EPC Contracting of Balance of Plant A Sensible Option

Sunil Bhat
22 May, 2012 BoP Systems Conference, New Delhi

Agenda

BoP the show stopper Power Project Contracting Options Pros and Cons of each Options EPC Vs Package Route L&Ts EPC business landscape in Power Sector

SB | BoP Systems Conference | 22 May, 2012

Agenda

BoP the show stopper Power Project Contracting Options Pros and Cons of each Options EPC Vs Package Route L&Ts EPC business landscape in Power Sector

SB | BoP Systems Conference | 22 May, 2012

BoP - the show stopper

Cost break-up of a typical 660 MW
Fuel Oil System 2% Electrical Water System C&I 7% 4% 1% Chimney 1% Cooling Tower 4% AHP 4% CHP 9% Spares Others 3% 1% Civil Works 15%

Turbine Island 20% Boiler Island 29% BoP 51%

BoP contributes to approx. 50% of the capital cost thus among the most important cost pillar While BTG island in Technology & manufacturing intense, BoP island in Integration & site activity intense Almost 74% of delayed power projects delayed due to non-readiness of BoP system

Source : CERC

BoP Systems execution determines the success of a power project on Time, Schedule and Cost parameters
3 SB | BoP Systems Conference | 22 May, 2012

Agenda

BoP the show stopper Power Project Contracting Options Pros and Cons of each Options EPC Vs Package Route L&Ts EPC business landscape in Power Sector

SB | BoP Systems Conference | 22 May, 2012

Power Project Contracting Structures

Multiple Packages
Entire project is broken into multiple packages (close to ~ 25 40 packages)
BoP ordered in Multiple Package

BTG - EPC BoP - Multiple Pkgs EPC BTG EPC BOP

BTG is ordered as a single EPC package however BoP is broken into multiple packages

Two EPC orders placed. One for BTG and the other for BoP
BoP ordered as EPC

Complete EPC
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A Single EPC order for the complete power plant project Includes both BTG and BoP
SB | BoP Systems Conference | 22 May, 2012

Agenda

BoP the show stopper Power Project Contracting Options Pros and Cons of each Options EPC Vs Package Route L&Ts EPC business landscape in Power Sector

SB | BoP Systems Conference | 22 May, 2012

Multiple Package Route

Developer

Advantages Least cost of Purchase Total Control over individual Vendor Selection Total Control over individual package specification

Contractor # 1

Contractor # n

Responsibility Matrix - Developer Project Mgmt Interface Mgmt Intra Pkg Engg Intra Pkg Coordination

Responsibility Matrix - Contractor Package Schedule Package Performance

SB | BoP Systems Conference | 22 May, 2012

Multiple Package Route

Developer

Drawbacks Requires large number experienced staff for micro level Project Monitoring Team to have competency in Project Management, Interface Management Large ordering cycle time Concentrates on individual package guarantee parameters

Contractor # 1

Contractor # n

Responsibility Matrix - Developer Project Mgmt Interface Mgmt Intra Pkg Engg Intra Pkg Coordination

Responsibility Matrix - Contractor Package Schedule Package Performance

SB | BoP Systems Conference | 22 May, 2012

Multiple Package Route

Developer

Successful with Developers having inhouse EPC team experienced in Engineering & Project Management

Contractor # 1

Contractor # n

Responsibility Matrix - Developer Project Mgmt Interface Mgmt Intra Pkg Engg Intra Pkg Coordination

Developers having EPC subsidiary

Responsibility Matrix - Contractor Package Schedule Package Performance

SB | BoP Systems Conference | 22 May, 2012

EPC Route
Developer

Advantages Single point responsibility Integrated Plant Level Performance guarantee Less manpower requirement for developer

ECP Contractor
Contractor #1 Contractor #n

Responsibility Matrix - Contractor Project Management Interface Management Intra Package Engineering Intra Package Co-ordination Plant Level Performance Guarantee
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SB | BoP Systems Conference | 22 May, 2012

EPC Route
Developer

Drawbacks Higher initial cost Less control on project schedule Less control over vendor selection

ECP Contractor
Contractor #1 Contractor #n

Responsibility Matrix - Contractor Project Management Interface Management Intra Package Engineering Intra Package Co-ordination Plant Level Performance Guarantee
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SB | BoP Systems Conference | 22 May, 2012

EPC Route
Developer

Successful with SEBs who dont have huge team for project management

ECP Contractor
Contractor #1 Contractor #n

Responsibility Matrix - Contractor Project Management Interface Management Intra Package Engineering Intra Package Co-ordination Plant Level Performance Guarantee
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Private IPPs

Agenda

BoP the show stopper Power Project Contracting Options Pros and Cons of each Options EPC Vs Package Route L&Ts EPC business landscape in Power Sector

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SB | BoP Systems Conference | 22 May, 2012

Package Route Vs EPC

Attribute
Project Engineering

Package Route
External Consultant to be appointed. Owner bears additional Cost Owner has to co-ordinate. Owner bears additional manpower and risk Low due to Multiple vendors

EPC Route
EPC Contractor Responsibility EPC Contractor Responsibility High due to single vendor responsibility and higher stakes

Interface Engineering Probability of Timely completion of Project Project Cost

Uncertain : Default of even Assured : Minimal one vendor adversely variations expected impact project completion schedule High cost as large staff to be employed by Owner Minimal cost as single vendor employed

