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Renewable Energy Breakup in India - June 2013
Renewable Energy Breakup in India - June 2013
19th July 2013
Solar Power Cheaper Than Coal Foreseen By German Solar CEO
14th July 2013
In a new interview withDeutsche Welle, the CEO of a Germany-based global solar developer made a good case for the potential for solar power to become cheaper than coal sooner rather than later. That would be Bernhard Beck, CEO of BELECTRIC. In the interview Beck had some interesting things to say about the direction of the global solar market and the potential for growth in large-scale solar power generating plants, and if anything, we think his forecast could come true even sooner than he thinks.
BELECTRICspecializes in utility-scale solar power plants as well as rooftop solar, and the former area is where the focus of theDeutsche Welleinterview takes place.
According to Beck, large scale solar power in Germany is already“approaching the costs”of conventional power, at 10 euro cents per kilowatt-hour (kWh)
Beck was reluctant to lay out a specific timetable, but he did predict that with additional technological improvements, the cost of solar power in Germany (and by extension, other relatively sun-poor countries), will ultimately fall below the cost of conventional energy.
He foresees a much shorter time span in “sun-rich” countries, where the trend is rapidly moving in the direction of solar power for less than 10 euro cents per kWh. That could put solar power below the cost of wind power as well as coal or gas.
However, Beck indicates that these countries have some obstacles to overcome. By “sun-rich” he means countries with a less developed transmission infrastructure, which puts large scale power plants at a disadvantage in terms of operating costs. Also contributing to higher operating costs is the characteristic dust-heavy environment of the “sun-rich” countries to which he refers, which translates into higher costs for cleaning and maintaining solar panels.
Power crisis may deepen: Report
20th August 2012
HYDERABAD: The state is spending Rs 15 crore every day to buy power for supply to consumers. But, new principal secretary of the energy department Mrutyunjay Sahoo has set alarm bells ringing by submitting an internal report predicting that things could turn worse what with power surpluses in other states also likely to dwindle.
In future, power will not be available from other states even at a higher price, the report says.
The report submitted to the chief minister points out that the present situation, in spite of such high purchases, cannot be said to be very rosy. Out of 9,300 feeders in the state that transmit power to consumers, 4,000 are not getting adequate supply while 2,000 are getting negligible supply, the report points out.
Because of this, the state is not able to provide a continuous seven-hour supply to the agriculture sector, the report said.
While the shortage in the state was 17.2% last month, it is expected to go up with the current dry spell likely to prolong. The dry spell is also deepening the crisis as power consumption is higher in areas under borewell agriculture.
Though Sahoo's appointment last fortnight was greeted by rains in Andhra Pradesh and Karnataka, this proved to be a shortlived joy. The dry spell has again set in the state and inflows into Srisailam are on the decline. The demand supply-gap is presently at 50 million units. "The demand is 265 million units and the supply is 215 million units. The gap is expected go up in the next few months," the report said.
The situation has worsened because of closure of the hydel plants.
"In normal conditions, the state gets about 3,100 MW power from hydel projects and the share of Srisailam and Nagarjunasagar is about 1,600 MW. Now, with the drying up of reservoirs, the hydel power generation has come down to almost nil," the report said.
Meanwhile, the power shortage issue is now taking a regional dimension. On Saturday, the Telangana Rashtra Samithi (TRS) alleged that the region was discriminated regarding power supply to agriculture.
Demanding a seven-hour power supply to farmers in the Telangana region, a delegation of TRS leaders submitted a memorandum to APGenco chairman K Vijayanand. TRS floor leader Etela Rajender accused the power utilities of discrimination against the Telangana region in the supply of power compared to Seemandhra.
Source - ToI
Madhya Pradesh Solar Policy
30th July 2012
Madhya Pradesh Government in its endeavor to encourage renewable energy to meet its power deficit (of nearly 1200+ MW) has announced a new Solar Policy. This is a welcome step considering the fact that M.P. has huge potential for Solar Energy.
There are 4 Categories of Solar Projects that have been identified.
Category I : Projects selected as per the competitive bidding process for selling power to MP Discoms / MP Power Management Company
Category II : Projects set up for captive use or sale of power to 3rd party within or outside the state or for sale of power to other states through open access.
Category III : Projects set up under Renewable Energy Certificate (REC) mode
Category IV : Projects under Jawaharlal Nehru National Solar Mission.
