Reduction Barriers

Study Report
Reduction of Barriers to Renovation

and Modernisation Interventions in
Thermal Power Stations in India
Includes:
Guidelines for Risk Identification and Mitigation in R&M Projects in
Thermal Power Stations in India
Guidelines for Early Identification of Potential Technical Surprises in
R&M Projects and Ways of Addressing Them
Prepared By:
Mercados Energy Markets India Private Ltd.
Under
India: Coal Fired Generation Rehabilitation Project
(November 2013)
Central Electricity Authority

CENTRAL ELECTRICITY AUTHORITY AF MERCADOS EMI
Study Report
Reduction of Barriers to R&M

Interventions in Thermal Power
Stations in India
Prepared By:
Mercados Energy Markets India Private Ltd.
Under
India: Coal Fired Generation Rehabilitation Project
Submitted to:
Central Electricity Authority

(November 2013)
Report on Reduction of Barriers to R&M Interventions in Thermal Power Stations in India 2

Disclaimer
The information, statements, statistics and observations (together the Information)

contained in this Report have been prepared by AF Mercados EMI from publicly available
material, discussions held and information provided by the Client and its stakeholders.
AF Mercados EMI does not express an opinion as to the accuracy or completeness of the
information provided, the assumptions made by the Client or related parties that
provided the information or any conclusions reached by the Client and its related parties.
AF Mercados EMI disclaims all liability and responsibility of errors or omissions in the
content contained in this report.

Table of Contents
Executive Summary
Chapter 1 - Introduction...................................................................................21
Chapter 2 - Approach and Methodology ..............................................................36

Chapter 3 - R&M Process Cycle .........................................................................55
Chapter 4 - Risk Identification and Mitigation Framework .....................................59
Chapter 5 - Risk Management Guidelines ...........................................................63
Chapter 6 - Risk Heat Matrix and Management Plan ........................................... 118
Chapter 7 - Framework for Early Identification and Addressal of

Technical Surprises ....................................................................... 129
Chapter 8 - Identification of Technical Surprises along with its Root
Cause and Impact ........................................................................ 131
Chapter 9 - Strategies for Early Identification of Technical Surprises

and Ways of Addressing Them ....................................................... 144
Chapter 10 - Global R&M Experience: Case Studies from selected

countries ..................................................................................... 177
Chapter 11 - Lessons for India based on review of International Best

Practices in R&M........................................................................... 228
Chapter 12 - Estimation of the Potential Reduction in GHG Emissions on

account of Implementation of Energy Efficient R&M .......................... 249
Chapter 13 - Possible Framework for Monetizing the GHG Emission

Reduction .................................................................................... 260
Chapter 14 - Conclusion ................................................................................... 290
Annexure 1 - Guidelines for Risk Identification and Mitigation in R&M

Projects in Thermal Power Stations in India ..................................... 292
Annexure 2 - Guidelines for Early Identification of Potential Technical

Surprises in R&M Projects and Ways of Addressing Them .................. 323
Annexure 3 - List of R&M/LE Plants for Estimating GHG Reduction

Potential ..................................................................................... 343
References ............................................................................................... 351

List of Tables
Table ES: Potential Risks involved in R&M Process along with Key Strategies
to Handle Risks and Surprises 15
Table 1: Achievement of R&M and LE works in various Plan periods 29
Table 2: Emerging Power Sector Market Scenario and Implications

for R&M 30
Table 3: Attributes of the identified plants 38
Table 4: List of entities consulted 41
Table 5: List of Task Force Members 43
Table 6: Attributes of the identified plants 46
Table 7: Deviation of operating heat rate with the design heat rate
for NTPC stations 50
Table 8: Pre Post R&M Experience of different Power Plants 51
Table 9: Design SHR and Auxiliary Consumption for various capacity

groups 53
Table 10: Potential Risks involved in R&M Process 63
Table 11: Technical Study of Thermal Plants 75
Table 12: Risk Management Plan 120
Table 13: Technical Surprises encountered during R&M Intervention 131
Table 14: Other components/equipments for potential technical

surprises 138
Table 15: Time gap between studies and Execution of Work 140
Table 16: Communication and Review Matrix 150
Table 17: Areas of potential surprises in various components of plant

system along with examples and key strategies to address
them 153
Table 18: Overview of Power Sector of different countries 180
Table 19: Overall Project References 186
Table 20: Power plant parameters Pre and Post R&M 194
Table 21: Comparative analysis of R&M experience in different

countries 216
Table 22: Measures to manage risk and technical surprises based on

international review 231
Table 23: Summary of the technological options along with efficiency

potential identified by NETL for different power plant
components 238

potential identified in SKM report for different power plant
components 239
Table 25: Summary of the technological options along with the

efficiency potential identified in S&L report for different
power plant components 240

potential identified in APEC report for different power plant
components 241
Table 27: Standard menu of options for energy efficiency focused

rehabilitation and life extension for different power plant
components based on international review 242
Table 28: Source of Production for different types of Greenhouse

Gases (GHG) 249
Table 29: R&M/LE Potential in 12th and 13th Plan 254
Table 30: Reduction Norm for thermal power plant under PAT
Scheme 265
Table 31: Technological Measures and Methodologies Applicable

under small scale CDM for R&M Projects 273
Table 32: Technological Measures and Methodologies Applicable

under CDM for R&M Projects 274
Table 33: Case Study on Budge Budge Generating Station (BBGS),

CESC Limited 282
Table 34: Case Study on AzDRES Energy Efficiency Improvement 282
Table 35: Case Study on Shandong Shiheng Power Plant Energy

Efficiency Improvement Project 283
Table 36: Case Study on Energy efficiency improvements of Mae Moh

Power Plant through retrofitting turbines in Thailand 284
Table 37: Case Study on #2 Steam Turbine Retrofit Project of Tianjin

Guohua Panshan Power Plant Co., Ltd 285
Table 38: Areas of potential surprises in various components of plant

system 327

List of Figures
Figure 1: Energy and Peak Deficit in India 23
Figure 2: Planned capacity and achievement of LE and R&M works

during 10th and 11th Plan 29
Figure 3: Approach for the study 36
Figure 4: List of units to be considered for review of R&M experience

with LE works as per the Terms of Reference 37
Figure 5: Approach and Methodology 44
Figure 6: Selected countries and power plants for Review of R&M

experience 45
Figure 7: R&M Process Cycle 58
Figure 8: Risk Heat Map for a typical R&M Project 119
Figure 9: Coal reserves by region and type (end 2009) 177
Figure 10: Share of different fuels in total electricity generation

worldwide 178
Figure 11: World CO2 emissions from fuel combustion by sector in

2009 178
Figure 12: Efficiency of coal fired power generation in various

countries 179
Figure 13: ETU II Emissions pre and post R&M 195
Figure 14: Technical Results achieved during the Trial Run 202
Figure 15: Indias CO2 emissions from fuel combustion by sector in

2009 250
Figure 16: Profile of operating fleet of coal fired power plants in India 251
Figure 17: Vintage of the operating fleet of coal fired power plants in
India 252
Figure 18: Share of coal fired generation units in terms of capacity in

India 252
Figure 19: CO2 emission reduction potential through R&M/LE of coal

based power plants in India in the 12th Plan 255

based power plants in India in the 13th Plan 255
Figure 21: Capacity wise break up for state sector coal based units
identified for R&M/LE during 12th Plan 256


based power plants in the state sector of India in the 12 th
Plan 256
Figure 23: Capacity wise break up for state sector coal based units

based power plants in the state sector of India in the 13 th
Plan 257
Figure 25: Capacity wise break up for central sector coal based units

based power plants in the central sector of India in the 12 th
Plan 258
Figure 27: Capacity wise break up for central sector coal based units

based power plants in the central sector of India in the 13 th
Plan 259
Figure 29: Global Carbon Market 260
Figure 31: Perform, Achieve and Trade Scheme Phase 264
Figure 31: Concept of Target, Compliance, ESCerts and Penalty 265
Figure 32: Procedure for CDM and VCS 266
Figure 33: R&M-CDM Process Cycle 270
Figure 34: Demand and Supply Imbalance and Declining Prices of

CERs 286

List of Boxes
Box 1: Benefits of undertaking R&M of old thermal power plants 23
Box 2: Approach adopted for identification of units for undertaking

R&M 65
Box 3: Lack of confidence and uncertainty with regard to R&M

Projects 68
Box 4: Need for Experience Sharing 70
Box 5: Inadequate Assessment for R&M 74
Box 6: Evaluation of different R&M options 78
Box 7: Limited capacities of the Utilities in undertaking R&M works 81
Box 8: Lack of funding for undertaking R&M (Thermal Power

Station - BTPS) 84
Box 9: Vendor Participation in R&M Bidding Process 88
Box 10: Higher than expected price discovery 91
Box 11: Rebidding of R&M Package 92
Box 12: Time gap between studies and Execution of Work 97
Box 13: Occurrence of Technical Surprises 99
Box 14: Delay in Supply of Material during Execution 101
Box 15: Lack of Penalty Clause for Delay in Completion of Work 103
Box 16: Need for Quality Control and Quality Assurance 105
Box 17: Formulation of CSR policy 107
Box 18: Delay in obtaining shutdown for R&M works during

execution 108
Box 19: Weak O&M practices of various State Generation Companies

in India 110
Box 20: Delay in capital overhaul post R&M of the unit 111
Box 21: Adequate skills to undertake O&M, post R&M of the plant 111
Box 22: Experience of Engaging Specialised Company for O&M of

Coal based Power Plant in India 112
Box 23: O&M supervision included in the contract of executing

agency 113
Box 24: Post R&M Guarantees Not Achieved 114
Box 25: Absence of post evaluation of R&M works 117

List of Abbreviations
AAUs Assigned Amount Units CDM EB CDM Executive Board
Central Electricity
ABB Asea Brown Boveri CEA
Authority
Condensate Extraction
AHP Ash Handling Plant CEP
Pump
Central Electricity
AOH Actual Operating Hour CERC
Regulatory Commission
Certified Emission
AOP Auxiliary Oil Pump CERs
Reductions
Asia-Pacific Economic
APEC CHP Coal Handling Plant
Cooperation
B&W Babcock & Wilcox CM Condition Monitoring
Bureau of Energy
BEE CO Carbon Monoxide
Efficiency
BFP Boiler Feed Pump CO2 Carbon Dioxide
Bharath Heavy Electricals Central Pollution Control

BHEL CPCB
Limited Board
Central Power Research

BoP Balance of Plant CPRI
Institute
Chhattisgarh Power
Bihar State Electricity
BSEB CSPGCL Generation Company
Board
Limited
Boiler, Turbine and

BTG CWP Circulating Water Pump
Generator
Barauni Thermal Power

BTPS DC Designated Consumers
Station
Control and
C&I DCS Digital Control System
Instrumentation
Designated Operational
CA Condition Assessment DOE
Entity
Comptroller and Auditor

CAG DPR Detailed Project Report
General
Clean Development Dispute Resolution

CDM DRC
Mechanism Committee

Gujarat State Electricity

EA Electricity Act GSECL
Corporation Limited
Energy Efficient
EE R&M Renovation & GWh GigaWatt hour
Modernization
Energy Efficiency
EESL GCC Gross Coal Consumption
Services Limited
Engineering Procurement
EPC HFO Heavy Furnace Oil
and Construction
ESCert Energy Saving Certificate HP High Pressure
Energy Sector
Haryana Power Generation
ESMAP Management Assistance HPGCL
Company Limited
Program
ESP Electrostatic Precipitator HQ Headquarter
EU European Union I&C Instrumentation & Control
EUA EU Allowance IBR Indian Boiler Regulations
International Bank for

Electricity Generation
EUAS IBRD Reconstruction and
A.. Turkey
Development
EU Emission Trading
EU-ETS ID Induced Draft
Scheme
Interest During
FD Forced Draft IDC
Construction
Flue Gas International Energy

FGD IEA
Desulphurization Agency
Failure Modes and Effects

FMEA IEX Indian Energy Exchange
Analysis
Global Environment Indo-German Energy

GEF IGEN
Facility Program
GENCO Generation Company IP Intermediate Pressure
GHG Green House Gases IRR Internal Rate of Return
Guru Nanak Dev Thermal

GNDTP ISB Intelligent Soot Blowers
Plant
Institute for Studies and

GoI Government of India ISPE
Power Engineering

JI Joint Implementation Mt Million Tonne
JV Joint Venture MU Million Units
Kanti Bijlee Utpadan

KBUNL MW Megawatt
Nigam Limited
kCal Kilo Calorie MYT Multi-Year Tariff
NTPC Alstom Power

kJ Kilojoule NASL
Services Private Limited
Koradi Thermal Power

KTPS NCDMA National CDM Authority
Station
kWh Kilowatt NDT Non-Destructive Test
LDO Light Diesel Oil NEP National Electricity Policy
National Energy
LE Life Extension NETL
Technology Laboratory
Life Extension and National Load Despatch

LE&U NLDC
Uprating Centre
LP Low Pressure NOx Nitrous oxide
Lease, Rehabilitate,
LROT NPV Net Present Value
Operate and Transfer
Low Temperature Super

LTSH NRV Non Return Valve
Heater
Milligrams per nominal NSW New South Wales GHG

Mg/NM3
cubic meter GHGAS Abatement Scheme
MJ Megajoule NTP National Tariff Policy
National Thermal Power

MoP Ministry of Power NTPC
Corporation
Memorandum Of
MOU O&M Operation & Maintenance
Understanding
Madhya Pradesh Power

Original Equipment
MPPGCL Generation Company OEM
Manufacturer
Limited
Maharashtra State
MSEB P. A. Fan Primary Air Fan
Electricity Board
Maharashtra State Power

MSPGCL Generation Corporation PAC Provisional Acceptance
Limited

Perform Achieve and

PAT SO2 Sulphur Dioxide
Trade
PDD Project Design Document STEAG Steinkohlen-Elektrizitt AG
Performance Evaluation
PET SUBC Sub Critical
Test
Power Finance
PFC SUPERC Super Critical
Corporation
PLF Plant Load Factor TCE Tata Consulting Engineers
Perusahaan Listrik
PLN TOP Turbine Oil Pump
Negara (Indonesia)
Punjab State Power

PSPCL TPE Techno Prom Export
Corporation Limited
PXIL Power Exchange of India TPP Thermal Power Plant
Panipat Thermal Power

PTPS TPS Thermal Power Station
Station
Quality Assurance
QAC TWh Terawatt hour
Consultants
United Nations Framework

Renovation &
R&M UNFCCC Convention on Climate
Modernization
Change
Regional Greenhouse Gas Uttar Pradesh Power

RGGI UPPCL
Initiative Corporation Limited
Uttar Pradesh Rajya

RLA Residual Life Assessment UPRVUNL Vidyut Utpadan Nigam
Limited
Uninterrupted Power
RMU Removal Unit UPS
Supply
Rashtriya Shram Vikas Uninterrupted Power

RSVY UPS
Yojana Supply
S&L Sargent & Lundy LLC VCS Verified Carbon Standard
Specific Energy Voluntary Emissions

SEC VERs
Consumption Reductions
SHR Station Heat Rate VFD Variable Frequency Drives
West Bengal Power

Sinclair Knight Merz Pty.
SKM WBPDCL Distribution Company
Ltd
Limited

Executive Summary
Planning and implementing Renovation and Modernisation (R&M) projects is

often affected by occurrence of adverse events that can derail the objectives of
the project. Identifying and mitigating project risks is crucial to successful
management of R&M projects. For this, a well-structured and documented Risk
Management Framework for each stage of the process is of utmost importance.
A thermal power plant undergoing R&M, despite undertaking prior plant

assessment, might face unforeseen events after the unit has been shut down
and opened up for R&M. Such unforeseen events - characterized as Technical
Surprises - act as major barriers in up-scaling R&M of thermal power plants.
With this background the objective of the study was to identify key risks and
surprises faced in planning and implementation of R&M of thermal power
projects, and develop guidelines to mitigate such risks and technical surprises.
To achieve the above objectives, a case study based approach was adopted
wherein select plants were identified across the country by the CEA for
undertaking a detailed assessment of the experience of these plants in executing
R&M works. Visits were undertaken to all these plants and discussions were held
with concerned officials dealing with R&M including plant/unit level engineers,
operation and maintenance department and commercial department to
understand their experience in planning, tendering, procurement, executing R&M
program and O&M of the units subsequent to R&M. Study of these units also
enabled the project team to understand the type of technical surprises faced by
the utilities, the root causes, impact on the project. The team investigated the
existing mechanism adopted by utilities to handle such surprises. The team also
undertook extensive stakeholder consultation to understand perspectives of
various stakeholders. The stakeholder group included the State Generating
Stations, Central and State Electricity Regulatory Commissions, Equipment
Suppliers, Design Consultants, Implementation Support Consultants, Sector
Experts, Funding Agencies and the CEA. The study team also evaluated
international experiences from Czech Republic, Poland, Turkey, Romania,
Indonesia and South Africa, and visited Poland and Czech Republic to obtain the
relevant experiences from personnel involved in R&M of projects in these
countries.
Basis the analysis and consultations a detailed set of guidelines for managing
technical surprises was evolved. The process of finalisation of the guidelines
involved intense consultation with the members of the Task Force, constituted
by the CEA for Promotion of Energy Efficiency R&M in Thermal Power Stations in
India under the Chairmanship of Member (Thermal), CEA.
The final outcomes of the study are a comprehensive report that includes two
detailed guidelines, namely the Guidelines for Risk Identification and Mitigation
in R&M Projects in Thermal Power Stations in India and Guidelines for Early

Identification of Potential Technical Surprises in R&M Projects and Ways of

Addressing Them. The flow of the guidelines has been mapped in accordance to
the different stages in R&M projects i.e. Identification Stage, Assessment Stage,
Planning Stage, Execution Stage and Closure Stage. Under each stages of R&M
life cycle, the guidelines contain the key risks that can arise during that stage,
its root cause, its impact and key strategies to mitigate the risks. The key risks
in R&M projects are categorized as Management Risk, Technical Risk,
Operational Risk, Institutional Risk, Market Risk, Regulatory Risk, Contractual
Risk, Funding Risk and Socio-Environmental Risk. The guidelines are intended to
help the utilities in advance in identifying and understanding the risks that may
arise as the R&M project progresses and can take corrective remedial actions for
minimisation of such risks.
The key risks identified in the study, categorized according to different stages
of the R&M life cycle along with appropriate strategies to handle the same are
indicated in the table below.
Table ES: Potential Risks involved in R&M Process along with Key Strategies to
Handle Risks and Surprises
S. Category of Strategies to handle risks
Stages Risk
No Risk and surprises
Reactive Strengthening of internal data

approach to acquisition, monitoring and
1 Management risk
identification of alert systems to track unit
plant for R&M performance. (Risk Avoidance)
Lack of long
Establishment of rationale for
term
R&M project at the state level
generation plan
2 Management Risk taking into account all the
and awareness
alternative competing options.
of available
(Risk Avoidance)
market options
Identification
Need for Experience Sharing
and Dissemination (Risk
Mitigation)
Lack of
Need to Develop Market for
confidence and
R&M in the Country by
3 Market Risk uncertainty
communicating the overall
with regard to
market size and addressing
R&M projects
concerns of various
stakeholders (Risk
Avoidance)
Delay in Advance Planning for Scheduling

obtaining unit of Technical Studies so as to
shut down for either coincide the timing with the
4 Institutional Risk
undertaking annual/capital overhaul or provide
technical advance notice to the discom for
Assessment studies such shutdown (Risk Avoidance)
Inadequate Comprehensive Studies for the

technical unit planned for R&M should be
5 Technical Risk
assessment/stu mandatory covering both Main
dies Plant and Balance of Plant.

Proxy assessment should be

avoided. The assessment
should cover review of O&M
processes as well. (Risk
Avoidance)
Comprehensive Identification
and Assessment of Options
Weak analytical
including computation of
framework for
6 Management Risk financial returns, payback
selection of
period, shutdown time required
R&M options
and conformance to the set
objectives.(Risk Avoidance)
Appropriate
Practice of obtaining in-principle
Commission not
approval from the Appropriate
7 Regulatory Risk apprised of the
Commission should be
R&M project
encouraged.(Risk Avoidance)
plan
Creation of dedicated R&M

Cell by the utility both at the
Limited headquarter and the plant
capacity of level. (Risk Avoidance)
8 Operational Risk utilities in Engaging Specialized
undertaking Consultants especially
R&M works design and implementation
support consultants. (Risk
Avoidance)
Scope of Work to be as precise

and comprehensive as possible
including roles and responsibilities
of each entity involved in the
Weakly defined contract. General statements
9 Contractual Risk
scope of work should be avoided. The scope of
work should be built on the
comprehensive studies conducted
and strengthened by root cause
analysis. (Risk Mitigation)
Increased proliferation of
innovative financing approaches
/models like LROT and JVs
coupled with creation of
Utility unable to awareness about benefits of
10 Funding Risk
mobilise funds R&M through pilot studies to be
taken up. Standard bid
document to include terms and
conditions for the above
models. (Risk Mitigation)
Focussed efforts should be

taken up to involve potential
Low level of
players in the R&M market by
participation by
the utilities and the CEA.(Risk
11 Planning Market Risk the vendors in
Mitigation)
the bidding
Opportunity origination through
process
designated state plans and
regulatory measures.

Standard Contracts and Bid

Documents (Risk Mitigation)
Bidding to be adopted as
mode of allocation (Risk
Higher than
Mitigation)
12 Market Risk expected price
Stringent Guarantees to be
discovery
avoided (Risk Mitigation)
Adherence to O&M plan and
minimizing time gap (Risk
Mitigation)
Rebidding should ideally be

avoided through robust
Rebidding/Re- project preparation. (Risk
award/Delay in Acceptance)
Market and
13 award of R&M
Operational Risk Time bound bid process and
packages/contr
activities (Risk Avoidance)
act
Standardized bid document
(Risk Avoidance)
Implementation
To avoid conflict of interest, a
contract
single entity should generally
awarded to
be avoided to assume both the
14 Management Risk vendor involved
role of design consultant as well
in carrying out
as the supplier. (Risk
technical
Avoidance)
studies
Creation of clearly defined

decision making and reporting
Weak decision-
structures with nominated
15 Management Risk making
officials authorized to undertake
framework
decisions related to R&M (Risk
Mitigation)
Preventive Measures
Robust studies; Strong
internal data reporting &
alerts; Good O&M practices
including during interim
stage; Dedicated R&M team;
Minimizing the time gap b/w
studies & execution and Site
Execution inspection by vendors
Occurrence of
Measure to Manage
16 Technical Risk technical
Surprises- Defining a
surprises
technical surprise plan
upfront; Creation of dispute
resolution mechanism with
clear decision making
authority; Provision of
Unit/rate contractors;
Supplier strategy to deal
with surprises and Creation
of Contingency fund
Weak dispute Creation of Dispute Resolution

17 Contractual Risk resolution Committee at the start of
mechanism project to address disputes

constraining the between the Utility and the

execution of Contractor in a timely manner
work (Risk Mitigation)
Availability of key
components should be
ensured before the start of
the project and should be in
Mismatch (or accordance with the pre-
delay) in supply defined plan finalized before
of critical the commencement of
18 Market Risk work.(Risk Mitigation)
equipment and
the shutdown Provision of Penalties for
period delay in completion of work.
(Risk Sharing/Transfer)
Sequential delivery of
materials to the R&M site
(Risk Mitigation)
Approval of detailed quality

Weak
plans and Engaging Quality
Supervision,
19 Operational Risk Control and Quality Assurance
Quality Control
Consultants by the Utility. (Risk
And Assurance
Mitigation)
Failure Of The
Plant To
Achieve
Environmental
Socio-environment impact
Standards And
Socio- assessment to be conducted
Plant Is
20 Environmental and recommendations to be
Perceived To
Risk implemented in a time bound
Have Negative
manner (Risk Mitigation)
Social/Environ
mental Impact
On Near-By
Villages
Advance Planning for

Scheduling of Shutdown for
Execution of Works (Risk
Delay in Avoidance)
provisioning of Additional Allocation of
obtaining unit Power to States from
shut down for Unallocated Quota of Central
executing R&M Pool (Risk Avoidance)
works Implementation of partial
R&M activities during Annual
shutdown periods. (Risk
Avoidance)
Preparation and
implementation of O&M
Sustainability of action plan by preparing
R&M gains O&M manuals including
22 Closure Operational Risk affected by preventive, capital and
weak O&M breakdown maintenance
practices procedure / guidelines for
units undergoing R&M. This
should be adopted through a

Board Resolution and

followed thereafter. (Risk
Mitigation)
Engaging specialised agency
for O&M of the plant, post
R&M. (Risk Mitigation)
After sale services to be
made an integral part of the
contract (Risk Mitigation)
Rectification/replacement of
components to meet
guaranteed parameters at
Post R&M
no extra financial cost to
23 Technical Risk guarantees not
utility. (Risk Mitigation)
achieved
Levy of Liquidated Damages
for shortfall in performance.
(Risk Mitigation)
Involvement of Regulator
should be ensured from the
Non-approval of
inception of the project with
24 Regulatory Risk costs incurred
regular updates about the
during R&M
progress of the project. (Risk
Avoidance)
Absence of ex- Experience gained must be

post evaluation documented and incorporated
25 Operational Risk
and feedback in subsequent units planned for
loop R&M works. (Risk Mitigation)
The above provide essential guidance for the generating companies, who
must evaluate and analyse the potential technical surprises and risks in
necessary detail for implementing R&M projects and formulate appropriate
strategies in line with those suggested in the guidelines to minimize such risks
and surprises.
In addition to the above, the study also provides an estimate of the overall
GHG reduction potential of EE R&M during the 12th and 13th Five Year Plan. In
order to estimate the CO2 emission reduction, potential various scenarios
(Conservative, Intermediate and Optimistic) has been built in. These scenarios
were developed considering the fact that different utilities may select different
options for R&M depending upon the cost involved, timeframe for shutdown and
their priorities.
On the basis of assessment it is seen that the current operating average net
SHR of coal based thermal power plants assessed for R&M/LE in the 12th Plan is
around 2962 kcal/kWh which translates into an efficiency of around 29.03%. If
all the plants post R&M operate on their design efficiencies, the average net SHR
can be improved to 2,551 kcal/kWh i.e. around 33.7%. This has an important
consequence for the coal requirements in the country. At a time when the
country is increasingly dependent on expensive coal imports that are affecting
the balance of payments and the competitiveness of the country, the R&M

measures will have a significant macro-economic impact. Equally importantly,

the R&M process will have a very significant bearing on the country's climate
related goals. The CO2 emission reduction potential ranges from 6%-13%
depending upon the level of average efficiency achieved post R&M/LE in the 12th
Plan. In absolute terms CO2 emission reduction potential ranges from 14.91 Mt
CO2 to 29.81 Mt CO2 across different scenarios with respect to the Baseline.
Similarly, the operating average net SHR is of around 2,926 kcal/kWh or
efficiency of 29.39% in the 13th Plan which if the plants post R&M operate at
designed efficiency can be improved to 2560 kcal/kWh which translates to
efficiency of 33.59%. The CO2 emission reduction potential ranges from 6%-
12% in the 13th Plan with absolute terms CO2 emission reduction potential
ranging from 6.31 Mt CO2 to 12.61 Mt CO2.
For monetisation of the GHG emission reduction achieved through

implementing R&M, utilities can take advantage of the available GHG
monetization framework. Clean Development Mechanism (CDM) and Voluntary
Carbon Standards (VCS) are two available monetisation frameworks for R&M in
India. Further, the Government of India (GOI) has also launched the Perform
Achieve and Trade (PAT) Scheme under National Action Plan on Climate Change
(NAPCC). It provides the requisite mechanism to prompt the utilities to
undertake R&M.
In summary, the role of R&M is increasingly becoming important in view of

fuel scarcity, and the need to utilise it in the most possible efficient manner.
However, R&M processes are prone to technical surprises, and these must be
dealt in a systematic manner. It is expected that risks and surprises identified in
this report and suggestions proposed for mitigating/avoiding various risks and
surprises will aid the utility in up scaling R&M activities and would help promote
good R&M practices in the country and support the objectives and policy goals of
Government of India on clean and economically sustainable development.

Chapter - 1
Introduction
1.1. Concept of R&M and Life Extension Programme for Coal Fired
Thermal Power Stations
1.1.1. Renovation and Modernization Programme

The main objective of R&M of power generating units is to make the
operating units well equipped with modified / augmented latest technology
equipment/components/ systems with a view to improving their performance in
terms of output, reliability and availability to the original design values,
reduction in maintenance requirements, ease of maintenance and enhanced
efficiency.
However, R&M is not a substitute for regular annual or capital

maintenance/overhaul which forms a part of Operation and Maintenance (O&M)
activity. Middle life R&M comes up preferably after 1,00,000 hrs of operation.
The R&M programme is primarily aimed at generation sustenance and
overcoming problems due to:
a) Generic defects
b) Design deficiencies /modifications
c) Avoidance of inefficient operation
d) Non-availability of spares because of obsolescence of
equipment/components.
e) Poor quality of coal
f) Major replacements of equipment arising due to unforeseen failures
and /or generation sustenance not covered under regular O&M
g) Stringent environmental regulation
h) Safety requirements etc.
1.1.2. R&M Programme with Life Extension (LE) & Uprating

The equipment subjected to fatigue stresses and creep due to high
temperatures such as turbine rotor and casings, HP piping, boiler headers, boiler
drum, main steam piping and valves, feed discharge lines etc. are designed for a
given fatigue life of about 25-30 years of operation. However, many
equipment/components might become prematurely weak metallurgically due to
various operational stresses like frequent temperature and pressure excursions,
full load tripping, frequent start and stops etc. and accordingly there is need to
check the remaining life of these components after 20 years of life or 1,60,000
hours of operation lest it may result into serious failures. A systematic study
called the Residual Life Assessment (RLA) study involving non-destructive and
destructive tests help reveal the remaining life of various critical components of
plants and equipment to enable introducing measures to extend the life of the
plant by a further period of about 15-20 years. A RLA study may be carried out
earlier, say after 15 years or 1,00,000 hrs of operation if the plant condition so

necessitates and as stipulated in IBR 391 A.
The LE programme is a major event in the thermal power stations history, as

it envisages extension of life over a considerable period of time beyond its
designed life. At this time it is a good practice to examine whether a plant
requires a viable modernisation which has not been carried out earlier so that
during the extended life the plant operates efficiently and delivers the rated or
higher capacity with improved heat rate. Adoption of improved and proven
technology can play an important role in plant upgraded output & higher
efficiency. There are cost effective options to up-rate the machines for higher
output and improved efficiencies thus making it economically viable to integrate
life extension programme with uprating.
1.1.3. Works Not Relating to R&M/LE

In general, works usually done under routine maintenance and annual or
capital maintenance do not fall under the purview of R&M Programme. The
repetitive nature of activities having the frequency once in five year or less is
covered under O&M. The following works should not be included as a part of
R&M / LE programme:
a) Infrastructural development work such as township, welfare measures

etc., general civil works within the plant such as boundary wall, roads,
drainages etc. However, technological structure works required for
equipments / structure based on RLA done as per design criteria (such
as turbine deck, foundation etc.) shall be part of LE.
b) Procurement of spare equipments.
c) Routine repairs/replacements during annual/capital overhauls.
The expenditure on such works which are O&M in nature is to be met from
O&M charges recovered through tariff for sale of electricity as notified by the
regulatory commission(s). O&M ought to be attended on a regular basis lest the
condition of the unit should deteriorate to such an extent resulting in major
breakdowns requiring huge expenditure.
1.2. Country Issues and Role of R&M

The power sector is imperative for sustained and inclusive economic growth.
One of the key challenges faced by the power sector is the perpetual lack of
adequate capacity addition viz-a viz demand leading to severe energy and peak
shortages. In 2012-13, overall energy shortage and peak deficit in the country
stood at 8.7% and 9% respectively. Trend of energy and peak shortages in India
is presented in figure below.

Figure 1: Energy and Peak Deficit in India

Energy Deficit
1,000 -25
Billion Units 900 -20
800 -15
%
-11.10
-9.90 -10.10
700 -8.50 -8.50 -8.70 -10
600
777
831
747
788
998
739
666
691
862
937
857
911
-5
500
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Energy Requirement (BU) Energy Availability (BU) Deficit %
Peak Deficit
-28
140
-21
Billion Units
110 -16.60
%
-11.90 -12.70 -14
-9.80 -10.60
80 -9.00
109
110
119
122
130
135
104
110
116
123
-7
91
97
50
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Peak Demand (GW) Peak Met (GW) Deficit %
With the high cost of new installations, poor financial health of the utilities
and emerging fuel constraints it has become essential to maximize generation
from the existing power stations by restoring their rated capacity and also
improve the efficiency of the power stations through R&M/LE. It is one of the
most cost effective options to achieve additional generation from existing old
units within a short gestation period. The benefits of undertaking R&M of old
plants are presented in the box below.
Box 1: Benefits of undertaking R&M of old thermal power plants
a) New plants are relatively expensive than the cost associated with
R&M of plants, wherein the old plants can be renovated and
modernized at lower costs along with the extension of their life.
b) Longer gestation period of new plant in comparison to outage time

when R&M is undertaken
c) Availability and efficiency can be improved through improvement in

heat rate, reduction in auxiliary consumption, hence lower
emissions
d) Focus on optimal utilisation of scarce resource of coal
e) With tariff based bidding becoming a norm, utilities have to bring

down their cost of generation to remain competitive.

f) Minimal Rehabilitation and Resettlement issues.
g) Incorporation of new technology
h) Ability to comply with environmental and safety norms that are

increasingly becoming stringent
R&M is thus a low hanging fruit that can be harnessed to bring in additional
capacity in the country. Also, considering the extent of shortages and severity of
challenges faced by the country, all modes of supply augmentation need to be
pursued simultaneously including R&M of old thermal power plants.
As per the National Perspective Plan of CEA, under 12th Plan, LE works have
been identified on 70 thermal units of total capacity 12,066 MW and R&M works
have been identified on 65 units (17,301 MW) during the 12th Plan.
Considering that the old generation capacities are likely to remain in use
(wherever possible) even after replacement capacities have been commissioned,
R&M needs to be accorded adequate focus and priority. Over the last decade,
the electricity supply industry has witnessed several changes that have
significant implications for R&M in the country. These changes need to be
understood in the context of the current legal, policy and regulatory framework,
which has been elaborated in the following sub-section.
1.3. Legislative, Policy and Regulatory Framework in India

Various policy and regulatory measures and national level mission and
programs lay emphasis on promoting R&M in the country. The enabling
provisions for R&M in the country are provided below:
a) Electricity Act 2003

The Electricity Act 2003 (EA 2003) is the primary legislative instrument
which governs the electricity supply industry in India.
Section 61 (C) of the Act requires the Appropriate Commission to

set tariff by considering, the factors which would encourage
competition, efficiency, economical use of resources, good
performance, and optimum investments.
b) Energy Conservation Act 2001

Similar to EA 2003, the Energy Conservation Act, 2001 contain
provisions related to the promotion, efficient use and consumption of
energy. It empowers the Central Government to force inefficient
generation utilities to take appropriate measures to increase energy
conversion efficiency in their operations.
c) National Electricity Policy 2005

National Electricity Policy notified by the Govt. of India (GOI) in 2005
under the provisions of EA 2003 states the following:

One of the major achievements of the power sector has been a

significant increase in availability and plant load factor of thermal
power stations especially over the last few years. Renovation and
modernization for achieving higher efficiency levels needs to be
pursued vigorously and all existing generation capacity should be
brought to minimum acceptable standards. The Govt. of India is
providing financial support for this purpose.
For projects performing below acceptable standards, R&M should be

undertaken as per well-defined plans featuring necessary cost-
benefit analysis. If economic operation does not appear feasible
through R&M, then there may be no alternative to closure of such
plants as the last resort.
In cases of plants with poor O&M record and persisting operational

problems, alternative strategies including change of management
may need to be considered so as to improve the efficiency to
acceptable levels of these power stations.
d) National Tariff Policy 2006

National Tariff Policy notified by the Govt. of India in 2006 under the
provisions of EA 2003 states the following:
Renovation and modernization (it shall not include periodic

overhauls) for higher efficiency levels needs to be encouraged. A
Multi-Year Tariff (MYT) framework may be prescribed which should
also cover capital investments necessary for renovation and
modernization and an incentive framework to share the benefits of
efficiency improvement between the utilities and the beneficiaries
with reference to revised and specific performance norms to be
fixed by the Appropriate Commission. Appropriate capital costs
required for pre-determined efficiency gains and/or for sustenance
of high level performance would need to be assessed by the
Appropriate Commission.
e) Integrated Energy Policy 2006

Integrated Energy Policy notified in 2006 within overall objective for
sustainable growth with energy security and improved efficiency. The
following provision directly pertains to R&M:
Rehabilitation of existing thermal stations could raise capacity at

least cost in the short run and this should be taken up urgently.
f) Guidelines for Renovation and Modernization / Life Extension

works of Coal/Lignite based Thermal Power Stations, 2009
With a view to expedite the R&M/ LE works during the 10thplan period,
GoI, Ministry of Power (MoP) issued guidelines in Feb, 2004. The
guidelines provided a framework to be followed if generators are to

benefit from debt financing from the Power Finance Corporation (PFC)
at an interest rate subsidy of 3-4 per cent. Consequently, the guidelines
were revised in 2009 by the MoP for R&M/LE works for power
generating stations.
These guidelines provide detailed methodology for implementation of

R&M and LE&U programmes along with roles and responsibilities of
different stakeholder and timelines etc.; lays down the maximum cost
for undertaking such programmes; emphasis on cost benefit analysis
before undertaking investment decision on R&M/LE&U scheme driven
by economic sensitivity analysis on cost of generation; and framework
for participation of private sector in LE programme etc.
g) PAT Scheme of the Bureau of Energy Efficiency

In order to accelerate as well as incentivize energy efficiency, the
Perform Achieve and Trade (PAT) mechanism has been designed by
Bureau of Energy Efficiency (BEE). PAT is a market based mechanism
to enhance cost effectiveness of improvements in energy efficiency in
energy-intensive large industries and facilities (classified as Designated
Consumers as per Energy Conservation Act 2001), through certification
of energy savings that could be traded. A total of 144 Thermal Power
Plants in the country have also been identified as a set of designated
consumers. Among other measures, R&M is likely to be one of the
means for achievement of the target heat rates provided to the above
plants.
h) CERC (Terms and Conditions of Tariff) Regulations, 20091

In order to provide requisite compensation to the generating utility for
R&M, the tariff regulations notified by the CERC provide the following
mechanism for recovery of the expenditure incurred on R&M of plants:-
The generating company for meeting the expenditure on

Renovation and Modernization (R&M) for the purpose of extension
of life beyond the useful life of the generating station or a unit
thereof shall make an application before the Commission for
approval of the proposal with a Detailed Project Report giving
complete scope, justification, cost-benefit analysis, estimated life
extension from a reference date, financial package, phasing of
expenditure, schedule of completion, reference price level,
estimated completion cost including foreign exchange component,
if any, record of consultation with beneficiaries and any other
information considered to be relevant by the generating company.
Provided that in case of coal-based/lignite fired thermal
generating station, the generating company, may, in its discretion,
avail of a special allowance as compensation for meeting the
1
New Regulations are under development which are likely to further incentivize R&M

requirement of expenses including Renovation and Modernization

beyond the useful life of the generating station. Special allowance
shall be @ Rs. 5 lakh/MW/year in 2009-10 and thereafter
escalated @ 5.72% every year during the tariff period 2009-14,
unit-wise from the next financial year from the respective date of
the completion of useful life with reference to the date of
commercial operation of the respective unit of generating station;
provided that in respect of a unit in commercial operation for more
than 25 years as on1.4.2009, this allowance shall be admissible
from the year 2009-10.
i) Tariff Regulations by State Electricity Regulatory Commissions

In line with provision of the CERC tariff regulations various state
electricity regulatory commissions have also incorporated relevant
provisions for recovery of expenditure incurred on R&M as part of their
tariff regulations.
j) National Perspective Plan for Renovation & Modernization and

Life Extension & Uprating of Thermal Power Stations
The Central Electricity Authority (CEA) in consultation with state power
utilities and other stakeholders have prepared a National Perspective
Plan for Renovation and Modernisation and Life Extension of thermal
power stations upto the year 2016-17.
The broad objectives of future R&M national plan include:
a) Identification of thermal units requiring LE during 11th and 12th

Plans in order to extend their useful economic life for another
15-20 years beyond their designed economic life of 25 years.
b) Assessment of total investment required during 11th and 12th
Plans for LE programme.
c) Identification of potential candidates for EE R&M programme
and assessment about external funding and other sources of
financing during the 11th and 12th Plan.
d) Providing a road map for smoother implementation of R&M/LE
schemes.
e) Projection of expected benefits from these schemes.
k) Indian Boiler Regulations, 1950

Regulation 391 A of IBR, 1950 elaborates on the aging effects on
boilers and maximum permitted working pressure allowed for operation
of various types of boilers. Specifically, for water tube boilers, these
regulations prescribe the following:
(i) The boilers which are operating at a temperature of 400C and

above including utility or industrial boilers and all boiler parts
operating in the creep range of the boiler shall be non-
destructively tested after they are in operation for 1,00,000

hours for assessment of the remnant life of the parts;
(ii) The parts of a boiler when it completes a life of twenty five years
are to be tested as per table 2 for assessment of the remnant life
of such parts. If results are acceptable as per the standards laid
down by the Central Boilers Board, a certificate shall be issued
by the Chief Inspector of Boilers for extending the life of the
boiler for a further period of ten years or such less period as
recommended by the Remnant Life Assessment Organisation.
This assessment of remnant life shall be carried out thereafter
every five years by the organisations working in the field of
boilers and remnant life and extension thereof after such
organisation is approved by the Central Boilers Board. Such
organisation shall work in close coordination with the office of the
Chief Inspector of Boilers in the field of remnant life assessment
and extension. The working pressure of such boilers may be
reduced on the recommendations of such approved organisation.
l) National Action Plan on Climate Change

Recognising that the climatic change is a global phenomenon,
Government of India released Indias first National Action Plan on
Climate Change (NAPCC) outlining existing and future policies and
programs addressing climate mitigation and adaptation. Emphasizing
the overriding priority of maintaining high economic growth rates to
raise living standards, the plan identifies measures that promote
development objectives while also yielding co-benefits for addressing
climate change effectively.
The plan identifies eight core national missions running through 2017
which represents multi-pronged, long term and integrated strategies for
achieving key goals in the context of climate change.
It may be worthwhile to mention here that while an enabling policy

and regulatory framework has been provided for undertaking R&M, the
performance from being reasonable until the 9thplan period, has
deteriorated since the 10th plan period. This is further discussed in the
following sub-section.
1.4. Achievement of R&M and LE works in the past Plan periods

The importance of R&M was recognised by the GOI way back in 1984 when
Phase-I R&M Programme for 34 thermal power stations in the country was
launched by the CEA as a Centrally sponsored scheme. Since then R&M option
has been effectively utilised over the various plan periods. R&M and LE works
completed in various plan periods along with the results achieved in terms of
additional generation in Million Units (MU) and equivalent Megawatt (MW) is
presented in the table below.

Table 1: Achievement of R&M and LE works in various Plan periods
S. Five Year No. of Capacity Additional Generation Equivalent

No Plan Units (MW) Achieved MU/Annum MW
1 7th 163 13,570 10,000 2,000
8th 198
2 (R&M) (194) 20,869 5,085 763
(LEP) (4)
9th 152
3 (R&M) (127) 18,991 14,500 2,200
(LEP) (25)
10th 25
4 (R&M) (14) 3,445 2,000 300
(LEP) (11)
11th 129
5 (R&M) (76) 16,146 5,400 820
(LEP) (53)
Source: Quarterly Review Report- Renovation, Modernisation and Life Extension of Thermal Power
Stations (January March; 2012), CEA
The momentum for undertaking R&M works continued till the 9th Plan but
considerable slippages were observed thereon in the subsequent plan periods.
Equipment capacity constraints, contractual delays, reluctance to shutdown units
in light of chronic power shortages in the respective states, financial constraints
etc. were some of the reasons for such slippages. Although the performance of
the programme improved during the 11th Plan, achievement had only been 56%
and 61.4% of the planned number of units and capacity respectively. Planned
capacity viz-a-viz the achievement of R&M and LE works during 10th and 11th
Plan is presented below.
Figure 2: Planned capacity and achievement of LE and R&M works during

10thand 11thPlan
10th Plan 11th Plan

15,000
20,000
10,000 15,000
MW
MW
10,000
5,000
18,965
14,855
10,413
14,270
7,318
1,291
2,460
5,000
985
- -
LE R&M LE R&M
Planned Achieved
Source: National Electricity Plan and Quarterly Review Report- Renovation, Modernisation and Life
Extension of Thermal Power Stations, (January March; 2012), CEA

1.5. Emerging Market Trends and its influence on R&M

Ever since the enactment of EA 2003, the electricity market has witnessed
several changes that strongly influence the R&M market for thermal power
plants. The table below maps out the changes prior to EA 2003 and after the
enactment and also indicates implications for R&M projects in India.
Table 2: Emerging Power Sector Market Scenario and Implications for R&M
Before
Characteristics
enactment Current
/ Market Implications for R&M
of the Scenario
Changes
EA2003
a) As a result of emergence of
power markets, alternate
procurement avenues are now
available to the state utilities
to prevent outages when
Presence of plants undergo R&M
Power Markets Absent Present b) Increased focus on efficiency
and Competition improvement owing to
competitive procurement of
power and possibility of
extension of the framework to
state generating companies in
the near future
Increased private sector

Degree of Private participation across the value chain
Sector Low High in the electricity supply industry
Participation has resulted in better response,
lower lead-time and risk sharing.
a) Open market policy of GoI and

increasing capacity expansion
has attracted many
international players,
decreasing market dominance
of domestic players like BHEL
by providing comparable
Equipment
Small Large technological competencies
Vendors Base
and services.
b) Alongside, the equipment
market has also seen
emergence of several domestic
players as well, leading to a
much more diversified
equipment vendor base.

Before
Characteristics
enactment Current
of the Scenario
Changes
EA2003
a) One of the strategies of PAT

Scheme of the BEE is aimed at
enhancing energy efficiency in
existing power plants and has
set power sector as one of the
Designated Consumers (DC).
b) Along with the above there are
Focus on
Low Higher several generation optimization
Optimization
products/modules that many
new generating plants or
plants undergoing
refurbishment are opting for to
increase the overall plant
output and increase process
efficiency.
a) With power sector

contributing 40% to carbon
emissions of India, R&M with
short gestation time can be
short and medium term
strategy to achieve National
Market
Action Plan on Climate
framework for
Change.
GHG emission
Absent Present b) Although at present the
reduction and
contribution of R&M towards
Environmental
GHG mitigation is small, the
Compliance
capabilities promise the
flexibility for responding to
emerging economic, socio
environmental and
sustainable development
needs.
a) At present, acute coal shortage

looms large on the sector.
Domestic coal shortage was
never envisaged in any of the
previous plan period; however
the sector today has suddenly
Coal Constraint No Yes awakened up to this reality.
b) In such extreme coal supply
constrained scenario, focus on
available coal being used in
most efficient form by the
market participants is high.
c) The above trend supports R&M

Before
Characteristics
enactment Current
of the Scenario
Changes
EA2003
as energy efficient R&M results

in lowering specific coal
consumption of the plant and
hence promotes optimal
utilization.
All of the above trends indicate positive changes for R&M market in the
country. However, the above changes have to be accompanied by introduction
of measures that are aimed at addressing the inherent policy, technical,
commercial, and regulatory barriers faced by the stakeholders involved in the
R&M process. These barriers once removed can alter the risk profile of the R&M
projects making them an attractive proposition for all stakeholders in the sector.
1.6. Background of the Assignment

The World Bank has financed the Coal-Fired Generation Rehabilitation
Project-India for demonstrating Energy Efficiency Rehabilitation &
Modernization (EE R&M) at coal fired generating units through rehabilitation of
640 MW of capacity across three States-West Bengal, Haryana and Maharashtra.
The above project has two components:-
a) Component-1: Energy Efficiency R&M at Pilot Projects

This component would fund implementation of Energy Efficient R&M of
640 MW capacity comprising Bandel TPS Unit-5 (210 MW) of WBPDCL,
Koradi TPS Unit-6 (210 MW) of Mahagenco and Panipat TPS Unit-3 & 4
(2x110 MW) of HPGCL. The World Bank has earmarked US $ 180
million of IBRD loan and US $ 37.9 million of GEF grants for the
Component-1.
b) Component-2: Technical Assistance to CEA and Utilities

The Technical Assistance component of the project is aimed at
providing support in implementation of EE R&M pilots, developing a
pipeline of EE R&M interventions, addressing barriers to EE R&M
projects and strengthening institutional capacities of implementing
agencies for improved operation and maintenance practices. The World
Bank has earmarked US $ 7.5 million GEF grant for the Component-2.
Under Component 2, The World Bank provided technical assistance of US $

1.1 million as a part of GEF grant to CEA under Coal Fired Generation
Rehabilitation Project-India for addressing the barriers to Energy Efficient R&M
of coal fired generating units in India. The project is being implemented by CEA
through appointment of consultants for carrying out following four studies:
a) Review of institutional capacity and capacity strengthening

interventions at CEA.
b) Study on reduction of barriers to R&M interventions in thermal power
stations in India.
c) Study on developing markets for implementation of R&M in thermal
power stations in India.
d) Review of experience from Pilot R&M interventions in thermal power
stations in India.
Accordingly, CEA has engaged M/S Mercados Energy Markets India Pvt. Ltd.
(AF-Mercados EMI) on April 02, 2012, for undertaking study on Reduction of
barriers to R&M interventions in thermal power stations in India.
1.7. Scope and objective of the study

The key objectives of the study of Reduction of barriers to R&M
interventions in thermal power stations in India were as follows:
1. Task 1- Assess the key risks in planning and implementation of R&M of

thermal power projects, and develop guidelines to mitigate such risks.
a) Reviewing the past experiences of developing and implementing

R&M with Life Extension Projects. The Consultant shall review the
experience of R&M and Life Extension in Indian thermal power
stations to identify the various risks encountered while carrying out
such R&M works.
b) Studying and analysing the risks identified in detail and the

consequences of such risks on R&M projects. The Consultant shall
study and analyse the various risks associated with development
and implementation of R&M projects in technical, commercial,
contractual and market aspects including but not limited to following
risks:
i. Policy and Regulatory Risks including recovery of Capital Cost

and its impact on post R&M Tariff
ii. Project Schedule and Time Over-run Risks along with its
impact on Estimated R&M Cost due to time over-run and
provisions in contractual arrangements;
iii. Cost Over-run Risks including change in scope and provisions
in contractual arrangements;
iv. Risks during execution phase including resources risks;
v. Political Risks if any;
vi. Post R&M Performance Risks and associated mitigation
measures i.e. Liquidated Damages, etc.
c) Conducting meetings and interaction with the concerned

stakeholders such as State Generating Stations, Central and State
Electricity Regulatory Commissions, Equipment Suppliers, Design
Consultants, Funding Agencies and CEA to analyze the identified

risks.
d) Based on the above study and interactions with stakeholders, the

Consultant shall develop strategies to mitigate the risks and prepare
Thermal Power Stations in India.
2. Task 2- Assess the technical surprises encountered during

implementation of R&M and develop guidelines for early identification of
potential surprises and ways of addressing them.
a) Reviewing the past experiences of developing and implementing

R&M with Life Extension Projects. The Consultant shall review the
experience of R&M and Life Extension in Indian thermal power
stations (list enclosed at Annexure 1) to identify the technical
surprises encountered by the utilities while carrying out the R&M
works.
b) Interacting with State Generating Companies, various Suppliers and

Design Consultants to collect information on surprises experienced
in R&M works of thermal power stations and suggestions for
addressing them. Based on the interaction, the Consultant shall
study the identified technical surprises and experiences at thermal
power stations in India in detail and develop strategies to address
and mitigate such technical surprises.
c) On the basis of this study and interaction with Suppliers and Design
Consultants, the Consultant shall develop Guidelines for Early
Identification of Potential Surprises in R&M Projects and Ways of
Addressing Them.
3. Task 3- Review International best practices in R&M
a) The Consultant shall review the international best practices in

developing and implementing the R&M projects considering the
energy efficiency and rehabilitation of thermal power stations. The
various best practices to be reviewed by the Consultant shall inter-
alia include the following:
i. Selection of Unit/Plant for R&M along with objectives of

carrying out R&M,
ii. Advanced technological options for EE R&M such as turbine up-
gradation, efficient and environment friendly furnace-boilers,
coal utilization etc.
iii. Finalisation of Scope of Work for R&M,
iv. Procurement Process for Selection of Consultant/Contractor,
v. Funding of R&M Projects,
vi. Cost Benefit Analysis,

vii. Implementation of R&M Projects including shut down time,

viii. Environmental safeguards,
ix. Measures for Guaranteed Performance post R&M
b) Based on the above review, the Consultant shall recommend and

suggest alternate cost-effective options for R&M under Indian
conditions with respect to the following parameters:
i. Augmentation of project capacity,

ii. Technical feasibility,
iii. Cost effectiveness,
iv. Efficiency Improvement,
v. Environmental safeguards.
c) The Consultant shall recommend best ways and means through

which these International practices can be adopted by the
generating companies in India.
d) On the basis of review of international best practices, the Consultant

shall identify the measures that can be used to mitigate the risks
and handle technical surprises in the thermal power stations in
India.
e) Based on the review of the international best practices, the

Consultant shall also develop standard menu of options for energy
efficiency focused rehabilitation and life extension of 210 MW and
above units in thermal power stations in India.
4. Task 4- Assess the potential reduction in Green House Gas (GHG)

emissions on account of implementation of Energy Efficient R&M and
suggest possible framework for monetizing the GHG emissions reduction.
a) The Consultant shall suggest the GHG emissions reduction potential

under various technological options considering the advanced
technologies of EE R&M of thermal power stations.
b) The Consultant shall also suggest the various possible frameworks

for monetizing the GHG emissions reduction potential in the National
and International markets.

Chapter - 2
Approach and Methodology
This chapter presents the Approach and Methodology (A&M) adopted by the
team for undertaking different tasks of the study.
2.1. Approach and Methodology for Task 1 and Task 22

The study team undertook the following
approach to undertake this study: Figure 3: Approach for the study
Site Visit to select

Power Plants in India
1. Review of the Past experience of R&M
in the country.
2. Site Visit to Select Power Plants in
Review of R&M in
Global Context
India
Review Past
Experience
3. Review of R&M in Global Context Task 1
and Task 2
4. Stakeholder and Expert Consultation
All of the above collectively contributed

towards development of the risk
identification and mitigation guidelines Stakeholder and
Expert Consultation
presented as part of this study. Each of the
above is explained below:
2.1.1. Review of past R&M experience in the country

Literature review was undertaken to understand the policy and regulatory
framework, the nature of contracts with the entities involved in R&M, experience
of past R&M projects, issues and concerns of different stakeholders. This also
included review of past studies, review of tariff regulations of various states and
previous tariff orders/petitions of the generation utilities.
2.1.2. Site visits to select power plants

In order to understand the ground level realities, concerns and barriers
constraining the R&M schemes in different states, a case study approach was
adopted wherein the ten plants were identified across the country by the CEA for
undertaking a detailed study.
Figure below highlights the units/plants considered for review of R&M

experience as per the terms of reference
2
It may be noted that for Task 1 (Guidelines for Risk Identification and Mitigation in R&M Projects
in Thermal Power Stations in India) and Task 2 (Guidelines for Early Identification of Potential
Technical Surprises in R&M Projects and Ways of Addressing Them) similar A&M was adopted.

Figure 4: List of units to be considered for review of R&M/LE works as per the
Terms of Reference
Obra TPS (UPRVUNL)

Unit- 9 and 10 (2x200 MW)
Barauni TPS (BSEB)

Unit- 7 (1x110 MW)
Bathinda TPS (PSPCL) KBUNL
Unit- 1,2 and 3 (3x110 MW) Unit-1(1x110 MW)
Panipat TPS (HPGCL)

Unit- 1,3 and 4 (3x110 MW)
Ukai TPS (GSECL)

Bandel TPS (WBPDCL)

Koradi TPS (MSPGCL) Unit- 5 (1x210 MW)
Unit- 6 (1x210 MW)
Korba (E) TPS (CSPGCL)

Unit-5 and 6 (2x120 MW)
Amarkantak Exten TPS

(MPPGCL)
Note: PSPCL- Punjab State Power Corporation Limited, HPGCL- Haryana Power Generation Corporation
Limited, GSECL- Gujarat State Electricity Corporation Limited, MSPGCL- Maharashtra State Power
Generation Company Limited, UPRVUNL- Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited, BSEB-
Bihar State Electricity Board, WBPDCL- West Bengal Power Development Corporation Limited,
CSPGCL- Chhattisgarh State Power Generation Company Limited, MPPGCL- Madhya Pradesh Power
Generating Company Limited
Visits were undertaken to all these plants and discussions were held with
concerned officials dealing with R&M including plant/unit level engineers,
operation and maintenance department and commercial department to
understand their experience in planning, tendering, procurement, executing R&M
program and O&M of the units subsequent to R&M.
Further, various project specific documents such as DPR, RLA studies,

contract documents with the vendors, performance of plant etc. were also
collected from the state utilities during the visits to understand the gap if any in
the entire R&M process and approaches followed by different states and utilities.
The units visited provided adequate depth to the analysis carried out
in the study as these units differed in terms of coverage, current
performance, implementation model, mode of funding etc. These factors
are explained below:
a) Coverage of various R&M stages- Includes representation from all

stages of R&M across the selected units.

b) Current Performance- Includes the performance of the plant post

R&M viz-a-viz that envisaged at the project planning stage. Both, plants
that have already completed R&M and those that are undergoing R&M
were considered in the sample set.
c) Implementation Model Includes two models generally adopted in
the Indian market i.e. (i) OEM initiated; or (ii) Competitive Bidding
(National/International).
d) Mode of Funding3 Includes (i) Public funds; (ii) Grants; (iii) Soft
Loans by Multi-lateral donor agencies
e) Specific Issues Includes specific experience witnessed by a
particular plant different from the normal/routine
This enabled the project team to understand the type of risks and technical
surprises faced by the utilities, its root causes, its impact on the project, bearer
of the risk and way of managing the risks and technical surprises. The table
below highlights in brief the unique attributes of the identified plants.
Table 3: Attributes of the identified plants
S. No Plant Name Attributes of the identified plants
R&M awarded on turnkey basis.

Unit 1,2&3 (3 x 110), Covers entire R&M life cycle R&M of all three
1 Bathinda Thermal units already completed
Power Station, PSPCL Have R&M experience from multiple vendors for
different units (NASL, BHEL)
R&M experience of multiple units already

completed.
Covers entire R&M life cycle R&M of all the four
units already completed.
Unit 1& 4 (2 x50) and Post R&M performance of these units have been
Unit 5 & 6 (2 x 120), satisfactory.
2
Korba (East) TPS, RLA included in the scope of the supplier and all
CSPGCL the related works needs to be undertaken within
the capped overall price of the contract.
O&M supervision post R&M works included in the
scope of implementing agency as one of the
measure to ensure performance guarantee.
Unsatisfactory R&M experience of Unit 1 and 2

Unit 1, 3 & 4
led to cancellation of R&M plans for Unit 3 and 4.
3 (3x110), Panipat TPS,
Mode of funding- Unit 3 and 4 were proposed to
HPGCL
be funded through soft loan from the World Bank
3
Mode of funding has influence on the level of preparedness and system introduced for robust
R&M implementation. While a few funding entities have enforced mandatory lending covenant to
be adopted by the utility during the course of design and implementation of R&M in their plants,
other entities have not followed such stringent lending criteria.

Contractual dispute between vendor and utility

leading to prolonged implementation period
Case of unsuccessful contracting at first
instance. Project was later rewarded.
Covers entire R&M life cycle R&M of both units

already completed
Initiated directly through OEM
Unit 1& 2 (2x120),
4 Post R&M outputs achieved have not been in line
Ukai TPS, GSECL
with the envisaged targets.
Performance Guarantee Test has been delayed
incessantly
Frequent change in scope of work due to funding

constraints
Unit 1&2 (2x120), Covers entire R&M life cycle R&M of both the
Amarkantak units completed.
5
Extension TPS, R&M for different equipments executed through
MPPGCL different vendors
R&M executed on discreet basis over a period of
time.
Covers different stages of R&M life cycle R&M

of Unit 9 is completed and Unit 10 is under
execution.
Multiple units (5) undertaken for R&M
Unit 9&10 (2x200),
6 Initiated directly through OEM
Obra TPS, UPRVUNL
One of the few units wherein R&M works are
going on 200 MW plant
Contingency reserves for handling technical
surprises included in the overall budget for R&M
Mode of funding- Grant provided by Planning

Commission / MOP under RSVY Fund.
Unit 7 (1x110),
7 R&M initiated through five-party MOU signed
Barauni TPS, BSEB
among BHEL, NTPC, BSEB, Govt. of Bihar and
MoP (Govt. of India).
A new company, KBUNL, formed as a Joint

Venture (JV) of the State Power Utility (BSEB)/
State Government (Government of Bihar) and
public power utility (NTPC).
R&M initiated through five-party MOU signed
Unit 1 (1x110),
among BHEL, NTPC, BSEB, Govt. of Bihar and
8 Muzzaffurpur, KBUNL,
MoP (Govt. of India).
Bihar
Mode of funding- Part funding through Grant
provided by the Planning Commission / MOP
under Rashtriya Sam Vikas Yojana (RSVY) Fund
and part funding by KBUNL in Debt Equity ratio
of 70:30

Mode of Funding through soft loan from World

Bank
R&M initiated through international competitive
Unit 5 (1x210), bidding model
9
Bandel TPS, WBPDCL High level of preparedness for robust R&M
implementation
Mode of Funding through soft loan from World

Bank
R&M initiated through international competitive
bidding model
High level of preparedness for robust R&M
implementation and technical surprise plan
Unit 6 (1X210), prepared in advance to handle potential
10
Koradi TPS, MSPGCL surprises during the R&M project execution that
also required unit rates to be sought from the
vendors.
Entire R&M works divided into four different
packages.
Further, study of these units also enabled the project team to understand the
type of technical surprises faced by the utilities, its root causes, its impact on
the project and the way of handling such surprises by the respective utilities.
In addition to the visit to these plants, the project team also participated in
the CEAs R&M Planning and Progress Review Meeting with the State and Central
Generation Utilities wherein the utilities highlighted the progress of their ongoing
R&M schemes and the key issues and concerns being faced in implementing
R&M projects.
2.1.3. Review of R&M in Global Context

Having understood the issues and concerns faced in planning and executing
R&M projects at the national level, state utility level and the plant level, the
study team undertook detailed review of international experience in R&M.
A case study approach was undertaken wherein experience of different

countries in implementing R&M works was documented. This includes countries
such as Czech Republic, Poland, Turkey, Romania, Indonesia and South Africa.
These case studies were prepared on the basis of literature review and visits in
some of the countries. The A&M for the same is detailed in the following section.
The above review enabled the team to capture diverse experience being
offered by various countries which collectively can be synthesized to offer useful

lessons for risk identification and mitigation for R&M of thermal power plants in
India. The lessons learned from these experiences are suitably incorporated in
the Guidelines for Risk Identification and Mitigation in R&M Projects in Thermal
Power Stations in India and also in the Guidelines for Early Identification of
Potential Technical Surprises in R&M Projects and Ways of Addressing Them.
2.1.4. Stakeholder and Expert Consultations

In order to identify various risks and technical surprises faced by the utilities
in execution of R&M project, the team also undertook extensive stakeholder
consultation to understand perspectives of various stakeholders. The stakeholder
group included the State Generating Stations, Central and State Electricity
Regulatory Commissions, Equipment Suppliers, Design Consultants,
Implementation Support Consultants, Sector Experts, Funding Agencies and the
CEA.
Table below provides a list of entities consulted during the visits made to
various states across the country.
Table 4: List of entities consulted
S. Entities Consulted (State Gencos, SERC, ISC, TC,

State
No. Suppliers)
a) Punjab State Electricity Regulatory Commission

(PSERC)
1 Punjab
b) Bathinda Thermal Power Station
c) Punjab State Power Corporation Limited
a) Chhattisgarh State Power Generation Company

Limited (CSPGCL)
2 Chhattisgarh b) Chhattisgarh State Electricity Regulatory
Commission (CSERC)
c) Korba (East) Thermal Power Station
a) Haryana Power Generation Corporation Limited

(HPGCL)
3 Haryana
b) Haryana Electricity Regulatory Commission (HERC)
c) Panipat Thermal Power Station
a) Gujarat State Electricity Corporation Limited

4 Gujarat (GSECL)
b) Ukai Thermal Power Station
a) Madhya Pradesh Power Generation Company

Madhya
5 Limited (MPPGCL)
Pradesh
b) Amarkantak Thermal Power Station
a) Obra Thermal Power Station

6 Uttar Pradesh b) NTPC (Consultant for Obra TPS)
c) BHEL (Vendor)
7 Bihar a) Bihar State Electricity Board (BSEB)


State
No. Suppliers)
b) Bihar Electricity Regulatory Commission (BERC)

c) Barauni Thermal Power Station
d) Kanti Bijlee Utpadan Nigam Ltd.
e) Muzzaffurpur Thermal Power Station
f) NTPC (ISC for Barauni Thermal Power Station)
a) West Bengal Power Development Corporation

Limited (WBPDCL)
b) West Bengal Electricity Regulatory Commission
8 West Bengal
(WBERC)
c) Bandel Thermal Power Station
d) Damodar Valley Corporation Ltd.
a) Maharashtra State Power Generation Company

9 Maharashtra Limited (MSPGCL)
b) Koradi Thermal Power Station
a) Bharat Heavy Electricals Limited (BHEL)

b) NTPC Alstom Power Services Limited (NASL)
c) Dongfang Electric (India) Private Limited
d) Toshiba
e) Siemens
f) Development Consultants Private Limited
g) Doosan Heavy Industries & Construction
h) Alstom India
i) Energo Group
j) NTPC
k) STEAG Energy Services (India) Private Limited
l) Lahmeyer India
m) Energy Enhancement Centre (EEC)
10 Delhi, NCR n) L&T-MHI Boilers Private Limited
o) GE Energy
p) WAPCOS Limited
q) Encotec Energy India Private Limited
r) Bureau of Energy Efficiency
s) Northern Regional Power Committee
t) Tata Consulting Engineers Limited
u) KfW
v) GIZ
w) Central Electricity Regulatory Commission
x) L&T Power Limited
y) McNally Bharat Engineering Company Limited
z) SPML Engineering Limited
aa) Deccan Mechanical & Chemical Industries Private


State
No. Suppliers)
Limited
bb) Central Power Research Institute
cc) Black & Veatch Consulting Private Limited
dd) L&T-Sargent & Lundy Limited
ee) EM Services India Private Limited
ff) Stock Redler India Private Limited
gg) Tecpro Systems Limited
hh) Techfab System Private Limited
ii) Assam Power Generation Corporation Limited
jj) Andhra Pradesh Power Generation Corporation
In addition to the above, the process of finalisation of the guidelines also

involved periodic consultation with the Task Force members. The Task Force has
been constituted by CEA for Promotion of Energy Efficiency R&M in Thermal
Power Stations in India under the Chairmanship of Member (Thermal), CEA.
The Table below provide the list of task force members consulted in various
stages of the report.
Table 5: List of Task Force Members
S. No Organisation Name
1 CEA Mr. Manjit Singh, Chairman of Task Force
2 APGENCO Mr. A.Venkateshwara Rao
3 CERC Mr. S.C. Srivastava
4 DVC Mr. T.K. Patra
5 HPGCL Mr. A. K. Sood
6 KfW Development Bank Arjun Guha
7 MSPGCL Mr. M. G. Waghmode
8 NTPC Mr. P. K. Mondal
9 PFC Mr. Naveen Kumar
10 WBPDCL Mr. A. K. Ghoshal
11 World Bank Ms. Surbhi Goyal

2.2. Approach and Methodology for Task 3

Having understood the issues and concerns faced in planning and executing
R&M projects at the national level, state utility level and the plant level (in the
previous reports undertaken as part
of the assignment), the study team Figure 5: Approach and Methodology
undertook the following approach
and methodology for a detailed Understanding of Risks and Surprises
encountered during R&M in India
review of international experience
in R&M.
Selection of Countries for Detailed

a) Understanding of Risks and
Expert & Stakeholder
Review of R&M Process

Surprises encountered
Consultation
during R&M in India Lessons for
b) Selection of Countries India
(keeping in mind relevance
for India) for Detailed
Review of R&M Process
c) Site Visits to select
international plants Site Visits to select
d) Expert & Stakeholder international plants
Consultation
All of the above collectively contributed towards development of this study on

international best practices in R&M. Each of the above is explained below:
2.2.1. Understanding of Risks and Surprises encountered during R&M in India

Various risks and technical surprises encountered in implementation of R&M
of thermal power plants in India have been identified as part of the Task 1 and
Task 2 of this assignment. In order to develop strategies to mitigate or handle
such risks and surprises it is important to understand how such risks and
surprise are dealt by the international generating companies.
The identified risks and surprises in the Indian context have formed the basis
for review of international practises.
2.2.2. Selection of countries for detailed review of R&M Process

A case study approach was adopted to document the experience of different
countries in implementing R&M works. The review included:
a) Context of R&M in the country including key drivers and priorities for
R&M.
b) Process adopted for design and implementation of R&M in the
country, including the roles and responsibilities of the entities
involved.
c) Measures considered for R&M including design of packages, award
and execution process.
d) Outcomes of the R&M process, and concerns and barriers faced in
R&M.
e) Identification of good practices and lessons for India.

