‘Fossil fuel plants are here to stay’
From manufacturing steam turbines and generators for new coal-based thermal power plants, GE Power India Sanand facility is evolving with the changing times. As capacity addition in thermal power generation slows down and the focus shifts to renewables, its managing director PRASHANT JAIN is bullish that fossil fuel-based plants are here to stay. Jain talks to
Vinay Umarji. Edited excerpts:
What direction is the power sector taking in terms of fuel mix?
India has 200 Gw of installed coal fired capacity of the total capacity of 336 Gw. While GE has all the elements of power, from GE Steam Power’s Sanand facility, we focus on steam and nuclear technologies, including turbines and generators. While we add renewables to the grid, going forward to the next 5-10 years, we still believe that in India, coal is domestically available. So, the country will still add 3-7 Gw per year for the next 3-5 years to support the renewable in the grid. Renewables will come in for sure but at the same time the base load will come from fossil fuel. If you look at the total electricity demand of the grid, it is around 1,250 billion units. It will be 1,500 billion units in the next five years.
What are the challenges amid a greater share of renewables?
The power sector is going through a disruption though the future is clear 10 years from now. It is a carbon free power on the grid and there are many ways for that. This includes use of nuclear units and making existing coal fired power plants more efficient. A lot of excitement is there towards the renewables sector. In 5-10 years, we will still need the existing 200 Gw of coal fired plants, operated by roughly 600,000 people. We would still need this talent to operate the plants. We will also need technology to make them more efficient and that is where I say thay fossil (fuel-based power) is here to stay.
And that is important to the investors and employees.
How does the Indian market compare with global peers in terms of technology?
In the last five years, the country adopted the super critical technology which is by far one of the most efficient, currently. From that point of view, the country has caught up. Secondly, the Paris COP21 agreement along with flue-gas desulfurisation (FGDS) have led to emissions of existing coal plants coming down. With the technology intervention, the newly-added coal fired plants in India are as efficient as anywhere in the world. Every 2-3 years, we have technology upgrade in steam turbines.
Does the challenge of reasonable power tariff make induction of new technology difficult?
It does. One has already invested the entire amount for a new plant that is coming with a new tariff today. And if an operator set up a plant, say, seven years ago, with usually the power purchase agreement (PPA) of 20-25 years, for the existing plant, it is challenging to bring down the tariff. That is why discoms play a role for bundling the power and then distributing it. If 20-25 years from now, one is to expect an open market, how does one make that transition towards an open market? We have a mix of plants set up just three years ago but then the tariffs were much higher and the new tariffs which are coming in are of a very small percentage or a fraction. And with money already invested, it needs to be paid back. That is where the transition needs to be done into the open market. Once that happens, it would be natural for plants to upgrade.
What would be your prescription?
The question is what would be the right thing to do. It is to have an open market. Are we on the right path ensuring that the existing assets are not disturbed and where technology, finance and regulation find a balance for the best consumer interest?
What are your plans for the Indian market?
With stress in the power sector, capacity addition is not the same as it was 4-5 years ago. Five years ago, demand that the power sector met was anywhere between 10 and 20 Gw per year. Then, Make in India was on the table and we wanted to invest locally and participate as a local manufacturer. So, the investment that we did was about $200 million at that time in the Sanand facility. We have 350 employees. We have produced about 5 Gw worth of turbine generators in this factory. We have done 4 Gw worth of servicing from this factory. So now, we are into the next phase where we have a full capacity and have established competency in delivering new units.
“THE RIGHT THING... IS TO HAVE AN OPEN MARKET. ARE WE ON THE RIGHT PATH ENSURING THAT THE EXISTING ASSETS ARE NOT DISTURBED AND WHERE TECHNOLOGY, FINANCE AND REGULATION FIND A BALANCE FOR THE BEST CONSUMER INTEREST?”