The government has set a target of 4,460 MW of power generation capacity addition this fiscal year from renewable energy sources
Read More
Arshad Khan As per the latest report released by consultancy firm KPMG, solar power will be a significant source of energy by the year 2025 and the market penetration of solar power is expected to increase form 5.7 per cent (54 GW) by 2020 to 12.5 per cent (166 GW) by 2025. The consultancy firm in its study, ‘Enrich 2015’ state that solar power is likely to contribute 4 per cent in India’s aim to reduce carbon emission by 33 to 35 per cent by 2030 from 2005 levels. The present NDA government made an announcement last month to reduce the emissions intensity by 33-35 per cent by 2030 from 2005 levels, and achieve 40 per cent of its cumulative electric power of around 350GW installed capacity from renewable power ahead of the UN Framework Convention on Climate Change (UNFCCC) to be held in Paris in December 2015. “A holistic vision is the need of the hour in order to reach 200 million people who are deprived of electricity 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,” said Piyush Goyal, Minister of State (IC) for Power, Coal and New and Renewable Energy, while releasing the report. The minister also made a new announcement that by 2017, India will not need to import coal except for the coastal regions to meet the demands of thermal plants. The report titled, ‘The Rising Sun – Disruption on the horizon’ specifies that prices for solar power will fall below the thermal power in near future and there will be surplus use of energy in the sector. For example ‘Solar House’ that is self-sufficient in energy terms could be a reality within the coming decade. “Solar power and storage are exponential technologies, meaning they could grow very rapidly and take stakeholders by surprise. The rapid rise is good for India but the sector needs preparation by all stakeholders – power generators need to become flexible, discoms should be efficient and retain customers, and the coal sector has to become cost-efficient and flexible to adjust to the evolving scenarios,” said Santosh Kamath, Partner and Head, Renewable Energy Services, KPMG in India. He added that power sector in the country needs very rigorous long-term planning that prepares for a transformed electricity grid of distributed sources, variable renewable and storage solutions. Key Findings from the StudyØ Solar force is expected to start being felt from 2017 and may accelerate post 2020. 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). Ø Solar power prices would be approximately 10 per cent lower than coal power prices. The solar rooftop power 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. Government has set a target to achieve 40GW power from solar rooftop in the total 100GW which is to achieve by solar energy by 2022. Ø There is a 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. Ø 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.
Read More
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)
Read More
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)
Read More
India approved a rescue package for its loss-making power utilities on Thursday, unveiled as a major reform that Prime Minister Narendra Modi hopes will end electricity blackouts and spur economic growth. Power Minister Piyush Goyal said states would over the next two years be allowed to take on 75 percent of the debts of their utility companies, which have grown to 4.3 trillion rupees ($65.3 billion) after years of undercharging customers for electricity. By clearing past debts and putting them on a better financial footing, Goyal said the utilities would be returned to profitability before 2019. "The cabinet believes that this will help the Indian power sector turn around once and for all and for the states to provide 24/7 power," he told reporters after the cabinet cleared the rescue plan. Modi has urged the power ministry and states to find a way to overhaul the power distribution sector, whose weak finances have limited bank lending and undermined the push to provide reliable electricity in Asia's third-largest economy. Unnerved by a series of setbacks to his economic reform agenda, Modi has marked out utilities as an area where he can revive his reputation. The government did not, however, say how it would ensure individual states raised electricity prices to meet the cost of power. State governments and local regulators, which decide tariffs, have long sold power below cost to win votes, undermining past attempts at reform, including a 2012 rescue plan under Modi's predecessor. "The discom debt problem in India is a result of a lack of political will on the part of the states and it is unclear if the new but relatively small carrots and sticks announced will be enough for state governnments to chart, and more importantly maintain, a new course," said Sasha Riser-Kositsky, an