8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 1/16

POWER SECTOR OVERVIEW

Power or electricity is one of the most critical components of infrastructureaffecting economic growth and well being of nations. The existence anddevelopment of adequate infrastructure is essential for sustained growth of 

the Indian economy.

The power sector provides one of the most important inputs for thedevelopment of a country and availability of reliable and inexpensive power is critical for its sustainable economic development. To sustain GDP growthrate of around 8-9 %, it is imperative that the power sector also grows at thesame rate.

Even after the considerable growth in the power sector infrastructure and thesupply of electricity, many parts of the country continue to face severe

 power shortages as consumption by commercial and industrial consumershas been increasing at much faster rate than electricity supply.

Power is one area of infrastructure where India lags far behind even incomparison to other developing countries. The per capita annualconsumption of electricity in India is one of the lowest in the world atapproximately 734(2008-09) kwh

The power sector in India is mainly governed by the Ministry of Power.There are three major pillars of power sector these are Generation,Transmission, and Distribution. As far as generation is concerned it is

mainly divided into three sectors these are Central Sector, State Sector, andPrivate Sector. Central Sector or Public Sector Undertakings (PSUs),constitute 31.21% (54412.63MW) of total installed capacityi.e, 174361.40 MW (as on 31/03/2011) in India. Major PSUs involved in thegeneration of electricity include

 National Hydroelectric Power Corporation (NHPC) National Thermal Power Corporation (NTPC) and Nuclear Power Corporation of India (NPCIL).

Besides PSUs, several state-level corporations are there which accounts for about 47.49% of overall generation , such as Jharkhand State Electricity Board (JSEB), Maharashtra State Electricity Board (MSEB), Kerala State Electricity Board (KSEB), in Gujarat (MGVCL, PGVCL, DGVCL, UGVCLfour distribution Companies and one controlling body GUVNL, and onegeneration company GSEC), are also involved in the generation and intra-state distribution of electricity.

1

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 2/16

Other than PSUs and state level corporations, private sector enterprises also  play a major role in generation, transmission and distribution,about 21.17%(36761.19MW) of total installed capacity is generated by

 private sector.

The Power Grid Corporation of India is responsible for the inter-statetransmission of electricity and the development of national grid.

The Ministry of Power is the apex body responsible for the development of electrical energy in India. This ministry started functioning independentlyfrom 2 July 1992; earlier, it was known as the Ministry of Energy. TheUnion Minister of Power at present is Sushilkumar Shinde and Minister of State for Power is K.C Venugopal.

India is world’s 6th largest energy consumer, accounting for 3.4% of global

energy consumption, with Maharashtra as the leading electricity generator among Indian states. Due to India’s economic rise, the demand for energyhas grown at an average of 3.6% per annum over the past 30 years. At theend of April 2011, the installed power generation capacity of India stoodat 174361.40MW, while the per capita energy consumption stoodat 733.54 KWh (2008-09). The Indian government has set an ambitioustarget to add approximately 78,000 MW of installed generation capacity by2012. The total demand for electricity in India is expected to cross 950,000MW by 2030.

India is the sixth largest in terms of power generation. About 65% of theelectricity consumed in India is generated by thermal power plants,22% by hydroelectric power plants, 3%by nuclear power plants and rest

 by10% from other alternate sources like solar, wind, biomass etc. 53.7% of India’s commercial energy demand is met through the country’s vast coalreserves. The country has also invested heavily in recent years on renewablesources of energy such as wind energy. As of March 2011, India’sinstalled wind power  generation capacity stood at about 12000MW . Additionally, India has committed massive amount of funds for the

construction of various nuclear reactors which would generate at least30,000 MW. In July 2009, India unveiled a $19 billion plan to produce20,000 MW of solar power   by 2020 under  National Solar Mission.

The per capita power consumption in India is 733.54KWh/yr, which is veryminimal as compared to global average of 2340KWh/yr.

2

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 3/16

Electricity losses in India during transmission and distribution are extremelyhigh, about 28.44% (2008-09). India needs to tide over a  peak power shortfall of 13% between 5pm and 11pm by reducing losses due to theft and

 pilferage.

