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This is a documentation is about company analysis of Reliance power.
Company Analysis Reliance Power Limited
Power Sector
Power or electricity is one of the most critical components of infrastructure affecting economic growth and well being of nations. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy. Infrastructure Power or electricity is one of the most critical components of infrastructure affecting economic growth and well being of nations. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy. Infrastructure investment in India is on the rise, but growth may be constrained without further improvements. The power sector provides one of the most important inputs for the development of a country and availability of reliable and inexpensive power is critical for its sustainable economic development. To sustain GDP growth rate of around 8-9 %, it is imperative that the power sector also grows at the same rate. Even after the considerable growth in the power sector infrastructure and the supply of electricity, many parts of the country continue to face severe power shortages as consumption by commercial and industrial consumers has been increasing at much faster rate than electricity supply. Power is one area of infrastructure where India lags far behind even in comparison to other developing countries. Power sector in India has 202.98 Giga watts (GW) as of May 2012, the world's fifth largest. The per capita average annual domestic electricity consumption in India in 2009 was 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity. The Indian power sector has grown significantly since 1947 and India today is the third largest producer of power in Asia. The power generating capacity has increased from 1,362 MW in 1947 to over 160,000 MW by mid of 2010. Despite significant growth in electricity generation over the years, the shortage of power continues to exist primarily on account of growth in demand for power outstripping the growth in generation and capacity additions in power generation. Historically, India has experienced shortages in energy and peak power requirements. The average energy deficit was 9.1 percent and the average peak power deficit was 12.8 percent between 2003 and 2010. The gap between demand and supply has not decreased in the last few years, leading to persistent power shortages.
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Company Analysis
As of March 31, 2011 India had an installed power capacity of over 173,000 MW Hydro 27,257 STATE 1,425 PRIVATE CENTRAL 8,885 TOTAL 37,567 Coal 47,257 12,616 34,045 93,918 Thermal Nuclear R.E.S. Total Gas Diesel Total (MNRE) 4,327 603 52,187 0 3,009 82,453 6,677 597 19,891 0 15,446 36,761 6,702 0 40,747 4,780 0 54,413 17,706 1,200 112,824 4,780 18,455 173,626
PEST ANALYSIS OF POWER SECTOR PEST is an acronym for Political, Environmental, Social & Technology. These are also the main factors while doing industry analysis expressing the various political, economic, social and technological trends and implement strategies & implementation of the same Political Factors Government is encouraging private players to produce power and also carry out its transmission and distribution activities. There has been significant Increase in private participation. Indistinctness involved in complicated tariff rates has been done away with by the government. Regulatory authorities like Central Electricity Regulatory Commission (CERC) & State Electricity Regulatory Commission (SERC) are appointed, to regulate the power industry at centre and state level
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Company Analysis
The government has laid following strategies to achieve the objective: ? Power Generation Strategy: focusing on low cost generation, optimization of capacity utilization, controlling input costs, optimisation of fuel mix, technology upgrades and utilization of non conventional energy sources; Transmission Strategy: focusing on developing the National Grid, including interstate connections, Technology upgrades and optimization of transmission cost; Distribution Strategy: achieving distribution reforms by focusing on system upgrades, loss reduction, theft control, consumer service orientation, quality power supply commercialization, decentralized distributed and supply for rural areas Regulation Strategy: protecting consumer interests and making the sector commercially viable; Financing Strategy: to generate resources for required growth of the power sector; Conservation Strategy: to optimise the utilization of electricity with a focus on demand side management, load management and technology upgrades to provide energy efficient equipment; and Communication Strategy: forming political consensus with the media support to enhance public awareness.
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Economical Factors: The country's power sector requires Rs 13.72 lakh crore in funding for the 12th Five-Year Plan (2012-17), the government said today. "The Working Group on Power for formulation of the 12th Five-Year Plan has estimated total fund requirement of Rs 13,72,580 crore for the power sector," Minister of State for Power K C Venugopal said in a written reply in the Rajya Sabha. Of the total, power generation would require about Rs 6,38,600 crore while requirement for electricity distribution would be Rs 3,06,235 crore. During the 2012-17 period, the capacity addition is expected to be around 76,000 MW. even though the Planning Commission has proposed a target of above 90,000 MW during the same period Power Ministry is believed to have fixed a target of adding 18,000 MW capacity in the current financial year The target may be around 16,000 MW during this fiscal, and also additional 2,000 MW of nuclear power capacity, sources said The government has added about 53,000 MW power generation capacity in the past five years (2007-12), around 9,000 MW short of the target of 62,000 MW. The government had earlier set a target of over 78,000 MW for the 2007-12 period, which was curtailed to 62,000 MW in the Planning Commission's mid-term review due to lack of environment clearance for the coal blocks allotted for the power projects. "During the 12th Five-Year Plan, the main sources of financing are commercial banks, public financial institutions, dedicated infrastructure/power finance institutions, insurance companies, overseas markets, bilateral/multilateral credit, bond markets and eQuity markets," Venugopal said.
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Company Analysis
According to him, the government has also taken steps to make funds available through credit enhancement schemes and infrastructure debt fund In a separate reply, Venugopal said that super critical capacity is likely to constitute about 50 per cent of the total coal-fired capacity addition in the 12th Plan. Units having 660 MW capacity and above are referred to as super critical. "52 super critical units totalling to 35,290 MW are presently under construction in the country for commissioning during the 12th Plan and one unit of 660 MW has been commissioned in the 12th Plan," the Minister noted. According to the Planning Commission estimates, the country's energy supply needs to grow at 6.5 per cent annually if the nation wants to achieve annual economic growth of 9 per cent during the 12th Five Year Plan period (2012-17) that commenced from April Social Factors: There are various issues which may not be purely technical but are required to be addressed such as technology dumping, trained manpower, technology forecast, rehabilitation of persons who are living in the vicinity of Upcoming power plants. Technological Factors: Power shortage, load shading
SWOT Analysis of Power Sector: Strengths: ? ? ? ? ? ? Up to 100 per cent FDI (foreign direct investment) is allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic/nuclear reactor power plants. No limit on the project cost and quantum of foreign direct investment. Zero customs duty on import of capital goods for Mega Power Projects Income tax holiday for 10 years under Sec. 80-IA for power generation plants. The Civil Nuclear Agreement signed in 2008, has opened the door even wider for US exports to help India meet its tremendous energy needs. Private sector permitted to set up coal, gas or liquid based thermal projects, hydel projects and wind or solar projects of any size.