In line with the depressed projections of economic growth, the Planning Commission on Wednesday lowered the target for power capacity addition during the 12th Plan period ending March 2017 to 88,000 Megawatt (Mw) from 100,000 Mw set earlier. Also, state power ministers raised concerns over 55 of the 89 thermal power generating units running on low capacity.
Every one per cent increase in Gross Domestic Product (GDP) requires power capacity to grow by 0.9 per cent in India. Power is one of the eight core infrastructure sectors, which have a combined weight of 38 per cent in the Index of Industrial Production (IIP).
“Now that we are realistically thinking of lowering the 12th plan GDP growth target to 8-8.5 per cent, the overall target for power generation capacity is also expected to be brought down,” Planning Commission deputy chairman Montek Singh Ahluwalia said, after a meeting of state power ministers.
The meeting noted 55 power plants were currently unable to run on full capacity owing to coal shortage. India currently has 89 thermal power generating units.
The deputy chairman also pitched for ramping up coal imports by CIL during the five-year period raising doubts over the state-owned miner Coal India Ltd’s ability to meet the entire domestic requirement alone. He said the commission was in favour of price pooling of the imported coal quantity. The pooling proposal will be mentioned in the 12th Plan document.
He also asked states to increase electricity charges and use power subsidy to improve essential services like drinking water, education and health. "This situation can be handled through a combination of tariff increase and serious efforts to reduce Aggregate Technical and Commercial losses."
On the issue of Fuel Supply Agreements with power companies, Power Secretary P Uma Shankar called for Coal India to commit supply at 80 per cent of the contracted quantity in new pacts.
Meanwhile, Rajasthan, Andhra Pradesh, Haryana, Punjab and some other states aired differences with the Centre's proposal for debt restructuring of state power distribution companies.
These states, including Rajasthan, Andhra Pradesh, Haryana and Punjab, said they were particularly opposed to a proposal under which half of Rs 120,000 debt will be met through bonds issued by DISCOMs backed by a guarantee of the state concerned.
India to exceed its Solar Power Target !
18th July 2012
India’s got big plans for its renewable energy sector.
This is the latest in a pattern of energy companies paying increasing attention to renewable power—just last month, India’s biggest wind power developer CLP Holdings Ltd. stated that it will be focusing more on renewable development after noting consistent conventional fuel shortages.
India’s government aims to establish 20 gigawatts of solar power generating capacity by 2022. Welspun, which has been signing numerous agreements over the last year to build 1,500 megawatts of solar power, says that they are more likely to hit 40 gigawatts given the increasing parity between renewable and fossil fuel costs.
India has seen explosive economic growth over the past few years with a 9 percent growth rate. However, to maintain that rate, the nation will need to add another 169 gigawatts of power capacity in five years according to the Indian Planning Commission.
The recent economic slowdowns worldwide have affected India’s growth as well; in the three months ending March, GDP rose by 5.3 percent. That is the slowest rate of growth in the past nine years.
Vineet Mittal, managing director of Welspun Energy, toldBloomberg:
“India is different from the U.S. or Europe because renewables aren’t just competing on cost with fossil fuels. It’s a question of energy security.”
And, he says, the fact that renewable energy is innately resistant to disruptions—a common feature of the conventional power infrastructure in India—makes it highly attractive to investors and consumers alike.
Today, 70 percent of India’s power supply comes from conventional fuels—coal, oil, gas—and the supply is frequently unreliable thanks to an aging rail and pipeline infrastructure. Solar and wind power costs have already fallen below that of diesel.
Welspun plans to replace diesel generation units at its group companies with renewable options over the next 18 months.
Solar power shines on photo voltaic panel price crash
16th July 2012
Riding on the crash in photo voltaic (PV) panel prices, thesolar powersector in India had a dream run last year with capacity ballooning to 940MW in 2011-12 from a paltry 20MW in 2010-11. That's just statistics. What's significant and not borne out by these statistics is the fact that the cost of power from solar is now on a par with the cost of power from new coal-based plants.
In industry parlance, it's referred to as grid parity, considered the holy grail of solar power. Grid-parity is the point where the cost of electricity generated from sunshine becomes competitive with that of power produced from coal, gas, wind and hydro-based plants.
Going forward, the appetite of the private sector can only increase with the government setting a target of adding 20,000MW capacity by 2020 under the Jawaharlal Nehru National Solar Mission (JNNSM). The flow of private investments into the country's solar sector has already seen a seven-fold jump to $4.2 billion in 2011, according to a latest report by Pew Charitable Trust.