The countries selected for the review included Czech Republic, Poland,
Turkey, Romania, Indonesia and South Africa. These case studies were prepared
on the basis of literature review and visits in some of the countries. The list of
references used for preparation of case studies/review is provided at the end of
the report.
Countries and power plants selected for R&M process review are presented in
Figure below.
Figure 6: Selected countries and power plants for Review of R&M experience
3
S. No Country Name of the Plant 2
4
Suralaya Power Station (Unit 1 & 2),
1 Indonesia 5
2x400 MW
Tusimice II (4x200 MW)
2 Czech Republic
Prunerov II (5x200 MW)
3 Poland Belchatow (12x370/380 MW) 1
4 Romania Turceni (7x330 MW)
Afsin Elbistan A (3x340 MW & 1x335
5 Turkey 6
MW)
6 South Africa Arnot (6x350 MW)
The following criteria were adopted for selection of the above countries:
a) Geographical Coverage
In order to ensure adequate geographical coverage of the worldwide
R&M experience, countries from different continents (European, Asian
and African continents) were reviewed. Further, experiences of both
developed and developing countries were reviewed.
b) Electricity scenario
Electricity scenario of respective countries was considered while
selecting countries for review. This included review of countries which
are surplus in electricity, as well as those that face electricity
shortages. Further, consideration was also given to countries using coal
as a primary/dominant source for production of electricity.
c) Coverage of various R&M stages

Countries were selected so as to include representation from all stages
of R&M process across the selected units. Further, countries having
adequate experience of completed R&M projects and having fleet of
ongoing R&M projects were also selected to understand how feedback
from one project is built into the other.
d) Implementation Model
Includes models such as (i) OEM initiated; or (ii) Competitive Bidding
(National/International)
e) Mode of Funding
Includes (i) Own sources of funds; (ii) Grants; (iii) Soft Loans by
Multi-lateral donor agencies
f) Specific Issues
Includes specific experience witnessed by a particular plant different
from the normal/routine.
Table below highlights in brief the unique attributes of the identified plants
reviewed as part of this report.
Table 6: Attributes of the identified plants
S. No Plant Name Attribute of the identified plants
1. Suralaya i. Suralaya is the largest TPP with a total capacity of

Power Station 4025 MW and plays a critical role in meeting the
Units 1 and 2 electricity demand of the country where only 70% of
(2*400 MW), the population have access to electricity
Indonesia ii. Coal is a dominant source of electricity production in
the countrys energy mix.
iii. Covers all stages of the R&M process.
iv. Project was funded by JBIC (Japan Bank for
International Cooperation).
v. R&M led to a reduction in NOx and CO2 emissions
and increase in the efficiency.
vi. Project successfully met all the pre-determined
objectives.
2. Tusimice II i. Country has wide range of experience on R&M

Power Plant covering completed and ongoing projects.
(4* 200 MW), ii. Coal is the major fuel used for generating electricity.
Czech Republic Coal accounts for almost 53% of the installed
capacity.
iii. R&M experience is recent and comprises mix of
plants that have already undergone R&M or plants
planning to implement R&M.
iv. Occurrence of technical surprises and effective
strategy to deal with the same.
v. Funded by the utility from its own resources.
vi. R&M implemented on EPC contract basis.
vii. The technologies used during R&M process are
equipped to meet the future emission standards
viii. Lessons learnt from R&M of one unit built in

subsequent units provided a feedback loop.
3. Prunerov II i. Coal is the major fuel used for generating electricity.

Power Plant Coal accounts for almost 53% of the installed
(5*210 MW), capacity.
Czech Republic ii. On-going R&M experience
iii. Learning from the R&M Experience of Tusimice built
into the project preparation work of Prunerov II.
4. Belchatow i. Country has significant experience on R&M covering

Power Plant completed and on-going projects
(12*370/ 380 ii. Largest power plant in Europe and contributes
MW), Poland around 20% of the total electricity generated in
Poland.
iii. Feasibility & diagnostic studies were undertaken for a
pre-assessment through consultants
iv. Learning from R&M of one unit in built in R&M of
subsequent units
v. Upward revision in efficiency targets based on
continuous learning from R&M works.
5. Turceni i. R&M for BTG was awarded to Austrian Energy and

Thermal Power Environment AG & Co KG (AE&E) on the basis of
Plant (7*330 international tender
MW), Romania ii. Funding for the project was garnered from the
internal resources of the utility and through loan
from KfW
iii. Pre-feasibility and feasibility studies were
undertaken.
6. Afsin Elbistan i. Project was funded by the World Bank and by the
A Thermal owner of the plant i.e. Electricity Generation A..
Power Plant (EUAS), the state owned utility company.
(3*340+ ii. Due to perceived high risk by suppliers, strategy for
1*335 MW), bidding revised due to non-participation of vendors.
Turkey
iii. R&M works could not be implemented due to
concerns of the bidders with regard to perceived
risks of not being able to achieve the functional
guarantees. Also, unrelated investigations by the
Government into the procurement actions by EUAS
led to the cancellation of the project.
7. Arnot Power i. In 2009, approximately, 12.5 million people had no

Station (6*350 access to electricity. Overall electrification stood at
MW), South 75% with 88% of urban and 55% of rural population
Africa having access to electricity in the country.
ii. Significant energy shortages exist in the country.
iii. Detailed studies were undertaken to finalize the
scope of work
iv. Recent R&M experience on multiple units

v. Contract was awarded to OEM i.e. Alstom and

involved in uprating of the power plant
vi. R&M implementation undertaken during phased
outages of the plant.
2.2.3. Site Visits to select international plants

Site visits were undertaken to select countries- Poland and Czech Republic to
understand the ground level R&M experience in terms of process adopted,
barriers or concerns of different stakeholders, strategies adopted to address
such concerns and possible lessons for India etc.
In Czech Republic visits were undertaken to Tusimice II Power Plant (4* 200
MW) and Prunerov II Power Plant (5*210 MW). During the site visits discussions
were held with concerned officials dealing with R&M at the utility level, at the
plant level and also with the EPC contractor i.e. Skoda Praha Invest to
understand their experience in planning, tendering, procurement and executing
R&M program of different units. Interaction with other sector experts was also
undertaken.
In case of Poland, R&M experience of Belchatow Power Plant

(12*370/380 MW) was studied. Interactions were held with the officials of
Alstom Power, Poland involved in R&M of various units of Belchatow Power Plant
(R&M contractor).
2.2.4. Expert & Stakeholder Consultation

As stated above, expert consultations at plant level were undertaken during
the site visit to Poland and Czech Republic. In addition to the above, the team
also interacted with select international experts and stakeholders to validate the
findings and obtain additional perspectives. The consultation process within
India also included discussion on global experiences of suppliers and vendors
wide cross-border presence.
In addition to the above, periodic consultation with the Task Force

constituted under the Chairmanship of Member (Thermal), CEA for Promotion of
Energy Efficiency R&M in Thermal Power Stations in India was also undertaken
before finalising the report.
2.3. Approach and Methodology for Task 4

The approach and methodology adopted for estimating the GHG emissions
reduction potential under various technological options of EE R&M of thermal
power stations and the possible monetisation framework is elaborated below.
2.3.1. GHG emission reduction potential under various technological options of

EE R&M of thermal power stations
Detailed unit level performance analysis has been undertaken to estimate the

overall GHG reduction potential of EE R&M. AF-Mercados EMI in its report titled
Developing Markets for Implementation of R&M Schemes in Thermal Power
Stations in India has assessed the overall market potential for R&M during the
12th and 13th Five Year Plan4. To estimate the GHG potential, these identified
coal based units for both state and central sector have been considered
(Annexure 3). In addition to the above identified potential, there are certain
plants on which R&M/LE works are on-going i.e. the plants that have slipped
from 11th to 12th Plan and these plants have also been considered while
estimating the GHG potential. Based on the unit level performance data for the
identified units under the 12th and 13th Plan, GHG emissions for each of the units
has been estimated in pre and post R&M/LE scenario which is then aggregated
to estimate the overall GHG emission reduction potential of R&M in the country.
Analysis made in this section is based on the performance data for past three
years i.e. 2008-09, 2009-10 and 2010-11 and certain assumptions.
2.3.2. Estimation of baseline CO2 emissions

CO2 emissions have been calculated separately for both coal and lignite
based units since plants based on coal and lignite differ in terms of their heat
rate.CO2 emissions at the unit level can be estimated as follows:
Absolute CO2 emissions (MT CO2) at the unit level = Specific CO2 emissions for
a unit (t CO2/MWh) * Net
Generation (MU) of the
unit
Specific CO2 emissions for a unit (tCO2/MWh)= (Fuel Emission Factor (g

CO2/MJ)* Net Station
Heat Rate
(kcal/kWh)*Conversion
Factor (4.1868) (kJ/kcal)
+ (Specific Oil
consumption (ml/kWh)
*Specific emissions for
Oil (CO2/ml))
Mt Million Tonne; tCO2 tonne of CO2; ml millilitre; gCO2 gram of CO2; kcal kilocalorie
Wherein,
i. Fuel Emission Factor for different fuels are being provided in the CEA
publication titled CO2 Baseline Database for Indian Power Sector,
Version 8.0, January 2013. Fuel Emission Factor for coal and lignite
is considered as 90.6 g CO2/MJ and 100.5 g CO2/MJ respectively.
Specific emission for oil is being considered as 2.89 g CO2/ml.
ii. Net Station Heat Rate for each of the state sector unit is calculated
based on the average of gross station heat rate and the auxiliary
4
The report is available on the CEA website.

consumption for past three years. In case of NTPC units, year wise
data on Gross SHR is not available. However, CEA in its publication
titled Recommendations on Operation Norms for Thermal Power
Stations for Tariff Period beginning 1.4.2009 has worked out the
deviation of operating heat rate with the design heat rate for various
NTPC plants for different years. This is presented below:
Table 7: Deviation of operating heat rate with the design heat rate for NTPC
stations
Weighted Avg.
Design Heat 2002- 2003- 2004- 2005- 2006-
Average
Rate 03 04 05 06 07
(kcal/kWh)
2267 7.33% 7.29% 6.84% 5.83% 5.46% 6.44%
It can be seen that average deviation of operating heat rate with

the design heat rate is reducing over the years indicating
improvement in performance. Therefore, for the purpose of analysis
of this report average deviation for the year 2006-07 has been
considered.
Data for various parameters were compiled from various documents

such as tariff orders, tariff petitions of various state utilities, CEA
thermal performance review for various years etc.
Various operational parameters particularly station heat rate was

not available unit-wise for state sector plants as these parameters
are generally reported plant wise. Thus, for units for which the SHR
data is not available, the model assumes SHR value of a unit of the
same plant with similar capacity and vintage.
iii. Net Generation for each of the unit is calculated based on the rated
capacity of the unit, average of PLF and auxiliary consumption for
past three years.
iv. Specific oil consumption for coal based and lignite based units is
considered as 2 ml/kWh and 3 ml/kWh respectively.
From the unit level CO2 emissions estimated above, total Baseline CO2
emissions are estimated for the R&M/LE for the 12th and 13th Plan. This is
estimated as follows:
Overall CO2 emissions (Mt CO2) for the R&M/LE in the 12th and 13th Plan =
Absolute CO2 emissions (Mt CO2) at the unit level.
2.3.3. Estimation of unit level CO2 emissions post R&M/LE

In order to estimate the CO2 emission reduction potential various scenarios
has been built in. These scenarios are based on the literature review of various
advance technological options available for EE R&M. Based on the international

review, it is observed that on average 3%-5% efficiency improvement potential
exists5. This is also corroborated by several national examples of R&M, planned
and those already executed. The table below presents the pre and post R&M
experience of different power plants in the Indian context i.e. the operating
station heat rate before R&M, design heat rate, guaranteed heat rate by the
supplier and actual/proposed station heat after R&M of some of these plants.
Table 8: Pre Post R&M Experience of different Power Plants
Operating Guaranteed Actual

Plant Unit Capacity SHR SHR/Expecte Designed SHR
Name No. (MW) (before d SHR as per SHR after
R&M) DPR R&M
R&M
Koradi a b
6 210 3264 2350 2395 under
TPS
process
R&M
Bandel
5 210 2874 2456b 2424 under
TPS
process
Korba 1 50 3270 2650 N.A. 2455c

(East)
TPS
6 120 N.A. 2434 2398 2381c
Ukai TPS 1 120 2899 2,482 2301 2848
Panipat
2 110 3950 N.A. N.A. 3511
TPS
Bathinda
2 110 3030 N.A. 2482 3005
TPS
a
Notes: Figure is for 2009-2010; b Figure is based on the option selected in DPR; c
Achieved as per PG Test; N.A.: Not available
Source: Detailed Project Report for Koradi TPS (Unit 6) and Bandel TPS (Unit 5); Data
collected during site visit to Korba TPS, Panipat TPS and Bathinda TPS; CAG
Audit Report No.4 (Commercial) for the year ended 31 March 2010 for GSECL;
CEA study titled Mapping of 85 pulverized coal fired thermal power generating
units in different states, by Evonik Energy Services India, under Indo-German
Energy Program
5
Refer Standard Menu of Options for Energy Efficiency focused Rehabilitation and Life Extension of
210 MW and above units in TPS in India under Chapter Lessons for India based on review of
international best practices in R&M

Based on the above assessment, the following key observations emerge:
a) In case of Koradi TPS Unit 6, efficiency improvement post R&M is

expected to be more than that of design.
b) In case of Bandel TPS Unit 5, efficiency improvement post R&M is
expected to be in line with that of design.
c) In case of Korba TPS Unit 1 and 6, SHR achieved after R&M was in
line with that guaranteed
d) In case of Ukai TPS Unit 1, improvement in the SHR post R&M was
not in line with that guaranteed.
e) In case of Bathinda TPS Unit 2, SHR post R&M improved marginally
as compared to pre R&M scenario
f) From the national case studies it can be observed that there are
possibilities to improve the operating efficiency of the plant by
more than its design.
g) Experience of successful R&M projects has been limited. The actual
achievement of R&M needs to be tested on ground.
Based on the observations made above, in order to compute the GHG

potential emission reduction for India the maximum achievable heat rate post
R&M is being considered as the design SHR. Various intermediate scenarios have
also been built in as plant level economics/ cost benefit analysis would guide the
number of interventions to be implemented and what could be the possible
reduction in the operating SHR or realization of station heat rate vis--vis design
SHR.
These scenarios are developed considering the fact that different utilities may
select different options for R&M depending upon the cost involved, timeframe for
shutdown and their priorities.
Scenario 1- Conservative Scenario

In this scenario it is assumed that net station heat rate is improved by 50%
from the design value.
For instance, if the plant design net station heat rate is say 2600 kcal/kWh
and the operating net station heat rate is 3366 kcal/kWh, according to this
scenario, net station heat rate for the calculation purposes would be considered
as 2983 kcal/kWh.
Scenario 2- Intermediate Scenario

In this scenario it is assumed that net station heat rate is improved by 75%
from the design value.
In continuation to the above example, this scenario would consider net

station heat rate as 2792 kcal/kWh.
Scenario 3- Optimistic Scenario

In this scenario it is assumed that net station heat rate is improved to the

design value.
In continuation to the above example, this scenario would consider net

station heat rate as 2600 kcal/kWh.
It may be worthwhile to mention the following here:

i. Design gross station heat rate for various units is considered as
follows:
Table 9: Design SHR and Auxiliary Consumption for various

capacity groups
Category SHR (kcal/kWh) Auxiliary Consumption
140 MW and less 2,395 9%
200/ 210 MW
- LMZ units 2,402 8.5%
- KWU units 2,342 8.5%
- Non KWU/LMZ units 2,371 8.5%
250 MW and above 2,297 8.5%
This is based on the CEA study titled Mapping of 85 pulverized coal

fired thermal power generating units in different states, by Evonik
Energy Services India, under Indo-German Energy Program.
ii. In cases where average operating heat rate is less than that of
design as mentioned above, average operating heat rate is
considered. In cases where average operating auxiliary consumption
is less than that of design value, average operating auxiliary
consumption is considered.
iii. Specific oil consumption for coal based and lignite based units post
R&M/LE scenario is being considered same as 2 ml/kWh and 3
ml/kWh respectively.
Based on the above steps total GHG emission reduction potential for the
plants has been estimated under various scenarios.
2.3.4. Data Sources
a) Recommendations on Operation Norms for Thermal Power Stations

for Tariff Period Beginning 1.4.2009, CEA, 2008
b) CO2 Baseline Database for Indian Power Sector, CEA, 2012
c) CEA study titled Mapping of 85 pulverized coal fired thermal power
generating units in different states, by Evonik Energy Services
India, under Indo-German Energy Program
d) CEA study titled Developing Markets for Implementation of R&M
Schemes in Thermal Power Stations in India, by AF-Mercados EMI,

under India: Coal Fired Generation Rehabilitation Project, financed

by the World Bank
e) Performance Review of Thermal Power Stations for various years,
CEA
f) Tariff Orders for different years by various State Electricity
Regulatory Commissions
g) Tariff Petitions for different years by various state generating
companies
2.3.5. Frameworks for Monetizing the GHG Emissions Reduction Potential in

the National and International markets
Market assessment of the Global carbon markets was undertaken to suggest
the available monetization frameworks for efficiency improvement and emission
reduction achieved through implementing EE R&M. This also included review of
appropriate methodologies for monetization for different R&M interventions
along with suitable international experience/examples.
In addition to the above, analysis has been undertaken to suggest different

steps that are required to be undertaken by the utilities to monetize GHG
emissions during different stages of R&M process cycle. Further, this section also
details out the national level mechanism of Perform Achieve and Trade (PAT).
There are various barriers that may constrain the utilities in monetizing the
GHG emission reduction including the evolving market situations. The different
barriers along with overall strategies to overcome each of the barriers have also
been detailed out in this section.
2.3.6. Expert Consultations

In addition to the above, the process of finalisation of the report also
involved periodic consultation with the Task Force members for Promotion of
Energy Efficiency R&M in Thermal Power Stations in India constituted under the
Chairmanship of Member (Thermal), CEA.
AF-Mercados EMI also conducted dissemination workshop in New

Delhi where the team presented the key findings and deliberated
on the study for reducing barriers for R&M intervention in thermal
power stations in India.

Chapter - 3
R&M Process Cycle
In order to identify the risks and surprises experienced during R&M projects
and to design strategies to mitigate risk and technical surprises, it is essential to
first understand various sub-steps of the entire R&M process, the activities that
are undertaken at each step and the stakeholders involved during various stages
of the R&M process cycle. Figure 7 maps out the overall R&M process and
stakeholders involved during each of the identified stage.
3.1. Identification Stage

During the identification stage the plant units are first identified to be
diagnosed further based on certain symptoms. At this stage the plant operators
regularly monitor the key plant unit parameters covering at least the following
aspects to identify symptoms that may necessitate R&M of power plants: (a)
Plant Availability, (b) Plant Load Factor, (c) Auxiliary Consumption, (d) Emission
Factors, (e) Level of Outages, (f) Life of the plant etc, (g) Frequency of annual
overhaul; (h) frequency of capital overhaul etc.
The diagnosis at this stage is based on available plant records and design
data. No inspections and/or testing of material, plant or equipment is involved at
this stage. Timely identification and diagnosis of problems is of critical
importance and form the foundation for successful R&M of the plant in the
future. This obviates the need for a comprehensive R&M in one go (except for
BTG) and ensures that necessary up-gradation is carried out during the course
of plant operation and annual/capital overhaul and maintenance.
3.2. Assessment Stage

Most of the equipment of a power plant is subjected to high temperature and
pressure and are designed for fatigue life of about 25 years of operation.
Due to ageing of the equipments and metallurgical deterioration of the

materials after prolonged use, it may become uneconomical or dangerous to
operate the unit. However, by undertaking preventive measures such as proper
maintenance, refurbishment, rectification or R&M of the plant it is possible to
operate the unit safely, reliably and economically for another 15-20 years.
Further, differences in the operational practices from design operation

environment may lead to premature equipment failure or lower than expected
output. This calls for systematic evaluation of the plant through undertaking of
various technical studies and tests. This includes the following:
a) Residual Life Assessment

b) Complete Condition Assessment
c) Energy Audit
d) Performance Evaluation Test
e) Past History of Plant (including maintenance schedules, overhauls

and assessment of O&M practices)
The technical evaluation of the plant is followed by the economic evaluation

of the plant to decide on the most optimal option. These include:
a) Plant retirement
b) Maintain and operate for extended time and retire subsequently
c) Capital Overhaul and refurbishment
d) R&M and Life Extension (LE)
e) R&M, LE and Up-rating
Detailed Project Report prepared for assessment of above options also

includes a detailed technical and economic analysis of the identified option. This
also includes assessment of the sources of fund and the phasing required for
execution of R&M option.
Several options can be worked out for involvement of private players in the
R&M process. Some options often discussed include: (i) Lease, rehabilitate,
operate and transfer; (ii) Joint venture between the private player and
public/private utilities.
Based on the technical studies and the option selected for R&M, the scope of
R&M Project is prepared. The aim here is generally to define scope in as precise
terms as possible however often changes and surprises occur when the plant is
actually opened up for implementing the R&M. The utility often is faced with the
issue of level of detailing that is required at the planning stage itself vs. the time
and resources that are available to be committed for achieving marginal
improvement in the scope assessment exercise.
Before the tenderization process begins, utility should also submit the details
of the assessment to the Appropriate Commission and seek its approval (often
in-principle approval, with the formal approval obtained post the R&M is
executed and actual amount incurred on the same is submitted).
3.3. Planning Stage

Once the scope of the project is finalised, the utility develops the design
specification and proposal package and determines the procurement/bidding
strategy.
Planning stage covers the entire bid process management i.e. issue of
tender(s), pre bid meetings, evaluation of technical and commercial bids,
selection of suitable bidder, negotiation of contracts and award of R&M contracts
to vendors/suppliers/OEMs.
In India, in certain cases, the bidding stage is omitted. In such cases, the
R&M process is directly initiated through the OEM and awarded for
implementation.

3.4. Execution Stage

This stage covers the entire R&M project implementation stage which begins
with the receipt of equipments to the site and planning of shutdown of unit. This
stage includes effective monitoring of work, timely decision making on
bottlenecks faced, ensuring the quality of work, inspection of material and
smooth implementation of work. Implementation support consultant hired by the
utility plays a key role in managing all the activities covered under this stage
through a structured process.
3.5. Closure Stage

After the R&M work is completed, it is very essential to evaluate whether the
goals and objectives of the R&M project was achieved or not. For this post-R&M
Performance Guarantee Test is conducted. Further, O&M Training is imparted to
engineers for efficient operation of the unit that has undergone R&M. This is very
important as there are issues involved in effective interfacing of the new
installations with the existing ones, commercial issues linked to change in tariff;
actual vs. planned performance outputs etc.

Figure 7: R&M Process Cycle
Identification Assessment Planning Execution Closure
Identification of plant units Selection of agencies / consultants for Preparation of bid documents Arrival of Equipments Post R&M Performance
technical studies/implementation support Technical and Commercial Guarantee Tests
Monitor and maintain /quality assurance Plan for Shutdown of Plants
record of key plant unit Issue of tenders and evaluation of Plant Performance Analysis
parameters Plant Assessment bids Start of execution of R&M
RLA Studies Work Follow-up Activities to meet
Complete Plant Assessment Selection of Bidders deficiencies
Energy Audit
Understanding prevailing O&M Negotiation of R&M Contracts Post R&M- Training and O&M
Practice of Plant
Operators Experience Award of R&M Contract
Past History of Plant
Procurement Plan Sequence of
Evaluation of Alternatives procurement and follow up with
vendors
Preparation of Scope of Work
Identification of key technical constraints
Finalize Scope of Work, Preparation of

Budget and Cost Benefit Analysis
Sourcing of Fund Bidders/Vendors, OEMs
Submission of R&M Project details to

Appropriate Commission
Funding Agency
29
Design Consultant/Implementation Support Consultant
Generating Company
Regulator Regulator
Indicative timeframe suggested by CEA in the National Perspective Plan for Renovation, Modernisation and Life Extension of Thermal Power Stations
(Upto 2016-17) for implementing LE&U schemes:
a) Appointment of consultant by utilities - 3 months

b) RLA / Energy Audit - 6 months
c) Freezing the scope of work/activities for LE&U - 3 to 4 month
d) Preparation of DPR - 6 to 8 months
e) Placement of order of LE&U - 6 to 8 months
f) Supply of critical spares - 16 to 20 months from placement of order.
f) Shutdown of unit - 6 - 8 months.

Chapter - 4
Risk Identification and Mitigation Framework
Planning and implementing R&M projects is often witnessed by occurrence

of adverse events that can derail the objectives of the project. Identifying and
mitigating project risks are crucial to manage R&M projects successfully. Thus,
a well-structured and documented Risk Management Framework at each stage
of the process is of utmost importance.
This chapter describes the key risk faced in implementing R&M mapped
across different stages of the R&M life cycle and the framework for
management of such risks.
4.1. Elements of Risk Identification

In order to effectively manage the potential risks that can be encountered
in R&M projects, it is important to understand the various elements of the risk
which include nature of risk, root causes or factors leading such risk or
unfavourable outcomes, bearer of the risk, frequency of occurrence and its
severity or impact on the plant/project time/schedule and cost. Each of these
elements is explained below.
4.1.1. Nature of Risk

The process of risk identification involves determining which risks are likely
to affect the R&M project and documenting the characteristics of each. Risk
Identification should address both internal and external risks. Internal risks are
those that project team can control or influence whereas external risks are
those that are beyond project teams influence and control.
Over the R&M life cycle, there could be various types of risk affecting the
effective implementation of R&M project. These include:
i. Management Risk: Risks associated with the incorrect/lack/delay

in initiating decisions or actions by the management of the
company. Such risks may impact the overall project outcome.
ii. Technical Risk: Risks associated with inadequate technical

assessment of the R&M projects. This includes risks such as
occurrence of technical surprises, non-achievement of post R&M
guarantees etc.
iii. Operational Risk: Risk arising due to internal system processes of

the company i.e. due to limited capacity and skills of the personnel
of the generating companies in undertaking R&M works.
iv. Institutional Risk: Risks associated with weak governance

framework. This includes risks related to socio-political

considerations that may result in delay in obtaining the shutdown

for undertaking both technical studies and execution of R&M
projects.
v. Market Risk: Risks arising primarily due to the actions or inaction

of suppliers in the market and the overall market conditions which
are beyond the control of the generating company. This includes
risks pertaining to limited participation of suppliers in the bidding
for R&M works, higher than expected price discovery, delay in
supply of material by the supplier etc.
vi. Regulatory Risk: Risks arising due to regulatory uncertainty or

change in regulations. This includes risk associated with the
disapproval of the investment made by the generating company in
undertaking R&M works.
vii. Contractual Risk: Risks associated with the uncertainty arising

from the contractual disputes or interpretation due to weakly
defined scope of works and inability to devise a mechanism to
resolve them constraining the overall execution.
viii. Funding Risk: Risks associated with mobilization of funds for

undertaking R&M project.
ix. Socio-Environment Risk: Risks arising due to the insensitivity

towards the habitations surrounding the power plant and
compliance to the environmental norms.
4.1.2. Frequency and Severity of Risk

Once the risk and its nature have been identified, it is important to assess
the frequency or likelihood of occurrence of risk and severity of impact.
Frequency and severity of the risk may differ from low to moderate to high
leading to different consequences. However, a distinction must be made
between: (i) high frequency low impact risk; (ii) high frequency high impact
risk; (iii) low frequency low impact risk and (iv) low frequency high impact
risk. The concentration of risk mitigation should largely focus around (ii) and
(iv) above, as these risk could be catastrophic for the project.
4.1.3. Root Cause Analysis

This step involves identifying the root causes of occurrence of risk or a
problem event faced during the course of the R&M life cycle. The practice of
root cause analysis is predicated on the belief that problems are best solved by
attempting to address, correct or eliminate root causes, as opposed to merely
addressing the immediately obvious symptoms. By directing corrective
measures at root causes, it is likely that problem recurrence will be prevented.
4.1.4. Bearer of Risk

Identification of risk bearer involves listing out entities that are directly and

indirectly affected by the risk event. This helps in design of approaches that
enable development of a balanced projects with specific risks allocated to the
entities that are best placed to manage them.
4.1.5. International Experience

The international generating companies have adopted multiple practices to
manage risks inherent in undertaking the R&M project. Based on the review of
the international best practices, lessons that can be learned for managing risks
has been suggested. It must be noted that key lessons have been highlighted
in this report.
4.2. Strategies for Addressing the Risk

Strategies to address a particular risk involve the following:
4.2.1. Risk Avoidance6

Risk avoidance implies not undertaking activities that trigger one or the
other risk or involve actions that either completely eliminate or reduce the
likelihood of the occurrence of risk. As such, it can be the most powerful
technique for managing risk. This may include preventive actions that may be
required from the stakeholders involved in the R&M process.
4.2.2. Risk Sharing/Transfer

It involves sharing some or all of the negative impact of the risk with other
agency in the form of performance guarantees or a third party in form of
insurance. Risk sharing could lead to risk mitigation in certain cases as by
sharing the risk with an agency which is able to manage the risk well, can
result in minimising the impact of the identified risk.
4.2.3. Risk Mitigation

Risk Mitigation involves reducing the severity of impact of the adverse
events. This strategy is used when either the risk cannot be avoided or the
cost of avoidance is high, and hence needs to be considered upfront in the
project cost estimates.
4.2.4. Risk Acceptance

This strategy is adopted because it is seldom possible to eliminate all the
risks. If a risk is identified and its impact or consequences are accepted, it then
can also be classified as risk management technique. Acceptance can be active
(by developing a contingency reserve to execute should the risk event occur,
adjusting the time schedule) or passive (by accepting a lower profit if some
activities overrun)
6
Risk Avoidance can also be defined as Preventive Risk Management. The concept is similar to
Preventive Maintenance in a thermal power plant that involves care and servicing by the plant
personnel for the purpose of maintaining equipment and facilities in satisfactory operating
condition by providing for systematic inspection, detection, and correction of incipient failures
either before they occur or before they develop into major defects.

In order to effectively manage the risks, one or combination of the

techniques mentioned above needs to be adopted.
The next chapter of this report provides a description of potential risk

events that may be encountered in planning and implementing R&M of thermal
power plants. Alongside, the chapter also describes the risk features and
strategies to address the risk based on the framework presented above.

Chapter - 5
Risk Management Guidelines
This chapter describes the risks identified across different stages of R&M
and the strategies to deal with the identified risk (refer Table 10).
Table 10: Potential Risks involved in R&M Process
S. Category of
Stage Risk
No Risk
Reactive approach to identification of

1 Management risk
plant for R&M
Management Lack of long term generation plan and

2 Identification
Risk awareness of available market options
Lack of confidence and uncertainty with

3 Market Risk
regard to R&M projects
Delay in obtaining unit shutdown for

undertaking technical studies
Inadequate technical
5 Technical Risk
assessment/studies
Management Weak analytical framework for

6
Risk selection of R&M options
Assessment
Appropriate Commission not apprised of
7 Regulatory Risk
the R&M project plan
Limited capacity of utilities in

8 Operational Risk
undertaking R&M works
9 Contractual Risk Weakly defined scope of work
10 Funding Risk Utility unable to mobilise funds
Low level of participation by the

11 Market Risk
vendors in the bidding process
12 Market Risk Higher than expected price discovery
Planning Market and Rebidding/Re-award/Delay in award of

13
Operational Risk R&M packages/contract
Implementation contract awarded to

Management
14 vendor involved in carrying out
Risk
technical studies
15 Execution Management Weak decision-making framework

S. Category of
Stage Risk
No Risk
Risk
16 Technical Risk Occurrence of technical surprises
Weak dispute resolution mechanism

17 Contractual Risk
constraining the execution of work
Mismatch (or delay) in supply of critical

18 Market Risk
equipment and the shutdown period
Weak Supervision, Quality Control And

19 Operational Risk
Assurance
Failure Of the Plant to Achieve

Socio- Environmental Standards And Plant Is
20 Environmental Perceived to Have Negative
Risk Social/Environmental Impact on Near-
by Villages
Delay in provisioning of obtaining unit

shutdown for executing R&M works
Sustainability of R&M gains affected by

22 Operational Risk
weak O&M practices
23 Technical Risk Post R&M guarantees not achieved
Closure
Non-approval of costs incurred during
24 Regulatory Risk
R&M
Absence of ex-post evaluation and

25 Operational Risk
feedback loop
The following section details out each of the above risk as per the R&M
process cycle along with the risk bearer, impact and strategy to manage the
risk.

The risk identified across identification stage of R&M process cycle and
strategies to handle the identified risks are presented below:
5.1.1. Reactive Approach to Identification of Plant for R&M (Management

Risk)
A. Risk Description
This risk arises due to delay in timely decision for R&M works. Ideally
decision to undertake comprehensive R&M should be based on the diagnosis of
the early warning symptoms. This includes diagnosis of the reasons for
deterioration in plant performance parameters such as Plant Availability,

Station Heat Rate (SHR), Auxiliary Consumption etc. and the ageing analysis of
the unit and critical equipments i.e. the number of remaining years left before
the plant completes its economic/designed life of operation.
B. Root Cause Analysis

This risk can be attributed to the weak monitoring processes at the plant
and institutional level.
In most of the states in India, it is observed that the decision to undergo

R&M is driven by reactive signals (Refer box below) i.e. (i) Units identified by
the CEA for undergoing R&M in the plan period during the progress review
discussions with the states; (ii) Regulatory signals wherein the petitioned
performance parameters are not approved by the Regulator or the generating
company has been cautioned by the Regulator; (iii) Tightening of emission
norms and notice from the State Pollution Control Board etc.
Box 2: Approach adopted for identification of units for undertaking R&M
Example: Barauni Thermal Power Station (BTPS)

Unit 6 and Unit 7 of BTPS (2X 110 MW) were commissioned in 1983 and 1985
respectively. These units were identified by CEA for R&M works during 11th plan.
However, the performance of the plant deteriorated much before the end of
economic life of the plant. The cumulative performance of the units from 1998-99 to
2007-08 is given below:
Cumulative Performance
Generation (MU) Auxiliary Overall

Year PLF Heat Rate
Consumption Efficiency
Unit Unit (%) (Kcal/kWh)
Total (%) (%)
6 7
1998-99 218 314 532 12.4 28.8 4608 18.8
1999-00 247 80.5 328 10.8 17.7 4681 18.4
2000-01 146 175 321 13.9 17.6 4424 19.7
2001-02 195 124 319 13.1 17.4 5127 16.9
2002-03 145 122 267 16.2 14.5 4637 18.7
2003-04 136 149 276 16.4 15 5050 17.8
2004-05 38.5 115 154 20.0 8.35 5253 16.4
2005-06 83.5 37.5 121 20.8 6.57 5404 16.1
2006-07 0 37.3 37.3 28.6 4.05 5198 16.5
2007-08 132 0 132 12.8 14.4 4450 19.3
Thus, the operational performance of the plant must be regularly monitored and
considered as a key parameter for undertaking decisions related to R&M of the plant.
The early warning symptoms should be identified and acted upon.
Source:- DPR for R&M of 2X110 MW (Units 6&7) Barauni TPS

In several cases the decision to undertake R&M is taken when either the
plant is already shutdown or the performance of the unit has significantly
deteriorated or the plant has outlived its economic/useful life.
C. Impact, Frequency and Severity of Risk

This risk leads to continued deterioration in the condition of the plant and
its performance. Higher is the delay in the decision to undertake R&M, more
adverse is the impact on the performance of the plant which ultimately leads
to longer time and higher cost for undertaking R&M of the plant.
The likelihood of occurrence of this risk is high in the Indian context as

most of the utilities adopt a reactive approach to R&M.
The severity of risk is moderate if the symptoms of deterioration in

performance are identified during the initial stages. However, the severity
keeps on increasing with the delay.
D. Bearer of Risk
Utility/Plant Owner is the direct bearer of this risk. However, this also
impacts the consumer in the state as it disrupts the quantum of power to be
supplied to the discom which then has to resort to purchase of costly power
from the short-term market.
E. Strategy to Manage the Risk

Strengthening of internal data acquisition, monitoring and alert
systems to track unit performance (Risk Avoidance)
Early diagnosis of the symptoms requires strengthening of data acquisition,
monitoring and alert system (Management Information System) within the
plant level. This system then interfaces with the Digital Control System (DCS)
for automatic generation of management reports. These reports then form the
basis of tracking of performance and R&M decisions.
Based on the above, this risk can be completely avoided or its impact can
be significantly minimized. Some of the critical actions involve:
a) Adherence to the annual maintenance/overhaul schedule and

capital overhaul schedules. This should also be accompanied by
updating the maintenance log, recording the history of such
overhauls, key issues faced and resolutions implemented.
b) Regular collection of unit level data pertaining to key performance

parameters such as Load Factor, Availability, Turbine Heat Rate,
Secondary Fuel Oil Consumption, Auxiliary Consumption, Emissions
(Sox, NOx etc.); reliability and condition of individual components;
and flagging of warning signals in the management reports.
c) Identification of the components/factors causing forced outages

along with reasons for such failures

For this, input from O&M department is critical and recording of routine
data such as material properties, geometries, crack sizing, hardness,
operational parameters etc. during operation, annual/ capital maintenance, will
be useful for undertaking technical studies/R&M in future.
The overall mitigation strategy described above is based on proactive approach

of the utility towards performance improvement.
5.1.2. Lack of Long Term Generation Plan and Awareness of Available Market
Options (Management Risk)
A. Risk Description
Key priorities of the state in the context of energy sector are: (i) to provide
adequate and affordable power to the consumers; (ii) be energy secure and
environmentally benign; and (iii) ensure financially sustainable utilities. The
states and the power utilities in the country must have long-term plan
(Optimal Generation Plan) for achieving the above mentioned goals. The
decisions related to R&M must be a consequence of this long-term plan.
The risk arises when decisions related to R&M are taken up in isolation
without considering other available options.

The root causes for the above behaviour are as follows:
a) Lack of power sector vision at the state level and vision at the
utility level
b) Conventional focus on augmentation of new supply as a means to
meet the increasing power demand
c) Lack of awareness of possible market options

The risk results in sub-optimal investment decisions. In addition, this risk
directly impacts the long term sustainability of the plant affecting its
performance and availability. As a consequence, this also affects the financial
performance of the generating company.
This trend has been observed in several states reviewed as part of this
study. Hence, the frequency of occurrence of this risk is high. The risk impacts
the plant and utility performance gradually, hence severity is moderate.
D. Bearer of Risk
Utility/plant owner is the direct bearer of the risk. However, non-
performance also impacts the consumers in terms of higher tariff (if pass
through under the regulatory mechanism).


The rationale for R&M of a project should be established at the state
level taking into account all the alternative competing options. (Risk
Avoidance)
R&M decision should take into account all the available market options
including new power plants (at same site or at a different location),
procurement of power through medium and long-term Case I bids, availability
of supply from renewable energy sources, purchase from open market etc. This
should form the basis of the decision i.e. whether to: (i) Retire; (ii) Maintain
and Operate for few years and eventually retire; (iii) Capital Overhauling and
Refurbishment; (iv) R&M and Life Extension; and (v) R&M, LE and Uprating.
The final decision of R&M should also be considered in consultation with the
Discoms, wherein the refurbished plant should fit with the Discoms long-term
power procurement plan and merit order schedule.
5.1.3. Lack of Confidence and Uncertainty with Regard to R&M projects

(Market Risk)
A. Risk Description
Due to limited experience sharing and success stories in India, a number of
generating companies are uncertain about the outcomes of the R&M. Hence,
appreciation of benefits associated with R&M is limited.
This leads to a risk wherein the utility may not consider R&M as an option,
even though it makes economic sense.
Box 3: Lack of confidence and uncertainty in taking up R&M
Uncertainty with regard to R&M projects

Example: Ukai Thermal Power Station Unit 1, Gujarat State Electricity
Corporation Limited (GSECL)
The post R&M performance of Ukai TPS unit 1 has not been in line with that
envisaged in DPR. The performance of the unit during Pre and Post R&M and as
envisaged in DPR is given below.
Norm Actual Post

Pre-R&M
Ukai TPS Unit 1 as per R&M
(2005-06)
DPR ( 2009-10)
Auxiliary consumption (%) 9.20 10.70 10.85
Heat Rate (in Kcal/ Kwh) 2,482 2899 2848
PLF (%) 80 54.53 50.68
Under performance was due to high vibration of turbine and excessive boiler tube
leakages which led to delay in stabilisation of operation of Unit I of Ukai TPS
(which was subsequently addressed by BHEL). Although, the performance

improved thereafter but it still has to achieve sustainable benefits as provided in

the DPR.
Source:- CAG Audit Report No.4 (Commercial) for the year ended 31 March 2010 and
discussion with the utility
Non completion of R&M work by selected vendor

Example: Obra A Thermal Power Station, Uttar Pradesh Rajya Vidyut
Utpadan Nigam Limited (UPRVUNL)
UPRVUNL entered into an agreement (February 2003) with M/s Techno Prom
Export (TPE), Russia for the refurbishment of 5 units of 50 MW capacity each of
Obra A TPS for Rs 479.50 Crore, work being divided in three phases. TPE started
the refurbishment of Unit No.1 & 2 under Phase I (July 2003) but stopped the
work (February 2006) mid-way without completing the contract. A MOU was
further signed (April 2006) with TPE for completion of work of Phase I by
November 2006. TPE again failed to complete the work within extended period up
to January 2008. Agreement was terminated (March 2008) and remaining work of
Phase-I was got completed (May 2009) by other vendor.
Source:- CAG Audit Report
Uncertain outcomes have created apprehensions about viability of R&M among the
utilities.

The root causes include:
a) Limited experience of R&M related to larger size plants especially

210 MW and above. This is critical as going forward 500 MW fleet
shall also require R&M.
b) In certain cases, post R&M performance of the plants has not been
in line with that envisaged at the planning stage leading to the
negative outlook of the utility towards R&M.
c) Limited dissemination of successful cases
d) Success of R&M has been limited in case of earlier installed 120 MW
sets in the country due to their inherent design problems.

This risk either results in delay or discarding of R&M as an option even
when it would have made economic sense. This also adversely impacts the
R&M market in the country.
The severity of the above risk depends on case to case basis, however may
range from low to moderate. The frequency of the above risk is moderate to
high.
D. Bearer of Risk
This risk impacts the entire R&M market including potential generating
companies, equipment suppliers, design consultants etc.


a) Need for Experience Sharing (Risk Mitigation)
The generating companies and other stakeholders should disseminate
their experience of implementing R&M. This besides being hosted on
their respective websites should also be disseminated through a
common platform such as the CEA official website. Utilities should
submit case studies to CEA upon completion of R&M projects
highlighting their experience and key learning in implementing R&M
projects which CEA may host on their websites after review.
Box 4: Need for Experience Sharing
Example: Korba (East) Thermal Power Station- Unit 1 to 4 (4x50 MW) and
Unit 5& 6(2x120 MW)
In case of the above plants, the achievement post R&M viz-a-viz the contracted
parameters has been encouraging. This is tabulated below:-
PERFORMANCE PARAMETERS (4X50 MW) KORBA EAST
As Per Contract
Agreement
Pre- Post-
Achieved as Per PG Test Results
Rehab Rehab
All Units All Units U#1 U#2 U#3 U#4
Rated
1 40 MW 50 MW 50MW 50MW 50MW 50MW
Capacity(MW)
TG Heat Rate
2 2714 2319 2186.12 2257.4 2253 2188.1
kcal/kWh
Boiler
3 83% 87.50% 89.03% 88.39% 88.97% 90.30%
Efficiency
Station Heat
4 3270 2650 2455.54 2553.85 2532.31 2423.145
Rate kcal/kWh
PERFORMANCE PARAMETER (2X120 MW) KORBA EAST
Guaranteed Parameters As per PG Test Results
U#5 U#6 U#5 U#6
1 Rated Capacity(MW) 120MW 120MW 120 MW 120MW
2 TG Heat Rate kcal/kWh 2087 2087 2096.96 2097.97
3 86.3(+/- 85.75(+/-
Boiler Efficiency 89.40% 88.13%
1%) 1%)
4 Station Heat Rate kcal/kWh 2418 2434 2346 2381
It is important that the generating companies and other stakeholders should

share their experience of implementing R&M so that other plants can also

take benefit of such experiences. This also results in confidence building

towards R&M interventions.
Source: Interaction of AF Mercados EMI team with the officials of CSPGCL
Pilot demonstrations in Bandel TPS Unit-5 (210 MW) and Koradi Unit 6 (210
MW) have already been initiated through the support of the World Bank. It is
expected that the experience from these pilots would help in better design and
implementation of R&M programs in future.
b) Need to Develop Market for R&M in the Country (Risk Avoidance)

The CEA needs to facilitate development of R&M market in the country
through appropriate signals. This includes:
i. Communicating the overall R&M market size to various

stakeholders. This will promote vendor development and
interest in the R&M market from India and outside.
ii. Initiate measure to address concerns of the stakeholders
including bidders/suppliers and technical consultants.
CEA has already initiated the above study with support from the World
Bank. The result of these will be available during 2013-2014.

The risks identified across assessment stage of R&M process cycle and
strategies to manage the identified risks are presented below:
5.2.1. Delay in Obtaining Unit Shut down for Undertaking Technical Studies
(Institutional Risk)
A. Risk Description
Robust baseline assessment through technical studies is the foundation for
the success of R&M project. In order to carry out comprehensive assessment of
the remnant life and condition of the plant, various standardised tests are
required to be performed (destructive and non-destructive) involving a
shutdown of approx. 2 to 3 months.
This risk arises if the utility is unable to obtain requisite approvals from the
relevant authorities (State Government or Regulatory Commission) for
shutdown of the plant for carrying out such studies.

Significant energy and peak deficit scenario in most of the states coupled
with lack of planning for procurement of power from other sources inhibits
shutdown of state owned units especially for carrying out such studies.

In certain cases this is driven by socio-political consideration that results in

delay in obtaining the shutdown.

The above risk leads to the following:
a) Delay in initializing the R&M activity, causing further

deterioration in the plant condition and performance
b) Shorter shutdown period results in inadequate assessment of
the condition of the plant and residual life of various
components derailing/impacting the entire R&M project.
The likelihood of the occurrence of this risk is low to high depending upon
the number of units requiring simultaneous shutdown. It may not be difficult to
obtain requisite approval for one unit but in case more units are scheduled for
such shutdown, obtaining requisite approvals/permissions may be difficult.
The severity of the risk is low.
D. Bearer of Risk
Generating company is the direct bearer of this risk.

This risk can be avoided through a combination of measures that should be
initiated from the Central Government, the Generating Company and the
Distribution Utility. These are explained below:
a) Advance Planning for Scheduling of Technical Studies (Risk

Avoidance)
The following steps are required at the plant level:
i. Efforts should be made to coincide the time period of technical

studies with that of annual maintenance/overhauling of the unit.
Thereby, a separate shutdown may not be required for carrying
out technical studies.
ii. In case a separate shutdown is required, it must be planned well

in advance and distribution utilities must be informed
accordingly. This would provide sufficient time to the distribution
utility to arrange for additional power to meet the shortfall on
account of the above. In addition current power market provides
several avenues for procurement of power in the short and
medium term, which should be considered.
iii. Further, efforts should be made to plan such studies during off-
peak demand months when the stress on the generating
systems is low. This however, should be considered in view of
the market conditions. As in certain cases it is noticed that when

multiple plants undergo R&M during off-peak periods, the stress

on the suppliers increases resulting in delays. Hence, availability
of the vendors should be assessed before actual
commencement.
b) Additional Allocation of Power to States from Unallocated Quota

of Central Pool for carrying out the studies (Risk Avoidance)
In order to obviate this risk the following is required:
i. As per clause 6.2 (ix) of the MoP Guidelines for R&Min National
Perspective Plan for Renovation and Modernisation and Life
Extension of Thermal Power Stations (upto 2016-17), the
utilities may approach the Government for additional allocation
of power to the extent possible from unallocated quota of
central sector power stations during the period of shut down of
units for comprehensive life extension works.
5.2.2. Inadequate Technical Assessment/Studies (Technical Risk)
A. Risk Description
Technical assessment is the most important and a resource intensive
activity in terms of time and manpower. It involves performance testing,
destructive and non-destructive evaluation of equipment, to diagnose the key
concern areas in the power plant. This risk arises on account of the following:
a) Requisite studies or tests not performed

b) Assessment undertaken only for major components of the plant
c) Proxy Assessment in case of multiple units, wherein studies are
undertaken only for one unit to finalise scope for other units

The root causes for the above are:
a) Studies undertaken only for the major components of the
plant
It is observed that in many cases RLA/CA study is undertaken for
boiler and turbine but no detailed study is undertaken to diagnose
critical areas in BoP and auxiliaries. Further, studies such as energy
audit may not be undertaken at all, inhibiting identification of
energy efficiency measures for improved performance and also
comparison of performance of different components of plants in pre
and post R&M scenario.
b) Due to lack of past operating and performance data with the utility,
it may difficult to identify improvement areas for certain
components in the unit/machine as every component cannot be
tested.

c) Utilities may also not be keen to undertake detailed assessment as

they generally underestimate the importance of data or in interest
of time these studies may be omitted.
d) Scope of work prepared for carrying out technical studies may be

weakly defined especially for critical plant components operating in
creep and fatigue range. Further, deliverables based on such
technical studies are not defined appropriately by the utilities
e) In case of multiple units, it is sometime assumed that since both

units are operating under same condition, assessment of any one of
the units would suffice the purpose. This is often done to save time
and cost during the initial stages (Refer box below).
Box 5: Inadequate Assessment for R&M
During interactions with various officials both at the utility headquarters

and the plant level, it was observed that most of the utilities do not
undertake comprehensive assessment, and studies are being
undertaken for the main plant only (BTG). In addition, in case of
multiple units undergoing R&M, studies are conducted only for one of
the units and scope for all units is prepared based on the same (Proxy
Assessment).
One of the examples is Barauni Thermal Power Station (Unit 6 and 7)

wherein the RLA study for Boiler & Auxiliaries and Turbine & Auxiliaries
was undertaken for only Unit 6. No RLA/CA study was conducted for
Electrical and C&I Systems or for common facilities. Further, no such
assessment was undertaken for Unit 7.
Based on the limited assessment scope of work was prepared for both
the units.
Source: Interaction of AF Mercados EMI team with the officials of various

utilities and DPR for R& M of 2X110 MW (Units 6&7) Barauni TPS.

The impact of this risk is reflected in the form of surprises or additional
scope of work at the project execution stage leading to increase in cost and
time of the project. The impact on the project could be high as identification of
additional scope not only increases the cost of procurement but also leads to
delay in execution leading to significant generation loss and hence revenue to
the utility.
The frequency of occurrence of this risk is high.
D. Bearer of Risk
The above risk impacts all the parties involved in the R&M activity including
generating company, supplier(s) and the Implementation Support Consultant
(if applicable).


Comprehensive Studies for the unit planned for R&M should be
mandatory. The scope of the study should cover both the Main Plant
Equipment as well as the Balance of Plant. (Risk Avoidance)
A comprehensive R&M assessment should aim to undertake the following
for each unit being considered for R&M or LE: (i) Data Gathering; (ii) Plant
Walk-down; (iii) Energy Audit; (iv) Pre-R&M Performance Testing; (v) Residual
Life Assessment; (vi) Steam Path Audit; (v) Stress Analysis of Critical Piping;
(vi) Potentially Non-destructive and Destructive Evaluation; and (vii) Review of
O&M Practices7. (Refer Table below)
Table 11: Technical Study of Thermal Plants
Balance of
Boiler Turbine/Generator
Plants/Auxiliaries
RLA Study RLA Study

Condition Assessment
Condition Assessment Performance Testing
Study
Study Finite Element Analysis
Performance Testing
Performance Testing Steam Path Audit
Additionally, diagnostic studies should also review the procedures, training

system and other similar aspects.
Further, in order, to minimize the impact of this risk it is advisable to

undertake comprehensive R&M assessment for each unit planned for R&M, and
review both the main plant equipment and the BoPs. The depth of the studies
between different units or plants could vary depending upon the condition of
the plant, availability of historical operation and maintenance records etc. For
example, if regular maintenance of the plant is being undertaken by the utility
and comprehensive maintenance records have been well kept in that case in-
depth testing may not be required for all the components of the plant. Also, it
is suggested that project financiers should consider submission of the
reports/results of such studies as a pre-requisite for funding the project.
In this regard CEA has prepared standard documents for carrying out
RLA/CA/EA studies which may be used by the utilities.
5.2.3. Weak Analytical Framework for Selection of R&M Options

(Management Risk)
A. Risk Description
Post the technical studies have been undertaken, the decision to
repair/improvement/replace/retrofit or combination of these measures (or
7
In certain cases, wherein the assessment of O&M practices has revealed serious gaps, funding
agencies have insisted on development of an O&M improvement action plan that is accepted by
the Board of Directors by the generating company, and proposed for implementation as soon as
the R&M is completed.

retire) is based on assessment of available options. This also includes

economic evaluation or comparison of options with regard to R&M, retirement
or setting up of new power plant etc.
This risk arises if the utility is not able to identify and/or evaluate different
options and select the best possible option depending upon the conditions of
the plant, financial constraints, etc.

The root causes of the above behaviour are:
a) Poorly defined objectives for undertaking R&M

b) Inability to identify alternative option or combination of options
c) Focus only on the technical criteria, with limited focus on financial
and economic returns
d) Limited project appraisal skills

The above risk leads to selection of sub-optimal option that may result in
unmet objectives and outcomes, and/or higher time and cost.
The likely occurrence of the risk is high and severity is moderate.
D. Bearer of Risk
The ultimate bearer of this risk would be consumers as the suboptimal
decision would lead have relatively high cost viz-a-viz benefit resulting in high
consumer tariffs.

Comprehensive Identification and Assessment of Options including
computation of financial returns, payback period, shutdown time
required and conformance to the set objectives. (Risk Avoidance)
R&M should be goal oriented. Hence, objective for undertaking R&M should
be decided upfront. The objective for undertaking R&M could be any one or a
combination of the following (i) Availability improvement i.e. increased
electrical output; (ii) efficiency upgrading i.e. reduced fuel consumption, (iii)
environmental control upgrading i.e. emissions within new norms, (iv) life
extension i.e. improved reliability. Based on the identified objective/(s),
options for R&M should be evaluated and selected.
A detailed cost benefit analysis by estimating the net present value (NPV),
rate of return (IRR), payback period and cost-benefit ratio, should be
undertaken by the utility for different options. Analysis should also include the
impact on key parameters such as life, PLF, heat rate, efficiency etc. Further,
the robustness of the selected option should be tested through scenarios such
as time and cost over-run, shortfall in capacity, change in shut-down, heat rate
or a combination of adverse factors. The justification of the R&M project needs

to be established clearly demonstrating that the R&M project is competitive

against all feasible power generation supply options (Refer Box below).
It must be noted that there is no benchmark cost for R&M. The actual cost
depends on a variety of factors including:
a) Periodicity and quality of regular maintenance and overhauls.

b) Overdue maintenance works imply a larger scope of R&M works
c) Age, technology and condition of the plant.
d) Higher Costs of Energy Efficiency Measures and Modernization
Hence, net financial returns should be the determining factor rather than
capital expenditure incurred on R&M. Independent specialized entities could be
considered for undertaking such assessments.

Box 6: Evaluation of different R&M options
Example: Unit 6 of Koradi Thermal Power Station (KTPS) (210 MW), Maharashtra State Power Generation Corporation Limited
(MSPGCL)
Table below indicates the options considered for R&M by MSPGCL for KTPS Unit 6. Based on the assessment Option D was selected.
Description/
A B C D E F G
Option
One to one
Option B,
replacement Option B plus
along with life
for life replacement
extension,
extension of of complete
aims for Option B plus
the plant for turbine with complete Insitu
restoration LP retrofit for
up to 20 new reaction replacement replacement
for design Increase in Option D plus
years with type turbine of the main of the main
capacity and Plant Capacity Generator
the present for increase in plant with plant with
restoration of up to 215 MW modification
Scope operating Plant Capacity new plant of new plant of
the design and to achieve
capacity up to 215 250 MW 250 MW
Unit Heat rate Improvement 220 MW
without MW, and capacity at capacity at
with Boiler in Unit Heat capacity
modification Improvement adjacent same
modification Rate beyond
for existing in Unit Heat location location.
for existing design Heat
coal quality, Rate beyond
coal quality
with design Heat
and Turbine
improvement Rate
refurbishment
in heat rate
Unit
Capacity 196 210 215 215 220 250 250
(MW)
Unit Heat
Rate
(kCal/kWh) 2476 2400 2370 2350 2350 2350 2350
PG Test
value

Project
Capital cost 309 403 456 486 536 984 849
Rs. Cr.
Cost per MW
1.57 1.92 2.12 2.26 2.43 3.93 3.39
(Rs. Cr/MW)
Cost of
Generation 2.27 2.27 2.23 2.21 2.24 2.59 2.36
(Rs/kWh)
FIRR % at
minimum
11.74 11.65 12.86 13.2 12.39 7.82 8.28
cost of
Generation
Pay Back
4.5 4.6 4.6 4.6 4.6 6.6 6.7
period
Shut down
period 5 6 6 6 6 4 18
months
Source: Detailed Project Report for KTPS (Unit 6)
Thus, various options for R&M should be comprehensively identified and evaluated, and best option be selected.

5.2.4. Appropriate Commission not apprised of the R&M Project Plan

(Regulatory Risk)
A. Risk Description
R&M project involves capital investment and hence regulatory approval for
such investment is essential to enable the generating company to recover the
amount through tariffs. It is thus, essential that the appropriate regulatory
commission is apprised well in advance about the plan for undertaking the
R&M. In addition, the plan should be in accordance with the regulations
notified by the Commission from time to time.
The risk arises when the Appropriate Commission is not apprised about the
R&M project.

This risk can be attributed to complacency resulting in oversight or lack of
awareness of regulatory requirement.

The impact of this risk would be that the generating company may not be
able to recover the investment or the cost it incurs on undertaking R&M of the
plant. This will also impact the financial position of the generating company.
The likelihood of this risk is moderate and the severity is moderate.
D. Bearer of Risk
Utility is the bearer of the risk.

Practice of obtaining in-principle approval from the Appropriate
Commission should be encouraged. (Risk Avoidance)
Review of the tariff regulations notified by various states indicate that in-
principle approval of R&M investment is not a mandatory requirement;
however experience suggests that it is a desirable practice that helps avoid
controllable risks at a later stage.
In accordance with the above, the generating company must provide all
required information to the regulator for obtaining such approval.
5.2.5. Limited Capacity of Utilities in Undertaking R&M Works (Operational

Risk)
A. Risk Description
The risk arises due to the limited skills and expertise of the generating
company to plan and implement R&M. In addition, absence of dedicated
cell/department at the company level also contributes to the risk.

The risk arises on account of the following:

a) Limited training of utility professionals in the area of planning
and execution of R&M projects
b) Inadequate exposure of the utility staff with regard to
experience of other states in India and outside in implementing
R&M
c) Adequate personnel not dedicated to the R&M activity. It is
often seen that most of the available manpower is dedicated to
the already on-going and large new capacity augmentation
programs.
d) People working in R&M project get transferred to other
departments in the middle of the project.
Box 7: Limited capacities of the Utilities in undertaking R&M works
During interactions with various utilities undertaking R&M, it was

observed that Adequate staff is not deployed for the project and
Maintenance Engineers from running plants are utilised as and when
need arises diluting the efficacy of work.
Adequate dedicated personnel is a pre-requisite for effective
implementation of R&M projects
Source: Interaction of AF Mercados EMI with officials of various utilities.

Every stage of the R&M process cycle is impacted leading poor execution of
project. The frequency of this risk is high and severity is moderate.
D. Bearer of Risk
Besides the utility, vendors also bear this risk as they would not be able to
perform their work effectively.
E. Strategies to Manage the Risk

Creation of dedicated R&M Cell and Engaging Specialised Consultants
(Risk Avoidance)
In order to effectively deliver a successful R&M project, the following steps
are required:
a) Creation of dedicated R&M cell by the utility at the headquarter
and the plant level
In order to effectively deliver on the R&M project it is important to
create a separate R&M cell with adequate and dedicated manpower for
the project. This team should involve a mix of plant level officials dealing
with the different plant level departments like Boiler, Turbine, Electrical,
C&I, CHP, Milling system and AHP etc.
Further, officials having prior R&M experience should also be included in

the team. To ensure timely decisions and approvals within the

organization it is important that this team is formed at both headquarter
and plant level.
b) Engaging of design and implementation support consultants

Specialized agencies should be engaged by the utility (on the basis of
competitive bidding) covering assistance on all works from design to
implementation. This could be either one agency or multiple agencies.
The role of design consultants is to assist the utility in tasks related to

conduct of different studies, identification and selection of best feasible
option for R&M, preparation of DPR, scope finalization, preparation of
tender documents, bid evaluation and selection of vendor etc.
The role of implementation consultant includes review and approval of

drawings, coordination between the vendors and the utility, monitoring
the progress of work as per approved schedule, assistance to Owner in
dealing with statutory authorities such as Boiler Inspectorate
Directorate, Pollution Control Board etc, monitoring of day to day
progress of the work, review of PG Test Report etc.
Further, to build the requisite capacity of the utility officials, scope of

work of consultants should also include training of utility/R&M cell
officials on each of these components/fields.
c) Avoidance of transfer of personnel involved in R&M Project in the

middle of R&M work
Abrupt transfers of personnel in an ongoing R&M project create
unnecessary distress and slow down the progress till the new personnel
gets acquainted with the project. It is imperative to involve people
selected for R&M Cell to work from the beginning to end of the project
so that timely decisions can be taken.
5.2.6. Weakly Defined Scope of Work (Contractual Risk)
A. Risk Description
This risk arises if the scope of work is broad and does not clearly define the
role and responsibility of different stakeholders including the works to be
performed by each party.
Further, if the scope of work or design specifications is prepared in a way to

favour a particular supplier or include propriety items.

The risk arises due to the lack of proper and detailed assessment of the
requirement of works at the start of the project by carrying out limited
technical studies. It needs to be acknowledged that the nature of R&M work is
such that exact scope cannot be defined but efforts are required to bridge this

gap as much as possible. However, instead of bridging this gap by specifying

the scope as precise as possible, utilities prefer to insert clauses the following
clauses to safeguard their interest (such as):
Any item essentially required for system completion and

commissioning of the units shall be treated as included in the scope of
works without any extra cost on this account
Such clauses although included in the contract, in reality are not acceptable
to the vendors. It is also difficult for the utilities to make vendors adhere to
such clauses. Further, scope is kept broad or are prepared in manner to favour
a particular supplier in cases where in there exists a potential conflict of
interest i.e. same organisation or consultant is involved in the entire process of
undertaking the technical studies, preparation of scope and its ultimate
execution.

Lack of clarity in the roles and responsibilities of the involved parties in the
scope of work leads to contractual disputes causing delay in project execution.
Also, such risk arises when the actual execution of the project starts leading to
increased shutdown period and hence loss in revenue to the utility.
Further, ill defined scope of work and specifications tailored to favour a

particular vendor lead to increased cost of procurement of the works for the
utility and discourages other vendors in the market ultimately hampering the
overall market development in a broader context.
Contractual delays also impact the bottom line of the vendor and
opportunity cost for the utility. The likelihood of the occurrence of this risk is
high and severity differs from moderate to high.
D. Bearer of Risk
Both utility and vendor are the bearers of this risk.

Scope of Work to be as precise and comprehensive as possible (Risk
Mitigation)
In order to mitigate this risk a multi-pronged approach is required which is
explained below:-
a) Role of Design Consultants- Besides their role in undertaking the

technical studies, it is required that design consultants should also
be involved in preparing the final scope of work for the study.
b) Involvement of plant level officials- It is required that

officials/engineers involved in the operation and maintenance of the
plant should be involved while finalizing the scope of work as they
have deeper knowledge of the condition of the plant.

c) Involvement of engineering team-Engineering team of the utility

should also be involved while finalizing the scope of works.
d) Discussions with vendor/s- Suppliers (especially the original

equipment suppliers) should be consulted in the early planning
process to understand the viability of options for R&M envisaged
including new technologies which can be used. However, it is
required that scope should not be biased towards any one or more
supplier. Further, in case of bidding, the bid clarification stage
would provide the opportunity to bidders to flag biases if any and
would help in strengthening of the scope of works. In case of
nomination basis, direct discussion with the vendor can provide
inputs in finalization of scope.
e) Avoid proprietary items in the scope of work- While preparing

specifications for different components efforts should be made to
avoid proprietary items. For e.g.: - in case of C&I systems, it is
important to select Open System to minimize proprietary hardware
and software; and ensure compatibility with existing systems. In
addition, the customer support and service policy should also be
taken into account during assessment.
Involvement of multiple agencies as suggested above and conducting

comprehensive R&M studies are vital components for preparation of best
possible specifications of the project.
5.2.7. Utility Unable to Mobilise Funds (Funding Risk)
A. Risk Description
This risk arises when the utility is unable to arrange adequate funding for
undertaking R&M of the project or faces constraints in raising funds for the
project.
Box 8: Lack of funding for undertaking R&M (Thermal Power

Station - BTPS)
Example: Barauni Thermal Power Station (BTPS)- Unit 4 and 5
Unit 4 and Unit 5 of BTPS (2x50 MW) were first identified by the CEA
for R&M works in 1989 and 1991 respectively. However, due to lack
of sufficient funds R&M works could not be taken up at that stage.
These units were later shutdown in 1995-96. Finally, in 2008, the

Bihar State Electricity Board (BSEB) decided to take up these units
for R&M. However, these were declared unviable by the CEA, and
considered for retirement under the 11 th five year plan.
Thus, due to funding constraints R&M plans could not materialize as
per expected schedule.
Source: CAG Report 2009-10


The risk arises due to the poor financial condition of state utilities that
makes it difficult to obtain financing especially from commercial sources.
Further, due to declining profitability, it is difficult for state utilities to even
arrange equity funds from their internal reserves.
In addition to the above, most of the utilities are unable to justify the
benefits envisaged from R&M to the potential financiers. This occurs on
account of three factors: (i) lack of robust analysis of various possible options;
(ii) lack of confidence of financiers on R&M due to limited success stories in the
country; and (iii) overwhelming focus of financiers on new capacity addition
(until recently).

The overall impact is that utility is unable to materialize its plan for
undertaking R&M. The consequent delay on account of the above results in
further deterioration in the plant performance. This also has a cascading affect
on the overall R&M market and leads to creation of a vicious cycle, wherein
projects do not get financed on account of limited success stories and vice
versa.
The likelihood of occurrence of this risk is low to moderate and severity of

risk is high.
D. Bearer of Risk
Utility is the direct bearer of this risk. This also impacts the suppliers as
they may not receive timely payments for their works.
In the long run, this risk has repercussions on the entire R&M market.

Use of innovative financing approaches/models (Risk Mitigation)
In order to attract public or private investment for R&M projects different
financing models should be taken up by the state utilities. These include:
a) Lease, rehabilitate, operate and transfer (LROT):-

Under this option, the private promoter (PP) would take over the
power station on a long -term lease, say 10 years or more wherein
PP would invest and carry out the R&M of the power station and
would also take over its operation and maintenance. However, legal
title and ownership of the plant remain with the utility. After the
completion of the contracted lease period, either the lease may be
renewed or the station may be transferred to the power utility. For
e.g. discussions with the MPPGCL officials revealed that due to
paucity of funds, R&M of Satpura TPS is being explored on LROT
basis.
b) Joint Venture between Power utility and public or private

company:-
In this option, a new company would be formed as a joint venture
(JV) of the state power utility/ State Government and selected
private/public collaborator. The JV Company would then undertake
the R&M/ LE works and also own, operate and maintain the power
station. The private collaborator could also be an equipment
supplier. Each partner shall hold minimum 26% equity in the JV
Company. For e.g. BSEB undertook the R&M of its Muzzaffurpur
Plant (Unit 1 and 2 (2x110)) by forming a new company, KBUNL,
as a Joint Venture (JV) of the State Power Utility (BSEB)/ State
Government (Government of Bihar) and public power utility
(NTPC).
These models though discussed at various levels, the actual implementation

of such models has been limited. It is important that utility should undertake a
robust analysis of alternative approaches, cost benefit analysis and
computation of financial returns. Also for increased participation of the
financial institutions it is important to safeguard the interest of financers by
clearly defining the roles and responsibility in the event of shortfall/ non
achievement of required operational parameters and financial returns along
with the suitable mechanism for recovery of investment.
Therefore, it is required that such models must be actively considered by

the generating company for financing R&M projects.
In addition, awareness campaigns and outreach activities to communicate

benefits of R&M provide certainty on the market size, and involving potential
vendors in the process is of critical importance. Demonstration of successful
pilots will also provide a strong fillip to the R&M market in India.
The Indian power market particularly the new thermal capacity addition is
facing unprecedented challenges on account of acute shortage in domestic
coal, slow production of coal from the captive coal blocks and huge
dependence on imported coal. All of the above coupled with inflexible
contractual structure for pass through of variation in the coal prices is resulting
in slow down of the new capacity addition. Thus, there is likely to be a very
strong focus on increasing the efficiency of the existing generation fleet of the
country. R&M market is likely to gain momentum in the near future, with
financiers also preferring to finance projects that demonstrate visible
improvement in the performance in short time.
5.3. Planning Stage

The risks identified across planning stage of R&M process cycle and

5.3.1. Low Level of Participation by the Vendors in the Bidding Process

(Market Risk)
A. Risk description
This risk arises when the utility adopts the bidding process for selection of
vendors and receives a poor response to its bid(s).

