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PGCIL debuts in intrastate power transmission

Earlier this month, Power Grid Corporation of India (PGCIL) debuted in the intrastate power transmission space by winning a concession in Uttar Pradesh, under the tariff-based competitive bidding route. The Central utility clinched the transmission scheme associated with the upcoming 2×660-mw Jawaharpur power generation project in Uttar Pradesh.

For PGCIL, which specializes in interregional and even cross-border transmission lines, winning an intrastate project assumes significance. When the TBCB mechanism was launched in January 2011, the initial projects were all of interregional lines—crucial components of the National Grid. It is only in recent years that state governments started using the TBCB mechanism for intrastate lines. However, this culture did not spread widely with only few states like Uttar Pradesh, Haryana, Rajasthan and a few others, deciding to adopt this modality.

Coming back to the concession won by PGCIL, the project special purpose vehicle is “Jawaharpur Firozabad Transmission Ltd,” which was incorporated on August 20, 2018, as a wholly-owned subsidiary of REC Transmission Projects Company Ltd. This SPV has now been transferred to PGCILwho will develop the project on build, own, operate, maintain (BOOM) basis under a 35-year concession period.

The transmission scheme comprises of three broad elements:

  • LILO of the 765kV Mainpur-Greater Noida single-circuit line at Jawaharpur thermal power project
  • 400kV double-circuit quad line from Jawaharpur thermal power project to Firozabad
  • 400/220/132kV air insulated substation (AIS) substation at Firozabad

 

The project will also include some more LILOs and a 132kV double-circuit line connecting the upcoming Firozabad substation to Narkhi.

UP takes the lead: It is worth observing that Uttar Pradesh has formalized three intrastate power transmission projects this year. This is a very commendable achievement considering that there was hardly any movement in other states in the intrastate TBCB power transmission space.

Of the three projects that UP formalized this year, one project (the Jawaharpur scheme discussed above) has gone to PGCIL and two have been bagged by Adani Power. In June this year, Adani Transmission Ltd (ATL) clinched the Ghatampur power transmission project under the tariff-based competitive bidding route, marking its first presence in Uttar Pradesh.

The transmission project involves around 900 ckm of transmission lines at 765kV and 400kV levels. Some major 765kV lines include Ghatampur-Agra, Agra-Greater Noida and Ghatampur-Hapur.

Incidentally, the Ghatampur project saw very aggressive bidding at the RfP stage with PGCIL being the only other contender in the race when the project ultimately went to Adani Group.

Very recently, Adani won the transmission scheme involving evacuation infrastructure for the upcoming 2×660-mw Obra-C thermal power project of state government utility Uttar Pradesh Vidyut Utpadan Nigam Ltd (UPVUNL).

Uttar Pradesh is seen to be very aggressive in recent years, in all aspects of the power value chain—generation, transmission and distribution. The northern state is gearing up to meet growing demand from both the industrial and household sector. Under the nationwide household electrification scheme “Saubhagya”, over 68 lakh households have been electrified since October 2017. This represents nearly 30 per cent of the 231 lakh households that have been electrified since the launch of Saubhagya.

UP is doing well to expedite its power generation projects and also step up household electrification. Its effort in accelerating the creating of power transmission infrastructure is a step in the right direction.

The author of this article, Venugopal Pillai, is Editor, T&D India, may be reached on venugopal.pillai@tndindia.com. The views expressed here are personal. 

Venugopal Pillai by — December 26, 2018 in Power Transmission 0
States must actively draw upon PGCIL’s expertise

One option by which PGCIL could meaningfully engage in intrastate projects is through joint ventures with state power utilities, at least for specific projects.

Very recenty, there was a news report that Kerala State Electricity Board was seeking the involvement of Power Grid Corporation of India (PGCIL) in the southern state’s ambitious “Transgrid-2.0” project. The Rs.10,000-crore project envisages substantial upgrade to its power transmission network, and that too, with a conscious adoption of modern technology.

It is well known that even if almost all the erstwhile state electricity boards have been split into separate entities for generation, transmission and distribution, most of them still lack the technical expertise or the financial prowess to deal with complexities in their intrastate transmission networks. This is exactly why drawing upon PGCIL’s competency could be harnessed advantageously.

