IEEE formed a Standards Interest Group in Bangalore and shared views on grid situation of the country…

Power India found that IEEE Standards Association (IEEE-SA) the world’s largest technical professional association, has formed IEEE Standards Interest Group (SIG) in Bangalore for India.

 

The IEEE SIG provides a platform for the Indian technical community to participate in global standards development including those for Smart grid, conducts outreach programs and Smart grid workshops across various cities in India deliberating the role of standards and challenges in the Indian context.

Mr. Srikanth Chandrasekaran, Chairman, IEEE SIG for India shared his views on smart grid and the benefits that his organisation and bring to the country.

Query: Considering the huge T&D losses, how significant a role can IEEE Standards Interest Group (SIG) play in helping the country?

IEEE Standards Interest Group (SIG) is working to partner with government and industry bodies in the country and engaging India’s professional technical communities, while leveraging IEEE-SA’s expertise and experience in global standards development to accelerate the process of establishing standards relevant to the Indian smart grid market.

IEEE-SA has launched key standards and guidelines such as the IEEE 2030 TM Smart Grid Interoperability Guide, the first such standard that aids interoperability of energy, information and communications technologies; IEEE 1701 TM IEEE 1702TM, and IEEE 1703TMadvanced Smart Metering Standards; IEEE 1547.4 TM, the first guide for implementation of Microgrids; and the IEEE 1901 TM standard for Broadband over Power Line.

Query: Comment on the awareness in the country about smart grid?

India is on the right path. The government of India’s R-APDRP is a good first step for successful implementation of the smart grid in the country. The program is designed to take three to five years to implement across parts of India. However, successful and complete implementation of the smart grid is not going to be an easy task as the Indian power sector poses a number of barriers.

The utility industry is capital-intensive but has been suffering losses due to theft and subsidisation. IEEE-SA is working to partner with government and industry bodies in the country and engaging India’s professional technical community, while leveraging its expertise and experience in global standards development to accelerate the process of establishing standards relevant to the Indian Smart grid market.

Utilities and distribution companies have limited experience in communication technologies, needed to manage critical components of the Smart grid. Also, if India’s utilities are to take an active part in designing and implementing IT and Smart grid projects, they must acquire the skills required to take over operation and maintenance.

The most overlooked component of Smart grid implementation is the education of consumers and what this means to them. It is important to build awareness to create an understanding of Smart grids, the associated benefits and the potential implementation issues.

For complete and successful implementation of the Smart grid, India needs a national vision and a flexible plan. The country needs to develop policies and regulations to create a receptive environment for Smart grid by encouraging innovation, establishing standards for interoperability and allowing market-oriented solutions.

Query: With its diversity and traditional practices, how can the smart grid help India in curtailing losses?

Smart grid technology can help us reduce the electricity transmission and distribution losses and electricity theft by 5 to 10 per cent annually.

Without Smart grid, India will not be able to keep pace with the growing needs of its cornerstone industries and will fail to create an environment for growth of its high technological and telecommunications sectors.

Smart grid implementation is not going to be an easy task since the Indian power sector poses a number of barriers such as minimise transmission and distribution losses, power theft, inadequate grid infrastructure and low metering efficiency.

The power industry has reached a stagnation point, and needs a complete switch to the next generation, that is automation. Moreover, as the technology is considered premium, its implementation in the Indian industry has been a bit slower than expected.

In spite of the monetary issues, power utilities need to begin with basic automation systems, eventually upgrading to advanced systems.

 

 

 

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Around 33 power plants have registered PLF of more than 90% during March 2012…

 

Power India found that around 33 Thermal Power Stations (TPSs) with an aggregate installed capacity of around 33,332.5 MW across the country have registered a Plant Load Factor (PLF) of more that 90% during the month of March 2012.

 

Out of these 33 TPSs around 12 TPSs are run by Central Generating Stations (CGSs), 12 are run by State Generating Stations (SGSs) and remaining 9 are run by Private Companies.

