In 10 years, half of India’s energy capacity will be from non-fossil fuel sources
Non-fossil fuels — renewables, nuclear and large hydroelectric power plants — will account for more than half (56.5 per cent) of India’s installed power capacity by 2027, according to a draft of the third National Electricity Plan (NEP3). The draft notes that if India achieves its target to install 175 GW of renewable energy capacity by 2022 — as committed under the 2015 Paris Agreement — it will not need to install, at least until 2027, any more coal-fired capacity than the 50 GW currently under construction. The Ministry of Power produces a National Electricity Plan every five years, in which it reviews the progress made over the previous five years, and sets out a detailed action plan for the next 10 with the overarching aim of achieving universal access to electricity and ensuring that power is supplied efficiently and at reasonable prices. NEP3 outlines how the government expects the electricity sector to develop over the five years from 2017 to 2022, as well as the subsequent five years to 2027. When the draft was released, India had installed just over 50 GW of renewable power capacity, of which wind energy made up 57.4 per cent and solar 18 per cent. This gave renewables a 15 per cent share in total installed capacity of just over 314 GW, while coal made up 60 per cent — the remaining being large hydropower, nuclear, gas and diesel. Renewables will have to scale rapidly to meet a national target set in 2015 to increase capacity to 175 GW by 2022 — 100 GW from solar, 60 GW from wind and the remainder from sundry smaller sources such as biofuels and biomass. NEP3 projects that not only will the 2022 target be achieved, renewable power capacity will reach 275 GW in 2027. This is three times the projection made in NEP2, of 70 GW, and significantly more ambitious than publicly proclaimed targets. Comparing NEP3 with India’s Intended Nationally Determined Contribution (INDC) under the Paris Agreement reached at the 21st Conference of Parties (COP21) to the UN Framework Convention on Climate Change (UNFCCC) in 2015 shows a higher level of ambition to reach a low-carbon economy faster. In its INDC, India had said it planned to achieve 40 per cent cumulative installed capacity from non-fossil fuel-based energy resources by 2030. NEP3 is significantly more upbeat, predicting that non-fossil power will make up 46.8 per cent of total installed capacity by 2021-22 and 56.5 per cent by 2027 — 10 years from now. If the NEP3 target is met as per the projected timelines, total installed renewable capacity will surpass coal-based capacity around 2024. Such ambitions are underpinned by the rapidly changing economics of wind and solar, whose price is falling rapidly. In February 2017, solar power was auctioned at a record low of Rs 2.97-Rs 2.979 per kilowatt-hour (kWh). Soon after, in auctions for wind power projects in March 2017, the winning bid quoted an all-time low price of Rs 3.46/kWh. Solar and wind are expected to reach grid parity — when they cost as much as conventional power — in the near future, perhaps as early as next year. As for other zero-emission sources like nuclear and large hydropower, NEP3 projects an addition of 7.6 GW of nuclear and 27.3 GW of large hydroelectricity capacity up to 2027, up from 6.7 GW and 44.4 GW of hydro installed as of March 2016, as ongoing and approved projects come online during 2017-22. While expecting renewable capacity to surge, NEP3 says no new coal-based capacity addition is required for the 10 years to 2027 beyond the 50 GW under different stages of construction and likely to come online between 2017 and 22. As per NEP3 projections, the 2022-27 period would require an addition of about 44 GW of coal-based capacity to meet projected demand, a requirement that would be adequately met by the 50 GW that will come online during 2017-22. This leaves India with 6 GW of extra capacity. The NEP’s projections for coal are different from INDC, which suggested the country would require 100 GW, and perhaps as much as 300 GW, of additional coal-fired capacity by 2030. The downgrading of coal expansion is not unexpected because rapid expansion of renewables means fossil fuel-based power plants are already under-utilised. NEP3 shows the average coal plant load factor — a measure of how much plants are used — has fallen from around 70 per cent to just over 62 per cent in the last four years, an “exceptionally low” level, according to the Economic Survey 2016-17. While renewable capacity is rising globally, developing countries including India are widely expected to continue using cheap coal. The International Energy Agency (IEA), an intergovernmental organisation that provides key information and statistics about the oil and energy markets, has forecast that India would witness massive growth in coal-fired capacity, with 438 GW of cumulative capacity by 2040, assuming India’s power system would quadruple in size to keep up with demand increasing by five per cent every year. NEP3 agrees with the IEA’s projections about growth in India’s coal capacity up to 2022, reflecting the 50 GW of capacity currently under construction, but suggests the IEA’s projections for the post-2022 scenario — made just two years ago — may need to be adjusted downwards. The current NEP concerns itself with the next 10 years only, but if the current trend of falling renewable power prices continues and India remains committed to cutting emissions, the country may well beat IEA forecasts while upholding and perhaps surpassing its INDC. Anthony Davis Jersey
