Thursday, 9 March 2017

Not a day too soon !



Hindustan Times ( 10 March 2017 ) carries following news report :


“ NTPC likely to enter electric vehicle sector “


Enthused by India’s electric vehicle ( EV ) market potential, state-owned energy company NTPC Ltd is exploring a new business around it


To start with, India’s largest power generation utility is looking at setting up charging stations to help create the demand for electricity generated by its plants and keep pace with the fast changing power sector


Said a government official :


“ The interests of a lot of companies in the Public Sector is aligned with the possibilities offered by India’s electric vehicle market . A case in point being NTPC Ltd, which has surplus power and is now looking at this market to set up charging stations . This offers a very strong complementary area for NTPC “



Said a NTPC spokesman :


“ Electric Vehicle charging infrastructure is set to be explored as an emerging requirement . The State owned utility is working on a plan to bring down the cost of setting up these charging stations by half to around Rs ONE LAKH each “





While congratulating NTPC strategy-planners on this initiative , I request them to remember what marketing Guru , Ted Levitt said , some 40 years ago , in his famous essay , “ Marketing Myopia


He said :

If you don’t make yourself obsolete , then someone else will

Continuously ask yourself : What business are we in ?

American Railroads thought they were in the “ Railroad Business “


They did not realize that they were , really in the business of “ transporting people “ !


But hundreds of Car Manufacturers did not think that they were in the business of  “ Manufacture of Cars “


They said : We are in the business of “ transporting people “


So they made the American Railroads , obsolete !



It is high time NTPC asks itself :


Are we in the business of “ Coal Power Plants “ ? or , are we in the business of “ Generating Electricity “ ?



Why is asking this question so critical for NTPC ?


Shri Pratim Ranjan Bose explains this in his article ( Dark Side of the shift to Renewables ) which appeared in Business Line ( 13 Feb 2017 ) . He writes :


·         
The CEA’s ( Central Electricity Authority ) exhaustive plan document pointed out that average PLF ( Plant Load Factor or availability ) of coal-fired plants declined from 78 per cent to 62 per cent  between 2009-10 and 2015-16


·         In November 2016, the PLF had gone down further to 61 per cent


·         This is against the declared goal of of the Electricity Policy 2005 , to increase PLF to 85 per cent



·         The PLF of the private sector – which took a lead role in capacity addition – is dangerously close to the techno-economic viability threshold


·         With 50 GW “ under construction coal fired plants “ expected to come on stream in next 5 years, the CEA did a range of sensitivity analyses ….. a mere 15 % RE share in generation can bring down the PLF of coal-fired plants to 53 per cent in 2022 . Higher RE capacity addition can reduce the PLF to as low as 48 per cent !


·         ----------------------------------------------------------------------------------------
Now relate this to what Debjoy Sengupta writes in a report in Economic Times ( 10 March 2017 ) , as follows :


·         Solar power costs had hit a low of Rs 3.3 per unit last month , which is equal to average generation tariffs of NTPC , which produces bulk of its power from coal


·         NTPC’s lowest cost of generation from one of its old plant is around Rs 1.8 per unit { My Note : The latest Solar Plant installed a few weeks back in MASDAR city – UAE – supplies power at Rs 1.8 per unit ! }


·         In February , solar tariffs in the country touched a low of Rs 2.97 per unit for the first year of generation and an average tariff of Rs 3.3  per unit


Then , in Economic Times ( 15 Feb ) Debjoy writes ( Clean Energy Cess Collections Rise , but spending Low ) :


·         The government’s collection from the clean environment cess imposed on coal ( Rs 400 per ton ), lignite and peat ( in 2010 ) , are likely to touch Rs 54,336 crore by March


·         However only Rs 9021 crore ( or about 17 % ) , has been spent through the National Clean Energy Fund


·         The spending falls short of the estimated Rs 34,822 crore needed to subsidize some 55 renewable energy projects


·         -------------------------------------------------------------------------------------------

An editorial ( Getting the Solar Power Goal on Track ) in Economic Times ( 15 Feb ) , reads :


·         The proposal to feed about 7,000 railway stations with Solar Power could go a long way in meeting if not exceeding, the national goal to have 100 GW of functional solar generation capacity by 2022


