Prospects may not be bright for rooftop solar unit users
Tangedco’s plan to do away with concessions for those with rooftop solar units generating power for the grid has disappointed low tension solar power installers, who say the move will affect them financially. At present, under the bi-directional net meter connection system, the net consumption of electricity would be arrived after subtracting from the total units consumed the units of solar power pushed to the grid. This helps in saving power cost. In a State where there is a graded tariff based on the number of units consumed, this seemed to be of huge benefit to consumers. For instance, if a home had consumed 501 units of power, and had a rooftop solar installation that had produced 50 units of power for the grid, then the bill for that house would be calculated for 451 units only. The rate for 501 units is about Rs. 2,300, whereas, the rate for less than 500 units could be only Rs. 1,200, resulting in a substantial saving for the household. Feed in tariff Tangedco’s current proposal to introduce ‘Feed in Tariff’ — fixing a different rate for solar low tension power producers — will put paid to this level of savings. As per the new strategy, if cleared, the number of units consumed will not factor in the units of solar power let into the grid by a home or a school. Instead, they would have to pay, in case of the above instance, for the 501 units consumed. As for the power they send to the grid, a lower rate will be fixed and the amount (calculated by units) will be credited to the generator. Though Tangedco’s petition for the implementation of the new system is yet to be taken up for hearing by Tamil Nadu Electricity Regulatory Commission, the move has confirmed the fears of solar installers who were wondering about the reasons for the delay in the installation of net meters for several roof-top solar plants. Several solar installers, having set up rooftop solar plants, have been claiming that they are unable to connect the plants with the electricity grid because of non-availability of net meters. Similarly, several low tension consumers, both domestic and commercial, say the shortage of net meters is causing a delay in completing their solar plant projects. Aggrieved consumers complain that despite their heavy investment on rooftop panels, now that there is a delay in providing government subsidy, they are unable to actually reap any of the benefits — either financially or in terms of savings in power consumption. A senior official of Tangedco, denying that there was shortage of net meters, says only a few applications for net metering are pending. He says several technical factors have to be weighed in before connecting to the grid such as the need for assessing the load of the transformers by the concerned local officials, as solar power could not be loaded more than 30 per cent with the electricity grid in a particular transformer. The senior official says they decided to go for the ‘Feed in Tariff’ system for rooftop solar plants after taking into consideration the falling solar prices. He said: “Net metering is proving to be a loss for us when it comes to commercial connections and so, the proposal was moved with the TNERC.” K.E. Raghunathan, Managing Director, Solkar Solar Industry, recalled the TNERC’s order dated November 13, 2013, which sought to encourage large scale solar power plants in the State through the implementation of a solar roof-top net metering policy. However, the proposed introduction of the ‘Feed in Tariff’ system at a time when installers are already shying away because of delay in getting net meters would sound the death knell for the solar industry. Several solar installers point out a recent comprehensive tariff order from TNERC indicates that the total connected load of solar power (from low tension generators) was roughly around 15 MW only. So, even if the net metering system continues, the electricity department is likely to suffer much losses, the solar installers point out, besides underlining the fact that the State government should be going in for more clean energy projects. Corey Grant Jersey
Essar, Adani and JSW to build LNG terminals at ports
