ISSUES & STRATEGIES FOR ENHANCING BHEL HYDRO BUSINESS

AGENDA FOR THE DAY

+ + + + + + Hydro Scenario in the World Hydro Scenario in India BHEL Current Share in Business Business Potential Available Customer Expectations & Priorities Present Issues- BHEL v/s Competitors

+ Issues for Future Business + Strategies to Increase Competitiveness + New Ways to Enhance Business

HYDRO WORLD SCENARIO

TRENDS SEEN AROUND THE GLOBE

FUEL WISE GENERATION OVER THE YEARS

4.8%

Used in 159 countries- provides 16% of worlds electricity

HYDRO GENERATION OVER THE YEARS

High growth era ushered in particularly by rapid growth in China Slowdown due to local & international controversies over large dams 52%

Hydro Installed capacity worldwide reached 1000 GW by 2010 end (Current annual growth rate of 2.5% owing to huge base)

SKEWED DISTRIBUTION OF HYDRO POWER

10 countries account for 70% of world generation

30%

4 countries account for 50% of world generation

18.7% 9.3%

10.7% 11.5%

India is sixth largest generator of hydro power 3.7 % of world generation

UNDEVELOPED POTENTIAL AVAILABLE

HYDRO GENERATION FORECAST

India & China expected to take the lead in hydro generation GoI launched 50,000 MW initiative in 2003

OVERVIEW OF HYDRO PLANTS

INTRODUCTION TO VARIOUS HYDRO SYSTEMS

WORKING OF A HYDRO POWER STATION

+ Water from the reservoir flows due to gravity to drive the turbine.
+ Turbine is connected to a generator. + Power generated is transmitted over power lines.

TYPES OF HYDRO POWER STATIONS

Sl.No Type of Plant Run of River (RoR) Features Harnesses energy from mainly the available flow of the river May include short term storage or pondage for flexibility in adapting to load demand profile Generation profile driven by natural river flow conditions Water stored in artificially created reservoirs by making dams or natural reservoirs Water storage provides greater flexibility to match generation with demand & reduce dependence on river flow Small reservoir HPP can serve as base plant & large ones as peaking plants Water pumped from lower reservoir to upper reservoir when supply exceeds demand When demand increases, water released from upper reservoir to flow back through turbines & generate power Effective electricity storage

Reservoir

Pumped Storage

TYPES OF HYDRO TURBINES

S.No 1 Turbine Type Pelton Features Used for high head (300 m & above) & low discharge Water passes through nozzles and strikes spoon-shaped buckets arranged on the periphery of a wheel Variety of heads (30 m to 600 m) & medium discharge Guide vanes direct the water tangentially to the turbine wheel, water enters the wheel and exits it in the middle Guide vanes can be adjusted to optimise output & efficiency Most commonly used Used for low (10 m to 80 m) heads & high discharge

Francis

Kaplan

Turbine selection done based on operating head & discharge required Other turbine types like Bulb turbines, tubular turbines & reversible Francis also used

HYDRO SCENARIO IN INDIA

CURRENT ECOSYSTEM FOR HYDRO POWER IN INDIA

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INDIAS INSTALLED CAPACITY

S. No 1 2 3 4 Fuel Installed Capacity (MW) 1,30,371 20,110 39,623 4,780 1,94,884 % Share 67% 10% 20% 3% Remarks Fuel shortage, reluctance to import due to power becoming costlier Dwindling gas supplies- no gas projects planned till 2015-16 Huge potential exists- underdeveloped Problems of clearances, R&R etc exist Public perception negative regarding safety

Thermal - Coal Thermal - Gas Hydro Nuclear TOTAL

Given the increased focus on renewables & impact on climate, imperative to expeditiously develop hydro power & increase its share in nations generation (contributes only 16% generation of nations generation)

EVOLUTION OF HYDRO POWER OVER THE YEARS

S. No
1 2 Plan 4th Plan 5th Plan Period 1969-74 1974-79 Total Capacity at the end of Plan (MW) 14988 23542 Hydro Capaci ty at the end of Plan (MW) 7140 10672 % Share 48 45

3
4 5 6 7 8 9 10

Annual Plan
6th Plan 7th Plan Annual Plan 8th Plan 9th Plan 10th Plan 11th Plan

1979-80
1980-85 1985-90 1990-92 1992-97 1997-02 2002-07 2007-12

25859
40950 62043 67969 84783 104188 132330 187294

11269
14457 18125 18808 21422 26186 34654 38990

44
35 29 28 25 25 26 21

CAPACITY PLANNED FOR XIIIth PLAN

S. No 1 Fuel Thermal - Coal Capacity (MW) Remarks

2
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Thermal - Gas
Hydro Nuclear