Weakness: ? Slow Pace Of growth reason being o No skilled manpower o Delay in getting clearance for power plant o Non Sequential supply of material o Shortage of fossil fuels o Disputes between project authorities
Opportunities:
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Company Analysis
? In 2006, the Ministry of Power launched an initiative to develop large coal based plants known as Ultra-Mega Power Projects (UMPPs) aimed at bridging the capacity gap. These are a series of ambitious supercritical power projects, with each project having a minimum capacity of 4000 MW In addition to UMPPs and mega power projects, the reforms instituted by the Electricity Act have also facilitated the construction and development of merchant power plants. Electricity sold in the spot market or on a short-term basis is categorized as merchant power
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Threats: ? ? ? ? Struggles with shortfalls of funds Banks have realised the stretch on fuel availability and the tariff concerns. Banks used to rely on LoA issued by coal ministry but as Coal India Ltd couldn?t produce it banks were forced to look beyond LoA. Delays in execution of new plants have exposed Banks to increase risk of default loans to companies related to power sector. SEBs across India are saddled with losses running into crores of rupees on account of power theft during transmission and distribution, billing inefficiencies, and, more importantly, because they have to buy expensive power to tide over short-term deficits. Some SEBs have also failed to revise tariffs for many years, adding to their losses
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Company Analysis
Reliance Group
Reliance Group ranks among India's top three private sector business houses. The group has a market capitalization of Rs 138,126 cr, net assets in excess of Rs 174,469 cr, and net worth to the tune of Rs 83,924 cr. Reliance Anil Dhirubhai Ambani Group has a customer base of over 230 million, the largest in India, and a shareholder base of over 11 million, among the largest in the world. The Reliance Group has a business presence that is spread over 4,500 towns and 300,000 villages in India, and 5 continents across the world. The interests of the Reliance Group span communications, financial services, generation, transmission and distribution of power, infrastructure and entertainment Companies of Reliance Group Reliance Communications Limited Reliance Communications Limited is India's largest private sector information and communications company. RCOM has a subscriber base of more than 100 million. The company is the culmination of the late Dhirubhai Ambani's dream of bringing about a digital revolution that would provide every Indian with affordable means of communication and a ready access to information. Reliance Communications started operations in 1999 and has well over a 100 million subscribers today. It has established a pan-India, high-capacity, integrated (wireless and wireline), convergent (voice, data and video) digital network, to offer services spanning the entire infocomm value chain.
Reliance Capital Reliance Capital is one of India's leading and most valuable private sector financial services companies, with interests in asset management and mutual funds; life and general insurance; commercial finance; stock broking; investment banking; wealth management services; distribution of financial products; exchanges; private equity; asset reconstruction; proprietary investments and other financial services activities.Reliance Mutual Fund is India's largest mutual fund with over seven million investor folios. Reliance Life Insurance and Reliance General Insurance are among the country's leading insurers in their space.Reliance Securities is one of India?s leading broking houses while Reliance Money is among the country's top distributors of financial products and services.
Reliance Power Limited
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Company Analysis
Reliance Power Limited currently generates more than 600 MW of electricity through its Rosa plant located in Shahjahanpur in Uttar Pradesh. It also has power stations located in Maharashtra, Madhya Pradesh, Andhra Pradesh, Jharkhand, Gujarat, Kerala, Karnataka and Goa. Reliance Power is currently pursuing a number of gas, coal, wind and hydro-based power generation projects in several States adding upto a capacity in excess of 35,000 MW.”
Reliance Infrastructure Reliance Infrastructure Limited operates in various segments and is actively engaged in transmission and distribution of electrical power at various locations. It distributes over eight billion units to 2.73 million consumers.Segments includes trading of electricity, engineering, procurement, construction (EPC) and contracts that render value-added services in construction, erection and commissioning. Other operations include businesses such as operation and maintenance of toll roads, metro rail transit system and real estate projects, including special economic zones.”
Reliance Media and Entertainment Reliance Media and Entertainment has interest in films, music, sports, gaming, internet & mobile portals, digital cinema, IPTV, DTH and Mobile TV. In 2005, Reliance ADA Group acQuired Adlabs Films, one of the largest entertainment companies in India with interests in film processing, production, exhibition and digital cinema. Reliance Entertainment is also in the FM Radio business with BIG 92.7 FM.
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Company Analysis
Reliance Power
The largest power generation portfolio under development in private sector in India Reliance Power Limited is a part of the Reliance Group, one of India?s largest business houses. The group operates across multiple sectors including telecommunications, financial services, media and entertainment, infrastructure and energy. The energy sector companies include Reliance Infrastructure and Reliance Power. Reliance Power has been established to develop, construct and operate power projects both in India as well as internationally. The Company on its own and through its subsidiaries has a portfolio of over 35,000 MW of power generation capacity, both in operation as well as capacity under development. The power projects are going to be diverse in terms of geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load centre. The company has 600 MW of operational power generation assets. The projects under development include seven coal-fired projects to be fueled by reserves from captive mines and supplies from India and elsewhere: two gas-fired projects to be fuelled primarily by reserves from the Krishna Godavari Basin (the "KG Basin") off India's east coast and seven hydroelectric projects, six of them in Arunachal Pradesh and one in Uttarakhand.
these, Reliance Power is also developing coal bed methane (CBM) blocks to fuel gas based power generation. The company is registering projects with the Clean Development Mechanism executive board for issuance of Certified Emission Reduction (CER) certificates to augment its revenues
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Company Analysis
Reliance Organization structure:
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Company Analysis
Reliance Power Plants:
Financial performance for 2011-12 ? ? ? ? ? ? ? ? ? ? ? ?
Q4 net profit of 231 crore (us$ 45 million) – an increase of 24% Q4 total income of 653 crore (us$ 128 million) – an increase of 9% Fy12 total income of 2,767 crore (us$ 541 million) – an increase of 46% Fy12 operating revenues of 2,019 crore (us$ 395 million) – an increase of 91% Fy12 ebitda from generating assets 753 crore (us$ 147 million) o An increase of 81% Fy12 net profit of 867 crore (us$ 169 million) – an increase of 14% Net worth of 17,571 crore (us$ 3,435 million) o India?s largest private sector power company Rosa phase I (600 mw) generated 4,233 million units – an increase of 49% and Net profit of 335 crore – an increase of 155% Rosa phase II (600 mw) commissioned four months ahead of ppa schedule in March 2012 India?s largest solar power plant - 40 mw solar photovoltaic project Commissioned in rajasthan in a record time of 129 days – project fully Funded by us-exim and adb Major milestone in 3,960 mw Sasan ultra mega power project construction - Hydro test completed for 660 mw first unit which is expected to be commissioned ahead of schedule in December 2012
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Company Analysis
? ? Large sized equipment deployed at sasan coal mines – production to commence in q2 fy13 600 mw butibori project set to be commissioned inq2 fy2012-13
Performance highlights include: FY11-12 2,019 crore Operating Revenues (us$ 395 million) 748 crore Other Income (us$ 146 million) 2,767 crore Total Income (us$ 541 million) 867 crore Net Profit (us$ 169 million) SWOT Analysis: Strengths ? Largest Portfolio
FY10-11 1,055 crore (us$ 260 million) 838 crore (us$ 164 million) 1,892 crore (us$ 370 million) 760 crore (us$ 149 million)
Reliance Power has portfolio of projects includes those in operation, those under construction and projects under development. Together, it constitutes an installed capacity of over 35,000 MW which is nearly 20% of India?s current installed generation capacity. It is the largest and the only private sector power generation company in India to have bagged three of the four Ultra Mega Power Projects (UMPP) awarded by the Government of India till date. ?
