Problems in Power

Sector

Eng. (Ms.) H. C. Ganege

• Generation
• Transmission
• Distribution
• Tariff
• Electrical Installation
 Generation -Hydro
• Geological surprises
• Land acquisition
• Rehabilitation & Resettlement
• Forest clearance
• Environment clearance
• Agitations
• Poor road infrastructure
Generation - Hydro
• High initial cost - 75% of hydro project costs are for civil, whereas only
10- 15%% project costs of thermal projects are for civil
• Construction period 4 years for thermal, but 6 to 8 years for hydro.
• Project preparation longer and more expensive than in thermal
Generation -thermal
• Fuel quality & availability
• Coal quality & availability constraints
• Coal beneficiation
• Power generation technology
• Clean coal based technologies
• Land accusation Problem
• Logistic route Rail/ Road, pipelines, port etc (for fuel, water, ash
etc)
• Power evacuation route (Electricity Grid)
• Water source
• Price of Fuel
• Volatility of coal price
• Environmental clearance
 Generation-
nuclear
• Safety concerns
• Concerns of transporting uranium
• Environmental costs not included in market
price
• Risk of catastrophic accidents
• High environmental impact (with major
accidents)
• Cannot compete economically without huge
government subsidies
• Spreads knowledge and technology for
building nuclear weapons
Generation -Renewable
• High initial cost
• Limited availability
• Delays in clearances and
approvals and long development
cycle
• Land and resource acquisition
issues
Transmission
• Transmission line loss
• Challenges to develop Transmission system to meet the requirement
of power flow from anywhere to anywhere.
• Creating High Voltage Evacuation Networks
• Maintain existing transmission lines
Distribution
• Government related issues
• Commercial issues
• Distribution line losses
• Operational issues
A summary of OperationalCosts
Depreciation
Finance cost 11%
7%
Other costs
6%

Transport &
Communication
2%

Accommodation Generation Cost

1% 64%

Material
2%

Personnel
8%
Average unit cost and Average sellingprice
24

23 Cost
22

21

20

19

18
Rs /kWh
Selling Price
17

16

15

14

13

12

11

10
Actual 2013 Actual 2014 Budget 2014 Budget 2015
Average Cost per unit (Rs) 17.7 20.19 23.13 18.5
Sales per unit (Rs) 18.27 18.57 19 15.4
Delays in Implementation of Power Projects
Past: Puttalam Coal Power Project
Upper Kotmale Hydro power project

Present : Sampur Coal - Cancelled

Moragolla
Broadlands

High Cost of production

With introduction of Coal costs coming down
Still will be relatively high compared to other countries
If LNG replaces Coal possible decreases will not happen
We have to import fuel
Even renewable has a high capital cost component
• Losses (financial) of the sector
• Selling below cost of production
• Policy Changes
• Coal /LNG – Sudden cancelling of long term projects
• Conflicting policies
• Tariff & Net metering
• Distortion due to tax & other pricing
• Climate change commitments
• Coal most economical – High GHG emission
• Global issue – local solutions
• Integration of intermittent renewables
• Environment / social issues in site locations
• Difficulty in implementation of tariff
• Involvement of private investment
• Issue of existing IPP
• Future investments
• Finding required capital
• Soft loans – difficulty
• IPP – other issues
• Sector reforms - deregulation
Renewable Energy & Integration
• Very attractive in the following context
• Climate change
• Increasing cost of thermal sources
• Foreign currency outflow
• Potential available
• Wind in the range of 3000 MW
• Solar – depend on bare land availability
• Dendro - huge
• Major issue intermittency
• Effect on power system with constant changes
• Investment Cost for thermal back up
• Smart metering / demand control costs
Renewable Energy & Integration
• Net metering & solar rooftop related issues
• High Cost of Feed in tariff
• Can we afford it?
• Business Interest Vs. National Interest