ADANI POWER LIMITED

SUPAN SHAH

ACKNOWLEDGEMENTS

I, hereby, express my profound gratitude to the management of Adani Power Ltd. for giving me an opportunity to carry out my internship at its prestigious organization.

I owe special gratitude to my mentor: Mr. Sandeep Dixit, Head APTRI, who devoted his time and attention to help me at various stages.

INTRODUCTIONAdani Power Limited is the power business subsidiary of Indian conglomerate Adani Group with head office at Ahmedabad, Gujarat. The company is India's largest private power producer, with an installed capacity of 10,440 MW. Its mission is to achieve 20,000 MW by 2020.Adani Power Limited has commissioned the first supercritical 660 MW unit in India. Mundra is also the worlds first supercritical technology based thermal power project to have received Clean Development Mechanism (CDM) Project certification from United Nations Framework Convention on Climate Change (UNFCCC).It has the fastest turnaround time of projects in the industry. Adanis Mundra power plant is also the largest private single location thermal power generating plant.To complete the value chain in power supply, Adani has forayed into power transmission. Groups first line to be commissioned was 400 KV, 430 km long double circuit line from Mundra to Dehgem. Further the group achieved a landmark with completion of about 1000 km long 500km Bi-pole HVDC line connecting Mundra in Gujrat to Mohimdevgarh in Haryana. This became the first HVDC line by a private player in India and connects western grid to northern grid. Today Adani power has approximately 5500 circuit Kms of transmission lines connecting its Tiroda project in Maharashtra with Maharashtra grid.The motto of Adani group is Courage, Commitment and Trust. ADANI POWER TRAINING AND RESEARCH INSTITUTE (APTRI)The energy sector, power sector specifically, is highly capital and technology intensive with low operational efficiencies. Power industry is highly interdisciplinary with Research and Development (R&D) playing a major role in the exploration, design and development of more efficient newer and better mechanisms capable of addressing the emerging challenging environment due to multiple constraints. Technology upgradation is thus necessary for strengthening the power sector. Further due to its nature there is requirement for strong economic, environmental and social incentives to leverage plant centric R&D driven re-organization of existing power units and innovative technology driven enlargement of capacity across the value chain for enhanced energy efficiency.

Adani Power Training & Research Institute (APTRI) is the Research, Training and Center for Performance Consulting arm of Adani Power Ltd. engaged in enhancing performance and delivery in the entire power value chain including Coal Mining, Generation, Transmission (HVAC and HVDC) and Distribution of Electricity. APTRI Mundra has been recognised and accredited as Grade A and Category I Institute by CEA , Ministry of Power, Government of India.At Adani Power it is firmly believed that for business excellence the human resource is the most critical and valuable asset that must be nurtured by customised learning and development programs. Continual learning and development of the professionals is the only way to navigate through the prevailing volatile, uncertain, complex and ambiguous environment. APTRI is thus the outcome of the intensive scientific effort undertaken by highly experienced professionals and SMEs to understand and analyse the power sector professionals competencies and training needs so as to design, develop and render efficient and effective programs across all the segments and functions of power business covering the entire value chain.

POWERING INDIA: 2030

INTRODUCTION:The Indian economy is the seventh-largest in the world by nominal GDP. The Indian economy has the potential to become the world's 3rd-largest Economy by next decade, and one of the largest economies by mid-century. As the Indian economy continues to grow, so will its energy consumption, especially as the growth of its manufacturing sector catches up with services and agriculture. The outlook and options for Indian power therefore become an important topic. A 2030 outlook is particularly relevant since it is difficult to significantly change energy policy in 5 or 10 years, but almost any boundary conditions can be changed over a 15-year period. The purpose of this report is to: Study the current situation of the power sector in the country Study demand drivers Evaluate the future potential of the various generation technologies Study the various issues and bottlenecks plaguing the power sector Electricity generation mix by 2030