The risk occurs due to the following reasons:-
a) Limited firms involved in the R&M market as most of the domestic

and foreign companies have focused on new capacity addition in
comparison to R&M projects.
b) Limited new vendor development initiatives - Insufficient/inadequate
market signals to the prospective vendors. Most of the utilities in the
past have preferred to execute R&M projects on nomination basis.
c) Stringent qualification requirements and guarantees impending
larger participation.
d) Prohibitive contractual conditions.

The utility is forced to select vendor from the limited pool of options
available. Low competition also results in a higher price discovery. The risk has
a broader market impact in terms of the development of competitive R&M
market in the country.
The likelihood of occurrence of this risk was high in the past but with more
utilities resorting to competitive bidding framework as opposed to only OEM
based model, situation is now gradually changing. With the increase in the
participation of international players in the Indian R&M market, the likelihood
of this risk is expected to be low. The severity of risk is moderate.
D. Bearer of Risk
Utility is the direct bearer of this risk. This also impacts the potential
vendors who are discouraged from entering into the R&M market.

Focussed efforts should be taken up to involve potential players in the
R&M market by the utilities and the CEA. (Risk Mitigation)
The following interventions should be taken up:
a) Qualification requirements in the tender documents should be
designed in a manner that encourages participation of players
including the new players. These should not be overly stringent.
b) The level of guarantees should not be excessive and should be

based on fair balance between risk and rewards. Review of
contractual documents and interaction with stakeholders indicates
that performance specifications are preferred as target

parameter over design specifications experience. This permits

defining the target performance relative to the present operating
and design conditions and provide flexibility to the bidder to
investigate alternatives for achieving (or overachieving) the
targets. In certain cases, a combination of design and
performance specifications has also been used.
c) Pre-bid meetings and two stage bidding process can be adopted

by the utility to address the concerns of the suppliers prior to
submission of price bid. Any concern related to scope of work or
technical specifications or quantities or performance requirements
or guarantees etc should be clarified during the pre-bid stage. The
bid documents should be easily accessible and available for the
bidders to examine.
d) Utilities should make efforts to reach out to the potential vendors

and disseminate information about the bid.
e) In this regard CEA has prepared standard bid documents which

may be used by the utilities.
Box 9: Vendor Participation in R&M Bidding Process
Example 1: Vendor Participation for Koradi TPS Unit 1 & 2 (2005) Vs

Koradi TPS Unit 6 (2012) Maharashtra Power Generation
Corporation Ltd. (Mahagenco)
During 2004, Mahagenco had planned to undertake R&M works for Unit 1 and 2 of
Koradi Thermal Power Station. A global tender was floated for participation of
vendors for R&M for Unit-1&2 R&M and LE Works in January 2005. Around four
companies purchased the tenders but only 2 companies finally submitted the bids.
Subsequently, the process was scrapped since for all units below and equal to 110
MW since investment in new capacity was considered to have better returns.
In case of Koradi Unit 6 (210 MW), participation of the vendors have been
encouraging. The process has been supported by the World Bank with robust
assessment and analysis of options. A participatory process has been undertaken
for finalization of specifications. Also, two stage bidding process has been involved
to address concerns of all the potential vendors.
All of the above have enable to create a balanced risk profile of the project
resulting in higher vendor participation. In case of BTG around 8-10 companies
purchased the tender and around 4 companies finally submitted the bids. In case
of Electrical package around 5 companies purchased the tender and around 2
companies finally submitted the bids. Similarly, large number of BoP vendors
purchased and participated in the bid for BoP works.
Source: Interactions of AF Mercados EMI with the officials of the KTPS, Mahagenco
Example 2: Stringent Qualification leading to low Vendor participation

Case of Bandel TPS (Unit 5), West Bengal Power Generation
Corporation Ltd.

In case of BTG package only one out of the four bidders qualified after the first
stage bid opening. Based on the discussions with the bidders, further refinements
in technical design and performance requirements were made and a decision was
undertaken to re-bid on a single stage basis. The single stage bids attracted two
bids.
Qualification requirements should be such that it encourages wider

participation and further refinements may be made if the need arises
during the bidding stage.
Source: Interactions of AF Mercados EMI with the officials of the Bandel TPS, WBPDCL
5.3.2. Higher than Expected Price Discovery (Market Risk)
A. Risk Description
This risk arises if the price discovered through competitive process or
through nomination basis is significantly higher in comparison to that
envisaged during the Planning Stage.

The risk arises due to the following factors:-
a) Lower vendor participation or selection of vendor through
nomination basis, lead to limited bargaining power of the utility
resulting in high procurement cost
b) Unrealistic assessment of cost of various components at the DPR

stage.
c) Weakly defined scope of work and uneven sharing of risks

between the utility and vendor. Clauses such as the following:
Anything not mentioned above, but required for safe, efficient,
reliable and requirement by the engineer-in-charge has to be
carried out by the bidder within the same time frame and with no
financial implication increase the risk perception leading to
increased risk premium or price for absorbing/sharing higher risk.
d) Stringent performance guarantees imposed/expected from the

vendors ultimately leads to high prices for the project.
e) Pre-R&M condition of the equipment is not well-established.

Usually, the information provided is not enough to determine
clearly the design of the equipment and its performance, and its
operating history.
f) Time gap between the technical studies and commencement of

actual implementation, as the units do not get maintenance
priority in the interim resulting in deterioration in plant
performance.

g) Lack of drawings and historical data of the plant discourages

vendors and/or increases their risk perception towards the
proposed R&M of the unit/plant as they are not able to sufficiently
familiarize with the condition of plant before bidding. This is
ultimately reflected in the price of R&M.

The impact of the above risk results in the following:
a) Compromises on the scope of work - In order to reduce the

price discovered the earlier set scope of work may be reduced.
This includes dropping uprating option, or dropping of up-
gradation of BoP or other similar measures.
b) Re-evaluation of option In view of the high price discovery,
the utility may re-evaluate the options and may drop R&M of the
plant.
The likelihood of occurrence is moderate. With increase in participation the

likelihood of occurrence of this risk may be low. The severity of the risk is
moderate to high.
D. Bearer of Risk
This risk is borne by the Utility and Vendor.

The contracts should aim at balancing the risk and benefits between
the utility and the implementation vendor. Adequate flexibilities in the
contract should be provided to accommodate reasonable/acceptable
changes. At this stage, the decision to go ahead for R&M should be re-
evaluated and considered in the light of proposed changes. (Risk
Mitigation)
In order to mitigate this risk following steps are required:-
a) Discussions with Vendors-

Suppliers should be consulted during the preparation of DPR (and
cost estimates) to understand the viability of options for R&M
envisaged including new technologies which can be used and to
understand the market prices of various components.
b) Proper Communication with the Vendors-

This is the most important step as this would enable the vendor to
realistically evaluate its cost and benefit and associated risks
involved in the project. This includes the following:
i. Provision of previous year data pertaining to plant

performance, results of technical studies etc. to the
prospective vendors along with the bidding documents.
ii. Suppliers interested in bidding for the project should be

encouraged to undertake plant visits to understand or review

the site conditions.
iii. Conduct of pre-bid meetings and two stage bidding process
can be adopted to address the concerns of the suppliers prior
to submission of price bid.
c) While preparing DPR of the project some contingency should be

provided for price discovery and scenario analysis should be
undertaken to understand the maximum price increase that can be
allowed so that the identified/selected option remain the best
possible option. If the price discovered is such that it makes the
option unviable, utility should try to select the second best
possible option. Thus, at this stage, the decision to go ahead for
R&M should be re-evaluated and considered in the light of
proposed changes.
d) Utility may also decide for rebidding (although it has its own risks)
the project with suitable modifications i.e. changes in qualification
criteria to increase participation, change in the selected R&M
option etc. However, efforts should be made for suitable
negotiations with the lowest bidder before resorting to such option.
e) Striking a right balance between the performance guarantees and

penalties- There should be adequate sharing of risks between the
utility and the supplier, shifting additional risk (beyond what the
supp lier has direct control on) only increases the overall price of
the contract.
Box 10: Higher than expected price discovery
Example 1: Koradi TPS Unit 1 and 2 (2x120MW), MSPGCL

MSPGCL re-evaluated the R&M Option for Unit 1 and Unit 2 of KTPS
after the price discovered was higher than the expected price.
MSPGCL planned to undertake R&M works for Unit 1 and 2 of Koradi Thermal
Power Station in 2004. The Feasibility report of Unit-1&2 was approved by the
CEA with cost estimation of Rs. 128 and 132 Crores respectively. The erstwhile
MSEB accorded its approval for Unit-1&2 for total estimated cost of Rs. 260
Crores with 15% variation above the estimated cost, under single tender for
both the Units.
Accordingly, KTPS published a global tender for Unit-1&2 R&M and LE Works in
January 2005.BHEL and NASL submitted the bids. Price bids were opened in
September2005 wherein the total cost of the project was Rs 492 Crores (Rs.
2.05 Crores per MW) with a payback period of 18 years and Life extension of 15
years.
With these facts MAHAGENCO appointed a financial consultant for economic

study in respect of Expenditure on LE works of Unit 1 to 4 Vs setting up of a

new 500 MW power project. The following results were obtained:
R&M of New 500 MW

Particular Unit R&M of Unit-1 to 4
Unit-1&2 Unit
Project IRR % 11.62 9.78 12.97
NPV Rs Cr. 69 28 250
Accordingly, the plans to undertake R&M for Unit 1 & 2 of KTPS were
abandoned.
Example 2: Barauni TPS Unit 6 and 7(2x110 MW), BSEB

The initial price offer submitted by BHEL was considered high and therefore in
order to accommodate the R&M activity within the sanctioned (available
grant/budget), the scope of R&M was adjusted wherein the option of uprating
(planned initially) and modernization of certain BoP items was dropped.
Source: Interaction of AF Mercados EMI team with the officials of BSEB
5.3.3. Rebidding/Re-award/Delay in Award of R&M Packages/Contract

(Market and Operational Risk)
A. Risk Description
This risk arises if the utility consumes significant time in awarding the
contract or has to rebid any of its contract or packages. There are examples
wherein this risk has originated from the vendor side as well as from the
utilitys side.
Box 11: Rebidding of R&M Package
Example 1: Amarkantak TPS, Chachai (Power Station), Power House

II(Unit 3 and 4), Madhya Pradesh Power Generating
Company Limited
Units 3 and 4 of Power House II (2x120) were commissioned in 1977 and 1978
respectively. Comprehensive refurbishment of the PH-II was initiated in 1996.
The contract was awarded in 1999 to Ansaldo Energia, Italy, which was
terminated in 2002 on account of non-performance.
Fresh tenders were invited in 2002 for major R & M works. Due to high cost of
main package (TG and boiler), the project was considered techno-economically
unviable and was, thus, dropped. Subsequently, the scope was reframed and it
was decided in late 2003 to split the work into smaller packages and
administrative approval was provided by the erstwhile State Electricity Board in
2004.
The Company invited tenders (April 2004) from BHEL on single tender basis,
against which BHEL offered (on 6 June 2005) to do the work at Rs.105.96
Crore. The Company reduced (between February 2005 and November 2005)
the scope of work, in view of fund constraint. The negotiations were held

(November/ December 2005) and BHEL agreed to do the work at a reduced

cost.
In the meantime, another firm NTPC Alstom Limited (NASL) on their own
expressed (November 2005) their interest to participate in the R & M of TG sets
and quoted a lower price. The Company, however, decided (January 2006) to
invite fresh tenders. The Company invited (March 2006) fresh tenders, against
which BHEL did not participate and the only tender received was from NASL.
Letter of Intent was issued (May 2007) to NASL at a total cost of Rs.59.80
Crore.
Thus, the repeated revision of scope of work coupled with several negotiations
resulted in delayed award of R & M work of TG sets.
Source: CAG Report Audit Report and interaction of AF Mercados EMI with officials of
MPPGCL
Example 2: Panipat TPS- 1 (Unit 4x110 MW), Haryana Power

Generation Corporation Limited (HPGCL)
Comprehensive R & M Scheme was adopted by the erstwhile Haryana State
Electricity Board for rehabilitation of the four Units of 110MW each at PTPS.
Competitive bids were invited (August 1995) and the contracts were awarded
(23 May 1997) to ABB Kraftwerke Berlin GmbH (now Alstom Power). However,
the work could not be completed as planned due to dispute, wherein the
contract was terminated by the vendor. Several attempts were made to resolve
the dispute however all of them were unsuccessful. Subsequently, the pending
works were completed through another vendor.
Source: HPGCL Petition for Approval of Tariff for the year FY 2012-13
Example 3: Delay in Award of Contract- Case of Obra B

(5x200MW),UPRVUNL
In 1998, UPRVUNL invited bids for refurbishment of 5 x 200 MW units of Obra
B TPS Power plant Performance Improvement Limited (PPIL), was found to be
the lowest bidder and it was decided (November 2001) to issue Letter of Intent
to the firm. In the meantime second lowest bidder M/s Alstom Power India
Limited reduced (December 2001) its earlier offer to less that offered by the
PPIL. The decision was hence deferred and subsequently the work was awarded
to BHEL at a higher cost than that originally offered by the vendors.
Source: CAG Report Audit Report (Commercial) for the year ended 31 March 2009

The risk arises due to the following factors:
a) Qualification requirements, specifications desired or scope of work

etc. are not clearly specified or utility has been constantly
reassessing its options and changing the scope.
b) Bid responses are in a manner wherein comparison of different
bids is not possible.

c) Discovery of higher than expected prices and subsequent

modification in scope, qualification requirement etc.
d) Supplier issues - Delay in start of work or non-availability of
manpower or dispute among sub-contractors.

This risk leads to significant delay in execution of project, cost overruns and
risk of change in baseline parameters. Likelihood of occurrence is moderate to
high, and severity is high.
D. Bearer of risk
This risk is borne by both the Utility and the Vendor.

a) Rebidding should ideally be avoided through robust project
preparation, however in cases where it still emerges as the only
option, potential bidders should be encouraged to assess the
current plant condition and assume the responsibility of the task.
(Risk Acceptance)
Further, the following should be considered:
i. The specialized design and implementation support consultants
should be accountable and responsible for clearly examining
the qualification requirements, scope of work etc, and must flag
these issues at the start to avoid such situations.
ii. Pre-bid meetings and two stage bidding process can be adopted
by the utility to address concerns of the suppliers and
incorporating their suggestions to improve specifications.
iii. Requisite safeguards should be adequately provided for in the

contract through bank guarantees and liquidated damages.
iv. Potential conditions that may lead to rebidding/re-award should

be comprehensively assessed and incorporated in the next
bidding round. In cases where work has been partially
performed (by the earlier selected bidder), the information
should be shared with potential bidders so that they assume
the responsibility of the work. In such cases, the potential
bidders should also be encouraged to visit the site for
undertaking their own assessment.
b) Management should undertake timely decision for award of
contract by formulating qualification requirements and
evaluation procedures along with appropriate timelines before
seeking interest from the vendor (Risk Avoidance)
To avoid such situations, it is required that qualification requirements
and evaluation procedures along with appropriate timelines should be
clearly formulated before seeking interest from the vendor. Role of
design consultant in clearly specifying such requirements becomes

essential. Further, ISC should facilitate timely decision by providing

advice with regard to evaluation and selection of successful bidder to
enable decision making at the utilitys end.
5.3.4. Implementation Contract Awarded to Vendor Involved in Carrying out

Technical Studies (Management Risk)
A. Risk Description
This risk arises if the same entity is involved in formulation of technical
specifications/scope of work and execution of R&M project.

The Original Equipment Manufacturer (OEM) is generally the first point of
contact in case of any R&M based requirement on account of various reasons
availability of engineering drawings and familiarity with the plant. In India, this
risk is accentuated from the fact that only a select few OEM were responsible
for commissioning of power plants during 1980s and 90s (those that will
require R&M).
Directly initiating the process with the OEM is considered safe, convenient
and saves time and effort of the utility.

Lack of independent assessment and presence of potential conflict of
interest may not lead to the best possible outcome for the utility. The
likelihood of occurrence is high, with moderate severity.
D. Bearer of Risk
The utility is the direct bearer of this risk.

A single entity should generally be avoided to assume both the role of
design consultant as well as the supplier. (Risk Avoidance)
Independent assessment through specialized agencies to develop the
technical specifications and the scope of work should be mandatory. Further
potential conflict of interest wherever possible should be avoided.
5.4. Execution stage

The risks identified across execution stage of R&M process cycle and
5.4.1. Weak Decision-Making Framework (Management Risk)
A. Risk Description
This risk arises if there is significant delay in undertaking decisions to
resolve issues faced during the execution of the work. This could be related to
the possible surprises upon the opening of machines which may require
contract modifications; difference in the interpretation of scope and
responsibility by vendors and employer etc.

The risk arises due to the following:
a) Lack of planning and ownership of the R&M project by the utility

officials due to frequent change in the officials handling R&M works,
lack of technical and professional management skills to address the
issue/situation, lack of accountability structure etc.
b) Lack of authority of the officials involved

This leads to contractual disputes and delay in execution of the work. The
frequency of occurrence is moderate and severity of this risk is high.
D. Bearer of Risk
This risk affects all the parties involved in the R&M implementation
including the utility, supplier and the implementation support consultant.

Creation of clearly defined decision making and reporting structures
with nominated officials authorized to undertake decisions (Risk
Mitigation)
Decision making and reporting structure should be clearly specified. This
should include roles, responsibility and authority to various officials involved in
R&M. For timely decision making it is important that these structures should
be defined in a way wherein relatively smaller issues (could be defined in
terms of value of money involved) or issues involved in day to day execution
with the vendor can be undertaken at the plant level and larger issues can be
reported to the top management for their action.
Further, contract review meetings to assess the progress and deviations if

any from the schedule of work should be held weekly. The minutes of the
meetings prepared should clearly specify the responsibility and the timelines to
address the issues. Requisite follow up of the actions should also be
undertaken regularly.
Here in the role of Implementation Support Consultant is of utmost

important as it is required to facilitate smooth coordination and timely action
for resolving of pending issues.
Alongside, empowered team of both the utility and the suppliers should be
nominated to ensure timely resolution of disputes and issues, as and when
they arise. In a number of successful examples of large projects being
implemented, a key governing philosophy of the host entity has been that
Success of the contractor/supplier is success of the projects. Hence, a
collaborative atmosphere needs to be created wherein both the utility and the
supplier work as partners.

5.4.2. Occurrence of Technical Surprises (Technical Risk)
A. Risk Description
A thermal power plant undergoing R&M, despite undertaking
comprehensive prior plant assessment might face unforeseen events once the
unit is shut down and opened up for R&M. Such unforeseen events are called
Technical Surprises. As the units are very old or nearing the useful life of
operation, such technical surprises are quite common. The utility due to such
surprises is faced with unexpected change or unforeseen additions in the scope
of work leading to cost and time overruns. In order to address this risk it is
suggested that CEA guidelines for Early Identification of Potential Technical
Surprises in R&M Projects and Ways of Addressing Them may be referred.

a) Inadequate assessment and weak scope of work. RLA and other
tests are conducted for main plant and equipments whereas in
case of rest of areas like Balance of Plant (BoP) the scope is
generally derived, without any actual condition assessment for BoP
items.
b) Huge time lag between the technical studies (RLA, DPR

preparation) and actual award of contract (and commencement of
R&M work). This entire process normally takes ~3-4 years. The
units in the interim get low maintenance priority leading to rapid
deterioration in the plant condition not captured in the studies and
hence the scope of work. In case of units that are already
shutdown, cannibalization of the material/spares to other unit has
also been observed as a common practice.
Box 12: Time gap between studies and Execution of Work
Table below presents the time gap between the completion of RLA study and
execution of work.
Completion of Actual Date of Start

Plant (Unit)
RLA study of Work
Bathinda Unit 3 (110 MW), PSPCL March 2001 January 2010
Bathinda Unit 4 (110 MW), PSPCL December 2001 November 2011
Ukai TPS, Unit 2 (120 MW), GSECL April 2003 August 2008
Barauni TPS, Unit 6 (110 MW), BSEB May 2006 November 2009
Bandel TPS, Unit 5 (210 MW), WBPDCL January 2005 February 2012
Source: CEA and interaction of AF- Mercados EMI with various utilities

c) Refurbishment of old equipment or spares may not be possible due

to technological obsolescence. This is true especially in case of old
units of 110/120 MW units wherein the manufacturers have
stopped manufacturing the spares (especially electrical) due to
technological obsolescence.
d) Identification of additional scope of work at the execution stage

not in the nature of surprise but required for better operation of
plant at the later stage.
e) Due to nature of R&M certain surprises are encountered when the

machine is actually opened. Even with careful planning and
implementation, some unforeseen situations are likely to arise. In
most cases, the strategy to deal with such surprises is not planned
for leading to distress.

The above risk results in the following:
a) Scope deviation: Additional scope of work to be addressed.

b) Contractual disputes due to weakly defined scope of works, and
non-agreement between the utility and vendor.
c) Situation of indecisiveness due to inflexible contracts making it
difficult for any alteration at the execution stage.
d) Delay in execution of work and increase in cost of the project.
In addition to the above, the finances of the utility are directly impacted in
absence of any strategy to deal with such surprises.
The frequency of occurrence and severity of this risk is high.
D. Bearer of Risk
Both Utility and Vendor are affected by this risk.

In order to mitigate this risk a multi-pronged approach is required. This
includes:
a) Undertaking comprehensive assessment through technical
studies with clearly defined scope of work (Risk Mitigation)
Effective assessment at the start of the project is the key to minimise
technical surprises. The nature and occurrence of technical surprises
depend upon the depth with which technical studies are undertaken. In
order to minimize technical surprises, the foremost step is to
undertake comprehensive assessment of both main plant equipment
and the BoP through studies for each unit planned for R&M. Based on
the studies, efforts should be made to define the scope as clear and
comprehensive as possible along with the roles and responsibilities of
each stakeholder.

b) Creation of technical surprise plan (Risk Acceptance)

A well-defined technical surprise plan should be prepared for
effectively handling technical surprises, as and when they occur8. The
design consultant involved in undertaking comprehensive assessment,
DPR and subsequent scope of work should also prepare a technical
surprise plan. This is required as replacement/repair of some
components may come up at the time of execution as everything
cannot be analysed / tested during the studies. This should be
prepared in consultation with the plant level officials involved in
operation, repair and maintenance of the plant to understand the
potential surprises as they have the experience of the actual condition
of the plant. This includes a list of possible surprises, ensuring
availability of spare parts to minimize delays, addressing upfront the
likely contractual aspects of additional supplies and works etc.
Further, this should also include the unit rates for equipment/parts and
total financial implications of the same. In this regard CEA has
prepared standard documents for Detailed Project Report which may
be considered by the utilities.
c) Establishing a clear decision making framework (Risk

Mitigation)
After the occurrence of technical surprises the indecisiveness of the
utility can result in significant delay in the execution of work. It is
important to specify the decision making process with clearly defined
roles and responsibilities along with requisite authority of different
officials to enable timely resolution of the issues encountered.
Box 13: Occurrence of Technical Surprises
Example1: Muzaffarpur TPS, KBUNL

Low Temperature Super Heater (LTSH): Only 50% coil replacement was
mentioned in the DPR and R&M work order. This was done to reduce cost.
Replacement of LTSH supply tubes was not included in the DPR and in the work
order. While executing R&M it was found that about thirty nos. of LTSH supply tubes
were missing. Discussions were held with the contractor and ultimately it was
decided that KBUNL would place separate purchase orders for these tubes.
Thus, comprehensive assessment of the plant is essential for understanding the

exact condition of equipment before placing the order or preparation of
specifications.
Turbine Side Valves: As per R&M contract, all valves were to be refurbished by the
contractor. However, requirement of spares for refurbishment of valves was
unknown during the contracting stage. When the valves were opened by contractor
8
The first aim in all earnest should be to minimize the occurrence of technical surprises.

it was found that additional spares were required.
An associated issue was that most of the valves were obsolete and now not being
manufactured by the contractor or their sub-vendors. Hence, replacement was the
only option.
Example 2: Obra B TPS (Unit 9 to 13) , UPRVUNL

Only main plant equipment has been considered for undertaking R&M while majority
of the auxiliaries i.e. motors and cables have not been refurbished or changed
impacting the quality of R&M works.
Site accessibility and space constraint are important factors for delay of R&M works
in Obra, which were not considered before the start of the project. Due to space
constraints crane cannot move between the units and therefore R&M works for Unit
10 & 11 were taken together. ESP of unit 11 had to be dismantled so that the crane
could move and work on Unit 10 can be undertaken. This was not envisaged at the
assessment stage.
Thus comprehensive assessment and planning before the execution of R&M works is
necessary to avoid technical surprises.
Example 3: Additional Scope of Work in Ukai TPS (Unit 1 and 2), GSECL
In case of Ukai TPS additional work over and above R&M work was identified such as
(i) Rewinding & Recaging of HT motors, (ii) Supply of IP Inlet Gland Box &
Accessories, (iii) Supply of spares for ESP fields 1&2 of Unit 2 etc. Since these works
were considered essential for future performance of the plant and there was no
provision for addition/alteration of R&M, separate purchase orders were placed by
the company.
Source: Interaction of AF Mercados EMI with officials of various utilities
5.4.3. Weak Dispute Resolution Mechanism Constraining the Execution of

Work (Contractual Risk)
A. Risk Description
This risk arises due to occurrence of disputes including contractual disputes
that affect the execution of work.

a) Misinterpretation of the scope of work by either party i.e. utility or

supplier.
b) Delay by supplier or claim of compensation by the supplier for any
additional work outside the scope of work.
c) Delay in decision making by the utility or delay in providing
shutdown of the plant.

The risk impact the harmony in work and results in halting or delay of the
work. The frequency of occurrence of this risk is moderate and severity is high.
D. Bearer of Risk

Creation of Dispute Resolution Committee at the start of project to
address disputes between the Utility and the Contractor in a timely
manner (Risk Mitigation)
In order to resolve disputes between the contractor, sub-contractor and
utility, it is important to create a Dispute Resolution Mechanism. Under this
mechanism a Dispute Resolution Committee (DRC) should be formed at the
start of the project with fair participation from both utility and contractor. The
institutional set up, powers and roles along with the time schedule (within
which case can be referred from the occurrence of the dispute, hearing of the
dispute and the final decision) of the DRC should be specified in the tender
document itself. Any dispute which cannot be amicably settled between the
parties can be referred to the DRC. However, until the dispute is resolved, the
contractor should proceed with the work and contract in discussion with the
utility and implementation support consultant.
5.4.4. Mismatch (or delay) in Supply of Critical Equipment and the Shutdown
Period (Market Risk)
A. Risk Description
Various sub-activities within the R&M have to be planned and timed
according to the available shutdown period. Accordingly, the schedule of
supply of critical equipment has to be synchronized with the shutdown period
to ensure completion of work in the minimum possible time. This risk arises
when there is delay in supply of key components and equipments by the
supplier and delivery schedule of the equipments is not in sync with the
shutdown period of the plant.
Box 14: Delay in Supply of Material during Execution
Example1:Ukai TPS, Unit 1 (110 MW), GSECL

There were significant delays in supply of material by the vendor during the
execution of the project leading to increased shut down period. Also, material with
regard to Mainsteam and Hot-Reheat System was not supplied by the contractor
until the end of the shutdown period and hence it could not be replaced. The
material during the interim period was kept as inventory since it required a
separate shutdown (outage) for installation.
Thus, supply of key components/material should be ensured before the

shutdown of the plant and should be according to a proper project
schedule.
Source: Interactions of AF Mercados EMI with the officials of the GSECL
Example2: PTPS, Unit 1 (110 MW), HPGCL

There was significant delay in supply of material by the contractor leading to delay
in execution of the project. As per the schedule, R&M and up-rating of Unit-I was
to be taken up from November 2006 but due to the delay in supply of material it
could be taken up from September 2007.
Accordingly, applicable Liquidated Damages were levied on the contractor

for delay in completion of works.
Source: CAG Audit Report and Interactions of AF Mercados EMI with the officials of the
HPGCL
Example 3: Mismatch between the delivery of material and the shutdown

period: Case of Obra B Units 9 to 13, (5X200 MW), UPRVUNL
R&M work for Obra B Units 9 to 13 was awarded to BHEL in May 2006 with a
completion period of 30 months. However, till August 2012, work on only Unit 9
has been completed and work on Unit 10 and 11 is still in progress.
Since the delivery of material was not linked with the shutdown period of the units,
the Contractor had supplied the entire material for all the five units during 2006 to
2010 leading to expiry of Warranty Period of material (24 months) even before
the work on different units could commence. This is expected to have significant
repercussion on the overall quality of execution of R&M project.
Thus, supply of material must be linked with the shut down schedule of
units.
Source: CAG Audit Report and Interactions of AF Mercados EMI team with the officials of
UPRVUNL.

This risk arises due to the following:
a) One of the major issues faced by the suppliers is the difficulty in

procurement of sub-vendor items. This difficultly stems from the
following: (a) non-existence of original vendors for such items; (b)
non-availability of original equipment details, specifications etc; (c)
obsolete design and (d) inadequate information available about
modification done/spares used earlier. This leads to delay in supply
of material on a timely basis.
b) Non-performance or underperformance of the vendor due to its
overbooked manufacturing capacity.
c) Technological obsolescence may require customized manufacturing
for certain components leading to delay in supply of components.
d) In-adequate planning on part of the utility.

The impact of the above risk results in:
a) Delay in implementation of project and hence longer shutdown

period.
b) Non-installation of certain components impacting the performance
and quality of R&M works executed.
The frequency of occurrence and severity of this risk is high.
D. Bearer of Risk

a) Availability of key components should be ensured before the
start of the project and should be in accordance with the pre-
defined plan finalized before the commencement of work (Risk
Mitigation)
The planning for pre-shutdown activities should be done meticulously.
Availability of key components along with the sequential delivery of the
components should be ensured before start of implementation/before
shutdown is provided. Further, delivery of materials should be linked to
the shutdown period of the plant.
b) Provision of Penalties for delay in completion of work (Risk

Sharing/Transfer)
Adequate penalties should be built into the contracts for delay in
completion of works by the vendor. This would provide right signals to
the vendor for timely completion of work and would also compensate the
utility to some extent for the potential loss9.
Box 15: Lack of Penalty Clause for Delay in Completion of Work
Example:- Obra A TPS (Unit No 1&2), UPRVUNL

Instrumentation Limited (I.L), Kota was awarded the work of upgrading C&I
system for Obra A TPS (Unit No 1&2) however the company could not
complete the work as per the planned schedule.
The delay on the part of I.L, Kota in completing the work of unit No.1 &2 as
per the schedule (October 2008) resulted in potential loss of generation to
the utility for the delayed months (work completed in January 2009).
Further, due to absence of the penalty clause in the agreement no penalty
could be imposed on I.L., Kota such delays.
9
A review of supply contracts of various plants indicates that such penalties are generally
included in the contract, however in some cases omissions have also been observed.
Thus, penalty clauses related to delay in completion of work should

be included in the contracts by the utilities to ensure adherence to
timely completion of work and to safeguard its financial interest.
Source:- CAG Audit Report
c) Sequential delivery of materials to the R&M site (Risk Mitigation)

Sequential delivery of materials should be agreed upon by both the
utility and vendor and built into the contract. In the contract clauses,
provision for non-acceptance and disallowance of material to the project
site if not delivered sequentially should be included in order to avoid
unnecessary delay in R&M work.
5.4.5. Weak Supervision, Quality Control and Assurance (Operational Risk)
A. Risk Description
The process of quality control involves setting up the specification of
equipment and service upfront and ensuring that the delivered material/service
is in compliance with the stated targets. This is often performed through
random inspections and test.
The process of quality assurance involves reviewing the practices adopted

by the vendor supplying the material or service to examine the extent to which
the quality will be, is being or has been controlled.
This risk arises if material supplied or work performed by the vendor is of
substandard quality. This risk also arises due to the weak quality review
procedures of contractor to review quality delivered by the subcontractors.

a) Lack of expertise in assessing the quality of material/service

supplied by the supplier
b) Quality audits not performed by the utility at the suppliers site
c) Lack of assessment of the vendors quality procedures with regard
to its sub-vendor
d) Lack of appreciation on the necessity of formal quality control and
quality assurance procedures

Substandard equipment and installation service has a direct impact on the
long term performance and life of the plant.
The frequency of occurrence and severity of this risk is moderate.
D. Bearer of risk
Utility is the direct bearer of this risk.

Approval of detailed Quality Plans and Engaging Quality Control and
Quality Assurance Consultants by the Utility (Risk Mitigation)
The detailed Quality Plans for both manufacturing and field activities should be
submitted separately by the contractors to the utility for approval before the
start of the project. The approved quality plan should then form as an integral
part of the Contract document. The contractor must submit the quality plan for
the project including the Quality Plan proposed for each sub-contracted item
along with the procedures followed by the contractor to finalize and assess the
quality assurances of the sub-contractors.
Implementation Support Consultants (ISC) or Independent Quality Assurance

Consultants (QAC) should be appointed to confirm that implementation is as
per the design requirements and that the documented quality plans are being
adhered to. Consultants would also certify quality of materials and works
before the payments are made as per contractual milestones. The QAC would
also be responsible for the inspection of material quality at the
workshop/facility of supplier.
Box 16: Need for Quality Control and Quality Assurance
Example 1: Quality Issues Encountered During the R&M

One of the utilities visited by AF Mercados EMI complained about the quality of
material supplied by the sub vendor with regard to gear box and spares
supplied for Wagon tippler. Gear box supplied by the sub-vendor was required
to be replaced within 2 years of its installation due to its poor performance.
Also, spares supplied for Wagon tippler were of inferior make/quality.
Example 2: Case of Koradi TPS (Unit 6), Maharashtra and Bandel TPS
(Unit 5), West Bengal
The R&M project plan for the above plants indicates the following:
Independent Implementation Support and Quality Assurance Consultants,
working in collaboration with the concerned power generation utility, would be
appointed for monitoring implementation progress as well as quality. These
consultants would act as owners engineers for the power generation utility
and validate all design details, material supplies and works executions. The
consultants would also support decision making process to handle surprises
during the course of R&M implementation
Thus, the process of having independent QAC has been considered and
ensured as part of the implementation process.
Source: Interactions of AF Mercados EMI with the Utility Officials and Review of
documents collected during the site visits
5.4.6. Failure to Comply with Environmental Standards and Perceived

Negative Externalities (Socio-Environmental Risk)
A. Risk Description
Thermal power plants lead to gaseous emissions containing carbon dioxide,
oxides of sulphur and nitrogen, and solid particulate matter (ash). Besides, the
waste water discharges contains the pollutants. These power plants, thus
results in air, water, noise pollution and land degradation.
The risk arises if the units undergoing R&M are not able to achieve the
target emission standards even if efficiency gains are achieved. Further, the
risk also arises if rehabilitation work is perceived to have adverse
environmental and social impact on the habitants in the project vicinity.

a) Inadequate environmental and social impact assessment by the

utility.
b) Most of the units do not have requisite infrastructure for
environmental monitoring and some are unable to install/ replace
existing Electrostatic Precipitators (ESPs) due to paucity of funds
or lack of space
c) Environmental norms are increasingly becoming stringent.

a) Non- compliance of environmental regulations, which in turn may

lead to closure of the plant.
b) Delayed execution/ or abandonment of R&M due to agitation or
demonstration from the community or civil societies.
The frequency of occurrence is high and severity is moderate as it may lead
to closure of the generating unit/plant.
D. Bearer of Risk
Both generating company and supplier are direct bearers of the risk.

a) Renovation of ESP system of the power plant (Risk Mitigation)
In order to meet the statutory environmental regulations there is a
need to renovate ESP system of the power plant. This includes the
following:
i. Retrofitting of existing ESPs with additional pass in parallel or

additional fields in series to enhance the collection area within
the available space.
ii. Renovation of the existing ESPs by increasing their height and
increasing the electrode spacing wherever the existing ESP

height is 9 mtrs.
iii. Application of moving electrode type ESP
iv. Retrofitting of ESPs with bag filters.
v. Periodic environment audit of power plant
vi. Timely renewal of consent to operate from statutory
authorities as per prevailing requirements.
b) Undertaking socio-environment impact assessment to assess

the impact of the project (Risk Mitigation)
i. Utility should carry out Rapid Social Impact Assessment Study
to identify potential adverse impacts of the Thermal Power Plant
on the immediate habitations and screening or the social
development issues of the immediate habitations. Further,
Environmental Audit and Due Diligence Studies should also be
carried out to improve environmental performance of the plant
(pollution prevention and control measures, waste minimization,
occupational health and safety) and develop strategies to
mitigate environment risk and liabilities.
ii. Appropriate CSR framework or policy should be formulated by

the generating company for the sustainable development of the
inhabitants surrounding the power plant and to address negative
externalities from the plant, if any.
iii. Generating company should engage with the local community

and efforts should be undertaken to disseminate project impact
assessments and benefits to nearby villages by deploying an
appropriate strategy for communication.
Box 17: Formulation of CSR policy
Example: Formulation of CSR policy by Rajasthan Rajya Vidyut

Utpadan Nigam Limited (RVUN)
RVUN, Government of Rajasthan has framed a CSR policy with an aim to
contribute to the socio-economic development of the local community and
society surrounding the power generating stations.
As per this policy, fund for carrying out CSR activities for power stations for
new/extension projects will be Rs. 2.5 lakhs, 2lakhs and 1.5 lakhs per MW
(one time) for coal based thermal power projects on supercritical
technology, subcritical technology and gas based thermal projects
respectively. Further, fund for power stations in operations will be 0.25%
of the total annual Operation and Maintenance charges/cost allowed by
Rajasthan Electricity Regulatory commission.
Thus, such policy should be framed by other generating stations also.
Source:- CSR Policy, 2011, RVUN
5.4.7. Delay in Provisioning of Unit Shut down for Executing R&M Works
A. Risk Description
This risk arises if the utility is unable to schedule timely shutdown for
executing R&M either due to grid conditions or delay in obtaining timely
approvals from the relevant authorities (State Government or Regulatory
Commission) for shutdown of the plant.

shutdown of state owned units for executing R&M works. In certain cases this
is driven by socio-political consideration that results in delay in obtaining the
shutdown.

i. Contractual disputes and delay in execution of work.

ii. Change in baseline parameters due to time gap between the
studies and actual execution.
iii. Deterioration in the material quality already supplied by the
vendor
Box 18: Delay in obtaining shutdown for R&M works during execution
Example: Amarkantak Thermal Power Station, Chachai (Unit 3 and 4)
While the material for boiler was supplied by the vendor, delay in providing
shutdown for the unit led to deterioration of the new equipment which further
delayed the execution of R&M.
Source: Interactions of AF Mercados EMI with the officials of MPPGCL
iv. Deterioration in condition of plant and occurrence of technical

surprises
The likelihood of the occurrence of this risk is low to high depending upon
the number of units requiring simultaneous shutdown. It may not be difficult to
obtain requisite approval for one unit but in case multiple units are scheduled
for such shutdown, obtaining requisite approvals/permissions may be difficult.
Severity of risk varies from low to high depending upon the delay in
obtaining the approvals for shutdown.
D. Bearer of Risk
Both generating company and supplier are the bearers of the risk.

This risk can be avoided through a combination of measure that should be
initiated from the Generating Company and the Distribution Utility. These are
explained below:
a) Advance Planning for Scheduling of Shutdown for Execution

of Works (Risk Avoidance)
Shutdown for executing R&M works must be planned well in advance
and distribution utilities must be informed accordingly. This would
provide sufficient time to the distribution utility to arrange for
additional power to meet the shortfall on account of the above. The
current power market provides several avenues for procurement of
power in the short and medium term, which should be considered.
b) Additional Allocation of Power to States from Unallocated

Quota of Central Pool (Risk Avoidance)
As per clause 6.2 (ix) of the MoP Guidelines for R&M, the utilities
may approach the Government for additional allocation of power to
the extent possible from unallocated quota of central sector power
stations during the period of shut down of units for comprehensive
life extension works.
Utilities can approach the Central Government well in advance to

procure power in line with the above clause/guideline.
c) Implementation of partial R&M activities during Annual
shutdown periods (Risk Avoidance)
R&M can also be implemented during planned shutdown for annual
maintenance over two to three years time period especially if the
work does not include opening of steam turbine and significant
repairs in the boiler and the generator. In case of Tanda (4x110 MW)
and Talcher thermal power station (4x60, 2x110 MW) of NTPC, R&M
was taken up during annual shutdowns over 3-4 years without
substantially enhancing the routine shutdown period.
5.5. Closure stage

The risks identified across closure stage of R&M process cycle and
5.5.1. Sustainability of R&M Gains (Operational Risk)
A. Risk Description
O&M practises being followed by state owned generation companies in India
are weak. Most of the state owned generating companies do not adhere to the
schedule of annual maintenance and periodic capital overhaul of the plant
leading to deterioration in the condition and performance of the plant. Most of
the DPRs (pre-R&M study) reviewed by team corroborate the above fact.
Another reason which could affect the sustainability of R&M gain is the non-
availability of spares or poor after sales services by the vendor.
This risk arises when the performance gain become difficult to sustain due
to weak O&M practices and poor support services by the vendor after R&M has
been completed.
Box 19: Weak O&M practices of various State Generation Companies in India
Most of the utilities do not adhere to the Maintenance Schedule and periodic Capital
Maintenance Schedule.
PTPS, HPGCL - Annual Maintenance of majority of Units at PTPS has been

delayed. The delay ranging from 107 to 328 days in respect of most of the units
was found during the CAG review period from 2005-06 to 2009-10.
GSECL- Annual Maintenance/Overhauling (AOH) (part of O&M) of Units of majority

of TPS was carried out with a delay up to 11 months from the date on which AOH
was due to be taken up.
BSEB - Annual Maintenance has not been undertaken at regular intervals. For
Barauni TPS Unit 6 the first and last capital maintenance was done during October
1988- November 1989 and for unit 7 during July 1992-May 1993 respectively.
UPRVUNL- Annual Maintenance has not been undertaken at regular intervals.

Inordinate delays observed in case of (i) Obra A & B: 21 to 58 months, (ii)
Parichha: 24 to 34 months, (iii) Panki: 19 to 22 months, Harduaganj: 17 to 20
months and (iv) Anpara A & B: 13 to 20 months in various units.
In most of the states the shutdown of the units for planned maintenance depends
upon the power availability situation of the state and thus, annual maintenance of
majority of units is delayed in many states.
Poor O&M practices impacts the long term performance of plant and leads
to its continual deterioration.
Source: CAG Audit Reports and Interaction of AF Mercados EMI with officials of various
utilities

a) Lack of proactive approach in operating and maintaining the plant

b) Lack of awareness about the new techniques, processes and
procedures
c) Lack of sufficient funds due to which mandatory spares are not
being purchased and stocked in advance by the utility
d) Weak recognition of support services as an important parameter
during evaluation of bids and formulation of contract
e) Difficulty in obtaining unit shut down for annual maintenance or
periodic capital overhaul due to significant energy shortages in
the state
Box 20: Delay in capital overhaul post R&M of the unit
Example:- Korba East TPS Unit 5 (120 MW), CSPGCL

The capital overhaul of the unit is yet to be undertaken (as on October
2012) after the completion of R&M of the unit in 2005.
Source: Interaction of AF Mercados EMI with officials of CSPGCL

The above risk leads to the gradual deterioration of the condition and
performance of the plant and hence the gains expected from undertaking R&M
may not be achieved over a longer period of time.
The likelihood of the occurrence and severity of this risk is high leading to
suboptimal utilisation of R&M investment.
D. Bearer of Risk
Generating company is the direct bearer of the risk.

a) Preparation and implementation of O&M action plan on priority
basis and engaging specialised agency for O&M of the plant,
post R&M. (Risk Mitigation)
O&M practices of the plant should be reviewed at the start of the
project and based on the assessment a long term O&M action plan like
preparation of O&M manuals including preventive, capital and
breakdown maintenance procedure / guidelines should be formulated.
This should include the time schedule and maintenance requirements
for each component, institutional structure, resource requirements in
terms of both financial and personnel etc. Further, the plan so
formulated should be approved at the highest authority and credible
actions should be taken to implement the plan on priority.
Box 21: Adequate skills to undertake O&M, post R&M of the plant
During interactions with various officials both at the utility headquarters and
the plant level, it was observed that most of the utilities lack adequate skills
and expertise in operation and maintenance of plant. The schedules are not
followed, there are no documented processes, and limited up-gradation has
happened over the years. In certain cases, this has resulted in degradation of
plant performance post R&M. Thus, it is important to ensure that O&M
practices are strengthened and a robust plan is developed upfront and
followed.
Source: Interaction of AF Mercados EMI with officials of various utilities
i. Contractor should revise the existing O&M manual as per the

new system/unit requirements.
ii. Adequate training should be provided by the contractor before
handing over the plant to the utility.

iii. The list of mandatory spares along with its unit prices should
be included in the total price of the R&M contract. This
mitigates the financial risk related to procurement of
mandatory spares post R&M of the project.
iv. Generating company can also outsource O&M of the plant;
post R&M to a specialized agency. There are models available
for participation of private players in O&M.
Box 22: Experience of Engaging Specialised Company for O&M of Coal based
Power Plant in India
Example 1: Sterlite Energy engaged Evonik Energy Services India (now

Steag Energy Service India Ltd.) for their 4x600 MW TPS at
Jharsuguda, Orissa
As per the agreement signed between the parties, Steag would be responsible for
smooth and reliable operations and maintenance for 4x600 MW Coal based Power
Plant at Jharsuguda. Further, as per the contract Steag would also bring in its
proprietary plant management system and latest fault prediction systems which
would ensure that the downtime for maintenance is reduced to a minimum. Health,
Safety and Environmental systems would also be given high priority. Thus, the
contract not only enables the company to ensure better O&M practices but also
enables access to the state of the art technologies, systems and processes.
Example 2: Comprehensive O&M services by DESEIN
DESEIN is currently handling total Operation & Maintenance of many plants in India
& Abroad. This includes :
i. 1 x 29.4 MW and 1 x 19 MW Coal / Lignite based Power Station at

Dalmiapuram, Trichy, Tamil Nadu of Dalmia Cement Bharat Ltd., (contract
continuing since 2005
ii. 2 x 15 MW Coal based Power Station at Butibori, Nagpur of Indorama
Petrochemicals Ltd., (contract of O&M continuing since 2007)
iii. 2 x 43 MW coal fired power plant for Action Ispat & Power Pvt. Ltd. at
Jharsuguda, Orissa (continuing since 2011)
Source: Compiled from various sources and media articles10
v. Generating company can also include O&M supervision in the

contract of executing agency. However, a right mix of balance
10
http://www.business-standard.com/india/news/vedantaevonik-ink-rs-14000-crore-
omdeal/392724/, last accessed on 12th September 2012
http://steag.in/pdf/STEAG%20Energy%20Services%20(India)%20Pvt.%20Ltd.%20%20%20Pro
file.pdf, last accessed on 12th September 2012
http://www.desein.com/Services/om-services.php, last accessed on 12th September 2012
needs to be ensured between performance and guarantees. In the

case of Korba East TPS (Unit 1 to 6), O&M supervision was included
in the contract of executing agency to meet and sustain the
guaranteed performance for a period of three years.
Box 23: O&M supervision included in the contract of executing agency
Example: Korba East Thermal Power Station, CSPGCL: Unit 1 to 4(4x50 MW)
and Unit 5 and 6 (2x120 MW)
Table below presents the post refurbishment performance of units in O&M guarantee
period.
The Post Refurbishment performance of units (Plant Utilization Factor - 80%)
O&M guarantee period First Year Second Year Third Year

Unit 1 to 4(4 X50 MW) 93.02% 90.47% 93.58%
U# 5 (120 MW) 73.91% 83.65% 79.64%
U# 6 (120 MW) 80.17% 77.37% 74.55%
Source: Interaction of AF Mercados EMI with officials of CSPGCL and data collected during the
visits
b) After sale services to be made an integral part of the contract

(Risk Mitigation)
After sale services provided by the vendors should be considered as an
important element during the bidding stage and support services for
some specific period of time (say one to two years) should be
incorporated in the contract.
5.5.2. Post R&M Guarantees not Achieved (Technical Risk)
A. Risk Description
Performance guarantee test are conducted to test the performance of the
plant viz-a-viz the guaranteed parameter, within a specified period of time
after commissioning of the plant. A review of contract indicates that in most
cases the following guaranteed parameters have been adopted: (i) plant
availability; (ii) ESP outlet emission level; (iii) boiler efficiency; (iv) turbine
heat rate, and (v) rated capacity.
This risk arises if the performance test fails and the requisite performance
guarantees are not achieved or if the performance guarantee test is not
conducted or delayed incessantly.

The root causes for the above are as follows:
a) Failure of supplier to meet the commitments.

b) Lack of confidence on the achievement of the requisite targets
leading to delay in conducting of PG test.

The risk results in the following impacts:
a) Envisaged R&M benefit not achieved during the assessment stage.

b) Contractual disputes
c) Levy of performance guarantee penalties on the supplier
d) Problems in regulatory approval and recovery of costs incurred on
the R&M of the plant
e) Consequent financial loss to the utility.
f) Non-achievement of performance post R&M may lead to
cancellation of future R&M works by the utility
The frequency of occurrence is moderate and severity of this risk is high.
D. Bearer of Risk
Both generating company and supplier are the bearers of this risk.

Rectification or replacement of components to meet guaranteed
parameters at no extra financial cost to utility and Levy of Liquidated
Damages for shortfall in performance (Risk Mitigation)
a) Guaranteed Performance Parameters with Liquidated Damages

should be included in the contract document.
b) Supplier should be asked to rectify/replace the components
affecting the performance of the plant at no extra financial cost to
the utility.
c) In case of non-achievement of performance guarantees, utility
should levy the requisite penalties as provided in the contract.
d) Performance Guarantees Test should be a critical milestone defined
in the contract.
While the impact of this risk is seen towards the end of the R&M exercise a
number of actions indicated in the previous sub-sections also contribute
towards non-achievement of the guaranteed parameters. Hence, preventive
actions as indicated earlier in this chapter are critical to avoid such situations.
Box 24: Post R&M Guarantees Not Achieved
Example 1: Performance Guarantee Tests not Performed by the Contractor

(Ukai TPS - Unit 1 and 2), GSECL
R&M works of Unit Nos.1 & 2 have been completed and units have been handed
over to GSECL. However, Unit 1 and 2 have not been able to operate at the rated
capacity of 120 MW and guaranteed parameters are yet to be achieved. Further,
PG tests are yet to be performed by the contractor, which have been pending for a
long time (approx. 1.5 years). There have been several efforts to facilitate this
including assistance of the CEA, however still the PG test remain pending.
Source: Interaction of AF Mercados EMI with officials of GSECL
Example 2: Under Achievement of Guaranteed Parameters (PTPS Unit 1),

HPGCL
The R&M and up-rating of Unit I from 110 MW to 117.8 MW was awarded in
August 2005. The Unit was synchronized in November 2008 and was declared for
commercial operation in April 2009.
However, the desired improvements in the performance of the unit have not been
achieved post R&M. The annual heat rate of Unit 1 was 3342 kCal/kWh for FY
2006-07 before refurbishment and after R&M, heat rate of 2916 kCal/kWh could be
achieved against the contracted provision of around 2346 kCal/kWh.
Plant Aux. Heat Rate

Specific Oil
Load Power (Kcal/kWh) Availability No. of
Year Consumption
Factor Cons. HERC factor (%) Tripping
(ml/kWh) Actual
(%) (%) Norm
Pre R&M
2002-03 58.09 6.26 11.66 - 3718 72.88 100
2003-04 63.09 4.5 11.04 - 3479 82.54 142
2004-05 52.59 5.13 12.2 3500 3554 71 112
2005-06 59.4 4.97 12.05 3450 3508 80.5 75
2006-07 62.63 3.11 11.67 3450 3342 89.16 55
Post R&M
2009-10 79.08 1.95 10.37 2930 3047 83.67 70
2010-11 48.90* 4.08 10.09 2750 3112 54.68 28
2011-12 79.27 2.89 11.24 3050 2916 93.91 32
*Unit 1 was shut down from 1/3/2010-23/8/2010.
Note: Unit has been up-rated from 110 MW to 117.8 MW w.e.f. 07.04.200 and unit
was under shutdown for R&M from Sept. 2007 to Oct 2008
Source: Interaction of AF Mercados EMI with officials of HPGCL.
5.5.3. Disapproval of Costs Incurred During R&M (Regulatory Risk)
A. Risk Description
The capital cost incurred during the R&M is considered as part of the overall
regulatory asset base of the utility wherein the regulator admits the cost based
on prudence check and approves a tariff to be charged from the consumer for
recovery of such costs. This risk arises if the regulator does not approve the
expenditure incurred by the utility for undertaking R&M works on account of

gaps/inadequacies in the submission.

The root cause of this risk is that the expenditure incurred by the utility is
high as compared to what was in-principally approved by the regulator or in
the DPR of the project. Also, the utility is unable to justify that the excess
expenditure incurred is not due to the inefficiency of the generating company
but due to factors non-attributable to the generating company.

This risk would lead to under recovery or non-recovery of cost incurred by
the generating company leading to financial losses.
The likelihood of occurrence of this risk is low if adequate planning is

undertaken. The severity is high if the risk goes unaddressed.
D. Bearer of Risk

Involvement of Regulator should be ensured from the inception of the
project with regular updates about the progress of the project. (Risk
Avoidance)
The need for apprising the regulator about the R&M plan is important as the
recovery of the cost incurred towards R&M is approved by the Regulator. This
involves:
a) Obtaining in-principle approval from the Regulator during the initial

stages for upfront commitment on the capital cost and plant
performance
b) Updating the regulator on progress and achievement of critical
milestones
c) Updating the regulator in case of abnormal or unexpected changes
leading to cost and time overruns
d) Ensuring coordination with the distribution company (through the
Regulator) since it is the primary off-taker of the power from the
project.
e) Obtaining the final approval for admittance of the capital cost
f) Sharing of information about the outcomes, performance achieved
vis--vis the guaranteed parameters with the regulator.
5.5.4. Absence of Ex-Post Evaluation and Feedback Loop (Operational Risk)
A. Risk Description
Post evaluation of R&M works is essential to understand the
impact/effectiveness of the program. Such evaluations though largely missing
would not only facilitate stakeholder feedback towards the scheme, but also
enhance understanding of the ground level barriers, implementation challenges

besides facilitating designing of effective R&M programs in future.
This risk arises if the generating company does not undertake ex-post
evaluation of the R&M works and fails to incorporate the experience or unable
to improve upon the execution of R&M works for its ongoing units. Also, this
leads to lack of institutional memory when the staff involved in R&M moves
out.
B. Root cause analysis

Undertaking post evaluation of projects is not considered as a standard
practice by the generating companies in India.
C. Impact, frequency and severity of risk

The impact of this risk is that the generating companies would be unable to
improve upon the execution of R&M projects based on its learning or
experiences.
The likelihood of occurrence of this risk is high. Severity of this risk is low
and it would also impact future R&M projects of the company.
D. Bearer of risk
E. Strategy to manage the risk

Experience gained must be documented and incorporated in
subsequent units planned for R&M works (Risk Mitigation)
Generating companies must undertake ex-post evaluation of the R&M works
and should document its experiences. This is important especially in cases
where multiple units are taken up for R&M. The learning/experiences gained
from the first unit must be incorporated in the implementation plan of the
subsequent units even if it requires modification in the scope of work of other
units.
In addition to the above, dissemination of ex-post evaluation provides

experiential learning to other utilities as well, and enables them to design their
R&M program effectively. CEA may provide a platform/ methodology for such
information sharing between the utilities
Box 25: Absence of post evaluation of R&M works
During interactions with various officials both at the utility headquarters

and the plant level, it was observed that most of the utilities do not
undertake ex-post evaluation or document their experience of the
works.
Source: Interaction of AF Mercados EMI with officials of various utilities.
Chapter 6
Risk Heat Matrix and Management Plan
This chapter presents the risk heat matrix and the risk management plan
emerging from the assessment in the preceding chapter.
6.1. Risk Heat Matrix

The risk heat matrix is divided into four tiers wherein:
- Tier 1: presents risks which have high likelihood of occurrence and

also have high severity. This is the most important Tier as the risks
identified in this tier are the most critical once. Highest priority
should be accorded for managing these risks else it would be
difficult to implement R&M project effectively.
- Tier2: presents risks which have high severity with low or

moderate likelihood of occurrence. This also includes risks which
have high likelihood of occurrence with moderate severity. Tier 2
category risks are second priority risks which also needs to be
attended as any change in operating environment can activate
these risks towards Tier 1.
- Tier 3: presents risks which have moderate severity with low or

moderate likelihood of occurrence. This also includes risk with high
likelihood of occurrence with low severity.
- Tier 4: presents risks which have low severity with low likelihood of
occurrence. These risks are of least importance for the project and
do not have material impact on the project.
Figure below presents the risk heat matrix for a typical R&M project.
Figure 8: Risk Heat Map for a typical R&M Project

Risk Heat Matrix S. No Risk Type Risk Code
21 Weak decision-making framework 1

(Significant)
20 9
Reactive approach to identification of plant for R&M 2
1 8
High
18 Lack of long term generation plan & awareness of available market

6 A Management Risk 3
options
23 24 7 Implementation contract awarded to vendor involved in carrying out
14 4
technical studies
Materiality of Impact
11 22 2 Weak analytical framework for selection of R&M options 5

16
(Moderate)
Inadequate technical assessment/studies 6

Medium
5
12 4 B Technical Risk Occurrence of technical surprises 7
19
17 15
25 Post R&M guarantees not achieved 8
Sustainability of R&M gains affected by weak O&M practices 9

13 10
(Insignificant)
Absence of ex-post evaluation and feedback loop 10

C Operational Risk
Low
Limited capacity of utilities in undertaking R&M 11
Weak Supervision, Quality Control And Assurance 12
Delay in obtaining unit shutdown for undertaking technical studies 13

Low Medium High D Institutional Risk
(Unlikely) (Possible) (Probable)
Delay in provisioning of unit shutdown for executing R&M works 14
Likelihood of Occurrence
Lack of confidence and uncertainty with regard to R&M projects 15
Management Risk Technical Risk Operational Risk Institutional Risk
Low level of vendor participation in the bidding process 16
E Market Risk
Market Risk Regulatory Risk Contractual Risk Funding Risk
Higher than expected price discovery 17
Market and Operational Risk Socio-Environmental Risk
Mismatch/delay in supply of critical equipment and the shutdown period 18
Appropriate Commission not apprised of the R&M project plan 19

F Regulatory Risk
Disapproval of costs incurred during R&M 20
Degree of Severity of Risk (High to Low)
Weakly defined scope of work 21
Tier I Tier II Tier III Tier IV G Contractual Risk
Weak dispute resolution mechanism constraining the execution of work 22
H Funding Risk Utility unable to mobilize funds 23

Market &Operational
I Rebidding/Re-award/Delay in award of R&M packages/contract 24
Note: The risk profile will vary from project to project. Risk
Failure to Comply with Environmental Standards & Perceived Negative
J Socio-Environment Risk 25
Externalities
6.2. Risk Management Plan
Table below summaries the key risk, the category of risk, the bearer, frequency, severity and the strategies proposed to deal with
such risk.
Table 12: Risk Management Plan
S. Category of Frequency of Severity of Bearer of the

Risk Strategy to Manage the Risk
No Risk Occurrence Impact risk
IDENTIFICATION STAGE
Strengthening of internal data acquisition,

Moderate if
monitoring and alert systems to track unit
symptoms are
performance and diagnose early warning
identified during Utility/Plant
Reactive symptoms. For this input from O&M department is
the initial stages. Owner is the
Management approach to critical and recording of routine data such as
1 High However, the direct bearer.
Risk identification of material properties, geometries, crack sizing,
magnitude of Also, impacts
plant for R&M hardness, operational parameters etc. during
impact increases the consumers.
operation, annual/ capital maintenance, breakdown
as the delay
maintenance can useful for undertaking RLA in
increases.
future. (Risk Avoidance)
Lack of long
Utility/Plant The rationale for R&M of a project should be
term
Owner is the established at the state level taking into account all
Management generation plan
2 High Moderate direct bearer. the alternative competing options. The decision
Risk and awareness
Also, impacts should involve multiple stakeholders including the
of available
the consumers. Discoms (Risk Avoidance)
market options
Lack of Moderate to Depends on case Entire R&M A. Need for Experience Sharing and Dissemination
3 Market Risk
confidence and high. to case basis, market (Risk Mitigation)

uncertainty may range from including

with regard to low to moderate potential
B. Need to Develop Market for R&M in the Country
R&M projects generating
by communicating the overall market size and
companies,
address concerns of various stakeholders (Risk
equipment
Avoidance)
suppliers,
design
consultants
etc.
ASSESSMENT STAGE
A. Advance Planning for Scheduling of Technical

Studies so as to either coincide the timing with
Low to high the annual/capital overhaul or provide advance
Delay in
depending notice to the discom for such shutdown (Risk
obtaining unit
upon the Avoidance)
Institutional shut down for Generating
4 number of Low
Risk undertaking company
units requiring
technical
simultaneous B. Additional Allocation of Power to States from
studies
shutdown Unallocated Quota of Central Pool for carrying
out the RLA studies, Condition Assessment and
Steam Path Audit (Risk Avoidance)
Inadequate Impacts all the Comprehensive Studies for the unit planned for
Technical technical parties R&M should be mandatory. The scope of the study
5 High High including should cover both the Main Plant Equipment as well
Risk assessment/stu
dies generating as the Balance of Plant. The assessment should
company, cover review of O&M processes as well. Proxy

supplier(s) and assessment i.e. in case of multiple units undergoing

the R&M, studies are conducted only for one of the
Implementatio units and scope for all units is prepared on the
n Support basis of the same, should be avoided. In this
Consultant (if regard CEA has prepared standard documents for
applicable). carrying out RLA/CA/EA studies which may be used
by the utilities. (Risk Avoidance)
Weak analytical Comprehensive Identification and Assessment of

Management framework for Options including computation of financial returns,
6 High Moderate Consumers
Risk selection of payback period, shutdown time required and
R&M options conformance to the set objectives.(Risk Avoidance)
Appropriate
Commission Practice of obtaining in-principle approval from the
Regulatory
7 not apprised of Moderate Moderate Utility Appropriate Commission should be
Risk
the R&M encouraged.(Risk Avoidance)
project plan
Creation of dedicated R&M Cell by the utility at the

headquarter and the plant level. The nominated
Limited officials should be exposed to the current practices
capacity of and must be trained on R&M aspects through
Operational Utility and specialist entities. (Risk Avoidance)
8 utilities in High Moderate
Risk Vendors
undertaking Engaging Specialised Consultants especially design
R&M works and implementation support consultants. (Risk
Avoidance)
Avoidance of transfer of personnel involved in R&M

Project in the middle of R&M work
Scope of Work to be as precise and comprehensive

as possible including roles and responsibilities of
each entity involved in the contract. General
statements should be avoided. The scope of work
should be built on the comprehensive studies
conducted and strengthened by root cause analysis.
Contractual Weakly defined Utility and
9 High Moderate to high (Risk Mitigation)
Risk scope of work Vendor
Based on above study, appropriate run- repair-
replace decisions with back up information to be
given.
Special attentions to components operating in creep

/ fatigue regime for residual life assessment.
Increased proliferation of innovative financing

Utility is the approaches /models coupled with creation of
direct bearer. awareness about benefits of R&M through pilot
Also impacts studies to be taken up. Alongside, the assessment
Utility unable the suppliers. of R&M should involve robust analysis of alternative
Low to
10 Funding Risk to mobilise High In the long run, approaches, cost benefit analysis and computation
moderate
funds this risk has of financial returns. Suitable mechanism needs to
repercussions be worked out for responsibility assigning in event
on the entire of shortfall/ non achievement of required
R&M market. operational parameters and financial returns and
recovery of investment. (Risk Mitigation)

PLANNING STAGE
Low level of Utility is the

participation by direct bearer. Focussed efforts should be taken up to involve
11 Market Risk the vendors in Low Moderate Also impacts potential players in the R&M market by the utilities
the bidding the potential and the CEA.(Risk Mitigation)
process vendors.
The contracts should aim at balancing the risk and

benefits between the utility and the implementation
Moderate, with
vendor. The price is an outcome of inherent risks in
Higher than increase in
Utility and the contract. Adequate flexibilities in the contract to
12 Market Risk expected price participation Moderate to high
Vendor be provided to accommodate reasonable/acceptable
discovery the likelihood
changes. The utility should re-evaluate R&M scope
may be low
and make necessary modification considering
proposed changes.(Risk Mitigation)
A. Rebidding should ideally be avoided through

robust project preparation, however in cases
where it still emerges as the only option,
Rebidding/Re- potential bidders should be encouraged to
Market and award/Delay in assess the current plant condition and assume
Moderate to Utility and
13 Operational award of R&M High the responsibility of the task.(Risk Acceptance)
high Vendor
Risk packages/contr
B. Management should undertake timely decision
act
for award of contract by formulating
qualification requirements and evaluation
procedures along with appropriate timelines
before seeking interest from the vendor. (Risk

Avoidance)
Implementatio
n contract
awarded to To avoid conflict of interest, a single entity should
Management vendor generally be avoided to assume both the role of
14 High Moderate Utility
Risk involved in design consultant as well as the supplier. (Risk
carrying out Avoidance)
technical
studies
EXECUTION STAGE
Affects all the

parties
including the Creation of clearly defined decision making and
Weak decision-
Management utility, supplier reporting structures with nominated officials
15 making Moderate High
Risk and the authorized to undertake decisions related to R&M
framework
implementation (Risk Mitigation)
support
consultant.
A. Undertaking comprehensive assessment

through technical studies with clearly defined
Occurrence of
Technical Utility and scope of work (Risk Mitigation)
16 technical High High
Risk Vendor
surprises B. Creation of technical surprise plan including unit
rates for specific items, contingency fund
allocation to deal with exigencies. (Risk

acceptance)
C. Establishing a clear decision making

framework.(Risk Mitigation)
Weak dispute
resolution Creation of Dispute Resolution Committee at the
Contractual mechanism Utility and start of project to address disputes between the
17 Moderate High
Risk constraining Vendor Utility and the Contractor in a timely manner (Risk
the execution Mitigation)
of work
A. Availability of key components should be

ensured before the start of the project and
Mismatch (or
should be in accordance with the pre-defined
delay) in
plan finalized before the commencement of
supply of
Utility and work.(Risk Mitigation)
18 Market Risk critical High High
Vendor
equipment and B. Provision of Penalties for delay in completion of
the shutdown work. (Risk Sharing/Transfer)
period
C. Sequential delivery of materials to the R&M site
(Risk Mitigation)
Weak
Approval of detailed quality plans and Engaging
Operational Supervision,
19 Moderate Moderate Utility Quality Control and Quality Assurance Consultants
Risk Quality Control
by the Utility. (Risk Mitigation)
And Assurance
20 Socio- Failure to High Moderate Generating A. Renovation of ESP system of the power

Environment comply with company and plant. (Risk Mitigation)

al Risk environmental supplier
B. Periodic environment audit of power plant (Risk
standards and
Mitigation)
perceived
negative C. Timely renewal of consent to operate from
externalities statutory authorities as per prevailing
requirements. (Risk Mitigation)
D. Undertaking socio-environment impact

assessment to assess the impact of the project.
(Risk Mitigation)
A. Advance Planning for Scheduling of Shutdown

Low to high
Delay in Low to high for Execution of Works (Risk Avoidance)
depending
provisioning of depending upon
upon the B. Additional Allocation of Power to States from
Institutional obtaining unit the delay in Utility and
21 number of Unallocated Quota of Central Pool (Risk
Risk shut down for obtaining the Vendor
units requiring Avoidance)
executing R&M approvals for
simultaneous
works shutdown. C. Implementation of partial R&M activities during
shutdown
Annual shutdown periods. (Risk Avoidance)
CLOSURE STAGE
Preparation and implementation of O&M action plan

by preparing O&M manuals including preventive,
Operational Sustainability Generating capital and breakdown maintenance procedure /
22 High High
Risk of R&M gains Company guidelines for units undergoing R&M. This should be
adopted through a Board Resolution and followed
thereafter. (Risk Mitigation)

Engaging specialised agency for O&M of the plant,

post R&M. (Risk Mitigation)
After sale services to be made an integral part of

the contract (Risk Mitigation)
Rectification/replacement of components to meet

Technical Post R&M Generating guaranteed parameters at no extra financial cost to
23 Risk guarantees not Moderate High company and utility. (Risk Mitigation)
achieved supplier Levy of Liquidated Damages for shortfall in
performance. (Risk Mitigation)
Disapproval of Involvement of Regulator should be ensured from

