icf ppt india infrastructure - the road ahead for power sector 16th may 2016
TRANSCRIPT
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India Infrastructure conference:
Road Ahead for Indian Power Sector
16th May 2016
Joint presentation by
Gurpreet Chugh & Ashish Singla
ICF International
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It is a matter of choice……
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1. Background and Changing environment
2. India’s NDC - Overview
3. Changing times ahead
4. What future holds1. What are the key trends in the segment (capacity, PLF, generation, etc.)?
2. What are the key challenges facing power producers?
3. What is the outlook on future demand and tariffs for power?
4. Is increased coal availability helping their business?
5. How will the reduction in RLNG prices impact gas-based generation?
6. What have been the recent developments in the hydro and nuclear segments?
5. Key Takeaways
6. Big Game changers for future
Table of Contents
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Sustainable Energy Transition for India to be marked by
various factors
1. Increased electricity
demand
2. Increase in per capita
consumption
3. Change in load shape
4. Reducing load factor
5. Addition of industrial
demand
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Sustainable Energy Transition for India to be marked by
various factors
• Boost for non-fossil based
generation and cleaner fuel
generation options
• Improving efficiency of coal based
generation
• Use of Clean coal technologies
• Boost to wind and solar generation
• Limiting GHG emissions
• Need for flexible generation for
integrating RE capacity
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COP21 commitments – a brief
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Commitment under NDC to shape the future
• Reduce emission intensity of GDP by 33% to 35% by 2030 (wrt 2005 levels).
• Govt. plans to achieve about 40 percent Generating capacity from non-fossil fuel based energy resources by 2030
• With a current installed capacity of 5.78 GW (and additional six reactors of 4.3 GW at different stages of commissioning and construction), efforts are being made to achieve 63 GW installed capacity by the year 2032, if supply of fuel is ensured
Targets for 2030
• 175 GW of RE capacity
– 100 GW of solar,
– 60 GW wind and
– 15 GW of Biomass + Small Hydro
Targets for 2022
• Target for whole economy
• Unclear how will this be distributed between
– Different sectors
– Centre v/s States
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• In absence of sector wise targets, we have assumed that same emission cuts are imposed on each sector.
– For Power Sector: From 2005 levels of 14.47 (Emission intensity of ‘GDP at factor cost’ in gm/INR, 2004-05 series), India has set a target of reaching ~9.41 gm/INR by 2030 (ie a reduction of ~35%)
• Power system will not be allowed to emit more than specified GHG to comply with target
To meet its commitment for INDC, a cap on total
system emissions will be needed
Historical Assumed
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Changing time ahead
Big game changers for Indian power sector: COP21 and RE capacity addition
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How to integrate 175 GW of RE capacity into system?
Will such huge RE capacity addition result in peak shortages?
Is system equipped to handle variability in demand?
Will it be sufficient to meet emission reduction targets, if not then what else can be done?
How will system meet emission reduction targets if RE capacity addition falters?
Can it lead to lesser coal generation?
How will the change in load factor of system impact generation mix requirement?
Can mix of coal and RE alone be sufficient to balance the overall objectives?
How will system integrate that amount of RE?
Will there be significant amount of peak and energy shortages in the system?
How will coal-based assets be impacted – especially the imported coal based and inefficient ones?
What will the dispatch levels will they be able to attain?
How much coal will we need and what do we do with the surplus?
Big game changers for Indian power sector: COP21 and RE capacity addition
Pertinent questions in front of planners right
now
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These questions can be answered using IPM®:
ICF’s proprietary power sector modeling tool
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I-IPM® is an Excellent and Versatile Long Range
Planning Model
• IPM® uses a Linear-programming based optimization approach
• It simulates least-cost plant dispatching and least-cost investments in generationcapacity and interconnections to meet projected load in the region.
• IPM® is a long-term capacity expansion and production costing model for electricpower systems including generation, transmission, and hourly demand
• It is a multi-regional, deterministic, dynamic, linear programming model
• Utilizes Dynamic Optimization Framework with an Objective Function of Minimizingthe Present Value of Total System Cost subject to:
– Electricity Demand Constraints
– Reserve Margin Constraints
– Environmental Constraints
– Transmission Constraints
– Fuel Constraints
– Other Operational Constraints
• Simulates rational expectations for perfect foresight providing the framework forinter-temporal decision making
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ICF has a Global Scope in Power and Fuels
Markets
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What Future holds…..