CURRENT SCENARIO: India is the worlds third largest electricity producer with a 5.1% global share in electricity production. The utility electricity sector in India had an installed capacity of 271.722 GW as of end March 2015. The gross electricity generated by utilities was 1106 TWh and 166 TWh by captive power plants during the 201415 fiscal. The gross electricity generation includes auxiliary power consumption of power generation plants. The current total consumption (utilities and non-utilities) durign2014-15 was 938.823 billion KWh. During the year 2014-15, the per capita electricity consumption in India was 1010 kWh. This is very less as compared with the per-capita consumption of other countries even though the tariff is comparatively lower in India. The per-capita consumption of China is 4000 KWh and that of the U.S is 15000 KWh.

SourceUtilities Capacity (MW)%Captive Power Capacity (MW)%

Coal164,635.8861.5127,588.0058.60

Hydroelectricity41,267.4315.4283.000.17

Renewable energy source31,692.1411.84Included inOil-

Natural Gas23,062.158.615,215.0011.08

Nuclear5,780.002.16--

Oil1,199.750.4414,196.0030.17

Total267,637.3547,082.00

TOTAL INSTALLED POWER GENERATION CAPACITY-SOURCE WISE BREAKUP

While 80% of Indian villages have at least an electricity line, just 52.5% of rural households have access to electricity. In urban areas, the access to electricity is 93.1% in 2008. The overall electrification rate in India is 64.5% while 35.5% of the population still lives without access to electricity. The Transmission and Distribution losses in India are currently in the range of ~28%. These losses are very high as compared to other countries.

TOTAL INSTALLED CAPACITY GROWTH

CURRENT ELECTRICITY GENERATION MIX (AS OF MARCH 2015)

From the figure above, an important observation that can be made is that the thermal and the renewable line closely follow the total installed capacity line i.e most of the new capacity has come from the thermal and renewables sector ( albeit on a much smaller scale). However, the share of hydro energy seems to have stagnated. The installed nuclear capacity has also remained the same. The nuclear sector is expected to take off in a big way after the signing of the U.S- India civil agreement.

DISTRIBUTION OF ELECTRICTY CONSUMPTION IN INDIA

India continues to face power shortages, especially the Southern and the North-Eastern regions. The Western and Eastern regions are surplus in energy. The anticipated shortage in the current fiscal year (2015-16) is 2.6% of demand.

RegionEnergyPeak Power

Requirement (MU)Availability (MU)Surplus(+)/Deficit(-)Demand (MW)Supply (MW)Surplus(+)/Deficit(-)

Northern355,794354,540-0.4%54,32954,137-0.4%

Western353,068364,826+3.3%48,47950,254+3.7%

Southern313,248277,979-11.3%43,63035,011-19.8%

Eastern124,610127,0662.0%18,50719,358+4.6%

North-Eastern15,70313,934-11.3%2,6502,544-4.0%

All India1,162,4231,138,346-2.1%156,862152,754-2.6%

DEMAND DRIVERS:Indias power demand is expected to cross 300GW by2021-22 and the installed capacity is expected to reach ~700 GW by 2030. The main demand drivers in the coming years are going to be: India is expected to be the fastest growing nation in the coming years. The electricity consumption increases as the GDP growth increases because the quality of life and income improves.

Indias manufacturing sector is likely to grow faster than in the past due to governments initiatives such as promoting Make In India, increasing the limit for FDI investment in the manufacturing sector and putting India on the global map. About 125,000 villages are likely to get connected to India's electricity grid. It is estimated that of the 1.4 billion people of the world who have no access to electricity in the world, India accounts for over 300 million and that ~33% of Indias population does not have access to electricity. As the transmission network is extended and these people are brought into the fold, the consumption is slated to rise.

Status of Electrification

Population Increase: Indias population is slated to overtake that of China by 2030. This imploding population will imply more energy consumption. Also, the per capita energy consumption in India is meager as compared to that of developed countries and other emerging markets as stated earlier.

