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ADVANCES IN FOSSIL FUELTECHNOLOGIES ANDINVESTMENTS FOR POWERGENERATION IN INDIAASIAN AND PACIFIC CENTRE FOR TRANSFER OF TECHNOLOGY (APCTT)

The Asian and Pacific Centre for Transfer of Technology (APCTT), a subsidiary body of ESCAP, was establishedon 16 July 1977 with the objectives: to assist the members and associate members of ESCAP throughstrengthening their capabilities to develop and manage national innovation systems; develop, transfer, adaptand apply technology; improve the terms of transfer of technology; and identify and promote the developmentand transfer of technologies relevant to the region.The Centre will achieve the above objectives by undertaking such functions as:• Research and analysis of trends, conditions and opportunities;• Advisory services;• Dissemination of information and good practices;• Networking and partnership with international organizations and key stakeholders; and• Training of national personnel, particularly national scientists and policy analysts.The shaded area of the map indicate ESCAP members and associate members

ADVANCES IN FOSSIL FUELTECHNOLOGIES ANDINVESTMENTS FOR POWERGENERATION IN INDIAProceedings and presentations at the Workshop on Advances in Fossil Fuel-basedPower Generation Technologies and Investments for Power Generation in IndiaASIAN AND PACIFIC CENTRE FOR TRANSFER OF TECHNOLOGY (APCTT)

ADVANCES IN FOSSIL FUEL TECHNOLOGIES AND INVESTMENTSFOR POWER GENERATION IN INDIAProceedings and presentations at the Workshop on Advances in Fossil Fuel-based PowerGeneration Technologies and Investments for Power Generation in India© APCTT-ESCAP, 2012This publication may be reproduced in whole or in part for educational or non-profit purposes without specialpermission from the copyright holder, provided that the source is acknowledged. APCTT-ESCAP wouldappreciate receiving a copy of any publication that uses this publication as a source.No use may be made of this publication for resale or any other commercial purpose whatsoever without priorpermission. Applications for such permission, with a statement of the purpose and extent of reproduction,should be addressed to the Head, APCTT-ESCAP, P.O. Box 4575, C-2, Qutub Institutional Area, New Delhi110 016, India.The opinions, figures and estimates set forth in this publication are the responsibility of the authors, andshould not necessarily be considered as reflecting the views or carrying the endorsement of the UnitedNations APCTT-ESCAP.The designations used and the presentation of the material in this publication do not imply the expression ofany opinion whatsoever on the part of the United Nations APCTT-ESCAP concerning the legal status of anycountry, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.Mention of firm names and commercial products does not imply the endorsement of the United NationsAPCTT-ESCAP.This document has been issued without formal editing.

CONTENTSABBREVIATIONSiiiPART ONEREPORT ON THE WORKSHOP ON ADVANCES IN FOSSIL FUEL TECHNOLOGIES ANDINVESTMENTS FOR POWER GENERATION IN INDIA 1I Organization of the Workshop 2II Opening of the Workshop 4III Consideration of Issues 6IV Conclusions 29PART TWOBASELINE REPORTS 31BASELINE REPORT ON FOSSIL FUEL TECHNOLOGIES FOR INDIA 33I Background 34II Technology Needs Assessment 35III Programmes and Policies to Encourage LCET 42IV Application of Advanced FFT for Power Generation 47V Conclusion 52VI Bibliography 53BASELINE REPORT ON FOREIGN DIRECT INVESTMENTS IN THE ENERGY SECTOR OF INDIA 55I Background 56II Status of Advanced Fossil Fuel-based Electricity Generation 60III Potential for International Co-operation 74IV Conclusions 75V Bibliography 76PART THREEANNEXES: PARTICIPANTS, PROGRAMME AND SELECTED PRESENTATIONS 79I List of Participants 80II Programme 84III An Overview of Advanced Fossil Fuel Technology Development in India 86IV Advanced Fossil Fuel Technology Development at BHEL 89V NTPC's CCT Programme Update & Induction Strategy 93VI Technology Development – Demonstration and Deployment Strategies 95i

VII GE Energy and Advanced Fossil Fuel Technologies 102VIII SWOT Analysis of Fossil Fuel Technology 104IX Mitigating Climate Change through FDI-financed Advanced Fossil Fuel Technologies 109X Energy Conservation: ERDA’s Contribution & Case Studies 112XI Electricity Generation Trends in UNDA Project Countries 115XII Financing of the Power Sector 120XIII Advanced Fossil Fuel-Based Power Generation – Financing Challenges 122ii

ABBREVIATIONSAC : Alternating currentACS : Average cost of supplyAdv-USC : Advanced ultra-supercriticalAHEC : Alternate Hydro Energy CentreAPCTT-ESCAP : Asian and Pacific Centre for Transfer of Technology of the Economic andSocial Commission for Asia and the PacificARR : Average revenue realizationASME : American Society of Mechanical EngineersBARC : Bhabha Atomic Research CentreBEE : Bureau of Energy EfficiencyBFBC : Bubbling fluidized bed combustionBHEL : Bharat Heavy Electricals LimitedBMCR : Boiler maximum continuous ratingBOFA : Bypass Over Fire AirBPO : Business process outsourcingCAGR : Compounded annual growth rateCCS : Carbon capture and storageCCGTs : Combined cycle gas turbinesCCT : Clean coal technologiesCDM : Clean Development MechanismCEA : Central Electricity AuthorityCERC : Central Electricity Regulatory CommissionCFBC : Circulating fluidized bed combustionCFFS : Cleaner Fossil Fuel SystemCHP : Combined heat and powerCII : Confederation of Indian IndustriesCIL : Coal India LimitedCMM : Coal mine methaneCMPDIL : Central Mine Planning and Design Institute Ltd.CO : Carbon monoxideCO 2: Carbon dioxideCOP : Conference of the PartiesCPRI : Central Power Research InstituteCSD15 : 15 th Session of the Commission on Sustainable DevelopmentCSIR : Council of Scientific and Industrial ResearchCSP : Concentrating solar powerCTL : Coal to liquidC-WET : Centre for Wind Energy TechnologyDC : Direct currentDFIG : Doubly fed induction generatorDiscom : Distribution company (electricity)ECB : External commercial borrowingELC : Electronic load controllerEHV : Extra-high voltageEMS : Energy Management SectionEPC : Engineering, procurement and constructionEPFO : Employees’ Provident Fund OrganizationERDA : Electrical Research & Development Associationiii

EREC : European Renewable Energy Councileq. : EquivalentFBC : Fluidized bed combustionFDI : Foreign direct investmentFGD : Flue gas desulphurizationFFT : Fossil fuel technologiesFIAB : Foreign Investment Approval BoardFII : Foreign institutional investorFYP : Five-Year PlanGDP : Gross domestic productGoI : Government of IndiaGt : GigatonneGW : GigawattGHG : Greenhouse gasHRD : Human Resource DevelopmentIEA : International Energy AgencyIEP : Integrated Energy PolicyIFC : Infrastructure Finance CompanyIGCAR : Indira Gandhi Centre for Atomic ResearchIGCC : Integrated gasification combined cycleIISc : Indian Institute of ScienceIIT : Indian Institute of TechnologyIPP : Independent power producerIPR : Intellectual property rightsIPTC : Independent power transmission companyIRDA : Insurance Regulatory and Development AuthorityISRO : Indian Space Research OrganizationIT : Information technologykV : KilovoltkWh : Kilowatt-hourLCE : Low carbon emissionLCET : Low-carbon energy technologyLIC : Life Insurance Corporation of IndiaLNG : Liquefied natural gasMNRE : Ministry of New and Renewable EnergyMoP : Ministry of PowerMPPT : Maximum power point trackingMSW : Municipal solid wastemt : Million tonnesmtoe : Million tonnes of oil equivalentMW : MegawattNATCOM : National CommunicationNCEF : National Clean Energy FundNCES : Non-conventional energy sourcesNDE : Non-destructive examinationNEF : National Energy FundNHPC : National Hydroelectric Power CorporationNOx : Nitrogen oxidesNPA : Non-performing assetNPCIL : Nuclear Power Corporation of India Ltd.NPP : National Perspective PlanNTPC : National Thermal Power Corporationiv

OECD : Organization for Economic Cooperation and DevelopmentOPTIMASH : Optimization of Gasifier for High-Ash CoalPADO : Performance Analysis Diagnostic and OptimizationPAT : Perform, Achieve and TradePCC : Pulverized coal combustionPFBC : Pressurized fluidized bed combustionPFC : Power Finance CorporationPFRDA : Pension Fund Regulatory and Development AuthorityPMSG : Permanent magnet synchronous generatorPOWERGRID : Power Grid Corporation of India LimitedPPA : Power purchase agreementPPP : Public-private partnershipPSU : Public sector unitPV : PhotovoltaicsR&D : Research and developmentR&M : Renovation and modernizationRBI : Reserve Bank of IndiaRECL : Rural Electrification Corporation LimitedRSoP : Research Scheme on PowerSBI : State Bank of IndiaSBI Caps : SBI Capital Markets LimitedSCT : Supercritical technologiesSE : Sustainable energySECPG : Shanghai Electric Power Generation GroupSEIG : Self-excited induction generatorSERC : State Electricity Regulatory CommissionSEZ : Special Economic ZoneSOE : State-owned enterpriseSOx : Sulphur oxidesSTPI : Software Technology Parks of IndiaT&D : Transmission and distributionTCM : Trillion cubic metresTWh : Trillion watt-hoursUCG : Underground coal gasificationUHV : Ultra-high voltageUNDA : United Nations Development AccountUNECE : United Nations Economic Commission for EuropeUNESCAP : United Nations Economic and Social Commission for Asia and the PacificUNFCCC : United Nations Framework Convention on Climate ChangeUSC : Ultra-supercriticalWEC : World Energy CouncilWEC-IMC : World Energy Council–Indian Member CommitteeWTO : World Trade Organizationv

PART ONEREPORT ON THE WORKSHOP ON ADVANCES INFOSSIL FUEL TECHNOLOGIES AND INVESTMENTSFOR POWER GENERATION IN INDIA1

IORGANIZATION OF THE WORKSHOPA. BackgroundAccording to the International Energy Agency (IEA), in 2006, fossil fuels accounted forabout 67 per cent of the primary energy used to generate electricity. The rise in theuse of fossil fuels for power generation has brought with it an increase in greenhousegases (GHG), such as carbon dioxide (CO 2) and nitrogen oxides (NOx), released tothe environment. It is estimated that burning of fossil fuel has caused about 75 percent of the GHG emissions in the last two decades. Following combustion, all of thecarbon contained in the fossil fuels end up as CO 2, the predominant GHG. The negativeimpact of GHG emissions on the environment, particularly on global warming andclimate change, resulting from the steep increase in fossil fuel-based power generationis alarming. With no international agreement to replace the failed Kyoto Protocol onreduction of GHG emissions, electricity generation from fossil fuels is expected toexpand in most developed economies. In the rapidly developing economies, particularlythe largest ones such as China and India, the demand for electricity is expected torise even faster than in the mature industrial economies. A significant part of thisdemand would be met by fossil fuel-generated power. A projection by the World EnergyOutlook 2010 says that world CO 2emissions from fuel combustion will continue togrow, reaching 35.4 Gigatonnes (Gt) CO 2by 2035.In 2009, 43 per cent of CO 2emissions from fuel combustion were produced from coal,says the IEA report CO 2Emissions from Fuel Combustion, 37 per cent from oil and 20per cent from gas. Coal consumption in Asia for power generation stood at an estimated2.7 billion metric tonnes in 2011. This figure is expected to rise to 4.4 billion tonnesannually from 2012 to 2020, according to a research report from New York-based GBIResearch. By 2020, China alone will produce 4.5 billion tonnes of coal annually, reflectinga 3.5 per cent compounded annual growth rate (CAGR) over the coming eight years,the report states. By the same year, India is projected to produce 1.1 billion tonnes ofcoal annually, up from 632 million tonnes of coal in 2011. Such robust growth wouldplace India on par with the United States in terms of total production, assuming internationalmarkets for United States coal remain strong, the GBI Research report adds.In view of the growing economy combined with growing population, India’s powergeneration capacity – 186,655 Megawatts (MW) as on 31 December 2011 accordingto the Central Electricity Authority (CEA) – may have to double in a decade. Coalbasedpower plants account for more than two-thirds of India’s electricity production,and would continue to play a major role in power generation, considering the country’ssizeable deposits of coal and its growing demand for energy. India’s annual rate ofgrowth of power capacity is among the highest in the world, comparable only to China,and is projected to be mostly fossil fuel-based. With nearly 40 per cent of the populationnot having access to grid-fed electricity and the annual per capita electricity consumptionat around 800 kilowatt-hours (kWh), compared with the world average of nearly fourtimes this figure, a massive expansion of power sector is a necessity for inclusivegrowth.In this scenario, adoption of technologies that would ensure emission reduction infossil fuel-based power plants becomes critical. Clean coal technologies (CCT) are2

eing discussed in India for quite some time, but field deployment has been hamperedby the lack of takers for such technologies. The factors that inhibit the adoption of CCTneed to be addressed.The main role of scientists and engineers in the energy sector is to make conventionalenergy sustainable and renewable energy available. It is, therefore, imperative to evolvetechnology-driven strategies to reduce the impact of fossil fuel-based power generationin a sustainable manner. One needs to look at the status of technologies and identifygaps if any in their adaptations. As coal is the main fossil fuel used in power generation,the focus needs to be on coal-based power generation technologies that limit thequantum and impact of GHG emissions.A two-day workshop was organized on 6 and 7 June 2012 in New Delhi to identify theappropriate advanced fossil fuel technologies (FFT) for power generation in India thatare efficient, state-of-the-art, affordable, adoptable, deployable and having low emission.B. Objectives and expected outcomeThe main objectives of the Workshop were to:• Deliver findings of the India baseline study on electricity generation, regulatoryframeworks and investment climate having a focus on low carbon fossil technologies;• Present an overview of current advanced fossil fuel technologies for power generationand their deployment in India, as well as other countries as suitable;• Present opportunities and challenges in developing and deploying advanced fossilfuel technologies in India; and• Share experiences and best practices of funding and creating an investment climatefor cleaner electricity production.The following outcomes were expected from the Workshop:• Identify changes needed in existing policy/legal/regulatory frameworks in India tofacilitate the creation of a climate conducive to investments for deployment ofadvanced fossil fuel technologies for power generation; and• Exchange ideas, experiences and issues related to the development and adoptionof low-carbon fossil fuel technologies.C. AttendanceParticipants to the Workshop were from the academia, industry, power utilities, researchand development (R&D) centres, government departments, energy professionals,financial/investment experts, international representatives, United Nations functionaries,consultants and other stakeholders dealing with fossil fuel-based power generation. Atotal of 70 people attended the workshop. A highlight of the workshop was the participationof high-level functionaries and policy makers from Afghanistan, China and Kazakhstan.A list of participants is given as Annex I.3

D. Election of officersThe following experts were elected as moderators:Session I: Promotion and Development of Advanced Fossil Fuel Technologies in India– Mr. A.K. Ahuja, Executive Director (CP), National Thermal Power Corporation (NTPC).Session II: Opportunities and Challenges in Advanced Fossil Fuel TechnologyDeployment – Mr. S. Seetharamu, Additional Director, Central Power Research Institute(CPRI).Session III: National Approaches, Including Investment Policies for the Deployment ofAdvanced Fossil Fuel Technologies – Mr. K. Ramanathan, Head of the Asian andPacific Centre for Transfer of Technology of the Economic and Social Commission forAsia and the Pacific (APCTT-ESCAP).Session IV: Investment and Financing for Deployment of Advanced Fossil Fuel-basedPower Generation Technologies in India – Mr. Kirit Parikh, former Member (Energy),Planning Commission, Government of India.Session V: Panel Discussion on Development of Power Sector with Reference toAdvanced Fossil Fuel Technologies – Mr. V. Raghuraman, former Principal Adviser(Energy), Confederation of Indian Industries (CII).E. ProgrammeThe Workshop proceeded as per the programme attached as Annex II.IIOPENING OF THE WORKSHOPA. Inaugural sessionThe inaugural session commenced with Mr. Nagesh Kumar, Chief Economist, UNESCAPand Director, Sub-Regional Office for South and South-West Asia, New Delhi, India,welcoming the gathering. This was followed by the opening address delivered by Mr.Arup Roy Choudhury, Chairman and Managing Director, NTPC, and Secretary, WorldEnergy Council–Indian Member Committee (WEC-IMC), New Delhi, India. Mr. P. UmaShankar, Secretary, Ministry of Power (MoP), Government of India (GoI), India deliveredthe inaugural address. After presentation of mementos to distinguished guests andpanel members, Mr. Branko Milicevic, Economic Affairs Officer, Sustainable EnergyDivision, United Nations Economic Commission for Europe (UNECE), Geneva,Switzerland, proposed a vote of thanks, thus concluding the inaugural session.In his welcome address, Mr. Nagesh Kumar explained the background to the organizationof the Workshop. Advanced fossil fuel technologies hold the key to climate changemitigation, he stated. The approach of the 12 th Five-Year Plan (FYP) of India for theperiod 2012-2017 appropriately focuses on modernization of power plants. There is anurgent need to create an investment climate for clean technologies. Public-private4

partnership (PPP) provides an effective alternate model of development. Foreign directinvestment (FDI) has to be focused for the speedy growth of the power sector in Indiain the 12 th FYP period.Mr. Arup Roy Choudhury, in his opening address, gave an overview of power generationscenario in India with NTPC being a major player in coal-based thermal power generation.He explained the steps taken by NTPC to promote CCT with emphasis on super- andultra-critical technologies. Significant opportunities exist in manufacturing of supercriticalpower plants; integrated gasification combined cycle (IGCC) demonstration;coal washeries; coal mining; and coal handling and transportation.Inaugurating the Workshop, Mr. P. Uma Shankar presented a comprehensive view ofthe policy of GoI to achieve a big leap in power development in India and the role ofadvanced FFT as the backbone to spur the country’s power generation capacity. India’sper capita power consumption is far below the world average. The challenge for India’spower sector is to increase installed power capacity, while keeping the environmentalconcerns in mind. India has several low-carbon growth strategies including power sectorvalue chain, efficiency, end use management, and energy labelling of power-consumingequipment and gadgets prescribed by the Bureau of Energy Efficiency (BEE). Lossesin distribution networks, including from power theft, need to be contained. Efforts areto be made to reduce losses in transmission lines through extra-high voltage (EHV)and ultra-high voltage (UHV) levels with installation of 1,200 kilovolt (kV) systems.On the generation front, coal will continue to be the backbone with nearly 200 Gigawatts(GW) planned capacity and 25 GW from non-fossil fuels. Solar energy, wind energy,hydro energy and bio-energy will play major roles. Supercritical technology that operatessystems at increased temperature and pressure will be vigorously pursued. The bulkof future installations will be supercritical and ultra-critical units. Mega projects of4,000 MW capacity are being planned. Larger unit sizes – 660, 800 and 1000 MW –are on the anvil. Indigenization of the manufacture of equipment for such state-of-theartsystems is encouraged. On coal quality, the high ash content of Indian coal needsto be factored in. A national clean energy fund is being created with a levy to create anenergy R&D fund of about Rs 50 billion (US$982.9 million) 1 . Coal- and gas-basedpower generation will have an investment of about Rs 2,000 billion (US$39.3 billion) inthe 12 th FYP to add about 76 GW 2 . Transmission lines will be augmented with 100,000circuit kilometre in addition to extension of distribution network.Mr. Branko Milicevic proposed a vote of thanks and briefed on the objective of theWorkshop from UNECE perspective. The current Workshop is part of a series ofworkshops planned in different countries to address local issues. Mitigating climatechange through use of advanced FFT is the aim. Coal and natural gas would be mainplayers. Supercritical technologies, IGCC and carbon capture and storage (CCS) needto be explored. FDI can spur growth in this front, but both foreign and domestic investmentwould be needed. United Nations agencies may facilitate such efforts. Green energytechnologies need to be vigorously pursued. Renewable energy versus efficiency mustbe assessed.1Conversion rate used throughout this report is US$1 = Rs 50.87.2Apparent variances between the figures quoted by different experts may be attributed tothe different sources of information that they relied on. For instance, the earlier estimate of76 GW of power capacity addition was later revised to 88 GW in view of the shortfall assessedfor the 11 th FYP period.5

IIICONSIDERATION OF ISSUESA. BackgroundIndia’s National Action Plan on Climate Change will take a strategic jump through the12 th FYP, with the government planning to make substantial investments through eightNational Missions – Solar Mission, Mission for Energy Efficiency, Water Mission,Mission for Sustainable Habitat, Mission for Sustaining the Himalayan Eco-system,Mission for Green India, Mission for Sustainable Agriculture and Mission for StrategicKnowledge on Climate Change. The government plans to set up a dedicated structureof governance to oversee different programmes under the 12 th FYP. It already spends2.8 per cent of gross domestic product (GDP) on programmes that bring adaptationbenefits. An expert group headed by Mr. K. Kasturirangan, Member of PlanningCommission, has prepared a report that advices the country to commit to emissionmitigation norms only after consultation with all relevant ministries and stakeholders.India’s commitment to reduce energy intensity by 20-25 per cent below 2005 levels by2020 would incur an expenditure of several billions of dollars. The report hasrecommended that a national authority be set up for implementing mitigation activities.It must be noted that the national political coalition constraints have often worked asdampeners, and only very limited efforts have been made for political consensus onpost-Kyoto climate change issues.The Integrated Energy Policy (IEP) of the Planning Commission suggests the followingsteps to reduce GHG emissions from current levels:• Energy efficiency in all sectors;• Emphasis on mass transport;• Active policy on renewable energy;• Accelerated development of nuclear energy and hydro energy; and• R&D for climate-friendly technologies.India’s mining sector has shown a particular weakness in the financial year 2011-12,caused by a combination of the weak coal output growth (negative growth in fourmonths of the year), a sharp decline in natural gas production in the KG-D6 fields andnegative growth in crude oil output in the third quarter of the year. There has beenimprovement in coal output from November 2011 onwards and the electricity sectorhas performed well. With appropriate supportive policy and administrative measures, itis possible to visualize an improvement in the investment rate in the financial year2012-13, notwithstanding difficult conditions in the international financial markets.Infrastructure – such as power, roads, railways, ocean ports and airports – is an areawhere the government can express its role most powerfully. The inadequacy ofinfrastructure availability continues to act as a constraint for the expansion of economicactivity across the country. It is likely that the targets set for 2011-12 in power androads may be achieved. The government must set ambitious targets for the financialyear 2012-13 for both capacity creation in key infrastructure areas and operationalperformance, especially in the coal sector, such that the economy will get an impetusduring the 12 th FYP.6

India has considerable R&D infrastructure in terms of laboratories, human resourceand facilities. With proper planning, support and networking, India has the potential toproduce state-of-the-art technologies. Gaps in FFT can thus be bridged to generateadvanced technologies that offer efficient energy production with reduced GHGemissions.B. Session I: Promotion and development of advanced FFT inIndiaProf. S.S. Murthy, Consultant to APCTT-ESCAP and Professor, Electrical EngineeringDepartment, Indian Institute of Technology (IIT), New Delhi, presented an overview ofadvanced FFT development in India.Climate change concerns: India has a low per capita emission (1.12 tonnes/year)compared with the world average (4.49), China (5.34) and the United States (18.85).The country’s efforts towards climate change mitigation will take a strategic leap in the12 th FYP, with the government planning to invest almost Rs 2,000 billion (US$39.3billion) through eight National Missions.Global and Indian scene: Sub-critical pulverized coal combustion power plants havebeen the backbone of India’s coal power sector. As on 31 July 2011, India’s installedpower generation capacity was 180,358 MW. Overall share of different energy sourcesin this was: thermal 64.28 per cent, hydro 23.13 per cent, nuclear 2.88 per cent andrenewables 10.55 per cent. Meeting electricity demand over the 12 th FYP period willrequire augmenting the existing capacity by about two-thirds to 280 GW by 2017.Low-carbon emission (LCE) technologies: Preferred LCE technologies are: renewableenergy (small hydro, solar, wind and biomass), geothermal, natural gas, coal(including IGCC and CCS) and nuclear.Coal: About 78 per cent of domestic coal production is dedicated to power generation.Continuing shortages should be made up through stepping up domestic productionand through imports (imported coal is more cost-competitive than imported gas).Domestic coal production should be stepped up by allotting coal block to public sectorundertakings and other captive users. In situ coal gasification suggested for depositsat non-extractable depths. Extracting coal-bed methane before and during mining isan option. Coal is intricately associated with pollution and CO 2emissions at 200-250g/kWh, and these levels have to be brought down by deploying CCT.Clean coal technologies: Of the 200 thermal power plants of different sizes andcapacities in India, about 40 per cent are more that two decades old and cause highlevels of pollution. CCT becomes very relevant in such a situation. CCT has differentforms: supercritical steam cycles, gasification, fluidized bed combustion and coalliquefaction. Supercritical technology is in the forefront of CCT. New power plants areset to perform at supercritical conditions of temperature and pressure, increasing theefficiency to 40-50 per cent. IGCC is another option for India, though expensive atUS$1,500/kW compared with conventional technologies (US$750/kW) or supercriticaltechnology (US$1,000/kW). CCS, while being feasible, has not received priority inIndia. Coal mine methane (CMM) is a large undeveloped resource that can reduce7

emissions. Underground coal gasification (UCG) is another feasible method of coaluse and allows access to more global coal resources. Fluidized bed combustion (FBC)is a very flexible method of electricity production and improves the environmental impactof coal-based electricity – most combustible material can be burnt including coal,biomass and general waste. Renovation and modernization (R&M) for life extension ofold power plants is a cost-effective approach, as compared with adding greenfieldplant capacities. Growing environmental regulations would force many utilities withinthe country to go for revamping old polluting power plants using environmentally benigncirculation fluidized bed combustion (CFBC) technology.Supercritical technologies (SCT): India has embarked on a major plan to introduceSCT in view of reduced fuel costs, low emissions and good part load efficiency, thoughcostlier by 3-10 per cent over current plants. Market penetration of SCT systems isexpected to rise from the current 10 per cent to 50 per cent of new plants by 2020.Nine SCT coal pulverization units of 660 MW, in addition to seven ultra-mega powerplants using SCT, are in different stages of construction in India. R&D thrust areas inSCT includes materials and metallurgy for boiler and turbine components subjected tohigh temperatures and pressures, supercritical cycle optimization, incremental heatrate improvement, retrofit of supercritical boiler to sub-critical pulverized coal boiler,fluidized bed supercritical steam cycles and multi-reheat supercritical boilers withdouble/triple re-heater.Research & development: R&D and deployment should form the core activity in theFFT sector in India to meet both higher power capacity and lower emission targets.The National Energy Fund (NEF) and National Clean Energy Fund (NCEF) planned byGoI must be structured to fund energy research effectively.Technology development: Mechanisms that enable joint technology developmentamong public and private sector entities, under suitable norms for financing and sharingof intellectual property rights (IPR), would be essential. For technologies that are alreadymature and deployed in the developed countries, appropriate financing models areimportant and may become operational through multilateral institutions, carbon marketsand mechanisms like Clean Development Mechanism (CDM).Human resource for sustainable energy: Capacity building and human resourcedevelopment (HRD) for the energy sector is central for the execution of new plans. Atpresent, national expertise in different sectors is inadequate for this.Potential for international cooperation: There is considerable scope for internationalcooperation in sustainable energy specific to advanced FFT.Prof. Murthy’s presentation is provided as Annex III.Mr. T. Jayakumar, Director, Metallurgy and Materials Group, Professor & Dean, HomiBhabha National Institute, Indira Gandhi Centre for Atomic Research (IGCAR), made apresentation on “Advanced Ultra-Supercritical Power Plants – Development of Materialsand Manufacturing Technologies”.A power plant operating at steam pressures exceeding 225 kg/cm 2 is called“supercritical” plant. When such a supercritical plant functions with a main steamtemperature of ≥600°C, it is called “ultra-supercritical” (USC) plant. Table 1-1 provides8

data on sub-critical and supercritical power plants planned in India during the 11 th(2007-2012), 12 th (2012-2017) and 13 th (2017-2022) FYP periods. A supercritical plantthat functions with a main steam temperature ≥700°C is called “advanced ultrasupercritical”(Adv-USC) plant. Data on the efficiency and CO 2emission data of differenttypes are provided in Table 1-2.Table 1-1: Data on sub-critical and supercritical power plants planned during Five Year PlansFive Year Plan period Total subcritical Supercritical Supercritical Total super- Total thermal(MWe) 660 MWe (no.) 800 MWe (no.) critical (MWe) capacity (MWe)11 th FYP (2007-2012) 43,330 12 2 9,520 52,85012 th FYP (2012-2017) 18,270 25 33 42,900 61,17013 th FYP (2017-2022) 4,000 36 36 52,560 56,560Table 1-2: Efficiency and CO 2emission data of different types of plantsPlant type with Steam Steam Efficiency CO 2power rating pressure temperature (per cent) emissions(kg/cm 2 ) (°C) (g/kWh)Sub-critical (500MWe) 170 540 35 900Supercritical 247 565 40 830Ultra-supercritical 250 600 42 784Advanced ultra- 300 700 45 740supercriticalFigure 1-1: Roles of the organization involved in Adv-USC Technology MissionIGCARAdvanced design analysisMaterial developmentManufacturing technologyTesting and evaluation800 MweAdvancedultra supercriticalpower plantBHELDevelopment, design &manufacture of power cycleequipment, System engineering,Test facility and EvaluationMOUNTPCDetailed project reportProject managementOperation & maintenanceTesting of real life componentsin existing plantsIn 2010, a Mission Programme for Adv-USC Technology at the national level involvingIGCAR, Bharat Heavy Electricals Limited (BHEL) and National Thermal PowerCorporation (NTPC) under the chairmanship of the Principal Scientific Advisor to GoIworked out the plant parameters and other details. The role of different partners in theproject is depicted in Figure 1-1. Plant parameters were specified as: power rating of9

800 MWe, a steam pressure of 300 kg/cm 2 and a steam temperature of 700°C. Theexpertise of IGCAR on materials technology developed for nuclear power plants waseffectively used to develop advanced materials for the supercritical technology underthis consortium project.In his presentation, Mr. Jayakumar detailed the technical aspects of these materials,which include Super 204HCu stainless steel tubes and Inconel 617 alloy tubes, customengineeredto suit the required parameters. The 304HCu stainless steel tubes developedindigenously met the specified chemistry, tensile properties, grain size and hardnessrequirements, and were qualified by ultrasonic, flaring and flattening tests. The tubesmeet the requirements of American Society of Mechanical Engineers (ASME) standardsand non-destructive examination (NDE). The stage-wise characterization helped understandthe material’s behaviour during metal processing and to optimize the final heattreatment to achieve the desired microstructure and mechanical properties. Weldingprocedures have been developed to weld the 304HCu tubes using ER625 and ER617alloys. The welded joints passed radiography and mechanical tests as per ASMEsection IX. Technical issues with the extruded Alloy 617M tubes were solved to obtainhigh-quality tubes with required specifications.Mr. R. Kumar, General Manager, BHEL, made a presentation on “Advanced FossilFuel Technology Development at BHEL” under the Mission Programme for Adv-USCTechnology research project. The trends in unit sizes and cycle parameters of coalfiredboilers are reflected in Table 1-3.Table 1-3: Unit sizes and parameters of BHEL’s coal-fired boilersUnite size SHO pressure SHO/RHO Year of(kg/cm 2 ) temperature (°C) introduction60/70 MW 96 540 1965110/120 MW 139 540/540 1966200/210 MW 137/156 540/540 1972250 MW 156 540/540 1991500 MW 179 540/540 1979179 540/568 1985600 MW 179 540/568 2008660 MW 256 568/596 2008700 MW 256 568/596 2010800 MW 256 568/596 2008The talk covered technology development of power plant equipment at BHEL Tiruchirapalliover the years. Of the total installed power generation capacity of India, 62 percent is contributed by BHEL power plants. Improved efficiency could be achieved byincreased operating temperature and pressure.Mr. Kumar listed the clean coal technology options as: pulverized coal combustion,fluidized bed combustion, circulating fluidized bed combustion, combined cycle gasturbine/co-generation and integrated gasification combined cycle.10

