In India's power crisis, China sees a business opportunity

[Ray]

This was a decision taken by the Cabinet recently

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The cabinet has approved a 21 per cent duty to protect the domestic power equipment makers and offer a level-playing field.

Imported equipment will attract a 5 per cent basic customs duty, 12 per cent counter-vailing duty and 4 per cent special additional duty, sources said.

At present, projects with less than 1,000 MW of generation capacity have to pay 5 per cent duty on equipment imports, while those above this limit enjoy duty-free imports.

The duty protection is likely to benefit firms such as L&T-Mitsubishi Heavy Industries, Bharat Forge-Alstom, Ansaldo-GB Power, Toshiba-JSW, Thermax-Babcock and BGR-Hitachi, which had entered into joint ventures to produce power equipment in the country.

However, it would affect Chinese power generation equipment firms such as Shandong Electric Power Construction, Shanghai Electric Group, Dongfang Electric and Harbin Power Equipment, and their Indian customers such as Reliance Power, Lanco Infratech and Adani Power. The duty would result in increased cost of equipment leading to higher power tariffs.

Private power generation companies expressed dissatisfaction with the government's decision.

"It will increase the cost of power. The government has only gone by the protection of domestic equipment makers. They have not really addressed the concerns of private power generation companies," Association of Power Producers director-general Ashok Khurana said.

Cabinet prop for selloff, power gear

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It will obviously increase cost, but will add to reliable power supply.

 

[Bhadra]

some asses need to be kicked and get some real management folks into this - or have they ALL run to the usa ?

stop looking at the electrical connections when the the real failure is the POWER grid at the POLITICAL levels

- that is where the failure is really is ! - the electrical failures are just SYMPTOMS of the other failure

india will have to get serious about facing political reform - avoiding the subject will simply result in more symptoms surfacing one way or another ...be it power failure, water failure , metro etc etc !

Roma all govt deptts in India including electricity etc are 50 per cent reservation ... six times failures in their degree.. and we expect them to manage such a huge national resource. On top of that they are headed by farting bureaucrats..

So supply grid also farts....

 

[pmaitra]

Power generating equipment and auxiliaries play a critical role.

Therefore, while installing these equipment, it becomes necessary to ensure that while advisable to buy cheap, it should also be reliable.

It is like expecting a cheaper car to compete with the efficiency of a Mercedez Benz.

Sir, I beg to differ. It is a common (mis)conception that anything that is cheap is bad. Not quite. A Honda Civic is much cheaper than a similar sized BMW 325i, but is way more reliable. Reliability has got nothing to do with price. The simplest solution that gets the job done should be the preferred solution. The simplest solutions often turn out to be cheap.

This might interest you: Occam's razor

 

[Ray]

Sir, I beg to differ. It is a common (mis)conception that anything that is cheap is bad. Not quite. A Honda Civic is much cheaper than a similar sized BMW 325i, but is way more reliable. Reliability has got nothing to do with price. The simplest solution that gets the job done should be the preferred solution. The simplest solutions often turn out to be cheap.

This might interest you: Occam's razor

You seem to have missed the operational sentence of my post - while advisable to buy cheap, it should also be reliable.

The allegory of cheap car to a Mercedez Benz is indicative of the number of redundancies that are built in to take on emergencies and shortfalls.

Calcutta was not affected by the power cut because it had isolation mode built in!

Now, the Indian power generation industry is running like headless chicken to install the same!

That is what happens when you cut corners and buy cheaper equipment - power failure!

 

[pmaitra]

You seem to have missed the operational sentence of my post - while advisable to buy cheap, it should also be reliable.

The allegory of cheap car to a Mercedez Benz is indicative of the number of redundancies that are built in to take on emergencies and shortfalls.

Calcutta was not affected by the power cut because it had isolation mode built in!

Now, the Indian power generation industry is running like headless chicken to install the same!

That is what happens when you cut corners and buy cheaper equipment - power failure!

I will have to disagree with your example of Merc-Benz.

The statement "while advisable to buy cheap, it should also be reliable," is countered by, "simpler systems tend to be both reliable, and oftentimes cheap."

Gong back to your example of Merc-Benz, over-complicating things will make equipment vulnerable to failures. Murphy's Law.

I completely disagree with the last statement, but then, that's me.

 

[Ray]

You are welcome to disagree, but when you are in Kolkata, please go to the CESC plants and see for yourself!

It is a private sector enterprise and they are with the best of equipment.

Hence, we were not affected as was half the country.