Diversified Fuel Sources and Technologies Reliance Power is developing a portfolio of power projects utilizing a variety of fuel sources and technologies. Upon completion power projects it will produce almost 20,000 MW of coal-fired capacity, 10,000 MW of gas-fired capacity and 4,620 MW of hydroelectric capacity. Most of the coal-fired power projects, will employ supercritical or ultra-supercritical technology, which will entitle the company to earn carbon credits. The entire gas-fired capacity will employ fuel and cost efficient advanced class turbines.
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Strategically Located Power Projects Reliance Power projects are situated in close proximity to the sources of fuel or load centres. In addition the geographic spread of power projects in Western, Southern, Eastern and North-Eastern parts of India across seven states will enableus to supply power to different load centres. This geographic proximity to load centres and sources of fuel helps us to minimize the added costs of fuel transport and power transmission. Also this geographic spread and fuel diversification mitigates the dependence on a particular region and fuel type or source.
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Company Analysis
? Fuel Access Security With substantial captive coal reserves in India and Indonesia, Reliance Power expect to meet most of our fuel needs for our coal fired capacity. The four captive coal mines in India that have been allocated have coal reserves of almost 2 billion tones. Reliance Power has also acquired economic interest in three Indonesian coal mines, from which they will import coal for some of our coal-fired power projects. ?
Diversified Power Off-take Arrangements Reliance Power has entered into a variety of long-term and medium-term power offtake arrangements which will ensure stable and committed revenues and short-term off-take arrangements which will allow generation of higher returns from the premium on power sold in the spot market
Weakness ? ? ? Dependency on volatile market price when it comes to fuel Adequate supply of fuel for smooth running project
Opportunities ? The Ministry of Power has set a goal - Mission 2012: o Power for All. Based on the 17th EPS, the total energy requirement in India will increase to 968,659 GWh by fiscal year 2012, 1,392,066 GWh by fiscal year 2017 and to 1,914,508 GWh by fiscal year 2022. o This would lead to an annual electric peak load of 152,746 MW in fiscal year 2012, 218,209 MW in fiscal year 2017 and 298,253 MW in fiscal year 2022. o The northern region is expected to contribute 30.1% and the western region contributes 28.4% of the overall annual electric peak load in fiscal year 2022. o The Government has estimated the total investment potential of the sector at Rs. 9,000 billion for a specified period up to fiscal year 2011. This represents a significant opportunity for capacity expansion and growth opportunity for power generation companies, both in the public and the private sector
Threats ? India has historically failed to meet its power sector targets by a significant margin and with tremendous opportunities ahead, the power sector continues to be affected by the shortfall both on generation as well as transmission side. So the challenge lies in completing project on time.
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Company Analysis
? Shortfall of human power
What differentiates Reliance Power? Reliance Power strives to preserve and uphold natural resources and reduce the environmental impact of its products and services throughout their lifecycle in order to be a responsible corporate citizen The guiding principle for our environmental initiatives is the 5Rs: Reduce, Reuse, Recycle, Renew and Respect. The imperative is to use natural resources efficiently to leave a minimal carbon footprint and impact on biodiversity. Reliance Power strives to develop and promote processes and newer technologies to make all our products and services environmentally responsible. Employees, the supply chain and other stakeholders are sensitized through personal interactions and other channels of effective communication. Initiatives can be measured through resource savings in all cases. The company aims to engage with government and non-government agencies to promote conservation.
Environmental initiatives for Reliance Power townships Strategies are in place for sustainable township development in various sites of Reliance Power by designing structures with minimum disturbance to the topography and ecology. The various steps towards building an eco-friendly composition are:
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In the township phase I of all sites, the construction, hostel and housing blocks modified to accommodate and preserve existing big trees. Rainwater harvesting has been made mandatory for all sites. Solar heating for public buildings Use of energy efficient building material Minimum day lighting arrangements for over 75% of the area Energy efficient electric fixtures within minimum 3 star BEE rating Water efficient plumbing fixtures Use of lead free paints Treatment of sewage water and reuse for landscape and irrigation purposes
Use of Green Technology
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Company Analysis
Reliance Power believes in using the best technology for all its businesses to lessen the environmental impact. The company would be using super-critical technology and ultra super-critical technology that enables better combustion of coal and thereby reducing the emission levels apart from the Flue Gas-De-sulphurisation plant that reduces sulphur dioxide emissions in flue gas. For some sites of Reliance Power, it would be using imported coal with low ash content. Moreover to limit ground level concentration of pollutants, the chimneys are being made taller at all o plant sites. Apart from using major breakthrough technologies and initiatives, Reliance Power has been very keen on ensuring optimum utilization of the resources. Of the 4000 acres of the land available with the company towards building of the power plant, it is striving to build plants within minimum possible use of land using compact designs and creating more capacity within the existing sites. The rest of the land resource is utilized for strengthening the green belt around the plants. Therefore ensures that „building a power plant in a forest?. Water being another of the precious natural resource, Reliance Power endeavours that in all plant sites the design and the technology use only minimum required amount of water and further employ 100 per cent recycling too. The company is also involved in implementing green steps like the fly-ash collected from the plants which is further recycled for use by using it in manufacture of concrete bricks. Events and days of ecological importance are celebrated to raise awareness for conservation of natural resource. Environmental sanitation with special emphasis on solid waste management, waste segregation and vermin-composting is practiced at site locations.