Special Cases

In some deserving cases, PGCIL is carrying out intrastate power transmission upgrade, thanks to extreme conditions that the state government-utilities would find difficult to contend with. For instance, PGCIL is implementing a project worth over Rs.5,000 crore to improve transmission network in topographically-challenging northeastern India, touching all northeastern states except Arunachal Pradesh. However, in Arunachal Pradesh and Sikkim alone, PGCIL has been entrusted with a Rs.4,700-crore project to improve transmission and distribution infrastructure. In Jammu & Kashmir also, PGCIL is involved in a Rs.1,800-project to connect the isolated Leh-Kargil area to the northern grid with a 220kV line. In these cases, PGCIL is playing the role of a “consultant” and has received the mandate from the Central government.

The real problem lies with states that are not “special” like the northeastern ones or Jammu & Kashmir, nor at the other extreme, are fully equipped to deal with their power transmission network.

TBCB might not work

State power utilities of course have the option of using the tariff-based competitive bidding mechanism that can bring in enterprise and investment, in a competitive environment. However, not many states of them have pursued this option aggressively although there are honourable exceptions like Haryana, Uttar Pradesh, Rajasthan, Haryana, etc. All said, the extent to which TBCB has percolated into intrastate projects, at the national level, is still shallow. Even if states float projects on the TBCB mechanism, PGCIL is free to bid just as it has successfully done in interregional lines. In such a case, states stand a potential chance to get PGCIL’s involvement. But the point is: Would PGCIL be excited enough to proactively participate in micro-level intrastate projects?

The JV option

One option by which PGCIL could meaningful engage in intrastate projects is through joint ventures with state power utilities, at least for specific projects. It has done so with Bihar, resulting in the formation of Bihar Grid Company Ltd, a 50:50 joint venture. PGCIL was engaged in similar talks with Odisha but the proposal did not take shape, ostensibly due to insufficient propulsion by the state government.

State governments must draw upon the rich technical and managerial experience of PGCIL and actively consider the joint venture route. To start with, JVs could be formed for specific but complex projects. Quite admittedly, formation of joint ventures would involve extended discussions and procedural formalities. The JV with Bihar, for instance, was formed in 2013 and has had its share of teething troubles. But once again, state governments would do well to realize that roping PGCIL has a JV partner is well worth the effort. For PGCIL too, an equity stake would mean closer bonding with the project, perhaps much more than it would in the capacity of a consultant.

(Photo: RTS Power Corporation)

(This article’s author, Venugopal Pillai, is Editor, T&D India. Views expressed here are personal. The author may be contacted on venugopal.pillai@tndindia.com)

Venugopal Pillai by — October 18, 2017 in Power Transmission 0
BHEL missing out on opportunities in T&D sector

The recent report of the Comptroller and Auditor General (CAG) titled “Competitiveness of BHEL in Emerging Markets” was presented in Parliament on August 8, 2017. The report provides insights on the debacle of BHEL. From FY13 onwards, BHEL’s sales turnover has been on a decline and in FY16, the PSU engineering firm posted its first-ever loss since inception.

A key insight derived from the CAG report is the inability to diversify from the power sector. During the period FY13 to FY16, power sector accounted for nearly 80 per cent of the order inflow of BHEL.

Even within the power sector, the focus has been on the generation side, and this is primarily responsible for BHEL’s steady southward journey. Supercritical power equipment has spelt trouble for BHEL from the onset. It could not get technology partners on time and it took years to BHEL to acquire competence in the field. By then, the Chinese had also made significant inroads and even foreign suppliers were busy with orders. BHEL even tried turn itself into a developer by forging joint venture with state power generation utilities of Tamil Nadu, Karnataka and Maharashtra. While BHEL was to hold minority stake in the joint ventures with an understanding that it would get the mandate to supply main plant equipment. Even this approach was largely unsuccessful.

Related story: BHEL gets “developer” tag

BHEL should have laid focus on the power transmission side given that the investments in the country’s power sector were gradually shifting from generation to T&D.

Take the case of modern T&D equipment like dry transformers, which are critical in power distribution infrastructure in urban areas. It is reliably learnt that BHEL still has not developed expertise in dry transformers. Even take the case of extra high voltage (765kV) gas-insulated switchgear. Suppliers like Areva T&D (later Alstom T&D and now GE T&D) have been cornering big market share in the 756kV power transmission equipment space. Even certain categories like 500 MVA interconnecting transformers was an area that BHEL missed out on.

By and large, BHEL has moved very slowly when it comes to innovative equipment in the power transmission space, especially the 765kV equipment space that is rapidly picking up. What happened in the power generation space to BHEL threatens to repeat itself in the 765kV power transmission space as well.

