India's Power Sector

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gashish
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Postby gashish » 08 Aug 2007 22:38

Calvin wrote:Today, the bio-diesel program runs on "alternative energy tax credits". It costs about $1/gal to convert soybean oil into gasoline. So, with gasoline at $2.50/gal, guess what it costs for soybean - $1.50/gal, and the $1/gal tax credit is gravy that is pushing up the price of soybean and keeping the biodiesel producers from reducing their operating costs. There is technology out there to reduce the operating costs by $0.10 - 0.20 per gallon. Do you think any of the producers are interested in this at all? Of course not, they are *all* expending their capital and other resources in increasing their "throughput" so they can get more tax credits. Come 2008 year end, if the credits are not extended, expect to see the mother of all consolidations happen as millions of investors find their investments vaporize because of unscrupulous operators.



These numbers are meaningless unless backed up by reliable references.
There are quite a few companies out there who claim to produce ethanol under a dollar per gallon (cellulosic ethanol is touted to be the cheapest in few cents per gallon). There are different types of bio-fuels(ethanol,biodiesel etc) produced from different raw materials and processes. Some of them are expensive and some are cheaper. The whole debate gets really muddied when one specific case, which always happens to be the worst case, is used to bash all the bio-fuels...throwing the baby with the bath water, so to speak.

Since it is "India's Power Sector" thread, it helps to keep things in Indian context. cane,sorghum,jatropha,cellulose(waste materials) are likely candidates for ethanol/biodiesel production which will be efficient and have lower cost than corn/soyabean. The production costs are likely lower in India due to cheap labor. The key is developments in technology that drive down the cost for a given identified flow("raw material-process-fuel") suited to Indian conditions.

There are tons of oil-wallah blogs and clean-energy wallah blogs who are busy tarring each other, but the real issue drowns in the din. Can biofuel become part of the whole energy solution?


You might, personally, agree with these tax-reliefs - but the reality is that the governments have been notoriously bad at spotting innovations. 40 years of pushing ethanol in Brazil haven't made ethanol manufacture any more competitive with regard to gasoline on the international market. Perhaps you remember the Synthetic Fuels Corporation from the Carter years? The sooner government bureaucrats should get out of the business of business, the better we will be.


Brazil has no direct subisidies to ethanol today. The rise in FFV vehicles is consumer demand driven in last few years.

Oil-wallahs beat biofuel with the stick of subsidy , as if they never in the past or currently getting any sort of subsidy.

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Postby Calvin » 08 Aug 2007 23:02

These numbers are meaningless unless backed up by reliable references.


Good luck with that. The numbers I quoted are the numbers that *I* developed for soybean oil, with a specific customer (s) with non-patented technology. The application with Landfill gas was another alternative fuel project that *I* pursued for years.

These are not theoretical numbers.

Some of us actually earn a living in the energy industry without being paid by an oil company. It matters little where the energy comes from, if it is economically produceable. The difficulty with subsidized or tax-incentivized programs is that the producers are not responding to the market any more. Their customers are now congressmen, not consumers.

Reality bites.

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Postby Calvin » 08 Aug 2007 23:17

Gasoline costs $4+ per gallon in Brazil today, of which taxes are about 50%.

But, ethanol has no "direct" subsidies. Yeah, sure.

Too often policies are set and advocated by people who have little experience in the technology or the economics, or both. How many times is intellectual property developed by tax-payer monies locked up by two-bit technologists who are content to feast on pork, rather than to get out and actually make a sale? If you have been in this business for any length of time, you know the answer to that question.

It is so much easier to accuse someone of being in the pocket of the oil companies.

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Postby gashish » 09 Aug 2007 01:17

I have not accused anyone on this board of being in Oil companies pocket
You have taken my request for references too personal for reasons best known to you..if i had known if u were in energy business, prolly i wudnt have even asked......I have been merely citing existence of propaganda machines(oil-wallahs and clean-energy wallahs) casting mud in the debate...

now the debate is being steered towards somebody's personal or professional experience in sales or technology....the real issue "if biofuel can be part of India's quest for energy solution or if it is worth pursuing or not" is out in the cold.

Real issue becomes the victim.

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Postby Calvin » 09 Aug 2007 02:05

the real issue "if biofuel can be part of India's quest for energy solution or if it is worth pursuing or not" is out in the cold.


If it is out in the cold, it is because it is not technically or economically feasible.

I think if we are going to get progress on this issue, we have to be completely open with the real costs of this kind of effort.

There is some kind of belief that the government "knows best" and is the best arbiter of how best to spend technology development dollars - when the track record of government led efforts has been atrocious. The only result of this program has been tax payer dollars lining the pockets of those that are claiming to work in alternative energy. If we didn't have tax payer funding, at least the so-called pioneers in this field would have been investing their own money, and would have a vested interest in developing a competitive product, as opposed to developing the next proposal to hoodwink the SBIR.[/quote]

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Postby gashish » 09 Aug 2007 02:41

Calvin wrote:
the real issue "if biofuel can be part of India's quest for energy solution or if it is worth pursuing or not" is out in the cold.


If it is out in the cold, it is because it is not technically or economically feasible.



This,IMHO, has not been proved beyond doubt. Time will be the arbiter....in next 5-15 years we will know...until then debate goes on.

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Postby Rishirishi » 09 Aug 2007 03:02

Good luck with that. The numbers I quoted are the numbers that *I* developed for soybean oil, with a specific customer (s) with non-patented technology. The application with Landfill gas was another alternative fuel project that *I* pursued for years.

These are not theoretical numbers.

Some of us actually earn a living in the energy industry without being paid by an oil company. It matters little where the energy comes from, if it is economically produceable. The difficulty with subsidized or tax-incentivized programs is that the producers are not responding to the market any more. Their customers are now congressmen, not consumers.

