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May 7, 2012

Orient Green to invest Rs. 1857 Crores for wind farms in Tamila Nadu, Andhra Pradesh & Gujarat…

Orient Green Power

Beta Wind Farm Private Ltd (BWFPL), a subsidiary of Orient Green Power Company Ltd, is planning to invest around Rs. 1857 Crores to set up wind farms in Tamil Nadu, Andhra Pradesh & Gujarat.

 

BWFPL earlier was planning to develop 300 MW wind farm in Tamil Nadu in Tirunelveli, Tuticorin & Theni places.

 

However due to “evacuation & infrastructure issues”, company has decided to revisit the plan and go for two more states.

 

As per the communication to the shareholders,

“evacuation and infrastructure issues” in Tamil Nadu had prompted Beta to revisit the plan. It has now “decided to set up wind farms with a generation capacity of 156 Mw in Tamil Nadu and 144 Mw in the states of Gujarat and Andhra Pradesh, where also the returns are expected to be equally attractive in terms of power generation”.

 

We found that a consortium of 10 banks such as Axis Bank (Lead banker), Canara Bank, Dena Bank, Karnataka Bank, Tamilnadu Mercantile Bank, Vijaya Bank and Indian Overseas Bank etc have sanctioned around 1,236 Crores rupee term loan to BWFPL.

 

To avail the above loan, Orient Green Power had issued a corporate guarantee for the project to Axis Bank, on behalf of BWFPL.

Besides BFWPL, Gamma Green Power Pvt Ltd, another Orient Green Power subsidiary engaged in the business of setting up of wind farms, is planning to purchase two WEGs at Gujarat, aggregating 4-MW assets. Towards refinance for assets of 3.98 Mw, it has a raised term loan from Bajaj Finance Ltd and Orient Green Power issued a corporate guarantee for Rs 23 crore in favour of Bajaj Finance.

 

With this acquisition, total capacity of Gamma would increase to 62.02 Mw.

 

Orient Green Power Company Ltd is promoted by Shriram EPC, a Shriram Group company, with investments from Bessemer Venture Partners of US and Olympus Capital Holdings, Singapore, for the creation and ownership of renewable energy assets. The company is one of the largest independent operators and developers; its portfolio includes biomass, biogas, wind energy and small hydroelectric projects at various stages of development.

 

As of September 2011, the company had 300 Mw of aggregate installed capacity. This comprised 250 Mw of wind energy projects and 50 Mw of biomass projects. The company has set a target to become the country’s largest renewable energy producer and other attractive markets, reaching 1,000 Mw by 2013.

 


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80,000 MW of Power Projects under construction during 12th Plan as per Power Ministry…

Power Capacity Addition

As said by Hon’ble Power Minister Sh. Sushilkumar Shinder, around 80,000 MW of Power Generation Projects are under construction during the 12th Five Year Plan which is ending on March 31, 2017.

 

On the status so fare he informed that:

  • For the 10th Plan the actual capacity addition was 21,000 MW against the target of 42,000 MW.
  • For the 11th Plan the actual capacity addition was 55,000 MW against  the targe of 62,000 which earlier was 78,775 MW

 

Looking to the past performance of the Indian Power Sector along with the current debacles which the industry is facing the gigantic figure of 80,000 MW seems to be very difficult to achieve.

 

However as said by him, the  re-structured Accelerated Power Development Programme was approved as a Central sector scheme on July 31, 2008 with total outlay of Rs 51,577 crore, which may assist the industry to achieve this target.

 

Projects under the scheme are taken up in two parts. Part-A is for establishing IT enabled system for energy accounting/auditing and SCADA for big cities whereas Part-B is for upgradation and strengthening of electrical network.

 

He said 43 projects with a total cost of Rs 4495.82 crore were sanctioned for Bihar under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY).

 

“Under RGGVY, funds are not allocated upfront but are disbursed as per the progress of works. So far, subsidy of Rs 3475.39 crore has been disbursed as per the progress,” he said.

