Indian Heat Rate Alliance (IHRA)

1. Indian Heat Rate Alliance (IHRA) Working Groups Meeting August 12, 2014

2. Background

3. Heat Rate Business Case • In 2011-12, CEA found an average 11.49% deviation between operating heat rate with designed heat rate (ranging largely from 2-20%). • PAT regulations under NMEEE expects144 thermal power plants (97 are coal-fired) designated consumers to save 3.1 mtoe (2.9 mtoe from coal-fired plants) during 2012-15

4. Barriers to Heat Rate Improvement Indian utilities are aware of heat rate opportunities and are now beginning to appreciate the role of solution developers, service providers and skill/knowledge building

5. Approaches to Address Barriers • Pursue policy prescriptions and regulatory directives to incentivize efficiency improvements • Facilitate market driven collaborative R&D to adapt & develop cost effective Heat Rate solutions • Foster partnerships and establish an operative network between stakeholders • Enlarge the support services market to meet the demand of an expanding sector through non-OEMs By establishing an industry organization to address the above barriers on an exclusive basis, a platform can be provided for a collective voice to all stakeholders

6. Indian Heat Rate Alliance

7. Proposed Aims/Objectives of IHRA • Encourage the idea and cause of improved heat rate of thermal power plants on a continual basis & help in achieving heat rate at par with global standards • Offer an autonomous, independent platform for reflecting on policies, regulations and salient topics concerning  heat rate improvement in utilities • Provide technical assistance to utilities for acquiring appropriate technologies and solutions for their problems through collaborative research & development • Act as a clearing-house of information and data bank • Facilitate technical and business partnerships between stakeholders • Engender a services sector to support the utilities and encourage tie-ups between international companies and Indian entrepreneurs

8. Stakeholder/Members

9. Value Proposition for Members

10. Organization Structure

11. Activities of Councils 1 or 2 Working Groups under each Council will provide policy guidance and technical leadership to the IHRA and its members in the selection, design and conduct of heat rate improvement strategies and solutions

12. Targetted IHRA Deliverables as on Dec 31, 2016

13. Solution Development Program A Unique Revenue Stream for IHRA

14. IHRA’s flagship program • Implementation through collaborative R&D • Focus on creation of IPR for wide-scale deployment & commercialization generating revenues for IHRA in the long term

15. National coal savings and CO2 mitigation potential Showcase • The CO2 mitigation can also be achieved by introduction of advanced technologies like • IGCC • Oxy fuel combustion • Carbon Sequestration

16. Key areas of efficiency improvement and cost saving potential at power utilities • High Loss category (40-80 kcal/kWh) • Condenser and Cooling Tower • Dry Flue Gas Loss • HP / IP Turbine • Medium Loss category(20-40 kcal/kWh) • RH Spray • Unburnt Carbon Loss • Unaccountable (LPT Efficiency, Hi Energy drain passing, Insulation loss, etc) • Low Loss category (<20 kcal/kWh) • MS & HRH Temperature deviations • Feed water Temperature deviations Source: Efficiency Improvement at State Utilities – Challenges and Opportunities, CII Power Plant Summit, 2013

17. Potential Priority Areas First solution with IHRA IPR to be developed by end 2016 and commercialized by 2020

18. Aims of Working Groups • Identify, prioritize and select operational and technological/ engineering solutions for development and implementation in select Indian utilities. • Foster partnerships between utilities, service providers, OEMs and other stakeholders in the planning and implementation of utility solutions. • Guide the design, development and pilot testing of the utility heat rate improvement measures, practices and technological solutions. • Monitor and evaluate the impact of the pilot projects on the utility’s technical and financial performance. • Authorize and certify the progress report on the impact of the operational and design solutions on the utility’s performance; disseminate widely the findings of the pilot projects, and • Provide strategic guidance and direction to the IHRA and members of the utility solution project consortium (eg. Service providers, OEMs, Utilities, R&D labs, etc.) on issues related to licensing and ownership of the Intellectual Property Rights (IPR)

19. Model Power Plant Program Demonstrations and Skills

20. Why Model Power Plants • Efficiency interventions follow an one-off, unit by unit approach. • Lessons take time to disseminate across the sector and, • Inaccessible to plant and personnel due to diversity among utilities and the geographical expanse There is thus, a need for a common model demonstration unit located at a relatively easily accessible thermal power station with in-plant facilities for training, laboratory, communication and data-links as well as “on-line” demonstration of technologies.