Reality bites.


Calvin

You are probably one of the best informed people in the field. I would appreciate if you could adress the following issues, within the Indian context. I am new to this field, and would really appreciate your coments.

1 Given that it is a strong political desire to avoid overdependance on oil imports, how does India solve the problem.

2 If we guarenteed not to allow the oilprice to be sold under 75 dollars per barrel, in the domestic market, how will this impact on the desire to make longterm commitment in biofuels and other alternative energies.

3 What is the total total cost of biofuel. What is the total cost of regular diesel, based on an oilprice of 75 dollars per barrel.

4How high would the oilprice have to be, before biofuel would become cost effective?

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Postby Calvin » 09 Aug 2007 03:53

Given that it is a strong political desire to avoid overdependance on oil imports, how does India solve the problem


We have to question the assumptions here. Does it really matter whether we are importing oil or not? Oil is a commodity, whether we import or not is irrelevant, other than for political purposes. You hear the same noises in the US about reducing "dependence on 'foreign oil' ", and no one complains when Marathon charges $75/bbl for the oil they produce from the Yates oil field that costs them roughly $1/bbl to produce.

From a technical standpoint, reducing consumption, or increasing efficiency both serve the same purpose. The only way to do this is to remove all artificality from pricing of energy products, so that people will not burn more "subsidized" fuel less efficiently. For example, a diesel engine is probably 25 - 30% more efficient than a gasoline engine. In the US and Canada one reason to not use diesel is that it turns to gel in the colder regions - this is not the case in India, or much of the tropical and equatorial countries. 25% reduction in the consumption associated with gasoline (which is probably 20% of all worldwide energy consumption) can probably reduce global hydrocarbon demand by 5 MMbpd. The US currently produces 0.3MM bpd, worldwide the number is around 0.7MMbpd.

Unless we removed artificialities in the market, the consumer will not recognize the value of a diesel fuelled car.

If we guarenteed not to allow the oilprice to be sold under 75 dollars per barrel, in the domestic market, how will this impact on the desire to make longterm commitment in biofuels and other alternative energies.


$75/bbl + $5/bbl processing cost = Rs. 20/liter.

Gasoline is already sold at a price higher than this in India. Therefore, we have to conclude that setting this kind of artificial price point will have no impact on any long term commitment to biofuels.

What is the total total cost of biofuel. What is the total cost of regular diesel, based on an oilprice of 75 dollars per barrel.


The cost of processing crude oil to make diesel down to 15 ppm sulfur is not more than $5/bbl. This is the number we used above. The "crack spread" which is the differential between product and raw material, and typically includes profit for the refiner is currrently at $15/bbl, but in high supply, low demand environments can dip to as little as $8/bbl. Most refiners use $8/bbl for their long term projections to justify capital. Therefore, it may be best to use this ($8 ) figure for the purpose you are looking for.

How high would the oilprice have to be, before biofuel would become cost effective?


As long as oil can be produced biofuels will *never* be cost effective. It probably costs $1/bbl to produce oil in Saudi Arabia, and $15/bbl to convert tar sands to oil in Canada, and probably $75/bbl to produce the massive shale deposits in Wyoming. Now, the cost of producing oil is different from the sell price of the oil - only the supply/demand differential.

Then, only about 15 - 20% o f the price of diesel is dependent on the energy cost of conversion. Nearly 50 - 75% of the cost any likely biofuel is the cost of energy. If the cost of energy goes up, the cost of a bio fuel will rise faster than the cost of a fossil fuel product.

Therefore, we will have this odd situation, where the supply/demand differential for oil sets oil prices, which because energy is fungible, sets the prices for natural gas, soybean, sugar cane and corn. Now you may make the case that marginal production of bio-fuels can favorably impact that supply-demand differential. This is true until the supply ratchets down to raise prices again. The problem in this market is that the resource base is finite, and producers have an incentive to delay production, because future dollars will likely be worth more than today's dollars. The only way to address this is by having a large enough threat to fossil fuel consumption.

Even if there was enzymatic conversion of celllulosic matter, the volumes of transportation fuel required would consume all of the avaialble cellulosic matter in a short amount of time - and what would be the environmental impact of that? The real solution here is not going to be biofuels, but nuclear, or geothermal or something like that. Solar, wind and tidal will probably have fringe applications but because the energy source is not guaranteed, it will not find wide acceptance. Given the technology base, nuclear, is likely to be the path of the future. The electric power generated would then have to be converted into some kind of transportation fuel (Methanol, Metal hydride) for mass-acceptance.

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Postby vina » 09 Aug 2007 04:29

Calvin wrote:For example, a diesel engine is probably 25 - 30% more efficient than a gasoline engine. In the US and Canada one reason to not use diesel is that it turns to gel in the colder regions - this is not the case in India,


In the US, the newer Common Rail Diesels (which overcome the bad rep of the earlier diesels sold in the US) which gave diesel a > 50% marketshare in the US are severely limited because they dont meet particulate emissions.

The Sierra Club is vehemently against CRD and diesels for cars as long as this is not addressed.

CRD is the easiest and most cost effective way of achieving hybrid or (better) fuel economy with current infrastructure (manufacturing,refining and distribution). Hybrid is a very expensive work around which adds more complexity, cost and requires exotic materials like lithium batteries, rare earth metal magnets /generators, all of which have their own life cycle problems with pollution , energy use (in manfuacture) , durability etc .

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Postby vina » 09 Aug 2007 04:47

Calvin wrote: The problem in this market is that the resource base is finite, and producers have an incentive to delay production, because future dollars will likely be worth more than today's dollars.


No.. No.. Fundamental error. By basic time value of money, today's dollars are always more valuable than future dollars .. For eg @ 10% year ly interest $1.1 a year from now is exactly $1 right now!

