The programme for the renovation and modernisation (R&M) and life extension (LE) of power plants was initiated by the government in 1984. At the time, its main objective was to increase generation. Now, it focuses on meeting environmental norms and flexibilising thermal power plants (TPPs) to integrate the large-scale renewable energy capacity.
Under the programme, R&M and LE works for 7.2 GW of thermal capacity were completed between 2012 and 2017. The target for 2017-22 is 14,929 MW. However, only 887 MW was completed till September 2018, as per the Central Electricity Authority (CEA). In the hydropower segment, R&M works for about 4.1 GW were completed during 2012-17. Meanwhile, nearly 10 GW of R&M works are planned for 2017-22, but only 213 MW has been completed as of December 2018.
Needs and drivers
In light of the increasing focus on emission control, several old TPPs need to be equipped with the latest equipment in order to comply with the revised environmental norms. The Ministry of Environment, Forest and Climate Change notified the new norms in December 2015, which set targets for SOx, NOx and particulate matter emission reduction in coal/lignite-based power plants. Accordingly, the CEA notified a plan for the installation/upgradation of flue gas desulphurisation (FGD) systems for 166 GW of capacity and electrostatic precipitators (ESPs) for 63.4 GW by March 2022. So far, 1,820 MW of FGD capacity has been commissioned, 15.36 GW has been awarded for installing FGDs, and 66.7 GW of tenders have been issued.
The age of TPPs also affects the operational performance in terms of generation, auxiliary power consumption, emissions and heat rate. By March 2018, nearly 35.7 GW of coal/lignite-based capacity was older than 25 years. These units are the key beneficiaries of R&M and LE.
In addition, the influx of renewable energy has increased the need for flexibilisation of TPPs. Thus, power plant cycling will be required so that coal-based units can operate at varying load levels (demand) in line with changes in system load requirements. To avoid equipment failure risks and reduction in the unit life associated with cycling, TPP upgradation and modification is required. In this context, in July 2018, a team of experts from the Excellence Enhancement Centre, Siemens and VGB Power Tech carried out test runs at Unit 6 of NTPC’s Dadri power plant. The aim was to run the 500 MW unit with a minimum load of 40 per cent. This was successfully demonstrated; the unit performed for five hours with a load of 200 MW. The test team was also able to successfully drive load ramps of 15 MW per minute (3 per cent ramp rate) to 200-500 MW and down to 200 MW.
Further, in the current fuel-deficit scenario, R&M and LE works provide a viable alternative for ramping up power generation in the country at lower costs and timelines. This is particularly true for greenfield hydropower plants, which are often held up due to delays in environment and forest clearances, and long gestation periods. R&M and LE of these plants can help them operate for a few more years and provide peaking power supply at a minimal cost.
Besides, it can help in improving the operational efficiency of both TPPs and hydropower plants. Between 2012-13 and 2018-19 (as of January 2019), the average thermal PLF in the country declined by nearly 9 percentage points, from 69.9 per cent to 61 per cent. While subdued demand from power discoms and coal shortage are the key reasons for its decline, factors such as inefficient power generation, increase in coal consumption and technological obsolescence are also responsible for low PLFs.
In the hydropower segment, electricity generation stood at 126 BUs in 2017-18 against a target of 141.4 BUs. Further, there were forced outages of 169,961 hours at HEPs in 2017-18. Problems in turbines and civil structures were the main causes of outages during the year.
Status of the R&M programme
For the 2017-22 period, a total of 34 units (aggregating 7,570 MW) have been identified for LE and 30 units (7,135 MW) have been identified for R&M. As of September 2018, LE was completed for four units aggregating 820 MW and R&M for two units (33.5 MW each). R&M and LE works are under way at three units totalling 410 MW owned by the state gencos of Uttar Pradesh and Bihar.
In the hydropower segment, R&M works are scheduled for 53 projects aggregating 9,982 MW. As of December 2018, R&M was completed for 213.4 MW of capacity and works for 5,565 MW of capacity were under implementation. In addition, tendering was under way for 2,332 MW of capacity and preparation of detailed project reports was under way for 1,424.2 MW.
As per the CEA’s National Perspective Plan for Renovation, Modernisation and Life Extension of Thermal Power Stations, the cost of LE works should not be more than 50 per cent of the engineering, procurement and construction cost of a new generation unit based on indigenous equipment. If LE works are implemented only for the main plant equipment, the cost ceiling should be 50 per cent of new boiler turbine generator equipment. The payback period ideally varies from five to seven years. In cases, where the cost is estimated to exceed the prescribed limits, a detailed cost comparison and cost-benefit analysis should be carried out between the R&M/LE works and setting up of a new greenfield power plant.
The R&M of hydropower plants is preferred as new hydro projects require huge investments and have a long gestation period. Also, all accessible sites for setting up greenfield hydropower projects have already been exploited and new sites are located in adverse mountainous terrain. Further, the issues pertaining to environmental impact, and resettlement and rehabilitation are more prominent in hydropower projects than coal-based projects. Typically, the capital cost of a greenfield hydropower project is Rs 100 million-Rs 120 million per MW and the gestation period is over 10 years. Meanwhile, the R&M costs of a hydropower plant are in the range of Rs 20 million-Rs 70 million per MW depending on the scope of work. All these factors make a strong case for R&M/LE of hydropower projects.
As per the Central Electricity Regulatory Commission’s Terms and Conditions of Tariff Regulations, 2014, coal-based power generators can avail of a special allowance as compensation for meeting their R&M expenses beyond the useful life of a generating station or unit. The special allowance was fixed at Rs 750,000 per MW for the year 2014-15 and thereafter escalated at 6.35 per cent every year during the tariff period 2014-15 to 2018-19. For the tariff period 2019-24, the CERC has proposed to increase the special allowance to Rs 950,000 per MW per year in the draft tariff regulations. For gencos availing of the special allowance, an upward revision of the capital cost will not be allowed and the applicable operational norms will not be relaxed, but the special allowance will be included in the annual fixed cost.
Issues and challenges
The generation segment has failed to utilise the full potential of R&M owing to various operational, regulatory and financial challenges. Utilities often find it difficult to justify the spending on R&M to regulators. Also, R&M results in generation losses for a considerable time owing to shutdown, which affects the utility’s revenues. Besides, there is a shortage of skilled contractors and contracts are typically awarded to original equipment manufacturers on a nomination basis. Also, technical surprises while carrying out R&M in a plant lead to expansion of scope of work and cost escalation, which results in delays in the completion of work, quality deviation and contractual disputes.
Further, it has been seen that while a general improvement is seen in key parameters such as gross generation, heat rate and PLF with R&M, power plant units take time (up to a year) to stabilise and deliver the targeted performance. Besides, utilities often fail to conduct performance tests after R&M as often multiple contractors are engaged for separate components and overall performance testing is not included in their scope of work. It is essential to strictly follow the maintenance schedule post R&M to ensure the smooth functioning of the power plant equipment.