Implementation of Project for setting up of 15,000 MW of Grid-connected Solar PV Power plants through NTPC/ NTPC Vidyut Vyapar Nigam Limited under National Solar Mission

 

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the implementation of the scheme for setting up of 15,000 MW of Grid-connected Solar PV Power projects under the National Solar Mission through NTPC/ NTPC Vidyut Vyapar Nigam Limited (NVVN) in three tranches namely, 3000 MW under Tranche-l under mechanism of Bundling with Unallocated Coal based Thermal Power and fixed levellised tariffs, 5,000 MW under Tranche-ll with some support from Government to be decided after getting some experience while implementing Tranche-l and balance 7,000 MW under Tranche-Ill without any financial support from the Government.

Successful completion of additional 15,000 MW capacity of Grid-connected solar PV power generation projects, mainly in the private sector, with largely private investment, under the National Solar Mission would accelerate the process of achieving grid tariff parity for solar power and also help reduce consumption of kerosene and diesel, which is presently in use to meet the unmet demand.

In Tranche-l, which will be Batch-II of Phase-II of the National Solar Mission, 3000 MW capacity of solar PV power plants will be based on bundling of solar power (3000 MW) with unallocated thermal power (1500 MW) in the ratio of 2:1 (in MW terms), for which the required 1500 MW unallocated thermal power has been made available by the Ministry of Power. The bundled power will be allotted to various States that come forward to (i) provide land for setting up the solar power projects and (ii) purchase a major portion of the bundled solar power for consumption within the State (iii) ensure connectivity to the solar power project. The capacity allotted to each such State will be set up through developers, to be selected through international competitive bidding by NTPC /NVVN. Both private and government companies would be free to bid for projects.

1000 MW capacity out of the 3000 MW under the bundling scheme will be set up on land already identified in Andhra Pradesh. The balance 2000 MW capacity under the Bundling Scheme will be allotted in other interested States that come forward.

It is estimated that implementation of Tranche-l of the scheme will entail total investment of over Rs.18,000 crore, all of which will be met by project developers, mainly private.

A Payment Security Mechanism / Working Capital Fund with an estimated corpus of Rs. 2300 crore to cover 3 months payment for bundled capacity of 3000 MW of Solar Capacity with 1500 MW NTPC Coal Power, will be set up to ensure bankability of PPAs and timely payment to developers. This will be evolved through collaborative efforts of Government of India and Solar Project Developers. The modalities for setting up of Payment Security Mechanism / Working Capital Fund will be finalized subsequently. Accruals from encashment of Bank Guarantees, penalties on developers, etc. will also go into this fund.

Some capacity will be earmarked out of the total procurement under this scheme with provisions of domestically manufactured solar cells as well as modules. The quantity to be fixed with Domestic Content Requirement (DCR) in each tender will be prescribed by Ministry of New and Renewable Energy (MNRE) based on the prevailing market conditions from time to time. Bids received under both the categories (one with DCR requirement and the other without any such requirement) will be evaluated and successful bidders selected independently. Further, this DCR will also be technology agnostic that is applied on both the crystalline silicon and thin film SPV cells and modules.
Background
The first Phase of the National Solar Mission (2010-2013) had a target of 1100 MW for Grid-connected solar power generation capacity, against which 1685 MW was set up in the country under various schemes. Further capacity addition of 9,000 MW comprising 3,000 MW under Central schemes and 6,000 MW under State initiatives/ other mechanisms was envisaged In the 2nd phase of the Mission (April 2013-March 2017).

Now that sufficient experience is available in India in this field and the Government is keen to expeditiously promote solar power in the country, it is proposed to give a quantum jump to development of solar power in India through market driven approach, wherein the role of subsidies and direct Government support is gradually phased out. Specifically, it is proposed to significantly enhance capacity addition in the 2nd phase itself under Central schemes through various mechanisms.

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Andhra Pradesh signs MoUs for 4200 MW of Renewable Energy Projects and unveils policies for Solar & Wind Energy

 

Andhra Pradesh Government signed Memorandum of Understanding (MoUs for generation of 4,000 MW of wind power and 200 MW of hybrid power in the State during the first Renewable Energy Global Investors Meet and Expo (RE-INVEST).

Andhra Pradesh Government also policies for the wind and solar power projects. 

According to the State Government, around Rs 8.5 billion investment is expected in the transmission & distribution and a huge investment in solar power projects.

The State Government has assured the green energy investors speedy clearances, several exemptions, faster execution schemes, vast land bank, committed bureaucracy and political will for the effective and efficient development of Renewable Energy Projects in the State.

The State Government has proposed the investors to enter into tripartite agreements with the State Discoms and State Government.

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2,66,000 MW Renewable Energy Projects commitment given by 293 companies

 

During the first Renewable Energy Global Investors Meet (RE-Invest), commitment to develop as much as 2,66,000 MW of Renewable Energy Projects has been given by around 293 companies. 

Some of them have also assured to put up equipment manufacturing plants as well.