And then visit the Govt generation plants anywhere in the country and see the difference.

 

[pmaitra]

You are welcome to disagree, but when you are in Kolkata, please go to the CESC plants and see for yourself!

It is a private sector enterprise and they are with the best of equipment.

Hence, we were not affected as was half the country.

And then visit the Govt generation plants anywhere in the country and see the difference.

I am sorry, but I don't quite see how my visiting CESC plants will prove anything to the contrary of what I have said. Will that prove that cheap is bad, and expensive is good? I don't think so.

Also, what defines 'best equipment?'

 

[Ray]

Capability to suit the Indian environment is what decides the best equipment.

In a perfect world, one can do without less.

 

[Bhadra]

Capability to suit the Indian environment is what decides the best equipment.

In a perfect world, one can do without less.

Import of Chinese equiment will doom Indian infrastructure..

 

[Daredevil]

Sir, I beg to differ. It is a common (mis)conception that anything that is cheap is bad. Not quite. A Honda Civic is much cheaper than a similar sized BMW 325i, but is way more reliable. Reliability has got nothing to do with price. The simplest solution that gets the job done should be the preferred solution. The simplest solutions often turn out to be cheap.

This might interest you: Occam's razor

This is just semantics.

The Chinese power equipment is cheap because they cut corners with little or no quality control leading to reliability issues and frequent breakdowns.

OTOH, BHEL power equipment is reliable and efficient because the components used are of high quality and therefore expensive.

If you apply the car example to a cheaper Nano to relatively little more expensive maruti Alto, you argument will be turned on its head because Nano is known to have certain reliability issues. As l said it's mere semantics. Message is same. You get what you pay for. Same with Chinese power equipment.

 

[roma]

it could actually be the inclusion of some china made components or systems that were designed to cause this collapse - not too far fetched an idea because we already know that prc made products and integrated circuits are installed in to US systems eg airplanes and are specifically an deliberately designed to fail !

 

[pmaitra]

This is just semantics.

The Chinese power equipment is cheap because they cut corners with little or no quality control leading to reliability issues and frequent breakdowns.

OTOH, BHEL power equipment is reliable and efficient because the components used are of high quality and therefore expensive.

If you apply the car example to a cheaper Nano to relatively little more expensive maruti Alto, you argument will be turned on its head because Nano is known to have certain reliability issues. As l said it's mere semantics. Message is same. You get what you pay for. Same with Chinese power equipment.

Do you have any evidence that Chinese electrical equipment are of low quality? If so, why isn't there any blackout in PRC?

How would you convince anyone that BHEL's equipment are better than the Chinese? Do you have any data in hand, or are you being imaginative?

Coming to cars, do you agree or disagree with my comparison between Honda Civic and BMW 325i?

Tata Nano was an alternative to a motorcycle, and should never have been brought into this discussion. However, since you brought it up, well, how about include the auto-rickshaws in the comparison, and see whose argument turns over its head.

 

[Cliff@sea]

Yeah well . . . . . .Let's not indulge ourselves in this stupid Pakistani habit of blaming the world for India's problems

Its quiet clear here that the fault primarily lies with us . . .

Even if we accept this unlikely theory that it was shoddy Equipment from China that failed us

Did the GoI representatives not know what they were getting at those throw away prices .

If Indians wanted to buy shit, at shitty prices . . . . its India's fault .

 

[Ray]

China's Power Outages Come Early and Often

Every summer for the past decade, China has had to endure power shortages in its most heavily industrialized provinces, as air conditioning use drove electricity consumption sharply upward. This year the government started rationing power in April. All told, China could face an electricity shortfall of 30 million kilowatts this summer, warned the China Electricity Council, the industry group for operators of power plants and utilities, on Apr. 28.

Companies are starting to feel the pain. Shane Lou, a small factory operator in Zhejiang province, now has to suspend operations every Thursday and Friday. He says he may have to shutter his plant for good.

Things are dire because coal prices in China are at a more than two-year high, in part because of flooding in Queensland, Australia, a top supplier. (Coal still generates about 80 percent of power in China.) Repairs on the railway from coal-rich Shanxi province in central China are not complete, and demand for electricity rose 13 percent in the first quarter. Worst of all, power-generating plants are running at only about half of capacity because of financial pressures, estimates Xizhou Zhou, the head of China energy at the Beijing office of IHS Cambridge Energy Research Associates (IHS). "It's not as if these plants are maxed out," he says.