Conglomerates in India now have a Rs 17,000-crore investment theme built around an industrial fuel: liquefied natural gas (LNG). The Essar, Adani and JSW Groups, among others, are setting up LNG terminals along India’s eastern and western water margins as natural extensions to the port infrastructure, reflecting the increasing demand for the gas as an alternative energy source in the country as global prices of the fuel head south. Essar Ports, part of the Essar Group, has won the recent bid for a Rs 450 crore, 1-million-tonne LNG import terminal at the Haldia port in West Bengal, according to two people aware of the developments. The Kolkata Port Trust had called bids for the terminal, for which staterun Petronet LNG and V Energy were also in the race. “As a group, we keep looking at growth opportunities in its businesses. But it is not our policy to comment on any specific proposal,” a spokesperson for the Essar Group told ET. Essar, Adani, and JSW Groups’ planned investments on their respective LNG terminal projects total Rs 17,000 crore: At its Dhamra port in Odisha, Adani Ports and SEZ is building an LNG terminal of 5 million ton capacity, entailing an investment of Rs 5,200 crore, and an LPG terminal of 2.5 million ton capacity, which would see an additional investment of Rs 2,300 crore. The JSW group has also tied up with the Hiranandandani Group, spending up to Rs 4,000 crore to set up an LNG terminal at JSW’s Jaigarh port in Maharashtra. Essar might sign the 30-year licence agreement in the next couple of months. It has already sought environmental clearance for the project that may come up in the next two years. The majority of the equipment would be on lease, keeping the investments relatively low, one of the two sources quoted above said. Later, Essar might set up a 5-million-ton LNG terminal at its facility at Hazira in Gujarat. “Going forward, LNG will be the focus for Essar,” the person said. A consortium led by Russia’s oil giant Rosneft has bought the group’s oil business for $12.9 billion putting the ports out of almost all liquid cargo. The resultant shift is toward hydrocarbons. “On a group level, Essar could be a large user of LNG, through its steel plants,” said the source. A fall in LNG prices amid rising demand stoked new investments in the fuel’s storage and transportation infrastructure. “There is high demand for LNG, and shift towards alternative sources of energy,” said Kalpana Jain, partner at Deloitte India. “Of course, the prices are a reason too. Landed rates in Japan, for instance, have fallen to $5 per unit from $16 in the last two years.” The Adani Group’s two terminals in Odisha would help close the gap in the state’s energy requirements, and support various local ancillary industries. At Mundra in Gujarat, the Adani Group is currently working on an LNG terminal that will have an initial annual capacity of 5 million tons a year. It is also working on a 1.6 million ton LPG import terminal. The project cost of the LNG import terminal is estimated to be about Rs 4,500 crore. Connor Brown Authentic Jersey
Assam’s NRL signs MoU with Paradip Port Trust and IOCL for Import of crude oil at Paradip Port
Under NRL’s proposed Refinery expansion Project, a 28 Inch Diameter 1400 Km long Crude Oil Pipeline of 1 MMTPA capacity will be laid for transporting 6.0 MMTPA of imported crude oil from Paradip Port in Odisha to Numaligarh in Assam. According to NRL,the MoU provides for utilizing IOCL’s spare capacity of existing SPMs (Single Point Mooring) at Paradip. Paradip Port Trust will extend land space for installation of Crude storage tanks, Pump house and Township at Paradip. The tripartite MoU was signed between Chairman Paradip Port Trust, Rinkesh Roy, Director (Technical) NRL,. B.J Phukan and ED (Pipelines.) IOCL, A. K Tiwari in the presence of Union Minister for Road Transport, Highways and Shipping, Nitin Gadkari; Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan; Assam’s Finance minister, Himanta Biswa Sarma, Assam’s Industry Minister, Chandra Mohan Patowary; and NRL MD P.Padmanabhan. Chris Pronger Womens Jersey
Cairn and partners to invest Rs 32.40 billion in Ravva Field
Cairn India Limited, along with its partners is set to invest Rs 32.40 billion in the Ravva Fields in the Krishna-Godavari Basin, to undertake 20 Developmental Wells and for setting up related infrastructure, as the oil and gas production is dwindling from the existing wells. Cairn India Limited approached the Ministry of environment Forest and Climate Change seeking necessary clearances for the proposed project. According to the minutes of the meeting by Expert Appraisal Committee under the Ministry, the proposal was given green signal as far as Coastal Regulation Zone (CRZ) is concerned. “In order to enhance the hydrocarbon production within the already approved capacities, Cairn India Limited on behalf of Ravva JV proposes the following oil and gas developments to produce contingent hydrocarbon resources available in Ravva Field-Drilling of 20 developmental wells: 6 from new RI Platform and 14 from existing platforms… Drilling of 6 nos. of exploratory/appraisal wells to assess presence of hydrocarbons in identified pockets. “The cost of the above proposed oil and gas development is estimated to be approximately Rs 32.40 billion,” the EAC said in the minutes of the meeting held last month. According to the company’s annual report of FY 16, the Ravva Fields produced 18,602 Barrels of Oil Equivalent per Day (BOEPD) average daily gross operated production in 2016-17 against 23, 845 