Vesa Rihimaki, Group Vice-President and Rakesh Sarin, Managing Director, Wartsila India

RS: The biggest challenge is that the universal service obligation is not followed in this country. There was a commitment from the government of India that there would be power for all by 2012, but that promise is nowhere being fulfilled. Today the industry is suffering because of this; companies are forced to install captive power plants to ensure regular power supply. If we have that sorted out and the utilities are asked to provide reliable power then it will solve many of our problems. Electricity is the biggest multiplier and one unit lost means a loss of `32 to `122, which means we need to make our system much more robust.

VR: There is also a need to reduce bureaucracy in import and export activity; it is not really supportive at present. If the decisions are taken faster and there is less paper work, operations can become more effective.

VR: Compared to India, Chinese are far more driven towards getting and attracting investment and they really invite people. Land is allocated if you really want to establish an industrial activity and you can very easily start an activity. The government in many areas provides investment support. In this regard there is a big difference.

RS: We are not able to provide basic infrastructure in terms of land, roads, power, port etc. to companies which want to invest in India. But I must add that the entrepreneurship of India despite all these odds is showing tremendous growth. Imagine if we have 24/7 power, what kind of growth we can achieve.  Data shows that we have invested close to `100,000 crore in generator sets, inverters and other means of alternative power back-up.

RS: Most of India Inc’s biggest companies have our captive power plants including Tatas and Birlas. At present we generate close to 3,500 mw of power through our various plants. The bulk of it is HFO and about 700 mw is gas-based, but now we see an opportunity in peaker plants. The base-load capacity is almost there, earlier we were deficit even in that. So the company strategy is to make people aware about the benefits of a peaker plant so that regular power supply can be achieved.

VR: It started with captive power plants in India but now we have a large project management automisation in India. Apart from Finland, India is the second country which is a major project management centre for Wartsila. We also have a manufacturing centre here which is providing supplies globally as well. Also, our solutions have two other dimensions, sustainability and affordability.

RS: We have the data for a peaking power plant model and it has been presented to various authorities but for them to work together we need a proper regulatory authority. Otherwise no one will put such an expensive mechanism into place. After all, who will take care of the capital expenditure of a plant which would operate for only about six hours a day? So, a sound regulatory framework is important to roll out such ideas in the country.

VR: I think now we are actually coming to the bottleneck as to why such a model has not been implemented yet. People see power generation only in terms of base load, but if we really look at the whole curve of the day then it is peaking power plants that we need to solve our problems. So, we need to average out the cost as both systems would be supporting each other. There should be some regulatory requirements about a certain amount of peaking power in the system. The faster the changes are made, the faster the model can be implemented.

VR: I’ll quote the example of Brazil which is generating 90 per cent of its power from water. If you have such a large number of hydro power plants then it is very difficult to have thermal plants in the system unless they study their architecture. Brazil is now using thermal power plants as back-up for power in case the water levels see a drop and is using 15-20 mw of thermal power as back-up. In India where thermal power is the base load factor, we can opt for LNG based peaker plants with very low capital expenditure. These peaker plants can be installed within a year and require an investment of a mere `3.5 crore per mw against `5-6 crore per mw for thermal plants. These plants are multipurpose plants; they can pitch in for power during peaking hours and become an integral part of the power system in future.

RS: We don’t have a regulatory framework in place for peaker plants which is why this LNG-based peaker plant model is yet to be implemented. We are saying that even LNG costing $16-18 per mmbtu optimises the cost as against HSD which is priced close to $40 per mmbtu (this cost is subsidised but the end cost to consumers is still very high) and which is being used in the unorganised sector. If we replace HSD with LNG in an organised way, it would be much more cost-effective and also improve the efficiency of the plants. The average cost to consumer would also come down drastically.