On the
Power Highway
Adani Power has
emerged as India’s
largest private thermal
power company within
a short period thanks
to the group’s integrated business model.
Its 2,500-megawatt
Mundra-Mohindergarh
HVDC transmission
system has set another
benchmark in India’s
power sector.
Text: Swati Prasad Photos: Arush Mayank
Illustration: Vesa Sammalisto
HVDC
M
India privatized power transmission in
2003, but corporate investment is still
lagging due to various constraints.
ost corner offices are adorned
with expensive art. But the
walls of Vneet S. Jaain’s office
in Law Garden, Ahmadabad (Gujarat),
display two huge collages designed
by him. One shows India’s business
leaders, while the other collage is of
Gautam Adani – chairman of the Adani
group. For someone who spends very
long hours in his office, each of the
faces in the collage provides a story,
along with some corporate lessons
and inspiration.
Those lessons have probably come
in handy for this rather young power
company, which began generating
power only in 2009 (Adani Power
started out as a power trading company in 1996). Today, it is one of India’s
largest thermal power generating
companies in the private sector with
generation capacity of 5,940 megawatts as of March 2013 (expected to
reach 9,240 megawatts by the end of
2013, which would make it the largest
private power generator in the country), surpassing established private
players. Adani Power’s 4,620-megawatt thermal power plant in Mundra
(Gujarat) is the country’s largest coalbased power project and the fifth largest in the world. Adani Power is also the
largest private energy trader in India.
At the heart of this feat is not just
the hard work of Jaain and his team,
but also a very well-crafted strategy
of market presence across the value
chain (cf. info box: “An Integrated
Player”) and the spirit to overcome
challenges that discourage most other
private players.
Jewel in the Crown
Though India privatized power transmission back in 2003, the private sector was reluctant to invest due to challenges such as acquisition of land,
securing mandatory clearances, and
time overruns. But Adani Power took
these challenges head-on and began
work on the 430-kilometer, 400-kilovolt double circuit line from Mundra
to Dehgam in 2007.
40 Living Energy · No. 8 | July 2013
Images of leadership: Vneet S. Jaain in his corporate office in Law Garden, Ahmadabad.
The new jewel in Adani Power’s crown,
however, is India’s first private highvoltage direct current (HVDC) transmission line from Mundra to Mohindergarh, completed in 2011 in a record
time of 24 months. This HVDC is a
bulk power highway that has the
capacity to transmit 2,500 megawatts
of power from Mundra to the load
centers in the National Capital Region
(NCR) through an inverter station at
Mohindergarh (Haryana) in a single
hop of about 1,000 kilometers.
An HVDC transmission system is the
optimal solution over a single trans-
mission line. The technology also
minimizes transmission losses and
needs less right of way. The system
has the capacity to control precisely
the amount of power to be transmitted, making it highly useful during
grid disturbance.
Overpowering Challenges
When Adani Power decided to set up
the 1,000-kilometer HVDC line to
transmit power to Haryana, Jaain and
his team were cautioned about the
various challenges not just in the area
of transmission, but with the HVDC u
“In the infrastructure business,
one has to be prepared to brave
all challenges.”
Vneet S. Jaain, CEO and Executive Director, Adani Power
Living Energy · No. 8 | July 2013
41
Transmission
HVDC
An Integrated Player
Jaain attributes his company’s
success to a presence across
the value chain and an integrated business model.
The Mundra-Mohindergarh HVDC
Transmission System
… is the first private-sector HVDC transmission project in India.
… is a bipolar HVDC transmission system with a power
transfer capacity of 2,500 megawatts.
… uses the first HVDC transformer of 500 megavoltamperes,
which is manufactured indigenously.
… marks the first time in India that a project has used a prefabricated steel structure for construction of the valve hall, which houses
the thyristor units (for conversion of AC to DC and vice versa).
… was completed by Adani Power and Siemens in the record time
of 24 months.
Adani Power’s choice was based on its
good relations with Siemens and the
German company’s HVDC expertise.
42 Living Energy · No. 8 | July 2013
technology as well. “Experts both in
India and abroad told us that HVDC
is a white elephant. It’s extremely difficult to find expertise,” says Jaain.
There are only five to six players offering HVDC technology.