Initiatives in Renewable Energy Reliance Power believes that enhanced use of natural and renewable energy sources is needed to help take the burden off our current dependency on fossil fuels. power generation from renewable energy sources is increasingly becoming important all over the world as it strive to mitigate green house gases and climate change issues important for our survival on Planet Earth. A diversified portfolio of power projects in which green energy generation has an important share. Development A 40 MW solar photovoltaic project, India's largest such project , in Pokharan, Rajasthan which is expected to be commissioned by March 2012. This will be followed by a 100 MW solar thermal project at the same location which is expected to be commissioned by May 2013. We are also developing a 200 MW wind project in Vashpet, Maharashtra. Around 94 MW of operational wind farms within the Group. Reliance Power have finalized plans to develop 5,292 MW of hydroelectric power projects which are at various stages of development. Also identified locations for setting up of wind and solar based capacities which would take total renewable capacities to 1,000 MW. India's potential for generating renewable energy is huge, especially solar power as well as hydroelectric and wind energy. With growing realization in the government of how important it is to harness all available energy sources, the potential that always existed is now transforming into reality. The key drivers are:
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Increased Government focus Recent regulatory initiatives promoting development of renewable energy sources such as
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Company Analysis
Mandatory Renewable Purchase Obligations Revised tariff guidelines Generation based incentives. Introduction of Renewable Energy Certificates (RECs) Reliance Power's strategy for its renewable renewable energy business can be captured in the following bullet points:
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Becoming one of the largest green portfolio company in the power sector A company with a diversified portfolio consisting of wind, solar and hydroelectric projects. Striving for a portfolio which provides attractive returns Earning additional revenues through Carbon Credits and Renewable Energy Certificates
Future Projects
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Clean Development Mechanism (CDM) o In 1997, Kyoto Protocol (“Protocol”) linked to United Nations Framework Convention on Climate Change(UNFCCC) resolved to reduce the greenhouse gases (GHGs) responsible for global warming. As an effort to minimize the global warming, the Protocol sets binding targets for 37 industrialized countries, five per-cent below GHG emission levels prevailing in 1990, between 2008 and 2012. Protocol established three market-based mechanisms allowing developed countries to meet the emission reduction targets. o Clean Development Mechanism (CDM) is one of the three project based mechanisms formulated under the Protocol. CDM establishes a win-win situation for both developed countries as well as developing countries. It allows developing countries to implement GHG emission reduction projects in a manner they assist developed countries meeting their GHG limitation targets in a cost-effective manner. o Efforts undertaken by the developers of such projects, in developing countries, is rewarded through issuance of salable Certified Emission Reductions / Carbon Credits stimulating economic growth in a sustainable manner. o Carbon Di-Oxide (CO2) is one of the six GHGs covered under the Protocol. Since fossil fuels are one of the emission sources for electricity generation, any projects that reduce CO2 emission may become CDM projects after going through scrutiny guidelines promulgated by CDM Executive Board (CDMEB). Examples of such projects include higher efficiency electricity generation, lesser emission intensive fuels, renewable energy technologies etc. Our CDM Projects While laying more emphasis on protection of environment, Reliance Power implementing several of projects as environmental friendly projects for future
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Company Analysis
generations. Aim to reduce CO2 emissions substantially. All the three Ultra Mega Power projects (Sasan, Krishnapatnam and Tilaiya UMPPs) in our kitty, with a total capacity of 11,880MW, have been registered with the CDM - Executive Board making us the largest supplier of CERs among Indian power generation companies. These projects would together generate 5.63 million CERs every year. Status of some of advanced-stage projects is: Sasan Ultra Mega Power Project( UMPP): o Sasan Power, implementing the 3,960 MW super-critical technology based power plant, in Singrauli district in Madhya Pradesh, India, is the world?s largest power generation plant ever registered with CDM-EB under United Nations Framework Convention on Climate Change since its inception. It is also the first Ultra Mega Power Project, in India, to be registered with the CDM-EB. o Sasan Power would reduce 2.24 million tonnes of CO2 per year (approximately).This emission reduction effort entitles the project to earn approximately 22.4 million carbon credits during its first ten years of operation.
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Krishnapatnam Ultra Mega Power Project( UMPP): o Coastal Andhra Power, implementing the 3,960 MW super-critical technology based power plant, in Potti Sri Ramulu Nellore district in Andhra Pradesh,has become the second UMPP to get approval for carbon credits from United Nations Framework Convention on Climate change. o Coastal Andhra Power would reduce 1.23 million tonnes of CO2 per year (approximately),an effort that entitles Coastal Andhra Power to earn approximately 12.3 million carbon credits during its first ten years of operation.
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Jharkhand Integrated Power Ltd.: o Jharkhand Integrated Power, implementing the 3,960 MW super-critical technology based power plant, in Hazaribagh District, Jharkhand, India, has become the third UMPP to get approval for carbon credits from United Nations Framework Convention on Climate change. o Jharkhand Integrated Power would reduce 2.13 million tonnes of CO2 per year,an effort that would earn 21.3million carbon credits for Jharkhand Integrated Power during its initial ten years of operation.
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Samalkot Power Ltd.: o Samalkot Power, implementing the 2,460 MW natural gas based power plant, in East Godavari district, Andhra Pradesh. The project is currently under validation. o Samalkot Power, being implemented in three CDM phases/blocks reduces approximately 5.55 Million tonnes of CO2 per year in comparison to baseline. This would entitle Samalkot Power to approximately 55.5 Million Carbon credits during its first ten years of operation, enabling it to become the world largest generator of carbon credits in the world.
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Company Analysis
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Rajasthan Sun Technique Energy Private Ltd.: o Rajasthan Sun Technique is developing a large-scale solar power project in Jaisalmer district, Rajasthan. Validation of the project is currently underway. o Rajasthan Sun Technique would reduce 266,169 tonnes of CO2 per year (conservatively) in comparison to baseline. This would entitle Rajasthan Sun Technique to approximately 2.6 million carbon credits during its initial ten years of operation.
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Reliance Cleantech Private Ltd.: o Reliance Clean Technique is developing a large scale solar power project in Jaisalmer district,Rajasthan. Validation of the project is currently under progress. This would entitle Reliance Cleantech to approximately 3.7 million carbon credits during its initial ten years of operation.
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Dahanu Solar Private Ltd.: o Rajasthan Sun Techinque is developing a large scale solar photovoltaic (PV) power project in Jaisalmer district, Rajasthan. Validation of the project is currently underway. o The Project would result in 153,717 tonnes of CO2 reduction per year (conservatively) in comparison to baseline.This would entitle Rajasthan Sun technique to approximately 1.53 million carbon credits during its intial ten years of operation.
Strategy Reduction of Cost of Power Generation Reliance Power intend to continue our focus on reducing the cost of power generation by acquiring and developing captive fuel sources that will insulate from the volatility in the market price of fuel and thus allow to leverage operating efficiencies. This is being achieved by pursuing economies of scale, securing favourable financing and sharing resources among our various power projects and with our affiliates.
Ensuring Fuel Supply Securing adequate supplies of fuel is critical to the success of a power project. It continues to take proactive steps to ensure access to sufficient coal reserves domestically and globally by investing in additional overseas opportunities that are a strategic fit with business. While they have secured fuel supplies for entire coal-fired portfolio, to strive to control the entire supply chain to ensure continued and uninterrupted availability and enable us to control costs.
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Company Analysis
Focusing on Power Deficit Regions Reliance Power intend to locate power projects and enter into off-take arrangements in power deficit regions that typically support higher market-wide tariffs. It will continue to concentrate our off-take arrangements on the Western and Northern regions of India, which it believes will comprise the bulk of power demand in India. It also intend to focus merchant off-take sales in these two regions to derive better returns on power generated from projects.
Establishing an Optimal Mix of Off-take Arrangements Reliance Power intends to continue to pursue an optimal mix of long and short-term PPAs to minimize the risks and maximize returns for shareholders. For power projects situated closer to load centers, it has entered into and will continue to enter into a mix of long and short-term PPAs to maintain a balanced portfolio. For power projects located in other locations, it intends to continue to focus on long-term PPAs. Further, we will continue to maintain a significant portion of merchant power in our portfolio to take advantage of favourable prices in the electricity spot market.
Targeting Additional Revenue Sources Reliance Power are actively pursuing opportunities to target additional revenue sources, including by selling carbon credits and fly ash. Sasan, Krishnapatnam, Chitrangi and Tilaiya power projects will be eligible for the CDM benefits as a result of the supercritical technologies. ash procurers in NCR and Western Uttar Pradesh.
