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Fossil Fuel : GasChallenges for Power Sector

5th Aug 2015A. M. Dharam

Sources of Natural Gas In India

Domestic Natural Gas – APM ( Administered Price Mechanisum)

Imported Gas RLNG ( Regasified –LNG)

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Domestic Gas• Quantity – as Per Availability at Gas

fields• Price – Declared by Govt of India

( Price based on four indices)• Henry Hub ( US & Mexico)• Alberta Gas ( Canada)• NBP ( UK)• Russia

RLNG• Quantity – Available on Take or Pay• Price – Linked to crude with a floor

to price.

Gas Scenario in India

Source National Vision 2030 2

Gas Demand break up

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Supply constraint

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Stranded Gas based generation

Central Sector – 1967 MW

State Sector – 2665 MW

Total Public Sector – 4632 MW

Private Sector – 9673 MW

Total Stranded Assets – 14305 MW

Gas based Power Plants with Average PLF 32 % - 9844 MW

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What has changed recently

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Power Rate in Exchange

05-07-201506-07-201507-07-201504-08-2015

Time of the Day in Hrs

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Imported Coal based generation Cost at current Coal Market beats the APM gas based generation cost.

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Domestic Gas Supply side constraints leading to

stranded assets.

With the Current down slide of International coal prices and drop in Power rate in

India, Sale of power from Gas based generation is difficult

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Why Gas based Generation

Coal 61%

Gas8%

Diesel 0%

Nuclear2%

Hydro15%

Renewal Energy Sources

13%

Coal GasDiesel NuclearHydroRenewal Energy Sources

•Gas based generation has Low Emission hence environment friendly.

•Balance Fuel portfolio for India.

•Lower startup time , Lower time in commissioning.

•Once Established the Logistics is comparatively easy

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Govt of India have come up with a scheme to subsidies RLNG by

• Waiver of VAT , CST, Octroi and entry Tax.

• Utilities need to bid out for subsidy.

• The Power generated will be sold to Distribution utilities.

• This will reduce the RLNG cost to 9- 10 USD/ MMBTU, as against

the mid term contract price of 15 USD/ MMBTU.

• In the current Market even selling Power from Such Gas is difficult.

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Govt Bail out for Stranded Assets

Suggestion

Just like RPO for renewable : Gas base low pollutant power should be obligated to each utility.

◦ Thus Gas based generation will survive, as it will be out of MOD

◦ Gas based Power will be blended with coal

◦ Thus 22000 MW power can be blended with 1,50,000 MW coal based generation.

◦ Power Generated from this gas based generation can be purchased by central govt and

can be redistributed to Discom based on demand.

◦ Regulators may monitor the Gas based generation fuel mix.

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Thank you