 

The data of PLFs of some of the TPSs as gathered from Central Electricity Authority (CEA):

• Dahanu TPS (500 MW) - 104.18% PLF
  
• OP Jindal TPS (1,000 MW) - 102.78% PLF
  
• Unchahar TPS (1,050 MW) - 101.18% PLF
  
• Bhilai TPS (500 MW) - 100.18% PLF
  
• Talcher STPS (3,000 MW) - 99.84% PLF
  
• Ramagundem STPS (2,600 MW) - 98.85% PLF
  
• Rihand STPS (2,000 MW) - 98.83% PLF
  
• Kota TPS (1,240 MW) - 98.72% PLF
  
• Korba-West TPS (840 MW) - 98.76% PLF
  
• Rayalaseema TPS (1,050 MW) - 94.74% PLF
  
• Vindhyachal STPS (3,260 MW) - 94.32% PLF

 

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Power sector (Transmission Segment) Performance during FY 2011-12; gains momentum in Q4 to make up for lost ground…

Power India found that the country has managed to surpass the target for new transmission lines by 0.22% during the year 2011-12. A total of 19,847 ckm transmission lines have been laid against the target of 19,792 ckm.

• While the country missed its targets for the first three quarters of the fiscal, the sector`s good performance during the fourth quarter helped overcome the shortfall and exceed the yearly target.
  
• Only 10,995 ckm, of the proposed 13,392 ckm, of lines were laid till the end of Q3, whereas 8,852 ckm lines were added in the last quarter alone against a target of 6,400 ckm.
  
• In terms of the achievement rate, the state sector fared much worse than its counterparts and fell short of its target by 16%. The central and private sectors exceeded their targets for the year by approximately 15% and 7.5%, respectively.
  
• The shortfall in the state sector occurred primarily due to severe right of way (RoW) problems, delay in grant of forest clearances and filing of cases in civil courts by affected farmers.
  
• Five states, namely -- Uttar Pradesh, Chhatisgarh, Karnataka, Tamil Nadu and Kerala -- account for the majority of the shortfall.
  
• Overall, 5,528 ckm of 220 KV lines, 10,931 ckm of 400 kV lines and 1,408 ckm of 765 kV lines were laid during the year.
   

 

 

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Power Sector (Generation Segment) Performance during FY 2011-12; electricity generation surpass targets…

Power India found that the Power Sector staged a turnaround of sorts during FY 2011-12 with exceeding the capacity addition targets set by Power Ministry by nearly 17%.

This is a welcome reversal of trend in the power sector. It witnessed only 60% target achievement during FY 2010-11.

• The capacity addition target for last year was pegged at 17,601 MW, which included 5,725 MW by the central sector, 4,266 MW by the states and 7,610 MW by the private sector.
  
• With regard to the actual achievement, totaling 20,501.7 MW, the sector-wise break-up works out to be 4,770 MW for the center, 3,761.2 MW for the state sector and 11,970.5 MW for the private sector.
  
• During the 11th five year plan, a total capacity of 54,964 MW, or 260% of the capacity added during the entire 10th plan, has been achieved in the country.
  
• Further, 102.51% of the electricity generation target of 855 billion units (BU) was met during the year 2011-12. The electricity generated in the fourth quarter was 222.41 BU, which was 6.029 BU greater than the estimate.
  
• The sector-wise break-up of the power generated during the last fiscal was 369.31 BU for the centre, 367.57 BU for the state sector and 139.56 BU for the private sector.
  

Source:CEA

 

 

 

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Stock updates of Power Companies to bet upon…

Power India provide a comprehensive update on stocks of various Power Companies.   Investors are better off paring their exposure to the stocks of private power generation companies due to limited upside.

 

Despite the additional capacity planned, revenue and profits might not improve significantly if coal production and supply is not ramped up by Coal India.

 

Many of the private players have issues with their upcoming or current projects. While JSW Energy has high proportion of un-tied power which is dependent on merchant tariffs, Adani Power's reliance on imported coal for existing projects is a negative.

 

Similarly, Tata Power's Mundra project and Reliance Power's Krishnapatnam project are locked at fixed tariffs which does not allow them to pass on the rise in fuel costs.

 

Reliance Power's 2,400-MW Samalkot project is yet to get gas allocation and with falling gas output in the KG D6 basin, the payback period may be pushed further. Adani Power also has bid for fixed tariffs for most projects and is exposed to fuel risk.

 

Lanco Infratech is trading at less than its book value due to legal problems abroad, thanks to its coal asset acquisition last year. The coal assets, which require sizeable investments, may also be a drag on its profitability.