 


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Reliance Power’s Krishnapatnam UMPP to be excluded from the capacity addition during 12th plan…

It seems that the 4000 MW Krishnapatnam Ultra Mega Power Project (UMPP) of Reliance Power Limited will not be included in Power Ministry’s proposal of capacity addition during the 12th plan period. (2012-17)

 

As said by Central Electricity Authority (CEA)”

"It is unlikely that the project can be included in the current 12th plan period (2012-17) projects. The company has said that the project is not feasible. The matter is in the court and even if it is resolved, it may not be able to come up by 2017. The work has been stalled,"

 

Reliance Power bagged the Krishnapatnam UMPP in 2007 through international competitive bidding. This project is one of the three UMPPs being developed by the company. The other two are - Sasan (Madhya Pradesh) and Tilaiya (Jharkhand). These two plants are domestic coal-based projects.

 

Coastal Andhra Power Ltd, Special Purpose Vehicle (SPV)  of Reliance Power, which is setting up the said project has filed a petition in the Delhi High Court after  its principal coal supplier, Indonesia, more than doubled the fuel price to $60 per tonne.

In a petition filed in Delhi High Court, the company said, "At the time of entering into the agreement it was understood that the imported coal would be sourced from Indonesia at $24 per tonne, which subsequently shot up to $60 per tonne."

 

Indonesian government had introduced a new legislation on September 23, 2011 prescribing that sale of coal from Indonesia would be made at a benchmark price based on the prevalent international market price of coal.

 

The company, in its petition, said that securing coal based on fixed price and fixed escalation was no longer possible and the very project was rendered unviable.

Coastal Andhra Power signed the power purchase agreements (PPAs) with the beneficiary states - Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra.


The power ministry has envisaged setting up 16 such UMPPs in the future to meet the proposed target of adding 1,00,000 MW in the current plan period (2012-17).

 


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NTPC developing Solar Projects…

NTPC on Solar

Largest domestic power producer National Thermal Power Corporation (NTPC) is on the track of developing around 300 MW of Solar Power Projects in various states of the Country. So far around 10 MW Projects are under construction and another 100 MW Projects bidding has been initiated.

Under various stages of implementation

  • 5 MW solar PV project at Andaman and Nicobar (A&N) Islands
  • 5 MW solar PV project at NTPC's Dadri

Under various stages of bidding

  • 15 MW solar thermal plant at NTPC Anta: Bids are being evaluated
  • 5 MW solar PV project at NTPC Faridabad: Bids are being evaluated
  • 10 MW solar PV project at NTPC Ramagundam phase-I: Bids are being evaluated
  • 10 MW solar PV project at NTPC Talchar: Under tendering
  • 50 MW solar project at Raigarh: Under tendering
  • 10 MW solar PV project at NTPC Unchahar: Under tendering

 

Under various stages of identification

  • 15 MW (Phase-2) Solar PV based project at NTPC-Ramagundam in Andhra Pradesh.
  • 25 MW Solar Thermal based project at NTPC-Singrauli in Uttar Pradesh.

 

Projects under planning with total capacity of 191 MW for the States of Gujarat (100 MW), Rajasthan (40 MW) and Karnataka (50 MW) and Andaman & Nicobar (1 MW).

 

The Estimated Cost of NTPC’s ongoing solar project are given below which is expected to be spent in 2012-13.

  • 05 MW Solar PV Project at A&N Island – Rs. 57.9 Crs
  • 05 MW Solar PV Project at NTPC Dadri – Rs. 48.6 Crs

 

Depending upon the site, solar radiation, the likely generation of power from these projects may range between 14.02 Million Units (MUs) to 17.52 MUs.

 


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May 6, 2012

Distribution Companies’ losses to reach 1.2 % of GDP by FY2014 adversely impacting the banking system; compels the need of reforms…

The current situation of the India Power Sector has reached its saturation point which is being witnessed by the widening financial losses of the distribution companies (DISCOM). As per the research carried out the Avendus Securities; with the current rate of increase, DISCOMs’s financial losses are likely to reach 1.2% of India’s nominal GDP by FY 2014 if no reforms are implemented.  

 

As per the study done by Avendus Securities; such high‐level losses, as a percentage of the GDP, were earlier reported in FY 1999 to FY 2002, when key reforms pertaining to the bail out of state electricity boards (SEBs) and formation of the Electricity Act were initiated.

