The cabinet committee on infrastructure approved the issue of tenders, comprising nine units of NTPC and two units of Damodar Valley Corporation (DVC)

Central power utility National Thermal Power Corporation (NTPC) will float tenders worth Rs 21,000 crore next week, seeking the supply of energy-efficient supercritical equipment for 11 power plants.

A senior official said that the company is ready with documents for the bidding process that is set to commence next week. He, however, said the date for the issue of tenders for international competitive bidding has not been fixed.

The cabinet committee on infrastructure approved the issue of tenders, comprising nine units of NTPC and two units of Damodar Valley Corporation (DVC), on August 27. Separate tenders will be floated for boiler and turbine generators for 11 proposed supercritical units totaling 7,260 megawatts (mw).

Only companies that can supply indigenously manufactured equipment are eligible to participate in the bidding process. With the clause, three consortia between Bhel-Alstom, Larsen & Toubro-Mitsubishi Heavy Industries, and GB Engineering-Ansaldo qualify for bidding for the bulk tenders.
Larsen & Toubro-Mitsubishi is also eligible for the supplying of steam turbine generators to NTPC and DVC. Besides, Bhel-Siemens, Bharat Forge-Alstom and Toshiba-JSW are expected to participate in the bidding process for the supply of turbine-generator packages.
L&T and MHI are setting up a facility in Gujarat to manufacture 4,000mw supercritical equipment. Alstom and Bharat Forge are working on a plan to produce 5,000mw power equipment.
Ansaldo Caldaie Boilers, the joint venture of GB Engineering Enterprises and Italy’s Ansaldo Caldaie, plan to invest about Rs 100 crore in setting up a 2,000 mw annual capacity.

MPL RATING

(The following statement was released by the ratings agency)

Sept 30 - Fitch Ratings has today affirmed at 'BBB+(ind)' India's Maithon Power Ltd.'s (MPL) long-term project bank loans aggregating INR31,150m and the non-fund based exposure aggregating INR581m (the latter serves as performance security and is executed in the form of a bank guarantee). The agency has also assigned a 'BBB+(ind)' rating to MPL's new guarantee limits of INR1bn. The Outlook is Stable.

MPL is a special-purpose company created solely to develop, own and operate a power generating facility ("the project") in the eastern state of Jharkhand. The project, to consist of two 525-MW coal-based thermal power plants, is expected to be commissioned in October 2010 and April 2011. It is a 74:26 JV between The Tata Power Company Ltd (TTPW.BO: Quote, Profile, Research). (Tata Power) and the state-owned Damodar Valley Corporation (DVC). The project is being implemented through the 'package' route by reputed equipment suppliers and contractors. Tata Power is the project management services provider and will be responsible for Operations and Maintenance (O&M).

The ratings affirmations follow the reasonable progress by MPL over the last year in achieving different project milestones during the critical construction phase, although as a whole, the company is slightly behind plans. There has been progress with the different aspects of physical construction and equipment delivery. Vendors for residual balance of plant packages such as water handling, ash handling and railway infrastructure systems have also been finalised, while drawdown of debt and equity is proceeding as per schedule.

Also Fitch notes there is now greater certainty on the off-take arrangements with the signing of a bankable long-term power purchase agreement (PPA) for 300MW with North Delhi Power Ltd. (NDPL) through Tata Power Trading Company Ltd. (TPTCL,'BBB+(ind)'/Stable), a 100% subsidiary of Tata Power. The PPA with DVC for 300MW is now being modeled along the lines of the PPA with NDPL (which has been approved by the lending bankers).

For the remaining capacity, a Power Sale Agreement (PSA) has been signed by TPTCL with Punjab State Electricity Board in February 2009 for 300MW; MPL will have to sign back-to-back PPAs with TPTCL. 150MW will be sold to the West Bengal State Electricity Distribution Company Ltd (WBSEDCL) through TPTCL; WBSEDCL has filed the signed PPA with West Bengal Electricity Regulatory Commission for approval. A regulatory change earlier this year allowing for a higher (15.5%) return on equity in the tariff at which power is sold, as determined by the appropriate regulatory commission, is a positive.

Key rating concerns emanate from the continued delay in executing the fuel supply agreement (FSA) and difficulties relating to land availability for the railway siding facilities; the latter can potentially hinder timely project completion. The Government of India has allocated 4.864 MMTPA of coal to the project; however, the FSA with the state-owned Coal India Ltd. or its subsidiaries has yet to be concluded, although Fitch notes the power department of the federal government has initiated steps to facilitate expeditious signing of the FSA.