 

• Renewable energy companies including Suzlon and Gamesa have committed to manufacture equipment to help generate 11,000 MW and 7,500 MW of power respectively to be used in the non conventional energy side.
• Country's largest power producer NTPC has also said it would generate 10,000 MW of power through green sources in the next five years.
• Among others are Welspun Energy with a target to generate 11,000 MW renewable energy, followed by ReNew Power 11,500 MW capacity, Reliance Power 6,000 MW, Hindustan Powerprojects 10,000 MW and Sun Edison 15,000 MW.

Country's biggest lender SBI has said it will finance 15,000 mw renewable energy over the next five years.

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Aggressive bidding in coal e-auction to hurt power sector…

 

According to some of the Power Sector Bidders, the aggressive bidding by some of the bidders would lead to disaster in the tariff and capital cost of the power projects.

Several bidders have taken a very aggressive call discounting the mining fee by making money elsewhere such as coal sizing/handling costs, washing costs, selling of rejects/middling in open market, port charges, transportation/shipping costs etc. in their landed price of coal to their power plant.

This will lead to a chaos in the sector and will hamper the sustainable growth of the coal sector.

It was expected the Power Ministry will prepare new Standard Bidding Documents & Guidelines by incorporated the past experience and plugging all the loopholes to encourage the bidders to bid for serious and mature bids which will be sustainable in the future and provide overall growth in the Sector.

However this philosophy is not evident in the present coal block auction process and the entire process is plagued with several important loopholes.

If the present auction process continues in the same way then it will defeat the sole purpose of the sustainable and transparent growth in the sector and will lead to a complete failure of the system which will end up providing control of the majority of the mines in the hands of few mighty bidders only.

The sector experts also pointed out that aggressive bidding will also not encourage investments in the sector. Some even suggested that the best solution today will be to handover these mines to Coal India in the interim and let the Ministry to develop a full-proof bidding guideline first so that the serious & sustainable bidding takes place leading to an overall growth of the coal sector.

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New net-metering policy to power Gujarat's solar-rooftops…

 

In order to provide the necessary fillip roof-top solar power projects sector in Gujarat, the state government will be introducing a new "net-metering policy" in 2-3 weeks, that will provide better financial incentives to solar-power generating households.

"We have prepared this policy and we hope to declare it before the Lok Sabha elections are announced," DJ Pandian, principal secretary (energy), Government of Gujarat told The Indian Express on the sidelines of a seminar on "Solar Energy in India' organised by the Ahmedabad Management Association (AMA) on Saturday.

Under this new policy, Gujarat government proposes to introduce "Net-Metering" for power consumers in the state. Net metering is an electricity policy --- similar to the ones introduced by Tamil Nadu, Andhra Pradesh or Uttarakhand --- for utility customers who operate their own "self-generation" photovoltaic systems at their residences.

"So, if a household consumes 200 units of electricity and generates 100 units through the solar panel on their roof-tops, they will have to pay for the remaining 100 units. In case, if a house produces more than their requirement (at any given point in time), the power will go to the grid," said Pandian while explaining the new net-metering policy that is expected to be announced in the next 2-3 weeks.

Under this policy an electricity meter, that measures the power utilised by the household from the grid, and the power supplied (from the solar-rooftop) to the grid,  will be installed in homes.
Gujarat government in 2010 had started the Gandhinagar rooftop solar programme and had approved the installation of rooftop solar panels up to a capacity of 5 MW across the state capital. In absence of a net-metering policy, the Gujarat government along with solar power companies had been providing individual homes in Gandhingar (under a pilot project), a green incentive of Rs 3 for every unit of power generated by photovoltaic systems installed on rooftops of households.

The net-metering system is expected to make solar rooftop projects more attractive to individual households, especially in the new towns and cities in Gujarat where the project is yet to pick up. As per the Census 2011, there are about 16,000 households in Gujarat that use solar energy as a primary source to illuminate their homes.

"The next revolution in solar power is not utility connected power, but solar power produced on roof-tops," the state government official said taking about the huge potential the segment held.
Pandian also spoke about how ITI students needed to be trained in managing and repairing these solar panels and systems so as to ensure that the roof-tops across Gujarat continue to generate power.

Apart from Gandhinagar, solar roof-top projects have been floated for the cities of Vadodara, Mehsana, Surat (5 MW each), Rajkot (6.5 MW) and Bhavnagar (3.5 MW).

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Renewable energy projects worth Rs 30,000 crore being implemented in Madhya Pradesh…

 

Renewable energy projects worth Rs 30,000 crore are being implemented in Madhya Pradesh, which have quietly reached out to companies and attracted GE, Reliance Power, Spanish wind major Gamesa and others, giving tough competition to Gujarat in the sector.

The buzz of activity has catapulted the state to the top slot of renewable energy in the country where Narendra Modi's Gujarat was hailed as the most successful state in the sector. MP's Chief Minister Shivraj Singh Chauhan has accelerated the state's drive for renewable energy, helping it expand rapidly and kickstart many projects, including 4,600 mw of being executed, state government officials said.