BOEPD in FY 16. Cairn India officials did not respond to mail seeking additional information. The Ravva field (PKGM-1 Block) located in the shallow offshore area of Krishna Godavari Basin, has completed 21 years of successful operations with, Cairn India as the operator with 22.5 per cent participating Interest. Exploration, development and production in the block are governed by a PSC that runs until 2019, which is in partnership with ONGC, videocon and Ravva Oil Singapore. Currently, there are eight unmanned offshore platforms and a 225 acre onshore processing facility at Surasaniyanam in East Godavari of Andhra Pradesh which processes the natural gas and crude oil produced from the field, the annual report said. Over the years due to ageing of the field, production of oil and gas has declined. The onshore processing facility though has approved capacity to produce 50,000 BOPD (Barrels of Oil Per Day) crude oil and 2.32 MMSMD ( Million Metric Standard Cubic Meters per Day) of gas and is presently producing approximately 22,000 BOPD of crude oil and 1.44 MMSCMD of natural gas, the minutes added. A.Q. Shipley Authentic Jersey
RIL, other CBM producers get pricing, marketing freedom
Reliance Industries and other producers of coal bed methane have been granted pricing and marketing independence as well as permission to sell fuel to affiliates after the formal policy notification. Through the April 13 notification, the oil ministry said a coal bed methane (CBM) producer has to call for open bids for sale of coal gas and seek price quotes to discover the market price. The producer will have to issue advertisement in national dailies and run a competitive bidding to arrive at the arms-length sale price, it said. The process prescribed is the same as the one Reliance Industries had run in 2012 to discover a price for CBM gas it is to produce in Madhya Pradesh. It had sought bids for 3.5 million standard cubic metres per day of coal gas from its Sohagpur CBM block in Madhya Pradesh at a benchmarked rate at 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus USD 0.26 per million British thermal unit. The formula was the same at which Petronet LNG, a joint venture of public sector oil companies, whose chairman is the oil secretary, used to buy long-term liquefied natural gas (LNG) from Qatar. At USD 100 per barrel oil price prevalent that year, CBM from RILs Madhya Pradesh block was to cost USD 12.93 per mmBtu. At USD 55 a barrel rate currently, it would cost USD 7.2. That formula was, however, rejected by the ministry even though 59 valid bids seeking about 70 mmscmd of gas were received in the open tender. “In the event of market-discovered price being less than the price notified by the Petroleum Planning Analysis Cell (PPAC) under the New Domestic Natural Gas Pricing Guidelines, 2014, the royalty and production level payment (PLP) shall be paid on the basis of the latter,” the CBM pricing policy notified last week said. The PPAC notified price of gas for April 1 to September 30 at USD 2.48 per mmBtu and the same for difficult areas is USD 5.56 per mmBtu, lower than the rate in RIL formula. “Sale of CBM to any affiliate of the contractor is permitted, in the event the contractor cannot identify any buyer following the procedure (of open bidding),” the policy said, adding that the reasons for sale to affiliates will have to be notified to the Directorate General of Hydrocarbons (DGH). The policy is expected to incentivise the CBM operation in the country to boost gas production. Of the 33 CBM-bearing blocks awarded so far in four auction rounds and on a nomination basis, gas is being produced from only four. The four CBM blocks in production have a combined output of 1.17 million standard cubic metres per day. As many as 18 blocks have either been relinquished or are in the process as operators found that it did not make economic sense to produce gas at the prevailing rates. According to the DGH, India has the fifth largest proven coal reserves in the world and holds significant prospects for exploration and exploitation of CBM. The estimated CBM resources in the country are about 92 trillion cubic feet. The 33 CBM blocks awarded so far hold a total of 62.4 tcf of the estimated resources, of which so far, 9.9 tcf has been established as Gas in Place (GIP). The pricing freedom will help quickly ramp up CBM gas production to targeted 5.77 mmscmd within a year, officials said. Wayne Gallman Jersey
New low solar tariff keep developers on tight rope