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doc_396092420.docx
This is a documentation is about company analysis of Reliance power.
Company Analysis Reliance Power Limited
Power Sector
Power or electricity is one of the most critical components of infrastructure affecting economic growth and well being of nations. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy. Infrastructure Power or electricity is one of the most critical components of infrastructure affecting economic growth and well being of nations. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy. Infrastructure investment in India is on the rise, but growth may be constrained without further improvements. The power sector provides one of the most important inputs for the development of a country and availability of reliable and inexpensive power is critical for its sustainable economic development. To sustain GDP growth rate of around 8-9 %, it is imperative that the power sector also grows at the same rate. Even after the considerable growth in the power sector infrastructure and the supply of electricity, many parts of the country continue to face severe power shortages as consumption by commercial and industrial consumers has been increasing at much faster rate than electricity supply. Power is one area of infrastructure where India lags far behind even in comparison to other developing countries. Power sector in India has 202.98 Giga watts (GW) as of May 2012, the world's fifth largest. The per capita average annual domestic electricity consumption in India in 2009 was 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity. The Indian power sector has grown significantly since 1947 and India today is the third largest producer of power in Asia. The power generating capacity has increased from 1,362 MW in 1947 to over 160,000 MW by mid of 2010. Despite significant growth in electricity generation over the years, the shortage of power continues to exist primarily on account of growth in demand for power outstripping the growth in generation and capacity additions in power generation. Historically, India has experienced shortages in energy and peak power requirements. The average energy deficit was 9.1 percent and the average peak power deficit was 12.8 percent between 2003 and 2010. The gap between demand and supply has not decreased in the last few years, leading to persistent power shortages.
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Company Analysis
As of March 31, 2011 India had an installed power capacity of over 173,000 MW Hydro 27,257 STATE 1,425 PRIVATE CENTRAL 8,885 TOTAL 37,567 Coal 47,257 12,616 34,045 93,918 Thermal Nuclear R.E.S. Total Gas Diesel Total (MNRE) 4,327 603 52,187 0 3,009 82,453 6,677 597 19,891 0 15,446 36,761 6,702 0 40,747 4,780 0 54,413 17,706 1,200 112,824 4,780 18,455 173,626
PEST ANALYSIS OF POWER SECTOR PEST is an acronym for Political, Environmental, Social & Technology. These are also the main factors while doing industry analysis expressing the various political, economic, social and technological trends and implement strategies & implementation of the same Political Factors Government is encouraging private players to produce power and also carry out its transmission and distribution activities. There has been significant Increase in private participation. Indistinctness involved in complicated tariff rates has been done away with by the government. Regulatory authorities like Central Electricity Regulatory Commission (CERC) & State Electricity Regulatory Commission (SERC) are appointed, to regulate the power industry at centre and state level
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Company Analysis
The government has laid following strategies to achieve the objective: ? Power Generation Strategy: focusing on low cost generation, optimization of capacity utilization, controlling input costs, optimisation of fuel mix, technology upgrades and utilization of non conventional energy sources; Transmission Strategy: focusing on developing the National Grid, including interstate connections, Technology upgrades and optimization of transmission cost; Distribution Strategy: achieving distribution reforms by focusing on system upgrades, loss reduction, theft control, consumer service orientation, quality power supply commercialization, decentralized distributed and supply for rural areas Regulation Strategy: protecting consumer interests and making the sector commercially viable; Financing Strategy: to generate resources for required growth of the power sector; Conservation Strategy: to optimise the utilization of electricity with a focus on demand side management, load management and technology upgrades to provide energy efficient equipment; and Communication Strategy: forming political consensus with the media support to enhance public awareness.
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Economical Factors: The country's power sector requires Rs 13.72 lakh crore in funding for the 12th Five-Year Plan (2012-17), the government said today. "The Working Group on Power for formulation of the 12th Five-Year Plan has estimated total fund requirement of Rs 13,72,580 crore for the power sector," Minister of State for Power K C Venugopal said in a written reply in the Rajya Sabha. Of the total, power generation would require about Rs 6,38,600 crore while requirement for electricity distribution would be Rs 3,06,235 crore. During the 2012-17 period, the capacity addition is expected to be around 76,000 MW. even though the Planning Commission has proposed a target of above 90,000 MW during the same period Power Ministry is believed to have fixed a target of adding 18,000 MW capacity in the current financial year The target may be around 16,000 MW during this fiscal, and also additional 2,000 MW of nuclear power capacity, sources said The government has added about 53,000 MW power generation capacity in the past five years (2007-12), around 9,000 MW short of the target of 62,000 MW. The government had earlier set a target of over 78,000 MW for the 2007-12 period, which was curtailed to 62,000 MW in the Planning Commission's mid-term review due to lack of environment clearance for the coal blocks allotted for the power projects. "During the 12th Five-Year Plan, the main sources of financing are commercial banks, public financial institutions, dedicated infrastructure/power finance institutions, insurance companies, overseas markets, bilateral/multilateral credit, bond markets and eQuity markets," Venugopal said.
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Company Analysis
According to him, the government has also taken steps to make funds available through credit enhancement schemes and infrastructure debt fund In a separate reply, Venugopal said that super critical capacity is likely to constitute about 50 per cent of the total coal-fired capacity addition in the 12th Plan. Units having 660 MW capacity and above are referred to as super critical. "52 super critical units totalling to 35,290 MW are presently under construction in the country for commissioning during the 12th Plan and one unit of 660 MW has been commissioned in the 12th Plan," the Minister noted. According to the Planning Commission estimates, the country's energy supply needs to grow at 6.5 per cent annually if the nation wants to achieve annual economic growth of 9 per cent during the 12th Five Year Plan period (2012-17) that commenced from April Social Factors: There are various issues which may not be purely technical but are required to be addressed such as technology dumping, trained manpower, technology forecast, rehabilitation of persons who are living in the vicinity of Upcoming power plants. Technological Factors: Power shortage, load shading
SWOT Analysis of Power Sector: Strengths: ? ? ? ? ? ? Up to 100 per cent FDI (foreign direct investment) is allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic/nuclear reactor power plants. No limit on the project cost and quantum of foreign direct investment. Zero customs duty on import of capital goods for Mega Power Projects Income tax holiday for 10 years under Sec. 80-IA for power generation plants. The Civil Nuclear Agreement signed in 2008, has opened the door even wider for US exports to help India meet its tremendous energy needs. Private sector permitted to set up coal, gas or liquid based thermal projects, hydel projects and wind or solar projects of any size.
