Conference on

Balance of Plant Systems

Market Developments, Requirements, Opportunities and Challenges

May 22-23, 2012

Key Trends and Outlook

Agenda

Thermal Power Generation Trends

BoP Market Size

Key Players

Procurement Models

Issues, Challenges and Key Success Factors

Conclusion
2

Thermal Power Generation Sector Overview

Growth in Thermal Power Generation Capacity
140

132

120
Capacity (GW)

100
80

102

94

92

78

76

113

112
94

84

60

The thermal power generation capacity

during the Eleventh Plan period grew at
a CAGR of 9.4%
Y-o-Y growth rate accelerated in the
last two years of Plan period. Over
18,000 MW added during 2011-12.

40
20
0
2007-08

2008-09
Thermal

2009-10

2010-11

Coal-based

Fuel Mix of Total Installed Capacity

Renewable
12%

Hydro
20%
Coal
56%
Nuclear
2%
Diesel
1%

Gas
9%

2011-12

The share of coal in the countrys power

mix stands at 56%
The share has declined from
around 65% around a decade ago,
primarily due to renewable
However, the share is expected to
increase over the course of time
(Over 80% of Twelfth Plan
capacity is expected to be based
on coal)

Twelfth Plan Targets

Fuel

Capacity (MW)

% share

Coal

62,695

82.73

Gas

1,086

1.43

Hydro

9,204

12.14

Nuclear

2,800

3.69

75,785

100.00

Total

The Twelfth Plan target for thermal power generation capacity has been set at 75,785 MW
Coal-based capacity, at 62,695 MW accounts for 82 per cent share
Private sectors share is expected to be over 60 per cent
More than 51,000 MW, or around 70% is expected to come from units of 600 MW and above
4

Agenda

Thermal Power Generation Trends

BoP Market Size

Key Players

Procurement Models

Issues, Challenges and Key Success Factors

Conclusion
5

Share of BoP in Project Cost

Share of Key BoP Segments (% of total BoP costs)

Others
17%

Coal handling
28%

Civil works
28%
Water treatment
and cooling tower
15%

Ash handling
12%

BoP works account for approximately 45-50 per cent of the total project costs.
Within this, major share is cornered by coal handling, ash handling, water
treatment, cooling tower and civil works.
Gestation period of these key segments ranges between 12-24 months.
Leading equipment suppliers have increasingly risen up the value chain to offer
turnkey BoP solutions instead of catering to standalone orders

BoP Market Size by Value

Segments

Estimated market size during

Twelfth Plan
(Rs billion)

Annual market
(Rs billion)

Coal handling

394.65

78.93

Ash handling

179.38

35.88

Water treatment and cooling

tower

215.26

43.05

Civil works

394.65

78.93

Others

251.14

50.23

1,435.07

287.01

Total

Twelfth Plan coal-based capacity addition plans have been scaled down due to fuel
shortages. This in turn has reduced the market for BoP segment as well
Upcoming capacities involve higher unit sizes (660 MW, 800 MW, etc). This entails
greater capacity requirements on BoP equipments in each category
Upcoming supercritical technology plants could involve changes in select BoP
equipment categories such as water treatment and condensate polishing unit
7

BoP Market Size by Volume

Projected BoP Requirement for Twelfth Plan Projects*

Cooling tower

218

Demineralised water plant

211

Water treatment plants

160

Fuel Oil system

148

Ash handling Plant

148

Coal handling plant

148

Chimney

77
0

50

100

150

* Based on earlier estimates of around 76,000 MW of thermal capacity addition

200

250
8

Agenda

Thermal Power Generation Trends

BoP Market Size

Key Players

Procurement Models

Issues, Challenges and Key Success Factors

Conclusion
9

BoP Vendor base

Categories

No. of vendors

Coal handling system

15

Ash handling system

13

Cooling tower

12

DM plant

18

Source: Central Electricity Authority

The number of approved vendors for major BoP categories has increased over time.
Yet, the capacity is constrained with respect to requirement
Most suppliers also cater to various other industries for similar product offerings.
Often this has brought their existing capacity under pressure
Pre-qualification criteria for new players has been relaxed to facilitate wider
participation
Suppliers product/service offering varies from catering to standalone orders to
undertaking EPC contracts for complete power plant BoP
10

Key Players
Turnkey projects Coal handling
Tecpro
L&T
Elecon Engineering
ThysenKrupp
TRF Limited
Indure
Macawber Beekay
DC Industrial Plant
Services
McNally Bharat
Paharpur Cooling
Towers
Gammon India
BGR Energy
NBCC
Driplex Water
Engineering
Doshion Exchange
Ion Exchange
Triveni Engineers
Thermax Limited

Ash handling

Water
treatment/DM
plants, etc

Cooling tower

11

Key Players
Turnkey projects Coal handling
Tecpro
L&T
Elecon Engineering
ThysenKrupp
TRF Limited
Indure
Macawber Beekay
DC Industrial Plant
Services
McNally Bharat
Paharpur Cooling
Towers
Gammon India
BGR Energy
NBCC
Driplex Water
Engineering
Doshion Exchange
Ion Exchange
Triveni Engineers
Thermax Limited

Ash handling

Water
treatment/DM
plants, etc

Cooling tower

Leading suppliers have scaled up in

value chain for turnkey projects, in
addition to the standalone BoP
packages.
So far, there are limited players in this
segment. But this is expected to grow.
This space is also finding EPC
suppliers of BTG