Due to shortage of electricity, power cuts are common throughout India andthis has adversely effected the country’s economic growth. Theft of electricity, common in most parts of urban India, amounts to 1.5% of India’sGDP. The condition of utilities are not good either, cumulative loss of 110

 power utilities are estimated as Rs 86,136crore which is expected to rise toRs 1,16,089crore by 2014-15. Despite an ambitious rural electrification

  program, some 400 million Indians lose electricity access during blackouts. While 84.9% of Indian villages have at least an electricity line, just 46 percent of rural households have access to electricity.

Electricity Generation

Grand Total Installed Capacity is 174361.40 MW.

• Captive generating capacity connected to the Grid (MW) = 19509

• The state of Maharashtra is the largest producer of thermal power inthe country.

• India was one of the pioneering countries in establishing hydro-electric power plants. The power plant  at Darjeeling and Shimsha(Shivanasamudra) was established in 1898 and 1902 respectively and

is one of the first in Asia.

Electricity Transmission

Transmission of electricity is defined as bulk transfer of power over a longdistance at high voltage, generally of 132kV and above. In India bulk transmission has increased from 3,708ckm in 1950 to more than1,66,000ckm, out of which 75556ckm is transmitted by Power GridCorporation of India (as on 30 Sep. 2010 ). The entire country has beendivided into five regions for transmission systems, namely Northern Region,

  North Eastern Region, Eastern Region, Southern region and Western

Region. The Interconnected transmission system within each region is alsocalled the regional grid.

Electricity Distribution

The total installed generating capacity in the country is 171926.40MW, andthe total number of consumers is over 146 million. Apart from an extensivetransmission system network at 500kV HVDC, 400kV, 220kV, 132kV and

3

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 4/16

66kV which has developed to transmit the power from generating station tothe grid substations, a vast network of sub transmission in distributionsystem has also come up for utilization of the power by the ultimateconsumers.

The latest figures released by the Central Electricity Authority (CEA)indicate a 5.5% growth in electricity generation in India during the financialyear 2010-11. Power generation recorded a CAGR of 5.17% during the

 period 2001-02 to 2010-11.

Highlights of power sector developments in 2010-11.

• The total thermal generation has achieved a growth rate of 3.81%.

Coal-based generation recorded a growth rate of 3.99%.Growth of thermal generation was mainly restricted due to coal shortages, receiptof poor quality/ wet coal, delay in commissioning of power plants.

• The average PLF of thermal power projects (coal/lignite) achievedduring the year was 75.10%, as compared to 77.68% in the previousyear.

• As on March 31, 2011, 29 power stations had critical coal stock  position (of less than 14 days) and 13 power stations with super critical stock meaning stock for less than 4 days.

• Gas-based power generation witnessed a setback due to lower fuel

availability from the Reliance Industries owned KG-D6 basin.

• Revival of good monsoon after two successive years of deficient/scanty rain fall resulted in a 10% growth in hydro power generation.

• The nuclear generation achieved a remarkable growth rate of 41.04%due to improved availability of nuclear fuel to the nuclear plants, andadditional generation from the newly commissioned nuclear unit atKaiga in January 2011 and re-commissioning of some of the unitsafter repairs & maintenance works.

4

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 5/16

COMPANY OVERVIEW- RELIANCE POWER 

Reliance Power Limited is a part of the Reliance Group, one of India’slargest business houses. The group operates across multiple sectors,

including telecommunications, financial services, media and entertainment,infrastructure and energy. The energy sector companies include RelianceInfrastructure and Reliance Power .

Reliance Power has been established to develop, construct and operate power projects both in India as well as internationally. The Company on itsown and through its subsidiaries has a portfolio of over 35,000 MW of 

  power generation capacity, both in operation as well as capacity under development.

The power projects are going to be diverse in terms of geographic location,

fuel type, fuel source and off-take, and each project is planned to bestrategically located near an available fuel supply or load centre. Thecompany has 600 MW of operational power generation assets. The projectsunder development include seven coal-fired projects to be fueled by reservesfrom captive mines and supplies from India and elsewhere: two gas-fired

 projects to be fueled primarily by reserves from the Krishna Godavari Basin(the "KG Basin") off India's east coast: and seven hydroelectric projects, sixof them in Arunachal Pradesh and one in Uttarakhand.