Weakness: ? Slow Pace Of growth reason being o No skilled manpower o Delay in getting clearance for power plant o Non Sequential supply of material o Shortage of fossil fuels o Disputes between project authorities
Opportunities:
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Company Analysis
? In 2006, the Ministry of Power launched an initiative to develop large coal based plants known as Ultra-Mega Power Projects (UMPPs) aimed at bridging the capacity gap. These are a series of ambitious supercritical power projects, with each project having a minimum capacity of 4000 MW In addition to UMPPs and mega power projects, the reforms instituted by the Electricity Act have also facilitated the construction and development of merchant power plants. Electricity sold in the spot market or on a short-term basis is categorized as merchant power
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Threats: ? ? ? ? Struggles with shortfalls of funds Banks have realised the stretch on fuel availability and the tariff concerns. Banks used to rely on LoA issued by coal ministry but as Coal India Ltd couldn?t produce it banks were forced to look beyond LoA. Delays in execution of new plants have exposed Banks to increase risk of default loans to companies related to power sector. SEBs across India are saddled with losses running into crores of rupees on account of power theft during transmission and distribution, billing inefficiencies, and, more importantly, because they have to buy expensive power to tide over short-term deficits. Some SEBs have also failed to revise tariffs for many years, adding to their losses
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Company Analysis
Reliance Group
Reliance Group ranks among India's top three private sector business houses. The group has a market capitalization of Rs 138,126 cr, net assets in excess of Rs 174,469 cr, and net worth to the tune of Rs 83,924 cr. Reliance Anil Dhirubhai Ambani Group has a customer base of over 230 million, the largest in India, and a shareholder base of over 11 million, among the largest in the world. The Reliance Group has a business presence that is spread over 4,500 towns and 300,000 villages in India, and 5 continents across the world. The interests of the Reliance Group span communications, financial services, generation, transmission and distribution of power, infrastructure and entertainment Companies of Reliance Group Reliance Communications Limited Reliance Communications Limited is India's largest private sector information and communications company. RCOM has a subscriber base of more than 100 million. The company is the culmination of the late Dhirubhai Ambani's dream of bringing about a digital revolution that would provide every Indian with affordable means of communication and a ready access to information. Reliance Communications started operations in 1999 and has well over a 100 million subscribers today. It has established a pan-India, high-capacity, integrated (wireless and wireline), convergent (voice, data and video) digital network, to offer services spanning the entire infocomm value chain.
Reliance Capital Reliance Capital is one of India's leading and most valuable private sector financial services companies, with interests in asset management and mutual funds; life and general insurance; commercial finance; stock broking; investment banking; wealth management services; distribution of financial products; exchanges; private equity; asset reconstruction; proprietary investments and other financial services activities.Reliance Mutual Fund is India's largest mutual fund with over seven million investor folios. Reliance Life Insurance and Reliance General Insurance are among the country's leading insurers in their space.Reliance Securities is one of India?s leading broking houses while Reliance Money is among the country's top distributors of financial products and services.
Reliance Power Limited
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Company Analysis
Reliance Power Limited currently generates more than 600 MW of electricity through its Rosa plant located in Shahjahanpur in Uttar Pradesh. It also has power stations located in Maharashtra, Madhya Pradesh, Andhra Pradesh, Jharkhand, Gujarat, Kerala, Karnataka and Goa. Reliance Power is currently pursuing a number of gas, coal, wind and hydro-based power generation projects in several States adding upto a capacity in excess of 35,000 MW.”
Reliance Infrastructure Reliance Infrastructure Limited operates in various segments and is actively engaged in transmission and distribution of electrical power at various locations. It distributes over eight billion units to 2.73 million consumers.Segments includes trading of electricity, engineering, procurement, construction (EPC) and contracts that render value-added services in construction, erection and commissioning. Other operations include businesses such as operation and maintenance of toll roads, metro rail transit system and real estate projects, including special economic zones.”
Reliance Media and Entertainment Reliance Media and Entertainment has interest in films, music, sports, gaming, internet & mobile portals, digital cinema, IPTV, DTH and Mobile TV. In 2005, Reliance ADA Group acQuired Adlabs Films, one of the largest entertainment companies in India with interests in film processing, production, exhibition and digital cinema. Reliance Entertainment is also in the FM Radio business with BIG 92.7 FM.
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Company Analysis
Reliance Power
The largest power generation portfolio under development in private sector in India Reliance Power Limited is a part of the Reliance Group, one of India?s largest business houses. The group operates across multiple sectors including telecommunications, financial services, media and entertainment, infrastructure and energy. The energy sector companies include Reliance Infrastructure and Reliance Power. Reliance Power has been established to develop, construct and operate power projects both in India as well as internationally. The Company on its own and through its subsidiaries has a portfolio of over 35,000 MW of power generation capacity, both in operation as well as capacity under development. The power projects are going to be diverse in terms of geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load centre. The company has 600 MW of operational power generation assets. The projects under development include seven coal-fired projects to be fueled by reserves from captive mines and supplies from India and elsewhere: two gas-fired projects to be fuelled primarily by reserves from the Krishna Godavari Basin (the "KG Basin") off India's east coast and seven hydroelectric projects, six of them in Arunachal Pradesh and one in Uttarakhand.
these, Reliance Power is also developing coal bed methane (CBM) blocks to fuel gas based power generation. The company is registering projects with the Clean Development Mechanism executive board for issuance of Certified Emission Reduction (CER) certificates to augment its revenues
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Company Analysis
Reliance Organization structure:
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Company Analysis
Reliance Power Plants:
Financial performance for 2011-12 ? ? ? ? ? ? ? ? ? ? ? ?
Q4 net profit of 231 crore (us$ 45 million) – an increase of 24% Q4 total income of 653 crore (us$ 128 million) – an increase of 9% Fy12 total income of 2,767 crore (us$ 541 million) – an increase of 46% Fy12 operating revenues of 2,019 crore (us$ 395 million) – an increase of 91% Fy12 ebitda from generating assets 753 crore (us$ 147 million) o An increase of 81% Fy12 net profit of 867 crore (us$ 169 million) – an increase of 14% Net worth of 17,571 crore (us$ 3,435 million) o India?s largest private sector power company Rosa phase I (600 mw) generated 4,233 million units – an increase of 49% and Net profit of 335 crore – an increase of 155% Rosa phase II (600 mw) commissioned four months ahead of ppa schedule in March 2012 India?s largest solar power plant - 40 mw solar photovoltaic project Commissioned in rajasthan in a record time of 129 days – project fully Funded by us-exim and adb Major milestone in 3,960 mw Sasan ultra mega power project construction - Hydro test completed for 660 mw first unit which is expected to be commissioned ahead of schedule in December 2012
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Company Analysis
? ? Large sized equipment deployed at sasan coal mines – production to commence in q2 fy13 600 mw butibori project set to be commissioned inq2 fy2012-13
Performance highlights include: FY11-12 2,019 crore Operating Revenues (us$ 395 million) 748 crore Other Income (us$ 146 million) 2,767 crore Total Income (us$ 541 million) 867 crore Net Profit (us$ 169 million) SWOT Analysis: Strengths ? Largest Portfolio
FY10-11 1,055 crore (us$ 260 million) 838 crore (us$ 164 million) 1,892 crore (us$ 370 million) 760 crore (us$ 149 million)
Reliance Power has portfolio of projects includes those in operation, those under construction and projects under development. Together, it constitutes an installed capacity of over 35,000 MW which is nearly 20% of India?s current installed generation capacity. It is the largest and the only private sector power generation company in India to have bagged three of the four Ultra Mega Power Projects (UMPP) awarded by the Government of India till date. ?