You always have to discount future cash flows to present value.. If you are valuing cash flow over 10 years or so , given that the denominator for the discount factor for (1 + r)^n for the nth year cash flow, it is easy to see that cash flows beyond 5 years or so have very little value unless the cash flow (directly linked to price of oil which in turn to demand supply stuff) grows far faster than the deflator /discount factor. For eg if the interest rate is 10% and you are looking at a 10th year cash flow, the deflator is 1 /2.6 times!! .. So unless you make the assumption that the price of a barrel of crude is going to be more than 2.6 times current values (nearly $180 per barrel), then the present value of a barrel you pump out 10 years from now is actually much less than a barrel you pump out today!! .

Factor in at what price levels do alternatives to crude oil start becoming economically feasible .. That automtically puts a cap on the price that crude can reach before people start switching and hurting the demand for crude!

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Postby Calvin » 09 Aug 2007 06:43

No.. No.. Fundamental error. By basic time value of money, today's dollars are always more valuable than future dollars... For eg if the interest rate is 10% and you are looking at a 10th year cash flow, the deflator is 1 /2.6 times


vina, first, 10% is not the number to use. 3% is probably more like it. More importantly, you are assuming that the additional production has no impact on prices, when it does.

Which is better, to produce 100,000 bpd of oil at $70/bbl or 105,000 bbl of oil at $70/bbl? In both cases you get about the same amount of money, but in the second case you have more oil left under the ground.

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Postby Calvin » 09 Aug 2007 07:02

at what price levels do alternatives to crude oil start becoming economically feasible .. That automtically puts a cap on the price that crude can reach before people start switching and hurting the demand for crude!


I don't think that the issue is the price level so much as the rate of availability of the energy.

Global energy consumption is the equivalent of 210 MM bpd of oil (15 TeraWatts). Oil is about 40% of this, and fossil fuels (oil, gas, coal) is about 85% of this. The growth of energy consumption is around 2%, or about 4MMbpd of oil equivalent per year. Oil production has to grow by 1.6-2.0 MMbpd to keep the supply-demand equation for oil from getting out of whack.

*Any* solution has to be able to address the growth rate (the marginal 4MMbpd) in some meaningful fashion. The entire bioethanol program is worth 0.6MMbpd, and will not even grow at 0.1MMbpd per year. Biodiesel is the same thing. There is simply not enough land to grow these agro products, boil off around 85 - 99% water and then use the energy. Of the options out there, nuclear (fission) is probably the most likely in the short term to have any value, nuclear is presently at around 12 MMbpd equivalent or 1 TW. Nuclear Fusion and Solar are ultimately likely the solution.

For those that want to get a sense of the magnitude of some of these numbers, check out the following Wikipedia link

http://en.wikipedia.org/wiki/World_ener ... onsumption

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Postby vina » 09 Aug 2007 09:40

Calvin wrote:vina, first, 10% is not the number to use. 3% is probably more like it. More importantly, you are assuming that the additional production has no impact on prices, when it does.


How do you get that 3% no ? The 10 year US Treasury's yield is around 5%. For a corporate the cost of capital will be significantly higher , definitely atleast prime which I think will be around 8% and typically more like 10%. I would think that the target Internal Rate of Return would be 10% plus. That is why I put around 10% as the rate.

But whatever interest rate you use, as long as it is > 0 (i.e the funds are not cost free), time value of money will hold. It is only when it is zero, future cash flows will be the same value of current cash. Notice that I am making no assumption whatsoever on prices or whatever in making the statement ,but just stating a bland fact of life that applies whenever you are borrowing,, either for a home, a car, or to dig an oil well.

Which is better, to produce 100,000 bpd of oil at $70/bbl or 105,000 bbl of oil at $70/bbl?


The question is $70*100,000 today vs $70*100,000 tomorrow . Assuming marginal cost remains the same in such a scenario of same price, the profit remains constant.. A 1$ profit right now is always more valuable than $1 anytime in future (even if just a day or second later). So you will pump like mad and run at full capacity.

The problem with oil is that it is a "constrained" supply and capacity along its value chain like refinery capacity are constrained as well, and not to mention the lead times and investments required to bring additional capacities online in response to increased demand.

Until 2000, oil prices were at their historical lows (which probably contributed significantly to the Clinton years boom in addition to other factors like IT/Vity /Productivity, strenght of US currency leading to lower inflation)..and there was significant underinvestment in the oil sector in terms of building capacity.. How many rigs were commissioned, how many refineries built in the US in the last 25 years (is it zero ?) .. So in short run definitely the supply is constrained and the Opec cartel and producers have significant pricing power. So you see oil prices at current levels

Long term, additional capacities start coming in, alternatives start becoming attractive and so there is a long term cap on price I think. In the short run, the best strategy would be to pump as much as you can and maximize your profits.. Long term, as prices moderate, you will have to cut back production and also investments in discovery etc to keep per unit profits up, until the secular demand (at whatever rate) catches up.

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Postby bala » 09 Aug 2007 10:04

In cost analysis I don't see a cost associated with pollution. Is Carbon Credit a way to deal with Oil pollution costs. Burning/consuming 1 gallon of oil should have a cost component associated with release of C02, disposal cost of plastics etc. Then how cost efficient is oil vs biodiesel?

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Postby Calvin » 09 Aug 2007 16:48

How do you get that 3% no ? The 10 year US Treasury's yield is around 5%.


The value after taxes.

The question is $70*100,000 today vs $70*100,000 tomorrow .


Its not that. The point is that the marginal 5,000 barrels effectively do not generate any more money. There is no doubt that for small producers who cannot impact the commodity price, your argument holds. For OPEC nations whose output can affect oil prices, there is a great incentive to delay production.