Although MPL management is reportedly making contingency plans for the transportation of coal by trucks in the event of a delay in completing the railway facility, Fitch believes this to be, at best, a stopgap measure. Continued inability to conclude satisfactory arrangements for the railway infrastructure beyond the next two months will act as a trigger for a review of the credit profile.

Siemens wins two orders from Power Grid for 765kV Substation

Mumbai - September 30, 2009:

The scope of work includes design, engineering, manufacturing, supply, installation, civil works, testing and commissioning of the complete substations on turnkey basis. PGCIL is installing these substations under the Transmission System associated with Damodar Valley Corporation (DVC) and Maithon Right Bank Projects. DVC and Maithon Right Bank is the hub for power generation in Eastern India with approximate capacity of 25,000MW.

Siemens will supply the high-end technology products such as circuit breakers, current transformers, capacitor voltage transformers, disconnectors, surge arrestors and substation automation (Control and relay panels as well as SCADA system). Both the substations are green field projects of PGCIL which will transmit power from DVC Right Bank and will enhance power reliability of NCR and WR of India thus helping PGCIL to support Government of India’s ambitious goal of ‘Power for All’ by 2012. These projects by PGCIL are a step ahead in their endeavour to transmit bulk power over long distances with substantially reduced transmission losses.

Speaking about the orders, Mr. A.K Dixit, CEO, Energy Sector, Siemens Ltd said, “We are delighted to receive this order from PGCIL. Their confidence in our capability to deliver high quality systems and solutions has resulted in this partnership. We are partnering with our customer to provide energy efficient solutions that involves supply of high-end technology products covering our high-voltage portfolio. The substations will be fully automated and are compact in design which will enable our customers to handle the plant more efficiently.”

Siemens having bagged three major packages of 765kV (Fatehpur, Gaya & Ranchi) in financial year 2009 will be the key player in contributing towards enabling PGCIL in boosting the Power transmission infrastructure of India.

The Siemens Energy Sector is the world’s leading supplier of a complete spectrum of products, services and solutions for the generation, transmission and distribution of power and for the extraction, conversion and transport of oil and gas. In fiscal 2008 (ended September 30), the Energy Sector had revenues of approximately Rs 42.3 billion and profits stood at Rs 3 billion.Siemens Ltd is the flagship listed company in India. Siemens in India, which comprises 20 legal entities, is a leading provider of industry and infrastructure solutions with a business volume aggregating about Rs 11,800 crore, as on September 2008. It operates in the core business areas of Industry, Energy and Healthcare. It has nation-wide Sales and Service network, 19 manufacturing plants, a network of around 500 channel partners and employs about 17,200 people.

Why is nuclear power so ineffective in combating greenhouse warming ?

To the folks who bring us nuclear power, this year's drought is one of the best things that could have happened.

Their logic goes like this. The drought is widely perceived to be a first sign of the greenhouse effect -- the global warming caused by a buildup of atmospheric pollutants. Primary among those pollutants is carbon dioxide, which comes from the burning of coal, oil, and gas. Nuclear power produces no carbon dioxide. Therefore, to prevent more and worse droughts, sea-level rises, floods, and other climatic horrors, we should nuclearize in a big way.

The media have been captivated by this reasoning. Time magazine ended its July 4 article on the greenhouse effect with the sentence: "As Democratic Senator Wendell Ford of Kentucky pointed out last week, the only major energy source that might replace fossil-fuel plants is nuclear power." And Newsweek said in its July 11 issue: "One irony is that the energy source most ready to fill the breach left by coal and oil is the environmentalists' nemesis: nuclear power."

The problem with this apparently obvious conclusion is that, like many apparently obvious conclusions, it doesn't hold up when you run out the numbers. Bill Keepin and Gregory Kats, energy analysts at Rocky Mountain Institute in Old Snowmass, Colorado, have gone to the trouble of figuring out exactly what it would take for nuclear power to "fill the breach." Their numbers suggest that there is indeed a solution to the climate change problem -- but the solution is not nuclear.

Keepin and Kats start by supposing that the world's nations come to an unprecedented agreement to replace all present and future uses for coal with nuclear power, and to accomplish that within 40 years. (They choose coal, rather than oil and gas, because coal is the greatest carbon-emitter of all the fossil fuels, and because nuclear can substitute directly for coal's major use, which is making electricity.) Keepin and Kats also make the deliberately optimistic assumption that it will take only six years to build each nuclear plant and that the cost will be $1000 per installed kilowatt capacity (which is the reported current cost in France; in the United States the cost is three times higher.)