Integrated Planning
Model – IPM®
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We analyse three distinct time periods in the
Power market
Historical
Short to medium term
Long-term
2008 to 2015 2016 to 2022 2023 to 2030
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Each technology type has their own technical,
commercial and operational limitations
LimitationsSolar and
WindBiomass
Small-Hydro
Hydro (RoR)
Hydro (Storage)
Nuclear GasCoal (Super
Critical)
Pace of Land acquisition P
Equipment supply P
Integration issues P
Capital cost P P P P P P
Fuel availability P P
Fuel Cost P P
Ability in providing flexible generation
NAHighly limited
Highly limited
Highly limited
Highly limited
Highly limited
Overall Potential P P
Fuel uncertainty P P P P
Delays in getting clearance P P P P P P
Local resistance P P P
Geological considerations P P
Emissions P P
If not for fuel prices, Gas is one of the best generation source. More importantly, (i) it can provide integration support to RE, and (ii) much less pollution than coal
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We analyse three distinct time periods in the
Power market
Historical
Short to medium term
Long-term
2008 to 2015 2016 to 2022 2023 to 2030
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45 GW of coal based plants are already in advance stages
of development and expected to come online by 2022
Between 2016 and 2022, India will add ~200 GW of new capacity, of which ~140 GW will be RE
Coal capacity addition has already slowed down from 17 GW YoY to 7 GW YoY in next 6 years
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Coal continues to be the mainstay of power in India (63%
of total mix), however average capacity factor reduces to
56%
Capacity Factor continue to decrease
Coal in generation mix (63%) - 2022
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India could end-up with surplus domestic coal
Excess Supply;
Imported coal bill going down
Assumed target of 750 MT by CIL: quite short of Government’s target of 1 Billion Tons
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Power tariff is likely to be dictated primarily by domestic
coal, and partly by Gas
Coal will continue to be marginal fuel in most of the hours, However, Gas will be required as balancing generation capacity for integration of RE sources
Increase in power prices expected: Power prices will be mix of domestic coal and Gas; but it remains to be seen as to will coal be able to take advantage of situation
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Is Low RE additions good for Coal?
Higher RE capacity addition benefits coal by offsetting emission
However,
High RE capacity addition restricts coal addition as RE requires flexible generation to balance itself
Needs thorough investigation
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We analyse three distinct time periods in the
Power market
Historical
Short to medium term
Long-term
2008 to 2015 2016 to 2022 2023 to 2030
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8-9 GW of YoY coal based plants will be required to meet
increasing demand
Between 2022 and 2031, India will require ~280 GW of new capacity, of which ~80 GW will be coal based
Total RE capacity of 270 GW (150 GW solar, 100 GW wind)
Total gas capacity of ~95 GW to firm-up RE and meet emission reduction targets
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System requires storage based hydro which can provide
intra-day flexibility
• Total installable potential of more than 150 GW of which India would have developed around 47 GW by end of 2019
• Historically, India has been able to add 2-3 GW of hydro capacity each year as hydro development has been marred by various factors like
• Extended timelines to procure all the necessary approvals, especially environmental permits
• Difficulties with land acquisition (both for the plant and for new transmission lines to evacuate the power)
• Public opposition
• Obtaining long-term finance
• Operational difficulties introduced by high level of sediments in river
• Water sharing disputes etc.
• By 2030, India is expected to have 70 GW of hydro based capacity which can provide intra-day flexibility in generation
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Nuclear continue to grow slow due to fuel availability
• Limited availability of Uranium, however, India has the world’s largest reserves of thorium
• India plans to have a first pilot reactor in service by 2022 and commercial reactors deployed by around 2030
• In long-term, we expect India would be able to set-up thorium based power plants and thereby have total installed capacity of 35 GW (by 2035)
Public Concern on plant safety
Radiation
Impediments in its developments
Development to watch out forFuel
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‘Coal continues to be the mainstay of power in India’ Hon'ble minister of State with Independent Charge for Power, Coal, New
and Renewable Energy
Year 2030Year 2016
Mix much more
healthier in 2030
Generation mix – All India
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India could end-up with surplus domestic coal
Excess Supply;
Imported coal bill going down
CIL 1 Billion Tons of coal supply by 2030
Total demand of 1 Billion Tons
Of domestic coal including
Captive coal
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NDC commitments to drive long-term gas demand from
power sector, however near term might remain slow
Near term gas
demand is primarily
driven by RE
integration
requirements
Long-term gas
demand is primarily
driven by emission
reduction
requirements
All India Gas Consumption
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Power tariff is likely to be dictated by mix of domestic
coal, and Gas
Merit order stack based on average availability of different plant types
Coal will continue to be marginal fuel, but role of gas is expected to increase in setting prices
Increase in power prices expected as Gas will be required as Mid-merit to Peaking generation
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Short to medium term:
Coal capacity factors to reduce
Coal to become surplus
Imported coal consumption to reduce
Gas to be used as balancing fuel for RE additions
It remains to be seen: Will low RE benefit coal or not
Long-term:
Coal YoY additions to slow down
Imported coal continue to remain low in consumption
Gas may increase for meeting emission targets and balancing coal
High variability in demand introduced by RE may result in high price opportunity for merchant plants (as gas will be required to dispatch)
Nuclear and hydro addition: Slow and steady
Key takeaways
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Game changers for the future…. Things to watch out for
Clean coal technology Battery storage systems
Pump storage and hydro storage systems
Their impact needs
thorough evaluation
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Gurpreet Chugh
Ashish Singla
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