The problem with oil is that it is a "constrained" supply and capacity


Yes. And well-meaning initiatives like "low sulfur" gasoline and diesel inadvertently constrain refining capacity even more.

how many refineries built in the US in the last 25 years


New refineries are not being built in the US because of EPA and other environmental issues. However refineries are being expanded.

Over the past 20 years, with the crack spread running at $1-2/bbl, imagine the risk of justifying a $7,000/bbl expansion. For the lay person, that is a simple payback over a 10-15 year period. That risk is slightly lower if you are in a $8-15/bbl environment when the cost of expansion is now up to $15,000/bbl.

Is Carbon Credit a way to deal with Oil pollution costs.


This is another artificiality. CO2 is not a "pollutant" the same way that trichloroethylene is.

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Postby bala » 09 Aug 2007 19:34

CO2 is not a "pollutant"


CO2 is a greenhouse gas. CO is a poisonous gas and is part of the emission problem. Talking of emission California has emission control devices as part of the exhaust system in vehicles and these costs (material/inspection/maintenance) must be added to the operation cost of gasoline/diesel consumption.

Another issue is transportation spillage. Exxon Valdez spill costs several billions in clean up around Alaska and the lingering effects are still to be recovered. Refineries themselves burn gas and the flues emit greenhouse gases and other toxins into the air. People who live in the area of refineries (Martinez Tosco refineries) complain of severe medical problems ranging from cancer to breathing issues.

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Postby Calvin » 09 Aug 2007 20:29

CO2 is a greenhouse gas.


Yeah, so is water vapor. Are we going to start taxing human beings for breathing, also?

CO is a poisonous gas and is part of the emission problem.


Sure, as is the 40% of the uncombusted fuel. BTW, the CO and uncombusted fuel emission issue is not going to go away with bio-diesel or bio-ethanol.

Another issue is transportation spillage. Exxon Valdez spill costs several billions in clean up around Alaska and the lingering effects are still to be recovered.


Yeah, Exxon paid for this. Remember that there a lot of issues with fossil fuel related products because of the sheer magnitude of their consumption. Any other energy, on a similar scale will have similar issues - we just don't comprehend them presently.

emission ... must be added to the operation cost of gasoline/diesel consumption


This is where, IMHO, the environmentalists are missing the boat. This is not about Big Bad Oil. Its really about the small individual consumer. The reason that all environmental problems exists is because the *consumer* doesn't want to pay 2X or (more likely) 10X more for the product.

In an instance where the consumer is willing to do so, the market responds - which is why you see people willingly paying $3 for 0.1 gallon of coffee, which is 98% water, or $1 for 0.1 gal of water.

If people would pay $10/gal of bio-diesel with zero-net carbon emission - why isn't anyone selling this? The answer should be obvious.

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Postby Vipul » 09 Aug 2007 22:01

Govt gets 745 applicants for 15 coal blocks.

The government has received 745 applications from a variety of companies for 15 power-project-linked coal blocks with estimated reserves of 3.6 billion tonnes, which can support power generation of 18,000 Mw.

Various government departments have shortlisted companies ahead of final allocation by a screening committee, comprising members from the power and coal ministries and the state governments of Jharkhand, Orissa, West Bengal, Chhattisgarh, Bihar and Maharashtra.

The Central Electricity Authority (CEA) has pre-qualified 44 applicants, the ministry of power 32 and the ministry of coal 100.

The applicants range from little-known traders to metals majors. Among them is BLA Coal Mining and Washeries Pvt Ltd, which operates a number of coal mines in Bihar and West Bengal and has been pre-qualified by the ministry of coal. Another coal miner, Mahavir Global Coal Ltd, is planning to set up a 540 Mw power plant in Raigarh in Chhattisgarh.

Kolkata-based Rashmi Cement, which makes and exports cement, iron and ferro alloys, is planning to set up a 500 Mw plant in Kharagpur in West Bengal for its captive use. The company does not own a coal block but hopes to bag one.

The BC Jindal group company Jindal Photo, which manufacturers photographic and allied products, is also eyeing a 1,000 Mw power project in Angul in Orissa.

Several steel companies are also among the applicants. Bhusan Steel, which has a presence through Bhusan Energy, is foraying into power for the first time and is planning to set up a 2,000 Mw plant in Angul, Orissa. It has also been recommended for coal block in Jharkhand.

Mittal Steel, part of the Laxmi Mittal group, has proposed a 750 Mw plant in Keonjhar, Orissa, while Tata Steel has applied for a coal block in Fatehpur in Chhattisgarh for its 625 Mw power project in Bastar. JSW Steel is also planning to set up a 900 Mw power plant in West Bengal and has applied for coal block in the same state. Continued on Page 2

The big power majors are also in the race. Hyderabad-based Lanco, which has lost the race for the 4,000 ultra-mega power project, has applied for a coal block in Rampia in Orissa for its 2640 Mw power plant in the state. The other major power applicants include Kolkata’s CESC, RPG group, Essar Power, AES and GMR Energy.

There has been hectic lobbying among companies to get the crucial blocks and the confusion has been compounded by lack of clarity in the allocation criterion. Many companies complain that serious power players who have a track record in the business should be given preference over non-power players who might just be trading in coal.

While government departments and the screening committee have discussed on the method of identifying winners among the shortlisted candidates, the Central Electricity Authority (CEA) has proposed that allocation of coal blocks should be prioritised on the basis of key criteria, such as land acquisition among others.

The CEA has also suggested two key methods of allocation. One, some of the bigger coal blocks can be allocated to more than one applicant. Second, one block per applicant should be allocated and priority should be given to projects proposed to be located near coal blocks.

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Postby Katare » 10 Aug 2007 07:00

What calvin says is true from pure economic perspective and all the renewable energy sources are utterly uncompetitive without the tax rebates and other incentives. That is the reaon natural oil/gas are so popular and big money maker for all including exporters, exploreres, importerers, govts, processors and who not.