If the world's energy demand grows at the top of the range of present forecasts, it will increase by 3.5 times between now and 2025. Under that scenario Keepin and Kats calculate that a substitution of nuclear for coal would require bringing on nuclear power approximately equal to ALL the world's present energy production. By 2025 the world would need 8000 large nuclear plants, as opposed to the 350 operating today. New plants would have to come on line at an average rate of one every 1.6 days, at an average cost of 787 billion dollars per year, for 38 years.

Even with this unimaginable increase in nuclear power, carbon dioxide emissions would grow to be 65 percent higher than they are now. Greenhouse warming would be rampant. The drought of '88 would look like a pleasant cool spell.

If energy demand goes up at a slower rate -- doubling by 2025 -- and again nuclear were systematically substituted for coal, one new nuclear plant would be required every 2.4 days, at a cost of $525 billion annually. To pay their share of this buildup, the Third World nations would have to double their current levels of debt (never mind the problem that no one would lend them that much). There would be 18 times as many nuclear plants as there are today. Carbon dioxide emissions would grow until the turn of the century and then slowly fall, but at all times they would be higher than they are now. The greenhouse effect would go on getting worse.

Why is nuclear power so ineffective in combating greenhouse warming in these calculations? Because it only provides electricity, which accounts for only one-third of fossel-fuel use. Because fossil fuel use accounts for only about half of the greenhouse problem (the rest comes from deforestation and from gases other than carbon dioxide). And because even with generous assumptions about construction time and cost, nuclear starts from too low a base and takes too much time and money to take over a major part of the world energy production.

The massive buildups of nuclear power assumed in the Keepin and Kats calculations could never really happen. Construction times of U.S. plants are more like 12 years than six. Costs around the world are typically two, three, even five times higher than Keepin and Kats assumed. Even if the managerial capacity were available to construct so many plants so fast, the drain of that much capital into nuclear construction would slow or stop the very economic growth that is assumed to require so much power in the first place. And of course the problems of nuclear power -- high cost, intractable and dangerous wastes, evacuation planning, threats to public health, decommissioning, diversion of fissile materials into bombs, vulnerability to terrorism, and political unpopularity -- all those problems would escalate.

Now for the good news. There are energy scenarios, much easier and cheaper than the high-nuclear ones just described, that can greatly ameliorate greenhouse warming. They involve state-of-the-art design to meet energy needs in the most efficient way possible. That doesn't mean what most people think of as conservation -- cold rooms, warm beer, and general deprivation. It means efficiency -- being smart about warming the rooms and cooling the beer, so as to use the least possible amount of energy for the purpose.

Most efficiency improvements are fast and cheap compared to nuclear power, and unlike nuclear, they apply to every kind of energy use, including transportation. For example, just changing all the light bulbs in America to the most efficient ones now available could shut down at least 40 large coal-fired power plants and save the nation $10 billion a year. New office buildings could be constructed in the most energy-efficient way at no increase cost, and over fifty years they would save the equivalent of 85 power plants and two Alaska oil pipelines. If the average fleet efficiency of U.S. cars doubled from the present 18 miles per gallon to 36, automobile carbon emissions could be cut in half (and another half if the fleet reached the 78 mpg of some current five-passenger full-size test vehicles.) That could be accomplished within one or two turnover times of the fleet -- 12 to 24 years -- at no cost, and as a side benefit there would be large reduction in urban air pollution, acid rain, and military costs in the Persian Gulf.

A number of studies have worked out the possible results of a major global commitment to energy efficiency. According to one of them, the industrialized nations could maintain annual GDP growth rates of 1-2 percent per year and stil cut per capita energy demand at nearly today's rates. The result would be a slight decline in carbon emissions from today's levels. Add a shift to solar energy, stop deforestation, and start reforestation, and the greenhouse problem could be reduced dramatically.

The folks who bring us nuclear power will be quick to point out that nuclear could be added to an efficiency scenario to reduce carbon emissions even further. Keepin and Kats do a calculation assuming a sixfold expansion of nuclear power by 2025 (a new plant every 7.5 days at an annual cost of $178 billion) IN ADDITION TO a major commitment to energy efficiency. In that scenario carbon emissions are about half of what they are today. About 38 percent of that reduction is due to nuclear substitution for coal.

Which is not, however, an argument for adding nuclear power to the list of possible solutions to the global warming problem, primarily because nuclear is so enormously expensive that it drains money away from better options. At current U.S. costs for nuclear and for efficiency, a dollar spent on efficiency displace nearly SEVEN TIMES as much carbon as a dollar spent

Nuclear power plant offers thermal efficiency around 35%, while a modern coal-powered plant with super-critical boiler tops out at 44%

In this era of high concern for energy consumption, readily available energy-efficient motors top the 96% mark, electric drives reach 95%, and many appliances and consumer devices exhibit rising efficiency. What, then, makes 60% thermal efficiency so special?