Thus, due to various social and economic factors, the electricity consumption of India is expected to rise in a big way. India is expected to be one of the largest electricity markets by 2030.

FUTURE POTENTIAL OF VARIOUS GENERATION TECHNOLOGIES:

THERMAL:

Thermal power plants convert energy rich fuels such as coal, natural gas, petroleum products, agricultural waste, domestic trash/waste, etc. into electricity.

COAL

The graph of Indias generation mix over the last 10 years shows that most of the capacity added has been in the thermal power sector. Coal and lignite account for about 60% of India's total installed capacity. India's electricity sector consumes about 72% of the coal produced in the country. India is estimated to have proven coal reserves of about 125 billion tonnes and an estimated reserve of about 300 billion tonnes. Most of the Indian coal is similar to Gondwana coal. It has low carbon content, low calorific value and high ash content (~35-45%). On average, the Indian power plants using India's coal supply consume about 0.7 kg of coal to generate a kWh, whereas United States thermal power plants consume about 0.45 kg of coal per kWh. This is because of the difference in the quality of the coal, as measured by the Gross Calorific Value (GCV). On average, Indian coal has a GCV of about 4500 Kcal/kg, whereas the quality elsewhere in the world is much better; for example, in Australia, the GCV is 6500 Kcal/kg approximately.

TECHNOLOGIESSub-CriticalSuper-CriticalUltra Super-CriticalAdvanced USC

Steam Temperature

~700 oC

Steam Pressure~160 bar~250 bar ~ 275 bar~300 bar

Efficiency~38%~42%~44%~47%

VARIOUS COAL-BASED THERMAL POWER PLANT TECHNOLOGIES

The efficiency of the thermal power plant increases as the pressure and temperature of the steam at the inlet of the turbine are increased. However, there is a practical limit due to metallurgical constraints. The increased efficiency leads to less fuel consumption, leading to lower emissions and higher cost-savings in the long run. The cost of a super-critical thermal plant is higher as compared to that of sub-critical plant by about 15~20% depending on the technology employed. Most of the power plants in India currently employ sub-critical technologies (~99%). However, the governments focus on reducing levels of CO2 and other harmful pollutants means that the adoption of super-critical technologies is going to increase in the coming years. One factor that might prove to be a hindrance to the adoption of these super-critical technologies is the fall in coal prices and the expectation that the prices wont shoot up a lot in the coming years due to increasing competition from the renewable energy sector leading to reduced demand. The share of coal based electricity generation is expected to remain constant or marginally decrease over the coming years. However, the scenario might change if solar power achieves grid parity (storage costs included). NATURAL GAS:

The installed capacity of natural gas-based power plants and the ready to be commissioned with the commencement of natural gas supply is nearly 26,765 MW at the end of financial year 2014-15. These base load power plants are operating at overall PLF of 25% only due to severe shortage of Natural gas in the country. Many of these power stations are shut down throughout the year for lack of natural gas supply. Natural gas shortage for power sector alone is nearly 100 MMSCMD. Indian government has taken steps to enhance the generation from the stranded gas based power plants for meeting peak load demand by waiving applicable import duties and taxes due to drastic fall in the LNG and crude oil international prices. However, till the issues about gas supply are not resolved, natural gas fired power plants are not going to be the preferable choices for power generation.

