Sunny days may be under cloud for all solar power cos in Gujarat…

Not all the companies, which are busy setting up their solar power projects in Gujarat, would be able to make hay when the sun shines. Many of them may not be able to avail Rs 15 per unit procurement tariff fixed by Gujarat government as the tariff is applicable to those units that get commissioned before December 2011.

This could be gauged from the fact that Gujarat has so far seen commissioning of only 11 Mw of solar power capacity by three entities, while 87 national and international companies have entered into power purchase agreement (PPAs) with the state government for supply of 961.5 Mw.

As part of solar power generation policy announced in 2009, Gujarat Electricity Regulatory Commission (GERC) had fixed a tariff of Rs 15 per unit for procurement of power from solar photovoltaic power projects and Rs 11 per unit for solar thermal power plants.

These tariffs were for initial 12 years and were applicable to the new solar power projects to be commissioned in the state by December 31, 2011.

According to Gujarat Energy Development Authority (GEDA), as many as 87 companies have signed PPAs with Gujarat Urja Vikas Nigam Ltd (GUVNL), a state-run electricity company, for a supply of 961.5 Mw.

"Of the total PPAs signed so far, majority of companies had expressed their intention of commissioning their projects before December 31, 2011 to avail Rs 15 per unit tariff. However, only three plants having cumulative generation capacity of 11 Mw have been commissioned as on date. With four months left for the deadline to end, another 200 Mw capacity is likely to be commissioned before December 2011", said a source in the state government.

Solar power plants so far commissioned in the state include those of Lanco (5 Mw) and Azure Power (5 Mw)

"If a company has committed to start its project before December 2011 and if it fails to honour the deadline, such companies may have to face penalty because they have entered into power purchase agreements," said officials of Gujarat Electricity Regulatory Commission (GERC), the state regulator.

Earlier, the state energy secretary, D J Pandian had also expressed his doubts about commissioning of the entire capacity by the set deadline.

However, Pandian had also made it clear that the state would be able to see commissioning of about a third of the capacities i.e. around 300 Mw of solar power generation by the end of December.

Now as only four months left for the deadline to come to an end, the companies making every effort to get projects commissioned before December. But it is believed that many of the companies, which have signed the PPAs have so far not received financial closure for their projects.

"It is very difficult to predict how much of solar power capacity will come up by December 2011 as many companies are at various stages of completion. But considering the current pace of execution, we can hope for about 200 Mw of capacities to get operational by December 2011," said K S Popli, director, Indian Renewable Energy Development Agency Limited (IREDA).

Industry insiders maintained that the availability of finances for projects has been a major road-block for the companies to faster implement the projects.

"Two out of three companies have not been able to achieve financial closure for their projects. Post December, it would be even more difficult for them to raise funds as the tariff would be less than Rs 15 per unit, making it less profitable for the companies," said a Mumbai-based solar power consultant.

While a large number of projects still struggling to get their project started, the industry is looking for some extension in the deadline by the government.

According to industry insiders, failing to meet the deadline of commissioning, the companies would be liable to be face penalty. "In case of non-completion of projects by December, the companies may terminate the PPAs and face monetary penalty," informed an industry expert.

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Indian Government proposes pool of domestic & imported gas for power projects…

The Indian Government proposes to supply gas for all gas based power projects under current five year plan by creating a pool of domestic gas and imported re-gasified Liquefied Natural Gas (R-LNG).

The proposed mechanism will not only ensure that gas is available to meet around 80% of the requirement of these power plants, but also provide fuel to them at competitive rates as pooling will help moderate R-LNG price.

Average domestic gas price is around $4.2 per million British Thermal unit (mmBtu), R-LNG costs over $15 per mmBtu. There are 10 power projects with a total capacity of 7,919 MW scheduled for commissioning by March-end 2012, but availability of gas to them is uncertain as production from country's biggest reserve, Reliance Industries' D6 block in Krishna Godavari basin has fallen sharply.

The government’s move will benefit Reliance Power’s 2,400 MW Samalkot project, RVK Energy’s 436 MW gas project, Panduranga Energy Systems’ 100 MW project, Torrent Power’s 1200 MW DGEN project and GSPC’s 700 MW Pipavav Power, among others.

 
On Friday, Prime Minister Manmohan Singh expressed concern over the sluggish pace of commissioning power projects at a review meeting of various ministries, directing that fuel-related issues be resolved at the earliest. At present, domestic gas is allocated only to existing power projects stranded due to gas shortage and a small quantity is given to new projects commissioned in 2009-10.

Projects under implementation and development have not been allocated fuel. According to the proposal being considered by the government, pooling may be done by combining gas and RLNG in a 3:1 ratio to meet 80% of the requirement of power plants. Pooling will bring down the cost of fuel to the power plants to $7-8 per mmBtu.

“This is a welcome move as it will allow us to get fuel at competitive rates and help us keep power tariff low. It will also end uncertainty and protect thousands of crores of project investments,” said an official of a leading private sector power company, asking not to be named.