 

image

 

Also, the power sector crisis may impact other sectors such as banks. Of the total loans, 50% loans to the WIP capacity and 90% to DISCOMs are likely to be at risk. As of Dec11, this amount was likely to be  Rs. 1,627 Billion, i.e., 32% of the banks, Power Finance Corporation and Rural Electrification Corporation’s exposure to the power sector that faces risk.

 

image

 

As the crisis reaches tipping point, the next set of reforms is likely to be implemented; among others, these may include the following:

  • Allowing  pass‐through  of  imported  coal  costs:  Most  private  power  producers  have  secured exclusive stakes in  coal  mines in  Indonesia and  Australia to  supply fuel  to  power plants. The electricity generated from these power plants is tied up under power purchase agreements (PPAs) with various DISCOMs and do not have pass‐through of increase in costs. However, the change in the Indonesian mining law and additional taxes imposed on miners in Australia has led to a rise in costs, making PPAs economically unviable. Reforms allowing pass‐through of rises in fuel costs is likely to restore the economic viability of private investments into such projects. Currently, 24GW of the WIP capacity is tied up under PPAs that may turn unviable.
  • Increase in tariffs by DISCOMs: Better profitability of DISCOMs, led by tariff hikes, is likely to boost power demand. This may lead to an improvement in merchant tariffs. The untied capacity, which varies between 8% and 65%, may generate higher returns. Thus, the viability of private investments would be restored.
  • Approvals for captive coal blocks: Faster processing of regulatory approvals for captive mining is likely to lead to an early start of production at captive mines. This may lead to higher availability of lower‐cost domestic coal. Higher production from captive coal blocks may free up demand for coal produced by Coal India. Thus, power plant capacity tied up under PPAs and fuelled through imported coal may reduce the operational cost through optimal blending of domestic and imported coal.

Signs of a likely initiation of the next set of reforms are visible with the following:

  • submission of the Shunglu committee’s report addressing measures to improve the financial health of DISCOMs;
  • removal of basic customs duty on imported coal; and
  • directing Coal India (COAL IN, Add) to sign fuel supply agreements (FSAs) for the power plants commissioned before 31Dec11.


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Mr. Sujay Ghosh – First Solar’s new India Business Head…

image

Mr. Sujay Ghosh has been appointed as Head – India Business Development for the First Solar, USA based manufacturer of Solar Photovoltaic Systems.

 

As said by First Solar;

“In this new role, Ghosh will be responsible for advancing and executing First Solar’s business strategy to expand the market for utility-scale solar photovoltaic (PV) power plants and to deliver value to Indian solar power producers,”

 

Currently, Mr, Ghosh will be reporting to Mr. Jim Brown which is the Vice President of First Solar’s Global Business Development.

Mr Ghosh would report to First Solar Executive Vice-President for Global Business Development, Mr Jim Brown.

 

As said by Mr. Brown:

“India is a land of immense opportunity for solar energy and First Solar, and we will continue to invest here as part of our strategy to develop sustainable, utility—scale solar markets where energy demand is strong and growing,”

Prior to this appointment, Mr Ghosh was with GE Energy where he was regional general manager for power generation business.

 

India accounted for about eight per cent of First Solar’s net sales in 2011.

 

 

 


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Is there an alternative to Kundakulam or any other Nuclear Power Project in India… an analysis by Business Standard…

During the prolonged agitation against the proposed Kudankulam Nuclear Power Project in Tamil Nadu, it was suggested that we should explore all alternatives to nuclear power that may be feasible.

 

India does not possess large deposits of one alternative, natural gas. Our largest discovery, in the Krishna-Godavari basin, is yielding far less gas than expected earlier. The first preference for use of natural gas is as a feedstock for producing fertilisers or petrochemicals. The second priority would be as compressed natural gas (CNG) as fuel for city buses and taxis. Krishna-Godavari gas will thus not be available for power generation in South India. Gas available in the Kaveri basin is very limited in quantity and is now supporting a small generation capacity. The only gas in South India can be liquefied natural gas (LNG) imported from the Middle East, Australia, Indonesia or Malaysia. The international price of LNG is indexed to the price of crude oil, and is presently $8-9/million BTU. At this price, gas based power will be Rs 6 or more per kWh — more than twice the cost of power from Kudankulam.

