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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GVK seeks MoEF nod to use HSD for gas-based power project…

 

With gas supplies from KG-Basin coming to a standstill, Gautami Power Ltd, a GVK group company has sought permit from the Ministry of Environment and Forests (MoEF) to use High Speed Diesel (HSD) instead of natural gas at its plant in East Godavari district of Andhra Pradesh.

This comes after a committee under the MoEF opined that usage of HSD for power generation will not be as eco-friendly as natural gas and directed the company to obtain views of Ministries of Power, Petroleum and Natural Gas on the issue.

"The Committee deliberated on the proposal and noted that the quantity of HSD to be utilised for power generation is quite substantial. The usage of HSD in such quantities will not be as eco-friendly as natural gas.

The Committee therefore desired that the PP shall obtain the views/comments of Ministry of Power and Ministry of Petroleum & Natural Gas on the use of HSD for the project before taking a decision," the Expert Appraisal Committee (EAC) under the MoEf said in its meeting last month.

It was also noted that Government is subsidising HSD for certain specific-end users only such as for transportation, the EAC further said. The gas-based power project has natural gas allocation of 1.96 MMSCMD by MoPNG from KG Basin for operating the plant on full capacity.

As the gas supplies for the project have come down due to reduction in gas production in the KG D6 fields, it is requested to amend the environment clearance for using HSD (green diesel) with sulphur content not exceeding 0.05 percent as an alternate fuel instead of emergency fuel. The plant operated on full generation for the years 2009, 2010 and 2011 using gas supplied from KG D6 gas fields. However, since October 2011, the total gas supply from KG D6 has been reducing from the original level of 60 MMSCMD to less than 15 MMSCMD and supply to power sector was stopped since March 2013.

As per the existing policy of the Government, power generation using indigenously sourced HSD is allowed.

The Ministry of Power and MoPNG has already accorded NOC for HSD as fuel for GVK's Jegurupadu Phase II Power Project (220 MW) in East Godavari district last year. Many gas-based power plants including that of GVK's are sitting idle due to non-availability of gas.

GVK Power stock price

On January 15, 2014, GVK Power & Infrastructure closed at Rs 10.20, down Rs 0.23, or 2.21 percent. The 52-week high of the share was Rs 15.36 and the 52-week low was Rs 5.52. The latest book value of the company is Rs 15.84 per share. At current value, the price-to-book value of the company was 0.64.

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MoEF gets deadline to give clearance to coal blocks…

 

In an move to speed up clearances for coal blocks, the Ministry of Environment and Forests (MoEF) have been given between four to six weeks to expedite Stage 1 and 2 forest and environment clearances for 42 coal blocks. On behalf of the government, the Attorney General of India today informed the court that it will take about 4-6 weeks to either expedite the process of clearances or to go for its allocation.

There are 32 coal blocks which are allocated to the private companies which are pending because they have only got Stage 1 clearances; about 10 coal blocks allotted to private companies again have got Stage 2 environment or forest clearances.

The government has promised that it will either cancel it or expedite the process of the clearances because of which these coal mines are not functional.

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Reliance Power's Jharkhand UMPP proposal gets CCI nod…

 

Cabinet Committee on Investment has cleared Reliance Power's Tilaiya ultra mega power project in Jharkhand, sources said.

RPower, according to them, may not have to provide non-forest land to compensate for the loss of forest land acquired for the proposed plant.

Sources said the company's 4,000 MW Tilaiya plant is now expected to be treated on a par with the other public sector projects and therefore would be exempted from providing compensatory afforestation for the loss of forest land.

At present, only central government or public sector undertakings have exemption from the obligation to provide non-forest land.

Tilaiya power plant is to be executed by a Special Purpose Vehicle (SPV), Jharkhand Integrated Power Ltd, which was handed over to Reliance Power in January 2009 by Power Finance Corporation -- the nodal agency for UMPPs.

Tilaiya would be the fourth UMPP to be awarded to a developer. Earlier, two UMPPs bagged by Reliance Power are those of Sasan (Madhya Pradesh) and Krishnapatnam (Andhra Pradesh). Tata Power is operating the Mundra UMPP in Gujarat.

UMPP is a big-size coal-based power plant with at least 4,000 MW capacity and is built at an approximate cost of Rs 25,000 crore.

CCI, headed by Prime Minister Manmohan Singh, aims to fast-track major projects and help boost investor sentiment.

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CEA asks Tata, Hindalco others to speed up coal mine output…

 

The Central Electricity Authority has asked companies including NTPC , Hindalco,  Tata Power  and  Tata Steel  to expedite production from captive coal blocks allocated to them and inform it about any constraints.

"A meeting was held...to review the status of development of captive coal blocks allocated for power generation," according to the minutes. "There are constraints in supply of coal to new power plants...therefore, it is necessary to expedite the development of captive coal blocks," the minutes said.