63,400

Under question due to fuel constraints, environmental impact

12,000 18,000

Potential for increase exists problems of clear ances, R&R etc. to be sorted
Safety issue, slow progress of Nuclear utting the same under question parks p

TOTAL

93,400

As per Working Group on Power report, Feasible hydro capacity addition of 12,000 MW and nuclear capacity addition of 18,000 MW has been considered as must run during 13th Plan

With thermal fuel constraints & nuclear safety concerns, hydro remains only feasible avenue for increase in capacity addition

MARKET POTENTIAL AVAILABLE

S. No 1 2 3 4 5 6 Category Installed Under Construction DPR Approved DPR Under Approval Stand Awarded Yet to be Awarded TOTAL Capacity (GW) 39 12 13 13 37 39 153 GW Projects in these categories to be accelerated for achievement of 12th & 13th Plan targets Remarks

Issues of projects for benefit of 12th & 13th Plan to be resolved before addressing concerns for balance projects

MARKET POTENTIAL AVAILABLE- BASIN WISE

S. No 1 2 3 4 5 6 River Basin Indus Ganga Central Indian rivers West flowing East flowing Brahmaputra Capacity (MW) 33832 20711 Potential at 60% PLF (MW) 19988 10715

4152 9430
14511 66065

2740 6149
9532 34920

TOTAL

148701

84044

Only 16% of identified potential developed. Market potential of 71 GW still exists (excluding Pump Storage)

MAJOR PLAYERS ALONGWITH BHEL

(Kishanganga 330 MW, Lata Tapovan 171 MW)

BHEL

ANDRITZ
(Rangit 120 MW, Kashang 195 MW, Pare 110 MW)

INDIANINDIAN SUPERCRITICAL

ALSTOM
(Teesta VI 500 MW, Jorethang Loop 96 MW, Bhasmey 55 MW, Tidong I 100 MW, Phatabayang 76 MW, Tehri 1000 MW, Ratle 850 MW)

HYDRO POWER POWER MARKET MARKET

VOITH SIEMENS

(Singoli Bhatwari 99 MW, Rongnichu 96 MW, Sainz 100 MW)

HYDRO MARKET SHARE (2009-12)

COMPANY
BHEL

2009-10
330 MW (35%) 120 MW (12%) 500 MW (53%)

2010-11

2011-12

2012-13
171 MW (17%)

TOTAL

501 MW
(12%) 425 MW (10%)

ANDRITZ

305 MW (33%) 523 MW (56%) 99 MW (11%) 1096 MW (85%) 196 MW (15%) 850 MW (83%)

ALSTOM

2969 MW (71%) 295 MW (7%)

VOITH SIEMENS

TOTAL

950 MW

927 MW

1292 MW

1021 MW

4190 MW

MARKET SCENARIO - HYDRO

ISSUE STATUS
Huge market potential with close to 1,00,000 MW potential assessed in the segment MARKET POTENTIAL Segment in focus keeping in mind the fuel situation in non-renewable sources

Increased focus on EPC tenders (~2,000 MW tenders in the market)

BHEL share falling down from 40% in 11th Plan to 12% in 12th Plan

Foreign suppliers set up manufacturing base in India (Andritz Hydro, Voith & Alstom) INCREASED COMPETITION Preference for foreign manufacturers shown by private developers (BHEL share only 26% in 11th Plan orders placed by IPPs)- ordering on firm basis

Chinese also started participating in tenders

QUALIFICATION A BIG HURDLE

ISSUE
REFERENCE FOR MEETING QR (FRANCIS TURBINES)

STATUS
4 x 150 MW Ranjit Sagar: Cannot be used any more as machine commissioned more than 10 yrs ago 3x135 MW Ranganadi, 8x125 MW Indira Sagar: Can be used for qualification of projects upto 165 MW capacity

Qualification an issue for 4x194 MW Luhri, 7x307 MW Etalin as per present QR issued
Qualification for 4x205 MW Ratle managed after relaxation by developer Need to commission projects like Koldam, Parbati III & Kameng at the earliest

REFERENCE FOR MEETING QR (PELTON TURBINES & HYDRO GENERATOR)

BHEL can qualify to quote upto 212.5 MW only on base of 6x170 MW Tala project commissioned in Feb, 2007 For qualification in projects upto 250 MW capacity, Parbati II to be commissioned at the earliest

