Low solar tariffs raise questions on viability of projects: Sajjan Jindal
Low solar power tariffs discovered in recent rounds of bidding for solar power projects has raised questions on the viability of projects, Sajjan Jindal, Chairman and Managing Director of private power producer JSW Energy, has said. “We are now seeing a lot of focus on solar power, with auction-based tariffs reaching all-time lows. Although a part of the reduction can be attributed to decline in equipment costs, it also raises questions on the long-term viability of projects at such low tariffs,” Jindal said in his speech at the company’s 23rd Annual General Meeting in Mumbai. He added the government has set ambitious targets for setting up renewable capacities and hence the viability of projects will be a crucial factor to achieve the long-term goal of energy security. “In this context, the recent draft proposal of the government to include hydropower as renewable energy and to stipulate a mandatory hydropower obligation is a welcome step,” he said. JSW Energy, part of the $11 billion JSW Group, is evaluating various opportunities involving next-generation technologies which are going to be disruptive in nature in the energy space, Jindal said. The current stress in the power sector could lead to consolidation which will offer good prospects for future investments, he added. Talking about the future of the energy sector, Jindal said India’s long-term energy appetite is enormous but a large proportion of the demand is latent. “The GST rollout is also likely to boost economic growth over the medium term as it improves efficiency of goods movement between states, avoids tax cascading as well as strengthens tax compliance and governance. This is likely to boost GDP growth rate to 8 per cent or above, consequently driving power demand,” he said. According to Jindal, the power sector is currently struggling with multiple issues including sluggish industrial demand, lack of long-term Power Purchase Agreements (PPAs) and ill financial health of distribution utilities. He, however, also noted the government has taken multiple policy initiatives and path-breaking measures to provide electricity for all at a fair and just price. Brad Richards Authentic Jersey
Analysis: First tech, now financing – U.S. shale firms get creative to pump more oil
U.S. shale producers survived an oil price crash and confounded OPEC’s efforts to drain a global glut by employing innovative drilling and production techniques. Now, some of these producers are turning to creative investments to pump more oil. Drilling joint ventures, called “DrillCos” for short, combine cash from investors like Carlyle Group LP with drillable-but-idle land already owned by producers. Investors get a pledge of double-digit returns within a few years, while producers can raise productivity without spending more of their own money. The total raised by these ventures – at least $2 billion in the last 24 months – is a small part of overall shale financing. But they represent another way for Wall Street and shale producers to increase the flow of oil, and frustrate plans by the Organization of the Petroleum Exporting Countries to prop up prices. Private equity this year has showered more than $20 billion on U.S. energy ventures. Driven by shale expansion, U.S. oil production this year is forecast to increase by 570,000 barrels per day (bpd) to 9.9 million bpd, the U.S. Energy Information Administration estimates. NO BALANCE-SHEET RISK Drillcos take control of drillable land and generally turn over 100 percent of the cash flow from oil and gas production to investors until they earn a 15 percent return. At that point, control reverts to the producer, with the investor’s stake shrinking to about 10 percent of remaining production. “It’s a type of surgical, temporary capital,” Mark Stoner a partner at private equity fund Bayou City Energy LP, said in an interview. Bayou City committed $256 million to an Oklahoma drillco with privately held Alta Mesa Holdings LP last year. “We get exposure to great, prolific oil basins, but don’t have to take on balance sheet risk.” Companies such as EOG Resources Inc, one of the financially strongest U.S. shale producers, are turning to drillcos. Two months ago, EOG struck a $400 million deal with Carlyle to finance wells in Oklahoma. The investment lets EOG focus its own cash on the Permian Basin, the largest U.S. oilfield, and lifts its production without increasing its spending. The venture also allows EOG to double or triple the value of land it held on its books, Lloyd Helms, EOG’s head of exploration and production, said an industry conference in May. Legacy Reserves LP, Exco Resources Inc, Alta Mesa and EOG are among 34 oil producers that since 2015 have formed drillcos worth more than $2.05 billion. The money has come from investors including Blackstone Group, Carlyle, KKR & Co, and others, according to 1Derrick Ltd, which tracks oilfield land deals. PUTTING IDLE LAND TO USE Historically, one way producers wrung more cash from financiers was to pledge future output for cash payments to finance drilling. There was no swap of land and no guaranteed return. Drillcos differ in that investors get control of land until a double-digit rate of return is met, providing insurance against a default. For producers, these ventures also help boost the total amount of oil they can eventually recover. Wall Street is rewarding those with strong production with share price gains at a time when OPEC and its allies have agreed to pull 1.8 million bpd off the global market. “This helped us drill acreage that we wouldn’t otherwise have been able to drill right away,” Mike McCabe, Alta Mesa’s chief financial officer, said in an interview. For investors, the potentially high rates of return, compared with commercial loan rates running about 5 percent to 7 percent, have spurred interest despite crude prices under $50 a barrel. “There’s a lot of money seeking a home, especially in this low interest rate environment,” Mingda Zhao of Vinson & Elkins LLP, a law firm that has negotiated drillco agreements, said in an interview. Drillcos are not risk free. If oil prices tumble, investors’ ability to grab high returns within a few years fades. Shale producers also must be willing to provide more information on the land than they would under more common loan agreements. Such detailed information “gives us well-level insight into what’s going on in a basin,” said Bayou City’s Stoner. For Carlyle, one of the world’s largest private equity funds, the drillco with EOG was a relatively low-risk way to invest in U.S. shale. “We were looking for very specific types of assets and drilling deals to make the risk-return work for us,” David Albert, co-head of Carlyle’s Energy Mezzanine Opportunities funds, said in an interview. The funds, with more than $4 billion under management, can still make money on its drillco investment even after oil prices slipped below $45 per barrel this month on oversupply concerns. “Even with current oil prices, there are still economic opportunities to be had out there,” Albert said. Ty Sambrailo Womens Jersey
