DERC announced RPO Regulations for Solar and other RE Sources…

The Delhi Electricity Regulatory Commission (DERC) has recently announced its much awaited RPO Regulations on 1st October 2012. DERC has made to RPO applicable to Distribution Licensees, Captive Users and Open Access Consumers on similar lines as per the other states.

The RPO regulation is applicable to:

• Distribution Licensee(s) operating in the National Capital Territory of Delhi
• Any Captive user, using other than renewable energy sources exceeding 1 MW
• Any Open Access Consumer with a contract Demand exceeding 1 MW from sources other than renewable sources of energy.

The obligation till FY 2016-17 is shown in the table below:

Financial Year	Solar RPO	Total RPO
2012-13	0.15%	3.40%
2013-14	0.20%	4.80%
2014-15	0.250%	6.20%
2015-16	0.300%	7.60%
2016-17	0.350%	9.00%

Open access consumer are exempted from the cross-subsidy surcharge determined by the Commission from time to time to the extent of RPO.
However, no banking facility shall be provided for supply of electricity from renewable energy sources through open access.

Rpo Rec Framework Implementation Regulations

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More literature on this topic…
http://powerbase.in/derc-issues-regulations-rpo/
http://www.indianpowersphere.com/2012/05/derc-to-specify-minimum-quantum-of.html

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Andhra Pradesh Government’s new solar power policy…

The government of Andhra Pradesh has recently announced its State Solar Policy on 26th Sep 12. Unlike other states’ solar policies, AP Government has sot specified any policy with respect to feed-in-tariffs or competitive bidding schemes etc rather they have put emphasise on developing solar power through REC Mechanism.

Following are some of the major policy incentives…

• Banking:
  • 100% banking is permitted from January to December of the year.
  • Banked units can not be adjusted during February to June and during evening peak hours 6.30 PM to 10.30 PM.
  • The banked energy will attract banking charge of 2%.
• Exemption of Wheeling and Transmission Charges: For all the intra-state open access transactions (through 33kV system), wheeling and transmission charges are exempted.
• Exemption of Cross Subsidy Surcharge (CSS): Consumers purchasing power from solar projects are exempted from CSS. This will be a great relief for consumers as CSS remains the major cause of worry for consumers as well as develop-ers opting for third-party sale / open access.
• Exemption of Electricity Duty: E-Duty is also exempted for all the solar power projects opting for third party sale and/or captive usage.
• Refund of VAT, Stamp Duty and Registration Charges: Solar developers will be able to get the refund of the said charges.

The above incentives are applicable only if the project is commissioned by June 2014. The incentives are extended for the period of 7 years.

The major concern is for the CPPs in the state as they cannot claim RECs on availing the above benefits. It will raise conflict regarding the state and central regulation on REC mechanism.

Read the full policy document here…

Andhra Pradesh Solar Policy 2012 Abstract

 

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More Literature on this topic…

• http://www.thehindubusinessline.com/news/states/article3951691.ece
• http://news.efytimes.com/e1/91625/Andhra-Pradesh-Gets-Solar-Policy

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Rs. 6,000 Crs investment in Solar Power planned by Aditya Birla group…

The USD 40 Bn Aditya Birla group is planning INR 6,000 Crores investment in solar power projects over the next five years.

 

 

 

Some of the companies recent developments towards solar power business are:

• Acquired a minority stake in a Solar PV plant controlled by Electrotherm in Gujarat
• Signed a long-term leasing agreement with Refex Energy to operate a solar plant at Bithuja in Rajsthan
• Essel Mining & Industries Ltd, a subsidiary of Aditya Birla is already into the business of wind power generation.
• Under the same company, around 100 MW solar projects are being planned over next 1 to 1.5 years.
• The current investment of the Group is around Rs. 200 Crs to develop 20 MW of solar projects.

 

Further plan of the Group includes, a target of $1 billion over the next 5-6 years.

 

According to sources, a three-pronged strategy has been devised by Mr. Ravi Khanna, CEO of Solar Power business (joined recently from Scandanavian Advanced Technology).

 

 

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More literature on this topic…

http://www.bloomberg.com/news/2012-10-05/india-s-aditya-birla-plans-solar-investments-times-says.html

http://www.adityabirla.com/our_companies/indian_companies/essel_mining.htm

http://economictimes.indiatimes.com/news/news-by-industry/energy/power/aditya-birla-group-to-invest-rs-6k-crore-in-solar-power-business/articleshow/16677992.cms

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Independent Directors of CIL opposes the CEA’s proposal for import of coal…

The independent directors of Coal India Ltd (CIL) have suggested the Coal Ministry and CIL that the recent proposal of Central Electricity Authority (CEA) regarding the import of coal would benefit only the Independent Power Producers (IPPs) at the expenses of public money.

 

The independent directors have sent a note to CIL as well as Coal Ministry wherein the have asked the official directors to re-consider their stand in view of the grave legal, commercial, economic and ethical problems arising out of their supporting the CEA views.