The power transmission sector in
India is facing unprecedented challenges. The opening up of power
trading has increased the requirement of transmission lines, thereby
leading to further shortage of skilled
manpower. “Most of the tower manufacturers are also overbooked,” says
Jaain. And then there is the tricky
issue of right of way, and the social
activism around it. The transmission
line passes through three states –
Gujarat, Rajasthan, and Haryana.
There was apprehension concerning
support from local administrations.
“Volatility in the rupee also threatened to push up the project cost,”
says Jaain. Nevertheless, the company
decided to go ahead. “We felt that if
we can’t do it, no one in the world
can,” quips Jaain.
Adani Power began by looking for the
right company to implement this
project. “We chose Siemens for two
reasons – our long-standing relationship and the fact that Siemens has
maximum experience in HVDC,” says
Jaain. This is the third HVDC system
installed by Siemens in India, the previous two being government-owned
2,500-megawatt transmission lines
from Ballia to Bhiwadi and from
Talcher to Kolar. The specifications of
the Mundra-Mohindergarh line were
very similar to the Talcher-Kolar line.
In order to ensure smooth completion of the project, Adani Power
made an effort to choose the right
people and set strict deadlines for
the engineering work. Having secured funding and permits, it leveraged its knowledge of the market
to choose suppliers for Siemens. The
result – the project was completed
in 24 months, setting a new industry
benchmark (cf. info box: “The Mundra-Mohindergarh HVDC Transmission System”). “In the infrastructure
business, one has to be prepared to
brave all challenges. Contrary to popular perception, things do move in
India’s government machinery,” Jaain
says.
Siemens has now installed
three HVDC systems in India.
Gautam Adani,
founder and
chairman of the
Adani group.
Deriving Efficiency
from the Group
Though a large part of Adani Power’s
achievement is owed to the sharp
business acumen and the risk-taking
approach of Gautam Adani and his
key management team, the integrated business model of the Adani group
has helped the power company ensure
better control and reliability of raw
materials for power generation. The
Adani group has three focus areas in
the infrastructure sector – energy,
resources, and logistics. “We are
present across the value chain. And
this gives us complete forward and
backward integration for all group
businesses,” says Jaain. No other
player has such a widespread presence in the infrastructure sector. And
power generation has been a huge
beneficiary of this business approach.
The HVDC transmission line has been
able to derive efficiency from the integrated business model of the Adani
group.
The biggest challenge that private
power generation companies in India
face is securing fuel. Since coal-fired
plants account for 57 percent of India’s installed electricity capacity
(cf. info box: “The Power Scenario for
India”), any change in policies concerning mining or imports affects the
industry. For instance, the enactment
of the new mining law in Indonesia
has significantly impacted the cost of
imported coal for Indian companies. u
The Adani group, with headquarters in Ahmadabad and an annual
turnover of US$8 billion, was founded in 1988 by Gautam Adani, who is
amongst the youngest billionaires in India. A first-generation entrepreneur, 50-year-old Gautam Adani has created a professionally managed
empire in a relatively short period of time. The group employs over
12,000 professionals.
The Adani group started out as a commodity trading firm and became
involved in the infrastructure sector by setting up its own port in Mundra
(Gujarat). Today, the group is an integrated infrastructure player with a
global footprint. It does business in the resources, logistics, and energy
sectors.
Resources: Obtaining coal from mines and trading.
Adani develops and operates mines in India, Indonesia, and Australia as
well as importing and trading coal from several other countries. Adani
is the largest coal importer in India. Its extractive capacity is scheduled
to increase from 3 million tonnes of thermal coal in 2011 to 200 million
tonnes per annum by 2020.
Logistics: Ports, Special Economic Zone (SEZ), and multimodal logistics
(e.g., railways and ship).
Adani owns and operates three ports – Mundra and Dahej in India and
Abbot Point in Australia. Mundra Port is the largest private port in India
with an SEZ status. Adani is also developing ports at Hazira, Mormugao,
Visakhapatnam, and Kandla in India and Dudgeon Point in Australia. It
plans to increase annual cargo handling capacity from 78 million tonnes
in 2012 to 200 million tonnes by 2020.
Energy: Power generation and transmission; gas distribution.
Adani is the largest private thermal power producer in India. Its power
generation capacity is expected to increase from 5,320 megawatts in
2012 to around 10,000 megawatts by the end of 2013. The aim is to
generate 20,000 megawatts by 2020.