The state invited proposals in November 2012, seeking investments to the tune of Rs 10,000 crore, with the full backing of Chauhan. "The chief minister gave us a blank cheque and complete support to go ahead with our plan to develop renewable energy in the state.

The idea was to set a plan in place and first see the results on the ground rather publicise just a policy on paper," said S R Mohanty, secretary, new and renewable energy department, Madhya Pradesh. The state has made things easy for investors.
Renewable energy projects worth Rs 30,000 crore being implemented in Madhya Pradesh To set up a wind project, the developer has to just submit a resource assessment report of any site in the state. It applies for solar, bio and hydel as well, where if the selected site is government's land, the developer gets it for the life of the project i.e. 25 years.

In case of private land, the government facilitates the acquisition. Finding a good site and getting clearance for it is a major hassle in the wind sector. So when the land is made available by the government, it simplifies the whole process. The state's policy, no doubt is simple and transparent," said Sunil Jain, managing director, Hero Future Energies.

Hero has 208 mw of wind and 50 mw of solar power project underway in the state. While there is a National Solar Mission at the central level, state policies on solar power are quite ambiguous, the only exception was Gujarat.

The Modi-ruled state was an early mover in the sector even before the PM announced the national solar mission. In 2010, Gujarat signed around 88 solar power purchase agreements with 75 developers for 25 years with tariff as high as Rs 12.54 per unit without competitive bidding. But Gujarat backtracked on the tariff last year as tariffs of new projects fell to half of Gujarat's rates, compelling the state to appeal to apex electricity regulator for revision in tariff.

Gujarat has an installed capacity of 852 mw in solar and 3,114 mw in wind as on March 2013. MP however has given developers much more freedom to sell power. They can sell outside the state; take the national solar mission or renewable energy certificate route, or sign a PPA. Sanjay Chakrabarti, partner & cleantech sector leader at Ernst & Young said MP is the new Gujarat for renewable power producers.

"In the last one year, maximum addition in renewable based power capacity has happened in MP. More than the policy, it's the strict execution and political stability that has helped invite investments in the state," he said.

"Gujarat had an ambitious feedin tariff policy while MP has a bigger focus on projects not getting feed-in tariff. For such projects, the efficiency rate in MP is higher as there is government support in getting clearances, choice of sale of power and transmission infrastructure," said Bharat Bhushan Agrawal, senior analyst (solar) at Bloomberg New Energy Finance. Sumant Sinha, founder and CEO of Renew Power said that MP could become an interesting state for investment in renewable.

"The state would see a good addition in solar and wind.It has a lot of room for investment with the government adopting a high degree of openness and facilitation," he said. Investors seem bullish about MP may be due to the ease of getting land, clearances and grid connectivity," said Agrawal.

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Why auctions are not the only way forward for power projects…

 

It is a given that policymakers need to optimise policy across multiple competing objectives. For example, in the power sector, they need to ensure tightest tariffs for buying energy, high capacity addition to address energy deficits, a nod to climate change and therefore renewable energy, diversification of energy sources, power availability for the masses at the most affordable cost, and so on.

The two most important objectives tend to be cost minimisation and capacity maximisation. Unfortunately, these two objectives are opposed to each other. Driving down cost means fewer players will be attracted to the sector, and this drives down capacity addition. To maximise capacity, pricing would need to leave something on the table for investors. Given current sensitivities on corruption, investigations and CAG audits, our bureaucrats believe the most transparent method is to use competitive bidding or auctioning — whether it is for power plants, airports, spectrum, roads or mineral resources.

As a public policy, the objective of minimising tariffs is unobjectionable —but in an infrastructure-starved country such as India, surely, maximising capacity and facilitating growth also have some merit. The secondary and tertiary benefits of infrastructure creation go beyond the immediate impact. Competitive bidding drives down pricing but it also drives down capacity addition, and by itself cannot be the answer to all policy conundrums. When competitive bidding is coupled with rapacious Indian promoters, the problems go beyond the lack of capacity addition.

Competitive bidding incentivises aggressive assumptions and low returns —both of which lead to poor project quality. To make ends meet, companies often use poor quality equipment, take unhedged dollar financing, make aggressive assumptions about the natural resource (for example, radiation in case of solar, or cost of coal going forward), or interest rates.

Many promoters have perfected the art of getting banks, mostly state-owned ones, to fully finance their projects. This leads to two negative consequences. The first is the moral hazard problem. Since the promoter has no invested equity in the project, any risk is worth taking as it is a free investment.

Second, since the projects are effectively 100% debt funded, they have no financial resilience to withstand adverse developments. So, banks get stuck with non-performing assets. The power sector is a case in point where almost 40,000 MW is stuck on account of aggressive assumptions on fuel availability. A huge amount of bank lending is turning sick. This, in turn, leads to reduced risk appetite among banks and reduced credit in the system.

