Transitioning India's Thermal Power Landscape: Embracing Efficiency and Sustainability

1. 20th India Power Forum 2017“Sustainability of Power Business – Paradigm Shift for 24x7 Power for All” Session I: Power Generation Scenario by 2022 : Business Case of Decommissioning Thermal Power Plants and their Replacement with Efficient and Cleaner Units Anup Bhargava Executive Director, Jindal Steel & Power Limited

2. India has witnessed an increasing trend in thermal capacity addition with a few dips, however, the future forecasts show that there will be a downward trend in yearly additions Capacity Addition Trend Yearly Capacity Additions in Thermal Power in India (MW) Total Capacity has more than doubled from 2010 to Mar 2017 The under construction capacity is estimated at 53,000 which will come in the next 4 years – that gives us ~12,000MW/Year addition capacity on an average – much lower than previous years Source: Avalon Consulting Research and Analysis, Interactions with suppliers, TPPs, power associations

3. JSPL Business Overview Power Mines & Minerals Global Ventures Construction Material & Solution Steel Current Capacities – Domestic & Global Cement Road solutions LGS IPP – 3400 MW** CPP – 1634 MW 2 MTPA Steel Coal Mines 3.11 MTPA* Iron ore 6.1 MTPA Steel* • Domestic • ** 1000 MW Divestment announced 3

4. A dominant share of capacity (~140,000 MW ~72%) is <17 years old accounting for 350 units whereas ~38,900 MW (20%) is >25 years old and is reàdy to decommissioned Unit Age Wise Share of Existing Thermal Power Capacity Thermal Power Capacity Breakup by Unit Age (MW) Thermal Power Capacity Breakup by Unit Age (No. of units) Comments • The biggest and most important age segment is > 17 year old plants that can be phased out from 2018-2022 • These account for over 54,400 MW capacity in India • Around 38,900 MW is over 25 years old – these plants do not have much life left, expensive to upgrade and comply to new Emission norms. Total = 194,400 MW Total = 674 units The total Decommissioning of Thermal Plants from an age perspective (>17 years old) is estimated at ~54,400 MW across 323 units, can be phased out from 2018 to 2021 Note: The existing market capacity is as of 31/07/2016 and April 2017 Report Source: CEA

5. Plant capacity / unit spread across Utility Companies ( Public/State and Private Sector ) :: Target Market > 25 yrs Unit ownership wise break up ( Current Figures may slightly vary as data collected from a research report published a few days back) India’s total thermal Capacity breakup by ownership and size (in MW) India’s total thermal Capacity breakup by ownership and size (in no. of units) Comments • > 25yrs Plant • - Central ( NTPC/DVC/NLC) = 37% • - State Sector = 58% • Average Net Station HR = 2,944 Kcal/kwhr, ( 8.8%, 60% PLF) • New 800 MW Supercritical • Net SHR = 2,100 kcal/kwh • Central and State Sector is the target market for decommissioning and then replacement with new technology Total = 194,400 MW Total = 674 units Average Central Sector and State Gencos ( 39,000 MW , > 25 yrs) is the Target Market for Decommissioning Source: Avalon Consulting Research and Analysis, CEA

6. Business Case of Decommissioning Thermal Power Plants and their Replacement with Efficient and Cleaner Units Business Case Target Power Stations (Thermal) Advantages of replacement Other Parameters • Coal will remain primary energy, which was 55% in 2015-16 and is expected to remain high at 48-54% by 2040 • Reduction in customer (Discom Tariff), due to removal of fix costs for these decommissioned power stations – Expected Rs 1/unit • Stranded Capacity ~ Approx 50,000 MW • For Decommissioning 71,000 MW -> Scrap Value – Rs 19,200 Cr • FSA Transfer • Retrofit – Rs 1.5cr / MW • Reduction in Tariff by replacing older units to New Supercritical units – 10% • Emission Reduction, including CO2, Sox, Nox as per new norms for plant after Jan 2017 Reduction in customer (Discom Tariff), due to removal of fix costs for these decommissioned power stations – Expected Rs 1/unit • Steel Scrap Availability 13 Million MT • Ash Generation reduction by 25% • Salvage value of a typical 4x120 MW PS ~Rs 130 Cr • Stage I : Phasing out > 25 yrs Power plant ( Approx. 242 Units, 38,900 MW) • Stage II : Phasing Out 17-25 yrs Power Plants ( Approx. 74 units, 15,500 MW) • Phasing out units where FGD Cannot be installed ( Approx. 16,600 MW) • Summary • Total Expected Decommissioning Opportunity 71,000 MW -> Rs 2,700 Cr • Expected capacity addition in Thermal to be 5% YOY (NEP) • New Unit 50,000 MW • ~ Rs 250,000 Cr Indian Power Sector revival and COP21 Compliance largely depend on Decommissioning & Replacement of Older Power Stations

7. Business Case of Decommissioning Thermal Power Plants and their Replacement with Efficient and Cleaner Units (Simulation) Business Case Business Case Advantages of replacement Conclusion • Replacement of 4x110 MW or 2x210 MW by 1x 800 MW • Distribution Tariff : Less by 13-15% • Generation Tariff : FC Less by 50% • : VC Less by 10% (due to 10% reduced coal + 10% increased O&M and 100% increased output) • Ash Reduction : Less by 12% • CO2 reduction : Less by 12% • SOx reduction : Less by 80-90% (considering present level of 1200/1400 to be reduced to 100 mg/Nm3) • NOx Reduction : Less by 80-90% (considering present level of 600/500 to be reduced to 100 mg/Nm3) • Water Consumption : Less by 35-40% (considering present level of 4.5/4.0 to be reduced to 2.5 m3/Mwh) • COP 21 Emission Compliance by 2021/22 by India by decommissioning and replacement of old units • Flexible Power Generation, with newer plant for < 30% turndown • Effective use of coal -> reduction of 80 T/MW We recommend decommissioning of > 17 yrs units to new 800 MW supercritical units

8. Thanks