 

In the Twelfth Plan, almost 38,548 MW or 60 per cent of the coal-based projects to be commissioned are expected to rely on coal supply from Coal India.

 

Another 6,292 MW of capacity is expected to be fuelled by coal imports. These projects may have to operate at sub-optimal load factors if Coal India doesn't supply the agreed quantity, or due to increased cost of imported coal.

 

Adani Power, Tata Power and Reliance Power are trading at price-to-book values of 2.34 times, 1.92 times and 1.6 times, respectively.

 

This is not significantly lower that the historical book-value range of 2 to 3 times for these companies. But given the clouded outlook, these valuations leave little room for stock price appreciation.

 

Bet on Regulated players

 

Investors who want to take exposure to power sector can go in for regulated players in the generation space, such as NTPC.

It is the largest player in the power generation space with capacity exceeding 35,000 MW. The company expects to add another 31,000 MW by 2017.

A cost-plus model that allows it to pass on most expenses, fuel security and high internal accruals, make it a good bet in the utility space.

The company has signed power purchase agreements (PPAs) for 1,00,000 MW amounting to three times the current installed capacity that secures its revenue stream.

Playing the power sector theme indirectly can also be considered.

Power Grid Corporation, can be a big beneficiary of the capacity additions planned in the upcoming years. And the company does not have to deal with fuel supply risk.

Over the next five years, the company is expected to invest as much as Rs 1 lakh crore in rolling out transmission corridors and strengthening its grids.

PGCIL has already awarded contracts worth Rs 55,000 crore towards this, lending visibility to upcoming projects.

Power Finance Corporation is another company which will benefit from the Twelfth Plan capacity addition.

The total fund requirement from PFC, which predominantly finances generation assets, is estimated at Rs 1.78 lakh crore.

Even if there are slippages in terms of capacity additions, the fund requirement is far higher than the current loan book of PFC which is outstanding at Rs 1.18 lakh crore.

Trading at slightly higher than book value, the stock looks reasonably attractive.

 

 

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India achieved 89% target of National Solar Mission Phase I with commissioning of 125 MW Solar Projects out of total 140 MW…

Power India found that with commissioning of 125 MW Solar PV Projects, India has commissioned 89% of its allotted capacity for the first phase of the National Solar Mission.

 

According to NTPC Vidyut Vyapar Nigam (NVVN), which executes the bidding and trades power with the developers, it  could have been 100% if hiccups like allegations against Lanco and delays by some other developers had not taken place.

The NVVN had signed power purchase agreements (PPA) with 28 solar power developers for 140-MW solar photo voltaic (PV) projects in January 2011, out of which 125-MW of capacity stands commissioned currently.

According to Mr. Tarun Kapoor, Joint Secretary, Ministry of New & Renewable Energy;

"The progress so far is very good as most of the projects are commissioned. The delayed projects have been given one month extension with a part of their bank guarantee encashed,"

For solar thermal sector, power purchase agreements were signed for 27 projects for a capacity of 470 MW in batch 1. They would be commissioned by May 2013.

 

One of the major participating companies in the mission, Lanco Infratech recently faced allegations irregularities such as creating front companies. The investigative report on the matter will soon be presented, officials said.

The solar PV projects under batch 2 of phase 1, with the selected capacity of 340 MW, signed the PPA in January this year and will commission by February 2013. These projects are highly awaited as this round of bidding saw some big names in the solar energy market quoting tariffs as low as Rs 7.49/unit.

"The projects under batch 2 are under construction and we are hopeful that they will start commissioning in time," said Kapoor. The ministry also hopes to achieve grid parity in next five years. Mission statement has set a target to achieve 20,000 MW of solar generated power by 2020.

The total installed capacity of solar generated power in the country stands at 503.9 MW so far. The total investment, as estimated by the ministry is about Rs 6,000 crore.

 

 

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Tenders of 2460 MW of Suratgarth & Chhabra Thermal Plants worth Rs. 12,000 Crs scrapped by RUVNL…

Power India found that Rajasthan Government has scrapped the tenders it issued for two thermal power projects worth RS. 12,000 Crs which were bagged by Bharat Heavy Electricals Limited (BHEL).