12

Key Players
Turnkey projects Coal handling
Tecpro
L&T
Elecon Engineering
ThysenKrupp
TRF Limited
Indure
Macawber Beekay
DC Industrial Plant
Services
McNally Bharat
Paharpur Cooling
Towers
Gammon India
BGR Energy
CHP and AHP continue to be the main pain
NBCC
points
for the developers.
Driplex
Water
Engineering
The recent
entrant in BTG space NTPCDoshion
Exchange
has started taking up CHP/AHP
IonBHEL
Exchange
projects
Triveni
Engineers
Thermax Limited

Ash handling

Water
treatment/DM
plants, etc

Cooling tower

13

Agenda

Thermal Power Generation Trends

BoP Market Size

Key Players

Procurement Models

Issues, Challenges and Key Success Factors

Conclusion
14

Procurement Models
Multiple Package Route

+
Low cost of purchase
Control over individual
components specifications
Control over vendor
selection for each BoP
component

High project scheduling risk

due to delivery times of
different packages
Micro-level project monitoring
required
Highly skilled manpower
required for execution and
project management
High project cost risk due to
escalation factors of
individual packages

15

Procurement Models
Single EPC Route

+
Single point responsibility for
costs and schedules
Performance guarantees for
overall performance of the
system
Lower risks in project
development due to
penalties being deterrents

Majority of components are

bought outs leading to
escalated costs
Longer procurement cycle
Low control over schedule
Low flexibility for engineering
change and vendor selection
This approach could lead to
cost and time overruns

16

Procurement Models
Twin Package Route (Turnkey EPC Contracting)

This route involves separate packages for main plant and BoP equipment
Single point responsibility for design, engineering, supply, erection and
commissioning of a number of BoP packages
Less issues relating to interfacing between subsystems would lead to faster
commissioning
Shorter ordering cycle time of sub-systems
Flexibility in vendor selection and design changes without affecting overall
schedule
Coordination requirements minimised due to single point of contact
Enforceable guaranteed plant performance due to penalties imposed as per cent
of total BoP package cost

17

Agenda

Thermal Power Generation Trends

BoP Market Size

Key Players

Procurement Models

Issues, Challenges and Key Success Factors

Conclusion
18

Issues and Challenges

There are not many players in each category of BoP equipment. There have
been very few new entrants in the sector over the past few years

Limited number
of vendors

Existing vendors are stretched due to capacity constraints leading to

scheduling issues
At times, this leads to single bidder situations faced by power utilities while
tendering for BoP equipment
Over the past few years, the capacity expansion by the current players has
not been significant to meet the growing demand

Limited
capacity
expansion

Coal and ash handling systems are the major pain points for utilities
Most manufacturers opt for subcontracting the BoP package and procure the
entire system from other suppliers
Most new players are system integrators, so manufacturing capacity addition
has not happened in the real sense
The multiple package route, though allows more control, but leads to higher
project risks and involves detailed project management

Contracting
processes

Delays in finalising the executing agency often leads to retendering by state

utilities
Ambiguity in scope of work, performance guarantees, subcontracting, net
worth requirement, weightage to projects executed in India are other
contentious issues

19

Policy Issues in Consideration

BoP orders placed within six months of main plant
equipment order

Enhanced liquidated damages for delays

Finalise pre-qualification criteria for BoP vendors

Level-playing field for domestic and foreign suppliers

Mandating a central organisation to maintain a dynamic

database on BoP orders
20

Slowdown in Orders
A marked slowdown in power projects is observed due
to challenges in fuel scarcity and delayed clearances
Projects face financing challenges due to uncertain fuel
linkages, higher interest rates, etc.
Developers are cancelling equipment contracts

BTG suppliers got orders worth about Rs 95 billion

during 2011-12. In 2010-11, BHELs order book was
worth over Rs 360 billion
Equipment tenders for about 35,000 MW are stalled
A wait-and-watch approach for suppliers
BoP orders are contingent on the BTG orders by plants
Cancellation in main plant equipment orders could
impact the order flow for the entire supply chain
Suppliers may have to contend with bunching of orders
(if not cancellations) as existing bottlenecks are sorted
out
21

Key Success Factors

Turnkey
capabilities

Ability to undertake BoP package contracts will be important, with clients

increasingly looking for such capabilities in future
Provides single point of contact to the client, leading to simpler coordination
and better control over the project to the developer
In-house manufacturing of critical components provides a competitive edge
to players over those using bought-outs

In-house
manufacturing
capability

Reduces the dependence on external manufacturers and suppliers

Reduces the time overruns due to lower uncertainty
Could also provide cost competitiveness
Would lead to lower interfacing-related issues between sub systems, hence
faster commissioning

Technical tieups

Since a number of present BoP vendors are specialists in one or two areas,
technical tie-ups or collaboration would be a way to acquire expertise in
other areas
These would also help companies to backward integrate into businesses like
coal washeries, port handling operations, etc.
22

Agenda

Thermal Power Generation Trends

BoP Market Size

Key Players

Procurement Models

Issues, Challenges and Key Success Factors

Conclusion
23

Summing Up
The BoP segment presents a huge opportunity due to the huge
capacity addition plans
The market is consolidated and characterised by few players
dominating each sub-segment
Capacity addition in BoP has not matched up with the demand,
leading to project delays
There is a trend toward turnkey contracts for BoP systems due to
the various advantages offered by them
Contracting processes need to be made more robust so as to
make the segment more attractive
Turnkey capabilities, in-house manufacturing, and technical tieups are the key success factors
24

Thank You