Renewables to account for over 60 per cent of India’s power capacity: Piyush Goyal
Enthused by drop in renewable energy tariff, Power Minister Piyush Goyal today said India’s 60-65 per cent of installed power generation capacity will be green energy. “Going by prices we have discovered, I am inspired to say that 60-65 per cent of India’s installed capacity base will be green energy,” Goyal said at Take Pride event organised by CII. He further said, “India’s renewable energy programme is a great example of how you can do big by thinking big.” Earlier this month, Goyal had predicted that India’s solar power generation capacity will cross 20,000 mw in the next 15 months, from the current 10,000 MW, and said drastic reduction in costs of solar power is proof of maturity of the sector. Lower capital expenditure and cheaper credit have pulled down solar tariff to a new low of Rs 2.97 per unit in an auction conducted for 750 mw capacity in Rewa Solar Park in Madhya Pradesh last month. The auction was conducted by a joint venture of Madhya Pradesh government and the Solar Energy Corporation of India (SECI). The wind power tariff has too dropped to a record low of Rs 3.46 per unit in an auction of 1,000 mw capacity conducted by the SECI. At present, out of 315 gw of total power generation installed capacity, around 50 gw is from renewable sources while large hydro projects (above 25 mw) constitute 44 gw. As much as 14,000 mw (or 14 gigawatt) of solar projects are currently under development and about 6 gw is to be auctioned soon. In 2016, about 4 gw of solar capacity was added, the fastest pace till date. According to power ministry estimate, another 8.8 gw capacity is likely to be added in 2017, including about 1.1 gw of rooftop solar installations. The government is targeting 100 gw of solar and 60 gw of wind energy capacity by 2022. Total renewable energy generation capacity is envisaged at 175 gw by 2022. Commending the government’s initiative on Goods and Services Tax (GST), he said: “Nearly seven constitutional laws have been passed in the last two and a half years by this government without a majority in the Rajya Sabha. Our finance minister is the best finance minister.” Bobby Hart Womens Jersey
Solar power tariffs in India have fallen by 73 percent since 2010
India’s solar sector recently reached record low tariff levels in the auction conducted at the Rewa Solar Park in the state of Madhya Pradesh. India was one of the first countries to adopt reverse auctions for solar projects since the inception of its national solar policy and the government’s goal has always been to procure solar power at the lowest price possible, according to Mercom Capital Group. According to the report, recent record low bid of Rs.3.30 (~$0.494)/kWh (levelized over 25 years) at the Rewa Solar Park by ACME was lower by Rs.1.05 (~$0.02) and 24 percent compared to the previous low of Rs.4.35 (~$0.07) quoted in Rajasthan (by Fortum) in July 2016. “When the first 150 MW of solar was tendered under the National Solar Mission (NSM) Batch-I in 2010, the average tariff quoted was Rs.12.16 (~$0.17)/kWh. Average tariffs have fallen by about 73 percent since 2010, almost in line with Chinese spot module prices, which have fallen by approximately 80 percent since 2010,” mentioned the report. Mercom Capital group said when the entire global solar market was about 17 GW in 2010; Indian solar installations at that point were only about 18 MW. When NSM was initially rolled out, neither the government agencies nor developers had much experience installing solar power projects, nor was there a supply chain in existence. With subsequent auctions, intense competition to get into a new sector resulted in aggressive bidding leading to continued drops in tariffs. “Intense competition in reverse auctions due to a limited supply of projects has pushed companies to bid lower and lower, sacrificing margins, in order to gain market share,” said the report. Other factors leading to fall included, highly competitive reverse auctions, falling module and component prices, the introduction of solar parks, lower borrowing costs, and the entry of large power conglomerates with strong balance sheets and access to cheaper capital have all contributed to the dramatic fall in bids. Additionally, an increase in lending by Indian Renewable Energy Development Agency (IREDA), the World Bank, the Asian Development Bank and other development banks have provided developers with cheaper loans which has enabled developers to bid at much lower prices, stated an official at Ministry of New and Renewable Energy (MNRE). In the last two years, average domestic borrowing rates have declined by approximately 14 percent for solar projects. Looking Ahead The central government just doubled solar park capacity to 40 GW, which is expected to help bring down costs as long as the parks are built and operated efficiently. The MNRE has also released new guidelines for auctions which brings in some of the lessons learned from REWA park. The additional 20 GW, when tendered, will change the face of the Indian solar sector and make it cheaper than thermal in some cases. At least that’s the expectation stated by an MNRE official. The government is also developing a green energy transmission corridor. Although the progress has been slow, the grid is getting