Regulatory Generating
24 costs incurred Low High the inception of the project with regular updates
Risk Company
during R&M about the progress of the project. (Risk Avoidance)
Experience gained must be documented and

Absence of ex-
incorporated in subsequent units planned for R&M
Operational post evaluation Generating
25 High Low works. CEA may provide a platform/ methodology
Risk and feedback company
for such information sharing between the utilities
loop
(Risk Mitigation)
A holistic assessment of the risks has been made (in the earlier chapter) by identifying risks occurring in different stages of R&M cycle i.e. in
identification, assessment, planning, execution and closure stage and by understanding the impact of the risk, its frequency of occurrence, its
severity and the bearer of the risk.
It is essential that the identified risks in these guidelines are evaluated by each generating company before implementing R&M
projects and appropriate strategies are formulated in line with these suggested in these guidelines to manage the
identified/evaluated risks.
Chapter - 7
Framework for Early Identification and Addressal of
Technical Surprises
A thermal power plant undergoing R&M, despite undertaking prior plant

assessment through Residual Life Assessment (RLA), Condition Assessment
(CA), Energy Audit (EA) and Performance Evaluation Test (PET) of units; might
face unforeseen events after the unit has been shut down and opened up for
R&M. Such unforeseen events are defined as Technical Surprises. As the units
are generally very old or nearing the useful life of operation, such technical
surprises are quite common. The utility due to such surprises is faced with
unexpected change in scope or unforeseen additions in the finalised scope of
work leading to unexpected cost escalation which may not be incorporated in
the final approved budget.
Occurrence of technical surprises can have adverse impact on scope,

schedule, cost and quality of R&M projects. Therefore, it is important to devise
strategies for the early identification of technical surprises to address them at
its nascent stage. In addition, it is equally important to develop a framework
that provides the utility, the ability to manage the surprises that are difficult to
obviate, as and when they occur during the course of R&M project. The aim of
this chapter is to describe the framework for the assessment of technical
surprises in R&M projects and ways to address them effectively.
7.1. Elements of Technical Surprises

In order to effectively handle the potential surprises that may be
encountered in R&M projects, it is important to understand the type of
technical surprise, root causes or factors leading such surprises and its severity
or impact on the plant/project time/schedule and cost. Each of these elements
is explained below:
7.1.1. Type of Technical Surprises

Potential surprises have been identified for each of the key components of
the plant system. Component wise identification of technical surprise enables
effective planning and management of these surprises by the utilities.
7.1.2. Root Cause Analysis

This step involves identifying the root causes of occurrence of technical
surprises during the course of the R&M life cycle. The practice of root cause
analysis is based on the belief that problems are best solved by attempting to
address, correct or eliminate root causes, as opposed to merely addressing the
immediately obvious symptoms. By directing corrective measures at root
causes, it is likely that problem recurrence will be prevented.
7.1.3. Impact of Technical Surprises

Once the potential surprises and its root causes are identified, it is
important to understand the impact of these surprises on scope, cost, schedule
and quality of R&M project. This will enable the utilities in assessing the impact
of technical surprise as one of the elements while undertaking cost-benefit
analysis and preparation of budgets for execution of R&M projects.
7.2. Strategies for Addressing the Technical Surprises

In order to address technical surprises, different actions/strategies need to
be undertaken/ executed during different stages of R&M process cycle i.e. from
the identification stage/start of R&M project until the closure stage/end of R&M
project. These strategies/actions for addressing technical surprises can be
categorised into the following categories:
7.2.1. Preventive Strategies

This involves undertaking actions/strategies by the utilities that either aim
at reducing or eliminating the likelihood of the occurrence of such surprises.
Preventive actions in general should be preferred as they aim to address the
issue when the magnitude of the problem is controllable.
7.2.2. Managing Surprises

This is essential because it is seldom possible to eliminate all the surprises
and the utilities are bound to face certain surprises. The only possible way is to
identify potential surprises, accept it and create provisions to minimise its
impact.
In order to effectively handle the surprises combination of the strategies

mentioned above need to be adopted.
Chapter - 8
Identification of Technical Surprises along with its Root
Cause and Impact
This chapter provides a description of potential surprises that may be

encountered during implementation of R&M of thermal power plants.
Alongside, it also describes the root causes and impact of such surprises based
on the framework presented in the preceding chapter.
8.1. Type of Technical Surprises

Different type of surprises encountered for various systems and/or
subsystems of the power plant have been briefly presented in table below
(refer Table 17 for further details). The visits to select power plants,
interactions with the officials of the generation utility, and consultation with
sector experts has been the basis of development of the following table.
Table 13: Technical Surprises encountered during R&M Intervention
S No. Plant System Areas of Potential Surprises
Boilers and Auxiliaries
Boiler tube failure is quite common in thermal

plants; the quantity requirement may change due
to the time lag between the assessment and
1 Boiler Tubes
execution of R&M works. This may result into
additional requirement of boiler tubes than those
listed in the contract.
In case of replacement of the wind box chamber,

the size of the new chamber may change. In such
2 Wind Box
cases, problems may be encountered in fitment of
new chamber.
In the interim period between RLA study and

actual R&M execution, bulge in the furnace may
occur due to minor explosion resulting in
3 Furnace
increased vulnerability of furnace to failure.
Additionally, problem in buck stay system may be
overlooked during the time of technical studies.
Leakages in manhole, handhole gaskets and in

safety valves may be overlooked during the
4 Boiler Drum
studies.
This impacts the overall boiler efficiency.
In R&M, to increase the efficiency and to improve

the performance of boiler, the coils of the Super
5 Super Heater Heater needs to be replaced. Additionally problem
and assessment of Superheater safety valves may
be overlooked during the time of technical studies.
While preparing scope of work exact requirement

for replacement of coils for Low Temperature
Super Heater (LTSH) and Platen Super Heater
may not be clearly specified by the utility. During
the designing stage, aspects related to shape,
gauge, material and size of the new coil
fabrication may be overlooked.
a) Deterioration of coils and sagging of assembly

due to constant high temperature and
pressure, developed during the time gap
between RLA study and commencement of
R&M works.
6 Reheaters
b) Specific details of coil replacement for
reheaters may not be clearly mentioned in the
scope of works. In addition, condition
assessment of reheater safety valves is
normally overlooked.
In case of replacement of economizer tubes, size

7 Economiser shape and gauge of tubes may differ from those
installed initially, resulting in problem of fitment.11
Superheater and There may be cracks in the seat and spindle of the
8 Reheater Safety safety valves which may be overlooked during the
Valves studies
Due to high corrosive nature of boiler flue gases,

there is corrosion in the Air Pre-heater which leads
to loss of effective support of the plates in the
9 Air Pre-heater
basket and bents in tubes. Diagnosis of the actual
condition may be overlooked during technical
studies.
Diagnosis of condition of the soot blowers is often

ignored during the scope assessment and
finalization stage.
10 Soot Blowers
In case of replacement, space constraints may be
encountered which may not have been assessed
at the time of placing of the order.
Pipe rerouting for Heavy Furnace Oil (HFO) and

Fuel Oil / Oil Firing
11 Light Diesel Oil (LDO) Pump may be required
System
which may be overlooked during the assessment.
Improper assessment of the foundation and

capacity of Forced Draft Fans in case of increase in
12 F.D. Fan
the size of the boiler furnace.
Further, there can be damages in the coupling and
11
This problem is non-existent when one to one replacement of the entire economizer is taken
up.
impeller assembly and blades of the fans during

the interim period between RLA studies and R&M
execution.
a) Over the years, many leakages develop in the

system and the utility instead of analyzing the
root cause of the leakages, generally decides
to increase the size/capacity of I. D. Fan which
may not be the requisite solution.
b) Surprises related to shaft cracks due to
13 I.D. Fan
excessive stress and damages in coupling
assembly may be observed if it is not properly
diagnosed during the studies. Further, there
may be deterioration of ID Fan during the
interim time period between the studies and
execution of R&M works.
a) If the utility decides to increase the boiler

capacity, the required new rating for the new
P.A Fans may not be assessed by the utility.
14 P.A. Fan b) Further, typically the Primary Air Fan faces
damages in shaft, coupling assembly and in
the impeller which sometimes is overlooked
during the plant assessment.
In case of complete replacement of Scanner fans

15 Scanner Fan
compatibility issues may be observed.
Electrostatic Precipitator is an integral part of coal

fired thermal plants to control particulate
emissions and with increasingly stringent norms
for emission, renovation and modernization of ESP
is an important part of the scope of work. Some of
Electrostatic the technical surprises observed are:
16
Precipitator
a) Space constraint for installing additional ESP
may not be considered at the time of
designing of the project,
b) Unavailability of spares due to technological
obsolescence,
a) In case of increase in capacity of the boiler,

the revised size required for the mill and
burner may be overlooked.
b) Due to improper assessment of long term
calorific value of coal, the size of mill and
17 Mill and Burner burner planned for installation may be
inadequate.
c) Possible technical surprises can arise due to
improper assessment of calorific value of coal
which has deteriorated over the years the unit
was in operation.
d) Improper Condition Assessment /Performance

Evaluation Test along with time gap between
the studies and actual execution.
Turbine & Auxiliaries
In Steam Turbine, potential technical surprises

observed are given below:
- Cracks in rotors and discs,
- Corrosion and fatigue of blades and
pitting
- Technological obsolescence of spare parts
18 Steam Turbine
especially in case of turbine valves,
- Failure on part of vendor to up-rate
turbine efficiency due to improper design
and
- Lack of timely decision by the utility with
regard to finalization of turbine design
a) Further weakening of condenser performance

due to deterioration of tubes, leakages and
insufficient heat transfer during the large
time gap between RLA studies and actual
19 Condenser R&M implementation.
b) Non-availability of condenser spare parts due
to technological obsolescence.
c) Non-specification of exact number of coils to
be replaced in the scope of work.
Circulating Water Pump (CWP) faces damages in

shaft, coupling assembly and in the impeller
which may be overlooked during the plant
assessment.
Circulating Water Lack of capacity assessment of CWP in case
20
Pump utility decides to increase the capacity of the
plant, may lead to technical surprise at later
stages as the old CWP may not be able to
circulate the water throughout the system
efficiently.
There can be space constraint in case of

21 Low Pressure Heaters installation of new one and compatibility issues
in case of new spares.
There can be mismatch of the outlet and inlet

flanges and the new HP heater may not fit to the
High Pressure existing heater space later during R&M
22
Heaters execution. HP Heater extraction Non Return
Valve (NRV) is also normally ignored by the
utility which may create problem later on.
BFP is the interface with the Feedwater system,

the Deaerator, and the steam condensate return
system.
Improper design of BFP can have cascading
effect if the utility decides to go for up-rating of
Boiler Feed Pump
23 the unit and do not assess the capacity and
(BFP)
ability to provide feed water to boiler drum at
the required temperature and pressure.
Moreover detailed requirements of its spares
may not be assessed leading to additional
requirement during execution.
Usually DBP suffers problems in shaft, coupling

assembly and in the impeller which may be
overlooked during the plant assessment.
Drip Booster Pump
24 Moreover proper size, capacity and its
(DBP)
compatibility with the existing connected system
like valves and piping system may be
overlooked.
CEP suffers problems in shaft, coupling assembly

and in the impeller which may be overlooked
Condensate
during the plant assessment. Moreover proper
25 Extraction Pump
size, capacity and its compatibility with the
(CEP)
existing connected system like valves and piping
system may be overlooked.
Balance Of Plant (BoP)
Possible technical surprises which the utility

might face are:
a) Replacement of few hammers may be
mentioned in the scope of work but during
execution more units may need to be
replaced.
b) Replacements of few crushers may be
execution entire unit may need to be
replaced.
26 Coal Handing Plant c) Weak foundation strength of coal crushers
d) Usually the building structure and pressure
house is in dilapidated condition and is not
part of scope.
e) Increase in size of marshalling yard for
accommodating additional Wagon Tippler is
given in DPR but space constraints may not
be considered.
f) Inadequate assessment of coal bunkers
supporting structure strength
g) The scope may be for replacement of few
rollers and idlers of conveyer belt however

later additional replacements may be
required during execution.
h) Replacement of metal detectors and
magnetic separators are usually not part of
RLA studies and may need replacement
during R&M execution.
i) Further there can be more deterioration
during the interim period after RLA studies.
a) Lack of proper assessment of the

Compressed Air compressed air system.
27
System b) Additional installation of auxiliary pipes may
be required.
While planning for installing new higher capacity

Cooling Water Pump, compatibility of associated
Cooling Water
28 components may not be taken into account due
System
to which pump cannot be operated at rated
capacity.
Significant technological advancement is

observed in case of C & I. Most of the utility
therefore prefers to undertake complete
Control And
replacement of C&I system and hence may not
29 Instrumentations
face any significant technical surprises. In case
System
entire system is not replaced, there may be
reliability and compatibility issues of the new
system with the old one.
Ash Hopper over time develops cracks in

supporting columns and in some cases there are
bents in balancing bolt which the utility may
30 Ash Handling Plant overlook during studies.
Further, there may be space constraints for
installation of new Ash Hopper which may be
overlooked.
Civil Work
Proper evaluation of the foundations of all major

equipments like boiler, turbine, ESPs etc. is
sometimes overlooked which may lead to
technical surprises during the execution.
Site accessibility and space constraint are

31 Civil works important factors for delay of R&M works which
are generally not considered before the start of
the project. Lack of planning with regard to the
movement of crane at the start leads to the
occurrence of technical surprises and delay in
execution of work.
Electrical System
Technical surprise arises due to lack of design

32 Generator documents and information of the sub-vendor
with regard to generator and its auxiliaries.
Damages in the generator stator may be

observed during the execution stage which may
33 Stator get overlooked at the time of studies or may
develop during the interim period between RLA
studies and execution.
There can be cracks in overhang portion of the

Rotor and Excitation rotor which might be overlooked during RLA
34
System studies or may develop during the interim period
between RLA studies and execution.
Transformers Insulation strength of paper (Furfural Test) of

(Generator transformer is normally not conducted in RLA
Transformer, Unit studies and there may be possibilities of
35 Auxiliary flashovers. Another possibility of technical
Transformer, Station surprise is that connections from bus duct to
Transformer, HT and transformer may be damaged which may be
LT Transformer) overlooked during assessment.
Technical surprise may arise due to improper

Motors (HT and LT
36 assessment with regard to compatibility of
Motors)
HT/LT motors with the up-rated system.
In most cases the old cables are usually

replaced with new ones. Cable tray fowling with
the existing structure may need rerouting during
Cables (HT and LT execution.
37
Cables) Although the scope may include replacement of
paper insulated cable and some PVC cables
having multiple joints with XLPE cables but exact
requirement (in kms) may not be provided.
Scope of UPS, battery and battery chargers may

not be clearly defined. During the plant
UPS, Battery and assessment the condition of battery and battery
38
Battery Charger charger can be found to be operating properly
but due to time lag between studies and actual
R&M execution, the deterioration may set in.
Energy efficiency opportunities in illumination

39 Plant illumination system of the plant (i.e. replacement of bulbs
with CFL, LEDs etc.) may not be assessed.
In addition to the above, there are other equipments/components where

technical surprises may occur (Refer Table below) and it is suggested that the
utilities should also assess the condition of these equipments to avoid technical
surprises based on the framework provided in this guidelines12.
Table 14: Other components/equipments for potential technical surprises
Boiler Island Turbine Island Balance of Plant Electrical Systems
- Vacuum Pump
- Low Pressure
Heaters
- Deaerator
- Gland Steam
Coolers
- LP Dozing Pump - Air Conditioning

System
- Turbine Governing
System and valves - Fuel Oil System
- Super Heater
Attemperator - Shaft Turning - Water Treatment
Gear/Barring Gear Plant
- Safety Valves - Switchyard
- Coolers (Hydrogen - Demineralisation
- Expansion Bellows
Coolers, Seal Oil Plant
- Fuel oil / Oil Firing Coolers, Lubricating - Control and
System Oil Coolers) Instrumentations
- Oil Pumps (Oil System
pumps include
jacking, starting,
seal, DC)
- Steam Jet Ejectors
- Pressure Reducing
and De-
superheating
System (PRDS)
8.2. Root Cause Analysis for Occurrence of Technical Surprises

Technical surprises occur due to the following:-
a) Weak data monitoring, reporting and maintenance
procedures at the unit level
Most of the utilities do not maintain data related to key
performance parameters of the unit, reliability of the unit and its
individual components etc. Even if such data is maintained, it is
done at the plant level only and not for all the unit level. Due to the
lack of historical data it becomes difficult to understand the exact
condition of the unit and this acts as one of the primary reasons for
occurrence of technical surprises (arising due to lack of information
12
No major technical surprises were observed for these equipments/components during the
visits to select power plants, interactions and consultation held with the officials of the
generation utilities and sector experts.
for any third party invited for R&M of the unit). Lack of overhauling
records with the utility is another related aspect. Due to the lack of
such records suppliers are unable to comprehensively understand
the exact condition of various equipments i.e. components that
were replaced during the operating life of the plant, replacement
time and history and remaining useful life of such equipments.
b) Unavailability of original design drawings with the utilities

Absence of design drawings with the utilities makes it difficult for
both the utility and suppliers to undertake R&M and leads to
technical surprises at the execution stage. Additionally, it also
makes it difficult for the equipment suppliers especially non-OEMs
to effectively assess the requirements of the plant as the
equipments/components to be supplied have to fit the existing/old
plant system averaging around 25-40 years of operation. For
example, after 25-30 years of operation of boiler and number of
start-ups, the hangers and supports may become jammed and
non-operative. The original drawing/design parameters of these
hangers and supports are not available with the utility which makes
it difficult for the vendor to re-engineer and design the hangers and
supports as the supplier may not know the loading and the
expansion range of the hangers.
c) Inadequate Assessment
RLA and other tests are conducted for main plant and equipments
only whereas in case of rest of areas like Balance of Plant (BoP) the
scope is generally derived, without any actual condition assessment
for BoP items. Lack of planning/assessment of BoP was found to be
the one of the most common issues faced by the utilities. Lack of
well chalked out path for cranes to reach the sites, space
constraints etc. are some of the important issues generally
overlooked during the planning stages.
Further, proxy assessment is undertaken in case of multiple units.

It is sometimes assumed that since both units are operating under
same condition, assessment of one of the units would suffice the
purpose and thus scope of work is prepared for both the units
based on such limited assessment. This although results in saving
of time and cost for the utility in the initial stages, leads to
occurrence of technical surprises at the later stages due to non-
exhaustive scope of work.
d) Weak/inadequate Scope of Work

Inadequate/weak scope of work is also one of the factors leading to
technical surprises. This is primarily due to inadequate
assessment/technical studies wherein the exact requirement for
R&M is not established. Another reason for weak/inadequate scope
of work is the financial constraints of the utility. In order to keep

the financial budget under control, the utility may not include
certain important works as part of R&M exercise and plans to cover
that under O&M head at the later stage. However, this may lead to
compatibility issue of old system with the new one leading to
surprises at later stages or may impact the overall quality of works.
For example: In case of R&M works of Obra TPS, some of the
motors were replaced whereas the rest were refurbished by re-
winding it and by renewing the insulators. However, the
refurbished motors may not be able to provide rated output and
there are chances that it may not be able to perform in sync with
the new system. Obra TPS also increased the capacity of ID fans
for the plant to operate at 216 MW but the motor was not changed
and only rewinding was undertaken. Due to lack of funds, UPRVUNL
didnt include it in the scope of work although all heavy HT motors
and continuous running motors which have no standby should have
been changed with new one with higher capacity.
e) Huge time lag between the technical studies (RLA, DPR

preparation) and actual award of contract (and
commencement of R&M work)
This entire process normally takes ~3-4 years. The units identified
for R&M in the interim period get low maintenance priority leading
to rapid deterioration in the plant condition not captured in the
studies and the scope of work leading to surprises at the execution
stage. In case of units that are already shutdown, cannibalization
of the material/spares to other unit has also been observed as a
common practice.
Table 15: Time gap between studies and Execution of Work
Table below presents the time gap between the completion of RLA study and
execution of work.
Completion of Actual Date of

Plant (Unit)
RLA study Start of Work
Bathinda Unit 3 (110 MW), PSPCL March 2001 January 2010
Bathinda Unit 4 (110 MW), PSPCL December 2001 November 2011
Ukai TPS, Unit 2 (120 MW), GSECL April 2003 August 2008
Barauni TPS, Unit 6 (110 MW),

May 2006 November 2009
BSEB
Bandel TPS, Unit 5 (210 MW),

January 2005 February 2012
WBPDCL
Source: CEA Quarterly Review Reports on R&M and LE of Thermal Power Stations and
interaction of AF- Mercados EMI with various utilities
f) Mismatch in plant shutdown period and supply of critical

equipments
The schedule of supply of critical equipment has to be synchronized
with the shutdown period to ensure completion of work in the
minimum possible time. However, this mismatch can be on account of
both suppliers and utility. There could be a delay in supply of key
components and equipments by the supplier on account of absence of
original vendors for such items; non-availability of original equipment
details, specifications etc.; obsolete design and inadequate
information available about modification done/spares used earlier.
This leads to delay in supply of material on a timely basis. Further,
due to energy shortages in the state and the prevailing grid
conditions, utility may not be able to provide for timely shutdown of
the plant. Larger the mismatch or gap higher are the chances of
occurrence of technical surprises.
g) Technological Obsolescence
Refurbishment of old equipment or spares may not be possible due to
technological obsolescence. This is true especially in case of old units
of 110/120 MW units wherein the manufacturers have stopped
manufacturing the spares (especially electrical) due to technological
obsolescence.
h) Genuine uncertainty in R&M

Even with careful planning and implementation, some unforeseen
situations are likely to arise. Most of the units being very old and
functioning beyond their operating life coupled with poor O&M
practices of the utility, it is common to find few technical surprises
which cannot be anticipated at early stages. Also, with careful
assessment and undertaking of studies some gaps in condition
assessment of the plant/unit may remain leading to technical
surprises at later stage. For e.g. in case of RLA study of the critical
piping system, the NDT (Non-destructive Test) are done at few
selected location of pipes and not on the overall length of the critical
piping system. Such studies do not reflect the true status of the
component as RLA is undertaken at specific points and those points
may not have any problem whereas during execution certain other
parts of piping may turn up as technical surprise which may lead to
change in scope of work during R&M execution stage. However, with
expected procedure and norms, such surprises can be minimized.
Also in most cases, the strategy to deal with such surprises is not
planned leading to distress for utilities.
8.3. Impact of Occurrence of Technical Surprises

The impact of the occurrence of technical surprises is as follows:
a) Scope Creep
The primary impact of occurrence of technical surprises is the

additional scope of work which needs to be addressed by the
supplier. This additional scope of work leads to cost escalation, time
delay and sometimes contractual disputes between the utility and
suppliers. The effectiveness with which utility decides the fair
allocation of additional work to the supplier, minimises the
contractual dispute and time taken by the supplier in delivering to
this additional work are the key factors which govern the magnitude
of the impact of the scope creep due to technical surprises. It has
been observed that in most of the cases suppliers are being made
solely responsible for addressing these surprises within the
given/capped contract value/amount without being adequately
compensated. A balanced arrangement is likely to go a long way in
contributing towards success of R&M market.
b) Cost Escalation
Any additional work discovered in the form of surprise has a cost
associated with it. This could be both direct as well as indirect.
Direct costs include the cost of additional work and increase in IDC
cost of the utility. Indirect cost include the loss in potential
generation and hence revenue of the utility due to additional time
required to address these surprises. Lack of ownership/active
participation by the utility in acknowledging such additional work
and deciding an acceptable course of action are key issues faced
during implementing R&M. Both suppliers and utility are bearers of
this risk. While the loss of supplier is limited to the cost of
addressing the surprise, utility suffers/bears a large proportion of
the cost in form of both direct as well as significant indirect cost
caused due to loss in potential generation. Moreover utility might
also face regulatory risk wherein recovery of these costs may not be
allowed by the state electricity regulatory commission while
determining generation tariffs.
c) Non-adherence to the project schedule timelines

Another related impact of technical surprise is the delay in the
project schedule due to additional time required to address the
technical surprise. The reasons for delay from the project schedule
includes the following: a) situation of indecisiveness, b) non-
availability of slots for repair, testing at various
production/manufacturing units of the supplier, c) non-existence of
original vendors for such items, d) customized manufacturing of a
particular component/spare due to obsolete design, e) practical time
required in transportation of material for repair from the utility place
to the workshop of the supplier and back at the utility place etc. All
these factors may have adverse impact on the utility revenues as it
can lead to months of shutdown of the unit.
d) Quality Deviation
Technical surprise may also impact the quality of R&M works and
non-achievement of overall R&M benefits. One of the most
concurring technical surprises seen is non-availability of spares or
incompatibility of older system with the new system envisaged in
R&M project. Due to such surprises, the expected outcome of the
scope cannot be met and the utility has to look for other
alternatives which affect the quality of the system. This situation
arises due to improper assessment of the relationship and
interaction between different components/equipments in a thermal
plant. Further, to minimise the delays/shutdown period certain non-
priority items are not given due importance during the R&M process
which may affect the overall quality of work.
e) Contractual Dispute
Disagreement between supplier and utility regarding additional
scope on account of technical surprise and incomplete interfacing
between components and instruments may lead to contractual
dispute causing delay or slow execution of the work. This dispute
also arises from the fact that in most of the contracts, scope of work
is vague and to safeguard its interest utilities generally include
clauses such as:
Any item essentially required for system completion and

commissioning of the units shall be treated as included in the
scope of work without any extra cost on this account
Such clauses although included in the contract, give rise to contractual

disputes at later stages which may not be in the best interest of the
R&M project.
Chapter - 9
Strategies for Early Identification of Technical
Surprises and Ways of Addressing Them
Occurrence of technical surprises is an important element/component of the

R&M project and un-preparedness or absence of strategies to handle these
surprises could derail the entire objectives/outcome of R&M project. For early
identification of technical surprises and to minimise its impact on the project,
planning/actions/ strategies to handle such surprises needs to be initiated right
from the inception/start of the R&M project.
A multipronged strategy is required to be undertaken covering different

stages of R&M process cycle. These strategies could be further classified
depending upon the nature of the impact of these strategies. While preventive
strategies aim to minimise occurrence of technical surprises, strategies for
managing surprises aims to minimise its impact on the project in case of its
occurrence. These are presented in detail below.

The identification stage includes execution of preventive strategies by the
utility to handle technical surprises. This includes strengthening of O&M
practices in the plant and strengthening of internal data maintenance,
acquisition and reporting in the plant. These are explained below:
9.1.1. Strengthening of O&M practices in the plant (Preventive)

Development of preventive maintenance manuals and adherence to the
annual maintenance/overhaul schedule and timely/periodic capital overhaul
schedule are pre-requisite for preventing occurrence of technical surprises
during R&M of the project. By undertaking regular O&M, utility is constantly
updated about the actual condition of the plant and wear and tear of different
components of the plant is addressed on regular intervals minimising the
probability of occurrence of technical surprises.
9.1.2. Strengthening of internal data maintenance, acquisition and reporting

in the plant (Preventive)
Internal data maintenance includes regular monitoring and data collection
of key operating and performance parameters such as heat rate, specific coal
and oil consumption, auxiliary consumption at the unit level (besides the
station level). Compilation and analysis of historical data enables accurate
identification of gaps; important for resolution of problems. Therefore, it is
required that utility should undertake the following steps:-
a) The utilities must properly maintain documents related to

Operating Procedures, Manuals, Technical Handbooks and
Instructions supplied by Original Equipment Manufacturers
(OEMs).
b) Documentation of key engineering diagrams/drawings and other

critical plant diagrams in centralised technical library in both hard
and soft format. This is one of the most critical requirements for
designing the components/equipments that are to be replaced and
made compatible with the existing system.
c) Operation Engineers should maintain day to day parameter data of

the units and generate monthly performance report.
d) Overhaul records (as stated above) along with complete details of

repair/replacement of plant equipments/components.
In most of the utilities majority of the above mentioned data is not

compiled/maintained in a usable format or is unavailable. It is important that
plants/units that are expected to undertake R&M in near future should try to
start compiling and collecting the above mentioned data to the extent possible.
Also, for the recently commissioned units, it is important that utility should
implement above suggestions in its day to day operation of the unit so that
such problem does not arise in future.
The above mentioned strategies coupled with good management practices

play an important role in minimising the surprises. The availability of good
quality information also enables the suppliers to acclimatise themselves to the
plant conditions in a better manner and hence permit proper design,
specifications and estimation of bills of quantities of the required equipments
within the project schedule time period.
Further, compilation of data mentioned above (especially performance

data) is also important from the viewpoint of estimation and monetization of
GHG emissions reduction through implementation of energy efficient R&M.

The assessment stage includes execution of both preventive strategies and
strategies for dealing with surprises. Preventive strategies include
comprehensive assessment and clearly defined scope of work. Strategies
related to dealing with technical surprises include development of technical
surprise plan and dispute resolution mechanism, establishing a clear decision
making framework and providing for contingency fund. These are explained
below:-
9.2.1. Undertaking comprehensive assessment through technical studies

with clearly defined scope of work (Preventive)
Effective assessment at the start of the project is the key to minimising
technical surprises. The nature and occurrence of technical surprises depend
upon the depth with which technical studies are undertaken. In order to
minimize technical surprises, the foremost step is to undertake comprehensive

assessment of both main plant equipment and the BoPs through technical
studies for each unit planned for R&M. In this regard, CEA has prepared
standard documents for carrying out RLA/CA/EA studies which may be used by
the utilities.
Based on the technical studies, efforts should be made to define the scope
as clear as possible along with the roles and responsibilities of each of the
stakeholder. This includes clarity in the scope with regard to the following:-
a) What needs to be done: The specification should clearly define the

R&M requirements and desired outputs on the basis of the plant
assessment
b) Who will do what: The division of work, roles and responsibilities of
the utility and the contractor/vendor must be clearly specified along
with the timelines
c) When should it be done: The utility must specify the schedule and
duration of shutdown of the unit along with the sequential delivery of
various equipments
9.2.2. Creation of Technical Surprise Plan (Managing Surprises)

A well-defined technical surprise plan should be prepared for effectively
handling technical surprises, as and when they occur13. The design consultant
involved in undertaking comprehensive assessment, DPR and subsequent
scope of work should also prepare a technical surprise plan. This is required as
replacement/repair of some components may come up at the time of execution
as everything cannot be analysed / tested during the studies. This should be
prepared in consultation with the plant level officials involved in operation,
repair and maintenance of the plant to understand the potential surprises as
they have the experience of the actual condition of the plant. This includes a
list of possible surprises, ensuring availability of spare parts to minimize
delays, addressing upfront the likely contractual aspects of additional supplies
and works etc.
Further, this should also include the unit rates for equipment/parts and
total financial implications of the same. In this regard CEA has prepared
standard documents for Detailed Project Report which may be used by the
utilities.
9.2.3. Creation of Dispute Resolution Mechanism (Managing Surprises)

Due to the occurrence of technical surprise there may be disagreement
between the utility and vendor on certain aspects which may translate into
disputes and affect overall execution of work. Therefore, in order to resolve
disputes between the contractor, sub-contractor and utility, it is important to
13
create a Dispute Resolution Mechanism. Under this mechanism a Dispute

Resolution Committee (DRC) should be formed at the start of the project with
fair participation from both utility and contractor. The institutional set up,
powers and roles along with the time schedule (within which case can be
referred from the occurrence of the dispute, hearing of the dispute and the
final decision) of the DRC should be specified in the tender document itself.
Any dispute which cannot be amicably settled between the parties can be
referred to the DRC. However, until the dispute is resolved, the contractor
should proceed with the work and contract in discussion with the utility and
implementation support consultant.
In this regard CEA has prepared standard bid documents which may be
used by the utilities.
9.2.4. Creation of dedicated R&M Cell and Engaging Specialized Consultants

(Preventive)
are required:
a) Creation of dedicated R&M cell by the utility at the
headquarter and at the plant
In order to effectively deliver on the R&M project it is important to
create a separate R&M cell with adequate and dedicated manpower
for the project. This team should involve plant level officials dealing
with the different departments like Boiler, Turbine, Electrical, C&I,
CHP, Milling system and AHP etc. Further, officials having prior R&M
experience should also be included in the team.
To ensure timely decisions and approvals within the organization it

is important that a dedicated R&M cell should also be formed at the
headquarters level.
b) Engaging of design and implementation support consultants

Specialized agencies should be engaged by the utility (on the basis
of competitive bidding) covering assistance on all works from
design to implementation. This could be either one agency or
multiple agencies.
The role of design consultants is to assist the utility in tasks related

to conduct of different studies, identification and selection of best
feasible option for R&M, preparation of DPR including technical
surprise plan, scope finalization, preparation of tender documents,
bid evaluation and selection of vendor etc.
The role of implementation consultant includes review and approval

of drawings, coordination between the vendors and the utility,
monitoring the progress of work as per approved schedule,
assistance to Owner in dealing with statutory authorities such as
Boiler Inspectorate Directorate, Pollution Control Board etc,

monitoring of day to day progress of the work, review of PG Test
Report etc.
Further, to build the requisite capacity of the utility officials, scope

of work of consultants should also include training of utility/R&M
cell officials on each of these components/fields.
9.2.5. Establishing a Clear Decision Making Framework (Managing Surprises)

Once the technical surprises occur, the indecisiveness of the utility can
result in significant delay in the execution of work. It is important to specify
the decision making process with clearly defined roles and responsibilities, and
requisite authority of different officials to enable timely resolution of the issues
encountered during the R&M. This includes internal reporting structures and
decision making authority for its timely addressal.
9.2.6. Pre-approved Contingency Fund (Managing Surprises)

As discussed earlier, occurrence of technical surprises has a direct impact
on the cost of the project. Lack of funds or approval of additional funds at a
later/advanced stage of execution may become difficult for the utility. Further,
it might happen that the unaccounted cost of such surprises may even
change/impact the entire cost-benefit analysis of the selected R&M option.
Therefore, it is required that some contingency fund may be provided for
handling technical surprises and must be incorporated in the final budget of
the project.
Based on the interaction with utilities and other stakeholders including

suppliers and technical consultants this fund can be capped around 5%-10% of
the total project cost. There is no specific percentage that can be prescribed as
contingency budget as this would depend upon the plant specific condition
such as level of preparedness of the utility through detailed studies, timely
execution of project etc.
Provision of contingency fund provides sufficient flexibility to the utilities to

undertake activities not envisaged earlier (surprises) and copes with the
surprises, as and when they occur.
Further, such pre-approved budget also reduces regulatory risk of the utility
at the closure stage.
9.2.7. In principle approval from the Regulatory Commission for additional

capital requirement for handling Technical Surprises (Managing
Surprises)
Appropriate regulatory commission should be apprised well in advance
about the technical surprise plan and contingency fund for provisioning of
additional costs for dealing with surprises. It is thus suggested that the
technical surprise plan and contingency fund be incorporated in the Detailed
Project Report (DPR).
9.3. Planning Stage

The planning stage includes execution of both preventive strategies and
strategies for managing surprises. Preventive strategies include minimising
time gap between assessment and award of contract and preparation of
interim O&M action plan (O&M plan during the time gap between RLA study
and commencement of R&M) by the utilities and provision for self studies by
the suppliers before bidding for the projects. Managing strategies include unit
price contract for certain items in the bidding document and submission of
action plan by the utilities for addressing technical surprises. These are
explained below:-
9.3.1. Minimizing time gap between assessment and award of contract and
preparation of interim O&M action plan by the utilities (Preventive)
One of the major reasons for occurrence of technical surprises is the time
gap between the assessment and the actual execution of the project. After
undertaking assessment of the plant and preparation of DPR, utility has to
undergo several approval procedures including approval from its own Board of
Directors, State Government (due to the requirement of equity capital),
regulatory commission etc. which may lead to significant lapse in time. Weak
contracting capabilities of the utilities may further add to the time delay.
Thus, it is required that specialised design and implementation support

agencies or consultants must be engaged by the utilities for assisting in
undertaking detailed assessment, preparation of DPR, selection of R&M option
and later seeking approvals from various authorities. While, this may minimise
the time gap to an extent, still some time gap is expected to lapse between the
assessment and actual execution of work by the selected vendor. Therefore, it
is suggested that an interim O&M action plan must be prepared by the utility
which identifies the urgent requirements or actions that must be undertaken
by the utility during this interim time period. This would minimise the chances
of occurrence of technical surprises at the execution stage. Further,
disclosure/sharing of such plan with the potential suppliers would reduce the
risk and thereby risk premium by suppliers which is ultimately reflected in the
price of the contract.
9.3.2. Provision for access of potential suppliers to the site (Preventive)

Access to the site should be provided to the bidders for carrying out due
diligence. The access to the site may be provided by the utility either at the
pre-bid stage or before the submission of financial bid by the supplier. This is
important as this would enable the suppliers to acclimatise to the actual
condition of the plant and enable them to bid accordingly. The access to the
plant site along with providing results of past studies undertaken by the
utilities would not only minimise surprises but would also lead to more realistic
price discovery for the utility.
9.3.3. Bid documents should seek unit price of various components

(Managing Surprises)
In the bid documents the utility should seek unit rates for such
components/works which are expected or anticipated based on the prepared
technical surprise plan. This is important as additional spares/components may
be required beyond those specified in the scope at the execution stage.
Further, upfront specification of additional requirements provides sufficient
flexibility in the contract to the utility for handling the additional requirements
during R&M of the plant. This would also ensure quick decision making as no
new contracting is to be undertaken for the additional supplies.
9.3.4. Understanding supplier strategy to deal with Technical Surprise as an

important evaluation criteria (Managing Surprises)
At the tendering stage, suppliers must be asked to provide their
understanding of potential surprises based on their past experience, results of
the plant studies provided by the utility, their own assessment and the
potential technical surprise plan prepared by the utility. Any additional
requirement may disrupt the overall production schedule of the supplier and it
may be difficult for the utility to make available slots for manufacture, repair or
testing of components at manufacturing/service centre/workshop of the
supplier leading to further delay. Therefore, it is important to understand the
suppliers plan for handling surprises.
Submission of strategy for dealing with the technical surprises by the

suppliers would provide some certainty and commitment to the utility of ability
of the supplier to deal with anticipated surprises.

Actual technical surprises are observed at the time of opening up of the
machine for R&M. In order to minimise the impact of technical surprises it is
important to timely identify and report technical surprises to the relevant
decision making authorities. This is explained in detail below:-
9.4.1. Timely identification and reporting of surprises (Managing Surprises)

In order to timely identify surprises, it is important that robust
communication and periodic review of R&M project be undertaken by the
utility. An indicative communication and review matrix is given below:-
Table 16: Communication and Review Matrix

Communication Objective of
Medium Frequency Participants
Type Communication
R&M Cell-
Plant Level
Review status of
R&M Cell Face to officials,
the project with Daily/Weekly
Meetings Face implementatio
the R&M Cell.
n support
consultants
Communication Objective of
Medium Frequency Participants
Type Communication
along with the
suppliers
R&M Cell-
Plant Level
officials,
Discussion over
implementatio
Technical the technical Face to
Weekly n support
Meetings issues / surprises Face
consultants
for the project.
along with the
senior officials
of suppliers
R&M plant cell
Report the status
to
of the project
Headquarter
Project Status including activities,
Email Weekly (HQ) Cell and
Reports progress, costs
subsequently
and issues, key
to higher
action points.
authorities
Report on the
status of the Board of
Monthly/Quarte
project to Face to Monthly/Quar Directors
rly Project
management. Face terly 3.4.
Status Meetings
Approval/decision R&M HQ Cell
on key issues
9.5. Closure stage

The occurrence of technical surprises has an adverse impact on the overall
cost of the project. It is therefore important for the utility to obtain approval
from the regulatory commission to capitalise the additional cost of the project
in order to safeguard its financial interest.
9.5.1. Submission of details to the Regulatory Commission detailing out the

occurrence of technical surprises and strategies adopted to minimise
the impact (Managing Surprises)
Utility should undertake a detailed mapping of the potential surprises
envisaged at the start of the project, technical surprises actually encountered
along with reasons for its occurrence and the mitigation steps undertaken by
the utility. This is important as it would enable the utility to justify to the
regulatory commission that the cost incurred was in the best interest of the
project and the additional expenditure was beyond the control of the utility.
9.5.2. Ex-Post evaluation of surprises and lessons learnt for future R&M
projects (Managing Surprises)
Ex-post evaluation of surprises encountered during execution of R&M works
and the actions undertaken is essential to understand the impact/effectiveness
of the entire plan. Generating company must undertake ex-post evaluation of
the R&M works and should document its experiences. This is important
especially in case company is undertaking R&M works on multiple units. The

learning/experiences gained from the first unit must be incorporated in the
implementation plan of the subsequent units even if it requires modification in
the scope of work of other units. CEA may provide a methodology/standard
template for ex-post evaluation. Further, the learning from different projects
should be disseminated through a common platform such as the CEA official
website. The CEA may initiate action in this regard.
The following table provides in detail the areas of potential surprises in

various components of plant system along with examples and key strategies to
address them.
Table 17: Areas of potential surprises in various components of plant system along with examples and key strategies to address
them
S. No Plant System Areas of Potential Surprises Strategies to handle the Surprises

a) The time gap between identification
of scope of replacement and
execution should be minimized, so
Boiler tube failure is quite common in
that the degradation of retained
thermal plants; the quantity requirement
components is not considerable from
may change due to the time lag between the
the original assessment. Also the
1 Boiler Tubes assessment and execution of R&M works.
plant should be maintained as per
This may result into additional requirement
regular O&M till the R&M is taken up.
of boiler tubes than those listed in the
b) The bid document and contract
contract.
should provide for additional
requirement of boiler tubes on the
basis of unit price.
In case of replacement of the wind box
chamber, the size of the new chamber may
During the designing/engineering stage
change. In such cases, problems may be
and before sourcing / manufacturing of
encountered in fitment of new chamber.
2 Wind Box new wind box chamber, availability of
For Example: Guru Nanak Dev Thermal
space should be considered as an
Plant (GNDTP) in Punjab faced a similar issue
important element by the vendor.
of space constraint during the installation of
new Wind Box.
3 Furnace In the interim period between RLA study and a) Efforts should be made to reduce the

actual R&M execution, bulge in the furnace time gap between studies and
may occur due to minor explosion resulting execution of work.
in increased vulnerability of furnace to b) Proper assessment of buck stay
failure. Additionally, problem in buck stay system should be undertaken and
system may be overlooked during the time the bid document and contract
of technical studies. should provide for additional
requirement of buck stays on the
basis of unit price.
Leakages in manhole, handhole gaskets and
Proper assessment of boiler drum, its
in safety valves may be overlooked during
4 Boiler Drum gaskets and safety valves should be
the studies.
undertaken
In R&M, to increase the efficiency and to a) Specific details with regard to the
improve the performance of boiler, the coils replacement of coils for Low
of the Super Heater needs to be replaced. Temperature Super Heater (LTSH)
Additionally problem and assessment of and Platen Super Heater should be
Superheater safety valves may be provided by the utility. Further,
overlooked during the time of technical superheater safety valves should be
5 Super Heater studies. assessed properly during the
While preparing scope of work exact Assessment Stage.
requirement for replacement of coils for Low b) Scope of work should be based on
Temperature Super Heater (LTSH) and the comprehensive assessment of
Platen Super Heater may not be clearly the unit and all critical requirements
specified by the utility. During the designing should be included in the
stage, aspects related to shape, gauge, scope/specifications. Deviation in

material and size of the new coil fabrication preparation of scope to reduce the
may be overlooked. cost (often witnessed during the
For Example: tender negotiation stage) in case of
critical equipments should not be
a) In case of R&M works of Kanti Bijlee
encouraged as this may lead to
Utpadan Nigam Limited (KBUNL) in Bihar,
increased cost at later stages
only 50% coil replacement in Super
impacting the entire cost-benefit
Heater was provided in the work order.
analysis of the selected R&M option.
This was done to reduce cost. Further,
replacement of LTSH supply tubes was c) Material technology has improved
not included in the work order. This led significantly over the years leading to
to confusion between the contractor and better efficiency. During the
the utility with regard to supply of these engineering and designing stage,
tubes. such improvements should be
considered. These may be expensive
initially, however better efficiencies
b) In case of R&M works of Unit 6 and 7 of
and lower running cost may ensure
Barauni TPS in Bihar, proxy assessment
better recovery in the long-run (over
was undertaken to prepare scope of work
the plant life).
(scope of work of Unit-6 was extended to
Unit-7). During R&M execution, Platen d) Comprehensive assessment should
Super Heater Outlet Header was not be undertaken for each of the unit
found in good condition for the unit on planned for R&M works. Proxy
which studies were not undertaken and assessment should be avoided.
complete replacement was suggested by
the vendor. This led to deviation from the
original scope of work.
Deterioration of coils and sagging of

assembly due to constant high temperature a) Specific details should be provided in
and pressure, developed during the time gap the scope of work.
between RLA study and commencement of b) Efforts should be made to reduce the
R&M works. time gap between studies and
6 Reheaters
Specific details of coil replacement for execution of work.
reheaters may not be clearly mentioned in c) Also, in case of additional work,
the scope of works. In addition, condition contingency fund should be
assessment of reheater safety valves is provisioned for and utilized.
In case of replacement of economizer tubes, During the design and engineering stage
size shape and gauge of tubes may differ this issue should be considered by the
7 Economiser
from those installed initially, resulting in vendor and incorporated in the scope
problem of fitment.14 itself.
There may be cracks in the seat and spindle Proper assessment of safety valves in
Superheater and Reheater
8 of the safety valves which may be Superheater and Reheater should be
Safety Valves
overlooked during the studies undertaken
Due to high corrosive nature of boiler flue a) Tubular Air Pre-Heaters should be
gases, there is corrosion in the Air Pre- replaced with rotary regenerative Air
9 Air Pre-heater heater which leads to loss of effective Pre-heaters depending on the
support of the plates in the basket and bents availability of the space. This should
in tubes. Diagnosis of the actual condition be assessed during engineering and
14
This problem is non-existent when one to one replacement of the entire economizer is taken up.

may be overlooked during technical studies. designing stage by the suppliers.
b) Grating on which baskets are placed
and the baskets of the Air Pre-heater
should be changed. Drive units
should be inspected before R&M
execution.
c) Sealing system of the Air Pre-heater
should be completely replaced.
Double seal may also be installed to
improve the efficiency.
d) Support bearing of the air pre-heater
must be supplied in the beginning as
it is the first item to be erected for
the boiler duct portion.
a) While deciding on the type and
design of the new soot blowers, the
Diagnosis of condition of the soot blowers is effectiveness and performances of
often ignored during the scope assessment the blowers along with its positioning
and finalization stage. in the boiler system must be
10 Soot Blowers In case of replacement, space constraints assessed.
may be encountered which may not have b) In case Smart Soot Blowers are
been assessed at the time of placing of the being installed, extra care to be
order. taken for proper installation of
sensors to detect slag formation on
waterwalls.
Pipe rerouting for Heavy Furnace Oil (HFO)

and Light Diesel Oil (LDO) Pump may be This issue should be addressed during
11 Fuel Oil / Oil Firing System
required which may be overlooked during the the planning stage by the utility.
assessment.
a) Proper assessment of the capacity
and foundation of the F. D. Fan for
upgraded boiler furnace in the
planning stage is very important.
b) Condition Assessment of fan along
with lube oil system and cooling
water system is necessary to assess
Improper assessment of the foundation and the physical condition/
capacity of Forced Draft Fans in case of damages/erosion/corrosion,
increase in the size of the boiler furnace. deformation, etc of components (like
12 F.D. Fan Further, there can be damages in the coupling, control devices/dampers,
coupling and impeller assembly and blades of stator parts, bearing assembly, shaft
the fans during the interim period between assembly, impeller assembly, etc) by
RLA studies and R&M execution. visual/NDT examination at site for
replacement or salvaging.
c) Performance Evaluation Test may be
done considering maximum
achievable capacity (MW) of the
boiler before R&M.
d) Efforts should be made to reduce the
time gap between studies and

execution of work.
and foundation of the I. D. Fan for
a) Over the years, many leakages develop in with lube oil system and cooling
the system and the utility instead of water system is necessary to assess
analyzing the root cause of the leakages, the physical condition/
generally decides to increase the damages/erosion/corrosion,
size/capacity of I. D. Fan which may not deformation, etc of components (like
be the requisite solution. coupling, control devices/dampers,
b) Surprises related to shaft cracks due to stator parts, bearing assembly, shaft
13 I.D. Fan
excessive stress and damages in coupling assembly, impeller assembly, etc) by
assembly may be observed if it is not visual/NDT examination at site for
properly diagnosed during the studies. replacement or salvaging.
Further, there may be deterioration of ID c) Performance Evaluation Test may be
Fan during the interim time period done considering maximum
between the studies and execution of achievable capacity (MW) of the
R&M works. boiler before R&M.
d) The root cause analysis of the
leakages should be thoroughly
assessed as increasing the size of the
same increases the auxiliary
consumption. Efforts should be made

to reduce the time gap between
studies and execution of work.
and foundation of the P. A. Fan for
with lube oil system and cooling
water system is necessary to assess
the physical condition/
If the utility decides to increase the boiler
damages/erosion/corrosion,
capacity, the required new rating for the new
deformation, etc of components (like
P.A Fans may not be assessed by the utility.
coupling, control devices/dampers,
14 P.A. Fan Further, typically the Primary Air Fan faces stator parts, bearing assembly, shaft
damages in shaft, coupling assembly and in assembly, impeller assembly, etc) by
the impeller which sometimes is overlooked visual/NDT examination at site for
during the plant assessment. replacement or salvaging.
c) Performance Evaluation Test may be
done considering maximum
achievable capacity (MW) of the
boiler before R&M.
d) Efforts should be made to reduce the
execution of work.
15 Scanner Fan In case of complete replacement of Scanner During the design and engineering stage

fans compatibility issues may be observed. this issue should be considered by the
For Example: In case of R&M works in vendor.
GNDTP in Punjab, the contractor faced
difficulty in installing new scanner fans due
to its new size and had to reposition it later
with few modifications.
Electrostatic Precipitator is an integral part of a) Earlier, ESP efficiency used to be

coal fired thermal plants to control around 95% and the environmental
particulate emissions and with increasingly norms were relatively less stringent.
stringent norms for emission, renovation and In the present scenario, the
modernization of ESP is an important part of efficiency of ESP is around 99% and
the scope of work. Some of the technical the environmental norms have also
16 Electrostatic Precipitator surprises observed are: become stringent. The utility should
properly assess the ESP
a) Space constraint for installing additional
requirements otherwise it may face
ESP may not be considered at the time of
issues from the Pollution Control
Board15. This is critical as going
b) Unavailability of spares due to forward the norms are likely to
technological obsolescence, witness further tightening.
15
Central Pollution Control Board (CPCB)Standards for Particulate Matter Emissions for Thermal Power Station are as follows-
Generation capacity 210 MW or more- 150 milligrams per normal cubic metre
Generation capacity less than 210 MW- 350 milligrams per normal cubic metre
However, it is advised that the utility should also check the standards of their respective state pollution control boards.

For Example: b) To avoid space constraint while
a) In case of R&M of KBUNL in Bihar, to installing new ESP fields, the utility
curtail cost, complete replacement of should plan this properly, assessing
internal components of ESP was not the space requirement upfront.
included in DPR and work order. But c) Interaction with the O&M department
during execution it was found that should be undertaken during the
requirement of ESP internals and Rapping planning stage with regard to the
Gear boxes were more than what was availability of spares in the market
ordered in the main package. and accordingly scope of work should
Earlier ESP control panels were Double be prepared.
Front type which are now obsolete and
are being replaced with Single Front
panel. In case of R&M works of KBUNL,
initially replacement of old Double Front
type with Single Front type ESP control
panels was envisaged but after its
delivery, it was found that it cannot be
accommodated due to space constraints.
So it was decided to again order Double
Front panel.
b) In case of R&M works of GNDTP in Punjab

increase in number of ESP fields were not
envisaged initially. However, during
execution it was decided to increase the
number of fields for better control of

pollutants. This lead to deviation from
original scope of work.
a) Proper assessment of the required
size of mill and burner should be
undertaken during the technical
studies, especially when the utility
a) In case of increase in capacity of the
plans to increase the capacity of the
boiler, the revised size required for the
boiler.
mill and burner may be overlooked.
b) The Calorific Value of coal has
degraded over the years and hence
to meet the rating of the boiler, more
burner planned for installation may be
coal has to be fed. This will also
inadequate.
increase in the capacity of the mill
17 Mill and Burner c) Possible technical surprises can arise due
and burner system. Therefore, the
to improper assessment of calorific value
utility may clearly mention in the
of coal which has deteriorated over the
scope of work about the range of
years the unit was in operation.
variation in quality of coal and long
d) Improper Condition Assessment term availability of type/quality of
/Performance Evaluation Test along with coal to be received so that adequate
time gap between the studies and actual size of mill and burner may be
execution. provided by the vendor.
c) Efforts should be made to reduce the
execution of work.
In Steam Turbine, potential technical

surprises observed are given below: a) During preparation of scope, the
- Cracks in rotors and discs, utility must undertake the following
- Corrosion and fatigue of blades and i. Proper engineering and
pitting designing of turbine and its
- Technological obsolescence of spare auxiliaries.
parts especially in case of turbine ii. Specification of detailed
valves, requirements for turbine and its
- Failure on part of vendor to up-rate auxiliaries including spares.
turbine efficiency due to improper iii. Unit price contract for additional
design and requirement must be
- Lack of timely decision by the utility undertaken by the utility during
18 Steam Turbine with regard to finalization of turbine the bidding stage to avoid any
design contractual issue at later
stages.
For Example:
iv. Also, in case of additional work,
- In case of R&M works of Obra TPS in
contingency fund may be
Uttar Pradesh, vendor was unable to
utilized.
upgrade Unit 9 to 216 MW from 200 MW.
Due to high axial shift, the machine load v. When multiple units are
couldnt be raised beyond 180 MW. One undertaken for R&M, the
of the reasons for this is the improper learning obtained from one unit
design of the turbine. must be incorporated in other
units even if that requires
Also, after significant delay in decision,
change in scope.
utility decided to retain the original
turbine design for other units undergoing

R&M. Due to this it is expected that there
would be significant delay in overall R&M
of other units.
- In case of R&M of KBUNL in Bihar, as per
the work order all valves were to be
refurbished but the total requirement of
spares for refurbishment valves was not
known. When the valves were opened, it
was found that many spares would be
required which were not part of scope of
work. Most of the valves were obsolete
and no longer manufactured by
supplier/sub vendors. Therefore, those
valves had to be replaced with new ones.
a) Further weakening of condenser a) The utility should specify the exact
performance due to deterioration of details of replacement of condenser
tubes, leakages and insufficient heat coils after proper assessment.
transfer during the large time gap Deterioration of
between RLA studies and actual R&M performance/condition post the
19 Condenser implementation. assessment should be avoided
b) Non-availability of condenser spare parts through minimizing time gap between
due to technological obsolescence. RLA studies and R&M execution.
c) Non-specification of exact number of coils b) The assessment should also include
to be replaced in the scope of work. availability of spares and
For Example: During R&M works of Obra compatibility of the same with the

TPS in Uttar Pradesh, non-availability of units installed.
Condenser spare parts led to complete
replacement of condensers by the main
contractor.
Circulating Water Pump (CWP) faces
damages in shaft, coupling assembly and in
the impeller which may be overlooked during Proper engineering and designing during
the plant assessment. planning stage and finalization of scope
Lack of capacity assessment of CWP in case to cover CWP in detail. Also, aim should
20 Circulating Water Pump
utility decides to increase the capacity of the be to minimize the time gap between
plant, may lead to technical surprise at later RLA studies and R&M execution to avoid
stages as the old CWP may not be able to unrecorded deterioration.
efficiently.
There can be space constraint in case of
installation of new one and compatibility
issues in case of new spares. During the designing and engineering
21 Low Pressure Heaters For Example: Ukai TPS in Gujarat stage this issue should be considered by
experienced mismatch of spares of LP the vendor.
heaters due to which the Unit start-up got
delayed.
There can be mismatch of the outlet and
Vendors while taking order for new HP
inlet flanges and the new HP heater may not
22 High Pressure Heaters heater should assess the compatibility of
fit to the existing heater space later during
new flanges with the existing ones.
R&M execution. HP Heater extraction Non

Return Valve (NRV) is also normally ignored
by the utility which may create problem later
on.
BFP is the interface with the Feedwater
system, the Deaerator, and the steam
condensate return system.
effect if the utility decides to go for up-rating a) Proper engineering and designing of
of the unit and do not assess the capacity Turbine Island.
and ability to provide feed water to boiler
23 Boiler Feed Pump (BFP) b) In addition, the exact requirement for
drum at the required temperature and
spares should be provided.
pressure. Moreover detailed requirements of
its spares may not be assessed leading to
additional requirement during execution.
For Example: Issue of mismatched spares
for BFP cartridge was observed in case of
R&M works at Ukai TPS in Gujarat.
Usually DBP suffers problems in shaft,
coupling assembly and in the impeller which
may be overlooked during the plant It should be ensured that in case new
assessment. Moreover proper size, capacity drip booster pump is ordered it should
24 Drip Booster Pump (DBP)
and its compatibility with the existing be compatible with the existing
connected system like valves and piping connected systems and space available.
For Example: In case of R&M works of

KBUNL in Bihar, DBP could not be installed in
the old foundation as the original pump was
smaller in size with 7 stages and RPM 3000
whereas the supplied pump was bigger in
size with 9 stages and RPM 1480.
CEP suffers problems in shaft, coupling

Moreover proper size, capacity and its It should be ensured that in case new
Condensate Extraction compatibility with the existing connected condensate extraction pump is ordered it
25
Pump (CEP) system like valves and piping system may be should be compatible with the existing
overlooked. connected systems and space available.
For Example: In case of R&M works of Ukai
TPS in Gujarat mismatch in spares for CEP
was observed.
Possible technical surprises which the utility Comprehensive condition assessment
might face are: studies for BoP should be undertaken by
a) Replacement of few hammers may be the utility and the recommendations of
mentioned in the scope of work but the studies should be incorporated in the
26 Coal Handing Plant
during execution more units may need to scope of work. Further, the bidding
be replaced. document should specify the range of
b) Replacements of few crushers may be variation in quality of coal received by
mentioned in the scope of work but the utility so that the bidders can

during execution entire unit may need to accordingly design coal handling plant to
be replaced. suit the boiler, feeder and milling
c) Weak foundation strength of coal system.
crushers
d) Usually the building structure and
pressure house is in dilapidated condition
and is not part of scope.
accommodating additional Wagon Tippler
is given in DPR but space constraints may
not be considered.
rollers and idlers of conveyer belt
however later additional replacements
may be required during execution.
magnetic separators are usually not part
of RLA studies and may need replacement
during the interim period after RLA
studies.
For Example:

a) In case of R&M of GNDTP in Punjab, the
ducts and coal pipe lines were not
thoroughly checked to avoid air ingress
and later during execution refurbishment
of the ducts and coal pipe was done
though originally it was not part of the
scope.
b) In case of R&M of Barauni TPS in Bihar,
scope of work included i) New supplies for
one no. railway crossing near fuel oil
pump house to enable railway
engine/shunter to change the track
during wagon placement for unloading
and ii) Repair/Overhauling/Replacement
of all other components/ systems/
subsystems which are not being supplied
new to ensure sustained and safe
operation for uninterrupted supply of coal
to running units and also to ensure that
the loaded railway wagons are released in
time. However, during the execution
there were contractual issues as some of
the high value equipment/ systems
related to the railway crossing did not
exist or were beyond repairable.
27 Compressed Air System a) Lack of proper assessment of the Comprehensive condition assessment

compressed air system. studies for BoP should be undertaken by
b) Additional installation of auxiliary pipes the utility and the recommendations of
may be required. the studies should be incorporated in the
scope of work.
For Example: In case of R&M works of
GNDTP in Punjab, installation of new
auxiliary piping for Service Air and
Instrument Air were required during
execution although this was not envisaged
during scope of works.
While planning for installing new higher
capacity Cooling Water Pump, compatibility During the designing and engineering
28 Cooling Water System of associated components may not be taken stage this issue should be considered by
into account due to which pump cannot be the vendor.
operated at rated capacity.
Adequate care need to be taken for
selection of C&I equipment/system in
Control And replacement of C&I system and hence may
29 respect of compatibility/quality
Instrumentations System not face any significant technical surprises.
manpower/field-support facilities, etc.,
In case entire system is not replaced, there
to avoid surprises, during R&M.
may be reliability and compatibility issues of
the new system with the old one.
Ash Hopper over time develops cracks in Comprehensive condition assessment
30 Ash Handling Plant supporting columns and in some cases there studies for BoP should be undertaken by
are bents in balancing bolt which the utility the utility and the recommendations of

may overlook during studies. the studies should be incorporated in the
Further, there may be space constraints for scope of work. Further, the bidding
installation of new Ash Hopper which may be document should specify the range of
overlooked. variation in quality of coal received by
the utility so that the bidders can
accordingly design ash handling plant to
efficiently evacuate the ash from boiler
bottom, economizer , air pre-heater
hoppers and from ESP
Civil Work
Proper evaluation of the foundations of all
major equipments like boiler, turbine, ESPs
etc. is sometimes overlooked which may lead
Utility should maintain civil foundation
to technical surprises during the execution.
details and proper assessment of the
For Example: In case of R&M works of PTPS
condition of the foundation of all major
in Haryana, the scope of works had to be
equipments should be undertaken during
changed at the time of execution when it
the technical studies.
31 Civil works was found that the turbine foundation had
sunk and required additional civil work to
repair the foundation.
important factors for delay of R&M works
Site accessibility and movement of crane
which are generally not considered before
must be assessed at the planning stage.
the start of the project. Lack of planning with
regard to the movement of crane at the start

leads to the occurrence of technical surprises
and delay in execution of work.
For Example: In case of R&M works at Obra
TPS in Uttar Pradesh, due to space
constraints crane cannot move between the
units and therefore R&M works for Unit 10 &
11 were taken together. ESP of unit 11 had
to be dismantled so that the crane could
move and work on Unit 10 can be
undertaken. This was not envisaged at the
assessment stage
Electrical System
Technical surprise arises due to lack of
design documents and information of the
sub-vendor with regard to generator and its
a) Design drawings should be made
auxiliaries.
available to the contractor to the
32 Generator For Example: In case of R&M works of extent possible.
KBUNL in Bihar contractor was unable to
b) Efforts should be made to reduce the
supply Generator seal oil control panel due
to the lack of design documents and name of
execution of work.
the sub- vendor.
c) Also, in case of additional work,
Damages in the generator stator may be contingency fund may be utilized.
observed during the execution stage which
33 Stator
may get overlooked at the time of studies or
may develop during the interim period

For Example: In case of R&M works of Ukai
TPS in Gujarat, flashover on Unit-1 overhang
stator winding coil was observed and
therefore six generator stator bars had to be
replaced.
There can be cracks in overhang portion of
the rotor which might be overlooked during
Rotor and Excitation
34 RLA studies or may develop during the
System
interim period between RLA studies and
execution.
Insulation strength of paper (Furfural Test)
Transformers (Generator of transformer is normally not conducted in
Transformer, Unit Auxiliary RLA studies and there may be possibilities of Comprehensive assessment of the unit
35 Transformer, Station flashovers. Another possibility of technical should be undertaken including that of
Transformer, HT and LT surprise is that connections from bus duct to the transformers.
Transformer) transformer may be damaged which may be
overlooked during assessment.
Technical surprise may arise due to improper a) Deviation in preparation of scope to

assessment with regard to compatibility of reduce the cost in case of critical
HT/LT motors with the up-rated system. equipments should not be encouraged
36 Motors (HT and LT Motors) as this may lead to increased cost at
later stages or non-realization of
For Example: envisaged benefits from R&M works.
a) In case of R&M works of Obra TPS in b) In case of additional work, contingency

Uttar Pradesh, some of the motors were fund may be utilized.
replaced whereas the rest were
refurbished by re-winding it or by
renewing the insulators. However the
refurbished motors may not be able to
provide rated output and there are
chances that it may not be able to
perform against the new system. . Obra
TPS also increased the capacity of ID fans
for the plant to operate at 216 MW but
the motor was not changed and only
rewinding was undertaken. Due to lack of
funds, UPRVUNL didnt include it in the
scope of work although all heavy HT
motors and continuous running motors
which have no standby should have been
changed with new one with higher
capacity.
b) In case of R&M works of Ukai TPS in
Gujarat, additional rewinding and re-
caging of four HT motors were
undertaken which were not part of scope
so that the motors can operate at the
new required capacity.
In most cases the old cables are usually Unit price contract for additional
37 Cables (HT and LT Cables)
replaced with new ones. Cable tray fowling requirement must be undertaken by the

with the existing structure may need utility during the bidding stage to avoid
rerouting during execution. any contractual issue at later stages.
Although the scope may include replacement
of paper insulated cable and some PVC
cables having multiple joints with XLPE
cables but exact requirement (in kms) may
not be provided.
Scope of UPS, battery and battery chargers
The utility while preparing the scope of
may not be clearly defined. During the plant
work should take into account the
assessment the condition of battery and
UPS, Battery and Battery expected time for undertaking entire R&M
38 battery charger can be found to be operating
Charger of the plant and then accordingly should
properly but due to time lag between studies
include the scope of UPS, battery and its
and actual R&M execution, the deterioration
chargers.
may set in.
Energy efficiency opportunities in Energy Audit of the unit should be
illumination system of the plant (i.e. undertaken and its recommendation
39 Plant illumination
replacement of bulbs with CFL, LEDs etc) should be implemented while preparing
may not be assessed. the scope of works.
Chapter - 10
Global R&M Experience: Case Studies from
selected countries
10.1. Context of R&M A World Wide Experience & Perspective

Coal is the most abundantly and dispersedly available fossil fuel in the World,
with proven global reserves of nearly 1 trillion tonnes, sufficient for 150 years of
generation at current consumption rates (Figure below).
Figure 9: Coal reserves by region and type (end 2009)
Note: Numbers
Source: in parentheses
IEA, 2012, Technologyrepresents
Roadmap,theHigh-Efficiency,
ratio of total coal resources-to-reserves
Low-Emissions, for Power
Coal-Fired each
region
Generation
Coal reserves in gigatonnes (Ct)
Therefore, Coal is Worlds most widely used fossil fuel for electricity
generation. In 2010, coal accounted for more than 40% of total electricity
generation in the World, (Refer Figure below) followed by natural gas and hydro.
Power generation from fossil fuel accounts for majority of CO2 emissions. In
2009, generation of electricity and heat contributed to 41% of the World CO2
emissions from fuel combustion primarily due to its heavy dependence on coal.
Despite increasing environmental concerns, coal is expected to remain one of
the major fuels for power generation in the foreseeable future driven by the
increasing demand from developing countries to improve electricity access in
their respective countries. Given the current and expected dominance of coal in
the World energy mix, improvement in the efficiency of coal based generation is
of immense importance.
Figure 10: Share of different fuels in total electricity generation worldwide

Other
4%
Hydro
16%
Coal/Peat
40%
Nuclear
13%
Natural Gas
22%
Oil
5%
Notes: Other includes geothermal, solar, wind, bio-fuels and waste, and heat.
Total electricity generated in 2010 is 21 431 TWh. This excludes pumped storage .
Source: IEA 2012 (a)
Figure 11: World CO2 emissions from fuel combustion by sector in 2009
Other
10%
Electricity and
Transport Heat
23% 41%
Residential
6%
Industry
20%
Other includes commercial/public services, agriculture/forestry, fishing, energy industries other

than electricity and heat generation and other emissions not specified elsewhere.
Source: IEA 2011
The average efficiency of coal-fired power generation units in the major coal
using countries varies enormously. Efficiencies from fossil fuel based power
plants for some of the countries are shown below. In 2008, the energy
efficiencies for coal-fired power generation ranged from 31% in India to 41% in
France.
Figure 12: Efficiency of coal fired power generation in various countries

45.00%
40.00%
Australia
China
35.00% France
Germany
India
30.00% Japan
Korea
UK + Ireland
25.00% United States
20.00%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: ECOFYS 2011
Worldwide coal-fired power plant efficiency averaged around 35.1% in 2007

(IEA, and CIAB 2010). These differences arise from diverse factors, including the
age of operating plants, technology employed i.e. sub critical, super critical or
ultra-supercritical etc., local climatic conditions, coal quality, operating and
maintenance skills, and receptiveness to uptake of advanced technologies.
As observed from above, there exists significant scope of improvement in

current efficiency of coal based power plants in India either through Renovation
and Modernisation (R&M) or by installing new systems based on advanced
technologies. Improving the efficiency of coal based generation plants offers
several benefits in terms of resource security i.e. reduced consumption of coal;
reduction in environmental degradation i.e. reduction in both global CO2
emissions and local pollutants; meeting energy shortages and increased access
to electricity.
Although review of literature indicates that R&M is one of the cost effective
options to improve the efficiency of thermal power plants, the drivers for
undertaking R&M differ across countries. The decision for undergoing R&M
depends upon a number of macro and micro level factors such as national level
policies, environmental regulations, resource availability, cost effectiveness of
competing fuels for power generation, need for increasing the availability and
reliability of power plant etc. For e.g., in EU member countries, climate change
policy and compliance to environmental standards acts as a major driver for
improving efficiency of thermal power plants. In South Africa, power
augmentation is a key driver. Similarly, in case of India, power augmentation

act as a key driver for refurbishment decisions (although in certain cases
environmental considerations also have been the priority).
Given the above background, this chapter presents the international R&M
experience of selected thermal power plants in different countries. The case
studies have been developed keeping in view the following research questions
(consistent with the scope of work and identified risks as part of Task 1 and Task
2 of this assignment):
a) Selection of Unit/Plant for R&M along with objectives of carrying out