Take the example of the growth of telecom. It is only when we moved to a revenue-sharing mechanism in 1999 that the sector really took off. When we subsequently introduced the bidding mechanism for spectrum and licences, we ran into all sorts of problems. Similarly, the first round of solar bids have left almost 250 MW out of 500 MW in solar thermal unbuilt. The Gujarat solar scheme (a feed-in tariff mechanism) has done what Phase I of the National Solar Mission and multiple states with competitive bidding and L1 matching have been able to achieve over the last three years.

Bidding for power plants is a mess with fuel issues and pricing disputes being rampant. Competitive bidding does lead to many levels of dysfunctional behaviour. While a first round of bidding may lead to maximising cost reduction, subsequent problems are so widespread that next rounds see only poor interest. Despite all this, competitive bidding has become an article of faith with our policymakers.

Policymakers need to have more imagination in designing policies for a growing India. To generate growth, we need to leave something on the table to allow investors to ride through problems that inevitably arise in any business. Only this will facilitate the entry of quality capital and dedicated investors to set up high quality, long term businesses that contribute growth. Else, only those who have perfected the art of creating returns the "Indian way" will thrive.

The many benefits of having more flexible and responsible policies far outweigh the hours of extra sleep for our policymakers.

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With CCI approval, Coal India on track to boost output by 50%...

 

India’s rising coal imports, increasingly a reason for the country’s wide trade and current account deficits, may be reined in considerably in the next few years, report Raj Kumar Ray and Aftab Ahmed in New Delhi. With the Cabinet Committee on Investment (CCI) approval in hand, the railways is set to complete work on three rail projects by end 2016, helping Coal India and its arms evacuate the black gold from some of their big mines and transport them to industrial hubs. The facility will help increase domestic coal output by 250 million tonnes or nearly 50%.

The three projects — Tori-Shivpur-Kathautia (Hazaribagh) triple line for the North Karanpura Coalfield in Jharkhand, Jharsuguda-Barpalli double line for Ib Valley coalfield in Orissa and Bhupdeopur-Raigur-Mand in Chhattisgarh — were stalled for nearly a decade due to various reasons. With the CCI clearance, work has begun at some of the sites, a senior official told.

“The clearance for these railway lines would be a milestone in terms of efforts to step up domestic production of coal. The rail connectivity has the potential to generate over 250 million tonnes of coal annually, which is almost half of what CIL produces now,” said a coal ministry official, asking not to be named.

India’s domestic coal output, mainly from Coal India, has grown slowly from 431 million tonnes (mt) in 2006-07 to 576 mt last fiscal, while imports more than trebled from 41.5 mt to 138 mt as power plants, steel and other units consumed more fuel to aid growth in Asia’s third-largest economy. Coal imports as a percentage of GDP almost doubled from 0.5% in 2006-07 to 0.9% in 2012-13, and was one of the main reasons along with oil and gold imports for widening the current account deficit.

While many captive coal blocks allotted to private players failed to take off, the pressure has mounted on Coal India to raise output. CIL has often blamed delays in green clearances, land acquisition and lack of rail links from pithead to industrial units as major reason for not being able to scale up its operations.

In this context, the three rail projects will address much of the coal shortage in coming years. The Jharsuguda-Barpalli rail line is essential for transportation of coal from the Ib Valley coalfield of Mahanadi Coalfields with a potential of 90 million tonnes per annum. The North Karanpura Coalfield covers an area of 1,230 square kilometres and has total coal reserves of 13.1 billion tonnes with a potential output of 70 mt annually. The Mand Raigarh Coalfield can supply 100 mt of coal annually once the rail link is built.

The environmental clearance for Jharsuguda-Barpalli was given last month and the project is likely to be completed by June 2016, an official said.

The Rs 2,345-crore Tori-Shivpur-Kathautia project has now got environmental clearance and land acquisition for some stretches is under way. The project is likely to be operational by December 2016.

In the case of the Rs 2,500-crore Bhupdeopur-Raigur-Mand line, the CCI/CCEA has resolved the issue and a special purpose vehicle led by Ircon will be set up by September 2016.

The three railway link projects are a part of the three inter-state rail corridor projects proposed by CIL that are dedicated to coal evacuation in the Naxal-affected areas in Orissa, Chhattisgarh and Jharkhand. CIL’s total investment in these three corridors are of the order of Rs 6,000 crore.

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Power bourses asked to show supply-demand curve on websites…

 

To ensure more transparency, sectoral watchdog CERC has asked power exchanges to display on their websites aggregate demand and supply curve of electricity trading for day-ahead market.

The move, according to the Central Electricity Regulatory Commission (CERC), would help market players in making informed decisions.

Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL) are the two electricity bourses in the country, with the former having more than 90 per cent market share.

"The proposal for display of aggregate demand and supply curve would be a positive step towards development of power markets.

"This would significantly contribute towards information dissemination, bring transparency in the markets and help market participants to take informed price decisions," CERC has said.

The directions would be applicable for day-ahead electricity trading market, starting from April 1 this year.

In the day-ahead market, participants transact electricity on 15-minutes block basis, a day before its delivery.

"The curves shall be available on the website for a period of one year from the date of publication. This shall be implemented for the results of day ahead auction held on 1.4.2014," the order said.