But why all the importing govts tax petrolium products so heavily except US of A. This should answer all the questions. For instance if there is nominal taxes on gasoline in India the consumption will go up by a factor of say 3 or 4 at half the prices. That would mean India will have to sell out $200B/year on oil imports, which it can't support. Only US of A can support it by printing more $$$

Now we don't have that problem when locally producing bio-fuel so taxing it so heavily is not necessory. Also all of the money goes into local ecnomy so GoI will get its share of taxes from some where else like corporate tax from processors and so on.

And finally biofuels are agricultural products that can not be taxed in India as per our constitution.

Much to gain from the 123 of nuke power

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Postby Calvin » 10 Aug 2007 07:17

But why all the importing govts tax petrolium products so heavily except US of A.


This is not quite true. Canada has a $0.80/gal tax, UK has $4/gal, and Brazil has around $2/gal - all these nations are either self-sufficient, or net exporters of petroleum products

For instance if there is nominal taxes on gasoline in India the consumption will go up by a factor of say 3 or 4 at half the prices.


In 1998, gasoline was $1/gal or less in the US. IN 2007, its probably averaging $2 - 3/gal. In this time frame, gasoline consumption has increased by 10 - 20%.

So, over a long enough period of time (i.e., not considering an oil shock) how do we obtain a 4-fold increase in consumption if the cost of gasoline fell in half? Secondly, would the consumption be productive for the nation? Would it effectively generate wealth? If it does generate wealth, does this increase in wealth offset the increase in oil consumption? If it does, then is it a bad thing?

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Postby Katare » 11 Aug 2007 23:18

Calvin wrote:
But why all the importing govts tax petrolium products so heavily except US of A.


This is not quite true. Canada has a $0.80/gal tax, UK has $4/gal, and Brazil has around $2/gal - all these nations are either self-sufficient, or net exporters of petroleum products

For instance if there is nominal taxes on gasoline in India the consumption will go up by a factor of say 3 or 4 at half the prices.


In 1998, gasoline was $1/gal or less in the US. IN 2007, its probably averaging $2 - 3/gal. In this time frame, gasoline consumption has increased by 10 - 20%.

So, over a long enough period of time (i.e., not considering an oil shock) how do we obtain a 4-fold increase in consumption if the cost of gasoline fell in half? Secondly, would the consumption be productive for the nation? Would it effectively generate wealth? If it does generate wealth, does this increase in wealth offset the increase in oil consumption? If it does, then is it a bad thing?


Calvin,

Those three countries are the best examples of how higher taxes enable them to be self-sufficient. Big exporters like Russia, SA et al don't have these taxes neither does USA who gets oil for a few pieces of green papers. Rest of the mortals will have to tax it heavily to minimize demand by jacking up domestic prices. Since biofuel will be produced domestically it doesn't need to be taxed so heavily.

By bringing petrol prices by half in India you'll make personal travel cheaper and would increase the number of people who would be able to afford more gas and the existing consumers will be able to meet their latent demands. A general rule of thumb is that if prices can be brought down by half volumes goes up by a factor of four. Be it cell phones, cars, chips or what not if there is latent demand for the stuff.

USA case is different, there is no logical latent demand left, all of it has already been met thanks to ‘almost no tax gas economy’. Even after trippling of the gas prices consumers are paying less than what they paid for the same gas in decade of 70s. Gas prices haven't tripled in India like in USA. They have gone up with almost the same rate as personal income of the middle class consumers.

When talking about biofuels, you have to take intangible benefits in to account which eventually yield big economic dividends. Also this has to be country specific, Russia, SA and USA may have fundamentally different biofuel economics than India, China and Brazil.

Taxes if freed in India will be revenue neutral for govt as it will collect its share of doe in the form of corporate taxes, enhanced excise on vehicle volumes etc. But it's entire economy would be vulnerable to major external shocks and humongous dependence on oil exporter and $ producer i.e. USofA.

If all the countries moderate taxes on oil and gas, they'll loose all that Tax money to oil exporting countries as all that latent demand will jack up the crude prices into stratosphere.

Also if economic scales are built into biofuel processing the yields will improve over the time. Most crops that are being used as feedstocks are optimize/invented for food purposes not making oil from them. New verities of seeds will be invented for higher oil yields, better processing technologies will be developed to bring down the cost. Over a two decade time frame the real cost of biofuel may comedown to half of what it is today.

Also US agricultural output and yields has been consistently decreasing since 1950s, IIRC. US Govt is/was paying farmers not to produce or move out to other professions to avoid over production. Converting those excess crops to biofuel may not be such a bad idea especially most of the worlds population is still involved in agriculture where demand for products rises very slowly.

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Postby ASPuar » 12 Aug 2007 10:29

*** ADMINS ***

This thread is completely derailed. Could some one please shift the last pageload of discussion to the Oil and Natural Gas thread??

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Postby Shwetank » 17 Aug 2007 04:27

Katare wrote:What calvin says is true from pure economic perspective and all the renewable energy sources are utterly uncompetitive without the tax rebates and other incentives.
Much to gain from the 123 of nuke power


Not true, geothermal power atleast is competitive and has been commercially applied for qutie some time now, with prices still coming down, without much hype or govt. support. There have been impressive gains in solar tech. (not just solar panels) efficiency and drops in price and it is projected to become competitive in a matter of years by several different orgs. so they are something to watch out for and seem to have convincing arguments as they have been continously lowering costs and improving efficiency over the last few years.

Biofuels is the more iffy category but again companies are claiming they have competitive prices or will have them soon and prices for some tech.s have been coming down so I don't think we can conclusively say that it is all crock and that nothing will happen in the next decade and all (hundreds of them) of these scientists, engineers, business people etc. actually working on these things and investing in them are necessarily deluded.