R&M,
b) Advanced technological options for EE R&M such as turbine up-
gradation, efficient and environment friendly furnace-boilers, coal
utilization etc.
c) Finalisation of Scope of Work for R&M,
d) Procurement Process for Selection of Consultant/Contractor,
e) Funding of R&M Projects,
f) Cost Benefit Analysis,
g) Implementation of R&M Projects including shut down time,
h) Environmental safeguards,
i) Measures for Guaranteed Performance post R&M.
Based on these experiences, lessons have been drawn for India for the
successful implementation of R&M in the country and measures required to
mitigate risks and technical surprises faced during the entire R&M process.
10.2. Overview of Power Sector of Different Countries

This chapter presents a brief overview of the power sector of different
countries.
Table 18: Overview of Power Sector of different countries
S No. Country Brief overview of Power sector of the country
i. Coal dominates the electricity production in the

country. As of 2012, the installed capacity of the
country was 39193 MW out of which almost 52% of
electricity was generated from coal followed by 23%
from gas, 15% oil, 6% and 5% from hydro and
1. Indonesia geothermal resources.
ii. Demand has outpaced the supply of electricity leading

to power shortages and low electrification rates in the
country. In 2011, only around 70 percent of
Indonesia's population had access to electricity.
iii. In 2011, Indonesia became the world's largest

exporter of coal by weight.
iv. Due to abundant domestic supply of coal, government

has been encouraging increased use of coal in the
power sector and reducing its dependence on liquid
fuels.
v. The focus of the government has been to maximize

the utilization of low-rank coal (around 4,200 kcal).
This policy has some important benefits as low value
of the coal enables power generation at a lower cost
and leaves higher quality coal for exports leading to
maximum usage of coal resources.
i. In 2011, the installed capacity of the country was

20,250 MW. Electricity is generated largely from
domestic coal and nuclear, whereas natural gas is
mainly used as complementary fuel in multi fired units
and for peaking purposes. Coal accounts for almost
53% of the installed capacity followed by Nuclear at
20%. Hydro including pumped storage and Renewable
energy (Wind and Photovoltaic (PV)) each accounts
for 11% share while Combined Cycle and gas fired
accounts for remaining 6% share.
2. Czech Republic
ii. Czech Republic is a net exporter of electricity. Net
electricity production in 2011 was 81028 GWh while
17044 GWh was the net export of electricity to other
countries accounting for ~21% share.
iii. Refurbishment of existing generation capacity through

efficiency improvements is an integral aspect of State
Energy Policy to attain a self-sufficient and export
oriented electricity sector and energy security of the
country.
i. In 2009, total installed capacity was 35.6 GW of which

31.6 GW was coalfired. The remaining capacity was
split between hydropower (2.3 GW), gas (0.9 GW),
3. Poland
biomass (0.6 GW), oil (0.5 GW) and wind (0.4 GW).
Coal accounts for almost 90% of electricity generation
in the country.
ii. In 2009, Poland was the worlds ninthlargest hard

coal producer and is the thirdlargest lignite producer
in the EU, after Germany and Greece.
iii. Poland has significant experience in rehabilitation of

power plants. Power plant rehabilitation and boiler
retrofits carried out over the last twenty years have
considerably improved the efficiency and
environmental performance of the power plants.
iv. Two thirds of the installed coal plants are older than
30 years presenting an opportunity for Poland's old
power plants to be replaced by newer and significantly
more efficient power stations.
i. Romania has a relatively balanced generation portfolio

comprising 36% hydro, 33% coal, 19% Nuclear, and
10% Gas and rest being contributed by renewable
energy.
ii. In 2010, the gross generation capacity was over

4. Romania
20GW, while the net generation capacity was
approximately 17GW (increasing from 16.1GW in
2009), giving Romania the largest generation sector
in South- East Europe.
iii. In 2010, Romania was a net exporter of electricity.
i. In 2009, the installed capacity of the country was

~44782 MW out of which almost 49% of electricity
was generated from natural gas followed by 29% from
coal, 18% from hydro, 3% from liquid fuels and 1%
from wind, geothermal and biogas.
5. Turkey ii. Turkey produces both hard coal and lignite. However,
it has significant reserves of lignite as compared to
hard coal. It produces all the lignite it uses while it
imports about 90 per cent of the hard coal it
consumes. Further, it is expected that volumes of
imported coal may rise in the future with the increase
of coal's importance for electricity generation.
iii. In 2009, Turkey was a net exporter of electricity but

on a small scale. Net exports averaged around 1 TWh
i.e. ~0.5% of total electricity supply in Turkey.
iv. In order to improve the environmental performance of

the energy sector Government of Turkey (GOT)
identified rehabilitation of existing thermal power
plants and retrofitting of FGD units as an important
part of its energy strategy.
i. Total installed electricity capacity in 2009 was ~43.5

GW. Electricity is mainly generated by thermal
sources with coal dominating the installed capacity in
the country (~85% of share in the total installed
capacity).
ii. South Africa has the world's ninth largest recoverable

coal reserves and holds 95 percent of Africa's total
coal reserves. Additionally, it is the fifth largest coal
exporter in the world.
iii. South Africa's total electricity consumption has grown

by about 20 per cent during 2000-2010 while installed
capacity grew at a slower rate of 7 per cent during
6. South Africa that same time period leading to significant energy
shortages in the country. Country faced severe power
crises in 2008 leading to rolling blackouts in the
country.
iv. In 2009, approximately, 12.5 million people had no

access to electricity. Overall electrification stood at
75% with 88% of urban and 55% of rural population
having access to electricity in the country.
v. In January 2008, the Department of Minerals and

Energy and Eskom released a new policy document,
National response to South Africa's electricity
shortage wherein several measures to meet
shortages was highlighted including capacity
expansion programmes from existing projects.
10.2. Case Study of Suralaya Power Station Unit 1 And 2 (2x400 Mw),
Indonesia
1. Plant Details
Suralaya Thermal Power Plant is one of the largest coal fired thermal power
station in Indonesia with a total generating capacity of 4025 MW. The plant
comprises 8 units of different capacities commissioned between 1983 and 2011.
Units 1 to 4 are of 400 MW each, Units 5 to 7 are rated at 600 MW each and
Unit 8 is rated at 625 MW.
The plant was constructed in 4 stages with Units 1 and 2 being placed into
service in 1983 and 1984. Units 3 and 4 were commissioned in 1989. Units 5 to
7 were placed into service in 1997. The last stage, consisting of Unit 8, was
placed into service in 2011.
The Suralaya Plant is owned by Indonesia's government-run utility

company, Perusahaan Listrik Negara [PLN].
Unit 1 and 2 have been operated for baseload power since commissioning.
Having exceeding their design life, rehabilitation and up gradation works were
carried out on the ageing boilers for Unit 1 and 2. The boilers for Units 1 and 2
are 400 MW pulverised coal fired radiant tower types and were originally
supplied by Babcock & Wilcox Power Generation Group Inc. and Japan's
Marubeni Corporation back in the early 1980s. The first unit outage began in
October 2010 and successfully passed all of its performance guarantees in July,
2011. The second unit outage began in July 2011 and successfully completed its
performance tests in February 2012.
2. Objectives of R&M (Rehabilitation and Capacity Upgrade Project)

The main objective of this R&M was to upgrade the capacity of these units in
order to meet the growing demand for electricity. The specific objectives were as
follows:
a) To extend the life of these units

b) To upgrade the capacity of Unit 1 and 2 from 400 MW to 440 MW
c) Reduction in NOx and CO2 emissions
d) Restoration of unit efficiency - Use of latest technology including
restoration of boiler efficiency i.e. make appropriate and required
modifications to allow the boiler to achieve the increased steam
output at the increased load condition.
e) Improving operating plant efficiency thereby decreasing the
operating and maintenance costs
f) Enable the plant to use wider varieties of Indonesian Coal
g) Improving reliability of other plant equipments
h) Achieve security of supply and increasing electricity demand
3. Project Planning and Assessment

In order to achieve the above objectives RLA (Residual Life Assessment) or
Life Cycle Management Process studies were undertaken to assess the condition
of the equipments. The life cycle management process comprised of three
stages:
a) Risk Assessment
Risk assessment on Unit 1 and 2 boilers was undertaken to
determine the probability of occurrence of a perilous event. Based
on known history, statistical data, judgment by experts, and an
evaluation of the consequences and repair or replacement costs of
the equipment, PLN/PT Indonesia assessed the potential risks.
b) Condition assessment
In order to assess the condition of the boiler and auxiliary
equipments following steps were undertaken:
i. Visual inspections and photo summary

ii. Evaluation and testing surveys of various components of the
boilers
iii. Mechanical checks, sample collection and laboratory analysis
c) Life Cycle decisions

After reviewing the results and the recommendations from the
condition assessment step in the life cycle management program
and taking into consideration the concerns identified during the risk
assessment stage of the process, PLN / PT. Indonesia Power
decided that the equipment could be refurbished / rehabilitated
more economically than a complete replacement of the boilers and
associated equipment. The life cycle of the equipment would also
be extended significantly if rehabilitation were performed on Units 1
and 2. Therefore, the utility decided to proceed with the
rehabilitation work and capacity upgrade for Suralaya Steam Power
Plant Units 1 and 2.
The rehabilitation involved replacement of the existing coal-/oil-

fired burners, heat transfer surface of the primary and secondary
air heaters, all boiler safety valves with the exception of the cold
reheat valves, and the replacement of a significant portion of the
convection heating surface.
In addition to the above, evaluation of the original boiler design,

original performance data sheets, new turbine heat balances,
setting drawings, and the current fuels being used were also
undertaken to improve on the conceptual design improvements for
the capacity upgrade and rehabilitation of Units 1 and 2.
4. Project Execution
This project was carried out in partnership with Japan's Marubeni Corporation
and Babcock & Wilcox Power Generation Group Inc. (B&W) of the US and was
funded by the Japan Bank for International Co-operation.
The technological interventions undertaken included the following:
a) Convection pass pressure part replacement

Convection heating surface modification was carried out and worn
out pressure parts were replaced by modified material to increase
operational reliability and to accommodate a capacity increase.
b) Safety valve replacement

Safety valves were replaced to accommodate the increased
steaming capacity of the boilers.
c) Air heater refurbishment

Worn/corroded air heater baskets, seals and some sector plates
were replaced. This reduced leakage and lowered the air heater exit
gas temperature.
d) Burner upgrade
Existing burners were replaced with low NOx burners complete with
igniters and flame scanners, which resulted in NOx emissions
reduction of 56% for both units combined.
e) Pulverizer rebuild and upgrade

Pulverizer rebuild and upgrade was undertaken to increase coal
fineness leading to improved combustion, improved overall
pulveriser performance and reduced pulveriser power consumption.
Based on the above interventions the comparison of pre and post overall
project benefits are provided in Table below:
Table 19: Overall Project References

Parameter Pre-Retrofit Post- Retrofit % Change
Boiler Efficiency 85.51% 86.22% +0.71%
Fuel Consumption (metric tons/yr)* 27,10,000 26,88,000 -0.81%
Primary, Secondary & ID Fan Power (kW) 30,000 29,000 +3.33%
NOx Emissions (metric tons/yr)* 15,970 7,080 -56%
CO2 Emissions(metric tons/yr)* 54,13,000 53,62,000 -0.94%
*NOTE: The values for (metric tons/yr) are for both units combined and are based on a boiler
capacity factor of 0.85 and the post-retrofit (increased) boiler output for both the Pre-
Retrofit and Post-Retrofit values.
The project was successful and met all the initial overall objectives, which
were to extend the life of the units, reducing the emissions and restoring unit
efficiency subsequently leading to reduction in fuel consumption.
5. Summary
In summary, the following points need to be highlighted:
a) Life extension/Rehabilitation works of unit 1 and 2 undertaken

after the end of the useful life of the plant (approximately 25
years)
b) Detailed studies were undertaken by the utility to assess the
condition of the plant.
c) The boiler inspection including RLA/CA studies were done by
Original Equipment Manufacturer (OEM) i.e. B&W PGG.
d) Based on the life cycle management process, it was determined
that the equipment could be refurbished/rehabilitated more
economically as compared to complete replacement of the boilers
and associated equipment.
e) Burners, pressure parts, pulverizers, air heater and flame
detection system were upgraded in order to handle wider range
and variety of coal.
f) Combustion systems were redesigned in order to reduce NOx
emissions.
g) The project was successful and met all the initial overall
objectives.
10.3. Case Study of Tusimice II (ETU II) Power Plant (4x200 MW),
Czech Republic
1. Tusimice II TPP: Plant Details

The Tusimice II TPP (ETU II) is owned by CEZ, the largest generating
company of Czech Republic. Tusimice TPP has 4 units of 200 MW each. The
power plant was put into operation unit by unit. The 1st Unit was commissioned
in 1974 and the 4th Unit was commissioned in 1975. During 1990s these units
were de-sulphurized and modernized due to which the lifetime of these units
was extended by another 10-15 years. The power plant is located near the
Libou brown coal mine.
In the period from 2007 to 2012, Tuimice Power Plant II underwent complex
restoration works to ensure its future operation in line with the current European
standards and planned operation life of the plant after rehabilitation corresponds
to the remaining life of the adjacent Libou mine.
2. Objective of R&M
There were several objectives for undertaking R&M. At the country level, the
decision for R&M was driven by energy security, compliance to EU environmental
regulations etc.
At the plant level, the decision for renewal of plant was based on the
availability of sufficient coal and quality of the available coal. The following two
considerations were assessed:
a) Option 1: In case of new plant, coal would be required for around 40

years
b) Option 2: In case of modernization, life of 25 years can be obtained
Since, the remaining life of Libou coal mine was only 25 years, Option 2 was
selected.
Further, assessment of the mine indicated that the coal available from
the mine for future utilization would be of markedly low quality and
hence power plant needs to be adapted to the lower fuel efficiency and
higher content of sulphur in future.
The main objectives for undertaking R&M were as follows:-
a) Restoring production portfolio for the next 25 to 30 years indexed

to the life of the coal mine, the only possible coal source in the
vicinity.
b) Improving the environmental performance of the plant and to
comply with the emission standards prescribed by the European
legislation.
c) Increasing the efficiency of electricity production, reduce

consumption of primary fuels.
d) Providing ability to burn low quality coal
e) To remain self-sufficient in energy, to ensure energy security for
the country and to maintain as a net exporter of electricity.

Detailed studies and assessment of the plant condition was undertaken by
the utility.
Civil surveys were also undertaken to inspect both the conditions for laying
foundation of the new structures and as-built state of the existing structures.
These surveys resulted in the decision on preservation or repair of the original
structures in order to allow the extension of the operational life of the plant.
On the basis of technical and economic study, a business plan was prepared
which provided the targets of the reconstruction of the power plant and main
principles of the technical solution.
In addition to the studies, comprehensive assessment of the following

parameters was also undertaken by the utility before undertaking R&M:
a) Technical parameters of the existing units such as power,

efficiency, steam admission conditions - temperature and pressure
etc. and the required parameters of the units after the
reconstruction
b) Required emission limits
c) Operating life of the existing power plant and service life required
after the reconstruction
d) Fuel, its quality (parameters)and total amount of the extractable
fuel (e.g. coal) with respect to the design service life of the power
plant
e) Source of water and its capacity
f) Economy of the secondary energy products (waste) present
arrangements and its possible disposal during design service life
g) Generator-to-grid connection and connections to the transmission
system
h) Possibility to supply heat if required
i) The existing I&C system
j) Key technical data and information on the main plants and
components: coal handling, boiler including the downstream
systems, flue-gas desulfurization (FGD) units, turbine island,
electrical parts, water chemical treatment plant, water
management, cooling circuit
k) Civil structures used and their possible use for the assumed design
life
l) Existing infrastructure and its potential additional use and Ties to
the existing infrastructure.
The project was executed through EPC contractor Skoda Praha Invest, Group
Company of CEZ. The contract for the preparation of the design was signed in
May 2005. The geological survey and inspection of the condition of buildings,
structures and process equipment at the power plant was carried out in order to
determine the possibility of their use for another 25 years.
After the successful completion of this stage, the EPC contract for the Power
Plant was signed in April 2006. The work related to the specifications started
immediately, along with the supplier selection procedure. The sub vendors for
the project were selected by Skoda Praha Invest on tender basis. Packaging was
done in a way that it ensures competition among different vendors leading to
competitive prices and at the same time the number of vendors to be managed
was limited. Around 10 major vendors were selected for the work related to
Machine, Turbine, Boiler House, I&C, Chemical Water treatment etc.
Further, for undertaking R&M works, dedicated team of 10 people was

formed by the utility. The funding for the project was garnered from the
internal resources of the utility.
The following tasks were undertaken as part of the execution of the

rehabilitation process
4.1. Phased Execution/Implementation of R&M

a) The project implementation was divided into two stages, with two
units being considered for R&M works at a time and
remaining two units being operated in parallel.
b) The first stage of the execution started in June 2007 with the
shutdown of Unit 3 and 4. The Unit 3 and 4 were commissioned in
February 2009 and April 2009 respectively. The trial run of these
units was completed in November 2009 and Protocol of the
Provisional Acceptance (PAC) was signed in September 2010.
c) The second stage of the execution started in November 2009 with

the shutdown of Unit 1 and 2. The trial run of Unit 2 was completed
in October 2011 and PAC protocol was signed in November 2011.
The trial run of Unit 1 was completed in April 2012 and PAC protocol
was signed in April 2012.
d) It was observed that first phase of R&M was delayed by one year but
the second Phase of R&M was delayed by only one month. The
experience gained and lessons learnt in undertaking R&M works
during the first phase was duly incorporated while executing R&M
works of second phase.
4.2. Meticulous planning in separation of operating and non-operating units

One of the key preparatory activities at the time of commencement of R&M
was construction of buildings and separation of operating units from the
non-operating ones (that will undergo R&M). This was completed well in
advance and before the commencement of the works. A large number of
temporary measures were implemented related to wide variety of process, civil
and especially electrical and I&C works during the planned 3-week complete
shutdown of the units so that the operation of units 1 and 2 could continue
during the reconstruction of units 3 and 4. A separator wall was also created
within the turbine house to create this separation and over 200 temporary
measures were implemented to effect such separation.
4.3. Handling of Technical Surprises

During implementation of R&M works for units 3 & 4, there was occurrence of
technical surprises in construction related work, Process Equipment Disassembly
and Assembly and works related to Commissioning and start-up of the new
units. These are explained in detail below:
a) Construction Work
i. Several underground systems and structures not recorded in

the documentation of ETU II were discovered during the
construction.
ii. Probes carried out after the dismantling of process
equipment showed in some cases (FGD plant) less load
carrying capacity of earth than in preliminary surveys.
iii. Some civil structures (e.g. Turbine Hallroof) had to be more
significantly overhauled than originally indicated by the
preliminary surveys.
b) Process Equipment Disassembly and Assembly

Some components intended for minor repairs by preliminary
surveys were completely replaced due to the operation life required
(some pipelines, LJ flushing tank, some components of the fan
mills, etc.).
c) Commissioning and start-up of the new units
i. Unusual composition of slag from the boiler caused

difficulties in the newly designed semi-dry slag and ash
extraction system and consequently in the balance of waste
water. It was resolved by adjusting the pumping in waste
water tanks.
ii. Cooperation between the existing systems and the new units
during the temporary operation (2 units out of service for
upgrade and2 units in operation) for example between the
FGD plant and the existing gypsum handling system.
iii. Difficulties with restarting the turbine generator in hot

condition after the trip addressed in co-operation with the
TG supplier, KODA POWER.
4.4. In order to resolve the technical surprises a joint committee was formed
by EPC contractor and CEZ
a) A common committee was formed by the Skoda Praha Invest, the

EPC contractor and CEZ to sort out issues/disputes of suppliers and
surprises faced during the implementation stage. The objective of
this committee was to decide that in case of occurrence of technical
surprise or additional scope, whether there exists any title on
behalf of the supplier to claim additional financial resources and the
quantum for the same. The committee was also consulted during
occurrence of disputes/hindrances in the project execution.
b) In order to implement R&M works successfully, it was important

that utility, EPC contractor, suppliers etc. should work as a team.
Disputes must be resolved in a timely manner through negotiations
in an amicable manner. This was followed as a practice between
the utility, the EPC contractor, and the sub-contractors.
c) Formation of such committee also proved useful in cases where

utility wanted to increase the scope of work beyond that mentioned
in the contract. For e.g., earlier only renovation of outer wall panel
windows of boiler house was part of the contract but later decision
was taken to completely replace the same.
d) Also, in case of sanction of additional work that influence other

work elements, the entire timeline and activities were re-aligned
according to such new work. This was mutually decided by CEZ and
Skoda Praha Invest.
4.5. The advanced technological options considered while undertaking R&M

are highlighted for each of the components below:
a) Boiler
Boilers were installed by Vitkovice Power Engineering and were
designed in a manner that can reach high effectiveness even while
burning fuel with a decreased quality in the future, while fulfilling
emission requirements.
b) Flue gas Desulphurization units

The reconstructed electrostatic precipitators ensure that the
concentration of solid pollutants in the output flue gases is below
100 mg/NM3. The dust-free flue gasses are routed into the new
outdoor desulphurization unit (supplied by Andritz Energy &

Environment), designed as one unit per boiler pair.
c) Machine Room
Modern three-stage turbines, each with a 200 MW power output,
were mounted on the slightly adjusted turbine foundations in the
original machine room. The turbines installed are of the action
blading, condensing type with steam reheating and eight non-
regulated steam outlets for heating of the condensate, feeding
water, and exchanger station heating water and feed water pump
drive. The turbine is being supplied by Skoda and generator is
being supplied by Siemens.
d) Coal handling Plant

The original equipment was repaired and worn out parts
exchanged.
e) Water handling
Removal of hydraulic de-slagging and integration of waste water in
the power plant process
f) Electrical part and Instrumentation and Control (I&C)

The electrical part was modernized and exchanged in the course of
the complex renewal of the Tusimice II power plant, including
repair and maintenance of some parts. I&C system was also
completely changed. The new process control systems contain
systems for control, monitoring and evaluation of the technological
process of power production, desulphurization and auxiliary parts of
the Tusimice II power plant, including the field instrumentation,
control valves with actuators, cabling and cable trays. The power
plant process is monitored, controlled and secured by distributed
control system supplied by Siemens.
g) Construction
Some of the major civil parts of the work included repair of the
boiler steel structure, exchange of the machine hall roof shell,
adjustment of the turbo set foundation, repair of the internal and
external surface of the cooling towers etc. Construction of
completely new buildings also formed part of the work (such as
FGD buildings, water treatment, new piping and cable bridges and
slag silos).
h) Power plant parameters Pre and Post R&M

The comparison of the original unit technical parameters and
emission values before the reconstruction and designed parameters
of the reconstructed units is shown in the following overview of the
power plant performance.
Table 20: Power plant parameters Pre and Post R&M
Power Plant Parameters Before Renewal After Renewal
Boiler Effectiveness 86-87.6% Min. 90%
NOx Emissions 320-440 mg/Nm3 Max 200 mg/Nm3
SO2 Emissions 450-500 mg/Nm3 Max 200 mg/Nm3
Fly ash emissions 60-100 mg/Nm3 Max 20 mg/Nm3
Unit efficiency 33-34% 37.82%
Fuel calorific value 10-11 MJ/kg 8.5-11 MJ/kg
Water content in the

32-38% 31-34%
untreated fuel
Ash content in the untreated

18-25% 31.74%
fuel
Nominal steam output of the

660 t/h 570 t/h
boiler
Nominal superheated steam

17.46 MPa 18.1 MPa
pressure
Nominal reheated steam

4.06 MPa 3.81 MPa
pressure
Nominal superheated steam

540 C 575 C
temperature
Nominal reheated steam

540 C 580 C
temperature
Feed Water Temperature 253 C 258 C
Unit rating 200 MW 200 MW
Maximal steam output 660 t/h 575 t/h
Superheated steam pressure

17.5 MPa 19.1 MPa
under maximum power
Ash content in dry fuel 42.98% 35-46%
Sulphur content in dry fuel 2.87% Max 3.5%
Post R&M, an efficiency improvement from 33% to 38%. Further, net

efficiency enhancement related to CO2 reduction was also achieved. CO2
emission factor reduced from 1.1 tCO2/MWh pre R&M to 1.0 tCO2/MWh post
R&M. Results of the warranty tests showed that the renewed power plant
equipment met all required technological and ecological parameters as
highlighted above. The EPC contractor met all the conditions and the
requirements stipulated in the contract. Emissions post R&M works were less
than the emission limits provided by EU standards.
Figure 13: ETU II Emissions pre and post R&M
Source: AF-Mercados EMI interactions with the utility and the EPC Player
4.6. Post R&M Guarantees

The guarantee period of 24 months for process equipment and 60 months for
the civil structures start after the signature of the Protocol of the Provisional
Acceptance (PAC).
Learning from the implementation of R&M works of ETU II was

incorporated by CEZ in implementation of R&M works of Prunerov II,
the subsequent plant taken for R&M by CEZ (discussed in the subsequent
sub-section).
5. Summary
a) Life extension/Rehabilitation works were undertaken again after the

end of the useful life of the plant.
b) Availability of adequate coal and inferior quality of coal were
important consideration for rehabilitation works.
c) R&M works were driven by both plant level economics and country
level objectives of energy security, compliance to EU environmental
regulations etc.
d) Detailed studies were undertaken by the utility to assess the
condition of the plant. Civil surveys were also undertaken to inspect
both the conditions for laying foundation of the new structures and
as-built state of the existing structures.
e) Execution of R&M works were undertaken on EPC basis. The sub-
vendors for the project were selected on the basis of competitive
bidding.
f) Execution of R&M works on the plant was divided into phases.
g) The funding for the project was garnered from the internal resources
of the utility
h) Occurrence of technical surprises was observed during the
implementation of R&M works and were resolved through formation
of joint committee between EPC contractor and the utility
i) The project was successful and met all the conditions and the
requirements stipulated in the contract.
10.4. Case Study of Prunerov II (EPR II) Power Plant (5x210 MW),
Czech Republic
1. Plant Details
The Prunerov TPP is owned by CEZ, the largest generating company of Czech
Republic. It consists of 5 units of 210 MW each, which was first taken into
operation in 1981 1982. In 1996, all units were retrofitted with limestone
based wet scrubbers to ensure proper SO2 emission control. In addition to the
production of electricity, also district heating is supplied to the neighbouring
urban agglomerations. Currently, R&M works are on-going on unit number 3-5.
R&M works are proposed for Unit 3-5 only. Unit number 1 and 2 are in
operation and are proposed to be retired after the R&M works for Unit 3-5 are
completed. Unit 1 is proposed to be closed in 2016 and Unit 2 in 2018. Time
schedule for R&M of Unit 3-5 is Sept 2012-2014.
2. Objective of R&M
The objective for undertaking R&M works include:
a) Extending the useful life of the three units with a period of 25 to

30 years
b) Improving the environmental performance of the plant and to
comply with the emission standards prescribed by the European
legislation.
c) Increasing the efficiency of electricity production, reduce
consumption of primary fuels.
d) Providing ability to burn low quality coal
e) To remain self-sufficient in energy, to ensure energy security for
the country and to maintain as a net exporter of electricity
f) Maintain the supply of heat to external customers using only the
capacity of the three renewed blocks.

The reconstruction project comprises the following activities:
a) Upgrading and maintenance to the existing lignite unloading,

handling and transport system
b) Upgrading and maintenance to the existing limestone unloading,
handling, and transport system
c) Refurbishment of the existing lignite mills with redesigned
classifiers, new motors and hydraulic Controls
d) Replacement of the three existing boilers, including combustion
chamber and lignite burners by three once-through boilers
(Benson boilers) with higher steam parameters
e) Partial replacement of the turbine
f) Installation of new electrostatic precipitators for dust removal
g) Installation of new wet scrubbers for SO2 removal

h) Complete replacement of the automatic control system for the
entire facility
i) Partial replacement and modernisation of electrical equipment
j) Introduction of cleaned flue gas in the reconstructed cooling
towers
The three refurbished blocks of EPR II will have an increased unit capacity of
250 MW.
In order to build upon the experience of R&M works of Tusimice and to
handle technical surprises, the learning of the project has been incorporated in
the preparatory work of EPR II.
This project is also executed under EPC mode and Skoda Praha Invest is
selected as the EPC contractor. In order to utilise the past R&M experience,
suppliers of key components are being retained.
Also, same project manager involved in R&M works of Tusimice power plant
has been involved for the R&M works of EPR II from the utility side.
The implementation of the project has started and timeline for R&M works
has been Sept 2012-2014. In order to effectively manage the project Skoda
Praha Invest organises working meetings with the relevant officials on a daily
basis. Further one official meeting per 14 days is also organised besides
providing the summary of work to the utility every week.
Post R&M it is expected that there would be an efficiency improvement from

32.6% to 39%. Further, CO2 emission factor is expected to be reduced from 1.2
tCO2/MWh pre R&M to 0.9 tCO2/MWh post R&M.
5. Summary
a) Life extension/Rehabilitation works are on-going and are expected to

be completed by 2014
b) Three refurbished blocks of EPR II will have an increased unit capacity
of 250 MW.
c) In order to build upon the experience of R&M works of Tusimice and to
handle technical surprises, the learning of the project has been
incorporated in the preparatory work of EPR II.
d) This project is also executed under EPC mode and Skoda Praha Invest
is selected as the EPC contractor. In order to utilise the past R&M
experience, suppliers of key components are also being retained.
e) The utility has retained the same project manager involved in R&M
works of Tusimice power plant.
10.5. Case Study of Belchatow Power Plant (12x370/380 MW), Poland
1. Plant Details
PGE Elektrownia Belchatow, in the Lodz province of Poland, approximately
170 km south west of Warsaw, is the largest power plant in Poland and the
largest lignite-fired power station in Europe. It consists of 12 x 370/380 MW
(originally 360 MW) lignite fired reheat units commissioned between 1982 and
1988 (initially 4320 MW installed capacity, now 4450 MW, following the various
modernisation activities completed to date). The plant accounts for 20% of the
electricity produced in Poland. Upon completion of a new 858 MW supercritical
unit, currently under construction, and completion of modernisation programmes
on ten of the existing units, the installed capacity will be around 5500 MW. The
Belchatow power plant was originally developed by the state-owned power
utility, but as a result of the privatisation process, it is now owned and operated
by PGE (Polska Grupa Energetyczna).
All units are in operation and R&M works are expected to be carried out
initially on 10 of its units. It was decided to operate Unit 1 and 2 till the time
R&M works are completed on other units and the new unit is being
commissioned. Unit 3, 4, 5, 6 are renovated as on date. R&M works on Unit 7
and 8 is expected to be completed in 2013. Based on the R&M experience,
generating company has decided to even undertake R&M on Unit 2 as well.
Therefore, in total 11 units are subjected to R&M works and are expected to be
refurbished by 2016. Although R&M works on Unit 7 and 8 are on-going,
contracts for unit 9-12 have been signed and awarded wherein the R&M work
will commence after the completion of R&M works on unit 7 and 8. Although
R&M works are undertaken on several units, details are provided with regard to
Unit 6 as it has one of the most recent experiences.
2. Objective of R&M
The objective of R&M for Unit 6 was to extend the plants life, increase output
and availability of the plant, enhance the environmental performance etc. The
key objectives are detailed out below:-
a) Unit life to be extended up to a total of 320 000 operating hours.

b) Thermal optimisation to increase generated output to between 390
and 400 MW, while maximising thermal efficiency.
c) Reliability, availability, and maintainability (RAM) to be improved to
achieve levels comparable with the best in the industry. The time
between main overhauls also to be extended.
d) Boiler firing system to be upgraded to meet emissions requirements
of less than 200 mg/Nm3 for both CO and NOx, as well as achieving
optimum coal burn parameters within the operating load range to
ensure compliance with EU Directive 2001/80/WE (Large
Combustion Plant Directive).
e) Automated start-up, shutdown and operation of the unit throughout
the load range, and operating load range extended from 60-100%
MCR to 40-100% MCR plus compliance with grid code
requirements.
Effective utilisation of the coal mine was also one of the key drivers for R&M
works of the power plant as the generating company is also the owner of the
mine.

Separate feasibility studies were carried out during 2002-2003 for the boiler
and turbine. Diagnostic studies were undertaken to undertake pre-assessment
and this was done through hiring of consultants/suppliers. The source of
financing for undertaking R&M works included internal resources and balance
sheet financing. Scope of work was prepared based on the diagnostic studies.
Also, during the entire period of operation, condition of plant was regularly
monitored. Normal overhauling and inspection programs are carried even if the
plant is undergoing R&M. This enables effective monitoring of the condition of
the plant on a regular basis.
Based on the studies, PGE Elektrownia Belchatow initially aimed for a live
steam temperature of 547C, a reheat steam temperature of 568C and live
steam pressure of 170.2 bar, with the existing feedwater temperature, 255C,
for units 3 and 4.
Unit 3 was the first unit which underwent R&M. It acted as a pilot project
wherein the execution process and the results of R&M were tested.
However, based on R&M experience obtained from Unit 3 and 4, regular

monitoring of the condition of the plant, R&M works on other units were
continued and based on new feasibility study carried in 2008-09, it was decided
to increase live steam temperature to 568C, live steam pressure to 185 bar and
feedwater temperature to 275C for the subsequent modernisations (i.e. Unit 5
onwards).
Based on the feasibility studies, the scope of work/technological interventions

for modernization of Unit 6 that were planned included the following:
a) Turbine island modernization included HP and IP turbine retrofits,

turbine auxiliaries, extraction pipe-work, generator retrofit, new
feed-water heat exchangers, electro- hydraulic control system and,
I&C equipment.
b) Boiler modernization included pressure parts, firing system, flue
gas and air ducts, ID and FD fan retrofit and I&C equipment.
c) Air pre-heater refurbishment
d) Electrostatic precipitator refurbishment
e) New Distributed Control System
f) New Flue gas heat exchanger.
Indicative cost of R&M works for Unit 3, 4, 5, 6 were in the range of 200-220
Million Euros for each of the unit. However, there was decrease in the cost of
R&M works for subsequent units i.e. for Unit 7-12 due to the experience gained
from the R&M works on the earlier units. Indicative cost of R&M works for Unit
7-12 are in the range of 180 Million Euros/unit.
Packaging strategy for each of the units differed. Initially, R&M works (in
case of Unit 3) were divided into large number of packages but due to
coordination issues among different vendors and inability of the utility to
manage large suppliers, works were later divided into lesser number of
packages as illustrated below:
a) Contracts for unit 5 were awarded as separate component

packages
b) Contract for unit 6 was awarded as an integrated project executed
by Alstom.
c) Similarly, contracts for unit 9-12 were awarded as separate
component packages wherein Alstom undertook works related to
turbine generator, ESP, certain BoP works etc. and Babcock
undertook boiler works.
Vendors were selected based on competitive bidding.
4.1. Post R&M Result

Modernisation of units 3 and 4 has led to a significant improvement in unit
efficiency providing a heat rate improvement of 1.35%, while the integrated
approach adopted for unit 6 promises a further efficiency improvement of 0.85%
on unit heat rate providing a total unit efficiency improvement of 2.2%
compared with the original units.
Figure 14: Technical Results achieved during the Trial Run
Source: Modernisation summary of unit 6 in Belchatow Power Plant, Presentation by Jarek

Ciesielski Koobrzeg, 24-27/04/2012
4.2. Post R&M Guarantees

Warranty period is three years and one warranty engineer is present at the
site for any assistance during the warranty period. Efficiency is guaranteed only
through performance tests but not beyond that. Through performance tests it is
shown that supplier has met the efficiency and this is not included in warranty.
In case efficiency is included ageing is considered as efficiency of plant
decreases with the increase in the age of the plant.
a) Absolute guarantees
i. NOX content in combustion gases: 200 mg/m3r

ii. CO content in combustion gases: 200 mg/ m3r
iii. Vibrations: the dynamical behaviour (absolute and relative) of
structures and delivered equipment
b) Penalized guarantees
i. Rated electric power output of power unit at generator terminals -

394 MW
ii. Gross efficiency of integrated boiler turbo set system - 41.34%
iii. Live steam temperature with contract coal - 570 degree
Celsius
iv. Reheated steam temperature with contract coal- 570 degree
Celsius
v. Water injection to reheated steam - 20 t/h
vi. Combustible part in volatile ash - 3%
vii. Availability - 90%-92.5%
5. Summary
a) Life extension/Rehabilitation works were started towards the

end of the useful life of the plant.
b) Phased approach to R&M works were adopted for different units
of the plant.
c) Detailed studies were undertaken by the utility to assess the
condition of the plant. Based on the experience gained from
R&M works of initial units, a detailed feasibility study was again
undertaken for rest of the units to tighten the performance
parameters.
d) Regular O&M works were carried out by the utility even if the
units were scheduled for R&M. Monitoring of plant condition by
the utility and increased familiarity of the vendors with regard to
the actual condition of the plant led to gradual reduction in the
cost of R&M works.
e) The funding for the project was garnered from the internal
resources of the utility and also from balance sheet financing.
f) Different packaging models were adopted by the utility for
undertaking R&M works on different units.
g) Warranty period of three years included in the contract and one
warranty engineer is made available at the site by the vendor
for any assistance during the warranty period.
10.6. Case Study of Turceni Thermal Power Plant (7x330 MW), Romania
1. Plant details
Romania has a diversified and balanced energy mix. Hydropower dominates
the energy mix with a share of ~36% followed by Coal with 33% and Nuclear
with 19% share.
Furthermore, Romania is a net exporter of electricity, with an approximate

net export of 2.91 TWh in 2010. The Turceni TPP is the largest in Romania with
an installed capacity of 2310 MW (7 X 330 MW) and a current operational
capacity of about 1320 MW. These units were commissioned during 1978 and
1987. The main fuel used is lignite with a low heat value of 1400 1800
kcal/kg.
Phased approach was undertaken for refurbishment of different units

of the Turceni TPP.
The units have been subject to several rehabilitation programs:

a) A1 Program
Urgent repairs of units 2 and 6, in cooperation with ABB and Babcock
Germany. It was financed via an IBRD loan and own financial
resources. It has led to an increased time availability of units and an
average output.
b) A2 Program
Reconditioning of units 3 and 7, in cooperation with ABB, Babcock,
Hannemann, Flender, Taprogge, Hartmann Braun (Germany), Voith
(Austria), Alsthom (France) financed by EIB loan and own financial
resources. It has led to increased time availability and an increased
average output.
c) A3 Program
Rehabilitation of units 4 and 5, in cooperation with ABB Kraftwerke
and Deutsche Babcock. Unit 4 was commissioned in 2004; Unit 5 was
commissioned in 2006. It was financed via a KfW loan and own
financial resources. It has led to increased time availability, average
output, reduced fuel and internal electricity consumption.
The project named "Program A3 - Rehabilitation of Turceni Thermal Power

Plant Units 4 & 5 has been initiated by CONEL (National Power Authority) -
Termoelectrica Subsidiary in order to rehabilitate and modernize the power units
4 and 5 rated 330 MW each, running on lignite. The rehabilitation of units 4 and
5 in Turceni TPP has been made by ISPE together with ABB/DBE German
Consortium.
2. Objective of R&M
The objectives for undertaking R&M were as follows:
a) To meet the in country increasing demand for electricity and to

maintain its current position of being a net exporter of electricity
b) Use of more efficient technologies, which reduces atmospheric
pollution
c) A very small number of thermal plants have been built since the
last 20 years and the existing thermal units are fairly old and
inefficient with old technologies. The average age of thermal
power plants in Romania is around 32.7 years.
d) To increase the operational and installed capacity of the existing
plants.
e) To increase the availability of Units for generation;
f) To increase the lifetime of the generating units by at least 15
years;
g) To improve the techno-economic parameters of the Units by
reducing the specific gross heat consumption among others;
h) To implement a modern automation, adjustment and control
systems that shall fulfill the present technical requirements.

The rehabilitation of units 5 was made by ISPE (Institute for Studies and
Power Engineering) together with ABB/DBE German consortium. The
rehabilitation technology for Unit 5 is provided by Consortium ABB KW
Mannheim Deutsche Babcock Energie Oberhausen, and represents best
available technology for coal-fired power plants in Romania. Inspections and
expert appraisal were undertaken on site in order to evaluate the technical
status of the equipments and to establish the upgrading measures which were to
be taken.
In order to execute this Project, Pre-Feasibility and Feasibility Studies were

undertaken by I.S.P.E. As general designer of the plant, ISPE offered the
following services related to this project:
a) Inspections and expert appraisal on site in order to evaluate the

technical status of the equipments and to establish the up-grading
measures which were to be taken;
b) Basic and detail engineering for the two units;
c) On site supervision and commissioning;
d) Configuring of control systems.
The following interventions were undertaken for the rehabilitation of Turceni
TPP Unit no.5:
a) Boiler full replacement of pressurized water circuit: a new design
of feeding water piping, as well as steam vaporization and

overheating sections has been put into place.
b) Turbine HP casing and rotor along with the bearings were
replaced. Some minor modifications were carried out in IP and LP
rotor including casing.
c) Generator the existing auxiliary generator exciting system was
replaced with static type system, provided with UNITROL-type ABB
voltage regulator.
d) A new technical solution for the lignite firing system has been
adopted: coal crunching mills have been integrally replaced, leading
to improved coal availability and operation security. Coal firing
system has been re-designed.
e) A digital command system has been implemented.
f) Conveyor belts modernization
g) ESP modernization
4.1. Achievements Post R&M
a) Time availability increased from 44% to 94%

b) Own consumption decreased from 15% to 7%
c) Reduction of particulate emissions below 50 mg / Nmc
5. Summary
a) Life extension/Rehabilitation works were undertaken at the end of

the useful life of the plant.
c) Execution of R&M works on the plant was divided into phases.
d) The funding for the project was garnered from the internal
resources of the utility and through loan from KfW.
e) The project was successful as highlighted by the post R&M
achievements.
10.7. Case Study of Afsin-Elbistan A Thermal Power Plant (1355 MW)

(3x340 + 1x335) MW, Turkey
1. Plant details
Afsin Elbistan A, a conventional thermal power plant utilizing low quality
lignite, was established by TEK in 1984-1987 and has 1355 MW of capacity. It
has four units and is of great importance in Turkey. The plant, owned by EAS,
the state owned Electricity Company. The plant was designed to burn low quality
lignite with high moisture easily without using supplementary fuel. The system
developed for such lignite is to first dry the lignite to increase its calorific value.
This TPP was designed for an annual electricity production of 8,800 GWh.
However, with the decrease in capacity and reliability of the plant due to
wear and tear of equipments and some unscheduled shutdowns. The average
efficiency decreased below the design efficiency. The R&M of this project was
planned as part of The World Banks support under the proposed Electricity
Generation Rehabilitation and Restructuring Project of Turkey.
2. Objective of R&M
Objectives envisaged for undertaking R&M were:
a) Technical
i. Extension of Plant Life for 20 years

ii. Removal of operational problems (wear, tear, cracks,
vibration and cavitations)
iii. Reduction of maintenance work
iv. Technological improvements (especially in electrical
components)
b) Economic
i. Increasing the capacity and efficiency
ii. Increasing the amount of electrical energy produced
iii. Help the generator decrease its losses
iv. Increasing operation period
v. Increasing the Availability and Reliability
c) Environmental
i. To reduce SO2, CO2 and NOx emissions as per the Turkish

Regulations

Technical and Economic assessment was undertaken where
extensive site inspection, performance tests on boiler, turbo generator,
mills, ash precipitators was conducted. The scope of the rehabilitation
component was developed based on a comprehensive feasibility study and

technical review. The initial pre-feasibility study was done by Chubu Electric
from Japan in 2004. This study established the broad scope of the rehabilitation
needed based on a technical and economic assessment. This work clearly
established the economic benefits of the rehabilitation. The Banks power
engineers reviewed the pre-feasibility report and assisted EUAS in defining the
terms of reference for the detailed engineering study and finalizing the scope of
work. The detailed engineering study/feasibility study was undertaken
by RWE Consulting Engineers, Germany. Further, it also assisted in the
development of tender documents and bid evaluation assistance.
This review provided important inputs to the decisions on what is required

and what is optional, and enabled EUAS to finalize the scope and cost estimates
for rehabilitation.
The rehabilitation work was expected to improve the plant performance as

follows:
a) Plant output of each unit will be increased from about 260 MW net
to 300 MW net;
b) Capacity factor will be increased from 40% or below to 75%; and
c) Net plant efficiency will be increased from 27% to 31% (30.6%
with the FGD).
The detailed scope for rehabilitation was prepared based on the feasibility
study and broadly it included R&M of the boiler and firing system, the
electrostatic precipitators (ESPs), the main cooling water and condensate water
system (covered under the Balance of Plant Mechanical), control and
instrumentation, and ash and coal handling. The scope of rehabilitation work is
summarized below:
a) Boiler
Detailed inspection and repair work of the boiler waterwall,
superheater, reheater and economizer tubes, headers and other
pressure parts. Installation of new boiler cleaning system and soot
blowing system to improve the boiler efficiency as well as preventing
slugging which causes tube failures.
b) Steam Turbine
Overhauling of high pressure (HP), intermediate pressure (IP) and low
pressure (LP) inner casing and blades and replacement of the same in
selected units in order to achieve efficiency improvements and
increase in plant output. It also included replacement of turbine
governors for better frequency control.
c) Balance of Plant Mechanical

This included inspection, overhaul, repair and replacement work for
circulating water system, fire suppression system, the main cooling

water system, condensate water system (LP feed water heater
replacement), condenser air extraction system, gland steam system,
condenser re-tubing, other system pumps.
d) Balance of Plant Electrical

This included inspection, overhaul, repair and replacement work for
transformers, large motors, general instrument supplies, 6kV
switchgear, 380V switch gear, generator protection and control
system, automatic voltage regulator, high voltage system, medium
and low voltage systems, uninterruptible power supplies, emergency
generators and DC systems, power metering and fire protection.
e) Precipitator
This included addition of a compartment to the main boiler flue gas
and the bruden vapour Electrostatic Precipitators (ESPs) to achieve the
required particulate emission level (100 mg/Nm3). This was necessary
to comply with the Turkish environmental regulations for Afsin (150
mg/Nm3) and the Bank's environmental guidelines for rehabilitated
existing plants.
f) Control and Instrumentation

Modernization of complete boiler and turbine control system to
Distributed Control System (DCS)
g) Ash and Coal Handling

This included replacement of the existing system with the dry bottom
ash handling system and enhancement of the coal handling system
including covering tops of conveyers and lighting systems to improve
availability of the plant.
h) Civil Works
This included repair/replacement of the reinforced concrete, steel
structure for the boiler, turbine and balance of plant. It also included
exterior and interior painting, earthquake safety (additional walls)
repair of damaged clear covers, and exposed reinforcement, protective
coatings and new foundations for concrete structure
Initially two stage bidding process was adopted. Two bidders applied at
the first stage with qualified bids, and were initially not found fully responsive.
Clarificatory meeting were held with the bidders, on the basis of which the
bidders were considered qualified, and were invited to the second stage.
The main concern of the bidders were perceived risks of not being able to
achieve the functional guarantees of a large scope rehabilitation works (1,300
MW), and the associated financing challenge.
Based on the discussions, the guarantees were reassessed: EUAS agreed

with the bidders to remove the requirement for functional guarantees for the
boiler efficiency and availability as these parameters are difficult to measure
accurately and depend on a number of factors, such as coal quality, outside the
control of the contractor.
Further, one of the bidders stated that they would not be able to qualify for
the rehabilitation of all four units of the plant, and thus requested that four units
of the plant be rehabilitated in two stages of two units each, EUAS did not agree
with this request, but allowed the bidder to strengthen their consortium.
However, despite all these adjustments, neither of the two bidders bid at the
second stage of the bidding process for the rehabilitation works.
Thereafter, EUAS proposed to proceed with the project with a revised

procurement approach by separating the single consolidated package covering
the entire project into separate supply and installation packages for different
works.
However, at the same time, the Government started an unrelated

investigation into the procurement actions by EUAS wherein the General
Manager of EUAS was requested to be on leave to facilitate the investigation. In
the absence of senior management, and environment of the ongoing
investigation, the transitional management team of EUAS did not felt
empowered to take decisions.
In September 2009 therefore, EUAS requested the Bank to allow cancellation

of the bidding process, followed by a cancellation of the Bank loan.
The Government and the Bank agreed that under the environment of the on-
going investigation, EUAS may not be in a position to implement such a large
and complex project. Therefore, instead of re-starting a third procurement
attempt, it would be more prudent to cancel the project.
4. Summary
a) The R&M of this project was planned as part of the World Banks
support under the proposed Electricity Generation Rehabilitation
and Restructuring Project of Turkey.
condition of the plant, preparation of scope of work etc.
c) Higher perceived risks by the vendors led to their limited/non-
participation in the bidding process.
d) Vendors were to be selected based on competitive bidding.
e) R&M works on all the four units were envisaged to be
implemented at the same time which also acted as one of the
reasons for non-participation of vendors due to increase in
perceived risks
f) R&M works were not implemented on the plant due to start of an
unrelated investigation by the government related to procurement
actions of EUAS.
10.8. Case Study of Arnot Power Station (6x350 MW), South Africa
1. Plant Details
ARNOT thermal power station is a coal fired power station located in
Mpumalanga, South Africa, is a coal-fired power plant operated by Eskom, a
South African utility. The plant initially comprised of 6 units of 350 MW each and
was commissioned between 1971 (unit 1) and 1975 (unit 6). Completion of 30
years of its useful lifetime/design life combined with the increasing demand for
electricity in the country, sustained running of the plant required
replacement/retrofit of most of the parts. Alstom was selected to retrofit and up-
rate the six units of Arnot power station.
2. Objectives
The objective of Rehabilitation works were to retrofit major plant components
in the most cost effective manner such that each unit would produce a
continuous gross electrical output of 400 MW and there is extension in the life of
the plant by another 20 years.

A comprehensive study was undertaken to investigate the feasibility of an
increase in capacity, up to a maximum gross output of 400 MWe per unit, and to
estimate the costs. Based on the study, detailed scope of the project was
prepared.
Using the results of the initial studies, Eskom initiated a competitive

tendering process, as a result of which Alstom was awarded a single contract for
the execution of the project.
The scope of the project carried out by Alstom included the complete retrofit
for the high pressure and intermediate pressure steam turbines, a capacity
upgrade of the low pressure steam turbine and the replacement and upgrade of
associated turbine side pumps and auxiliaries.
In addition, Alstom carried out major upgrading works to the boiler plant.
4.1. Equipment requiring retrofitting/Scope of Work

a) Turbine Plant
The major retrofit required to the turbine plant was the complete
replacement of the high pressure (HP) and intermediate pressure
(IP) turbine inner cylinders. However, the increased operational
demand to achieve the project objectives meant that much of the
auxiliary equipment associated with the turbine plant was also
affected (as highlighted during the studies) and the scope was
therefore extended to include modifications to the existing low
pressure (LP) turbines and other plant.
b) Boiler Plant
The following description outlines the equipment upgraded or
replaced as part of the project to upgrade the boiler plant from a
continuous output of 365 MW to 400 MW.
i. Furnace
The existing furnace size was adequate for the 400 MW upgrade
and the furnace plan and heat release rating were within
allowable maximums for the normally supplied coals.
ii. Milling Plant

Modifications undertaken with regard to the mill classifier and
gearbox
iii. PA Fans
New Primary air fans were installed.
iv. Burner Nozzles

New burner nozzles were installed.The new nozzles were
suitable for additional NOx reduction measures without major
modification should NOx reduction legislation be introduced in
South Africa.
v. Economiser
Two additional rows of extended economizer surface were added
to the existing configuration. The economizer profile was similar
to that previously installed and the support structure was
suitable for the additional surface with only minor modifications.
vi. Up-gradation of Superheater and Reheater Materials

The fifth stage Superheater and third stage Reheater were
upgraded by enhanced 9% chromium material on the leading
and trailing tubes of the elements.
R&M was performed during routine major outages of the six units over
a three-year period. In each case, the outage length was 13 weeks,
principally the significant amount of work required on the boiler.
For each of Arnots six steam generating units, the output was
upgraded from 350MWe to 400MWe. Results of the performance tests
carried out by Eskom on two units had been extremely encouraging.
Power output under calibrated steady state test conditions has been
measured as 406.2 MWe for Unit 3 (against a target of 400) and 409.0
MWe for Unit 2. Informally, substantially higher outputs have been
observed under high load conditions.
The incorporation of modern technology and the consequent increased
efficiency of the plant led to significant reduction in NOx emissions.
The first unit was completed by December 2007 and the last unit by
December 2010.
4.2. Implementation issues and challenges

a) Quality control
Manufacture of the turbine retrofit inner cylinders was undertaken
in both Europe (Units 3 and 2) and China (Units 6, 4, 1 and 5).
Similarly, virtually all manufacture for the boiler upgrades was
devolved to South African facilities, both Alstom factories and local
subcontractors. Rigorous and identical quality standards were
applied throughout the global network by Alstom. Also,
representatives of Eskom were invited to visit all factories in which
manufacture was being undertaken to observe for the quality of the
work. Eskom also exercised their right to institute a more rigorous
regime of third party inspection in certain factories. Technical Field
Advisers from Europe were also deployed during each outage to
guide the local installation workforce. So far as possible, the same
personnel were employed on each occasion to benefit from past
experiences and ensure consistency of quality and standards.
b) Technical surprises
Alstom was the Original Equipment Manufacturer (OEM) for the
major equipment at Arnot Power Station. Copies of the original
design documentation still existed and had been used for the initial
feasibility study. However, to minimize occurrence of technical
surprises, access to records of Eskom were made and interactions
were held with the plant level officials with long experience at the
plant, which revealed some items previously unknown to either
party, particularly from the plants construction phase. Minor
surprises still occurred when the equipment was opened up
for retrofit. These surprises or variations were recorded in a formal
system so that lessons may be may be applied in future, both on
other units on the same project and on similar plant elsewhere.
5. Summary
a) Life extension/Rehabilitation works were undertaken at the end of

the design life of the plant (i.e. 30 years).
condition of the plant. Detailed studies were undertaken by the
OEM.
c) Alstom was awarded a single contract for the execution of the
project based on the competitive tendering process undertaken
by the utility.
d) To understand the operational history of the plant, vendor

scrutinised the past records of utility and interacted with the plant
level officials with long experience at the plant.
e) In order to ensure quality of works, visits were undertaken by the
utility officials to some of the factories of the suppliers and third
party inspections were also conducted by the utility.
f) R&M works were executed in major shutdowns of the units of 13
weeks over period of three years.
10.9. Comparative Analysis of R&M Experience in Different Countries
Based on the review undertaken in previous chapters, this section presents the comparative analysis of R&M experience in
different countries.
Table 21: Comparative analysis of R&M experience in different countries

S. South
Parameters Indonesia Czech Republic Poland Turkey Romania
No. Africa
Afsin
Suralaya Power
Prunerov II Belchatow Elbistan A
Plant Station Tusimice II Arnot Turceni
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
The plant was Objectives: Objectives: The plant was The plant was
Objectives:
selected for R&M selected on the selected for R&M as
Restoring Extend the The plant was
as it is the basis: Extension of it is the largest TPP
production useful life of selected on
largest TPP in plant life in Romania with a
portfolio for the the units The plant had the basis that
Indonesia with a total capacity of
next 25 to 30 exceeded its Removal of it had
total capacity of Improving the 2310 MW.
years indexed to useful lifetime operational completed its
Selection of 4025 MW and the life of the environmental and contributes problems useful Objectives:
Unit/Plant plays a critical mine. performance around 20%of lifetime/desig
for R&M role in meeting of the plant Reduction To maintain its
the total n life of 30
1. along with the electricity Improving the and to comply of current position of
electricity years
objectives demand. environmental with the maintenanc being a net exporter
produced in
of carrying performance of European e work Objectives: of electricity
Objectives: Poland
out R&M the plant emission Technologic To increase Reduction of CO2 and
Reduction in CO2 standards. Objectives:
To comply with al the unit SO2 emissions in
and NOx the emission Extension of improveme capacity order to follow the
Efficiency
emissions standards Unit life nts environmental
Improvement Extension of
Upgrade the prescribed by and reduce (especially regulations.
Thermal plant life
capacity of unit 1 the European consumption in electrical
optimisation to To increase the
and 2 from 400 legislation. of primary components
increase operational and
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
MW to 440 MW Increasing the fuels. generated ) installed capacity of

efficiency of output, while the existing plants.
To extend the life Ability to burn Increasing
electricity maximising
of the units low quality the capacity To increase the
production, thermal
coal and availability of Units
Enable the plant reduce efficiency.
efficiency for generation;
to use wider consumption of To ensure
Reliability,
variety of primary fuels. energy To reduce To increase the
availability, and
Indonesian coal security for SO2, CO2 lifetime of the
To ensure maintainability
the country and NOx generating units by at
energy security (RAM) to be
and to emissions least 15 years;
improved
Maintain its maintain its as per the
To implement a
status as a net status as a Boiler firing Turkish
modern automation,
exporter of net exporter system to be Regulations
adjustment and
electricity. of electricity upgraded to
control systems.
meet emissions
10.4. 10.5.
requirements
Automated
start-up,
shutdown and
operation of the
unit throughout
the load range,
and operating
load range
2. Advanced Convection pass Boilers used Partial Turbine island R&M of the Turbine Plant: Boiler full
technologic pressure part were designed in replacement modernisation boiler and The major replacement of
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
al options replacement a manner that of the turbine include HP and firing retrofit pressurized water
for EE R&M could reach high IP turbine system, the required to circuit.
Safety valve Installation of
such as effectiveness retrofits, electrostatic the turbine
replacement new Turbine HP case
turbine up- even while turbine precipitators plant was the
electrostatic and rotor
gradation, Air heater burning low auxiliaries, (ESPs), the complete
precipitators replacement
efficient refurbishment quality fuel in extraction pipe main replacement
for dust
and the future, while work, generator cooling of the high Generator system
Burner upgrade removal
environmen fulfilling emission retrofit, new water and pressure (HP) modernisation
t friendly Pulverizer rebuild requirements. Installation of feed-water heat condensate and
Coal firing system
furnace- and upgrade new wet exchangers, water intermediate
Reconstruction has been re-
boilers, coal scrubbers for electro- system pressure (IP)
of Flue gas designed,
utilization SO2 removal hydraulic (covered turbine inner
Desulphurization
etc control system under the cylinders. A digital command
units Complete
and, I&C Balance of system has been
replacement Milling Plant:
Machine Room: equipment. Plant implemented
of the modifications
Modern three- Mechanical),
automatic Boiler undertaken Conveyor belts
stage turbines, control and
control modernisation with regard to modernisation
each with a 200 instrumenta
system for the includes the mill
MW power tion, and ESP modernisation
entire facility pressure parts, classifier and
output, were ash and coal
firing system, gearbox. 10.6.
mounted in the Partial handling.
flue gas and air
original machine replacement PA Fans: New
ducts, ID and
room. and Primary air
FD fan retrofit
modernisation fans were
In case of Coal and I&C
of electrical installed.
handling the equipment.
equipment
original Burner
Air pre-heater
equipment was Introduction Nozzles: New
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
repaired and of cleaned refurbishment burner

wear parts flue gas in the nozzles were
Electrostatic
exchanged. reconstructed installed.
precipitator
cooling towers
Improved Water refurbishment Up-gradation
handling process of
New Distributed
Superheater
Modernization of Control System,
and Reheater
Electrical part
New Flue gas Materials
and
heat exchanger.
Instrumentation
and control
(I&C)
Detailed studies The scope of Pre-Feasibility and

The scope of
and assessment the Feasibility Studies
work was
of the plant Feasibility & rehabilitation were undertaken.
finalized based
The scope of work condition was Diagnostic component Further, inspections
on detailed
was finalized after undertaken by studies were had been and expert appraisal
studies Scope of Work
Finalisation Life Cycle the utility. On the undertaken to do developed were undertaken on
undertaken. was decided
of Scope of Management basis of technical a pre- based on a site in order to
3. Also, the based on the
Work for Process/ Residual and economic assessment and comprehensi evaluate the technical
learning of the detailed
R&M Life Assessment study, a business this was done ve feasibility status of the
Tusimice project studies.
studies were plan was through hiring of study and equipments and to
were also
undertaken. prepared which consultants/supp technical establish the
incorporated in
provided the liers review. upgrading measures
the preparatory
targets of the Technical which were to be
work.
reconstruction of and taken.
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
the power plant Economic

and main assessment
principles of the was
technical solution undertaken
where
extensive
site
inspection,
performance
tests on
boiler, turbo
generator,
mills, ash
precipitators
was
conducted.
Packaging was This project is Packaging Initially,

done in a way also executed strategy for each approach of
that it ensured under EPC of the units single
competition mode and differed. Initially, consolidated Entire works
Packaging among different Skoda Praha R&M works (in packaging was awarded to Not Available
4. Not available
Strategy vendors leading Invest is case of Unit 3) strategy was single player by
10.7.
to competitive selected as the were divided into adopted but the utility.
prices and at the EPC contractor. large number of later on this
same time the In order to packages but due strategy was
numbers of utilise the past to coordination revised. The
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
vendors to be R&M issues among single

managed were experience, different vendors package was
limited. suppliers of key and inability of divided into
components are the utility to separate
being retained. manage large supply and
suppliers, works installation
were later divided packages.
into less number
of packages.
Contracts for unit
5 were awarded
as separate
component
packages while
contract for unit
6, was awarded
as an integrated
project executed
by Alstom.
Similarly,
contracts for unit
9-12 were
awarded as
separate
component
packages wherein
Alstom undertook
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
works related to
turbine
generator, ESP,
certain BOP
works etc. and
Babcock would be
undertook Boiler
works.
The EPC
contractor International
The EPC Skoda Praha Competitive
contractor Skoda was selected bidding
Praha was on nomination Process was
selected on basis as it is a used to
Procuremen group Suppliers for Competitive
nomination basis select
t Process company. different units bidding
as it is a group vendors.
for While the Sub were selected Process was
5. Not Available company. While However, Not Available
Selection of vendors were based on adopted to
the Sub vendors the bidding
Consultant/ selected competitive select the
were selected process was
Contractor through a bidding process. vendor
through a cancelled
competitive competitive and R&M
bidding process bidding works were
by Skoda Praha. process. not
However, some undertaken.
of the key
vendors
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
involved in
R&M works of
Tusimice
project were
retained.
The source of
The source of
financing for
financing for
IFI Funding undertaking
Funding was undertaking R&M IFI funding
Funding of (funded by Japan R&M works Financed via a KfW
through the works included (funded by
6. R&M Bank for included Not Available loan and own financial
internal sources of internal The World
Projects International internal resources
the utility resources and Bank)
Cooperation) resources and
balance sheet
balance sheet
financing
financing
Cost benefit Detailed technical Cost benefit Cost benefit A

analysis was and economic analysis was analysis comprehensive
undertaken to studies were undertaken by undertaken study was
undertaken and on the utility Feasibility studies before undertaken to In order to execute this
calculate the
Cost the basis of these before were carried out bidding of the investigate the Project, Pre-Feasibility
payback period of
7. Benefit studies a business executing R&M before project feasibility of an and Feasibility Studies
the capital
Analysis plan was prepared. works. Cost undertaking R&M through increase in were undertaken by the
expenditure
The decision for benefit analysis of the project. initially pre- capacity, up to utility.
incurred for the
Rehabilitation renewal of plant linked to the life feasibility a maximum
process. was based on the of the mine and study was gross output of
availability of based on the carried out 400 MWe per
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
sufficient coal and availability of which unit, and to

quality of the sufficient coal, established estimate the
available coal. The R&M works economic costs. Based
following two proposed for benefits of on the study,
considerations three units only. the project. detailed scope
were assessed: Thereafter, a of the project
detailed was prepared
Option 1: In case
feasibility and decision to
of new plant, coal
study was undertake R&M
would be required
also works was
for around 40
undertaken. undertaken.
years
Option 2: In case
of modernization
life of 25 years can
be obtained
Since, the
remaining life of
Libou coal mine
was only 25 years,
Option 2 was
selected.
Implement R&M was The project R&M works are In total 11 units R&M was Phased approach was
R&M works
8. ation of implemented in a implementation ongoing. Time are subjected to performed undertaken for
were not
R&M phased manner. was divided into schedule for R&M works. during routine refurbishment of
implemented
Projects Phased outages for two stages. The R&M of Unit 3- major outages different units of the
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
including unit 1 and unit 2. first stage of the 5 is Sept 2012- The current . of the six units Turceni TPP. Unit 4 was
shut down The first unit execution started 2014. modernisation over a three- commissioned in 2004;
time outage began in in June 2007 with programme year period. In Unit 5 was
October 2010 and the shutdown of underway at the each case, the commissioned in 2006.
successfully Unit 3 and 4. The Belchatow plant outage length
passed all of its Unit 3 and 4 were was started was 13 weeks.
performance commissioned in during 2007 and
The first unit
guarantees in July, February 2009 is expected to be
was completed
2011. The second and April 2009 refurbished by
by December
unit outage began respectively. The 2016.
2007 and the
in July 2011 and trial run of these
last unit by
successfully units was
December
completed its completed in
2010.
performance tests November 2009.
in February 2012.
The second stage
of the execution
started in
November 2009
with the
shutdown of Unit
1 and 2. The trial
run of Unit 2 was
completed in
October 2011.
The trial run of
Unit 1 was
completed in April
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
2012.
One of the One of the One of the The

objectives of objectives of objectives incorporation
undertaking R&M undertaking included up- of modern
works was R&M works was gradation of technology and
improving the improving the boiler firing the
environmental environmental system to meet consequent
One of the performance of the performance of emissions increased
objectives of plant and to the plant and to To comply efficiency of One of the objectives
requirements of
undertaking R&M comply with the comply with the with the the plant led to of the R&M works was
less than 200
works was to emission standards emission emission significant use of more efficient
mg/Nm3 for both
improve the prescribed by the standards standards reduction in technologies, which
CO and NOx, as
Environmen environmental European prescribed by prescribed by NOx reduces atmospheric
well as achieving
9. tal performance. The legislation. R&M the European the European emissions. pollution. R&M works
optimum coal
safeguards project was works included legislation. The and the included ESP
burn parameters New burner
successful and met reconstruction of scope of R&M Turkish modernization. Post
within the nozzles were
all the initial electrostatic works includes Environmenta R&M, particulate
operating load installed. The
overall objectives precipitators to installation of l legislation. emissions below 50 Mg
range to ensure new nozzles
including reduction ensure that the new compliance 10.9.
with / Nm3 were reduced.
were suitable
in NOx emissions. concentration of electrostatic EU Directive for additional
solid pollutants in precipitators for 2001/80/WE NOx reduction
the output flue dust removal (Large measures
gases is below 100 and installation Combustion Plant without major
mg/NM3. of new wet Directive). modification
scrubbers for
Emissions post 10.8. should NOx
SO2 removal.
R&M works were reduction
S. South
No. Africa
Afsin
Suralaya Power
Name (5x200 (12x370/380 (3x340 MW
(Units 1 & 2) (4x200 MW) (6x350 MW) (7x330 MW)
MW) MW) & 1x335
2x400 MW
MW)
less than the legislation be

emission limits introduced in
provided by EU South Africa.
standards.
R&M was
successful as it
R&M was R&M works met all the
successful as it Warranty period not pre-
met all the pre- is three years and implemented. determined
determined one warranty One of the objectives.
objectives. The engineer is main Suitable
guarantee period present at the concerns of equipment
Measures R&M was of 24 months for site for any the bidders warranties
In line with
for successful as it process assistance during were were R&M was successful as
that of
10. Guaranteed met all the pre- equipment and 60 the warranty perceived negotiated for it met all the pre-
Tusimice II
Performanc determined months for the period. risks of not the scope of determined objectives.
project.
e post R&M objectives civil structures being able to hardware and
start after the Stipulation of achieve the services being
signature of the Absolute and functional provided by
Protocol of the penalised guarantees of Alstom
Provisional guarantees in the a large scope together with
Acceptance contract. rehabilitation adequate non-
(PAC). works. conformance
resolution and
remedy.
Chapter - 11
Lessons for India based on review of International
Best Practices in R&M
Based on the review of international best practices in R&M, this chapter

presents the lessons that can be learned for India. This chapter is divided into
three sections, the first presents the cost effective options for R&M based on
certain parameters and ways and means through which these International
practices can be adopted by the generating companies in India.
Second part presents the measures that can be used to mitigate the risks
and handle technical surprises in the thermal power stations in India. Third part
presents the standard menu of options/ advance technological options for
energy efficiency focused rehabilitation and life extension of 210 MW and above
units in thermal power stations in India.
11.1. Lessons from the International practices that can be adopted by

the generating companies in India
The lessons from the international practises are presented below:
a) Formation of Dedicated R&M cell for the project