China was a competition to BHEL in the power generation equipment space, and is also providing to be a strong competitor in the 765kV power transmission equipment space. Let us remind ourselves that Chinese major like TBEA and BTW have already set up shop in India, and have been receiving from utilities like Power Grid Corporation of India. Also, traditional European suppliers like Siemens, ABB and GE (erstwhile Alstom), and big Japanese names like Toshiba are also in the fray. EHV power transmission equipment, especially 765kV GIS, should be a key area for BHEL.

In FY18 so far, BHEL has not reported any significant order in the power transmission space except for a very recent export order for transformer bushings placed by customers in Chile and Estonia. In FY17, the situation was similar with the exception of a 765kV air insulated substation mandate placed by the Tamil Nadu state power transmission utility.

BHEL has been reporting diversification in its order inflows covering areas like solar power, metro coaches, defence, aerospace and even water treatment, but 765kV GIS is an area that BHEL needs to make serious inroads into.

(Photograph showing GIS substation of ABB is for representational purpose only. Photo Courtesy: ABB)

(This article’s author, Venugopal Pillai, is Editor, T&D India. Views expressed here are personal. The author may be contacted on venugopal.pillai@tndindia.com)

Venugopal Pillai by — August 9, 2017 in Power Transmission 0
India crosses new milestone in EHV equipment testing

National High Power Test Laboratory Pvt Ltd (NHPTL) last week announced that it began commercial operations from July 1, 2017, and that it was now open to accepting enquiries for high-voltage equipment testing. The commissioning of India’s most advanced laboratory for high voltage equipment testing, albeit just the first phase for now, is a very important development for the electrical equipment industry. Not only will the laboratory (located at Bina in Madhya Pradesh) serve Indian customers, it is also expected to attract business from SAARC, ASEAN and Middle East countries.

India’s inadequacy in the field of testing of high- and extra high voltage equipment, typically power transformers, is well known. The new Bina lab is expected to mitigate India’s reliance on foreign testing houses, typically CPRI (Italy) and KEMA (The Netherlands).

India’s two traditional testing laboratories, ERDA and CPRI, have been bolstering their competency but they haven’t really been able to obviate the dependence on foreign labs. For instance, though ERDA is capable of carrying out impulse test on transformers up to 400kV, there is no scope for undertaking the most crucial short-circuit test. The Bina laboratory of NHPTL, on the other hand, is well equipped to carry out short-circuit test on 400kV power transformers. It is estimated that Indian transformer manufacturers spend an estimated Rs.30 crore each year in getting their products type-tested in foreign laboratories. Apart from the high expenses, the turnaround time in getting transformers tested overseas labs is very high.

While the first phase of the Bina laboratory is commissioned, it is also encouraging to see that ERDA and CPRI are also moving on with their expansion plans.  All this is good news for the Indian power transmission industry that is progressively moving to higher voltages (765kV, 800kV and even 1,200kV). It is also pursuing high voltage direct current (HVDC) power transmission modalities, apart from conventional alternating current (AC).

NHPTL’s Bina laboratory has an intrinsic advantage of having taken birth in a technogically-advanced era. This being the case, it will not face legacy-related impediments of migrating from a low-voltage regime to an extra-high voltage regime. For CPRI and ERDA, on the other hand, this transition will not be seamless. Also, NHTPL is a corporate entity (company) that makes matters like decision-making and fund raising relatively easier than in the case of ERDA and CPRI that are registered as non-corporate entities.

All said and done, India’s reliance on foreign laboratories will decline only gradually. It must be acknowledged that KEMA and CESI, in particular, have been longstanding partners to the Indian electrical equipment fraternity. Certification from these agencies has been very helpful for Indian companies, especially those exporting high-voltage equipment. Both these agencies have played a critical role in the development of NHPTL’s Bina laboratory, right from the conception stage.

Coming back to the Bina laboratory, NHPTL, in the second phase, has envisaged a high power synthetic (HPS) lab for short circuit testing of circuit breakers up to 550kV, 63kA with synthetic methods. Also part of the second phase, is a high current low voltage (HCLV) lab for testing high current withstand capability of electrical equipment such as low-voltage bus bar, contacts, breakers, disconnectors, bushings, current transformers, etc.

Self-sufficiency in high-voltage electrical equipment testing was a cherished dream of Indian electrical equipment manufacturers, and NHPTL’s Bina lab is a definitive first step towards the realization of this dream.

Venugopal Pillai by — July 10, 2017 in Power Transmission 0
The highs and lows of tariff-based competitive bidding

It is a matter of irony that while the country the celebrating the success of the tariff-based competitive bidding (TBCB) mechanism in the solar and wind energy sectors in terms of historically low tariffs quoted by developers, the same philosophy is creating turmoil in the conventional power generation and transmission industry.