Diversified Fuel Sources and Technologies Reliance Power is developing a portfolio of power projects utilizing a variety of fuel sources and technologies. Upon completion power projects it will produce almost 20,000 MW of coal-fired capacity, 10,000 MW of gas-fired capacity and 4,620 MW of hydroelectric capacity. Most of the coal-fired power projects, will employ supercritical or ultra-supercritical technology, which will entitle the company to earn carbon credits. The entire gas-fired capacity will employ fuel and cost efficient advanced class turbines.
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Strategically Located Power Projects Reliance Power projects are situated in close proximity to the sources of fuel or load centres. In addition the geographic spread of power projects in Western, Southern, Eastern and North-Eastern parts of India across seven states will enableus to supply power to different load centres. This geographic proximity to load centres and sources of fuel helps us to minimize the added costs of fuel transport and power transmission. Also this geographic spread and fuel diversification mitigates the dependence on a particular region and fuel type or source.
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Company Analysis
? Fuel Access Security With substantial captive coal reserves in India and Indonesia, Reliance Power expect to meet most of our fuel needs for our coal fired capacity. The four captive coal mines in India that have been allocated have coal reserves of almost 2 billion tones. Reliance Power has also acquired economic interest in three Indonesian coal mines, from which they will import coal for some of our coal-fired power projects. ?
Diversified Power Off-take Arrangements Reliance Power has entered into a variety of long-term and medium-term power offtake arrangements which will ensure stable and committed revenues and short-term off-take arrangements which will allow generation of higher returns from the premium on power sold in the spot market
Weakness ? ? ? Dependency on volatile market price when it comes to fuel Adequate supply of fuel for smooth running project
Opportunities ? The Ministry of Power has set a goal - Mission 2012: o Power for All. Based on the 17th EPS, the total energy requirement in India will increase to 968,659 GWh by fiscal year 2012, 1,392,066 GWh by fiscal year 2017 and to 1,914,508 GWh by fiscal year 2022. o This would lead to an annual electric peak load of 152,746 MW in fiscal year 2012, 218,209 MW in fiscal year 2017 and 298,253 MW in fiscal year 2022. o The northern region is expected to contribute 30.1% and the western region contributes 28.4% of the overall annual electric peak load in fiscal year 2022. o The Government has estimated the total investment potential of the sector at Rs. 9,000 billion for a specified period up to fiscal year 2011. This represents a significant opportunity for capacity expansion and growth opportunity for power generation companies, both in the public and the private sector
Threats ? India has historically failed to meet its power sector targets by a significant margin and with tremendous opportunities ahead, the power sector continues to be affected by the shortfall both on generation as well as transmission side. So the challenge lies in completing project on time.
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Company Analysis
? Shortfall of human power
What differentiates Reliance Power? Reliance Power strives to preserve and uphold natural resources and reduce the environmental impact of its products and services throughout their lifecycle in order to be a responsible corporate citizen The guiding principle for our environmental initiatives is the 5Rs: Reduce, Reuse, Recycle, Renew and Respect. The imperative is to use natural resources efficiently to leave a minimal carbon footprint and impact on biodiversity. Reliance Power strives to develop and promote processes and newer technologies to make all our products and services environmentally responsible. Employees, the supply chain and other stakeholders are sensitized through personal interactions and other channels of effective communication. Initiatives can be measured through resource savings in all cases. The company aims to engage with government and non-government agencies to promote conservation.
Environmental initiatives for Reliance Power townships Strategies are in place for sustainable township development in various sites of Reliance Power by designing structures with minimum disturbance to the topography and ecology. The various steps towards building an eco-friendly composition are:
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In the township phase I of all sites, the construction, hostel and housing blocks modified to accommodate and preserve existing big trees. Rainwater harvesting has been made mandatory for all sites. Solar heating for public buildings Use of energy efficient building material Minimum day lighting arrangements for over 75% of the area Energy efficient electric fixtures within minimum 3 star BEE rating Water efficient plumbing fixtures Use of lead free paints Treatment of sewage water and reuse for landscape and irrigation purposes
Use of Green Technology
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Company Analysis
Reliance Power believes in using the best technology for all its businesses to lessen the environmental impact. The company would be using super-critical technology and ultra super-critical technology that enables better combustion of coal and thereby reducing the emission levels apart from the Flue Gas-De-sulphurisation plant that reduces sulphur dioxide emissions in flue gas. For some sites of Reliance Power, it would be using imported coal with low ash content. Moreover to limit ground level concentration of pollutants, the chimneys are being made taller at all o plant sites. Apart from using major breakthrough technologies and initiatives, Reliance Power has been very keen on ensuring optimum utilization of the resources. Of the 4000 acres of the land available with the company towards building of the power plant, it is striving to build plants within minimum possible use of land using compact designs and creating more capacity within the existing sites. The rest of the land resource is utilized for strengthening the green belt around the plants. Therefore ensures that „building a power plant in a forest?. Water being another of the precious natural resource, Reliance Power endeavours that in all plant sites the design and the technology use only minimum required amount of water and further employ 100 per cent recycling too. The company is also involved in implementing green steps like the fly-ash collected from the plants which is further recycled for use by using it in manufacture of concrete bricks. Events and days of ecological importance are celebrated to raise awareness for conservation of natural resource. Environmental sanitation with special emphasis on solid waste management, waste segregation and vermin-composting is practiced at site locations.
