Indian power sector is showing signs of revival. The Ministry of Coal has completed its first phase of Coal block auctions that saw an overwhelming response from the bidders. On the policy front, the Government has taken steps to reduce the lead time in getting environmental clearance and land acquisitions. Such steps are expected to fuel growth in Indian power sector and other industries.
The Government of India had set a target of renewable energy power capacity addition at 29,800 MW during 12th five year plan period, of which 9,124 MW of renewable energy was installed till March 2015. However, Biomass power projects have been facing roadblocks due to shortage and increasing prices of fuel. Co-generation projects have slowed down drastically due to current financial situation of the Sugar Companies.
Up to end of February 2015, India had installed 34,351 MW of Grid connected renewable power, of which 22,644 MW is wind power, 4,025 MW is hydro power, 1,365 MW is biomass and gasification, 2,818 MW is bagasse co-generation, 115 MW waste to energy and 3,382 MW is solar power. Though potential for biomass is huge, there was no addition of biomass power in FY 15.
The Indian government is giving a massive thrust on renewables in order to increase the share of clean energy in India’s energy mix. Ministry of New and Renewable Energy (MNRE) has been promoting private investment in renewable energy through an attractive mix of policy and financial incentives to make India a hub for renewable energy. This includes capital subsidy, excise and custom duty exemption and participation from other countries by allowing 100% Foreign Direct Investment in Renewable Energy etc.
According to the estimates, renewable energy sources has the power generation potential of 897 GW which includes 749 GW from solar, 103 GW from wind, 25 GW from bio-energy and 20 GW from small hydro power. MNRE has proposed grid power of 175 GW from various renewable energy sources by the year 2022 which includes 10 GW from bio-power and 5 GW from small hydro power.
Though the contribution of Renewable power to total power generation was just 9.1% globally as of 2014, the investments in 2014 grew by 17%. China saw a huge investment followed by the USA. Most of the investments (92%) came from Solar and Wind power investors. Investments in Biomass and Waste to Energy dropped by 10% in 2014 from the levels in the previous year. India, Mexico, Indonesia, Chile, Kenya and Turkey are some of the main investors in Renewable power.
In Europe, waste to Energy capacity additions are expected in the UK, Ireland, poland and Estonia. In South Africa, the government through Renewable Energy Independent Power Producer Procurement Programme (REIPPP) policy has allotted USD 14 billion for renewable power investment which is estimated to add up to 3 GW of power capacity.
The largest demand for TTL’s products is from the process industries that have a requirement of steam for the manufacturing process and generate power on-site. Electricity generation by deploying a condensing steam turbine in a captive power plant would give a thermal efficiency of around 30-34% as compared to 39-43% in case of a super critical power plant operating at significantly higher temperatures and pressures. Co-generation based captive power plants deliver two forms of energy – electrical power and heat in the form of steam and thereby delivering thermal efficiency in excess of 70%.
Most of the other industries opt for power generation due to their remote location and inaccessibility to grid for the supply of consistent quality and cost-effective electricity.
The Renewable Energy segment is also one of the largest demand drivers for TTL. The segment comprises of three distinct sectors – small scale renewable based independent power producers (IPPs), agro based co-generation and renewable waste-heat recovery captive power plants. The advantage of an assured fuel supply coupled with financial incentives makes this segment a steady contributor to demand. On account of overall economic slowdown and high cost of capital etc., during the last two-three years, there has been no demand from the first segment i.e. small scale renewable based IPPs. However, with the economic environment getting better, the Company believes that the demand from this segment could re-emerge in the near future.
During the past two-three years, the agro based co-generation sectors are the most reliable source of demand for steam turbines. While this demand may not be as large as the potential of the industrial capital goods segment, it does form the base demand. This sector will always attract investments as long as there is a sustained availability of feedstock and is usually non-cyclical.
Captive Power is a source of continuous and reliable power that cannot be obtained from the Grid. Captive Power Plant is also an economic solution for power requirement of many industries to achieve maximum operational efficiency. Indian captive power generation at end December, 2014 stood at 40,726 MW. Many captive power plants in India are producing low / no power due to non-availability of Coal. However, with the completion of coal block auctions, many of the captive power plants are expected to revive their power production to normalcy. In the medium to long term, this sector is expected to grow, considering India’s power requirement to achieve its GDP targets and unreliable grid power.
The demand for capital goods remained subdued even in FY 15 due to a variety of reasons enumerated above. FY 15 also saw a change in Government which has fuelled improved business sentiments and positive outlook for Indian Industry. However, it is yet to be translated into demand generation and increased allocation for capital expenditure. The industrial activity remained sluggish and select segments of the economy showed improved signs of demand. With the change in economic & business outlook together with the Government of India’s various industry friendly initiatives, the Company believes the demand for it’s products should get increased visibility in the coming years.
The world GDP growth by end of 2014 stood at 2.8% over the previous year. Though the global economy is in the recovery cycle, few major economies such as Russia, China, Euro zone and Japan showed subdued results. Offsetting the developed nations, developing nations have performed reasonably well due to fall in oil prices. Countries such as Indonesia, Philippines and Vietnam have shown growth in industrial activity. The situation of capital inflows is expected to improve in developing nations. Far in the west, the Central American economies such as Panama, Nicaragua and Mexico have performed moderately well compared to their counterparts in South America.
The nature of Indian engineering exports is changing with time. India is moving towards exporting high-value goods to developed countries as new opportunities, such as outsourcing of engineering goods and services, new product design, product improvement, maintenance and designing of manufacturing systems, are providing fresh growth avenues. Further, depreciation of rupee against dollar has also helped the Indian companies to export to various countries.
Triveni Turbine Limited
12-A, Peenya Industrial
Area, Bangalore, Karnataka
- 560 058, India