• Michael Porter five force model
• Analysis
• Recommendations
• Limitations of the study
• Recommendations for future use
 About the Company
• Toshiba J.S.W. Power Systems Pvt. Ltd was established in 2008
• Started as joint venture between Toshiba Group 93% &JSW Group 7% (JSW
Energy and JSW Steel)
• Managing Director is Mr.Takayuki Marume
• Profits of the Company before paying taxes were 336.88 crores
• Profits of the Company before paying taxes were 194.74 crores
About Project

The project which I

undertook was to find out
the market potential of
Renovation &
Modernization and Life
extension in Power Plants.
 Indian Power Sector
Sector MW % of Total

State 84,637 24.2

Central 1,04,039 29.7
Private 1,61,487 46.1
Total 3,50,162

Fuel MW % of Total

Total Thermal 2,22,927 63.7

Coal 1,91,093 54.6
Lignite 6,260 1.8
Gas 24,937 7.1
Oil 638 .2
Hydro 45,399 13
Nuclear 6,780 1.9
RES 74,082 21.2
TOTAL 3,50,162
 Thermal Power Segment

• Generation capacity addition target of 88.5 GW during 2012-17

• Generation capacity addition of 101.64 GW is likely to be achieved during 2012-17
• 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the
power sector for Generation from all sources (except atomic energy)
• To reduce dependency on imported coal, a PPP policy framework will be devised
with Coal India Ltd. to increase coal production
• Fuel supply agreement with Coal India Ltd. will ensure the availability of coal for
power companies over the long term
 National Electricity Policy

Govt. of India is revising the National Electricity Policy :-

• to ensure a cleaner atmosphere by increasing renewable generation including
rooftop solar PV generation using the energy of the sun
• increasing electric vehicles in cities and towns which get polluted on account of
emissions from diesel and petrol vehicles
• improved reliable supply of power to consumers through smart grid
• Incentives are available for the setting up of projects in special areas like the North-
east, Jammu & Kashmir, Himachal Pradesh & Uttarakhand
 National Electricity Plan
Category LE/R&M works identified during 12th Plan Total(State Sector +
No. of units & Capacity (MW) Central Sector)
State Sector Central Sector

LE 38(6820) 32(5246) 70(12066)

R&M 20(4150) 45(13151) 65(17301)
Total 58(10970) 77(18397) 135(29367)

Particulars LE/R&M works identified during 12th Plan Total(State Sector +

No. of units & Capacity(MW) Central Sector)

State Sector Central Sector

LE 7(870) 11(1261.76) 18(2131.76)
R&M 5(850) 6(1210.5) 11(2060.5)
Total 12(1720) 17(2472.26) 29(4192.26
 Expected Share of Power Generation
300,000
250,000
200,000
150,000
100,000
50,000
0
Renewable
Coal Nuclear Hydro Gas
s
2021-2022 248,513 175,000 10,080 59,828 29,968
2026-2017 248,513 275,000 14,880 71,828 29,968
2021-2022 2026-2017
NATIONAL ELECTRICITY POLICY

Four key objectives of our

energy policy:
• Access at affordable prices
• Improved security and
Independence
• Greater Sustainability and
• Economic Growth
 Why R&M for Toshiba?
Parameters Y1 Y2 Y3 Y4 Y5 Y8 Y15 Y20 Y25
Option A : Business As Usual(BAU)
Net Generation(MU) 939.2 910.7 883.1 856.3 830.3 757
Residual life of the plant is 8 years and hence, no generation is available from 9th year onwards

Capacity Charge(Rs/kWh) .94 1.00 1.06 1.13 1.20 1.46

Energy Charge(Rs/kWh) 2.27 2.40 2.53 2.66 2.81 3.29

Cost of Power(Rs/kWh) 3.21 3.40 3.59 3.79 4.01 4.75

Levelised tariff(Rs/kWh) 3.82

Option B :R&M

Net Generation(MU) 1362.62 1360.38 1358.15 1355.93 1353.70 1347.05 1320.75 1320.75

Capacity Charge(Rs/kWh) 1.00 .99 .98 .97 .96 .94 1.04 1.23

Energy Charge(Rs/kWh) 1.91 2.01 2.11 2.22 2.34 2.73 3.89 5.02

Cost of Power(Rs/kWh) 2.91 3.00 3.09 3.19 3.30 3.66 5.17 6.25

Levelised tariff(Rs/kWh) 3.72

Option C : Greenfield Project

Net Generation(MU) 1458.54 1458.36 1458.18 1458.01 1457.83 1457.29 1455.85 1455.12 1454.21