 

The proposal of CEA was as below:

• CIL shall import around 20 million tonnes of coal in 2012-13 and supply the same at a subsidised price (nearly half of the cost price) to IPPs.
• This will result in a loss of Rs. 3,000 Crore annually to the company and over 20 years the same will be around Rs. 60,000 Crore.
• The above losses shall be made good by increasing the prices of indigenous coal to about Rs.100 a tonne for all power producers.
• The decisions of CIL in finalising the terms of the fuel supply agreements (FSAs), including the trigger point at 80 per cent of annual contracted quantity (ACQ) and the rate of penalty at 0.01 per cent taken on April 16, were a result of wide and deep deliberations carried out at several meetings of the CIL board this year in pursuance of the April 4 Presidential directive.
• These decisions have already been implemented in the case of 29 private power producers.
• It states that no arrangement has been made by the CIL management to protect the company or its directors against allegations and proceedings likely to come up by deviating from the Presidential directive. The note states that the new dispensations entail lowering the trigger points from 80 per cent of ACQ to 65 per cent but also seek to levy penalty ranging from 5 to 40 per cent of the quantity not delivered. This mechanism is sought to be justified on the ground of ensuring better performance of CIL.
• The management seems to agree with the premise that the qualitative changes for securing productivity can be obtained only by a threat of penalty of 40 per cent. To us, it looks like an arrangement to transfer thousands of crores of public money to the private power producers in the name of penalty over CIL.

 

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More news on this topic:

http://www.thehindu.com/business/coal-india-board-split-on-cea-proposals/article3958525.ece

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Tussle between Power and Coal Ministry on coal shortfall…

Power Secretary P Uma Shankar has recently issued a letter to Coal India Ltd (CIL) to compensate for the losses of power companies due to failure of CIL to provide coal to the power firms.

 

This is sparked a confrontation between to prominent Ministries of India; Coal Ministry and Power Ministry.

 

Power Secretary blamed CIL for hurting power sector investments as financial institutions had been shaken by the coal shortages.

 

We believe that the move of CIL’s independent directors to block the import of coal and their sale at a discount to power producers as suggested by the Central Electricity Authority has triggered the Power Ministry to issue the said letter.

 

The views depicted in the letter by Mr. Shanakr were:

• Power producers had made investments after coal supplies were approved by the Coal Ministry and assurance letters issued by CIL, Shankar wrote in his letter.
• However, CIL has failed to honour its binding obligation, thus leaving such assets stranded, threatening not only their viability, but likely to make them non-performing assets.
• CIL board has also rejected the suggestion to import coal.

 

According to Mr. Shankar:

“CIL board and its director will do a great service to the nation if they do some soul searching on their responsibility and their commitment to increase production of domestic coal and ensure adequate supply of coal to help the growth of the country and not expose power and banking sectors to the risk of jeopardising all their investments, which is largely public money. In fact, as a responsible corporate entity, CIL should compensate the power producers for the loss suffered by them due to its failure in providing them the promised fuel to run their plants at a viable level. The PSU has obtained bank guarantees worth hundreds of crores from the power producers to bind them in an offtake agreement... CIL has failed to honour its commitments.

 

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More news on this topic:

http://www.indianexpress.com/news/power-secy-to-coal-india-no-coal-pay-companies/1011143/

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Power Plants should be given at par priority for gas allocation with fertilizer plants…

Power India found that the MoP (Ministry of Power) has requested that the gas based power plants should be given the at par preferences for allocations of natural gas with that of fertilizer plants. According to MoP, this should be due to the fact that import of power is not possible as is the case with urea.

 

As with the current priorities are concerned with respect to allocation of natural gas to various industries, fertilizer plants get top most priority followed b LPG extraction units; gas based power plants comes third in the priority list.

 

Due to this reason, when RIL’s (Reliance Industries Limited) KG-D6 field production fall then the expected level, all the available gas was first utilized for the meeting the fertilizer plant’s requirements and thereafter the requirements of LPG plants was met. Only leftover gas was distributed among the power plants on a pro-rata basis, resulting in sharp dip in electricity generation.

 

Following statistics may enlighten the above:

• KG-D6 output dipping to 27.5 million standard cubic meters per day (mmscmd) instead of rising to projected 80 mmscmd,
• Entire 15.668 mmscmd allocations to 16 fertiliser plants were met first (from the anove 27.5 mmscmd.)
• LPG manufacturing plants got 2.6 mmscmd as required
• Balance 9.3 mmscmd distributed among 25 power plants (the actual allocations/requirement was 28.9 mmscmd)
• Hence, only 30% requirement of gas plants were met while 100% requirement of fertilizer and LPG manufacturing plants were met.