The talk emphasized the indigenous capabilities of BHEL in latest technologies forthermal power generation. After supplying more than 950 boilers, BHEL is currentlyadopting advanced steam cycle technology to improve the environmental and economicperformance of India’s power generation. BHEL, under licence from Alstom, offerssupercritical technology at unit sizes ranging from 660 MW to 1000 MW with thefollowing benefits to Indian power utilities:• Increased efficiency;• Lower fuel consumption;• Lower emission levels;• Lower operating costs; and• Greater operational flexibility.BHEL has been contracted for 17 supercritical boilers thus far, and has built up 20,000MW capacity to meet the planned capacity addition in the country. Mr. Kumar explainedthe process of supercritical technology and manufacturing methods available with BHEL.He also covered emission control methods adopted by BHEL over the years and theimprovements achieved. BHEL has circulating fluidized bed combustion (CFBC)/bubblingfluidized bed combustion (BFBC) boilers for the following alternative fuels:• High sulphur coals;• Coal washery rejects;• Waste coal from steel plants;• Lignite;• Petcoke; and• Biomass.BHEL has built a pilot 6.2 MW IGCC plant. Pilot-scale development of CO 2absorptionfrom flue gas and syngas is in progress.The presentation is given in Annex IV.Mr. D.K. Dubey, General Manager (PE-Mech), NTPC Limited, spoke on “NTPC CCTProgramme Update & Induction Strategy”. Out of the total installed capacity of 201GW, 57 per cent is from coal-fired power plants. It is estimated that by 2032, coal willcontribute about 50 per cent of installed capacity of 350-450 GW. Coal, thus, is expectedto maintain dominance in the future due to following factors:• India has the fourth largest coal reserves in the world;• India is the third largest coal producer in the world;• Coal prices are less volatile; and• Coal-based power generation technology is quite mature.NTPC’s “clean coal” focus over the years is represented in Figure 1-2.India’s Advanced Ultra-Supercritical (Adv-USC) Programme has set the following projectdevelopment approach for an 800 MWe Adv-USC demo plant:• Design criteria, standards and codes;• Testing and validation of materials and components;11

• Materials development & manufacturing;• Advanced non-destructive evaluation and on-line damage assessment;• Development of major equipment (boiler and turbine); and• Collaborations and consultancy (national and international).Figure 1-2: NTPC’s focus on clean coalNewtechnologyinductionPlant efficiencycontrolStack emissionscontrolEstablishing national normsESP design customizationStack height normsCCT technologySuitability scan37,000+MWAdv. USCprojectRenewablesIGCC technology studySupercritical technologyPlant performance optimizationCenPEEP establishedFurnace design customizationUnit parameters ramp-upFlue gasdesulphurization1975 1980 1985 1990 1995 2000 2005 2010NTPC has twin CCT strategies – one on the supercritical front and the other on IGCC.NTPC’s thrust for supercritical technology is reflected in Figure1-3.Figure 1-3: NTPC’s thrust for supercritical technology42.0%45.0% 45.0%38.6%Rihand-II38.9%Simh-II39.5%Sipat-I40.8%Barh-IIonwardsIst USCunitIst AUSCunitAUSCfleet1998 2006 2011 2013 2018 2020 2025IGCC is another CCT that offers better coal utilization because of the potential forhigher efficiency through the use of gas turbine, cheaper dedusting and desulphurizing(removing sulphur dioxide), low reactor temperatures, and low nitrogen oxides andsyngas volumes. Further improvements in gas turbine technology would boost theadoption of IGCC technology. NTPC’s IGCC programme aims to set up a 100 MWe netcapacity IGCC demo plant. The mainstay CCT ideally suited to Indian energy needsmay be a totally new combination of present approaches, according to Mr. Dubey.Mr. Dubey’s presentation is in Annex V.12

C. Session II: Opportunities and challenges in FFT deploymentMr. R.R. Sonde, Executive Vice President, Thermax Ltd., began his presentation on“Technology Development – Demonstration and Deployment Strategies” with a question– Is gasification of India’s high-ash coal a credible option? He illustrated (Figure 1-4)that the CCT pathway must be a zero emission pathway.Figure 1-4: Clean coal technology pathwayCarbon reductionCO2capturee.g. chemical scrubbingZero emissionstrajectoryIncreasedefficiencytrajectoryE.g. IGCC (45%) to IGCC (+55%) & H production2Zero emissionpathway (II)Efficiencydrivenpathway (I)Near-term Mid-term Long-termProducing clean power with coal, even today, is a challenge. Electric energy obtainedat the consumer end is less than 22 per cent of that available in coal, the source, dueto losses in the process. Mr. Sonde presented strategies to build India-centric CCT.Retrofitting the current fleet with clean technologies, choosing new CCT to achieve settarget parameters, and developing manufacturing capabilities for critical componentsin these technologies must form the three immediate goals. Continued R&D andappropriate policy and regulatory framework should support these goals. He said fluidizedbed coal gasification would be the ideal CCT for India, provided certain gaps in thetechnology are addressed, and discussed the demo unit’s technical parameters, designchallenges, and Themax’s experiences in terms of equipment selection and systemintegration.Mr. Sonde said that the challenge is to expand power generation at low cost whileenhancing India’s energy security and reducing impact on local and global environment.Critical analysis is necessary for bringing insight into the best option for India consideringthe nature of coal and climate and manufacturing capabilities. Critical aspects onIndian coal (high-ash, high-alpha quartz) need to be understood in terms of its impacton plant availability.Mr. Sonde explained three Thermax projects that are under various stages ofimplementation. Another consortium project with Thermax participation is Optimizationof Gasifier for High Ash Coal (OPTIMASH) Project for Coal Gasification Developmentunder the FP7 Programme of the European Union. A strategy as suggested in Figure1-5 to make clean coal power plants commercially competitive.Mr. Sonde’s presentation is provided in Annex VI.Mr. Praveen Gali, Head, Advanced Technology Operations, GE Energy India, spoke on“Advanced Fossil Fuel Technologies from GE perspective”. He briefly presented theactivities and expertise of GE. On the impact of fuel on power generation, he presented13

Figure 1-5: Strategy for commercially competitive coal-fired power plantsProliferation of clean coal technologies - Multiple dimensionsAcademia-Industry-GovernmentIntensive research &technology-drivenproof of conceptsIndustry-GovernmentCritical demonstrationplants for differentgeographical settings80:20 funding bygovernment andindustryNew clean coal power generation technologiesNational CleanEnergy Fundmust focuson criticaldevelopmentsR&D stageCost: Rs 180 mil/MWEarly developmentCost: Rs 120 mil/MWIndustry-GovernmentMass-scale deploymentin tandem with manufacturingcapacity creationGovernmentPolloy supportPAT, Carbon indexTargetCost: Rs 70 mil/MWthe Indian scenario on coal, oil and gas from both short-term and long-term perspectives.Fossil power generation technologies involve gas turbines, steam turbines and gasifiers.Combined cycle efficiencies of gas turbines are increasing over the years, as firingtemperatures are increased. He explained GE’s advanced gas turbine, steam turbineand combustion technologies.Mr. Gali said that CO 2reduction alternatives in the power sector involve:• Alteration of system operations;• Addition of new generation options;• Replacement or modification of existing system; and/or• Alteration of electrical consumption pattern.Modification of existing system may involve steam turbine retrofit that results in improvedefficiency, reduced CO 2and reduced cost per unit electricity produced. In conclusion,Mr. Gali said:• Technology to address climate change and efficiency improvement exists;• A portfolio of technology solutions should be pursued; and• Deployment often requires policy support, incentives and mandates.Mr. Gali’s presentation is given in Annex VII.Mr. A.K. Sinha, General Manager (PE), NTPC, presented a “SWOT Analysis of FossilFuel Technology”. He quoted IEA’s projections for 2035 as:• Rising fossil energy use will lead to irreversible and potentially catastrophic climatechange;• Global energy-related CO 2emissions peak before 2020 and then decline to 21.6Gt by 2035;• Carbon capture and storage (CCS) is a likely abatement option (efficacy yet to beproven), accounting for 18 per cent of emissions savings;14

• Coal is the most abundant fossil fuel globally, with reserves totalling 1 trillion tonnes(lasting about 150 years at the current production level);• Fossil fuel consumption subsidies worldwide amounted to US$409 billion in 2010,with subsidies to oil products representing almost half of the total;• By encouraging deployment, renewable energy subsidies can help cut greenhousegas emissions; and• Unconventional gas – shale gas and coal bed methane – is set to play an increasinglyimportant role.More than 35 per cent of new power generation during 2011-2035 will be through coalwith nearly 18 per cent of new investments, Mr. Sinha noted. He listed the major newFFTs as:• Coal-based technologies• Sub-critical;• Supercritical (up to 593 ° C);• Ultra-supercritical (600 ° C and above);• Adv. ultra-supercritical (650 ° C and above) – under developmental stage; and• IGCC – under developmental stage for Indian coals.• Gas/liquid fuel-based technologies• Open cycle gas turbine;• Combined cycle gas turbine;• Gas turbine for heat and power in distributed generation; and• Internal combustion engines.• Oil shale (15 billion tonnes), gas hydrate (1,894 trillion cubic metre, TCM), CBM(4.6 TCM) extraction technologiesAccording to Mr. Sinha, the road ahead consists of:• Need to develop low-cost and clean FFT;• R&D cost targets for CCTs shall have to be revised in view of falling renewableprices;• As gas network is required for non-power use also, gas-based generation shouldbe used in distributed framework preferably with combined heat and power (CHP),resulting in better cost competitiveness and efficiency;• Gas in distributed framework can complement renewable generation, solving theintermittency challenge of renewable generation; and• Gradual and planned weaning from fossil fuel-based generation to renewablesbasedgeneration.Mr. Sinha’s SWOT analysis of FFT is in Annex VIII.Mr. D. Thomas Gochenour, Head of Research, 55 North Capital Partners, and Consultantto United Nations Economic Commission for Europe (UNECE) made a presentationon “Mitigating Climate Change through FDI-financed Fossil Fuel Technologies”. Hepointed out that India’s 12 th FYP calls for 90 GW of new capacity to be added to itscurrent stock of 201 GW, at a cost of about US$113 billion. Although the 11 th FYPtargeted new capacity addition of 78 GW, only 55 GW could be added during the planperiod due to environmental and coal problems. In spite of coal reserves of 60 billion15

tonnes, the state-owned enterprise (SOE) Coal India Limited (CIL) is unable to reliablysupply enough coal to the power sector. NTPC, another SOE, says it may miss itstarget expansion because of coal shortages. The supply deficit has grown to over 130million tonnes of coal, which has to be imported.In 2010, coal supplied 52 per cent of all of India’s primary energy needs, and more than45 per cent of its power output. Also in 2010, India became the world’s 4 th largestemitter of CO 2, with 1,750 million tonnes, almost 9 per cent more than in 2009. To slowdown the rate of growth and reduce CO 2emissions, higher efficiency technologiesmust be rolled out in the 12 th FYP.Indian private investors are making their development plans based on imported coal. Inthis situation, the possibility of developing new power plants based on imported liquefiednatural gas (LNG), which with combined cycle gas turbine (CCGT) delivers higher than50 per cent efficiency and less than half the CO 2emissions than coal, could be explored.Reliance Power’s plans for its 2.4 GW gas-powered CCGT in Andhra Pradesh will bebased on LNG, which now powers only 9 per cent of India’s installed power capacity.Mr. Gochenour’s presentation is provided as Annex IX.Mr. G.S. Grewal from Electrical Research & Development Association (ERDA) gave apresentation on “Energy Conservation: ERDA’s Contribution & Case Studies”. TheEnergy Management Section (EMS) of ERDA undertakes the following activities.• Energy audit study;• Energy conservation measures;• Certification of energy-efficient equipment (including a nodal laboratory for refrigeratortesting for BEE Star rating check and challenge);• Research & development in the field of renewable energy; and• Seminars/workshops and in-house training programmes on energy audit and energyconservation measures.ERDA has the following expertise:• Electrical-I: Motors, pumps, air and chiller compressors, and blowers;• Electrical-II: Transformers, lighting and capacitor banks;• Thermal-I: Boilers, turbines, condensers and cooling towers;• Thermal-II: Furnaces, heaters, dryers, etc.; and• Chemical process: Specialists in iron and steel-making processes.ERDA has conducted energy audits in 129 generating units. Overall plant efficienciesof power plants audited were in the range of 26-30 per cent. By simple housekeeping,considerable energy saving could be achieved and existing coal-based plants could bemade to operate at higher efficiency that mitigate emissions.Mr. Grewal’s presentations are reproduced in Annex X.16

D. Session III: National approaches, including investmentpolicies for the deployment of advanced FFTThe session discussed national investment policies and approaches in selectedcountries in the promotion and deployment of advanced FFTs, and the sharing of potentialopportunities for international cooperation especially in the area of investment, and coproductionand sharing of electricity. The session was chaired by Dr K. Ramanathan,Head of APCTT-ESCAP. Presentations were made by:• Mr. Branko Milicevic, Economic Affairs Officer, UNECE Sustainable Energy Division,Geneva, Switzerland, supplemented by Mr. D. Thomas Gochenour, ProjectConsultant, UNECE;• Mr. Abdul Ghafar Rassin, Sector Specialist, Afghanistan Investment PromotionAgency, Kabul, Afghanistan;• Mr. Antony Qinghua Zhang, Sales and Marketing Division, EPC Division, ShanghaiElectric India Ltd., India; and• Ms. Khairullina Zhanna, Adviser to Vice-Minister of Industry and New Technologyof Kazakhstan, Astana, Kazakhstan.1. OverviewMr. Branko Milicevic presented an overview titled “Deploying Advanced FFTs: electricityand coal use trends, gaps between countries and examples of investment policies”.He presented electricity trends and the per capita of the electricity output in ninecountries (Afghanistan, China, India, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan,Ukraine and Uzbekistan) of a United Nations Development Account (UNDA) project.Trends on coal use and electricity generation in all the countries were also presentedand their direct co-relationship with growth elucidated. China showed the highest growthrate in electricity generation trends followed by India. Coal consumption by thermalpower plants was also reflected in the same proportion. Mr. Milicevic also identified thegaps in coal use efficiency in terms of its utilization by the economy. The coal intensityof the electricity sector remains a crucial issue in India, where coal is the main fuel forelectricity generation. The energy sector is treated as a ‘black box’ 3 that takes in coalto produce electricity. Coal intensity is he highest in Kazakhstan followed by India andthen China.Mr. Milicevic pointed out the substantial gaps that exist among the nine countries interms of installed capacity per capita (kWh per capita) and coal intensities (kg of coalper MWh of electricity). To close these gaps, more high-efficiency coal power plants,natural gas-fired power plants and renewable energy-based power plants need to bebuilt. However, this would require substantial investments and FDI would be one wayto do this. Mr. Milicevic stated that, based on studies carried out in Chile and NewZealand, FDI can be attracted to a liberalized market under a competitive climate.However, some conditions need to be met for this, and these include:• Strong record or regulatory impartiality;• Application and adoption of open, non-discriminatory standards to evaluate potentialFDI opportunities;3A system that is viewed solely in terms of its input, output and transfer characteristics, without any considerationof its internal workings.17

• Ensuring not just easy FDI entry but also easy FDI exits; and• Effective intellectual property protection to encourage long-term FDI and the transferof innovative technologies.The presentation of Mr. Milicevic is given as Annex XI.Mr. D. Thomas Gochenour used the example of Ukraine vs. Russia, both of whichstarted from a similar position – a centralized power sector – and had substantial coalfiredsystems as of 1992. 4 The experience since 1992 has been highly contrasted.Russia liberalized the electric power sector, installed meters in the 1990s and beganto raise power tariffs. It also decided, by 2004, that it had to privatize the power generationsector in order to raise the investment capital needed to upgrade and expand thesystem. Russia felt it needed to do this because of the age of the power plants and theexpected strong demand growth that had already started to manifest. It completed thisprocess by 2008 and attracted some US$30 billion in new investment into the powersector, with four new state-of-the-art power plants being built since then.Ukraine, on the other hand, was slow to perceive the need for upgrading its powersector, even though coal was even more strategic for it than for Russia and the plantswere of the same age as that of Russia (also in poorer state of repair because ofUkraine’s relative poverty over the past 20 years). Ukraine does not have a policy tothis day for replacing or upgrading the old capacity and still does not seem to beconvinced that such a policy is needed before 2020. The country started privatizationof the power sector six years later than Russia and completed it only in 2012. Thisprivatization drive, however, did not attract new investment capital and most of thesystem was sold to one local oligarch at deeply knocked-down prices. Ukraine hasmaintained that the populace is too poor to afford the real market price of electricity.So an elaborate (and very costly) system of subsidization and cross-subsidies existsto this day with no definite plans in place to liberalize prices 5 , as political populisminsists on low energy prices. The power stations lost vast amounts of money for thepast several years and for nearly a decade hardly any new investment has come in.2. AfghanistanMr. Abdul Ghafar Rassin made a presentation titled “Investment Opportunities andOverview of Energy Sector in Afghanistan” and talked of the strong political commitmentthat exists currently in Afghanistan to foster FDI-led private sector growth, highlightingthe legal system that has been put in place to attract private investment. Afghanistanis a fast-growing economy with constitutional commitment to private investment andmarket economy. Hundred per cent foreign ownership is allowed and no discriminationis made between foreign and domestic investments. There is no restriction on inwardand outward capital flow and on profit and other cash repatriation. Import of capitalgoods and machinery is duty free and there is only 1 per cent duty on raw and intermediatematerials. He also highlighted financial incentives that an investor would receiveand pointed out the positive features of investing in Afghanistan. From an energyperspective these include: rapid economic growth and increasing demand for energy,4Russia has converted more of its power plants to gas-powered ones, and Ukraine hashad a large contribution from nuclear power generation.5Prices of both coal and electricity are set by the State.18

especially electricity; international partners supporting economic development; accessto regional markets; emphasis on improving physical infrastructure; and access tountapped world-class mineral resources such as oil, natural gas and coal. Total privateinvestment in Afghanistan amounts to US$8.9 billion, and FDI makes almost one-thirdof all investments. Besides energy, the other major sectors for investment are constructionand construction material, mining, services and agriculture/agro-processing.Afghanistan has three proven oil and gas basins and three potential basins. Theestimated reserves are 3.4 billion barrels of petroleum liquids, more than 450 billioncubic metres of natural gas and 443 million tonnes of high-quality coal.Only 30 per cent of all households have access to electricity and 70 per cent of theenergy demands are met through traditional biomass. Per capita annual consumptionis less than 60 kWh. Of the total installed capacity of 1,150 MW, hydropower provides52 MW, diesel generators 239.5 MW, thermal power 94 MW, small hydropower 75.14MW and renewable energy about 2 per cent. Energy imports – mainly from theneighbouring Uzbekistan, Tajikistan, Turkmenistan and Iran – amount to 465 MW or40 per cent.The power supply potential and projected demand are depicted in Figure 1-6. Afghanistanhas short-term, mid-term and long-term strategies for the electricity sector, and hasdeveloped appropriate policy framework. The short-term strategy stresses therehabilitation of the existent facilities and new power generation, mainly using generatorsets. In the medium term, the focus will be on energy trade (primarily import). Thelong-term strategy is to develop the country’s own energy resources to meet its demand,and renewable energy will be tapped to meet the demand in rural areas. The countryneeds to determine the required infrastructure for advanced FFTs for power generation.Figure 1-6: Potential supply of and projected demand for powerMW7,0006,0005,0004,0003,0002,0001,00006,200SupplyDemand3,5003,1001,7501,5001,000 1,0105202007 2008/09 2014 2020+Year3. ChinaMr. Antony Qinghua Zhang introduced the Shanghai Electric Power Generation Group(SECPG) by briefly outlining the company structure. The main products of SECPGare: 300 MW/600 MW sub-critical, supercritical and ultra-supercritical units; 1,00019

MW ultra-supercritical units; and steam/gas turbine, turbine generator and auxiliaryequipment. As of May 2011, SECPG has installed 61 units of 1,000 MW, 146 units of600 MW and 322 units of 300 MW. Mr. Zhang highlighted the technology partnershipsthat SECPG has established with renowned international firms and provided details ofthe plants that it set up in different countries, including India. He also explained theexperience of SECPG in designing and setting up 1,000 MW coal-fired ultra-supercriticalunits.4. KazakhstanMs. Khairullina Zhanna made a presentation on the coal industry of the Republic ofKazakhstan and the use of coal for electric power. Kazakhstan has coal reserves of33.6 million tonnes, which will suffice for more than 300 years at the current level ofmining. In addition, it also has 39.8 billion barrels of oil reserves, 3 trillion cubic metresof gas (natural and tail) and 1.6 million tonnes of uranium. About 65 per cent of its coaldeposits are in the central region, followed by 21 per cent in North Kazakhstan. Coalmining has gradually increased with the rising domestic consumption (Figure 1-7). In2006, 96.3 million tonnes of coal were mined, out of which 27.8 million tonnes wereexported.Figure 1-7: Mining and distribution of coalMillion tonnes140120100806040200130.452.0Mined Domestic use Export76.855.721.179.150.628.596.368.51991 1996 2001 2006Year27.8Kazakhstan has developed a programme for the period up to 2020 for ensuring sustainableand balanced growth of the economy through the effective development of theelectric power industry. The immediate tasks include: modernization and reconstructionof existing generation capacity, construction of new generation capacity, and modernizationof transmission and electric network systems; development of fuel-basedelectricity generation; improvement and development of market for electricity; involvementof renewable energy balance; and other regulatory and human resources measures.The programme also looks at the power needs up to 2030. The target indicators specifiedare: electricity production at 150.2 million kWh; coal production at 155 million tonnes;and renewable energy systems at 15 billion kWh per year.The programme projects coal supplies to power plants to touch 75 million tonnes by2030. This projection also shows that from 2012 to 2030, nearly 50 per cent of the coalproduced will be utilized for power generation. Export of high-grade coal is expected togrow to 50 million tonnes from the 34 million tonnes in 2011 (Figure 1-8).20

Figure 1-8: Projected export of coal60Million tonnes5040302010Total exportsExport: highqualitycoalExport:enriched coal02011 2015 2020Year2030During the post-presentation discussions, the following salient points emerged:• It would be useful for Afghanistan to specify its power requirements in terms ofmain grid, mini grid and off-grid categories. This would give potential investors abetter understanding of the power needs landscape.• Cross-country comparisons of coal intensities (kg of coal per MWh of electricity)and carbon emissions per unit of coal burned need to be linked to the properties ofthe coal being used.• Investments in advanced but still evolving technologies, such as IGCC, shouldperhaps be led by governments to serve as demonstration projects to attract privateinvestors. Local governments could consider providing quick access to low-costland and other tax incentives to facilitate economic viability.• Technologies such as establishing coal gasifier plants at the pithead and transportingthe gas to end-users located far away could make the logistics associatedwith moving coal to the power plants economically more attractive.• The design and development of coal-fired ultra-supercritical units pose substantialtechnological challenges if the coal has high ash content.ESession IV: Investment and financing for deployment ofadvanced fossil fuel-based power generation technologies inIndiaThe session was chaired by Mr. Kirit Parikh, former Member (Energy), PlanningCommission, Government of India. Presentations were made by the following experts:• Mr. Pradeep Chaturvedi, Consultant, APCTT-ESCAP and Vice Chairman (Energy),World Federation of Engineering Organizations;• Mr. S.V. Prasad, Vice President, Project Advisory & Structured Finance, SBI CapitalMarkets Limited; and• Mr. Shubhranshu Patnaik, Senior Director (Partner), Deloitte Touche TohmatsuIndia Private Limited.Mr. Pradeep Chaturvedi made a presentation titled “Investments for Power Generation– Baseline Study of India” based on his baseline report on FDI investments in India’spower sector (Part Two). Mr. Chaturvedi said that India’s total installed capacity (including21

the captive generation capacity) on 31 March 2012 was 231,393.90 MW. Electricitygeneration in the fiscal year 2011-12 was 876.88 billion units. The national annual percapita consumption of electricity during the same period was 813.3 kWh.The approach paper to the 12 th FYP, Mr. Chaturvedi pointed out, has focused on additionto the power generation capacity in the country during the period 2012-2017. Theexpected addition is 94,000 MW. 6 Coal- and gas-based power plants are expected toadd 63,781 MW, hydro projects 9,200 MW and nuclear power 2,800 MW. Renewableenergy sources are expected to add about 29,000 MW during the period. The powersector would require an investment of nearly Rs 13,726 billion (about US$269.80 billion),including Rs 1,351 billion (US$26.60 billion) for renewable energy during 2012-2017,and the private sector is expected to invest 50 per cent this.Automatic approval (Reserve Bank of India Rule) is provided for 100 per cent foreignequity in generation, transmission, distribution and trading of power without any uppersealing on the quantum of investment. FDI in the power sector in the fiscal year 2010-11 was US$1,252 million, making it to a cumulative of US$5,900 million since 1 April2000.The 12 th FYP Working Group has recommended funding of R&D programmes throughvarious schemes such as the National Perspective Plan (NPP) and the ResearchScheme on Power (RSoP). The financial requirement to execute such projects is Rs15 billion (US$294.87 million). A National Clean Energy Fund (NCEF) has been createdfor funding research and innovative projects in clean energy technology. The corpusunder the fund in the fiscal year 2011-12 is expected to be Rs 65 billion (US$1.28billion).CCT development is considered appropriate for the following technologies: refineryresidue-based IGCC; imported coal-based IGCC; high-efficiency CCGT; indigenouscoal-based IGCC; normal CCGT; ultra-supercritical boiler; and supercritical boiler. Thesetechnologies could result in reducing coal consumption by 122 million tonnes of oilequivalent by 2031.The major conclusions of the baseline report are:• Coal will remain an important primary source of energy;• Investment mobilization would be feasible if a GDP growth rate of 8 per cent ismaintained;• Investment in the power generation sector offers an opportunity for the business;• FDI needs to be attracted and the business needs to play an important role;• Fund support for R&D should be enhanced; and• Policy for R&D fund utilization from coal cess and other such routes needs to beestablished.In his presentation on “Financing of the Power Sector”, Mr. S.V. Prasad cited theinvolvement of SBI Capital Markets Limited (SBI Caps) with government’s variouscommittees under the Ministry of Power and the Planning Commission to advise onbroad policy issues and financing aspects of the power sector (Annex XII). SBI Caps,6See footnote 2 on page 5 regarding variation in figures.22

incorporated in 1986 as a wholly owned subsidiary of State Bank of India, has arrangedaggregate debt of Rs 1,392.7 billion (US$28 billion) for the power sector for about25,000 MW generation capacity during 2010 and 2011. It has funded projects in bothpublic and private sectors.Financial help of the off-takers is a major concern mainly due to: precarious financialhelp and negative worth of power distribution companies (Discoms); widening gapbetween average revenue realization (ARR) and average cost of supply (ACS); andestimated accumulated losses of Discoms at Rs 1,200 billion (US$23.6 billion). Fearabout the financial restructuring of many power projects owing to delays has beenanother major concern. Difficulties in timely execution are caused by issues related toland acquisition, firm power purchase agreements (PPAs)/off-take arrangement, fuelsupply and transportation arrangements, transportation network, and time taken forgovernment clearances and evacuation arrangement (which are sometimes beyondthe developer’s control).Certain constraints have surfaced in the current lending scenario: aggressive lendingto extremely selective cases; power sector lending being close to saturation; increasingdemand for higher upfront equity; significant hardening of interest rates in the pastthree years; lenders’ preference for short loan tenures, which are especially inadequatefor hydro and renewable sectors; lenders’ demand for greater recourse, other thanproject assets; and slowing down of power sector investments. In such a situation, theonly feasible way forward is to adopt measures such as: improvement in the financialperformance of Discoms; stepping up of coal mining; expediting implementation ofdedicated freight corridor; close monitoring of projects and government interventionwherever needed to sort out matters; expediting forest and environmental clearancesand coal linkages by government; and facilitation of take-out finances (proposed in thebudget for the fiscal year 2011-12).Mr. Subhranshu Patnaik’s presentation dealt with “Advanced Fossil Fuel-based PowerGeneration: Financing Challenges” (Annex XIII). Major power projects are being establishedthrough competitive bidding route, and the electricity tariff is to be decided bythe Central Electricity Regulatory Commission (CERC) and the State ElectricityRegulatory Commissions (SERCs). However, these regulatory commissions have beenhesitant to revise electricity tariffs in a timely fashion. Some of the states have notrevised tariffs for almost 7-8 years. State utility companies are dependent on subsidyfor their finances and their financial health is deteriorating because of reducing revenues.As at the end of financial year 2009-10, all state utilities together have made a loss ofabout Rs 820 billion (US$16.12 billion). The five states of Maharashtra, Madhya Pradesh,Rajasthan, Tamil Nadu and Uttar Pradesh contributed 75 per cent of the total losses inthe financial year 2009-10, while contributing only 40 per cent of the total sales. Morethan 70 per cent of the losses were financed by public sector banks. Kerala, Chattisgarhand Delhi continued to make some profits.Competition for coal assets are heating up and increasingly, the quality of such assetsavailable in the market is going down, as only the low-hanging fruits are being harvested.Banks and Infrastructure Finance Companies (IFCs) account for about 85 per cent ofthe total loans to the power sector with banks being the primary sources of funds forprivate borrowers. The total amount of loan outstanding against the power sector isestimated at Rs 6,500 billion (US$127.78 billion), with banks accounting for approximately46.1 per cent, IFCs about 38.5 per cent, and government lending through grants23

and other financial institutions – such as the Life Insurance Corporation of India (LIC)and Employees’ Provident Fund Organization (EPFO) – bearing the remaining 15.4per cent. State Electricity Boards account for 46.1 per cent of loan outstanding.Sector/environment concerns have made financiers proceed with caution: some largedevelopers have multiple projects under construction and the leverage has increased.Financiers are wary of lending further without enhancement in equity base. Powersector concerns that are under sharp focus include domestic coal shortage, worrisomestate of utility finances, continuing dip in the short-term price of electricity, and risingcommodity prices and borrowing costs with fixed price contract for sale of electricity.Financiers are therefore bound to exercise more caution, although this need not be abarrier and could help bring the focus back on improving the preparedness of projectsfor financing as well as on addressing fundamental underlying factors impacting thesector’s sustainability.Financing for advanced technologies has its own characteristic requirements, andhaving a policy road map for supporting advanced technologies is a basic requirement.The framework must have cost reduction/commercialization roadmap. Until technologytransits into being baseline, commercial finance will be difficult to harness. Governmentwill have to play a leading role to develop projects and multilateral/bilateral financialinstitutions could be tapped to part-finance such projects. In the R&D/demonstrationphase, state and central public sector units (PSUs) will have to play an important roleand provide upfront capital subsidies/grants to avoid burdening distribution utilities.Summing up the discussions, Mr. Kirit Parikh, former Member of Planning Commission,opined that the independence of the regulator is a must to attain preferable conditionsfor motivating finance from the market. The regulator should carefully device and adviceon the tariff plan so that the utilities and Discoms have appropriate operational marginsand are self-dependent. Coal imports to inland sites are a nightmare in view of thetransportation linkage from port and the transportation arrangements, and these addto the price of the coal. Trading imported coal involves transaction costs that need tobe covered. Fluctuations in the international prices of coal have also caused a majorconcern. It is essential to improve the efficiencies of indigenous coal mining and tomake major efforts in underground coal mining. It is not sufficient to focus only on coalcombustion technologies that will help reduce the emissions; the quantity of coalavailable also needs to be improved.The Integrated Energy Policy had made 122 recommendations out of which 40 havebeen implemented thus far, another 40 are in a state of possible implementation, andthere is an agreement on 20 recommendations that may be followed. However, there isno agreement among different ministries on the implementation of the remaining 22recommendations. It is for the government now to consider whether the energy policyneeds to be revisited.FSession V: Panel discussion on development of power sectorwith reference to advanced FFTsThe Session was chaired by Mr. V. Raghuraman, former Principal Adviser (Energy),CII. Following were the panellists:24