SOLAR POWER:

India is endowed with a vast solar energy potential. India receives one of the highest global solar radiation - an energy of about 5,000 trillion kWh per year is incident over India's land mass with most parts receiving 4-7 kWh per m2 per day. The present Indian government has an ambitious plan to add 100 GW of solar power by 2022. Installation of solar power plants require nearly 2.4 hectares (6 acres) land per MW capacity which is similar to coal-fired power plants when life cycle coal mining, consumptive water storage & ash disposal areas are also accounted and hydro power plants when submergence area of water reservoir is also accounted. There are vast tracts of land suitable for solar power in all parts of India exceeding 8% of its total area which are unproductive barren and devoid of vegetation. Part of waste lands (32,000 square km) when installed with solar power plants can produce 2000 billion Kwh of electricity (two times the total generation in the year 2013-14) with land productivity/yield of 1.5 million Rs per acre (6 Rs/kwh price) which is at par with many industrial areas and many times more than the best productive irrigated agriculture lands. Moreover, these solar power units are not dependent on supply of any raw material and are self-productive. There is unlimited scope for solar electricity to replace all fossil fuel energy requirements (natural gas, coal, lignite, nuclear fuels and crude oil) if all the marginally productive lands are occupied by solar power plants in future. It is predicted that solar power in India will achieve grid parity with thermal power by 2018. In India, the bids for power plants with imported coal, they are all in the range of Rs.5.50 to Rs.7/kWh. The most recent solar bids that have come in Karnataka are all in the range of Rs.6.50-7/kWh. So, solar is already in the ballpark of coal prices. There was even a company that bid Rs. 5.05/ KWh when Madhya Pradesh government invited bids for solar power procurement. Also, coal is polluting, takes many years to develop. Environment clearances are challenging. Fuel linkage is an issue, and domestic coal has been having all sorts of problems over the last few months. Imported coal has the price variability. But, solar is clean. It can be developed in few months, and constructed in 6-12 months, no issue of fuel linkages, generates electricity during the day time, and no seasonality. So, when we compare all sources of energy - nuclear, wind, gas and coal- solar clearly is emerging as the front-runner for future electricity generation. However, solar energy still cannot be stored economically and solar energy is intermittent. Therefore, the real hurdle for solar developers is producing electricity on demand instead of just when the sun is shining. When solar can do that at the same price as coal and natural gas, then it truly will have reached grid parity.

WIND POWER: India has the fifth largest installed wind power capacity in the world. As of 31 March 2015 the installed capacity of wind power in India was 23,763 MW, mainly spread across Tamil Nadu (7,253 MW), Gujarat (3,093 MW), Maharashtra (2,976 MW), Karnataka (2,113 MW), Rajasthan (2,355 MW), Madhya Pradesh (386 MW), Andhra Pradesh (916 MW), Kerala (35.1 MW),etc. East and North east regions have no grid connected wind power plant as of March, 2015 end. It takes about 24 months to develop a wind farm. The concept of off-shore wind farms is also catching up in India. A 100 MW demonstration plant has been set up off the coast of Gujarat. The wind speed at off shore wind farms is relatively higher, more consistent and there are no obstructions nearby. The cost of an off-shore wind farm is considerably higher as compared to that of an on-shore wind farm. Currently, for a wind farm, the capital cost ranges between 4.5 crores to 6.85 crores per MW, depending up on the type of turbine, technology, size and location. The operating cost of a Wind Farm is very low as the fuel cost is zero and operations and maintenance costs are low also. Thus, the capital cost and the cost of electricity generated by a wind farm is comparable to that of a fossil fired plant. However, there is one major flaw with wind power. One cannot depend on wind energy, which is not available around the clock and 365 days in a year. Wind energy can at best be produced only for 4-5 months from May to September coinciding with South West monsoon duration in a year. During that time also, it can be produced only when the wind speed is high. When large wind power plants are located away from the load centres, laying dedicated transmission lines to evacuate the unreliable secondary wind power is additional cost liability. Indias total wind energy potential is estimated to be 65~70 GW. Out of this, ~23 GW has been currently installed. So there is an opportunity to add another ~25 GW. The rest of the potential sites may not be economically feasible for other reasons. Although wind power has great potential, it is presently at a cross-road since incentives such as the 50 paisa subsidy per unit given to wind generation companies, the IT holiday and the accelerated depreciation have either been removed or have not been extended. Thus, in the coming years, there is not going to be much thrust on wind power as long as these issues are not sorted out.