Reliance Power has won three of the four Ultra Mega Power Projects

(UMPPs) awarded by the Indian Government so far. These include UMPPsin Sasan (Madhya Pradesh), Krishnapatnam ( Andhra Pradesh) & Tilaiya(Jharkhand).UMPPs are a significant part of the Indian government’sinitiative to collaborate with power generation companies to set up 4,000MW projects to ease the country’s power deficit situation.

Besides these, Reliance Power is also developing coal bed methane(CBM) blocks to fuel gas based power generation. The company isregistering projects with the Clean Development Mechanism executive

 board for issuance of Certified Emission Reduction (CER) certificates to

augment its revenues.

5

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 6/16

Management Team

Board of Directors include :• Shri Anil Dhirubhai Ambani• Shri S L Rao• Shri J. L. Bajaj• Dr. V. K. Chaturvedi

• Dr. Yogendra Narain

Awards

Reliance Power has won Euro money’s ‘Deal of the year – 2010’ for itsSasan Ultra Mega Power Project. The $3-billion debt raising for Sasan

UMPP is India's largest ever-project financing sourced solely from domesticlenders against the backdrop of the global financial crisis. This is the firstsuch project to reach financial closure without multilateral or foreigncommercial banking commitments in the quickest possible time world-wide.

 

6

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 7/16

PROCESS FLOW

Diagram of a typical coal-fired thermal power  station 

Key

1. Cooling tower 2. Cooling water pump

3. Transmission line (3-phase)4. Unit transformer (3-phase)5. Electric generator (3-phase)6. Low pressure turbine7. Boiler feed pump8. Condensor 9. Intermediate pressure turbine

7

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 8/16

10. Steam governor valve11. High pressure turbine12. Deaerator 13. Feed heater 14. Coal conveyor 15. Coal hopper 16. Pulverised fuel mill17. Boiler drum18. Ash hopper 19. Superheater 20. Forced draught fan21. Reheater 22. Air intake23. Economiser 

24. Air preheater 25. Precipitator 26. Induced draught fan27. Chimney Stack 

Description:

1. Coal is conveyed (14) from an external stack and ground to a very fine powder by large metal spheres in the pulverized fuel mill (16).

2. There it is mixed with preheated air (24) driven by the forced draught fan(20).

3. The hot air-fuel mixture is forced at high pressure into the boiler where itrapidly ignites.

4. Water of a high purity flows vertically up the tube-lined walls of the boiler, where it turns into steam, and is passed to the boiler drum, wheresteam is separated from any remaining water.

5. The steam passes through a manifold in the roof of the drum into the  pendant super heater (19) where its temperature and pressure increaserapidly to around 200 bars and 570°C, sufficient to make the tube walls glowa dull red.6. The steam is piped to the high-pressure turbine (11), the first of a three-stage turbine process.

8

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 9/16

7. A steam governor valve (10) allows for both manual control of the turbineand automatic set point following.

8. The steam is exhausted from the high-pressure turbine, and reduced in both pressure and temperature, is returned to the boiler reheater (21).

9. The reheated steam is then passed to the intermediate pressure turbine (9),and from there passed directly to the low pressure turbine set (6).

10. The exiting steam, now a little above its boiling point, is brought intothermal contact with cold water (pumped in from the cooling tower) in thecondensor (8), where it condenses rapidly back into water, creating near vacuum-like conditions inside the condensor chest.

11. The condensed water is then passed by a feed pump (7) through adeaerator (12), and prewarmed,first in a feed heater (13) powered by steamdrawn from the high pressure set, and then in the economiser (23), before

 being returned to the boiler drum.

12. The cooling water from the condensor is sprayed inside a cooling tower (1), creating a highly visible plume of water vapour, before being pumped

 back to the condensor (8) in cooling water cycle.

13. The three turbine sets are coupled on the same shaft as the three-phaseelectrical generator (5) which generates an intermediate level voltage(typically 20-25 kV).

14. This is stepped up by the unit transformer (4) to a voltage more suitablefor transmission (typically 250-500 kV) and is sent out onto the three-phasetransmission system (3).

