Challenges in Developing Coal Power Plants in...

Challenges in Developing Coal Power Plants in PakistanPower Plants in Pakistan

Tahir Jawaid

September, 2014

Tahir Jawaid

The Hub Power Company Limited

Agenda

I Pakistan’s Energy Crisis Short VersionI. Pakistan’s Energy Crisis ‐ Short Versiona. Magnitude

b Rb. Reasons

II. Hubco – The Companyba. Hub Power

b. Hub Narowal

L i b Ec. Lairab Energy

d. 660 MW Coal based IPP

III Ch ll f C l P Pl t D l tIII. Challenges for Coal Power Plant Development

IV. Question & Answers


Section I: Pakistan’s Energy Crisis ‐ Short Version


25 000

Pakistan’s Energy Crisis

20,000

25,000

15,000

5,000

10,000 Computed Peak DemandCorresponding SupplySurplus/Shortfall

0

2009 2010 2011 2012 2013

‐10,000

‐5,0009 3


10,000

Source: NEPRA State of Industry Report 2013


Energy Crisis ReasonsOther 0 P ki t

G %

Coal, 0.1% Hydro, 2

Other, 0.4%

Pakistan

Gas, 29%

Nuclear,

% y ,9%

Oil, 36%5%

Energy Fuel MixTransmission Losses

Power TheftPower TheftTariff MismatchNon‐Payment


yLow Investment

Country Power Demand Projection

Assumptions:• Annual GDP Growth Rate : 4.8% (Low), 5.9% (Normal), 6.5% (High)• Annual Population Growth Rate : 1.7%• Per capita power consumption : Expected to increase from 800 kWh/y

nsion

Per capita power consumption : Expected to increase from 800 kWh/y presently to 2,538 kWh/y by 2035. In comparison, Malaysia is now at 3,724 kWh/y

Current DependableCapacity

+ M

W expa

100,000+


Source: National Transmission & Distribution Co. (NTDC), Pakistan

Section II: Hubco – The Company


Hubco – Operations

Pakistan’s 1st IPP : 1,292 MW Hub Plant

Narowal IPP : 225 MW

Pakistan’s 1st Hydel IPP : 84 MW Laraib Pakistan s 1 Hydel IPP : 84 MW Laraib

Total Capacity : 1,601 MW

Generating 10% of Pakistan’s electricity


Hub Power Plant – 1292 MW


4x323 MW STG, Fuel: RFO, COD: 1997

Narowal Power Plant – 225MW


11 Engines, 1xSTG, Fuel: RFO, COD: 2012

Laraib ‐ Pakistan’s 1st Hydel IPP – 84MW


4x21MW, Run‐of‐River, COD: 2013

Hubco – Unique Site with a Future

1500 Acres

4.3 NM / 8 KMKarachi: 35 Miles /

56 KM


Hub‐II – 660 MW Imported Coal Fired IPP

• 2x660MW at Hub Site• 2x660MW at Hub Site• Brownfield vs Greenfield• Super Critical Technology

ld k l d d• World Bank Environmental Standards• Existing Grid ConnectivityExisting Grid Connectivity• Imported Coal 5500 Kcal/Kg NAR• Coastal location, multiple logistic options


Section III: Risks & Challenges in Coal Power Plant Section III: Risks & Challenges in Coal Power Plant

Development


Project Financing Challenge• Coal is a dirty fuel & is not a favorite for western yfinancing

• Only option is Chinese based Financing• Chinese institution have little experience in PK Project Financing, most project financed are G‐to‐G

l h ld b d f d l l• Developers should be ready for delays in Financial Close thus exposure to increase in Project Cost

• With number of Power Projects being developed • With number of Power Projects being developed there will be a stress on local debt availability for projects

• Security Structure: IA & PPA guarantees being questioned due to Circular Debt


Technological Challenge

• No prior experience of installing & operating coal No prior experience of installing & operating coal based power plants in the country – HR Gap

• Fire & Explosion risk due to coal dust operating • Fire & Explosion risk due to coal dust, operating regime & equipment selection critical

• Fuel significantly different than gas & oil, solid with different handling, storage & transportation needs

• Un‐processed fuel thus variations depending upon fuel origins posing quality challengesg p g q y g

• New environmental mitigations: FGD, ESP, SCR


• Ash Disposal: 1x660 MW plant produces 250KTPA

Power Evacuation Challenge60

60

70

30.339.5

40

50

60

8.9

21.3

6

2014

10

20

30

0

Balochistan Sindh Punjab KP, GB & AJK

I t ll d C it % L d %

• Load Centers in the middle of the country• Transmission infrastructure missing to evacuate power to

Installed Capacity % Load %

• Transmission infrastructure missing to evacuate power toload centers

• Transmission planning not keeping pace with power asset


Transmission planning not keeping pace with power assetdevelopment, NTDC can do 23 KM per month

Logistic Challenge• 10x660MW will require say 20 MTPA of Bituminous Coal• 500 Ships of 40KT are required to bring 20 MT coal i‐e 1.5 ships per day

• Ports take 3 to 4 days to off load a ship using on‐board cranes, poor port infrastructure

• 1100 trucks required every day to move coal from port• Moving 10 MTPA on train require 28 trains leaving port e er da i e 1 e er 45 mins (don’t get ca ght at a every day i‐e 1 every 45 mins (don’t get caught at a railway crossing)

• Railway requires $4B investment to upgrade• Railway requires $4B investment to upgrade• Port will require significant investment, PQA is getting bulk terminal will solve part of the issue


bulk terminal will solve part of the issue• Delays in coal arrival for an IPP means LD’s

Social & Environmental Challenge

2 PicturesPictures Equals

22 Million Words

• If Environment is not respected will create Social & PR issues


p• Weak Regulatory Structure may breed compromises

Powering Pakistan

•Short Term: Coastal Power Plants based on •Short Term: Coastal Power Plants based on imported coal & few power assets in Thar, invest in power evacuation South to North

•Medium Term: Imported Coal Power Plants in f fCenter near Load Centers & few Run‐of River

• Long Term: Large Scale Hydro Assets • Long Term: Large Scale Hydro Assets developed in North like Bhasha, Dassu etc.

The Hub Power Company Limited• In‐between: Wind & Solar as grid Stabilizes

What Can Insurance Industry do for Coal IPP’s?

• Very rich database of world wide losses in coal • Very rich database of world wide losses in coal fired plants:

• Equipment Damages• Equipment Damages• Bodily Harms

• Knowledge can be made available to industry to • Knowledge can be made available to industry to understand the inherent risks & be able to mitigate themthem

• Win‐Win for both, less accidents, low premium for asset owners & nil loss pay off by insurance asset owners & nil loss pay off by insurance companies


Challenges in Developing Coal Power Plants in...

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