Solar could scale up substantially to be a significant energy source by 2025, with the market penetration of solar power expected to be 5.7 per cent (54 GW) by 2020 and 12.5 per cent (166 GW) by 2025.India aims to reduce emission intensity of its GDP by 33 to 35 per cent by 2030 from 2005 levels, and solar power is likely to contribute 4 per cent towards this target, stated KPMG in India’s report, titled ‘The Rising Sun – Disruption on the horizon’.The report was released by Piyush Goyal, Minister of State (IC) for Power, Coal, and New and Renewable Energy and Dharmendra Pradhan, Minister of State (IC) – Petroleum and Natural Gas at ENRich 2015, KPMG in India’s annual energy conclave. Other eminent dignitaries present during the report launch included Richard Rekhy, CEO, KPMG in India, Michiel Soeting, Global Chair for ENR, KPMG, Arvind Mahajan, Partner and Head of Infrastructure, Government & Energy, KPMG in India, Nitin Atroley, Partner and Head, Sales and Markets, KPMG in India and Manish Aggarwal, Partner and Head – Energy and Natural Resources, KPMG in India among others.The report talks about how the scale up and competitiveness of solar power could disrupt the traditional generators. The disruptive force is expected to start being felt from 2017 and may accelerate post 2020. In some states which are promoting solar (and also wind power) aggressively, conventional coal generators could see their Plant Load Factors (PLFs) fall by as much as 10-15 per cent by 2020, as solar replaces coal-fired generation in the daytime hours. This effect may speed up post 2020 with the annual addition of large amounts of solar (estimated to exceed by 20 GW per year by 2022-23).The report highlights that the price for solar power has seen a decline; today, in India, solar prices are within 15 per cent of the coal power prices on a levelised basis and, it is expected that that by 2020, solar power prices would be approximately 10 per cent lower than coal power prices. The solar rooftop power, today, is already competitive compared to grid power for many consumers and, as per the report, if combined with storage, it could be cheaper than grid power after 2022 for a large section of the consumers and drive a considerable shift to rooftop power. A ‘Solar House’ that is self-sufficient in energy terms could be a reality within the coming decade.Piyush Goyal, Honourable Minister of State (IC) for Power, Coal and New and Renewable Energy said, “We need to re-engineer our process to create energy efficiency and conservation to give India an affordable energy access. It is important that we remove all disparity at the root level to ensure social harmony for all in India and also to compete globally. A holistic vision is the need of the hour in order to reach 200 million people at a faster rate. I am personally convinced that any amount of investment in this sector will have a quick pay back. This is possible and achievable and I am confident that the era of shortage is over and we are now in the era of surplus. I am hopeful that you will see the economy picking up rapidly and the benefits would be seen across the nation.”“The power sector in India is going through a significant change and solar is expected to play a dominant role in it. This presents a great opportunity for India, especially in the current political-social environment where the country has embarked on a vision to have energy security, by providing affordable and sustainable power to all. The Government of India has laid down its ambitious vision for the renewable sector, especially solar, and some of the global developments also point in the direction to achieve it, provided we understand the implications, and gear up to plan for this fundamental shift. Also, the issue is not about coal vs solar since India needs to harness all its natural resources for achieving energy security at affordable prices, which at the same time provides reasonable return to investors. The government has also identified the goal of ’Power for all by 2022’, and renewable energy sources, such as solar, are expected to play an important role in this,” said Manish Aggarwal, Partner and Head – Energy and Natural Resources, KPMG in India.The report highlights the need for the government to significantly strengthen the planning infrastructure and processes, and emphasises the energy sector’s need for a new planning paradigm which takes into account the expected emphasis on renewable energy in India. The Government needs to focus on significant strengthening of the planning infrastructure and processes.The right incentives for investments in grid integration of solar and balancing services should be put in place early. The report also recognises that significant conventional generation capacities are also needed to meet the country’s growing energy demand. In fact, conventional generators will need to contribute 60 per cent of incremental capacity needs up to 2025, with solar contributing between 20-25 per cent, and considering another 15 per cent coming from wind. However, these additional capacities will need different attributes from the ones we have seen so far. These attributes are related to flexibility in generation (in terms of ramp rates and minimum thresholds) and low fixed cost, and higher variable cost preference, rather than vice versa.(BW Online Bureau)