• Mr. Pradeep Chaturvedi, Consultant, APCTT-ESCAP, and Vice-Chairman (Energy),World Federation of Engineering Organization;• Mr. J.K. Mehta, Regional Manager, World Energy Council;• Prof. S.S. Murthy, Consultant, APCTT-ESCAP, and Professor, Electrical EngineeringDepartment, IIT Delhi; and• Mr. Shekhar Kumar, Assistant Director, CPRI.Mr. V. Raghuraman described that investment needs for the power sector in the 12 thFYP is estimated at US$265 billion to add 90,000 MW of new capacity along withattendant transmission and distribution facilities. 7 Mobilizing funds of this magnitudewould require:• Timely revision of tariffs by states to make Discoms viable and bankable;• Effective linkages of coal and gas for existing capacity and likely additions, andfacilitating PPAs to enable banks to make provision to lend to the sector;• Increased production by CIL on its own or through joint ventures, and ensuring thatcaptive coal mine development issues are resolved;• Resolving the current imbroglio on imported coal prices being not a ‘pass through’for tariff considerations;• Building 100 km railway corridors in Odisha, Chattisgarh and Jharkhand to movecoal freely from pithead to railhead;• Fixing price for a blend of local coal and 15 per cent imported coal to insulateconsumers from tariff shocks;• Overcoming the fear on the part of private investors about non-performing assets(NPAs) through rational changes in NPA norms; and• Removing major irritants to FDI such as retrospective punitive measures.Technology development will need to consider the following:• Clean Energy Fund accumulated with a cess of Rs 50 per tonne of coal should beused for flagship R&D programmes and demonstration projects;• Like the BHEL/NTPC/IGCAR consortia development project on ultra-supercriticaltechnology, consortia could be developed for using CFBC technologies for washerymiddling, washability and blending of coals, IGCC etc., and the involvement ofacademics needs to be encouraged;• Renewable technologies such as advanced solar photovoltaic material, solar thermal,biofuels and low-speed wind generators need development;• Dissemination of information among the public on the role of technologies to shiftto a low-carbon economy is essential; and• Energy efficiency efforts – such as energy labelling, Perform, Achieve and Trade(PAT) scheme, Energy Conservation Building Code and BEE’s fuel efficiency normsfor cars – need further support, notably the PAT scheme that will give a fillip torenovation/modernization programme of thermal power stations and acceleratephasing out of inefficient units.Mr. Pradeep Chaturvedi focused on the need for planned development of the powersector by creating a special purpose vehicle to facilitate all clearances before theprojects are tendered out. While there is an urgent need to move over to supercritical7See footnote 2 on page 5 regarding variation in figures.25

and higher efficiency power generation technologies, it is also necessary to retrofitand improve efficiencies of the existing power plants. Supercritical technology willyield better results, but that will be time-consuming and has many parameters like theloading conditions of the plant that will have a bearing on performance efficiency. Newtechnologies have R&D and deployment phases, which require funding. Such fundsneed to come from the government, the public sector and the private sector. Multilateraland bilateral agencies will play an important role in technology development anddeployment and that role should be clearly defined in the government’s policy framework.New capacities for manufacturing supercritical power plants have already put greatpressure on many private companies and commercial banks. There is an urgent needto follow a planned pattern for growth of the power sector.Investments in power generation provide an opportunity for the business, provided anappropriate policy framework and administrative practices are adopted to attract privateand foreign investments. Laying down standards, conducting verification of audits onperformance and ensuring technology transfers from major equipment suppliers willcreate an environment conducive to speedy growth. There are enough opportunities forFDI in India’s power sector. In parallel to an expectation of higher FDI, it will be necessaryfor the power sector to strengthen domestic commercial markets and move towards ascenario where larger capital equities are put in by the developers and the rate ofinterest for accessing funds is higher than at present.Mr. J.K. Mehta said that fossil fuels have supplied nearly all of the world’s commercialenergy supply for nearly a century, and still provide about 85 per cent. Fossil fuels arepredicted to continue to supply around 80 per cent of the energy supply by 2030 andnearly 60 per cent in 2050.The world’s energy system is huge. The introduction of new technology and systemson an annual basis can only incrementally change the entire system. Changes inenergy sources and utilization technology take 25 to 50 years of penetration to changethe entire system.In 1999, the World Energy Council (WEC) created the Cleaner Fossil Fuel Systems(CFFS) Committee to discuss and promote knowledge worldwide about the research,development, demonstration and deployment of cleaner fossil fuel systems to meetglobal energy needs. Global energy use is projected to increase by 50 per cent betweennow and 2030. Fossil fuels are critical to meeting global economic development andenergy security needs. Both production and consumption of all forms of fossil fuels aretipped to increase to meet the growing needs.The aim of the WEC Committee on CFFS is to ensure that a broad range of stakeholdersappreciate the great potential of these systems to ensure the sustainable use of fossilfuels. To achieve this mission, the Committee:• Provides a forum for energy experts, decision makers and consumers to discussthe role of cleaner FFTs;• Exchanges information, creates networks, elaborates proposals and introducesrecommendations for the worldwide deployment of cleaner FFTs; and• Addresses barriers and critical issues that may hamper the advancement of cleanerFFTs and encourages governments, investors and financial institutions to proactivelydeploy innovative and clean FFTs.26

There is a need for an integrated approach to the deployment of new FFTs along withincreased coordination among the ministries and departments concerned, collaborativeR&D efforts by manufacturers and utilities with improved industry-academic cooperation,and predictable and stable policies with a longer-term perspective and a holistic viewof all issues involved.Prof. S.S. Murthy said that India has a considerable R&D infrastructure in terms oflaboratories, human resource and facilities. Academia, government R&D institutionsand multinational R&D institutions form the backbone of R&D in India. Proper networkingand planned development of technology missions are necessary to take advantage ofthe existing facilities.The increase in energy demand influences the scale and unit size of power generationtechnologies. The relative success of increasing energy efficiency dramatically affectsthe rate of demand growth and hence the need for technologies that are more suitablefor generation expansion. Such a strategy is important for low-carbon emission powergeneration technology because it provides a window of additional time and opportunityfor emerging technologies to mature and become more cost-competitive. In addition topromising initiatives that apply essentially to all low-carbon emission technologies,each technology has its own features limiting the rate of commercial deployment.Some technologies require substantial continued development or fundamental innovation,despite being on a fast development track already, to reduce costs or mitigateperformance risks and compete with traditional options.India had an early opportunity in the 1990s to go in for large-scale supercriticaltechnology, but that was missed. As a follow-up of recommendations of the IntegratedEnergy Policy, the government has put carbon cess on coal and raised Rs 65 billion(US$1.28 billion) by 31 March 2012. Similarly, other funds have also been created topromote R&D in the energy sector. It is necessary to set up a separate organization/authority to coordinate all funds and activities, lay down policies and take follow-upaction on implementation.Mr. Shekhar Kumar said that the high ash content of domestic coal is a major concern.In case of washed coal, the moisture content of coal has to be closely monitored.CPRI has conducted audit of a number of power plants and concluded that lack ofquality assurance in coal supply is a major hurdle. Energy audit of power plants needsto be conducted on a regular basis to ensure performance of thermal power plants.G Valedictory sessionAt the valedictory session, Prof. S.S. Murthy and Mr. Pradeep Chaturvedi summarisedthe proceedings and discussions at the “Workshop on Advances in Fossil FuelTechnologies and Investments for Power Generation in India”. Climate change mitigationwill require decarbonising the global economy through the promotion of cleaner advancedenergy technologies while steadily increasing efficiency in the usage of fossil fuels inelectricity generation. Inter-governmental consultations at the 15 th Session of theCommission on Sustainable Development (CSD-15) have shown that despite the driveto adopt renewable energy technologies, fossil fuels will continue to be the largestenergy source in many developing countries in the coming decades. Simultaneously,countries have also emphasised the importance of developing and deploying advanced27

energy technologies, which can enable the use of fossil energy resources, in particularcoal, for electricity generation in a manner that is compatible with climate changemitigation. In this context, a major challenge is to find ways to attract investmentsneeded for the deployment of advanced FFTs so that the shift to a low-carbon economycan be achieved through the transition to a more efficient electricity sector.In his valedictory address, Mr. R.V. Shahi, former Secretary, Ministry of Power,Government of India, emphasised that renewables cannot be the only solution forIndia’s growing power sector needs. The megawatt installed capacity of conventionalsources and of renewable sources differ in terms of the energy supply. Mostly, therenewable sources supply about 25 per cent of the energy for same megawatt installedcapacity.Coal will continue to be the major resource for electricity generation in India. Unfortunately,the quality of coal in India is very poor and its availability too is an issue. The countryneeds to find solutions to these problems.The heat rate for sub-critical and supercritical power plants differ but they also varywith the loading conditions of the power plant, and the advantage gained in supercriticalmay not be very pronounced in India’s operational conditions. Even when supercriticaltechnology is used, almost 60 per cent of the energy is being wasted. The challengefor the technologists is to find solutions for using the total energy content of coal.There are three key issues in India’s power sector development: we do not have thetechnology; we do not know to use the technology; and we are not allowed to use thetechnology. Looking to the West for technology will not bring a solution; instead majorcompanies like CIL, BHEL and NTPC should jointly take up the challenge and findsolutions.India has been criticised for slippages in installation of electricity generation capacity.It should be noted that despite the coal production remaining stagnant and fuel linkagesnot established, India could still add over 54,000 MW during the 11 th FYP.R&D funds have been created from cess on coal production and import. There isDeforestation Funds of Rs 150 billion (US$2.95 billion) and Transmission ConstraintFund of Rs 12 billion (US$235.90 million) raised for developing climate-friendlytechnologies. However, the utilization of these funds has still not been structured.Therefore, there is an urgent need for creating a policy framework to put all these fundsat one place and utilize them appropriately.While financing is always a challenge, it will never be a constraint in the growth ofIndia’s power sector if the country is able to fix technological, administrative and socialissues associated with this sector.Mr. Shahi said the current Workshop has given greater insight into the power sectorissues that need to be addressed and hoped that the baseline study being conductedby APCTT-ESCAP would effectively bring together all the issues involved.28

IVCONCLUSIONSAfter discussions on the advances in FFTs and the investment requirements for powergeneration in India, the experts at the Workshop reached the following major conclusions:• Coal will remain the primary source for power generation in several countriesincluding India. Low-carbon technologies and carbon capture and storage wouldbe the key enabling technologies to address carbon emissions from the continueduse of fossil fuels. Coal mining, washing and transportation need to be in focus.• Technological advancements on coal combustion have made impressive stridesand reflect the possibility of high-efficiency supercritical, ultra-supercritical andadvanced supercritical power plants to be in operation in India based on localmanufacturing capabilities.• Large capacities for local manufacturing of power plants have been created byBHEL, Larsen & Toubro/Mitsubishi, BGR Energy Systems/Hitachi, JSW Energy/Toshiba, Bharat Forge/Alstom, and Thermax/Babcock and Wilcox. These capacitieswere created in India based on the government’s projected targets. On the otherhand, the customs duty concessions for equipment for large power plants and thehigher excise duty in India have adversely affected local manufacturing capacities.• R&D in the power sector is being promoted. The government has created a specialfund by putting a carbon tax on total coal supply from India and abroad, whichstood at Rs 65 billion (US$1.28 billion) on 31 March 2012. However, the lack ofproper policy for the utilization of the funds has hampered their appropriatedeployment for low-carbon technologies. Besides establishing a policy framework,the government also needs to create a separate authority for the utilization ofthese funds. Promotion of venture capital funds that take equity risk could contributeto successful commercialization of innovations.• Investment mobilization should be feasible. An economy growing at a rapid rateshould have little difficulty in mobilizing the needed resources, particularly throughPPP. The main challenge appears to be to create efficient and financially viableenergy sub-sectors so that the investors have the incentive to invest in a competitiveenvironment where the interests of both investors and consumers are protected.• Investment in the power generation sector is an opportunity for business to grow.The Expert Committee on Integrated Energy Policy in India, in its report of 2006,projected that the electricity generation, transmission and distribution sector alonewill require an investment of more than US$1 trillion. The Working Group on Powerfor the 12 th FYP has projected an investment requirement of more than Rs 13trillion (US$256 billion), with more than 28 per cent only for the coal-based powergeneration capacity creation.• The private sector is expected to meet 50 per cent of the targets for the 12 th FYP.That is, an investment of almost US$130 billion is expected from the private sector,including both domestic and foreign companies. This total investment could alsocome through the FDI route.• The Working Group on Power also studied various options for equity, debt,multilateral/bilateral funding and external commercial borrowing, and observed thatthere is likely to be an equity shortfall of Rs 903 billion (US$17.8 billion) and debtshortfall of Rs 974 billion (US$19.2 billion). Thus, an anticipated shortfall of Rs1,877 billion (US$37 billion) has been projected, which is an opportunity for foreigninstitutions and direct investors to be a part of the growth of India’s power sector.29

• Such massive financial inputs can only be arranged through a new global financingregime based on the collaborative efforts of governments, industry, multilateralfinancing agencies, foreign institutional investors, foreign direct investors andexternal commercial borrowers, as well as domestic banks and financial institutions.This global regime has to be created strategically so as to indicate a win-winsituation for all involved.• Business will play an important role in the future. The private sector is expected totake on itself the responsibility to establish 50 per cent of the power generationand transmission capacity and has to bring equity from its own resources. Thebusiness will require greater certainty of cover for risk and liability associated withmaking commercial investments in zero- and low-emission technologies. Anunderstanding of the constraints that will apply to GHG emissions in the future isfundamental to estimating future demand for investment for zero- and low-emissiontechnologies.BIBLIOGRAPHYCentral Electricity Authority (CEA), 2012. National Electricity Plan, Volume 1,Generation. CEA, Ministry of Power, Government of India. Available at http://www.cea.nic.in/reports/powersystems/nep2012/generation_12.pdf.Cuisik, D. and ClimateWire, 2012. “Asian demand forecasts boom for coal”, ScientificAmerican, 14 May 2012. Available at http://www.scientificamerican.com/article.cfm?id=asian-demand-forecasts-boom-for-coal.International Energy Agency (IEA), 2010. World Energy Outlook 2010. IEA, Paris,France. Available at http://www.iea.org/publications/freepublications/publication/weo2010.pdf.International Energy Agency (IEA), 2011. CO 2Emissions from Fuel Combustion:Highlights. IEA, Paris, France. Available at http://www.iea.org/co2highlights/co2highlights.pdf.Ministry of Power, Government of India, 2012. Report of the Working Group on Powerfor Twelfth Plan (2012-17). Available at http:// www.planningcommission.nic.in.Press Information Bureau (PIB), Government of India, 2012. Press release on “Percapita power consumption”, 18 May 2012. Available at http://pib.nic.in/newsite/erelease.aspx?relid=84206.Planning Commission, Government of India, 2006. Integrated Energy Policy: Report ofthe Expert Committee. Available at http:// www.planningcommission.nic.in.Planning Commission, Government of India, 2011. Faster, Sustainable and MoreInclusive Growth: An Approach to the Twelfth Five Year Plan (2012-2017). Available athttp:// www.planningcommission.nic.in.30

PART TWOBASELINE REPORTS31

BASELINE REPORT ON FOSSIL FUEL TECHNOLOGIES FOR INDIAByProf. S.S. MurthyConsultant, APCTT-ESCAP &Professor, Department of Electrical Engineering, IIT Delhi33

IBACKGROUNDA. Climate change mitigation and technology adaptation in theenergy sectorThe fight against climate change in India will take a strategic jump in the 12 th Five YearPlan (FYP) for the period 2012-2017, with the government planning to invest almost Rs2 trillion (US$39.3 billion) through eight National Missions – Solar Mission, Mission forEnergy Efficiency, Water Mission, Mission for Sustainable Habitat, Mission forSustaining the Himalayan Eco-system, Mission for Green India, Mission for SustainableAgriculture and Mission for Strategic Knowledge on Climate Change. The governmentplans to set up a dedicated structure of governance to oversee different programmesunder the 12 th FYP. The government already spends 2.8 per cent of gross domesticproduct (GDP) on programmes that bring adaptation benefits. The expert group headedby Mr. K. Kasturirangan, Member of Planning Commission, has prepared a report thatrecommends the country should commit to emission mitigation norms only afterconsultations with all relevant ministries and stakeholders. The country’s commitmentto reduce energy intensity by 20-25 per cent below 2005 levels by 2020 would incurthe expenditure of several billion dollars. The report has recommended that a nationalauthority be established for implementing mitigation activities.The Integrated Energy Policy (IEP) of Planning Commission suggests the followingsteps to reduce greenhouse gas (GHG) emissions from current levels:• Energy efficiency in all sectors;• Emphasis on mass transport;• Active policy on renewable energy;• Accelerated development of nuclear energy and hydro energy; and• R&D for climate-friendly technologies.India’s mining sector has shown particular weakness during the fiscal year 2011-12owing to a combination of weak coal output growth (negative in four months of theyear), a sharp decline in natural gas production in the KG-D6 fields and negative growthin crude oil output in the third quarter of the year. There has been improvement in coaloutput from November 2011 onwards and the electricity sector has performed well. Theinadequacy of infrastructure availability continues to act as a constraint to the expansionof economic activity across the country, particularly in the energy sector. While it islikely that the targets set for 2011-12 in the power and roads sectors may be achieved,the government must set ambitious targets in the fiscal year 2012-13 for both capacitycreation in key infrastructure areas and operational performance, especially in thecoal sector, such that an impetus is provided for the improvement of the economyduring the period, which is also the first year of the 12 th FYP.On the political front, efforts have been very limited in achieving a political consensuson climate change issues in the post-Kyoto Protocol period.34

B. General R&D climate in the countryAcademic institutions such as the Indian Institutes of Technology (IITs) and the IndianInstitute of Science (IISc), universities, R&D laboratories such as the laboratories ofthe Council of Scientific and Industrial Research (CSIR), CPRI and Energy Researchand Development Administration (ERDA), and government research organizations suchas the Bhabha Atomic Research Centre (BARC) and the Indian Space ResearchOrganization (ISRO) form the backbone of R&D in India, besides R&D by the industry.Proper networking and planning among these entities are needed for technologydevelopment missions.There has been R&D success in some strategic areas such as space, atomic energyand defence, with considerable investment and limited foreign linkages, except in satellitetechnologies. R&D in the agriculture and dairy sectors that ushered in the ‘GreenRevolution’ 8 and the ‘White Revolution’ 9 are success stories.R&D centres of multinational companies such as General Electric, Texas Instrumentsand National Instruments located in India are successful in developing globallymarketable technologies for parent organizations.With proper planning, support and networking, India has potential to produce state-ofthe-arttechnologies to bridge the technology gaps in fossil fuel technologies (FFTs).IITECHNOLOGY NEEDS ASSESSMENTAccording to the International Energy Agency (IEA), in 2006, fossil fuels accounted forsome 67 per cent of the primary energy used to generate electricity. Followingcombustion, all of the carbon contained in these fossil fuels ends up as carbon dioxide(CO 2), the predominant GHG. Most of the remaining electricity is produced using eithernuclear power or hydroelectric resources without any GHG emissions. With nointernational agreement to replace the failed Kyoto Protocol on reduction of GHGemissions, electricity generation from fossil fuels is expected to grow in most developedeconomies. In the rapidly developing economies, particularly the large ones such asChina and India, the demand for electricity is expected to grow even faster than inindustrialized economies.Electricity is expected to become a more dominant energy carrier in the future, asnon-traditional uses, such as transportation, become more important. Since some 40per cent of current electricity generation uses coal as the primary energy source and20 per cent uses natural gas, there will be an urgent need to expand the use of nonfossilfuels for electricity generation in the future. Non-fossil fuels are now used for justover one-third of electricity generation, with hydroelectric power and nuclear power8Adoption of a series of measures – such as the introduction of high-yielding varieties ofseeds, increased use of fertilizers, use of chemical pesticides, expanded and improvedirrigation, land reforms, access to credit, etc. – led to vastly improved agricultural output.9‘Operation flood’, a programme started by the National Dairy Development Board in 1970,made India one of the largest milk producers in the world. A process developed for convertingbuffalo milk into milk powder provided the technological impetus required for the programme.35

each accounting for about 15 per cent of total generation. Renewable energy sourcesother than hydroelectric power currently account for only about 2 per cent of electricitygeneration, because of the high cost of generation and, in some cases, the need torestrict the amount of intermittent generation on the electricity grid. There are onlythree ways to generate electricity without producing GHG emissions: nuclear power,renewable energy or fossil fuel generation together with carbon capture and storage(CCS). The cost of new low-carbon energy generation is likely to be significantly higherthan that associated with traditional fossil fuel-based generation. In order to expandthe development of energy generation without GHG emissions, it may be necessary tointroduce carbon pricing or regulation to make low-carbon energy technologies (LCETs)more attractive commercially. LCETs have different development timescales andtechnological risks compared with traditional energy sources, and these add to theurgency to start planning for a greener future. The challenges for expanding the use oflow-carbon energy generation, both technically and financially, are huge, and this reportwill examine these issues in some detail.On 21 July 2011, India had about 180 GW 10 of installed power generating capacity,with coal-based thermal plants accounting for more than 60 per cent. India’s annualrate of growth of power capacity is among the highest in the world, but this too ismostly fossil fuel-based. In view of the growing economy and burgeoning population,the current installed capacity may have to be doubled in a decade. With nearly 40 percent of the population not having access to grid-fed electricity and an annual per capitaelectricity consumption of around 800 kWh, compared with the world average nearlyfour times this figure, a massive expansion of the power sector is a necessity forinclusive growth. With the growing concern about the impact of GHG emissions,resulting from the anticipated steep increase in fossil fuel-based power generation, onglobal warming and climate change, the time has come to evolve strategies to developand deploy new low-carbon FFTs. The status of current technologies needs to beassessed and existing gaps in their adoption identified and addressed. While cleancoal technologies are being talked about in the country for quite some time, there havebeen few takers for the field deployment of these. The factors inhibiting the adoption ofsuch technologies need to be examined in detail.The role of scientists and engineers working in the energy sector is to make ‘conventionalenergy sustainable’ and ‘renewable energy available’. Renewable energy sources suchas solar, wind and biomass are considered attractive both for grid-fed and off-gridsystems. A 20 per cent penetration of renewable energy in electricity generation globallyis considered necessary in this decade (by 2020). By its very nature, renewable energyis dispersed, distributed and random. The bulk of the global population is also distributed,which makes concentrated generation not always desirable or feasible. In India, withits large and dispersed population, the challenge is not only to produce electricitywithout upsetting the nature but also to efficiently transmit and utilize the electricitygenerated. Nearly 2 billion of the world’s population does not have access to grid-fedelectricity. In India, nearly half of its 1.2 billon population is deprived of the benefit ofelectricity despite massive rural electrification plans. In most of the so-called electrifiedvillages, the number of households with electricity is a fraction of the total and even inthese households, electricity is available only for an average of four hours per day.Energy use and its impact on the environment are among the most important technical,social and public policy issues that face mankind today. “Energy conversion chain” is10Increased to 190.59 GW as of February 2012.36

a convenient way to envisage energy use, and the impact of this use on primaryresources and the environment. Between the primary source and the ultimate end uselie a number of steps in which the primary source is converted into an energy ‘carrier’or is stored for use at a later time. There are only three primary sources of energy –fossil fuels, nuclear energy and renewable energy – and only three energy carriers ofsignificance – refined petroleum products, natural gas and electricity. 11The following can be listed as the necessary steps to tackle the energy crisis at handamplified by emission concerns:• Conservation;• Coal or gas to liquid;• Biofuels;• Offshore energy resources;• Nuclear power;• Large-scale hydro power;• Infrastructure development; and• Renewable energy resources.The Integrated Energy Policy (IEP) for India prepared by an Expert Committee of thePlanning Commission makes the following observations and recommendations on coal:• Half of India’s commercial energy consumption is from coal, and 78 per cent ofdomestic coal production is dedicated to power generation;• Because of price decontrol, the coal sector has become competitive;• The continuing shortages should be made up through stepping up domesticproduction and imports, as imported coal is more cost-competitive than importedgas;• Domestic coal production should be stepped up by allotting coal blocks to publicsector undertakings and other captive users;• Coal blocks vested with Coal India Ltd. in which production cannot be started by2016-17 should be offered by 2011-12 to other developers for production;• All coal-bearing areas should be subjected to comprehensive regional and detaileddrilling;• In situ coal gasification should be attempted for deposits at non-extractable depths;• Extracting coal-bed methane should be attempted before and during mining; and• The private sector should be involved in mining.IEP affirms that coal will continue to be central to power generation in foreseeablefuture in India. To boost energy R&D, the IEP makes the following recommendations:• Creation of a National Energy Fund (NEF) by levying a cess of 0.1 per cent of turnoveron all companies dealing with primary and secondary energy, if the company’sturnover exceeds Rs 1 billion;• Establishing technology missions for coal and renewable technologies; and11Hydrogen, often billed erroneously in the popular press as an energy source of the future,is just a potential energy carrier and must be “manufactured” using one of the three primaryenergy sources.37

• NEF to fund R&D for applications, innovative new ideas and fundamental researchby universities, institutes and individuals.While NEF with a corpus of nearly Rs 10 billion (US$196.56 million) has been created,there is no policy framework as yet for its effective utilization for driving R&D. AdvancedFFTs for sustainable power generation must be considered a priority area to gainfullyuse NEF and develop appropriate technologies for domestic applications.A wide range of LCETs for power generation have the potential to contribute significantlyto reduction of carbon emissions worldwide, but virtually all of them will require somekind of substantial intervention – fundamental innovation, technology development,demonstration at market scale, market incentive, etc. – to change the deploymentcourse that these technologies are already on throughout much of the world. That is, asubstantially increased role for LCETs will likely require substantial interventions,especially over the next two decades, if they are to make a significant difference inreduction of emissions by 2050.A number of the most promising possible initiatives to profoundly influence thedevelopment and rate of adoption of LCETs are common to all such technologies, suchas: various mechanisms that place an actual or de facto price on carbon; expansion,improved control and efficiency of electric power transmission and distribution; anddevelopment and deployment of electricity storage or other mechanisms for dealingwith generation variability common to many of the relevant emerging technologies.The rate of increase in energy demand is among the most important factors necessitatingLCETs. World Energy Outlook 2011 presents a scenario that traces an energy pathconsistent with meeting the globally agreed goal of limiting the temperature rise to2°C. By that path, 80 per cent of the total energy-related CO 2emissions permissibleby 2035 are already locked in by existing capital stock (power plants, factories, buildings,etc.). Moreover, if significant progress in reduction of global carbon emissions is notachieved by 2017, then emissions from existing facilities leave no room at all for additionalinfrastructure, unless expansion involves zero net increase in carbon emissions.The rate of increase in energy demand also influences the scale and unit size of powergeneration technologies most suitably deployed to meet that demand. Large-scale,large unit size power plants with long construction lead times are typically only practicalat high rates of demand growth with relative certainty that such demand will materialize.Smaller scale, more modular power plants with shorter lead times are generally bettermatched to meeting uncertain and lower rates of demand growth. However, with a largepopulation of smaller scale modular power plants, instead of larger central scale plants,the transmission and distribution system would need to be configured and controlledquite differently, especially if the system involves coordination of intermittent generation,such as solar or wind, and associated storage and or generators with load followingcapabilities.Finally, and perhaps most importantly, the relative success of increasing energyefficiency will dramatically affect the rate of demand growth and hence both the needfor and the type of technology most suitable for generation expansion.The reason such a strategy is important for low-carbon power generation technologiesis that it provides a window of additional time and opportunity for emerging technologies38

to mature and become more cost-competitive. This might reduce the necessity or atleast the intensity of other kinds of policy initiatives to encourage deployment. In short,by far the most promising options for both reducing carbon emissions and profoundlyaffecting the prospects of most, if not all, power generation technologies to reduceemissions are efforts to develop and deploy technologies and other means of promotingimproved energy efficiency.In addition to promising initiatives that apply to essentially all LCETs, each technologyhas its own features limiting the rate of commercial deployment. Some technologiesrequire substantial continued development or fundamental innovation, despite being ona fast development track already, to reduce cost or mitigate performance risks andcompete with traditional options. Many have geographic constraints that limit theirpotential in many parts of the world. Tragic or costly experiences with some quitemature technologies have led to deployments at much reduced rates than expected.The LCETs identified in these conditions are described below.A. Hydroelectric powerHydroelectric power generation is for the most part a mature, well-developed and widelydeployed technology. This is especially true for large-scale hydropower, although modestincreases in turbine efficiency can still yield significant increases in capacity even atexisting facilities. As the prospect for new large-scale hydropower worldwide is modestand geographically concentrated, an engineering initiative to examine the potential forcapacity expansion might be the most important and immediate step required in existinglarge-scale facilities. Small-scale hydropower has much more potential for substantiallyincreased deployment, but the obstacles are much more site-specific. It is possiblethat more standardized designs could help facilitate faster deployment, especially incountries with large sparsely populated land areas.B. Solar electric powerThe most promising and possible initiatives for accelerating the deployment of solartechnologies vary considerably by technology, especially for photovoltaics (PV) versussolar thermal or concentrating solar power (CSP), although there are some initiativesthat could dramatically affect the prospects of all solar technologies.Despite significant cost reductions in recent years, the prospects of PV hinge largelyon further cost reductions in both raw materials and fabrication of PV cells and modules.Manufacturing economies realized through automation in large capacity plants for siliconbasedPVs, utilization of lower cost commodity elements such as copper, zinc andtin, continued development of organic hybrid PV cells, etc. are useful efforts in thisdirection. The most promising initiatives that address both these cost dimensions areaccelerated R&D and building platforms for large-scale deployment. Additional factorsthat affect cost vary with location and include cost of land, options of orientation (e.g.,rooftops), level of solar insolation and perhaps the availability of power networkinterconnection and regulatory policies affecting that interconnection. Cost is the majorfactor limiting the rate of deployment of CSP technologies as well. In many respects,CSP technologies are relatively mature in terms of basic technology design andconfiguration. Although additional R&D will continue to bring costs down, increased39

economies of scale in manufacturing and installation are essential for CSP to becomewidely competitive; that is, to go beyond the most attractive solar resource locationswhere they are often cost competitive already. An R&D focus on more efficient powercycles (Brayton, organic Rankine or supercritical CO 2) could improve CSP’s prospectsas well, and continued development of low-cost reflectors and receivers holds promise.Among the most important developments needed is a highly efficient mechanism forthermal energy storage that may, at least in some situations, address the issue ofvariability of solar power.C. Geothermal and carbon sequestrationGeothermal energy and carbon sequestration have some similarities in terms ofimpediments to more widespread utilization, but the most important challenges aredifferent in each case. Power generation technologies from conventional geothermalresources dominated by steam and liquid are relatively mature. Continued technologyimprovements are possible, such as using binary power cycles and improved corrosioncontrol, but increased deployment is limited primarily by resource location and accessto the power grid.Enhanced geothermal technology or power generation from “hot dry rocks” is a mucha less mature technology but has more widespread resource potential worldwide.Enhanced geothermal technology development and experience with deployment areessential to demonstrate the technology and reduce uncertainty for application in widelydifferent geological profiles. Necessary R&D includes development of reliable analyticalmodels for predicting how fractures develop and for estimating the capacity of theresulting reservoir, as well as development of techniques for deep-hole high temperatureand pressure drilling up to a depth of 4,000 m to demonstrate the geology, temperatureand flow characteristics of the enhanced geothermal reservoirs. Some recent enhancedgeothermal system demonstrations have also experienced unexpected inducedseismicity, which may ultimately play a limiting role in siting such facilities.Carbon sequestration, while commonly applied in many oil and gas fields, remainslargely an unproven technology, at least at the scales necessary to make a sufficientdifference in carbon emissions reduction by 2050. It is essential that carbon captureand sequestration be demonstrated at large scales in power generation applicationsand in a wide variety of geologic circumstances within the next decade for it to becounted upon as a significant contributor to reduction of carbon emissions. Even if thetechnology is proved at scale, some certainty on carbon price trajectory over the next10-20 years will be essential as well to make the technology cost-effective comparedwith the alternatives. Finally, development regulations to manage identified risksassociated with long-term storage of CO 2will be just as important.D. Natural gasTechnologies for producing “unconventional gas” from tight geologic formations usinghydraulic fracturing of horizontal wells have led to a huge expansion in access tonatural gas resources in many parts of the world. If these resources can be producedat the scale that current estimates suggest, power generation using combined cyclegas turbines (CCGTs) could show great promise for reduction of expected carbon40

emissions, at least relative to single-cycle gas plants and coal-fired generation. CCGTshave relatively low capital costs, can be rapidly constructed and can cope with rapidchanges in demand relatively easily. These attributes make them very attractive optionsof power systems in both base load and cycling applications. With extension of pipelinesfor the transmission of natural gas, power plants could be sited much more flexiblythan other options; for example, closer to sources of cooling water. Natural gas turbinescan also be used for peak load generation and for load following where grids incorporatevariable sources such as wind and solar power. The most challenges to rapid expansionof unconventional gas resources are ensuring prudent and environmentally responsibledevelopment, besides the development of scalable infrastructure for both productionand delivery.E. Wind + biomassPower generation from wind continues to be the fastest growing renewable electricpower technology worldwide. In China alone, wind-based generation of electricityexpanded from 2 TWh in 2005 to 27 TWh in 2009 and will grow to 590 TWh by 2035,according to IEA. Growth in wind generation in Europe has been policy-driven, perhapsmost significantly by feed-in tariffs in Germany, Spain and Denmark that provideguaranteed grid access, long-term contracts for electricity production and purchaseprices based on generation cost. In the United States too, wind capacity expansionhas been policy-driven through federal and state tax credits and renewable portfoliostandards in many states. Such facilitating policies have led to the explosive expansionof wind power capacity worldwide and significant improvements in technology cost andperformance. As the penetration of wind generating capacity expands in a power systemcontrol region, integration of wind turbines into the power system would require specialattention to cope with the operating characteristics of low capacity factor and resourceintermittency. New capabilities that make it easier to integrate wind power plants intothe power system and to increase their typically low capacity factors are essential toexpanded utilization of wind power. Particularly important is the development anddeployment of controls that enable modern turbines to remain connected to the powergrid during voltage disturbances and reduce the draw on the grid’s reactive powerresources.Generation of electricity from biomass (biopower) typically falls into three categoriesbased on the biomass feedstock: wood/plant waste, municipal solid waste/landfill gas,and “other” biomass that includes agricultural by-products, biofuels and selected wasteproducts. While each type of biopower technology faces its own technical challengesfor substantial increases in deployment, one challenge common to all categories isthe competition between using biomass to generate electricity or to produce liquidtransportation fuels. In particular, conversion from raw biomass into syngas or otherfuels might render biomass more attractive for transportation applications. For example,in the United States, the Department of Energy essentially terminated its biopowerprogrammes in favour of biofuels for transportation following legislative requirements togreatly expand the use of biofuels in transportation. In addition, currently, the longtermpotential of biomass is limited by the low conversion efficiency of the photosynthesisprocess. As a result, biopower faces two classes of challenges: (1) technical challenges,which can likely be addressed by aggressive research, development and demonstration;and (2) policy/economic challenges that could be addressed by incentive/disincentiveand regulation.41

