“With a solar thrust, BTG market could face challenges”

  As India continues to rely upon thermal power generation to meet its increasing energy needs, how do you see the opportunities for BTG (boiler, turbine and generator) market?India’s installed capacity as of September stands at 3,07,278 MW. Over 2,12,468 MW is contributed by thermal plants which are a mix of coal, gas and diesel based fuels. India’s thermal share contributes over 70 per cent of the country’s energy needs. During the thermal boom in the late 1990’s and early 2000’s, the competition was fierce among IPPs to pick up developer licences. Big corporates took up big projects and in order to save on the promised tariff to the government, they tried to save further project escalation costs by cutting costs and therefore gave a big chunk of the BTG contracts to Chinese suppliers.
With the coal scam, the thermal sector took a beating as coal linkages were disrupted and projects had already begun construction without a validated fuel supply agreement in place. All these factors played a spoilt sport on the thermal sector and obviously the BTG market was affected with contracts going below market prices.
Moreover, there was also a similar slump in the hydro sector. So there was no reprieve to the power sector in general. Now with the government’s initiative on renewables and a dismal hydro sector, the thermal sector continues to contribute in terms of maximum contribution to the capacity addition of the 12th Five Year Plan. However, with an unbalanced market, except for NTPC, the contracts been awarded to manufacturers were one-sided and in favour of developers. This made a lot of global technology providers abstain from participating in BTG tenders. Only one state-owned equipment manufacturer went ahead and picked up large orders. These are being currently executed. Also the huge pile up of debts in the books of SEBs and IPPs is taking a toll on the BTG market. Moreover, the thrust now seems to be mainly on solar power addition and pump storage plants.
Is emergence of renewable energy as an alternative becoming problem for BTG sector?The government is now very focussed on environmental issues and has made a big commitment at the COP21 summit held in Paris last year. Obviously, thermal plants are not seen as a green energy with regard to environment aspects. In lieu, the government is focussing on renewables like never before. A solar power addition target of 1.3 GW by 2022 is a massive objective. Now, there are also talks of including hydro plants upto the size of 100 MW, under renewables. So it is obvious that the focus is on non-coal based power plants.
However, as a roll-over of capacity addition targets from the 11th Five Year Plan, the total capacity addition target from thermal plants in the 12th Five Year Plan was 72,340 MW and the achievement was 83,778 MW. This means that the BTG market was very opportunistic of the situation in spite of many issues facing the power sector in India.
However, it is important to note that there is a change in focus, and with a solar thrust, the BTG market could start facing further issues. We saw a big capacity addition from renewables in the last year and a half while there was an incremental contribution from the thermal sector. Over and above the burgeoning issues, there is a strict emission norm in place now to curb pollution from thermal plants using flue gas desulphurisation processes. These will only add cost to the project and how many developers will be willing to take the challenge is another story all-together. 
It is important to note that there is a change in focus, and with a solar thrust, the BTG market could start facing further issues.
Neelav Samrat De, Asst. General Manager (Marketing), Andritz India Pvt Ltd