 

Due to the above cited reasons, the Hon’ble Power MInister M Veerappa Moil has told in an interview that "There is a need of re-prioritisation of gas. Fertiliser can be imported but power cannot be imported. An equal status for power plants can be considered as we give to fertilizer,"

 

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More on this topic…

• http://www.moneycontrol.com/news/economy/give-power-stations-priority-for-gas-allocation-ministry_764246.html

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Coal Ministry to submit its report on ongoing coal block allocation issues by September 15…

The Coal Ministry is on track to meet the deadline of September 15 for deciding on the 29 coal blocks allotted to private firms whose review has been undertaken by an Inter-Ministerial Group (IMG).

 

Controller and Auditor General (CAG) has estimated that around Rs. 1.86 Crore undue benefits have been received by the private firms on account of allocation of coal blocks without auction. After that, the Coal Ministry has proposed to submit its report to IMG by September 15.

 

Out of the 58 coal allocations around 29 private firms who failed to develop the blocks as per schedule have given representations to the IMG are meeting again.

The meeting assumes significance as the Finance Ministry has reportedly voiced objections over de-allocations of mines.

Tata Steel, Reliance Power, JSW, Grasim Industries, Kesoram Industries, IST Steel & Power, SKS Ispat and Power, Bihar Sponge Iron, among others, had appeared before the panel.

As per sources, it may also decide the dates for assessing the performance of the blocks allotted to PSUs, without auction.

Around 30 coal blocks, of the 58 that have been issued showcause notices for delaying production, are with public sector firms, including MMTC, Chhattisgarh Mineral Development Corporation and Jharkhand State Mineral Development Corporation.

 

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More news on this topic

• http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/metals-mining/coal-ministry-hopeful-of-deciding-on-29-coal-blocks-by-sep-15/articleshow/16368638.cms

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Revamped duty structure for imported power equipment…

Power India found that the Finance Ministry has recently notified a revamped duty structure prescribing an effective duty of over 22 per cent, including education cess.

 

However, as proposed by the MoF, the new duty is not going to be imposed on Ultra Mega Power Projects (UMPPs) and Mega Power Projects and expansion of existing mega projects which had received certificate of approval from the Power Ministry till July 19, 2012, the date on which the Cabinet took the decision.

 

With this as many as seven Ultra Mega Power Projects (UMPPs) and 106 Mega Power Projects will not have to pay higher duty for importing equipment's.

 

As said by Power Secretary P. Umashankar: “There is a list of projects given mega status or provisionally declared as a mega project. These will not be affected. But any other project beyond this list will have to pay duty as per Government notification.”

 

According to the leading power producers such as NTPC, Tata Power etc, the imposition of customs duty will increase the project cost which in turn will hinder the advancement of the sector.

 

 

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More news on this topic

• http://www.thehindubusinessline.com/industry-and-economy/article3882310.ece?ref=wl_opinion

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Steps being initiated by GoI for the power sector…

Power India found that, Government of India (GoI) is considering to initiate several attempts in order to bridge the demand and supply gap of power sector.

• Close monitoring of capacity addition for the under construction projects
• Thrust on import of coal by utilities
• Development of ultra mega power projects
• Strengthening of inter-state and inter-regional transmission capacity to optimally utilise power and reduce the losses in transmission and distribution

 

As per GoI, Coal India is also planning to acquire coal resources abroad.

 

For that purpose, International Coal Ventures Ltd (ICVL), a special purpose vehicle set up by the GoI, would work for acquisition of foreign coal assets/mines/companies to meet the current and growing requirements of the country.

 

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More news on this topic

• http://business-standard.com/india/news/govt-taking-steps-to-bridge-demand-supply-gap-in-power-moily/185185/on

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Tata Power want the Moser Baer to be debarred…

Tata Power Delhi Distribution Ltd (TPDDL), a Joint Venture of Tata Power and Delhi Government, asked to debar Moser Baer Photo Voltaic Ltd due to the poor performance of solar projects.

 

TPDDL has awarded three solar projects to Moser Baer Photo Voltaic Ltd, a unit of the Moser Baer group.

A letter has been issued by TPDDL to the Ministry of New & Renewable Energy (MNRE) which says:

 

• The performance of the solar plants installed by Moser Baer has not been up to the industry standards.
• The letter cites a number of failures, including failure to adhere to contractual timelines leading to “tremendous delay” in commissioning of the projects, poor engineering leading to “faulty design and frequent change in layouts”, quality of workmanship and high system losses leading to actual electricity generation being much less than the guaranteed generation.”
• The “poor response to client’s complaints for rectification of faults” and the “weak operations and maintenance support”.

 

As per the news reports, the said letter has been copied to around 87 industry people of Ministry of Power, Ministry of New & Renewable Energy and various State Electricity Regulatory Commissions.

 

AS said by TPDDL, “We had been following it up with them (Moser Baer) for over one year but there was no proper response. However, after the letter was issued (on May 7), there has been some action from Moser Baer side. If the action is satisfactory, we may withdraw the letter.”

 

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More news on this topic…

• http://www.thehindubusinessline.com/companies/article3584112.ece

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