"If we compare the cost of power from new coal-based plants, it will be at par with that of solar. If one takes into account the total duration of the power purchasing agreement, which is 25 years, grid-parity is already there. Solar power needs only a one-time investment in the form of land and PV panels. Its fuel, which is sunshine, is free unlike coal where price will head only northwards," said Gaurav Sood, managing director, Solairedirect, a solar power producer. Solairedirect was the lowest bidder at Rs 7.49 per unit for a 5MW plant auctioned under JNNSM in December, 2011. The average tariff bid for 350MW under the mission was Rs 8.8 per unit.
Three years ago, the cost of generating a unit of solar energy was around Rs 18. In fact, solar has already taken over diesel as a cheaper form of energy and a lot of telecom towers are now being run on solar power.
In recent years, there has been a sharp decline in capital costs for solar PV plants. PV module prices have fallen a sharp 80% in the last five years and 30% during last year alone. ACrisil report released a few weeks ago said, "Capital costs fell by 30% from a year ago to Rs 10 crore per MW (megawatt) by the end of 2011. The fall was driven by 50% drop in prices of solar PV modules, which account for almost half the capital costs of a PV project. The sharp fall in capital costs has improved the returns from the projects that were commissioned in FY12."
Heavy subsidies by China to its domestic manufacturers have been a major factor in driving down module prices. The recent reduction of subsidy to the sector by Germany, the largest solar power generator in the world, has also pushed down prices further.
While the solar power generators are basking in the sunshine with optimism, the module makers are fighting to stay afloat. The nascent solar equipment industry in India is facing the heat and looking for ways to survive the Chinese subsidy onslaught that has already consumed many leading global manufacturers such as Solyndra (US), Q Cells and Solar Millennium (both in Germany) which have filed for bankruptcy.
Funding to the sector has also seen an uptick, even though banks are still cagey about rock-bottom tariffs and higher debt levels. "We are keen to assist solar projects as they are pollution free. But we would prefer a lower debt-equity ratio in the range of 60:40," said B K Batra, executive director, IDBI Bank. The bank has funded half a dozen projects in the past. Given its green energy status, it's also not surprising that agencies such as US EXIM bank, ADB and IFC have also been active in the space.
Power Minister to inaugurate new energy-efficiency scheme
The Power Minister, Mr Sushilkumar Shinde, will inaugurate the ‘Perform, Achieve, Trade’ (PAT) scheme in New Delhi tomorrow.
The much-awaited, path breaking scheme that could engender an ‘energy efficiency industry’ is meant to give a boost to energy conservation efforts in the country. It basically creates a market for energy efficiency, through tradeable ‘energy savings certificates’, or ESCerts.
You consume less energy against a benchmark, you get an ESCert that you can sell. It will be bought by an entity whose consumption is above the norm. Therefore, the scheme operates pretty much on the same principle as carbon credits or the ‘renewable energy certificates’.
A Ministry of Power press release issued on Monday describes the PAT mechanism as “an innovative programme with no precedence anywhere else in the world”. The Ministry expects the mechanism to bring about a “transformational change in energy efficiency”.
‘PAT’ is a step taken under the National Mission for Enhanced Energy Efficiency, one of the eight National Missions under the National Action Plan of Climate Change.
“The scheme provides the option to trade any additional certified energy savings with other designated consumers to comply with the Specific Energy Consumption reduction targets,” says the press release.
“The Energy Savings Certificates (ESCerts) so issued to those who exceed their saving targets, will be tradable on special trading platforms to be created in the two power exchanges (Indian Energy Exchange and Power Exchange India),” it says. The Ministry of Power has notified 478 ‘designated consumers’, 8 industrial sectors (and railway workshops) for the operation of the scheme.
The Government has notified targets for the 478 industrial units and thermal power stations as of March 30, 2012. These targets are to be achieved by 2014-15. Any additional saving will qualify for earning EScerts which could be sold to designated consumers who fall short of the target.
The Bureau of Energy Efficiency will set up a company, Energy Efficiency Services Ltd, which will function as an implementation and monitoring agency for the scheme. BEE had estimated that the capital investments that would be made in 2011-14 at Rs 30,603 crore.
REC Trading - June 2012 - HUGE Jump in demand for Solar REC
June Trading of Renewable Energy Certificates (RECs) took place on 27th June 2012 in IEX and PXIL. The session was marked by a huge jump in demand for Solar RECs standing at a staggering 9,619 (as compared to 1,642 in May 2012 trading) - a jump of nearly 600% as compared to last trading session.
The Sell volume also witnessed a surge with latest figures at 563 as compared to 249 in the May 2012 trading session - a 100% jump.