ready to take on large renewable energy capacities. In addition, solar park capacities have doubled. You add these to falling module prices and the MNRE guidelines for solar tenders and we have the perfect environment for a solar boom in India, stated a project developer. “The Rewa auction was unique and is not a direct comparison to previous auctions or low bids. After many years of experimentation, the government is finally realizing that eliminating risks leads to lower bids, which results in lower tariff pay outs, saving possibly billions in the future. It took them seven years, but they are learning,” commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. The government is extremely pleased with these record low bids; the question is – can developers and investors make attractive returns at these levels? There is no margin for error. Chukwuma Okorafor Jersey
IREDA to sanction Rs 13,000 crore loans for renewables in FY18
State-run Indian Renewable Energy Development Agency (IREDA) will sanction Rs 13,000 crore for clean energy projects next fiscal in the country, vying for around 20 per cent of the loan market share. With the government aiming at adding around 15 to 16 GW of clean energy projects, including solar and wind, there would be total credit market size of around Rs 65,000 crore. “We have planned to sanction around Rs 13,000 crore credit to clean energy project developers in the country in next financial year, which would be around 20 per cent of the market share,” IREDA Chairman K S Popli told PTI. Popli also said that IREDA would be able to release around Rs 8,000 crore for these clean energy projects in country. IREDA has sanctioned around Rs 37,000 crore of credit for clean energy projects in the country so far and has released around Rs 28,000 crore to developers, which aids generation capacity of around 7,000 MW. Elaborating further, Popli said, “The same amount of credit would be able to aid larger green capacities as the cost of clean energy equipment was quite high in earlier days”. The lower cost of equipment and lower borrowing charges have already pulled down solar energy tariff to all time low of Rs 2.97 per unit last month. The wind power tariff has too dropped to a record low of Rs 3.46 per unit in an auction of 1,000 MW capacity conducted by the Solar Energy Corporation of India (SECI). The loan sanctions by IREDA have grown from Rs 826 crore in 2007-08 to Rs 7,806 crore in 2015-16, with a CAGR of 32 per cent and expected to cross Rs 10,000 crore during this fiscal. Similarly, the loan disbursements have grown from Rs 553 crore in 2007-08 to Rs 4,257 crore in 2015-16, with a CAGR of 29 per cent and is likely to cross Rs 6,000 crore in the financial year 2016-17. The net profit of the company has increased from Rs 47.96 crore in 2007-08 to Rs 298.04 crore in 2015-16. In order to give more wings to IREDA’s ambitious plans to finance clean energy projects, its board has approved initial public offer proposal of Rs 13.90 crore fresh equity share with face value of Rs 10 each during February 2017. The initiative would help IREDA to increase its net worth facilitating lending to larger projects. The fresh issue of share shall be at price to be determined through a book building process. The IPO process is expected to be completed within six months from the date of approval of Cabinet Committee on Economic Affairs (CCEA). As soon as the necessary approvals are in place, IREDA shall approach the market and there is no question of wait by the agency for the market to stabilise before approaching the bourses, the official said. Though several commercial banks and financial institutions have forayed into clean energy financing, IREDA has been successfully maintaining its substantial share of the renewable market. Now, the other big players in the green energy finance market next fiscal would be state-run Power Finance Corp and Rural Electrification Corp, which are likely to have substantial share in the segment. DJ Moore Authentic Jersey
Andhra plans to generate 11,670 Mw additional power
Keeping in view the future power requirements of the capital city of Amaravati, the state government has unveiled its ambitious plans to add 11,670 mw more to its capacity. The government will take up projects in that direction in the next 10 years at an estimated cost of Rs 84,000 crore. At a review meeting here on Sunday, managing director of AP Genco K K Vijayanand said that the chief minister had directed the officials to adopt the latest global technologies in power generation for optimising thermal power generation in a cost-effective manner. He said the government will tap non-conventional energy sources like solar and wind power. Vijayanand, who is also the chairman and managing director (CMD) of AP Transco, said that the state government is keen to constitute a committee to study the best global practices and the latest IT initiatives in thermal energy generation, transmission and distribution.” To further enhance the efficiency of AP utilities, we are planning to study the best practices adopted in Japan and Germany,” he added. Stating that the state government is ready to meet power requirements during summer, Vijayanand said AP Genco is geared to enhance its thermal power generation. Nick Martin Womens Jersey
Essar Oil gives undertaking to pay lenders soon after Rosneft deal
