CDM prices to fall more…

Carbon credits prices are tumbling due to the prospects of increase in supply. Prices have fallen by more than 20 per cent in six weeks and are at a four-month low.

Spark Network believes that credits from HFC-23 (fluoroform, a potent greenhouse gas) projects will go up, as the suspension on such projects has been lifted. Also, many power plants have been shifting from coal to much cheaper gas, which is passing through a glut, leading to lower demand for purchasing such credits.

Certified Emission Reduction (CER, also called carbon credits) prices are trading only a little above the current financial year’s low, seen in July. They’re down nearly 20 per cent from the recent high of  EURO 14.07 in October. Some months earlier, the United Nations’ Forum for Climate Change’s (UNFCC’s) clean development mechanism (CDM) had suspended carbon credits generated by HFC-23 projects, which had led to a rise in prices. However, many companies in India and China had sold such credits at EURO 9-10 each.

Lobbying by these buyers met with success and CDM approved the credits generated by such projects. The decision came last weekend and CER prices on the European climate exchange fell further in the beginning of the week, reaching a level which is the lowest in the past four months.

The CDM executive board’s decision to lift the suspension on the issuance of carbon credits to HFC-23 projects might have come as good news for the project developers, but it will have its repercussion on the pricing economics of carbon credits. The move is likely to press down the prices of the credits due to the enhanced supply.

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JBIC to provide equity funding for private sector projects in India including Renewable Energy…

The Japan Bank for International Cooperation (JBIC) is looking at providing equity funding to private sector projects in India instead of debt support for public sector entities. The principal Japanese overseas funding agency is also shifting its focus on the Indian market from China following political tensions with its Asian neighbour.

Spark’s Network learned that JBIC also plans to create a green investment fund not limited to India but mainly for India, with other partners such as the International Finance Corporation, the World Bank’s private lending arm.

The fund will mainly target India and South East Asia. It will start with a corpus of roughly $200-300 million. Renewable energy will be part of it but it will not be restricted to renewable.

Spark’s Network assumes that In 2011-12, JBIC may plan to increase the equity investment portion to $2 billion from $200 million.

As part of its strategy for India, JBIC wanted to promote export of clean technology and energy-efficient infrastructure. It has already committed to exporting technology to DMIC and creating an eco-city, a new concept of urban development under which green technology and energy management devices are installed through smart grids and smart housing.

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Siemens to invest $87mn for 250MW wind turbine development in India

Siemens Ltd., started off it’s renewable energy segment, in India by setting up an office in Vadodara, Gujarat to further expand the business. The renewable energy division already had 30 employees on board and the company had announced that they would ramp up the number of employees to 100 within one year. “The market outlook for renewable energies in India is extremely positive and we see huge potential for the wind and solar business in the near future”, said Dr. Armin Bruck, Managing Director, Siemens Ltd. “ Setting up of the Vadodara office marks our foray into the Solar & wind business in India and with this initiative, we will be able to strengthen our activities in this important market,” he further added, according to this release from the company in September this year.

Initially, Siemens had identified sites in the states of Tamil Nadu and Gujarat for setting up their manufacturing base and was expected to start operation by 2012 with an initial capacity aggregating to 200MW.

In a later announcement a couple of months back, Siemens Ltd, the flagship listed company of Siemens AG in India, announced plans to invest €70 million (Rs 430 crore) in the first phase for the Baroda project, to set up a 250 Mw manufacturing capacity.

According to a report in the media today,engineering major Siemens Ltd plans to invest Rs.400 crore ($87 million) on the development of wind turbines in the country over the next two years, said a top company official here Tuesday.

Speaking on the sidelines of a function after Gujarat Chief Minister Narendra Modi inaugurated the second phase of the steam turbine and compressor manufacturing plant here, A.K. Dixit, CEO Energy cluster of the company, said the designing and manufacture of this equipment would be done in the country and the manufacture would start by 2013.

‘Though the location is yet to be finalized, we propose to set it up in Gujarat and are talking to the state government in this regard,’ he added.

Earlier, talking to mediapersons Armin Bruck, managing director of the company, said the company would be investing Rs.1,600 crore ($348 million) in India over the next three years to set up six hubs of base level products in India.

‘The company will now be able to manufacture steam turbines upto 150 MW and manufacture and package process compressors for domestic as well as other emerging markets,’ he added. These products, about 60 of them produced at Vadodara, will be constituting around 70 percent of the total market in India.