NUCLEAR POWER:

As of 2015, India had 5.78 GW of installed nuclear capacity and accounted for 2.61% of Indias current installed capacity. As of 2013, India has 21 nuclear reactors in operation in 7 nuclear power plants, having an installed capacity of 5780 MW and producing a total of 30,292.91 GWh of electricity. The capacity factor of Indian reactors was at 79% in the year 2011-12 compared to 71% in 2010-11. Nine out of twenty Indian reactors recorded an unprecedented 97% capacity factor during 2011-12. With the imported uranium from France, the 220 MW Kakrapar 2 PHWR reactors recorded 99% capacity factor during 2011-12. The Availability factor for the year 2011-12 was at 89%. The Indian nuclear power industry is expected to undergo a significant expansion in the coming years, in part due to the passing of the U.S.-India Civil Nuclear Agreement. This agreement will allow India to carry out trade of nuclear fuel and technologies with other countries and significantly enhance its power generation capacity. India now envisages increasing the contribution of nuclear power to overall electricity generation capacity from 2.8% to 9% within 25 years. The main issues with nuclear power are the safety issues, long approval and execution times and the complex technology involved. Indias strategy is to use its limited uranium reserves to run first generation plants that also produce plutonium along with power, using the plutonium in fast breeders reactor that produce more plutonium than what is put in, and then using in the third stage its abundant resource of thorium can provide 4 to 5 million MW of power for more than 100 years. The catch here, however, is the time required to realise this. By 2030 one can expect no more than 100 GW of nuclear capacity.

HYDEL POWER: Currently, India has an installed hydel capacity of 41.26 GW amounting to 15.42% of Indias installed capacity. India is endowed with economically exploitable and viable hydro potential assessed to be about 84,000 MW at 60% load factor. Looking at the graph of Indias installed energy mix over the last 10 years, we see that the installed hydel capacity has remained the same. As per the latest power generation figures just released by the Central Electricity Authority, the hydropower generation during Financial Year 2014-15 was 4.25% lower than the previous years generation even though the installed capacity has gone up. Average generation per MW of hydro capacity in India in 2014-15 was over 20% less power than what our average generation was in 1993-94.

Graph showing how the power generation per MW installed Hydro Capacity has been doing down over the last two decades

There are many reasons why the generation per MW is dipping: unviable projects, unviable installed capacities, over-optimistic hydrological assumptions, over development (development beyond the carrying capacity of the basin), catchment degradation, high rates of sedimentation, inadequate Repair & Maintenance, Run of River projects changing monsoon patterns due to climate change, etc.

Here it should be added that the destruction of forests, rivers, fisheries, biodiversity and submergence of lands is also making the impact of climate related disasters worse for the people and also for the hydropower projects, as could be seen during the June 2013 Uttarakhand disaster. All this needs to be part of our impact assessment and decision making process. Added to all these are the long project execution time. Currently, the outlook for the hydro power sector does not look particularly bright.

CURRENT ISSUES PLAGUING THE POWER SECTOR: Average transmission, distribution and consumer-level losses in the Indian power sector exceed 30%. This includes the losses due to theft and billing inefficiencies. The figure for developed economies is in the range of 15%. Inadequate last mile connectivity is the main problem to supply electricity for all users. Over 300 million people in India have no access to electricity. Of those who do, almost all find electricity supply intermittent and unreliable. A system of cross-subsidization is practised based on the principle of 'the consumer's ability to pay'. In general, the industrial and commercial consumers subsidize the domestic and agricultural consumers. Further, Government giveaways such as free electricity for farmers, partly to curry political favour, have depleted the cash reserves of state-run electricity-distribution system. This has financially crippled the distribution network, and its ability to pay for power to meet the demand. Key implementation challenges for India's electricity sector include new project management and execution, ensuring availability of fuel quantities and qualities, lack of initiative to develop large coal and natural gas resources available in India, land acquisition, environmental clearances at state and central government level, and training of skilled manpower to prevent talent shortages for operating latest technology plants. Shortages of fuel: despite abundant reserves of coal, India is facing a severe shortage of coal. The country isn't producing enough to feed its power plants. Some plants do not have reserve coal supplies to last a day of operations. India's monopoly coal producer, state-controlled Coal India, is constrained by primitive mining techniques and is rife with theft and corruption; Coal India has consistently missed production targets and growth targets. Poor coal transport infrastructure has worsened these problems. To expand its coal production capacity, Coal India needs to mine new deposits. However, most of India's coal lies under protected forests or designated tribal lands. Any mining activity or land acquisition for infrastructure in these coal-rich areas of India, has been rife with political demonstrations, social activism and public interest litigations.

