Gas, a Better Option

Industry's thrust on using gas as a fuel for cogeneration would change the dynamics of decentralised cogen in India.

Energy is one of the most important commodities enhancing the growth of any country. And, India in the recent past has taken various steps in augmenting its resources with the aim of attaining energy security. This includes harnessing the renewable energy sources, decentralised captive and cogeneration facilities etc. This is in addition to the conventional energy plants which dominate the supply side in the country.

India had a total installed capacity of 330 gigawatts (GW) as of November 2017. And, of which, the 60 GW (60,158 MW as on September 30, 2017) is from renewable energy sources, which include, wind, solar, small hydro and cogeneration (bagasse) etc. In September 2017 India breached the significant mark of 60 GW from renewable energy. In December 2016 it touched 50 GW - milestone.

Of the 60 GW, wind power lead the pack with an installation of 32,701 MW, followed by solar ground-mounted with about 13,982 MW, while rooftop capacity stood at 790 MW. At the same time, cogeneration capacity, primarily from bagasse (bio-power) was at 8,182 MW, small hydro at 4,390 MW and waste-to-power at 114 MW.

Traditionally, cogeneration is defined as bagasse-based generation with steam turbine. The other segment that is part of cogeneration is the Combined Heat and Power (CHP).

Bagasse cogeneration segment has its own battle to fight. States like Maharashtra, Tamil Nadu and Haryana are some of the leading names in bagasse-based cogeneration. The producers of cogeneration face state- level issues when it comes to power purchasing. Recently, Maharashtra which has a collective capacity of 2GW (2000 MW) from cogeneration, had a tough run. The power produced by sugar co-operatives and private producers were being sold to the state utility MahaVitaran through long-term power purchase agreements (PPA). The utility which was going through financial crisis indicated its inability to procure power from cogenerators - current producers and those in the pipeline - as the cost of cogeneration power is high - between Rs 6.10 and Rs 6.50 per unit. We need to see how the utilities are going to resolve these concerns arising from utilities.

Interestingly, there is a shift which is seen in the cogeneration segment. In the past couple of years the industry started recognising gas-based generation as a better tool given the multiple benefits it offers.

According to government data, production of natural gas has steadily increased from a mere 37.60 BCM during 2006-07 to 48.83 BCMs during 2015-16. This has registered a CAGR of 2.65 per cent. And, most of the increase in production is attributed to the discovery of new reserves in India.

Though gas-based power generation is cleaner, the availability and pricing of gas in the domestic market is the biggest challenge the industry is facing.

Rajesh Shah, Chief Executive Officer - SWCOGEN, Sterling and Wilson pointed out that the gas-based cogen hasn't taken off the way it should have been. He said, 'What is opening up in the northern region is the standby plants. This is because they are looking at shifting away from diesel - a pollutant and costlier affair. Thus, we see some growth in the standby application only. But the CHP has not picked up.'

He also elaborated on the need for a conducive policy support for making gas-based cogeneration a priority. The supply to cogeneration should be the second priority after domestic consumption.

The industry players are of the opinion the policymakers keenly look at harnessing all the congen opportunity and CHPs, with natural gas as a fuel. This will result in reduction of carbon dioxide (CO2) emissions by almost 30 per cent. That is a significant number as India has also committed to fight climate change by curtailing its carbon emissions.

Another segment gaining prominence in the cogeneration space is the heat- recovery power generation. The heat-recovery steam generator is an energy-recovery heat exchanger designed to recover the waste or exhaust heat from a plant. This system produces steam by utilising exhaust gas which can further be used for captive power generation or cogeneration.

According to a report by Future Markets Insight, a global consulting firm, the heat-recovery steam generator improve system efficiency from 35-40 per cent when used in cogeneration. The efficiency-improvement levels could also reach between 55 per cent and 60 per cent when used in combined cycle.

This stream is gaining attention globally and registering significant growth owing to growing concerns over energy savings, carbon emissions reduction and improving process efficiencies. And, the concerns are expected to drive the segment in the market.

The report further says that the developing countries are expected to show high demand in global heat recovery steam generator market. The Asia-Pacific region, particularly India and China, are expected to be high potential markets.

'The growing power consumption owing to infrastructure development and improving standard of living in Asia Pacific, Middle East and Africa the demand in heat recovery steam generator market is expected to grow at a decent rate in these regions,' it said.

Global Market
In the deal corner, Ducon Infratechnologies Limited - a technology company listed on BSE - has announced it has set up a wholly owned subsidiary named Ducon Combustion Equipment Inc. (DCE) in New York, USA to sell diversified combustion and power products. The products shall include: steam and power turbines, heat recovery steam generators, and cogeneration plants using both gas and biomass fuels.

Highlighting the rationale behind setting up a subsidiary catering to cogeneration segment Aron Govil, Chairman, Ducon Infratechnologies Limited said, 'The world-wide market for turbines and cogeneration plants is expected to reach over US$50 billion by 2022. This growth will be driven by the increasing replacement of coal-fired power plants with natural gas and biomass plants and the rising efficiency and durability of turbines due to improved technological advances in the industry.'

According to India Brand Equity Foundation (IBEF), around 293 global and domestic companies have committed to generate 266 GW of solar, wind, mini-hydel and biomass-based power in India over the next 5-10 years. The initiative would entail an investment of about US$310û350 billion. Between April 2000 and March 2017, the power industry attracted US$11.59 billion in Foreign Direct Investment (FDI).

While there is huge opportunity available in India for cogeneration, the sector is yet to gain momentum.

Looking Ahead
Now is the time, says Shah, 'I would say, the time has come, because now we can expect a momentum in the industrial growth. Parallel to the service sector and some of the other sectors, we see a push in the industrial growth momentum with 'Make in India' and several other policies.'

It is reported that industries in the middle of the cities, for e.g.; many of them in Surat and Ankleshwar have moved to coal for heat generation, adding to the existing pollution.

He added, 'So if you have an encouraging cogeneration or CHP policy with natural gas as a fuel, I am sure we will see a shift towards natural gas CHP. But, this will depend on the price of natural gas as it needs to be viable for competing in the global space. Today, gas supply to any industry globally is priced at $2 per mmbtu. India should also have gas pricing at the same level.'

The need of the hour is to concentrate on making gas as a fuel available for cogeneration and ensure the cost is on par with global pricing.

- Renjini Liza Varghese