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Postby Katare » 17 Aug 2007 05:23

we were talking about oil not power, although in the wrong thread! :(

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Postby ASPuar » 23 Aug 2007 10:19

http://tinyurl.com/29cgpm


[quote]

UP has no objection to R-ADAG power project
23 Aug, 2007, 0308 hrs IST,Mayur Shekhar Jha, TNN


NEW DELHI: The UP government is willing to let R-ADAG set up a power plant in Noida over 500 acres of land if it wants to do so. The state government had last week rejected R-ADAG’s proposal for setting up a 2,500-acre multi-product special economic zone (SEZ) in Noida.

R-ADAG had been allotted 500 acres by the previous state government and this was to form part of the 2,500-acre SEZ. As this 500 acres is available with R-ADAG, the present state government has indicated that if the group wants it can set up a power plant in this area, said a senior state government official. An e-mail sent to an R-ADAG spokesperson did not elicit any comment.

If the proposed power plant gets underway, it will potentially help address the power crisis in western UP to a great extent. R-ADAG group company Reliance Natural Resources (RNRL) is developing another power plant in the adjoining Dadri district, with an investment of about Rs 10,000 crore.

The 3,500-MW plant is slated to be the world’s largest gas-based power project. Another group company, Reliance Energy (REL), is setting up a 600-MW coal-based power project in Shahjahanpur. “The three projects together, can potentially make UP a power surplus state,â€
Last edited by ASPuar on 23 Aug 2007 10:34, edited 1 time in total.

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Postby ASPuar » 23 Aug 2007 10:20

http://tinyurl.com/2a5y9r



Centre's nod to 21 MW unit of Baramura power project
22 Aug, 2007, 1500 hrs IST, PTI




SHILLONG: The Centre on Wednesday approved the setting up a 21 MW gas-based unit of Baramura power project in Tripura, at an estimated cost of Rs 81.20 crore.

The project which comes under North Eastern Council (NEC) plan, is estimated to cost Rs 81.20 crore, a PIB release said here today.

The project will be implemented by the Tripura State Electricity Corporation Ltd (TSECL).

While NEC would release 90 per cent of the total project cost in phases as grant-in-aid, the Tripura government would provide the remaining fund as loan from its own resources.

Manipur and Mizoram would also benefit from the project, that would be implemented during the Eleventh Five-Year Plan.
Last edited by ASPuar on 23 Aug 2007 10:35, edited 1 time in total.

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Postby ASPuar » 23 Aug 2007 10:21

http://tinyurl.com/28yzqv

Ultra mega power plans to speed up
23 Aug, 2007, 0141 hrs IST,Subhash Narayan & Ashish K Mishra, TNN



[quote]

NEW DELHI: It would be mandatory for companies executing ultra mega power projects (UMPP) to commission a minimum one unit (about 660 mw) in the 11th Plan (2007-12).

The government is considering a mechanism to catch up with the lost time on account of delays in awarding the controversial Sasan project. The proposal would be applicable to all nine UMPPs.

“UMPPs should start giving tangible results soon. We are planning to ask bidders of all UMPPs if they could advance the implementation schedule of their projects and commission at least one unit by 2012. However, this would depend on the completion of bidding process for all the proposed nine UMPPs by early next year,â€

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Postby Singha » 23 Aug 2007 16:25

yahoo

Areva gets 630 mln rupees order from Essar Steel

MUMBAI (Reuters) - Areva T & D India Ltd said on Thursday it has received an order worth 630 million rupees from Essar Steel Ltd.

The project is for design, supply and commissioning of switchyard and transformers of various ratings for Essar's sub-station at Hazira.

The company said it has also received an order worth 339 million rupees from Maharashtra State Electricity Transmission Co Ltd for its first gas-insulated switchgear and supply of transfomers.

"Areva T&D is a market leader in the evolving GIS (Geographic Information Systems) market segment in India and has the highest number of references, and we also have a distinction of supplying in hydropower plants, transmission sub-stations and to independent power producers in India," country president of Areva, Rathin Basu, said in a statemen

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Postby Vipul » 23 Aug 2007 18:58

Industrial power tariffs are highest in world.

New Delhi: Electricity tariff for household consumers in India is comparable with many developed nations, but charges paid by industrial users are much higher in some cases, the Rajya Sabha was informed on Monday.

Household consumers in China (Taipei) pay only Rs 2.83 per unit of power as against Rs 1.14 to Rs 5.16 a unit in India. While household users in US pay Rs 3.94 a unit, Rs 5.59 in France, Rs 6.47 in UK and the highest – Rs 8.05 – in Japan, Power Minister Sushilkumar Shinde said.

But industrial users in India paid between Rs 1.57 to Rs 8.04 per unit, while France charged Rs 1.98, China (Taipei) Rs 2.10, US Rs 2.25, UK Rs 4.11 and Japan Rs 5.21 per unit.

Shinde said the average per capita consumption of power in the country was about 631 kilowatt hours as compared to 17,176 units per person in Canada, 13,338 in USA, 11,126 in Australia, 8,076 in Japan, 7,689 in France, 7,030 in Germany, 6,206 in UK, 5,642 in Russia and 5,644 kWh in Italy.

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Postby Gerard » 24 Aug 2007 23:54


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Postby bala » 25 Aug 2007 00:15

The dangers of wind power is a scare article for deploying wind power. Yes any excessive wind can tear of propellers, roof tops, fling cars and what not. In fact, while driving though the windy Hwy 580 in California, the top roof rack on my car came of. Nothing I could do, so are cars unsafe. You bet.