Project Management

Package Route Vs EPC

Attribute
Functional Guarantees

Package Route
Numerous : Owner to handle multiple contractors for equipment / system level performance guarantees Difficult : Largely dependent on Owners experience / practices Difficult to maintain uniformity in contractors competence and capability levels Low : Small size contractor / vendors

EPC Route
Key Plant level performance guarantees : EPC Contractors single point responsibility Easy : EPC contractors are better equipped & updated to provide value for money Easy : Selection restricted only to performing and competent EPC contractors High : Reputation at stake

Benefits of design standardization and optimization Selection of Reputed & reliable Contractors After sales services Support

EPC Value Proposition

Single Point Responsibility for Design, Engineering, Supply, Erection & Commissioning Simpler co-ordination requirement One point contact. Minimum staffing required from end user organization Minimum Finance risk Minimal schedule risk Least Interfacing related issues between sub systems, thereby faster commissioning Flexibility during engineering for design changes without affecting overall schedule Enforceable Guaranteed Plant performance Stiff Penalties that are levied as percentage of total package cost is a big deterrent

Agenda

BoP the show stopper Power Project Contracting Options Pros and Cons of each Options EPC Vs Package Route L&Ts EPC business landscape in Power Sector

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SB | BoP Systems Conference | 22 May, 2012

L&T Power: Many facets

L&T-BMH -Coal Handling Plant -S/R, Wagon T

L&T-S&L Engineering Gas EPC

L&T-MHI STG

L&T-ECC/EBG -E&I -Control & Automation

ESP
L&T POWER TPPC
Coal EPC /STGI

Piping Centre

L&T-Valves -Valves & Fittings

Foundry

L&T-HED -Heater -Condenser -Deaerator

L&T-Howden Fans & APHs

L&T-MHI Boiler Island

In-house Capabilities are 85% of Total Power Plant Offerings

Civil Works & BOP

Water systems Fuel Oil System incl Storage Feed Cycle Equipment Power Cycle Piping LP Piping

CHP, AHP Compressed Air System HVAC Fire Protection LV Switchgear Electrical BOP Control rooms

Civil Works for Main Plant, Power House & BOP Cooling Towers Chimneys Erection of Boilers STG / GTG, ESP

Civil & Construction

Extensive experience in construction of all types of Power Plants Coal based Gas based Open Cycle Gas based Combined Cycle Co-generation

660 MW Sipat

330 MW PPN CCPP

Kayamkulam CCPP

Power Block Erection

Steam Generators & auxiliaries GTG / STG & auxiliaries HRSG HP & LP piping Ducting & refractory/ lining Inland Transportation & Stores Management at site Welding new alloys - X20, P91. Erecting the first of any type of Boiler in India 110, 200, 300, 500, 660 MW

5x660 MW Adani Power, Mundra Boiler Erection

4x600 MW Jharsuguda (Sterlite Energy Ltd.)

Chimney

2x 250 MW CESC Budge Budge

210 MW NEYVELI TPS

Cooling Tower
Natural Circulation

Induced Draft

In-house manufacturing
HP FW Heater LP FW Heater

Rectangular Condenser

Circular Condenser

Coal Handling Plants (CHP)

Technology based equipment for Sizing & Conveying Stockyard preparation machines Wagon loading & marshalling system Main Activities Design & Engineering Manufacturing & Supply Construction, Testing & Commissioning Performance testing, training and after sales service

CHP our track record

In Power Sector, 31 CHPs has been installed by L&T till date 12 Track Hoppers ranging from 110 mtr to 310 mtr length More than 100 KM conveying system upto 4000 TPH 58 Paddle Feeders upto 2400 TPH 69 Crushers upto 1875 TPH 13 Apron Feeders upto 1500 TPH

Largest capacity CHP in Power sector 3200 TPH for NTPC Barh (3 x 660 MW) Wagon Shifter Indiabulls, Nasik 5x270 MW (under execution) Asias longest Track Hopper of 310 mtr long at NTPC Kahalgaon & Barh

In house manufacturing facilities for key CHP equipment and dedicated vendor base for other components AMC/ O&M contracts

CHP - Wagon Tippler

20 Wagon Tipplers up to 24 tips / hr First Wagon Tippler supplied at Kothagudam T.P.P (Year 1987)

CHP-Reversible Stacker Cum Reclaimer

29 Stacker Reclaimers upto 4000 TPH

BOOM LENGTH: 41 M STACKING CAP: 3300 TPH RECLAIMING CAP: 3750 TPH (PEAK)

Switchyard
Design, detail engineering, supply, erection, testing & commissioning : 33KV to 440KV Switchyards 220KV to 400KV Gas Insulated Substations

Other Competencies
Station Switchgear, SPBD Service Transformers, Non SPBDs MV / LV Switchgear HT / LT Cabling Illumination System Earthing & Lightning Protection Switchboards (PCC / MCC) C&I (including PLC, SCADA & Telemetry, drives)

L&T Value Proposition

Cost break-up of a typical 660 MW
Fuel Oil System 2% Electrical Water System C&I 7% 4% 1% Chimney 1% Cooling Tower 4% AHP 4% CHP 9% Spares Others 3% 1% Civil Works 15%

Turbine Island 20% Boiler Island 29% BoP 51%

L&T has in-house capability for Supercritical & UltraSupercritical BTG for ratings upto 1000 MW In addition, L&T has more than 85% of BoP package capabilities inhouse Because of majority in-house capabilities, L&T is best placed to delivery projects on scheduled.

L&T In-house Capability

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SB | BoP Systems Conference | 22 May, 2012