BUSINESS DRIVERS
CHOICES SHAPING BUSINESS FOR TODAY AND THE FUTURE

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KEY ISSUES-AFFECTING ORDERING OF HYDRO PROJECTS

Law & Order situation/ Terrorist threat Environmental Clearance

R&R Issues

Logistical/ Infrastructure Roadblocks

International Water treaties

Long gestation period

Poor Health of SEBs

Large financial commitment with no bankability of returns

Limited links between NE Grid & National Grid

STEPS TAKEN BY GOVERNMENT

STEP
50, 000 MW Initiative

DESCRIPTION
Govt. identified hydro scheme of 50,000 MW in may 2003. PFRs of all 162 have been prepared. Lower interest rates for financing offered to developers Set up to fast track large investment projects Many hydro projects cleared in meeting held in May Changing basis of EIA studies from basin wise to sub-basin wise in order to enhance potential Standard specs for Hydro projects developed by CEA Transmission system planning by Power Grid to be done in accordance with status of DPRs of hydro projects esp. in North East India CEA appointed central advisory body to cater to all issues pertaining to development of hydro projects from concept to commissioning 5,000 MW of hydro power from Bhutan by 2020 signedmarket potential further augmented

Incentives to Developers
Cabinet Committee on Investment Basin wise EIA studies Standardization of Specs Transmission Systems CEA central advisory body for Hydro Agreement with Bhutan

Govt. looking to address issues concerning Hydro business

BIDS ALREADY SUBMITTED - STATUS

S. No

Project

Scope / Rating 2x60 MW (E&M) 2x60 MW (E&M)

Price Openi ng / Bid Su bmission D ate Nov, 2011 Sept, 2011 Jan, 2012 April, 2012 Aug, 2012

Results

Reasons for delay in ordering Forest Clearance, Land acquisition, Financial Closure Environment clearance awaited Financial Closure PIB Clearance Project on hold

1 2 3 4 5

KSK Dibbin SEW Infra Nafra HEP

L1- BHEL L2- Alstom Bid not opened Bid not opened
Technical evaluati on in progress

Patel Gongri
CVPPPL Pakaldul CHPLLP Gulu

2x72 MW (EPC)
4x250 MW (EPC) 2x 12 MW (E&M)

Bid not opened

BIDS ALREADY SUBMITTED - STATUS

S. No
Project

Scope / Rating
2 x 60 MW (E&M)

Price Openi ng / Bid Su bmission D ate Aug, 2012

Results

Reasons for delay in ordering

Environment clearance, Financial Closure

UJVNL Vyasi JKSPDC New Ganderbal

Bid not opened

3 x 31 MW (EPC)

April, 2012

Bid not opened

Bids of 3154 MW already submitted & ordering not yet done

KEY ISSUES-AFFECTING EXECUTION OF HYDRO PROJECTS

Environmental Conditions Environmental Clearance

R&R Issues

Logistical Roadblocks

Non availability of skilled manpower

Huge financial commitment with no guarantee of revenue

Revenue in fixed terms while costs in PVC

Inter State Disputes

Long execution cycle resulting in cost overrun

EXECUTION PERIOD OF HYDRO PROJECTS

S. No 1 Project Rating Zero Date Commissioning Schedule (Unit 1) 21 months Months Elapsed

Mukerian

2x9 MW

June, 2004

108 months

Koldam

4x200 MW

July, 2004

48 months

107 months

3 4 5

Kameng TLDP

3x150 MW 4 x 40 MW

Dec, 2004 May, 2007 Jan, 2008

46 months 33 months 43 months

102 months 73 months 65 months

Tapovan 4 x 130 MW Vishnugarh

KEY ISSUES-AFFECTING BHEL COMPETITIVENESS IN HYDRO

Development of Runner Profiles Quality of BHEL supplies

High E&C, BoP prices

Qualifying Requirements

Civil/EPC Pre-bid tie up

Competitors having local manufacturing base

Loading due to technical parameters

Non optimal designs/ High turbine weights

Price Estimates not aligned to market levels

STRATEGIES TO BE ADOPTED
MOVES ENABLING US TO WIN THE GAME

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SIX PRIORITY AREAS IDENTIFIED

Task force set up to look into best practices available in market
Turbine weights reduced considerably

Commissiong of Parbati II to create reference for upto 250 MW

Optimisation of Design

No dispatch without inspection Attempt to minimize rework at site

Qualification Criteria

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Tech Tie-up on case to case basis

Quality Control

Aligning Estimates to Market levels

Review of estimates along with Units / Regions to meet market levels

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Increasing Runner Profile database
Advance action being taken for developing new runner profiles

KEY INITIATIVES TO BE TAKEN Key initiatives helping in achievement of targets

1. Reduction of number of BOP agencies within BHEL. 2. Maximizing orders from Centre / State sectors by various routes like orders on negotiated basis / JVs

3. Time bound program to improve quality-measurable milestones

4. Timely, complete and Sequential supply of equipment

5. Take special measures to reduce cost of input material by developing alternative vendors (including Chinese vendors).
6. Make or buy analysis for cost reduction.

Thank you for your attention

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