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U.S. crude fell for a third session in a row on Friday to the lowest in over two months as a relentless climb in oil stockpiles helped trigger a 10 percent drop in prices since the start of November, with traders taking on bets on further falls. Benchmark U.S. crude futures were at $41.52 a barrel at 0417 GMT, down 23 cents from Thursday, when prices tumbled almost 3 percent on the back of rising U.S. stocks. The contract was at the lowest since Aug. 27. Internationally traded Brent crude futures were at $44.10 a barrel, up four cents on their last settlement, but close to August lows. "U.S. crude inventories breaking to a new high and production inching upwards should have been the reason for the market shakedown," Singapore-based Phillip Futures said, referring to a 4.2 million barrel crude inventory rise by last week against a market expectation for a 1.3 million barrel gain. ANZ bank said a big price rebound this year was unlikely: "A year-end recovery in commodity prices remains unlikely with a stronger US$ and EM (emerging market) growth concerns." There are also signs that traders are preparing for more price falls this year and into 2016, with the number of options taken to sell crude futures if prices fall to $40 or even $25 per barrel between December 2015 and June 2016 soaring over the past month. Oil markets have been dogged by oversupply, which analysts estimate to be between 0.7 and 2.5 million barrels of oil being produced a day above demand, and which has resulted in prices falling by almost two-thirds since June 2014. The glut is a result of high production by most major producers, including countries making up the Middle East-led Organization of the Petroleum Exporting Countries (OPEC), but also Russia and North America. OPEC said it expects an oil surplus to extend into 2016, albeit at a lower rate than this year. The group said it pumped 31.38 million barrels per day (bpd) last month, down 256,000 bpd from September. That is the first decline since March, according to OPEC figures. On the demand side, an economic slowdown in Asia, led by the region's two biggest economies, China and Japan, has led to concerns about slowing demand, although consumption has so far held up. (Reuters)
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Looking at utilising underground mines more efficiently, CIL has invited bids from consultants for preparing a study on a range of issues, including raising output, as the state-owned firm gears up to meet the ambitious production target of 1 billion tonnes. There are 227 working underground mines and 28 mixed mines under Coal India Ltd. "CMPDI, on behalf of Coal India Ltd (CIL), invites offers/bids through e-tendering from academic/research institutions and/or consultancy firms/organisations of India or abroad for providing consultancy services for 'study on underground coal mining in CIL - problems, potential, technology, modernisation, production and safety'," according to a tender document dated November 2, 2015. About Rs 762 crore is likely to be invested in the underground coalmines in the ongoing fiscal. Coal and Power Minister Piyush Goyal had earlier said that as against the output target of 37.6 million tonnes (MT) from the underground mines last fiscal, CIL had produced a little over 35 MT. The scope for augmenting production from the underground mines, he had said, was limited on account of difficult geo-mining conditions, non-availability of large size deposits for adopting mass production technologies, inadequate experience in mechanisation of underground mines. He had said that the major constraints in increasing coal production from underground mines, include lack of appropriate technologies to mine coal from thick and steeply inclines and multiple seams, heavy pumping out of water and adverse roof conditions. The government has set an ambitious 1 billion tonnes coal production target for CIL by 2020. It accounts for over 80 per cent of the domestic coal output. (PTI)
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Shravan Sampath Last week, the big news in the energy business was the solar bids in Andhra Pradesh. Eyebrows were raised when a 500 MW solar park bid attracted a lowest bid of Rs 4.63 per kilowatt-hour. Such aggressive bids have usually been the hallmark of Indian promoter groups who are hoping to change the goalpost at a later date. However, this aggressive bid was by Sun Edison, an internationally reputed and NYSE listed project developer, whose stock unfortunately appears to be in a perilously downward spiral. While most market experts feel that such aggressive bids will never be commercially viable, Sun Edison appears to be confident. Apart from redefining the price point for solar in the country, Sun Edison has also established new benchmarks in sycophancy by attributing their success to Minister of Power and Renewable Energy Piyush Goyal.Taking a cue from Indian promoters' ability to profusely thank the government at every small opportunity, Pasupati Gopalan, the president & managing director of Sun Edison Asia Pacific is reported to have said "These low bids are the result of the tireless efforts of the minister (Piyush Goyal) and the ministry. They took a lot of feedback from the industry, assured the investors about the transmission and evacuation of power and land availability for the project. Then, an entity like NTPC is also involved. As the risks were significantly reduced, all this was factored in the low bids that were quoted." One can only hope that when his wonderful solar plant starts generating power, Gopalan would not attribute the bright shining sun also to the minister's tireless efforts.However, for industry watchers, it is quite depressing to note that while bids become more and more aggressive, the commercial framework around solar seems to be stagnating. The innovation shown by the conventional power sector even way back in 2006-07 in formulating of standard bidding documents seems to be missing in formulating a bidding framework for solar. It appears that there are so many more areas where it is possible to optimize the bidding framework. For instance, a distinct improvement on the bidding framework that is waiting to happen is different tariffs for different blocks of years. For instance, bidders can be asked to enter different tariffs for the first 12-15 years and a different tariff for the remainder of the PPA