F. CoalCoal dominated the incremental growth in world primary energy demand and accountedfor 40 per cent of total worldwide electricity generation in 2010 and over half of electricitygeneration in countries that are not part of the Organization for Economic Cooperationand Development (OECD). With weak controls on carbon emissions, coal continuesto be the dominant fuel. The future of coal worldwide will likely be principally policydriven.With some mechanism for controlling carbon emissions, the continuing expansionof coal use will hinge on the degree of government intervention, although IEAprojects that even with substantial controls in non-OECD Asia, especially China andIndia, coal will remain the dominant fuel. Under such circumstances, the stakes arevery high to reducing emissions from coal-fired electricity generation by using emergingtechnologies, such as IGCC technology, CCS, and policy instruments that place anactual or de facto price on carbon.G. Nuclear powerFollowing the March 2011 accident at the Fukushima Daiichi nuclear power plant inJapan, a number of governments are revisiting plans for nuclear power expansion,such as: the early retirement of nuclear plants in Germany; the cancellation of plantlife extension projects in Switzerland; the decommissioning of plants in Japan; anddelays of projected massive expansion of nuclear capacity in China. Nonetheless,nuclear power is a mature and widely deployed technology. It forms a significant partof power generation and a large fraction of carbon-free power generation around theworld. Many developing nations have expressed keen interest in nuclear power.A number of significant challenges stand in the way of substantial increases in nucleargeneration, including high cost and large capital investment requirements relative toother options, besides public concerns worldwide regarding nuclear waste, proliferationof weapons-grade material and plant safety, especially following the Fukushima accident.In highly industrialized countries where public concerns are limiting the rate of nuclearpower expansion, resolution of those concerns within the next decade is essential ifnuclear power is to play an important role by 2035. For example, a 2009 study by theUnited States National Academies concluded that sufficient reduction in cost anddemonstration that evolutionary nuclear plants are commercially viable can be achievedby construction of a suite of about five plants over the next decade. The report alsoconcluded that failure to demonstrate the viability of nuclear power during the nextdecade in the United States would greatly restrict options to reduce the nation’s electricitysector’s CO 2emissions over succeeding decades through 2020. Another importantpossibility is the demonstration of small-scale modular nuclear reactors, which respondsto arguably the most problematic feature of traditional nuclear plants – very large capitalrequirement, which poses an asset concentration risk to many utility systems, that is,potential failure of a single plant posing a substantial financial and operations risk.IIIPROGRAMMES AND POLICIES TO ENCOURAGE LCETAs already mentioned, India has eight National Missions to mitigate climate changethat encourages LCETs. There are several ministries handling energy sector – Power,Renewable Energy, Coal, Oil, Atomic Energy, Environment & Forests, Transport, etc.42

The Ministry of Power (MoP), which is a direct stakeholder with a focus on electricity,has under it units such as Central Electricity Authority (CEA), Central Power ResearchInstitute (CPRI), Bureau of Energy Efficiency (BEE), Rural Electrification CorporationLimited (RECL), National Thermal Power Corporation (NTPC) and NHPC Limited. TheMinistry of New and Renewable Energy (MNRE), which too is a direct stakeholder inelectricity production, has units in autonomous R&D institutions such as the Centrefor Wind Energy Technology (C-WET) and the Alternate Hydro Energy Centre (AHEC).The policy document of MNRE states as follows:“Off-grid applications are major Indian renewable energy priorities. Such applicationsnot only replace fossil fuels but also make significant contribution to reduction in theirconsumption. As such, the strength and potential of renewable energy lies in its abilityto generate power in decentralized and distributed mode which has the advantages ofproduction at consumption points and does away with land and environment-relatedconcerns and problems. Accordingly, the Ministry has put in place a policy frameworkfor rapid up-scaling of off-grid programmes in an inclusive mode.”Rural electrification to meet unmet demand through renewable energy is a priority byitself. In Bihar, 150 villages have been covered in the last two years through mini gridby rice husk-based gasification systems. The Ministry has plans to cover about 10,000villages with biomass-based systems and over 1000 villages with solar power by 2022.The Ministry would like to step up renewable energy decentralized applications tosave a billion litres of diesel/furnace oil/kerosene annually after five years. Telecomtowers and industrial power generation are two areas in focus for reduction of dieselconsumption.India’s current renewable energy base is 22,233 MW and it is 11.66 per cent of thetotal installed capacity of 190.59 GW (February 2012). India stands fourth in the installedpower generation capacity using renewable energy sources. A European RenewableEnergy Council (EREC) report (March 2009) has projected that by 2050, about 69 percent of the electricity produced in India will come from renewable energy sources.‘New’ renewables – mainly wind, solar thermal energy and PV – will contribute almost40 per cent of this. The country has an estimated renewable energy potential of around88 GW from available exploitable sources, as given in Table 2-1.A. Grid-connected renewable energy systems1. Wind energyGrid-connected wind energy systems are installed in large numbers in India, a majorityof them having unit sizes of about 1 MW. All the major global players in this field havetheir presence in the country and the unit size of machines has gone up to 2.5 MW.Variable power dependant on wind speed poses challenges for designers. Wind energysystems mostly use horizontal axis turbines that drive a generator through a gearboxto feed generated power to a local 11 kV or 33 kV grid through a transformer. Initially,fixed-speed induction generators were used, but the present trend is to use variablespeedsystems employing doubly fed induction generator (DFIG) or permanent magnetsynchronous generator (PMSG). Grid interface issues have assumed importance, aspower evacuation levels are affected and mismatch or weak grids are causing reduced43

Table 2-1: Indian renewable energy at a glanceRenewable energy systems Estimated potential Installed capacity(MW) (MW, Feb. 2012)A. Grid-connectedWind 48,500 16,179.00Small hydro 15,000 3,300.13Biomass power 16,881 1,142.60Co-generation – bagasse 5,000 1,952.53Waste to energy 2,700 73.46Solar PV and thermal (per sq. km) 50 481.48Total A 88,081 23,129.20B. Off-gridWaste to energy 92.93Biomass (non-bagasse cogeneration) 347.85Biomass gasifier 148.26Aero generators/hybrid systems 1.45Solar PV (>1kW) 81.01Total B* 671.50Total (A + B) 23,800.70Note: * Watermills/micro-hydel units numbering 2,025 have not been taken into account.(Source: MNRE)energy production. There are many technology and management issues in the Indiancontext for up-scaling grid-connected wind energy to its full potential. A positive featureis a strong manufacturing base of wind equipment. Higher capacities require largerblades with taller towers along with associated material and mechanical factors. Newtechnologies on variable-speed generators involving different types of generators (DFIG,PMSG) and power electronic converters need to be researched, adapted and indigenized.A comprehensive study on relative options for such applications and the extent ofindigenization and global cooperation is indeed warranted. A study on the interfacing ofsuch wind systems with the Indian grid is another critical need. While the estimatedpotential of wind energy systems is 50 GW, assuming 2 per cent of land availability,undeveloped sites are in low wind (4-8 m/s) regimes with poor evacuation and transportinfrastructure.2. Small hydropowerSmall hydro systems have great promise in India. About 30,000 MW of the total hydrocapacity of nearly 100,000 MW may be tapped for small hydro category, which requiresminimal civil works and has little environmental impact. They are classified as mini (afew MW), micro (20 kW to 1 MW) and pico (up to 20 kW). Higher capacity systemsare grid-connected while the lower ones can be off-grid to energize local isolatedcommunities. Grid-connected systems are fairly standardized with mature deployabletechnologies and enough local industry base in terms of turbines, generators andother equipment.44

3. Bio-energyBio-energy, widely available in both rural and urban sectors, can be an attractive sourcefor electricity and heat. It has multiple variants – solid, liquid and gas – convertible toheat. In India, bio-energy is estimated to have 25,000 MW potential. Biomass powerplants account for about 1,000 MW of existing capacity. Bio-energy attracts annualinvestments of over US$40 billion, generates more than 7 billion units of electricity andcreates employment opportunities of more than 15 million work days in rural areas.Municipal solid waste (MSW), agro wastes, animal dung, forest residue, urban sewerage,bagasse, biomass and biofuels (from algae, jatropha, etc.) are some of the raw bioenergysources to be exploited. ‘Waste to Watts’ is a popular slogan that combineswaste management with power generation. Biothermal and biochemical processesare used to convert bio-energy sources to useable gas or liquid. Grid-connected systemsof unit sizes of 1 MW and above can be installed. India has the capacity and expertisefor producing the required equipment. Security of supply with price stability is crucial.Co-firing of coal-fed boilers with biomass is an option to save coal. Bagasse in sugarmills is a major source of co-generation. In view of multiple variants of bio-energy, thereare many inter-related issues to be studied. Conflicting interests of food versus energycall for judicious actions. Social forestry ‘tree to electricity’ scheme is an exciting areato be explored. Techno-economic and socially viable sources must be identified thatmay vary with local conditions. Standardization of technology and energy conversionequipment for bio-energy should be addressed.4. Solar energyIndia launched the Jawaharlal Nehru National Solar Mission in January 2010 for thedevelopment and deployment of solar energy technologies in the country. The Missionhas targeted 20,000 MW of solar power capacity (both thermal and PV) by 2022, withthe current (as of July 2011) installed capacity being 45 MW. The phased implementationhas targeted 1,000 MW by 2013. Cost and efficiency are issues that have limited thewidespread use of solar energy systems for both grid-connected and off-grid systems.Solar PV and solar thermal are the two routes. The cost of solar cells is claimed to befalling to a level of less than US$1/W. There are many technological challenges foreffective utilization of solar energy. The need for import of technology and equipment isa key concern for India, as it affects the energy security of the country. IndigenousR&D, coupled with local manufacture, is the way forward. Present penetration of solarenergy into the grid is negligible. Deployable technologies for PV panels and convertersystems to interface with the grid should be critically studied. Developing a solarenergizeddirect current (DC) micro-grid is an attractive option that eliminates invertersand alternating current (AC) grid interface problems if loads can be modified to work onDC supply.B. Off-grid renewable energy systemsTechnology requirements of grid-connected and off-grid systems using renewable energyare very different. The objective of off-grid systems is to provide quality power (constantvoltage, steady frequency, balanced and harmonics-free) to the consumer at varyingloads using available local energy sources. Each source will have distinct features onthe type of power it provides. A bio-energy-driven, governor-controlled engine will providevarying power to the load as per demand by adjusting the input fuel to the engine. It is45

a near-constant, speed-variable power arrangement. In stand-alone small hydro units(say up to 100 kW) – typically classified as micro, pico and nano hydro systems – itis apt to use uncontrolled constant power turbines with constant head and discharge.Thus, the generated power is always constant while the consumer load varies. Anautomatic load controller is needed to ensure that controllable additional load is phasedby the generator such that the total output power is constant at varying consumerloads. Wind energy, on the other hand, provides varying power as cube of wind speed.Thus, output power must always match this wind power. For this, power balancers areneeded for all wind speeds and loads through dump loads and additional source orstorage system. In solar PV systems, power output is DC and depends on lightintensity, thus needing a controller and inverter. A combination of renewable energysources in hybrid mode, which may involve storage systems like a battery, could alsobe explored.1. Bio-energyDifferent types of biofuels can be converted to liquids or gases to feed an engine todrive a generator, which in turn will energize the local load. The energy system may besimilar to the small petrol/kerosene-driven generator sets (1-10 kW) that are commonin domestic and commercial sectors. Such units are in use in ships, boats, camping,tourism, military and other stand-alone, off-grid applications. Biofuel can replace fossilfuel in these engines, with synchronous or induction generators. Power quality atgeneration, transmission and load levels should be ensured under varying magnitudeand types of loads (1-phase, 3-phase, balanced, unbalanced, linear and non-linear).While petroleum is readily available for use in engines, the user must install a systemto convert the available bio-energy source to a form compatible with the engine. Apartfrom sizing and design of the engine for a given load, its performance with biofuel mustbe assessed. Suitable electrical system – comprising the generator, control andtransmission – should be evolved. Unit sizes may vary from 5 kW to 100 kW andbeyond. It has near-constant speed prime mover with a typical speed drop of 5 percent from no load to full load via governor control. The engine operates at varying inputpower by adjusting fuel intake decided by output power. Indian R&D institutions havecarried out considerable work with great promise on energy conversion systems. Thereare some success stories such as ‘husk power’ in Bihar, where power is generatedfrom rice husk for local communities. A comprehensive list of examples of Indianexperience in bio-energy may be prepared and required support provided for promisinginventions in terms of technology transfer as well as for deployment in rural areas withutilization of local bio-energy resources.2. Small hydro energyMicro or pico hydro units in off-grid mode can be installed for local loads in remotelocations with favourable hydro potential needing minimal civil works. For off-gridapplications, uncontrolled turbine or ‘pump as turbine’ in constant power mode is moreapt since head and discharge at turbine end are constant with specific water headnaturally available in a site. Since consumer power varies randomly, surplus powershould either be used or dissipated, and that requires an electronic load controller(ELC). Self-excited induction generator (SEIG), researched in depth at the Indian Instituteof Technology (IIT) Delhi, is a good candidate for such applications, and a few SEIGunits have been installed following the study by IIT Delhi. Power in moving rivers andcanals is the other variant of hydro energy. A vertical axis Darius type turbine installed46

in such a canal will rotate at a low speed, which can be used to produce electricity.However, this demands proper conversion systems and controls to provide qualitypower to local consumers. The task ahead is to consolidate the existing technology,expertise and industry base to standardize on such off-grid hydro systems for largescaledeployment in the Himalayan region and on river basins.3. Wind energyAs already mentioned, both input wind power and output electric power vary randomlyand the challenge is to match them at all instances through a control mechanism. Inits simplest form, connected load can be varied through a switching mechanism tomatch with wind speed. It can be noted from typical wind turbine characteristics fordifferent wind speeds that for any given wind speed, there is one generator speed atwhich the extracted power has maximum value. A maximum power point tracking(MPPT) mechanism is required to take advantage of this. Turbine type, powertransmission and generator should be standardized. The main challenge is to developa suitable control mechanism for energy balance and this needs R&D efforts.4. Solar energyIndia targets 200 MW of off-grid solar energy by 2013 but has so far sanctioned projectsonly for 45 MW. Within the off-grid component, there is a separate target of covering 20million rural households with solar lighting. Similar to wind-based power, the poweroutput from a PV panel varies with the intensity and temperature of sunlight. Fromtypical volt-ampere characteristics of PV panels, the apt load for maximum power canbe determined. Here too, MPPT could be used to adjust the load with the availablemaximum solar power.IVAPPLICATION OF ADVANCED FFT FOR POWER GENERATIONA World Energy Council (WEC) document has made the following observations andsuggestions while discussing realistic energy targets for 2030 and 2050:• At present, 2 billion people do not have access to commercial energy and thisnumber will be halved by 2035;• At present, there are obstacles for transferring “energy sources from where theyare plentiful to where they are needed and converting them to sustainable stationary,electricity and transport”;• The energy sector will need an investment of US$20 trillion by 2030;• International energy trade requires new set of rules to be set to strike a compromisebetween the interests of producers and consumers;• Closer integration of regional and global energy markets is required;• A new international framework for technology transfer is needed;• There is a need to develop local skills;• A global dialogue on security of energy supply and demand needs to be initiated;and• Taxation and legal and commercial frameworks must limit investment risks andfoster realistic expectations for risk and return.47

WEC’s 2007 survey on global energy resources makes the following observations oncoal:• For 200 years, coal was the major fuel for energy production as well as input toiron and steel manufacture and fuelled the Industrial Revolution;• Coal started loosing to oil as the principal source of primary energy and wasovertaken by oil in the 1960s;• Coal remains abundant and has once again become the most rapidly growing fuelon a global basis;• At the current rate of extraction, coal may last for 150 years;• Economically recoverable coal exists in over 70 countries, spread in all regions,and amounts to 850 billion tonnes.• At the close of the 20 th century, the share of different fuels in world’s commercialenergy consumption was: oil - 39 per cent, coal - 24 per cent, natural gas - 24 percent, nuclear power - 7 per cent, hydro and other renewables - 6 per cent;• In the year 2000, the total world coal consumption was 4,740 million tonnes. Theshare of Asia-Pacific (including Japan) was 44 per cent;• China is the world’s largest consumer of coal accounting for 23 per cent of globalcoal consumption, followed by the United States with 22 per cent and India with 7per cent;• Coal consumption has shown increases in he United States, Japan and mostdeveloping nations;• Fossil fuel will continue to provide 80 per cent of primary energy;• Coal will see the largest demand among fossil fuels, with China alone showing 30per cent increase in demand;• Global coal demand will grow from 2,772 million tonnes of oil equivalent (mtoe) in2004 to 4,441 mtoe in 2030;• Developing regions of Asia, where reserves are large and cost low, will witness 86per cent increase in coal consumption; and• India’s coal consumption will grow annually by 3.3 per cent till 2030.If coal is the solution, what is the problem? The major concerns are GHG (includingCO 2) emissions and their impact on climate change, as coal is the main culprit in GHGemissions. It is possible to contain coal-generated GHG emissions by adopting advancedcoal technologies such as: coal to liquids, clean coal, and carbon capture and storage(CCS).A. Improving efficiencies in coal-based power plantsA range of advanced coal combustion technologies have been developed to improvethe efficiency of coal-fired power generation. New, more efficient coal-fired combustiontechnologies reduce emissions of CO 2, as well as pollutants such as nitrogen oxides(NOx), sulphur oxides (SOx) and particulates.1. Improving efficiency levelsImproving efficiency levels increases the amount of energy that can be extracted froma single unit of coal. Increases in the efficiency of electricity generation are essential48

in tackling climate change. A one percentage point improvement in the efficiency of aconventional pulverized coal combustion plant results in 2-3 per cent reduction inCO 2emissions. Highly efficient modern coal plants emit almost 40 per cent lessCO 2than the average coal plant currently installed.Efficiency improvements include the most cost-effective and shortest lead time actionsfor reducing emissions from coal-fired electricity. This is particularly the case indeveloping and transition economies where existing plant efficiencies are generallylow while coal usage in electricity generation is increasing.The average global efficiency of coal-fired power plants is currently 28 per cent, comparedwith 45 per cent for the most efficient plants (see Figure 2-1). A programme of repoweringexisting coal-fired plants to improve their efficiency, coupled with the installationof newer and more efficient plants, will reduce CO 2emissions significantly. Althoughthe deployment of new, highly efficient plants is subject to local constraints, such asambient environmental conditions and coal quality, deploying the most efficient plantpossible is critical to enable these plants to be retrofitted with CCS in the future.Efficient plants are a prerequisite for retrofitting with CCS because capturing, transportingand storing the plant’s CO 2will consume significant quantities of energy. Inefficientplants will undermine the capacity to deploy CCS technologies.Figure 2-1: Efficiencies of coal-fired power plants2000Sub-criticalSupercriticalUltra supercritical (IGCC)Emissions (gCO /kWh)215001000500Global average efficiencyof power plantsEfficiency of stateof-the-artpower plants025 35 45 55Efficiency (%, HHV)Note: 1% increase in efficiency = 2-3% decrease in emissionsSource: IEA "Focus on Clean Coal" (2006)Improving the efficiency of old and inefficient coal-fired plants would reduce CO 2emissionfrom coal use by almost 25 per cent, representing 6 per cent reduction in globalCO 2emission. These significant emission reductions can be achieved by replacing49

coal-fired plants aged more than 25 years and having capacity below 300 MW withlarger and significantly more efficient plants and, where technically and economicallyappropriate, replacing or re-powering larger inefficient plants with high-efficiency (morethan 40 per cent) plants. Technologies that help improve the efficiency of coal-firedpower plants are discussed below.(a) Fluidized Bed Combustion (FBC)Fluidized bed combustion (FBC) is a very flexible method of electricity production –most combustible material including coal, biomass and general waste can be burnt.FBC systems improve the environmental impact of coal-based electricity, reducingSOx and NOx emissions by 90 per cent. In fluidized bed combustion, coal is burned ina reactor that consists of a bed through which gas is fed to keep the fuel in a turbulentstate. This improves combustion, heat transfer and recovery of waste products. Thehigher heat exchanger efficiencies and better mixing of FBC systems allows them tooperate at lower temperatures than conventional pulverized coal combustion (PCC)systems. By elevating pressures within a bed, a high-pressure gas stream can beused to drive a gas turbine, generating electricity.FBC systems fit into two groups, non-pressurized and pressurized systems, and twosub-groups, circulating or bubbling fluidized bed. Non-pressurized FBC systems operateat atmospheric pressure and are the most widely applied type of FBC. They have 30-40 per cent efficiencies, similar to PCC. Pressurized FBC systems operate at elevatedpressures and produce a high-pressure gas stream that can drive a gas turbine, creatinga combined cycle system that is more than 40 per cent efficient. Bubbling FCB usesa low fluidizing velocity so that the particles are held mainly in a bed, and is generallyused with small plants offering a non-pressurized efficiency of around 30 per cent.Circulating FCB uses a higher fluidizing velocity so that the particles are constantlyheld in the flue gases, and are used for much larger plants offering efficiencies above40 per cent. The flexibility of FBC systems allows them to utilize abandoned coalwaste that previously could not be used due to its poor quality.(b) Supercritical and ultra-supercritical technologiesCurrently used sub-critical steam cycles operate well below the steam pressure of 221bar. New PCC systems that utilize supercritical and ultra-supercritical technologiesoperate at increasingly higher temperatures (600 ° C) and pressures (300 bar), andtherefore achieve higher efficiencies (45 per cent) than conventional PCC units andsignificant CO 2reductions. Supercritical steam cycle technology has been used fordecades and is becoming the system of choice for new commercial coal-fired plants inmany countries.At present R&D is under way for ultra-supercritical units that operate at even higherefficiencies, potentially up to around 50 per cent. The introduction of ultra-supercriticaltechnology has been driven over recent years in countries such as Denmark, Germanyand Japan, by the need to achieve improved plant efficiencies and reduce fuel costs.Research is focusing on the development of new steels for boiler tubes and on highalloy steels that minimize corrosion. These developments are expected to result in adramatic increase in the installation of ultra-supercritical units in the coming years.50

Advantages of supercritical plants over sub-critical plants are reduced fuel costs, 15per cent reduction on CO 2emissions and good part load efficiency. However, they are3-10 per cent costlier than sub-critical plants. Market penetration of supercriticalsystems is expected to rise from current level of 10 per cent to 50 per cent of newplants by 2020, according to Reliance Review of Energy Markets, 2002.(c) Integrated gasification combined cycle (IGCC)IGCC, a technology with several benefits, does not burn coal directly to produce steam.It uses a gasifier to convert coal (or other carbon-based materials) into synthesis gas(syngas) – a mixture of hydrogen and carbon monoxide (CO) – and uses this gas torun a gas turbine. Coal is combined with oxygen and steam in the gasifier to producesyngas, which is then cleaned to remove impurities, such as sulphur, and used in agas turbine to produce electricity. Waste heat from the gas turbine is recovered tocreate steam, which drives a secondary steam turbine to produce more electricity –hence the combined cycle system. This combination brings increased efficiency, uses30 per cent less water and reduces CO 2, NOx and SOx. By adding a ‘shift’ reaction,additional hydrogen can be produced and the CO converted to CO 2, which can then becaptured and stored. IGCC efficiencies typically reach the mid-40s, although plantdesigns offering around 50 per cent efficiencies are achievable.Reliability and availability have been challenges facing IGCC development andcommercialization. Cost has also been an issue for the wider uptake of the technology:IGCC is expensive at US$1,500/kW compared with US$750/kW for sub-critical plantand US$1,000/kW for supercritical plant. Nevertheless, recent studies in the UnitedStates by IGCC Alliance claim that the technology is competitive with reducedemissions.(d) Inter-fuel substitution – coal to liquidCoal to liquid (CTL) technology can counter petroleum-related security risks, as it canprovide ultra-clean fuels for transportation, power generation and domestic use. SouthAfrica has CTL production since 1950. The United States, China, Australia, India,Indonesia and Germany are in the race at different levels. The current status of CTL inIndia needs to be discussed to evolve suitable policy support and roadmap.(e) Clean coal technologies (CCT)An array of CCT is being developed at the global level to address environmental issues.Pollution control technologies are installed to reduce SOx, NOx and particulateemissions. Retrofit programmes for old plants can improve their performance. WECrecommends that greater deployment of such technologies be encouraged. New powerplants are being built to perform at supercritical conditions of temperature and pressure,increasing plant efficiencies to 40-50 per cent. China added 93,000 MW of coal-firedplants in 2006 with a first 1,000 MW supercritical plant. India too must phase out old,small, obsolete and inefficient plants and replace them with ones that use CCT.(f) Carbon capture and storage (CCS)CO 2is removed from flue gases and injected underground into deep saline aquifers orused for enhanced oil recovery. Pipelines are preferred for transporting CO 2for distances51

up to 1,000 km to store in onshore/offshore geological formations and coal beds thatcannot be mined. It is estimated that there is a worldwide storage capacity of around2,000 billion tonnes of CO 2. Cost may be less by 30 per cent if we take into accountclimate control strategy. CCS is presently in R&D stage, with demo projects planned.In 2009, the Australian government launched the Global CCS Institute to accelerateglobal deployment of CCS.(g) Coal mine methane (CMM)CMM is a large undeveloped resource and its use will reduce GHG emissions. China,Russia, Poland and the United States account for 77 per cent of CMM emissions.According to a 2006 report by the United States Environmental Protection Agency,methane emissions from coal mining will reach 449 million tonnes CO 2eby 2020.Currently only a fraction of CMM is recovered for heat or power production. Powerproduction from CMM has been tried in Australia, Germany, Japan, the United Kingdomand the United States. China, Poland and Ukraine are recent players with 50 projectsrunning worldwide. Motivation for CMM is the Clean Development Mechanism (CDM)defined in the Kyoto Protocol.(h) Underground coal gasification (UCG)The UCG process consists of drilling two production wells, one into the unmined coalseam for injecting the oxidants and the other to bring the gas to the surface. The coalseam, lighted through the first well, burns at temperatures above 1,200°C. Thecombustion generates CO 2, CO and hydrogen, besides minor quantities of methaneand hydrogen sulphide. As the coal depletes on burning, the oxidants are injectedunto the first well to control the burning process. UCG allows access to more of globalcoal resources. In places where mining is uneconomical, the mines could be used toproduce syngas gas through controlled gasification. This may result in an increase ofreserves by 600 billion tonnes worldwide. The United Kingdom, Russia, China, SouthAfrica and New Zealand are the countries attempting this idea.V CONCLUSIONCoal will continue to have a key role in the global energy mix, particularly in light ofChina and India using coal to power their energy requirements for economic growth.Coal provides energy security to these and other emerging economies. It is important,however, that the world attempts to reduce coal’s negative impact while retaining itsbenefits. Clean coal technologies to reduce emissions associated with coal miningand power generation are being developed and deployed around the world. Carbonemissions per kWh generated range from 230 g/kWh for sub-critical plants to lessthan 200 g/kWh for the best available supercritical plant with 45 per cent efficiency.Nevertheless, investments are needed in carbon capture and sequestration as well asother low-carbon technologies in the very near future.As mentioned previously, in India, a proposal to create a National Energy Fund as perthe Integrated Energy Policy is in place. While large public sector enterprises likeBHEL and NTPC are pursuing CCTs, R&D efforts in advanced FFTs are not structuredand no mission-oriented projects have been initiated. There is enormous potential inIndia to develop and deploy advanced technologies to improve not only the efficiency of52

existing power plants but also to build new ones using state-of-the-art technologies.The gap between benchmark technologies and local technology needs to be identified.Materials and technologies for ultra-supercritical plants need to be developed, andsome international players such as GE could play a part in this.There is a large world market for clean coal technologies. Since nearly 40 per cent ofelectricity will still be produced from coal by 2020 this poses great potential for globalsynergy. Advanced FFTs in countries such as the United States, Canada, Australia,Japan and European Union nations need to be assessed for adoption in India. With thevast experience of Indian entities such as NTPC and BHEL, India could effectivelypartner with other developing countries and emerging economies for the deployment ofnew technologies. International consortium of academies such as CAETS can play aproactive role in the development and assessment of new technologies, and internationalorganizations such as WEC and IEA could assist in the adoption of those technologies.VIBIBLIOGRAPHYAnonymous, 2012. “Climate change and renewable energy: IPCC special report onrenewable energy sources and climate change mitigation, 2011”. Akshay Urja,Renewable Energy, Ministry of New and Renewable Energy, vol. 5, issue 4, February2012.Bairiganjan, Sreyamsa and others, 2010. Power to the People: Investing in CleanEnergy for the Base of the Pyramid in India, Centre for Development Finance – WorldResources Institute, Washington D.C., United States of America.Central Electricity Authority (CEA), 2012. National Electricity Plan, Volume 1,Generation. CEA, Ministry of Power, Government of India. Available at http://www.cea.nic.in/reports/powersystems/nep2012/generation_12.pdf.Government of India, 2008. National Action Plan on Climate Change, Prime Minister’sCouncil, Government of India.International Energy Agency (IEA), 2011. World Energy Outlook 2011. IEA, Paris,France. Available at http://www.scribd.com/doc/72512781/World-Energy-Outlook-2011.Kasturirangan, K., 2011. “Science and technology as instruments of faster, sustainableand inclusive development”, 20 th Dr. Amitabha Bhattacharya Memorial Lecture, 15-18December 2011, Institution of Engineers (India), Bangalore, India.Meshram, J.R., 2011. “Biomass power in India - an overview”. Akshay Urja, Ministry ofNew and Renewable Energy, vol. 5, issue 3, December 2011.Ministry of Environment & Forests, 2009. Climate Change and India: Towards Preparationof a Comprehensive Climate Change Assessment, Ministry of Environment & Forests,Government of India.Ministry of Environment & Forests, 2010. Climate Change and India: A 4x4 Assessment,A Sectoral and Regional Analysis for 2030s, Indian Network for Climate ChangeAssessment (INCCA), Ministry of Environment & Forests, Government of India.Ministry of Environment & Forests, 2012. India: Second National Communication tothe United Nations Framework Convention on Climate Change. Ministry of Environment& Forests, Government of India.53