Pratt engine fixes prompt IndiGo to ground seven airbus planes
India’s biggest airline grounded at least seven Airbus SE jetliners as it awaits fixes for balky Pratt & Whitney engines, joining several carriers around the world that have pulled the planes from service. IndiGo stopped using one A320neo aircraft this month after grounding four in June and two in May, according to data from flight-tracking website Flightradar24. Including IndiGo’s planes, there are 12 A320neos now out of service across five airlines worldwide, said a person familiar with the matter, who asked not to be named because the information isn’t public. “We are aware thata limited number of Pratt & Whitney GTF-powered A320 aircraft are temporarily out of service for engine upgrades,” the engine maker said in a statement. “We are working with Airbus and our airline customers to ensure that any disruption involved will be minimized.” Pratt, a unit of United Technologies Corp., has been working to fix durability issues and production snags that have hampered the roll-out of the engine, which was selected to power new jets from Airbus, Bombardier Inc. and Embraer SA. Airbus deliveries have been affected amid problems with engine parts, including the carbon seal and combustor liner. For IndiGo, a lack of spare parts for Pratt’s new geared turbofan has been compounded by a new Indian tax on goods and services, which has made importing products more difficult, said a separate person familiar with the matter. ‘Operational Disruptions’ The airline, which is the world’s biggest customer for the A320neo with 430 on order, said in a statement that it “faced some issues with the neo engine, causing operational disruptions.” Japan’s ANA Holdings Inc. and Hong Kong Express Airways Ltd. are also among airlines that have have grounded some aircraft recently. “The A320neo and its GTF engine option, being a new aircraft type as well as a new engine type, require time to mature in their operational reliability,” HK Express, which has had one of its three A320neos under maintenance since June, said in a statement. ANA is operating one aircraft while the other one is undergoing maintenance after issues with both its engines, Youichi Uchida, a company spokesman, said by phone. Airbus is working with the engine maker to ensure disruptions for airlines are minimized, it said in an emailed statement. Pratt said it received certification in April for a fix to the carbon seal issue. Kawann Short Womens Jersey
Surging heat may limit aircraft takeoffs globally: Study
Rising temperatures due to global warming will make it harder for aircraft around the world to take off in coming decades, according to a study. During the hottest parts of the day, 10 to 30 per cent of fully loaded planes may have to remove some fuel, cargo or passengers, or else wait for cooler hours to fly, researchers said. “Our results suggest that weight restriction may impose a non-trivial cost on airline and impact aviation operations around the world,” said Ethan Coffel from Columbia University in the US. As air warms, it spreads out, and its density declines. In thinner air, wings generate less lift as a plane races along a runway, researchers said. Thus, depending on aircraft model, runway length and other factors, at some point a packed plane may be unable to take off safely if the temperature gets too high. Weight must be dumped, or else the flight delayed or cancelled, they said. Average global temperatures have gone up nearly one degree Celsius since about 1980, and this may already be having an effect. Worldwide, average temperatures are expected to go up as much as another three degrees Celsius by 2100, they said. However, heat waves will probably become more prevalent, with annual maximum daily temperatures at airports worldwide projected to go up four to eight degrees Celsius by 2080, according to the study. It is these heat waves that may produce the most problems. “This points to the unexplored risks of changing climate on aviation,” said Radley Horton, a climatologist at Columbia University. “As the world gets more connected and aviation grows, there may be substantial potential for cascading effects, economic and otherwise,” said Horton, coauthor of the study published in the journal Climatic Change. Most studies so far have focused on how aviation may affect global warming (aircraft comprise about 2 per cent of global greenhouse-gas emissions), not vice versa. However, a handful of studies have warned that warming climate may increase dangerous turbulence along major air routes, and head winds that could lengthen travel times. The new study projects effects on a wide range of jets at busiest airports in the US, Europe, the Middle East, China and south Asia. The researchers estimate that if globe-warming emission continues unabated, fuel capacities and payload weights will have to be reduced by as much as four per cent on the hottest days for some aircraft. If the world somehow manages to sharply reduce carbon emissions soon, such reductions may amount to as little as 0.5 per cent, they said. For an average aircraft operating today, a four per cent weight reduction would mean roughly 12 or 13 fewer passengers on an average 160-seat craft. This does not count the major logistical and economic effects of delays and cancellations that can instantly ripple from one air hub to another, said Horton. Some aircraft with lower temperature tolerances will far worse than others, and certain airports – those with shorter runways, in hotter parts of the world or at higher elevations, where the air is already thinner – will suffer more. Benoit Pouliot Womens Jersey