DECLARATION - National Power Training · PDF fileDECLARATION I, Satyanarayan ... and through...
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i DECLARATION I, Satyanarayan Mahapatra, Roll No 1120812269, student of MBA-Power Management (2011- 13) at National Power Training Institute, Faridabad hereby declare that the Summer Training Report entitled ―STUDY ON REDUCTION OF BARRIERS TO R&M INTERVENTIONS IN THERMAL POWER STATIONS IN INDIA‖ is an original work and the same has not been submitted to any other Institute for the award of any other degree. A Seminar presentation of the Training Report was made on ________________________ and the suggestions as approved by the faculty were duly incorporated. Presentation In-Charge Signature of the Candidate (Faculty) Countersigned Director/Principal of the Institute
Transcript of DECLARATION - National Power Training · PDF fileDECLARATION I, Satyanarayan ... and through...
i
DECLARATION
I, Satyanarayan Mahapatra, Roll No 1120812269, student of MBA-Power Management (2011-
13) at National Power Training Institute, Faridabad hereby declare that the Summer Training
Report entitled ―STUDY ON REDUCTION OF BARRIERS TO R&M INTERVENTIONS IN
THERMAL POWER STATIONS IN INDIA‖ is an original work and the same has not been
submitted to any other Institute for the award of any other degree.
A Seminar presentation of the Training Report was made on ________________________
and the suggestions as approved by the faculty were duly incorporated.
Presentation In-Charge Signature of the Candidate
(Faculty)
Countersigned
Director/Principal of the Institute
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ACKNOWLEDGEMENT
Apart from efforts of the person doing the project, the success of any project depends
largely on the encouragements and guidelines of many others. I take this opportunity to
express my gratitude to the people who have been instrumental in the successful completion of
the project.
I thank to Shri Anish De, CEO AF-Mercados EMI for giving me the opportunity to work on such
an insightful project for CEA and World Bank. I would like to extend my thanks to my guide Mr.
Vikas Gaba, Senior Manager, AF-Mercados for showing me the right path and approach towards
the project.
I also record my sincere thanks to Mr. Sarim Siddiquie and Mr. Bharath V. for their support
during my project. I also give my immense pleasure to thank the entire staff for their
immeasurable cooperation necessary for carrying out project related work.
I feel deep sense of gratitude towards Mr. J.S.S. RAO, Principal Director, CAMPS (NPTI),
Mr.S.K.Chaudhary, Principal Director, CAMPS, Mrs. Indu Maheshwari, Dy. Director, NPTI
and Mrs. Manju Mam, Dy. Director, NPTI for arranging my internship and being a constant
source of motivation and guidance throughout the course of my internship.
I also extend my thanks to our course co-coordinator Mr. K.P.S.Parmar, Asst. Director, NPTI,
Mr. Amit Mishra, Asst. Director, NPTI and all the faculties and my batch mates in CAMPS
(NPTI), for their support and guidance throughout the course of internship.
Thank you all for being there for me always.
Satyanarayan Mahapatra
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EXECUTIVE SUMMARY
The Indian power sector suffers from considerable supply shortages. The Government of India
(GoI) is addressing this problem both through a major new build programme (including certain
fiscal incentives for construction of larger and more efficient plant) and through Renovation and
Modernization (R&M) of existing coal fired plant. Around two-thirds of India‘s existing coal
fired plant capacity is owned by State Government utilities, but much of this is reported to be in
a poor condition, with low load factors and station heat rates of up to 4,000 kcal/kwh. R&M is
required to counteract the effects of deterioration of equipment due to aging, design deficiencies,
safety and pollution related factors. Poor maintenance and inefficient operation of plant also
raises the need for R&M. Technological obsolescence too lead to non-availability of spares,
leaving no other option but to upgrade. The GoI has taken several policy initiatives to support
R&M activity which is reflected in the Electricity Act 2003 and the National Tariff Policy.
However, despite several policy and programme initiatives by the GoI pace of R&M projects in
India remains extremely slow. Clearly, there are a number of barriers affecting the rate of
investment. The GoI has requested the World Bank and Global Environment Facility (GEF) to
demonstrate the viability of energy efficient R&M practices through pilot projects in three coal-
fired generation units across the states of Maharashtra (Koradi TPP), West Bengal (Bandel TPP)
and Haryana (Panipat TPP). During plant visits and discussions with stakeholders the barriers
and constraints to promotion of energy efficient R&M projects have been identified. These
discussions and analysis are summarized in section 3 and 4 of Chapter 2 of this report. A review
of international best practices that could apply to considerations in India is documented in
section 5 of Chapter 3. Based on these, a range of potential options was developed for successful
R&M implementation. These options were analyzed and refined using cost-benefit analysis
approach and subsequently discussed with the regulators, utilities, generators and policy makers.
This report provides guidance to plan and implement renovation & modernization (R&M)
projects of thermal power plants (TPPs) in India. More specifically, it is intended to provide
input into the development of more comprehensive set of guidelines, which may be developed by
the Central Electricity Authority (CEA), in collaboration with the World Bank for the successful
implementation of R&M projects during 12th five year plan.
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LIST OF FIGURES
Figure 1.1 Business Sectors and Services of AF-Mercados
Figure 2.1 Chronological order of Policies Introduced for R&M
Figure 2.2 Research Approach towards the Project
Figure 3.1 R&M Process Cycle
Figure 3.2 Stages of Risk Identification and Mitigation Strategies
Figure 3.3 Risk Breakdown Structure (RBS)
Figure 3.4 Probabilities and Impact Matrix
Figure 3.5 Early Technical Surprises Identification Approach
Figure 3.6 Impact Assessment Matrixes
Figure 3.7 Mitigation Mechanism Table
Figure 4.1 Cost break up of plant equipment in total equipment cost
Figure 4.2 Cost break up of Services in total service cost
Figure4.3 Effect of Plant availability on Cash Inflows and Effect of efficiency on Cash Outflows
Figure 4.4 Generation addition due to reduced Heat rate and Effect of PLF and Capacity on Fuel
Requirement
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LIST OF TABLES
Table 1.1 Benefits associated with R&M of Torrent AEC Sabarmati ―D‖ Station, 110 MW
Table 3.1 Current Power Sector Market Scenario for R&M Implementation
Table 3.2: Tabulation of Technical Surprises
Table 4.1 Comparison of three level of project Assessment
Table 4.2 Risk-Responsibility matrix for R&M projects
Table 4.3 Energy Audit studies of thermal Power Plant at PTPS, Panipat
Table 4.4 Performance of Unit-1 PTPS Panipat Before and After R&M
Table 4.5 Overall Plant Performance of PTPS Panipat
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ABBREVIATIONS
AHP Ash Handling Plant
BoP Balance of Plant
BTG Boiler-Turbine-Generator
CEA Central Electricity Authority
CER Carbon Emission Reduction
CDM Clean Development Mechanism
EA Energy Audit
EE R&M Energy Efficient Renovation and Modernization
GEF Global Environment Facility
GoI Government of India
GHG Greenhouse Gas
LROT Lease, Rehabilitate, Operate and Transfer
LE Life Extension
MW Mega Watt
MYT Multi Year Tariff
MHR Maximum Heat Rate
O&M Operation and Maintenance
OEM Original Equipment Manufacturer
PAT Performance, Achieve and Trade
PLF Plant Load Factor
R&M Renovation and Modernization
RLA Residual Life Assessment
UNFCCC United Nations Framework Convention on Climate Change
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TABLE OF CONTENTS
DECLARATION…………………………………………………………………………………..i
ACKNOWLEDGEMENT .............................................................................................................. ii
EXECUTIVE SUMMARY ........................................................................................................... iii
LIST OF FIGURES ....................................................................................................................... iv
LIST OF TABLES .......................................................................................................................... v
ABBREVIATIONS ....................................................................................................................... vi
TABLE OF CONTENTS .............................................................................................................. vii
CHAPTER-1
INTRODUCTION
1.1. THERMAL POWER GENERATION IN INDIA ............................................................... 1
1.2. RENOVATION AND MODERNIZATION ....................................................................... 2
1.3. PROBLEM STATEMENT .................................................................................................. 3
1.4. OBJECTIVE ........................................................................................................................ 4
1.5. SCOPE OF WORK .............................................................................................................. 4
1.5.1. Study on Strategies to handle risks during R&M interventions: .................................. 4
1.5.2. Study on Strategies to handle technical surprises in R&M Interventions: ................... 5
1.5.3. Review of International best practices in R&M: .......................................................... 6
1.6. ORGANIZATION PROFILE .............................................................................................. 7
CHAPTER-2
LITERATURE SURVEY, POLICY AND RESEARCH METHODOLOGY
2.1. LITERATURE REVIEW .................................................................................................... 9
2.2. ANALYSIS ........................................................................................................................ 14
2.3. R&M POLICY, REGULATIONS AND PROGRAMME IN INDIA ............................... 14
2.3.1. MoP policy for R&M of existing stations-1995 ......................................................... 15
2.3.2. Electricity Act, 2003 ................................................................................................... 16
2.3.3. Energy Conservation Act, 2001 .................................................................................. 17
2.3.4. National Electricity Policy, 2005 ................................................................................ 17
2.3.5. National Tariff Policy, 2006 ....................................................................................... 18
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2.3.6. Integrated Energy Policy, 2006 .................................................................................. 18
2.3.7. CERC (Terms and Conditions of Tariff) Regulations, 2009-14 ................................ 21
2.3.8. National Renovation & Modernization Programme: .................................................. 22
2.3.9. Accelerated Generation and Supply Programme (AG&SP) ....................................... 23
2.4. BARRIERS AND CONSTRAINTS TO R&M ................................................................. 24
2.5. RESEARCH METHODOLOGY....................................................................................... 25
2.5.1. REVIEW OF PAST EXPERIENCES ........................................................................ 25
2.5.2. REVIEW OF PROJECT DOCUMENTS ................................................................... 25
2.5.3. PLANT VISITS .......................................................................................................... 26
2.5.4. REVIEW OF INTERNATIONAL EXPERIENCE .................................................... 27
2.5.5. STAKEHOLDER CONSULTATION ....................................................................... 28
CHAPTER-3
RENOVATION & MODERNIZATION AND PROPOSED GUIDELINES
3.1. INTRODUCTION ............................................................................................................. 30
3.2. R&M PROJECT IMPLEMENTATION STRATEGIES ................................................... 30
3.3. R&M PROCESS CYCLE .................................................................................................. 35
3.3.1. ASSESSMENT STAGE ......................................................................................... 35
3.3.2. PLANNING STAGE .............................................................................................. 37
3.3.3. EXECUTION STAGE ............................................................................................ 38
3.3.4. CLOSURE STAGE ................................................................................................. 38
3.3.5. POST R&M STAGE ............................................................................................... 38
3.4. GUIDELINES FOR RISK IDENTIFICATION AND MITIGATION MEASURES ........ 39
3.4.1 RISK IDENTIFICATION AND CLASSIFICATION ................................................ 40
3.4.2 RISK ASSESSMENT ................................................................................................. 41
3.4.3 RISK MITIGATION .................................................................................................. 43
3.5 GUIDELINES FOR EARLY IDENTIFICATION OF POTENTIAL TECHNICAL
SURPRISES AND WAYS OF ADDRESSING THEM ............................................................... 45
3.6 REVIEW OF INTERNATIONAL BEST PRACTICES IN R&M .................................... 49
3.6.1 UKRAINE .................................................................................................................. 51
3.6.1.1 BACKGROUND OF UKRAINE POWER SECTOR ........................................ 51
3.6.1.2 SELECTION OF UNITS AND OBJECTIVES OF CARRYING OUT R&M .. 54
3.6.1.3 FINALISATION OF SCOPE OF WORK .......................................................... 57
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3.6.1.4 PROCUREMENT PROCESS FOR SELECTION OF CONTRACTOR ........... 58
3.6.1.5 FUNDING MECHANISM OF R&M PROJECTS ............................................. 59
3.6.2 CHINA........................................................................................................................ 62
3.6.2.1 BACKGROUND OF CHINA POWER SECTOR.............................................. 62
3.6.2.2 LESSONS FROM R&M PROJECTS OF CHINA ............................................. 64
3.6.3 AUSTRALIA.............................................................................................................. 67
3.6.3.1 BACKGROUND OF AUSTRALIA POWER SECTOR ................................... 67
3.6.3.2 CONTROLS AND INCENTIVES FOR GENERATION THROUGH R&M ... 69
3.6.3.3 THE NATIONAL GREENHOUSE AND ENERGY REPORTING ACT ........ 69
3.6.3.4 GENERATOR EFFICIENCY STANDARDS.................................................... 70
3.6.3.5 FUNDING FOR LOW EMISSIONS TECHNOLOGY AND ABATEMENT .. 70
3.6.3.6 COAL21 Programme .......................................................................................... 71
3.6.3.7 GREENHOUSE GAS ABATEMENT PROGRAM (GGAP) ............................ 72
CHAPTER-4
RESULTS AND DISCUSSION
4.1. RESULTS .......................................................................................................................... 74
4.2. DISCUSSION .................................................................................................................... 79
4.3. RECOMMENDATIONS ................................................................................................... 80
CHAPTER-5
CONCLUSION AND FUTURE SCOPE OF WORK
5.1. CONCLUSION .................................................................................................................. 81
5.2. FUTURE SCOPE OF WORK ........................................................................................... 82
BIBLIOGRAPHY ......................................................................................................................... 83
ANNEXURES .............................................................................................................................. 87
1
CHAPTER-1
INTRODUCTION
1.1. THERMAL POWER GENERATION IN INDIA
The Power Sector is imperative for sustained and inclusive economic growth. At the time of
independence, the total installed capacity in the power sector was 1362 MW of which steam
power plants contributed 756 MW. The installed generation capacity has since grown manifold.
The total installed capacity as on 30.06.2012 is 205340 MW of which Thermal power plants
contributed 116333 MW (Coal based) and 18903 MW (Gas based). Though the power sector in
India has witnessed a few success stories in the last 4-5 years, the road that lies ahead of us is
dotted with innumerable challenges that result from the gaps that exist between what is
planned versus what the power sector has been able to deliver. Coal fired generation in India
accounts for 56% of the total installed generation capacity and all future estimates of capacity
addition show that coal will continue to be the dominant fuel source despite the recent short
supply in the domestic coal. The envisaged coal based capacity for the 12th plan period is
62,695 MW i.e. 82.7% of the total proposed capacity addition (75,785 MW).In addition to the
above; there is considerable gap between demand and availability of power in the country in
spite of substantial increases in capacity addition in successive Five Year Plans. India faces
severe peak shortages (Peak Deficit of 11.1% and Energy deficit of 10.2% in 2011-12). With the
high cost of new installations, it is essential to maximize generation from the existing power
stations by restoring their rated capacity as, also, the efficiency of the power stations.
This will involve, necessarily, the replacement of the existing obsolete items of equipment with
those having higher efficiencies. While much of the 1970s (and older) vintage units have been or
need to be retired, many of the coal-fired power plants (NTPC as well as state utility owned
plants) that were commissioned on and before early 1980s are now due for rehabilitation and life
extension. Most of the smaller size units ranging from 30 MW to 100 MW are operating for
more than 30 years and are of non-reheat type with low design efficiency and are operating at
poor efficiency and very low plant load factors. Such units are being considered for retirement in
a phased manner. During the 11th Plan, 47 units amounting to 2,098 MW have already been
retired. The 210-500 MW sized Units have a better track record in terms of their plant load factor
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and availability. However, many of 200/210 MW units have completed or are near the end of
their normal operating life and require inputs for life extension and modernization to upgrade and
improve their performance level.
1.2. RENOVATION AND MODERNIZATION
It is essential to view the broad meaning of the term renovation & modernization (R&M) with
specific reference to thermal power plants (TPPs) before proposing specific guidelines to R&M
planning. R&M is defined broadly as set of activities which lead to improved performance and
reliability of an existing power generation facility. It is natural for the performance and reliability
(sometimes the output, too) of a power plant to decline over its operating life. Typically R&M
requires that the plant comes off line for longer than typically scheduled outages for maintenance
and repairs.
Many of the thermal power plants in India are not operating to their full potential. Also large
numbers of thermal units are old and outlived their normal life. Renovation and Modernization
(R&M) and Life Extension (LE) of existing old power stations have been recognized as an
effective option to achieve additional generation from existing units at low cost and short
gestation period. Besides generation improvement and life extension, other benefits achieved
from R&M / LE include improvement in availability, safety, reliability and environmental
emissions. Presently, a large number of 200/210 MW units have completed or are near
completion of their normal design life. The perspective R&M programme aims at extending their
operating life further and also upgrade their performance through Energy Efficient R&M.