Capacity Charge(Rs/kWh) 1.48 1.44 1.41 1.37 1.33 1.23 1.24 1.45 1.63

Cost of Power(Rs/kWh) 1.89 1.99 2.10 2.20 2.32 2.84 3.86 4.98 6.42

Cost of Power(Rs/kWh) 3.37 3.44 3.50 3.57 3.65 3.93 5.10 6.39 8.05

Levelised tariff(Rs/kWh) 4.25

Michael Porter’s Five Force Model
 Analysis
1.Total Potential of R&m and LE-
Cost of Renovation and Modernization & Life Expectancy project = 2.25 crore per MW
So, total potential of Renovation and Modernization & Life Expectancy = 2.25 *x
Here, x=total MW

2. Total Potential for Toshiba

Cost of Renovation and Modernization & Life Expectancy project = 2.25 crore per MW
So, total potential of Renovation and Modernization & Life Expectancy = 2.25 *x
Here, x=total MW
Since, Toshiba is not looking to do complete Renovation and Modernization & Life Expectancy but only the Turbine part of the
project.
Turbine costs around 50 lakhs.
So, Total Potential for Toshiba =2.25*x*.50/2.25
3.Total Potential for Toshiba after external factors-
Cost of Renovation and Modernization & Life Expectancy project = 2.25 crore per MW
So, total potential of Renovation and Modernization & Life Expectancy = 2.25 *x
Here, x=total MW
Total Potential for Toshiba =2.25*x*.50/2.25
Since, it is not possible for Toshiba to capture all the projects because of other competitors which is why we have identified that
there is a 25% chance for Toshiba to grab the project so the probability is .25.
So, Total Potential for Toshiba after external factors = 2.25*x*.50/2.25*.25

Age of Power Plants(in Total potential For

years) Toshiba(in crores)
13-14 422.5
15-16 513.5
17-18 225
19-20 450
21-22 230
23-24 423.75
25-26 581.25
27-28 463.125
29-30 758.75
 Total Potential For Toshiba
800
758.75

700

600 581.25

513.5
500 463.125
450
422.5 423.75
400

300
225 230

200

100

0
13-14 15-16 17-18 19-20 21-22 23-24 25-26 27-28 29-30

Total Potential
 Recommendations
• The potential for Toshiba is greatest in the time period of 29-30 is 758.75 crore but it
is not advisable for Toshiba to invest in the power plants aged 29-30 years
• It is not advisable to invest in power plants aged 29-30 years because the
infrastructure and machines would have become really old and the owners might not
be interested in upgrading the infrastructure
• It is advisable to start putting the efforts in power plants aged 13-24 because these
are the power plants which are going to increase the revenue of Toshiba
• Although the power plants start ageing at around 18-20 years but it is advisable to
start investing time in power plants aged around 13 years because the lobbying and
tendering process takes up a chunk of time
• It would be advisable if Toshiba sets up a production unit in the proximity of the
hotspot of power plants
• Toshiba should conduct more research of to how they create a new plant to
make the costing of shipping optimum
• Taking my analysis into consideration, Toshiba should conduct a cost benefit
analysis on which power plants to target and which region to target
• We can lobby for the introduction of IOT in the power plants by showcasing the
IOT portfolio of Toshiba and explaining how it would improve the condition of
the power plants
• Since the costing of IOT would not be cheap so it would be better to create a
market segmentation of which vendors to target
• Toshiba should also take into account if they are targeting new clients or existing
clients before lobbying and should take the financial conditions of the companies
 Limitations of the Study

• Since the data of P.L.F load factor of the organization is not made public so, P.L.F load
factor could not be taken as factor for our analysis
• Since the time frame was less so cost benefit analysis of every company could not be done
• Since, the initial investment for entering the power sector is really large so not a lot of
companies are interested in entering this sector which would mean that according to the
Michael Porters model the component of New Entrants had to ignored
• Research papers relevant to this topic are really scarce making it difficult to refer them for
any help
 Recommendations for Future Use

Scope of I.O.T in Power Plants

• Asset Performance Management for the Digital Steam Plant
• Operations Optimization for the Digital Steam Plant
• Boiler Optimization
• Coal Analyser
• Plant Optimization
• Smart Start