Strong project management team was observed to be key in
successful implementation of R&M projects undertaken
internationally. Based on the interactions held in Czech Republic
and Poland it was observed that dedicated utility staff has been
involved for the project. To ensure successful implementation of
R&M on subsequent units, team or at least the project manager
(and key personnel) involved in undertaking R&M projects of
previous units were involved right from the beginning. The benefit
of such approach is that the learning from the past experience,
issues encountered etc. can be incorporated or handled in a more
effective manner. Based on the above learning, it is suggested that
Indian utilities while undertaking R&M works should form a
dedicated R&M cell responsible for such works and frequent
transfers of employees from this department should be avoided to
ensure institutional capacity and memory.
b) Creation of Dispute Resolution Mechanism

While undertaking R&M works technical surprises do occur. The
important aspect of this event is the timely resolution and action on
the same. In order to handle such surprises it is important to form
a joint committee (as done in case of Czech Republic) with
representation from both suppliers and utility officials. In case of
India, Formation of this committee is important as to arrive at an
amicable and mutually acceptable solution/decision in the interest
of the completion of R&M works.
c) Effective Quality control mechanisms by hiring quality

control consultants
In the case of South Africa it was observed that the utility
undertook visits and conducted third party inspections in some of
the factories of the suppliers to ensure quality of works. Ensuring
quality of the works implemented is essential for the long term
sustainability of the project. Stringent quality checks are generally
observed to be missing in the Indian context. Therefore, it is
required that while undertaking R&M works utility should engage
Quality Control and Quality Assurance Consultants to ensure quality
of works.
d) Ex-post evaluation and feedback loop

Ex-post evaluation or learning from the past experience is the most
important part of the R&M project. Study of best practices reveals
that the successful implementation of R&M projects depends upon
the incorporation of learning from previous experiences in the
subsequent projects. In the Indian context given large number of
capacity due for R&M, this assumes significant importance as
sharing of experience and incorporation of same can provide
insights into the issues that arise during implementing R&M and
thus can be tackled in a more effective and informed manner in
future projects.
e) Phased approach to R&M works

From the international review it is observed that while undertaking
R&M for multiple units, a phased approach is adopted wherein R&M
is undertaken on certain units and rest of the units are in
operation. This approach requires meticulous planning at the start
of the project as it involves continued use of common facilities in
some parts of the plants, and segregation of other parts where
R&M is being performed. Adoption of phased approach has the twin
benefits i.e. feedback and learning from the initial units can be
incorporated in the subsequent ones and secondly, electricity
generation from the remaining units continues.
f) Augmentation of project capacity

International experience with regard to R&M reveals that
augmentation of plant capacity through up rating of power plants is
considered as an effective option to augment project capacity.
However, the decision to up rate depends upon many factors such
as resource security i.e. life of the coal mine, technical and
economic feasibility i.e. to what extent the plant can be up rated
and at what cost. The decision to augment project capacity is plant
specific in nature and therefore it is suggested that before
undertaking such decision detailed plant specific studies are

required.
g) Technical feasibility
Before taking up R&M works undertaking technical feasibility
studies are pre-requisites. From the international experience it is
observed that such studies are being carried out before undertaking
R&M works based on which a detailed scope of work is prepared. In
the Indian context, it is observed that at times utility does not
undertake comprehensive studies or undertake proxy assessments
leading to weak or unrepresentative scope of work and sub-optimal
outputs. Therefore, it is suggested that technical feasibility of
different R&M options must be undertaken by the utilities before
undertaking such works.
h) Efficiency Improvement
Efficiency improvement is a key objective and outcome for
implementation of R&M works. To effectively implement R&M
projects it is important to mitigate different risks and technical
surprises that may occur during the implementation of R&M
projects. Various measures that are required to be undertaken to
address such risks is explained in detail in next section.
i) Environmental safeguards
Meeting environmental standards has been one of the key
objectives for undertaking R&M works in the international scenario.
R&M works are carried out keeping in view not only the existing
standards but compliance to possible future stringent standards
that may come into effect in future. Some of the interventions
undertaken in this regard included installation of new electrostatic
precipitators for dust removal, installation of new wet scrubbers for
removal of SO2, Redesigning of combustion system to reduce NOx
emissions etc. Therefore, it is important for successful
implementation of R&M works and operation of plant thereafter
environmental considerations/safeguards or interventions need to
be built in while planning R&M works.
j) Engagement of specialized agency for O&M post R&M

Generating company can also include O&M supervision in the
contract of executing agency. However, a right mix of balance
needs to be ensured between performance and guarantees. In the
case of Korba East TPS (Unit 1 to 6), O&M supervision was included
in the contract of executing agency to meet and sustain the
guaranteed performance for a period of three years. Similar
practice is also observed in the international scenario. In the case
of Poland it was observed that a warranty engineer is present at
the site for any assistance during the warranty period.
11.2. Measures to mitigate the risks and handle technical surprises in

the thermal power stations in India
Certain risks and technical surprises were identified as part of the earlier
reports of this assignment. This section presents the measures to manage each
of the risk and technical surprises based on the international review. It must be
noted that occurrence of technical surprises is also identified as one of the
technical risks and therefore the strategy to manage technical surprises is
addressed as part of the technical risk. (Refer point 16 in the Table below for
measures to mitigate occurrence of technical surprises).
It is worthwhile to mention there that the lesson emanating from the

review of international experience have also been incorporated in the
Thermal Power Stations in India and also in the Guidelines for Early
Identification of Potential Technical Surprises in R&M Projects and Ways
of Addressing Them.
Table 22: Measures to manage risk and technical surprises based on

international review
S. Category of Measures to Manage the Risk based
Risk
No. Risk on International review
Reactive It is observed that a proactive approach is

approach to Management being adopted for identification/selection
1
identification of Risk of plant for R&M in case of international
plant for R&M generating companies
Based on the international review it is

observed the selection criteria is driven by
a mix of macro level objectives such as
Lack of long energy security, resource efficiency and
term plan micro level objectives such as
(Optimal improvement in technical parameters
Generation Management such as improvement in life of the plant,
2
Plan) and Risk decrease in operational problems;
awareness of economic parameter such as
available improvement in availability, efficiency and
market options reliability of plant, and current/future
environmental considerations such as
compliance to SOx, NOx norms or
decrease in carbon intensity.
In order to ensure success and eliminate

Lack of uncertainty in implementing R&M projects
confidence and it is important that a phased approach to
uncertainty with R&M be undertaken wherein the lessons
3 Market Risk
regard to and experience gained from the
success of R&M implementation of previous projects are
projects incorporated in the subsequent projects.
It was observed in case of Belchatow TPS,

Risk
Poland that incorporation of learning from
implementation of earlier units lead to
further improvement and achievement in
efficiency parameters for subsequent
units compared to earlier unit efficiency
targets.
As R&M implementation happens in India,
it is suggested that lessons learnt by
various utilities / plants / suppliers should
be shared, and considered in designing
subsequent R&M interventions.
Delay in Comprehensive studies are being

obtaining unit undertaken by the generating companies
shut down for Institutional before undertaking R&M projects. Such
4
undertaking Risk studies are conducted during annual
technical maintenance/capital overhaul period of
studies the plant.
From the international experience it is

Inadequate observed that comprehensive studies are
technical being undertaken for plants undergoing
5 Technical Risk
assessment/stu R&M. Establishment of baseline through
dies comprehensive studies is the key for the
success of R&M projects.

observed that the objectives for
undertaking R&M are very clearly defined
Weak analytical and adequate evaluation is being
framework for Management undertaken while selecting R&M as an
6
selection of Risk option. A holistic approach is adopted,
R&M options wherein decision for R&M or new plant is
even being linked with the life of the
resource or coal mine, besides
environmental and economic conditions.
Appropriate
Commission not This risk was not observed in the selected
Regulatory
7 apprised of the international case studies undertaken as
Risk
R&M project part of the study.
plan
From the experience of Czech Republic in

implementing R&M projects, it is observed
Limited capacity
that the project manager involved in the
of utilities in Operational
8 R&M of certain units is continued to be
undertaking Risk
involved for R&M of other units to ensure
R&M works
that lessons from previous R&M projects
are incorporated into the new ones also.
9 Weakly defined Contractual Based on international review it is

Risk
scope of work Risk observed that scope of work is prepared
based on the detailed studies undertaken
before the implementation of R&M works
and also on past experiences and
learning, thus is more clear and precise.
This risk was not observed in the selected

Utility unable to
10 Funding Risk international case studies undertaken as
mobilise funds
part of the study.
From the case studies undertaken it is

observed that low level of participation is
linked with the perceived risks of
suppliers with regard to the R&M project.
In case of Afsin Elbistan A TPS in Turkey,
it was observed that level of participation
of suppliers was low due to functional
Low level of guarantees involved and confidence with
participation by regard to the implementation of project of
11 the vendors in Market Risk such magnitude.
the bidding In order to encourage participation it is
process important that adequate studies are
undertaken to assess the condition of the
plant and same is communicated/shared
with the supplier. Further, a phased
approach to R&M is important as it
increases familiarity of the utility and
supplier with regard to plant conditions
and helps in building confidence.
From the case studies undertaken it is

observed that prices are linked with the
Higher than perceived risks of suppliers with regard to
12 expected price Market Risk the R&M project. With the increase in the
discovery familiarity of the plant condition by the
suppliers, price of the R&M project tend to
decrease.
In order to timely execute R&M projects,

timely award of contract is a pre-
Rebidding/Rewa
requisite. Efforts must be made to
rd/Delay in Market and
minimise time in award of contract.
13 award of R&M Operational
Further, efforts must be taken to provide
packages/contra Risk
all possible clarifications or address all
ct
concerns of the bidders at the bid
clarification stage.
Implementation From the international review, it was

contract Management observed that both scenarios existed
14
awarded to Risk wherein
vendor involved a) Studies and implementation were

Risk
in carrying out awarded to same vendor and
technical b) Studies and implementation were
studies awarded to different vendors.
However, in case of India option (a) may
not be appropriate due to large R&M
potential in the country and it is
important to develop market for both
technical consultants and suppliers.

observed that dedicated R&M cell is
created to facilitate decision making. Also,
Weak decision- to enable smooth implementation regular
Management
15 making meetings with the suppliers are
Risk
framework conducted. Further, to resolve any issues
or concerns a dispute resolution
committee is formed at the start of the
project.
It was observed that technical surprises

do occur even in the international
scenario.
In order to minimise technical surprises it
is important to carry out detailed studies
at the start of the project. Further,
interactions should be carried out with the
plant level officials associated with the
plant from long to understand the
In order to handle technical surprises it is
important to take timely decision for the
resolution of the same. Efforts should be
Occurrence of
made towards amicable resolution of
16 technical Technical Risk
disputes through formation of joint
surprises
committee having representation from
both suppliers and utility.
Also, in case of occurrence of surprises,
such variations must be recorded for
future reference so that lessons may be
applied in future, both on other units on
the same project and on similar plant
elsewhere.
Further, experiences from past
implementation should be built in the
project preparation work of the
subsequent units to minimise or address
such occurrences.
17 Weak dispute Contractual It is important to take timely decision for

Risk
resolution Risk the resolution of the same. Efforts should
mechanism be made towards amicable resolution of
constraining the disputes through formation of joint
execution of committee having representation from
work both suppliers and utility.
Any variations must be recorded for
future reference so that lessons may be
applied in future, both on other units on
the same project and on similar plant
elsewhere.
Further, experiences from past
implementation should be built in the
project preparation work of the
subsequent units to minimise or address
such occurrences.
Mismatch (or
delay) in supply
This risk was not observed in the selected
of critical
18 Market Risk international case studies undertaken as
equipment and
part of the study.
the shutdown
period
In the case of South Africa it was

observed that the utility undertook visits
and conducted third party inspections in
some of the factories of the suppliers to
ensure quality of works. Ensuring quality
Weak of the works implemented is essential for
Supervision, Operational the long term sustainability of the project.
19
Quality Control Risk Stringent quality checks are generally
And Assurance observed to be missing in the Indian
context. Therefore, it is required that
while undertaking R&M works utility
should engage Quality Control and Quality
Assurance Consultants to ensure quality
of works.
Meeting environmental standards has

Failure to
been one of the key objectives for
comply with
undertaking R&M works in the
environmental Socio-
international scenario. R&M works are
20 standards and Environmenta
carried out keeping in view not only the
perceived l Risk
existing standards but compliance to
negative
possible future stringent standards that
externalities
may come into effect in future.
Delay in
Obtaining shutdown has not been
provisioning of Institutional
21 observed as a concern in the international
obtaining unit Risk
scenario.
shut down for

Risk
executing R&M
works
Sustainability of
R&M gains This risk was not observed in the selected
Operational
22 affected by international case studies undertaken as
Risk
weak O&M part of the study.
practices
Guarantees have been an important part

of R&M works and are observed to be part
of every contract. There are both absolute
and penalised guarantees being built into
the contract that are required to be met
by the suppliers.
Post R&M
Technical Risk Generating company can also include
23 guarantees not
O&M supervision in the contract of
achieved
executing agency. However, a right mix of
balance needs to be ensured between
performance and guarantees. In the case
of Poland it was observed that a warranty
engineer is present at the site for any
assistance during the warranty period.
Non-approval of This risk was not observed in the selected

Regulatory
24 costs incurred international case studies undertaken as
Risk
during R&M part of the study.
Ex-post evaluation or learning from the

past experience is the most important
part of the R&M project. Study of best
practises reveals that the successful
implementation of R&M projects depends
upon the incorporation of learning from
Absence of ex- previous experiences in the subsequent
post evaluation Operational projects.
25
and feedback Risk In the Indian context given large number
loop of capacity due for R&M, this assumes
significant importance as sharing of
experience and incorporation of same can
provide insights into the issues that arise
during implementing R&M and thus can
be tackled in a more effective and
informed manner in future projects.
11.3. Standard menu of options for energy efficiency focused

rehabilitation and life extension of 210 MW and above units in
thermal power stations in India
This section presents various technological options available while
undertaking refurbishment/R&M of a power plant. A range of
applications/options exist for different components of the power plant that can
be implemented to improve the overall efficiency of the plant. Based on the
review of international experiences, this section brings out the
possible/indicative/achievable improvement in the efficiency or station heat rate
of the unit in post R&M scenario.
Based on the review of international experience of both developed and

developing countries possible interventions that can be undertaken for different
components of the plant system are highlighted below:
Boiler Island
Pulverizers and Feeder Upgrade

Installation of Coal Drying
Installation of dry ash extraction system
Improved Combustion system control/optimize
Soot blower optimization/Installation of new/intelligent soot blowers
Low Excess Air Operation
Replacement/Upgrade Air Pre-heater
Replacement/Upgrade Economizer
Improvement in FD Fan efficiency
Improvement in ID Fan efficiency
Turbine Island
Refurbishment/Overhaul of Turbine
Replacement of turbine blades
Reduction of steam leakages
Optimization or Repair of Condensers
Refurbishment of Boiler Feed Pump
Refurbishment of Feed Water Heaters
Others
Installation of new integrated Neural Network with Distributed

Control System
Installation of Variable Frequency Drives
Various studies have been undertaken in the past by different organizations

to estimate the potential efficiencies that can be achieved by implementing the
above mentioned measures. These studies have been undertaken for different
regions of the World (including both developed and developing countries) and
are based on the condition or situation of the coal based power plants in their
respective regions/country. Some of the studies in this regard include:-
a) Study on Reducing CO2 Emissions by Improving the

Efficiency of the Existing Coal-fired Power Plant Fleet,
National Energy Technology Laboratory (NETL), April 2010

NETL conducted a literature survey of over 110 of published articles
and technical papers that identified potential coal-fired power plant
efficiency improvement methods. Based on the literature survey
the report presents range of efficiency improvement for a variety of
power plant components/systems. The summary of this is
presented below:

potential identified by NETL for different power plant components
Efficiency Increase
Power Plant Improvements
(percentage points)
Air Preheaters (optimize) 0.16 to 1.5
Ash Removal System (replace) 0.1
Boiler (increase air heater surface) 2.1
Combustion System (optimize) 0.15 to 0.84
Condenser (optimize) 0.7 to 2.4
Cooling System Performance (upgrade) 0.2 to 1
Feedwater Heaters (optimize) 0.2 to 2
Flue Gas Moisture Recovery 0.3 to 0.65
Flue Gas Heat Recovery 0.3 to 1.5
Coal Drying (Installation) 0.1 to 1.7
Process Controls (installation/improvement) 0.2 to 2
Reduction of Slag and Furnace Fouling (magnesium hydroxide

0.4
injection)
Sootblower Optimization 0.1 to 0.65
Steam Leaks (reduce) 1.1
Steam Turbine (refurbish) 0.84 to 2.6
It is important to mention that the efficiency improvement indicated for

various components are not additive in nature. The actual efficiency
improvement affected depends on combination of interventions considered for
implementation in the plant. The report also presents the average potential of
around 5% for US power plants based on the operating average efficiencies of
coal fired power plants in 2007 (32%) vis--vis the efficiency of the top 10%
performing power plants in US (37%).
b) Study on Costs And Effectiveness Of Upgrading And

Refurbishing Older Coal-Fired Power Plants In Developing
APEC Economies, APEC Energy Working Group, Expert
Group on Clean Fossil Energy (APEC study), June 2005
Sinclair Knight Merz (SKM), Integrating Consultancy carried out a
study for the Australian Greenhouse Office (AGO) in relation to the
Efficiency Standards for Power Generation measures. This report

presented the efficiency improvement potential of various
technological options for coal based power plants. The analysis is
based on the data from the surveys of generators and plant specific
data.

potential identified in SKM report for different power plant
components
Efficiency Improvement
Action
(%)
Restore the plant to design conditions:
Minimise boiler tramp air 0.42
Reinstate any feedheaters out of service (Plant X) 0.46
Reinstate any feedheaters out of service (Plant Y) 1.97
Refurbish feedheaters 0.84
Reduce steam leaks 1.1
Reduce turbine gland leakage 0.84
Changes to operational settings:
Low excess air operation 1.22
Improved combustion control 0.84
Retrofit improvements:
Coal drying with heat recovery 4.5
Extra air-heater surface in the boiler 2.1
Install new high efficiency turbine blades 0.98
Change to steam driven feed pumps
Install variable speed drives 1.97
Install on-line condenser cleaning system 0.84
Install new cooling tower film pack 1.97
Install intermittent energisation to ESPs 0.32
c) Study on Coal-Fired Power Plant Heat Rate Reductions,

Sargent & Lundy LLC (S&L study), January 2009
Study by Sargent & Lundy, L.L.C. (S&L) presented various methods
or options to reduce the heat rate of existing US coal fired power
plants for different range of capacity sizes. The study is based on
the literature review, interactions with the technology provider and
the in-house expertise of S&L.
The summary of the options along with their efficiency
improvement potential for 200 MW and 500 MW plants is presented

in table below. The study indicated the efficiency improvement
potential in BTU/kWh. For the purpose of this report these has been
converted to overall efficiency potential.
Table 25: Summary of the technological options along with the efficiency
potential identified in S&L report for different power plant
components
Technological Options % Improvement
Boiler Island 200 MW 500 MW
Economizer Replacements 0.16 - 0.32 0.16 - 0.32
Implement Neural Network technology 0.16 - 0.48 0.09- 0.32
Installation of Intelligent Soot Blowers 0.09 - 0.48 0.09 - 0.29
Air Heater and Duct Leakage Control 0.03 - 0.13 0.03 - 0.13
Acid Dew Point Control 0.16 - 0.38 0.16 - 0.38
Turbine Island
Turbine Overhaul 0.32 - 0.97 0.32 - 0.97
Optimization or Repair of Condensers 0.09 - 0.22 0.09 - 0.22
Upgrade/Rebuild Boiler Feed Pump 0.08 - 0.16 0.08 - 0.16
Flue Gas System
Replacement of centrifugal ID fans with axial fans 0.03 - 0.16% 0.03 - 0.16
Installation of VFDs 0.06 - 0.32% 0.06 - 0.32
Installation of Combined VFD and Fan 0.03 - 0.48% 0.03 - 0.48
Modification FGD System 0 - 0.16% 0 - 0.16
Modification ESP 0 - 0.02% 0 - 0.02
Combined Environmental Controls Technology 0 - 0.21% 0 - 0.21
Cooling Tower Advanced Packing Upgrade 0 - 0.22% 0 - 0.22
d) Study on Efficiency Standards for Power Generation, SKM

Sinclair Knight Merz Pty. Ltd, Integrating Consultancy,
January 2000
The study identified technical options available to reduce CO2
emissions from existing and planned power plants for the APEC
region. The results of the study are based on the survey
undertaken in the APEC economies, literature review and use of
priced data base such as the World Electric Power Plants Database
compiled by UDI/McGraw-Hill Energy.
The summary of the potential efficiency improvement indicated by

this study is provided in table below.

potential identified in APEC report for different power plant
components
Net Efficiency Gain (%
Improvement
points)
Pulverizer and feeder upgrades 0.3
Combustion Air preheater repair or upgrade 0.25
System Sootblower improvements 0.35
Excess air I&C 0.2
Feedwater heater repairs 0.4
Heat transfer tube upgrades 0.6
Steam Cycle Steam turbine blades 0.5
Cycle isolation 0.5
Condenser repairs 0.4
O&M training
Computerized maintenance and management Included in combustion
O&M systems and Reliability centered maintenance and steam cycle gains.
Efficient operation
Distributed control systems realized over the long
term.
Combined Total 3.5
The estimated efficiency potential for different technological options by each

of the studies is provided below.
It is important to mention that the efficiency improvement indicated for

various components are not additive in nature. The actual efficiency
improvement affected depends on combination of interventions considered for
implementation in the plant. Also, the indicated efficiency should not be
considered as achievable benchmark for any plant as actual efficiency
improvement will depend on variety of factors such as current plant condition,
O&M practices, interventions planned, coal quality, plant technology etc.
Based on the above standard menu of options for energy efficiency focused
rehabilitation and life extension for different power plant components is
presented in brief below:
Table 27: Standard menu of options for energy efficiency focused rehabilitation and life extension for different power plant
components based on international review
Potential
Technological Options Description Efficiency Reference
Improvement (%)
Boiler Island
Pulverizer:
Low Speed:
- Ball and Tube Mil
Medium Speed:
Improvements in pulverisers and
- Ring and Ball Mill
feeder design allows better grinding
- Vertical Spindle
of coal which leads to:
Roller Mill
Improvement in combustion due
Pulverizers and Feeder - Bowl Mill
to better fineness of coal Up to 0.3 APEC
Upgrade High Speed:
Reduces the amount of coal
- Hammer Mill required to be burnt in boiler as
- Attrition Mill carbon content in the bottom ash
Coal - Beater Wheel Mill and in fly ash reduces.
Handling
Plant Feeder:
Volumetric Feeders
Gravimetric Feeders
Coal Dryers
- Rotary Dryers
- Pneumatic Dryers
Coal Drying process reduces the
- Fluid-bed dryers
Upgrade Coal Drying moisture content in coal and
with spouted bed 0.1 to 1.7 NETL
Process improves combustion efficiency of
- Vibratory fluid-bed
the boiler
dryers
- Shaft Dryers
- Mill type Dryers
Potential
Improvement (%)
Bottom Ash
Handling
- Water impounded
Bottom Ash hopper
with hydro jet
pump or ash slurry
pumps
- Dry type Bottom Dry Ash Handling System doesnt
Ash hopper with require water in the bottom ash
removal process. It provides several
submerged scraper
conveyor benefits such as improvement in
boiler efficiency, reduced thermal
- De-watering Bin
energy losses as the air is heated by
System
Ash the heat of bottom ash. Further, as
Installation of dry ash - Pressure Pneumatic
Handling the land availability is very difficult it Upto 0.1 NETL
extraction system Conveying System
Plant is going to be the latest
- Dense Phase
environmental norms.
Pneumatic
Conveying system
Fly Ash Handling

- Vacuum Pneumatic
conveying system
- Vacuum cum
Pressure Pneumatic
Conveying System
- Dense Phase
Pneumatic
Conveying System
Potential
Improvement (%)
- Fly ash Storage
Silos
- Feeder ejector
system
- Dry mechanical
conveyors
Advanced Low NOx
Combustion System
- Low NOx Burners
- Overfire Air (OFA)
System
Improvement in combustion control
Improved Combustion Combustion enables proper air and coal flow NETL
0.15 to 0.84
system control/optimise Optimisation DCS leading to better heat transfer and SKM
and Software for improvement in boiler efficiency
- Fireball Centering
- O2 distribution
Boiler
balancing
- Combustion
balancing
Soot Blowers
- Long Retractable Installation of additional/intelligent
Soot Blowers soot blowers (ISB) helps in keeping
Soot blower
- Wall Blowers the boiler pressure parts surface S&L
optimisation/Installation of 0.09 to 0.65
clean improves furnace performance NETL
new/intelligent soot blowers Intelligent Soot
by better heat transfer and increases
Blowers
the longevity of tubes.
Sonic Soot Blowers
Potential
Improvement (%)
Excess of air in flue gas means that
there is more air than required for
combustion. If controlled and tuned, APEC
Low Excess Air Operation 0.2 to 1.22
low excess air reduces heat loss from SKM
flue gas exiting the boiler and
improves the efficiency.
Recuperative Type
- Cast Iron Air
Preheater
- Plate Air Preheaters
- Tubular Air
Air Pre- Replacement/Upgrade Air Preheater Replacement or up-gradation S&L
0.03 to 1.5
heater Pre-heater improves the efficiency due to better NETL
Regenerative Type heat transfer from the flue gas.
- Ljunstorm
- Bi-sector Extra heat surface also allows more
- Tri-sector heat to be extracted leading to
- Rothemuhle maintain/lower flue gas temperature
Boiler Tubes
Provides better heat pickup area and
Extended Surface increases the boiler efficiency.
Replacement/Upgrade - Stud Fins
Economiser 0.16 to 0.32 S&L
Economiser - Longitudinal Fins
- Helical Fins
- Rectangular Fins
-Baffles
Improvement in FD Fan Axial Fan Replacement of centrifugal fans with 0.03 to 0.16
FD Fan S&L
efficiency axial fans and replacement of (without VFD)
Potential
Improvement (%)
Centrifugal Fan dampers with Variable Frequency
- Airfoil Drives (VFD) maximises efficiency 0.03 to 0.48
- Backward Inclined and minimises operating costs by (with VFD)
- Curved Backward lowering the Auxiliary power
Improvement in ID Fan Inclined consumption.
ID Fan
efficiency - Flat Backward
Inclined
- Radial Tip
- Forward Curved
Blades
Turbine Island
Technological advancement in
Refurbishment/Overhaul computation in fluid dynamics has S&L
Reaction Type allowed the manufacturers design 0.32 to 2.6
of Turbine NETL
Turbine higher efficient turbines. In any case,
whether the utilities decide to
Impulse Type replace the entire turbine or
Replacement of turbine Turbine refurbish turbine with better blades, APEC
0.5 to 0.98
Turbine blades the utility stands benefited from the NETL
enhanced performance.
Steam leakages in turbine means
that the steam gets wasted without
doing any useful work in the turbine.
Reduction of steam leakages 0.84 to 1.1 Aus NETL
Reduction in leakages like in main
gland can greatly enhance the
performance of the turbine output.
Optimisation or Repair of Offline/Online From thermodynamics point of view, S&L
Condenser 0.09 to 2.4
Condensers Condenser Cleaning the steam condensed in condenser NETL
Potential
Improvement (%)
System should occur at lowest feasible
vacuum temperature. However with
time, due to degradation and fouling
of condenser, installation of either
offline or online condenser cleaning
can greatly reduce the back pressure
which results in significant reduction
in heat rate.
BFP consumes significant amount of
auxiliary power and thus
refurbishment of Boiler Feed Pump
Boiler Feed
Refurbishment of Boiler Feed Pump can significantly increase the 0.08 to 0.16 S&L
Pump (BFP)
reliability and availability of the unit.
In addition to this turbine driven
BFPs are also being used.
Feed water heaters primarily preheat
the boiler feed water and improves
steam cycle efficiency by using heat
Feed Water from low / high pressure steam from NETL
Refurbishment of Feed Water Heaters 0.2 to 1.97
Heaters the turbine. Refurbishment or SKM
addition of feed water heaters can
significantly increase the feed water
temperature
Others
Computer simulation model with real
time measurement of plant
Control Installation of new integrated Neural Network with
performance from data input from 0.16 to 2 S&L - NETL
System Distributed Control System (DCS)
DCS can help in optimising boiler
performances by predicting and
Potential
Improvement (%)
adapting to the different load
requirement at different time of the
day. The optimisation Neural
Network model can be also be
extended to efficient use of FGD,
superheat and reheat temperature.
Variable Frequency Drives provide
many advantages over varying
pressure/temperature with fixed
speed drives:
Increase in life of motors due to
soft start
Increases the life of pumps and
Variable
fans by reducing the stress and
Frequency
Installation of Variable Frequency Drives wear 0.06 to 1.97 S&L - SKM
Drives
Ensures high degree of accuracy
(VFD)
due to accurate speed control
and quick response
Increases reliability and
availability of drives as it
eliminates any sudden voltage
dip and ensures smooth control
over motors, pumps and fans.
Chapter - 12
Estimation of the Potential Reduction in GHG Emissions
on account of Implementation of Energy Efficient R&M
12.1. What is Greenhouse Gas (GHG) Emission?

The weather and climate of the earth is driven by the energy from the sun
where the earth absorbs some of the energy it receives and radiates back the
rest to the atmosphere/space. However certain gases like carbon-dioxide,
methane, nitrous and sulphur oxide, also known as greenhouse gases absorb
some of the energy radiated from the earth and trap it in the atmosphere. These
gases act as a blanket and warms up the Earths surface substantially which
affects adversely the biodiversity and ecosystem of the earth. Over the years,
the emission of the greenhouse gases has been increasing at an alarming rate,
mainly due to human activities. Many of the major greenhouse gases can remain
in the atmosphere for tens to hundreds of years after being released and they
mix in the lower atmosphere, reflecting emission effects globally. The major
greenhouse gases associated with human activities are summarized in the table
below:
Table 28: Source of Production for different types of Greenhouse Gases (GHG)
Greenhouse
Source of production
Gas
Primarily the emission is through burning of fossil fuels (oil, natural
gas, and coal), solid waste, and trees and wood products. Further,
Carbon-dioxide
deforestation and soil degradation leads to increase in carbon-
dioxide, whereas forestation reduces it.
Methane is emitted during the production and transport of coal,
natural gas, and oil. The emission also occurs due to livestock
Methane
breeding, agricultural practices and from the anaerobic decay of
organic waste in municipal solid waste landfills.
Nitrous and Main emissions are from combustion of fossil fuels and solid waste
Sulphur oxide and also from agricultural and industrial activities.
Source: http://www.epa.gov/climatechange/ghgemissions/gases.html
The Fourth Assessment Report of the Inter-Governmental Panel on Climate

Change (IPCC) has established that it is unequivocal that Earths climate is
warming and is anthropogenic in nature. Climate change poses serious
challenges to social and economic well-being of countries and it is important to
reduce Worlds carbon footprint.
12.2. GHG Emission in the Electricity Sector

Coal dominates electricity generation in the country and is expected to
continue its dominance in the short to medium term period with India planning
to add 62,695 MW of coal based generation during the 12th Plan16.
In 2009, generation of electricity accounted for more than 50% of the total
CO2 emissions from fuel combustion in India primarily due to its heavy
dependence on coal.
Figure 15: Indias CO2 emissions from fuel combustion by sector in 2009
Others
Transport
10%
9%
Residential
5%
Electricity
and Heat
54%
Industry
22%
Other includes commercial/public services, agriculture/forestry, fishing, energy industries other

than electricity and heat generation and other emissions not specified elsewhere.
Source: IEA 2011
Further, average efficiency of coal fired power plants in India is lower than
the world average. Worldwide coal-fired power plant efficiency averaged around
35.1% in 2007 (IEA, and CIAB 2010).
The variation in efficiency is on account of variety of factors covering:
a) Technology employed i.e. sub critical, super critical or ultra-

supercritical etc.
b) Vintage of the power plant
c) Low capacity plants
d) Type and quality of coal used
e) O&M practices etc.
Each of the above are explained below:
a) Technology
Efficiency to a great extent is dependent upon the technology adopted for power
generation. In India most of the past installed capacity is sub critical technology
16
Report of The Working Group on Power for Twelfth Plan (2012-17), Ministry of Power,
Government of India, January 2012
with few recently commissioned super critical power plants.
Figure 16: Profile of operating fleet of coal fired power plants in India
Source: IEA 2012 (b)
Recent advancement in super critical and ultra supercritical technology has led
to higher performance levels by the coal fired power plants. Although, as of now
the majority of the new power plants are sub critical, there has been increasing
emphasis on the super critical technology and large numbers of recent units
(under construction) are super critical units. In addition, according to the
12thPlan Working Group Report on Power, 38% of the overall 12thPlan capacity
addition target is based on supercritical technology. Further, it is expected that
13thPlan may stipulate all new coal fired plants constructed to be at least on
supercritical technology.
b) Vintage
Lower levels of performance can be expected from plants of older design,
although upgrades can improve even the oldest plants. For example, in case of
turbine, efficiency decreases with the increase in the years of operation and in
the initial years of operation this deterioration in efficiency may be relatively
faster. Deterioration may be equivalent of 0.25% of heat rate per year of
operation between overhauls and up to 2% in the first two years alone.
However, with routine maintenance some of the deterioration can be restored.
Plant performance can also be restored during major overhauls (IEA, 2010).
In India, more than 40% of the total operating coal fired power plant fleet is
older than 20 years.
Figure 17: Vintage of the operating fleet of coal fired power plants in India
Younger
Older than than 10
20 years
42% 38%
Between
10-20 years
20%
c) Low Capacity Plants

In India majority (more than 70%) of the total operating coal fired power plant
fleet has a generation capacity below 300 MW implying lower efficiency.
Figure 18: Share of coal fired generation units in terms of capacity in India
Larger than
300 MW
29%
Lower than
300 MW
71%
d) Coal Quality
Indian coal is predominantly from the open cast mines and has high ash and
high moisture content, which results in the lower plant efficiency. The typical ash
content in Indian domestic coal is in the range of 30% to 45% as compared to
15-20% in most of the developed countries.
Over the years, the coal quality is degrading due to increasing ash content and
due to high moisture content. The new coal mines identified are also producing
inferior quality coal. Over the years, the calorific value of Indian coal has
reduced from 5900 kcal/kg in 1960s to 3500 kcal/kg in the present scenario.
This is one of the major reasons for low operating efficiency of coal fired power
plants in the country. Poor quality of coal also leads to higher wear and tear in
combustion chambers/mills etc. and leads to lower plant efficiency. In FY 2011,
the generation loss due to poor coal quality was estimated to be around 5.9
Billion Units17.
e) Plant Maintenance and Overhauls

Plant operation and maintenance is also one of the key factors in the overall
efficiency of the power plant. Better O&M practices may lead to the plant
operational efficiency near to the design efficiency levels.
According to the report of ESMAP titled Strengthening Operations and

Maintenance Practices in State-Sector Coal-Fired Power Generation Plants in
India:
Operational practices among state-sector power generation utilities in

India display a wide spectrum, with some of the better managed utilities
exhibiting superior systems and procedures, while most of the remaining
have critical gaps in several key operational areas, leading to reduced
plant performance in terms of availability, generation and energy
efficiency. Further, absence of adequate condition monitoring systems
leads to reactive maintenance practices rather than pro-active
maintenance practices.
It can be observed from above that the current efficiency of coal based power
plants in India is well below the state of art and it is important to improve the
overall efficiency of power plants by improving existing plants through
Renovation and Modernisation (R&M) or by installing new systems based on
advanced technologies. Improving the efficiency of coal based generation plants
offers several benefits in terms of reduced consumption of coal, meeting energy
shortages, increased access of electricity and savings in balance of payment
through reduction in importation of coal. Further, as electricity accounts for
majority of emissions, improvement in the efficiency of the coal based
generation becomes the key policy target for reducing the GHG emissions of the
country.
With the above background, the next section presents GHG emission reduction
potential of EE R&M of thermal power stations in India under various scenarios.
12.3. Overall GHG Reduction Potential of R&M/LE

AF-Mercados EMI in its report titled Developing Markets for Implementation
of R&M Schemes in Thermal Power Stations in India has assessed the overall
market potential for R&M during the 12th and 13th Five Year Plan18. The table
17
Central Electricity Authority, Operation Performance of Generating Stations in the Country
During the Year 2011-12, April, 2012
18
The report is available in the CEA website.
presented below provides the sector-wise breakup of the R&M/LE potential in the
12thand 13th plan as assessed in the report.
Table 29: R&M/LE Potential in 12thand 13thPlan

R&M/LE Potential
Sector
Capacity (MW) Units
12th Five Year Plan19
State Sector 18,360 89
Central Sector 16,350 55
Sub-total 12th Plan 34,710 144
13th Five Year Plan
State Sector 8,890 39
Central Sector 5,680 20
Sub-total 13th Plan 14,570 59
The current operating average net SHR of coal based thermal power plants
assessed for R&M/LE in the 12th Plan is around 2962 kcal/kWh which translates
into an efficiency of around 29.03%. If all the plants post R&M operate on their
design efficiencies, the average net SHR can be improved to 2,551 kcal/kWh i.e.
around 33.7%. The CO2 emission reduction potential ranges from 6%-13%
depending upon the level of average efficiency achieved post R&M/LE in the 12th
Plan. In absolute terms CO2 emission reduction potential ranges from 14.91 Mt
CO2 to 29.81 Mt CO2 across different scenarios with respect to the Baseline.
Similarly, the operating average net SHR of around 2,926 kcal/kWh or

efficiency of 29.39% in the 13th Plan which if the plants post R&M operate at
designed efficiency can be improved to 2560 kcal/kWh which translates to
efficiency of 33.59%.
The results of different scenarios are summarized in the figure below:
19
This also includes slipped units (Both State and Central) from 11thPlan. Units which have
completed R&M/LE during the FY- 2012-13 have not been considered while estimating GHG
reduction potential.
Figure 19: CO2 emission reduction potential of coal based power plants
targeted for R&M/LE in India in the 12th Plan
Co2 Emission reduction potential

235.39 MtCo2
6%
1114 gCo2/kWh
Co2 Emission per kWh
220.48 MtCo2
9%
1044 gCo2/kWh
213.03 MtCo2 13%

1008 gCo2/kWh
205.58 MtCo2
973 gCo2/kWh
2962 kcal/kWh 2551 kcal/kWh
Baseline Conservative Intermediate Optimistic

Scenario Scenario Scenario
Improvement in net SHR Total Emissions
Source: AF-Mercados EMI analysis
Similarly, CO2 emission reduction potential ranges from 6%-12% in the 13th
Plan with absolute terms CO2 emission reduction potential ranging from 6.31 Mt
CO2 to 12.61 Mt CO2 across different scenarios with respect to the Baseline. The
result is summarized in the figure below:
Figure 20: CO2 emission reduction potential of coal based power plants
targeted for R&M/LE in India in the 13th Plan
Co2 Emission reduction potential

105.01 MtCo2
6%
1130 gCo2/kWh
Co2 Emission per kWh
98.70 MtCo2
9%
1062 gCo2/kWh
95.55 MtCo2 12%
1028 gCo2/kWh
92.40 MtCo2
994 gCo2/kWh
2926 kcal/kWh 2560 kcal/kWh

Improvement in net SHR

12.4. GHG reduction potential of R&M/LE by state and central sector
State Sector Results

a) 12th Five Year Plan
targeted for R&M/LE in the 12th Plan is around 3066 kcal/kWh which translates
into an efficiency of around 28.1%. If all the plants post R&M operate on their
design efficiencies, the average net SHR can be improved to 2565 kcal/kWh i.e.
efficiency of around 33.5%.
The CO2 emission reduction potential ranges from 8%-15% depending upon the
level of average efficiency achieved post R&M/LE in the 12th Plan. In absolute
terms CO2 emission reduction potential ranges from 8.96 Mt CO2 to 17.93 Mt
CO2 across different scenarios with respect to the Baseline.
Figure 21: Capacity wise break up for state sector coal based units identified
for R&M/LE during the 12th Plan
100 MW 1
Capacity (MW)
110 MW 13
200 MW 8
210 MW 63
500 MW 4
0 10 20 30 40 50 60 70
Number of units
Figure 22: CO2 emission reduction potential through R&M/LE of coal based
power plants in the state sector of India during the 12th Plan
120.00 1154.01 1200.00
115.00 1065.86
1021.78
110.00 1050.00
gCO2/unit
977.71
Mt CO2
105.00
100.00 900.00
117.40
108.44
103.95
99.47
95.00
90.00 750.00
Scenarios Mt CO2
g CO2/unit
b) 13th Five Year Plan

Similarly, for 13th Plan, the current operating average net SHR of coal based
thermal power plants identified for R&M/LE is around 2915 kcal/kWh translating
into an efficiency of around 29%. If all the plants post R&M operate on their
efficiency of around 34%.
Further, CO2 emission reduction potential ranges from 6%-12% depending upon
the level of average efficiency achieved post R&M/LE in the 13th Plan. In absolute
terms CO2 emission reduction potential ranges from 3.70 Mt CO2 to 7.41 Mt CO2
across different scenarios with respect to the Baseline.
Figure 23: Capacity wise break up for state sector coal based units identified
Capacity (MW)
250 MW 3
210 MW 34
500 MW 2
0 5 10 15 20 25 30 35 40
Number of Units
power plants in the state sector of India during the 13th Plan
65.00 1300.00
1104.93
1038.26
gCO2/unit
60.00 1004.93 1100.00
Mt CO2
971.59
55.00 900.00
57.68
61.38
55.82
53.97
50.00 700.00
Scenarios Mt CO2
g CO2/unit
Central Sector Results

identified for R&M/LE in the 12th Plan is around 2847 kcal/kWh which translates
into an efficiency of around 30%. If all the plants post R&M operate on their
efficiency of around 34%.
terms CO2 emission reduction potential ranges from 5.93 Mt CO2 to 11.87 Mt
CO2 across different scenarios with respect to the Baseline.
Figure 25: Capacity wise break up for central sector coal based units identified
Capacity (MW)
200 MW 13
210 MW 25
500 MW 17
0 5 10 15 20 25 30
Number of Units
Source: CEA 2009
power plants in the central sector of India during the 12th Plan
120.00 1077.16 1100.00

1022.99
995.90
968.82
115.00 1000.00
gCO2/unit
Mt CO2
110.00 900.00
117.98
112.05
109.08
106.11
105.00 800.00
100.00 700.00
Scenarios
Mt CO2
g CO2/unit

In 13th Plan, the operating average net SHR of coal based thermal power plants
identified for R&M/LE is around 2943 kcal/kWh having efficiency of around 29%.
If all the plants post R&M operate on their design efficiencies, the average net
SHR can be improved to 2576 kcal/kWh i.e. efficiency of around 33%.
terms CO2 emission reduction potential ranges from 2.6 Mt CO2 to 5.20 Mt CO2
across different scenarios with respect to the Baseline.
Figure 27: Capacity wise break up for central sector coal based units identified
250 MW 1
Capacity (MW)
200 MW 1
210 MW 13
500 MW 5
0 2 4 6 8 10 12 14
Number of units
power plants in the central sector of India during the 13th Plan
1166.71
46.00 1200.00
1097.09
44.00 1062.28
1027.47
42.00 1050.00
Mt CO2
gCO2/unit
40.00
38.00 900.00
39.73
43.63
41.03
38.43
36.00
34.00 750.00
Scenarios Mt CO2
g CO2/unit
Chapter 13
Possible Framework for Monetizing the GHG
Emission Reduction
This chapter presents the global carbon market mechanism and different
monetising framework for R&M in India. This chapter also presents the barriers
in monetizing GHG reductions from R&M measures and the related strategies to
overcome the barriers.
13.1. Global Carbon Market

The Global Carbon Market comprises of both Compliance and Voluntary
market as illustrated below. The compliance market was created by mandatory
regional, national and international regimes whereas voluntary market exists
outside the compliance markets where individuals and companies trade carbon
offsets on a voluntary basis.
Figure 29: Global Carbon Market
Global Carbon Market
Voluntary Market
Compliance Market
(governed by standards)
Global Verified Carbon Climate Action

Regional Gold Standard Others
(Kyoto Protocol) Standard Reserve
CDM JI
Australia
Europe Japan New Zealand
NSW GHG Abatement US
EU - ETS Japanese ETS NZ ETS
Scheme
California
RGGI WCI
ETS
Source: AF-Mercados EMI Compilation from United Nations Framework Convention on Climate
Change (UNFCCC) and various reports
Each of the above market mechanism is explained below:
13.2. Compliance Market

Compliance Market consists of global and regional mechanisms. These are
explained below:
1. Global Mechanism
Kyoto Protocol20
The Kyoto Protocol was signed in 1997, at the 3rd Conference of the Parties
(COP 3) to the Framework Convention on Climate Change in Kyoto, Japan. This
treaty provided for legally binding national caps on GHG emissions on developed
countries, known as Annex 1 countries that ratified the protocol.
Each participating country is being provided with a specified number of

carbon dioxide equivalent (CO2e) emission units, termed Assigned Amount Units
(AAU), which the participating country was allowed to emit during the first Kyoto
commitment period (i.e. 2008-2012). The second commitment period (1st
January 2013 to 31st December 2020) of Kyoto Protocol has been agreed at the
Doha climate change talks, 2012.
To meet these commitments, the participating countries could either

undertake a range of domestic policies and measures or acquire emission
reduction credits by taking advantage of the three flexibility mechanisms
defined under the Protocol. These mechanisms are as follows:
i. International Emissions Trading (IET): IET is the trading of AAUs

between two Annex 1 countries, while both JI and CDM are project
based mechanisms.
ii. Joint Implementation (JI): JI projects allow Annex 1 parties to
implement projects that reduce GHG emissions in other Annex 1
Parties.
iii. Clean Development Mechanism (CDM)21: The CDM allows for GHG
emission reduction projects in developing countries (non-Annex 1
countries with no emission limitation targets). The emission
reduction credits generated by these projects are called Certified
Emission Reductions (CERs), wherein one CER equals one tonne of
CO2e.
The emission reductions from CDM and JI projects can be procured by Annex 1
countries to meet their Kyoto commitments.
2. Regional Market
In addition to Kyoto Protocol there are other numerous emission trading
schemes established at the regional and national level. Some of these are
explained in brief below:
20
The Clean Development Mechanism, An Assessment of Progress, United Nations Development
Programme, November 2006
21
In the recent CDM Conference of Parties (COP) at Doha, the parties have agreed to extend the
CDM mechanism for the second commitment period, which runs from 1 January 2013 to 31
December 2020. The CERs generated through the CDM projects will remain tradable in the second
commitment period as well.
a) Australia - New South Wales GHG Abatement Scheme (NSW GHGAS)22

The NSW Greenhouse Gas Reduction Scheme (NSW GHGAS) commenced on 1
January 2003. It is one of the first mandatory greenhouse gas emissions trading
schemes in the World. NSW GHGAS aims to reduce GHG emissions associated
with the production and use of electricity. It achieves this by using project-
based activities to offset the production of greenhouse gas emissions. NSW
GHGAS establishes annual state-wide greenhouse gas reduction targets, and
then requires individual electricity retailers and certain other parties who buy or
sell electricity in NSW to meet mandatory benchmarks based on the size of their
share of the electricity market.
b) Europe - European Union Emission Trading Scheme (EU ETS)23

European Union Emission Trading Scheme (EU ETS), launched in 2005 is the
largest multi-country, multi-sector emission trading scheme in the World where
all 27 members of European Union (EU) including Croatia, Iceland, Norway and
Liechtenstein are under this umbrella. EU ETS covers more than 11,000 power
stations and industrial plants in 31 countries as well as airlines. The EU ETS
works on the 'cap and trade' principle. A 'cap', or limit, is set on the total
amount of certain greenhouse gases that can be emitted by the factories, power
plants and other installations in the system. The cap is reduced over time so
that total emissions fall. In 2020, emissions from sectors covered by the EU ETS
will be 21% lower than in 2005.
c) USA
i. Regional Greenhouse Gas Initiative (RGGI)24
Regional Greenhouse Gas Initiative (RGGI) is the first market-
based regulatory program in the United States to reduce GHG
emissions. RGGI is a cooperative effort among the states of
Connecticut, Delaware, Maine, Maryland, Massachusetts, New
Hampshire, New York, Rhode Island, and Vermont. Together, these
states have capped and will reduce CO2 emissions from the power
sector by 10 per cent by 2018. States sell nearly all emission
allowances through auctions and invest proceeds in consumer
benefits: energy efficiency, renewable energy, and other clean
energy technologies.
ii. Western Climate Initiative (WCI)25

The Western Climate Initiative (WCI) is a collaboration of seven
U.S. states and four Canadian provinces working together since
2007 to identify evaluate and implement policies to address the
threats posed by climate change. A comprehensive strategy has
22
http://www.greenhousegas.nsw.gov.au/
23
http://ec.europa.eu/clima/policies/ets/index_en.htm
24
http://www.rggi.org/
25
http://www.westernclimateinitiative.org/
been developed to reduce, at the regional level, GHG emissions to

15% below 2005 levels by 2020. The first phase of WCI program
begins in 2012 with a three year compliance period.
iii. California Emission Trading Scheme (California ETS)26

In 2006, California passed a law to introduce an emission trading
scheme (ETS) as part of a broad package of reforms designed to
reduce the states emissions to 1990 levels by the year 2020 with a
further reduction of 50 per cent by 2050. Rules to establish
Californias emissions trading scheme were finalised in 2011 and
the scheme will apply from 1 January 2013.
In addition to the above, many countries such as New Zealand,

Japan, South Korea, China, Taiwan and Vietnam have
introduced/planning to introduce carbon trading schemes.
13.3. Voluntary Market

Voluntary market provides an alternative to the compliance market wherein
transactions are not driven by any country level regulations but driven by
companies, NGOs and individuals who on voluntary basis purchase the carbon
offsets. Trading volumes and price of carbon offsets in the compliance market is
relatively higher than that of voluntary market as compliance market is driven
by the obligation of the entities to purchase the offsets whereas voluntary
market is driven by the voluntary wish of the entities. Currently, voluntary
markets are governed by numerous mechanisms such as Verified Carbon
Standard (VCS), Gold Standard, Climate Action Reserve, American Carbon
Registry, ISO-14064, Plan Vivo, VER+ etc.
Out of all these mechanisms, VCS is most commonly and widely used GHG
program in the global voluntary carbon market.
13.4. National Level Mechanism: Perform, Achieve and Trade (PAT)27

The Government of India (GOI) launched the Perform Achieve and Trade
(PAT) Scheme under National Action Plan on Climate Change (NAPCC). The PAT
Mechanism is a market based mechanism to further accelerate as well as
incentivize energy efficiency in the large energy-intensive industries. The
scheme provides the option to trade any additional certified energy savings with
other Designated Consumers (DCs) to comply with the Specific Energy
Consumption (SEC) reduction targets by 2014-15. The Energy Savings
Certificates (ESCerts) so issued will be tradable on special trading platforms to
be created in the two power exchanges - Indian Energy Exchange and Power
Exchange India.
26
http://www.cleanenergyfuture.gov.au/why-we-need-to-act/what-others-are-doing/united-
states-of-america/
27
PAT Perform, Achieve and Trade, Ministry of Power, Government of India, July 2012
The PAT framework has the following elements:

- Setting of Specific Energy Consumption (SEC) for each DC in the
baseline year
- Target setting for reduction of SEC by target year, 2014-15 from
the baseline year
- Verification process by accredited verification agency of the SEC of
each DC in the baseline year and in the target year
- Issuance of Energy Savings Certificates (ESCerts) to DCs who
achieved SEC lower than the specified value
- Trading of ESCerts
The figure below illustrates the phase-wise scheme of Perform, Achieve and
Trade (PAT).
Figure 30: Perform, Achieve and Trade Scheme Phase
Implementation
Target Setting Verification Trading
& Monitoring
The notified DCs

are given 3 years
Energy intensive to implement
companies or measures to meet SECs against
Designated the PAT targets. targets for each
DCs will be Allotment and
Consumers (DCs)
trading of ESCerts
were identified Annually assessed by
and Specific monitoring results independent
Energy Reduction to be submitted auditors
targets notified to Bureau of
Energy Efficiency
(BEE)
Target Setting Phase In this phase, energy intensive companies, also known
as Designated Consumers (DCs) were identified which will fall under the PAT
Scheme. The Specific Energy Consumption (SEC) reduction targets have been
notified to DCs in March 2012.
Implementation & Monitoring Phase The notified companies or DCs are

given 3 years (April 2012 March 2015) for implementing measures to achieve
their PAT targets. Annually the monitoring results are to be submitted to the
Bureau of Energy Efficiency (BEE).
Verification Stage - At the end of implementation phase, the SECs against

their targets will be assessed for each designated consumers by independent
auditors. The verification report prepared by these auditors will be presented to
Energy Efficiency Services Limited (EESL).
Trading Phase Trading and allotment of ESCerts will take place during April
2015 March 2016. Companies which have over achieved their targets would
entail them to issue ESCerts and companies with under achieved targets will
need to purchase ESCerts to fill the gap between targets and achievements.
Failure to do so will attract market based penalties. The penalties would be
based on the price of ESCerts and the quantum under achieved targets.
Figure 31: Concept of Target, Compliance, ESCerts and Penalty

Issued
ESCerts Penalty
Baseline
SEC
Saving Achieved
Targets SEC
Compliance
Achieved Purchased
SEC ESCerts
Source: PAT Perform, Achieve and Trade, Ministry of Power, Government of India, July 2012
The PAT Scheme covers eight industry sectors (Thermal Power Plants,
Fertilizers, Iron & Steel, Cement, Pulp & Paper, Aluminium, Chlor-alkali and,
Textiles) based on the intensity or quantity of energy consumed.
With regard to thermal power plants, in first PAT cycle 144 designated
consumers from various states have been identified for which the target have
already been notified. Thermal Power Plant sector has been categorized on the
basis of their fuel input i.e. gas, oil and coal/lignite based plants where there are
107 units under Coal/lignite, 33 and 4 under gas and diesel respectively. The
total reported energy consumption of these designated consumers is about 104
million ton of oil equivalent. By the end of the first PAT cycle, the energy savings
of 3.211 million ton of oil equivalent /year is expected to be achieved, which is
around 48% of total national energy saving targets assessed under PAT. The
target reduction for thermal plants has been based on the deviation of average
net heat rate (2007-2010). The table below illustrates the reduction norm for
the thermal plants:
Table 30: Reduction Norm for thermal power plant under PAT Scheme
Deviation in net SHR from Reduction target (%) as percentage of
designed net SHR deviation in net heat rate
Upto 5% 10%
More than 5% and upto 10% 17%
Deviation in net SHR from Reduction target (%) as percentage of

designed net SHR deviation in net heat rate
More than 10% and upto 20% 21%
More than 20% 24%
The BEE notification document of July 2012 provides the specific reduction
targets for individual units.
These thermal plants can improve the efficiencies of their plants through EE
R&M in order to comply with the PAT target and can become eligible for ESCerts,
which can be traded at market determined prices.
13.5. Monetizing Frameworks for R&M in India

CDM and VCS are two available GHG monetisation frameworks for R&M in
India. The typical procedure for registration under CDM and VCS is almost
similar with one fundamental difference between them; that voluntary credit
cannot be issued by an entity to meet its legal compliance obligations under the
Kyoto Protocol whereas under CDM it can. It is also generally relatively easier to
develop new project methodology or register new project under VCS programme
than CDM of UNFCCC, as in general the validation, verification process as well as
additionality requirement is less stringent for VERs from project under VCS
programme than that of CERs of CDM project. The procedure for CDM and VCS
is presented below:
Figure 32: Procedure for CDM and VCS
Pre-Development Certifications: Issuance

Stage of CERs/VERs
Project Implementation
Monitoring and and Operation
Data Collection Verification
Operation of CDM /
VCS Project
Evaluation of
technology options
Not required Registration

for VCS
Assessment of viability
Project Design
of CDM Project
Host Country Approval Validation

Management Approval
and Identification of
Carbon Credit Preparation of Project
Mechanism CDM / VCS Design Document /
Project Document
Source: - AF-Mercados EMI compilation from various sources
It is worthwhile to mention that while the CDM mechanism received strong

support during the initial year of implementation with the CERs trading at high
prices (~USD 20/CER). Recently, due to market distortions, the market prices
crashed resulting in making CDM less attractive. The market trend recently has
also moved towards regional and country level mechanism to support efficiency
improvement. PAT (described already in this report) is one such mechanism
available for India. Nevertheless, CDM still is a more widely available mechanism
for monetizing GHG emission reduction and is described in subsequent section.
Since the aim of the report is to suggest framework for monetization of

emission reduction achieved through R&M, the following section superimpose the
CDM/VCS process cycle on the R&M Process Cycle (Annexure IV). Moreover,
since under the VCS programme, projects may use methodologies approved
under CDM, the following sections describe the monetizing framework for R&M in
the context of CDM. The resultant outcome is a step by step guide for generation
utilities intending to monetize emission reduction achieved through R&M.
The next section presents R&M-CDM process cycle.
13.6. R&M-CDM Process Cycle

This section details out the steps required to be undertaken by the Indian
utilities for developing project under the CDM mechanism. These steps are
detailed out as per different stages of R&M process cycle.
a) Identification Stage
During this stage of R&M the plant operators regularly monitor the key plant unit
parameters covering at least the following aspects to identify symptoms that
may necessitate R&M of power plants: (a) Plant Availability, (b) Plant Load
Factor, (c) Auxiliary Consumption, (d) Emission Factors, (e) Level of Outages, (f)
Life of the plant etc., (g) Frequency of annual overhaul; (h) frequency of capital
overhaul etc. The diagnosis at this stage is based on available plant records and
design data. Timely identification and diagnosis of problems is of critical
importance and form the foundation for successful R&M of the plant in the
future.
Similarly, this stage also forms foundation for developing project under the CDM.
In order to initiate CDM project, it is important to establish a credible baseline
for the project. Past unit wise data on parameters such as fuel consumption,
electricity generation, plant load factor etc. for at least five years prior to
implementation of R&M is generally required for developing the R&M project
under the CDM.
b) Assessment Stage
During the assessment stage detailed technical evaluation of the plant is
undertaken through conducting various studies such as Residual Life
Assessment, Condition Assessment studies, Energy Audit etc. The technical
evaluation of the plant is followed by the economic evaluation of the plant to
decide on the most optimal option for undertaking R&M of the project. This is
followed by preparation of Detailed Project Report and preparation of the scope
of R&M Project for the selected option.
After the preparation of DPR, utility is required to undertake an internal analysis

of the project with and without CDM benefits. Based on this analysis, a Board
resolution to develop the project under CDM is required by the utility. It must be
noted that to develop the project under CDM, it is required that Detailed Project
Report (DPR) is prepared by an independent agency. The DPR must demonstrate
that CDM benefits results in making the project viable.
c) Planning Stage
specification and proposal package and determines the procurement/bidding
strategy. Planning stage covers the entire bid process management i.e. issue of
tender(s), pre bid meetings, evaluation of technical and commercial bids,
selection of suitable bidder, negotiation of contracts and award of R&M contracts
to vendors/suppliers/OEMs.
The CDM process in this stage starts after the issuance of purchase order to the
suppliers in accordance with the scope of work formulated in the previous stage.
Within 180 days of issuance of the purchase order utility is required to submit a
Prior Consideration Form to UNFCCC. The purpose of this form is to submit the
notification of the commencement of the project activity and the intention to
seek CDM status.
After the submission of this form, utility is required to prepare the Project
Design Document (PDD). The PDD contains a detailed description and
specification of the proposed CDM project, including information about the
project, baseline scenario and quantification methodology, monitoring plan,
stakeholder comments, and environmental impacts. An essential component of
the PDD is the determination of the project baseline against which emission
reductions are measured. The project proponent/utility must also make the case
that the projects emission reductions are in addition to reductions that would
have otherwise occurred. In order to determine the baseline scenario, UNFCCC
approved methodologies may be used or a new methodology may be developed
by the project proponent (for which approval from CDM EB will be required). In
case of Energy Efficient R&M measures there are few existing approved
methodologies to estimate GHG reduction through R&M measures such as AM
0061, AM 0062 etc. A detailed discussion on the existing approved
methodologies is undertaken in the next sub-section of the report.
Preparation of PDD requires specialised knowledge, therefore it is required that

utility may engage a specialised CDM consultant to prepare the PDD and to
undertake various procedures as required under the CDM28.
d) Execution Stage
This stage covers the entire R&M project implementation stage which begins
with the receipt of equipments to the site and planning of shutdown of unit. This
stage involves the Validation and Registration of CDM project.
After the preparation of PDD, utility is required to appoint a Designated
Operational Entity (DOE), approved by the UNFCCC, for independent
validation/evaluation of the project. DOE evaluates the PDD and also make the
document public for stakeholder consultation/comments on the PDD.
Based on the validation and stakeholder comments, PDD is revised to reflect

those comments/suggestions.
This stage also involves approval of the project from the host country and the
confirmation that the project activity assists the host country in achieving
sustainable development. In case of India, this approval is required from the
National CDM Authority (NCDMA). NCDMA evaluates the project in the light of
sustainable development objectives of the country and also assess the
probability of successful implementation of CDM projects.29
After the successful project validation, the revised PDD along with host country
approval and other details is submitted for the review of CDM Executive Board
(EB) by the DOE. The CDM EB is the ultimate point of contact for CDM Project
Participants for the registration of projects and the issuance of CERs.30
CDM EB evaluates the PDD, validation report and provides its observation on the
same. These documents are also made public for receiving the comments on the
same.
The CDM EB may, based on its evaluation approve the project for registration,
request a project review, or reject the proposed project.
After the addressal of these comments, project is formally accepted and is

registered. Registration implies that the project is now eligible for getting the
CERs issued.
28
A designated operational entity (DOE) is an independent auditor accredited by
the CDM Executive Board (CDM EB) to validate project proposals or verify whether implemented
projects have achieved planned greenhouse gas emission reductions. Source:
http://cdm.unfccc.int/DOE/index.html
List of DOEs: http://cdm.unfccc.int/DOE/list/index.html
Sectoral scopes related to approved methodologies and DOEs (as on 27 Dec 2012):
http://cdm.unfccc.int/DOE/scopes.html
29
http://www.cdmindia.in/constitution.php
30
http://cdm.unfccc.int/EB/index.html
e) Closure Stage
After the R&M work is completed, it is very essential to evaluate whether the
goals and objectives of the R&M project was achieved or not. For this post-R&M
Performance Guarantee Test is conducted. Further, Operation and Maintenance
Training is imparted to engineers for efficient operation of the unit that has
undergone R&M.
After the completion of R&M works, monitoring of the CDM project is initiated.
This includes collection of the required data to quantify the actual emission
reduction achieved by the project. The actual monitoring of the project must be
in line with that specified in PDD.
The monitoring of the project is followed by the validation stage wherein DOE
will verify the emission reduction as proposed by the monitoring report. In order
to avoid conflict of interest it is important that a new DOE be appointed for
verification. The time period for undertaking Verification process and issuance of
CERs can be annually/monthly depending upon the volume of emission reduction
or the time frame specified in the PDD.
After the submission of this report EB is requested for issuance of CERs.
It must be noted that adoption of proper O&M practises post R&M is crucial as
deterioration in the performance of the plant would reduce the quantity of CERs
to be issued to the utility.
Figure 33: R&M-CDM Process Cycle
Identification Assessment Planning Execution Closure
Data collection on Preparation of DPR Bidding of project Appointment of PG Test after

key plant for R&M by Validator completion of R&M
parameters Independent Work
Agencies Issue of purchase
Approval from host
order to the Maintain good O&M
DNA
supplier Practice
Board Resolution Acceptance of PDD
to develop project Hiring of by Validation Team
consultant Monitoring Report
under CDM and upload by CDM Consultant
Validation Report and Verification
Submission of Prior on UNFCCC for Report by DOE
Consideration Form request for
to UNFCCC registration
Evaluation by CDM
EB and issuance of
Preparation of Evaluation by CDM
CERs
PDD EB
Address queries Trading of CERs

and comments if and sharing of
CDM revenues
any
between utility and
Registration of consumers
Project
CDM Consultant
Generating Company
DOE
DNA
CDM EB
Regulator
Source: - AF-Mercados EMI analysis
It is important to mention that in addition to the above; utility needs to fulfil

certain overall conditions of CDM in order to derive benefits from the
mechanism. The key conditions that must be fulfilled for getting the CDM
benefits from R&M are as follows:
i. The projects must result in real, measurable and long-term

emission reductions which will be certified by a third party agency.
ii. Emission reductions must fulfil the additionality31 clause.
iii. Projects must be in line with sustainable development objectives of
the host country.
iv. Projects undertaking CDM benefits must make positive impact to
sustainable use of natural resources.
Issuance of CERs is followed by the trading of CERs and sharing of the CDM
benefits with the consumers, in line with that specified by the State Electricity
Regulatory Commission/Central Electricity Regulatory Commission (CERC). As
per CERC, Tariff Regulations 2009 2014, Regulation 36, the proceeds from
carbon credit from approved CDM project shall be shared in the following
manner:
i. 100% of the gross proceeds on account of CDM to be retained by

the project developer in the first year after the date of commercial
operation of the generating station or the transmission system, as
the case may be;
ii. In the second year, the share of the beneficiaries shall be 10%
which shall be progressively increased by 10% every year till it
reaches 50%, where-after the proceeds shall be shared in equal
proportion, by the generating company or the transmission
licensee, as the case may be, and the beneficiaries.
For trading the CERs; the utility may opt for two methods. They may
approach CDM consultants directly or they can trade in the exchange. In case,
the utility opts for CDM consultant, the consultants can provide the following
services:
i. Identify suitable buyers of CERs (Certified Emission Reductions)

ii. Facilitate in upfront contracting with the buyers
iii. Assist in developing the commercial terms for Emission Reduction
31
Additionality is the requirement that the greenhouse gas emissions after implementation of a
CDM project activity are lower than those that would have occurred in the most plausible
alternative scenario to the implementation of the CDM project activity. The alternative scenario
may be the business-as-usual case (that is, the continuation of current emission levels in the
absence of the CDM project activity), or it may be some other scenario which involves a gradual
lowering of emissions intensity.
Purchase Agreement (ERPA)32

iv. Assist in developing financial package along with the buyers to
handle the risk and investment
In this approach, the utility with the help of CDM consultants can directly
come into negotiations with the buyer and trade carbon credits. Alternatively,
the utility can sell carbon credit in the exchange. In India, the Multi Commodity
Exchange (MCX) entered into an alliance with the Chicago Climate Exchange in
2005 to introduce future carbon credit trading in India. There are certain
benefits in trading carbon credit in the exchanges which are given below:
i. Hedge against price risk for sellers and intermediaries

ii. Advance selling of carbon credit can help R&M projects generate
liquidity and reduce costs of implementation;
iii. MCX guarantees the trade and hence there is no counterparty risk
iv. MCX platform ensures fair price for both the buyer and the seller
v. The players are on a single platform which eliminates the laborious
process of identifying either buyers or sellers with enough
credibility
vi. The MCX provides immediate reference price and hence the sellers
are not at the receiving end with no bargaining power
The next section elaborates on the different approved CDM methodologies

which the utility can utilize for monetisation of GHG emission reduction.
It is also important to mention that while CDM currently has become

relatively less attractive; the requirement of any regional mechanism
that may evolve is also likely to be similar. Hence adequate
preparedness on the basis of above is likely to prove useful.
13.7. Approved CDM Methodologies

The Clean Development Mechanism (CDM) requires application of a baseline
and monitoring methodology in order to determine the amount of CERs
generated by a mitigation project in a project host country.
There are various methodologies presented by UNFCCC for estimating the

GHG reduction through different technological measures in coal based power
plants. These methodologies can be classified into two groups:-
a) Methodology that covers the overall efficiency improvement in the

power plant through multiple technological options incorporated
under a plant R&M program. For instance, AM0061: Methodology
for rehabilitation and/or energy efficiency improvement in existing
32
ERPA is an agreement between the buyer and seller where the responsibilities, rights and
obligations to manage project risks is recorded. It also defines the commercial terms of the project
including price, volume and delivery schedule of emission reductions
power plants incorporates various technological options.
b) Methodologies that cover the individual technology option such as

energy efficiency in plant auxiliary systems, boiler efficiency
improvement, waste heat recovery, etc. For instance, AM0062:
Energy efficiency improvements of a power plant through
retrofitting turbines is specific to technological intervention in
turbines.
Further, it must be noted that some of these methodologies are specific to

power plant and the others have a wider scope but can be applied for different
R&M measures as well. For instance methodologies such as AM0061:
Methodology for rehabilitation and/or energy efficiency improvement in existing
power plants and AM0062: Energy efficiency improvements of a power plant
through retrofitting turbines are specific to power plants. While methodology
such as AM0017: Steam system efficiency improvements by replacing steam
traps and returning condensate and AM0018: Baseline methodology for steam
optimization systems focus on steam systems and covers efficiency
improvement in steam and steam optimization systems. Since such
opportunities also exist in case of thermal power plants, these methodologies
can be used for R&M as well.
The selection of particular methodology will depend upon the site specific
conditions and type of technological interventions undertaken during R&M of the
plant.
CDM projects can be classified into large scale project and small scale project
depending on the scale of the projects. If utility is planning to undertake small
R&M works and the expected benefit is low, then the project can be developed
under small scale methodology. Further, small scale projects can be applied with
simplified modalities and procedures. For small scale project, the following
criteria must be fulfilled:
Technologies or measures that improve the efficiency of fossil fuel generating

units that supply an electricity or thermal system by reducing energy or fuel
consumption by up to the equivalent of 60 GWhe per year.
The eligible existing methodology under small scale project is given below:
Table 31: Technological Measures and Methodologies Applicable under small

scale CDM for R&M Projects
Technological Measures Methodology
Higher efficiency by reduction AMS-II.B: Supply side energy efficiency

of fossil fuel consumption improvements generation
Under large scale projects some of the existing methodologies proposed by

UNFCCC that can be applied to estimate GHG reduction through R&M measures
are tabulated below.
Table 32: Technological Measures and Methodologies Applicable under CDM

for R&M Projects
Technological Measures Methodology
AM0017: Steam system efficiency improvement
AM0018: Steam optimization system
AM0044: Energy efficiency improvement in boiler
Efficient coal consumption

AM0056: Efficiency improvement by boiler replacement
technologies
or rehabilitation
AM0061: Methodology for rehabilitation and/or energy

efficiency improvement in existing power plants
ACM0012: Waste Heat Recovery system
AM0062: Energy efficiency improvements of a power

plant through retrofitting turbines.
Efficient turbine technologies
AM0061: Methodology for rehabilitation and/or energy
efficiency improvement in existing power plants
Waste heat recovery

ACM0012: Waste heat recovery system
technologies
Efficient auxiliary
AM0044: Energy efficiency improvement in boiler
technologies
The extracts of relevant methodologies to estimate GHG emission reduction

through R&M measures as provided in the CDM Methodology Booklet, 4th Edition,
November 2012, UNFCCC website. These are as follows:
1. AMS-II.B: Supply side energy efficiency improvements Generation
Applicability: Introduction of more-efficient electricity and/or thermal energy

generation units or complete replacement of existing power stations, district
heating plants and cogeneration units by new equipment with a higher efficiency
or retrofitting of existing fossil-fuel-fired generating units in order to increase
their efficiency.
Baseline case: Continuation of the current situation; i.e. use of the existing
fossil-fuel-fired energy generation equipment with lower efficiency.
Project scenario: Installation of more-efficient energy generation technology

and/or complete replacement of existing less-efficient equipment and/or
retrofitting of an existing energy generation system reduces fossil fuel
consumption and GHG emissions.
Summary of AMS-II.B methodology
Baseline Parameter to be
Applicability condition Project Scenario
case monitored
Technologies or Installation of more-

Use of the
measures to improve the efficient energy 1. Quantity of fuel
existing
efficiency of fossil fuel generation technology used in the
fossil-fuel-
generating units that and/or complete energy
fired
supply an electricity or replacement of existing generating
energy
thermal system by less-efficient equipment;
generation
reducing energy or fuel equipment and/or
equipment 2. Quantity of
consumption by up to retrofitting of an
with lower energy output.
the equivalent of 60 existing energy
efficiency
GWhe per year. generation system
2. AM0017: Steam system efficiency improvements by replacing steam

traps and returning condensate
Applicability: Optimization of steam distribution, end-use and condensate

return to increase the energy efficiency of a steam system.
Baseline case: Use of fossil fuel in a boiler with a low efficiency to supply steam
to a steam system.
Project scenario: Use of less fossil fuel in a boiler as less steam is required for
the steam system due to improved efficiency. Improvement in the boiler
operation leads to reduction in coal consumption for same output. Reduction in
coal consumption means less GHG emission.
Summary of AM0017 methodology
Baseline Project Parameter to be

Applicability condition
case Scenario monitored
1. The regular 1. Steam and

Use of less
maintenance of steam Use of fossil condensate flow,
fossil fuel in a
traps or the return of fuel in a boiler temperature and
boiler as less
condensate is not to supply pressure
steam is
common practice steam to a
required for the 2. Boiler efficiency
steam system
2. Data on the condition of steam system
with a low 3. Electricity
steam traps and the with improved
efficiency consumption of
return of condensate is efficiency.
the project.
accessible in at least

five other similar plants.
3. AM0018: Baseline methodology for steam optimization systems
Applicability: More-efficient use of steam in a production process reduces

steam consumption and thereby steam generation.
Baseline case: Use of fossil fuel in a boiler to supply steam to a process with
high steam consumption.
Project scenario: Use of less fossil fuel in a boiler as less steam is required for
the process with a higher efficiency. This methodology majorly covers efficiency
improvement on the boiler. Improvement in the boiler operation leads to
reduction in coal consumption for same output.
Applicability Project
Baseline case Parameter to be monitored
condition Scenario
1. Production output
2. Corresponding steam
consumption
A project Use of fossil fuel Use of less fossil
activities that in a boiler to fuel in a boiler 3. Boiler efficiency
optimize the supply steam to as less steam is 4. Steam enthalpy
use of steam in a process with required for the
a production high steam process with a 5. Additional electricity /
steam / fuel consumption
process consumption higher efficiency
for the project activity
6. Fuel consumption analysis
and calorific values
4. AM0044: Boiler rehabilitation or replacement in industrial and district

heating sectors
Applicability: Thermal energy efficiency improvement of fossil-fuel-fired

boilers, at multiple locations, through rehabilitation or replacement of the
boilers.
Baseline case: Boiler(s) with lower efficiency will continue to operate at

multiple locations, thereby consuming high amounts of fossil fuel.
Project scenario: Efficiency of the boiler improvement through rehabilitation

resulting reduction of fossil fuel consumption and related CO2 emission.
Improvement in the boiler operation leads to reduction in coal consumption for

same output.