In addition to lowering generation costs and having positive local and global environmental
effects, R&M has the added advantage of: (i) not involving land acquisition and resettlement of
people; (ii) being able to avail of existing coal, water supply, power transmission and other
facilities and linkages; and (iii) enhancing the effective utilization of scarce fuel resources. Table
below indicates a case study of benefits associated with the R&M of a thermal power plant.
3
Table 1.1 Benefits associated with R&M of Torrent AEC Sabarmati “D” Station, 110 MW
Parameter Before R&M After R&M
Turbine Heat Rate 2200 kCal/kWh 2030 kCal/kWh
Output 105 MW 120 MW Plus
Availability after R&M 90.5% (3 years) 98% plus
Average PLF after R&M >83.5% (3 years) 87.5%
Uninterrupted Continuous
Run
- 186 days
Highest PLF - 101.2% (quarter average
post R&M)
Source: NTPC-Alstom Power Services Pvt. Ltd.
1.3. PROBLEM STATEMENT
India was able to keep pace with much needed Renovation and Modernization (R&M)
investments through the better part of the 7th, 8th and 9th Five-Year Plans, covering the fifteen
years until 2002. Since then though the R&M requirements have increased rapidly the
implementation of R&M schemes has slowed down. The 10th Plan (2002-2007) R&M target was
not fully met especially by the state generation utilities and nearly 8000 MW spilled over
into the 11th Plan, which now has an R&M requirement of nearly 27,000 MW (about a third
of the total installed coal-fired generation capacity in the country) for the 12th
Plan. But there are
many constraints and barriers within and beyond regulatory framework such as longer shut
downs of plants, procurement process, financial risk as well as various technical risks due to
which there is lack of interest among generating companies and equipment suppliers towards
R&M projects as compared to green field projects.
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1.4. OBJECTIVE
The main objective of the assignment is to review and access the risks associated with
implementation of R&M projects in thermal power stations in India and technical surprises
encountered while carrying out R&M works in thermal power stations in India. In this study a
detailed review of international best practices adopted by different entities in countries like
Ukraine, Romania, Australia, and China where R&M have been very successful in capacity
addition. Based on these reviews guidelines are to be prepared which after review of CEA will
be handy for the generating companies to carry out R&M works for effective mitigation of risks
and surprises in the R&M projects in thermal power stations.
1.5. SCOPE OF WORK
1.5.1. Study on Strategies to handle risks during R&M interventions:
a) Reviewing the past experiences of developing and implementing R&M with Life
Extension Projects. The detailed review of past R&M and Life Extension experiences
in Indian thermal power stations (list enclosed at Annexure-1) to identify the various
risks encountered while carrying out such R&M works.
b) Studying and analyzing the risks identified in detail and the consequences of such
risks on R&M projects. study and analyze the various risks associated with
development and implementation of R&M projects in technical, commercial,
contractual and market aspects including but not limited to following risks:
Policy and Regulatory Risks including recovery of Capital Cost and its impact on
post R&M Tariff;
Project Schedule and Time Over-run Risks along with its impact on Estimated
R&M Cost due to time over-run and provisions in contractual arrangements;
Cost Over-run Risks including change in scope and provisions in contractual
arrangements;
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Risks during execution phase including resources risks;
Post R&M Performance Risks and associated mitigation measures i.e. Liquidated
Damages, etc.
c) Conducting meetings and interaction with the concerned stakeholders such as State
Generating Stations, Central and State Electricity Regulatory Commissions,
Equipment Suppliers, Design Consultants, Funding Agencies and CEA to analyze the
identified risks.
d) Based on the above study and interactions with stakeholders, the Consultant shall
strategies are developed to mitigate the risks and prepare ―Guidelines for Risk
Identification and Mitigation in R&M Projects in Thermal Power Stations in India‖.
1.5.2. Study on Strategies to handle technical surprises in R&M Interventions:
a) Reviewing the past experiences of developing and implementing R&M with Life
Extension Projects the technical surprises encountered by the utilities while carrying
out the R&M works to be identified.
b) Interacting with State Generating Companies, various Suppliers and Design
Consultants to collect information on surprises experienced in R&M works of thermal
power stations and suggestions for addressing them. Based on the identified technical
surprises and experiences at thermal power stations in India strategies to be developed
to address and mitigate such technical surprises.
c) On the basis of this study and interaction with Suppliers and Design Consultants,
guidelines to be prepared for ―Early Identification of Potential Surprises in R&M
Projects and Ways of addressing them‖.
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1.5.3. Review of International best practices in R&M:
a) Detailed review of international best practices in developing and implementing the
R&M projects considering the energy efficiency and rehabilitation of thermal power
stations. The various best practices to be reviewed are as per details below:
i) Selection of Unit/Plant for R&M along with objectives of carrying out
R&M,
ii) Advanced technological options for EE R&M such as turbine up
gradation, efficient and environment friendly furnace-boilers, coal
utilization etc.
iii) Finalization of Scope of Work for R&M,
iv) Procurement Process for Selection of Consultant/Contractor,
v) Funding of R&M Projects,
vi) Cost Benefit Analysis,
vii) Implementation of R&M Projects including shut down time,
viii) Environmental safeguards,
ix) Measures for Guaranteed Performance post R&M.
b) Based on the above review, recommendation and suggestion for alternate cost-
effective options of R&M under Indian conditions with respect to the following
parameters:
i) Augmentation of project capacity,
ii) Technical feasibility,
iii) Cost effectiveness,
iv) Efficiency Improvement
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1.6. ORGANIZATION PROFILE
AF-Mercados EMI is a specialist consulting and transaction advisory firm based in Madrid, with
regional offices in Edinburgh, Rome, Ankara, Moscow, New Delhi and Beijing. In its nearly
20-year history, the company has evolved from a focus largely on energy sector
restructuring, policy and regulation to an integrated practice that supports sustainable
energy development through public and private initiatives, market-based mechanisms and
efficient management on national, regional and corporate levels. AF-Mercados EMI integrates
its in-depth experience and long history in the detailed development of electricity and gas
policy, utilities regulation and markets, with the needs of the global economy for reliable and
sustainable energy infrastructure.
We support governments to integrate low carbon energy policy objectives – the use of renewable
energies, energy efficiency and carbon-reductions strategies – and up to date incentive
mechanisms into a realistic regulation and sector operation. With the understanding of how
markets & policies affect investors, we also actively assist private firms to meet the ever-
growing demands for affordable electricity and natural gas supply, advising on financially solid
investment opportunities in infrastructure and supply.
Our approach combines innovation and experience, state-of-the- art techniques with practical,
tailor-made solutions to today s energy sector challenges. Our key people offer both, academic
qualification and the experience of having held top positions in government, regulatory
authorities and corporations. In addition our multinational, multicultural footprint and our
background of having worked in more than 60 countries around the world allow us to bring a
global perspective to local and regional issues.
In December 2010 AF-Mercados EMI became a member company of the ÅF Group, one of the
largest and fastest-growing consultancy businesses in Europe.
8
VISION:
ÅF Mercados EMI, through its hands-on energy market experience, its highly qualified experts
and international footprint aims to:
Become the leading energy consultancy in South Europe
Expand its position in key emerging energy markets such as Russia, India, Turkey and
beyond
Further establishing its key advisory role among international institutions
Offer expert advice covering the full spectrum of energy consulting services to energy
businesses
MISSION:
Respond to our clients‟ needs in a changing world
Create value for our clients and for our future
Respect our values
SECTORS AND PRACTICES:
Figure 1.1 Business Sectors and Services of AF-Mercados
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CHAPTER-2
LITERATURE SURVEY, POLICY AND RESEARCH METHODOLOGY
2.1. LITERATURE REVIEW
Gill et al (1984) mentioned in his studies that with higher rated machines in service and capacity
of boiler and ancillary plant been installed to meet the peak demand. But the expansion coupled
with escalating fuel costs has imposed an increasingly urgent need to ensure that the plant is
operated and maintained as near to optimum conditions as possible. As per his findings at the
fuel prices that time in UK if a large unit is operated at an efficiency one percentage point lower
than design it will incur an additional fuel cost of over two million pounds per year. In his
studies he has suggested many technological aspects of boiler efficiency improvement, pollution
control methods, turbine performance and monitoring through heat consumption tests, economies
of various outages etc.
Sethi et al (1986) suggested improvement in energy efficiency during conversion from heat to
electricity is one of the potential areas for energy saving keeping in view of the high capital cost
in newer capacity addition. According to his opinion Energy audit will thus go a long way in
improving energy efficiency of existing plants. This requires check on fuel consumption,
auxiliary power consumption, heat rate and heat balance of thermal systems. There is need of
introducing of practice of periodic in house performance testing of existing plants for
determining fuel consumption, boiler efficiency and turbine heat rate.
Fuzikura et al (2000) in the study investigated methodological shortcomings in the impact
assessment practices employed by environmentally concerned groups for Calaca TPP in
Philippines and proposes improvements in project assessment methodology. The second thermal
power plant project constructed in the Philippine city of Calaca was examined. This post project
review found the assessment made by environmentally concerned groups to be inaccurate. The
following factors were identified as the probable causes of their erroneous estimates: the lack of
a holistic approach in the particular sector or regional assessment; misunderstandings about the
10
environmental regulation of the Philippines; the imposition of the environmental standards of the
lending nation upon the borrower nation; excessively simplified assumptions about the second
project's cause-and-effect relationships; preoccupation with problems of the first power plant
project, particularly in confusing its soluble and insoluble aspects; which not only led to
erroneous estimates but also prevented them from examining the full range of alternative options.
Another lesson from the case was that pre-existing political bias in the minds of practitioners
tended to prevent them from examining the full range of alternative options in the event that
some adverse impact was predicted. Such political bias also had a tendency to lead to technically
erroneous methodologies in assessing project impact.
Bansal et al (2007) stated that the objective of R&M of power plants is generally to regain the
capacity lost due to plant aging, availability and include environmental performance and to
improve the reliability of plant. R&M of old power plants can deliver additional clean power,
cheaper and faster. But very less progress has been made in this area. The reason sited most often
is the shortage of funds. The State Electricity Boards (SEBs) are not in position to invest in
R&M even when institution like Power Finance Corporation (PFC) is willing to finance the
R&M projects at concessional rates. Most of the SEBs are yet to qualify even for minimum loan
requirements. The CEA has estimated that during ninth, tenth and eleventh five-year plans, an
investment of approximately Rs.225 million is required for R&M activities and live extension
services. The total expected capacity increase would be 25,000 MW [6]. New plant installation
would require over Rs.1000 million. Thus it is especially remarkably that these benefits can be
just derived by investing just 20 to 25% of the investment required for installing new power
plants. Additionally it will reduce the problems of finding new locations for power plants,
reduction of pollution of old power plants, etc. The scope of any R&M activities varies from
plant to plant. Its range may vary from a simple replacement of components to complete the
redesign of process. The specific scope of any R&M effort is generally determined after a
comprehensive study of all the critical components and auxiliaries. Such study is often termed as
residual life assessment (RLA). RLA exercise pinpoints the key weak points in the power
stations [7].Any major R&M drive involve some changes in the critical components of the power
station. These may include turbo generator, steam generator, boilers and its auxiliaries,
instrumentation and control (I&C) system, coal-handling plants, etc.
11
Chikkatur et al (2007) stated that the performance of India‘s power sector can be improved by
improving the efficiency of coal-based power plant. It allows for increased consumer benefits
through cost reduction, while enhancing energy security and helping reduce local and global
pollution through more efficient coal use. A focus on supply-side efficiency also complements
other on-going efforts on end-use efficiency. The restructuring of the Indian electricity sector
have offered an important route to improving power plant efficiency, through regulatory
mechanisms that allow for an independent tariff setting process for bulk purchases of electricity
from generators. Current tariffs based on normative benchmarks for performance norms are
hobbled by information asymmetry (where regulators do not have access to detailed performance
data). A new incentive scheme had been proposed that gets around the asymmetry problem by
setting performance benchmarks based on actual efficiency data, rather than on a normative
basis. The scheme provides direct tariff-based incentives for efficiency improvements, while
benefiting consumers by reducing electricity costs in the long run. These proposals were also
useful for regulators in other countries to incorporate similar incentives for efficiency
improvement in power generation. Three types of proposals for incentive-based efficiency
improvement have been mentioned such as; revised performance benchmark, Relative
performance incentive and Self-improvement incentive (SII) that work concomitantly with the
MHR-based benchmark to improve heat rates, similar to the existing interlinking of PLF and UI
incentives for increasing generation. Thus, the combined effect of all three elements of the
proposal would result in improved efficiency of the system. The low generation efficiency is
usually blamed on a variety of technical and institutional factors such as poor quality of coal, bad
grid conditions, low PLF, degradation due to age, lack of proper operation and maintenance at
power plants, ownership patterns, regulatory framework, and tariff structure and incentives
(CEA, 2005; Khanna and Zilberman, 1999; Shukla et al., 2004). However, regardless of reason,
it is increasingly apparent that there will not be significant improvements in power-plant
efficiency unless there are either mandates or appropriate incentives for improving efficiency.
While the Ministry of Environment and Forests in India mandates the control of air, water and
solid waste pollution from power plants, it does not provide any guidelines for overall plant
efficiency. Efficiency of power plants is generally considered to be a technical operational issue
outside the purview of the environmental guidelines, despite the fact the improving efficiency of
power plants reduces coal use (per MWh generated) and thereby directly contributes to reduction
12
of pollution. Rather, the management of operational parameters is left to electricity regulators.
To ensure high generation (i.e., high PLF), a PLF norm was set between 62.8% and 68.5% for
different power plants in 1992, wherein the full recovery of fixed charges was subject to plants
meeting the PLF norm. Furthermore, power plants were offered an incentive of Rs. 0.01/kWh for
every 1% increase in deemed PLF above the norm (Rao, 1999). The incentive was mainly
targeted at improving economy and efficiency of the generators, while encouraging private
investment into the electricity sector.
Avdiu et al (2008) stated that as per United Nation Interim Administration Mission in Kosovo-
UNMIK main activities in the KOSOVO energy sector consisted of repairing damaged facilities,
rehabilitating equipment that had been inadequately maintained during the years of conflict,
restoring production at thermal power stations and in coal mines. The most urgent tasks in power
sector for the Kosovo is rehabilitation of its thermal power plants and building new generating
capacity. In the paper he has presented energy situation in Kosovo and the dilemmas of
rehabilitation of old thermal power plant Kosovo A. Investigation regarding the feasibility of
rehabilitation of coal thermal power plant Kosovo A with five units have been done. Further in
the paper he also presented structural changes of power sector; main pieces of Kosovo legislation
regarding the interaction between energy conversion technologies and environment; evolution
trends of the pollution generated by thermal power units; difficulties encountered in the process
of alignment to the EU provisions. To ensure an acceptable extension of life for the operation of
the existing units of Kosovo A, within the frame of the EU standards for environment protection
related to the electrical generation (i.e. noxious flue gas contents such as carbon oxide, nitrogen
oxide, sulphur etc. and dust emission) it will be mandatory to analyse the incidence of coal
combustion as polluting factor and to replace or eventually repair existing electrostatic
precipitators to reduce dust emission. The paper also presents some rehabilitation aspects of
existing TPP A taking into account the technical assessment, economic cost-benefit evaluation,
with sensitivity analyses on variable parameters, and calculated the internal rate of return and
other representative economic criteria for each scenario.
Shrivastava et al (2011) in the study concluded that over use of coal input is one of the reasons
behind poor performance of inefficient power plants. It could increase emission of carbon
13
dioxide too. Over use of auxiliary power and secondary fuel oil are other reasons behind
inefficiency. Study suggested that efficient utilization of resources will lead to higher efficiency
and lesser emissions of carbon dioxide. Better operational practices and regular maintenance are
recommended to reduce input resources. Results reveal that efficiency of small category power
plants is lower than medium and large category. It would be better to plan long term strategy to
replace old aged small power plants by large power plants of latest and efficient technology
(super critical technology).According to National Perspective Plan for R&M,(Central Electricity
Authority,2009c), some power plants have completed or about to complete their economic life.
Replacement of over aged power plants with latest technology power plants is also
recommended in order to improve overall efficiency. Renovation and modernization will be the
effective method to improve technical efficiency and to extend life of a power plant in moderate
investment. Periodic renovation and modernization is recommended to minimize coal
consumption, secondary fuel oil consumption and auxiliary power consumption. Results reveal
that performance of state government owned power plant is comparatively low than central and
private owned. There would also be scope to modify managerial measures to improve
performance of state owned power plants. Study recommends that like central owned power
plants, state owned should also introduce maintenance planning department (if not introduced till
now), headed by a senior officer. This department will be responsible to organize daily, monthly
and annual review meetings of departmental heads to improve coordination. Results indicate that
performance of private owned power plant is slightly better than its counterpart of central
government owned. Mild managerial adjustment could improve performance of central owned
power plants.
