Given its fast ramping capabilities and cleaner generation, gas-based power can play a key role in helping meet India its COP21 commitments. However, enabling policy and regulatory measures are needed to address the issues of stranded gas assets, says Deepesh Nanda, chief executive officer, Gas Power Systems, GE South Asia. In a recent interview with Power Line, he spoke about the challenges impacting the segment in India, the technologies that can help address some of these issues, and GE’s experience and plans in India and overseas. Excerpts…
What is your perspective on the power sector’s performance during the past year?
India’s energy sector is one of the most diverse among global economies, moving aggressively towards deploying renewable and cleaner means of power generation. The mere scale of adoption of new technologies across the electricity value chain has put India under the global spotlight in terms of influencing and shaping the global energy economy. In the past year, 2018-19, conventional generation stood at 1,249.3 BUs as compared to 1,206.3 BUs in 2017-18, representing a growth of about 3.57 per cent. Meanwhile, the net generation capacity addition for both thermal and renewable was sluggish. In total, only 12 GW of capacity was added compared to an average 22 GW added between 2012-13 and 2016-17 and 17 GW in 2017-18.
Despite taking several measures to push investment in the conventional power sector and making it viable, the investor community has a unique proclivity towards renewable sources. Renewable energy, particularly solar power, is today available at a cost of Rs 2.44 per unit and, therefore, financial institutions are less inclined to invest in fossil fuels. Such a scenario has triggered another trend that is proving detrimental to the growth of the power sector. About 5.5 GW of awarded renewable energy capacity was cancelled by state and central agencies during the past 15 months in expectation of even lower than the auctioned tariffs. It is critical to strike a balance in risk-return sharing among the government, investors and project developers.
India’s new renewable energy target of taking the installed capacity from the current levels of 80 GW to 500 GW by 2030 is indeed encouraging. It aligns with the government’s agenda to provide reliable, sustainable and affordable electricity to the masses and focus on changing the energy mix towards green energy sources. Another aspect to move towards establishing a cleaner energy regime is reducing sulphur oxide (SOx) and nitrogen oxide (NOx) emissions from the already operational power plants based on fossil fuels. According to the report “India’s Energy Transition”, from the International Institute of Sustainable Development, the total capital expenditure required to install SOx, NOx and PM pollution control technologies is estimated at $12 billion, if plants to be retired by 2027 are excluded. As India continues to play a significant role in driving net energy demand growth owing to its population and infrastructure growth, it is imperative to arrive at a win-win situation by striking the right balance in the energy mix.
What are the top technology trends that will shape the power sector in the coming few years?
Access to affordable and reliable energy is critical to sustain the growing economies. According to the International Energy Agency (IEA), by 2025, the global economy’s GDP is expected to grow by approximately 3.5 per cent annually and the population will increase by more than 600 million. Power producers are under a lot of pressure to not only meet the growing demand, but also to provide access in remote areas, meet evolving regulations, and keep up with evolving technologies.
Globally, decarbonisation, digitalisation and decentralisation have become the focal points of the energy transformation, attracting investment and technology innovations. Driving tremendous value across the energy value chain, digital interventions are fast changing the ways in which electricity is produced, distributed and utilised by consumers.
With energy storage gaining traction, it has the power to disrupt the conventional power generation models. One solution recently developed by GE and its partners utilises a hybrid electric gas turbine (Hybrid EGTTM). With the increasing proportion of intermittent resources supplying power to the grid, battery storage holds significant promise for the future. Bulk storage holds the promise of providing backup power, peak shaving and ancillary services. Transmission and distribution investments may be deferred as batteries provide congestion relief during times of peak demand. GE’s Hybrid EGTTM is the world’s first gas turbine and battery storage hybrid, coupling a 10 MW battery with a 50 MW GE LM6000, operated by an integrated digital turbine control system.
By embracing digitalisation, power plants can apply new insights, capabilities and innovative business models to improve performance across the entire electricity value network. Digital transformation can enable power producers to make better decisions by leveraging analytics, monitoring the performance/health of assets, analysing the root causes for effective problem resolution, predicting to avoid issues before they occur, and optimising their performance and profitability. For instance, with GE digital technologies, a 3 per cent improvement in heat rate is estimated to provide an equivalent amount of reduction in tariff with fuel savings amounting to about Re 0.15 (US 0.2 cents) per kWh reduction in tariff.