India-focused analyst at Eurasia Group. States and utilities which want to take up the rescue package will sign agreements with the power ministry committing them to improve performance in return for the debt swap, Goyal said. The remaining debt not absorbed by states will be converted by banks into low interest rate loans, and states will also take over up to 50 percent of utilities' future annual losses. Utility debt taken on by states would not be included in their fiscal deficits for this and next financial year. The government said compulsory smart metering and efficiency measures would help cut electricity theft and other transmission losses to 15 percent from today's 22 percent within four years. The government will also ask banks not to lend to utilities to fund their losses, Goyal said. (Reuters)
Read More
India's integrated power player, Hindustan Powerprojects has commissioned 1200 MW phase 1 (600 MW each for both the units) Anuppur thermal project by successfully conducting the boiler light-up test for the 2nd unit.The test signifies the readiness of the boiler for power generation process and the company has started the work for steam blowing and synchronization of the unit well within the scheduled timeline.Ratul Puri, Chairman, Hindustan Power said, “India has a unique opportunity over the next few years to become one of the leading economies, globally. For this to happen, we need a robust growth in our energy sector hence the objective of the organization is to deliver a state-of-the-art thermal project capable of sustainably generating high efficiencies. Needless to say that improved performance would also mean increased power availability. We are now at the doorsteps of commissioning 1200 MW which would play a critical role in addressing energy gap in the power deficient region. This milestone would not have been possible without the support and guidance of the community, local administration and stakeholders.”Raghav Trivedi President, Thermal business, Hindustan Power said, “The team of highly trained engineers conducted this test as per the prescribed best practices and standards. The focus now shifts to the take up steam blowing of the Unit which would signal the readiness of the power generation. Built using ESP technology, the plant at Anuppur is already being spoken about for its non-polluting operations.”The clean energy arm of Hindustan Powerprojects, the largest solar developer in the country has recently achieved the distinction of entering in to the credit enhanced bond market with the the Issue fully underwritten by Yes Bank. The clean energy arm is set to issue secured, rated, listed, partially guaranteed, debentures of Rs. 380,00,00,000 (Rupees three hundred and eighty crore) on a private placement basis to YES Bank Limited for three of its AA+ SO rated projects in, Gujarat.(Reuters)
Read More
By Amit Bhandari | IndiaSpend India’s state electricity utilities collectively owe Indian banks Rs 545,922 crore ($90.5 billion), according to the Power Finance Corporation’s latest report. This is a sum equivalent to two-and-a-half times the defence budget; roughly six times the amount that will be spent this financial year on building roads; and enough to wipe out India’s fiscal deficit. The data reveal the urgent need for electricity reforms and the amount of money being wasted at a time when India is cutting back on health and social-sector spending. Electricity utilities incurred a net loss of Rs 62,154 crore–$10.3 billion–during the financial year 2013-14. This is not a one-off: losses have been in this range for the past several years in a row. The annual loss of state utilities is more than twice the total allocation to Department of Health and Family Welfare and 10 times the budgetary allocation to the Ministry of Drinking Water and Sanitation. This money is enough to pay for 300 light combat aircraft Tejas–sufficient to meet Indian Air Force’s need for new squadrons. If supplying electricity were an actual business–as it is in many countries–it would have been bankrupt, with lenders worrying about recovering their money. As it happens, since the borrowers are owned by the state governments, they continue to be shown as viable, as are their standard assets. Why are state utilities such loss makers? The primary business of these utilities is to sell electricity to consumers – industries, commercial establishments, households and agriculture. During FY14, their average cost of supply was Rs 5.15 per unit while the average selling price was Rs 4 per unit. So, these utilities lose Rs 1.15 per unit. However, this is not an across-the-board loss that is incurred on all electricity sales–far from it. Utilities are losing money because large groups of customers are either paying very little or not at all for power. India’s power companies lose a large volume of power to unmetered consumers, to outright theft and to technical losses due