Performance Improvement Strategies for Thermal O&M

THERMAL POWER O&M SUMMIT SEPTEMBER 2014

24nd September 2014

 * Emerging Trends in Power Sector

• Global Case Laws

• Why O&M

• Thermal O&M Strategies

• Conclusion

• About Deesha Power Solutions

THERMAL POWER O&M SUMMIT 2014

 Generation capacity in India likely to grow at ~7% CAGR in next 5 years

GENERATION CAPACITY

Power Generation Capacity in India (GW)

CAGR 7% Comments

403 • Capacity addition has happened at ~9%

9% CAGR in the past 5 years

• Growth in capacity constrained due to:

289
267  Economic slowdown
239
218  Lack of adequate transmission
202
infrastructure

 Low off-take by State Discoms

• Capacity addition to happen at ~7%
CAGR in the next 5 years, primarily
driven by private players
FY10 FY11 FY12 FY13 FY14 FY19P

Source: Secondary Research, Analysis by Deesha Power

 Coal based capacity likely to dominate capacity addition in next 5 years

PREEMINENCE OF COAL AS FEEDSTOCK

Fuelwise Capacity Addition (FY09 – FY13) Expected Fuelwise Capacity Addition (FY14 – FY18)

Hydel
Nuclear 6%
3% Renewable
Hydel Renewable 8%
Nuclear 3% 16%
1%
Diesel
Diesel 0%
0%

Gas
Coal
3% Coal
75%
Gas 80%
5%

Source: Secondary Research, Analysis by Deesha Power

 Significant deterioration in PAF from 85% in FY08 to 80% in FY13

DETERIORATING PERFORMANCE PARAMETERS

Performance Parameters

Comments

84.8 85.1 85.1

83.9 • ~20% shortage in coal supplied against
82.6
80.0 the growth in coal-based power plant
capacity.
78.9
77.6 77.8
75.4
73.5 • Lower Capacity Utilization due to rapid

69.7 capacity addition during the period.

• Poor maintenance & Ageing fleet

FY08 FY09 FY10 FY11 FY12 FY13

PLF (%) PAF (%)

Source: Secondary Research, Analysis by Deesha Power

 IPPs expected to continue dominating capacity addition in next 5 years

GROWING SHARE OF IPPs

Break-up: Power Generation Capacity in India (GW)

Comments
CAGR
Total 202 218 239 267 289 403
FY13-18 • Private players would account for ~55%
of total installed capacity by FY18

102 7%
• Capacity addition by IPPs has grown at

74 114 ~22% CAGR in the past

70 13%
65
54 59 54 63
CPP
29 37 • Capacity addition by IPPs likely to
IPP 23 102 3%
82 86 88
State 76 79 slowdown to ~13% but would still
51 54 60 64 85 6%
Central 49 dominate overall capacity addition

2010 2011 2012 2013 2014 2019P

Source: Secondary Research, Analysis by Deesha Power

 BTG oversupply situation is forcing players to look at spares and services
revenue
BTG MANUFACTURING CAPACITY

BTG Manufacturing Capacity (%)

Comments
Others
20% • Capacity addition of ~15 GW in the
recent past

BHEL • Hardly any big contracts being awarded

60%
in the recent past, with Q1 of FY 15 was
Toshiba JSW almost dry across India
10%

• Resulting into severe undercutting

LnT MHHI
10%
• Players are forced to focus on spares
Installed Capacity: 30GW
and services

Source: Secondary Research, Analysis by Deesha Power

 Increasing shortage in technically skilled manpower is likely to drive the
outsourcing of O&M
MANPOWER SHORTAGE

Reducing Skilled Manpower Availability

Comments

Manpower Availability • Shortage of ~27,000 personnel in

(Man/MW)
10 technical cadre during 12th plan period

8
(2012-2017)
6
4 9
7 5.8
• Attracting scarce, specialized talent is a
2
0 challenging task for private IPPs

9th Plan 10th Plan 11th Plan

Source: Secondary Research, Analysis by Deesha Power

 Chinese equipments add to the O&M challenges of the industry

OTHER TRENDS IN POWER INDUSTRY

EMERGENCE OF CHINESE EQUIPMENT SUPERCRITICAL TECHNOLOGY

Thermal
Capacity added • Cleaner, more efficient and plant costs
XIth plan 39% ~36 GW comparable to subcritical technology