15. Exhaust gas from the boiler is drawn by the induced draft fan (26)

through an electrostatic precipitator (25) and is then vented through thechimney stack (27).

9

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 10/16

CDM PROCESS

In 1997, Kyoto Protocol (“Protocol”) linked to United Nations Framework Convention on Climate Change (UNFCCC) resolved to reduce the

greenhouse gases (GHGs) responsible for global warming. As an effort tominimize the global warming, the Protocol sets binding targets for 37industrialized countries. Protocol established three market-basedmechanisms allowing developed countries to meet the emission reductiontargets.

Clean Development Mechanism (CDM) is one of the three project basedmechanisms formulated under the Protocol. CDM establishes a win-winsituation for both developed countries as well as developing countries. Itallows developing countries to implement GHG emission reduction projects

in a manner they assist developed countries meeting their GHG limitationtargets in a cost-effective manner.

Efforts undertaken by the developers of such projects, in developingcountries, is rewarded through issuance of salable Certified EmissionReductions / Carbon Credits stimulating economic growth in a sustainablemanner.

Carbon Di-Oxide (CO2) is one of the six GHGs covered under the Protocol.Since fossil fuels are one of the emission sources for electricity generation,

any projects that reduce CO2 emission may become CDM projects after going through scrutiny guidelines promulgated by CDM Executive Board(CDM-EB). Examples of such projects include higher efficiency electricitygeneration, lesser emission intensive fuels, renewable energy technologiesetc.

The authenticity of any CDM project activity is assessed by validation andverification protocols which are essentially based on the terms of accuracy,conservativeness, relevance, credibility, reliability, completeness and

  principles of consistency, transparency, Impartiality, independence andsafeguarding against conflicts of interest, and confidentiality.

These stringent modalities and procedures are designed to ensure only those  projects, which result in real, measurable and verifiable reductions ingreenhouse gases are entitled to earn certified emission reductions or carboncredits. A strict adherence to the validation and verification protocols and

10

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 11/16

modalities and procedures is essential for making a particular project eligibleto earn carbon credits.

Following diagram illustrates the key steps involved in a CDM project:

PROJECT DESIGN: The first step starts with a determination of whether the project concept would qualify as a CDM project, including screening against

 project criteria, estimating the magnitude of emissions reductions, and preparing a Project Design Document (PDD).

VALIDATION: Validation is the process by which the PDD isindependently evaluated by a "designated operation entity" (DOE) againstthe requirements of the CDM.

REGISTRATION BY CDM-EB: Registration is a formal acceptance by theCDM Executive Board of a validated project as a CDM project activity andis the official recognition of the project feasibility to generate CER.

MONITORING: This includes monitoring of emissions reductions asspecified in the PDD monitoring plan. It can be achieved by subtracting thecurrent from the reference scenario.

VERIFICATION: A certification report is required on an annual basis toquantify the actual emissions reductions achieved during that period.

11

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 12/16

ISSUANCE: The certification constitutes a request to the CDM ExecutiveBoard for issuance of CERs equal to the verified amount of reductions fromthe project. The requisite amount of CERs is then deposited in the registryaccount of the project developer.

Validation and verification of the project activity are one of the most crucialand stringent steps in the entire CDM cycle and hence considered as one of the major risk factors in getting the project “registered” under CDM in order to claim for CERs and further getting these CERs "issued".

12

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 13/16

APPLICATION OF CDM IN RELIANCE POWER 

While laying more emphasis on protection of environment, Reliance Power   believes in implementing projects as environmental friendly projects for 

future generations. Reliance Power aims to reduce CO2 emissionssubstantially.

There are three Ultra Mega Power projects (Sasan, Krishnapatnam andTilaiya UMPPs), with a total capacity of 11,880MW, that have beenregistered with the CDM - Executive Board.

Reliance Power is the largest supplier of CERs among Indian power generation companies. These projects will together generate 5.63 millionCERs every year.

SASAN ULTRA MEGA POWER PROJECT( UMPP):

UMPPs are coal based power plants that produce around 4,000 MW -compared to an average coal plant which produces 500 MW - making themsome of the largest sources of greenhouse gas emissions in the world. In fact,annual emissions are between 26-27 million tonnes of carbon dioxide for 

 both the mine and local refinery. Usually a plant will emit approximately832 grams carbon dioxide per kilowatt hour.