Viability of new low tariffs committed by solar power developers will critically depend on the availability of 18-20 year debt at competitive rates, their ability to keep cost of solar modules within budgeted levels and completion of the project in time. Bids for solar tariffs touched a new low of Rs 3.15 per unit for NTPC’s 250 mw solar plant at Kadapa Solar Park in Andhra Pradesh, on Wednesday. This implies a tariff drop of 4.5% over the previous bid of Rs 3.33 per unit for Rewa Solar Project in Madhya Pradesh during February 2017. It signifies a further improvement in the cost competitiveness of solar energy against both alternate renewable as well as conventional energy sources, in ICRA’s view. Sabyasachi Majumdar, senior vice president & group head at ICRA Ratings said; “Viability of such tariff for project developer from credit perspective will be critically dependent upon the availability of long tenure debt at cost competitive rates as well as its ability to keep costs of modules within budgeted levels. Project execution in a time-bound manner also assumes immense importance.” With declining module price levels and the bidding process adopted, tariff competitiveness for solar projects has been showing an improvement in the last three years. Solar tariffs fell from an average Rs 6.79 per unit in 2014 to Rs 5.01 per unit in 2016. An improving tariff competitiveness of solar power thus remains favourable for the distribution utilities, in ICRA’s view. Assuming capital costs of Rs 4.5 crore per megawatt and capacity utilisation of around 21%, ICRA estimates cumulative average DSCR over debt tenure of 18 year at 1.20 time and rate of return below 10%, for a project with a levellised bid tariff of Rs 3.15 per unit. Any deviation in project parameters and cost assumptions may have an adverse impact on project returns and debt service ratios. “On the other hand however, project developers may have an incremental upside arising out of their ability to improve capacity utilisation using trackers or by a further downward movement in equipment prices over the execution period” adds, Majumdar. Kris Versteeg Authentic Jersey
Dark side of solar success: It may kill thermal power, banks
The latest solar power auction has yielded an electricity price of just Rs 3.15unit, down from Rs 5 two years ago. This seems competitive with coal-based thermal power. The government has raised its solar capacity target to 40GW by 2020 and 100GW by 2030, up from 12GW today. This promises to replace dirty coal-based power by cheap, renewable power. What’s not to like? Plenty. Solar power has many hidden subsidies. Its true cost is far higher than for thermal power. A far bigger problem is that solar power is given preference when supply exceeds demand, so thermal plants have to back down. The plant load factor (PLF) or capacity utilisation of coal-based plants was 76% six years ago, but is now just 58%. India used to be perennially short of electricity, but now most regions have surplus. India now exports power to Bangladesh, Nepal and Myanmar. Thermal producers had expected the power shortage to continue, and hoped for at least 70% PLF , yielding good profits. But at today’s PLF of 58%, many are in trouble, especially merchant plants selling power on the open market because they don’t have power purchasing agreements with state governments. If average PLF falls below 48%, and that of merchant plants falls even more -as is likely if solar capacity soars to 40,000MW by 2020 -then many coal-based projects will go bust. These are financed overwhelmingly by loans, not equity . Interest on loans must be paid even if plants lie idle, so high interest costs can kill projects when the PLF falls. Around 65GW of new thermal power plants are already in the pipeline. These, plus new solar plants, threaten a rising power surplus at a time of tepid demand growth. The consequent PLF collapse could bankrupt many projects, hugely burdening lenders. Many banks are already staggering under enormous bad debts, and now face the threat of a fresh avalanche. That will hit the whole economy . In sum, explosive solar power growth looks a blessing, but can become a curse. We should hurry slowly . Solar power looks great when the sun shines, but stops at sunset, just as power demand soars to its evening peak. Much thermal power has to remain idle during the day, ready to pick up the slack when solar production suddenly stops. This forced idleness carries huge costs hidden by ostensibly cheap solar power quotations. The notion that solar power has become cheaper than coal-based power is an illusion (though, hopefully it will become reality if costs keep fall ing). An official answer to a question in Parliament said, “The government is promoting solar energy through fiscal and promotional incentives such as capital and or interest subsidies, tax holidays on earnings for 10 years, generation based incentives, accelerated depreciation, viability gap funding, financing rooftop solar as part of home loans, concessional excise and customs duties, preferences for power generated from renewables. “Whew! Besides, the government offers a 25% capital subsidy for solar equipment production. The solar parks attracting the recent low bids get cheap or