• Special emphasis on O&M required for

XIIth plan 40% ~47 GW 1 Supercritical units

• Operations at much higher pressure &

• Chinese companies supplying to India: Shanghai
Electric, Harbin, Dong Fang, SEPCO
• Growth of Chinese equipment driven mostly in by
Private players, e.g. Lanco, Sterlite Energy, GMR
Energy, Reliance Power, Adani Power, JSW
Energy, Essar Power
temperature compared to subcritical units
• Plant personnel require special training for
supercritical machines
• Demand management necessary for smooth
operations of Supercritical units given nature
of load variations in India

Notes : 1) Calculated assuming 75% of the total announced capacity would be commissioned 8

Source: Secondary Research, Analysis by Deesha Power

 There is clear shift in mindset from “Cost Plus” to “Cost Conscious”

IPP MINDSET

Transformation in the Power Sector over the Years

Factors pushing the power generators
towards Operational Excellence

Attribute Past Current & Future • Non availability of land

Capacity • Rising cost and unavailability of

utilization and
Focus Capacity addition feedstock in domestic market
efficient utilization
of resources
• Increasing interest rates

Tariff Competitive
Regulated • Thus Power producers have moved
determination bidding
from “cost plus” mind-set to “cost

Mind-set Cost plus Cost conscious conscious” mind-set; and this trend is

clearly visible among the IPPs.

Source: Secondary Research, Analysis by Deesha Power

 • Emerging Trends in Power Sector

* Global Case Laws

• Why O&M

• Thermal O&M Strategies

• Conclusion

• About Tata Strategic

THERMAL POWER O&M SUMMIT 2014

 Globally, power generators has been focusing on Operational Excellence to
comply with environmental regulations
GLOBAL DRIVERS FOR OPERATIONAL EXCELLANCE

Regulatory CO2-trading regulations have ramped up pressure on generators' cost and cash
1
Pressure positions.

2 Pricing Shift Energy pricing to capacity-based pricing.

Liberalization & deregulation of Power sector has resultant into new entrants
3 Global Competition
entering into power sector, thus increased the competition.

11

Source: Secondary Research, Analysis by Deesha Power

 RWE’s lignite power plant has been achieving 43% efficiency as against 35% for
such plants globally
CASE STUDY 1

BOA Concept Additional flue gas coolers

The crucial aspect of the BOA RWE Power – Additional flue gas coolers have
concept is the rise in the been installed to recover as much
operating pressure and Niederaussem
heat as possible from the flue gases
temperature of the Power Plant
and reduce the flue gas temperature
superheated steam (Germany) up to 57oC
1 2

Reducing the Condenser

Pressure

The condenser pressure is

maintained at negative
pressure of 29 to 35 millibar

12

Source: Secondary Research, Analysis by Deesha Power

 Robust EnMS is the backbone of superior performance of STEAG plant

CASE STUDY 2
STEAG Voerde Power Plant (Germany)

Energy Management Plant Management

System System

Computation of ratios and key figures Minimizing of the administrative effort

Efficient job scheduling and control

Component evaluation

Cost optimized shift planning

Optimizing
Optimizing and reporting of the use of
operating supplies and the stocks of supplies

Fore cast Assurance of compliance with processing and

quality standards

13

Source: Secondary Research, Analysis by Deesha Power

Power industry in India is undergoing a change from being in a nascent phase to
developing phase
STAGES OF MATURITY OF SELECT MARKETS

Nascent Developing Mature

Industry maturity

Canada UK Australia
France
China
Italy US
Germany
Russia
India (2012)
Mexico
Brazil
India (2003)

Market stage

Dominance of government Increasing competition, rapid Intense competition, highly

companies, large unmet demand & supply growth, deregulated, consolidation,
demand, nascent reforms greater transparency free play of market forces

14
• Emerging Trends in Power Sector

* Global Case Laws

* Why O&M

• Thermal O&M Strategies

• Conclusion

• About Tata Strategic

15
 2/3rd of lifecycle cost of power plant lies in O&M phase

IMPORTANCE OF O&M (1/3)

Breakup of life cycle cost for a typical thermal power plant

Comments

• Historically it has been considered as a

mundane activity`

• Changing scenario has led to an

increasing focus on O&M activities by

the Power Plants.