The Sasan UMPP is a 3,960 MW (6 units of 660 MW each) super-criticaltechnology based pit-head coal-fired power generating plant at Sasan, inMadhya Pradesh, India. The project is scheduled to be on-stream byDecember 2013, when the first 660 MW unit comes on-line. The project isscheduled to be fully commissioned by April 2016. The estimated cost of theSasan project is Rs. 18,342 crore, which includes the initial capital costsrelated to the mining of coal.

This is the first of the three UMPPs awarded to Reliance Power. It involves

development of associated captive coal mines allotted to the Company,which ensures fuel security.

PROBLEM FACED:

13

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 14/16

In 2009 the US Exim Bank  established and implemented a carbon policy thatrequires its board of directors to carefully consider the potentially adverseenvironmental impact of high-carbon intensity transactions. On June 24th,the Board of Directors of the Export-Import Bank of the United States (Ex-Im) voted not to proceed with further review of the application for the Sasan

 project, based on environmental concerns.

 Noting that Reliance's Sasan plant is projected to emit close to 26,000-27,000 tonnes of carbon dioxide per year, the official said that the board,"after careful consideration, viewed "The board felt that the environmentalimpact of the facility is such that they could not support it.

Exim, however, reversed its decision on July 1, after Reliance Power'scommitment for developing renewable energy and cut emissions. The

reversal came with a "compromise" between Reliance and Ex-Im to generate250 MW of renewable energy on site to address low carbon policy concerns.

FURTHER DEVELOPMENTS:

Sasan Power has entered into a 25-year Power Purchase Agreement (PPA)with off-takers of power for its entire capacity at a competitive tariff of 1.19

 per kWh. The Project would supply power to 14 off-takers in seven states benefiting over 35 crore Indians.

Sasan Power would reduce 2.24 million tonnes of CO2 per year (approximately). This emission reduction effort entitles the project to earnapproximately 22.4 million carbon credits during its first ten years of operation.

The Project was granted Host Country Approval for by Ministry of Environment & Forests, Government of India (MOEF) in 2009 confirmingthat the project contributes to sustainable development in India.

MEASURING CER 

14

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 15/16

CER's or Certified Emissions Reductions are a "certificate" just like a stock.A CER is given by the CDM Executive Board to projects in developingcountries to certify they have reduced green house gas emissions by onetonne of carbon dioxide per year.

Developed countries buy CER's from developing countries under the CDM process to help them achieve their Kyoto targets.

CER is calculated based on two factors:1. Tonnes of greenhouse gases reduced2. Global warming potential of the gas

Green house gases affect global warming with varying intensities. This

intensity is measured by the "global warming potential" of the gas.

There are many gases that contribute to the green house effect. The KyotoProtocol covers six of them and also provides their global warming potential.

GAS GLOBAL WARMING POTENTIAL

Carbon dioxide (CO2 ) 1

Methane (CH4) 21

 Nitrous oxide (N2O) 310

Hydrofluorocarbons (HFCs) 140-11700

Perfluorocarbons (PFCs) 7000-9200Sulphur hexafluoride (SF6) 23900

FORMULA:

CER AWARDED = Tonnes of green house gas reduced * Global WarmingPotential of the Gas

IN CASE OF RELIANCE POWER SASAN PROJECT:

The estimated reduction in the carbon emission is 2.24 million tones per year 

and the Global Warming Potential for CO2 is 1Hence the CER awarded will be:2.24 * 1 = Rs 2.24million per year.

BIBLIOGRAPHY

• http://www.reliancepower.co.in

15

8/3/2019 Project on Carbon Credit

http://slidepdf.com/reader/full/project-on-carbon-credit 16/16

• http://www.carbonventures.com

• http://old.cseindia.org/programme/geg/cdm_faq.htm

• http://www.tfsgreen.com/global-markets/clean-development-mechanism/

• http://www.banktrack.org/show/dodgydeals/sasan_ultra_mega_power_project_um pp_/_blank 

16