The surging demand clearly indicates that Obligated Entities are flocking the market to meet their Renewable Purchase Obligation (RPO) mandate. A slow rise in sell volume also indicates the number of REC sellers is gradually increasing. However a huge demand-supply gap in Solar REC will ensure that the Solar REC prices will continue to be in the range of INR 12,000 to INR 13,000 per REC.
Solar REC :: First REC Issued
The country’s first solar ‘Renewable Energy Certificates’ were issued today.
NSE and BSE-listed M and B Switchgear Ltd was issued 249 RECs by the National Load Despatch Centre in New Delhi.
RECs are generation-based ‘certificates’ awarded (electronically, in demat form) to those generating electricity from renewable sources such as wind, biomass, hydro and solar, if they opt not to sell the electricity at a preferentially higher tariff.
These certificates are tradeable on the power exchanges and are bought by ‘obligated entities’ that are either specified consumers or electricity distribution companies. These obligated entities may be required to purchase a certain quantum of either green power or RECs.
The obligations are split into non-solar and solar — which means the obligated entities have to purchase either power from solar power projects or RECs generated by them.
M and B Switchgear, headquartered in Indore, is a manufacturer of transformers. In 2010-11, the company’s turnover was Rs 37 crore on which it made a net profit of Rs 77 lakh. For the first nine months of 2011-12, its turnover was Rs 18 crore, and net profit, Rs 32 lakh. M and B’s shares closed on the CSE on Wednesday at Rs 76.85.
The company also has a 2 MW solar photovoltaic power plant. In 2012-13, this plant is expected to generate close to 3,250 RECs.
The government fixes the floor and ceiling prices of RECs for a specified period. The minimum and maximum prices for solar RECs for 2012-17 are Rs 9,300 and Rs 13,400 respectively. Therefore, if M and B’s solar plant generates 3,250 RECs, the company could be richer by anywhere between Rs 3 crore and Rs 4.35 crore.
Getting the certificates is a two-step process — first ‘registration’ with the state load despatch centre and then ‘accreditation’ by NLDC. While M and B Switchgear is the only one to be accredited so far, four other solar power developers have been registered for RECs. They are: Jain Irrigation – 8.5 MW Maharashtra; Kanoria Chemicals – 5 MW, Rajasthan; Gupta Suns – 0.5 MW, Madhya Pradesh; and Numeric Power Systems – 1.0555 MW, Tamil Nadu.
India targets saving of 12,000 mw electricity
New Delhi:Under pressure from the international community to cut emissions and support the fight against climate change, India is focusing on implementation of energy efficiency measures in a big way. The country has targeted to save as much as 12,000 mw of electricity by increasing energy efficiency standards of power equipment and appliances and buildings during the current Twelfth Five-Year Plan (April 2012-March 2017).
‘‘We have targeted energy savings of 12,000 mw during the 12th Plan,’’ Ajay Mathur, director general, BEE, told FE.
The Bureau of Energy Efficiency (BEE), a statutory body under the Union power ministry, has raised energy efficiency standards for split air-conditioners by 8%. The move comes in the wake of the upcoming freeze hydro-chlorofloro-carbons under the Montreal Compact on Environment next year. BEE introduced mandatory star labelling of electrical appliances in January 2010.
Star-labelleing indicates the level of energy savings. Consumers can make an informed choice about purchase of air-conditioners by looking at Stars inscribed on the appliance. A commercial consumer is likely to prefer air-conditioners with higher Star ratings because of larger potential energy savings, which would entail a shorter payback period for him.
"We are happy that our initial steps in introducing star labelling for airconditioners has borne such good results," Mathur said.
The agency has also developed a mobile phone-based application "AC Power Saver" to create awareness among electricity consumers. It enables consumers to calculate energy consumption and savings on their mobile handsets. The application will be available for Android, Balckberry and iPhone users free of charge. These tools will help consumers calculate in advance their annual electricity bills and the potential savings. BEE is also training air-conditioner sales executives as part of its consumer awareness programme. It has already trained 1,544 salesmen across six cities. BEE has partnered with Emerson Climate Technologies and International Copper Promotion Council to educate the market on the benefits of the star labelling for split airconditioners. The agency plans to further tighten the energy efficiency norms for split air-conditioners in 2014.
