Tamil Nadu Moving towards 24/7 Sustainable Power Supply

Transcription

1 Conference on Tamil Nadu Moving towards 24/7 Sustainable Power Supply Chennai 6 th October 2017 V. Sriram Chief Operating Officer, IMaCS

2 Agenda TN s power situation: a snapshot Prospects, challenges and imperatives 2

3 1. Tamil Nadu punches well above its size in economic terms 14.0% 10.8% 13.1% GSDP growth (constant prices) 10.0% 6.0% 5.5% 7.4% 4.8% 6.9% 6.9% 8.8% 7.9% 2.0% FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 Scores high on urbanisation and economic output 11 th largest State by area 7 th largest by population Most urbanised state 48.45% of the population 100% rural electrification achieved Leads in several industries including Automotive components, General engineering, Cotton spinning, Ready Made Garments, Leather processing & exports, Wind & Solar energy 3

4 2. Demand-supply gap and peak deficit have fallen sharply since FY % 15.00% 10.00% 5.00% 0.00% -5.00% Energy Deficit TN(%) Energy Deficit India(%) 17.50% 8.70% 5.90% 3.60% 4.20% 2.10% 3.10% 0.0% 0.70% FY 13 FY 14 FY 15 FY 16 FY % Supply has grown faster (CAGR 8%) vis-à-vis demand (CAGR 3%) Sharper fall in peak deficit visà-vis national average. National peak deficit in FY 17 is in the negative 15.00% 10.00% 5.00% 0.00% -5.00% Peak Deficit TN(%) Peak Deficit India(%) 13.20% 9.00% 7.60% 4.70% 3.20% 4.50% 1.50% 0.00% 0.00% FY 13 FY 14 FY 15 FY 16 FY %

5 3. Industry ~ 28.5% of power demand; industrial power demand correlates well with GSDP growth Sales mix FY 16 Others, 0.8% Agricultu Railway, re, 15.9% 1.2% Commerc ial, 19.1% Industrial, 28.5% Domestic, 34.5% 12% 8% 4% 0% Industrial Consumption (MU) GSDP Growth (constant prices) 8% 5% 9% 7% 7% FY 13 FY 14 FY 15 FY 16 FY Tamil Nadu enjoys a well balanced sales mix with significant percentage of industrial demand creating scope for cross subsidising. 5

6 4. Signing of UDAY, successful renewable auctions - a positive sign for the sector Successful solar and wind bids have resulted in all time low tariff of Rs 3.47/ unit and Rs 3.42/unit. Saving to the tune of Rs 5796 crore expected from the implementation of UDAY. Savings in Revenue Expenditure Cash Savings Particulars Rs crore Particulars Rs crore Interest savings due to takeover of loans 2882 Cash flow savings on annual Interest savings by conversion to bonds 200 Principal repayment 2282 Interest saving due to conversion of State 432 loan as equity Total 3514 Total

7 A. TANGEDCO s stable financial health paramount for 24*7 power supply ACS (Rs/kWh) ARR w/o subsidy (Rs/kWh) GAP vs ACS 60.0% 42.5% Significant increase of over 15% in ABR in FY 16. Reduction expected in FY 17 given the reduction in domestic tariff % 37.4% 35.7% % FY 12 FY 13 FY 14 FY 15 FY % 20.0% 0.0% Despite reduction in FY 16, ACS-ARR gap remains significant at 24.3%. A.P/ Telangana Gujarat Karnataka FY 12 FY 13 FY 14 FY 15 FY 16 Despite increased ABR, TANGEDCO s ACS-ARR gap continues to be high.

8 5B. Power tariffs for commercial/industrial connections high relative to most peer States Rs / unit Andhra Pradesh Maharashtra Gujarat Karnataka Tamil Nadu Industrial Commecial Domestic Limited room to increase industrial and commercial tariffs without denting competitiveness 8

9 5C. TANGEDCO s AT&C losses are high, though lower than national average AT&C losses have reduced marginally in 5 years. Significant efforts needed to meet UDAY target of 13.5% by FY 19 AP Karnataka Tamil Nadu India 30.0% 20.0% 25.6% 24.6% 23.3% 22.4% 22.2% 21.7% 20.8% 20.7% 20.3% 25.7% 24.7% 18.7% 24.0% 20.4% 10.0% 15.3% 13.7% 14.8% 10.6% 13.6% 13.9% 0.0% FY 12 FY 13 FY 14 FY 15 FY 16 9

10 5D. GoTN s subsidy burden continues to remain significant GoTN Revenue (Rs. Crore) Subsidy support (Rs. Crore) 1,50,000 Subsidy/GoTN revenue Subsidy/ TANGEDCO revenue 24% 1,20,000 90,000 85, % 98,828 1,08, % 1,22, % 1,29, % 20% 16% 12% 60,000 30, % 5.7% 6.0% 4.5% 4.6% 2.4% 4,457 4,985 6,953 7,695 2,071 FY 12 FY 13 FY 14 FY 15 FY 16 8% 4% 0% 10