Rai et al (2012) suggested that theoretically maximum achievable thermal efficiency by a power
plant by using the Rankine cycle regardless of the technologies used is approximately 63 % but
due to thermodynamic limitations and energy losses that cannot be recovered. Existing coal fired
Power plant using the Rankine cycle operates well below this limit. If the energy input to the
cycle is kept constant, increasing the pressures and temperatures for the water-steam cycle will
increase the output and the overall efficiency. However, a practical limitation to the higher
pressure and temperatures that can be achieved in a boiler is the availability of boiler materials
14
that can withstand these increased conditions over an acceptable service life. To improve the
operating efficiency of the coal-fired power plants and thereby significantly reduce CO2
emissions various recommendations on advanced technological options like Combustion
Management and Flue Gas Exhaust temperature Optimization, Cooling System Heat Loss
Recovery, Flue Gas Heat Recovery, Low-Grade Coal Drying, Intelligent Soot Blowers
Optimization etc. The development and demonstration of these technologies that target higher
efficiency at coal-fired power plants should be accelerated. For example, advanced materials,
coal cleaning and drying, co-generation of heat and power, and more efficient CO2 capture
technologies all need to be deployed. In addition to these efficiency improvements, the
deployment of CO2capture and storage (CCS) technology is vital.
2.2. ANALYSIS
Although a lot of research has been done and many techniques are proposed by eminent people
for R&M implementation but still there is no standard set of guidelines available in India for
reduction of barriers to R&M projects in thermal power plants. Hence in order to achieve the 12th
plan target of capacity addition through R&M, I have proposed a set of guidelines through my
research work based on best practises followed by other countries. During my plant visits with
the consultation of utilities and various stakeholders the existing barriers and constraints has
been identified and the measures to mitigate them have been suggested.
2.3. R&M POLICY, REGULATIONS AND PROGRAMME IN INDIA
R&M of generation utilities were given prime importance by the government to improve the
operational performance and overall efficiency. Consequently, GoI initiated a centrally
sponsored R&M programme in a structured manner in 1984. However, with some initial success,
the programme did not progress as per schedule mainly due to non-availability of funds and poor
financial condition of State Electricity Board (SEBs). As a result, importance of private
investment was felt in order to address the financial constraints in R&M implementation. With
this consideration, GoI announced Independent Power Producer (IPP) policy in 1991. The policy
15
brought much needed private investment in the sector and a new avenue of financing of R&M of
power plants got opened up. In order to mobilize the private investment, Ministry of Power
(MoP) came out with a policy framework for private sector participation in R&M of existing
power stations. MoP policy was followed by various other provisions represented in a
chronological order as follows:
Figure 2.1 Chronological order of Policies Introduced for R&M
2.3.1. MoP policy for R&M of existing stations-1995
The policy introduced on October, 1995, laid out the framework for private sector participation
in R&M of existing power stations. The policy advocates private sector participation in R&M for
the following reasons:
Relative economics: Private sector involvement would result participation by larger number of
players, thereby increasing competition in choice of supply and making it cost effective.
Risks: In privatized R&M, risks associated with time and cost overruns, plans and design,
operational risks and shortfall in realizing target improvement would be transferred to the private
sector.
Financing other priority areas: Private sector involvement will result in generation of
resources and will reduce calls on limited public sector finances. The public sector finances
16
could then be used to finance other priority areas such as system up gradation, improvement in
metering etc.
Resulting price of energy: The higher cost of private financing will find reflection in the
resulting energy prices. By providing a closer reflection of real current costs, competitively
derived prices of privatized R&M, would help eliminate hidden subsidies that are detrimental to
effective functioning. The policy recognized that ―for most SEBs, the alternative of traditional
financing no longer exists; the choice for them is to postpone R&M for some- perhaps for all-
times (foregoing the benefits correspondingly) or to draft private investment from among the
different forms available‖. However, the options identified are only illustrative and the choice
and initiative would lie with the states. The remaining aspects of the policy document set out
issues related to payment security, contracts &agreements and the procedure for implementation
of R&M through competitive bidding.
2.3.2. Electricity Act, 2003
The EA, 2003 is the primary legislative instrument which governs the electricity supply industry
in India. The salient provisions of the act on R&M are:
As per section 73(m), it is the duty of CEA to give advice to generating companies on
matters that enable them to operate in ―an improved manner‖.
As per section 79(2) and 86(2) (i), it is the duty of regulatory commission to be guided by
the encouragement of competition, efficiency, the economical use of resources, improved
performance and the need to reward efficiency in performance.
From the above provisions, it is clear that the Act provides a framework under which the
central and state level bodies are expected to take account of measures that promote
efficiency through improved performance. This includes R&M measures which reward
generators to improve efficiency by providing them suitable incentives.
17
2.3.3. Energy Conservation Act, 2001
Similar to EA 2003, the Energy Conservation Act, 2001 contain provisions related to the
promotion, efficient use and consumption of energy. It empowers the Central Government to
force inefficient generation utilities to take ―appropriate measures‖ to increase energy conversion
efficiency in their operations.
2.3.4. National Electricity Policy, 2005
National Electricity Policy is determined by the GoI, in accordance with the provisions of the
Electricity Act and in consultation with the various stakeholders of the electricity industry.
The salient provisions of NEP related to R&M are:
R&M for achieving higher efficiency levels needs to be pursued vigorously and all
existing generation capacity should be brought to minimum acceptable standards.
For projects performing below acceptable standards, R&M should be undertaken as per
well-defined plans featuring necessary cost benefit analysis. If economic operation does
not appear feasible through R&M, then there may be no alternative to closure of such
plants as the last resort.
In case of plants with poor O&M record and persisting operational problems, alternative
strategies including change in management may need to be considered so as to improve
efficiency to acceptable levels of these power stations.
The NEP imposes somewhat stronger demands in relation to R&M than the Electricity
Act or Energy Conservation Act, since it clearly specifies that R&M for achieving higher
efficiency levels needs to be pursued vigorously.
18
2.3.5. National Tariff Policy, 2006
The National Tariff Policy came out in 2006 in accordance with the provisions of EA 2003. The
salient provisions of the policy regarding R&M are:
R&M for higher efficiency levels needs to be encouraged, but it must not include
periodic overhauls.
Consistent with the overall objectives, a Multi-Year Tariff (MYT) framework may be
prescribed which should cover capital investments necessary for R&M and an incentive
framework to share the benefits of efficiency improvement between the utilities and the
beneficiaries with reference to revised and specific performance norms to be fixed by the
appropriate commission.
Appropriate regulatory costs required for pre-determined efficiency gains and/or for
sustenance of high level performance would need to be assessed by the appropriate
regulatory commission.
Just like NEP, NTP also recognized the role of R&M in the generation sector. However,
NTP suggested a overall regulatory framework for functioning and promotion of R&M
activities.
2.3.6. Integrated Energy Policy, 2006
Integrated Energy Policy came out in 2006 with an overall objective for sustainable growth with
energy security and improved efficiency. The salient provisions of IEP, 2006 related to R&M
are:
Rehabilitation of existing thermal stations could raise capacity at least cost in the short-
term and must be taken urgently.
Incentives for increasing the energy efficiency of thermal power stations need to be
provided through appropriate pricing and policy interventions.
19
IEP also specified the importance of R&M and recognized the fact of energy efficiency
as the most important virtual energy supply source over the next
Guidelines for R&M/LE works for power generating stations-2009
With a view to expedite the R&M/ LE works during the Xth plan period, GoI, MoP issued
guidelines in Feb, 2004. The guidelines provided a framework to be followed if generators are to
get benefit from debt financing from the PFC (Power Finance Corporation) at an interest rate
subsidy of 3-4 percent.
The guidelines outlined three main categories of plant that can be considered for R&M and Life
Extension:
i) Plants that has been under long shut down or that has a very low level of performance i.e.
PLF below 40 percent - Decision to revive/scrap has to be taken by the consultant.
ii) Plants that do not operate to a desired level of performance i.e. having PLF between 40-
60 percent - Performance of these units is to be improved by taking R&M and LE
measures.
iii) Plants operating at satisfactory levels of performance but where performance can be
further improved/ sustained (PLF above 60 percent) - Efforts need to be made to further
improve the performance and sustain high levels of performance. Latest O&M practices
and RLA studies should be taken up to reduce cost of generation as well as to extend the
life of the units.
However, a need was felt to revise the guidelines due to:
Delays in achieving desired completion targets.
Constraints in supply of materials resulting in time/ cost overrun.
Large number of units of 200 MW capacities is becoming due for R&M and LE Works
Shift in objective from ‗generation maximization‘ to performance optimization
20
Consequently, the guidelines were revised in 2009 by MoP for R&M/LE works for power
generating stations.
Salient features of new guidelines:
The new guidelines laid down the framework for the scope and the implementation of
R&M and LE&U schemes. Moreover, it specified the cost estimates along with cost-
benefit analysis.
Lastly, similar to the MoP policy on R&M, it specified same three options for
participation of private sector in LE&U programme.
Methodology of implementation of R&M and LE&U schemes
R&M works
The guidelines recognized that power utilities are adopting two main variants in implementation
of R&M programme which are:
A rolling plan in which the activities/ schemes identified for R&M are implemented in
phases depending on the availability of particular system/ unit shutdown.
A comprehensive scheme is implemented in a single stretch and taking unit‘s planned
shutdown after ensuring all inputs and supply of materials.
The methodology for implementation is to be decided by the utility. However the option of
comprehensive scheme is preferable due to well definable and quantifiable benefits.
LE&U works
In order to facilitate the implementation of LE&U works, utilities may appoint a reputed
consultant for rapid life assessment, condition assessment, energy auditing, performance
tests, environmental studies, preparation of DPR etc.
21
Based on DPR, a detailed technical specification & contract document may be prepared
which includes detailed scope of work, responsibilities to be shared with regard to
implementation of LE&U works and time frame for implementation of activities.
Monitoring the progress of implementation of R&M/LE schemes -R&M/LE&U schemes
of INR 100 crore and above shall be monitored by MoP/ CEA.
Physical and financial progress report in prescribed format shall be submitted to CEA on
regularly basis.
Cost estimates
The cost of LE&U shall not exceed 50 percent of the EPC cost of a new generating unit
of indigenous origin (such as BHEL-Bharat Heavy Electricals Limited). However, a
detailed study should be carried out to ensure its techno-economic viability.
In cases, where the cost is estimated to exceed the above limits, a detailed cost
comparison & cost benefit analysis shall be carried out between the R& M/ LE work and
that of setting up a new green field plant.
2.3.7. CERC (Terms and Conditions of Tariff) Regulations, 2009-14
As per the CERC tariff regulations, provisions related to R&M are:
The generating company or the transmission licensee, for meeting the expenditure on R&M for
the purpose of extension of life beyond the useful life of the associated facility, shall make an
application before the Commission for approval of the proposal. The application for the approval
should be accompanied with a Detailed Project Report (DPR).
The approval shall be granted after due consideration of reasonableness of the cost estimates,
financing plan, schedule of completion, interest during construction, use of efficient technology,
cost-benefit analysis, and such other factors as may be considered relevant by the Commission.
22
Any expenditure incurred or projected to be incurred and admitted by the Commission after
prudence check based on the estimates of R&M expenditure and life extension, and after
deducting the accumulated depreciation already recovered from the original project cost, shall
form the basis for determination of tariff.
For a coal-based/ lignite fired thermal generating station, the generating company, may, in its
discretion, avail of a ‗special allowance‘ in accordance with the norms as compensation for
meeting the requirement of expenses including R&M beyond the useful life of the generating
station or a unit thereof. In such an event revision of the capital cost shall not be considered and
the applicable operational norms shall not be relaxed but the special allowance shall be included
in the annual fixed cost.
The allowed special allowance would be @ INR 5 lakh per MW per annum in 2009-10 and
thereafter escalated @ 5.72 percent every year during the tariff period 2009-14, unit-wise from
the next financial year from the respective date of the completion of useful life with reference to
the date of commercial operation of the respective unit of the generating station. Moreover, no
such allowance shall be applicable for a generating station or unit for which R&M has been
undertaken and the expenditure has been admitted by the Commission before commencement of
these regulations, or for a generating station or unit which is in a depleted condition or operating
under relaxed operational and performance norms.
2.3.8. National Renovation & Modernization Programme:
In order to improve performance of underperforming thermal power stations in the country, GoI
initiated National Renovation and Modernization Programme in 1984. Financial assistance for
implementing R&M works was provided by GoI. In the first phase, the programme covered 34
thermal power stations involving 163 thermal units. The first phase was successfully completed
in the year 1992 and an additional generation of 10,000 MU annum was achieved.
The second phase R&M programme was taken up in the year 1990-91. Loan assistance was
provided to the SEBs through PFC for R&M works. However, this programme could not
23
progress as per schedule mainly due to non-availability of funds and poor financial condition of
SEBs. However, the programme continued albeit in a different form subsequently during IXth
and Xth plan periods with resultant improved performance from thermal generating units. The
programme is being further continued in the XIth plan and future FYPs.
2.3.9. Accelerated Generation and Supply Programme (AG&SP)
The Accelerated Generation and Supply Programme (AG&SP) were launched in the IXth plan
and were extended to the Xth FYP. The programme was launched with an objective of
accelerating power supply to consumers through implementation of R&M and LE extension
schemes and new generation projects. PFC was identified as an agency to provide subsidized
financing at an interest subsidy under the scheme is up to 3 percent and the subsidy for north-
eastern projects in up to 4 percent. This interest subsidy is passed on to the utilities over the life
of the loans.
Under AG&SP, during IXth plan, MoP has released INR 1,476 crore to PFC for passing it on to
eligible borrowers as per the programme. During Xth plan, funds of INR 1500 crore was
provided for the programme. Parallel to this programme, Accelerated Power Development
Programme for thermal and hydro power stations was launched in 2000-01. Under this
programme, R&M/ LE/ Uprating of old power plants were taken up. The programme provided
funds in the form of 50 percent grant and 50 percent loan. However, from Xth plan onwards, the
programme was discontinued and all funding was brought under AG&SP.
24
2.4. BARRIERS AND CONSTRAINTS TO R&M
In spite of all research work and policies undertaken R&M is still not successful in India as far as
10th
and 11th
plan is concerned. Hence CEA decided to appoint independent consultant for
identification of major barriers and prepare guidelines for implementation of R&M projects in
12th
plan for which 27,000 MW of capacity addition has been planned. The World Bank is
providing technical assistance of US $ 1.1 million as a part of GEF grant to CEA under ―Coal
Fired Generation Rehabilitation Project-India‖ for addressing the barriers to Energy Efficient
R&M of coal fired generating units in India. The project is being implemented by CEA through
appointment of consultant (AF-Mercados) for carrying out the studies. As a part of this project
team I have done detailed research for identification of barriers and constraints to R&M and also
prepared guidelines to mitigate the problems faced by various utilities. Through literature survey
and studies based on past experiences the following barriers have been identified:
R&M require long shutdowns: 4-5 months at the best that can go even up to 8-12 months
Unpredictability of shutdown duration due to technical surprises, non-availability of
spares, changes in scopes after opening the equipment etc.
Shutdowns for residual life assessments are also sometimes difficult to secure
R&M requires greater institutional involvement compared to green-field projects, while
adding less capacity.
Institutional capacities of utilities to prepare and implement projects is limited
Design, Procurement and Implementation challenges
Limited Supplier Capacity and interest
Risks and Rewards are not balanced
Poor O&M practices of Utilities in many states
Financial Constraints
Challenges in meeting National Safeguard Norms
Compliance with Environmental norms
25
2.5. RESEARCH METHODOLOGY
The graphic below highlights the overall approach proposed for undertaking various tasks.
The following sections detail out the specific approach proposed to be adopted for various
tasks of the assignment.
Figure 2.2 Research Approach towards the Project
2.5.1. REVIEW OF PAST EXPERIENCES
In order to understand the issues related to R&M project, the detailed research on past
experiences of the stakeholders in undertaking R&M for their plants has been undertaken.
This will involve consultation with the stakeholders to understand their concerns, issues, as
well as factors that influenced their decision to go ahead with R&M. Review of past
experiences will provide rich information base about the root underlying causes that motivate
utilities to go ahead with R&M of their thermal power plants.
