part 1: overview of cogeneration and its status in asia - Fire

56 Part II: Cogeneration experiences in Asia and elsewhere
1.4 India
India continues to face serious power shortages in spite of an installed capacity close to
90,000 MW, mainly due to the lack of funds for new installations as well as poor operation of
the power industry managed by the public sector. As a result, the country faces shortages of
more than 18 per cent in peak demand and over 9 per cent in electricity requirements.
Realizing the important role that the private sector can play in power development,
government has recently opened the power sector to the private sector. In addition,
government is also encouraging other low-cost or more efficient alternatives, such as the use
of non-conventional energies and cogeneration in industry.
1.4.1 Assessment of cogeneration potential
A report prepared by the Ministry of Power reveals that considering the various in-house
generating facilities adopted by Indian industries, the installed capacity in industry alone is
around 12,000 MW, without taking into account units of less than 1 MW capacity. Though
some of the industries have already adopted cogeneration plants, additional cogeneration
potential in selected industrial sub-sectors is estimated to be 6,530 MW. The actual installed
capacity is still very low, and aside from the sugar industry, cogeneration has not been
pursued seriously due to various reasons.
According to this report, sugar mills have the highest cogeneration potential, estimated as
3,200 MW. To achieve this, the mills need to be modernized. On supply side, high-pressure
boilers with high efficiency turbo-generators can assure better utilization of bagasse. On the
demand side, replacement of small turbines by hydraulic drives and use of multiple-effect
evaporators can help to reduce the process steam demand.
A recent national survey estimates the overall industrial cogeneration potential to be around
15,000 MW, with the sugar mills alone accounting for one-third of the total, followed by
distilleries, fertilizer plants, rice mills, textile industries and pulp and paper mills, and others. 4
1.4.2 Drawbacks in cogeneration development
The main drawback in cogeneration development has been the lack of clear policies and
regulations. The State Electricity Boards (SEBs) have not been supportive of the idea of
captive power plants; cogeneration being regarded as a subset of the captive segment, was
also neglected and never fully promoted. SEBs consider the power from industry to be too
small and its cost to be generally higher than the prevailing tariff. As industries are charged a
higher tariff, utilities are afraid to lose good customers.
Many industries are not aware of the benefits of cogeneration in terms of cost savings, the low
level of incremental investment needed, and the existence of a number of financing options.
They are concerned about the problem of space, shut down and investment necessary for
setting up cogeneration facilities. They are not sure about the long-term availability of fuel for
operating the cogeneration plant. In case there is excess electricity available for export to the
grid, industries are not sure whether the SEBs can pay as most of them are facing acute
financial constraints.
4 A.S. Bakshi, “Status of cogeneration development in India”, ESCAP South-Asia Sub-regional
Seminar on Promotion of Energy Efficiency and Pollution Control through Cogeneration, Dhaka, 14-15
November 1998.