 

Some people favour developing more wind power. We are now installing wind turbines with an output of 2.5 Mw. To replace the two 1000-Mw Kudankulam units, we will need 800 units of 2.5 Mw size. This will require a very large land area, apart from a large investment. We must note that wind is available only 20-25 per cent of the time. So we will need some other form of electricity generation, as a backup, when wind does not blow.

 

India is endowed with a lot of sunshine. Unfortunately solar energy is, on the other hand, available only in a diffused manner. The largest solar photo voltaic power plant in the world is less than 100 Mw in capacity; the cost of solar power is about Rs 20 per kWh. Solar cells available today have an efficiency of less than 15 per cent, and hence large collecting surfaces are necessary. Competitive designs may not be commercially available for 10-20 years.

 

What about the hydro-electric option? The southern states have very little hydro potential available. What is left will involve the submergence of tropical rain forests — areas with rich biodiversity. What we can do, however, is to convert some of the storage-type hydro-power units to pumped-storage hydro-power, using reversible pump-turbines to provide peaking power — provided base load power, coal- or nuclear-generated, is adequately available.

 

Let us now discuss the role of coal. We produce some 55-60 per cent of our electricity from coal. Indian coal has a high ash content and low heat value. Coal stations in south India have to get coal transported over a long rail route, as coastal shipping of coal is relatively undeveloped. In the past few months, supply to south India has been hit by social or political agitations and flooding of coal mines in Orissa.

 

India produces about 400 million tonnes of coal. Our demand is increasing, but increasing production is difficult; new coal mining areas are largely in India’s forested areas. We now import coal for use in power stations from Australia, Indonesia and South Africa. Imported coal costs two or three times more. As we import more coal, our coal-fired stations will produce more expensive power than now.

 

While in the near term India has to increasingly depend on coal-based power, this will make it difficult to reduce its carbon emissions. A little-known fact about coal-based power is that fly ash from these stations also spreads radioactivity; coal often has some uranium bearing rocks mixed in it. Furthermore, black-lung disease among coal miners and accidents in coal mines contribute to a high adverse health impact for coal, when calculated on a per-kWh basis. In fact, nuclear power comes out much better in such comparisons.

 

Now let’s look at the nuclear option. There are about 430 nuclear power units in operation in different parts of the world. The accident at Three Mile Island in the US in 1979 did not result in any fatality or escape of radiation to the environment. But the utility concerned suffered a huge financial loss. The Chernobyl accident in 1986 in present-day Ukraine resulted in some deaths among the plant operators and fire-fighters. A nearby town housing the plant personnel was evacuated completely and remains unoccupied. Many lessons were learnt from these two accidents and the industry set up the World Association of Nuclear Operators (WANO) to freely exchange all operational experience. This resulted in greatly enhanced safety and reliability for the world’s nuclear plants.

 

The Fukushima disaster happened because of an unusual combination of a very high intensity earthquake and a severe tsunami. These natural forces combined with the inadequacies of a design from an earlier time (the 1960s) resulted in the very serious partial meltdown of three reactors.

 

Following the Fukushima accident, Prime Minister Manmohan Singh ordered a safety review of all nuclear units operating in India. The results of these reviews have been placed in the public domain. WANO carried out a peer review of Kudankulam and is satisfied about the design provisions, quality of workmanship and the competence of our operations and maintenance personnel.

 

When the southern region as a whole is suffering from an acute shortage of power, the delay in the start-up of Kudankulam based on imaginary fears has been most unfortunate. The country should place its confidence on its nuclear engineers and scientists who have demonstrated their competence by operating 20 nuclear power units, the earliest two of which have been safely in service for over 40 years. What we should ensure is that our nuclear power units are built to the highest standards of safety and operated in the best possible manner.

 

 

 

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Coal Secretary on efforts to revive the country’s drowning coal mine sector…

Coal Production

Coal Secretary Mr. Alok Perti put the light on government’s on going and upcoming efforts to revive the drowning coal mine sector.As said by him, despite having globally fourth largest coal reserves in India, production of coal remained at a very low level due to the monolithic structure of the industry and government control.