2.5.2. REVIEW OF PROJECT DOCUMENTS
Review of project documents, plans, assumptions, contacts and other information will help in
reviewing the inherent risks and barriers inhibiting successful R&M Project. The quality of
plans as well as consistency between these plans and project requirements can be a good
indicator to the possible inherent R&M risks. This will include R&M Project DPRs of the
utilities, Design Consultant‘s reports on RLA, Energy Audits and Complete Plant
Assessment, Performance Test Reports, Presentations by different stakeholders that were
26
conducted Post R&M as Experience/Knowledge sharing to its employees, Reports by World
Bank/GEF/USAID on R&M Project, Bids and Tender Documents of R&M Projects. It is
expected that the counter-part team at the CEA will facilitate AF-Mercados EMI team‟s
access to such documents.
2.5.3. PLANT VISITS
Thermal power plants visits (list provided in annexure-2 ) have been done as part of research
methodology that have undergone R&M in order to understand the ground realities and the
experiences of the utility in evaluating, planning, tendering and executing R&M. Also,
specific plants would be chosen for which reasonable time has elapsed since R&M was
undertaken to understand whether the performance outputs were in conformance to the plant
outputs or deviations were observed. Further, issues like whether the plants are able to
maintain their performance or are there issues associated with the same. In case of deviations,
reasons for deviations will also be discussed and analyzed. The plant visit is proposed to be
undertaken in two phases:
PHASE-1: During the first phase (to be performed at early stages of the assignment) visits
will be undertaken for diagnostic study to understand the issues, concerns and the risks faced
PHASE-2: During the second phase (to be performed at later stages of the assignment) visits
will be undertaken to validate the findings derived from the study.Selection of plants for the
visits shall be done to ensure that a representative sample has been considered. The criteria
proposed for selection is as follows:
History of R&M – Whether the plants has undertaken R&M previously or not. Efforts will
be made to select plant in both categories.
Plant Capacity – Plants with different unit size (MW range) will be selected to ensure that
specific issues with plants of certain MW range are captured.
27
Equipment Supplier and Executing Agencies - Majority of the old plants run on equipment
supplied by the BHEL; however there could be other plants as well. Efforts will be made to
select plants in both the categories.
Geographical Coverage – To ensure that sample is geographically representative.
Objective of R&M for the selected plants: Specific purposes for which R&M decisions was
considered.
In undertaking the above three tasks specific facilitation and support would be required from
the CEA. This includes:
Providing authorization letters for visiting the plants and utilities of the state for
consultation purposes
Obtaining relevant documents including project plans, contracts, tender documents
(RfQ, RFP etc.) of various plants that have executed R&M.
2.5.4. REVIEW OF INTERNATIONAL EXPERIENCE
Having understood the issues and concerns faced in planning and executing R&M projects at
the national level, state utility level and the plant level (in the previous steps), AF-Mercados
EMI will undertake a detailed review of international experience in R&M. The review in
particular will aim to undertake process benchmarking covering issues such as:
a) Mechanism of selection of Unit/Plant for R&M along with objectives of carrying out
R&M
b) Advanced technological options considered for EE R&M such as turbine up-
gradation, efficient and environment friendly furnace-boilers, coal utilization etc
c) Process of Finalization of Scope of Work for R&M
d) Procurement Process for Selection of Consultant/Contractor
e) Mechanism of funding of R&M Projects
f) Methodology adopted for Cost Benefit Analysis
g) Process of implementation of R&M Projects including shut down time
28
h) Environmental safeguards
i) Measures for Guaranteed Performance post R&M
Chapter-3 provides more a detailed description of the approach proposed to be undertaken
for review of international experience.
2.5.5. STAKEHOLDER CONSULTATION
Effective Consultation Methodology that is proposed to be deployed for the assignment
which will be invaluable towards development of practical solutions that stand the test of
robust scrutiny. This research includes variety of techniques such as personal interview and
focus group discussions for similar assignments. The core focus of such consultation is to
elicit a set of qualitative and quantitative outputs from such consultation to obtain a set of
actionable outputs. For this, issues are categorized and thereafter specific views are obtained
on those parameters in a manner that aids statistical analysis which in turn aids decision.
Such statistical analysis backed by qualitative results becomes the basis of refinement of the
base propositions made to stakeholders. This sub-task will involve stakeholder consultation
with key experts and relevant entities in the sector. The purpose of the stakeholder
consultation would be to:
Obtain perspectives
Validate findings
Sharing of experiences and case studies
The methodology to the stakeholder consultation will include:
Identification of critical stakeholder groups: This step will involve the key stakeholder
group at various levels. The graphic below indicates the critical stakeholder groups for
consultation. Conducting meetings and interaction with the concerned stakeholders such as
State Generating Stations, Central and State Electricity Regulatory Commissions, Equipment
Suppliers, Design Consultants, Funding Agencies and CEA to analyze the identified risks.
29
List of identified stakeholders with whom we will hold meetings and discuss about R&M are
in Annexure 3 and indicative questions to them are also in Annexure 4.
Method of Consultation: The approach and technique adopted for consultation with various
stakeholder groups may differ from entity to entity. Broadly, the three methods extensively
used as part of various assignments include:
Surveys through structured questionnaires
One-on-one meetings
Multi-stakeholder consultations
At various stages of the assignment, the above three methods will be adopted to capture the
views of stakeholders. Box below indicates a snapshot of questionnaire developed as part of
study undertaken to review the policy aspects of hydro power development for the Finance
Commission, Government of India.
Collation of Responses and its analysis (Cross-Tabulation): Once the responses from
various stakeholder groups are in place, the responses are collated and analyzed. Responses
and outcomes of all consultations will be documented and recorded for the purpose of
reference.
Expert validation: Validation of responses received from various stakeholders is extremely
crucial to ensure meaningful outcomes. This is done through discussion with a select
stakeholder group and the Client. Box below indicates approach to the consultation process.
Identification of Issues: This step will involve documentation and listing of key issues that
are required to be address during the stakeholder discussion. Issues for stakeholders may
differ and hence its identification at early stages is very important. Based on the above study
and interactions with stakeholders, strategies to mitigate the barriers and prepare detailed set
of ―Study on Reduction of Barriers to R&M Interventions in Thermal Power Stations in
India‖.
30
CHAPTER-3
RENOVATION & MODERNIZATION AND PROPOSED GUIDELINES
3.1. INTRODUCTION
Renovation and modernization gained prominence in India since mid-1970. The government
came out with the national perspective plan for R&M/LE of thermal power plant in order to
emphasize the importance of and to encourage further investments in this segment. An
organization which plans to undertake R&M of its existing plant shall go through the R&M
process. The process starts off with corporate planning which is followed by R&M planning,
implementation and monitoring. The preceding chapter explains in depth the planning and
development stages of the R&M process. This chapter delineates further the implementation and
monitoring phase of the R&M process. First the current R& M practices has been explained post
reform era then a new set of schemes have been proposed in order to reduce the barriers and
constraints to R&M. Subsequently guidelines for risk identification and mitigation measures have
been explained in detail. The approach for identification of potential technical surprises has been
given so that the appropriate measures can be taken to avoid further delays in commissioning. A
detailed review of countries like Ukraine, China and Australia has been done to derive the best
practices followed by them for successful R&M implementation.
3.2. R&M PROJECT IMPLEMENTATION STRATEGIES
Ever since the enactment of Electricity Act 2003, there are several changes that have occurred in
the electricity market and electricity supply industry. The table below maps out the changes and
its implications for R&M project in India. The implementation strategies can be developed based
on the current power market scenario and stakeholder consultation.
31
Table 3.1 Current Power Sector Market Scenario for R&M Implementation
Characteristics /
Market Changes
Before
enactment of
the EA 2003
Current
Scenario
Implementation for R&M
Presence of Power
Markets and
Competition
Absent Present
As a result of emergence of power
markets, alternate procurement
avenues are now available to the
state utilities to prevent outages
when plants undergo R&M
Increased focus on efficiency
improvement owing to competitive
procurement of power and
possibility of extension of the
framework to state generating
companies in the near future
Degree of Private
Sector Participation Low High
Increased private sector
participation across the value
chain in the electricity supply
industry has resulted in better
response, lower lead-time and risk
sharing.
Equipment Vendors
Base Small Large
Open market policy of GoI and
increasing capacity expansion has
attracted many international
players, rubbing shoulder against
market dominant players like
BHEL by providing comparable
technological competencies and
services.
Alongside, the equipment market
has also seen emergence of several
domestic players as well, leading
to a much more diversified
equipment vendor base.
32
Focus on
Optimization Lower Higher
One of the strategies of Perform
Achieve & Trade (PAT) Scheme
of the Bureau of Energy Efficiency
(BEE) is aimed at enhancing
energy efficiency in existing
power plants and has set power
sector as one of the Designated
Consumers (DC). DCs have to
achieve notified reduction in fuel
consumption (kcal/kWh) by 2014-
15.
Along with the above there are
several generation optimization
products/modules that many new
generating plants or plants
undergoing refurbishment are
opting for to increase the overall
plant output and increase process
efficiency.
Market framework
for GHG emission
reduction and
Environmental
Compliance
Absent Present
With power sector contributing
40% to carbon emissions of India,
R&M with short gestation time
can be short and medium term
strategy to achieve National
Action Plan on Climate Change.
Although at present the
contribution of R&M towards
GHG mitigation is small, the
capabilities promise the flexibility
for responding to emerging
economic, environmental and
sustainable development needs.
33
Each of the points mentioned in the table is explained below through a strategic approach:
Presence of Power Markets has enabled the state utilities to go for alternative procurement
strategies like procuring power competitively from Trader and Power Exchanges in the
country i.e., Indian Energy Exchange (IEX) and Power Exchange of India (PXIL) in order
to negate long outages during R&M Project.
In addition to the above, Power Market overtime has now become much more
Competitive. As per the National Tariff Policy, the procurement of power by distribution
licensees has to be made through competitive bidding and thus arrangement of power
supply both in the short and medium term is no longer a constraint. Soon Central / State
public sector companies are also expected to compete with private sector to supply power
to the distribution companies through competitive bidding. The above clearly requires the
state utilities/generating plants to gear up to meet the improved efficiency requirement that
comes along with competitive conditions.
Coal Constraint No Yes
At present, acute coal shortage
looms large on the sector.
Domestic coal shortage was never
envisaged in any of the previous
plan period; however the sector
today has suddenly awakened up
to this reality.
In such extreme coal supply
constrained scenario, focus on
available coal being used in most
efficient form by the market
participants is high.
The above trend supports R&M as
energy efficient R&M results in
lowering specific coal
consumption of the plant and
hence promotes optimal
utilization.
34
Energy Efficient R&M also allows suitable performance optimization of the plant and
helps in reducing the Station Heat Rate. This traditionally has not been the focus (most of
the old plants that have undergone R&M have focused on life extension or improvement
in plant availability).
Improvement in efficiency and quality of supply allows reduction of Variable Cost of the
plant and thus helps the plant be in higher position in State Merit Order Dispatch. Further
going deeper, EE R&M allows exploration of newer technologies in Coal Blending for
reducing the cost of generation.
Higher Degree of Private Sector Participation across the entire energy sector value chain
has enabled streamlined processes for quicker response, lower lead time and efficient
delivery. R&M projects traditionally beleaguered with delays due to poor project
management, active participation of private parties from the beginning of R&M process as
design consultants, in bidding and procurement of materials, etc. can reduce the
unnecessary delays.
Increase of Equipment Vendors Base since GoI opened up the power sector to competition
has allowed bringing in market innovations and advanced technological options to Indian
Power Sector. The shift in focus from ―Generation Maximization‖ to ―Generation
Optimization‖ with efficiency enhancement, recent global forays of companies and
strategic alliances with Indian vendors can provide quicker and more reliable supply of
diverse systems and equipments to counteract the shortages and delays in R&M Project.
In addition, emergence of several domestic manufacturers has also led to diversification of
equipment supplier vendor database. GoI‘s various initiatives to focus on Optimization in
Energy sector by creating nodal agency Bureau of Energy Efficiency has resulted in
handsome savings by implementing Perform, Achieve & Trade (PAT) Scheme. Under this
scheme, power utilities can purchase Energy Saving Certificates (ESCerts) by reducing
their specific energy consumption and trade in Power Exchanges or pay penalties.
Due to the predominance of fossil fuels in the generation mix, there are large negative
environmental externalities caused by electricity generation. Market framework for GHG
emission reduction and Environmental Compliance promotes energy efficient drivers like
R&M intervention that lead to sustainability of the energy –environment system. R&M
35
Program contributes to global sustainability through GHG mitigation and it conforms to
national priorities of development of local capacities and infrastructure.
Coal Constraint faced by power project developers in India is adding significantly to the
woes of the power sector, given it is already grappling with challenges of land acquisition
and environmental clearances.
Energy Efficient R&M Intervention mitigates the problem to an extent as it allows the
utility to operate the plant at its designed parameters with lower specific coal consumption
and doesn‘t require land acquisition and environmental clearances. State utilities and
private players may also think of options like LROT (Lease, Rehabilitate, Operate and
Transfer), Sale of Plant and Joint venture.
3.3. R&M PROCESS CYCLE
Having understood the market context of the R&M, it is essential now to understand various sub-
steps of the R&M, the activities that are undertaken at each step and the stakeholders involved
during various stages of the R&M process cycle.
3.3.1. ASSESSMENT STAGE
Step 1: Most of the equipment of a power plant is subjected to high temperature and pressure and
are designed for fatigue life of about 25-30 years of operation. However, differences in the
operational practices from design operation environment may lead to premature equipment failure
or lower than expected output. This calls for systematic evaluation of the plant to understand the
available options and decide on the most optimal option. In the context of R&M these are:
Plant retirement
Maintain and operate for extended time and retire subsequently
Capital Overhaul and refurbishment
R&M and Life Extension (LE)
R&M, LE and Up-rating
36
Fig
ure
3.1
R&
M P
RO
CE
SS
CY
CL
E
37
The above decision is supported by undertaking various technical studies (often performed
through the Design Consultants employed by the State Utility). These tests include:
Residual Life Assessment
Complete Condition Assessment
Energy Audit
Past History of Plant, O&M Practices
The outputs of the above tests are then utilized for decision making and selection of optimal
option among those listed above.
3.3.2. PLANNING STAGE
Assuming that the decision of the utility is to go for R&M of the plant, the next exercise is to plan
for executing the R&M of the plant. This involves the following steps:
Step 2: The scope of the R&M Project is prepared after detailed assessment of the condition of
the plant components and evaluation of technical alternatives and constraints. The aim here is
generally to define scope in as precise terms as possible however often changes and surprises
occur when the plant is actually opened up for implementing the R&M. The utility often is faced
with the issue of level of detailing that is required at the planning stage itself vs. the time and
resources that are available to be committed for achieving marginal improvement in the scope
assessment exercise.
Step 3: Next step after the finalization of the scope of work involves evaluation of Cost-Benefit
Analysis to fulfill the objectives of the scope. Cost benefit analysis is done after preparation of
budget and evaluating various sources of fund.
Step 4: After the scope of the project is finalized, the utility decides on following tasks prior to
initiating bidding process:
Development of design specification and proposal package
Determination of procurement/bidding strategy
Approval of the R&M Plan by the Regulatory Authority
38
3.3.3. EXECUTION STAGE
Step 5: Involves the entire bid process management covering evaluation of commercial bids,
selection of most suitable bids, and negotiation of contracts and award of R&M contracts to
vendors/suppliers/OEMs takes place. Several options can be worked out for involvement of
private players in the R&M process. Some options often discussed include: (i) Lease, rehabilitate,
operate and transfer; (ii) Sale of plant; (iii) Joint venture between the private player and
public/private utilities.
The utility also needs to make Procurement Strategies and Planning for quality assurance,
inspection and expedite dispatch with sequential importance of procurement and arrival.
Step 6: The actual R&M project implementation begins after arrival of equipments to the site and
planning of shutdown of unit. One of the areas of concern towards successfully implementing
R&M often pointed out is the delay between decision to undertake R&M and actual
commencement of R&M. Lack of maintenance during this period could further deteriorate the
plant condition.
3.3.4. CLOSURE STAGE
Step 7: After the R&M work is completed, it is very essential to evaluate whether the goals and
objectives of the R&M project was achieved or not. For this post-R&M Performance Guarantee
Test is conducted.
3.3.5. POST R&M STAGE
Step 8: Operation and Maintenance Training is imparted to engineers for efficient operation of
the unit that has undergone R&M. This is very important as there are issues involved in effective
interfacing of the new installations with the existing ones, commercial issues linked to change in
tariff; actual vs. planned performance outputs etc.
39
3.4. GUIDELINES FOR RISK IDENTIFICATION AND MITIGATION MEASURES
Planning and implementing R&M projects is often witnessed by occurrence of adverse events that
can derail the objectives of the project. Thus, a well-structured and documented Risk
Management at each nodal point is of utmost importance. The main objective of Risk
Management is to increase the probability and impact of positive events and decrease the
probability and impact of negative events.