Source - FE
South India reeling under Power Crisis
Vishnu Vardhan, 24, had never bargained for this when he decided to turn entrepreneur. A fresh management graduate from Wales in the United Kingdom, he set up a small unit in Coimbatore, Tamil Nadu, six months ago to make motors. First, he found himself facing10 hours of power shutdown every day. Then came another shock: there would be a second weekly 'power holiday', starting March 1. Industrial consumers would get power only five days a week. "I am managing with a diesel generator set rented at a cost of Rs 2,500 for seven hours," he says. The additional expense has increased his costs, apart from adversely affecting production.
The story is the same with most small manufacturers in Coimbatore. It is even worse for makers of tiny components, most of whom cannot afford theadded expense of running diesel sets. For the likes of Vardhan too, diesel sets can only be a temporary recourse, since their power costs between Rs 15 and 19 per unit, while grid power costs Rs 5.
The situation in Coimbatore is a microcosm of what is happening across Tamil Nadu. The state, whose power sector was reasonably well managed till 2004, has seen a reversal in recent times, withpeak shortage touching 2,886 megawatts(MW) in February, or 24.3 per cent. Even a year ago, in February 2011, the peak shortage was 865 MW, or 7.7 per cent.
The situation in the rest of South India, or any other part of the country, is no better. Like Tamil Nadu, Andhra Pradesh too has enforced two weekly power holidays for industries.
Agriculture has also been hit, with thestate unable to supply sufficient powerto pump water to the fields, after the north-east monsoon failed last year.
"The fill rate, or the extent to which shop shelves are restocked following sales, slipped to 90 per cent in February for vegetables and rice, from 96 per cent earlier," says S. Jagdish Krishnan, COO, Retail and Bakery Divisions, Heritage Foods,
In Karnataka, the tribulations of the Toyota Kirloskar Motor auto plant on the outskirts of Bangalore, tell a typical story. Every time the power supply trips, a bunch of cars under production turn into scrap.
"As soon as power trips, car bodies passing through the electrodeposition process fail the quality assurance test," says Shekar Viswanathan, Deputy Managing Director (Commercial), Toyota Kirloskar. Last year, between March and August, the company lost 73 vehicles worth Rs 6.2 crore.
In the next six months from September, it has lost a staggering 830 vehicles worth Rs 56.9 crore. Karnataka has declared a weekly holiday for industries and banned private generating companies from selling power outside the state.
Why has this situation arisen? Not for lack of new generation projects. The country is estimated to have added fresh capacity of 53,922 MW during the Eleventh Five-year Plan period, which ended in March, more than twice the amount of 21,180 MW, added during the Tenth Plan.
But all thenew plants are working below capacitybecause they are not getting enough coal or gas.
"The total capacity of power projects impacted by fuel issues would be around 43,000 MW," says Ashok Khurana, Director General of the Association of Power Producers (APP), and former additional secretary in the power ministry.
The coal shortage in the country in 2011/12 was around 54 million tonnes, the generation loss due to which was 8.73 billion units in the first 11 months up to February, says an estimate of the Central Electricity Authority (CEA).
In the same period during the last financial year, the loss was 6.87 billion units. On the last day of February, 34 thermal plants across the country had coal stocks for barely a week.
Coal shortage has dogged the country for years, but power producers claim this level of scarcity is unprecedented.
"In four years, domestic coal prices have shot up 40 per cent, while imported coal prices have gone up 150 per cent," says Khurana,
The Centre finally acted in the first week of April, issuing aPresidential directive to Coal India Ltd(CIL) - which provides the bulk of domestic coal supply - to meet 80 per cent of itssupply commitments to the power sector, under the pain of penalty.
Earlier, milder efforts to pressure CIL had not worked: a late February initiative by the Committee of Secretaries, for instance, to get CIL to sign fuel supply agreements with the new projects commissioned during the 11th Plan period came to naught, as the company's independent directors opposed it strongly.
"The state governments need to address the power problem, though we are trying our best to help them," says Union Power Minister Sushil Kumar Shinde.
There is little hope from natural gas either.
Gas plants in the South are already operating at half their capacity, while production at the KG D6 basin in Andhra Pradesh has been steadily falling for the last two years and now stands at 34 million metric standard cubic metres per day (mmscmd).
"Theavailability of gas from KG-D6is expected to continuously decline in 2012/13 and 2013/14," Jaipal Reddy, Union Petroleum and Natural Gas Minister, told the Rajya Sabha on March 20.
From 43 mmscmd in 2011/12, gas production is likely to drop to 15 mmscmd in 2012/13 and 11 mmscmd in 2013/14. Gas-based plants with a capacity of 9,860 MW are expected to go on stream in 2012/13, which will need about 25 mmscmd of gas, but where it will come from is anybody's guess.