China renewable power waste worsens in 2016 – Greenpeace
The amount of electricity wasted by China’s solar and wind power sectors rose significantly last year, environment group Greenpeace said in a research report published Wednesday, despite government pledges to rectify the problem. China has promised to improve what it called the “rhythm” of grid and generation capacity construction to avoid “curtailment,” which occurs when there is insufficient transmission to absorb power produced by renewable projects. But Greenpeace said wasted wind power still reached 17 percent of the total generated by wind farms last year, up from 8 percent in 2014, and was as high as 43 percent in the northwestern province of Gansu. The amount that failed to make it to the grid was enough to power Beijing for the whole of 2015, it added. Solar curtailment across China rose 50 percent over 2015 and 2016. More than 30 percent of solar power in Gansu and neighbouring Xinjiang failed to reach the grid. Greenpeace said earlier that total solar and wind investment between now and 2030 could hit $780 billion. But, rising levels of waste cost the industry as much as 34.1 billion yuan ($4.95 billion) in lost earnings over 2015-16, it said Wednesday. China’s energy regulator said late on Tuesday that it aims to raise the share of non-hydro renewable electricity delivered to the grid to 9 percent of the total by 2020, up from 6.3 percent last year and 5 percent in 2015. It said renewable capacity hit 34.6 percent of the national total in 2016, while actual generation from renewable sources – including major hydro projects – stood at 25.4 percent of the total last year. China produced 12.3 billion kWh of solar power in the first quarter of 2017, up 31 percent year-on-year but accounting for just 1.1 percent of total generation over the period, official data showed on Monday. Wind hit 62.1 billion kWh, 4.3 percent of the total and dwarfed by the 77.9 percent share occupied by thermal electricity. Grid construction has slipped behind, with China focusing on expensive ultra-high voltage (UHV) routes that better suit large-scale power generation projects. “Upgrades to the system are urgently needed, including a more flexible physical structure of the grid, efficient cross-region transmission channels and smart peak load operation,” said Greenpeace climate and energy campaigner Yuan Ying. Many regions have used renewables as back-up electricity sources during peak periods, and it falls idle when power use drops. Provinces are now lobbying for UHV connections allowing them to sell surplus power to other regions. Executives at a Shanghai conference on Wednesday said curtailment was eroding cash flows and discouraging investment, and while China was looking for solutions, the answer was likely to be technological. “If you are in remote areas and there’s no grid around, you build storage – transformer stations and storage plants that can make the energy available at a later stage,” said Andreas Liebheit, president of Heraeus Materials Technology Shanghai, which produces specialist materials for solar panels. Christian Dvorak Authentic Jersey
Indian Oil Corp sees more synergy in buying PSU rivals than oil producers
It would make more sense for Indian Oil (IOCL), the country’s biggest refiner, to acquire rival Bharat Petroleum or Hindustan Petroleum or natural gas marketing company GAIL (India) than a producer like Oil India as part of the government’s plan to create a major state-owned energy company , the finance chief of IOCL said. “Broadly , there are just two potential acquirers -Oil & Natural Gas Corp. and Indian Oil -and there are four potential targets -BPCL, HPCL, GAIL and Oil India,“ AK Sharma, director (finance) of Indian Oil, told ET in an interview, while analysing combinations. “It’s all very hazy right now. The government will take a final call on who should merge with whom.“ The oil ministry has asked stateowned oil companies to indicate their preference for a partner in the proposed merger. The government indicated in the Budget its intention to restructure state-owned oil companies to form an integrated public sector `oil major’ that will match the performance of international and domestic private sector oil and gas companies. Each major state-run oil company must submit a separate plan to the oil ministry . If Indian Oil were to acquire HPCL or BPCL, it would bring a lot of synergy, Sharma said .