Identifying and mitigating project risks are crucial steps in managing successful R&M projects.
Today, effectively managing risk is an essential element of successful project management.
Proper risk management can assist the project manager to mitigate both known and unanticipated
risks on projects of all kinds. Failure to perform effective risk management can cause R&M
projects to exceed budget, fall behind schedule, miss critical performance targets, or exhibit any
combination of these troubles.
The figure below indicates steps for risk identification and mitigation during planning and
execution stage of the R&M.
Figure 3.2 Stages of Risk Identification and Mitigation Strategies
Though a number of factors influence R&M decisions and determine successful outcomes; a
robust risk management framework can contribute significantly towards ensuring that the project
undergoes R&M successfully. The following sections provide a description of approach proposed
to be adopted for developing guidelines for risk identification and its management.
40
3.4.1 RISK IDENTIFICATION AND CLASSIFICATION
Risk Identification consists of determining which risks are likely to affect the R&M project and
documenting the characteristics of each. Risk Identification should address both internal and
external risks. Internal risks are those that project team can control or influence whereas external
risks are those that are beyond project team‘s influence and control.
In order to undertake this task, a Risk Breakdown Structure proposed (Fig No. 10) that ensures
comprehensive and systematic identification of risks in the R&M Process. The Risk Breakdown
Structure will also identify various areas and causes of potential risks.
Figure 3.3 Risk Breakdown Structure (RBS)
Tabulation of Risk experience in each of the above stages will help in identifying the key issues
and reasons why, what and how the risks come into existence in an R&M project. The tabulation
41
can be exhaustive but ultimately this will help future R&M projects in risk identification during
conceptualization phase only.
The above risks will be classified further into the following for proper mitigation strategies:
Internal and External Risk – Classification of risks whether they are controllable or
uncontrollable. The classification may be grouped based on the themes such as regulatory risks
during the course of the R&M process, technical risks in R&M, market risks in R&M, Project
Planning and Control Risk, Regulatory and Policy Risk, Natural Calamity Risk etc.
Risk Bearer – Classification of risk borne by entities involved. The risk borne by various entities
also stems from the concerns experience by various entities in planning and implementing R&M.
Annexure 13.2 provides a list of key concerns faced by various entities involved in the R&M
process.
Impact of Occurrence – Likely impact of the risk to occur
Frequency of Occurrence – the possibility of occurrence of a particular risk
Magnitude of Risk – this implies degree of severity of the risk being faced (discussed in more
detail in the following sub-section)
The aim of the above is to focus on developing strategies for risk identification and mitigation for
risks that under the current system and mechanism are unmanageable and have a high impact.
3.4.2 RISK ASSESSMENT
Estimation of risks can involve both Qualitative Assessment and Quantitative Assessment. The
main objective is to quantify the risks wherever possible so that the impact of a particular risk is
well understood. However, at places where quantification is not feasible, qualitative risk
assessment shall be undertaken.
42
Some of the key activities that will be performed here are as follows:
Risk Probability Assessment – This investigates the likelihood that each specific risk will
occur. During the meetings with the stakeholders the level of probability for each source of risks
and its impact on each objective has been accessed and rating has been done accordingly. Risks
with low probability and impact can be included in the watch list for future monitoring.
Risk Impact Assessment – This investigates the potential effect on project objectives such as
schedule, cost, quality or performance. The Probability and Impact Matrix will be prepared based
on risk rating as illustrated in the table below.
Figure 3.4 Probabilities and Impact Matrix (ILLUSTRATIVE)
43
3.4.3 RISK MITIGATION
Risk Mitigation response involves defining steps to respond to risks. Respond to threats in R&M
Project can be mitigated by the following methods:
Avoidance
o Risk avoidance involves changing the R&M project management plan to eliminate the
threat entirely either by isolating the objectives of the project from the risk‘s impact or
change the objective that will be affected.
o For example: Extending the schedule, change the strategy or reducing the scope. Some
risks that arise early can be avoided by clarifying requirements, obtaining information,
improving communication or acquiring expertise.
Transfer
o Risk transfer requires shifting some or all of the negative impact of the R&M Project
threat, along with ownership of the responses to a third party. Transferring the risk
simply gives another party responsibility for its management- it doesn‘t eliminate it.
o Transference tools can be quite diverse and include, but not limited to, the use of
insurance, performance bonds, warrantees, guarantees etc. Risk Transference nearly
always involves payment of risk premium to the party taking the risk.
o However, there are strategies where transfer is carried out in a manner that it transfers
the risk to entity that is able to manage that risk well, hence resulting in minimizing
the impact of the identified risk. Thus, transfer could also lead to mitigation in certain
cases.
Mitigation
o Risk mitigation in R&M Project implies a reduction in the probability and impact of
an adverse risk event to be within acceptable threshold limits.
44
o Adopting less complex processes, conducting more tests or choosing more stable
suppliers, having contract flexibilities to handle surprises are some examples of
mitigation actions.
o Another way can be development of redundancy into a system may reduce the impact
from failure of original component.
Acceptance
o This strategy is adopted because it is seldom possible to eliminate all threats from a
project. Acceptance can be active (by developing a contingency reserve to execute
should the risk event occur) or passive (by accepting a lower profit if some activities
overrun)
NOTE: The strategies or mix of strategies most likely to be effective will be selected for each
risk identified in the previous stage. Specific action plan will be developed to implement the
strategies that will include primary and back-up strategies as necessary.
45
3.5 GUIDELINES FOR EARLY IDENTIFICATION OF POTENTIAL TECHNICAL
SURPRISES AND WAYS OF ADDRESSING THEM
Potential Technical Surprise is itself a type of risk which may arise due to improper assessment
of the plant and inadequate scope definition. Given that it is difficult to design and assess
technical specifications initially without actually opening the unit, upfront studies like Residual
Life Assessment, Energy Audits etc. need to be carried out. However past experiences shows
that the sometimes there is a huge time lapse between RLA Studies and actual implementation of
R&M and the units that are planned to undergo R&M do not get any maintenance priority. Both
these factors lead to further deterioration and also lead to some level of surprises experienced
when the units are actually opened for R&M. RLA and other tests are conducted by OEMs and
reputed agencies whereas in case of rest of areas like Balance of Plant (BoP) the scope is derived
from the Plant O&M. When the actual work is executed by respective suppliers, along with
changes in scope, many technical surprises are encountered.
During plant visits many such cases were identified, for example initial plan for R&M of Korba
TPP in Chhattisgarh required overhauling of Ash Handling Plant (AHP), however after
dismantling unforeseen damages required replacement of AHP. Similarly, in case of Panipat TPS
in Haryana, the Executing Agency had to change the scope of project when they found that the
boiler foundation had sunk and required additional civil work to repair the foundation. Similarly
in Obra TPP in Uttar Pradesh non-availability of spare parts led to complete replacement of
condensers by BHEL. These changes in scope are generally not compensated and Executing
Agency has to bear the losses. The anonymity of actual scope is deterrent for Bidders besides
hosts of concerns like delay between RLA studies and actual bidding, delay in payment,
fluctuations in commodity prices etc.
Hence, a three stage approach is proposed for early identification of technical surprises.
46
Figure 3.5 Early Technical Surprises Identification Approach
Stage 1: Identification of Technical Surprises
The Identification of Technical Risks shall be sub-divided in two stages. Initially, based on
review of stakeholder experiences, documents on surprises and technical barriers encountered are
framed. Then discussion with the industry experts are held about the possibilities and range of
technical surprises that R&M Project can face. Subsequently the surprises encountered by
reviewing technical reports like DPRs, RLA Studies etc. are validated to check whether the
surprises faced have been flagged or indicated initially before beginning of R&M or not.
For example in Korba as mentioned above, it is important to check whether the Design
Consultant has done analysis of the performance of AHP or not and whether a root-cause
analysis was done or not on why the performance is below the designed parameters. Such prior
detailed analysis though it takes time goes a long way in keeping the R&M Project economically
viable. In order the exhaustive list can be examined in a more meaningful and useful manner, the
technical surprises are tabulated as mentioned below.
47
Table 3.2: Tabulation of Technical Surprises (ILLUSTRATION)
PLANT SYSTEM TYPICAL EE R&M MEASURES POSSIBLE TECHNICAL SURPRISES
MAIN PLANT
Boiler and Auxiliaries Improve Combustion
Arrest air leakages
Reduce dry flue gas heat
Reduce leaks in air heater
Reduce auxiliary consumption
Replace high pressure valves, parts
Turbine and Auxiliaries Replacement/modification of HP,IP and LP turbine blades
Proper Regenerative System
Modification of cooling water pumps
Improve heat transfers and heat exchangers
Generator Increase generator rating by better insulation, cooling and sealing system
OTHERS
Control and Instrumentation System
Replacement of entire C&I system with DDC system
Advanced control system for turbine furnace etc.
New UPS system for reliability
New Stem and water Analyzer
Balance of Plant Enhance coal handling plant capacity
Strengthen Ash Handling System
Fire detection and Protection system
Enhance DM plant
Environmental and social consideration
Suppression of dust in CHP, AHP
Stage 2: Impact Assessment
Identification of Technical Risk alone will not serve the purpose unless the impacts of these
surprises can have on Scope, Cost, Schedule and Quality is assessed. This will help the
stakeholders in making proper Cost-Benefit Analysis and in the preparation of budgets.
Currently the Executing Agencies or OEMs keep a cap of certain amount to tackle technical
48
surprises but it is not based on proper scientific evaluation. An Impact Assessment Matrix is
designed that will give exhaustive possible technical surprises. Based on these surprises the
Scope, Cost, Schedule and Quality of R&M projects are determined.
Figure 3.6 Impact Assessment matrix (ILLUSTRATION)
The Impact Assessment Matrix will contain how these technical surprises can affect the overall
project on different objectives of the project.
Stage 3: Mechanism for Mitigation
After the assessment of impact technical surprises can have on R&M project, we will
recommend mechanisms to mitigate the surprises as per the table below:
Figure 3.7 Mitigation Mechanism Table (ILLUSTRATION)
49
3.6 REVIEW OF INTERNATIONAL BEST PRACTICES IN R&M
Assessment and Review of other countries reveal many similar barriers faced by India. Few of
the constraints faced by other countries are regulatory constraints (tariff and recovery
mechanism), funding constraints, inability to keep scope, schedule, cost and time of R&M
projects in check, lack of supplier‘s interest etc. However many noteworthy R&M Projects have
taken place in countries like Ukraine, Romania, Albania, China, Australia. In these countries
similar to Indian scenario it is seen that R&M is still competitive despite increasing fuel prices
(in case of India it is quality and availability of coal), increasing price of new plants, emphasis on
efficiency and emissions provided impetus to go for R&M Projects.
Though the similarity in constraints in other countries may seem despairing, it actually provides
a window to examine strategies, policies and regulation interventions of these countries on
―how‖ they overcame the barriers and risks to make R&M program successful. This is
particularly for the reason that most of the countries emphasis on efficiency and reduction of
GHG emission like in India. Many countries like in Australia, Great Britain, USA and South
Africa have paved the ways in amending regulatory incentives and market framework to
incentivize and support R&M Projects.
The usual process at first is identifying the best practices across the world and then
contextualized to the local context. This approach can sometime backfire as this approach
doesn‘t take into consideration the key issues faced internally and hence mapping sometimes has
to be abandoned in the middle. Henceforth, first step would be to understand and assess the key
issues and risks faced in India. Tabulation of issues in each stage of R&M allows clearer picture
in identifying best International Practices and also to look specifically for solutions across hosts
of countries.
Thus, the international review proposed to be carried out shall be theme/issues based. The table
below illustrates the approach proposed for capturing the International Experience.
50
Table 3.2 Mapping of International Best Practices to Indian Context
Some of the key themes where the process benchmarking3 shall be undertaken are as follows:
Mechanism of selection of Unit/Plant for R&M along with objectives of carrying out
R&M
Advanced technological options considered for EE R&M such as turbine up-gradation,
efficient and environment friendly furnace-boilers, coal utilization etc.
Process of Finalization of Scope of Work for R&M
Procurement Process for Selection of Consultant/Contractor
Mechanism of funding of R&M Projects
Methodology adopted for Cost Benefit Analysis
Process of implementation of R&M Projects including shut down time
Environmental safeguards
Measures for Guaranteed Performance post R&M
R &M Stage Key Issues Faced in Indian R &M Ukraine Romania Australia China
Assessment Stage
Improper plant assessment
Poor past O&M practice
Improper cost benefit
Limited agencies undertake assessment
Planning Stage
Improper planning of scopes and budget
Improper Risk management plan
Regulatory approvals
Procurement Stage
Improper negotiations and contracts
Suppliers reliance on design consultant's report
Different solution by suppliers
Execution and Closure Stage
Delay in delivery of components to plant site
Inability to mitigate technical surprises
Inadequate skills
Post R&M Performance stage
Efficiency gains/ perf. not realized
Unmet emissions standard
51
3.6.1 UKRAINE
3.6.1.1 BACKGROUND OF UKRAINE POWER SECTOR
Ukraine‘s power sector is structured along the major business activities: generation,
transmission, distribution and supply of electricity. Electricity generation is mainly presented by
thermal power plants and nuclear power plants. In early 2012 the total installed capacity in
Ukraine was 53,341 MW out of which 27.2 GW (51% of installed capacity of Ukrainian plants)
generated by five thermal power generation companies- Centrenergo, Donbasenergo,
Dniproenergo, Skhidenergo and Zahidenergo comprising 14 powerful thermal power plants; 4
nuclear power plants with total installed capacity of 13.8 GW united in the State Enterprise
Energoatom; 2 hydro power generation companies - Ukrhydroenergo and Dniester HPSP
comprising cascades of hydro power plants at Dnieper and Dniester rivers with total installed
capacity of 4.6 GW. Besides there is a number of combined heat & power plants (CHPs). Some
of them are being operated by local power distribution companies and other institutions while
others became separate enterprises.
The Ukrainian electricity market is currently organized under a single-buyer model. A
competitive wholesale electricity market (WEM) was established in 1996, with the state
enterprise Energorynok functioning as market administrator. Transmission is organized within
NEC (National Electricity Company) Ukrenergo, which owns and operates the high voltage
network. Distribution is carried out via 27 regional distributions and supply companies (so-called
Oblenergos).Supply is conducted by Oblenergos (suppliers at regulated tariff) and independent
(non-regulated tariff) suppliers. In the mid-1990s, the government unbundled transmission and
distribution from supply. However, in 2004, the government created a new company, Energy
Company of Ukraine, which took over the state power assets (both supply and distribution). The
grid company and nuclear operator are also state owned, although in separate companies. Several
of the regional distribution companies are in private hands and are not part of Energy Company
of Ukraine. The power sector is significantly more stable than it was several years ago, with
fewer outages, more stable grid frequency and higher levels of payment. At the same time, the
sector needs significant new investment and would benefit from a more vibrant market with
greater incentives for efficiency.
52
In the coal sector, the privatized mines attracted most investments and showed positive
production results, but privatization and restructuring slowed down by 2003. In electricity, only
six distribution companies were privatized by 2001. The remaining 21 power distributors are
partially privatized with a mix of free-floating shares and shares owned by the government or
other shareholders. Ukraine has several private companies and organizations working on energy
efficiency, as well as a state-owned energy service company, UkrESCO. In addition, several
state research institutes focus on energy- efficiency issues. In 2002 an Act was implemented for
Thermal Power Reconstruction, as per Article 18, Design and construction (new construction,
expansion, reconstruction and technical re-equipment) of electricity is based on the laws of
construction. Rigging of electricity carried out on tender basis. {Part one of Article 18 as
amended by the Law N 741-IV (741-15) of 15.05.2003}.
In 2004, the government somewhat changed the policy direction and took new steps to increase
state control in the energy sector. It reconsolidated the electricity and coal industries into large,
vertically-integrated companies, similar to Naftogaz of Ukraine, which dominates the
hydrocarbon sector. In the electricity sector, the government created the state holding Energy
Company of Ukraine (ECU) in June 2004. The holding company Coal of Ukraine was created in
the autumn of 2004 by consolidating state-owned assets, although it has since been abolished and
its assets have been transferred to the Ministry of Coal Industry. By 2003-04 it became clear that
the comprehensive energy programme were not being implemented as expected. The government
tasked the Ministry of Fuel and Energy with preparing an improved energy strategy. The
Ministry adjusted the previous draft version, using the most recent statistical data and the state
policy trends. Ukraine has been in an energy crisis at least since the gas supply disruption from
Russia in January 2006. The actual energy crisis has been triggered mostly by low energy prices
which have implications both on energy supply and energy demand. Most Ukrainian energy
providers have been unable to finance even their replacement investments as their revenues from
sales did not cover all their costs. The importance of cost-reflective energy prices has been well
recognized in Ukraine.
