With a substantial number of thermal plants getting old and recommended for retirement or modernization, refurbishment and efficiency improvement orders will come to the rescue of some of them, say analysts. Graphic: Subrata Jana/Mint
The draft national electricity plan of the Central Electricity Authority (CEA) sounds the death knell for thermal power capacity addition. Given the massive capacity addition plans in the renewable sector, CEA estimates there is no requirement for new coal plants in 2017-22.
Based on demand projections, CEA estimates new coal-based capacity requirement of 44,085 megawatts (MW) in 2022-27. But with 50,025MW of coal power projects already in different stages of construction and likely to yield benefits in 2017-22, the agency does not foresee any immediate requirement for new coal power plants.
If indeed things pan out as per the forecast, it can spell trouble for equipment suppliers in the capital goods sector, especially in the industry-boiler, turbine generator and related segments.
Bharat Heavy Electricals Ltd (Bhel) is estimated to have manufacturing capacity for power equipment of 20,000MW a year. Apart from this, several domestic firms have joint ventures (L&T-MHI, Alstom-Bharat Forge, Toshiba-JSW, Gammon-Ansaldo, Thermax-Babcock and Wilcox, BGR Hitachi) with indigenous manufacturing capacity for supercritical boilers at 16,200MW and supercritical turbine generators at 14,000MW, CEA says. With most firms already strapped for orders, a dearth of new coal power plants can have an adverse impact on equipment suppliers.
But as Rabindra Nayak, an analyst at Dolat Capital Market Pvt. Ltd, points out, all firms may not be affected uniformly. With a substantial number of thermal plants getting old and recommended for retirement or modernization, refurbishment and efficiency improvement orders will come to the rescue of some of them.
According to Nayak, an estimated 30,000MW of thermal plants needs refurbishment or modernization. The opportunity can generate an annual business of Rs25,000 crore for five years. Given Bhel’s historical ties with state utilities, the firm may be better placed for this business. But firms such as BGR Energy Systems Ltd, with only manufacturing capability and limited access to technology, may be forced to look overseas for business.
That said, the spurt in renewable capacities may provide respite for gas power plants. The infirm nature of renewable capacities—solar power generation peaks during day and varies depending on climatic conditions—means gas capacities are seen as ideal balancers. They can be ramped up quickly and are said to offer better efficiencies.
The plants are, however, operating at low capacities (utilization stood at 23% in 2015-16) due to shortage of fuel. But improvement in supplies, either through imports or local production, can make gas plants good balancers to renewable energy and ensure grid stability.
“The role of gas-based plants during evening to meet the balancing power and ramping requirement is vital for the Indian grid,” CEA says. “Therefore, for effective utilization of available gas-based plants in India to meet the balancing and ramping requirement of the grid, availability of a minimum quantum of gas to the tune of 53.56 MMSCMD needs to be ensured.” MMSCMD is short for million metric standard cu. m a day.
While the views should bring relief to gas power plant owners, the only challenge is to find sufficient quantities of affordable fuel.
Source:livemint