It’s a much different scenario for power generation. Complex combustion and fluid-flow processes involved in power conversion limit thermal efficiency, despite application of the best engineering know-how. For example, a typical light-water reactor nuclear power plant offers thermal efficiency around 35%, while a modern coal-powered plant with super-critical boiler tops out at 44%.

However, one power technology, the gas turbine, has been pushing the efficiency envelope. These large, land-based (stationary) turbines—with 100s of megawatt (MW) output—draw on the advances in design, materials, and cooling techniques of their more numerous aircraft gas turbine cousins. The latest turbines offer thermal efficiencies in the 40% range, with a recent model reportedly obtaining 46%.

These values refer to simple-cycle operation, where turbine exhaust is not further used. Real advantage comes from gas turbine exhaust applied as input to a standard steam turbine in a combined-cycle power plant. This is where new-generation gas turbines can become the driving engine to obtain 60%+ overall thermal efficiency.

Europe leads the way

Among stationary gas turbine suppliers, developments from two manufacturers are particularly noteworthy. GE Energy installed the first of its H systems (combined-cycle gas and steam turbine) at Baglan Bay power station in South Wales (U.K.). The plant went commercial in 2003 and, to date, has logged over 30,000 operating hours. Currently it runs at 480 MW, with capability for higher output, according to GE Energy.

Five other GE H turbines are in various stages of implementation; three are in Japan at Tokyo Electric Power Co.’s (TEPCO’s) Futtsu thermal power station. The first of these 50-Hz machines was initially fired in Dec. 2007, and is expected to be in operation in late summer 2008. H systems in TEPCO Units 2 and 3 are scheduled to run by mid-2010.

GE’s first H-class turbine in the U.S., also its first 60-Hz machine, was installed in 2006 at Inland Empire Energy Center—a natural gas combined-cycle power plant in Riverside County, CA. Two GE H systems will comprise this plant, which is designed for maximum net rated electrical output of 775 MW to domestic and business users. Inland’s two units are scheduled to go online later this summer.

Meanwhile, Siemens Power Generation is moving its H-class SGT5-8000H turbine toward commercialization. Installed at the Irsching 4 gas power plant near Ingolstadt, Germany, the first firing of the turbine occurred in Dec. 2007. First synchronization to the grid followed in March 2008 and full-load testing (simple-cycle mode) started in April 2008, notes Phillip Ratliff, director of next-generation gas turbines at Siemens.

Siemens’ 50-Hz machine outputs 340 MW, but is designed to produce 530 MW in eventual combined-cycle operation—with expected efficiency of more than 60%. “A 60-Hz turbine is being developed after further verification of the first design,” says Ratliff.

An extensive test and validation program will continue for the SGT5-8000H turbine until mid-2009. Then, build-out of the combined-cycle plant begins in phase 2 of the program, with transfer to the plant operator, E.ON Kraftwerke GmbH, expected in mid-2011.

The next couple of years look exciting for the gas turbine power generation arena.

