2008年-世界发展银行全球_Regulatory_Study_to_Encourage_Energy_Efficiency_through_Investment_in_Rehabilitation_of_Coal-fired_Generation_Plant_in_India_237页_4mb

Summary of Regulatory Study to Encourage Energy Efficiency through Investment in Rehabilitation of Coal Fired Generation Plant in India

Core Content

This report presents a regulatory study funded by the Energy Sector Management Assistance Program (ESMAP), aimed at encouraging investment in Energy Efficiency through Rehabilitation and Modernisation (EE R&M) of coal-fired power plants in India. The study was conducted by IPA Energy Consulting in October 2008 and provides a comprehensive framework of regulatory options to improve the efficiency and viability of R&M projects in the Indian power sector.

Main Objectives

• To provide a coherent understanding of regulatory options that can encourage investment in energy-efficient R&M at the state level.
• To develop workable regulatory solutions based on both domestic and international best practices.
• To evaluate the feasibility of various regulatory approaches in addressing the barriers and constraints to R&M.

Key Findings

Context of Study

• India faces significant supply shortages in its power sector.
• The Government of India (GoI) is addressing this through new build programmes and rehabilitation of existing coal-fired plants.
• Over 65,000 MW of coal-fired capacity exists, with two-thirds owned by State Government utilities.
• Many of these plants are in poor condition, with low load factors and high station heat rates (up to 4,000 kcal/kWh).
• Current R&M activity is not keeping pace with the demand, with 13,000 MW targeted in the 11th Five-Year Plan.

Regulatory Barriers

• Gaps in evaluation framework: Current assessment of R&M options is limited to engineering or generator perspectives, not considering the benefits to discoms and consumers.
• Misalignment of risk and benefits: In the cost-plus model, the generator bears the risk of inefficient R&M decisions, while discoms reap the benefits.
• Institutional capacity issues: Lack of risk-sharing arrangements, low R&M capability, and limited vendor interest are significant barriers.

Evolving Power Market Context

• Over 80% of generation capacity is under cost-plus regulation, while new capacity is expected to follow market-based pricing.
• Different state-level power market conditions necessitate diverse regulatory approaches.
• The study identifies three broad regulatory approaches to address the diversity in market development.

Proposed Regulatory Options

Option 1: Modification of Traditional Cost-Plus Approach

• Discom-driven R&M options based on least cost power procurement plans.
• Cost recovery is limited to normative levels if performance falls below the set band.
• Existing returns continue for the generator.
• Tariff structure: Two-part tariff with incentives.
• Implementation prerequisite: Formal regulatory processes for least cost planning and investment approval.

Option 2: Advanced Cost-Plus with Price Certainty

• Performance Based Regulation (PBR) model, with price certainty over a longer control period.
• Operating norms are set for the extended plant life.
• Tariff structure: Two-part tariff with incentives and UI (Uniformity of Input) regime.
• Implementation prerequisite: Regulatory approval for investment and tariff setting.

Option 3: Marginal Cost Based Tariff Determination

• Generator-driven decision on whether to renovate, continue, or scrap the plant.
• The generator is contractually obligated to supply a pre-agreed quantity at pre-agreed rates.
• Additional generation is priced at marginal cost.
• Tariff structure: Single part tariff for committed supply.
• Implementation prerequisite: Regulatory approval not required, as tariff is independent of plant costs.

Variants for Private Sector Participation

• Option 2B (IPP-type model): R&M and O&M are bundled in a competitive bidding process.
• Option 3B2 (Generation franchise model): A private sector investor is given a franchise for a pre-determined time period, with PPA for base and additional supply.

Evaluation of Options

• Option 2 and 3 offer better alignment of benefits and risks between generator and discom.
• Option 1 places more responsibility and risk on the discom, which is less aligned with the current regime.
• Option 3 shifts significant responsibility and risk to the generator, encouraging efficient decision-making.
• A financial model was used to evaluate the cost-benefit of the options, with Option 2 showing better benefit sharing.

Recommendations

• Regulators should analyze the impact on power purchase prices and other relevant factors before adopting any option.
• A calibrated transition path is necessary for the power market.
• Pilot projects should be implemented to test the regulatory options and demonstrate their potential benefits.
• Private sector participation is crucial in addressing institutional capacity constraints and risk perceptions.

Conclusion

• The study highlights the need for diverse regulatory options to address the heterogeneous power market conditions in India.
• The three options are not mutually exclusive and can coexist based on the state-specific context.
• The regulatory framework must evolve to incorporate performance-based incentives and market-oriented pricing to accelerate energy efficiency and rehabilitation of coal-fired plants.