What are the opportunities and challenges associated with integrating gas in the Indian electricity mix?
Gas-based power generation has many inherent benefits and is an important option to be considered in the energy mix for sustainable power for tomorrow.
Gas to help meet COP21 commitments: Burning natural gas produces lower carbon dioxide (CO2), NOx, SOx and fine particulate matter (PM2.5) emissions. Reduced greenhouse gas emissions could help India meet its COP21 commitments.
Gas to help in renewables’ integration: The benefits associated with flexible gas-based power generation – quick start-up, deeper turndown and faster ramp rates – are key enablers for integrating higher amounts of renewables into the system, and meeting seasonal power and peak demand. Gas-based power plants could be designed to meet specific start-stops and ramp up to meet state-specific demands. Advanced classes of gas turbines, like the 9HA, have the capability to ramp output at approximately 88 MW per minute in a combined cycle plant set up for a single block.
Gas adds to efficiency in the system: With the prioritisation of the available natural gas for power generation, optimal per unit generation costs can be achieved for gas-based power in India.
Gas ensures optimal use of resources: The low level of land requirement, construction time and costs enable gas-based power plants to be located near load centres, significantly reducing the cost of transmission and distribution investments. The water requirement of gas-based power plants is also significantly lower, a critical aspect to consider in water-deficient Indian states.
There are several policy-level interventions that can contribute towards integrating gas-based power in India’s energy mix. The government can reintroduce the gas pooling scheme or, alternatively, have a pooling mechanism where LNG and domestic gas prices are pooled to have a competitive fuel price. Considering the flexibility that gas-based power plants can provide and the increasing penetration of renewables at the grid level, the government can look at creating a pool of gas-based capacity. Power from this pool can be made available at short notice to account for ramping and additional operating reserve requirements. Steps such as these could revive stranded assets.
Steps should be initiated for an ancillary market for reserves where power units could be paid “capacity payments” (to recover capex and fixed operations and maintenance costs) for providing capacity and variable payments when they are despatched.
High efficiency flexible combined cycle technologies should be promoted, for example, GE’s H-class, which can provide power at competitive rates and offer flexibility benefits in terms of higher ramp rates, better part load efficiencies and lower minimum thermal limits with a turndown of up to 10-25 per cent of the gas turbine baseload MW.
Despite the benefits associated with gas-based power generation, the majority of the gas-based capacity is stranded or operating at PLFs of under 30 per cent. India needs to secure economical gas supply to change this scenario. Hopefully, fast-track development of 10-15 trillion cubic feet of discovered resources in the next four to seven years will give a boost to the domestic gas market. The development of these gas fields will lead to an additional potential production of around 100 mmscmd. Further, there is a potential of enhanced recovery from matured fields using technology.
With the development of 15,000 km of gas pipelines as envisaged by the government, the gas supply network would improve significantly. Sustainable policy actions, the upcoming LNG import terminals, gas pipeline network and domestic gas exploration would help ensure that gas is available with viable economics.
What have been some of the key highlights of GE’s gas business during the past year?
GE’s power businesses are providing integrated powering solutions to its customers in the South Asia region. In India, GE’s gas turbines are fuelling both captive and utility power plants. GE has a massive installed base of close to 2.5 GW in the oil and gas refinery segment in India comprising Frame 6, Frame 5, Frame 9 and Frame 3 gas turbines. GE has more than 70 6B gas turbines that are currently under operation, meeting a wide range of combined heat and power needs in industrial set-ups.
While in India the gas-based utility space continues to be a laggard, GE has continued to book orders in the industrial segment for both new equipment and services. GE’s gas business signed a contract worth Rs 2.2 billion with Bharat Heavy Electricals Limited for the supply of the 6F.03 gas turbine generator and accessories for installation at Hindustan Petroleum Corporation Limited’s (HPCL) refinery at Vizag. The order is a part of the HPCL’s plans for refinery capacity expansion plan from the current 8.33 mmtpa to 15 mmtpa. The HPCL Vizag order also marks the foray of GE’s F-class technology into the country’s refinery segment, which offers significant opportunity for technology upgrades in the future. Another order positioned GE’s Advanced Gas Path (AGP) technology upgrade for the 9E gas turbines installed in a refinery.
