Essar in multi-fuel gambit for boiler foray

Essar Projects, the project management and construction division of the Essar Group, has forayed into the power boiler industry, joining a horde of companies, such as Thermax and L&T, that are of late betting on the crowded sector.

Analysts, however, said with several private players entering the business in the last four years, the supply has overtaken demand and it was not a good time for any company to enter the business.
But Essar has its USP in place, said a senior company official.

“We have entered into a 20-year licensing agreement with Sweden-based Foster Wheelers for their specialised circulating fluidised-bed combustion, or CFBC, boilers, which can take any fuel as feedstock,” said Arjun Bharatan, senior vice-president - plant technologies, Essar Projects.

He said these boilers will help companies to take advantage of the fuel arbitrage opportunity and protect them from fuel price volatility.

The boiler industry has seen several new private players enter the sector in the last few years with companies such as L&T, JSW Energy and Thermax having  a head-start over others.
“We have already reached an overcapacity situation with Bharat Heavy Electricals Ltd churning out 15,000 mw of boilers and L&T and Thermax’s plants to be ready very soon.

At such a time, an entry into the boiler space is not a very good decision,” said Shailesh Kanani, an analyst with Angel Broking.
He said under the 12th Five Year Plan, the government is targeting a power capacity addition of 1 lakh mw, which translates into an addition of 20,000 mw capacity per annum.

This will require an equal supply of boiler-turbine-generator (BTG) package every year.

“With even Chinese companies entering the fray, the market has become highly competitive,” he said.

Bharatan said despite there being several Chinese manufacturers, the CFBC boilers enjoy a huge market in China. These boilers are also widespread in Europe and the US.

“Foster Wheeler has a 92% market share of the worldwide utility CFBC (200-550 MWe unit size) range, with over 8,000 MWe installed fleet size,” he said, adding it currently has a 460 mw boiler running in Poland.

The company has design capabilities of 1,000 mw, he said.
“We already have several enquiries and are also looking at outsourcing the manufacturing,” he said.