Pushed by LIC, Essar Oil has given an unconditional undertaking to the institution and some of the lenders that their dues would be cleared within three days of the closure of its crucial deal with the Russian firm Rosneft. These lenders had expressed their reluctance to approve the proposed acquisition of Essar Oil by Rosneft and other offshore investors till the dues are cleared. On Friday, Essar communicated its decision to LIC, GIC and some of the banks which insisted on settlement of loan dues, a person familiar with the development told ET. The unconditional and irrevocable undertaking has been en cable undertaking has been endorsed by Rosneft and other strategic investors who would hold 98% of Essar Oil once Essar group promoters Ruias sell their stake. Under the circumstances Essar will have to prepay around $225 million to various lenders in persuading them to clear the deal -which is expected to revive the group and lower leverage levels of debt saddled companies like Essar Steel. Most loan covenants typically lay down that lender’s consent is necessary for a change of management. Essar and its lenders having large exposure to the group are keen to close the deal by March 31. One of the possible reasons for sticking to the deadline could be future tax implication of signing the deal on or after April 1, 2017. Since Essar holds stake in the g roup company through Mauritius-based entities, selling shares after March 31 would mean a capital gains tax for Rosneft and other foreign investors if they choose to exit in future. According to India’s revised treaty with Mauritius, while shares bought before April 1, 2017 would not attract capital gains tax irrespective of when they are sold, there would be capital gains tax on shares bought on or after this date and sold later. Thus, even though selling shares after the deadline of March 31, 2017 would not require Essar to pay any capital gains tax, it would expose Rosneft and other investors to capital gains tax as and when they sell their stakes. However, a senior banker as well as a person close to Essar brushed aside any such concern and the possibility of renegotiation of the deal price if the transaction is not closed by March 31, 2017. “It’s not an issue for long-term strategic investors like Rosneft. These are matters which typically would concern private equity investors,” said one of them. LIC had told Essar that it would approve the deal only after its loans to Essar’s power venture are regularised.In reference to this, an Essar official told ET that Essar Oil and Essar Power had individually availed long term facilities from LIC and the these facilities cannot be linked. LIC and other lenders are yet to respond to the proposed undertaking. The $13-bn deal, which would be single largest inflow of foreign direct investment into India, was announced last October when Prime Minister Narendra Modi met President Vladimir Putin during a meeting of BRIC leaders in Goa. Rob Housler Authentic Jersey
India to formally sign oil and gas contracts with companies under new policy
India’s oil ministry will today formally sign oil and gas extraction contracts with winning bidders under the recently concluded discovered small field (DSF) auctions, the first such bidding for exploration licenses held by India after a gap of six years. The auctions had witnessed 134 e-bids for 34 contact areas of the 46 offered. Later, 22 companies were shortlisted for 31 contract areas of which 15 companies were new entrants with no prior experience in the sector. Touted as an auction round that would replicate the shale gas revolution of the US, half of the fields went to new and lesser known entrants like engineering company Megha Engineering & Infrastructure, KEI-RSOS Petroleum, Enquest Drilling and Nippon Power and many more new players with no prior experience in the oil and gas sector. “The DSF auction round was very important for the country as it helped us gauge the high investment sentiment even at a time when investments in the exploration sector were at an all-time low globally. The government has successfully changed the negative sentiment that used to be attached with the sector earlier,” a senior official said overseeing the contract signing said. He added that the positive response from the investors, especially new players, has given the government the confident to go ahead with the second round of DSF bidding. “We also expect a healthy response from investors in the upcoming oil and gas auctions held under a revamped bidding mechanism called open acreage licensing policy,” he said. The oil ministry had launched DSF I in May 2016 under a new liberalized policy under which 46 contract areas consisting of 67 fields spread across nine sedimentary basins were auctioned. The ministry had pegged the indicative gross revenue over the economic life of these fields at Rs 46,400 crore. These fields, which hold in place reserves of 62 million tonnes of oil and oil equivalent gas, can cumulatively produce a peak of around 15,000 barrels of oil per day and 2 million standard cubic meters per day of gas, the Directorate General of Hydrocarbons (DGH) said in a statement last month. The peak oil and gas output envisaged is about 2 per cent of India’s current oil and gas production Maurkice Pouncey Authentic Jersey