Wind power is a safe environmentally sound concept and more utilities in the US are adopting wind power. The US can potentially produce 3x current power generation just by using wind power alone. If utility companies can generate electricity from wind, then large private land owners also can and ergo private homes. However utility companies would lose revenue if private homes started to generate their own power. So, the same scare reason was used in Texas to prevent private home owners to install a compact wind turbine in their back yard.

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Postby Gaurav_S » 30 Aug 2007 13:50

BHEL wins Rs 1,900-cr order from NTPC JV company

NEW DELHI: Public-sector power equipment maker Bharat Heavy Electricals Limited on Thursday announced it has bagged a Rs 1,990-crore order for supply and installation of steam generator and steam turbine packages at the upcoming Vallur Thermal Power Project at Ennore in Tamil Nadu.

Outbidding leading European equipment suppliers, BHEL received the order from NTPC-Tamil Nadu Energy Company Limited (NTECL), a joint venture between NTPC and Tamil Nadu Electricity Board (TNEB).

The order comes close on the heels of BHEL winning three contracts for supply and installation of seven sets of 500 MW each at Jhajjar STPS, Koderma TPS and Durgapur Steel TPS, it said in a release.

Being set up under the government's mega power project policy, the Vallur project is targeted for synchronisation during the 11th Plan and would add nearly 24 million units every day to the grid on commissioning.

As per the order, BHEL's scope of work would involve designing, engineering manufacturing, supply, erection and commissioning of steam and turbine generators, electrostatic precipitators, associated auxiliaries and controls and instrumentation system.

So far, BHEL has won orders for supply and installation of 60 units of 500 MW each, of which 31 have been commissioned.

Aimed at equipping itself to meet the country's power capacity addition targets in the 11th Plan and beyond, BHEL is enhancing its manufacturing capacity in the next three years, from the current level of 6,000 MW to 15,000 MW per annum, the release said.

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Postby Vipul » 18 Sep 2007 01:34

India’s power projects to adopt Chinese model.

Stirred by the Chinese model that helped them add 100,000 mw of fresh power capacity in just one year, India too wishes to adopt a similar technique to pull up its laggard power projects in India. The government is mulling to standardise set design for projects to be implemented by state and central agencies.

Standard set design will help equipment manufacturers as they would know the exact specifications to be followed and save time in finalising designs for projects.

India, which targets capacity addition in time slices of five years (following the five year plans), during the 10th Plan targeted to add around 40,000 mw but managed to supplement only 50 per cent. And now for the 11th Plan that begins in 2007, the aim is to add over 72,000 mw of fresh capacity.

Speaking to The Indian Express, member of planning commission B K Chaturvedi, who is responsible for overseeing implementation of targets in the power sector, said that they expect to award all contracts for projects planned in the 11th Plan by March next year. Till now progress has been made for around 50,000 mw of capacity, he said.

Chaturvedi also mentioned that to ensure quick implementation, they have recommended standardised set designs for 500 mw units and that states had accepted this recommendation as well. He also confirmed that a huge part of China’s success in implementing projects rests on having standardised sets.

Apart from this, the implementing agencies are also going to streamline the qualification requirements which would allow more companies to bid for equipment supply contracts. While more equipment suppliers are welcome to participate in projects, the planning commission is against NTPC entering equipment supply.

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Postby Vipul » 18 Sep 2007 18:40

India's largest power plant ahead of schedule.

In the scorching heat of the Kutch sun, about 200 workers are busy etching a boundary around a 2,700 acre tract of inhabitable desert land. This land, now owned by the Tata Power Company [Get Quote], will soon house the country's largest power plant of 4,000 Mw.

This will be the first of the ten-odd ultra mega power plants (umpp) to be set up across the country through a public-private-partnership.

Though the workers at the site are ignorant about the dimensions of the project, the contractors and the people in the neighbouring villages know what the buzz is all about. "This is a Tata project. . .and Tata is a very big company," says one local inhabitant.

Most knew about the project even before the boundary wall started coming up in late August. Tata Projects -- a sister concern of Tata Power -- has been given the contract to build the fence.

Tata Power bagged the Rs 20,000 crore (Rs 200 billion) project in Mundra last year by offering to supply electricity at the lowest rate of Rs 2.26 per unit by burning imported coal. It acquired Coastal Gujarat Power Limited (CGPL), a special purpose vehicle (SPV) which housed the Mundra umpp, and merged it with itself in April, making it the first umpp to be transferred to the project developer.

The other umpp which has been transferred to the developer is the Sasan project in Madhya Pradesh, which is based on pithead coal.

Mundra project is progressing on schedule, or rather "ahead of schedule," say company officials. The project would comprise of five super-critical units of 800 Mw each. Though the contractual date for commissioning of these units is from 2013 to 2015, the company is confident of commissioning the first unit within the 11th plan itself (by 2012). Orders for equipment have already been placed with Japan's Toshiba and Korea's Doosan.

The electricity from the Mundra plant would be supplied to Gujarat (1,900 Mw), Maharashtra (800 Mw), Punjab (500 Mw), Haryana (400 Mw) and Rajasthan (400 Mw). Gujarat Distribution Company is the lead procurer on behalf of all procurers.

While such projects typically have to go through the pains of relocating local population, the nature of this land -- infertile and barren -- ensures that "resettle-ment and rehabilitation would be minimal," says a company official.

Just about ten kilometres away from the Tata site, work on another private sector power plant is on at full swing.

The Ahmedabad-based Adani group is all set to put up a 2,640 Mw thermal plant in Mundra which would also run on imported coal. The coal for the Rs 10,000 crore (Rs 100 billion) plant would be imported from Indonesia through Adani port, which is about 25 kilometre from the Mundra project site. Adani Power has also started building another imported coal based project of 1,320 Mw.

All of these projects would collectively disperse over 6,000 Mw of power from the vast spread of uninhabitable desert of Kutch, which would make it a veritable power hub of the west coast.