Siemens, is a late entrant into the wind energy space in India where Suzlon and Vestas have been leaders in the market.  The wind energy space is crowded with about nine manufactures having wind turbine models possessing valid type approval and certificate for sale in India. Further, there are about half a dozen models under testing and certification process. Panchabuta, will keep readers updated on the progress of Siemens as it enters the wind space.

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CEO of NVVN resigns; Potential setback to National Solar Mission

According to this report by Bloomberg Businessweek, the CEO of NTPC Vidyut Vyapar Nigam Ltd (NVVN) Shri. A.K. Goyal has resigned and that the resignation could serve as a potential setback to the government program and the National Solar Mission itself.

NTPC Vidyut Vyapar Nigam Ltd. (NVVN) was formed by NTPC Ltd, as its wholly owned subsidiary to tap the potential of power trading in the country thereby promote optimum capacity utilization of generation and transmission assets in the country and act as a catalyst in development of a vibrant electricity market in India.

In order to facilitate grid connected solar power generation in the first phase of the Jawaharlal Nehru National Solar Mission, a mechanism of “bundling” relatively expensive solar power with power from the unallocated quota of the Government of India (Ministry of Power) generated at NTPC coal based stations, which is relatively cheaper, has been proposed by the Mission. This “bundled power” would be sold to the Distribution Utilities at the Central Electricity Regulatory Commission (CERC) determined prices.

The JNNSM also provides for NTPC’s Vidyut Vyapar Nigam Ltd to be the designated Nodal Agency for procuring the solar power by entering into a Power Purchase Agreement or PPA with Solar Power Generation Project Developers who will be setting up Solar Projects during the next three years, i.e., before March 2013 and are connected to the grid at a voltage level of 33 kV and above. For each MW of installed capacity of solar power for which a PPA is signed by NVVN, the Ministry of Power (MOP) shall allocate to NVVN an equivalent amount of MW capacity from the unallocated quota of NTPC coal based stations and NWN will supply this “bundled” power to the Distribution Utilities.

Bloomberg New Energy Finance lead analyst, Ashish Sethia, said in New Delhi, a couple of days ago in this report, “These are bad signs,” “Many large players have either not bid very aggressively or stayed away from bidding.”

Lanco Infratech Ltd, KVK Energy and Infrastructure Pvt. Ltd and Anil Ambani-controlled Reliance Power Ltd’s (RPower),  all participated and won the bids in the first phase of the mission.

AlsoMahindra Partners Division a division of Mahindra group has also participated and won the bid in the first phase.

Given the fact so many big players tha had participated and won bids it would be unfair to say that many large developers have not bid or stayed away from the Solar Mission.

This report states that, Tata Power Co., India’s largest non-state electricity developer, had said last week it was not participating in the auction, citing concerns including equipment import restrictions and aggressive bidding that may be underestimating the cost and complexity of setting up solar plants.

Apart from the reasons discussed above which are both valid and genuine, Tata Power could have also decided to stay away from the bidding  due to the capacity restriction of 5MW for a group in Solar PV. Added to this is the fact that they were already planning to commission a 3MW PV plant at Mulshi in Maharashtra and set up two PV power plants with 25MW of capacity each at the site of its group company Tata Chemicals (TTCH IN) at Mithapur in Gujarat.

It has glad to note that, according to Bloomberg Businessweek report, NTPC said today in an e-mailed response to questions that  “The Solar Mission project “shall not get affected in any way by this development.”

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Why Tatas Stayed Away from Bidding For Solar Projects?

Tata Power Co., India’s largest non- state electricity developer, is shunning the country’s first major solar auction on concerns that terms set by the government will make it difficult for projects to be built profitably.

“We haven’t bid for the National Solar Mission,” Banmali Agrawala, executive director of strategy and business development, said in an interview in Mumbai on the plan to generate 20,000 megawatts of power from the sun by 2022.

The decision by Tata Power, the generating unit of India’s biggest industrial group, not to take part in the first bids highlights concern that the plan is failing to draw companies with the skills and resources to jumpstart the program.

That could delay the development of India’s solar industry, which potential investors including the World Bank and atomic reactor maker Areva SA see as one of the world’s most promising. India gets about 300 sunny days a year in most of the country.

“These are bad signs,” said Ashish Sethia, lead analyst at Bloomberg New Energy Finance in New Delhi. “Many large players have either not bid very aggressively or stayed away from bidding.”

European governments including Spain, Germany and France are curbing solar subsidies that set off a boom of investment and spiraling state renewable-energy costs. India is seeking to avoid such problems in part by awarding capacity to developers offering the deepest discounts to the rate at which they’ll sell their electricity.