According to reliable reports, the Supreme Court has disallowed any increase in tariffs from Tata Power’s 4,000-mw Mundra ultra mega power project (UMPP) to be passed on to beneficiary utilities. Tata Power in late 2006 had clinched the Mundra UMPP quoting a levelised tariff of Rs.2.26 per kwh during the 25-year concession period. The tariff quoted by Tata Power was based on long-term negotiated deals signed with Indonesian coal suppliers. However, Indonesia in 2010 ruled that coal cannot be exported at less than market price. The fuel cost for Tata Power shot up, rendering the tariff (of Rs.2.26 per kwh) simply unviable.

Two mega transmission schemes of Reliance Power (Anil Ambani Group) have been under litigation for quite some time now, on the same grounds. Reliance Power had won the North Karanpura and Talcher-II transmission schemes under the TBCB mechanism, back in 2009. Reliance Power has sought revision in tariffs as the company has alleged that work on the projects could not start on time due to non-timely pre-project clearances from the Union government. Reliance Power has sought 160 per cent increase in tariff for the North Karanpura project and 90 per cent in the case of Talcher-II. Beneficiary state utilities have contested this plea and the matter is still sub-judice. The next hearing of the Appellate Tribunal of Electricity (ATE), with whom the matter is now resting, is scheduled on July 12, 2017, for both these projects. Incidentally, Power Grid Corporation of India has stepped in and offered to take over the projects but on conventional “cost-plus” basis, and not under the tariff-based competitive route.

Selling stake

Coming back to the Mundra UMPP case, Tata Power has offered GUVNL 51 per cent stake in Coastal Gujarat Power Ltd (the 100 per cent Tata Power subsidiary that owns the Mundra UMPP) for just Re.1. This will result in CPGL relegating itself to an O&M contractor. GUVNL (Gujarat Urja Vikas Nigam Ltd) is the parent body of all power utilities in Gujarat. It is never going to be easy for power utilities to take over the project and sell power at Rs.2.26 per kwh. The project is designed to run on imported coal; domestic coal will be an inferior alternative from both technical and commercial standpoints.

Adani Power and Essar Power are also saddled with their projects – Mundra (4,620 mw) and Salaya (1,200 mw), respectively – that are based on imported (Indonesian) coal. Both the developers are finding it difficult to sell power at rates contracted in the power purchase agreements. [These projects do not technically fall under the TBCB mechanism but are based on long-term PPAs signed with beneficiary utilities. However, the impact of rising fuel costs on the commercial viability of the power generation asset is the same.]

Also read: Tariff-based bidding in wind energy to gain momentum

The TBCB mechanism has done wonders for the solar industry with tariffs falling to a historical and incredulous low of Rs.2.44 per kwh, as seen in the Bhadla-Phase III project in Rajasthan. Even in the recent 1-GW wind energy auction conducted by SECI, the winning tariffs have been around Rs.3.50 per kwh, much lower than the Rs.4-6 per kwh band seen in the feed-in tariff regime. The biggest advantage that solar and wind projects have is a complete insulation from the vagaries of fuel cost. Despite this, experts believe that such aggressive quotations have been submitted with an underlying desperation to bag projects. Solar developers have set up large teams but the flow of projects has not been much slower than anticipated.

What next?

Based on the cases under discussion, it appears that the TBCB regime is going through a rough patch. While the developer does his homework in quoting the winning tariff, there is always room for unexpected developments that can make financial calculations go awry. Agreed that developers fully subscribe to the project risk but what happens when a developer is confronted by a totally unanticipated situation that makes the tariffs unviable? This is more so considering that the concession periods are long—25 to 30 years. Although concession agreements provide for force majeure, not all eventualities can qualify.

The power projects of Tata, Adani and Essar under discussion are stuck in a policy logjam, and there is no easy way out. It is a tragedy that technically efficient power generation projects are becoming victims of commercial inefficiency.

The tariff-based competitive bidding mechanism, a sound philosophy of power procurement implemented in the country since January 2011, needs some rethinking. Right now, the Central government appears to be distancing itself as issue is strictly between the power generator, the procuring state government utilities, and the lending institutions. While this is understandable, the Centre could do well in reworking the nuances of the otherwise sound tariff-based competitive bidding mechanism, protecting the long-term interests of all stakeholders.

venu by — June 29, 2017 in Policy 0
Restricting China in India’s power transmission

The Union power ministry, according to reliable media reports, is planning to issue a note that seeks to restrict China’s involvement in the Indian power sector. The reports further suggest that restrictions will be imposed in the power transmission sector to start with, and will be extended to power generation and power distribution subsequently.