free land from state governments, a big implicit subsidy since 1,000MW needs 5,000 acres. At an investor conference last year, one solar entrepreneur estimated the true cost of solar power (sans implicit and explicit subsidies) at Rs 6unit without storage and Rs 8 unit with stor age. A captive coal-based power station working flat out yields power at just Rs 2.50unit, far cheaper than solar power. Commercial thermal plants have quoted Rs 1.77 to Rs 4 unit. Solar power is intermittent. It fails at night and works weakly on cloudy or foggy days. Ideally , plants should store part of their generation during the day and then release it after sunset. If all solar power that creates surplus supply is stored, thermal plants need not back down when the sun shines. Power storage based on conventional batteries is very expensive. Hopefully new technologies will cut the cost, but none are in sight yet. Solar costs are falling fast. The slower we go, the more solar costs will fall. So speed is not a virtue. Raising solar targets repeatedly looks green and good, but has hidden, potentially disastrous costs. In place of solar target practice, India must plan to match total power supply with decelerating demand, and aim for a solar-thermal mix that avoids huge idle capacities. Both thermal and solar capacity creation must slow down. Breakneck speed for solar power will break the neck of thermal plants and banks. Nickell Robey-Coleman Authentic Jersey
Aiming The Subsidies Wrong : Delhi’s Electricity Subsidies where the poor get only Rs. 1,000 per year and the rich Rs. 9,000 per year
Delhi is one of the richest states in India, with the highest household per capita consumption of power. States are taking steps to lower the tariffs unlike Delhi, which is relying only on subsidies. For initial 200 units, Punjab state has reduced tariff by 9.2% in 2015-16 in comparison to previous year, Similarly J&K has reduced tariff by 7% in 2015-16 incomparison to previous year. Before election AamAadmi Party promised to reduce the electricity tariff through audit of DISCOMS & by improving efficiency in the system. None of the promisedactions were fulfilled so to hide its failure the AAP government gave subsidies on electricity bills to consumers. The AAP government budget for 2016-17 had a non-plan budget of 26,000 Cr., implying a burden on taxpayer of almost 6%, as a result of the 400 kWh threshold level. They allocated Rs. 1600 Cr. for providing subsidy on Power Bills in budget 2016-17 which is more than 8 times allocated for Smart City i.e. Rs. 196 Cr., more than 1/3rd of the total budget allocated for Medical & Public health, and nearly 20% of the total budget allocated for Education. This clearly shows that the AAP government has been compromising on development efforts due to their failure in brining efficiency in electricity. The AAP Government has set the threshold for availing subsidies so high that on an average about 80% of households are eligible for a 50% subsidy. Furthermore, the average household subsidy varies from Rs. 1,000/year (consumers upto 100 units per month) to over Rs. 9,000/year (consumers with average consumption of 300-400 units per month). Clearly this shows that the current subsidy design is benefiting the rich more than the poor. Hence, there is a need for an effective and viable subsidy design with a primary focus on helping the marginal or poor. One of the ways for AAP Government to ensure a better targeting to those who need subsidies the most is to lower the threshold. For example, lowering the threshold of maximum monthly consumption to be eligible for the subsidy from 400 to 300 units per month results in almost 30% savings while reducing coverage by only about 13%. As a result of this, Delhi could find at least Rs. 450 Cr. extra, which could be used for other public services or support. Alternatively, the 450 Cr. could be spread out bottom-up, so the poorer “x” actually get a 70% subsidyinstead of a 50% subsidy. Thus, by just changing the subsidy rules, the Delhi Government can significantly save money of the Delhi taxpayer or can be further given to poor electricity customers. Joe Namath Womens Jersey
Government to replace 7,700 Megawatt old power units with efficient plants