The Energy Strategy of Ukraine to 2030, approved by the Cabinet of Ministers of Ukraine in
March 2006 (Cabinet of Ministers, 2006a), indicates that privatisation of energy sector facilities
53
should be based on an individual approach towards each company. It also highlights the need to
apply privatization methods that would re-invest revenue from privatisation (in full or in part) in
the company privatized. It is important to ensure that privatisation takes place in a transparent
and competitive manner. The sector‘s regulation is performed by the Ministry of Fuel and
Energy and the National Electricity Regulatory Commission (NERC).
FUEL & ENERGY MINISTRY
The main function of the Fuel and Energy Ministry is implementation of the Government policy
in energy sector, regulation and reformation of the power industry and energy market. It is also
responsible for keeping integrity and reliability of the Ukrainian energy system. The Ministry
takes part in the forecasts and scheduling of energy generation, development of technical, social,
financial and other areas in the industry, as well as development and implementation of
investment policy in the industry. Fuel and Energy Ministry manages NEC Ukrenergo,
Energoatom and holding Energy Company of Ukraine which in its turn manages state‘s stakes in
the state owned power companies.
NATIONAL ELECTRICITY REGULATORY COMMISSION (NERC)
In December 1994, the National Energy Regulatory Commission (―NERC‖) was formed. It was
founded as the Commission Dealing with Issues on Electricity in 1994 and became NERC under
a new Charter approved by the Decree of the President in 1998.Laws providing for NERC‘s
regulatory authority include the Law on Electricity(1997), the Law on Natural Monopolies
(2000), and the Law on the Principles of State Regulation in the Economy (2003). NERC‘s
authority to make rules and decisions is subject to the Law of Ukraine ―On Electricity‖, Law of
Ukraine ―On Natural Monopolies‖, Regulation on NERC. The procedure set by the Law of
Ukraine ―On the basics of the State Regulatory Policy‖ imposes a variety of requirements, such
as public opportunities to comment and submission to various government agencies for
agreement, which can sometimes lead to very lengthy rule and decision‐making processes.
NERC has set about 60 technical rules since 1995; ten of these were issued in the first half of
2005 alone.
54
The major roles and responsibilities of NERC are as follows:
Regulation of natural monopolies activities in the power sector, in the oil and gas
complex and in the sphere of heat generation;
Electricity, heat, gas, oil and oil products consumers rights protection;
Issuance of licenses to entrepreneurial entities operating in the energy sector;
Ensures implementation of pricing policies in the power sector, in the oil and gas
complex and in the sphere of heat generation;
Regulation of relations in the retail electricity market
3.6.1.2 SELECTION OF UNITS AND OBJECTIVES OF CARRYING OUT R&M
Production capacities in electricity sector of Ukraine were badly out-dated by 1994. As per the
survey by clean coal technology task force in 1994, 95% of power units had already worked out
their normal service life (100,000 hours), more than a half were been working for 200,000 hours.
80% of power plants have been operating for 30 years. According to official estimates, the
residual life of thermal power plants is 5-7 years. Given high depreciation level of power plants
the future of Ukrainian electricity sector was ambiguous. Such deterioration was stipulated by
low quality fuel (with high sulphur and ash content), fickle regime of TPPs capacities due to
poor maneuverability and lack of funds for reconstruction. Nuclear power plants will approach
the end of their designed service life in 2011-2030. Proposals to implement a restructuring
programme along the lines of the British model were then discussed with Minenergo, Ukraine.
This rather complicated and, at the time, relatively untested arrangement of unbundling and
privatization was accepted by the international donors for implementation in Ukraine.
Beginning in 1994, a Clean Coal Technology Task Force was formed to demonstrate in a
concrete way how modern technologies for coal utilization could be used to benefit the thermal
power sector of Ukraine. The Task Force was formed under sponsorship of the U.S. Agency for
International Development, and membership consisted of the U.S. Department of Energy (Office
of Fossil Energy), the Ukrainian Ministry of Energy (Minenergo), and the Ukrainian Academy of
Sciences. The Task Force performed a project definition study for upgrading the anthracite
burning generating stations of Ukraine that were not performing well in the Donbass region,
named Lugansk GRES. The study was completed in 1997 with the preparation of engineering
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and financial analyses for the upgrade project. It was observed in the study that Power plants
built in the period 1959-1975 do not comply with modem standards of economic efficiency and
environment protection. As about 80% of fossil power units have exceeded their lifetime
(100,000 operation hours), thermal power plants need extensive reconstruction.
Ministry of Energy of Ukraine (Minenergo), Federal Energy Technology Centre, US Department
of Energy, Pittsburgh, Babcock & Wilcox and Burns and Roe Enterprises, USA and Coal Energy
Technology Centre (CETC), Kyiv, a division of the Ukrainian National Academy of Sciences
cooperatively devised the power plant upgrade project. Collecting data, inspection and
evaluation of the plant equipment, engineering and financial analysis to determine optimal
upgrading plans for different levels of capital investment that was performed during more than
two years period have confirmed technical possibility and economic feasibility of reconstruction
of different power plants in Ukraine.
Burns and Roe Enterprises, Inc. within the framework of the U S. Agency for International
Development (USAID) Emergency Energy Program for the Newly Independent States (NIS),
Energy Efficiency and Reliability - Ukraine, Task 1- Technology Based Project, Energy
Efficiency and Market Reform Project (EEMRP), Task 2 - Power Plants Combustion Efficiency.
As per the survey the following observations were made as per Ukrainian average figures:
The net efficiency of power plants based on condition assessment of boilers, turbines,
generators, and process steam parameters etc. which was found to be 31% for
GRES(condenser type TPP) and 55% for TEZ(Co-generation type TPP).
The CHP plants were operating in extraction-condensing mode which is less energy
efficient than back the back pressure operation due to low availability of units annual
load factor was very low.
Average gross electric efficiency (34% for GRES and 29% for TEZ) that are almost 5%
below the modern plants.
Auxiliary power consumption was 10% which is 4-5% more than global average. It‘s due
to inefficient motors, pumps, fans, drives, regulation and control systems.
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The average sulphur oxide emissions from coal-fired plants are about 20 times higher
than the LCP values for new plants, and 10 times higher than the LCP values for existing
plants.
The average operation hours of steam turbines exceeds 200 000 hours which can be
generally considered as upper limit for major reconstruction.
The average annual operation time of turbines, boilers and other main equipment is about
5500 hours which describes the availability of the units, but possibly also the electricity
market situation. Based on this figure, the average availability is about 65%, which are
25%-units less than in Western plants.
The average time that the turbines are operating between each start and shutdown is about
400 hours (17 days), which is very low figure and indicates problems in the reliability of
the plant.
U S AID/Kiev has submitted an energy savings program by providing instrumentation equipment
to combined heat and power plants (CHP) and power plant stations to improve combustion
efficiency of the boilers as a first step towards life extension of these plants. The purpose of
Task-2 is to implement this energy saving program at seven power and/or CHP plants. The
project team visited Ukraine September 14-0ctober 13, 1994, to select representative plants and
to gather preliminary information at the selected plants. The project teams performed combustion
audits during February and March 1995. During these audits, the project teams trained plant
personnel on the use of portable combustion efficiency instrumentation. A set of portable
combustion efficiency instrumentation was given to Zmiev plant in 1995. In 1997 the Zmiev
plant received and accepted oxygen analyzer, high range infrared thermometer, liquid flow
meter, combustion analyzer consumables, and sulphur analyzer. Installation of oxygen analyzers
was initiated at Zmiev in May 1997.The Zmiev Power Plant is presently 51% government owned
and is in the process of privatization.
The plant consists of six subcritical 200 MW units and four supercritical 300 MW units with a
total of 2400 MW installed capacity. The plant was commissioned between 1960 and 1969. The
coal supplied to the power station has poor quality, with calorific values of 3200 to 5000 kcal/kg
and 40% ash content.
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The purpose of Task -2 is to improve boiler efficiency at seven power plants and/or combined
power and district heating plants which were selected by USAID/Kiev in consultation With the
Ministry of Energy and Electrification. These plants are fired with natural gas, fuel oil or coal.
The objectives are:
To foster Improved management of boiler/plant operations by Identifying and
implementing immediately cost-effective "low cost - no cost" efficiency Improvements.
Provide equipment support to Implement low-cost operations, improve monitoring and
energy management.
Provide operation training.
Source: Audit report of Burns and Roe Enterprises, Inc. submitted to USAID
3.6.1.3 FINALISATION OF SCOPE OF WORK
The various scope of work of the repair and service manufacture enterprise as part of
rehabilitation work was as follows:
To provide reliable operation of the existing boilers and improve boiler techno economic
performance which allows competing efficiently at the Wholesale Energy Market and
getting maximum profit.
To provide reliable operation of the existing 200 MW boiler units is planned to realize by
staged reconstruction together with overhaul repair.
The scope of the reconstruction will include boiler modernization with implementation of
new solid fuel combustion technology, reconstruction of regenerative air-heater seals,
reconstruction of turbines by low-pressure rotor replacement, reconstruction or
replacement of electrostatic precipitators (ESP), implementation of SOx and NOx
removal systems.
Replacement of non-effective and worn 100 MW turbo generators by new power
equipment using new coal combustion technologies.
Improvement of ecological performance of the plant by reconstruction or replacement of
the ESPs with further implementation of advanced electronic-beam flue-gas cleaning
system at the 200-300 MW boilers.
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3.6.1.4 PROCUREMENT PROCESS FOR SELECTION OF CONTRACTOR
In Ukraine the procurement process for selection of consultant/contractor are done through a
tender committee that consist of group of specialists designated by the procuring entity who is
responsible for conducting the procurement procedure in accordance with the law of Ukraine on
Procurement of Goods, Works, and Services with State Funds. The detailed procurement
processes for Rehabilitation work of power plants are as follows:
The Tender Committee is established by the client for organization of procurement
procedures. The Tender Committee functions on a collegiate basis. Its members must be
unbiased and there must be no conflicts of interests between them.
The composition of the Tender Committee and the Regulation on the Tender Committee
are approved by the decision of the client (Genco) and the Tender Committee must
include at least 5 persons.
Experts and consultants involved in the work of tender committees on a contractual basis
in accordance with the legislation may not be members of the tender committee and are
not responsible for decisions, actions or inactivity of the tender committee and officials of
the client, participant or other persons, for the fulfillment (non-fulfillment) of
procurement contracts, as well as for consequences of such decisions, actions or
inactivity.
The work of the tender committee is managed by its Chairperson. The Chairperson of the
tender committee organizes the work of the committee and is personally responsible for
the fulfillment of the committee‘s functions. The Chairperson, Deputy Chairperson and
Secretary of the tender committee must receive a document certifying that they have
received training (qualification upgrade) in the procurement sphere following the
procedure established by the Authorized Body.
Decisions of the tender committee are presented in the form of a protocol, which must be
signed by all members of the committee who participated in the voting. Members of the
tender committee are personally responsible for their decisions in accordance with laws
of Ukraine.
The Authorized Body drafts and approved a Model Regulation for the tender committee.
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3.6.1.5 FUNDING MECHANISM OF R&M PROJECTS
A large share of assets in the Ukrainian energy sector have worked beyond their design life and
need urgent replacement or modernization. The Energy Strategy to 2030 estimates the total
investment requirements in the supply side of the energy sector at more than UAH 1 trillion
(USD 200 billion) from 2005-30 (Table 1.2), which implies a substantial higher rate of
investment than occurred in the last 15 years. In looking at the demand side, it estimates
investments in energy-efficiency improvements at UAH 102.3 billion (USD 21 billion) over the
same time period. Currently, investment in the sector is insufficient to meet the needs of the
ageing infrastructure. One reason for underinvestment is the sector‘s ownership structure: most
assets belong to the state, which cannot make all the necessary investments because it faces other
priorities for the state budget. Moreover, financing from the state budget is not always very
efficient because social or political concerns often prevail over economics. Private investment
has made inroads in the energy sector, but private companies could play an even greater role.
In general, the project implementation provides funding in the amount of 3 to 10 million USD
(approximately for Ukraine may be the sum of $ 5 million). It will consist of five stages.
Stage 1: Development of technical specifications and proposals for market readiness (description
of available resources, characteristics of the Ukrainian system of greenhouse gas emissions and
their accounting, proposals to improve existing capabilities).
Stage 2: Collection of data on greenhouse gas emissions and development of methods to manage
these data.
Stage 3: Determination of volumes of permits for greenhouse gases which will be distributed
among market makers.
Stage 4: Development of legal framework for the further implementation of the chosen model of
the market.
Stage 5: Forming of management system by the market.
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CASE STUDY: Krivoy Rog Power Plant Rehabilitation
Krivoy Rog GRES is a coal-fired power station with 3,000 MW installed capacity (10x300MW),
located in Zelenodolsk (Dnipropetrovsk region) and operated by Dniproenergo Joint Stock
Power Company, based in Zaporozhye. Because of derating, the current operating capacity is
only 2,600 MW. A number of Krivoy Rog units are nearing their design lives and vital
components are at the end of their safe metallurgical life. The Station's environmental
performance is inadequate. Serious deterioration in reliability of equipment has adversely
affecting unit generating capacity, availability and efficiency. Rebuilding or replacement of some
of these components is necessary for the continued economical, reliable and environmentally
sustainable operation of this plant.
The main development objectives of the proposed project include support for:
The full implementation of the on-going power market reforms;
Transforming Dniproenergo into a commercially oriented and financially viable modern
utility;
Implementing the sector investment plan leading to the closure of the Chernobyl nuclear
power station as agreed between the Ukraine and the G-7 by financing a priority project,
which is part of the plan;
Rehabilitating a total of 900 MW generating capacity at Krivoy Rog GRES.
Specific technical objectives include:
Extending the life of three 300 MW power units by at least 15 years;
Increasing power output through improved unit availability and thermal efficiency;
Reducing operating and maintenance costs;
Improving load-following capability;
Improving environmental performance of the plant.
Six thermal power plants have been identified by the Ministry of Power and Electrification
(Minenergo) as possible investment targets. Of these six plants, detailed rehabilitation feasibility
studies were carried out for Krivoy Rog GRES. Based on these studies, the major components of
the proposed project are:
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General Station Rehabilitation: This includes upgrading of fuel receiving and handling
facilities, including installation of a new crane; rehabilitation or replacement of parts of the
electrical system, including transformers, switchgear, cables, circuit breakers; installation of
automatic dispatch controls; upgrading of water treatment and waste water disposal; installation
of ash, S02 and NOx measuring devices; and upgrading of service facilities;
Boiler Rehabilitation (Units 6, 7, 8): This includes reconstruction of pulverizers and the air and
flue gas system; improvement of casing and insulation; replacement of high pressure parts;
upgrading/replacement of main and reheat steam piping; reconstruction of feed water system;
replacement/reconstruction of electrostatic precipitators; upgrading of instrumentation and
control; and installation of emission measuring instruments;
Turbine-Generator Rehabilitation (Units 6, 7, 8): This includes replacement of governors,
controls, medium and high pressure cylinders, condenser tubes and screens; and reconstruction
of condensate pumps, heaters and motors; Replacement of Generator for Unit 2; and
Environmental Aspects: With respect to its environmental impact, the proposed project has
been classified in the World Bank as category B, under which an environmental analysis is
required. The project is designed to bring about a substantial improvement of air quality in the
Krivoy Rog region, which is regarded as one of the most polluted regions in Ukraine. The
estimated reductions are 12,000 tons of S02, 5,000 tons of NOx, and 28,000 tons of fly ash
emissions per year. In accordance with the environmental regulation of the Government of
Ukraine, the Ecological Assessment of the project by the appropriate regional environmental
office is in progress. In October 1996, a preliminary official approval was granted by the
Dnipropetrovsk Environmental Inspectorate.
The proposed rehabilitation extends the life of three 300 MW units by at least 15 years. It is
expected to increase:
Generating capacity for the total plant from 2,600 MW to 2,993 MW.
Annual availability by 24%; (84% against 60%)
Overall plant thermal efficiency by 5.2%.
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3.6.2 CHINA
3.6.2.1 BACKGROUND OF CHINA POWER SECTOR
In China, the power industry has gone through a series of changes since 1985, including: the
termination of the monopoly of ‗‗exclusive investment in power generation,‘‘ which existed for
over 30 years during China‘s planned economy period; the gradual opening of the power
generation market; and the introduction of new investment and operation entities to relieve the
power shortage that had been hindering the development of the Chinese economy. Such changes
led to the remarkably rapid development of China‘s power industry. For example, the demands
for electricity have been largely met.