Adani has tied up with the Chinese equipment company SENEC for setting up the plant on a turnkey basis. According to a senior company official, by October 2008, two units of 660 would be ready for commissioning. And going by what one sees on ground, this claim doesn't look hollow.

"We would beat Tata Power in getting the project commissioned before them", says the official.

Already huge boiler installations have been set up and building material is lying all over the place which has scurrying workers busy in construction. "The Chinese equipment are not only low cost but their delivery time is also less as compared to Indian equipment manufacturers," added the official.

Besides Tata and Adani, Torrent [Get Quote] group would be adding over 1,000 Mw of capacity while Gujarat state electricity board would be adding 115 Mw during the 11th Five Year Plan (2007-12). Currently, of 10,781 Mw of installed capacity that the state of Gujarat has, 2,673 has been contributed by the private sector.

The public-private mix of power is however set to change as more private players come to the fore like Tata and Adani Power.

emsin

Postby emsin » 19 Sep 2007 01:56

Our first FBR based solely on Pu- thorium is coming up in 2 years. 500 MW. Can we import Pu from somewhere under agreement? Russia and US have an agreement to destroy nukes. Due to that there is a lot of unwanted Pu which we can use alongwith Thorium as fuel for tremendous energy.

What if we have an open ended deal with the Russians and Americans to use their Pu..for use in our reactors. What you give either you get back or you check the quantity at the end. THen we don't need Uranium. The Uranium cartel will be useless for us starting 2010.

Can we do so realistically? IMO we can..strong and effective political vision coupled with engineering common sense.

Just say bluntly..We want your PLUTIONIUM WEAPONS GRDE YOU DISMANTLING..for our civilian project. For energy. You are free to monitor it.

Possible?

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Postby Rishirishi » 19 Sep 2007 02:06

Anyone care to explain why India is importing coal, when it is such a coal rich country?

emsin

Postby emsin » 19 Sep 2007 02:16

Indian coal has low CV and high ash content. Most power plants import coal so do steel plants. Indian dug coal is inferior quality.

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Postby putnanja » 19 Sep 2007 02:18

Couple of reasons. One the calorific value of Indian coal is supposed to be low. But the other important reason is due to the coal mafia. The coal ministry is very reluctant to offer coal mines/coal allotments to power companies. In Bihar and Jharkhand where the majority of the mines are, there are entrenched mafia to whom regular payments need to be made. Quite a lot of coal is stolen/taken away by these mafia. I remember reading an article on it couple of years back.

Many power companies prefer to import coal than face the coal mafia.

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Postby Katare » 24 Sep 2007 03:44

Its cheaper for plants located close to seaports to import high grade coal than to haul low grade Indian coal to the coast on land.

Anyhow Chinese companies are having hard time in india.......they nder bid win the project and than are unable to execute them. They need to get the local managment (or JV) to better understand ground realities before they go on bidding and create a bad name for themselves.

Chhattisgarh govt invokes bank security on Chinese power firm

R Krishna Das / Raipur September 24, 2007



Co fails to meet deadline to start work, says state power board.

State-run Chhattisgarh State Electricity Board (CSEB) has decided to invoke the Rs 36-crore bank guarantee of the China National Machinery and Equipment Import and Export Company (CMEC) for failing to start construction work on the 600-Mw thermal power plants in Korba district, one of the state’s key industrial hubs.

This is the first time the state has invoked a security guarantee of a foreign company. Rejecting a request by CMEC for a two-month extension, the CSEB wrote to the Beijing branch of the Bank of China last week asking it to remit the security amount to the board’s banker, the State Bank of India.

CMEC, which had built a power plant in Korba for Vedanta-owned Bharat Aluminium Company Ltd (Balco), bagged the project two months ago. It outbid public sector engineering major Bharat Heavy Electricals Ltd (Bhel), quoting the lowest rate of Rs 3.61 crore per Mw for the two 300-Mw plants.

[u]Confirming the development, CSEB Chairman Rajib Ranjan told Business Standard: “Despite receiving the letter of intent, the company did not show any interest in starting the work on the basis of the low rate it had quoted, citing an increase in steel prices and other factors.â€

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Postby JTull » 28 Sep 2007 19:02

Would love this for A&N islands where most of the power generation is from Petroleum products. Though the tsunami threat make this improbable.

World's 1st floating N-plant in Russia

MOSCOW: The world's first floating nuclear power plant will be commissioned in 2011 in Russia's Arctic, the governor of the Arkhangelsk Region said.

"The construction of the first such power unit with 70 MW capacity was started this year and should be completed by 2010. The plant is most likely to operate in Severodvinsk (in Russia's Arkhangelsk Region). Its launch is planned for 2011," Nikolai Kiselyov said.

"A floating nuclear power plant is a new product on the global market, and I hope it will be in demand," he said.

Russia started building the plant at the Arctic port of Severodvinsk in April, and is expected to build six more nuclear power plants of its kind within a decade.

Earlier, a Russian nuclear official said over 20 countries were interested in buying Russia's floating nuclear power plants. The nuclear power plants are expected to be widely used in remote regions with power shortfalls and also in the implementation of projects requiring stand-alone and uninterrupted electricity supplies in the absence of a developed power grid.

The second floating nuclear power plant could be built near the Russky Island in the Primorye Territory in Russia's Far East in 2011. The region may host an Asian-Pacific Economic Cooperation summit in August 2012.

If Vladivostok does not host the summit, the nuclear power plant could be placed in Peveka, in the remote northeastern Chukotka Autonomous Area.

The first floating nuclear power plant will have a capacity of 70 MW of electricity, and about 300 MW of thermal power. The cost of the first plant is estimated at 10 billion roubles ($400 million), but could later be reduced to six billion roubles ($240 million).


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