to poor systems. During FY14, these losses accounted for 22.7% of all electricity generated by utilities–meaning, for over one-fifth of their product, the utilities got no revenue. There are other consumers that pay only a fraction of the actual price of electricity. Agricultural consumers used 22% of total electricity during FY14 but accounted for only 8% of the revenue. This is because electricity for farmers is free in many states and is highly subsidised in most others. In short, 44.7% of the product gets in just 8% of the revenue. As a result, other users end up paying much more. For instance, in Haryana, agricultural users pay less than 50 paise per unit, while industrial users pay more than Rs 5 per unit. A similar trend is visible in states like Andhra Pradesh (before the division) and Uttar Pradesh–industry pays prices 4-10 times higher than those for agricultural users. In cities like Mumbai, industrial and commercial users often pay over Rs 10 per unit for electricity, which IndiaSpend has reported earlier. At an all-India level, agricultural users pay less than Rs 2 per unit, while industrial and commercial users pay upwards of Rs 6 per unit and Rs 7 per unit, respectively. The result: State companies are driving away their best customers One impact of this distorted pricing structure has been that large industrial consumers–the kind who subsidise agriculture and make up the losses from power theft–are gradually moving away from state electricity boards. Large electricity users can and do set up captive generation plants–which added up to 36,500 megawatts of capacity by 2012, according to the erstwhile Planning Commission. This was almost a sixth of the electricity generation capacity of utilities. By overcharging them, the state electricity boards are driving away their best and biggest customers–and sinking further. Second, because they incur heavy losses, the utilities cannot upgrade infrastructure, and since they lose money on electricity sales, they try to source only the cheapest possible electricity–generated using subsidised fuel from Coal India. This means several private-sector power plants, which buy their coal internationally, have little incentive to generate electricity. From April to September 2015, central-government-owned NTPC’s coal-based power plants operated at 72% of their capacity while private-sector utilities operated at 57%. State-sector plants are in a worse situation; paying for fuel/operations isn’t always possible, and they operate at 54% of their capacity. Finally, the losses also mean that state utilities cannot or will not pay for renewable energy, which doesn’t pollute the environment but is more expensive than coal or nuclear power. It is a nascent technology with a high, but decreasing, cost. For 2015-16, Central Electricity Regulatory Commission (CERC) has set a tariff of Rs 7-12 per unit for solar electricity generated from different technologies. A financially unviable electricity sector means investments in next-generation technologies, such as renewable energy, will be seriously hobbled. (Amit Bhandari, is a media, research and finance professional. He holds a B-Tech from IIT-BHU and an MBA from IIM-Ahmedabad.)
Read More
Simar SinghOver the course of the next three years, the Haryana government plans to commission 215 additional sub-stations of different capacities across the state, with the view of strengthening the distribution and transmission infrastructure. Further, the state administration wants to augment as many as 418 existing sub-stations. An official spokesperson told PTI that there were plans of laying 3,171 kilometres of transmission lines over the coming three years. The Manohar Lal Khattar led government has initiated several schemes to improve the power situation in Haryana. In July the Haryana government had announced the launch of a voluntary scheme ‘Mhara Gaon – Jagmag Gaon’.This is aimed at working towards the provision of 24-hour uninterrupted supply to domestic consumers in rural areas and improving electricity bill collections to combat the accumulated losses of power utilities. The spokesperson further said that an outlay of Rs. 316 crore had been approved by the central government under the ‘Deen Dayal Upadhyaya Gram Jyoti Yojana’, to stabilise the distribution system in rural areas. The decision to develop a ‘Smart Grid’ in Gurgaon has also been taken by the state. This will be done in collaboration with the central government and is estimated to cost Rs. 7,000 crore. Solving problems of power outages in the satellite city is a key area of concern for the government. Most recently, the decision to hike power tariffs lead to criticism across the state. This compelled the Haryana Electricity Regulation Commission to issue a revised tariff order, bringing down electricity costs for domestic consumers and making a provision for households to pay off their dues in instalments.
Read More