“Infrastructure and logistics duplication can be avoided. We can have common user facilities,“ he said, adding that combining two oil marketing companies can have an adverse effect on competition. The merger must result in at least two state marketing companies, which along with private players, will ensure fair play for consumers, Sharma said. Of India’s oil refining capacity of 230 million tonnes per annum, Indian Oil has 80 million tonnes, BPCL 30 million tonnes and HPCL 24 million tonnes. Reliance Industries, controlled by Mukesh Ambani, has a capacity of 60 million tonnes a year. Indian Oil has 45% of the 58,000 fuel retail outlets in the country, while BPCL and HPCL have a quarter each. Acquiring GAIL is an option because it ties in with Indian Oil’s gas business. Indian Oil is the secondlargest gas marketer in the country , and, at the current rate of investment, its gas business can exceed that of GAIL’s in the next few years, Sharma said. “Merging Oil India with Indian “Merging Oil India with Indian Oil may not bring much technical synergy but can add to balance sheet strength,“ said Sharma, adding that Indian Oil had a very small presence in exploration and production and bringing in another E&P company may not make sense. India’s oil demand growth slowed to 5% in 2016-17 from 11% in the previous year. “That’s a matter of concern,“ Sharma said, adding that he expected less than 4.5% sales growth in petrol and diesel in 2017-18. Indian Oil plans to spend Rs 20,000 crore in the current financial year, Sharma said. At March-end, its borrowings were Rs 55,000 crore and its debt-equity ratio stood at 0.54, he said. The company paid about Rs 10,000 crore as dividend in 2016-17. John Kuhn Jersey
Essar Projects clocks revenue of Rs 2,000 cr in 2016-17
Essar Projects India (EPIL), a part of the diversified Essar Group, today said it has posted revenues of Rs 2,000 crore in fiscal 2016-17. The EPC company has completed and commissioned 10 projects worth Rs 2,862 crore during the previous fiscal and clocked revenues of around Rs 2,000 crore, it said in a statement. “With an order book of almost Rs 8,000 crore, we are confident of even better performance in FY18,” its Chief Operating Officer AV Amarnath said. EPIL has executed critical activities in Indian Oil Corporation’s 15 MMTPA Paradip Refinery project, the Saurashtra Narmada Avtaran Irrigation (SAUNI) Pipeline Yojana project, as well as the Kaladan Multimodal Transport Project in Myanmar. The other projects are in sectors as diverse as steel, oil and gas and fertilisers, with a footprint spanning India and neighbouring countries. “Over the years, EPIL has gained experience by executing and delivering large turnkey projects for government and private sector organisations,” he said. Amarnath also said in FY 2016-17, the focus of the company was to finish projects at hand. “The Indian market is poised for bigger opportunities given the government’s thrust on core infrastructure. EPIL is well placed to seize those opportunities. Our cost competitiveness, timely delivery and technology knowhow give us a distinct edge,” he added. Wil Lutz Jersey
ConocoPhillips, partners weigh expansion of Darwin LNG
ConocoPhillips and its partners are considering expanding their Darwin liquefied natural gas (LNG) plant in Australia, with backing from other companies with undeveloped gas resources that could feed the plant. ConocoPhillips has previously talked only about developing a new gas field for around $10 billion to fill the plant’s single production unit, or train, when supply from its current gas source, the Bayu-Undan field, runs out around 2022. The U.S. oil major has also previously said an expansion in the current market would be challenging due to low oil and LNG prices, and costs that have risen steeply since Darwin LNG was built more than a decade ago. A $650,000 feasibility study on building a second train is due to be completed this year, the Northern Territory government said on Wednesday, announcing that it would contribute $250,000 towards the study. “The Territory Labor Government is supporting the feasibility study because this is a significant investment towards the business case for potential expansion at Darwin LNG, potentially creating thousands of jobs during construction and operation,” Northern Territory Chief Minister Michael Gunner said in a statement. Five joint ventures with undeveloped gas resources off the coast of the Northern Territory are backing the study, with stakeholders including Royal Dutch Shell, Malaysia’s Petronas, Italy’s ENI SpA, and Australia’s Santos and Origin Energy. “With Darwin LNG, five upstream joint ventures and the Northern Territory Government involved, it is a pioneering example of all of industry and government collaborating on solutions to unlock major investments,” ConocoPhillips Australia West vice president Kayleen Ewin said in a statement. Darwin LNG is co-owned by ConocoPhillips, Santos, Japan’s Inpex, ENI, Tokyo Electric Power Co and Tokyo Gas Co. Jonathan Quick USA Womens Jersey
Petroleum Products Crack Spreads And GRMs To Drop This Financial Year