Living Energy · No. 8 | July 2013
43
HVDC
HVDC
The Power Scenario for India
1. Power reforms: Until the early 1990s, the power sector was shielded
from private sector involvement. The amendment to the Supply Act
(1948) in 1991, followed by the enactment of the Electricity Act (2003)
and notification of the Mega Power Policy (1995), National Tariff Policy
(2005), National Electricity Policy (2005), and Integrated Energy Policy
(2008) have liberalized the power sector, which then saw active investments from the private sector across the value chain.
2. Growing energy needs: The Indian economy grew by 7.5 percent
between 2000 and 2010. The electricity generation grew at 5.5 percent
annually in the same period. Due to the lack of power generation capacity
and constraints on fuel supply, India faces negative reserve margins and
recent blackouts. A forecast from Global Insight shows a GDP growth
of 6.9 percent annually between 2013 and 2030. To fuel the strong
economic growth, India requires growing energy supply.
3. Low per-capita consumption: The average per-capita power consumption in India is very low at 717 kilowatt-hours. In China, it is about
1,200 kilowatt-hours, and in the USA 13,300 kilowatt-hours. Therefore,
there is tremendous growth opportunity for private companies.
4. Private participation in generation: Most private-sector involvement
has been in power generation, driven by delicensing of generation, fiscal
incentives for large-scale capacity additions, and competitive procurement of power.
5. Coal-driven industry: The primary source of fuel for power generation
is still coal. Around 57 percent of current generation capacity is driven by
thermal power.
The key mission: ensuring energy security for India.
44 Living Energy · No. 8 | July 2013
“ We felt that if
we can’t do it,
no one in the
world can.”
megawatts of power capacity in the
pipeline. “Once the market improves,
we will look at more transmission
projects,” says Jaain. Adani Power
plans to increase power generation
capacity to 20,000 megawatts by
2020. “But much of our target depends on how the power sector picks
up,” adds the CEO.
India’s growth story relies on the
availability of electricity. India’s annual energy demand is expected to
more than double the next decade,
and the energy crunch threatens to
knock India off its growth path. Jaain,
however, is optimistic that the power
sector will pick up. “India is a strong
market, with immense growth opportunities,” he says. All it needs to do is
ensure reliable fuel supply and review existing policies at regular intervals. And more players like Adani
Power would help India’s cause. p
Vneet S. Jaain
“Our integrated business model is
helping us sail through this difficult
phase by leveraging various constituents along the value chain,” says
Jaain.
Towards a Brighter Future
In the past, transmission planning
in India was arranged around regional power generation centers. Over
time, the transmission sector started
to move towards integrated system
planning, because generation capacities were distributed unevenly across
India, which had created zones with
energy surpluses and others with
energy shortages. The Indian government has set a vision of achieving
reliable, adequate, and quality power
for all at reasonable prices by the end
of the Twelfth Five-Year Plan (2012–17).
To this end, the transmission sector
must ensure that power is transferred
efficiently from generating stations
to distribution networks while maintaining stable capacity and network
integrity.
The opportunity for private investment in interstate transmission lines
is huge, given the sheer lack of interregional transfer capacity. For instance, in 2010, India’s total power
generation capacity was 160 gigawatts, as against which the interregional transfer capacity was only
20 gigawatts. Given this opportunity,
other private players are also showing interest in power transmission.
Such projects can be lucrative, fetching an average return on equity of
15 percent.
Swati Prasad is a New Delhi-based freelance
business journalist. She has worked in both
Delhi and Mumbai as a correspondent and editor for India’s leading publications. As a freelance journalist, she writes on technology, the
economy, and corporate issues.
The lack of interregional transfer capacity is a huge opportunity for companies
like Adani Power.
Green Power for Growth
The company is also committed to
greener technologies. For instance,
Mundra is the world’s first thermal
power project based on supercritical
technology to have received “Clean
Development Mechanism (CDM) Project” certification from the United Nations Framework Convention on Climate Change (UNFCCC). In fact, such
is the company’s commitment to
green technology that Adani Power
took the initiative of developing a
methodology of registration for
HVDC projects in UNFCCC. The methodology has been approved by
UNFCCC. Adani Power has filed for
registration of the Mundra-Mohindergarh HVDC line, which is under
active consideration at UNFCCC.
The Adani group has also commissioned the largest solar power project
in Gujarat.
For Adani Power, ensuring energy
security for India is a key mission.
Adani Power has more than 10,000
India’s annual energy demand
is expected to more than double
by the next decade.
Living Energy · No. 8 | July 2013
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