 

The sector has been mired in controversies and has made headlines for missing targets.

The on going efforts of Coal Ministry

  • The work had already begun to get the coal policies are in sync with the SC order on spectrum and natural resources.
  • It has been decided that no coal block assigned to power projects including the ultra mega projects will come free.
  • The power plant bidder will have to pay a reserve price for the coal to the state government.
  • The reserve price will be determined through a formula that we are in the process of finalizing with the help of consultants. As far as captive coal blocks that are given to private end users like steel, or cement, will only be given on auction basis.
  • As per the decision taken by the Ministry of Power, Coal blocks for power sector will be allocated as part of a tariff based bidding process in the future with the exception of allocation being made to government companies like NTPC who are setting up their own plants.
  • Expression of interests have already been received from the consultants firms. The formula for arriving at the reserve price should not take more than two or three months. The entire exercise should be completed by September when we may initiate the process of auction.

Coal Production Issue

  • There is a coal shortage in the country, but the entire blame cannot be put on CIL. For one, a large number of the projects are stuck for environment and forest clearances.
  • The Prime Minister's Office had dealt with this issue and Coal Ministry have followed it up with the environment ministry. The idea is to first look at those projects which are expansion plans. They are likely to come on stream early.

 

 


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All Villages in Rajasthan to get 24 hour power supply by March 2013…

Rural ElectrificationAs said by Rajasthan State Energy Minister Mr. Jitendra Singh; all villages in Rajasthan are likely to get 24 hours power supply by March 2013.

 

As said by him these would be the results of multi pronged power sector reforms in various aspects such as generation, transmission & distribution segments.

 

We found that the state government is planning to install 550 kV Grid stations across the State. For every three village panchayats, a 33 KV sub-station is being constructed, while 132 KV sub-stations would be established wherever needed.

 

Solar energy is also emerging as the new sphere in which the State would make some major achievements in near future.

 

Currently the farmers are being supplied with electricity at the rate of 90 paise per unit.

 

The Minister sought the cooperation of rural and agricultural consumers in reducing the transmission and distribution losses and said the power saved in this manner would support the State's growth.

 

 


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May 5, 2012

World Bank Loan by PGCIL for strengthening of power system…

Power Grid

Power Grid Corporation of India Ltd (PGCIL) has earlier signed three loan agreements with World Bank for development of Power Systems; currently the disbursements are being availed.

 

Presently, following three loans are ongoing, i.e. disbursements being availed:

  1. Power System Development Project-IV (No. 4890-IN) - Loan amount: USD 600 million, loan signed on 28th March 2008;
  2. Additional Financing for Power System Development Project-IV (No. 7593-IN) - Loan amount: USD 400 million, loan signed on 27th January 2009; and
  3. Power System Development Project-V (No. 7787-IN) - Loan amount: USD 1000 million, loan signed on 13th October 2009.
 


Major projects being funded by the above loans are:




  • ±500kV, 2500MW Balia - Bhiwadi HVDC Bipole System.


  • East-West Transmission Corridor Strengthening Scheme.


  • North-West Transmission Corridor Strengthening Scheme.


  • Western Region System Strengthening Scheme-II.


  • Eastern Region System Strengthening Scheme-I.


  • System Strengthening–XIII in Southern Regional Grid.


  • Northern Region System Strengthening Scheme- XXIV.


  • System Strengthening–XVII in Southern Regional Grid.


  • System Strengthening in Western Region for Sasan UMPP.


  • System Strengthening in Western Region for Mundra UMPP.


  • System Strengthening in Northern Region for Sasan and Mundra UMPP.


  • System Strengthening in Southern and Western Region for Krishnapatnam UMPP.


  • Northern Region System Strengthening Scheme-XXV.


  • Northern Region System Strengthening Scheme-XXVI.



 



Thus, these loans shall facilitate strengthening of the power transmission network across the country including inter-regional link and evacuation of power from Ultra Mega Power Projects like Sasan, Mundra and Krishnapatnam.



 



 






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