Initiatives in Renewable Energy Reliance Power believes that enhanced use of natural and renewable energy sources is needed to help take the burden off our current dependency on fossil fuels. power generation from renewable energy sources is increasingly becoming important all over the world as it strive to mitigate green house gases and climate change issues important for our survival on Planet Earth. A diversified portfolio of power projects in which green energy generation has an important share. Development A 40 MW solar photovoltaic project, India's largest such project , in Pokharan, Rajasthan which is expected to be commissioned by March 2012. This will be followed by a 100 MW solar thermal project at the same location which is expected to be commissioned by May 2013. We are also developing a 200 MW wind project in Vashpet, Maharashtra. Around 94 MW of operational wind farms within the Group. Reliance Power have finalized plans to develop 5,292 MW of hydroelectric power projects which are at various stages of development. Also identified locations for setting up of wind and solar based capacities which would take total renewable capacities to 1,000 MW. India's potential for generating renewable energy is huge, especially solar power as well as hydroelectric and wind energy. With growing realization in the government of how important it is to harness all available energy sources, the potential that always existed is now transforming into reality. The key drivers are:
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Increased Government focus Recent regulatory initiatives promoting development of renewable energy sources such as
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Company Analysis
Mandatory Renewable Purchase Obligations Revised tariff guidelines Generation based incentives. Introduction of Renewable Energy Certificates (RECs) Reliance Power's strategy for its renewable renewable energy business can be captured in the following bullet points:
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Becoming one of the largest green portfolio company in the power sector A company with a diversified portfolio consisting of wind, solar and hydroelectric projects. Striving for a portfolio which provides attractive returns Earning additional revenues through Carbon Credits and Renewable Energy Certificates
Future Projects
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Clean Development Mechanism (CDM) o In 1997, Kyoto Protocol (“Protocol”) linked to United Nations Framework Convention on Climate Change(UNFCCC) resolved to reduce the greenhouse gases (GHGs) responsible for global warming. As an effort to minimize the global warming, the Protocol sets binding targets for 37 industrialized countries, five per-cent below GHG emission levels prevailing in 1990, between 2008 and 2012. Protocol established three market-based mechanisms allowing developed countries to meet the emission reduction targets. o Clean Development Mechanism (CDM) is one of the three project based mechanisms formulated under the Protocol. CDM establishes a win-win situation for both developed countries as well as developing countries. It allows developing countries to implement GHG emission reduction projects in a manner they assist developed countries meeting their GHG limitation targets in a cost-effective manner. o Efforts undertaken by the developers of such projects, in developing countries, is rewarded through issuance of salable Certified Emission Reductions / Carbon Credits stimulating economic growth in a sustainable manner. o Carbon Di-Oxide (CO2) is one of the six GHGs covered under the Protocol. Since fossil fuels are one of the emission sources for electricity generation, any projects that reduce CO2 emission may become CDM projects after going through scrutiny guidelines promulgated by CDM Executive Board (CDMEB). Examples of such projects include higher efficiency electricity generation, lesser emission intensive fuels, renewable energy technologies etc. Our CDM Projects While laying more emphasis on protection of environment, Reliance Power implementing several of projects as environmental friendly projects for future
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Company Analysis
generations. Aim to reduce CO2 emissions substantially. All the three Ultra Mega Power projects (Sasan, Krishnapatnam and Tilaiya UMPPs) in our kitty, with a total capacity of 11,880MW, have been registered with the CDM - Executive Board making us the largest supplier of CERs among Indian power generation companies. These projects would together generate 5.63 million CERs every year. Status of some of advanced-stage projects is: Sasan Ultra Mega Power Project( UMPP): o Sasan Power, implementing the 3,960 MW super-critical technology based power plant, in Singrauli district in Madhya Pradesh, India, is the world?s largest power generation plant ever registered with CDM-EB under United Nations Framework Convention on Climate Change since its inception. It is also the first Ultra Mega Power Project, in India, to be registered with the CDM-EB. o Sasan Power would reduce 2.24 million tonnes of CO2 per year (approximately).This emission reduction effort entitles the project to earn approximately 22.4 million carbon credits during its first ten years of operation.
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Krishnapatnam Ultra Mega Power Project( UMPP): o Coastal Andhra Power, implementing the 3,960 MW super-critical technology based power plant, in Potti Sri Ramulu Nellore district in Andhra Pradesh,has become the second UMPP to get approval for carbon credits from United Nations Framework Convention on Climate change. o Coastal Andhra Power would reduce 1.23 million tonnes of CO2 per year (approximately),an effort that entitles Coastal Andhra Power to earn approximately 12.3 million carbon credits during its first ten years of operation.
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Jharkhand Integrated Power Ltd.: o Jharkhand Integrated Power, implementing the 3,960 MW super-critical technology based power plant, in Hazaribagh District, Jharkhand, India, has become the third UMPP to get approval for carbon credits from United Nations Framework Convention on Climate change. o Jharkhand Integrated Power would reduce 2.13 million tonnes of CO2 per year,an effort that would earn 21.3million carbon credits for Jharkhand Integrated Power during its initial ten years of operation.
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Samalkot Power Ltd.: o Samalkot Power, implementing the 2,460 MW natural gas based power plant, in East Godavari district, Andhra Pradesh. The project is currently under validation. o Samalkot Power, being implemented in three CDM phases/blocks reduces approximately 5.55 Million tonnes of CO2 per year in comparison to baseline. This would entitle Samalkot Power to approximately 55.5 Million Carbon credits during its first ten years of operation, enabling it to become the world largest generator of carbon credits in the world.
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Company Analysis
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Rajasthan Sun Technique Energy Private Ltd.: o Rajasthan Sun Technique is developing a large-scale solar power project in Jaisalmer district, Rajasthan. Validation of the project is currently underway. o Rajasthan Sun Technique would reduce 266,169 tonnes of CO2 per year (conservatively) in comparison to baseline. This would entitle Rajasthan Sun Technique to approximately 2.6 million carbon credits during its initial ten years of operation.
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Reliance Cleantech Private Ltd.: o Reliance Clean Technique is developing a large scale solar power project in Jaisalmer district,Rajasthan. Validation of the project is currently under progress. This would entitle Reliance Cleantech to approximately 3.7 million carbon credits during its initial ten years of operation.
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Dahanu Solar Private Ltd.: o Rajasthan Sun Techinque is developing a large scale solar photovoltaic (PV) power project in Jaisalmer district, Rajasthan. Validation of the project is currently underway. o The Project would result in 153,717 tonnes of CO2 reduction per year (conservatively) in comparison to baseline.This would entitle Rajasthan Sun technique to approximately 1.53 million carbon credits during its intial ten years of operation.
Strategy Reduction of Cost of Power Generation Reliance Power intend to continue our focus on reducing the cost of power generation by acquiring and developing captive fuel sources that will insulate from the volatility in the market price of fuel and thus allow to leverage operating efficiencies. This is being achieved by pursuing economies of scale, securing favourable financing and sharing resources among our various power projects and with our affiliates.
Ensuring Fuel Supply Securing adequate supplies of fuel is critical to the success of a power project. It continues to take proactive steps to ensure access to sufficient coal reserves domestically and globally by investing in additional overseas opportunities that are a strategic fit with business. While they have secured fuel supplies for entire coal-fired portfolio, to strive to control the entire supply chain to ensure continued and uninterrupted availability and enable us to control costs.
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Company Analysis
Focusing on Power Deficit Regions Reliance Power intend to locate power projects and enter into off-take arrangements in power deficit regions that typically support higher market-wide tariffs. It will continue to concentrate our off-take arrangements on the Western and Northern regions of India, which it believes will comprise the bulk of power demand in India. It also intend to focus merchant off-take sales in these two regions to derive better returns on power generated from projects.
Establishing an Optimal Mix of Off-take Arrangements Reliance Power intends to continue to pursue an optimal mix of long and short-term PPAs to minimize the risks and maximize returns for shareholders. For power projects situated closer to load centers, it has entered into and will continue to enter into a mix of long and short-term PPAs to maintain a balanced portfolio. For power projects located in other locations, it intends to continue to focus on long-term PPAs. Further, we will continue to maintain a significant portion of merchant power in our portfolio to take advantage of favourable prices in the electricity spot market.
Targeting Additional Revenue Sources Reliance Power are actively pursuing opportunities to target additional revenue sources, including by selling carbon credits and fly ash. Sasan, Krishnapatnam, Chitrangi and Tilaiya power projects will be eligible for the CDM benefits as a result of the supercritical technologies. ash procurers in NCR and Western Uttar Pradesh.
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