21. EPRI Model • Model Power Plants (MPP) • Monitoring & Diagnostic (M&D) Center at Philadelphia Electric Power Company (PEPCO) • Instrumentation and Controls (I&C) Center at TVA’s Kingston Plant, • Heat Rate Improvement Center at Potomac Electric Power Company • Functions of MPP • Venue for training and workshops • Showcase of innovative technologies and operational solutions; • Testing, standardization and certification of processes and products; • Site for market driven, collaborative R&D projects • Hardware/tool lending facilities

22. Profile of Power Plants in India • CEA estimated 490 thermal power plant units (as on Mar 31, 2012) • 25 to 800 MW of capacity and have varied problems and solutions • 46% of units producing 46% of national generation have 195-250 MW capacity • 37% units producing only 15% of national generation have 25-150 MW capacity • 17% of units producing 39% of national generation have a capacity of 500 MW or more • 67.7% of the total operating coal based thermal units have exceeded their mid-life (> 15 years) while 46.2% have exceeded their operational life (> 25 years) • 52.4% of the total capacity (MW) of coal based power has exceeded their mid-life (> 15 years) while 28.6% has exceeded the operational life (> 25 years) Utility members will be requested to offer and earmark representative units with capacities of 210 MW, 250 MW, 500 MW and 660 MW to serve as model power units

23. Aims of Working Groups • Identify, prioritize and select model power plants for heat rate technology and operational solutions demonstration. • To assist in the program design and costing of the model power plant demonstration projects. Specifically, the WG will consult and deliberate on the following: • expectations from the proposed MPP unit as a site for pilots and for training & knowledge sharing • accrual of monetary benefits and resolution of IPR issues to the utility and its partners hosting the MPP. • To advise on the methodology, criteria & number of selected stations and units. The Working Group will need to explore establishing multiple model units on the basis of capacity or choice of model units that have a functional focus similar to the approach followed in the US by EPRI. • Discussions with utilities to secure buy-in for designating the identified units as MPPs; Selection of 3-6 units based upon the agreed criteria • Determination of broad budgetary requirements for designated MPPs and funding mechanisms • Foster partnerships between utilities, service providers, OEMs, National Labs and other stakeholders in the design and conduct of market driven consortia R&D projects. . • Guide the design, development and pilot testing of the utility heat rate improvement measures, practices and technological solutions. • Monitor and evaluate the impact of the model power projects on the spread and dissemination of best practices in the country • Provide strategic guidance and direction to the IHRA and members of the utility solution project consortium (eg. Service providers, OEMs, Utilities, R&D labs, etc.) on issues related to licensing and ownership of the Intellectual Property Rights (IPR)

24. Service Provider Development Program Wide-scaling Run & Repair Services

25. Potential & Challenges • Potential • CEA estimates that “run-repair-replace’ for R&M/LE during 2012-22 will require investments of Rs. 555-855 bn • Compliance of Perform Achieve Trade Scheme • Significant challenges • Non availability of competitively priced, modern, state of the art services and products • services are available internationally usually through small and medium scale service providers at prices that are competitive in developed countries • such service providers do not typically exist in India • international service providers can be contracted by Indian utilities, the costs are exhorbitant and therefore not financially viable in the Indian context • BTG manufacturers/OEMs focus on on green-field capacity addition or replacements “Run and repair” market remains small with a huge un-estimated potential

26. Conclusions from Round-table for Service Providers and Original Equipment Manufacturers • MSMEs provide a range of thermal efficiency related services in the developed markets. • Many MSMEs established by former employees. India has very few such service providers. They face significant barriers: • Lack of recognition by utilities and misconstrued competition by OEMs • Utility procurement practices that does not recognize start-ups/new enterprises or have entry barriers like financial creditworthiness and/or proven institutional track record • Lack of dedicated budget lines in utilities for promotion of efficiency • Expanding the pool of heat-rate service providers needs a nurturing eco-system • Encouraging former employees to turn entrepreneurs and establish enterprises • Facilitating partnerships or franchisee agreements between international service providers and Indian entrepreneurs • Creation of a platform that can assist service providers to network and market their skills and products

27. Aims of Working Groups • In discussion with utilities, identify and prioritize solution areas for which service providers are immediately required • Identify priority solutions areas for which service providers are not available in India but are available abroad • Initiate discussions with 3-5 international service providers on their plans to establish a base in India. • Foster partnerships between these international service providers and Indian entrepreneurs for establishing indigenous enterprises/franchisees • Create awareness amongst utilities on availability of indigenous service providers and the need to develop procurement frameworks to contract them • Guide IHRA to develop model/standard documents for procurement and contracting of various services

28. Finance & Sustainability

29. Potential sources of revenue • Membership fee • Seed money • Participation fees for training programs • Sponsorships for events • Management fee for collaborative/ consortia research, • Fees from consulting services, IPR and/or technology commercialization

30. Challenges & Support required for IHRA • IHRA expected to break even in year 6 • Activities of Learning by Sharing & Business Development Councils will start generating a surplus from year 1 itself • Risks: Low • Solutions developed by Applied Research & Technology Council expected to be commercialized with IHRA revenues from year 5 • Risks: High • IHRA’s sustainability • Need for international collaboration and partnership for technology transfer • Capacity building for the IHRA team both in terms of technical and managerial capability through • Understanding the functioning & focus areas of EPRI, VGB, Jcoal & similar organizations internationally • Needs gap funding of nearly Rs. 3 Crores in the first 5 years • Will generate surplus of around Rs. 1 Crores in years 6-8

31. Thank You