In Bangladesh, GE is making significant efforts to strategically position its HA gas turbines for upcoming high capacity power plants in the country. The company is also providing complete turnkey solutions to its customers, helping them drive greater economic value. GE is a long-term partner with several government agencies in Bangladesh, including the Bangladesh Power Development Board (BPDB). Today, a robust portfolio of GE’s gas power generation technologies including E-class, F-class, Frame 5, Frame 6 and Aeroderivative is powering numerous power projects owned by BPDB. With regard to our association with private power players in Bangladesh, last year, GE Power won an order from the Unique Group, which is among the most diversified business entities in Bangladesh. GE will co-develop a 600 MW natural gas-based combined cycle power plant at Meghnaghat near Dhaka, Bangladesh. GE’s turnkey scope for this project includes supplying one 9HA.01 gas turbine, one heat recovery steam generator, one steam turbine generator, a condenser and associated systems for the project. The power plant is expected to start commercial operations by 2021. It is located close to the load centre and the capital Dhaka, and will bring power to 700,000 Bangladeshi homes.
This is GE’s second 9HA project in Bangladesh, the first being with Summit Power, the largest IPP in Bangladesh. In the past, GE has signed an MoU with Summit Power for developing LNG-based combined cycle power plants with a total capacity of 2.4 GW. Once operational, these projects will save huge volumes of natural gas over the life cycle of the plants while lowering emissions.
What are the company’s future plans for gas-based power generation in the Indian market?
GE Power is offering a full scope of services including technology and project financing to its customers in the South Asia region. In India, as the gas-based power market evolves and becomes viable, there will be a tremendous opportunity for setting up high capacity power plants serving the utilities. Undoubtedly, India is a mature power market that has a lot of appetite to use multiple energy resources to support the growing electricity demand. GE Power is winning new projects across the energy value chain in India.
Specifically, in the Indian utility space, with the inclusion of more renewables in the energy mix grid, firming such power will be critical. Today, GE has the latest technology to offer customised solutions to meet the fluctuating power demand. For instance, the 9F gas turbines are designed to offer one of the most flexible operational capabilities and dedicated services as per grid requirements. India has a significant installed base of 9F gas turbines amounting to over 9 GW, which, through GE solutions, could be upgraded to complement renewables generation very well and play a vital role in balancing and ancillary services.
For managing issues like the requirement for fast power and immediate load balancing, GE’s Aeroderivative gas turbines are a superior alternative. This gas turbine technology comes with extremely fast start rates (about five-minute start to full power) and ramp rates (about 50 MW per minute). These machines are easy to install and can be transported to any part of the world, providing higher reliability and availability.
How has GE’s experience been in the Bangladesh market? What are some of the promising emerging markets for GE?
Bangladesh’s GDP has been growing at 7 per cent per annum over the last decade, and the government has been proactive in introducing economic reforms in the country. The Bangladesh government has also promoted privatisation of various sectors, specifically power. Today, 70 per cent of the total investments in the country are driven by the private sector. The core idea is to remove inefficiencies in the system and fast-track the approval process, fostering transparency and accountability. Taking cues from such a conducive policy environment, GE charted a unique path in Bangladesh to decode the dynamics and capture the demand. We focused on market-creating strategies by offering end-to-end powering solutions to our customers, leveraging GE’s global thread to develop a strong GE ecosystem for customers and partners, and relying on local talent. Along with providing best-in-class technology to power their projects, GE is helping customers like Summit Power to set up LNG terminals, thus contributing to energy security in Bangladesh. Our customers have also been exposed to GE’s network of export credit agencies, helping them with suitable financing options.
To achieve the goal of providing uninterrupted power to its people, Bangladesh has drawn up an ambitious plan to reach 40 GW of installed capacity by 2030. As Bangladesh continues to push massive infrastructure growth, there will be ample opportunities to work on high capacity power projects and GE is well positioned to take the lead. At present, GE has an installed base of 37 gas turbines, contributing more than 2.2 GW of electricity.
In the South Asia region, other than India and Bangladesh, Sri Lanka is another country that has been trying to reform its power sector by liberalising its policy framework and attracting foreign investment. The country’s power generation capabilities need a revamp, which can be achieved by adopting affordable yet reliable technology options.