Ultra mega power projects

The government proposes to make it mandatory for bidders of ultra mega power projects (UMPPs) to source equipment from domestic suppliers. The move is aimed at reducing the dependence on foreign companies, particularly Chinese, and encourage a build-up of domestic supercritical technology equipment capacity.
Central Electricity Authority data reflect the UPA government’s concerns that Chinese companies hold sway over power equipment supplies in India. Of 43 supercritical units bought by Indian companies so far, orders for only four have been placed with Indian companies. Chinese companies have bagged orders for 26 boiler–turbine–generation sets (BTG). Koreans managed eight, while three went to Russian companies and two to Italian firms.
Tata Power has placed orders for five units of 800 mw each for the Mundra UMPP with Korea’s Doosan and Hitachi of Japan. Reliance Power has awarded contracts for six units of 660 mw Sasan UMPP to China’s Shanghai Electric. Equipment for Reliance Power’s Krishnapatnam and Tilaiya UMPPs are yet to be awarded.
Developers both in the state and private sectors have been moving from supercritical to sub-critical projects, causing concern. About 44,700 mw of supercritical capacity is under construction.
The power ministry proposes to revise bidding norms to make it mandatory for qualified bidders to buy equipment within the country. The plan to amend request for proposal would be put before the empowered group of ministers, headed by power minister Sushilkumar Shinde, that has been constituted to look into the UMPP issues, a senior government official said told Financial Chronicle.
Artificially pegged conversion rates for the yuan has given Chinese companies a distinct pricing advantage. “They have been able to quote 25 per cent lower because of the artificially determined exchange rates,” said an indigenous equipment supplier.
The centre will direct all state-owned power utilities to invite bids from equipment suppliers from Indian companies.
Power equipment makers like Bhel and Larsen & Toubro have welcomed the move, but electricity generators, including Tata Power and Lanco Power, said the move was the worst thing to happen to the power sector.
The state-owned Bhel said the step was in the right direction.
“We have always been saying that there is unfair competition with foreign players as there is zero per cent customs duty on imports. Some support is required at least till the time Indian supercritical equipment market is developed and is ready to take on competition. The government should facilitate manufacture of at least the first 10 or 15 supercritical sets,” Bhel chairman and managing director K Ravi Kumar said.
L&T Power managing director and chief executive officer Ravi Uppal said this was a step long overdue. “Companies like ours, Toshiba, and Bharat Forge are investing hundreds of crores in the sector. The proposal would help domestic players to grow and make the country self-reliant. We welcome foreign players to participate in Indian tenders as long as they set up shop in India,” he said.
However, Lanco Infratech chief financial officer J Suresh Kumar said the proposal would “lead to the market becoming anti-competitive, making Bhel a monopoly and subjecting generators to the whims and fancies of equipment suppliers.”
Tata Power finance director S Ramakrishnan said, “One has to look at the delivery schedules of domestic equipment makers”, implying that there were problems in supplies.
The government official said the power ministry was in favour of placing equipment orders with local equipment makers to help them establish more facilities and bring down costs.
The cost of initial supercritical units is high because of the large import content and low volume. Bhel is expanding its production capacity to 15,000 mw by the year- end. The company has tie-ups with Alstom and Siemens for manufacture of supercritical boilers and turbines. New joint ventures of L&T-Mitsubishi, JSW-Toshiba, Bharat Forge-Alstom and Ansaldo-GB Engineering are also setting up capacity.
Companies with domestic presence are at an advantage as they have qualified for bulk tenders to be floated by NTPC and DVC for 11 supercritical units. Only companies with a manufacturing base in India are qualified to bid for the contracts.

Placing a Rs40,000 crore order for the supply of power equipment to state-run NTPC Ltd and Damodar Valley Corp

New Delhi: In a move that will provide a fillip to the capital goods industry and the power sector, the Congress-led United Progressive Alliance (UPA) government will be placing a Rs40,000 crore order for the supply of power equipment to state-run NTPC Ltd and Damodar Valley Corp. (DVC).

The cabinet committee on infrastructure took the decision on Thursday, setting the stage for NTPC, India’s largest power generation utility, to invite tenders for the purchase of 11 boilers and 11 turbines of 660MW each within 45 days. Of these, nine units will be for NTPC and two for DVC.

The order will lead to “rapid capacity addition in the country, transfer of super critical technology and development of indigenous manufacturing capacity”, said a press note of the government.

Such so-called super critical equipment, apart from being environment-friendly, helps increase plant efficiencies.

Mint had reported on 16 June that the government’s 100-day agenda included this proposal.

“The order will be a huge boost for the Indian manufacturing sector and the power sector. It will also help in establishing super-critical technology in the country,” said K. Ravi Kumar, chairman and managing director, Bharat Heavy Electricals Ltd (Bhel).

Private sector joint venture firms expected to participate in the tender include Toshiba Corp. of Japan along with JSW Group; Ansaldo Caldaie SpA of Italy and GB Engineering Enterprises Pvt. Ltd; and Larsen and Toubro Ltd and Mitsubishi Heavy Industries Ltd of Japan.

“Bhel would be the primary beneficiary which would minimum get orders for five sets out of total 11 sets to be tendered under bulk route, this should help the company achieve more than targeted Rs55,000 crore order inflow for the year FY10,” said Madanagopal R., an equity research analyst at Mumbai-based Centrum Broking Pvt. Ltd, said.

In addition, the cabinet committee on economic affairs (CCEA) on Thursday gave its assent to an empowered committee of secretaries (eCoS) set up for International Coal Ventures Pvt. Ltd, to also consider the overseas acquisition plans of Coal India Ltd, India’s largest coal miner.

In another development, CCEA has given its in-principle approval to the department of telecommunication’s proposal to allow Telecommunications Consultants India Ltd (TCIL) to exit from the Rajasthan-based telecom operator Bharti Hexacom Ltd.

Bharti Hexacom is a joint venture with Sunil Mittal promoted Bharti Airtel Ltd holding 70%; TCIL had invested Rs106.02 crore for its stake.