tenure. This could enable bidders to financially structure the bid tariff such that the project cash flows match with the debt servicing tenure. This structure was employed by the first generation of standard bidding documents issued by the Ministry of Power way back in 2006-07 itself, but has not yet been discovered by solar.Another suggested optimization, which, it is understood, is already in the works due to the "tireless efforts of the minister" is bidding in US dollars. Most of the financing today is obtained internationally and it would greatly help for the projects to have a dollarized revenue stream as well. Once again, imported coal based power bidding was introduced in 2006-07 itself with these parameters, and there is nothing new about this. Large projects like Tata Mundra and Adani Mundra have been set up with the imported coal price being denominated in US Dollars, and this has not hurt the procurers one bit.Another interesting innovation can be to utilize the international drop in module prices to provide the best tariff to the power procurer. The bidders in the market today are betting on the fact that the module prices are likely to fall next year and the developers can make a neat margin by building the plant on a reduced capital cost. To enable this benefit to pass on to the power procurer, a part of the tariff can be benchmarked to an international module indicator, and this can be increased or decreased based on the drop or increase in the index. Again, this innovation has been employed in fixed costs for thermal power that have been indexed to Wholesale Price Index (WPI) and Consumer Price Index (CPI).Another interesting possibility is to move from generation based Power Purchase Agreements (PPAs) to capacity based PPAs like conventional power. At the moment, solar power is purchased for each unit of power generated (or kWh), as against conventional power, which is based on the power capacity set up (or MW). At the moment, the developer has to take a call on solar radiation levels, and estimate how much solar power can be generated per Megawatt of capacity set up. He (or she, as the case may be) then bids based on the actual energy likely to generated in kWh. Thus, the solar radiation risk is taken by the developer. An option to be explored is whether solar power can be procured with the procurer providing an assumption of Plant Load Factor (PLF), and asking the developer to bid based on the assumed PLF. This could be employed in states where solar radiation data is unknown or limited, such as the north eastern states for instance.With such innovative structuring possible in the bids, it is difficult to understand why our state utilities and the Ministry of New and Renewable Energy have not yet incorporated any such structures in solar bids. There is clearly a long way to go in improving the bidding documents and commercial frameworks around which solar power is being procured.(The author, Shravan Sampath, is CEO, Oakridge Energy)
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Hindustan Petroleum Corporation reported a Rs 320 crore net loss for the three months to September against a net profit of Rs 850.31 crore a year ago, on high inventory losses following low crude oil prices, but a marginal rise in gross refining margins to $2.74 a barrel cushioned deeper cuts. The state-run company has booked an inventory loss of Rs 1,400 crore during the quarter. The oil refiner and marketer had earned $2.12 on turning every barrel of crude oil into products in the year ago period, which had helped it report more than double its net income to Rs 850.31 crore. "Declining crude and product prices severely impacted our bottomline on account of inventory losses worth Rs 1,400 crore during the quarter leading to a net loss of Rs 320 crore," HPCL chairperson and managing director Nishi Vasudeva told reporters in Mumbai on Monday. During the reporting period its net sales declined to Rs 42,003.57 crore from Rs 51,803.26 crore, she said, adding expenses declined to Rs 42,672.93 crore from Rs 49,491 crore. The finance cost also increased to Rs 165.03 crore from Rs 122.74 crore, as its long-term borrowings rose to Rs 15,405.53 crore from Rs 14,855.83 crore a year ago, while tax expenses came down massively to Rs 149.85 crore from Rs 832.38 crore during the quarter. The company's total debt on the book stood at Rs 22,000 crore at the end of the quarter. The state-run company's under-recovery stood at Rs 552 crore during the quarter but it got back Rs 550 crore of that from the government by way of subsidy reimbursements. Vasudeva said the board has approved the Rs 4,200 crore expansion plan of the Mumbai Refinery, which will increase its refining capacity to 9.5 million tonne from 6.5 million now, which will help it become compliant by 2020 to offer BS IV/V diesel and petrol. The company has invested Rs 280 crore capital into the national crude reserves cavern in Vishakapatnam, which is under operations now. This investment has taken the company's crude storage capacity to 330 tmt. The chairperson also said the company will commission the 443-km Rewari-Kanpur oil pipeline with a capacity of 7.98 mt this fiscal. The company is investing Rs 1,400 crore into the project. The company will also commission the LPG pipeline between Uran near Mumbai to Chakan near Pune as well as the Mangalore-Hassan-Mysore LPG pipeline. She said to date, out of its 48 million LPG customers 1.28 million have given up their subsidies, while the industry as a whole has seen 4.52 million customers. The company imports 30 per cent of LPG demand. (PTI)