‘Piece of Cake?’

That could backfire should developers submit bids underestimating the cost and complexity of setting up solar plants, Agrawala said.

Some of the bids may be “a little aggressive,” Agrawala said. “We do hope that the people who are bidding those numbers understand what it means to set up a solar project. It’s not a piece of cake.”

The government set an initial selling price of 17.91 rupees (39 U.S. cents) a kilowatt-hour for solar photovoltaic projects and 15.31 rupees for solar thermal projects. Bids have been submitted offering discounts of as much as 4 rupees to those rates, he said.

“There is definitely a risk that a number of projects might either be delayed and some even be shunned completely at later dates” as developers find themselves unable to execute at quoted rates, New Energy Finance’s Sethia said.

State Alternatives

India’s wealth of sunny days provides 5,000 trillion kilowatt-hours per year of solar energy equivalent, according to the Ministry of New and Renewable Energy. In comparison, India’s projected total energy consumption this year is a fraction of that, 848 billion kilowatt-hours, a ministry report showed.

The country’s Solar Mission initiative seeks to draw investment to the sector by offering incentives including special tariffs and a power-bundling arrangement designed to assure projects of a buyer for their electricity. It has also set restrictions, including limits on solar equipment imports and a 5-megawatt limit on any one developer.

“To restrict the size to just 5 megawatts per business group we felt was too small,” Agrawala said. “Also, you’re not allowed to import equipment. As an owner, I’d like to discover what is the least possible price in the global markets.”

Tata Power determined it would have trouble raising loans from banks under the program because it wasn’t clear whether the designated power buyer, a unit of state-run utility NTPC Ltd., has the financial backing to ensure developers are paid for what they generate, Agrawala said.

Mumbai-based Tata Power is setting up a 25-megawatt solar plant in western Gujarat under a separate state program, Agrawala said. It expects to sign a power purchase agreement with Gujarat state this month and commission the plant by the end of 2011, he said.

“Serious players are still exploring other state-based mechanisms and the success of the sector will also be dependent on the success of those schemes,” Sethia said.

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“City gets Rs 9 crore for solar project”

The Ministry of New and Renewable Energy has released Rs 9 crore to make Chandigarh a solar city. Now the UT Administration will have to pump in a matching grant so that the project is completed under the Five Year Plan. This was stated by AP Shrivastava, president of Solar Energy Society of India (SESI), who was in city for a seminar on ‘Renewable Energy Sources for Inclusive Growth’. He said SESI has proposed to the Government of Indian that a Rs 20,000-crore solar fund should be created, from which subsidy could be given for sun-run projects.

Shrivastava said India receives 5,000 trillion KW solar energy per year that could be used to supplement energy requirement of about 30 per cent who do not have access to power. For 8 per cent GDP growth, 6 per cent increase in energy sector was required, he added. Rajya Sabha MP Mabell Rebello said inclusive growth was not possible till all sections of the society, especially people at the grass roots level, were involved. Presenting grim statistics, she said, “India has 2.4 per cent of the total land mass, but 17.4 per cent of the world’s population. About 70 per cent of the population India lived in villages, 50 per cent of which were not electrified.”

She said other states need to learn from a Jharkhand village, Jhargaon, which had cent per cent electrification through solar energy. From farm tubewells to cooking and lighting, everything runs on solar power. Asserting that political will was important in the renewable energy sector, she said for India’s development, which was not possible without sufficient power, first corruption at all levels has to end. Manoj Dutta, director of PEC University of Technology, said technology could be a solution to many problems. “We live in a world of opportunities, which have to be grabbed,” he added. Dr Patrick Noser from Switzerland’s Meyer Burger Technologies, said his country had much less sunlight than India, and if they could use solar energy to meet the power demand, then why not this country.

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“Don’t give free power, let farmers get it from sun”

Instead of giving free electricity, the Punjab government should help farmers set up solar panels in their fields, feels NASA’s former mission manager for space flights Dr N K Gupta. Asserting that subsidy spoils economy, he said: “Let farmers generate their own power. This will not only reduce the burden on the state, but also make the farm sector self-reliant. Solar power panels can be set up even on cowsheds in farms, and the power can be used to run tubewells.”