16

Source: Secondary Research, Analysis by Deesha Power

 Inefficient O&M could adversaly impact IRR by 27%

IMPORTANCE OF O&M (2/3)

Impact on Project Returns for a 1300 MW power plant

Impact of operational parameters – 27%

17

Source: Analysis by Deesha Power Solutions

Superior O&M would help in proactive regulatory compliances

IMPORTANCE OF O&M (3/3)

PERFORM ACHIEVE & TRADE (PAT) SCHEME

• Introduced by the Bureau of Energy Efficiency (BEE) under the purview of the Ministry of Power

• Aims to reduce the energy consumption in 8 energy intensive sectors by 2015

• Superior O&M could help achieve proactive regulatory compliance

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 • Emerging Trends in Power Sector

• Global Case Laws

• Why O&M

* Thermal O&M Strategies

• Conclusion

• About Deesha Power Solutions

THERMAL POWER O&M SUMMIT 2014

 Reducing unburned coal is a significant cost saving strategy for boilers

COST REDUCTION IN BOILER

A Typical 210 MW Pulverised Fuel Boiler

Exploration of Cost Reduction &
Performance Improvement opportunities

• Incomplete combustion

• High Stack temperature

• Blow down

• Soot blowing losses

• High Dry flue gas loss

• Radiation and convection heat loss

20
 Continuous monitoring of turbine heat rate is a better O&M practice

TURBINE

Barrel Type Hp Turbine

Exploration of Cost Reduction &
Performance Improvement opportunities

• Turbine heat rate and efficiency

• H P Heaters / LP heaters / LP heaters –

Performance Analysis

• Non operational of HP heaters

21
 Improving the through put of CHP is an important O&M Strategy

COAL HANDLING PLANT

A Typical Coal Handling Plant

Exploration of Cost Reduction &
Performance Improvement opportunities

• Improving the throughput.

• Use of natural day light on conveyor

galleries.

• Installation of power saver devices in

major LT.

• Using chemicals for reduced water

spray.

• Reduced number of fillings.

22
Improving ash-water ratio is significant energy usage reduction methodology

BOP

ASH HANDLING COAL MILL GEAR-BOX

• Optimisation / Improving the ash to water ratio • Use of modified gearbox sealing

arrangement.
• Adequacy of pipe sizes & Use of high

efficiency motors • Use of on-line side-stream filtration system

working on electrostatic principle.

• Rationalisation of pressures

• Use of energy efficient pumps and drives.

• Use of high performance lubricants.

23
 There are four levers for TPP Performance Improvement

KEY FOCUS AREA

Reducing
Auxiliary
Station Heat
Power
Rate (SHR)
Consumption
(APC)

Reducing Optimizing
Manpower on Spares
Cost Inventory

Combined impact through superior O&M practices for a 1300 MW plant could be in the range of
INR 75 Cr to INR 100 Cr p.a.
24

Source: Analysis by Deesha Power Solutions

 • Emerging Trends in Power Sector

• Global Case Laws

• Why O&M

• Thermal O&M Strategies

* Conclusion

• About Deesha Power Solution

THERMAL POWER O&M SUMMIT 2014

Conclusion

Coal shortage, lower capacity utilization due to rapid capacity addition, ageing fleet, manpower
shortage are some of the factors effective the project return of Thermal Power plant.

Inadequate maintenance of energy-using systems is a major cause of energy waste

Good maintenance practices can generate substantial energy savings and should be considered a
resource

SHR, APC, Manpower and Spares Optimisation are the levers for performance improvement

These efforts, sustained over time, can help in achieving excellence in O&M and unlock hidden value,
thus helping companies for sustainable and profitable power plant operations

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 • Emerging Trends in Power Sector

• Global Case Laws

• Why O&M

• Thermal O&M Strategies

• Conclusion

* About Deesha Power Solutions

THERMAL POWER O&M SUMMIT 2014

Deesha Power has offerings around consulting, events and energy cost
optimization solutions
AN OVERVIEW

• RE
• Energy Management –
Consulting Maturity
• Thermal – O&M Strategy

• Design
Events • Sector Reports

• Energy Management &

Solutions Energy Cost – Optimisation
tools

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Thank You !

Shardul Kulkarni
Chief Executive Officer

Mobile: +91 99308 50279

E-mail: shardulkukarni@gmail.com