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AUG 21 2013

Fuel guzzler

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 21st AUG 2013

Thermal power plants in India consume 50% more fuel to generate every one unit of electricity than those in Japan, 44% more as against plants in France and 36% more than those in Germany and 34% more than the US power stations, according to a recent report.

Even in comparison to China, not particularly known for the quality of power equipment and where replacement of old machinery is a bit tardy, India fares poorly, with power plants in the country using 17% more coal.

This finding assumes significance in the context of India's rising coal import bill, which is adversely impacting our current account deficit (CAD).

India imported coal worth $ 15.5 billion in 2012-13, owing to the inability of the domestic producers - public sector monolith Coal India and its subsidiaries account for 80% of India's coal output - to augment production in the face of rising demand.

India's CAD hit a record level of 6.7% of GDP in the quarter ended December 2012. If fuel efficiency of power plants can be raised, it would help in containing the runaway CAD.

The revelations in the report titled "International Comparison of Fossil Power Efficiency and CO2 Intensity" by Netherlands-based Ecofys, a consulting firm specialising in energy and climate change policy, only confirm what domestic studies showed earlier.

For example, a central electricity authority (CEA) study examining energy efficiency of 85 aging power plants of SEBs with a combined capacity of 18,000 MW found that their operating heat rate was 13-24% higher than the specified limit. Higher heat rate indicates poor fuel conversion efficiency of power plants. According to the CEA, if the heat rate of these plants could be brought within 7% of the specified limit through renovation and modernisation (R&M), as much as R970 crore (or 7 million tonnes of coal) would be saved annually on their fuel costs. Fuel savings would be much higher if these obsolete units are replaced with energy efficient super-critical equipment.

According to industry norms, the maximum economically useful life of a thermal power plants is 25 years. But nearly one-third of India's 1.32 lakh mw of coal-fired generating capacity is well past the critical mark. State electricity boards (SEBs) own a major chunk of this outdated capacity.

Indian power sector has also been behind the curve in introducing supercritical generation technology, which is 15% more energy efficient than sub-critical plants. Globally, commercial application of supercritical technology began in 1966. But India took some 44 years in introducing the new technology. India's first supercritical unit was put up by Adani Power at its Mundra plant in December 2010.

"Almost entire fleet of Japan's coal-based thermal generation is based on super-critical or more advanced technologies whereas India has only just started using them. Japan's generating stations would be 30% better than average Indian thermal projects and if you take old Indian power plants, the difference could well be 50%," said Kameswara Rao, leader, energy utilities and mining practices, PWC.

Industry experts agree that India needs to replace its fleet of obsolete, sub-critical, coal-devouring power plants with energy efficient supercritical units. If that option is not feasible due to fund constraints, at least R&M should be undertaken to bring efficiency of these plants to an acceptable level.

"The central electricity regulatory commission (CERC) fixes tariff mostly for NTPC plants where efficiency norms are comparable to international level. But in states respective electricity commissions (SERCs) have to deal with old, inefficient and poorly maintained plants. Not all SERCs follow CERC's tariff norms. A large number of state plants must undergo renovation and modernization (R&M)," former CERC chairman Pramod Deo told FE.

Rao, too, agreed with Deo's view: "It makes good economic and environmental case to replace our aged and subcritical power plants with a modern fleet. R&M can make a difference, and will probably be adopted more given our financing limitations, but a replacement offers a more assured solution to both conservation of coal and limiting emissions," Rao said.

Former power secretary RV Shahi echoed views of Deo and Rao."Aging plants need to be renovated and modernised to improve their overall efficiency and heat rates," Shahi told FE.

Tags

Adani Power Ltd Carbon Emission Reduction Central Electricity Regulatory Commission Pramod Deo Coal China NTPC Ltd Central Electricity Authority United States State Electricity Board Price waterhouseCoopers Pvt. Ltd Indus Japan SERC Power India

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