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Union Power Minister Piyush Goyal has said the implementation of the revival package of the near bankrupt state-run power utilities will result in total savings of nearly $30 billion by FY 2018-19. "If all goes as planned, the Uday scheme (the nomenclature of the revival package involving taking away the Rs 4.3 trillion debt of the discoms' books), will help save nearly $30 billion in total by FY15," Goyal told investors here this evening. The government last week approved a rescue package for discoms under which states would over the next two years be allowed to take on 75 per cent of the debts of their utility companies. The banking sector as a whole has a huge exposure to the near bankrupt state-run discoms to the tune of Rs 4.3 trillion in principle alone and over Rs 5 trillion if interest and unpaid dues are counted. These discoms have accumulated losses of about Rs 3.8 trillion. Goyal assured that the state-run Power Finance Corporation and Rural Electrification Corporation, which have an exposure of around $20 billion to the discoms, will not be forced to buy the bonds to be issued by the respective states under the scheme at 8.8.5 per cent yield. He also said this is aimed at protecting the balance sheet of PFC, which gets loans at 7.5 to 8 per cent. "We will not stress PFC and REC's balance sheets with these bonds which will be priced at 8-8.5 per cent. It could only affect their working capital requirement," he said, adding this is the reason why the government will be selling these bonds in the market. Claiming that there is a huge appetite in the market for such bonds as the renewable and transmission sectors are doing well, the minister said he has already spoken to pension funds, provident funds and insurers. He said once the scheme is implemented PFC and REC can unlock their $20 billion exposure and invest further in projects. "I believe they (PFC and REC) can even expand their loan book in the next two to three years. Both can fund up to $60 billion in the next five years in fresh investment," Goyal said. Announcing the revival plan last week, Goyal had said that the state discoms in Rajasthan, Uttar Pradesh, Tamil Nadu and Haryana are the biggest loss-making ones, while seven more other state utilities are stressed. The Uday scheme involves a massive bailout of the Rs 4.3 trillion debt of discoms besides measures to cut power thefts and align consumer tariff with generation cost. Under the plan the states can take over 75 per cent of their debt as of September 30 and pay back lenders by selling bonds. But this will not be added to fiscal deficit of the states. For the remaining 25 per cent, SEBs will issue bonds. The Centre will also ease rules to allow the states participating in the scheme to borrow more and help with the additional burden. The rescue plan, called Ujwal Discom Assurance Yojna or Uday, provides "a permanent resolution of past as well as potential future issues of the sector" and empowers the utilities to break-even in next tow-three years. Goyal also claims that the restructuring will bring dowb SEBs' interest cost to 8-9 per cent from a high 14-15 per cent now, while their operational losses are pegged at 15 per cent by FY19 from around 22 per cent now. (Agencies)
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Abu Dhabi National Energy Company (TAQA) has begun selling electricity from its hydro power project in Himachal Pradesh, which will provide another revenue stream for the company which has been hit by low oil prices. The state-controlled oil exploration and power supply group swung to a net loss of 421 million dirhams ($114.7 million) in the second quarter as revenues from oil and gas nearly halved partly on the impact of the lower prices. The 100 megawatt Sorang hydro power project started selling power to northern India from Oct. 31, TAQA said in a statement. The facility can supply emissions-free electricity to 500,000 homes at full capacity, it said. TAQA holds a minority stake in Himachal Sorang Power Private Ltd, the developer of the Sorang hydro power project in Himachal Pradesh. Last month, TAQA said it began commercial operations at the expanded T2 power plant in Ghana. In April, TAQA announced full commercial operations at its Bergermeer gas storage facility in the Netherlands. “We are keen to participate in meeting India’s growing energy needs through the completion of this project which provides cost-efficient power and helps develop renewable energy sources,” Saeed Mubarak al-Hajeri, chairman of TAQA said in the statement. TAQA’s India operations also include a 250 MW lignite power station in the Neyveli region of south India. Next week, TAQA will be reporting its third quarter earnings. TAQA is 75 percent owned by the government of Abu Dhabi, capital of the United Arab Emirates. (Reuters)
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Castrol India posted on Friday (06 November) an increase in its profit after tax of 23.1 per cent at Rs 206.5 crore for July-September 2015 while profit after Tax was Rs 143.2 crore during the same period in the previous year.For the nine month period January – September 2015, Profit after Tax was up by 38.5 per cent to Rs 474.4 crore as against Rs 342.5 crore during the same period in the previous year.Omer Dormen, Managing Director, Castrol India Limited, said, “After sharp decline in the first two quarters due to sluggish manufacturing activity and increased competition, the Industrial business is seeing some improvement as a result of new customer wins especially in the wind and steel segments. On a like for like basis, our Sales Volume during third quarter remained flat versus same period last year. Year-to-date, the Industrial business delivered double digit Gross Margin and Operating profit growth over the same period last year, driven largely through increased focus on product mix.”The financial results for the third quarter demonstrate a solid performance, building on operational momentum and continued premiumization of our portfolio, aided by a more favorable cost of goods environment, Dormen added.(BW Online Bureau)
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