Balance of plant (BoP) constitutes a critical part of a power plant and accounts for 40-45 per cent of the total project cost. The key subsystems of BoP for thermal power plants typically include coal handling plants (CHPs), ash handling plants (AHPs), water treatment facilities, cooling towers, chimneys, fuel oil systems, effluent treatment, switchyard as well as electrical control and instrumentation.
As with the main plant equipment, demand from the BoP segment too has been subdued for the past couple of years, with a slowdown in order inflows from the power sector. While vendors have received some orders from private players, they are dependent on orders from the central and state sectors. However, given the host of initiatives being taken by the government, investment in the segment is likely to pick up.
A look at the key market trends in the BoP segment, and the industry opportunities and outlook…
Over the years, BoP equipment suppliers have expanded their portfolio to offer turnkey BoP solutions instead of catering to stand-alone orders. Further, most of the BoP suppliers, especially those providing material handling systems, are now catering to various other industries like cement and steel for similar product offerings. This has allowed them to fully utilise their capacities.
However, a key challenge for vendors has been the financial crunch. According to developers, the availability of good BoP system vendors has been limited, especially for CHPs and AHPs, owing to the poor financial health of vendors. As a result, BoP agencies have taken works that are beyond their capacities and have not been able to make supplies available to meet project commissioning targets.
Taking cognisance of this issue and to ensure that these constraints do not impact future projects, the draft National Electricity Plan for the Thirteenth Plan period has suggested the setting up of an organisational mechanism for information sharing on BoP vendors across industries. Such a mechanism could provide the salient details on orders in hand, tools and plants available, and past performance. The mechanism could also provide ratings to BoP vendors based on their performance.
Meanwhile, another trend shaping the industry is the growing demand for environment-friendly BoP equipment. New, advanced technologies for BoP systems like high concentration slurry disposal type ash disposal systems, closed pipe type conveyers for CHPs, and large-size RO systems are expected to play a major role in the sector in light of the new environment norms. Players are thus working on enhancing their capacity for the implementation of these systems and for indigenous manufacturing of key equipment for such systems.
Opportunities and outlook
The growing focus on sustainable energy and the announcement of revised emission norms have necessitated the replacement of old power plants with more efficient and environment-friendly technologies like supercritical and advanced ultra supercritical. A key area of focus is expected to be the installation of flue gas desulphurisation (FGD) systems, zero liquid discharge systems and water treatment solutions. FGD has tremendous potential for large engineering, procurement and construction companies. Further, though power capacity addition is a key driver for the market for BoP systems, a huge opportunity exists for BoP vendors in renovation and modernisation (R&M). Over 22 per cent of India’s coal-based power plants are over 25 years old and about 27 per cent of the hydropower plants have completed 35 years, thus requiring life extension, and performance and efficiency upgrades.
In the balance of system (BoS) segment, a noticeable trend has been the increasing adoption of solar tracking technologies. With advancements in solar tracker technologies helping bring down tracker costs, about 50 per cent of the upcoming solar power capacity will be set up with trackers. Driven by government programmes, the total installed solar photo-voltaic capacity has crossed 10 GW and a further 10-12 GW of new solar capacity is expected to come online in the next two years. Given that about one-third of the cost of a solar project pertains to BoS, this presents a significant opportunity for companies operating in this space.
Going forward, the outlook for the BoP industry is expected to improve, with policy steps to revive old thermal power plants and boost renewable energy, thus creating adequate demand opportunities for BoP providers.