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New capacity addition in India’s thermal power sector may be hurt by the problems in the beleaguered sector but there is a huge opportunity in upgrading existing projects, which could potentially lead to savings of $3 billion in power bills and reduce emissions, Andrew DeLeone, managing director of engineering major GE’s India power business told ET.
The Indian thermal power sector has been crippled by a lack of power purchase agreements, which has rendered projects stranded, many other power units are running below capacity and some are facing delays in payments. Private sector companies are reeling under heavy debt and while the government has taken measures to revive the health of state-run power distribution companies, industry players don't see recovery in the foreseeable future.
“Economics of new thermal power plant is very difficult right now. But that also gives us the opportunity to run the existing plants better and make them more profitable. There is a very good investment case for investing in improving efficiency and flexibility of power plants. For the amount you spend, you get payback in four years and you reduce carbon emission too,” DeLeone said.
GE is currently executing power projects totalling 12,000 megawatts (mw) in India, of which a majority is based off low carbon emitting technology. The company pegs new capacity addition in thermal power at 6-8 gigawatts per year, but sees a strong pipeline for unit upgrade given its interactions with private power firms.
“We feel India will see around 6-8 gigawatts of new thermal power capacity every year but there is 70-80 gigawatts of capacity that can be upgraded for efficiency and flexibility, this may happen over the next five years. This upgrade can save the country more than $3 billion dollars in power bills and at the same time reduce carbon emission,” DeLeone said.
Companies like L&T, JSW Energy, Bharat Forge, Thermax, BGR Energy, among others formed joint ventures with foreign partners and committed huge investments to set up units to manufacture thermal power boilers and turbine generators in India.
The industry is running at 25-30% capacity utilisation as new orders have been far too less in the last few years. Despite government’s attempt to revive the state-run power distribution firms, key customers to power generators, with the Uday scheme, discoms are still reluctant to enter power purchase pacts.
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