In 1997, the Chinese government took more radical steps to reform the power industry,
particularly with respect to separating business operations and management from government
oversight and guidance. The governmental functions of the former Ministry of Electric Power
were divided between the State Power Corporation of China (which was newly established) and
the State Economic and Trade Commission. In the evolution of the People‘s Republic of China,
we can identify the following three main phases of the power regulatory system:
1st Phase (1986-1995): 7th and 8th Five year Plans
Multi-channel financing capital expansion project
Allow foreign investment since 1995
Aroused the enthusiasm of the society to generate power and rapidly changed the serious
power shortage all around the country
Multiple investment bodies gradually formed in the power market
2nd Phase (1996-2000): 9th Five year Plan
State Power Corporation was founded in January 1997
Four-step reform strategy in August 1998
Separation of Administration from Enterprise Operation
Separation of Generation from Grid and bidding for on-grid
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3rd Phase (2001-2010): 10th and 11th Five year Plan
Plans of Power Regime Reform was formally approved by the State Council in March
2002
State Electricity Regulatory Commission (SERC) was set up in October 2002
The former SPC was restructured into two grid corporations, five large GenCo‘s and four
subsidy groups in Dec 2002
Separation of Generation from Grid
4th Phase (2011-Present): 12th Five year Plan
Approved by the Central Committee of the Communist Party of China (CPC) on 14
March 2011
Focused on optimizing the structure of power generation in a micro-level for better
economic and sustainable development
Set out systematic reform strategies for developing clean energies, optimizing production
of coal-fired electricity, rationally allocate peaking power, developing distributed energy
and constructing a strong and smart grid.
Reference: China Energy Policy, 2006
Major Objectives of Reform
Introduce competitive incentives
Improve efficiency
Reduce generation cost
Ensure the sector contribute to meeting boarder economic and environmental goal
Optimizing coal-fired power generation capacity by accelerating construction of coal-
based generation
Achieve greater overall economic and social benefits
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3.6.2.2 LESSONS FROM R&M PROJECTS OF CHINA
CASE STUDY: HuBei Hanxin Power Station
Location: Hanchuan, Hubei Province, People‘s Republic of China
Unit: No. 2
Capacity Rating (MCR): 326 MW
Owner: China GuoDian Group
Components Renovated/Upgraded:
• Air Heater
• Boiler Burner
• Soot blower
• Turbine
• Condenser
Year commissioning after R&M: 2004
Plant Background:
Hanxin Group is located in Hanchuan, Hubei province. The company has total installed capacity
of 4 × 300-MWe. All four units are pulverized coal-fired subcritical type. Original commercial
operation of Unit No. 2 started in June 1996 (Unit No. 1 started earlier), and Units 3 & 4 were
started in 1998.
Scope of work and technological up gradation:
• Air Heater – Air heater had high air leakage and poor heat transfer
• Oil Burners – Poor combustion efficiency and stability
• Soot blowers – Soot blower performance deteriorated to a very low level
• Steam Turbine – Seal needed retrofit. Governing stage nozzles required replacement.
• Condenser – Steam turbine back pressure consistently high due to insufficient heat
transfer surface area.
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Installation Cost:
• Air Heater - $542,857 (RMB 3,800,000)
• Boil Burner - $285,714 (RMB 2,000,000)
• Soot blowers - $571,429 (RMB 4,000,000)
• Steam Turbine - $757,143 (RMB 5,300,000)
• Condenser - S1, 542,857 (RMB 10,800,000)
Total = $3,700,000 (RMB 25,900,000)
Source of Funding – Self-funded
Age of Plant when Upgraded/Refurbished: 4.5 years (start of plant commercial operation was on
June 28, 1996)
Savings/Benefits from R&M:
$795,171 base year 2000 (from 2004 – 2007) inflated at 2% per year
$1,665,882 base year 2008, inflated at 2% per year thereafter
Savings/Benefits derived from: Turbine Heat Rate Improvement of 179 BTU/kWh
Assumptions:
A yearly escalation factor (inflation rate) of 2% is assumed on all cost related items.
A Plant Capacity Factor of 70% is assumed. Capacity factor in this case, is equal to the
average annual operating time that the Unit is running @ 100% Load.
Basis: Reference point of Economic Analysis is year 2004.
Dollar values is based at year 2004
Coal Price basis: $2.00 /mm BTU (year 2000 inflated @ 2% per annum till price surge in
2008 due to Chinese coal industry deregulation $4.19/mmBTU (year 2008 price upward
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shift which is higher than the 2% annual increase projection as reckoned from year 2004;
partly due to coal industry deregulation.
15 years of economic life for the new upgrades/refurbishment.
Economic Evaluation Tool(s) Used in Project Performance Assessment:
The economic tools used in evaluating this case are DCFROR or IRR, the Net Present Value at
guideline rate of 20% and calculation for the Payback Period. The generally accepted definition
of a project‘s discounted cash flow rate of return is that it is the discount rate which makes the
present value of future cash flows equal to the initial capital outlay. It may be defined as that
discount rate which makes NPV equal to zero. As reinforcing indicator of the economic
feasibility of the project, payback period is also calculated. In this case, payback period is
obtained by simply dividing the total initial investment cost (outflow) by the annual income in
terms of fuel savings (Inflow).
Calculating for the Levelized life cycle cost of the plant, another approach to see the impact of
investments on plant upgrades is not used in this case, since the initial cost of the power plant is
not known.
Economic Feasibility Calculations:
Project Feasibility Indicator for this case is as follows:
• Discounted Cash Flow Rate of Return (DCFROR) = 29.54%
• NPV @ 20% Guideline Rate (Base Year 2004) = $1,700,000
• Payback Period = 3.74 years
The Net Present Value Profile for the project is shown below.
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3.6.3 AUSTRALIA
3.6.3.1 BACKGROUND OF AUSTRALIA POWER SECTOR
Australia is one of the largest coal exporters of the world. Power generation is Australia is
dominated by thermal power plants with a share of 69%. The electricity industry, consisting of
generators, transmission and distribution networks, and retailers, is one of Australia‘s largest
industries, contributing 1.4 per cent to Australian industry value added in 2009–10. Between
1999–2000 and 2009–10, Australia‘s electricity generation increased at an average rate of 1.4 per
cent a year. However, in 2009–10, electricity generation declined by 1.2 per cent.
Industry structure
The current structure of Australia‘s south-east electricity market was shaped by industry reforms
in the early 1990s. A key element of these reforms was the establishment of the National
Electricity Market (NEM), which began operation in 1998. The NEM allows market determined
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power flows across the Australian Capital Territory, New South Wales, Queensland, South
Australia, Victoria, and, from May 2005, Tasmania. Western Australia and the Northern
Territory are not connected to the NEM, primarily because of their geographical distance from
the east coast. The NEM operates as a wholesale spot market in which generators and retailers
trade electricity through a gross pool managed by the Australian Energy Market Operator
(AEMO). AEMO is responsible for aggregating and dispatching supply to meet demand in the
lowest cost manner available. In addition to the physical wholesale market, retailers may also
contract with generators through financial markets to better manage any price risk associated
with trade on the spot market.
The Australian Energy Market Commission (AEMC) is responsible for reviewing, amending and
expanding the National Electricity Rules (NER) which govern the operations of the NEM. The
enforcement of these rules, in addition to the economic regulation of electricity transmission and
distribution networks and covered gas pipelines, is the responsibility of the Australian Energy
Regulator (AER). The AER is also responsible for reporting on generator bidding behavior in the
NEM and compliance. The interaction between these three bodies (AEMO, the AEMC and the
AER) allows a consistent near national approach to regulate Australia‘s energy markets.
There is no formal, integrated electricity market in Western Australia. Electricity infrastructure is
organized in several distinct systems including the South West Interconnected System (SWIS);
the North West Interconnected System (NWIS); and a number of regional, non-interconnected
power systems. The SWIS became a wholesale market (where generators sell directly to
retailers) in 2006. The Independent Market Operator (IMO) is responsible for the administration
and operation of this market. Because of the small scale of the other systems in Western
Australia it is impractical to introduce a wholesale market. Instead, they operate as retail markets
where consumers purchase from competing retailers. Western Australia retains state-based
regulation of its electricity sector. The regulation of electricity transmission and distribution
networks is the responsibility of the local Economic Regulation Authority (ERA). The ERA
interprets, applies, and enforces the Electricity Networks Access Code which governs the
operations of these networks.
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3.6.3.2 CONTROLS AND INCENTIVES FOR GENERATION THROUGH R&M
The Australian Federal Government has created a Low Emissions Technology Demonstration
Fund, with around A$500m available to help finance projects that would reduce greenhouse gas
emissions and one of the key projects supported by this fund is the so-called ―Oxygen‖ project,
which plans to alter the way in which coal is burned to enable CO2 to be more easily separated
and then stored, so reducing the negative impacts on efficiency of other CO‖ capture
technologies. In addition, BP and Rio Tinto (Anglo-Australian mining company) have
announced plans to build a A$2bn coal fired plant in Western Australia that would bury most of
its CO2 in an offshore underground reservoir, whilst Stanwell Corporation (owned by the State
Government of Queensland) has announced similar plans in relation to the ZeroGen project to be
located within the state. Zero Gen has applied for support from the Federal Governments Low
Emissions Technology Demonstration Fund.
A summary of each of the incentives and controls applicable at the present time is set out below.
3.6.3.3 THE NATIONAL GREENHOUSE AND ENERGY REPORTING ACT
The National Greenhouse and Energy Reporting Act 2007 established a single, national system
for reporting greenhouse gas emissions, abatement actions, and energy consumption and
production by companies, commencing on 1 July 2008. Data reported through the system will
underpin the Australian Emissions Trading Scheme. The ability to monitor report and verify
businesses' emissions data will be essential for maintaining the environmental and financial
integrity of the trading system.
Key features of the system are:
a single online entry point for reporting based on the Online System for Comprehensive
Activity Reporting (OSCAR);
a standard data set and nationally consistent methodologies for reporting;
public disclosure of company level greenhouse gas emissions and energy data;
consistent and comparable data provided to government for policy making;
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3.6.3.4 GENERATOR EFFICIENCY STANDARDS
On 1 July 2000, Australia introduced a voluntary measure for fossil fuel electricity generators to
reduce the greenhouse intensity of energy supply. The Generator Efficiency Standards apply to
new projects and existing electricity generators above a minimum threshold, whether grid
connected, off-grid or self-generators. The minimum threshold is 30 MW capacity, 50 GWh
electrical output, and capacity factor of 5% or more in each of the last three years. The current
(2004) best-practice efficiency guidelines for new plants are:
Natural gas plant, 52% net thermal efficiency (Higher Heating Value HHV);
Black coal plant, 42% net thermal efficiency (HHV) and,
Brown coal plan, 31% net thermal efficiency (HHV).
The measure is implemented through legally-binding, 5-year Deeds of Agreement between the
Australian Government and participating businesses. Following implementation of action plans,
generators are required to monitor their performance and report to the AGO (Australian
Greenhouse Office) on an annual basis. The efficiency targets set under the scheme are expected
to be reviewed every 5 years. The scheme is focused on greenhouse gas emissions, rather than
analyzing any economic benefits from enhanced generation efficiency. Nevertheless, the
methodology and process used may provide useful models for India.
3.6.3.5 FUNDING FOR LOW EMISSIONS TECHNOLOGY AND ABATEMENT
In 2005, the Australian Government announced that it would provide funding of $26.9 million
over four years (2005-2009) to encourage ongoing investment in the development, demonstration
and deployment of smaller scale low emissions technologies, and other cost-effective abatement
activities through the Australian Greenhouse Office and the Department of Environment and
Water Resources. Projects eligible for funding should fall into one or more of the following
categories:
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Low Emissions Fossil Fuel Technology
Strategic Abatement
Geosequestration
Renewable Energy
The Low Emissions Technology Demonstration Fund supports industry-led projects to
demonstrate low-emission technologies. These technologies must have the potential to lower
Australia‘s emissions by at least 2% in the long term at realistic uptake rates and be
commercially available by 2020 to 2030.
The fund is designed to facilitate private sector investment of at least $1 billion and provides a
path by which industry can invest in a low-emissions future. It is aimed at supporting
technologies at the commercial and demonstration stage, when required investments are large
and risks remain high.
In 2006, the Australian Government committed $AUS 60 million to develop the world's then
largest carbon capture and storage (CCS) project in Western Australia.
3.6.3.6 COAL21 Programme
The COAL21 programme is a collaborative partnership between Federal and State Governments,
the coal and electricity generation industries and the research community. The key objectives of
COAL21 are to:
Create a national plan to scope, develop, demonstrate and implement near zero
emissions coal-based electricity generation;
Use the plan to inform Governments and industry as an input to policy
development;
Facilitate the demonstration, commercialization and early uptake of technologies
identified in the plan;
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Promote relevant Australian R&D;
Foster greater public awareness of the role of coal and the potential for near zero
emissions coal based electricity generation to reduce or eliminate greenhouse gas
emissions and other environmental impacts associated with its use;
Provide a mechanism for effective interaction and integration with other
international zero-emission coal initiatives.
3.6.3.7 GREENHOUSE GAS ABATEMENT PROGRAM (GGAP)
The Australian Government's Greenhouse Gas Abatement Programme (GGAP) has played an
important part in helping Australia meet its international emissions reduction target. GGAP aims
to reduce Australia's net greenhouse gas emissions by supporting activities that are likely to
result in substantial emissions reductions or activities to offset greenhouse emissions, particularly
in the period 2008-2012. The most recent emission projections show that GGAP will deliver an
abatement of 5 million tonnes (Mt) of carbon dioxide equivalent (CO2-e) in 2010. The
programme leverages private sector investment in activities or technologies through projects.
Examples of GGAP projects are based on co-generation (the use of waste heat or steam from
power production or greenhouse gas emissions reductions and industrial processes for power
generation), energy efficiency, travel demand management, alternative fuels, coal mine gas
technologies and fuel conversion.
CASE STUDY: Macquarie Generation – Liddell Power Station, NSW
Plant Background:
The Macquarie Generation project was designed to increase the generating efficiency at the
Liddell Power Station located near Muswellbrook in New South Wales. Prior to the project, the
efficiency of the Liddell Power Station turbines was around 85 per cent. Through the
replacement of the old low pressure turbines with modern turbines, the GGAP project increased
the generation efficiency of the four 500MW units by an average of 3.32% across the four units.
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Hitachi Australia Ltd was contracted by Macquarie Generation to design, manufacture, install
and commission the new Low Pressure turbines at Liddell Power Station and the upgrade was
successfully completed in July 2005.
GGAP funding: $5 million
Total project cost: Over $53 million.
Expected greenhouse gas abatement:
Total abatement up to 1.66 million tonnes of carbon dioxide equivalent is expected in the Kyoto
commitment period 2008-2012.
Efficiency improvements:
More energy can now be extracted from the steam flowing through the turbine, allowing an
increase of more than 60MW in the output capacity of Liddell, with no increase in CO2
emissions and reduced sulphur dioxide and nitrous oxide emissions from burning less coal. There
are also lower water demands from the power station and reduced sulphur dioxide and nitrous
oxide emissions from burning less coal. As a result the project is a potential catalyst for
investment in similar large scale abatement projects by other coal fired generators.
Technical summary:
The efficiency increase is achieved through improved control of the flow of steam through the
turbine. Advances in computer modeling techniques allow for more detailed assessment of the
impact of various steam path design options. This results in closer to optimum conditions than
was achievable when the Liddell turbines were originally designed.
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CHAPTER-4
RESULTS, DISCUSSIONS AND RECOMMENDATIONS
4.1.RESULTS
4.1.1. Augmentation of project capacity
A three stage project assessment is undertaken to ensure effective implementation of R&M/LE
work. Initially (Level 1), the assessment is based on available plant records and design data; no
inspections and testing of materials is required. Level 2 assessments involve measured data
(including performance testing), inspections and preliminary estimation of component remaining
life. Finally, Level 3 assessment is based on detailed inspection, actual material properties and
testing of material samples.
Table 4.1 Comparison of three level of project Assessment
Comparison Parameters Level 1 Level 2 Level 3
Level of Detail Minimum Details Substantial details Maximum Details
Information Source Plant Records Plant Records Plant Records
Nature of study Preliminary Extensive Comprehensive
Plant Dimensions Designed or Nominal Measured or Nominal Measured
Parameter Measurement Designed or Operational Operational or Measured Measured
Condition Assessment Records Inspection Detailed Inspection
Material Properties Minimum Minimum Actual material
Need of Material Samples No No Yes
In context to successful implementation of an R&M project, planning and development of R&M
project assumes a critical role. In this regard, detailed project assessment needs to be carried out
by undertaking various studies before appointment of an R&M contractor. These studies
mandate the need of appointment of an R&M consultant with suitable experience, which requires
a well-defined procedure to mitigate any future risks. Moreover, it is of critical importance that a
75
project owner should balance risks and responsibilities through appropriate contracts. Table 4.5
represents the risk-responsibility matrix for R&M projects.