On March 19, the CEA issued an advisory asking developers not to plan any gas-based projects till 2015/16, since no additional domestic gas will be available till then.
Workers at a small scale unit in Coimbatore using battery-powered lamps during a power cut.
Worse, most state-owned distribution companies are in such bad shape they cannot afford to buy more power, especially if power producers seek slightly higher tariffs. The actual cost of generation at the first unit of Tata Power's Mundra ultra mega power project in Gujarat has shot up after coal imports became more costly, but the states buying its power have refused to absorb the extra cost.
All stakeholders have turned cautious. The APP points out that 50 per cent of power sector loans sanctioned have not yet been actually drawn by the loan seekers. Even the big guns among consumers are hedging their bets.
"We will not be adding capacities in the manufacturing facilities where power cost is a significant component of product cost," says Mithun Chittalappilly, Executive Director of the Rs 1,000-crore, Keralabased V-Guard Industries.
Are there any solutions? One way out is that used by the Opto Circuits plant in Bangalore, which has eschewed grid power altogether, spending Rs 25,000 per day instead on diesel. "We don't use grid power at all as any interruption in power supply will damage our machinery," says Muniswamy Srinivas, Finance Head, Opto Circuits. But given the high cost of diesel power this remains an unfeasible option for most.
"Countries such as Thailand, China and South Korea supply cheap power to industry to push up exports," says energy expert V. Raghuraman. "How will Indian manufacturing compete with these countries in the global marketplace?"
One small section of industry, however, is smiling: the manufacturers of diesel generator sets and inverters. V Guard also makes inverters, the sales of which shot up 340 per cent in the first 11 months of 2011/12, compared to the same period last year. "We are not able to meet the demand," says Chittalappilly.
Source - BT
Coal and Power prices are heading higher
The confusion around coal supplies/prices seems to go on and on.
On the one hand, is an almost hapless management which wants to shift to a universally accepted pricing mechanism for coal, while on the other is an almost arrogant government, which does not want to even raise coal prices moderately for power producers for fear that these hikes will be immediately passed on to consumers, a treasured vote bank.
In between this tussle is The Children’s Investment Fund, the second largest shareholder in Coal India, which is insisting that Coal India raise prices to ensure that shareholders do not lose out because of the government’s callous policies.
Now there are hints that Coal India’s management may well give in to the pressures from TCI and raise prices in some coal categories.
Earlier, the company had announced that it would price coal according to gross calorific value (GCV) instead of the useful heat value (UHV). At the time, the expectation was that its average realisation could go up by13-15 percent. In some cases, depending on the quality of the coal, prices of the stuff were expected to go up by more than than 100 percent. However, protests from power producers put paid to that attempt.
Now, another attempt is being made. Today, the board of Coal India will meet to resolve the issues of signing long- term fuel supply arrangements (FSA) with power producers. Given that now there is a possible penalty in case of failing to supply power companies the promised quantities of coal, it might decide to review and raise prices in some coal categories, reports The Economic Times.
There is also a plan to impose an ad valorem royalty on coal, according toIndian Express. Coal minister Saiprakash Jaiswal has proposed to levy an ad valorem levy of 14 percent for coal and 6 percent for lignite, the newspaper said. While that would make the state government richer by Rs 1,000 crore, power producers will probably bear the brunt of this levy, which could lead to an increase in electricity prices.
Either move, a review of prices or duty addition or both, will no doubt add to the cost of power production. Since power generators or state electricity boards (mainly power distributors) are not in any position to absorb additional price hikes, they will be passed on to the end consumers of power.
It is well known that power tariff hikes have been delayed for several years across states, leading to a staggering loss of Rs 1 lakh crore for SEBs, according to some estimates.
Skewed policies in the power, coal and oil sector have left companies bleeding across the board. Coal India, while currently profitable, is also in danger of rapidly eroding policies because of the government’s whimsical policies.
To bring about more profitable and sustainable energy output, we need more balanced policies, which start with enforcing reasonable prices hikes.
Given that the country is power hungry, there is no option but to pay higher prices for the limited power supplies we have. More power can only be generated if companies get properly paid for what they produce.
Otherwise, we might as well get used to the coming blackouts.
Source - FP
Indonesia's 25% tax plan on coal exports to hit Indian power firms
MUMBAI: Indian companies, cheering the Presidential decree forcingCoal Indiato fuel their power stations, face a fresh bout of uncertainty asIndonesiahas proposed a 25% tax oncoal exportswhich would make many plants unviable and encourage India to turn to Africa and Australia for fuel.