·         If the Railways can gainfully leverage land and building space for, say, 20 MW of Solar capacity in each of the 7,000 stations, it would greatly increase green, renewable power nationally ( - 140 GW as against 2022 target of 100 GW ! )


·         -------------------------------------------------------------------------------------------

I suppose NTPC strategy planners have read the following in MINT ( 06 March 2017 ) :


“ How the World’s largest Solar Park is shaping up in Karnataka “

·         The aim is to generate around 2,700 MW from the Pavagada solar park by the end of 2018 , spread over an area of 13,000 acres


·         The first phase capacity of 500 MW has been bid out and generation is expected to start in the next 4 months



·         Bundled tariff range from Rs 3.5 and Rs 4.5 per unit



To make matters worse ( for NTPC ) , M Ramesh explains to us in Business Line ( 11 Feb 2017 ) – “ How Solar Power was made cheap “ :


·         Experts calculate that a tariff of Rs 2.97 would be based on an assumption of that  modules could be purchased for 25 US cents. To day, the cheapest modules are quoted around 30 cents


·         The REWA tender was superbly structured. For instance, if the commissioning of the project gets delayed because of delays in approvals, the developer gets paid for  “ deemed generation “


·         The tender also promises that the grid will not be shut for over 50 hours in a year, or the developer gets paid again for “ deemed generation “


·         The tariff escalation for 15 years and explicit state guarantee for payments sweetened the tender


·          

And now to complete the perspective , DNA ( 11 March 2017 ) carries a news report which reads :


“ 100 days nahi toh free , Musk ka vaada “


South Australia has been going through a power crisis that has resulted in load shedding in several parts of the region.

Australia has been phasing out COAL POWER PLANTS to reduce POLLUTION LEVELS.

The power cuts have however, not gone down well with most Australians
Elon Musk , the billionaire founder of electric car giant TESLA has thrown a challenge to the Australian Federal Government , saying he can solve the State’s energy woes within 100 DAYS – or he will deliver the 100 MW BATTERY STORAGE SYSTEM for free !


   
·          
WHAT  DOES  FUTURE  HOLD  ?

·         With continuously dropping prices of solar PV modules from China , per unit cost of solar power could well touch Rs 1.5 in 2018 and Rs 1.0 in 2022


With Chinese exports falling dramatically , expect PV module prices to drop to 20 US cents by 2018 !


·         Transmission costs , by themselves are more than this !


·         With large consumers switching over to Solar power , demand for NTPC’s coal generated power will continue to fall – leading to PLF of 48 % by 2020 !


·         Should NTPC continue to operate its plants at such a low PLF , it will incur huge losses !


·         Government does not want to “ subsidize “ coal based plants . If anything , it wants to “ penalize “ such plants


·         NTPC will not be able to supply to “ Electric Vehicle Charging Stations “ , power from its “ Coal based power plants “ , which can compete with power from Solar power plants ! Hence , this strategy to expand its customer base is hopeless !



HOW  SHOULD  NTPC  RE-INVENT  ITSELF  ?


·         Convert its coal based power plants into Solar Power Parks ( plenty of space )


·         Set up a joint venture with TESLA to manufacture in India , Powerwall and Powerpack storage batteries – the missing links in our Solar Chain Strategy



This will enable NTPC to operate all of its coal based power plants ( till these get permanently shut down ) , at 80 per cent PLF ( half the plants during daytime and half during the night ) . Powerpack Battery Storage installations in different parts of the country will even out the peak and the lean demand cycles


These very same Powerpack Storage Installations will also cater to those 34 + 50 Solar Parks being set up – and also provide Solar Power to those Charging Stations


For details , read :

Welcome , Elon Musk !  ( 11 Feb 2017 )





·         Change its name from NTPC to NCEC ( National Clean Energy Corporation ) – in order to accurately reflect : “ What business are we in ? “



·         Adopt for itself , following CORPORATE MISSION :


“ To save the lives of 600,000 Indians who die prematurely , every year , due to emission of green house gases and particulate matter , produced by coal fired power plants



11  March  2017


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