For the proposed gas pool, government is considering to tap gas produced by state-owned ONGC and Oil India from the nominated fields. A portion of gas going from these fields to non-priority sectors such as petrochemicals and steel will be diverted for use by priority sectors such as power and fertilizer.

Of the 55 million metric standard cubic metres a day (mmscmd) gas produced by the two state-run companies from nominated blocks, the government will be able to free up about 10-15 mmscmd gas for use by new power plants. This will enable these power projects to get gas to run plants at close to 60% of their rated capacity. The balance will come from imported LNG.

The oil ministry has already directed RIL to meet the natural gas requirement of priority sectors first before giving the clean fuel to others from its KG D6 block. KG production has dipped below 45 mmscmd against an expected production of 80 mmscmd, leading to less-than agreed gas availability for all existing gas projects. Now, the power sector gets about 25 mmscmd and the fertiliser sector gets about 15 mmscmd of gas from nominated fields at an administered price of $4.2 million metric British thermal units. What remains of the 55 mmscmd APM gas goes mainly to consumers having allocations less than 0.05 mmscmd. A few buyers covered under certain court orders also get APM gas.

Gas allocation for these new projects could give a fresh lease of life for the capacity addition programme of the government which is is already far short of the 11th Plan target. In the current Plan, government planned to add 62,000 MW of new generation capacity but the Plan is expected to end with just about 45,000 MW. Gas for new projects could add another 8,000 MW of generation capacity.

Gujarat State Energy Generation’s 350 MW project at Hazira, Pragati Power Corporation’s 1,000 MW Bawana power project, Lanco’s 740 MW Kondapalli Phase III, GMR’s Vemagiri expansion project, Uttarakhand’s Kashipur project are also expected to benefit from gas pooling.

In May, the petroleum ministry passed an order order asking RIL to fully meet the contracted gas supply to priority sectors like fertilizer, LPG, power and city gas distribution in spite of the fall in gas production from the D6 field. Considering the shortfall in output, the ministry allowed RIL to make pro rata cuts in supply only in the case of remaining sectors like steel and petrochemical producers and refineries.

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Power Exchange India conducts sixth REC trading session…

Power Exchange India Limited (PXIL) has conducted its Renewable Energy Certificate (REC) trading session for the month of July on 27th July, 2011. Several members including obligated entities like the distribution licensees, captive power plants and open access users participated in this session.

The total orders received for Non-Solar Certificates were 24,566 comprising 14,766 buy bids and 9,800 sell bids. From the total bids received for the trade, 3,900 certificates were cleared today. REC market on the Exchanges has witnessed growing interest over the past few months. The total orders received for Non-Solar category by PXIL have increased from 598 Certificates in March ‘11 to 24,566 Certificates in this session.

Central Electricity Regulatory Commission (CERC) had come up with REC mechanism to incentivize the RE generators through a market based mechanism of trading and promoting newer investments into the sector. While the primary goal of the RECs is to address the needs of the compliance market, it also serves as a useful tool for meeting the ‘green electricity’ needs of the voluntary market. Companies have started purchasing RECs as part of their corporate social responsibility.

Trading in RECs which started with a slow response has gained momentum within a few months. PXIL, in its endeavor to offer easy access, transparent and fully electronic market place, had developed a robust and user friendly platform to trade on RECs. PXIL had launched its platform in March 30, 2011 to facilitate trade of these certificates and captured 70% of the market share in the first trade itself. Obligated entities like the distribution licensees, captive power plants, open access users and voluntary buyers participated in the bid for the RECs.

Power Exchange India Limited (PXIL) is India’s first institutionally promoted Power Exchange that provides innovative and credible solutions to transform the Indian Power Markets. It is joint venture of National Stock Exchange (NSE) and National Commodity & Derivatives Exchange (NCDEX). PXIL’s unique combination of local insights and global perspectives helps its stakeholders to make better informed business and investment decisions. The Exchange is currently operating a Day Ahead, Week Ahead and a Contingency Market as well.

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NTPC to stop supplying BSES; Delhi may have blackout…

India’s largest power producer National Thermal Power Corporation (NTPC) has issued a notice to  two private sector distribution utilities of Delhi, BSES Rajdhani and BSES Yamuna (Subsidiaries of Reliance Infrastructure Limited) for the money due by them to NTPC and threatened to cut off supply of electricity to them. This may result in Blackout in Delhi.

Currently, NTPC is supplying around 2050 MW of electricity (more than 68% of total requirement) to BSES utilities.

However, according to Spark’s market analysis both the BSES utilities have not cleared the due of Rs. 814 Crs for the energy supplied during the month of July 2011. As per the Power Purchase Agreement (PPA) signed with NTPC, NTPC could realize only Rs. 334 Crs through letter of credit (LC). Further NTPC has supplied electricity worth of Rs. 425 Crs during August. Hence, the combined outstanding amounts due by BSES utilities are more than Rs. 900 Crs.

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