China's half-liberalized energy market is responsible for the mess. While power-generating companies have to buy coal at market rates, they still must sell power to utilities at regulated prices that don't cover costs. Losses among China's five big state-controlled power producers, including China Huaneng, China Datang, and China Guodian, totaled 13 billion yuan ($2 billion) last year, says Nate Taplin, an energy analyst at economic consultants GaveKal Dragonomics in Beijing. Not surprisingly, the power companies won't produce more, since that will just increase losses. Neither the electricity council nor the five big power companies responded to faxed questions.

The obvious remedy is to let the power companies charge more. Yet officials fear that pricier electricity would fan inflation, now at more than 5 percent, which would then increase the risk of social instability. "The government needs power, and it needs factories to run," says Dragonomics' Taplin. "But other than raising prices, there is very little else they can do." A recent small hike in the power price charged to grid operators was too little to make a difference, he adds.

The electricity council's warning of shortages was a clear message to regulators that they should hike power prices or face the consequences, both Taplin and Zhou say. "These power companies are totally reliant on the government to make money. But they can control the amount of coal they buy and the power they produce," says Taplin. "It's kind of a blackmail situation."

The bottom line: Power shortages in China have caused brownouts and pit power generators, who want to raise prices, against regulators.

China's Power Outages Come Early and Often - Businessweek

If power generating equipment run at half capacity, then the chances of failure reduces or is non existent. If load is less and power generation at half capacity, there is ample scope of rotating and giving rest to the a batch of equipment and there is more time for detailed inspection and maintenance.

 

[Ray]

Chinese equipment is 20-25 percent cheaper than domestically manufactured equipment. Indian power firms import about 50 percent of the total 92,717 MW power equipment orders placed in the 11th (2007-12 ) and 12th (2012-17 ) five-year Plans. Out of the total imports, the Chinese share is over 35,000 MW.

Light at the end of a dark tunnel «

 

[sob]

Do you have any evidence that Chinese electrical equipment are of low quality? If so, why isn't there any blackout in PRC?

How would you convince anyone that BHEL's equipment are better than the Chinese? Do you have any data in hand, or are you being imaginative?

Coming to cars, do you agree or disagree with my comparison between Honda Civic and BMW 325i?

Tata Nano was an alternative to a motorcycle, and should never have been brought into this discussion. However, since you brought it up, well, how about include the auto-rickshaws in the comparison, and see whose argument turns over its head.

PM, I will give you an example. As per the latest GOI guidelines to improve efficiency and reduce pollution the Government has specified that the minumum size of a thermal power station unit will be 660 MW, or in other words only Super Critical Thermal plants will be allowed.

The standards for the Heat Rate for Super Critical Units is

Heat rate at 100% MCR with motor driven BFP: 1,810 kcal/ kWh.
Heat rate at 100% MCR with turbine driven BFP: 1,850 kcal/ kWh.with a heat rate of 1850 Kcal/kwh

Chinese do not manufacture equipment with Heat Rates ( level of efficiency) less than 1860 Kcal/kwh, so you can understand about the quality levels.

The Chinese firms can supply equipment with these specs. but then they will not be competitive anymore.

 

[sob]

There was a study done on the life cycle cost of equipment with different heat rates.

Global investment research firms like CLSA and JM Financial have conducted studies to assess comparative energy efficiency of equipment from Bhel versus those from Chinese makers.

"Our analysis of the 2009-10 secondary fuel oil (SFO) consumption by thermal plants supports arguments that Bhel's equipment quality is better and lifecycle costs are lower. Average SFO consumption at Chinese sets stands at 20.7ml/kWh vis-a-vis India's average of 1.5ml/kWh, CERC (Central Electricity Regulatory Commission) benchmark of 1.0ml/kWh and NTPC-Bhel plants' average of 0.65ml/kWh," JM Financial said in a recent report.

"Despite the 15% initial savings on capital costs of Chinese power equipment, the discounted or lifecycle cost is lower for Bhel equipment due to lower operational costs, better plant load factor and lower downtime," the report said.

Link to the article /: http://www.financialexpress.com/news/equipment-rule-to-check-china-boost-power-tariffs/876052/0

 

[sob]

Another similar report based on a visit by officials from CEA and NTPC to thermal plants in China

Chinese power equipment are not energy efficient - Indian Express

 

[Ray]

Another similar report based on a visit by officials from CEA and NTPC to thermal plants in China

Chinese power equipment are not energy efficient - Indian Express

But they are cheap!

 

[sob]

They are cheap to buy, but on a life cycle cost basis they are more expensive.