Nigam, Dilip, 2011. “Wind power in India”. Akshay Urja, Ministry of New and RenewableEnergy, vol. 5, issue 2, October 2011.Planning Commission, Government of India, 2006. Integrated Energy Policy: Report ofthe Expert Committee. Available at http:// www.planningcommission.nic.in.Ramachandran, A., 2011. “Technology and the challenge of sustainable development”,54 th Sir M. Visvesvaraya Memorial Lecture at The Institution of Engineers (India), 15-18December 2011, Institution of Engineers (India), Bangalore, India.Reliance Industries Limited, 2003. “Reliance Review of Energy Markets”, EnergyResearch Group, Reliance Industries Limited, India.Sonde, R.R. 2011. “Biomass resource for power generation in India”. Bioenergy India,Ministry of New and Renewable Energy, issues 9&10, July-September & October-December 2011, pp. 28-31.United States Environmental Protection Agency, 2006. Global Anthropogenic Non-CO2Greenhouse Gas Emissions: 1990 – 2020. Revised on June 2006. USEPA, WashingtonD.C., United States of America.World Energy Council, 2007. Deciding the Future: Energy Policy Scenarios to 2050.World Energy Council, London, United Kingdom.World Energy Council, 2010. Survey of Energy Resources 2010, World Energy Council,London, United Kingdom.54

BASELINE REPORT ON FOREIGN DIRECT INVESTMENTSIN THE ENERGY SECTOR OF INDIAByMr. Pradeep ChaturvediConsultant, APCTT-ESCAP &Vice-Chairman (Energy),World Federation of Engineering Organizations55

IBACKGROUNDA. India and climate changeIndia is a party to both the United Nations Framework Convention on Climate Change(UNFCCC) and the Kyoto Protocol. As a non-Annex I Party, 12 India has no bindingGHG emission commitment under the Protocol. India’s position on climate changeissues has been in accordance with the principle of ‘common but differentiatedresponsibilities and respective capabilities’, a principle that is enshrined in the UNFCCC.Till the 15 th Conference of the Parties (COP 15) (COP 15, Copenhagen, 2009), India’sstated official position was that of not accepting any kind of GHG emissions reductiontargets on the ground that:• Climate change is not taking place on account of the current level of GHG emissions,but is the result of carbon-based industrial activity that has occurred in the developedcountries over the past two centuries;• UNFCCC does not require developing countries to take on any commitment onreducing their GHG emissions; and• India’s per capita CO 2emission is currently one-twentieth that of the United Statesand around a tenth of most OECD countries.At the Copenhagen Summit, however, India voluntarily committed to reduce by 2020the carbon intensity of its economy by 20-25 per cent from the emissions level of 2005.Data for GHG emissions (including CO 2emissions) for India as reported for 2007 byIndia’s National Communication (NATCOM) project indicates that the total net GHGemissions were 1,727.71 million tones (mt) CO 2equivalent (eq.). Energy sector emitted1,100.06 mt of CO 2eq. of which 719.31 mt of CO 2eq. was emitted from electricitygeneration and 142.04 mt of CO 2eq from the transport sector. India’s per capita CO 2eq. emissions were 1.25 t in 2007, about one-third of the world average. Further, India’stotal GHG emissions were less than a quarter of the leading global emitters, Chinaand the United States, in both annual and per capita terms. Sector-wise emissiondetails are provided in Table 2-2.CEA has reported that the net electricity generation from utilities for the financial year2007-08 was 653 billion kWh and corresponding CO 2eq. emissions were 520 mt.Generation from non-utilities for 2007-08 was 90.4 billion kWh (53.5 billion kWh fromcoal, 10.7 billion kWh from diesel, 25.5 billion kWh from gas and a small component ofrenewables). This resulted in 76 mt of CO 2eq. emissions from net generation from thenon-utilities. Thus, the total power sector emissions for 2007-08 are estimated to be598 mt leading to overall power sector specific CO 2eq. emissions of 0.81 kg/kWh. Infact, the specific CO 2eq. emissions have been relatively stable during the period 2005-2009 at an average of 0.82 kg per kWh.It should be noted that the CO 2eq. emissions quoted by NATCOM in the 2007 reportfor financila year 2007-08 at 719 mt is different from the number estimated above by12UNFCCC divides countries into three main groups according to differing commitments:Annex I Parties, Annex II Parties and Non-Annex I Parties. Non-Annex I Parties are mostlydeveloping countries.56

CEA at 598 mt. This is mainly due to different methodologies adopted by CEA andNATCOM. This could be also attributed partly to the inefficiencies in the coal transportationand distribution network and likely diversion to the other sectors.Table 2-2: India’s national GHG inventories of anthropogenic emissions by sources and removal for 2007(in million tonnes)GHG source and sink categories CO 2CO 2CH 4N 2O CO 2emissions removal equivalentTotal (net) national emission 1,497.03 275.36 20.56 0.239 1,727.71All energy 992.84 4.27 0.057 1,100.06Industrial processes 405.86 0.015 0.021 412.55Agriculture 13.77 0.146 334.40Land use, land-use change and forestry 98.33 275.36 (-)177.03Waste 2.51 0.016 57.72Emissions from bunker fuels 3.45 0.00003 0.0001 3.48Note: CH 4= methane; N 2O = nitrous oxide; bunker fuels = fuels used for aviation and maritime transport.(Source: India’s Greenhouse Gas Emissions 2007, Ministry of Environment and Forests, May 2010.http://moef.nic.in/downloads/public-information/Report_INCCA.pdf)The Expert Group on Low Carbon Strategies for Inclusive Growth has projected in itsInterim Report of April 2011 that, “When the supply side possibilities are matched withthe demand side scenarios, CO 2emission in 2020 are expected to be in the range of1,263 mt of CO 2equivalent for the 8 per cent growth scenario.”The government spent 2.8 per cent of the GDP on climate change mitigation andadaptation measures in financial year 2010-11. The Working Group on Climate Changeof the 12 th Five Year Plan (2012-2017) has recommended an investment of Rs 2,000billion (US$ 9.3 billion) over the 10 year period 2012-2022. The Working Group statedthat India’s commitment at the international forums to reduce by 2020 the carbonintensity of country’s economy by 20-25 per cent from the 2005 levels would entail ahuge cost for the country.B. General investment climate1. Foreign direct investment (FDI)At the end of December 2011, there were 1,767 registered foreign institutional investors(FIIs) as compared with 1,722 on 31 March 2011. The number of registered sub-accountsalso increased to 6,278 from 5,686 during the same period. In the Indian equity market,FIIs withdrew Rs 2.13 billion (US$41.87 million) during April-December 2011, comparedwith Rs 1,101,21 billion (US$21.65 billion) investment in 2010-11. During the sameperiod in 2011-12, they invested Rs 305.90 billion (US$6.01 billion) in the debt segmentas compared with Rs 363.17 (US$7.14 billion) in 2010-11. From April to December2011, the total investment in equity and debt by FIIs stood at Rs 303.76 billion (US$5.97billion), as compared with Rs 1,474.38 billion (US$28.98 billion) in 2010-11.57

•Foreign investment comprising FDI and portfolio investment represents non-debt liabilitieswhile loans – external assistance, external commercial borrowings (ECBs) and tradecredit – and banking capital including deposits are debt liabilities. In India, FDI ispreferred over portfolio growth as the FDI growth tends to be more stable than portfolioand other forms of capital growth. Rupee denominating debt is preferred over foreigncurrency debt, and medium- and long-term debt is preferred over short-term debt.Since 2000, significant changes have been made in the FDI policy regime by thegovernment to ensure that India becomes an increasingly attractive and investor-friendlydestination.The current phase of FDI policy is characterized by negative listing, which permits FDIfreely in all sectors except a few sectors indicated through a negative list. Under thecurrent policy regime, there are three broad entry options for FDIs. In a few sectors,FDI is not permitted (negative list); in another small category of sectors, foreigninvestment is permitted only till a specified level of foreign equity participation; and thethird category, comprising all the other sectors, where foreign investment up to 100 percent of equity participation is allowed.The third category has two subsets – one consisting of sectors where automatic approvalis granted for FDI (often foreign equity participation less than 100 per cent) and theother consisting of sectors where prior approval from the Foreign Investment ApprovalBoard (FIAB) is required. FDI policy changes increasingly reflect the requirements ofindustry and are based on stakeholders’ consultation. Upfront listing of negative sectorshas helped focus on reform areas, which are reflected in buoyant FDI inflows.The cumulative amount of FDI inflows from April 2000 to December 2011 stood atUS$240.06 billion, out of which FDI equity inflows amounted to US$157.97 billion asshown in Table 2-3. FDI inflows declined globally in 2009 and 2010. While India wasable to insulate itself from the decline in global inflows in 2009-10, FDI flows moderatedin 2010-11.Table 2-3: FDI inflows into IndiaFinancial Year As per international Growth FDI equity inflows Growthpractices (US$ billion)* (US$ billion)# (per cent) (per cent)2003-04 4.32 -14 2.19 -192004-05 6.05 +40 3.22 +472005-06 8.96 +48 5.54 +722006-07 22.83 +146 12.49 +1252007-08 34.84 +53 24.58 +972008-09 (P) 41.87 +20 27.33 +112009-10 (P) 37.75 -10 25.83 -52010-11 (P) 32.90 -13 19.43 -252011-12 (April-Dec.) 35.35 24.19April 2000-Dec. 2011 240.06 157.97Notes: * As per Reserve Bank of India estimates;#As per Department of Industrial Policy & Promotion estimates.(Source: Office of the Economic Adviser, DIPP)58

For India to maintain its momentum of GDP growth, it is vital to ensure that therobustness of its FDI inflows is also maintained. FDI inflows rose to US$24.19 billionduring April-December 2011, an increase of 50.8 per cent compared with the correspondingperiod of the previous year.Policy flip-flops, combined with global risk aversion, are prompting foreign companiesto increasingly repatriate their investments out of India during the last three yearsended December 2011 – the figure that was just a few million dollars between 2000 and2008 jumped to US$3.1 billion in 2009 and further to US$10.7 billion in 2011, accordingto Nomura, a global financial power house. Although total FDI flows are still in the positiveterritory, estimated at about US$20 billion for the year 2011-12, increasing FDI debtcould turn out to be, among other issues, another drag on the strength of the rupee.2. FDI projectsIndia attracts a variety of investments from all regions of the world, but more than half(51 per cent) from the United States, Germany, the United Kingdom and France. Thetotal value of FDI was US$58,261 million in the year 2011. India is the fourth destinationcountry in terms of projects, behind the United States (first), China (second) and theUnited Kingdom (third). However, in terms of FDI value, India is the third destinationbehind China (first) and Brazil (second). FDI projects increased by 20 per cent in Indiain 2011, attracting 932 projects, which created an estimated 255,416 jobs.Ernst & Young Consulting conducted a 2012 India Attractiveness Survey, which observedthat regardless of present economic crisis, the strong increase in the number of FDIprojects in India is a clear indication that global investors view the country as aneffective investment destination. More than half of the respondents remained convincedabout India’s long-term prospects and planned to strengthen their operations in thecountry, and more than two-thirds of those interested in India were planning to implementprojects in the short term. The Survey report held that manufacturing is likely to play aleading role in India’s future growth trajectory, as the country is rapidly emerging as amanufacturing location for many foreign corporations.India’s FDI activity is specialized on large industrial and back-office operations. In2011, the country received 288 large-scale manufacturing projects, creating an estimated142,235 new jobs, mostly in the automotive, industrial equipment and metals industries.India also received 238 large back-office and business process outsourcing (BPO)projects creating 30,269 new jobs, mainly in the information technology (IT) servicesindustry.3. TechnologyThe technology sector in India has a major impact on the Indian economy. The industryhas grown from US$4 billion in 1998 to more than US$80 billion in 2011, employingdirectly and indirectly more than 10 million people. Riding on the services outsourcingway, domestic and international companies have leveraged India’s value proposition toenhance their competitiveness in the global market.The technology sector in India received US$6.2 billion through FDI in 2011. Thisinvestment has created 153 projects with an estimated 41,607 jobs in the industry.59

Five principle sectors in the IT industry, namely online businesses, IT services, ITenabled services, and software and hardware merchandise received most of theinvestments. Compelling cost advantage, coupled with available skilled workforce, hasdriven this growth.Key government initiatives – such as setting up of tax free zones, Software TechnologyParks of India (STPI) and Special Economic Zones (SEZ) – have given strong impetusto the export of IT services by exempting companies from a variety of taxes during thesetting up and the initial years of operations. India is still developing its attractivenessfor strategic operations, such as R&D centres and headquarters. In 2011, investorsonly brought 20 R&D centres to India and 13 headquarters. R&D is the most attractivestrategic function in India. However, in 2011, the country only gained 20 such projectsor 2 per cent of the total FDI projects. This is mainly because of the lack of sufficienttraining centres and vocational training courses in the country. In addition, there is aneed to make India’s current intellectual property systems more inclusive and safe,and to enable investors to access the system at low or subsidized costs.4. Three elements of concernThere are three aspects that are critical to India’s ability to attract investments into itsindustries. One is that the investors want to secure their investments in easily accessibleand predictable business climates with FDI-friendly regulatory environments. Theprospective investors also need a better business environment, with improvedinfrastructure network and better governance and transparency in system. India alsoneeds to foster an innovation-led culture that is needed to improve the quality of itslaboratories in research institutions and corporations, which would otherwise be aroadblock to developing new products in the country.IISTATUS OF ADVANCED FOSSIL FUEL-BASED ELECTRICITYGENERATIONA. Electric power sector: current statusThe status of electric power generation in the country as on 31 March 2012 in terms ofinstalled generation capacity and electricity target and achievement as reported byCEA is reflected in Tables 2-4 and 2-5:Table 2-4: Installed generation capacity (MW, as on 31.03.2012) (Utilities)All India Thermal Nuclear Hydro RES* Grand totalCoal Gas Diesel TotalCapacity 112,022.38 18,381.05 1,199.75 131,603.18 4,780.00 38,990.40 24,503.45 199,877.03Percentage 56.0 9.2 0.6 65.8 2.4 19.5 12.3 100.0Notes:RES – Renewable energy sources, includes small hydro projects, biomass gas, biomass power, urban & industrial waste power,wind energy and solar power.* Data from the Ministry of New and Renewable Energy (MNRE).(Source: Central Electricity Authority, May 2012)60

Table 2-5: Electricity generation target/achievement (2011-12) (Utilities only)Hydro Thermal Nuclear Imported* TotalTarget(Million units) 112,050.00 712,234.00 25,130.00 5,586.00 855,000.00Achievement (up to 31.03.12)(Million units) 130,511.50 708,805.94 32,286.56 5,284.51 876,888.48Percentage 116.48 99.52 128.48 94.60 102.56Note: * From BhutanSource: Central Electricity Authority, May 2012The captive generation capacity in industries having demand of 1 MW and above, gridinteractive (non-utilities) as on 31.03.2012 was 31,516.87 MW, while the total installedgeneration capacity in the country was 231393.90 MW.Electricity generation in the year 2011-12 (provisional up to 31 March 2012) was 876.88billion units as given in Table 2-5. The All India annual per capita consumption ofelectricity during the year 2010-11 was 813.3 kWh.It may be mentioned that currently, none of the coal-based thermal plants in India is ofsupercritical category.B. FDI into the power sectorAutomatic approval (Reserve Bank of India Rule) for 100 per cent foreign equity ispermitted in generation, transmission and distribution and trading in the power sectorwithout any upper sealing on the quantum of investment.The power sector was the first to be liberalized, allowing FDI in power generation sincethe mid-1990s. FDI inflow, however, picked up only during 2008-09 (US$985 million),2009-10 (US$1,437 million) and 2010-11 (US$1,252 million), taking the cumulativetotal since April 2000 to US$5,900 million.C. Regulatory environmentThe Central Electricity Regulatory Commission (CERC) is an independent statutorybody with quasi-judicial powers. It was constituted on 25 July 1998 under the ElectricityRegulatory Commission Act, 1998 and has been continued under Electricity Act, 2003.The regulatory functions of CERC include:• Tariff regulation;• Regulation of inter-state transmission of electricity;• Granting licence for inter-state transmission and inter-state trading in electricity;• Adjudication of disputes;• Specifying grid code;• Specifying and enforcing the standards with respect to quality, continuity andreliability of service by licensees; and61

• Fixing trading margin in inter-state trading of electricity, if considered necessary.CERC also has advisory functions on:• Formulation of national electricity policy and tariff policy;• Promotion of competition, efficiency and economy in the activities of the electricityindustry;• Promotion of investment in electricity industry; and• Any other matter referred to CERC by the Government of India.D. Needs assessment1. National Energy StrategyThe National Energy Strategy is based on the IEP announced in 2008. The broadvision behind IEP is to meet the demand for energy services of all sectors at competitiveprices to deliver a sustained growth rate of 8 per cent through 2031-32, and to meet thelifeline energy needs of all citizens.This calls for an approach to realizing a cost-effective energy system through thefollowing elements:• Energy markets should be competitive, wherever possible, though competitionalone has been shown to have its limitations in a number of areas of the energysector and independent regulation becomes even more critical in such instances;• Pricing and resource allocations that are determined by market forces under aneffective and credible regulatory oversight;• Transparent and targeted subsidies;• Improved efficiencies across the energy chain;• Policies that reflect externalities of energy consumption;• Policies that rely on incentives/disincentives to regulate market and consumerbehaviour;• Policies that are implementable; and• Management reforms that create accountability and incentives for efficiency.With regard to climate change concerns, the thrust has been on energy efficiencyimprovement in all sectors, on mass transport and on accelerated development ofnuclear and hydro electricity. The most important among the strategy recommendationsincluded technology mission for clean coal technologies and focus on R&D on variousclimate-friendly technologies. The IEP framework has been developed over a 25-yeartime horizon (2006-07 to 2031-32). This is spread over to five FYP periods and stronglyrecommends the low-carbon route: the thrust during the 12 th FYP period and subsequentyears is on the low-carbon route.Thermal power generation options under low-carbon strategiesMr. Kirit Parikh, Chairman, Expert Committee on Integrated Energy Policy during 2005-06, subsequently chaired the Expert Group on Low Carbon Strategies for Inclusive62

Growth, which submitted its interim report in April 2011. The report – which examinedpower, transport, industry, building and forestry sectors – considered supply options inand emissions from the power sector. On thermal power generation through the lowcarbonroute, the report made several important observations and suggestions.On the supply side, coal is presently the least-cost option and will continue to be themain power generation source by 2020 as well. To ensure energy security, the presentcoal-based capacity needs to be expanded to 230 GW by 2020. This will require anannual coal supply of at least 1,000 million tonnes, two-and-a-half times the presentsupply. Domestic mining will have to increase considerably and/or imports will have tomeet a sizable fraction of coal demand.As of May 2010, all the coal-based plants were of sub-critical technology. The totalgeneration from coal and lignite power plants was 461 billion kWh (at bus-bar) during2008-09, leading to 508 million tonnes of CO 2emissions. Thus, the specific CO 2emissionof all existing coal and lignite power plants is 1.1 kg per net kWh for this period. Someof the old and less efficient coal power plants emit as high as 2 kg of CO 2per kWh.However, the new 500 MW sub-critical power plants have net heat rates of 2,450 kCal/kWh leading to specific emission of 0.93 kg per net kWh.There are several technology options to improve combustion efficiency and lower CO 2emissions. Supercritical plants operate at higher temperatures leading to a net heatrate of 2,235 kCal/kWh and specific emissions of 0.83 kg per net kWh. The technologyis available globally and the cost is almost the same as sub-critical plants. Accordingto recent guidelines and projections, supercritical power plants would account for 60per cent of thermal capacity to be built in the 12 th FYP and 100 per cent in the 13 th FYP.Supercritical units could thus contribute up to 50 GW by 2020.Ultra-supercritical power plants operate at still higher temperatures leading to a netheat rate of 1,986 kCal/kWh and specific CO 2emissions of 0.74 kg per kWh. However,the technology is still not ready for large-scale adoption. The high temperatures imposestringent materials challenges. It is unlikely that such plants would be installed before2020. IGCC is another promising technology that can attain higher efficiencies andlower CO 2emissions. It can also produce synthetic chemical fuels such as diesel andhydrogen. However, initial estimates show very high auxiliary power consumption whenusing Indian coal with high ash content and hence, the overall efficiency is comparableto sub-critical units at almost double the cost. While research in IGCC should bepursued, commercial deployment of the technology is unlikely before 2020.CCS is being considered in several countries with substantial coal-based powergeneration. However, there are several technical, economic and regulatory challengesin its role as a commercially viable low-carbon option. The government should watchthe development of this technology in the United States and the European Union,where a number of commercial plants are under implementation/consideration. It couldalso undertake a few studies to examine the issues of potential and feasibility, bothtechnical and economic.Gas-based power is an attractive power generation option, as the capital cost is lowand the CO 2emissions are only 0.4 kg per kWh. However, the cost of gas is usuallymuch more than the cost of coal to generate one unit of electricity. Besides, given thelimited gas reserves and also its use in fertilizer production and other sectors, there is63

considerable uncertainty about the availability of gas for power. It is, therefore, unlikelythat gas can contribute a large share in electricity generation, even assuming that gascapacity could grow to 25,000 MW by 2020.2. Planned activities and changesThe extent of the increase in energy requirement over the 12 th FYP (2012-2017) dependson the elasticity of per capita energy demand with respect to GDP, which has beenfalling over time and was 0.82 during the period 1990-91 to 2003-04. Allowing for somefurther decline in the elasticity, the GDP growth rate of 9 per cent per year projectedover the 12 th FYP will require energy supply to grow at around 6.5 per cent per year.The ability to meet this energy demand depends on expansion of domestic productionin critical energy sub-sectors – notably petroleum, gas and coal – and meeting thebalance requirement through imports.Primary energy importThe import requirement of oil is expected to increase from 76 per cent in 2010-11 to 80per cent in 2016-17. In the same period import of natural gas is expected to increasefrom 19 per cent to 28.4 per cent, while coal import will go up from 19.8 per cent toabout 22.1 per cent. In quantum terms, this means that coal import would increasefrom about 100 mt in 2011-12 to about 200 mt in 2016-17, i.e. a doubling of importquantity. The estimated coal requirement is 842 mt at the end of the 12 th FYP (2017)and 1,040 mt at the end of the 13 th FYP (2022).Power generation capacity additionThe approach paper to the 12 th FYP has focused on addition to the power generationcapacity in the country during the period 2012-2017. The fast growing Indian powersector is expected to add 94,000 MW during that period. New capacity addition will be75,785 MW and the rest will be spill-over from the 11 th FYP. Coal- and gas-based powerplants are expected to add 63,781 MW, while hydro projects would add 9,200 MW andnuclear projects 2,800 MW. Coal-based thermal power plants would account for 62,695MW of which 23,940 MW (or 38 per cent) would be of supercritical category. Thiswould be about 30 per cent of the total capacity to be created in the 12 th FYP period.Renewable energy sources are expected to add about 29,000 MW during the sameperiod.Moving five years further, a power capacity addition of 123,900 MW (including renewables)is expected during the 13 th FYP period (2017-2022). Installed capacity additionin coal-based thermal power would be 63,400 MW, all based on supercritical powerplants and about 50 per cent of the total capacity addition during the period. Theexpectation is that by 2022, the installed electricity generation capacity will be about350,000 MW.Human resources requirementThis massive capacity addition would require additional human resources, projected at407,670 workers, of which 312,000 would be technical workers and the remainingwould be non-technical workers. The total workforce by the end of the 12 th FYP (2017)would be more than 1,425,000 people with technical personnel accounting for 76 per cent.64

3. Future challengesThe future challenge is mainly on the technological front where the continuous supplyof power will have to be ensured and safety of the means of power production will haveto be fully explained to and accepted by the public. Price too is a concern, but not amajor one at present. Financing of the sector is not a major issue as India has a highcredit standing. But, recent downgrading of India’s credit rating has resulted in escalationof cost of such finance from external commercial sources. The turbulence in globaleconomy has pressurized financing agencies to first finance their own economies.Weakening of Indian rupee against US dollar would add further to the cost of commercialborrowing in rupee terms. International aid is declining because there is no surpluswith developed countries, and now India is often bracketed with developed countries.The two indigenously available energy sources – nuclear and renewables – cancontribute significantly. In the case of nuclear power, high safety standards have to beensured and the public needs to be assured about the reliability of those safety standards.In the case of renewables, storage capacity has to be developed so as to ensurecontinuous supply of electricity.4. Clean coal technologiesIndia has focused on both coal production technologies and coal combustiontechnologies to reduce carbon intensity of power generation.Coal production technologiesTechnology development in coal mining is mainly development of underground miningthat too at depth of over 300 m. This is a long-term process that requires explorationas well as mining equipment development. Given the importance of expanding supplyand the indifferent performance of Coal India Limited in increasing production, there isa need for inducting private sector investment in coal.The Central Mine Planning and Design Institute Ltd. (CMPDIL) needs to be strengthenedfor it to make greater R&D efforts and scale up its efforts to improve coal extractiontechnologies and methods, especially beyond 300 m depth.The second challenge is to establish more coal washeries to expand washery capacity.It would improve the quality for coal and efficiency of the consuming industries. Therehas been a very marginal increase in the coal washery capacity over the years. Onereason for this is that the system of coal pricing does not contain a sufficient premiumfor higher quality coal. Experts believe that India will need a coal washing facility of 250mt by 2016-17, entailing an investment of more than US$1,500 million.Clean coal combustion technologiesThe Office of the Principal Scientific Advisor to the Government of India sponsored astudy on “National Energy Map: Technology Vision 2030” in 2006. The study hasprojected that the preferred low-carbon power generation technologies, in order ofeconomic merit, are:65

• Large hydropower;• Refinery residue-based IGCC;• Imported coal-based IGCC;• High-efficiency CCG;• Indigenous coal-based IGCC;• Normal CCGT;• Ultra-supercritical boiler; and• Supercritical boiler.The above-mentioned technologies could result in reducing coal consumption by 122mt of oil equivalent by 2031.As part of the National Mission for Development of Clean Coal (carbon technologies),BHEL and NTPC have come together to develop advanced ultra-supercritical (Adv-USC) technology in association with Indira Gandhi Centre for Atomic Research (IGCAR).BHEL has also established an R&D gateway at IIT Madras Research Park for promotingresearch in Adv-USC power cycles and high-temperature materials.5. Investment in clean energyThe flow of private investments into India’s clean energy sector rose 54 per cent tomore than US$10 billion in 2011, making the second highest growth rate for suchinvestments among the G-20 nations. The National Solar Mission was the main driverfor such a jump in clean energy investments.The Working Group on Power for the 12 th FYP has assessed that the power sectorwould require an investment of Rs 13,725.8 billion (US$269.83 billion) including Rs1,351 billion (US$26.56 billion) for renewable energy during 2012-2017. Half of thisinvestment is required for power generation capacity addition. At Rs 60 million perMW, coal-based power generation of 62,695 MW will need an investment of Rs 3,761.7billion (US$73.95 billion). As 23,940 MW (or 38 per cent of thermal capacity) will be ofsupercritical type, the investment for supercritical power plants will be Rs 1,429.45billion (US$28 billion). The 63,400 MW of coal-based power generation during the 13 thFYP will need a further investment of about Rs 3,804 billion (US$74.78 billion), all of itgoing for supercritical power plants.Thus, the investment requirement for over the next 10 years (2012-2022) will be aboutRs 7,566 billion (US$148.73 billion) for coal-based power generation, out of which Rs5,250 billion (US$103.2 billion) will be for supercritical power plants.India has focused on enhancing energy efficiency in the short term. However, the goalof technology development through R&D needs to be supported in the long term. TheNational Clean Energy Fund (NCEF) has been created for funding research andinnovative projects in clean energy technology. To build the corpus of NCEF, a cleanenergy cess of Rs.50/tonne is levied on indigenous and imported coal. More than Rs31.24 billion (US$614 million) had been collected from the coal cess in 2010-11, andthe corpus under the fund is expected to exceed Rs 65 billion (US$1,278 million) in2011-12. The NCEF corpus needs to be leveraged and the R&D plan for technology66

development worked out. Public-private partnerships will help in enhancing innovationand developing cutting edge technologies to address Indian priorities and simultaneouslyprepare for global applications.6. Programmes and policies for low-carbon FDIThe high potential of the domestic market driven by an emerging middle class, costcompetitiveness and a large pool of scientific and engineering talent makes India apreferred destination for FDI. The country’s domestic demand-driven growth model isan attraction for foreign investors. The government’s economic reforms and the emergenceof long-term policy measures have encouraged foreign investors to invest in thecountry, though the recent announcements on effecting changes in certain taxationlaws with retrospective effect have raised some concerns too. India attracted close toUS$47 billion during the financial year 2011-12, according to Reserve Bank of India(RBI) data, representing a 34 per cent jump over the previous year’s inflow. However,as mentioned earlier, there are areas of concern for foreign investors and the governmenthas begun to address some of these.In April 2012, India’s Minister for Power called upon the United States industries toexplore emerging investment opportunities in the Indian power sector and consolidateexisting partnerships and projects between the two countries. He also gave an indicationthat the total investment in the power generation segment in the 12 th FYP will be aboutUS$120 billion and a similar quantum of investment will be required for transmission,distribution and related activities. The private sector is expected to create 50 per centof the capacity addition planned in the 12 th FYP. The Electricity Act, 2003 is emphaticon allowing the power sector to align itself with market dynamics and facilitate greaterparticipation by the private sector. The budget proposals for 2012-13 are also expectedto stimulate investments in the power sector. The rate of withholding tax on interestpayment on ECB is proposed to be reduced from 20 per cent to 5 per cent for threeyears. ECB has also been allowed to finance partly rupee debt of existing powerprojects. These measures are aimed at promoting FDI in the power sector, particularlyfor low-carbon technologies.E. Specificities of the power sector1. The challenge of accessing state-of-the-art technologyThe Working Group on Power for the 12 th FYP points out that with the opening up of theIndian market, foreign companies are now allowed to set up 100 per cent-owned subsidiariesand tap the domestic market demand. Technology transfer is considered themost important benefit of permitting FDI into the country. This, however, is not happening.International technology leaders are not willing to share technology with Indian companiesas government-to-government exchange and insist on business sharing approach.Hence, accessing state-of-the-art technology is becoming difficult.The government has laid down its power sector R&D promotion on the following lines:• Utilities should have collaboration with research institutes so that the problemsfaced by them can be taken up as research work and will also have immediateapplication;67

• Manufacturers should also participate and sponsor the research programme relevantto the power sector;• Successful R&D projects should be given a wide publicity within the power sector;and• The power sector should have collaboration with research institutes abroad to haveexchange of know-how and latest methods.The government has also proposed setting up a Power Academy that would be entrustedwith all the research needs of the sector in the country. Manufacturing firms, utilitiesand those connected even remotely with the power sector would be expected to reportall their technical problems and R&D requirements to this Academy.2. Key organizations to achieve R&D targets of the 12 th FYPThe research projects proposed will be executed through National Perspective Plan(NPP) and Research Scheme on Power (RSoP) of the Ministry of Power (MoP), in acollaborative manner involving: central PSUs, research organizations and academicinstitutions as mentioned below:• Generation – National Thermal Power Corporation (NTPC), National HydroelectricPower Corporation (NHPC), SJVN Limited and Nuclear Power Corporation of IndiaLtd. (NPCIL) will be the key central agencies in the generation sector, and they willbe complemented by state generation companies and independent power producers(IPPs);• Transmission - At the centre, Power Grid Corporation of India Limited(POWERGRID) will play a critical role with the state transmission and privatetransmission companies;• Distribution – The state Discoms will be the key agencies in the distribution sectorapart from private distribution licensees and input franchisees; and• Nodal centre for R&D – MoP through CPRI and CEA.3. Promoting R&D and risk managementThe Working Group on Power for the 12 th Five Year Plan has recognised that domesticR&D is an important ingredient in the self-sustenance effort of the country. In thecontext of the power sector, for indigenously developed projects, especially thoseinvolving substantial developmental investments, there is a need to remove qualificationrequirements pertaining to equipment performance over a minimum period specified bycustomers like Electricity Boards, NTPC, etc.Insurance schemes to cover riskTo support commercialization of indigenously developed products, an acceptablemechanism or enabling provision is needed for risk mitigation. This could be in theform of an insurance scheme to cover any potential risks over and above the normalwarranties and guaranties offered by the product developer and funded through theR&D cess. As per the Research and Development Act 1986, as amended in 1995, acess of 5 per cent is being levied by government on all payments made towards importof technology.68