Dr Gupta, who now lives in Washington DC and was with the Punjab State Industrial Development Corporation in the 80s, who was in Chandigarh on Wednesday for a seminar on solar energy. He told The Indian Express that free power had done more harm than good to the economy of Punjab. “Once I approached World Bank officials, asking them to give grants to the state for some project. But on hearing the name, Punjab, they refused point-blank, saying they could not help a state that gives free power,” he added.

“Freebie regime is against good trading principles, as something which is not being charged for is bound to be misused. Free electricity is at places being used to run air-conditions,” he said.

“Solar power is highly dependable. It can be used anywhere from space to farms. Satellites use solar power, as the set-up has no moving part, and once installed, it stays for 20 to 30 years and requires little or no maintenance,” he said.

Once agriculturists become self-sustained, the available power could be supplied to the industry, he said. “Industry is a more productive sector as compared to agriculture,” he added.

Asserting that the state should keep future in mind while planning, Dr Gupta said: “When Ranjitgarh was being planned near Phillaur more than 25 years ago, I was a member of the commission that worked on the project. I had proposed that the houses should be constructed in a fashion that rooftops can be used to set up solar panels and the walls facing south should also be used for the purpose. The plan did not mature, as the price of solar cells was high at that time, though we knew that it will come down.”

The government should now at least make rooftop panels mandatory, as nanotechnology would bring the costs further down, he added. Spelling out more economic gains, Gupta said the grid could be stabilised once the power demand went down and farmers and domestic users could sell surplus power.

Advocating the need for creating awareness about new technologies, he said the state would have to first do away with machines-will-take-away-jobs thinking. “In India, more than 50 per cent population is into agriculture. In the USA, only 2 per cent people are in the farm sector, but the production is four times higher. This is because of the dependence on machines. Farm labourers can be employed in companies manufacturing machines,” he said.

“Punjab has abundant sunlight and huge potential that needs to be tapped, but for that political will is most important,” he added.

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Competitive tariff bidding for thermal projects from 2011

India's power sector regulator said that come 2011, all thermal power projects and transmission systems will be awarded on competitive tariff bidding and trading in renewable energy certificate is set to start. Mr Pramod Deo chairman of Central Electricity Regulatory Commission said that "The ministry of power has agreed to the suggestion of competitive bidding for all thermal power projects to be set up in the country after January 2011 onwards.

This will be applicable for all projects whose power purchase agreement would be signed from next January onwards.” Speaking to reporters on the sidelines of the All India Conference of chairmen of Central and State Electricity Regulatory Commissions here, he said that "Public sector utilities like NTPC have completed their PPA for their projects. The ministry of power has said it will not extend the deadline." Mr Deo said the process of trading in RECs will start in two months as registration has commenced with the Power System Operation Corporation Ltd.

He added that "The volume of RECs that would come up for trading is not possible to estimate.” The REC is classified into two categories solar and non solar and will be issued to renewable energy generators. Power distribution and captive power companies can buy RECs to meet their green power norms.

On the issue of payment of transmission charges by Nuclear Power Corporation of India Ltd for its Kudankulam power plant with effect from 2009 onwards when the plant is yet to start power generation, Mr Deo said that "The same principle will be followed in the future. Where ever the transmission infrastructure is ready to evacuate power, the power generating company will have to pay the charges."

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Competitive tariff bidding for thermal projects from 2011

India's power sector regulator said that come 2011, all thermal power projects and transmission systems will be awarded on competitive tariff bidding and trading in renewable energy certificate is set to start. Mr Pramod Deo chairman of Central Electricity Regulatory Commission said that "The ministry of power has agreed to the suggestion of competitive bidding for all thermal power projects to be set up in the country after January 2011 onwards. This will be applicable for all projects whose power purchase agreement would be signed from next January onwards.” Speaking to reporters on the sidelines of the All India Conference of chairmen of Central and State Electricity Regulatory Commissions here, he said that "Public sector utilities like NTPC have completed their PPA for their projects. The ministry of power has said it will not extend the deadline." Mr Deo said the process of trading in RECs will start in two months as registration has commenced with the Power System Operation Corporation Ltd. He added that "The volume of RECs that would come up for trading is not possible to estimate.” The REC is classified into two categories solar and non solar and will be issued to renewable energy generators. Power distribution and captive power companies can buy RECs to meet their green power norms. On the issue of payment of transmission charges by Nuclear Power Corporation of India Ltd for its Kudankulam power plant with effect from 2009 onwards when the plant is yet to start power generation, Mr Deo said that "The same principle will be followed in the future. Where ever the transmission infrastructure is ready to evacuate power, the power generating company will have to pay the charges."

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