Boiler(s)
1. The boilers that are with lower The efficiency of 1. Total thermal output
rehabilitated under the efficiency boiler(s) of each boiler in the
project should have will project.
is improved
some remaining lifetime continue to through their 2. Amount of fossil fuel
2. The installed capacity of operate at rehabilitation consumed; net
each boiler shall be multiple resulting in a calorific value of
determined using a locations, reduction of fossil fuel, emission
performance test in thereby fossil fuel factor of fossil fuel,
accordance with well- consuming consumption oxidation factor of
recognized international high and related CO2 fossil fuel in each
standards. amounts of emissions boiler in the project.
fossil fuel
5. AM0056: Efficiency improvement by boiler replacement or rehabilitation

and optional fuel switch in fossil fuel-fired steam boiler systems
Applicability: Complete replacement of existing boilers by new boilers with a

higher efficiency in an existing facility with steam demands or retrofitting of
existing boilers in order to increase their efficiency; or a combination with one or
both activities described above and a switch in the type of fossil fuel used to fuel
boilers.
Baseline case: Continuation of the current situation; i.e. use of the existing
boilers without fossil fuel switch, replacement of retrofit of the boilers.
Project scenario: Complete replacement of boilers, and/or retrofitting of an

existing steam generating system results in higher efficiency and less
consumption of fossil fuel (fuel switch may also be an element of the project
scenario).
Applicability Parameter to be
Baseline case Project Scenario
condition monitored
1. Quantity of fuel
1. Completely Continuation of the Complete
used in the
replace one or current situation; replacement of
boilers;
more boilers i.e. use of the boilers, and/or
with some existing boilers retrofitting of an 2. Quantity of steam
remaining without fossil fuel existing steam produced;
Applicability Parameter to be
Baseline case Project Scenario
condition monitored
lifetime; and/or switch, generating system 3. Temperature and

replacement of results in higher pressure of the
2. Implement
retrofit of the efficiency and less steam produced.
fitting of
boilers. consumption of
additional new
fossil fuel (fuel
equipment to an
switch may also be
existing steam
an element of the
generating
project scenario
system
(retrofitting);
and
3. Implement
optional switch
in fossil fuel.
6. AM0061: Methodology for rehabilitation and/or energy efficiency

improvement in existing power plants
Applicability: Implementation of measures to increase the energy efficiency of

existing power plants that supply electricity to the grid. Examples of these
measures are: the replacement of worn blades of a turbine by new ones; the
implementation of new control systems; replacement of deficient heat
exchangers in a boiler by new ones, or the installation of additional heat
recovery units in an existing boiler.
Baseline case: Continuation of the operation of the power plant, using all
power generation equipment already used prior to the implementation of the
project, and undertaking business as usual maintenance.
Project scenario: Implementation of energy efficiency improvement measures

or the rehabilitation of an existing fossil-fuel-fired power plant. As a result, less
fossil fuel is consumed to generate electricity and less GHG emission.
Summary of methodology AM0061
Project Parameter to be
Applicability condition Baseline case
Scenario monitored
1. The project does not Continuation of Implementatio 1. Energy

involve the installation the operation of n of energy efficiency of the
and commissioning of the power plant, efficiency project power
new electricity generation using all power improvement plant
units generation measures or
2. Quantity of fuel
2. The designed power equipment the
used in the
generation capacity of already used prior rehabilitation
project power
each unit may increase as to the of an existing
plant;
a result of the project but implementation of fossil-fuel-
Scenario monitored
this increase is limited to the project, and fired power 3. Calorific value
15% of the former design undertaking plant. As a and emission
power generation business as usual result, less factor of the
capacity of the whole maintenance. fossil fuel is fuel used in the
plant consumed to project power
generate plant
3. The existing power plant
electricity.
has an operation history 4. Electricity
of at least 10 years and supplied to the
data on fuel consumption grid by the
and electricity generation project power
for the most recent five plant.
years prior to the
implementation of the
project are available
4. Only measures that

require capital investment
can be included.
7. AM0062: Energy efficiency improvements of a power plant through

retrofitting turbines
Applicability: Implementation of measures to increase the energy efficiency of

steam or gas turbines in existing power plants that supply electricity to the grid.
Examples of these measures are: replacement of worn blades of a turbine by
new ones; implementation of refined sealing to reduce leakage; replacement of
complete inner blocks (steam path, rotor, inner casing, inlet nozzles).
Baseline case: Continuation of the current practise; i.e. the turbine continues
to operate without retrofit.
Project scenario: Retrofitting of steam turbines and gas turbines with
components of improved design to increase the energy efficiency in an existing
fossil fuel power plant.
Summary of methodology AM0062

1. The operational Retrofitting of 1. Quantity,
Continuation
parameters that affect steam turbines calorific value
of the current
the energy efficiency of and gas and emission
practice; i.e.
the turbine (e.g. steam turbines with factor of fuel
the turbine
pressure and components of used in the
continues to
temperature, quality of improved project power
be operated
steam in the case of a design to plant;
without
saturated steam turbine; increase the 2. Electricity
retrofitting
condenser vacuum, and energy supplied to the

combustion temperature efficiency in an grid by the
for gas turbine) remain existing fossil project power
the same, subject to a fuel power plant;
variation of +/- 5 %, in plant. Thus, 3. Enthalpy of the
the baseline and the fossil fuel steam supplied
project scenario consumption is to the turbine, in
2. The methodology is reduced case of steam
applicable up to the end turbines
of the lifetime of the
existing turbine, if
shorter than the
crediting period
8. ACM0012: Consolidated baseline methodology for GHG emission

reductions from waste energy recovery projects
Applicability: Project activities implemented in an existing or Greenfield facility

converting waste energy into useful energy.
Baseline case: Carbon-intensive sources will continue to supply

heat/electricity/ mechanical energy to the applications of the recipient facility
and unrecovered energy from waste energy source will continue to be wasted.
Project scenario: Heat/ electricity/ mechanical energy are generated by

recovery of energy from a waste energy source. This leads to GHG emission
reduction.
Summary of methodology ACM0012
Scenario monitored
1. In the absence of the Carbon-

project, all waste intensive Heat/ electricity/
energy would be flared sources will mechanical
or released into the continue to energy are 1. Quantity of
atmosphere. supply generated by electricity/ heat
heat/electricity recovery of supplied to the
2. For capacity expansion / mechanical recipient plant(s).
energy from a
projects, the new energy to the waste energy 2. Quantity and
capacity should be applications of source and are parameters of
treated as new facility the recipient supplied to the waste energy
and therefore the facility and grid and/or streams during
applicable guidance for unrecovered applications in project.
baseline scenario energy from the recipient
determination, capping waste energy facility
of baseline emissions source will
and demonstration of continue to be
Scenario monitored
use of waste energy in wasted

absence of the CDM
project, should be
followed
3. An official agreement is
required between the
generating facility and
the recipient facility of
energy generated by
project, in case they
are different entities
As stated earlier the project proponent can also develop/suggest a new

methodology to CDM EB for its approval for the same.
13.8. Case Studies

This section presents in brief international/national case studies wherein EE
R&M activities were implemented in thermal power stations and these projects
were considered for CDM registration.
Under the methodology AM0061, two case studies33 are available wherein
both the projects are registered.
Similarly, under the methodology AM0062, three case studies are available,
wherein two projects are registered and the other one has been rejected.
Further, at present, no projects related to thermal power plant has been
registered in case of other large scale methodologies mentioned above.
It must be noted that none of the Indian R&M projects have attempted to
claim CDM benefits for R&M measures in coal based thermal power plant except
Budge Budge Generating Station, CESC Limited and that too under small scale
methodology. Further, even internationally the exposure of energy efficiency
projects especially related to in R&M of thermal power plants to CDM has been
limited. Nevertheless, successful registration of few of the cases presented
below highlights that possibility for availing CDM benefits do exist.
1. Case Study on Budge Budge Generating Station (BBGS), CESC Limited,

under AMS-II.B Methodology
The table below presents case study on Budge Budge Generating Station
(BBGS), CESC Limited which has been successfully registered and had crediting
period till April 2012. Details of the project are provided below:
33
The number of case studies is provided as on 9th July 2013 and the number of projects may
vary with time.
Table 33: Case Study on Budge Budge Generating Station (BBGS), CESC Limited
Project Title Budge Budge Generating Station (BBGS), CESC Limited
Host Country India
Project The brief background of the project is presented below:-

Information
The basic objective of the project is to reduce energy (fuel)
consumption per kWh of energy generation through
implementation of energy efficient measures and technologies.
The project activity also was proactively taken up due to the

related environmental benefits particularly in the form of
Greenhouse Gas (GHG) emission reduction.
Various technologically advanced instruments were installed at
BBGS under the energy efficiency improvement programme and
the project was implemented between April 2000 and October
2001 in phases. The different components of the project activity
are:
o Replacing existing High Pressure Dosing by 'All Volatile

Chemical Treatment' in Boiler
o Modification in Auto Furnace Draft Control Logic in

Induced Draft (ID) Fan Vane-Scoop Combination Control
Status of project Registered
Reference For details refer:
http://cdm.unfccc.int/Projects/DB/DNV-CUK1151074102.67/view
Emission The total emission reductions are 3,8419 tonnes of CO 2 equivalent

Reduction per annum for ten years.
2. Case Study on AzDRES Energy Efficiency Improvement under AM0061

Methodology
The table below presents case study on AzDRES Energy Efficiency Improvement
project which has been successfully registered for availing CERs. Details of the
project are provided below:
Table 34: Case Study on AzDRES Energy Efficiency Improvement
Project Title AzDRES Energy Efficiency Improvement
Host Country Azerbaijan Republic

Information
This project involved the rehabilitation of seven 300 MW power
generating units in Azerbaijan and incorporation of cooling
systems for the eight units.
The AzDRES facility is capable of burning heavy fuel oil and/or
Project Title AzDRES Energy Efficiency Improvement
natural gas.
Following R&M measures were considered in the scope of CDM:
o Rehabilitation of the turbine equipment to restore its

initial efficiency and modernise its command & control
system;
o Rehabilitation of the boilers to improve their efficiency

and reduce the heat losses.
o Incorporation of cooling system for all entire eight units
of the power plant.
Reference For details refer:

http://cdm.unfccc.int/Projects/DB/DNV-CUK1324273859.59/view
Emission The emission reductions projected are 1,023,293 tonnes of CO 2

Reduction equivalent per annum for ten years.
3. Case Study on Shandong Shiheng Power Plant Energy Efficiency

Improvement Project under AM0061 Methodology
The table below presents case study on Shandong Shiheng Power Plant Energy
Efficiency Improvement Project which has been successfully registered for
availing CERs. Details of the project are provided in brief below:
Table 35: Case Study on Shandong Shiheng Power Plant Energy Efficiency
Improvement Project
Shandong Shiheng Power Plant Energy Efficiency

Project Title
Improvement Project
Host Country Peoples Republic of China

Information
This project involves retrofit of steam turbines on Unit 1 and 2
of 315 MW.
The following technological improvement measures were

included in the project:
o Replacement of the HP-IP (high-pressure and
intermediate-pressure) rotors and LP (low-pressure)
rotors;
o Optimization design and replacement of stator blades

and moving blades at HP, IP and LP levels;
o Replacement of the HP-IP and LP inner casings;
o Replacement of the diaphragm steam seal and nozzle
Shandong Shiheng Power Plant Energy Efficiency

Project Title
Improvement Project
block at all levels.
Reference http://cdm.unfccc.int/Projects/DB/BVQI1343203714.92/view
Emission The emission reductions projected are 72,484 metric tonnes CO2
Reduction equivalent per annum.
4. Case Study on Energy Efficiency Improvement of Mae Moh Power Plant

through retrofitting turbines in Thailand under AM0062 Methodology
The table below presents case study on Energy Efficiency Improvement of Mae
Moh Power Plant through retrofitting turbines in Thailand which has been
successfully registered for availing CERs. Details of the project are provided in
brief below:
Table 36: Case Study on Energy efficiency improvements of Mae Moh Power
Plant through retrofitting turbines in Thailand
Energy Efficiency Improvement of Mae Moh Power Plant

Project Title
through retrofitting turbines in Thailand
Host Country Thailand

Information
The aim of the project activity is to increase the electricity
generation efficiency by retrofitting turbines of units 10 and 11. The
rated capacities of the turbines are 300 MW each. For the last three
years, they were operated at a capacity of around 288 MW and
291MW respectively.
The following technological improvement measures were

included in the project:
o Retrofitting low pressure steam turbine rotor set at low

pressure stage where main retrofitting parts are Low
pressure rotor, reaction stage of moving blade, inner
casing with stationary blades, low pressure stationary
blade ring TS and GS, Diffuser TS and GS, Guide cone TS
and GS and Bellow.
o In the reaction stage of moving blade, the existing

reaction blades are replaced by the high efficiency
reaction blades and the low pressure blades are replaced
by advanced low pressure blades
Reference http://cdm.unfccc.int/Projects/DB/TUEV-
Energy Efficiency Improvement of Mae Moh Power Plant

Project Title
through retrofitting turbines in Thailand
RHEIN1355199535.37/view
Emission The total emission reductions are 3,94,878 metric tonnes CO2
Reduction equivalent per annum for four years..
5. Case Study on #2 Steam Turbine Retrofit Project of Tianjin Guohua

Panshan Power Plant Co. Ltd. in China under AM0062 methodology
The table below presents case study on #2 Steam Turbine Retrofit Project of
Tianjin Guohua Panshan Power Plant Co., Ltd which has been successfully
registered for availing CERs. Details of the project are provided in brief below:
Table 37: Case Study on #2 Steam Turbine Retrofit Project of Tianjin Guohua
Panshan Power Plant Co., Ltd
#2 Steam Turbine Retrofit Project of Tianjin Guohua Panshan

Project Title
Power Plant Co., Ltd
Host Country Peoples Republic of China
The brief background of the project is presented below:-
This project involved retrofitting of two supercritical steam

turbines with rated power of 500MW.
The following technological improvement measures were included

in the project
o Retrofitting of the low pressure cylinder to promote its

Project
performance and reduce the coal consumption. The
Information
components retrofitted include rotor, blades, diaphragm and
its set, inner cylinder and shaft butt seal of low pressure
cylinder.
o Steam seal installed on the surrounding bend of first stage of

high-pressure cylinder, steam seal of each turbine stage and
shaft butt seal of high-cylinder and medium-cylinder were also
altered.
Status of
Registered
project
Reference http://cdm.unfccc.int/Projects/DB/JCI1316688124.05/view
Emission
The estimated emission reduction from the project is 92,463 tCO2e.
Reduction
13.9. Barriers in Monetizing GHG Reductions from the R&M Measures

There are various barriers constraining the utility in monetizing GHG emission
reduction. These are discussed in detail below:
i. Weak data monitoring, reporting and maintenance procedures

at the unit level
Most of the utilities do not maintain data related to key performance
parameters of the unit, reliability of the unit and its individual
components etc. Even if such data is maintained, it is done at the plant
level only and not for all the individual units. Due to the lack of
historical data it may become difficult to establish credible baseline
and therefore utility may not be able to develop the project for
claiming CDM benefits.
ii. Limited Capacity of Utilities with regard to CDM and other

similar procedures
The utility may not have adequate capacity or understanding of the
UNFCCC mechanisms or CDM procedures and the benefits that can be
availed through CDM. Due to the lack of understanding of CDM
procedures, utility may not consider the option of CDM at all or even if
this is considered the probability for successful registration of the
project and subsequent issuance of CERs is lower. In addition, these
mechanisms have been evolving from time to time and hence the
utility needs to remain updated about the development.
iii. Absence of existing methodology

Absence of existing methodology aligned to R&M interventions planned
by the utility may also act as a barrier as the utility may not have
requisite expertise and awareness to design, seek approval of new
methodology.
iv. Low price of CERs

Price of CERs have declined significantly over the years which may not
provide enough incentives for developing R&M/LE projects based on
CDM mechanism. The figure below presents the demand and supply
imbalance in the CDM market leading to decline in prices of CERs.
Figure 34: Demand and Supply Imbalance and Declining Prices of CERs
Source: Climate Change, Carbon Markets and the CDM: A Call to Action Report of the High-Level
Panel on the CDM Policy Dialogue, 2012
The above has happened due to market distortions that have crept in
the last few years. However, this has resulted in emergence of several
regional and country based mechanisms that are likely to be available
to promote efficiency improvement.
v. Limited Exposure of R&M projects under the CDM and other

similar procedures
As explained earlier, different methodologies exists which can be
applied for R&M projects, but there has been limited exposure of such
projects under the CDM.
Under the methodology AM0061, two case studies are available

wherein both the projects are registered. Under the methodology
AM0062, three case studies are available, wherein two projects are
registered and the other one has been rejected. Further, it must be
noted that none of the Indian R&M projects have attempted to claim
CDM benefits for R&M measures in coal based thermal power plant
except Budge Budge Generating Station, CESC Limited and that too
under small scale methodology. Thus, the effectiveness of CDM or
other available procedures in the context of R&M of coal based thermal
power stations needs to be established.
vi. Sustainability of CERs or emission reduction benefits in light of

weak O&M Practices post R&M
O&M practises being followed by state owned generation companies in
India are weak. Most of the state owned generating companies do not
adhere to the schedule of annual maintenance and periodic capital
overhaul of the plant leading to deterioration in the condition and
performance of the plant. Weak O&M practices post R&M may wipe off
the benefits of R&M and the actual reduction in GHG emissions may
not be in line with that envisaged during the PDD stage. Thus, the
number of CERs to be issued for the project may be significantly lower
or in extreme cases no CER may be issued if performance, post R&M
reaches to the level of Pre- R&M scenario impacting the financial
viability of the project.
13.10. Strategies for Monetising GHG Reductions from the R&M measures
The carbon price over the recent years have declined significantly, the
agreements by the Parties to the Kyoto Protocol for the second commitment
period of emission reductions from 2013 2020 is expected to provide the
requisite impetus to the carbon market.
Although limited global experience exists for developing R&M/LE projects

based on CDM, it would worthwhile to explore the CDM opportunities as it can
provide additional revenue to the utilities. The state and central tariff regulations
also incentives the utilities, wherein, utilities are allowed to retain majority part
of the CDM benefits. Similarly, it is also important to explore benefits through
other regional or country based mechanisms that may come up in the future.
Therefore, it is important to devise strategies to overcome the challenges faced
by the utilities in monetizing carbon emissions. These are detailed below:
i. Developing pilot projects for monetization

CEA can provide assistance in developing selected R&M/LE projects on
CDM (or under other mechanism as they become available) on pilot
basis. This is important as it would provide necessary guidance to the
utilities with regard to procedure, methodology etc. of the CDM
process or other mechanisms. The learning from the pilot project can
then be shared with the utilities to enable them to develop projects for
monetization.
ii. Strengthening of internal data maintenance, acquisition and

reporting in the plant
Internal data maintenance includes regular monitoring and data
collection of key operating and performance parameters such as heat
rate, specific coal and oil consumption, auxiliary consumption at the
unit level (besides the station level). Compilation and analysis of
historical data is pre-requisite for any monetization scheme such as
CDM as it enables establishment of baseline performance and GHG
reduction potential.
iii. Engaging of specialized agencies/consultants

Specialized agencies should be engaged by the utility covering
assistance on all works related to CDM or similar mechanisms. The role
of consultants should be to assist the utilities with all the procedures
including preparation of DPR, addressing stakeholder comments etc,
during the registration stage and in monitoring the GHG reduction and
issuance of carbon reduction certificates. Moreover, the consultants
can assist the utilities in development and approval of new
methodology in case it is required.
iv. Preparation and implementation of O&M action plan for

sustainability of efficiency improvement benefits
O&M practices of the plant should be reviewed at the start of the
project and based on the assessment a long term O&M action plan
should be formulated. This should include the time schedule and
maintenance requirements for each component, institutional structure,
resource requirements in terms of both financial and personnel etc.
Further, the plan so formulated should be approved at the highest
authority and credible actions should be taken to implement the plan
on priority.
This is important as in case of CDM, registration of CDM project only

implies that the project is eligible for getting the CERs but actual
issuance of CERs is dependent upon the actual reduction in GHG

emissions on ground.
v. Bundling of units for CDM or other similar schemes/programs

In case utility is undertaking R&M on multiple projects, all of these
units can be bundled together for developing these projects under
CDM or other similar schemes/programs. Bundling of units is beneficial
as it reduces both the transaction time and cost of the project.
13.11. Incentives/Penalty for R&M projects under PAT Scheme

PAT provides requisite incentive/penalty mechanism to the utilities for
undertaking R&M works.
As of now 144 plants have been included under the PAT mechanism and
range of efficiency to be achieved has also been specified. The target provided
as of now is not very stringent and the plants can achieve some of these targets
either by improving their O&M of the plant or by undertaking small R&M works.
Since O&M practises at the plant site especially in the state sector is weak,
significant efficiency can be gained by just improving the O&M. The plants which
have good O&M practices and are already operating at higher efficiency levels
may have to undertake small R&M works to achieve the target.
However it must be noted that plants which achieve higher efficiency vis--
vis the targets will become eligible for ESCerts which can be traded in the
market leading to monetisation of the efficiency gained.
The utilities can achieve/overachieve their targets by undertaking R&M

works. Thus, R&M become very important in this context as it can enable the
utilities to not only achieve but overachieving targets will lead to financial gain
to them.
Also going forward, at the end of first PAT cycle, targets are expected to be
further strengthened and achieving targets through undertaking R&M works
would remain the only viable options for the utility.
As financing and implementing R&M works takes time, it is important that

utilities should initiate the requisite R&M works at the plant site to take the
benefit of the incentives provided under the mechanism.
Indecisiveness from the utilities to undertake R&M works will not only lead to
financial loss to the utilities in the form of penalty paid for non-achievement of
targets but also leads to opportunity loss in terms of benefits that could have
been accrued in case of overachievement of targets.
Thus, these actions of the utilities would enable the country to move towards
low carbon footprints in line with its sustainable development priorities.
Chapter - 14
Conclusion
R&M market is still at a nascent stage in India. It encounters different kinds

of risks that need to be carefully identified for each stage of R&M process cycle,
which should be effectively addressed to minimise their impact. Effective
implementation of R&M projects requires meticulous planning of various
components/tasks. This includes undertaking in-depth technical studies for each
unit proposed for execution of R&M, financial and economic evaluation of
available options, creation of dedicated R&M cell with adequate manpower both
at the plant level at the headquarters. Minimising delays in selection/award of
contract is the most crucial step in the entire R&M process cycle as it creates a
vicious circle wherein delays lead to further deterioration in the condition of
plant, leading to occurrence of technical surprises having both cost and time
implication and revenue loss to the utility. This not only impacts the utilities but
also have negative impacts on the other stakeholders, impacting the entire R&M
market. Further, ensuring the sustainability of R&M gains is critical. Various
studies in the past have identified serious gaps in the O&M practices of the state
utilities which negates the benefits likely from the R&M processes. Hence,
adoption of a well-defined O&M improvement/action plan along with R&M is of
utmost importance.
Review of international practice indicates need for proper planning through

technical studies and assessments to form a project baseline. Planning is also
undertaken to introduce temporary arrangements that need to be implemented
to ensure smooth operation of the remaining units while other units are taken
out of service for R&M. Dedicated R&M teams are formed by the utility to
implement such works. Occurrence of technical surprises is common even in the
international context. However, mechanisms to deal with such events in the
timely manner are provided for in the contracts. Formation of joint committee of
suppliers and utility officials is one of the ways to handle such surprises and
issues in an amicable manner. The most important observation is the practice of
ex-post evaluation and incorporation of feedback from the previous experience
in the planning phase of subsequent projects. Incorporation of learning and past
experience has played an important role in the successful implementation of
R&M projects internationally.
The efficiency improvement achieved through R&M can also be monitored

through GHG monetization frameworks i.e. Clean Development Mechanism
(CDM) and Voluntary Carbon Standards (VCS). It is worthwhile to mention that
while the CDM mechanism received strong support during the initial year of
implementation with the CERs trading at high prices (~ USD 20/CER). Recently,
due to market distortions, the market prices crashed resulting in making CDM
less attractive. With the recent agreement over the second commitment period
(1st January 2013 to 31st December 2020) of Kyoto Protocol during the Doha
Climate Change Talks, 2012, it is expected that in the medium to long term
developing R&M/LE projects under such mechanisms would provide an attractive
option to monetize GHG emission reductions. Further, the market trend recently
has also moved towards regional and country level mechanisms to support
efficiency improvement. Plants that have been identified in the PAT scheme can
improve upon the efficiencies of their plants through R&M beyond the target
levels and can become eligible for ESCerts, which can be traded at market
determined prices.
The role of R&M in bridging the demand supply gap through generation
optimisation is well recognised in the Indian context. This is increasingly
becoming more important in view of the shortage of fuel experienced in recent
times and the necessity to optimally utilize this scarce resource. An approach
that balances the risks of various parties involved is much desired.
In addition to the above, an attitudinal change that emphasizes on

participatory approach between the utility and the supplier(s) is most important
the success of contractor should be viewed as the success of the project.
Platforms for interaction among stakeholders to exchange knowledge,
information and experience through various modes is as much important as the
need for redressal/removal of barriers faced by various stakeholders during the
R&M process.
In summary, the Guidelines for Risk Identification and Mitigation in R&M

Projects in Thermal Power Stations in India and Guidelines for Early
Identification of Potential Technical Surprises in R&M Projects and Ways of
Addressing Them developed as part of this report aims to provide direction to
the utilities to minimize the risk and surprises during planning and execution of
R&M. It is expected that the suggestions proposed for mitigating/avoiding
various risks and surprises will facilitate successful management of R&M projects
and promote the R&M market in the country.
Annexure 1
Guidelines for Risk Identification and Mitigation in R&M

Projects in Thermal Power Stations in India
1. Background
1.1 Renovation & Modernisation (R&M) including Life Extension (LE) of
existing old power plants is one of the most cost effective options to
achieve additional generation from these plants in a short gestation
period.
1.2 The importance of R&M was recognised by the Government of India way
back in 1984 when Phase-I R&M Programme for 34 thermal power
stations in the country was launched by the CEA as a Centrally sponsored
scheme. Since then R&M option has been effectively utilised over the
various plan periods. As per the National Perspective Plan of CEA, under
12th Plan, LE works have been identified on 70 thermal units of total
capacity 12,066 MW and R&M works have been identified on 65 units
(17,301 MW) during the 12th Plan.
1.3 Planning and implementing R&M projects is often witnessed by occurrence
of adverse events that can derail the objectives of the project. Identifying
and mitigating project risks are crucial steps in managing successful R&M
projects. Thus, a well structured and documented Risk Management at
each stage of the process is of utmost importance. Mitigation of the
identified risks can significantly alter the risk profile of the R&M projects
making them an attractive proposition for all stakeholders in the sector.
1.4 With the above background, the objective of the guidelines is to provide
direction to the utilities in identifying and addressing the key risks faced in
design and implementation of R&M in the country.
2. Concept of R&M and Life Extension Programme for Coal Fired

2.1 Renovation and Modernisation Programme
operating units well equipped with modified / augmented latest
technology equipment /components/ systems with a view to improving
their performance in terms of output, reliability and availability to the
original design values, reduction in maintenance requirements, ease of
maintenance and enhanced efficiency.
maintenance/overhaul which form a part of Operation and Maintenance
(O&M) activity. Middle life R&M come up preferably after 1,00,000 hrs of
operation.
- Generic defects
- Design deficiencies /modifications
- Avoidance of inefficient operation
- Non-availability of spares because of obsolescence of
- Poor quality of coal
- Major replacements of equipment arising due to unforeseen
failures and /or generation sustenance not covered under
regular O&M
- Stringent environmental regulation
- Safety requirements etc.
2.2 R&M Programme With Life Extension (LE) & Uprating
temperatures such as turbine rotor and casings, HP piping, boiler headers,
boiler drum, main steam piping and valves, feed discharge lines etc. are
designed for a given fatigue life of about 25-30 years of operation.
However, many equipment/components might become prematurely weak
metallurgically due to various operational stresses like frequent
temperature and pressure excursions, full load tripping, frequent start and
stops etc. and accordingly there is need to check the remaining life of
these components after 20 years of life or 1,60,000 hours of operation
lest it may result into serious failures. A systematic study called the
Residual Life Assessment (RLA) involving non-destructive and destructive
tests help reveal the remaining life of various critical components of plants
and equipment to enable introducing measures to extend the life of the
plant by a further period of about 15-20 years. A RLA study may be
carried out earlier, say after 15 years or 1, 00,000 hrs. of operation if the
plant condition so necessitates and as stipulated in IBR 391 A.
The LE programme is a major event in the thermal power stations
history, as it envisages extension of life over a considerable period of time
beyond its designed life. At this time it is a good practice to examine
whether a plant requires a viable modernization which has not been
carried out earlier so that during the extended life the plant operates
efficiently and delivers the rated or higher capacity with improved heat
rate. Adoption of improved and proven technology can play an important
role in plant upgraded output & higher efficiency. There are cost effective
options to up-rate the machines for higher output and improved
efficiencies thus making it economically viable to integrate life extension
programme with uprating.
2.3 Works Not Relating to R&M / LE
capital maintenance do not fall under the purview of R&M Programme.
The repetitive nature of activities having the frequency once in five year
or less is covered under O&M. The following works should not be included
as a part of R&M / LE programme:

- Infrastructural development work such as township, welfare
measures etc., general civil works within the plant such as
boundary wall, roads, drainages etc. However, technological
structure works required for equipments / structure based on
RLA done as per design criteria (such as turbine deck,
foundation etc.) shall be part of LE.
- Procurement of spare equipments.
- Routine repairs/replacements during annual/capital overhauls.
O&M charges recovered through tariff for sale of electricity as notified by
the regulatory commission(s). O&M ought to be attended on a regular
basis lest the condition of the unit should deteriorate to such an extent
resulting in major breakdowns requiring huge expenditure.
3. Intent of the Guidelines for Risk Identification and Mitigation

Measures in R&M
3.1 The intent of these guidelines is to identify risks constraining the large
scale implementation of renovation and modernization programme of coal
based thermal power plants in the country. A holistic assessment of the
risks has been undertaken by identifying risks occurring in different stages
of R&M cycle i.e. in identification, assessment, planning, execution and
closure stage and by understanding their root causes and impact.
3.2 Various strategies have been suggested to effectively handle the risk
comprising strategies for risk mitigation, risk avoidance, risk sharing and
risk acceptance.
4. Stages of R&M Process Cycle

Various stages of the R&M process and the activities that are undertaken
at each stage are described below.
4.1 Identification Stage
diagnosed further based on certain symptoms. At this stage the plant
operators regularly monitor the key plant unit parameters covering at
least the following aspects to identify symptoms that may necessitate
R&M of the units: (a) Plant Availability, (b) Plant Load Factor, (c) Auxiliary
Consumption, (d) Emission Factors, (e) Level of Outages, (f) Life of the
plant etc., (g) Frequency of annual overhaul; (h) Frequency of capital
overhaul etc. The diagnosis at this stage is based on available plant
records and design data. No inspections and/or testing of material, plant
or equipment is involved at this stage.
4.2 Assessment Stage
During this stage systematic evaluation of the plant is undertaken through
technical studies and tests. This includes the following:- (a) Residual Life
Assessment (b) Complete Condition Assessment (c) Performance
Evaluation Test (d) Energy Audit (e) Past History of Plant (including
maintenance schedules, overhauls and assessment of O&M practices). The
technical evaluation of the plant is followed by the economic evaluation of
the plant to decide on the most optimal option. This includes (a) Plant
retirement (b) Maintain and operate for extended time and retire
subsequently (c) Capital Overhaul and refurbishment (d) R&M and Life
Extension (e) R&M, LE and Up-rating. Detailed Project Report prepared for
assessment of above options also includes a detailed technical and
economic analysis of the identified option. This also includes assessment
of the sources of fund and the phasing required for execution of R&M
option. Based on the technical studies and the option selected for R&M,
the scope of R&M Project is prepared. Before the tenderization process
begins, utility is expected to submit the details of the assessment to the
Appropriate Commission and seek its in-principle approval.
4.3 Planning Stage
specification and proposal package and determines the
procurement/bidding strategy. Planning stage covers the entire bid
process management i.e. issue of tender(s), pre bid meetings, evaluation
of technical and commercial bids, selection of suitable bidder, negotiation
of contracts and award of R&M contracts to vendors/suppliers/OEMs.
4.4 Execution Stage
This stage covers the entire R&M project implementation stage which
begins with the receipt of equipments to the site and planning of
shutdown of unit. This stage includes effective monitoring of work, timely
decision making on bottlenecks faced, ensuring the quality of work,
inspection of material and smooth implementation of work.
Implementation support consultant hired by the utility plays a key role in
managing all the activities covered under this stage through a structured
process.
4.5 Closure Stage
After the R&M work is completed, it is very essential to evaluate whether
the goals and objectives of the R&M project were achieved or not. For this
post-R&M Performance Guarantee Test is conducted. Further, O&M
training is imparted to engineers for efficient operation of the unit that
has undergone R&M.
4.6 The indicative timeframe suggested by CEA in the National Perspective
Plan for Renovation, Modernisation and Life Extension of Thermal Power
Stations(Upto 2016-17) may be adopted for implementing LE&U schemes:
i. Appointment of consultant by utilities - 3 months
ii. RLA / Energy Audit - 6 months
iii. Freezing the scope of work/activities
for LE&U - 3 to 4 month
iv. Preparation of DPR - 6 to 8 months
v. Placement of order of LE&U - 6 to 8 months

vi. Supply of critical spares - 16 to 20 months from
placement of order
vii. Shut down of unit - 6 - 8 months.
5. Risk Identification and Management Strategies

The risks identified across identification stage of R&M process cycle and
the strategies to handle the identified risk are presented below:
5.1.1. Reactive approach to Identification of Plant for R&M (Management

Risk)
a) Risk Description
This risk arises due to delay in timely decision for R&M works. Ideally
decision to undertake comprehensive R&M should be based on the
diagnosis of the early warning symptoms. This includes diagnosis of the
reasons for deterioration in plant performance parameters such as Plant
Availability, Station Heat Rate (SHR), Auxiliary Consumption etc. and the
ageing analysis of the unit and critical components i.e. the number of
remaining years left before the plant completes its economic/designed life
of operation.
b) Root Cause Analysis
This risk can be attributed to the weak monitoring processes at the plant
and institutional level. In several cases the decision to undertake R&M is
taken either when the plant is already shutdown or the performance of
the unit has significantly deteriorated or the plant has outlived its
economic/useful life.
c) Impact of Risk
This risk leads to continued deterioration in the condition of the plant and
its performance. Higher is the delay in the decision to undertake R&M,
more adverse is the impact on the performance of the plant which
ultimately leads to longer time and higher cost for undertaking R&M of the
plant.
d) Strategy to Manage the Risk
Strengthening of internal data acquisition, monitoring and alert
systems to track unit performance (Risk Avoidance)
Some of the critical actions in this regard involve:
i. Adherence to the annual maintenance/overhaul schedule and
capital overhaul schedules. This should also be accompanied by
updating the maintenance log recording the history of such
overhauls, key issues faced and resolutions implemented.
ii. Regular collection of unit level data pertaining to key
performance parameters such as Load Factor, Availability,
Turbine Heat Rate, Secondary Fuel Oil Consumption, Auxiliary
Consumption, Emissions (Sox, NOx etc.); reliability and condition

of individual components; and flagging of warning signals in the
management reports.
iii. Identification of the components/factors causing forced outages
along with reasons for such failures
For this, input from O&M department is critical and recording of routine
data such as material properties, geometries, crack sizing, hardness,
operational parameters etc. during operation, annual/ capital
maintenance, will be useful for undertaking technical studies/R&M in
future.
5.1.2. Lack of Long Term Generation Plan and Awareness of Available

Market Options (Management Risk)
a) Risk Description
Key priorities of the state in the context of energy sector are: (i) to
provide adequate and affordable power to the consumers; (ii) be energy
secure and environmentally benign; and (iii) ensure financially sustainable
utilities. The states and the power utilities in the country must have long-
term plan (Optimal Generation Plan) for achieving the above mentioned
goals. The decisions related to R&M must be a consequence of this long-
term plan.
The risk arises when decisions related to R&M are taken up in isolation
without considering other available options.
The root causes for the above behaviour are as follows:
i. Lack of power sector vision at the state level and vision at the
utility level
ii. Conventional focus on augmentation of new supply as a means
to meet the increasing power demand
iii. Lack of awareness of possible market options
c) Impact of Risk
The risk results in sub-optimal investment decisions. In addition, this risk
directly impacts the long term sustainability of the plant affecting its
performance and availability. As a consequence, this also affects the
financial performance of the generating company.
The rationale for R&M of a project should be established at the
state level taking into account all the alternative competing
options. (Risk Avoidance)
R&M decision should take into account all the available market options
including new power plants (at same site or at a different location),
procurement of power through medium and long-term Case I bids,
availability of supply from renewable energy sources, purchase from open
market etc. This should form the basis of the decision i.e. whether to: (i)
Retire; (ii) Maintain and Operate for few years and eventually retire; (iii)
Capital Overhauling and Refurbishment; (iv) R&M and Life Extension; and
(v) R&M, LE and Uprating.
The final decision of R&M should also be considered in consultation with
the Discoms, wherein the refurbished plant should fit with the Discoms
long-term power procurement plan and merit order schedule.
5.1.3. Lack of Confidence and Uncertainty with Regard to R&M Projects

(Market Risk)
a) Risk Description
Due to limited experience sharing and success stories in India, a number
of generating companies are uncertain about the outcomes of the R&M.
Hence, appreciation of benefits associated with R&M is limited. This leads
to a risk wherein the utility may not consider R&M as an option, even
though it makes economic sense.
The root causes include:
i. Limited experience of R&M related to larger size plants
especially 210 MW and above. This is critical as going forward
500 MW fleet shall also require R&M.
ii. In certain cases, post R&M performance of the plants has not
been in line with that envisaged at the planning stage leading to
the negative outlook of the utility towards R&M.
iii. Limited dissemination of successful cases.
iv. Success of R&M has been limited in case of earlier installed 120
MW sets in the country due to their inherent design problems.
c) Impact of Risk
This risk either results in delay or discarding of R&M as an option even
when it would have made economic sense. This also adversely impacts
the R&M market in the country.
i. Need for Experience Sharing (Risk Mitigation)
The generating companies and other stakeholders should
disseminate their experience of implementing R&M. This besides
being hosted on their respective websites should also be
disseminated through a common platform such as the CEA
official website. Utilities should submit case studies to CEA upon
completion of R&M projects highlighting their experience and
key learning in implementing R&M projects which CEA may host
on their websites after review.
ii. Need to Develop Market for R&M in the Country (Risk
Avoidance)
The CEA needs to facilitate development of R&M market in the

country through appropriate signals. This includes:
- Communicating the overall R&M market size to various
stakeholders. This will promote vendor development and
interest in the R&M market from India and outside.
- Initiate measure to address concerns of the stakeholders
including bidders/suppliers and technical consultants.
CEA has already initiated the above study with support from the
World Bank. The result of these will be available during 2013-14.

The risks identified across assessment stage of R&M process cycle and
5.2.1. Delay in obtaining Unit Shut down for Undertaking Technical

Studies (Institutional Risk)
a) Risk Description
Robust baseline assessment through technical studies is the foundation
for the success of R&M project. In order to carry out comprehensive
assessment of the remnant life and condition of the plant, various
standardised tests are required to be performed (destructive and non-
destructive) involving a shutdown of approximately 2 to 3 months.
This risk arises if the utility is unable to obtain requisite approvals from
the relevant authorities (State Government or Regulatory Commission) for
shutdown of the plant for carrying out such studies.
shutdown of state owned units especially for carrying out such studies.
c) Impact of Risk
i. Delay in initializing the R&M activity, causing further
deterioration in the plant condition and performance
ii. Shorter shutdown period results in inadequate assessment of
the condition of the plant and residual life of various
components derailing/impacting the entire R&M project.
i. Advance Planning for Scheduling of Technical Studies
(Risk Avoidance)
The following steps are required at the plant level:
- Efforts should be made to coincide the time period of
technical studies with that of annual
maintenance/overhauling of the unit. Thereby, a separate
shutdown may not be required for carrying out technical

studies.
- In case a separate shutdown is required, it must be planned
well in advance and distribution utilities must be informed
accordingly. This would provide sufficient time to the
distribution utility for arranging for additional power to meet
the shortfall on account of the above. In addition current
power market provides several avenues for procurement of
power in the short and medium term, which should be
considered.
- Further, efforts should be made to plan such studies during
off-peak demand months when the stress on the generating
systems is low. This however, should be considered in view
of the market conditions. As in certain cases it is noticed that
when multiple plants undergo R&M during off-peak periods,
the stress on the suppliers increases resulting in delays.
Hence, availability of the vendors should be assessed before
actual commencement.
ii. Additional Allocation of Power to States from
Unallocated Quota of Central Pool for carrying out the
studies (Risk Avoidance)
In order to obviate this risk the following is required:
As per clause 6.2 (ix) of the MoP Guidelines for R&M in National
Perspective Plan for Renovation and Modernisation and Life
Extension of Thermal Power Stations (upto 2016-17), the
5.2.2. Inadequate Technical Assessment/Studies (Technical Risk)

a) Risk Description
This risk arises on account of the following:
i. Requisite studies or tests not performed
ii. Assessment undertaken only for major components of the plant
iii. Proxy Assessment in case of multiple units, wherein studies are
undertaken only for one unit to finalise scope of other units
The root causes for the above are:
i. Studies undertaken only for the major components of the plant-
It is observed that in many cases RLA/CA study is undertaken
for boiler and turbine but no detailed study is undertaken to
diagnose critical areas in BoP and auxiliaries. Further, studies
such as energy audit may not be undertaken at all.
ii. Due to lack of past operating and performance data with the
utility, it may difficult to identify improvement areas for certain
components in the unit/machine as every component cannot be
tested.
iii. Utilities may also not be keen to undertake detailed assessment
as they generally underestimate the importance of data or in
interest of time these studies may be omitted.
iv. Scope of work prepared for carrying out technical studies may
be weakly defined especially for critical plant components
operating in creep and fatigue range. Further, deliverables
based on such technical studies are not defined appropriately by
the utilities
v. In case of multiple units, it is sometime assumed that since both
units are operating under same condition, assessment of any
one of the units would suffice the purpose. This is often done to
save time and cost during the initial stages
c) Impact of Risk
The impact of this risk is reflected in the form of surprises or additional
scope of work at the project execution stage leading to increase in cost
and time of the project.
Comprehensive Studies for the unit planned for R&M should be
mandatory. The scope of the study should cover both the Main
Plant Equipment as well as the Balance of Plant. (Risk Avoidance)
A comprehensive R&M assessment should aim to undertake the following
for each unit being considered for R&M or LE: (i) Data Gathering; (ii) Plant
Walk-down; (iii) Energy Audit; (iv) Pre-R&M Performance Testing; (v)
Residual Life Assessment; (vi) Steam Path Audit; (v) Stress Analysis of
Critical Piping; (vi) Potentially Non-destructive and Destructive
Evaluation; and (vii) Review of O&M Practices.
Additionally, diagnostic studies should also review the procedures, training
system and other similar aspects.
Further, in order, to minimize the impact of this risk it is advisable to
undertake comprehensive R&M assessment for each unit planned for R&M,
and review both the main plant equipment and the BoPs. Also, it is
suggested that project financiers should consider submission of the
reports/results of such studies as a pre-requisite for funding the project.
In this regard CEA has prepared standard documents for carrying out
RLA/CA/EA studies which may be used by the utilities.
5.2.3. Weak Analytical Framework for Selection of R&M Options

(Management Risk)
a) Risk Description
This risk arises if the utility is not able to identify and/or evaluate different
options and select the best possible option depending upon the conditions
of the plant, financial constraints, etc.
The root causes of the above behaviour are:
i. Poorly defined objectives for undertaking R&M
ii. Focus only on the technical criteria, with limited focus on
financial and economic returns
iii. Limited project appraisal skills
c) Impact of Risk
The above risk leads to selection of sub-optimal option that may result in
unmet objectives and outcomes, and/or higher time and cost.
Comprehensive Identification and Assessment of Options including
computation of financial returns, payback period, shutdown time
required and conformance to the set objectives (Risk Avoidance)
A detailed cost benefit analysis by estimating the net present value (NPV),
rate of return (IRR), payback period and cost-benefit ratio, should be
undertaken by the utility for different options. Analysis should also include
the impact on key parameters such as life, PLF, heat rate, efficiency etc.
Further, the robustness of the selected option should be tested through
scenarios such as time and cost over-run, shortfall in capacity, change in
shut-down, heat rate or a combination of adverse factors. The justification
of the R&M project needs to be established clearly demonstrating that the
R&M project is competitive against all feasible power generation supply
options.
5.2.4. Appropriate Commission not apprised of the R&M Project Plan

(Regulatory Risk)
a) Risk Description
The risk arises when the Appropriate Commission is not apprised about
the R&M project.
This risk can be attributed to complacency resulting in oversight or lack of
awareness of regulatory requirement.
c) Impact of Risk
The impact of this risk would be that the generating company may not be
able to recover the investment or the cost it incurs on undertaking R&M of
the plant.
Practice of obtaining in-principle approval from the Appropriate
Commission should be encouraged (Risk Avoidance)
Review of the tariff regulations notified by various states indicate that in-
principle approval of R&M investment is not a mandatory requirement;
however experience suggests that it is a desirable practice that helps

avoid controllable risks at a later stage.
5.2.5. Limited Capacity of Utilities in Undertaking R&M works

(Operational Risk)
a) Risk Description
The risk arises due to the limited skills and expertise of the generating
company to plan and implement R&M. In addition, absence of dedicated
cell/department at the company level also contributes to the risk.
The risk arises on account of the following:
i. Limited training of utility professionals in the area of planning
and execution of R&M projects
ii. Inadequate exposure of the utility staff to Indian and outside
R&M experience
iii. Adequate personnel not dedicated to the R&M activity. It is
often seen that most of the available manpower is dedicated to
the already ongoing and large new capacity augmentation
programs.
iv. People working in R&M project get transferred to other
departments in the middle of the project.
c) Impact of Risk
Every stage of the R&M process cycle is impacted leading poor execution
of project.
Creation of dedicated R&M Cell and Engaging Specialised
Consultants (Risk Avoidance)
In order to effectively deliver a successful R&M project, the following
steps are required:
i. Creation of dedicated R&M cell by the utility at the
headquarter and the plant level
In order to effectively deliver on the R&M project it is
important to create a separate R&M cell with adequate and
dedicated manpower for the project. This team should involve
a mix of plant level officials dealing with the different plant
level departments like Boiler, Turbine, Electrical, C&I, CHP,
Milling system and AHP etc.
Further, officials having prior R&M experience should also be
included in the team. To ensure timely decisions and approvals
within the organization it is important that this team is formed
at both headquarter and plant level.
ii. Engaging of design and implementation support
consultants
Specialized agencies should be engaged by the utility (on the

basis of competitive bidding) covering assistance on all works
from design to implementation. This could be either one
agency or multiple agencies.
iii. Avoidance of transfer of personnel involved in R&M
Project in the middle of R&M work
Abrupt transfers of personnel in an ongoing R&M project
create unnecessary distress and slow down the progress till
the new personnel gets acquainted with the project. It is
imperative to involve people selected for R&M Cell to work
from the beginning to end of the project so that timely
decisions can be taken.
5.2.6. Weakly Defined Scope of Work (Contractual Risk)

a) Risk Description
This risk arises if the scope of work is broad and does not clearly define
the role and responsibility of different stakeholders including the works to
be performed by each party.
Further, if the scope of work or design specifications is prepared in a way
to favour a particular supplier or include propriety items.
The risk arises due to the lack of proper and detailed assessment of the
requirement of works at the start of the project by carrying out limited
technical studies.
c) Impact of Risk
Lack of clarity in the roles and responsibilities of the involved parties in
the scope of work leads to contractual disputes causing delay in project
execution.
Scope of Work to be as precise and comprehensive as possible
(Risk Mitigation)
In order to mitigate this risk a multi-pronged approach is required which
is explained below:-
i. Role of Design Consultants- Besides their role in undertaking
the technical studies, it is required that design consultants
should also be involved in preparing the final scope of work for
the study.
ii. Involvement of plant level officials- It is required that
officials/engineers involved in the operation and maintenance
of the plant should be involved while finalizing the scope of
work as they have deeper knowledge of the condition of the
plant.
iii. Involvement of engineering team-Engineering team of the
utility should also be involved while finalizing the scope of

works.
iv. Discussions with vendor/s- Suppliers (especially the original
equipment suppliers) should be consulted in the early planning
process to understand the viability of options for R&M
envisaged including new technologies which can be used.
However, it is required that scope should not be biased
towards any one or more supplier. Further, in case of bidding,
the bid clarification stage would provide the opportunity to
bidders to flag biases if any and would help in strengthening of
the scope of works. In case of nomination basis, direct
discussion with the vendor can provide inputs in finalization of
scope.
v. Avoid proprietary items in the scope of work- While preparing
specifications for different components efforts should be made
to avoid proprietary items.
Involvement of multiple agencies as suggested above and conducting
comprehensive R&M studies are vital components for preparation of best
possible specifications of the project.
5.2.7. Utility Unable to Mobilise Funds (Funding Risk)

a) Risk Description
This risk arises when the utility is unable to arrange adequate funding for
undertaking R&M of the project or faces constraints in raising funds for
the project.
The risk arises due to the poor financial condition of state utilities that
makes it difficult to obtain financing especially from commercial sources.
Further, due to declining profitability, it is difficult for state utilities to
even arrange equity funds from their internal reserves.
c) Impact of Risk
The overall impact is that utility is unable to materialize its plan for
undertaking R&M. The consequent delay on account of the above results
in further deterioration in the plant performance.
Use of innovative financing approaches/models (Risk Mitigation)
In order to attract public or private investment for R&M projects different
financing models should be taken up by the state utilities. These include:
i. Lease, rehabilitate, operate and transfer (LROT):- Under this
option, the private promoter (PP) would take over the power
station on a long -term lease, say 10 years or more wherein
PP would invest and carry out the R&M of the power station
and would also take over its operation and maintenance.
However, legal title and ownership of the plant remain with the
utility. After the completion of the contracted lease period,

either the lease may be renewed or the station may be
transferred to the power utility.
ii. Joint Venture between Power utility and public or private
company: -In this option, a new company would be formed as
a joint venture (JV) of the state power utility/ State
Government and selected private/public collaborator. The JV
Company would then undertake the R&M/ LE works and also
own, operate and maintain the power station. The private
collaborator could also be an equipment supplier. Each partner
shall hold minimum 26% equity in the JV Company.
5.3. Planning Stage

The risks identified across planning stage of R&M process cycle and
5.3.1. Low Level of Participation by the Vendors in the Bidding Process

(Market Risk)
a) Risk Description
This risk arises when the utility adopts the bidding process for selection of
vendors and receives a poor response to its bid(s).
The risk occurs due to the following reasons:-
i. Limited firms involved in the R&M market as most of the
domestic and foreign companies have focused on new capacity
addition in comparison to R&M projects.
ii. Limited new vendor development initiatives -
Insufficient/inadequate market signals to the prospective
vendors. Most of the utilities in the past have preferred to
execute R&M projects on nomination basis.
iii. Stringent qualification requirements and guarantees impending
larger participation.
iv. Prohibitive contractual conditions.
c) Impact of Risk
The utility is forced to select vendor from the limited pool of options
available. The risk has a broader market impact in terms of the
development of competitive R&M market in the country.
Focussed efforts should be taken up to involve potential players in
the R&M market by the utilities and the CEA (Risk Mitigation)
The following interventions should be taken up:
i. Qualification requirements in the tender documents should be
designed in a manner that encourages participation of players
including the new players. These should not be overly

stringent.
ii. The level of guarantees should not be excessive and should be
based on fair balance between risk and rewards.
iii. Pre-bid meetings and two stage bidding process can be
adopted by the utility to address the concerns of the suppliers
prior to submission of price bid.
iv. Utilities should make efforts to reach out to the potential
vendors and disseminate information about the bid.
v. In this regard CEA has prepared standard bid documents
which may be used by the utilities.
5.3.2. Higher than Expected Price Discovery (Market Risk)

a) Risk Description
This risk arises if the price discovered through competitive process or
through nomination basis is significantly higher in comparison to that
envisaged during the Planning Stage.
The risk arises due to the following factors:-
i. Lower vendor participation or selection of vendor through
nomination basis, lead to limited bargaining power of the
utility resulting in high procurement cost
ii. Unrealistic assessment of cost of various components not
undertaken at the DPR stage.
iii. Weakly defined scope of work and uneven sharing of risks
between the utility and vendor.
iv. Stringent performance guarantees imposed/expected from the
vendors ultimately leads to high prices for the project.
v. Pre-R&M condition of the equipment is not well-established.
Usually, the information provided is not enough to determine
clearly the design of the equipment and its performance, and
its operating history.
vi. Time gap between the technical studies and commencement of
actual implementation, as the units do not get maintenance
priority in the interim resulting in deterioration in plant
performance.
vii. Lack of drawings and historical data of the plant discourages
vendors and/or increases their risk perception towards the
proposed R&M of the unit/plant as they are not able to
sufficiently familiarize with the condition of plant before
bidding.
c) Impact of Risk
The impact of the above risk results in the following:
i. Compromises on the scope of work - In order to reduce the

price discovered the earlier set scope of work may be reduced.
This includes dropping uprating option, or dropping of up-
gradation of BoP or other similar measures.
ii. Re-evaluation of option In view of the high price discovery,
the utility may re-evaluate the options and may drop R&M of
the plant.
Adequate flexibilities in the contract should be provided to
accommodate reasonable/acceptable changes (Risk Mitigation)
In order to mitigate this risk following steps are required:-
i. Discussions with Vendor/s- Suppliers should be consulted
during the preparation of DPR (and cost estimates) to
understand the viability of options for R&M envisaged
including new technologies which can be used and to
understand the market prices of various components.
ii. Proper Communication with the Vendors- This is the most
important step as this would enable the vendor to realistically
evaluate its cost and benefit and associated risks involved in
the project. This includes the following:
- Provision of previous year data pertaining to plant
performance, results of technical studies etc. to the
prospective vendors along with the bidding documents.
- Suppliers interested in bidding for the project should be
encouraged to undertake plant visits to understand or
review the site conditions.
- Conduct of pre-bid meetings and two stage bidding process
can be adopted to address the concerns of the suppliers
prior to submission of price bid.
iii. While preparing DPR of the project some contingency should
be provided for price discovery and scenario analysis should
be undertaken to understand the maximum price increase
that can be allowed so that the identified/selected option
remain the best possible option. If the price discovered is
such that it makes the option unviable, utility should try to
select the second best possible option. Thus, at this stage,
the decision to go ahead for R&M should be re-evaluated and
considered in the light of proposed changes.
iv. Utility may also decide for rebidding (although it has its own
risks) the project with suitable modifications i.e. change in
qualification criteria to increase participation, change in the
selected R&M option etc. However, efforts should be made for
suitable negotiations with the lowest bidder before resorting
to such option.
v. Striking a right balance between the performance guarantees

and penalties- There should be adequate sharing of risks
between the utility and the supplier, shifting additional risk
(beyond what the supplier has direct control on) only
increases the overall price of the contract.
5.3.3. Rebidding/Re-award/Delay in Award of R&M Packages/Contract

(Market and Operational Risk)
a) Risk Description
This risk arises if the utility consumes significant time in awarding the
contract or has to rebid any of its contract or packages.
The risk arises due to the following factors:
i. Qualification requirements, specifications desired or scope of
work etc. are not clearly specified or utility has been
constantly reassessing its options and changing the scope.
ii. Bid responses are in a manner wherein comparison of different
bids is not possible.
iii. Discovery of higher than expected prices and subsequent
modification in scope, qualification requirement etc.
iv. Supplier issues - Delay in start of work or non-availability of
manpower or dispute among sub-contractors.
c) Impact of Risk
This risk leads to significant delay in execution of project, cost overruns
and risk of change in baseline parameters.
i. Rebidding should ideally be avoided through robust project
preparation, however in cases where it still emerges as the
only option, potential bidders should be encouraged to
assess the current plant condition and assume the
responsibility of the task. (Risk Acceptance)
Further, the following should be considered:
- The specialized design and implementation support consultants
should be accountable and responsible for clearly examining
the qualification requirements, scope of work etc, and must
flag these issues at the start to avoid such situations.
- Pre-bid meetings and two stage bidding process can be
adopted by the utility to address concerns of the suppliers and
incorporating their suggestions to improve specifications.
- Requisite safeguards should be adequately provided for in the
contract through bank guarantees and liquidated damages.
- Potential conditions that may lead to rebidding/re-award
should be comprehensively assessed and incorporated in the
next bidding round. In cases where work has been partially

performed (by the earlier selected bidder), the information
should be shared with potential bidders so that they assume
the responsibility of the work. In such cases, the potential
bidders should also be encouraged to visit the site for
undertaking their own assessment.
ii. Management should undertake timely decision for award of
contract by formulating qualification requirements and
evaluation procedures along with appropriate timelines
before seeking interest from the vendor (Risk Avoidance)
To avoid such situations, it is required that qualification
requirements and evaluation procedures along with appropriate
timelines should be clearly formulated before seeking interest
from the vendor. Role of design consultant in clearly specifying
such requirements becomes essential. Further, ISC should
facilitate timely decision by providing advice with regard to
evaluation and selection of successful bidder to enable decision
making at the utilitys end.
5.3.4. Implementation Contract Awarded to Vendor involved in carrying

out Technical Studies (Management Risk)
a) Risk Description
This risk arises if the same entity is involved in formulation of technical
specifications/scope of work and execution of R&M project.
The Original Equipment Manufacturer (OEM) is generally the first point of
contact in case of any R&M based requirement on account of various
reasons availability of engineering drawings and familiarity with the
plant.
c) Impact of Risk
Lack of independent assessment and presence of potential conflict of
interest may not lead to the best possible outcome for the utility.
A single entity should generally be avoided to assume both the
role of design consultant as well as the supplier. (Risk Avoidance)
Independent assessment through specialized agencies to develop the
technical specifications and the scope of work should be mandatory.
Further potential conflict of interest wherever possible should be avoided.

The risks identified across execution stage of R&M process cycle and
5.4.1. Weak Decision-Making Framework (Management Risk)

a) Risk Description
This risk arises if there is significant delay in undertaking decisions to
resolve issues faced during the execution of the work.
i. Lack of planning and ownership of the R&M project by the
utility officials due to frequent change in the officials handling
R&M works, lack of technical and professional management
skills to address the issue/situation, lack of accountability
structure etc.
ii. Lack of authority of the officials involved.
c) Impact of Risk
This leads to contractual disputes and delay in execution of the work.
Creation of clearly defined decision making and reporting
structures with nominated officials authorized to undertake
decisions (Risk Mitigation)
Decision making and reporting structure should be clearly specified. This
should include roles, responsibility and authority to various officials
involved in R&M.
Further, contract review meetings to assess the progress and deviations if
any from the schedule of work should be held weekly.
Here in the role of Implementation Support Consultant is of utmost
important as it is required to facilitate smooth coordination and timely
action for resolving of pending issues.
Alongside, empowered team of both the utility and the suppliers should be
nominated to ensure timely resolution of disputes and issues, as and
when they arise.
5.4.2. Occurrence of Technical Surprises (Technical Risk)

a) Risk Description
A thermal power plant undergoing R&M, despite undertaking
comprehensive prior plant assessment might face unforeseen events once
the unit is shut down and opened up for R&M. Such unforeseen events
are called Technical Surprises. As the units are very old or nearing the
useful life of operation, such technical surprises are quite common. The
utility due to such surprises is faced with unexpected change or
unforeseen additions in the scope of work leading to cost and time
overruns. In order to address this risk it is suggested that CEA guidelines
for Early Identification of Potential Technical Surprises in R&M Projects
and Ways of Addressing Them may be referred.

i. Inadequate assessment and weak scope of work.
ii. Huge time lag between the technical studies and actual award
of contract.
iii. Refurbishment of old equipment or spares may not be possible
due to technological obsolescence.
iv. Identification of additional scope of work at the execution
stage not in the nature of surprise but required for better
operation of plant at the later stage
v. Due to nature of R&M that certain surprises are encountered
when the machine is actually opened.
c) Impact of Risk
The above risk results in the following:
i. Scope deviation: Additional scope of work to be addressed
ii. Contractual disputes due to weakly defined scope of works,
and non-agreement between the utility and vendor
iii. Situation of indecisiveness due to inflexible contracts making it
difficult for any alteration at the execution stage
iv. Delay in execution of work and increase in cost of the project.
i. Undertaking comprehensive assessment through
technical studies with clearly defined scope of work (Risk
Mitigation)
Effective assessment at the start of the project is the key to
minimise technical surprises. The nature and occurrence of
technical surprises depend upon the depth with which technical
studies are undertaken. In order to minimize technical surprises,
the foremost step is to undertake comprehensive assessment of
both main plant equipment and the BoP through studies for
each unit planned for R&M. Based on the studies, efforts should
be made to define the scope as clear and comprehensive as
possible along with the roles and responsibilities of each
stakeholder.
ii. Creation of technical surprise plan (Risk Acceptance)
A well-defined technical surprise plan should be prepared for
effectively handling technical surprises, as and when they occur.
The design consultant involved in undertaking comprehensive
assessment, DPR and subsequent scope of work should also
prepare a technical surprise plan. This is required as
replacement/repair of some components may come up at the
time of execution as everything cannot be analysed / tested
during the studies. This should be prepared in consultation with
the plant level officials involved in operation, repair and
maintenance of the plant to understand the potential surprises
as they have the experience of the actual condition of the plant.