Linking FDI to technology transferIn certain specific areas identified for attracting FDI, policy changes are necessary toinclude transfer of technology to an Indian company as a mandatory condition to allowaccess to India’s huge domestic market. It may be mentioned that the World TradeOrganization (WTO) Working Group on Trade and Transfer of Technology recommendedthat special treatment be given to developing countries for transfer of clean coaltechnology on reasonable terms and conditions and in a manner that contributes tothe long-term developmental prospects for the host developing countries.Government support for corporate R&DCertain high-cost domestic R&D efforts of Indian companies need to be supportedthrough government funding (grants and soft loan). For demonstration projects, acollaborative approach involving the developer, the user and the government withappropriate equity participation could also be considered. The Government of the UnitedStates extends 50 per cent funding on demonstration projects based on advancedultra-supercritical technology.4. A framework for the power sector R&DGovernment needs to fund R&D programmes in the power sector through variousschemes such as NPP and RSoP. Some of the funding can be in collaborative modewith participation from central PSUs, the industry, academic institutes and utilities.CPRI, NTPC, NHPC, SJVN Limited, POWERGRID, Discoms, BHEL, laboratories ofthe Council of Scientific and Industrial Research (CSIR), IITs and NIITs could executethe identified projects, with coordination and management by CEA and CPRI on behalfof MoP. The financial requirements to execute the projects outlined through NPP andRSoP amount Rs 15 billion (around US$295 million). The proposed funding requirementis given in Table 2-6.Table 2-6: Government funding support for power sector R&DSl. No. Thrust area Proposed budget(Rs million)1 Generation: thermal, hydro, renewables anddistributed generation 4,0002 Transmission 6,0003 Distribution 1,5004 Energy & environment 5005 Centres of excellence: (1) energy storage devices;(2) high-temperature superconducting technology inpower sector; (3) power electronics; and (4) smartgrid technologies 1,0006 Power Academy 2,000Total 15,000Half of the Rs 15 billion proposed for R&D needs to come by way of direct governmentgrant and the balance raised through participation from central PSUs, utilities and the69

industry. It is expected that effective participation of the industry and foreign R&Dinstitutions can result in investments of about US$1 billion in the power sector R&D by2016-17. The government grant-in-aid reflected above is only from MoP. The Departmentof Atomic Energy and the Department of Science and Technology have also madebudgetary provisions for grant-in-aid for specific activities, and these could also betapped.Funding for CPRIThe Indian government realizes the necessity of creating fully grant-in-aid funding facility,under its control, to provide support for testing, standardization, technology developmentand deployment. CPRI needs such support. CPRI can also collaborate with foreignlaboratories and investors to access funds. In order to take up R&D projects undermajor thrust areas, augment existing research facilities and establish new facilities,capital projects amounting to Rs 26.68 billion (US$524.47 million) are proposed (Table2-7).Table 2-7: Capital projects proposed for CPRISl. No. Capital projects Amount(Rs in millions)Testing and consultancy1 Upgrading of short circuit test facilities including additionof 2,500 MVA short circuit generator 13,7902 Upgrading of high-voltage/ultra-high-voltage test facilities 7903 Augmentation of power system, custom power &electronics 1504 Augmentation of energy meters, SPV, energy efficiencymotor 8105 Augmentation and modernization of diagnostics, cables,capacitors, temperature rise, environmental test facility 1,0906 Establishment of new transmission tower and seismictest facility 1,5007 Augmentation of existing Regional Testing Laboratoriesat Kolkata and Guwahati, and establishment of newRegional Testing Centres 4,2008 Infrastructure improvement for business developmentand protection 3209 Setting up of advanced research facilities likesuperconductivity technology, nanotechnology, supergridlaboratory, etc. 2,530Research & Development ProjectsCPRI Research Contingency (Plan R&D) projects 1,000RSoP projects 500Total 26,68070

The total requirement of fund during the 12 th FYP period for R&D in the power sectorthus works out to Rs 41.68 billion.F. Actions required to attract investment1. Investments for power sector: the challengeFund availability is one of the key factors that will play a crucial role in determining thequantum of capacity addition. Various financial issues, such as quantum and tenure offunds and cost of funds, related to the availability of funds for the power sector areimportant. Certain policy issues – such as concerns related to land acquisition, fuelsecurity-related issues, environment issues and poor financial health of power distributioncompanies – could impede the flow of funds to the power sector. Therefore, thePlanning Commission has considered various policy measures such as the introductionof specialized long-tenure debt fund, dedicated fund for financing power projects inNorth-Eastern sector, take-out financing schemes, credit enhancement schemes andvarious tax incentives on investments.It would be prudent to consider barriers and opportunities of attracting investment forthe total power sector (and not only for low-carbon technologies), as R&D is an integralpart of the business plan.Fund availabilityThe total investment in generation segment from conventional energy sources in the12 th FYP is expected to be about Rs 6,000 billion and a similar investment will berequired for transmission, distribution and other activities, totalling investment to aboutRs 12,000 billion. Investment of about Rs 3,800 billion is expected into coal-basedpower capacity installation. In addition, investment requirement for installed capacityadditions based on renewable energy will be close to Rs 1,200 billion. Half of the totalinvestment is expected to come from the private sector. Table 2-8 gives major sourcesof financing and the funds that needs to be mobilized.Shortfalls in funds availability/mobilization have also been estimated:Equity shortfallDebt shortfallTotal shortfall: Rs 903.63 billion: Rs 994.44 billion: Rs 1,878.07 billionDebt/equity ratios for central, state and private sectors have been recommended basedon the current lending norms for funding the power sector (Table 2-9). The possiblesources of funding also include overseas market, multilateral credit and equity markets. 13External commercial borrowing (ECB)RBI specifies two routes to access ECB: automatic route and approval route. ECB forinvestment in infrastructure sector up to US$500 million falls under the automaticroute and does not require RBI/government approval. Borrowers can raise ECB from13For the purpose of this report, other in-country sources of funding have not been mentioned.71

internationally recognized sources, such as international banks, international capitalmarkets, multilateral financial institutions, export credit agencies, suppliers ofequipment, foreign collaborators and foreign equity holders. According to RBI data,India secured more than US$36 billion in ECBs during 2011.Table 2-8: Major sources of financing and funds mobilizationSources of funds12th FYP estimations(in Rs billion)InvestmentsBy promoters for IPPs, IPTCs 804,81By promoters for NCES & captive power 567.80Internal resources 1,262.26Total equity (A) 2,634.87DebtScheduled commercial banks 2,704.55Power Finance Corporation (PFC) 1,782.59Rural Electrification Corporation (REC) 1,759.50Other infrastructure financing companies 364.27Bonds/debentures 1,405.41Multilateral/bilateral credits/ECBs 907.55Insurance companies 288.99Total debt (B) 9,212.86Total debt and equity (A+B) 11,847.73Notes: IPP = Independent power producer; IPTC = Independent powertransmission company; NCES = Non-conventional energy sources;ECBs = External commercial borrowings.Table 2-9: Debt/equity ratiosSector Debt EquityCentre 70 per cent 30 per centState 80 per cent 20 per centPrivate 75 per cent 25 per centTo ensure adequate supply of funds for the power sector, ECBs need to be appropriatelychannelized towards the sector, in the form of syndicated debt, tied financing/supplier’scredit or assistance from multilateral agencies. The rising cost of domestic borrowingscould lead to an increase in demand for ECBs among Indian companies. On the otherhand, the sliding value of the rupee will make ECBs more burdensome. Limited availabilityof long-term funds in overseas markets, with the lenders generally preferring to limittheir exposure to short-term tenure of up to five years, is an area of concern. Furthermore,global pressure on sustainability has forced all major commercial banks/institutions toensure that sustainability principles are duly ingrained into the project.72

Funding from multilateral agenciesMultilateral agencies, such as the World Bank and the Asian Development Bank, havethe following focus: significant emphasis on environment and social issues with addedcosts of audits and certifications; and comparatively lengthy and time-consumingappraisal and due diligence exercise. These can be attributed to the requirement onthe part of multilateral agencies to study the risk profile of the project and pastexperiences of the progress of power sector reforms in the country. Furthermore,inadequate returns caused by the poor financial health of State Electricity Boards,financial implications of free electricity schemes bestowed by state governments ontheir constituencies, lack of comprehensive payment security mechanism, etc. areacting as deterrents to the advancement of funds by multilateral agencies to the sectorin a big way.Besides the above-mentioned issues that may become barriers, financial issues likequantum of funds, tenure of funds (funds that can support a power project for about 25years) and the cost of funds are major issues. On the policy side, the concerns aremainly regarding land acquisition, fuel linkage security and related issues, environmentalissues, financial health of power distribution companies, and regulatory issues thatcontrol the risk on account of fuel costs.2. Recent government initiatives for smooth project launchesTo facilitate project launches, the Prime Minister’s Office has mooted the setting up ofspecial agencies that would acquire all the necessary licences and approvals for aproject before bids are invited from investors. The proposed ‘Special Purpose Vehicle’under each Ministry would ensure that a project would be ready to be launched assoon as the bid is awarded. The laborious process being followed at present isexemplified by the case of 58 clearances a company requires to set up a power project,although this is a de-controlled sector and does not involve any licensing. A companyhas to seek these clearances from several agencies at the central, state and localgovernment (Panchayat) levels across various departments. The associated delaysmake accessing funds difficult.3. Suggested implementation mechanism for channelizing more fundsThe Working Group on Power for the 12 th FYP has also recommended implementationmechanisms aimed at channelizing more funds into the power sector.Policy interventions and financial measures for reducing funding gap• Tax incentive on investment: For garnering additional funds for the power sector, ajustification has been provided to introduce an additional investment limit of Rs50,000 per year for infrastructure bonds.• Institutional/regulatory interventions: Payment security mechanism has to be putin place.Fiscal and other measures to enable cheaper power• Technology transfer for developing and enhancing the existing manufacturing facilityin India needs to be incorporated in equipment procurement contracts. As a first73

step, the domestic manufacturing obligations on the line of bulk tendering carriedout by NTPC for 800/660 MW sets could be stipulated for the power projects beingawarded for the benefit of the 13 th FYP (2017-2022). Such a step will ensure thatindigenous vendor development is facilitated for high-tech supplies in the future.4. Role of various agenciesPolicy measures for equity participationThe Insurance Regulatory and Development Authority (IRDA) and the Pension FundRegulatory and Development Authority (PFRDA) need to consider modifying their policyframework so as to channelize long-term funds available with insurance companiesand pension (provident) fund organizations. Profit-making central and state utilities inpower generation, transmission and distribution – such as NTPC, NHPC, POWERGRIDand NHDC Limited – should be encouraged to offer their company shares via the stockmarket.Sector-specific fundsThe Government of India introduced sector-specific funds with the specific objectivesof making funds available to a particular sector under respective funds. Some of thesefunds considered potential source of finance for the power sector are:• Specialized debt funds for infrastructure financing;• Creation of specialized long-term debt funds to cater to the needs of the infrastructuresector; and• A regulatory and tax environment suitable for attracting investments is the key forchannelizing long-term funds into infrastructure development. RBI has been askedto look into the feasibility of not treating investments by banks in such closeendeddebt funds as capital market exposure. IRDA may consider including investmentin registered debt funds as approved investments for insurance companies.Policy measures for take-out financing for ECB lendersRBI has stipulated guidelines for take-out financing through ECB policy. The guidelinesspecify that corporates developing infrastructure projects (including power projects)should have a tripartite agreement with domestic banks and recognized overseas lendersfor conditional or unconditional take-out of the loan within three years of the scheduledcommercial operation day. As the market conditions cannot be predicted, a window of6-12 months is suggested. Further, the guidelines stipulate that the loan should havea minimum average maturity period of seven years. It is suggested that the minimumaverage maturity period stipulated should be aligned to maturity profiles of ECB aboveUS$20 million and up to US$500 million – that is, minimum average maturity of fiveyears as stipulated in RBI Master Circular.IIIPOTENTIAL FOR INTERNATIONAL COOPERATIONSignificant understanding at the international level would be necessary to ensure thatglobal cooperation helps reduce the carbon intensity in power generation. International74

cooperation will be essential in some technology areas, and developed countries willneed to provide the lead in low-carbon technologies. A major effort to realize this wouldbe required at the level of both the government and the industry.WEC has projected that decades will be required, even with the most effective applicationof policy and technologies, to achieve significant sustainable reduction in CO 2emissionsfrom the world’s energy economy in large part because of the time and cost involved inreplacing existing and building new infrastructure. According to IEA, “Just to keeppace with the world’s growing energy demands will require US$800 billion per year ofinvestment over the 25 year period i.e. 2007-2032”. It is possible to chart out a roadmap, enabling the world to meet this challenge in three stages. Many an expert believesthat a major proportion of investments of US$800 billion per year over the 25 yearsperiod will be in India and China.The first two of these stages are expected to be completed by 2030 and call for: (a)lower carbon intensity in energy production and use, particularly in the electricity sector;and (b) carbon capture and storage. This can only be facilitated by intelligent electricitydelivery technology, along with the broad commercial introduction of advances in cleancoal technology, particularly in rapidly industrializing nations such as China and India.Predicting the effect of policy options on future GHG emissions requires a soundunderstanding of the global economy, the technologies and processes that emit or havethe capacity to reduce emissions, and the inter-relationship that exist between them.The long-term sustainability of an international mechanism that imposes costs onsovereign states depends on the international community’s confidence in theirgovernments and belief that costs are distributed equitably. Transparency of process,emissions reduction performance and appropriate accountability provision in case offailure to comply with requirements are necessary to underpin international confidencein governance and equity.IVCONCLUSIONSThis baseline study has drawn the following conclusions:1. Coal will remain an important primary energy source – The abundance, affordabilityand availability of coal, and other fossil resources as well, have determined that it willremain an important primary energy source for decades to come. Low-carbontechnologies and carbon capture and storage are considered the key enablingtechnologies to address carbon emissions from the continued use of fossil fuels.2. Investment mobilization should be feasible – An economy growing at 8 per centshould have little difficulty in mobilizing the needed resources particularly through publicprivatepartnerships. The main challenge, however, is to create efficient and financiallyviable energy sub-sectors so that investors have the incentive to invest in a competitiveset-up where consumers interest are simultaneously protected.3. Investment in the power generation sector offers a business opportunity – In its2006 report, the Integrated Energy Policy Expert Committee projected that, apart fromthe challenges of physically supplying different forms of energy, the investment75

equirement also shows a need for purposive action. Electricity generation, transmissionand distribution are estimated to require an investment of at least US$1 trillion. Thetotal energy sector investment could well amount to US$2 trillion, inclusive of relatedinfrastructure.4. Global investments need to be attracted – Such massive financial inputs can onlybe arranged through a new global financing regime based on the collaborative efforts ofgovernments, industry, multilateral financing agencies, FIIs, FDIs, external commercialinstitutions (banks) and domestic banks and financing institutions. This global regimewould be a dynamic mechanism that offers a win-win situation for all.5. The business needs to play an important role – While governments are accountablefor implementing the policies that drive sustainable reductions in GHG emissions, it isthe business – both in the public sector and in the private sector – that actually deliversthose reductions. The business requires greater certainty of cover for risk and liabilityassociated with making commercial investments in zero and low emission technologies.Understanding the constraints that will apply to GHG emissions in the future isfundamental to estimating the future demand for investment for zero- and low-emissiontechnologies.6. Funding support for R&D must be enhanced – The government should continuouslyfund and support low-carbon coal combustion technology development and deployment.There is an urgent need to scale up and expand funds for such technology developmentand innovation. This will require supportive policy framework for R&D and also interventionsthat facilitate adoption and absorption of new technologies. Promotion of venturecapital funds that take equity risk could contribute to successful commercialization ofinnovations.VBIBLIOGRAPHYErnst & Young Consulting, 2012. 2012 Attractiveness Survey, India Ready for theTransition. Available at http://emergingmarkets.ey.com/wp-content/uploads/downloads/2012/03/india-attractiveness-final-version1.pdf.Government of India, 2012. Economic Survey 2011-12.Ministry of Environment and Forests, 2010. India’s Greenhouse Gas Emissions 2007,Ministry of Environment and Forests, Government of India. Available at http://moef.nic.in/downloads/public-information/Report_INCCA.pdf.Ministry of Power, Government of India, 2012. Report of the Working Group on Powerfor Twelfth Plan (2012-2017), Ministry of Power, Government of India.Planning Commission, Government of India, 2006. Integrated Energy Policy: Report ofthe Expert Committee. Available at http://www.planningcommission.nic.in.Planning Commission, Government of India, 2011. Climate Change & 12 th Five YearPlan, Report of Sub-group on Climate Change. Available at http://planningcommission.nic.in/aboutus/committee/wrkgrp12/enf/wgsub_climate.pdfPlanning Commission, Government of India, 2011. Interim Report of the Export Groupon Low Carbon Strategies for Inclusive Growth. Available at http://planningcommission.nic.in/reports/genrep/Inter_Exp.pdf.76

Planning Commission, Government of India, 2011. Faster, Sustainable and MoreInclusive Growth: An approach to the Twelfth Five Year Plan (2017-2022). Available athttp://planningcommission.nic.in/plans/planrel/12appdrft/appraoch_12plan.pdfWorld Energy Council, 2010. Study on Energy and Climate Change, World EnergyCouncil, London, United Kingdom..World Energy Council, Indian Member Committee, 2012. India Energy Book 2012,World Energy Council, London, United Kingdom.77

PART THREEANNEXESPARTICIPANTS, PROGRAMME ANDSELECTED PRESENTATIONS79

ANNEX I:LIST OF PARTICIPANTSMr. A.K. Ahuja, Executive Director (CP), National Thermal Power Corporation (NTPC),Noida, Uttar Pradesh, India. Tel: +91 (120) 24363533; E-mail: akahuja@ntpc.co.in.Mr. Hemant Ahuja, Associate Professor, Ideal Institute of Technology, Govind Puram,Ghaziabad, Uttar Pradesh, India. Tel: +91 (120) 2767351; Mobile: +919899008275; E-mail: ahujahemant@rediff.com.Mr. Rajesh Kumar Ahuja, Research Scholar, IIT Delhi, Hauz Khas, New Delhi 110 016,India. Mobile: +919990477433; E-mail: rajeshkrahuja@gmail.com.Ms. Roopali Bajaj, Vice President, LSI Financial Services Pvt. Ltd., 1201, 12 th Floor,Chiranjiv Tower, 43 Nehru Place, New Delhi, India. Mobile: +919711998440; E-mail:iroopali@hotmail.com.Mr. Naren Bharatwaj V., Research Scholar, WA-08, Zanskar Hostel, IIT Delhi, HauzKhas, New Delhi 110016, India. E-mail: naren.bharatwaj@gmail.com.Mr. Anshu Kumar Chaddha, Senior Officer, National Thermal Power Corporation (NTPC),NTPC Bhawan, SCOPE Complex, Institutional Area, Lodhi Road, New Delhi 110003,India. Mobile: +919650990576; E-mail: akchaddha@ntpc.co.in.Mr. Pradip Chanda, AGM (Corporate Planning), National Thermal Power Corporation(NTPC), NTPC Bhawan, Core-6, 7 th Floor, SCOPE Complex, Institutional Area, LodhiRoad, New Delhi 110003, India. Tel: +91 (11) 24368298; Mobile: +919650990162; E-mail: pradipchanda@ntpc.co.in.Mr. Arup Roy Choudhury, Chairman and Managing Director, National Thermal PowerCorporation (NTPC), NTPC Bhawan, Core-6, 7 th Floor, SCOPE Complex, InstitutionalArea, Lodhi Road, New Delhi 110003, India & Secretary, World Energy Council–IndianMember Committee (WEC-IMC).Mr. C. Garroway, UNESCAP, APCTT Building, C-2 Qutab Institutional Area, New Delhi110016, India. Tel: +91 (11) 30973706; E-mail: garroway@un.org.Mrs. Malti Goel, CSIR Emeritus Scientist, and Former Advisor, DST, Jawaharlal NehruUniversity, Aruna Asaf Ali Road, New Delhi 110067, India. Tel: +91 (11) 26670463;Mobile: +919810287736; E-mail: maltigoel2008@gmail.com.Mr. Gautam Goswami, Director, TIFAC, Department of Science & Technology, 3 rd Floor,Vishwakarma Bhawan, Saheed Jeet Singh Marg, New Delhi 110016, India. Tel: +91(11) 26859629; Mobile: +919868287802; E-mail: goswamig@hotmail.com.Mr. V.K. Gupta, Advisor, International Institution of Technology & Management (IITM),1116, Vikas Kunj Puri, New Delhi 110018, India. Tel: +91 (11) 2559 5210, 4514 2384;Mobile: +919811039584; E-mail: wcm.iitm@gmail.com, dr.vkgupta@gmail.com.Mr. Rajendra Kumar Joshi, Deputy General Manager, Corporate Planning, NationalThermal Power Corporation (NTPC), NTPC Bhawan, Core-6, 7 th Floor, SCOPE Complex,Institutional Area, Lodhi Road, New Delhi 110003, India. Tel: +91 (11) 24363902; Mobile:+919650990599; E-mail: rkjwecimc@gmail.com.Mr. Abdul Alim Kaiani, Generation & Transmission Planning Engineer, Ministry of Energyand Water, Kabul, Afghanistan. Tel: +93 (0) 700068849; E-mail: kaiani7976@hotmail.com.Mr. Manohar Singh Katoch, Research Scholar, IIT Delhi, Hauz Khas, New Delhi 110016, India. Mobile: +919650114771; E-mail: manoharsingh33@gmail.com.80

Mr. Nagesh Kumar, Chief Economist, UNESCAP, and Director, UNESCAP Sub-RegionalOffice for South and South-West Asia, APCTT Building, C-2 Qutab Institutional Area,New Delhi 110016, India.Mr. A. Mahesh, Post-doctoral Research Fellow, Centre for Energy Studies, IndianInstitute of Technology (IIT), New Delhi 110016, India. Mobile: +919899669886; E-mail:maheshiit10@gmail.com.Mr. Nasir Ahmad Mahmood, Adviser to Deputy Minister or Policy and Programmes,Ministry of Mines, Darul Amon, Kabul, Afghanistan. Mobile: +9193790621622; E-mail:nasirahmad@gmail.com.Ms. Preeti Malhotra, Director, Environmental Policies & Global Advocacy, ALSTOMProject India Limited, IHDP Building, Plot -7, Sector 127, Noida 201301, Uttar Pradesh,India. Tel: +91 (120) 4731214, 4731100; Mobile: +919717776629; E-mail:preetimalhotrapower.alstom.com.Mr. Yudhishthir Pandey, Assistant Professor, JRE Group of Institutions, Plot No. 5-8,Knowledge Park IV, Greater Noida 201308, Uttar Pradesh, India. Tel: +91 (120) 6494438;Mobile: +919990385812; E-mail: Yudhishthir.eee@jre.edu.in.Mr. Kirit Parikh, Former Member, Planning Commission, Government of India &Chairman, Integrated Research and Action for Development (IRADe), New Delhi, India.E-mail: kparikh@irade.org.Mr. Adlan Bagus Pradana, M. Tech Student, IIT Delhi, ED-41, Kumaon Hostel, HauzKhas, New Delhi 110 016, India. Mobile: +919953769579; E-mail: adlan.pradana@gmail.com.Mr. K.E. Prasad, Director, Lanco Power Limited, Lanco Power House, Plot No. 397,Phase-3, Udyog Vihar, Gurgaon 122016. Haryana, India. Tel: +91 (124) 474100; Mobile:+919650648844; E-mail: keprasad@lancogroup.com.Mr. Arshad Husain Quadri, Associate Professor, Ideal Institute of Technology, GovindPuram, Ghaziabad, Uttar Pradesh, India. Tel: +91 (120) 276735; Mobile:+919868703786; E-mail: arshad_quadri@yahoo.com.Mr. V. Raghuraman, Former Adviser – Energy, Confederation of Indian Industries (CII),New Delhi, India. E-mail: vr1943@gmail.com.Mr. B.V. Krishna Rao, Dean, IRF School of Engineering, JRE Group of Institutions,Plot No. 5-8, Knowledge Park IV, Greater Noida 201308, Uttar Pradesh, India. Tel: +91(120) 4712720; Mobile: +919711499964; E-mail: dean.engineering@jre.edu.in,krishna@educompraffles.com.Mr. S. Seetharamu, Additional Director, Central Power Research Institute (CPRI), SirC.V. Raman Road, Sadashiva Nagar P.O., Bangalore 560 080, India. E-mail:ssramu@cpri.in.Mr. Perumalla Chandra Sekhar, Research Scholar, c/o Dr. S. Mishra, Department ofElectrical Engineering, IIT Delhi, Hauz Khas, New Delhi 110016, India. Mobile:+919717583955; E-mail: psekhar.chandra@gmail.com.Mr. R.V. Shahi, Former Secretary, Ministry of Power, Government of India, and Chairman,Energy Infra Tech Pvt. Ltd., 145-146, Udyog Vihar, Phase - IV, Gurgaon, Haryana122015, India. Tel: +91 (124) 4651 9710; E-mail: rvshahi@nic.in.Mr. P. Uma Shankar, Secretary, Ministry of Power, Government of India, New Delhi,India. Tel: +91 (11) 23710271, 23711316; E-mail: p.umashankar@nic.in.81

Mr. S.C. Shrivastava, Joint Chief (Engineering), Central Electricity RegulatoryCommission, 3 rd Floor, Chanderlok Building, 36 Janpath, New Delhi 110001, India. Tel:+91 (11) 2335 3503; Mobile: +919717973825; E-mail: seschandra@hotmail.com.Mr. K.P. Singh, Member, Bihar Electricity Regulatory Commission, Vidyut Bhawan-2,Baily Road, Patna 800021, Bihar, India. Tel: +91 (612) 2504484; Mobile: +919868161010;E-mail: kpsingh52@hotmail.com.Mr. Pan Song, Managing Director, Shanghai Electric India Pvt. Ltd., 32 Sector, Gurgaon,Haryana, India. Mobile: +919873041871.Mr. P. Narasimha Sripad, Student, Department of Electrical Engineering (Power), IITDelhi, B-46 Karakoram Hostel, Hauz Khas, New Delhi 110016, India. Mobile:+919990912205; E-mail: psripad@gmail.com.Mr. Abhishek Surana, Co-founder and CEO, Jaagriti Solar Pvt. Ltd., IIT Delhi, HauzKhas, New Delhi 110016, India. Mobile: +919990909760; E-mail: abhishek.surana@jaagritisolar.com.Mr. P. Varsheney, Senior Vice President, PTC India Limited, 2 nd Floor, NBCC Tower 15Bhikaji Cama Place, New Delhi 110066, India. Tel: +91 (11) 41659132; Fax: +91 (11)41659145; Mobile: +919810153223; E-mail: pvarshney@ptcindia.com; Website:www.ptcindia.com.Mr. Antony Qinghua Zhang, Shanghai Electric India Pvt. Ltd. 32 Sector, Gurgaon,Haryana, India.RESOURCE PERSONSMr. Pradeep Chaturvedi, Consultant to APCTT-ESCAP & Vice-Chairman (Energy), WorldFederation of Engineering Organizations. E-mail: pradeep08@gmail.com.Mr. D.K. Dubey, General Manager (PE-Mech), National Thermal Power Corporation(NTPC), Noida, Uttar Pradesh, India. Tel: +91 (120) 2410255; E-mail: dkdubey@ntpc.co.in.Mr. Praveen K. Gali, Head of Advanced Technology, GE Energy India EngineeringOperations, Bangalore, Karnataka, India. Tel: +91 (80) 40123292; E-mail:Praveen.gali@ge.com.Mr. D. Thomas Gochenour, Consultant to UNECE, and Head of Research, 55 NorthCapital Partners, Naberezhnaya Tower, Block C, 10 Presnenskaya Emb., Office 451,Moscow, Russian Federation 123317.Mr. G. Grewal, Electrical Research & Development Association, Vadodara, Gujarat,India. E-mail: gurpreet.grewal@erda.org.Mr. T. Jayakumar, Director, Metallurgy and Materials Group, Professor & Dean, HomiBhabha National Institute, and Indira Gandhi Centre for Atomic Research, Kalpakkam,Tamil Nadu, India. Tel: +91 (44) 27480232, 274826401; E-mail: tjk@igcar.gov.in.Mr. R. Kumar, General Manager, Bharat Heavy Electricals Limited (BHEL), Tiruchirappalli,Tamil Nadu, India. Mobile: +919443343010; E-mail: rkr@bheltry.co.in.Mr. Shekhar Kumar, Joint Director, Central Power Research Institute (CPRI), Sir C.V.Raman Road, Sadashiva Nagar P.O., Bangalore 560 080, India. E-mail: shekar@cpri.in.Mr. J.K. Mehta, Regional Manager, World Energy Council, 215 Green Towers, Plot 7C,Sec. 23, Dwarka, New Delhi 110075, India. Mobile: +919999702221; E-mail: jkmehta2@gmail.com.82

Mr. Branko Milicevic, Economic Affairs Officer, UNECE Sustainable Energy Division,Geneva, Switzerland. E-mail: Branko.Milicevic@unece.org.Prof. S.S. Murthy, Consultant to APCTT-ESCAP & Professor, Electrical EngineeringDepartment, Indian Institute of Technology (IIT), New Delhi 110016, India. Mobile:+919810240174; E-mails: ssmurthy@ee.iitd.ac.in, ssmurthy4@gmail.com.Mr. Shubhranshu Patnaik, Senior Director (Partner), Deloitte Touche Tohmatsu IndiaPrivate Limited, Gurgaon, Haryana, India. Mobile: +919899524446; E-mail:spatnaik@deloitte.com.Mr. S.V. Prasad, Vice President, Project Advisory & Structured Finance, SBI CapitalMarkets Ltd., New Delhi, India. Tel: +91 (11) 23417781; Mobile: +919818664631; E-mail: Sv.Prasad@sbicaps.com.Mr. Abdul Ghafar Rassin, Sector Specialist (Industries), Research and StatisticsDepartment, Afghanistan Investment Promotion Agency, Kabul, Afghanistan. E-mail:ghafar.rassin@aisa.org.af.Mr. A.K. Sinha, General Manger (PE), National Thermal Power Corporation (NTPC),Noida, Uttar Pradesh, India. Tel: +91 (120) 2410413; Mobile: +919650991618; E-mail:gravindra@ntpc.co.in.Mr. Ramakrishna Ramanath Sonde, Executive Vice President, Thermax Limited,Thermax House, 14 Mumbai-Pune Road, Wakdewadi, Pune 411003, Maharashtra,India. Tel: +91 (20) 66051200, 25542122; E-mail: rsonde@thermaxindia.com,rrsonde@yahoo.co.in.Mr. Peng Zhang, Regional Manager, Shanghai Electric Power Generation Group,Shanghai Electric India Pvt. Ltd., 32 Sector, Gurgaon, Haryana, India. Mobile:+919711740665; E-mail: zhangpeng1955@gmail.com.Ms. Khairullina Zhanna, Adviser to Vice Minister of Industry and New Technology ofKazakhstan, Kabannay Batyr Street, Astana, Kazakhstan. E-mail: zhanna_dapr@mail.ru.APCTT-ESCAPMr. K. Ramanathan, Head, Asian and Pacific Centre for Transfer of Technology (APCTT-ESCAP), C-2, Qutab Institutional Area, P.O. Box 4575, New Delhi 110 016, India. Tel:+91 (11) 26856255; Fax: +91 (11) 26856274; E-mail: ramanathan@un.org.Mr. N. Srinivasan, In-charge, Innovation Management Group, Asian and Pacific Centrefor Transfer of Technology (APCTT-ESCAP), C-2, Qutab Institutional Area, P.O. Box4575, New Delhi 110 016, India. Tel: +91 (11) 26864501; Fax: +91 (11) 26856274; E-mail: srini@un.org.The following persons also attended the workshop: Mr. S.G. Abhilash, Mr. MukeshBarma, Mr. S.K. Chakraborty, Ms. Pallavi Chelluri, Mr. B.L. Jangir, Mr. Arvind Kumar,Mr. Vineet Mall, Mr. Mohan Menon, Mr. Maharajan Nallasivan, Mr. S. Surender Reddy,Mr. V. Sandeep, and Mr. Arvind Kumar Sharma.83