Indonesia's industry ministry, which proposes to impose this tax to prevent overexploitation of its mines, plans to double the levy to 50% in 2013, according to agency reports.
Indonesia's vast coal reserves had attracted large investments by companies, such as Tata Power,Adani Powerand Reliance Power, who bought assets in the country to fuel their projects in India, while others, such as Lanco Infratech, have long-term pacts with miners and traders in the country.
Indian power producers are rapidly losing faith in Indonesia as this is the second time that the country has rattled them.
Earlier, it had upset the economics of ultra mega power plants (UMPPs) being set up byTata PowerandReliance Poweras it changed its law to raise the export price of coal. Companies are struggling to honour power purchase agreements, and are seeking tariff revision.
"The 25% tax would be a very heavy burden on us and make power unaffordable. Companies generating power from imported fuel are finding it difficult to get buyers and with any more increase, it would be completely unviable," said Ashok Khurana, director general of theAssociation of Power Producers.
India, one of the biggest importers of Indonesian coal, currently runs around 9,000 MW capacity on coal from the country, and has another 10,000 MW under execution, Khurana said. Mega projects of companies, like Tata Power and Reliance Power, have been hurt after Indonesia's decided to link coal prices to international benchmarks, making the coal from the country almost 150% more expensive.
Source - ET
Low Energy Efficiency : Indian Industries to be penalised
In a new measure to check emissions responsible for global warming, the government has notified a domestic carbon trade mechanism that will impose penalties on industries failing to achieve new energy efficiency targets.New rules notified for eight energy-intensive sectors will allow the government to impose a penalty of over Rs 10,000 for missing the target by 1 tonne of oil-equivalent. It means that if a company falls short by 5 tonnes of oil-equivalent, it will have to pay a penalty of over Rs 50,000 to the government.
There is also an incentive for companies that surpass the energy-efficiency target set for 2014-15. For each extra tonne of oil-equivalent saved, the company will get an energy saving certificate. These certificates can be sold through a market mechanism to companies that fail to meet the target.
Bureau for Energy Efficiency (BEE) director general Ajay Mathur told HT that the scheme would enable the Indian industry to “progressively” reduce its carbon intensity, strengthening its bottom line as well. “In a way, the production cost for each tonne will reduce,” he said.
Among the world’s first domestic carbon emission trading mechanisms, this scheme — known as Perform Achieve Trade (PAT) — has been implemented under the National Mission for Energy Efficiency Enhancement. It is a part of the Prime Minister’s National Action Plan on Climate Change.
The power ministry on Friday notified the rules under the Energy Conservation Act-2011, aimed at reducing 6.6 million tonnes of oil-equivalent by 2015, or 4% of the energy consumed by these industries in 2009-10. As the bureau wanted to target energy-intense industries, eight sectors — iron and steel, cement, fertilisers, aluminum, pulp and paper, chloralkali, textiles and thermal power stations — were included.
Accounting for one-third of India’s total energy consumption, these sectors cover 478 industrial units whose energy consumption for producing a tonne of end-product is higher than the standard specified by BEE. They include some of India’s top companies, such as Reliance, Vedanta Aluminum Limited and Gujarat Fluorochemicals Limited.
Source - HT
Power firms need steep hike in tariff to survive
A tariff hike of 45-60% is needed for the survival of power distribution companies in the country, stated a recent study conducted by the Citigroup Global Markets.The hike, if approved by the regulators, would put enormous burden on consumers.Increase in supply cost because of fuelprice hike, interest burden and expensive outsourcing are some of the factors leading to the hike, stated the study. The recent average countrywide tariff hike was 12%. While states such as Haryana (3%) and Maharashtra (5%) had low average, Rajasthan (24%), Karnataka (22%), Delhi (21%), Orissa (20%) and Bihar (19%) were on the higher side.
With the government subsidies reducing by 38% in the last three years, the financial condition of power utilities in the state is deteriorating. Their cumulative losses without the government subsidies are expected to reach Rs7,50,000 crore this year, said the report.
Stating that only steep hikes could help companies break even, the study recommended the implementation of the measures suggested by the Shunglu Committee, appointed for looking into state electricity boards’ financial status. A strong political leadership that will pass on the costs to domestic and agriculture consumers — who are being cross-subsidised by industrial and commercial consumers — is the need of the hour, said the report.
A case in point could be utilities in Mumbai that spend close to 80% of their budget on buying power. This cost is, thus, passed on to the consumers making power tariff in city’s suburbs highest in the country.