The watchdog, in its order on January 8, has asked the bourses to display on their respective websites the national level aggregate demand and supply curves -- price and quantity -- after completion of auction and final price discovery.

Noting that curves should be displayed for each 15 minute time block of the day, the regulator said exchanges should not display information about any individual participant.

As per the regulator, the demand and supply curve should be displayed at the same time when the final prices results for day ahead market are published on the website.

"This information shall be over and above the cleared prices of different bid areas presently being displayed for the day ahead markets," it added.

The power exchanges have also been asked to closely monitor the market and monitor the bidding behavior of participants to check whether any market abuse is happening.

In September last year, CERC had sought comments on a discussion paper titled 'Improvement of market efficiency by information dissemination through display of aggregate demand and supply day ahead curves by power exchanges on their website'.

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Power gencos seek relief on CERC’s draft multi-year tariff norms…

 

Power generation companies (Gencos) have sought relief from the electricity regulator on many of the regulations that came out in the draft multi-year tariff (MYT) regulations 2014-2019.

The final draft is likely to come in a month’s time. Among those, the power gencos, like NTPC , have asked CERC (Central Electricity Regulatory Commission) to allow them plant-availability-based incentive.

Earlier, power gencos got incentives over and above the fixed cost charges that they would get in cases when plant was available for power generation.

However, under the new draft, CERC has removed these incentives, stating that incentives will only be given if plant is generating the power to distribution companies (discoms). Thus, the incentives have got generation-linked from being availability-linked.

The change of the structure from availability to production puts the onus on generators, which according to experts, have to pay a price due to the inability of the distributors to buy power from them. But the distribution companies have contested this saying that power generation companies get unnecessary advantage, and are seeking for capping these incentives.

Over and above the fixed charges, NTPC alone used to recover Rs 600 crore as incentives annually. The power gencos have also sought for easing the operating and maintenance parameters and reducing the proposed cap for station heat rate as proposed in the draft norms. Station heat rate (SHR) is fuel required to make one unit of power.

And CERC in draft MYT had capped SHR by 2% to 2,375 kcal/kwat hour for 500 MW of power, since according to CERC this would increase their efficiency. NTPC has also sought for 18% minimum assured return on equity, an increase from what was proposed in the draft where the ROE was capped at 15.5%. One of the key highlights was a proposal in the draft to remove the tax arbitrage for power generation companies like NTPC, which earned around Rs 500 crore yearly as tax arbitrage.

The power gencos have requested CERC to remove this regulation from the draft and continue with the earlier one. Experts say that a pre-tax ROE for companies like

NTPC would ensure higher cash flows and a better balance sheet. Discoms, on the other hand, have presented to the central electricity regulator to use the interest income earned by companies like NTPC, which is as high as Rs 2000 crore, to set off the tariff reduction.

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Andhra Pradesh to offer incentives to energy saving industries…

 

The Andhra Pradesh Government is working on modalities to offer incentives to industries who bring about savings in their process through energy efficiency measures.

A Green Factory Code will also be shortly announced whose objective is to encourage savings in high energy consuming industrial establishments.

During the Fifth State Energy Conservation Mission meeting held here today, P.K.Mohanty, State Chief Secretary, highlighted the importance of energy saving and various measures initiated by the Government.

During the meeting, he said, “Energy intensity, which is measure of energy required for unit of GDP growth in India is twice that of other developed countries. Reducing energy intensity must be our top priority by improving energy efficiency.”

As per the integrated energy policy of the planning commission, the electricity saving potential per year on demand side in India is about 15 per cent (15 billion units) of the total electricity demand. By improving efficiency and bringing down losses, a significant demand-supply gap could be met, he said.

The State Government expects to facilitate the addition of about 1000 mw of wind energy and 500 mw of solar energy every year during the XII Plan period.

The Government is planning to utilise the entire force of self help groups for creation of awareness about energy efficiency programmes. The State has about 10 lakh self help groups with 1.2 crore women members.

A memorandum of understanding with the UK Government will be signed shortly for sharing global best practices in energy savings. And a comprehensive roadmap for energy efficiency improvement is under preparation.

As a part of Government move to encourage energy saving, the Confederation of Indian Industry has been requested to institute awards for industries who adopt best energy efficient management practices.

A Japanese company has made a baseline study in Cherlapally industrial estate area on energy efficiency measures. In about six months, the model practiced here is planned to be replicated in other industrial areas of the State.

The Mission has come out with broad areas of savings sector wise. As per the Mission’s calculations, there is potential to save about 15,105 million units across domestic, industrial, Government and local bodies and in agriculture sectors.

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FinMin rejects power ministry's plan to make gas projects viable through subsidy…

 

The finance ministry has rejected a proposal by its power counterpart for making stranded gas-based projects viable through subsidizing high cost imported fuel.

“We had proposed subsidizing the high cost of imported Re-gasified Liquefied Natural Gas (R-LNG) through pooling. The finance ministry has turned down the proposal last week,” power secretary P K Sinha told reporters at the sidelines of the ministry’s media interaction. The ministry is now reworking the proposal.