The objective of the policy is to maintain the principle of reciprocity. China, it should be noted, does not allow Indian companies in its power sector. While there are other countries that also disallow Indian participation, China is significant because of its widespread involvement in the Indian power sector.

When it comes to a Chinese, or any foreign entity for that matter, there are two ways in which it could associate with the Indian power sector. It could either be an equipment supplier or it could be a developer. In the case of a developer, the foreign (Chinese) entity will own equity in the power project, be in the field of generation, transmission or distribution, and will therefore share the risk of the project. When it plays the role of an equipment supplier, there is no equity stake. An equipment supplier can, at the most, become an EPC contractor and perhaps undertake a concomitant operations & maintenance (O&M) contract.

Within equipment suppliers, there are two classes. The first is one that has domestic manufacturing facilities in India, and the second is where the supplier caters to the Indian market through exports from the country of origin.

Thus, we have three broad categories in which a Chinese supplier could cater to the Indian power sector – developer, equipment supplier without local manufacturing facilities and equipment supplier with local presence.

Gauging the impact

Let us gauge the impact of the proposed restriction in the power transmission sector. So far, there are no Chinese developers of power transmission lines. This means that no Chinese company owns and operates transmission lines in India, as yet. Ownership and management of power transmission lines is possible under the under the BOOT/BOOM model. All the same, it is learnt that CLP (incidentally the only independent power producer in India, of Chinese origin) has bid for some interregional lines offered under the tariff-based competitive bidding route. CLP India had bid for three lines but did not secure any. Very recently, CLP India in association with China Southern Power Grid International (CSGI) has bid for three interregional lines, the results of which are awaited. The entry of China as a potential developer of power transmission lines in India was also discussed in a Parliament session earlier this year. Barring this case, there is no other Chinese company that has evinced interested in India’s power transmission sector, in the capacity of a developer.

When it comes to equipment used in the power transmission sector, the proposed ban could have some impact. India’s power transmission infrastructure is gradually moving to extra high voltage levels, typically 765kV. Till around five years ago, power utilities (both Central and state) made large-scale imports of 765kV gear, like transformers and reactors. However, today, local manufacturing capabilities of 765kV equipment have improved thereby lowering the reliance on Chinese equipment. However, there are some items like insulators are imported on a large scale from China as they are available at a very low cost. It is well known that Indian insulator companies have been hurt badly by cheap imports, for several years now.

China as a local player

It is also interesting to note that China is taking the Indian power transmission sector seriously and has even set up local manufacturing facilities. BTW, TBEA and Hyosung are some Chinese companies that have started operations in India through local plants, in the field of EHV power transformers, reactors, switchgear, etc. The Indian manufacturing fraternity, is should be mentioned, has not objected to Chinese companies setting up facilities in India. Their contention has always been to put a check on cheap imports from China.

Though details of the proposed restrictions are not available, it remains to be seen if India actually prohibits Chinese companies from setting up manufacturing facilities in India. Given that India currently permits 100 per cent FDI in the electrical equipment sector, and is also encouraging the “Make in India” campaign, how deftly it deals with the sensitive issue remains to be seen.

The final picture

Since the proposed restrictions on China in the power transmission sector have not yet been spelt out, the final picture cannot be painted. In summary, there will little impact from the “developer” angle. By and large, Chinese companies are not interested in owning and managing transmission lines. It is unlikely that Chinese equipment suppliers that have already set up shop in India will come under the ambit of the proposed restrictions. What could be done is to check imports of power transmission-related equipment. Here, India will be affected but fortunately the dependence on Chinese equipment today is far lesser than what it was, say, five years ago.

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China’s Role In Power Transmission Raises Concern

venu by — June 6, 2017 in Power Transmission 0
BHEL gets “developer” tag

 

Very recently, the first unit of the 2×800-mw Yeramarus supercritical power plant in Karnataka was commissioned. This development assumes significance on several counts. First, it imparts to public sector engineering firm Bharat Heavy Electricals Ltd (BHEL) the status of “power developer.” The Yeramarus plant is owned by Raichur Power Corporation Ltd – a joint venture between Karnataka Power Corporation Ltd (approximately equity stake: 50 per cent), BHEL (26 per cent) and IFCI Ltd (24 per cent). BHEL, after having supplied equipment to a very large share of India’s power generation capacity, is finally an owner, albeit part-owner, of a power plant.

venu by — March 24, 2017 in Power Transmission 0