The Supreme Court had observed last week that huge investments made by companies in coal blocks without getting approvals cannot be a ground for not cancelling licences. The apex court had sought the Centre's response on whether it intended to de-allocate such mines. The CEA asked "the participants to intimate the latest status of development of captive coal blocks and end-use power plants, including the constraints being faced by them, if any, in obtaining clearances, land acquisition and mining lease," according to the minutes of the meeting.

The CEA would try to facilitate the removal of the constraints, it added. The CEA is the apex technical organisation for facilitating development of the power sector in the country. During the meeting held in December, the CEA reviewed the progress of 22 mines, including NTPC's Chatti Bariatu, Talaipalli and Pakri Barwadih blocks; Essar Power and Hindalco's Mahan block; Mandakani 'A' block jointly allotted to Tata Power, Monnet Ispat & Energy and Jindal Photo, and Ganeshpur block given to Tata Steel and Adhunik Power & Natural Resources Ltd.

The coal ministry has allocated 88 captive blocks with geological reserves of about 1.37 billion tonnes of coal for power generation.

NTPC stock price

On January 15, 2014, at 12:03 hrs NTPC was quoting at Rs 132.80, up Rs 1.40, or 1.07 percent. The 52-week high of the share was Rs 167.25 and the 52-week low was Rs 122.65.

The company's trailing 12-month (TTM) EPS was at Rs 14.55 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 9.13. The latest book value of the company is Rs 97.49 per share. At current value, the price-to-book value of the company is 1.36.

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Odisha rejects CEA projection of power shortfall by 2017…

 

The Odisha government has rejected the projection of Central Electricity Authority (CEA) on power availability in the state. The CEA has predicted that Odisha will face power deficit in the 12th Five Year Plan that ends in 2017 in its 18th Electric Power Survey (EPS) report.

For the current fiscal, the EPS said that the peak demand of the state will be around 4,686 Mw. However, the state government pegs it at a much lower level.

"For the 2013-14, OERC (Odisha Electricity Regulatory Commission) has approved a peak demand of 3,993 Mw, against the forecast of 4,686 Mw made in the 18th EPS. Therefore, the demand forecast presented in the 18th EPS cannot be taken as absolutely correct," said state Energy department in its observation on the survey report.

The CEA had earlier projected that Odisha's power requirement in 2013-14 will be 4,686 Mw while availability will overshoot the demand at 6,356 Mw. However, due to delay in the commissioning of several power projects caused by land acquisition and coal linkage issues, concerns were raised that the state would be power deficit in the current and subsequent years till the end of 12 Five Year Plan period.

Out of 29 Independent Power Producers (IPPs), who have signed agreements with the state to produce thermal power with a combined generation capacity of 37,000 Mw, only three have completed construction of their plant within the agreed timeline, while all others have missed their deadline. These agreements were signed in 2006 and 2009 with a commitment that the plants would be ready by three years from the date of agreements.

As per the survey projection, peak power demand in the state would be in the range of 4,994 Mw, 5,322 Mw and 5,672 Mw for 2014-15, 2015-16 and 2016-17 respectively. But the state said, the projections are not realistic.

"Power availability in the state during the 12th Plan shall be adequate in comparison to the demand forecast. Further, availability from CGPs (captive generating plants) and renewable energy sources and opportunity to procure power through bilateral trading and power exchanges have not been considered in the availability of peak power. Therefore, the demand in the state can be comfortably met during the 12th Plan," the Energy department said.

Officials in Gridco said, while average demand of the state is around 2500 Mw in winter season and 2700 Mw in summer, it is getting supplies of around 2800 Mw from various thermal power stations, hydro power generators, captive power producers and its share out of Central power pool. The sources said, Odisha would be surplus in 2016-17 by around 500 Mw, when at least five new IPPs would become operational. As per the agreement with these IPPs, Odisha will get at least 14 per cent of their total production.

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BYPL not to get power from Nathpa Jhakri power station…

 

Satluj Jal Vidyut Nigam (SJVN) Ltd has regulated power supply to Reliance-backed discom BSES Yamuna from Nathpa Jhakri power station from January 1 to June 30, 2014, following non-payment of dues.

BYPL had earlier been barred power supply from this Himachal Pradesh-based power plant from October to December 2013, after defaulting on payments and now SJVN Ltd has extended this power regulation till June-end. This deprived the national capital of about 40-50 MW of power.

SJVN Ltd sent a regulation notice to the state load dispatch centre on regulation of supply from its 1,500 MW hydel plant in December, sources said. BYPL's share from the plant is 27.24% of total allocation.

"SJVN Ltd in its notice has informed that power rendered surplus due to regulation of power supply to BYPL would be sold through PTC on energy exchange platform," said an official. Sources said the regulation will continue in 'duration of regulation' or up to an earlier date if the default is rectified.

"The regulation will be communicated by reducing the schedule of BYPL from the identified source (Nathpa Jhakri plant). SLDC Delhi will have to regulate drawal schedule for the intrastate regulated entities and the regional load dispatch centre (RLDC) would regulate drawal schedule of Delhi State Control Area," said a notice served by SJVN Ltd.