Rajasthan Vidyut Utpadan Nigam Ltd (RVUNL) the state government company has a year ago issued tenders for super critical projects at Suratgarth and Chhabra Thermal Power stations having total capacity of 2,640 MW. The tenders were for design, engineering, manufacture, assembly, testing at works, supply, civil structural and architectural works, erection, testing and commissioning of main plant and balance of plant on EPC basis.

During the bidding process BHEL has emerged as the lower bidder followed by BGR Energy as second lowest bidder in the month of January 2011. Power India found that RUVNL has again initiated price renegotiations with BHEL in January 2012. After that extensive  discussions were happened between RUVNL and BHEL.

 

However, on April 25, 2012  cancellation letters were sent without assigning any reasons.

 

The development was took place at a time when BHEL is grappling with slowdown in its order book.

 

Owing to an overall sluggishness in the power sector, the company's order book more than halved to Rs 22,096 crore last fiscal compared to 2010-11 period.

The scrapping of the tenders would delay the setting up of two projects  in Rajasthan, which is grappling with power shortage. At present, RUVN has an installed capacity of 4,097.35 MW.

 

 

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Single Window Clearance Authority to decide on electricity duty exemption for Jayashree Chemicals…

Power India found that the State Level Single Window Clearance Authority (SLSWCA) will decide on the issue of electricity duty exemption for Jayashree Chemicals Ltd, the only manufacturer of caustic soda in Odisha.

 

Burdened by the steep cost of electricity which accounts for 60 per cent of its production cost, the company had sought waiver in electricity duty for a period of 10 years. The hike in power tariff announced recently by power regulator-Odisha Electricity Regulatory Commission (OERC) had nullified the power conservation efforts of the company which was achieved through installation of membrane cell technology.

At a recent meeting held under the chairmanship of Chief Secretary on grant of incentives to Jayashree Chemicals, the state government asked the company to submit a separate proposal, substantiating its plea for the duty waiver. The proposal would then be considered by SLSWCA.
The company said its financial position did not permit it to set up a captive power plant.

 

The state government, has however, decided to offer exemption on value added tax (VAT) on incremental production of the company. Jayashree Chemicals had ramped up caustic soda production capacity of its plant at Ganjam in south Odisha from 22,500 tonnes per annum (tpa) to 53,200 tpa. The company had also invested Rs 150 crore on switching over to membrane cell technology from mercury cell technology.

 

The company which is engaged in the manufacture of caustic soda, liquid chlorine, hydrochloric acid and sodium hypo chlorite counts Emami Paper Mills, Ballarpur Industries Ltd, J K Paper, Hindalco Industries and National Thermal Power Corporation (NTPC) as its major clients.

 

 

 

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Tata Power got legal opinion to strengthen it case of captive mines…

After Reliance Power, the company’s arch rival, Tata Power, too, has independently secured a favourable opinion from the country’s top legal brains, including retired Chief Justice of India M N Venkatchaliah and former Solicitor General Dipankar Gupta, over the legality of a government decision allowing Reliance Power to divert surplus coal from the captive mines associated with its Sasan ultra mega power project in Madhya Pradesh.

The opinion given to Tata Power runs contrary to what legal experts have told Reliance Power on their private initiative aimed at strengthening the case on coal diversion. The two companies, which are engaged in a legal battle where Tata Power has challenged the government’s decision in the Supreme Court, are likely to use the legal opinion they secured to strengthen their respective cases ahead of the Saturday’s ministerial panel meeting.

The empowered group of ministers (EGoM) has been convened to examine the official opinion from the Attorney General. At its December meeting, the group headed by finance minister Pranab Mukherjee, had decided to seek fresh legal opinion from the AG Goolam E Vahanvati to defuse the controversy arising from the group’s earlier in-principle decision in 2009 to allow Reliance Power to divert surplus coal following adverse remarks made in a draft report of the Comptroller and Auditor General (CAG) that said that decision meant windfall gain for Reliance Power.

In the opinion given to Tata Power, legal experts have termed the EGoM permission as ‘ultra vires’ as the decision with regard to diversion of coal went against stated policy for allocation of coal blocks. Both Venkatchaliah and Gupta have also said that a change in the terms and conditions of the bid for UMPP in the immediate aftermath of the completion of the bidding process would in effect amount to changing the terms and conditions of the bidding process itself, which is also violation of Article 14 of the Constitution and also arbitrary and unreasonable.