The gross refining margins (GRMs) of petroleum products will weaken in the absence of inventory gains, while crack spreads will have a downward bias in the financial year 2017-18, says India Ratings and Research. The products crack spread, which is the difference between wholesale petroleum product prices and crude oil prices, is estimated to remain under pressure, on the back of the fragile global demand growth amid net capacity additions in FY18. The Chinese and the U.S. export volumes are likely to remain high so as to maintain utilisation levels. In 2016, China’s diesel exports increased by 115 percent to 15.4 million tonnes, while consumption declined by 5 percent to 164.7 MT. Indian refiners’ production has a larger mix of middle distillates and hence it has an important bearing on overall margins. The agency expects the rally in crude oil prices to fade and price to remain in a narrow range in FY18. India Ratings had highlighted in the report ‘India Ratings Maintains Stable Outlook on Oil and Gas Sector for FY18’ that Indian refiners’ GRMs will decline in FY18, from the highs seen in FY16 and FY17, driven by two factors: inventory gains remaining low in FY18, given the crude price assumption at $55 per barrel and the crack spreads between petrol and LPG moderating in FY18 from the highs seen in FY16 on the back of a higher demand. The products cracks have remained under pressure in FY17 with Gasoil, Gasoline and JetKero crack declining by 10 percent, 34 percent and 18 percent year-on-year. However, the reported margins were masked by inventory gains with recovery in crude prices. Indian refineries benefited from substantial inventory gains on the back of a rally in crude oil prices (Arab heavy) touching $51.7 per barrel in December 2016, up 26 percent year-to-date, before declining to $48.5 per barrel at the close of the year. Similarly, Brent prices inched up to an average of $58 per barrel in December 2016 up 16 percent year-to-date before declining to $53 per barrel by close of the year March 2017. In FY18, domestic GRMs are also expected to be impacted with higher cost of energy due to higher feedstock prices. Volatility in crude prices and currency may also have a moderately negative impact on the margins. However efficiency-led gains, strong dollar against most currencies and refinery shutdowns in the region may bump-up the margins temporarily during the course of the year. The agency expects the Indian petroleum refineries to continue reporting strong GRMs in the fourth quarter of FY17, on the back of stable product cracks and modest inventory gains. The Singapore Dubai-Fateh netback margins stood at $6.3 per barrel up 11 percent compared to $5.7 per barrel in the third quarter. Singapore Dubai Gasoline cracks improved by 29 percent quarter-on-quarter to $12.0 per barrel, while Gasoil and JetKero crack weakened by 6 percent and 13 percent respectively. The benchmark Singapore GRMs are excluding the inventory gains as such the strength in the GRM will also be underpinned by inventory gains. In the fourth quarter, the average Arab Heavy crude oil and Brent crude oil are up by 9 percent and 2 percent quarter-on-quarter respectively. Domestic petroleum product prices are linked to import parity or trade parity prices with reference to Singapore benchmarks. The agency rates Indian refiners namely, Reliance Industries Ltd. (RIL; ‘IND AAA’/Stable), Hindustan Petroleum Corporation Ltd. (‘IND AAA’/Stable) and Indian Oil Corporation Ltd. (‘IND AAA’/Stable). The agency estimates RIL’s FY18 GRMs to remain stable at $10 per barrel-$10.5 per barrel, helped by efficiency gains, compared to $10.3 per barrel-$10.8 per barrel during the first nine months of FY17. For public sector units (PSU), GRMs are estimated in the range of $5.0 per barrel-$6.0 per barrel, lower compared to $5.5 per barrel-$7.0 per barrel achieved in the first nine months. The agency expects working capital requirements to also inch up with lower Iranian crude oil procurement mix, which refiners benefited from the higher credit period during the last few years, and higher average raw material and output prices. PSU refiners will continue to have strong capital expenditure in FY18 and FY19, incurred on all 3Cs that is capacity, configuration and complexity. Hence India Ratings expects PSU refiners’ credit metrics to moderate in FY18, from the levels of FY17. However, the deterioration is credit neutral as the PSUs credit benefits from linkages with the state and RIL benefits from its strong business profile, robust cash flows and financial flexibility. Riley Dixon Authentic Jersey
IndianOil buys 3 million bbls Russian Urals crude
Indian Oil Corp bought 3 million barrels of Russian Urals for June loading in a tender, trade sources said on Tuesday. IOC stepped up purchase of Russian grade as Brent-linked grades become competitive against those priced on Dubai after the price spread between the two benchmarks narrowed. IOC issued second tender for sour crude to close on April 19. IOC last bought 1 million barrels of Urals each to load in May and March. Early Wynn Womens Jersey