Table 4.2 Risk-Responsibility matrix for R&M projects
PARTY INVOLVED RISK RESPONSIBILITY
PLANT OWNER
Regulatory risk-Uncertainty of capital cost approval and reasonableness of tariff for recovery of capital cost
Coordination with different project agencies
Time overrun risk-Extended shutdown period
CONSULTANT Performance Risk
Detailed Project Assessment
Supervision of implementation works
Strengthening of O&M practices
CONTRACTOR
Cost Overrun risk-Unforeseen items/surprises during execution and impact on cost escalation
Execution of R&M works within the scheduled timeline
Scope surprises
Performing quality R&M works and providing performance guarantees
FINANCIAL INSTITUTION
Credit Risk- Utility dismal financial situation or project not viable
Providing sufficient and timely loans to project owner
4.1.2. Technical feasibility
Energy Audit studies, Residual Life Assessment (RLA) and Condition Assessment studies of
various equipments of plants were undertaken during plant visits. Based on these data the various
levels of assessments have been done and cost of losses due to deterioration in various system
and sub-system condition has been calculated. Deterioration has been calculated by comparison
with performance guarantee test figures wherever available or with designs figure in its absence.
Table 4.3 Energy Audit studies of thermal Power Plant at PTPS, Panipat
Component/System Studies Conducted
Boiler and Auxiliaries
Boiler Combustion efficiency
Boiler Outlet temperature
Air preheated efficiency and leakage, flue gas temperature
Power consumption by Boiler feed pump
Turbine Turbine cylinder efficiency and cycle efficiency
76
Condenser Condensate pumps power consumption and performance evaluation
Coal handling Plant Estimation of average capacity utilization of CHP
Coal measuring system and quality check
Ash Handling system and ESP
Electricity consumption of ESP
Collection efficiency, coal quality and ash property
Ash utilization and disposal methods
Power consumption and pump performance of ash handling system
Cooling water system
Cooling tower capacity and efficiency
Circulating water pump performance and power consumption
Water circulation, condenser efficiency and turbine heat rate
Assessment of vacuum system
Raw water system and waste water treatment system
Capacity utilization and power consumption by the system
Electrical system
Transformer load management
Power factor management
Distribution losses
Harmonic analysis
Performance guarantee test were done after R&M and the various parameters like Specific oil
consumption, Coal consumption, PLF, Auxiliary power, Heat rate and availability of plant have
been tabulated as mentioned below.
Table 4.4 Performance of Unit-1 PTPS Panipat Before and After R&M
Financial
Year
Generation (MU) Sp. Oil Consp.
(ml/kwh)
Sp. Coal Cons.
(Kg/kwh) Gross Net
2002-03 559.7812 494.5107 6.26 0.864
2003-04 609.6400 542.2748 4.50 0.813
2004-05 506.7770 444.9502 5.13 0.858
2005-06 572.3970 503.4232 4.97 0.843
2006-07 603.5300 533.0981 3.11 0.842
R&M of Unit-1 carried out from 25.09.2007 to 04.11.2008
2009-10 815.1560 730.2782 1.95 0.795
2010-11 504.6018 450.3209 4.08 0.842
2011-12 820.2800 727.3118 2.89 0.831
77
Table 4.5 Overall Plant Performance of PTPS Panipat
Year Plant Load Factor (%)
Aux. Power Cons. (%)
Heat Rate (Kcal/kWh) Availability factor (%)
No. of Trippings HERC Norm Actual
2002-03 58.09 11.66 3718 72.88 100
2003-04 63.09 11.04 3479 82.54 142
2004-05 52.59 12.2 3500 3554 71 112
2005-06 59.4 12.05 3450 3508 80.5 75
2006-07 62.63 11.67 3450 3342 89.16 55
2009-10 79.08 10.37 2930 3047** 83.67 70
2010-11 48.90* 10.09 2750 3112** 54.68 28
2011-12 79.27 11.24 3050 2916** 93.91 32
NOTE: In 2010-11 the PLF was low as unit-3 and 4 were under shutdown for R&M
4.1.3. Cost effectiveness
Figure 4.1 Cost break up of plant equipment in total equipment cost
82%
7% 5% 6%
BTG
CHP
BOP
ESP
78
Figure 4.2 Cost break up of Services in total service cost
4.1.4. Efficiency Improvement (Sensitivity Analysis)
Fig 4.3 Effect of Plant availability on Cash Inflows Effect of efficiency on Cash Outflows
Note: The analysis was done for a 210 MW plant at 0.4 PLF and Heat Rate 3300 Kcal/kwh
22%
4%
41%
18%
7% 8% Design consultancy
EA and RSA
Better O&M practices
Implementation support
Quality Assurance
Front End Fee
79
Fig4.4 Generation addition due to reduced Effect of PLF and Capacity Improvement
Heat Rate on Fuel Requirement
4.2.DISCUSSION
During plant visits and discussion with various stakeholders, equipment suppliers and meeting
with state regulatory commission the following aspects were discussed to minimize barriers and
effective implementation of R&M work.
15-20 % additional fund should be approved as contingency fund to avoid time overrun
due to technical surprises.
A single consultant should be appointed starting from RLA study till re-commissioning
of units.
R&M work should be started only after receiving 100% material at site
The contract and bid documents should be transparent and must contain all relevant work
and spare supplies during R&M.
A performance monitoring cell should be established and calibration of major equipments
should be done regularly (for example PTPS is planning to install the I-GEN software for
performance monitoring).
80
4.3.RECOMMENDATIONS
4.3.1. Improve regulations affecting R&M projects and streamline approval process
It is recommended that a working group be established in collaboration with the Ministry of
Power and the Forum of Regulators to propose specific changes in the regulatory process.
4.3.2. Standardized documents
Guidelines on how to plan and implement R&M projects
Scope of Consultancy Services
Bid Documents
Commercial Contracts
4.3.3. Assistance to minimize power supply issues
It is recommended that the Central and the State Governments collaborate to allocate more
power supply to companies planning R&M projects
4.3.4. Bulk tendering
Tendering multiple units together should be explored urgently especially for the steam turbines
which are of identical design (210 MW LMZ or Siemens turbines). Also, a central organization
could be established to provide spare parts to power companies.
4.3.5. Private sector financing
Private-Public-Partnership (PPP) Guidelines should be developed and opportunities should be
sought to apply such concept. The Lease-Rehabilitate-Operate-Transfer (LROT) option may be
the most suitable option short-term.
4.3.6. Dissemination of best practice experience
International best practices are important for Indian power companies planning R&M projects. A
tour of plants which have implemented 210 MW LMZ design plants in Eastern Europe has been
proposed by USAID. Also, it would be beneficial to have a ―road show‖ to encourage equipment
suppliers and engineering companies to participate in R&M projects in India
81
CHAPTER-5
CONCLUSION AND FUTURE SCOPE OF WORK
5.1.CONCLUSION
The Indian power sector has been embroiled in issues like energy deficits and load shedding.
Though the government has emphasized and advocated the need for R&M and has come out
with national perspective plan, but lacks serious implementation on its part with most of the
R&M projects not yet started or are getting delayed due to inadequate and inefficient project
management. This is primarily due to lack of participation by the private sector for government
projects, as most of the plants undertaken or eligible for R&M lies with the central or state
utilities which are already financially handicapped with huge annual losses. Thus the opportunity
cost favors private players to go ahead with Greenfield projects where returns are assured rather
than getting trapped in issues with payments and lack of authentic data regarding actual
operational parameters of plant in R&M projects. Now, with government‘s emphasis on
improving power availability in the XII plan and a proper risk mitigation strategy in place, the
R&M segment is going to be highly lucrative. For successful implementation of an R&M
project, planning and development of R&M project assumes a critical role. In this regard,
detailed project assessment needs to be carried out by undertaking various studies before
appointment of an R&M contractor. These studies mandate the need of appointment of an R&M
.consultant with suitable experience, which requires a well-defined procedure to mitigate any
future risks. Moreover, it is of critical importance that a project owner should balance risks and
responsibilities through appropriate contracts. This would require standardization of tendering
procedure for appointment of R&M consultant and contractor. Standardization will assist in
smooth and quick execution of R&M projects.
82
5.2.FUTURE SCOPE OF WORK
Reducing carbon footprint in energy production activities has emerged as the one of the topmost
priorities as in India power sector is a major contributor to India‘s overall GHG emissions.
Moreover with growing economic growth the demand is going to grow more and the large
capacity installation in the pipeline might not be able to meet the demand. Further coal supply
constraint adds another dimension of distress about the economic growth. While the long term
opportunity to reshape this infrastructure to have a low carbon profile is promising, near term
opportunities to reduce carbon emissions are very limited. Because power plants account for over
40% of carbon emissions of overall India‘s GHG emission and growing at the rate of nearly
10%, improving the efficiency of the existing coal fired power plant fleet presents one of the
most promising, low cost options for reducing near term carbon emissions.
Currently there are two frameworks adopted in developed countries that can be applied to
monetize the emission reduction benefits associated with R&M of thermal power plants:
Clean Development Mechanism (CDM): The Clean Development Mechanism (CDM) allows a
country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol
to implement an emission-reduction project in developing countries. Such projects can earn
saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which
can be counted towards meeting Kyoto targets. The mechanism stimulates sustainable
development and emission reductions, while giving industrialized countries some flexibility in
how they meet their emission reduction or limitation targets.
Verified Carbon Standard (VCS): The Verified Carbon Standard is a greenhouse gas accounting
program used by projects around the world to verify and issue carbon credits in voluntary
markets. VCS was founded in 2005 by business and environmental leaders who identified a need
for greater quality assurance in voluntary markets.
83
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87
ANNEXURES
ANNEX- I: INDICATIVE QUESTIONNAIRES
a) State Electricity Utilities (SEBs)
What were Objective Criteria to go for R&M on the basis of various Assessment Tests?
S.No Criteria Yes/No Comment
1 Increase of PLF
2 Increase Availability of the Plant
3 Decrease Specific Coal Consumption of the
Plant
4 Decrease Specific Oil Consumption of the Plant
5 Improve Turbine Heat Rate or increase the
capacity increases
6 Improve Boiler Heat Rate
8 Improvement in the performance of Mill
Functions
9 Improvement in water consumption
10 Improve C&I system to reduce manual
interventions
11 Online Condition Monitoring
12 Environment (Emission level reduction)
88
S.No Criteria Yes/No Comment
13 Upgrade Electrical System Reliability
14 Improvement in Water Chemistry
15 Improvement in CHP availability
16 Up-gradation of ID Fan
17 Overall Energy Efficient Plant
18 Increase Plant Safety
19 Decrease Auxiliary Power Consumption
20 Proper Metering for better Energy Measurement
21 Any Other
1. What were the factors that were looked into while preparing the scope of work?
2. How were the R&M Team selected?
3. Were the Scope of Work developed after careful consideration of the following criteria:
89
S.No Criteria Yes/No Comment
1 RLA Studies and Life Extension
2 Complete Condition Studies
3 Post Overhaul Evaluation Test
4 Post Overhaul Energy Audit
5 Utility Experience
6 Discussions with OEMs and
Consultants
4. Was the finalization of scope done keeping the balance of both Technical and
Commercial aspects of the project?
5. Were Cost and Time factors taken into consideration?
6. Were Risk Analysis/Evaluations done?
7. Did the utility interact with OEMs and Consultations?
8. Was Cost-Benefit (CB) analysis done? What costs and benefits were taken into account?
9. Whether tariff calculated after R&M were within the permissible Regulatory Band? If
not, what steps were taken?
10. Were there any interactions with the Regulator during the preparation of proposed tariff
after R&M?
90
11. Were the tariff before R&M and after R&M were taken into consideration or not? If not,
why?
12. After finalization of scope, how were the costs, what types of costs were considered? Did
they look into OEMs budgetary offers? Were there any comparisons of OEMs?
13. What were the qualifying requirements put in preparation of bid to get response from
bidders?
14. How was the response? How many bid documents were purchased and how many
actually submitted
15. What was the consultant‘s overall experience in Preparation of Bids?
16. What was the form of contract in terms of base price or unit price?
17. How were the scopes surprises dealt?
18. How was the bidding done? How was the negotiations done?
19. What were the selection criteria?
20. What was the technical financial ratio taken? Why and How?
21. While planning for shutting down the plant, did the utility tie up capacity from the central
sector unallocated quota of 15%?
22. Did the utility tie up with the Power trading companies?
23. What other planning was taken into consideration?
24. Were Road Permits taken during transportation of Materials?
91
25. How was the movement of materials planned? Were delays like Road accidents etc taken
into consideration?
26. Were any priorities on basis of importance given to any material‘s arrival at the site?
How was it prioritized?
27. Were inspectors present during R&M? Did the utility tie up with any inspectors?
28. Were Equipments/Instruments ready to measure Performance Guarantee Tests?
29. Did the plant stabilize after R&M? What problems did it face?
30. Were there any discussions with the R&M Agencies initially regarding clarifications of
the Performance Guarantee Tests?
31. Were penalties inbuilt if Performance Guarantee Tests failed?
32. Did the utility provide samples like coal etc. to the OEMs to be analyzed in their lab so
that proper specifications could be provided?
33. After the R&M, did the utility initiate Operation Efficiency Cell?
34. How were the maintenance planning done?
35. Were any training provided to the engineers for safe and correct operations of the new
equipments? Who were given?
b) REGULATORS
c) EXECUTING AGENCY
92
ANNEX-II: KEY CONCERN OF STAKE HOLDERS
93
ANNEX-III: LIST OF POWER PLANT VISITS AND THEIR CURRENT STATUS
S.
No
Unit
No. Capacity
(MW)
Name of
Thermal
Power
Station (TPS)
Name of
Utility/State
Executing
Agency
Completion of LE
Works
1 1, 2
& 3
3 x 110 Bhatinda TPS PSPCL/
Punjab
Unit 1 -
NASL,
Unit 2&3-
BHEL
Unit 1- Unit was
synchronized on 8 Feb
2007 after LE works
Unit 2- Unit was
synchronized on 5
Oct 2005 after LE
works
Unit 3 –
Synchronization
expected by
November 2011 after
LE works
2 1& 4,
5 & 6
2x50,
2 x 120
Korba (East)
TPS
CSPGCL/
Chhattisgarh
Unit 1&4,
ABB
Alstom,
Unit 5 & 6-
BHEL,
Unit 1- Unit was
synchronized on 31
Mar 2004 after LE
works.
Unit 4- Unit was
synchronized on 3 Oct
2003 after LE works.
Unit 5- Unit was
synchronized on 3
Mar 2005 after LE
works
Unit 6- Unit was
synchronized on 8
October 2003 after
LE works
3 1,3
&4
3x110, Panipat TPS HPGCL/
Haryana
Unit 1-
BHEL,
Unit 3 & 4-
Yet to be
awarded
Unit 1- Unit was
synchronized on 4
Nov 2008 after LE
works
Unit 3 &4 – DPRs for
LE works is under
finalization.
4 1& 2 2x120 Ukai TPS GSECL/
Gujarat
BHEL Unit 1- Unit was
synchronized on 24
94
May 2008 after LE
works
Unit 2 – Unit was
synchronized on 24
February 2010 after
LE works
5 1 & 2 2x120 Amarkantak
Extension
TPS
MPPGCL/
Madhya
Pradesh
BHEL Unit 1- Expected date
of Completion by
October 2011
Unit 2 – Unit was
synchronized on 26
October 2010
6 9 &
10
2x200 Obra TPS UPRUNVL/
Uttar Pradesh
BHEL Unit 9- Synchronized
in September 2010.
Unit is under
stabilization after
R&M
Unit 10 –Shut down is
expected in October
2011. LE works to be
completed in 2012-13
7
7
1x110
Barauni TPS
BESB/Bihar
BHEL
Completion of LE
works is expected in
2012-13
8
1
1x110
Muzzaffurpur
KBUNL/Bihar
BHEL
Expected date of
Completion November
2011 after LE works
9
5
1x110
Bandel TPS
WBPDCL/
West Bengal
Yet to be
awarded
Procurement of
executing Agencies
are under process
10
6
1X210 Koradi TPS MSPGCL/
Maharashtra
Yet to be
awarded
Procurement of
executing Agencies
are under process
Total No of TPS- 10