BSES discoms have been regularly defaulting on payment to entities like NTPC, NHPC, DTL, IPGCL and PPCL, claiming cash flow crisis and financial difficulties.

The discoms are now in the midst of disagreement with the new government led by chief minister Arvind Kejriwal who not only ordered a CAG audit for the companies but also announced a Rs 200 crore subsidy benefit for consumers, the cost of which owed to the BSES companies would be adjusted against their pending dues to Delhi government. BSES discoms have said that this adjustment would not be sustainable for them.

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Odisha to sell surplus power to Karnataka…

 

The Odisha government has decided to sell surplus power to Karnataka.

The matter was discussed at a high-level meeting here on Monday, which was attended by chief secretaries of both states. Senior officials of the Odisha government’s Energy department were also present.

“Karnataka Chief Secretary Kaushik Mukherjee, who is in the State, had an official meeting with our Chief Secretary J K Mohapatra here on Monday, where a preliminary discussion on the power sale was held. Details will be worked out when officials of both states meet,” said sources in the Energy department.

At the meeting, the Karnataka chief secretary reportedly expressed his keenness to purchase power from a State-owned undertaking in Odisha rather than a private company.

If everything works out well, Karnataka will purchase power from the Grid Corporation of Odisha, a State-owned undertaking which purchases power from different sources, including private sector electricity generation companies in the State. It sells them to four power distribution utilities that supply power to consumers in four different zones in Odisha.

This will not be the first instance of Odisha, one of the very few power surplus states in the country, selling electricity to another state. It had earlier sold power to Rajasthan, Delhi and Haryana.

If sources in the Energy department are to be believed, the average power requirement in Odisha at present stands at around 2,700 MW. The State currently gets about 3,000 MW from different sources, including its own thermal and hydro power stations, besides electricity generating private sector companies. “We get around 300 MW of surplus power at the moment which can be sold to other states”, an official in the Energy department said.

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Maharashtra Cabinet likely to discuss power tariff subsidy today…

 

The Maharashtra Cabinet is meeting on Wednesday and is likely to take up the proposal to cut power tariffs in Mumbai.

This comes after Congress MPs Sanjay Nirupam and Priya Dutt held protests on Monday demanding slashing down of electricity bills for Mumbaikars.

Backed by a crowd, the two Congress leaders gathered outside Reliance's regional office in Kandivali and raised slogans.

A Group of Ministers headed by Industries Minister Narayan Rane had recommended 10 to 20 per cent cut in power tariffs for Mumbai.

Earlier to protests, Nirupam had also written to Maharashtra Chief Minister Prithviraj Chavan demanding a cut in power tariff, asking if the AAP government in Delhi can do so why the same can't be done in Mumbai and Maharashtra.

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Micro-windmills could power your cellphone…

 

Researchers at the University of Texas at Arlington have designed a micro-windmill that generates wind energy and may become an innovative solution to cell phone batteries constantly in need of recharging and home energy generation where large windmills are not preferred.
 
Smitha Rao and J C Chiao designed and built the device that is about 1.8 mm at its widest point. A single grain of rice could hold about 10 of these tiny windmills. Hundreds of the windmills could be embedded in a sleeve for a cellphone.

Wind, created by waving the cellphone in air or holding it up to an open window on a windy day, would generate the electricity that could be collected by the cellphone’s battery.

Rao’s designs blend origami concepts into conventional wafer-scale semiconductor device layouts so complex 3-D moveable mechanical structures can be self-assembled from two-dimensional metal pieces utilising planar multilayer electroplating techniques that have been optimized by WinMEMS Technologies Co., the Taiwanese fabrication foundry that took an initial interest in Rao’s work.

“The micro-windmills work well because the metal alloy is flexible and Smitha’s design follows minimalism for functionality.” Chiao said. These inventions are essential to build micro-robots that can be used as surgical tools, sensing machines to explore disaster zones or manufacturing tools to assemble micro-machines.
 
The micro windmills were tested successfully in September 2013 in Chiao’s lab. The windmills operate under strong artificial winds without any fracture in the material because of the durable nickel alloy and smart aerodynamic design.

“The problem most designers have is that materials are too brittle,” Rao said. “With the nickel alloy, we don’t have that same issue. They’re very, very durable.” The micro-windmills can be made in an array using the batch processes.
 
The fabrication cost of making one device is the same as making hundreds or thousands on a single wafer, which enables for mass production of very inexpensive systems.

“Imagine that they can be cheaply made on the surfaces of portable electronics,” Chiao said, “so you can place them on a sleeve for your smart phone.

When the phone is out of battery power, all you need to do is to put on the sleeve, wave the phone in the air for a few minutes and you can use the phone again.”

Chiao said because of the small sizes, flat panels with thousand of windmills could be made and mounted on the walls of houses or building to harvest energy for lighting, security or environmental sensing and wireless communication.

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