Speaking at the event, power minister Jyotiraditya Scindia said the government is mulling seeking a relief mechanism for the gas-projects which have been stranded for want of lack of availability and high cost of fuel.

He added that power generated using costly imported Re-gasified Liquefied Natural Gas (RLNG) will not get scheduled as the output prices are regulated. “Power sector will not be able to bear a gas cost of more than $5 per million metric british thermal units (mmbtu).”

Power projects are facing an acute gas shortage owing to dwindling output from Reliance Industries’ KG-D6 block off Andhra coast. The government has notified an increase in prices under a formula that will push up gas prices from the current $4.2 per mmbtu to $8.4 an mmbtu.

The new price regime will kick in from April 1 and be applicable for five years. Every quarter, prices will be reviewed and adjusted, depending on how global prices move. Scindia said the sector will get additional gas of around 8.9 mmscmd over the next three years helping ease the crunch.

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Government looking at ways to reduce smart grid tech costs…

 

Various options are being studied to reduce the cost of smart grid technologies, which will help in bringing down overall transmission and distribution losses in the power sector, a Planning Commission member said today.

Smart grid technologies would help in ensuring efficient power system and pilot projects in this regard have already been identified by the government.

Planning Commission Member B K Chaturvedi said that an exercise is underway to reduce the cost of smart grid technologies.

High capital and operating costs are among the major challenges in implementing smart grid technologies in the power sector.

"There is an eminent need to develop smart meters to meet the challenges of power theft," Chaturvedi said and added that the losses related to transmission and distribution of electricity should be reduced.

He was speaking at a conference on smart grids organised by industry body PHD Chamber of Commerce and Industry here.

Fourteen smart grid pilot projects have been shortlisted by the Power Ministry for funding.

Going by estimates, India's Aggregate Technical and Commercial (AT&C) losses are more than 20 per cent, among one of the highest in the world.

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Green shoots emerge in power sector: India Ratings

 

Indian government's policy measures are helping the power sector as green shoots have started to emerge, believes India Ratings. These policies are directed to solve the fuel risk and poor financial health of state power utilities in 2012-13 and 2013-14.

Two years before the reforms kicked in (2010-11 and 2011-12), were the worst years for the sector due to many reasons like low retail tariff hikes amongst others. “Power entities also suffered due to high debtors for players across the value chain, non-availability of fuel, high interest rates, foreign exchange losses and regulatory risk leading to low investor interest,” said the rating agency.

After two tough years came measures to ease coal availability, which include a Presidential directive issued to Coal India to sign fuel supply agreements with power producers, fast-track mine clearances and action on non-serious captive coal block developers.

India Ratings believes that fuel price risk is likely to be manageable with the formulation of a new standard bidding document with fuel costs passed through, compensatory tariff for select competitive bids and suitable modifications to allow pass-through of imported coal costs in Coal India linkage-based fuel supply agreements.

“The government is also working towards bringing greater transparency in the sector through the constitution of a coal regulator and formulation of a coal block auction mechanism,” the agency said, in a press release.

The state electricity boards have gradually increased tariffs, leading to a gradual recovery. The Cabinet Committee has also approved a financial restructuring package, which was adopted by the states of Haryana, Uttar Pradesh, Rajasthan and Tamil Nadu and Himachal Pradesh.

“This comes with certain pre-conditions like regular tariff rationalisation and a reduction in aggregate technical and commercial losses. India Ratings believes this will alleviate the risks posed by weak state power utilities over the long-term,” said India Ratings.

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Odisha to extend MoUs of 10 IPPs by month-end…

 

The Odisha government has decided to extend the lapsed memorandum of understanding (MoU) with 10 independent power producers (IPPs).

"Based on the progress made on their projects, we have decided to sign fresh MoUs with 10 IPPs. The new pacts will be signed by the end of this month”, said a senior government official.

The IPPs whose MoUs are to be extended are GMR Kamalanga Energy Ltd, Lanco Babandh Power, Monnet Energy, Jindal India Thermal Power Ltd (JITPL), Ind-Barath Energy Utkal Ltd, CESC Ltd, Visakha Power, Mahanadi Aban Power Ltd, BGR Energy Systems and Maa Durga Power Company Ltd.

The IPPs have to retain at least 51% stake in their power projects for a minimum of three years from the date of commissioning of their plants, as per the new MoU framed by the state government.

Also, any stake sale beyond this lock-in period will need prior permission of the state government

According to the terms set in the new draft MoUs, the IPPs have to comply with the mandatory clause to promote employment among locals.

The clause stipulates that industries setting up their projects in the state have to reserve 90% jobs for locals in the unskilled and semi-skilled category, up to 60% in skilled category and 30% for the supervisory and managerial cadre while giving them the option to fill up the post of senior executives from the open market.

The IPPs also have to take steps to develop ancillary and downstream units around the mother plant.

It may be noted that the lapsed MoUs were impeding the progress of power projects since the banks and financial institutions were reluctant to provide funds to the developers.