The government has identified old power projects totalling 7,738 mw capacity owned by the Centre and states for replacement with energy-efficient supercritical plants, which will generate a gross 18,560 mw. “The government has identified 7,738 mw inefficient thermal plants, which would be replaced with supercritical units, to conserve scarce natural resources like land, water and coal,” a senior official said. According to the official, the replacement will result in creation of 18,560 mw of capacity as per the assessment of power generation utilities. The move is expected to not just save natural resources, but help in boosting generation capacity of the plants. Taking an example, the official added that 440 mw of the Haryana Power Generation Corporation in Panipat will be replaced with an 800-mw energy efficient plant, which will almost double the generation capacity. Breaking down the numbers, state power generation utilities have marked out 6,608 mw for the purpose, which will lead to creation of 16,580 mw. The central utilities have marked 1,130 mw for replacement that will create 1,980 mw, going forward. According to power ministry estimates, as on March 31, 2016, the capacity of coal-based thermal plants that are more than 25 years old was about 37,453 mw, including 35,509 mw in the government sector and 1,947 mw in private space. The official said the move towards energy efficiency and less-polluting technology makes more sense than renovation and modernisation and will yield long-term benefits. The plan is being chalked out after stringent norms for thermal power plants were laid down by the environment ministry. The new guidelines for coal-based power stations were introduced in December 2015 to cut down emission of PM10, SO2 and NOx and improve ambient air quality around plants. The ministry for the first time had fixed SOx and NOx norms for such stations and mandated that plants must adhere to these guidelines by 2017. According to industry estimate, the cost for technical changes at these plants could entail up to Rs 1.5 crore per megawatt. Besides, the domestic capacity to manufacture power equipment for the upgrade is not more than 15 gw a year compared to demand of around 40 gw per annum for meeting SOx norms alone. Phil Taylor Authentic Jersey
PM Narendra Modi may step in to resolve wrangling on NITI Aayog’s proposed National Energy Policy
Prime Minister Narendra Modi is likely to intervene to resolve an inter-ministerial wrangling over NITI Aayog’s proposed National Energy Policy to roll out the long-overdue power sector reforms. Different stakeholder ministries, including those of power, coal, and new and renewable energy, have failed to come to a consensus on some points of the proposed policies, including freeing coal from price control, despite several rounds of consultations, said a senior government official who is aware of the deliberations on the matter. “National Energy Policy is pending with PMO (prime minister’s office),” the official told ET. “The top office is now planning to convene a high-level meeting of all concerned ministers and secretaries to be chaired by the PM himself to suggest way forward to the policy,” the official said. The first draft of the policy, framed by the Aayog after intense consultations over last one and a half year, was ready for seeking public comments by March. But that has been held back after concerned ministries raised objections with the PMO over certain proposals. Coal ministry, for example, expressed reservations over the proposal to free up the commodity from any price control. Such a move would divest the ministry of its power to control coal prices and help maximise profit for Coal India. However, NITI Aayog has largely stood by its reforms agenda. National Energy Policy has proposed comprehensive reforms to free sectors such as coal, electricity and fertilisers from subsidies and price controls, helping to produce more power by making electricity generation projects commercially viable for private companies. The policy has outlined the need and measures to improve financial condition of power distribution companies (discoms), which are bogged down by debt, to make the sector profitable in the medium to long term. Key suggestions being considered include overhauling the entire structural and functional capacity of discoms so that they operate more professionally. In India, electricity and fertiliser sectors are heavily subsidised. The government feels there is a need to bring down subsides in such sectors and, hence, a clear roadmap for lowering subsidies and aligning their prices to that of the market has been laid out. But this proposal hasn’t gone down well with concerned ministries. National Energy Policy is aimed at curbing imports by increasing production of renewable energy in the country fivefold to 300 billion units by 2019 and tripling coal production to 1.5 billion tonnes. Coal imports are envisaged to come down by 10% by 2022 and by 50% by 2030. NITI Aayog CEO Amitabh Kant had earlier told ET that differences are obvious as the policy proposes far reaching reforms to transform the power sector. “Wherever there are differences, we’ll pose them before the Prime Minister and let him take a call,” he had said earlier. Prime Minister is the chairman of the Aayog. National Energy Policy will replace Integrated Energy Policy of the UPA regime that envisioned a roadmap for sustainable growth with energy security over a reasonable period of time. Cam Newton Authentic Jersey