ANNEX II:PROGRAMME6 June 2012, Wednesday0900-0930 Registration0930-1100 Inaugural Session0930-0950 Welcome Address by Mr. Nagesh Kumar, Chief Economist,UNESCAP & Director, UNESCAP Sub-Regional Office for Southand South-West Asia, New Delhi0950-1010 Opening Address by Mr. Arup Roy Choudhury, Chairman andManaging Director, NTPC & Secretary, World Energy Council–Indian Member Committee, New Delhi1010-1045 Inaugural Address by Mr. P. Uma Shankar, Secretary, Ministry ofPower, Government of India, New Delhi1045-1050 Presentation of Mementos1050-1100 Vote of Thanks by Mr. Branko Milicevic, Economic Affairs Officer,UNECE Sustainable Energy Division, Geneva, Switzerland1100-1130 Coffee/Tea Break1130-1330 Session I: Promotion and Development of Advanced FFTs inIndia(Chairman & Moderator: Mr. A.K. Ahuja, Executive Director-CP,NTPC)1130-1200 Overview of Advanced Fossil Fuel Technology Development in IndiaProf. S.S. Murthy, Consultant, APCTT-ESCAP and Professor,Electrical Engineering Department, IIT Delhi1200-1230 Advanced Material Technologies for Power GenerationMr. T. Jayakumar, Director, Metallurgy and Materials Group,Professor & Dean, Homi Bhabha National Institute, Indira GandhiCentre for Atomic Research, Kalpakkam, Tamil Nadu1230-1300 Advanced Fossil Fuel Technology Development at BHELMr. R. Kumar, General Manager, BHEL, Tiruchirappalli, Tamil Nadu1300-1330 Deployment of Advanced Fossil Fuel Technology in IndiaMr. D.K. Dubey, General Manager (PE-Mech), NTPC, Noida, UttarPradesh1330-1430 Lunch Break1430-1700 Session II: Opportunities and Challenges in Advanced FFTDeployment(Chairman & Moderator: Mr. S. Seetharamu, Additional Director,CPRI, Bangalore)1430-1450 Mr. Ramakrishna Ramanath Sonde, Executive Vice President,Thermax Limited, Pune, Maharashtra1450-1510 Mr. Praveen K Gali, Head of Advanced Technology, GE Energy IndiaEngineering Operations, Bangalore, Karnataka1510-1530 Mr. A.K. Sinha, General Manger-PE, NTPC, Noida, Uttar Pradesh84

1530-1600 Coffee/Tea Break1600-1620 Mr. Thomas Gochenour, Project Consultant, UNECE1620-1640 Mr. G. Grewal, Electrical Research & Development Association,Vadodara, Gujarat1640-1700 Mr. James Peng Zhang, Regional Manager, Shanghai Electric IndiaPvt. Ltd., Gurgaon, Haryana7 June 2012, Thursday0930-1130 Session III: National Approaches, Including InvestmentPolicies for the Deployment of Advanced FFTs(Chairman & Moderator Mr. K. Ramanathan, Head, APCTT-ESCAP)0930-1010 Mr. Branko Milicevic1010-1050 Mr. Abdul Ghafar Rassin, Sector Specialist, Afghanistan InvestmentPromotion Agency, Kabul, Afghanistan1050-1130 Ms. Khairullina Zhanna, Adviser to Vice Minister of Industry andNew Technology of Kazakhstan, Kabannay Batyr Street, Astana,Kazakhstan1130-1200 Coffee/Tea Break1200-1330 Session IV: Investment and Financing for Deployment ofAdvanced Fossil Fuel-based Power Generation Technologiesin India(Chairman & Moderator: Mr. Kirit Parikh, Former Member-Energy,Planning Commission, Government of India)1200-1230 Mr. Pradeep Chaturvedi, Consultant, APCTT-ESCAP and Vice-Chairman (Energy), World Federation of Engineering Organizations,New Delhi1230-1300 Mr. S.V. Prasad, Vice President, Project Advisory & StructuredFinance, SBI Capital Markets Ltd., New Delhi1300-1330 Mr. Shubhranshu Patnaik, Senior Director (Partner), Deloitte ToucheTohmatsu India Private Limited, Gurgaon, Haryana1330-1430 Lunch Break1430-1600 Session V: Panel Discussion on Development of Power Sectorwith reference to Advanced FFTs(Chairman & Moderator: Mr. V. Raghuraman, Former PrincipalAdviser -Energy, CII, New Delhi)Panelists: Mr. Pradeep Chaturvedi; Mr. J.K. Mehta, RegionalManager, World Energy Council, New Delhi; Prof. S.S. MurthyMr. Shekhar Kumar, Joint Director, CPRI, Bangalore, Karnataka1600-1700 Closing Session1600-1615 Concluding Remarks by Prof. S.S. Murthy and Mr. PradeepChaturvedi1615-1645 Valedictory Address by Mr. R.V. Shahi, Former Secretary, Ministryof Power & Chairman, Energy Infratech Pvt. Ltd., New Delhi1645-1700 Workshop Closing Remarks by Mr. K. Ramanathan1700-1730 Coffee/Tea Break85

ANNEX III:AN OVERVIEW OF ADVANCED FOSSIL FUELTECHNOLOGY DEVELOPMENT IN INDIAByProf. S.S. MurthyConsultant, APCTT-ESCAP &Professor, Department of Electrical Engineering, IIT Delhi, IndiaIndia's Integrated Energy Policy (IEP) of Planning Commission suggests several stepsto reduce greenhouse gas (GHG) emissions from current levels, although the country'sper capita emission level is just one-fourth of the world average (Table 3-1).Table 3-1: Selected emission data (2010)Country Population Per capita CO 2emission Total CO 2emissions(million) (tonnes/year) (tonnes/year)India 1,220 1.12 1,366China 1,352 5.34 7,222USA 311 18.65 5,801World 6,903 4.49 30,967For India to achieve universal energy access by 2030, additional generation supply willbe needed as shown in Figure 3-1.Figure 3-1: Additional power generation required368 TWh 470 TWhOn-grid generationOff-grid generationNote: Bulk of the presentation by Prof. S.S. Murthy is contained in the Baseline Report(page 33) and only the data not covered in the Baseline Report are given here.86

As on 31 July 2011, India’s installed generation capacity was 180,358 MW, withrenewable energy accounting for 18,455 MW. In 2009-10 alone, the country added9,585 MW. India’s generation mix is as in Table 3-2.Table 3-2: India's power generation mix (July 2011)Energy sourcePercentageThermal energy 64.28Hydro energy 23.13Nuclear energy 2.88Renewable energy sources 10.55In the year 2000, the total coal consumption in the world was 4,740 million tonnes. Ofthis, the Asia-Pacific region (including Japan) accounted for 44 per cent. In non-OECDcountries in Asia, especially China and India, coal will remain the dominant fuel. Indiahas embarked on a major plan to introduce supercritical combustion technologies toreduce GHG emissions. For the Indian power sector, the cost of CO 2mitigation wouldbe the lowest for co-generation and the highest for pressurized fluidized bed combustion(PFBC), as shown in Table 3-3.Table 3-3: Cost of CO 2mitigation options for India's power sectorPotential GHG emission Mitigation costtechnologies reduction (kg/kWh) (Rs/tonne CO 2)Co-generation 1.500 480Combined cycle 0.960 2,600PBFC 0.180 24,000IGCC 0.230 16,000Supercritical 0.180 16,000Coal washing 0.125 8,500(Source: ADP, 1998)Supercritical steam cycle technology has been in use for several years and is becomingthe system of choice for new commercial coal-fired plants in many countries, includingIndia. National agencies such as BHEL and NTPC are conducting R&D on supercriticaltechnology, focusing on certain areas as in the list below:• Materials and metallurgy for components of boiler and turbine subjected to hightemperature and high pressure;• Supercritical cycle optimization – incremental heat rate improvement;• Retrofit of supercritical boiler to sub-critical pulverized coal boiler;• Fluidized bed supercritical steam cycles; and• Multi-reheat supercritical boilers with double/triple reheater.Indian policies related to technology development in power generation technologiesare directed by certain facts and conditions that include:• In the move towards a low-carbon economy, technology has a vital role to play;87

• Technology solutions are also very important for enhancing adaptive capacity andreducing vulnerability to climate change and its impacts;• International cooperation in science and technology is of great significance;• It is important to ensure that within the multilateral process under UNFCCC, themenu of cooperation mechanisms is not constrained and proactive measures aretaken for these mechanisms to be used;• For example, when the technology solutions are at a very early stage of development,the primary focus is usually on co-operation in basic scientific research;• India is actively engaged in international scientific programmes for transition to asustainable energy future, and this scientific co-operation will remain very importantfrom a long-term perspective;• As ideas progress from the laboratory closer towards the market, the focus shiftstowards technology design and development;• Mechanisms that enable joint technology development involving public and privatesector entities and with suitable norms for financing and IPR-sharing would beimportant for ensuring that the process of technology development and commercializationhappens more rapidly and effectively;• For technologies that are already mature and deployed in the developed countries,appropriate financing models are essential, which may become operational throughmultilateral institutions, carbon markets and mechanisms like CDM;• However, given the somewhat limited role that CDM appears to have played withregard to technology transfer, this issue will merit detailed examination, and newmodels and mechanisms for technology transfer will need to incorporate at leastthe following three key elements: appropriate funding modalities and approaches;a facilitative IPR environment; and enhancing the absorptive capacity withindeveloping countries;• New multilateral technology cooperation funds may be required that would financethe development, deployment, diffusion and transfer of technologies for both mitigationand adaptation to developing countries;• One of the barriers to technology adoption lies in the low absorptive capacities ofdeveloping countries; and• It is vital that mechanisms for technology transfer include measures that will enablethe enhancement of absorptive capacities, keeping in mind the targets of suchtechnology interventions.88

ANNEX IV:ADVANCED FOSSIL FUEL TECHNOLOGYDEVELOPMENT AT BHELByMr. R. KumarGeneral ManagerBharat Heavy Electricals Limited (BHEL)Tiruchirappalli, Tamil Nadu, IndiaThermal power generation technology has been undergoing rapid advancement towards:• Improving the efficiency of power generation;• Minimizing atmospheric pollutants; and• CO 2reduction, capture and storage.Table 3-4 lists the salient events in the thermal power generation technologydevelopment in India over the years.Table 3-4: Thermal power generation technology development in India over the yearsPeriodDevelopments1960s • Boiler design as per Czechoslovakian technology, 30 MW & 60 MW1970s • Technology from Combustion Engineering, the United States; unitcapacities 110 MW• 210 MW – Low-pressure steam cycle1980s • Pressure ratings increased to achieve higher plant efficiency; unitcapacity increased to 500 MW; controlled circulation introducedfor very high pressures• Firing system design for low NOx emission• Deteriorating coal properties led to increased tube erosion andperformance deviations; units redesigned for inferior coals; towertype boilers introduced for highly erosive coals1990s • 250 MW units developed• 130 MW unit firing steel plant by-product gas (Corex gas)• Boiler efficiency improvement by designing for low exit gastemperatures2000s • Technology tie-up for supercritical steam generators with ALSTOM,France• Introduction of IT-based ‘Performance Analysis Diagnostic andOptimization’ (PADO) for monitoring power plant performance andoptimization• Designs for firing washed coal/imported coal developedBHEL has attempted to improve cycle efficiency through higher inlet steam temperatureand pressure parameters (Table 3-5).89

Table 3-5: Improvement in cycle efficiency with higher steam parametersInlet pressure Inlet temperatures Efficiency increase(kg/cm 2 ) (°C) (% points)170 537 537 Base (500 MW)170 537 565 0.75247 565 565 1.31247 565 593 1.64247 600 600 1.96After supplying more than 950 subcritical boilers, BHEL is currently adopting advancedsteam cycles to improve the environmental and economic performance in India’s powergeneration. BHEL offers Indian power utilities "Once Through" supercritical technologylicensed from Alstom, France. Figure 3-2 depicts the basics of supercritical technology.Figure 3-2: Supercritical technologySC steam generatorBoiler steam pressureabove the critical point35Critical point221 bar, 374 deg. CTemperatureT421 6EntropyS1-2 Feed water pumping process2-3 Heat addition in the feedwater heaters & boiler3-4 Expansion in high-pressureturbine4-5 Reheating in boiler5-6 Expansion in IP 7 LP turbine6-1 Heat injection in condenserFor improving the cycle efficiency, higher pressure, higher SHO/RHO temperature andhigher feed water temperature have been adopted. Drum has been eliminated, verticalseparator with start-up recirculation system used for loads below 40 per cent boilermaximum continuous rating (BMCR), and two-stage SH and two-stage RH adopted.Pollution control systems typically comprise selective catalytic reduction for 85 percent NOx reduction, low-NOx burner for 50 per cent NOx reduction, flue gas desulphurizationfor more than 90 per cent reduction in SO 2, and dust collection equipmentthat meets the current standard. BHEL developed a Bypass Over Fire Air (BOFA)system to reduce NOx emission by about 40 per cent (Figure 3-3).90

Figure 3-3: BHEL's Bypass Over Fire Air (BOFA) SystemPlaten SHReheaterFinal SHLTSHBOFA nozzle at38.8 m elevationBOFA nozzle at31.8 m elevationRegularwind boxLTSHECOECOHot pry. AirSulphur content is high in imported coal as compared with Indian coal. BHEL hasmade provision for installing flue gas desulphurization (FGD) in all its 660 MW and 800MW projects. FGD retrofit is a distinct possibility in the future, as ambient air qualitynorms in the country get more stringent.BHEL has built fluidized bed combustion (FBC) boilers for alternative fuels such ashigh-sulphur coals, coal washery rejects, waste coal from steel plants, lignite, petcokeand biomass. FBC steam generators (both circulating and bubbling) work well withthese alternative fuels and produce lower NOx and SOx emissions owing to tighter insitu controls.BHEL's has built a pilot-scale FBC gasification test facility with the following parameters:Coal throughput: 18 t/dayGasifier diameter : 450 mmGasification media : Air/steam mixGasification temperature : 1,000ºCGasification pressure : 11 kg/cm 2Gas calorific value : 1,000-1,100 kcal/Nm 3FBC units have several advantages, such as:• Higher unit capacity;• On-bed sulphur removal option;• No tar or oil formation and easy gas cleaning;91

• No liquid effluent formation;• Capability to accept all types of coals;• Better reliability and control;• Operates in non-slagging mode unlike entrained bed gasification;• Best suited for high-ash Indian coals; and• Lower capital and operating costs compared with entrained bed gasifier.BHEL has also built a pilot 6.2 MW integrated gasification combined cycle (IGCC)plant and there is a proposal for a scaled-up 182 MW demo plant as well. As theclimate change is pressing for cleaner power generation and as the reliability of IGCCprocess is increasing, it is clearly evident that IGCC will be one of the future technologiesfor green power generation. IGCC plant cost is higher at this point of time as comparedwith PC boilers without gas cleaning. However, as the emission standard and carboncapture increases, IGCC plant will have more advantage. Improvement and developmentin technologies like gas turbines, hot gas clean-up and gasifiers will make IGCC morecompetitive for power generation. BHEL has gained significant experience via continuousoperation of the gasifier island for the past one year and is now geared fully to commercializethe technology for higher size plants.92

ANNEX V:NTPC'S CCT PROGRAMME UPDATE AND INDUCTIONSTRATEGYByMr. D.K. DubeyGeneral Manager (PE-Mech/SG, WS)NTPC Limited, IndiaNTPC considers advanced ultra-supercritical (Adv-USC) power units as the nexttechnology milestone. The Adv-USC Programme – implemented under a partnershipamong NTPC, BHEL and IGCAR – aims to establish a 800 MWe Adv-USC demo Plantwith steam parameters of 300 kg/cm 2 pressure and 700°C within seven years.IGCC is the other promising option, as it offers:• Better coal utilization;• Potential for higher efficiency owing to gas turbine use;• Cheaper dedusting and deSOx operations because of low syngas volumes; and• Low NOx volumes because of low reactor temperatures.Figure 3-4 provides an efficiency comparison between different clean coal technologyoptions.Figure 3-4: Clean coal technologies – efficiency comparison80Current Possible Future70Thermal efficiency (%)605040302010PCSCPCNGCCPFBCIGCC0ln IGCC, gas turbine is the key building block and improvements in it will further boostthe IGCC technology adoption. Figure 3-5 depicts the advancement of gas turbinetechnology in terms of combined cycle efficiency.93

Figure 3-5: Advancement of gas turbine technologyNet combined-cycleefficiency (%)60555045E ClassF ClassH Class401970 1975 1980 1985 1990 1995 2000Year of shipment2014: J Class1,600 deg. C1,5001,4001,3001,2001,1001,000Firing temperature (deg. C)20151,700 deg. CNTPC's 100 MWe net capacity IGCC demo plant at Dadri (Uttar Pradesh) aims to:• Establish the gasification process for Indian coals;• Establish design for ‘Gasification Island’ and other key equipment;• Establish the IGCC process package;• Establish in-house engineering capability for IGCC plants;• Establish O&M systems for IGCC plant; and• Establish commercial viability with non-recourse funding.Earlier attempts had thrown up certain issues, which have been critically analysed toobtain specific findings (Table 3-6).Table 3-6: CCT development – issues and findingsIssues Analysis FindingsExcessive SH/RH spray Model development Shortfall in W/W absorptionUnacceptably high SH Field test for all boilers Consequent heat transfertemperatureupsets in other areasTop mills deployment DM/FM coal-specific Indian coal has uniqueinability model heat release characterMS Temp not in +/-5°C Predict zonal heatrangeabsorptionExcessive soot blowing Prediction of coalburning timeNTPC has adopted a three-pronged strategy for CCT deployment strategy: channelizingexperience; technology customization; and contractual flexibility.94

ANNEX VI:TECHNOLOGY DEVELOPMENT – DEMONSTRATIONAND DEPLOYMENT STRATEGIESByMr. R.R. SondeExecutive Vice PresidentThermax Ltd., IndiaIs gasification a credible option for high-ash Indian coal? Producing clean power withcoal, even today, is a challenge – the energy delivered to the consumer is just 22 percent of the total energy in the coal (Figure 3-6).Figure 3-6: The challenge of thermal power productionOverall

Figure 3-8: Goal 2 – New clean technologiesNew power generation technologiesConduct athoroughstudy onnew energytechnologiesShortlistChoice 1ShortlistChoice 2Large-scalemultiplicationmodelsFigure 3-9: Goal 3 – Improved capabilities in critical technologiesImproving thermal efficiency in pulverized coal andultra-supercritical pulverized coal technologies660Operating temperature (deg. C)62045%Ultrasupercritical+NoveltechnologiesLargescale58053535-36%Near-term Mid-term Long-termSupercritical,coal blends37-38%Increasingsteamparameters38-40%SupercriticalCoal gasification,multi-feed42%SecondreheatUltra supercritical,IGFC (fuel cell +gas turbine),carbon capture43%SupercriticalEfficiency vs. AvailabilityConversion efficiencies of various technologies, in both power and transport sectors,are given in Figure 3-10. It can be seen that integrated gasification combined cycle(IGCC) and other such technologies offer the highest conversion efficiencies. Need forcapture and sequester carbon would further make gasification-based technologies moreattractive in the future.96

Figure 3-10: Conversion efficiencies of technologiesConventionalpower from coalCombustionsub/super/ultra35-45%Power tohydrogen (20%) 7%Conversion(90%) to gasGas to power(45-57%) 40-52%Electricity-driventransport/fuel cell 36-46%Need for captureand sequestrationwould further makegasification-basedtechnologies moreattractiveGas to hydrogen Hydrogen storage/(80%) transport (90%) 50-58%Hydrogen-driventransport (50%) 32%Gas to liquids Liquid fuel-driven(45%) transport (IC) 95%IGCC+ technologiesDependence on import will be integral to India’s energy scenario, as requirement willoutstrip production (Figure 3-11). In the case of oil, it will be in excess of 90 per cent.Figure 3-11: Projected requirement and production of fuels in India900800700827Requirement (2031-32)Domestic productionQuantity (mtoe)600500400300560Converting coal to a liquid fuelcan help bridge this gap418200100351491000CoalPetroleumoilFuelsGas + coal-bedmethane97

Compared with conventional power plants, coal gasification has several environmentalbenefits such as: 11.7 per cent less CO 2; 86.6 per cent less NOx; 93.4 per cent lessSOx; almost no particulate emissions; and 38.5 per cent less water utilization. Acomparison of emissions and resource utilization for different electricity generationtechnologies is given in Table 3-7. Converting coal to a liquid fuel (CTL) allows coal tobe utilized as an alternative to petroleum oil.Table 3-7: A comparison of different electricity generation technologiesEmission Pulverized coal Gasification Combined natural gascombustioncombustionCO 2(kg/kWh) 0.77 0.680 0.36SO 2(kg/MWh) 0.68 0.045 0.00NOx (kg/MWh) 0.61 0.082 0.09Water use (L/kWh) 4.62 2.840 2.16India needs a paradigm shift in technology intervention that involves poly-generationand multi-level utilization of gasification technology. Gasification facilities use a rangeof carbon-based feedstocks, such as natural gas, coal, petroleum, petcoke, biomassand industrial wastes. Currently, coal dominates as the feedstock with 36,315 MW thor51 per cent of the global syngas capacity (Figure 3-12). Petroleum fuels are the secondleading feedstock, with 17,938 MW thor 25 per cent of the total gasification capacity.80,000Figure 3-12: Global syngas capacity by feedstockSyngas (MWth)70,00060,00050,00040,00030,00020,00010,000In operationUnder constructionIn planning0Coal Petroleum Gas Petcoke Biomass/wasteAt present, Thermax is executing the following three projects in collaboration withvarious partner institutions:98

(1) Gasifier for CTL applicationCapacity: 100 kg/hFuel: Indian coal, petcoke (mix) and ligniteOperating pressure: 30 bar(2) Gasifier for IGCC applicationCapacity: 200 kg/hFuel: Indian high-ash coalOperating pressure: 10 bar(3) Biomass gasification systemCapacity: 1.0 MWeFuel: Agro waste (e.g. soya residue)Operating pressure: 1 barFigure 3-13 depicts the effect of 40 per cent ash in coal on the performance of fluidizedbed gasifier (recommended for the high-ash Indian coal).Figure 3-13: Effect of 40 per cent ash in coal on gasifier performanceFB gasifierSyngasCoalChemicalenergyinput toFB gasifier4% Air pre-8% Steamheatinggeneration & feed100% 91% 81%79% 74%Chemical energylocked in gas9% AirSteam & O 2Ashcompressoror airTemp 975, RT 20 minThis loss could be reducedby fast fluid bed gasifier.2%Dryash10%Unburnt2%Sensibleheat lossHowever, fluidized bed gasifier technology has the following four issues, which need tobe addressed in any technology development:• High amount of unburnt carbon, with consequent ash disposal problem, and lossof coal that lowers efficiency;• Poor and fluctuating calorific value;• Scale-up for pressure and size; and• Low flexibility for load follow-up.The gasifier project for CTL application, which Thermax (Gasifier Island) is implementingin collaboration with Engineers India Limited (Gas Clean-up Island) and Bharat PetroleumCorporation Limited (Hydrocarbon Island), uses as fuels 100 per cent high-ash coal,90 per cent coal + 10 per cent petcoke, and 100 per cent lignite. It operates at apressure of 22-30 bar and a temperature of 900°-1,000°C, using 91-93 per cent oxygenas the oxidizing medium. The Thermax Coal Gasification System is depicted in Figure3-14.99

Figure 3-14: Thermax coal gasification systemSteamFuelFuel sizing&classifierLockhoppersGasifierCycloneGascoolerSyngasWaterASUSteamN2De-ashingFine ashThere were several design-level challenges for the gasifier system:• High-pressure operation (30 bar);• High-temperature operation (1000°C);• High dust load (>10 gm/Nm 3 );• Safe handing of carbon monoxide and hydrogen at high temperature and pressure;• Syngas composition and its energy content;• Pollutants in syngas;• Refractory erosion;• Equipment dimensions (kinetics and hydrodynamics play important roles); and• Manufacturing critical components and sourcing some auxiliary equipment.Equipment-level challenges included:• High-pressure fuel feeding♦ Lock hopper feeding system♦ High-pressure hydraulic pump♦ Stamet posimetric pumpDry solid pump challenges included:• High-pressure and -temperature ash extraction♦ Screw cooler♦ Lock hopper system• Syngas coolerIntegration of various components (such as ASU, high-pressure feeder, gasifier, gascooler and barrier filter), as well as maintaining strict quality parameters for advanceprocess control and instrumentation posed system integration challenges.Under the Seventh Framework Programme (FP7) of the European Union, Thermax isworking with Centre National de la Recherche Scientifique of France, Energy CentrumNederland of the Netherlands, Indian Institute of Technology Madras, Turkish CoalEnterprises and Hacettepe University of Turkey on Optimization of Gasifier for High-Ash Coal (OPTIMASH) Project for coal gasification development.100

In the demonstration plant for biomass gasification, Thermax is trialling a new conceptthat offers higher conversion efficiency and lower fuel consumption to produce fuel gaswith higher calorific value (Table 3-8).Table 3-8: Existing and proposed systems for biomass utilizationCriterion Existing plants Proposed plantConversion efficiency (%) 80-85 >95Fuel consumption (kg/kW) 1.3 0.9Gas calorific value (kcal/kg) 1,200 3,223Availability (%) 85Bleed treatment Difficult Simple, cleanerOverall plant size Relatively bulky CompactIndigenous, intensive efforts are required on the part of academia, industry and governmentto address the need for cutting-edge technology suitable for India's high-ash,low-grade coal along with locally available feedstock like agro waste, biomass, municipalsolid waste and petcoke.101

ANNEX VII:GE ENERGY AND ADVANCED FOSSIL FUELTECHNOLOGIESByMr. Praveen GaliHead, Advanced Technology OperationsGE Energy, IndiaGE Energy, with globally spread out operations that employ around 100,000 employees,accounts for 25 per cent of the total revenues of GE Group. Its activities span variousaspects of power and water, oil and gas, and energy management.In the Indian power generation scenario, in the near term (up to three years), coal willbe troubled by infrastructural bottlenecks, while gas will still face lack of availabilityand oil will continue to be imported to meet the rising demand. In the longer term (morethan 10 years), coal will firmly establish as the dominant fuel, shale gas would bring innotable changes in the power generation sector, and renewable sources of energy willpenetrate distributed generation. In this scenario, relative cost and ease of availabilitywill drive the choice of technology.As far as fossil fuels are concerned, coal emits the most carbon dioxide (CO 2), followedby oil and gas. Among technologies that employ fossil fuel for power generation,Integrated Gasification Combined Cycle (IGCC) releases the least amount of CO 2,while sub-critical pulverized coal boilers generate the most. Over the years, gas turbineshave become more advanced, showing a 3 per cent decrease in CO 2emissions forevery 1 per cent increase in efficiency.Gas turbines offer advantages in terms of availability, price, emission, capital cost andoperational flexibility. GE’s gas turbine technology has seen advancements incombustion, thermal coating materials, and cooling and sealing aspects. In combustiontechnology, while the current norm sets nitrogen oxides (NOx) level at 50 ppm,technology could brings this down to about 1 ppm.In the power generation sector, there are basically four alternative approaches to reducingCO 2emissions: (1) alter system operations; (2) alter new generation additions; (3)replace/modify existing system; or (4) alter electricity consumption. Figure 3-15 liststhe options available under these approaches.At present, and in the coming decade as well, fossil fuels-based generation is themainstay of Indian power sector. However, a majority of the units is in the 210 MWcategory, according to Central Electricity Authority data, and several of those units areold plants operating at 29-32 per cent efficiency. This situation needs to be corrected,and retrofitting existing plants is an option that may be pursued where feasible.Technology to address climate change and efficiency improvement does exist andneeds to be utilized by pursuing a portfolio of technology solutions. The deployment ofthese technologies would require policy support – incentives and mandates – from thegovernment.102

Figure 3-15: CO 2reduction alternatives in the power sectorAlterSystemOperationsAlter NewGenerationAdditionsReplace orModify ExistingSystemAlter ElectricalConsumption- More gas,less coal- More efficient coal- More renewables- More nuclear- Coal with CCS- Efficiencyimprovements- Retrofit CCS- Retirements- Repowering- Trans/Dist lossreduction- Conservation& DSM- Substituteelectricityfor other fuels- Substituteother energyfor electricity103

ANNEX VIII:SWOT ANALYSIS OF FOSSIL FUEL TECHNOLOGYByMr. A.K. SinhaGeneral Manager (PE)National Thermal Power Corporation (NTPC)Noida, IndiaThe International Energy Agency (IEA) has made the following projections for 2035:• Rising fossil energy use will lead to irreversible and potentially catastrophic climatechange;• Global energy-related carbon dioxide (CO 2) emissions will peak before 2020 andthen decline to 21.6 Gt by 2035;• Carbon capture and storage (CCS) is a likely abatement option (efficacy yet to beproven), accounting for 18 per cent of emissions savings;• Coal is the most abundant fossil fuel globally, with reserves totaling 1 trillion tonnes(lasting about 150 years at the current production level);• Fossil fuel consumption subsidies worldwide amounted to US$409 billion in 2010,with subsidies to oil products representing almost half of the total;• By encouraging deployment, renewable energy subsidies can help cut greenhousegas emissions; and• Unconventional gas – shale gas and coal-bed methane – is set to play an increasinglyimportant role.The global energy demand is expected to increase by one-third from 2010 to 2035,with China and India accounting for 50 per cent of the growth (Figure 3-16).Energy (mtoe)Figure 3-16: Growth in global primary energy demand4,5004,0003,500China3,0002,500India2,000Other developing Asia1,500Russia1,000Middle East500Rest of the world0OECD2010 2015 2020 2025 2030 2035Years(Source: World Energy Organization, 2011)

Renewables and natural gas would collectively meet almost two-thirds of incrementalenergy demand during 2010-2035 (Figure 3-17).Figure 3-17: Energy sources and global primary energy demandEnergy (mtoe)5,0004,0003,0002,0001,000Additional to 203520100Oil Coal Gas Renewables NuclearFuels(Source: World Energy Organization, 2011)Renewable energy sources are often capital-intensive, representing 60 per cent ofinvestment for 30 per cent of additional generation, but they bring environmental benefitsand have minimal fuel costs (Figure 3-18). Power investments beyond 2011 will focuson low-carbon technologies.Figure 3-18: Share of new power generation and investment 2011-2035403530GenerationInvestmentPer cent2520151050Coal Gas Nuclear Hydro Wind Solar PVEnergy sources(Source: World Energy Organization, 2011)