“The decision [on tariff] will be politically sensitive and will test the will of the state government,” added the report.
Anil Sardana, managing director, Tata Power, said: “The revocation of customs duty on imported coal, natural gas and liquid natural gas in this year’s union budget and the incentives for mining sector will marginally improve supply of coal. It is still a far cry from achieving adequate fuel security.”
Ramesh Chandak, president, Indian Electrical and Electronics Manufacturers’ Association, said: “The union budget did not approve of any of the major demands of the power industry including the service tax exemption for all power projects and duty-free import of a raw material for making transformers.”
Short Fuel Supply, Incomplete Power Projects indicate Power Problems to continue
Brace yourself for a cruel summer this time, as coal and gas shortages may cripple the country’s existing power generation capacity during the peak demand period.The crisis is likely to worsen since the power ministry has fallen 8,000mw short of the 11th plan target — ending March 31 —of an additional capacity of 62,000 mw due to the fuel shortages.
The power ministry carried out a downward revision of the 78,500-mw target mid-term to 62,000 mw. But the actual capacity addition at the end of the plan period is much behind at 54,000 mw.
Union minister for power Shushilkumar Shinde told HT: “Fuel shortages have led to missing the targets… I am afraid that fuel shortages may hit the 76,000mw generation target we have set for the next plan period (2012-2017).
Since coal is the mainstay of India’s power sector — more than 55% of the 192,792-mw installed capacity is coal-based — the situation looks grim, especially because state-owned Coal India Ltd’s production has remained stagnant at 420-430 million tonne a year since 2009.
The company has resorted to coal imports to make up for the shortfall, resulting in a sharp rise in generation costs. At present, power producers are importing 40 million tonne a year, but the figure could go up to 60-70 million tonne by 2012-13.
This will put an immense pressure on the power firms as the imported coal costs R4,000 a tonne against the domestic coal price of R1,000 a tonne.
Similarly, gas output from India's largest fields, the KG D6 in the east coast, has dropped to 28.16 mmscmd, or million standard cubic metre per day — used as a unit of measurement for liquids and gases — in March 2012 against the projection of 80 mmscmd for 2012.
Arup Roy Choudhury, chairman of India's largest power producer NTPC, said his company would have to put on hold the capacity expansion plans at it 4,000-mw gas-based plants at Kayamkulam, Kawas, Gandhar, Dadri, Anta and Auraiya.
Also, the fate of a significant number of coal and gas-fired projects of private sector producers, including those of Tata Power, Reliance Power, Essar Power, Adani, Lanco and GVK — expected to produce over 70,000 mw — has become uncertain.
What's more, the state electricity boards are refusing to pay higher prices for power since in most states, power tariffs cannot be hiked mainly for political reasons.
Source - HT
Erratic power cuts prompt people to opt for Solar energy
COIMBATORE: With no answers to the power crisis in the district, more people and industries are opting for alternative sources of energy. The manufacturers of solar panels have been witnessing a dramatic increase in sales in recent months. "We did not expect a 100% increase in sales, considering the cost of solar panels," said K Muthumani, proprietor of Omega Solar in Uppilipalayam, Coimbatore. People are beginning to realize the importance of green energy, he said. Besides, they are fed up with the power cuts, he added.
Until a few years ago, the cost of a solar panel was exorbitant. Not many people resorted to solar energy then as they felt the return on investment would not be worth the wait.
However, the recent power crisis has forced many to look at solar energy as an option. People are more willing to invest in a panel that would produce 500 watts of energy to light residences, said Muthumani.
Earlier, the panel for each watt cost Rs200. But today, the price has come down to as low as Rs80, said R Gautam, proprietor of Next Generation of Solar Solutions. "People invested in solar water heaters, but the demand for panels was minimal. We used to sell 100 watts per month, but now we sell about 500 watts every day for residential use. Industries purchase anywhere between 1,000 watts and 20 kilo watts of energy," he said.
Photovoltaic cells are imported from Germany. Cheaper versions are imported from China. The panels are assembled and marketed here. With the extended power cuts, Muthumani said that the UPS has not been very useful. However, he revealed that the UPS can be charged with solar energy.
"I was having sleepless nights and was upset with the erratic power supply," said R Palanisamy, a retired veterinarian and resident of Kamraj Nagar, who has opted for solar energy. To light four LED bulbs, four fans and nine CFL bulbs, 300 watts are needed. This would cost Rs1.2 lakh, he said.
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