11 5E. TANGEDCO s weak financials - a burden on TN state financials 100% 80% 60% 40% 20% 0% Revenue Receipts (GoTN) Fiscal Deficit TANGEDCO Losses Ratio (Losses/Fiscal Deficit) 1,22,420 1,29,008 77% 1,08,036 98,828 85,202 71% 68% 47% 32,628 17,274 20,583 27,162 16,519 13,321 11,679 13,985 12,757 18% 5,787 FY 12 FY 13 FY 14 FY 15 FY 16 1,40,000 1,05,000 70,000 35,000 - Steep reduction in reported losses in FY 16, losses still equivalent to nearly 18% of Fiscal deficit. Regulatory assets in upwards of Rs 10,000 crore. 11

12 6A. Expected incremental generation appears to be sufficient to meet expected growth in demand IMaCS estimates addition of 15,847 MU between FY 17 and FY 19. Significantly above EPS estimates of additional energy requirement of 11,582 MU. Particular Estimated additional requirement (19 th EPS) IMaCS estimated additional generation MU 11,582 15,847 4,880 MW of projects are in the pipeline for commissioning post FY 19. Projects in pipeline post FY 19 MW ETPS Expansion Project 660 Scheduled commissioning of these projects would be sufficient to meet the additional demand till FY 23. Ennore SEZ Supercritical Thermal Power Project Kundah Pumped Storage Hydro Electric Project 1, Additional capacity also planned from IPPs 12 Uppur Thermal power project 1,600 NCTPP Stage III 800

13 6B. Scheduled completion of projects necessary to meet growing demand Thermal projects prone to delays GoTN needs to provide for necessary facilitations for the timely completion of power projects S.N Project Name Developer Capacity (MW) Scheduled Actual/Anticip date ated 1 Neyvelli New TPP NLC 1000 FY 16 FY 19 2 IL&FS TPP IL&FS 1200 FY 15 FY 17 3 Tuticorin TPP Ind-Bharat PIL 660 FY 13 FY 19 4 Mutiara TPP Coastal Energen 1200 FY 12 FY 16 5 Ennore SEZ SCTPP TANGEDCO 1320 FY 19 unknown Though estimates look positive, delayed projects may lead to deficit. 13

14 7A. TN s ambitious renewable capacity addition plans need infrastructural and policy support Tamil Nadu leads in renewable energy with strong prospects Capacity to be enhanced by 5265 MW between FY 16 and FY 19 Source Capacity (MW) Wind Power 2,000 Solar 3,000 Biomass/Biogas 100 Co-generation 165 Total 5,265 Action points Development of adequate power evacuation infrastructure Flexible generation (greater share of complementary generation such as pumped storage and gas-based plants) High-end storage solutions + Upgrading grid technology, planning protocols New technologies in weather estimations, forecasting and scheduling 14

15 7B. Interests of existing renewable projects should not be compromised in light of the recently discovered tariffs Successful solar and wind bids have discovered tariffs significantly lower than the feed-in tariffs. Rs./kWh Wind Solar Feed-in tariff Latest bid tariff Challenges and issues Solar curtailment has increased significantly. Availability of cheaper short term power, a probable reason. Tamil Nadu has cancelled award of 500 MW solar projects that resulted from the bids conducted in January 2017 at tariff of Rs.4.40 /kwh stating high tariff. Wind Power Policy not in place. Taking cues from the CERC solar TBCB guidelines, TN needs to formulate forward looking policies to adequately compensate renewable energy developers. Enforceability of agreements is paramount 15

16 8. New avenues need to be explored for sustained growth in the sector GoI plans to make India 100% EV nation by 2030, current market share % Investments need to be made in developing charging infrastructure to make TN an attractive proposition for investors. Developments in EV market open the market for battery manufacturing Investments in EV will harness significant benefits for the power sector Better utilisation of renewable energy in the off-peak hours for charging Reduction in storage requirements May help reducing AT&C losses on account of more accurate billing TN needs to embrace the opportunities existing in the electric vehicle market. Demand forecasting should accordingly be done. 16

17 In summary. High AT&C losses Poor financial position Need for grid integration, evacuation and policy support for renewables Delays in project execution Sharp reduction in power deficit Signing up for UDAY Successful renewable bids Capacity addition plans 17

18 Thank you

19 Disclaimer All information contained in this document has been obtained by IMaCS from public sources and believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and IMaCS in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and IMaCS shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our holding company, ICRA Limited (ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been issued or are to be issued by any entity.

20 For any clarifications on this presentation, please contact: V. Sriram Chief Operating Officer