By 2035, cumulative CO 2emissions from today onwards will exceed three-quarters ofthe total since 1900, and China’s per capita emission will match the average of theOrganization for Economic Cooperation and Development (OECD) nations (Figure 3-19).Figure 3-19: Cumulative energy-related CO 2emissions in selected regions5002010-2035CO emissions (Gt)24003002001001900-20090United StatesChinaEuropean India JapanUnionCountries(Source: World Energy Organization, 2011)India has set up National Missions within its National Action Plan on Climate Changeto address effectively various aspects of climate change mitigation. Under theCopenhagen Accord, India has pledged to reduce its emission intensity by 20-25 percent by 2020 relative to 2005 levels. As a consequence, the following steps have beenundertaken by the Government of India in the field of power generation:• The National Solar Mission♦ Targets for 2022: 20 GW of grid-connected solar power, 2 GW of off-grid solarapplications, 20 million m 2 of solar water collectors and 20 million solar lightingsystems.♦ To strengthen India’s manufacturing capability for PV modules, to reach 4-5GW by 2020.• The National Mission for Enhanced Energy Efficiency♦ To enhance cost effectiveness of improvements in energy efficiency in energyintensivelarge industries and facilities, through certification of energy savingsthat could be traded.• The National Mission on Strategic Knowledge of Climate Change (under preparation)♦ Calls for establishment of a climate science research fund, improved climatemodeling capacities and increased international collaboration.Sub-critical coal-based power generation accounts for the highest deployment in Indiain thermal category, but new coal-based capacity addition is largely supercritical units.Some R&D and pilot projects have been taken up for development of IGCC suited forIndian coals. To enhance the efficiency of coal-based plants, NTPC, BHEL and IGCARhave initiated 650°C class advanced ultra-supercritical project under the National Missionfor Enhanced Efficiency.106

Among gas/liquid fuel-based technologies, open cycle gas-based plants are preferredat the locations where water is scarce. Gas turbine for heat and power in distributedgeneration is preferred when both heating/cooling and power are required, such as inairports, malls and hospitals. Combined cycle gas turbine technology is best suitedfor bulk peak power requirement. It has higher efficiency than other technologies in thesame category. Internal combustion engines are best suited for remote places andback-up for grid-connected systems. It is also suited for peak service and distributedgeneration with combined heat and power (CHP) mode.SWOT analysisStrengths• Indian coal reserves inventory is 286 Bt (114 Bt proven);• Lower prices;• Development of shale gas technology has increased the global gas availability andresulted in considerable decline in prices;• Fossil fuel-based technologies are mature and more familiar;• Slow pace of technology changes;• Coal-based technologies are desirable for energy security and self-reliance; and• Because of high capacities, fossil fuel-based power generation act as the nucleusof social development in remote areas.Weaknesses• Large emission of CO 2, a greenhouse gas contributing to climate change;• Although gas is also being used in distributed framework, fossil technologies ingeneral are more suitable for centralized generation;• Higher transmission and distribution losses and associated cost; and• Non-perennial (finite) resource.Opportunities• Source of bulk power generation and base load requirement;• Huge energy deficit in the foreseeable future;• Economy of scale – reduced cost of installation;• Fukushima incident raised concerns regarding safety of nuclear power generation;and• Public acceptance of large hydro is poor due to submergence of huge area resultingin population dislocation and methane generation, a potent greenhouse gas.Threats• Growing climate change concerns♦ Copenhagen Accord recognized the need to limit the global temperature riseby 2050 to below 2°C above pre-industrial levels.• Increasing fossil fuel and technology prices♦ As the reserves are depleting, coal prices are soaring high.107

• Falling prices of renewable energy technologies♦ Wind generation has already achieved grid parity;♦ Cost of solar power generation has reduced considerably and is on the verge ofgrid parity;♦ Cost of solar power is expected to fall by 40 percent in the next 4-5 years;♦ Renewable technology-based generation can be at the point of use and hence,no transmission & distribution losses and costs; and♦ Cost of delivered power of using renewable sources may be less than that withfossil fuel-based power in the next decade.The road ahead• Need to develop low-cost and clean FFT;• R&D cost targets for CCTs shall have to be revised in view of falling renewableprices;• As a gas network is required for non-power use also, gas-based generation shouldbe used in distributed framework preferably with CHP, resulting in better cost competitivenessand efficiency;• Gas in distributed framework can complement renewable generation solving theintermittency challenge of renewable generation; and• Gradual and planned weaning from fossil fuel-based generation to renewablesbasedgeneration.108

ANNEX IX:MITIGATING CLIMATE CHANGE THROUGH FDI-FINANCED ADVANCED FOSSIL FUEL TECHNOLOGIESByMr. D Thomas GochenourHead of Research55 North Capital PartnersMoscow, Russian Federation&ConsultantUnited Nations Economic Commission for EuropeA. India’s pressing energy needsIndia’s 12 th Five-Year Plan (FYP, 2012-2017) calls for 90 GW of new capacity to beadded to its current stock of 201 GW, at a cost of US$113 billion. In the 11 th FYP, theoriginal target for new capacity additions was 78 GW, but only 55 GW were added dueto environmental and coal problems.In spite of reserves of 60 billion tonnes, the state-owned enterprise (SOE) Coal IndiaLimited is unable to reliably supply enough coal to the power sector. The SOE NationalThermal Power Corporation (NTPC) says it may miss its target expansion because ofcoal shortages. The coal supply deficit has grown to over 130 million tonnes, whichhas to be imported.In 2010, coal supplied 52 per cent of all of India’s primary energy needs, and more than45 per cent of its power output. Also in 2010, India became the world’s fourth largestemitter of CO 2, with 1,750 million tonnes, almost 9 per cent more than in 2009. To slowthe rate of growth and reduce CO 2emissions, higher efficiency technologies must berolled out in the 12 th Plan.Because of its large coal reserves, India has planned to adopt advanced coal-firedtechnologies in its thermal power investment plan. In the 12 th FYP, the aim is for 60 percent supercritical pulverized coal power plants. It is expected to be 100 per cent in the13 th FYP. The technologies are likeliest to be supercritical, ultra-supercritical andadvanced ultra-supercritical (Figure 3-20).B. The strategy for clean coalPrivate Indian investors are making their development plans based on imported coal.Even NTPC is looking to buy overseas coal. Politicians have been unable to solve theproblems of Coal India Limited, but reform is not in the cards at the moment. Oneforeign investor, CPL, recently got a debt rating of BBB- for its offshore loans becauseof the coal risks, as well as other risks.If coal must be imported, then why not develop more power plants based on importedgas (liquefied natural gas, LNG) which, with combined cycle gas turbine (CCGT), delivers109

Figure 3-20: New advanced coal power technologies launched in IndiaKawai SCPC 1,320 MWMundra SCPF 4,620 MWSugen CCGT 1,147 MWJhajjar SCPC 1,320 MWJunagadh SCPC 1,320 MWSingrauli SCPC 1,320 MWDehrand SCPC 1,600 MWSalaya SCPC 1,320 MWSolapur SCPC 1,320 MWBarh I & II SCPC 3,300 MWSipat SCPC 1,980 MWTiroda SCPC 3,300 MWFigure 3-21: LNG import terminals and likely sites of new CCGT power plantinvestmentsMundra AdaniPipavav APMDahej PetronetKandukar RILHazira ShellDabholMangaloreEnnoreChennaiKochi Petronet(Red letters indicate newor planned projects)110

higher than 50 per cent efficiency and less than half the carbon dioxide emissions thancoal? Reliance Power’s plans for its 2.4 GW gas-powered CCGT in Andhra Pradeshwill be based on LNG, which now powers only 9 per cent of India’s power installedcapacity. Possible sites for CCGT plants are indicated in Figure 3-21.111

ANNEX X:ENERGY CONSERVATION: ERDA’S CONTRIBUTION &CASE STUDIESByMr. G. S. GrewalElectrical Research & Development Association (ERDA)Gujarat, IndiaA. Energy Management Section, ERDAERDA's Energy Management Section (EMS), established in 1995, carries out:• Energy audit study;• Energy conservation measures;• Certification of energy-efficient equipment (including a nodal laboratory for refrigeratortesting for BEE Star Rating Check and Challenge Programme);• Research & Development in the field of renewable energy; and• Seminars/workshops and in-house training programmes on energy audit and energyconservation measures.The core expertise of EMS are:• Electrical-I: Motors, pumps, air and chiller compressors and blowers;• Electrical-II: Transformers, lighting and capacitor banks;• Thermal-I: Boilers, turbines, condensers and cooling towers;• Thermal-II: Furnaces, heaters, dryers, etc.; and• Process: Specialists in iron & steel making processes.EMS-ERDA has carried out energy audits of 129 power generating units: 77 thermal, 3lignite-based, 13 gas-based, 27 hydroelectric and 7 nuclear. Table 3-9 provides dataon efficiencies of thermal power plants that ERDA audited.Table 3-9: Typical efficiencies of thermal power plants audited by ERDARating (MW) Efficiencies (%)Boiler Turbine Overall plant500 (Coal) 80.5 37.87 (2,263.4 kcal/kWh) 30.0210 (Coal) 87.0 35.8 (2,391.6 kcal/kWh) 31.0120 (Coal) 87.0 26.6 (2,814.8 kcal/kWh) 26.6In India, the typical average performance parameters of coal-based thermal powerplants are as follows:Heat rate: 3,400 kcal/kWhEfficiency : 25%Auxiliary power consumption : 6-9%Specific coal consumption : 0.8 kg/kWh (3.25 kWh coal/1 kWh electric power)112

In the case of gas-based thermal plants, for a 30 MW plant, the typical efficiency is24.4 per cent (3,251 kcal/kWh) for open cycle and 39 per cent (2,177 kcal/kWh) forclosed cycle.B. Key drivers for energy conservation in IndiaThe key aspects that drive energy conservation efforts in India are:• Low per capita energy consumption – Around 704 kWh, compared with 13,241kWh in the United States, 1,139 kWh in China and around 4,000 kWh world average;• Reliability issues – High downtime of power plants that decreases the averagedthermodynamic efficiency of plants and results in loss of revenue to power generationcompanies;• Energy reserves not proportionate to population;• High cost of energy;• Higher specific energy consumption by the processing sector;• High cost of setting up new power plants; and• Demand and supply gap, with peak shortages up to 25 per cent (all-India averageis 11 per cent).India is the fifth largest energy consumer in the world, although 35 per cent of the 1.21billion population is not grid-connected – that is about 425 million people, more thanthe population of the United States. Currently, India meets close to 30 per cent of itsenergy needs through imports and this is likely to increase in the future.In thermal power generation, coal accounts for 83.65 per cent with 96.74 GW installedcapacity, followed by gas with 17.71 GW (15.31 per cent) and oil with 1.2 GW (1.03per cent). While the efficiency is an average 30 per cent, transmission and distributionlosses run up to 30-35 per cent, burdening the State Electricity Boards with a whoppingannual loss of around Rs 200 billion! The average cost per unit (kWh) of power is high inIndia – US$0.095, compared with US$0.062 in China, US$0.060 in the United Statesand US$0.58 in the Republic of Korea.Table 3-10: A comparison of Indian and global energy reservesType India World PercentageOil (mt) 800 138,300 0.58Gas (mtoe) 700 139,700 0.5Coal (mt) 69,947 1,031,610 6.78Hydro (mtoe) 30 218 13.76Nuclear (mt Uranium) 100,000 10,000,000 1.00Table 3-10 provides the energy reserves of India in comparison with global figures.Compared with its counterpart in developed nations, the Indian industry incurs a highercost for use of power in production (Table 3-11). The intensity of energy usage inproduction too is comparatively higher in the Indian industry than in the industrialsector in developed nations.113

Table 3-11: Energy cost and intensity Indian and global energy reservesIndustry Energy cost (% of manufacturing cost) Energy intensity (%)India Developed nations IndiaIron & Steel 8.0-9.5 4-6 36.1-57.6Cement 1.0-4.4 0.6-0.9 30.0-59.0Aluminium 16-20 13-15 36.1-71.2Considering the above aspects of power production in India, it is recommended that allmeans of energy conservation be pursued. One approach, for example, is to examinethe various components of the power production system to ascertain which componentcan be tweaked to save power.Centrifugal pump, a common equipment in almost all industries, forms one suchcomponent. In general, centrifugal pumps account for 40-60 per cent of the total powerconsumption in processing plants. By adopting appropriate measures related tocentrifugal pumps, at least 25 per cent energy saving is possible. An audit of thepumps in the system will help identify the issues by examining aspects such as:• Wrong selection – under- or over-selection;• Over-design;• Improper equipment layout;• Usage of old, inefficient pumps;• Usage of multiple smaller-than-required size pumps; and• Systematic engineering principles ignored in pump selection.EMS-ERDA has conducted several such audits and successfully helped conserveenergy in a variety of industries.114

ANNEX XI:ELECTRICITY GENERATION TRENDS IN UNDAPROJECT COUNTRIESByProf. Mr. Branko MilicevicEconomic Affairs OfficerSustainable Energy DivisionUnited Nations Economic Commission for Europe (UNECE)Geneva, SwitzerlandA. UNDA ProjectThe United Nations Development Account (UNDA) Project on “Mitigating Climate Changethrough Attracting Foreign Direct Investment in Advanced Fossil Fuel Technologies”was approved by the United Nations General Assembly for the period 2010-2012, witha budget of US$629,000. The purpose of the project is to assist countries in increasingcapacity to attract investment in advanced fossil fuel technologies. The project coversnine countries: Afghanistan, China, India, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan,Ukraine and Uzbekistan. The United Nations Economic Commission for Europe(UNECE) executes the project in cooperation with the United Nations Conference onTrade and Development (UNCTAD) and the Economic and Social Commission for Asiaand the Pacfic (ESCAP).B. Electricity generation trends in UNDA project countries600Figure 3-22: Electricity output in selected UNDA project countries (W/capita)500400300200KazakhstanUkraineChinaIndia10001992 1994 1996 1998 2000 2002 2004 2006 2008 2010115

300Figure 3-23: Trends in coal use and electricity generation in nine UNDA countries250200Coal consumption by thermalplants, (index number,1993=100)CTDCTDlosses,losses,(index(indexnumber,number,1993=100)1993=100)Electricity production (indexnumber, 1993=100)150100501992 1994 1996 1998 2000 2002 2004 2006 2008 2010Base: 1993 = 100Figure 3-24: Electricity generation trends in all UNDA countries400350300250200150ChinaIndiaMongoliaAfghanistanKyrgystanKazakhstanUzbekistanTajikistanUkraine1005001992 1994 1996 1998 2000 2002 2004 2006 2008 2010Base: 1993 = 100116

350Figure 3-25: Coal consumption by thermal power plants in six UNDA countries300250200ChinaIndiaKazakhstanKyrgystanMongoliaUkraine1501005001992 1994 1996 1998 2000 2002 2004 2006 2008 2010Base: 1993 = 100Figure 3-26: Power output of selected countries350300250200150ChinaIndiaPolandGermanyKazakhstanAfghanistanTajikistan100501992 1994 1996 1998 2000 2002 2004 2006 2008 2010Base: 1993 = 100117

C. Gaps in coal use efficiencyFigure 3-27: Coal intensity of the electricity sectorCoalEnergysectorElectricityEnergy sector is treated as a black box that takes coal in to produceelectricity. Coal intensity is defined as “Kilograms of coal needed toproduce 1 MWh of electricity by the entire electricity sector”.Figure 3-28: Coal intensities of selected countries (kg of coal per MWh of electricity)800700600500400300IndiaKazakhstanChinaPolandUkraine200USA100Germany01992 1994 1996 1998 2000 2002 2004 2006 2008 20102012Gaps exist in installed capacity per capita – one or two orders of magnitude – and incoal intensities – 6 to 7 times. To close these gaps, more high-efficiency coal-, orbetter, natural gas-fired power plants will have to be built in India, China and otherdeveloping countries. Tapping renewable energy for power will be an even better solution.D. Examples of investment policies in various countriesOne could learn from the mistakes and successes of other countries. Best practices,good practices and bad practices could be observed and understood. The globaleconomic crisis and the role of state in it could be analysed. These approaches do notprescribe India’s current national investment policies, including promoting FDI.118

There are some lessons to be learned from the cases of Chile and New Zealand:• FDI can be attracted to a liberalized market under competitive conditions;• FDI is possible in a system with high levels of state ownership…but a strongrecord or regulatory impartiality is needed;• Applying and adopting open, non-discriminatory standards creates a positiveenvironment for evaluating potential FDI opportunities;• Countries should be prepared for FDI exits as well as entries – FDI comes and goes;• Effective property protection encourages long-term FDI and the transfer of innovativetechnologies; and• Successful inward FDI can lead to beneficial outward FDI, leveraging economies ofscale.119

ANNEX XII:FINANCING OF THE POWER SECTORByMr. S.V. PrasadVice PresidentProject Advisory & Structured FinanceSBI Capital Markets LimitedNew Delhi, IndiaA. IntroductionSBI Capital Markets Limited (SBICaps), a wholly owned subsidiary of State Bank ofIndia (SBI), was incorporated in 1986. It is a member of a Working Group Sub-committeecreated by the Planning Commission on financing issues for the 11 th and 12 th Five-YearPlans, and a member of the Inter-Institutional Group set up by the Ministry of Power foradvising on broad policy issues and financing aspects for the power sector. It is also anominee on various committees of the Government of India, including the high-powered‘Expert Group’ chaired by the Planning Commission to suggest ways and means tosettle the dues of State Electricity Boards, as a precursor to their privatization.SBICaps arranged aggregate debt of around Rs 1,393 billion (more than US$27 billion)for India's power sector, accounting for about 24-25 GW generation capacity, in financialyear 2010-2011. Its clientele include major names in the country’s power sector – TataPower, Reliance Power, Adani Power, Bajaj Group, Jaypee Group and India Bulls Power.B. India’s power sectorIndia has been witnessing energy deficit of more than 7 per cent, with a peak deficitexceeding 10 per cent, for the last seven years (Figures 3-29 and 3-30).Figure 3-29: Energy demand vs. supply in IndiaBillion units9008508007507006506005505008628307897747397466916896666326245915795482004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11Financial yearsEnergy requirementEnergy supplied120

Figure 3-30: Peak demand vs. deficit in IndiaGiga watts13012011010090807093888278Peak demand101Peak met87125118112109 11010397912004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11Financial yearsWhile achievement continues to fall short of target, it has increased from 50 per centof the target to 70 per cent over the Five-Year Plan (FYP) periods (Figure 3-31). Capacityaddition during the 11 th FYP is greater than total capacity addition during the previousthree FYPs together. Target capacity addition in the 12 th FYP is expected to be 94,825MW, and coal-based power plants constitute 66 per cent of the target planned.90,000Figure 3-31: Growth in power generation capacity80,000Target (MW)78,70070,00060,000Achievement (MW)56,81650,00040,00030,00020,00030,53816,42340,24519,01541,11021,81010,00008th Plan9th Plan 10th Plan 11th PlanC. Technology landscapeCurrently, coal accounts for over 56 per cent of India’s installed power generationcapacity of 114 GW. Coal-based power generation technology is constantly undergoingdevelopment, driven by the steep escalation in coal prices, growing environmentalconcerns and norms for lower emissions. Sub-critical technology is now being displacedby supercritical technology that offers reduced coal consumption and lower emissions.121

With the entry of many private sector players – such as L&T-Mitsubishi, Bharat Forge-Alstom, BGR-Hitachi and JSW-Toshiba – into power generation equipment, thetechnology landscape is changing. Indigenous development of ultra-supercriticaltechnology has also begun, with a memorandum of understanding being signed betweenIGCAR, BHEL and NTPC to develop a power plant that uses the technology.D. Factors that hinder financingThe financial health of the off-takers is a major concern. For instance, several powerdistribution companies (Discoms) have precarious financial health and negative networth. Estimated accumulated losses of Discoms have run up to Rs 1,200 billion(US$23.6 billion), with a widening gap between average revenue realization (ARR) andaverage cost of supply (ACS). Furthermore, several major power projects may have toundergo financial restructuring in view of the extensive delays and associated costescalations. Areas that create difficulties in timely execution of projects include:• Land acquisition;• Firm power purchase agreements and off-take arrangements;• Fuel supply and transportation arrangements;• Choking transportation network; and• Undue delay in government clearances and evacuation arrangements.E. Current status and the way forwardAt present, aggressive lending is extremely selective, based on the project preparednessand the track record of project developers. Furthermore, power sector lending is nearingsaturation, with several banks breaching power sector exposure ceilings. As on 31March 2010, Indian banks and financing institutions had approximately Rs 3,300 billion(US$64.9 billion) power sector exposure.Debt to equity ratio has moved from 80:20 to 70:30, or even 60:40 in the case ofrenewable energy, and there is demand for higher upfront equity. Interest rates havehardened quite significantly during the past three years, and lenders are preferringshorter loan tenures, which are especially inadequate for hydro and renewable sectors.In addition, lenders demand collaterals other than project assets. All these factors areslowing down power sector investments.In the future, the financial performance of Discoms needs to be improved through:• Aggressively pursuing steps to reduce aggregate technical and commercial losses;• Undertaking steps to achieve tariff rationalization to recover the costs; and• Capitalization of Discoms and debt restructuring on priority basis.Coal mining needs to be stepped up and the implementation of the "Dedicated FreightCorridor" speeded up. Power projects, especially the major ones, need to be closelymonitored and the government needs to intervene proactively wherever needed to sortout matters. In addition, the government could expedite forest and environmentalclearances, as well as coal linkages and coal blocks. Take-out financing could befacilitated, with longer overall tenures that will increase debt servicing capacity ofprojects.122

ANNEX XIII:ADVANCED FOSSIL FUEL-BASED POWERGENERATION – FINANCING CHALLENGESByMr. Subhranshu PatnaikSenior Director (Partner)Deloitte Touche Tohmatsu India Private LimitedGurgaon, Haryana, IndiaA. Sector overviewThe deficit situation has improved in financial year 2010-11, partly on account of lowergrowth in demand and partly on account of underutilization of existing capacity andtransmission and distribution (T&D) losses (Table 3-12). During 2010-11 energy availabilityincreased by 5.6 per cent over the previous year and peak met increased by 6per cent. Peak demand has grown at an average rate of 7.1 per cent in the last fiveyears till 2009-10 (9 per cent in 2009-10). During the same period, energy consumptiongrew at an average of 6.3 per cent (10 per cent in FY 2006-07). In addition, the installedcapacity has grown at an average of 6.9 per cent in the last six years.Table 3-12: Power supply position in 2010-2011 (actual) and 2011-2012 (provisional)Component 2010-11 2011-12Energy (MU) Peak (MU) Energy (MU) Peak (MU)Requirement 861,591 122,287 933,741 136,193Availability 788,355 110,256 837,374 118,676Shortage 73,236 12,031 96,367 17,517Percentage 8.5 9.8 10.3 12.9In the Five-Year Plan (FYP) periods from 8 th to 10 th – i.e. 15 years – only 56,000 MWwas added. However, the 11 th FYP period achieved 54,000 MW. Private playerscontributed only 13 per cent to the capacity added in the 10 th FYP, but contributed to32 per cent addition till 2010-11 in the 11 th FYP. Delay in engineering, procurement andconstruction (EPC) was the main reason for failing to achieve the target in the 10 th FYPperiod. A shortfall of around 14,000 MW in the 11 th FYP period was on account of EPCdelay; coal availability has been the other reason for delay (likely to be more acute inthe 12 th FYP period).Guided by Section 63 of Electricity Act, 2003, the National Tariff Policy mandates theutilities to procure power through competitive bidding route. Before 6 January 2006,approval of power purchase agreement (PPA) was governed through individual StateRegulatory Acts, and was on a cost plus basis and offered a regulated return of only 14per cent. There was lack of clarity on the basis for approval of PPA and the scope fornegotiations on almost every cost item resulted in long-drawn processes. Since6 January 2006, however, the National Tariff Policy mandates that the power procurement123

for future requirements should be through a transparent competitive bidding mechanismthat follows process as per the guidelines issued by the Union Government. Thecompetitive bidding mechanism allows for the bidder to bid on a competitive returnbasis and the process is transparent and time-bound. All new public sector projectswill have to take the competitive bidding route.In general, State Regulatory Commissions have been hesitant to increase tariffs, withsome states going without tariff hikes for up to 7-8 years (Figure 3-32). T&D losseshave decreased over the last six years but still are more than 25 per cent, with onlyAndhra Pradesh, Punjab, Gujarat and Tamil Nadu achieving losses less than 20 percent. Bihar, Jharkhand, Orissa and Madhya Pradesh utilities have T&D losses of morethan 40 per cent (Figure 3-33).Figure 3-32: Average retail tariff in selected Indian statesAverage unit price (Rs)5.004.003.00MaharashtraRajasthanGujaratTamil NaduKarnatakaAndhra Pradesh2.002006-20072007-2008 2008-2009 2009-2010 2010-2011Financial yearsFigure 3-33: T&D losses in selected Indian states (2004-2009)35Loss (per cent)3025202004 2005 2006 2007 2008 2009YearsThe financial health of most state utilities is deteriorating. At the end of 2009-10, all thestate utilities together registered a loss of Rs 820 billion (Table 3-13). The five states of124

Maharashtra, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh contributed75 per cent of the losses in 2009-10, which account for 40 per cent of total sales inIndia. The tariff hikes proposed are not consistent with rise in costs of distributionutilities, and only the state utilities in Kerala, Chhattisgarh, Delhi and Gujarat continueto be profit-making. Public sector banks finance more than 70 per cent of the losses.Table 3-13: Combined revenue and losses of state utilitiesParticulars (Rs billion)Financial years2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 TotalRevenue 1,500 1,340 1,190 1,070 900 6,000Subsidies 300 250 170 130 120 970Other income 70 60 60 50 50 290Total income 1,870 1,650 1,420 1,250 1,070 7,260Total expenditure 2,140 1,910 1,560 1,350 1,120 8,080Net loss before subsidies (570) (510) (310) (230) (170) (1,790)Net loss after subsidies (270) (260) (140) (100) (50) (820)B. Fuel scenario – the need for advanced technologiesWith coal production remaining stagnant, demand for coal rose by about 8 per cent peryear during the 11 th FYP, and is expected to rise further through the 12 th FYP. Importdependence by the end of the 12 th Plan is expected to increase (Table 3-14).Table 3-14: Projected primary commercial energy requirementFuel 2010-11 (mtoe) 2016-17 (mtoe)Oil 164.32 204.8of which imports 125.5 (76.4%) 164.8 (80.5%)Natural Gas & LNG 57.99 87.22of which imports 10.99 (19%) 24.8 (28.4%)Coal 272.86 406.78of which imports 54 (19.8%) 90 (22.1%)Lignite 9.52 14Hydro 10.31 14.85of which imports 0.48 (4.6%) 0.52 (3.5%)Nuclear 6.86 9.14Renewables 0.95 1.29Total energy 522.81 738.07Total imports 190.97 280.12Percentage of total 36.53 37.95125

Short supply of coal has started affecting thermal power plants. Coal India Limited(CIL) is currently unable to ramp up production capacity as required to maintain stocksin thermal plants. Around 25-30 power plants have critical stock of less than 7 daysevery month. This is expected to worsen in future if CIL is unable to ramp up significantly.CIL is only promising take or pay for 50 per cent of the capacity in its PPA to privateutilities. Imported coal requirements will increase in future to offset shortage of domesticcoal.The Ministry of Coal has awarded around 105 blocks with a cumulative capacity ofaround 28,000 million tonnes, which could ideally support the addition of 180,000 MW.More than 80 per cent of the captive block have been allotted only in the last five years.Coal mine developers confront a number of issues such as:• Land acquisition – Social issues pertaining to land acquisition, rehabilitation andresettlement have delayed several projects including those of the large centralpublic sector undertaking;• Environmental and forest clearances – With the implementation of “go-no go”classifications, coal mining projects have run into further delays;• Implementing projects – Many mining projects have faced inordinate delays due tolack of experience and expertise in coal mining. Many captive coal block ownershave preferred to appoint mine developers and operators on turnkey basis;• Financing – The world has changed since the financial downturn and the minershave to face cautious financiers even when they have cash surpluses to pick theequity components; and• Infrastructure development – Niners are faced with projects with no infrastructurebackbone to support productions and dispatches and the missing link betweenthe coal and their power plants.C. Challenges in financingThe macroeconomic environment is disappointing, with global economic recovery stillstalling and commodity prices being on the rise. In India, inflation continues to be high,forcing the Reserve Bank of India (RBI) to resort to aggressive monetary policy actions.CIL resorted to a rate hike (by almost 30 per cent) in February 2011 and has demandedanother round of revision in keeping with increasing input costs and pay revisions.Indian developers are thus faced with the double whammy of increasing commodityprices and cost of borrowings.Banks and Infrastructure Finance Companies (IFCs) account for about 85 per cent ofthe total loans to the power sector with banks being the primary sources of funds forprivate borrowers (Figure 3-34). The total amount of loan outstanding against the powersector is estimated at Rs 6,500 billion (US$127.78 billion), with banks accounting forapproximately 46.1 per cent, IFCs about 38.5 per cent, and government lending throughgrants and other financial institutions – such as the Life Insurance Corporation of India(LIC) and Employees’ Provident Fund Organization (EPFO) – bearing the remaining15.4 per cent. State Electricity Boards account for 46.1 per cent of loan outstanding.Sector/environment concerns have made financiers proceed with caution: some largedevelopers have multiple projects under construction and the leverage has increased.Financiers are wary of lending further without enhancement in equity base. Power126

sector concerns sharply under focus include domestic coal shortage, worrisome stateof utility finances, continuing dip in short-term price of electricity, and rising commodityprices and borrowing costs with fixed price contract for sale of electricity. Financiersare therefore bound to exercise more caution, although this need not necessarily be abarrier and could help bring the focus back on improving the preparedness of projectsfor financing as well as on addressing fundamental underlying factors impacting thesector’s sustainability.Figure 3-34: Average retail tariff in selected Indian statesPer cent1009080706050403020100Banks IFCs Govt. Other FIs300 550 610 65018040806030160State Centre Private10201050 10Some large developers have multiple projects under construction and their leveragehas increased. Financiers wary of lending further without enhancement in equity base.Power sector concerns that are sharply under focus at present are:• Domestic coal shortage vs. price pressure for imported coal;• Worrisome state of finance of state utilities;• Continuing dip in short-term price of electricity; and• Rising commodity prices and borrowing costs with fixed price contract for sale ofelectricity.Given these constraints, there is bound to be more caution exercised by financiers inthe immediate future. This is not necessarily a barrier; in fact, they help bring focusback to improving the preparedness of projects for financing as well as addressingfundamental underlying factors impacting the sector’s sustainability. In the mediumterm, concerted action from the government towards deepening the availability of longtermfinance for the sector is crucial to realize India’s dream of achieving 100 GWcapacity addition over the 12 th FYP.D. Financing advanced technologiesThe role of public financing in the life-cycle of technology financing is depicted inFigure 3-35.127

Figure 3-35: Life-cycle of technology financing – role of public financingCommercial Debt /Equity / InsuranceSupercriticalRefinancing, GuaranteeSchemes, VC Funds,Donor Grants, ClimateTechnology FundCredit Lines, SoftCapital / InterestLoans, Public/PrivateSubsidyVC Funds (Developers/ Manufacturers)Credit Lines,Guarantee SchemesInfluencing Policy SupportE.g., UltraSuper-criticalCredit LinesCommercial Debt/ Equity /InsuranceR&D Grants, CapitalSubsidy(manufacturers)E.g., C2L,IGCC, CCSPayment Security Fund, Tax incentives, etc.R&D Demonstration Deployment Diffusion CommercializationDirect Public Payment /Policy SupportFacilitating Public FinancingMechanisms (including donorfinancing)Commercial FinancingIt is essential for the power sector to have a policy road map for long-term planning.Supercritical technologies have now transited to be a baseline through policies advocatedby the Government of India. But what is the policy road map for the remaining technologies?Do they have a cost-reduction/commercialization road map? Until technologytransits to be a baseline, securing of commercial finance will be difficult. In the deployment/diffusionphase, the government should play a leading role to develop projectsunder a “Case-2” like framework:• Undertake preparatory activities for the project with land, water, fuel and clearancestied up;• Pre-agreed procurement contracts with distribution utilities;• If sufficient scale is envisaged for some technologies (e.g., ultra-supercritical), aportfolio obligation mechanism could also be followed to mandate a proportion ofprocurement from such technologies – spreads risk across utilities; and• Follow a strong pre-qualification process and a competitive bidding mechanism toselect developers/technology providers.Multi/bi-lateral financial institutions could be tapped to part-finance such projects.In the R&D/demonstration phase, central public sector units (PSUs) like NTPC couldbe mandated to undertake such projects in smaller scale, with or without the collaborationof international agencies. Focus should be on local adaptation and cost-reduction,and Idian equipment suppliers could be involved in the project life-cycle. Up-front capitalsubsidies/grants could be provided to avoid burdening distribution utilities. Here toopart-financing could be sourced from multilateral/bilateral financial institutions.128