This includes a list of possible surprises, ensuring availability of
spare parts to minimize delays, addressing upfront the likely
contractual aspects of additional supplies and works etc.
Further, this should also include the unit rates for
equipment/parts and total financial implications of the same. In
this regard CEA has prepared standard documents for Detailed
Project Report which may be considered by the utilities.
iii. Establishing a clear decision making framework (Risk
Mitigation)
After the occurrence of technical surprises the indecisiveness of
the utility can result in significant delay in the execution of
work. It is important to specify the decision making process with
clearly defined roles and responsibilities along with authority of
different officials to enable timely resolution of the issues
encountered.
5.4.3. Weak Dispute Resolution Mechanism constraining the Execution of

Work (Contractual Risk)
a) Risk Description
This risk arises due to occurrence of disputes including contractual
disputes that affect the execution of work.
i. Misinterpretation of the scope of work by either party i.e.
utility or supplier.
ii. Delay by supplier or claim of compensation by the supplier for
any additional work outside the scope of work.
iii. Delay in decision making by the utility or delay in providing
shutdown of the plant.
c) Impact of Risk
The risk impact the harmony in work and results in halting or delay of the
work.
Creation of Dispute Resolution Committee at the start of project to
address disputes between the Utility and the Contractor in a
timely manner (Risk Mitigation)
In order to resolve disputes between the contractor, sub-contractor and
utility, it is important to create a Dispute Resolution Mechanism. Under
this mechanism a Dispute Resolution Committee (DRC) should be formed
at the start of the project with fair participation from both utility and
contractor. The institutional set up, powers and roles along with the time
schedule (within which case can be referred from the occurrence of the
dispute, hearing of the dispute and the final decision) of the DRC should
be specified in the tender document itself. Any dispute which cannot be
amicably settled between the parties can be referred to the DRC.
5.4.4. Mismatch (or delay) in Supply of Critical Equipment and the

Shutdown Period (Market Risk)
a) Risk Description
This risk arises when there is delay in supply of key components and
equipments by the supplier and delivery schedule of the equipments is not
in sync with the shutdown period of the plant.
i. One of the major issues faced by the suppliers is the difficulty
in procurement of sub-vendor items. This difficultly stems from
the following: (a) non-existence of original vendors for such
items; (b) non-availability of original equipment details,
specifications etc.; (c) obsolete design and (d) inadequate
information available about modification done/spares used
earlier. This leads to delay in supply of material on a timely
basis.
ii. Non-performance or underperformance on part of the vendor
due to its overbooked manufacturing capacity
iii. Technological obsolescence may require customized
manufacturing for certain components leading to delay in
supply of components
iv. In-adequate planning on part of the utility
c) Impact of Risk
The risk results in delay in implementation of project and hence longer
shutdown period.
i. Availability of key components should be ensured before
the start of the project and should be in accordance
with the pre-defined plan finalized before the
commencement of work (Risk Mitigation)
The planning for pre-shutdown activities should be done
meticulously. Availability of key components along with the
sequential delivery of the components should be ensured
before start of implementation/before shutdown is provided.
Further, delivery of materials should be linked to the shutdown
period of the plant.
ii. Provision of Penalties for delay in completion of work
(Risk Sharing/Transfer)
Adequate penalties should be built into the contracts for delay
in completion of works by the vendor

iii. Sequential delivery of materials to the R&M site (Risk
Mitigation)
Sequential delivery of materials should be agreed upon by
both the utility and vendor and built into the contract. In the
contract clauses, provision for non-acceptance and
disallowance of material to the project site if not delivered
sequentially should be included in order to avoid unnecessary
delay in R&M work.
5.4.5. Weak Supervision, Quality Control and Assurance (Operational

Risk)
a) Risk Description
This risk arises if material supplied or work performed by the vendor is of
substandard quality. This risk also arises due to the weak quality review
procedures of contractor to review quality delivered by the
subcontractors.
i. Lack of expertise in assessing the quality of material/service
supplied by the supplier
ii. Quality audits not performed by the utility at the suppliers site
iii. Lack of assessment of the vendors quality procedures with
regard to its sub-vendor
iv. Lack of appreciation on the necessity of formal quality control
and quality assurance procedures
c) Impact of Risk
Substandard equipment and installation service has a direct impact on the
long term performance and life of the plant.
Approval of detailed Quality Plans and Engaging Quality Control
and Quality Assurance Consultants by the Utility (Risk Mitigation)
The detailed Quality Plans for both manufacturing and field activities
should be submitted separately by the contractors to the utility for
approval before the start of the project. The approved quality plan should
then form as an integral part of the Contract document. The contractor
must submit the quality plan for the project including the Quality Plan
proposed for each sub-contracted item along with the procedures followed
by the contractor to finalize and assess the quality assurances of the sub-
contractors.
Implementation Support Consultants (ISC) or Independent Quality
Assurance Consultants (QAC) should be appointed to confirm that
implementation is as per the design requirements and that the
documented quality plans are being adhered to. Consultants would also
certify quality of materials and works before the payments are made as
per contractual milestones. The QAC would also be responsible for the
inspection of material quality at the workshop/facility of supplier.
5.4.6. Failure to Comply with Environmental Standards and Perceived

Negative Externalities (Socio-Environmental Risk)
a) Risk Description
The risk arises if the units undergoing R&M are not able to achieve the
target emission standards even if efficiency gains are achieved. Further,
the risk also arises if rehabilitation work is perceived to have adverse
environmental and social impact on the habitants in the project vicinity.
i. Inadequate environmental and social impact assessment by
the utility.
ii. Most of the units do not have requisite infrastructure for
environmental monitoring and some are unable to install/
replace existing Electrostatic Precipitators (ESPs) due to
paucity of funds or lack of space
iii. Environmental norms are increasingly becoming stringent.
c) Impact of Risk
i. Non- compliance of environmental regulations, which in turn
may lead to closure of the plant.
ii. Delayed execution/ or abandonment of R&M due to agitation
or demonstration from the community or civil societies.
i. Renovation of ESP system of the power plant (Risk
Mitigation)
In order to meet the statutory environmental regulations there
is a need to renovate ESP system of the power plant. This
includes the following:
- Periodic environment audit of power plant
- Timely renewal of consent to operate from statutory
authorities as per prevailing requirements
ii. Undertaking socio-environment impact assessment to
assess the impact of the project (Risk Mitigation)
- Utility should carry out Rapid Social Impact Assessment
Study to identify potential adverse impacts of the Thermal
Power Plant on the immediate habitations and screening or
the social development issues of the immediate habitations.
Further, Environmental Audit and Due Diligence Studies
should also be carried out to improve environmental

performance of the plant (pollution prevention and control
measures, waste minimization, occupational health and
safety) and develop strategies to mitigate environment risk
and liabilities.
- Appropriate CSR framework or policy should be formulated
by the generating company for the sustainable
development of the inhabitants surrounding the power
plant and to address negative externalities from the plant,
if any.
- Generating company should engage with the local
community and efforts should be undertaken to
disseminate project impact assessments and benefits to
nearby villages by deploying an appropriate strategy for
communication.
5.4.7. Delay in Provisioning of Unit Shut down for Executing R&M works
a) Risk Description
This risk arises if the utility is unable to schedule timely shutdown for
executing R&M either due to grid conditions or delay in obtaining timely
approvals from the relevant authorities (State Government or Regulatory
Commission) for shutdown of the plant.
shutdown of state owned units for executing R&M works.
c) Impact of Risk
i. Contractual disputes and delay in execution of work.
ii. Change in baseline parameters due to time gap between the
studies and actual execution.
iii. Deterioration in the material quality already supplied by the
vendor
iv. Deterioration in condition of plant and occurrence of technical
surprises
i. Advance Planning for Scheduling of Shutdown for
Execution of Works (Risk Avoidance)
Shutdown for executing R&M works must be planned well in
advance and distribution utilities must be informed
accordingly.
ii. Additional Allocation of Power to States from
Unallocated Quota of Central Pool (Risk Avoidance)

As per clause 6.2 (ix) of the MoP Guidelines for R&M, the
Utilities can approach the Central Government well in advance
to procure power in line with the above clause/guideline.
iii. Implementation of partial R&M activities during Annual
shutdown periods (Risk Avoidance)
R&M can also be implemented during planned shutdown for
annual maintenance over two to three years time period
especially if the work does not include opening of steam
turbine and significant repairs in the boiler and the generator.
However, it must be noted that for executing R&M works
during annual shutdown period spread over many years, a
proactive approach coupled with comprehensive planning will
be required by the utility.
5.5. Closure Stage

The risks identified across closure stage of R&M process cycle and
5.5.1. Sustainability of R&M Gains (Operational Risk)

a) Risk Description
This risk arises when the performance gain become difficult to sustain due
to weak O&M practices and poor support services by the vendor after R&M
has been completed.
i. Lack of proactive approach in operating and maintaining the
plant
ii. Lack of awareness about the new techniques, processes and
procedures
iii. Lack of sufficient funds due to which mandatory spares are not
being purchased and stocked in advance by the utility
iv. Weak recognition of support services as an important
parameter during evaluation of bids and formulation of
contract
v. Difficulty in obtaining unit shut down for annual maintenance
or periodic capital overhaul due to significant energy shortages
in the state
c) Impact of Risk
The above risk leads to the gradual deterioration of the condition and
performance of the plant and hence the gains expected from undertaking
R&M may not be achieved over a longer period of time.
i. Preparation and implementation of O&M action plan on
priority basis and engaging specialized agency for O&M
of the plant, post R&M. (Risk Mitigation)
- O&M practices of the plant should be reviewed at the start
of the project and based on the assessment a long term
O&M action plan like preparation of O&M manuals including
preventive, capital and breakdown maintenance procedure
/ guidelines should be formulated. Further, the plan so
formulated should be approved at the highest authority and
credible actions should be taken to implement the plan on
priority.
- Contractor should revise the existing O&M manual as per
the new system/unit requirements.
- Adequate training should be provided by the contractor
before handing over the plant to the utility.
- The list of mandatory spares along with its unit prices
should be included in the total price of the R&M contract.
This mitigates the financial risk related to procurement of
mandatory spares post R&M of the project.
- Generating company can also outsource O&M of the plant;
post R&M to a specialized agency. There are models
available for participation of private players in O&M.
- Generating company can also include O&M supervision in
the contract of executing agency.
ii. After sale services to be made an integral part of the
contract (Risk Mitigation)
After sale services provided by the vendors should be
considered as an important element during the bidding stage
and support services for some specific period of time (say one
to two years) should be incorporated in the contract.
5.5.2. Post R&M Guarantees not achieved (Technical Risk)

a) Risk Description
This risk arises if the performance test fails and the requisite performance
guarantees are not achieved or if the performance guarantee test is not
conducted or delayed incessantly.
The root causes for the above are as follows:
i. Failure on part of supplier to meet the commitments
ii. Lack of confidence on the achievement of the requisite targets

leading to delay in conducting of PG test
c) Impact of Risk
The risk results in the following impacts:
i. Envisaged R&M benefit not achieved during the assessment
stage
ii. Contractual disputes
iii. Levy of performance guarantee penalties on the supplier
iv. Problems in regulatory approval and recovery of costs incurred
on the R&M of the plant
v. Consequent financial loss to the utility
vi. Non-achievement of performance post R&M may lead to
cancellation of future R&M works by the utility
Rectification or replacement of components to meet guaranteed
parameters at no extra financial cost to utility and Levy of
Liquidated Damages for shortfall in performance (Risk Mitigation)
i. Guaranteed Performance Parameters with Liquidated Damages
should be included in the contract document.
ii. Supplier should be asked to rectify/replace the components
affecting the performance of the plant at no extra financial
cost to the utility.
iii. In case of non-achievement of performance guarantees, utility
should levy the requisite penalties as provided in the contract.
iv. Performance Guarantees Test should be a critical milestone
defined in the contract.
5.5.3. Disapproval of Costs Incurred During R&M (Regulatory Risk)

a) Risk Description
This risk arises if the regulator does not approve the expenditure incurred
by the utility for undertaking R&M works on account of gaps/inadequacies
in the submission.
The root cause is that the expenditure incurred by the utility is high in
comparison to that approved in-principal during the initial stages or in the
DPR of the project and utility is unable to justify the prudence of excess
expenditure incurred.
c) Impact of Risk
This risk would lead to under recovery or non-recovery of cost incurred by
the generating company leading to financial losses.
Involvement of Regulator should be ensured from the inception of
the project with regular updates about the progress of the project.
(Risk Avoidance)
The need for apprising the regulator about the R&M plan is important as
the recovery of the cost incurred towards R&M is approved by the
Regulator. This involves:
i. Obtaining in-principle approval from the Regulator
ii. Updating the regulator on progress and achievement of critical
milestones
iii. Updating the regulator in case of abnormal or unexpected
changes leading to cost and time overruns
iv. Sharing of information about the outcomes, performance
achieved vis--vis the guaranteed parameters with the
regulator
5.5.4. Absence of Ex-Post Evaluation and Feedback Loop (Operational

Risk)
a) Risk Description
This risk arises if the generating company does not undertake ex-post
evaluation of the R&M works and fails to incorporate the experience or
unable to improve upon the execution of R&M works for its ongoing units.
Also, this leads to lack of institutional memory when the staff involved in
R&M moves out.
Undertaking post evaluation of projects is not considered as a standard
practice by the generating companies in India.
c) Impact of Risk
The impact of this risk is that the generating companies would be unable
to improve upon the execution of R&M projects based on its learning or
experiences.
Experience gained must be documented and incorporated in
subsequent units planned for R&M works (Risk Mitigation)
Generating companies must undertake ex-post evaluation of the R&M
works and should document its experiences. This is important especially in
cases where multiple units are taken up for R&M. The
learning/experiences gained from the first unit must be incorporated in
the implementation plan of the subsequent units.
6. Implementation of the Guidelines

The identified risks and suggested strategies presented in these guidelines
should be considered by the utilities for implementation after suitably
modifying it as per their local conditions or set up of their power plants.
The utilities should evaluate the risks identified before the commencement
of the R&M and formulate appropriate strategies in line with those

suggested in these guidelines to manage the identified/evaluated risks.
It is expected that these guidelines would serve as a guide for the utilities
to improve planning and execution of R&M projects by minimizing the risk
experience during various stages of the R&M.
Annexure 2
Guidelines for Early Identification of Potential Technical
Surprises in R&M Projects and Ways of Addressing Them
1. Background
1.1 Renovation & Modernisation (R&M) including Life Extension (LE) of
existing old power plants is one of the most cost effective options to
achieve additional generation from these plants in a short gestation
period.
1.2 The importance of R&M was recognised by the Government of India way
back in 1984 when Phase-I R&M Programme for 34 thermal power
stations in the country was launched by the CEA as a Centrally sponsored
scheme. Since then R&M option has been effectively utilised over the
various plan periods. As per the National Perspective Plan of CEA, under
12th Plan, LE works have been identified on 70 thermal units of total
capacity 12,066 MW and R&M works have been identified on 65 units
(17,301 MW) during the 12th Plan.
2. Concept of R&M and Life Extension Programme for Coal Fired

2.1 Renovation and Modernisation Programme
operating units well equipped with modified / augmented latest
technology equipment /components/ systems with a view to improving
their performance in terms of output, reliability and availability to the
original design values, reduction in maintenance requirements, ease of
maintenance and enhanced efficiency.
maintenance/overhaul which form a part of Operation and Maintenance
(O&M) activity. Middle life R&M come up preferably after 1,00,000 hrs of
operation.
- Generic defects
- Design deficiencies /modifications
- Avoidance of inefficient operation
- Non-availability of spares because of obsolescence of
- Poor quality of coal
- Major replacements of equipment arising due to unforeseen
failures and /or generation sustenance not covered under
regular O&M
- Stringent environmental regulation
- Safety requirements etc.
2.2 R&M Programme With Life Extension (LE) & Uprating
temperatures such as turbine rotor and casings, HP piping, boiler headers,
boiler drum, main steam piping and valves, feed discharge lines etc. are
designed for a given fatigue life of about 25-30 years of operation.
However, many equipment/components might become prematurely weak
metallurgically due to various operational stresses like frequent
temperature and pressure excursions, full load tripping, frequent start and
stops etc. and accordingly there is need to check the remaining life of
these components after 20 years of life or 1,60,000 hours of operation
lest it may result into serious failures. A systematic study called the
Residual Life Assessment (RLA) study involving non-destructive and
destructive tests help reveal the remaining life of various critical
components of plants and equipment to enable introducing measures to
extend the life of the plant by a further period of about 15-20 years. A
RLA study may be carried out earlier, say after 15 years or 1, 00,000 hrs
of operation if the plant condition so necessitates and as stipulated in IBR
391 A.
The LE programme is a major event in the thermal power stations
history, as it envisages extension of life over a considerable period of time
beyond its designed life. At this time it is a good practice to examine
whether a plant requires a viable modernization which has not been
carried out earlier so that during the extended life the plant operates
efficiently and delivers the rated or higher capacity with improved heat
rate. Adoption of improved and proven technology can play an important
role in plant upgraded output & higher efficiency. There are cost effective
options to up-rate the machines for higher output and improved
efficiencies thus making it economically viable to integrate life extension
programme with uprating.
2.3 Works Not Relating to R&M / LE
capital maintenance do not fall under the purview of R&M Programme.
The repetitive nature of activities having the frequency once in five year
or less is covered under O&M. The following works should not be included
as a part of R&M / LE programme:
- Infrastructural development work such as township, welfare
measures etc., general civil works within the plant such as
boundary wall, roads, drainages etc. However, technological
structure works required for equipments / structure based on
RLA done as per design criteria (such as turbine deck,
foundation etc.) shall be part of LE.
- Procurement of spare equipments.
- Routine repairs/replacements during annual/capital overhauls.

O&M charges recovered through tariff for sale of electricity as notified by
the regulatory commission(s). O&M ought to be attended on a regular
basis lest the condition of the unit should deteriorate to such an extent
resulting in major breakdowns requiring huge expenditure.
3. Defining Technical Surprises

3.1 A thermal power plant undergoing R&M, despite undertaking prior plant
assessment through Residual Life Assessment (RLA), Condition
Assessment (CA), Energy Audit (EA) and Performance Evaluation Test
(PET) of units; might face unforeseen events after the unit has been shut
down and opened up for R&M. Such unforeseen events are defined as
Technical Surprises
3.2 Occurrence of technical surprises can have adverse impact on scope,
schedule, cost and quality of R&M projects. Therefore, it is important to
devise strategies for the early identification of technical surprises to
address them at its nascent stage.
3.3 With the above background, the objective of these guidelines is to provide
direction to the utilities in early identification of potential technical
surprises in R&M projects and ways of addressing them.
4. Intent of the Guidelines

4.1 The intent behind the guidelines is to identify potential surprises which
may occur during implementation of R&M of coal based thermal power
plants in the country. A detailed assessment of potential surprises has
been undertaken wherein different types of surprises that can occur for
each of the key components of the plant system have been identified.
Further, root cause analysis for occurrence of technical surprises and its
impact on the project has also been provided.
4.2 Various strategies have been suggested to effectively minimize and
handle the surprises which include both preventive strategies and
managing strategies. These strategies are provided according to different
stages of R&M process cycle.
5. Stages of R&M Process Cycle

Various stages of the R&M process and the activities that are undertaken
at each stage are described below.
diagnosed further based on certain symptoms. At this stage the plant
operators regularly monitor the key plant unit parameters covering at
least the following aspects to identify symptoms that may necessitate
R&M of the units: (a) Plant Availability, (b) Plant Load Factor, (c) Auxiliary
Consumption, (d) Emission Factors, (e) Level of Outages, (f) Life of the
plant etc., (g) Frequency of annual overhaul; (h) Frequency of capital
overhaul etc. The diagnosis at this stage is based on available plant
records and design data. No inspections and/or testing of material, plant
or equipment is involved at this stage.
During this stage systematic evaluation of the plant is undertaken through
technical studies and tests. This includes the following:- (a) Residual Life
Assessment (b) Complete Condition Assessment (c) Performance
Evaluation Test (d) Energy Audit (e) Past History of Plant (including
maintenance schedules, overhauls and assessment of O&M practices). The
technical evaluation of the plant is followed by the economic evaluation of
the plant to decide on the most optimal option. This includes (a) Plant
retirement (b) Maintain and operate for extended time and retire
subsequently (c) Capital Overhaul and refurbishment (d) R&M and Life
Extension (e) R&M, LE and Up-rating. Detailed Project Report prepared for
assessment of above options also includes a detailed technical and
economic analysis of the identified option. This also includes assessment
of the sources of fund and the phasing required for execution of R&M
option. Based on the technical studies and the option selected for R&M,
the scope of R&M Project is prepared. Before the tenderization process
begins, utility is expected to submit the details of the assessment to the
Appropriate Commission and seek its in-principle approval.
5.3 Planning Stage
specification and proposal package and determines the
procurement/bidding strategy. Planning stage covers the entire bid
process management i.e. issue of tender(s), pre bid meetings, evaluation
of technical and commercial bids, selection of suitable bidder, negotiation
of contracts and award of R&M contracts to vendors/suppliers/OEMs.
5.4 Execution Stage
This stage covers the entire R&M project implementation stage which
begins with the receipt of equipments to the site and planning of
shutdown of unit. This stage includes effective monitoring of work, timely
decision making on bottlenecks faced, ensuring the quality of work,
inspection of material and smooth implementation of work.
Implementation support consultant hired by the utility plays a key role in
managing all the activities covered under this stage through a structured
process.
5.5 Closure Stage
After the R&M work is completed, it is very essential to evaluate whether
the goals and objectives of the R&M project were achieved or not. For this
post-R&M Performance Guarantee Test is conducted. Further, O&M
training is imparted to engineers for efficient operation of the unit that
has undergone R&M.

5.6. The indicative timeframe suggested by CEA in the National Perspective
Plan for Renovation, Modernisation and Life Extension of Thermal Power
Stations(Upto 2016-17) may be adopted for implementing LE&U schemes:
i. Appointment of consultant by utilities - 3 months
ii. RLA / Energy Audit - 6 months
iii. Freezing the scope of work/activities
for LE&U - 3 to 4 month
iv. Preparation of DPR - 6 to 8 months
v. Placement of order of LE&U - 6 to 8 months
vi. Supply of critical spares - 16 to 20 months from
placement of order
vii. Shut down of unit - 6 - 8 months.
6. Type of Technical Surprises

The following section provides a description of potential technical surprises
that may be encountered during implementation of R&M works in thermal
power plants.
Table 38: Areas of potential surprises in various components of plant system
Boiler tube failure is quite common in thermal

plants; the quantity requirement may change
due to the time lag between the assessment
1 Boiler Tubes
and execution of R&M works. This may result
into additional requirement of boiler tubes
than those listed in the contract.
In case of replacement of the wind box

chamber, the size of the new chamber may
2 Wind Box
change. In such cases, problems may be
encountered in fitment of new chamber.
In the interim period between RLA study and

actual R&M execution, bulge in the furnace
may occur due to minor explosion resulting in
3 Furnace increased vulnerability of furnace to failure.
Additionally, problem in buck stay system
may be overlooked during the time of
technical studies.
Leakages in manhole, handhole gaskets and

in safety valves may be overlooked during the
4 Boiler Drum
studies.
In R&M, to increase the efficiency and to

improve the performance of boiler, the coils
5 Super Heater
of the Super Heater needs to be replaced.
Additionally problem and assessment of

Superheater safety valves may be overlooked
during the time of technical studies.
While preparing scope of work exact
requirement for replacement of coils for Low
Temperature Super Heater (LTSH) and Platen
Super Heater may not be clearly specified by
the utility. During the designing stage,
aspects related to shape, gauge, material and
size of the new coil fabrication may be
overlooked.
a) Deterioration of coils and sagging of

assembly due to constant high
temperature and pressure, developed
during the time gap between RLA study
and commencement of R&M works.
6 Reheaters
b) Specific details of coil replacement for
reheaters may not be clearly mentioned in
the scope of works. In addition, condition
assessment of reheater safety valves is
In case of replacement of economizer tubes,

size shape and gauge of tubes may differ
7 Economiser
from those installed initially, resulting in
problem of fitment.34
There may be cracks in the seat and spindle

Superheater and
8 of the safety valves which may be overlooked
Reheater Safety Valves
during the studies
Due to high corrosive nature of boiler flue

gases, there is corrosion in the Air Pre-heater
which leads to loss of effective support of the
9 Air Pre-heater
plates in the basket and bents in tubes.
Diagnosis of the actual condition may be
overlooked during technical studies.
Diagnosis of condition of the soot blowers is

often ignored during the scope assessment
and finalization stage.
10 Soot Blowers In case of replacement, space constraints
may be encountered which may not have
been assessed at the time of placing of the
order.
Pipe rerouting for Heavy Furnace Oil (HFO)

Fuel Oil / Oil Firing
11 and Light Diesel Oil (LDO) Pump may be
System
required which may be overlooked during the
34
This problem is non-existent when one to one replacement of the entire economizer is taken up.

assessment.
Improper assessment of the foundation and

capacity of Forced Draft Fans in case of
increase in the size of the boiler furnace.
12 F.D. Fan Further, there can be damages in the coupling
and impeller assembly and blades of the fans
during the interim period between RLA
studies and R&M execution.
a) Over the years, many leakages develop in

the system and the utility instead of
analyzing the root cause of the leakages,
generally decides to increase the
size/capacity of I. D. Fan which may not
be the requisite solution.
b) Surprises related to shaft cracks due to
13 I.D. Fan
excessive stress and damages in coupling
assembly may be observed if it is not
properly diagnosed during the studies.
Further, there may be deterioration of ID
Fan during the interim time period
between the studies and execution of R&M
works.
a) If the utility decides to increase the boiler

capacity, the required new rating for the
new P.A Fans may not be assessed by the
utility.
14 P.A. Fan
b) Further, typically the Primary Air Fan faces
damages in shaft, coupling assembly and
in the impeller which sometimes is
In case of complete replacement of Scanner

15 Scanner Fan
fans compatibility issues may be observed.
Electrostatic Precipitator is an integral part of

coal fired thermal plants to control particulate
emissions and with increasingly stringent
norms for emission, renovation and
modernization of ESP is an important part of
the scope of work. Some of the technical
16 Electrostatic Precipitator surprises observed are:
a) Space constraint for installing additional
ESP may not be considered at the time of
b) Unavailability of spares due to
technological obsolescence,
a) In case of increase in capacity of the

17 Mill and Burner
boiler, the revised size required for the

mill and burner may be overlooked.
burner planned for installation may be
inadequate.
c) Possible technical surprises can arise due
to improper assessment of calorific value
of coal which has deteriorated over the
years the unit was in operation.
d) Improper Condition Assessment
/Performance Evaluation Test along with
time gap between the studies and actual
execution.
In Steam Turbine, potential technical

surprises observed are given below:
- Cracks in rotors and discs,
- Corrosion and fatigue of blades and pitting
- Technological obsolescence of spare parts
18 Steam Turbine especially in case of turbine valves,
- Failure on part of vendor to up-rate
turbine efficiency due to improper design
and
- Lack of timely decision by the utility with
regard to finalization of turbine design
a) Further weakening of condenser

performance due to deterioration of tubes,
leakages and insufficient heat transfer
during the large time gap between RLA
19 Condenser studies and actual R&M implementation.
b) Non-availability of condenser spare parts
due to technological obsolescence.
c) Non-specification of exact number of coils
to be replaced in the scope of work.
Circulating Water Pump (CWP) faces damages

in shaft, coupling assembly and in the
impeller which may be overlooked during the
plant assessment.
Lack of capacity assessment of CWP in case
20 Circulating Water Pump
utility decides to increase the capacity of the
plant, may lead to technical surprise at later
stages as the old CWP may not be able to
efficiently.
21 Low Pressure Heaters There can be space constraint in case of

installation of new one and compatibility
issues in case of new spares.
There can be mismatch of the outlet and inlet

flanges and the new HP heater may not fit to
the existing heater space later during R&M
22 High Pressure Heaters
execution. HP Heater extraction Non Return
Valve (NRV) is also normally ignored by the
utility which may create problem later on.
BFP is the interface with the Feedwater

system, the Deaerator, and the steam
condensate return system.
effect if the utility decides to go for up-rating
23 Boiler Feed Pump (BFP) of the unit and do not assess the capacity and
ability to provide feed water to boiler drum at
the required temperature and pressure.
Moreover detailed requirements of its spares
may not be assessed leading to additional
requirement during execution.
Usually DBP suffers problems in shaft,

coupling assembly and in the impeller which
may be overlooked during the plant
24 Drip Booster Pump (DBP) assessment. Moreover proper size, capacity
and its compatibility with the existing
connected system like valves and piping
CEP suffers problems in shaft, coupling

Condensate Extraction
25 Moreover proper size, capacity and its
Pump (CEP)
compatibility with the existing connected
system like valves and piping system may be
overlooked.
Possible technical surprises which the utility

might face are:
a) Replacement of few hammers may be
execution more units may need to be
replaced.
26 Coal Handing Plant
b) Replacements of few crushers may be
execution entire unit may need to be
replaced.
c) Weak foundation strength of coal crushers
d) Usually the building structure and

pressure house is in dilapidated condition
and is not part of scope.
accommodating additional Wagon Tippler
is given in DPR but space constraints may
not be considered.
rollers and idlers of conveyer belt however
later additional replacements may be
required during execution.
magnetic separators are usually not part
of RLA studies and may need replacement
during the interim period after RLA
studies.
a) Lack of proper assessment of the

compressed air system.
27 Compressed Air System
b) Additional installation of auxiliary pipes
may be required.
While planning for installing new higher

capacity Cooling Water Pump, compatibility of
28 Cooling Water System associated components may not be taken into
account due to which pump cannot be
operated at rated capacity.

Control And replacement of C&I system and hence may
29
Instrumentations System not face any significant technical surprises. In
case entire system is not replaced, there may
be reliability and compatibility issues of the
new system with the old one.
Ash Hopper over time develops cracks in

supporting columns and in some cases there
are bents in balancing bolt which the utility
30 Ash Handling Plant may overlook during studies.
Further, there may be space constraints for
installation of new Ash Hopper which may be
overlooked.
Civil Work
Proper evaluation of the foundations of all

31 Civil works
major equipments like boiler, turbine, ESPs

etc. is sometimes overlooked which may lead
to technical surprises during the execution.

important factors for delay of R&M works
which are generally not considered before the
start of the project. Lack of planning with
regard to the movement of crane at the start
leads to the occurrence of technical surprises
and delay in execution of work.
Electrical System
Technical surprise arises due to lack of design

32 Generator documents and information of the sub-vendor
with regard to generator and its auxiliaries.
Damages in the generator stator may be

observed during the execution stage which
33 Stator may get overlooked at the time of studies or
may develop during the interim period
There can be cracks in overhang portion of

the rotor which might be overlooked during
Rotor and Excitation
34 RLA studies or may develop during the
System
interim period between RLA studies and
execution.
Insulation strength of paper (Furfural Test) of

Transformers (Generator transformer is normally not conducted in RLA
Transformer, Unit studies and there may be possibilities of
35 Auxiliary Transformer, flashovers. Another possibility of technical
Station Transformer, HT surprise is that connections from bus duct to
and LT Transformer) transformer may be damaged which may be
overlooked during assessment.
Technical surprise may arise due to improper

Motors (HT and LT
36 assessment with regard to compatibility of
Motors)
HT/LT motors with the up-rated system.
In most cases the old cables are usually

replaced with new ones. Cable tray fowling
with the existing structure may need
rerouting during execution.
Cables (HT and LT
37 Although the scope may include replacement
Cables)
of paper insulated cable and some PVC cables
having multiple joints with XLPE cables but
exact requirement (in kms) may not be
provided.
Scope of UPS, battery and battery chargers

UPS, Battery and Battery
38 may not be clearly defined. During the plant
Charger
assessment the condition of battery and

battery charger can be found to be operating
properly but due to time lag between studies
and actual R&M execution, the deterioration
may set in.
Energy efficiency opportunities in illumination

39 Plant illumination system of the plant (i.e. replacement of bulbs
with CFL, LEDs etc) may not be assessed.
7. Root Causes for Occurrence of Potential Surprises

The following sections detail out the root causes for occurrence of
technical surprises.
7.1 Weak data monitoring, reporting and maintenance procedures at
the unit level
Most of the utilities do not maintain data related to key performance
parameters of the unit, reliability of the unit and its individual components
etc. Even if such data is maintained, it is done at the plant level only and
not for all the unit level. Due to the lack of historical data it becomes
difficult to understand the exact condition of the unit and this acts as one
of the primary reasons for occurrence of technical surprises (arising due
to lack of information for any third party invited for R&M of the unit). Lack
of overhauling records with the utility is another related aspect. Due to
the lack of such records suppliers are unable to comprehensively
understand the exact condition of various equipments i.e. components
that were replaced during the operating life of the plant, replacement time
and history and remaining useful life of such equipments.
7.2 Unavailability of original design drawings with the utilities
Absence of design drawings with the utilities makes it difficult for both the
utility and suppliers to undertake R&M and leads to technical surprises at
the execution stage.
7.3 Inadequate assessment
RLA and other tests are conducted for main plant and equipments only
whereas in case of rest of areas like BoP the scope is generally derived,
without any actual condition assessment for BoP items. Lack of
planning/assessment of BoP were found to be the one of the most
common issues faced by the utilities. Lack of well chalked out path for
cranes to reach the sites, space constraints etc. are some of the important
issues generally overlooked during the planning stages. Further, proxy
assessment is undertaken in case of multiple units. It is sometimes
assumed that since both units are operating under same condition,
assessment of one of the units would suffice the purpose and thus scope
of work is prepared for both the units based on such limited assessment.
This although results in saving of time and cost for the utility in the initial
stages, leads to occurrence of technical surprises at the later stages due
to non-exhaustive scope of work.
7.4 Weak/inadequate scope of work

Inadequate/weak scope of work is also one of the factors leading to
technical surprises. This is primarily due to inadequate
assessment/technical studies wherein the exact requirement for R&M is
not established. Another reason for weak/inadequate scope of work is the
financial constraints of the utility. In order to keep the financial budget
under control, the utility may not include certain important works as part
of R&M exercise and plans to cover that under O&M head at the later
stage. However, this may lead to compatibility issue of old system with
the new one leading to surprises at later stages or may impact the overall
quality of works.
7.5 Huge time lag between the technical studies (RLA, DPR
preparation) and actual award of contract (and commencement of
R&M work)
This entire process normally takes ~3-4 years. The units identified for
R&M in the interim period get low maintenance priority leading to rapid
deterioration in the plant condition not captured in the studies and the
scope of work leading to surprises at the execution stage. In case of units
that are already shutdown, cannibalization of the material/spares to other
unit has also been observed as a common practice.
7.6 Mismatch in plant shutdown period and supply of critical
equipments
The schedule of supply of critical equipment has to be synchronized with
the shutdown period to ensure completion of work in the minimum
possible time. However, this mismatch can be on account of both
suppliers and utility. There could be a delay in supply of key components
and equipments by the supplier on account of absence of original vendors
for such items; non-availability of original equipment details,
specifications etc.; obsolete design and inadequate information available
about modification done/spares used earlier. This leads to delay in supply
of material on a timely basis. Further, due to energy shortages in the
state and the prevailing grid conditions, utility may not be able to provide
timely shutdown of the plant. Larger the mismatch or gap higher are the
chances of occurrence of technical surprises.
7.7 Technological obsolescence
Refurbishment of old equipment or spares may not be possible due to
technological obsolescence. This is true especially in case of old units of
110/120 MW units wherein the manufacturers have stopped
manufacturing the spares (especially electrical) due to technological
obsolescence.
7.8 Genuine uncertainty in R&M
Even with careful planning and implementation, some unforeseen
situations are likely to arise. Most of the units being very old and
functioning beyond their operating life coupled with poor O&M practices of
the utility, it is common to find few technical surprises which cannot be
anticipated at early stages.
8. Impact of Occurrence of Technical Surprises

The impact of the occurrence of technical surprises is as follows:
8.1 Scope Creep
The primary impact of occurrence of technical surprises is the additional
scope of work which needs to be addressed by the supplier. This
additional scope of work leads to cost escalation, time delay and
sometimes contractual disputes between the utility and suppliers. The
effectiveness with which utility decides the fair allocation of additional
work to the supplier, minimises the contractual dispute and time taken by
the supplier in delivering to this additional work are the key factors which
govern the magnitude of the impact of the scope creep due to technical
surprises.
8.2 Cost Escalation
Any additional work discovered in the form of surprise has a cost
associated with it. This could be both direct as well as indirect. Direct
costs include the cost of additional work and increase in IDC cost of the
utility. Indirect cost include the loss in potential generation and hence
revenue of the utility due to additional time required to address these
surprises. Lack of ownership/active participation by the utility in
acknowledging such additional work and deciding an acceptable course of
action are key issues faced during implementing R&M. Both suppliers and
utility are bearers of this risk. While the loss of supplier is limited to the
cost of addressing the surprise, utility suffers/bears a large proportion of
the cost in form of both direct as well as significant indirect cost caused
due to loss in potential generation. Moreover utility might also face
regulatory risk wherein recovery of these costs may not be allowed by the
state electricity regulatory commission while determining generation
tariffs.
8.3 Non-adherence to the project schedule timelines
Another related impact of technical surprise is the delay in the project
schedule due to additional time required to address the technical surprise.
The reasons for delay from the project schedule includes the following: a)
situation of indecisiveness, b) non-availability of slots for repair, testing at
various production/manufacturing units of the supplier, c) non-existence
of original vendors for such items, d) customized manufacturing of a
particular component/spare due to obsolete design, e) practical time
required in transportation of material for repair from the utility place to
the workshop of the supplier and back at the utility place etc. All these
factors may have adverse impact on the utility revenues as it can lead to
months of shutdown of the unit.
8.4 Quality Deviation
Technical surprise may also impact the quality of R&M works and non-
achievement of overall R&M benefits. One of the most concurring
technical surprises seen is non-availability of spares or incompatibility of

older system with the new system envisaged in R&M project. Due to such
surprises, the expected outcome of the scope cannot be met and the
utility has to look for other alternatives which affect the quality of the
system. This situation arises due to improper assessment of the
relationship and interaction between different components/equipments in
a thermal plant. Further, to minimise the delays/shutdown period certain
non-priority items are not given due importance during the R&M process
which may affect the overall quality of work.
8.5 Contractual Dispute
Disagreement between supplier and utility regarding additional scope on
account of technical surprise and incomplete interfacing between
components and instruments may lead to contractual dispute causing
delay or slow execution of the work.
9. Strategies for early identification of Technical Surprises and

ways to address them
In order to address technical surprises, different actions/strategies need
to be undertaken/ executed during different stages of R&M process cycle
i.e. from the identification stage/start of R&M project until the closure
stage/end of R&M project. These strategies/actions for addressing
technical surprises can be categorised into the following categories:
9.1 Preventive Strategy
This involves undertaking actions/strategies by the utilities that either aim
at reducing or eliminating the likelihood of the occurrence of such
surprises. Preventive actions in generally should be preferred as they aim
to address the issue when the magnitude of the problem is
small/controllable.
9.2 Managing Strategy
This strategy is adopted because it is seldom possible to eliminate all the
surprises and the utilities are bound to face certain surprises. The only
possible way is to identify potential surprises, accept it and undertake
immediate actions to minimise its impact or consequences.
In order to effectively handle the surprises combination of the strategies
mentioned above needs to be adopted. These are explained below.

The identification stage includes execution of preventive strategies by the
utility to handle technical surprises. This includes strengthening of O&M
practices in the plant and strengthening of internal data maintenance,
acquisition and reporting in the plant. These are explained below:
9.3.1 Strengthening of O&M practises in the plant (Preventive)

Development of preventive maintenance manuals and adherence to the
annual maintenance/overhaul schedule and timely/periodic capital

overhaul schedule are pre-requisite for preventing occurrence of technical
surprises during R&M of the project. By undertaking regular O&M, utility is
constantly updated about the actual condition of the plant and wear and
tear of different components of the plant is addressed on regular intervals
minimising the probability of occurrence of technical surprises.
9.3.2 Strengthening of internal data maintenance, acquisition and
reporting in the plant (Preventive)
Internal data maintenance includes regular monitoring and data collection
of key operating and performance parameters such as heat rate, specific
coal and oil consumption, auxiliary consumption at the unit level. It is
required that utility should undertake the following steps:-
i. The utilities must properly maintain documents related to
Operating Procedures, Manuals, Technical Handbooks and
Instructions supplied by Original Equipment Manufacturers
(OEMs).
ii. Documentation of key engineering diagrams/drawings and other
critical plant diagrams in centralised technical library in both
hard and soft format. This is one of the most critical
requirements for designing the components/equipments that are
to be replaced and made compatible with the existing system.
iii. Operation Engineers should maintain day to day parameter data
of the units and generate monthly performance report.
iv. Overhaul records along with complete details of
repair/replacement of plant equipments/components.
It is important that plants/units that are expected to undertake R&M in
near future should try to start compiling and collecting the above
mentioned data. Also, for the recently commissioned units, it is important
that utility should implement above suggestions in its day to day
operation of the unit so that such problem does not arise in future.
Further, compilation of data mentioned above (especially performance
data) is also important from the viewpoint of estimation and monetization
of GHG emissions reduction through implementation of energy efficient
R&M.

The assessment stage includes execution of both preventive strategies
and strategies for managing surprises. These are explained below:
9.4.1 Undertaking comprehensive assessment through technical studies

with clearly defined scope of work (Preventive)
In order to minimize technical surprises, the utility should undertake
comprehensive assessment of both main plant equipment and the BoPs
through technical studies for each unit planned for R&M. In this regard
CEA has prepared standard documents for carrying out RLA/CA/EA studies
9.4.2 Creation of technical surprise plan (Managing Surprises)
A well-defined technical surprise plan should be prepared for effectively
handling technical surprises, as and when they occur35. The design
consultant involved in undertaking comprehensive assessment, DPR and
subsequent scope of work should also prepare a technical surprise plan.
This should be prepared in consultation with the plant level officials
involved in operation, repair and maintenance of the plant to understand
the potential surprises as they have the experience of the actual condition
of the plant. This includes a list of possible surprises, ensuring availability
of spare parts to minimize delays, addressing upfront the likely
contractual aspects of additional supplies and works etc. Further, this
should also include the unit rates for equipment/parts and total financial
implications of the same. In this regard CEA has prepared standard
documents for Detailed Project Report (DPR) which may be used by the
utilities.
9.4.3 Creation of Dispute Resolution Mechanism (Managing Surprises)
Due to the occurrence of technical surprise there may be disagreement
between the utility and vendor on certain aspects which may translate
into disputes and affect overall execution of work. Therefore, in order to
resolve disputes between the contractor, sub-contractor and utility, it is
important to create a Dispute Resolution Mechanism. Under this
mechanism a Dispute Resolution Committee (DRC) should be formed at
the start of the project with fair participation from both utility and
contractor. In this regard, CEA has prepared standard bid documents
9.4.4 Creation of dedicated R&M Cell and Engaging Specialised
Consultants (Preventive)
are required:
i. Creation of dedicated R&M cell by the utility at the
headquarter and at the plant
In order to effectively deliver on the R&M project it is important
to create a separate R&M cell with adequate and dedicated
manpower for the project. This team should involve plant level
officials dealing with the different departments like Boiler,
Turbine, Electrical, C&I, CHP, Milling system and AHP etc.
Further, officials having prior R&M experience should also be
included in the team.
To ensure timely decisions and approvals within the organization
it is important that a dedicated R&M cell should also be formed
35
at the headquarters level.

ii. Engaging of design and implementation support
consultants
Specialized agencies should be engaged by the utility (on the
basis of competitive bidding) covering assistance on all works
from design to implementation. This could be either one agency
or multiple agencies.
The role of design consultants is to assist the utility in tasks
related to conduct of different studies, identification and
selection of best feasible option for R&M, preparation of DPR
including technical surprise plan, scope finalization, preparation
of tender documents, bid evaluation and selection of vendor etc.
The role of implementation consultant includes review and
approval of drawings, coordination between the vendors and the
utility, monitoring the progress of work as per approved
schedule, assistance to Owner in dealing with statutory
authorities such as Boiler Inspectorate Directorate, Pollution
Control Board etc., monitoring of day to day progress of the
work, review of PG Test Report etc.
Further, to build the requisite capacity of the utility officials,
scope of work of consultants should also include training of
utility/R&M cell officials on each of these components/fields.
9.4.5 Establishing a clear decision making framework (Managing
Surprises)
Once the technical surprises occur, the indecisiveness on the part of the
utility can result in significant delay in the execution of work. It is
important to specify the decision making process with clearly defined roles
and responsibilities, and requisite authority of different officials to enable
timely resolution of the issues encountered during the R&M. This includes
internal reporting structures and decision making authority for its timely
addressal.
9.4.6 Pre-approved contingency fund (Managing Surprises)
Contingency fund should be provided for handling technical surprises and
should be incorporated in the final budget of the project.
9.4.7 In principle approval from the regulatory commission for
additional capital requirement for handling technical surprises
Appropriate regulatory commission should be apprised well in advance
about the technical surprise plan and contingency fund for provisioning of
additional costs for dealing with surprises. It is thus suggested that the
technical surprise plan and contingency fund be incorporated in the DPR.
9.5 Planning stage

The planning stage includes execution of both preventive strategies and
strategies for managing surprises. These are explained below:
9.5.1 Minimising time gap between assessment and award of contract

and preparation of interim O&M action plan by the utilities
(Preventive)
Time gap between assessment and award of contract should be minimised
by the utilities. Also, an interim O&M action plan should be prepared by
the utility which identifies the key urgent requirements or actions that
must be undertaken by the utility during this interim time period.
9.5.2 Provision for access of potential suppliers to the site (Preventive)
Access to the site should be provided to the bidders for carrying out due
diligence. The access to the site may be provided by the utility either at
the pre-bid stage or before the submission of financial bid by the supplier.
This is important as this would enable the suppliers to acclimatise to the
actual condition of the plant and enable them to bid accordingly. The
access to the plant site along with providing results of past studies
undertaken by the utilities would not only minimise surprises but would
also lead to more realistic price discovery for the utility.
9.5.3 Bid documents should seek unit price of various components
In the bid documents the utility should seek unit rates for such
components/works which are expected or anticipated based on the
prepared technical surprise plan. This should also be incorporated in the
contract.
9.5.4 Understanding supplier strategy to deal with technical surprise as
an important evaluation criteria (Managing Surprises)
At the tendering stage, suppliers must be asked to provide their
understanding of potential surprises based on their past experience,
results of the plant studies provided by the utility, their own assessment
and the potential technical surprise plan prepared by the utility.
Submission of strategy for technical surprises from the suppliers end
would provide some certainty and commitment from the supplier to deal
with such surprises.
9.6 Execution Stage

Actual technical surprises are observed at the time of opening up of the
machine for R&M. The strategy at this stage includes the following:
9.6.1 Timely identification and reporting of surprises (Managing

Surprises)
In order to timely identify surprises it is important that robust
communication and periodic review of R&M project be undertaken by the
utility.
9.7 Closure stage

The occurrence of technical surprises has an adverse impact on the overall
cost of the project. It is therefore important for the utility to obtain
approval from the regulatory commission to capitalise the additional cost
of the project in order to safeguard its financial interest. This includes the
following:
9.7.1 Submission of details to the regulatory commission detailing out

the occurrence of technical surprises and strategies adopted to
minimise the impact (Managing Surprises)
Utility should undertake a detailed mapping of the potential surprises
envisaged at the start of the project, technical surprises actually
encountered along with reasons for its occurrence and the mitigation
steps undertaken by the utility. This is important as it would enable the
utility to justify to the regulatory commission that the cost incurred was in
the best interest of the project and the additional expenditure was beyond
the control of the utility.
9.7.2 Ex-Post evaluation of surprises and lessons learnt for future R&M
projects (Managing Surprises)
Ex-post evaluation of surprises encountered during execution of R&M
works and the actions undertaken is essential to understand the
impact/effectiveness of the entire plan. Generating company must
undertake ex-post evaluation of the R&M works and should document its
experiences. This is important especially in case company is undertaking
R&M works on multiple units. The learning/experiences gained from the
first unit must be incorporated in the implementation plan of the
subsequent units even if it requires modification in the scope of work of
other units. CEA may provide a methodology/standard template for ex-
post evaluation. Further, the learning from different projects should be
disseminated through a common platform such as the CEA official
website. The CEA may initiate action in this regard.
10. Implementation of the Guidelines

10.1 The utilities should evaluate the type/root causes of potential surprises
identified in these guidelines before implementing R&M projects and
formulate appropriate strategies in line with that suggested in these
guidelines to minimize and manage such surprises.
10.2 It is expected that the guidelines would provide direction to the utilities to
improve the planning and execution of R&M projects by preventing and
managing the occurrence of surprises.
Annexure 3
List of R&M/LE Plants for Estimating GHG Reduction
Potential
A. State Sector (R&M/ LE in 12th Plan)
# Plant Name State Capacity
1 Bhusawal TPS, Unit - 2 Maharashtra 210
2 Bhusawal TPS, Unit - 3 Maharashtra 210
3 Chandrapur TPS Maha, Stage - 1, Unit - 1 Maharashtra 210
9 Gandhinagar TPS, Unit - 3 Gujarat 210
Hasdeo Thermal Power Station(HTPS), Korba

11 Chhattisgarh 210
West, Unit - 1

12 Chhattisgarh 210
West, Unit - 2

13 Chhattisgarh 210
West, Unit - 3

14 Chhattisgarh 210
West, Unit - 4
15 KHAPERKHEDA TPS, Unit - 1 Maharashtra 210
17 Kolaghat TPS, Unit - 1 West Bengal 210
23 Koradi TPS, Unit - 5 Maharashtra 200
25 Kota TPS, Unit - 3 Rajasthan 210
28 Nasik TPS, Unit - 3 Maharashtra 210
31 Panipat Thermal Power Station, Unit - 5 Haryana 210
32 Parli TPS, Unit - 3 Maharashtra 210
35 Raichur TPS, Unit - 1 Karnataka 210
39 Ropar TPS, Unit - 1 Punjab 210
45 Sanjay Gandhi (Birsinghpur), Stage 1, Unit - 1 Madhya Pradesh 210
47 Satpura, Stage - 2, Unit - 6 Madhya Pradesh 200
51 TENUGHAT TPS, Unit - 1 Jharkhand 210
52 Tuticorin TPS/Thoothukudi TPS (TTPS), Unit - 1 Tamil Nadu 210
57 Ukai Thermal Power Station, Stage 1, Unit - 3 Gujarat 200
60 Wanakbori Thermal Power Station, Unit - 1 Gujarat 210
66 Anpara TPS, Stage - B, Unit - 4 Uttar Pradesh 500
67 Anpara TPS, Stage - B, Unit - 5 Uttar Pradesh 500
68 Bandel TPS, Unit - 5 West Bengal 210
69 Barauni TPS, Unit - 6 Bihar 110
70 Barauni TPS, Unit - 7 Bihar 110
71 Guru Nanak Dev TPS, Unit - 4 Punjab 110
72 Harduaganj TPS, Unit - 7 Uttar Pradesh 110
76 Muzaffarpur TPS, Unit - 1 Bihar 110
77 Muzaffarpur TPS, Unit - 2 Bihar 110
78 Obra TPS, Unit - 10 Uttar Pradesh 200
85 PARICHA TPS, Unit - 1 Uttar Pradesh 110
86 PARICHA TPS, Unit - 2 Uttar Pradesh 110
87 Patratu Thermal Power Station, Unit - 9 Jharkhand 110
88 Vijayawada TPS, Stage 1, Unit - 1 Andhra Pradesh 210
Grand total 18360
B. State Sector (R&M/ LE in 13th Plan)
10 Mettur TPS, Unit - 1 Tamil Nadu 210
26 TENUGHAT TPS, Unit - 2 Jharkhand 210
34 Suratgarh TPS, Unit - 3 Rajasthan 250
37 Bakreshwar TPS, Unit - 3 West Bengal 210
Grand total 8890
C. Central Sector (R&M/ LE in 12th Plan)
1 Bokaro TPS B, Unit - 1 Jharkhand 210
2 Durgapur TPS, Unit- 4 DVC 210
3 FARAKKA STAGE-1, Unit - 1 West Bengal 200
6 Korba STPP, Stage - 1, Unit - 2 Chhattisgarh 200
8 Neyveli TPS - 2, Stage 1, Unit - 3 Tamil Nadu 210
9 Ramagundam, Stage - 1, Unit - 2 Andhra Pradesh 200
11 Singrauli Thermal Power Station, Unit - 3 Uttar Pradesh 200
Vindhyachal Thermal Power Station, Stage - 1,

15 Madhya Pradesh 210
Unit - 1
23 Unchahar TPS, Stage 1, Unit - 1 Uttar Pradesh 210

Unit - 2

Unit - 3

Unit - 4

Unit - 5

Unit - 6

Unit - 7

Unit - 8
34 Simhadri TPS, Stage - 1, Unit - 1 Andhra Pradesh 500
35 Simhadri TPS, Stage - 1, Unit - 2 Andhra Pradesh 500
36 Talcher STPS, Stage - 1 for ER, Unit - 1 Orissa 500
37 Talcher STPS, Stage - 1 for ER, Unit - 2 Orissa 500
38 Dadri Thermal (NCTPP) - Stage 1, Unit- 1 Uttar Pradesh 210
42 Rihand STPS, Stage - 1, Unit - 1 Uttar Pradesh 500
Kahalgaon Thermal Power Station Stage 1, Unit

44 Bihar 210
-1

45 Bihar 210
-2

46 Bihar 210
-3

47 Bihar 210
-4
50 Badarpur Thermal Power Station, Unit - 4 Delhi 210
51 Badarpur Thermal Power Station, Unit - 5 Delhi 210
Grand total 16350
D. Central Sector (R&M/ LE in 13th Plan)
1 Mejia TPS, Unit - 1, (MTPS - A) Jharkhand 210
2 Mejia TPS, Unit - 2, (MTPS - A) West Bengal 210
3 Mejia TPS, Unit - 3, (MTPS - A) Tamil Nadu 210
4 Bokaro TPS B, Unit - 3 Tamil Nadu 210
5 Talcher STPS, Stage - 2 for SR, Unit - 4 Tamil Nadu 500
6 Talcher STPS, Stage - 2 for SR, Unit - 3 Tamil Nadu 500
7 Neyveli TPS - 1, Expn (Stage - 3), Unit - 2 Tamil Nadu 210
8 Neyveli TPS - 1, Expn (Stage - 3), Unit - 1 Tamil Nadu 210
9 Neyveli TPS - 2, Expn, Unit - 1 Tamil Nadu 250
Grand total 4430
References
1. National Perspective Plan for Renovation, Modernization and Life Extension of
Thermal Power stations (up to 2016-2017), Central Electricity Authority,
December 2009.
2. Quarterly Review Report on Renovation, Modernization and Life Extension of

Thermal Power Stations, Central Electricity Authority, 1st Quarter of 2012-13,
(April June; 2012) during 12th Plan.
3. Presentation on Renovation &Modernization and Life Extension of Thermal

Power Stations In India, Mr. Bhai Lal, Central Electricity Authority, October
2011
4. Report on Guidelines for Renovation and Modernization/Life Extension Works

of Coal/Lignite Based Thermal Power Stations, Central Electricity Authority,
October 2009.
5. Project Document on India: Coal Fired Generation Rehabilitation Project,

Global Environment Facility, April 2009.
6. Presentation on Constraints to Acceleration of Renovation and Modernization

(R&M) of Coal fired Power Generation Units in India, Mikul Bhatia, Energy
Specialist, World Bank, Indo-German Symposium on Energy Efficiency, May
2008.
7. Presentation on Renovation and Modernization (R&M)/Life Extension (LE) of

power plants and financing, Mr. Naveen Kumar, Executive Director, Power
Finance Corporation Ltd., Conference on Renovation & Modernization of Power
Plants: New Delhi, October, 2011.
8. Report on Strengthening Operations and Maintenance Practices In State-

Sector Coal-Fired Power Generation Plants in India, Sustainable Development
Network, South Asia Region, Energy Sector Management Assistance Program
(ESMAP), March, 2009.
9. Presentation on India Power Sector Case for Plant Life Extension with
Energy Efficient R&M, Mr. Sarajit Sen, Managing Director, Power Service,
Doosan Power Service India Pvt. Ltd., Conference on Renovation &
Modernization of Power Plants: New Delhi, October, 2011.
10. Report on Scaling Up Renovation and Modernization of Thermal Power Plants

in India Key Findings of a Survey and Roundtable Consultation USAID,
World Bank and Asia Pacific Partnership on Clean Development and Climate,
September 2009.
11. Report on Regulatory Study to Encourage Energy Efficiency through

Investment in Rehabilitation of Coal fired Generation Plant in India IPA and
KPMG funded by Energy Sector Management Assistance Program (ESMAP),
October 2008.
12. Report on Review of Tendering Procedures and Documents Followed by Public

Utilities for Renovation &Modernization Projects Evonik Industries, September
2009.
13. Report on Renovation and Modernization of Thermal Power Plants in India,

Planning and Implementation Guidelines. USAID, June 2010.
14. Report on Renovation and Modernization of Power Plants in India- USD 6.5
Billion Opportunity, Infraline Energy, April 2012
15. Presentation on Improvement of Power Plant Economics and Investment

Opportunities, Mr. N.K.Srivastava, NTPC Limited, Conference on Renovation
& Modernization of Power Plants: New Delhi, October, 2011.
16. Presentation on International Practices of Renovation and Modernization of

Thermal Power Plants, Stratos Tavoulareas, ECO-Asia Clean Development
and Climate Program, Workshop on Rehabilitation of Coal-fired Power Plants,
Noida, September 2008

Opportunities by BHEL, Conference on Renovation & Modernization of Power
Plants: New Delhi, October, 2011
18. Presentation on Energy Efficiency-Focused Renovation and Modernization

(R&M) of Coal-fired Generation Units in India, Mr. Chandrasekeren
Subramaniam and Ms. Mani Khurana, October 2011.
19. Presentation on Renovation & Modernisation and Life Extension of Thermal

Power Stations In India, Mr. Bhai Lal, Central Electricity Authority, October
2011
20. Presentation on Renovation & Modernisation and Life Extension of Thermal

Power Stations In India, Mr. Bhai Lal, Central Electricity Authority, September
2011
21. Report on Strengthening Operations and Maintenance Practices In State-

Sector Coal-Fired Power Generation Plants in India, Sustainable Development
Network, South Asia Region, Energy Sector Management Assistance Program
(ESMAP), March, 2009
22. Report on Scaling Up Renovation and Modernisation of Thermal Power Plants

in India Key Findings of a Survey and Roundtable Consultation USAID,
World Bank and Asia Pacific Partnership on Clean Development and Climate,
September 2009.
23. Report on Review of Tendering Procedures and Documents Followed by Public

Utilities for Renovation & Modernisation Projects Evonik Industries,
September 2009.
24. Presentation on Renovation, Modernisation (R&M)/ Life extension (LE) of

power plants and financing, Naveen Kumar, Power Finance Corporation,
October 2011

Opportunities, Mr. N.K.Srivastava, NTPC Limited, Conference on Renovation
& Modernization of Power Plants: New Delhi, October, 2011
26. Costs and Effectiveness of Upgrading and Refurbishing Older Coal-Fired Power
Plants in Developing APEC Economies, APEC Energy Working Group, Expert
Group on Clean Fossil Energy (APEC study), June 2005.
27. IEA 2012( a), Key World Energy Statistics, International Energy Agency, 2012
28. IEA 2012(b), CCS RETROFIT - Analysis of the Globally Installed Coal-Fired
Power Plant Fleet, International Energy Agency, 2012
29. IEA 2011, CO2 Emissions from Fuel Combustion, International Energy Agency,
2011
30. ECOFYS 2011, International Comparison of Fossil Power Efficiency and CO2
Intensity, Study by ECOFYS for Mitsubishi Research Institute, Japan, 2011
31. Reducing CO2 Emissions by Improving the Efficiency of the Existing Coal-fired
Power Plant Fleet, National Energy Technology Laboratory, July 2008
32. Summary Sheet: Ministry of Economy, Commerce & Business Environment;

S.C. Complexul Energetic Turceni S.A
33. www.romelectro.ro/romelectro/en/...thermal/a1-a3-turceni-rovinari
34. Privatization, Investment and Development of the Energy Program Pride;

Turceni Energy Complex Valuation Report; October 2005
35. Joint Implementation Project Design Document Form Version 01; Turceni
Energy Efficiency Project; Document Version Number 4; 17 January 2007
36. http://www.eturceni.ro/date_gen.htm
37. http://www.eturceni.ro/desulfurare.htm
38. http://en.wikipedia.org/wiki/prun%c3%a9%c5%99ov_power_station
39. http://www.cez.cz/edee/content/file/investori/equity-investors-august-
2008.pdf
40. http://www.vitkovicepower.cz/default/file/download/id/12966/inline/1
41. http://www.mzp.cz/c1257458002f0dc7/cz/news_tz_100318_dnv/$file/100317
%20final%20report%20%203rd%20party%20assessment%20dnv.pdf
42. http://www.ispe.ro/en/references/casestudies/energy_power_generation/10_t
urceni_tpp_rehabilitation_4x5.html
43. Belchatw - Retrofitting the EUs Largest Power Plant Site; 2012
44. 858 MW supercritical extension for Belchatow: Poland's largest and most
efcient lignite-red plant; October 2007
45. Backfitting Belchatow, Modern Power Systems, communicating Power

Technology Worldwide, March 2010
46. Modernisation summary of unit 6 in Belchatow Power Plant, Presentation by

Jarek Ciesielski Koobrzeg, 24-27/04/2012
47. Efficiency Enhancement and CO2 reduction in Czech Projects; by Vladimir

Budinsky; 8th Session of UNECE AHG of Experts on Cleaner Electricity
Production from Coal and other fossil fuels; Geneva 14-15 November, 2011
48. Complex Renewal of the Tusimice II Power Plant (4*200 MW); Skoda Praha
Invest
49. Suralaya Thermal Generating Station, Units 1 and 2; 2005
50. www.babcock.com/library/pdf/br-1885.pdf
51. www.slthermal.com/pdf/suralaya,%20indonesia.pdf
52. http://www.thefreelibrary.com/b%26w+subsidiary+awarded+contract+to+up
grade+boilers+at+indonesia+power...-a0192354813
53. http://www.powerengineeringint.com/articles/print/volume-20/issue-
10/features/turn-something-old-into-something-new.html
54. Afsin Elbistan A Power Plant Rehabilitation; RWE; 2009
55. Comparative energetic and exergetic performance analyses for coal-red

thermal power plants in Turkey; 2009
56. Note on Cancelled Operation Report; ELECTRICITY GENERATION

REHABILITATION AND RESTRUCTURING PROJECT EBRD; 2010
57. Project appraisal document on a proposed loan in the amount of eur 280
million (USD 336 million equivalent) to ELEKTHK WTIM (EUAS) with the
guarantee of the republic of turkey for the report no: 35747-tu electricity
generation rehabilitation and restructuring project; May 5,2006
58. Executive Summary Of The Environmental Impact Assessment Report For

Rehabilitation Of Afsjn-Elbistan A Thermal Power Plant; 2005
59. http://wwwwds.worldbank.org/external/default/wdscontentserver/wdsp/ib/20
06/02/06/000160016_20060206153650/rendered/pdf/35162.pdf
60. An Alstom Integrated boiler and Turbine Retrofit Project to increase unit
output and efficiency; Alstom Annual Conference 2007
61. The Arnot Capacity Increase Project
62. http://www.alstom.com/south-africa/projects/arnot/
63. Coal-Fired Power Plant Heat Rate Reductions, Sargent & Lundy LLC study,
January 2009
64. Integrating Consultancies - Efficiency Standards for Power Generation, Sinclair

Knight Merz Pty. Ltd, January 2000
65. Technical Guidelines Generator Efficiency Standards, Australian Greenhouse

Office Department of the Environment and Heritage, December 2006
66. Retrofitting of Coal-Fired Power Plants for CO2 Emission Reductions, MIT
Energy Initiative Symposium, March 2009
67. http://www.eia.gov/countries/analysisbriefs/indonesia/indonesia.pdf
68. http://energyindonesia.com/03dge/0120720%20electricity%20development%
20in%20indonesia.pdf
69. Energy Policy Review of Indonesia, IEA, 2008
70. Energy Policies of IEA countries, The Czech Republic, 2010 Review
71. Yearly report on the operation of the Czech Electricity Grid for 2011, Energy
Regulatory Office
72. Energy Policies of IEA countries, Poland, 2011 Review
73. http://bankwatch.org/our-work/projects/coal-fired-power-plants-poland
74. http://www.marketinfo.dk/index.php/markets/romania/energy-sector-romania
75. http://www.kpmg.com/ro/en/issuesandinsights/articlespublications/factsheets
/audit/documents/romanian_energy_market_factsheet_en_.pdf
76. Energy Policies of IEA countries, Turkey 2009 Review.
77. http://wwwwds.worldbank.org/external/default/wdscontentserver/wdsp/ib/20
06/05/15/000160016_20060515185428/rendered/index/e1307.txt
78. http://www.eia.gov/countries/analysisbriefs/turkey/turkey.pdf
79. http://www.eskom.co.za/content/gx_0001genplantmixrev13.pdf
80. http://cigrasp.pik-potsdam.de/countries/833900607/energy_profile
81. http://www.eia.gov/countries/cab.cfm?fips=sf
82. http://www.info.gov.za/otherdocs/2008/nationalresponse_sa_electricity1.pdf
83. CERC Tariff Regulation, 2009 2014
84. PAT - Perform, Achieve and Trade, Ministry of Power, Government of India,
July 2012
85. The Future Context of the CDM, Vivid Economics, July 2012
86. Carbon Trading, Centre of Excellence in Environmental Economics (Sponsored

by Ministry of Environment and Forests, Government of India), Madras School
of Economics, K. S. Kavi Kumar
87. State and Trends of the Carbon Market, Carbon Finance at the World Bank,
May 2012
88. The Clean Development Mechanism An Assessment of Progress, United

Nations Development Programme, November 2006
89. Making sense of the Voluntary Carbon Market A Comparison of Carbon

Offset Standards, WWF Germany, March 2008
90. CDM Methodology Booklet, UNFCCC, November 2012
91. Cleaner Power in India Clean Coal Technology Roadmap, December 2007
92. National Action Plan on Climate Change, Government of India, June 2008
93. http://cdm.unfccc.int/projects/db/dnv-cuk1324273859.59/view
94. http://cdm.unfccc.int/projects/validation/db/1gi6f47dwy1k8rzl0br7x4li3s7df1/
view.html
95. http://cdm.unfccc.int/projects/db/jqa1302517640.25/view
96. http://cdm.unfccc.int/projects/db/jci1316688124.05/view
97. IEA and CIAB 2010, Power Generation from Coal Measuring and Reporting
Efficiency Performance and CO2 Emissions, IEA and Coal Industry Advisory
Board 2010
98. Strengthening Operations and Maintenance Practices In State-Sector Coal-

Fired Power Generation Plants in India, Sustainable Development Network,
South Asia Region, Energy Sector Management Assistance Program (ESMAP),
March, 2009
99. Recommendations on Operation Norms for Thermal Power Stations for Tariff
Period Beginning 1.4.2009, CEA, 2008
100. CO2 Baseline Database for Indian Power Sector, CEA, 2012
101. CEA study titled Mapping of 85 pulverized coal fired thermal power
generating units in different states, Evonik Energy Services India, under
Indo-German Energy Program
102. CEA Published Performance Review of Thermal Power Stations for 2008-09,
2009-10 and 2010-11
103. Tariff Orders for different years by various State Electricity Regulatory
Commission
104. Tariff Petitions for different years by various State Generating Companies
105. CEA 2012, Operation Performance of Generating Stations in the Country

during the Year 2011-12, CEA, April, 2012
106. CEA 2009, National Perspective Plan for Renovation, Modernization and Life
Extension of Thermal Power stations (up to 2016-2017), Central Electricity
Authority, December 2009
107. Climate Change, Carbon Markets and the CDM: A Call To Action Report of the
High-Level Panel on the CDM Policy Dialogue, 2012

Reduction Barriers

Uploaded by

Copyright:

Available Formats

Reduction Barriers

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Reduction Barriers

Uploaded by

Copyright:

Available Formats

Study Report

Reduction of Barriers to Renovation

Central Electricity Authority

Reduction of Barriers to R&M

Mercados Energy Markets India Private Ltd.

India: Coal Fired Generation Rehabilitation Project

Central Electricity Authority

Report on Reduction of Barriers to R&M Interventions in Thermal Power Stations in India 2

The information, statements, statistics and observations (together the Information)

Report on Reduction of Barriers to R&M Interventions in Thermal Power Stations in India 3

Chapter 2 - Approach and Methodology ..............................................................36

Chapter 4 - Risk Identification and Mitigation Framework .....................................59

Chapter 5 - Risk Management Guidelines ...........................................................63

Chapter 6 - Risk Heat Matrix and Management Plan ........................................... 118

Chapter 7 - Framework for Early Identification and Addressal of

Chapter 9 - Strategies for Early Identification of Technical Surprises

Chapter 10 - Global R&M Experience: Case Studies from selected

Chapter 11 - Lessons for India based on review of International Best

Chapter 12 - Estimation of the Potential Reduction in GHG Emissions on

Chapter 13 - Possible Framework for Monetizing the GHG Emission

Chapter 14 - Conclusion ................................................................................... 290

Annexure 1 - Guidelines for Risk Identification and Mitigation in R&M

Annexure 2 - Guidelines for Early Identification of Potential Technical

Annexure 3 - List of R&M/LE Plants for Estimating GHG Reduction

References ............................................................................................... 351

Report on Reduction of Barriers to R&M Interventions in Thermal Power Stations in India 4

Table 1: Achievement of R&M and LE works in various Plan periods 29

Table 2: Emerging Power Sector Market Scenario and Implications

Table 3: Attributes of the identified plants 38

Table 4: List of entities consulted 41

Table 5: List of Task Force Members 43

Table 6: Attributes of the identified plants 46

Table 8: Pre Post R&M Experience of different Power Plants 51

Table 9: Design SHR and Auxiliary Consumption for various capacity

Table 10: Potential Risks involved in R&M Process 63

Table 11: Technical Study of Thermal Plants 75

Table 12: Risk Management Plan 120

Table 13: Technical Surprises encountered during R&M Intervention 131

Table 14: Other components/equipments for potential technical

Table 16: Communication and Review Matrix 150

Table 17: Areas of potential surprises in various components of plant

Table 18: Overview of Power Sector of different countries 180

Table 19: Overall Project References 186

Table 21: Comparative analysis of R&M experience in different

Table 22: Measures to manage risk and technical surprises based on

Report on Reduction of Barriers to R&M Interventions in Thermal Power Stations in India 5

international review 231

Table 23: Summary of the technological options along with efficiency

Table 24: Summary of the technological options along with efficiency

Table 25: Summary of the technological options along with the

Table 26: Summary of the technological options along with efficiency

Table 27: Standard menu of options for energy efficiency focused

Table 28: Source of Production for different types of Greenhouse

Table 29: R&M/LE Potential in 12th and 13th Plan 254

Table 31: Technological Measures and Methodologies Applicable

Table 32: Technological Measures and Methodologies Applicable

Table 33: Case Study on Budge Budge Generating Station (BBGS),

Table 34: Case Study on AzDRES Energy Efficiency Improvement 282

Table 35: Case Study on Shandong Shiheng Power Plant Energy