So far, two IPPs- Sterlite Energy and GMR Kamalanga Energy have commissioned their units. While Sterlite Energy has fully operationalized its 2400 Mw coal-based plant at Burkhamunda near Jharsuguda, GMR has put on stream two 350 Mw units of its plant at Kamalanga in Dhenkanal district.

The rest eight IPPs were in advanced stage of commissioning their projects.

The state government had entered into MoUs with 29 developers for establishment of coal-based projects. Together, these projects have a generation capacity of over 37,000 Mw with the state share about 6000 Mw.

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Indian to launch National Smart Grid Mission soon...

 

The government will soon launch a national smart grid mission and monitor the implementation of policies and programmes envisioned in the smart grid road map for the power sector.

"This will help in finding solutions for some of the daunting challenges the Indian power sector is faced with, such as enabling better access to electricity, providing lifeline supply to all households and reducing T&D losses among others. This would also guide planning and investments for future power projects and T&D activities," B N Sharma, joint secretary, ministry of power said.

Speaking at an international conference organised as part of an international exhibition on electrical products and services, ELECRAMA, on Friday, he said the government had recently unveiled the Smart Grid Vision and Road Map for the future for both modernising the ageing grids as well as for transition towards low carbon power economy by integrating renewable generation with the grid.

According to ABB, a smart grid is an evolved grid system that manages electricity demand in a sustainable, reliable and economic manner, built on advanced infrastructure and tuned to facilitate the integration of all involved. Smart grids will provide more electricity to meet rising demand, increase reliability and quality of power supplies, increase energy efficiency, and be able to integrate low carbon energy sources into power networks.

G Kumar Naik, Managing Director, KPTCL said, "The Government of Karnataka has given top most priority to transformers by proposing to set up transformer repair centres in every taluk in the state and transformer banks in every district head quarter."

Raj Eswaran, President, Indian Electrical and Electronics Manufacturing Association (IEEMA) said in his address that the industry body had identified five areas for strategic and policy interventions by both the government and industry.

India's Rs 12,000 crore transformer industry is facing a few challenges as it is currently operating at about 60 per cent capacity due to a slump in demand projected by the government companies, said Aditya Dhoot, Vice-Chairman ELECRAMA. The Mission plan 2012-2022 for the electrical equipment industry was launched in July 2013 and its vision is to make India the country of choice for production of electrical equipment and reach an output of $100 billion by balancing exports and imports.

Source: Business Standard

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Government eases environment clearance norms for coal mines...

 

The government has eased environmental clearance norms for expanding coal mines, which will help state-run Coal India boost output by a record 30-40 million tonnes in the new financial year and ease the crippling fuel scarcity in the power sector.

The ministry, which has taken a pro-industry stance since Veerappa Moily took charge, has ruled that mines with an annual capacity of up to 8 million tonnes can expand capacity by up to 50% without holding public hearings. This exemption will apply to one-time capacity expansion in projects that do not involve land beyond the existing lease area. Several mining projects have been stalled because of the earlier provision that required public hearings if the capacity was being expanded by 25%.

The decision is a big boost for Coal India, which has been under enormous pressure to boost output as large power generation capacity is idling or underutilised because private investment led to record capacity addition in the last fiscal year while coal output stagnated.

Coal India produced about 450 million tonnes last fiscal. It has 400 mines with annual production of less than 8 million tonnes. "We are easily looking at an increase of 30-40 million tonnes increase in production in the next financial year ... the increase could be even more, but, at this stage we will study the possibility of increasing production by 50% for all mines in this category. This order will give a boost to production teams at every mine as they can increase production by 1 to 1.5 million tonnes without additional hearing," said Coal India Limited Director N Kumar.

Tuesday's order increases the ambit of an expansion that has been in place since December 2012. Former environment minister Jayanthi Natarajan had exempted existing coal mines with plans to increase production by as much as a quarter of the current permissible production levels from holding public hearings as part of the environment clearance process.

The decision to further relax the clearance process for expansion projects comes at the behest of the coal ministry, which argued that the December 2012 exemption norms were unfavourable for smaller coal mining projects. For mines with lower permissible annual production levels, a 25% capacity increase worked out to a negligible increase. Therefore, were unable to avail of the exemption from holding public hearings for getting the clearance.

Moily's latest industry-friendly move comes at a time when the environment ministry has been under attack, particularly from infrastructure ministries, for delays in clearing projects. The coal ministry has consistently maintained that these delays were primarily responsible for lower coal production. However, some experts say delays in environmental clearance is only part of the reason for Coal India's failure to meet annual production targets. Lower coal production adversely affected power, steel and other industry projects, all of which a section of the government and industry claimed was derailing India's growth. The coal ministry, in particular, has since 2009 been demanding a more liberal and pro-growth environmental regulatory framework.

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CIL to once again invite fresh applications for coal import...

 

State-owned  Coal India  (CIL) will once again invite fresh applications from interested entities for importing coal that would be supplied to power plants under fuel supply agreements as the earlier tender floated by the PSU elicit no response.