Poor pipeline connectivity and infrastructure to harness India's abundant coal bed methane and shale gas potential. Hydroelectric power projects in India's mountainous north and north east regions have been slowed down by ecological, environmental and rehabilitation controversies, coupled with public interest litigations.

EXCPECTED GENERATION MIX BY 2030:Indias energy requirement is forecasted to reach ~750 GW by 2030. To fulfill this requirement, Indias options for energy supply are limited. Currently, India imports nearly 30-35% of its primary energy requirements. Indias options for energy supply are limited. It has very small reserves of crude oil and currently nearly 80 per cent of consumption of petroleum products is based on imports. While some more reserves of natural gas have been located in the Krishna-Godavari basin, these deep sea reserves pose formidable challenges to exploit. Domestic gas is not expected to constitute more than 20 percent of Indias primary energy supply. The most important resource is coal. India will continue to depend on it for the next few decades. Among the renewables hydro-power is important. However, assuming full development of Indias potential, it can generate no more than 450 bkwhr of electricity. Compared to the projected requirement for 2030 of 3400 to 4000 bkwhr, this is less than 15 per cent. Wind power potential is much smaller and with the current technology the estimated potential of 45 GW can generate about 90 bkwhr which will be less than 3 per cent of the needed generation in 2030. Other renewables such as ethanol, bio-diesel and wood plantation have limited scope as India is short of land and these would compete with food production. Cellulosic ethanol, when the technology is developed can make a substantial contribution if ethanol can be produced from agricultural wastes such as wheat straw or rice straw. The sources that have sizable potential are solar energy and nuclear power. Solar is abundant and the land requirement does not have to compete with agricultural land. Nuclear power also has vast potential to contribute to electricity generation. These sources of power can help India achieve its quest of energy independence and clean energy generation. Also, renewable sources are not inflation linked i.e there are no price hikes required. They work on solar irradiation, wind and these are always going to be free.One major drawback of renewable technology is that the power generated by it is intermittent and not continuous. Solar energy cannot be generated during night time. Wind energy can only be utilized during a few months of the year. In India, there are specific problems such as land acquisition issues, lack of evacuation infrastructure, large amounts of water needed and other such reasons. A solar farm needs approximately 5-6 acres per MW whereas a thermal plant needs 0.6-1 acre per MW. Land acquisition is a cumbersome process in the Indian context due to distributed land holding. A lesser known fact is that to generate solar power efficiently, large amounts of water are required. Also, there is a lack of evacuation infrastructure due to the right of way issues. In spite of these problems, I assert that if solar power (storage system included) achieves grid parity, solar will be the next major source of power in the long term. Other innovative solutions such as pumped storage hydro-power stations that generate electricity during night using water that is pumped to a height during the day using solar power should also be looked at. After the recent signing of the Indo-U.S civil agreement, nuclear power is expected to play a major role in power generation in the coming years. However, the Fukushima disaster may prove to be a potential stumbling block in the implementation of nuclear power technology.The share of coal fired power plants in electricity generation by 2030 is expected to decrease marginally. However, it will not become marginal due to its proven reliability and the drawbacks of competing renewable sources.