“Tender documents should not be designed to encourage speculation. The allocation of the coal mines is intertwined with the Sasan project and cannot be used for any other project. The permission given by EGoM has augmented the right of the successful bidder for incremental coal. It is ultra vires of the specific provisions of the statute, rules, and the policy governing allocation of coal, and also altered the bid conditions,” Venkatchaliah said in his opinion given to Tata Power.

Tata Power is fighting the issue not solely on government’s decision to allow for diversion of surplus coal, but also the changes the decision made in the bidding condition finalised for Sasan power projects where the company had emerged with the second best bid after Reliance Power. The company has said that as bid conditions were changed after completion of process, fresh bidding for the project should be undertaken with explicit permission on diversion being included in the bid document.

“…In any event, the alterations in the terms and conditions of the contract, which was the subject matter of the tendering process is itself arbitrary, unreasonable and intended to grant undue favours to private parties and against public interest,” Gupta said.

“Tata Power would have a cause of action to file a writ petition under Article 226 for quashing of the award of Sasan UMPP and/ or in any event the grant of permission to use coal from the Captive Coal Mines linked to Sasan UMPP for other projects of RPL, which would have a reasonable chance of success,” Gupta added.

The views given to Tata Power run contrary to views given by legal experts to Reliance Power. Retired chief justices AS Anand and AM Ahmadi and former attorney general Soli Sorabjee in their respective opinion’s have said that there was no violation of Sasan UMPP bid conditions and have cautioned that the cancellation would amount to violation of the principle of promissory estoppel.

The issue between two private sector power entities involves a decision taken by an EgoM in 2009. The group had allowed Reliance Power (RPL), the successful bidder of the Sasan UMPP, to use surplus coal from the Sasan block for another 4,000 mw power project at Chitrangi in Madhya Pradesh.

The government has allocated Moher, Moher-Almohri and Chhatrasal captive coal blocks to help the private developer meet the fuel requirement of the Sasan UMPP, which it bagged through tariff-based competitive bidding.

Tata Power, which bid for the Sasan UMPP, has challenged in court the government’s decision permitting Reliance Power to divert excess coal from the Sasan mines to the Chitrangi power project. Tata Power also cited while tariff for Sasan was 1.19 per unit, the same for Chitrangi has been fixed at 2.45 per unit though coal is coming from the same blocks.

As per existing regulations, captive coal mines are given to specific end-users. Any surplus coal generated from such blocks becomes a property of the central government which then disposes it through its PSU Coal India (CIL). In a few special cases, however, the coal ministry accords permission for sale of excess coal on a temporary basis. With the approval of the bidding process, even captive blocks would now have to be bid.

The EGoM on Saturday is expected to take a view whether its in-principle approval could be could be converted into a final decision after taking legal opinion of the Attorney General.

 

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PFC formed an SPV (Deoghar Mega Power Ltd) for 4000 MW UMPP at Jharkhand…

Power india found that State-run Power Finance Corp  has formed special purpose vehicle, Deoghar Mega Power Ltd, for developing a 4,000 MW ultra mega power project in Jharkhand.
 
Deoghar would be the second ultra mega power project (UMPP) in the state after Tilaiya, which is being executed by Reliance Power, the company informed the BSE.
Power Finance Corporation, the nodal agency for UMPPs in the country, has awarded four such projects so far.
 
Three UMPPs — Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaya (Jharkhand) were bagged by Reliance Power and one at Mundra in Gujarat is being developed by Tata Power.
 
The first round of bidding for the Bedabahal UMPP in Odisha, which was held in July last year, witnessed interest from 20 bidders. The second or the final round would take place after the government completes the amendments in the standard bidding documents (SBDs) for the UMPPs.
 
The Requests for Qualification (RFQ) or the initial bids for the Sarguja UMPP in Chhattisgarh are likely to be invited in June this year.
 
The preliminary bids for this UMPP have been delayed many times in the past on account of environmental clearance.
 
The government plans to add close to 1,00,000 MW in the next five years, of which a lion’s share would be contributed by these UMPPs.
 
 
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