"We will float a fresh tender anytime...There was no response to the the tender floated earlier as the potential people (the PSUs like STC, MMTC) because of some apprehensions expressed by them," Coal India Chairman and Managing Director S Narsing Rao told PTI.

Rao said the company intends to import five million tonnes (MT) of coal to meet the shortfall against deliveries under fuel supply agreements (FSAs). CIL had for the first time invited th applications with regard to coal import in November, 2013 which closed last month.

"(CIL invites) NIT (Notice Inviting Tender) for selection of agency from government department or government owned company or public sector entity for supply of imported coal to purchaser (power producers) at delivery point (power plant end)," the company said on its website.

The company had said that the agency will supply coal to various power plant across the country till March 2015. "The successful bidder shall procure imported coal through tendering for the quantity required for each quarter separately," CIL said.

CIL had said in September last year said that it is likely to import 15 million tonnes of coal for power utilities as part of meeting the FSA commitment. According to the new FSA, Coal India will supply 65 percent of the contracted amount from domestic sources and another 15 percent through imports with pass-on pricing model.

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Buying hydro power may become mandatory for discoms...

 

The Union power ministry is planning to make it mandatory for power distribution companies (discoms) to buy electricity from hydel projects — a move that would put them on a par with renewable power plants. The idea is to attract investments into the sector and raise the falling share of hydroelectricity in the country’s power mix.

Since the proposal has the potential to increase discoms’ power purchase costs, the ministry has decided to consult electricity regulators and state governments on the issue. Sources said the proposal will be first put up before electricity regulators who are meeting in Chandigarh on January 17. Thereafter, the ministry is expected to call a meeting of state energy ministers to discuss this issue.

Specifically, the idea is to put in place a policy of hydropower purchase obligation (HPO) similar to renewable power purchase obligation, which mandates discoms to buy a certain share of electricity from generating stations running on wind, solar energy and bio-mass. Under the mechanism, discoms in states lacking renewable resources can fulfil their obligation by buying renewable energy certificates from others. Apart from discoms, captive power generators are also required to comply with the policy.

“We are considering HPO for hydropower plants along the lines of renewable power purchase obligation and will soon begin consultations with stakeholders, including state governments, on it,” a senior power official said.

The ideal ratio of thermal and hydropower is 60:40. But, in India, the share of hydel power in the energy basket has fallen from 26% in 2007-08 to 16%, and is projected to further decline to 13% by 2022.

India has the potential to generate 1.5 lakh mw electricity from hydro resources, but it has harnessed only 40,000 mw. The Union power ministry had envisaged capacity addition of 8,237 mw in the hydropower sector during the 11th Plan. However, only half the targeted capacity could be added.

Some industry experts feel the proposed HPO can go a long way in boosting investor sentiment on the hydropower sector if it is implemented properly. Others think HPO needs to be complemented with other incentives, such as an increase in the return on equity (RoE) for hydel projects, if the desired result is to be achieved.

Debasish Mishra, senior director, Deloitte, told Fe: “HPO will definitely give a boost to investment in hydel projects provided state electricity regulators set reasonable targets and ensure adherence by utilities and consumers. Else it will meet the same fate as renewable power purchase obligations.”

“Apart from HPO, the RoE on hydel projects should also be increased if the share of hydropower is to be restored to the ideal level of 40%,” said Ashok Khurana, director-general, association of power producers.

Apart from the risk of geological surprises, lack of road connectivity, especially in border areas, hampers capacity addition based on hydro resources. The Centre has constituted a ministerial panel headed by finance minister P Chidambram to suggest ways to expedite development of supporting infrastructure for hydel projects.

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Govt mulling National Offshore Wind Energy Agency...

 

To explore the potential of generating power through wind energy, New and Renewable Energy Ministry is making efforts for setting up a National Offshore Wind Energy Agency.

The agency will explore wind generation potential in the offshore areas of the country.

"The potential of generating power through wind energy in the offshore areas is immense and the ministry will approach the Union Cabinet soon for a decision," New and Renewable Energy Minister Farooq Abdullah said.

He was speaking during a day-long "National Level Consultation on National Wind Energy Mission" here.

Abdullah also expressed hope that the Finance Ministry will restore the benefits of accelerated depreciation for wind power producers in the Interim Budget to be presented next month.

The Minister also supported the idea of appropriate financial support to the wind power producers.

The national consultation was organised by the ministry to discuss the need and scope of a National Wind Energy Mission.

The mission works towards improving investment climate by resolving issues connected with resource potential, land availability, grid connectivity, clearance procedure and zoning.

This initiative is part of the efforts of the ministry to remove hurdles in wind power development in the country and bring together all stakeholders on a common platform to work in a coordinated and concerted manner, officials said.

The consultation was attended by industry representatives, state electricity regulators, state and central government officials and research and development experts.

Secretary, MNRE S B Agnihotri also highlighted the importance of setting up an evacuation infrastructure and short-term large scale storage facilities for the renewable energy.

He also stressed on the need for making long term finance available at reasonable rate for the wind power producers.

Source: Business Standard

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