From cheaper power to higher availability, mark out UDAY but operational improvement still to come
My article “Fixing Discom’s Finances” on July 9, 2015, suggested a way forward for commercial viability. Subsequently, the government introduced a comprehensive program UDAY in November 2015. The scheme comprises three parts; (i) financial re-engineering of debt of Rs 4.3 lakh crore; (ii) provisioning of cheap power through the higher availability of coal/swapping of coal, etc, and higher funding towards DDUJY/IPDS schemes, (iii) operational improvement by discoms for sustainability. The scheme envisaged that 75% of the debt shall be taken over by the state, of which 50% will be in the first year and the remaining in the second. Although this has improved discom balance sheets and has lowered interest rate by 3-4%, while ensuring cheaper power and higher availability, operational improvement still has a long way to go. While 27 states/UTs have signed UDAY, analysis has been limited to top-10 states which consume more than 70% of the total energy. Of 26 discoms involved in the 10 states, three in Gujarat have retained highest (A+) category. There has been an improvement in eight(one each in Rajasthan, MP, TN, Maharashtra, UP, Gujarat, two in AP), 12 have maintained status quo (Punjab, all four in Karnataka, two in Rajasthan, three in UP, one in Telangana & one in MP). But three (one each in MP, Telangana & UP) have slipped from their earlier rating. Thus, an analysis of rating shows that there has been no improvement in six States comprising 15 discoms (catering to 50% energy). Thus, issues need to be addressed without further loss of time to have a turnaround of discoms in the shortest possible time Consumer metering, billing and collection efficiencies continue to be dismal, particularly in Rajasthan, UP & MP, where AT&C losses have increased in FY16 even reaching 45% in some cases. Billing efficiency of certain discoms is as low as 68%. Thus, technology needs to be implemented to enhance the efficacy of billing and collection. Cost coverage ratios, which basically indicate the cash flow situation of a discom, are as low as 70% leading to 30% revenues remaining unrealised even after accounting for subsidies. Moreover, despite power being available for Rs 2.50-Rs 3.00, average procurement price for some has been `4.50 per unit. Distribution system operation and specialised power procurement group do not exist in many discoms. This shall become more critical with higher penetration of renewable energy in future. Also, technology penetration is low in distribution segment. State of the art control centre for switching, control, operation and automatic fault detection and rectification are absent. Many of the discoms have negative net worth and accounts are not prepared on time. This results in poor credit rating; thus, borrowing is difficult as well as borrowing costs are high. This creates a utility spiral and it is difficult to come out of it. Methodology needs to be worked out in a time bound manner to make them solvent. The average subsidy is over 12 % of revenue for discoms. For instance, in Gujarat, the subsidy has increased from Rs 727 crore from March 2010 to Rs 4,664 crore in March 2016. An absence of disbursement from states would seriously affect the operation/cash flow as power procurement costs are as high as 75-80% of the electricity cost. That’s why many discoms prefer long-term purchase on deferred payment basis, even though it is costlier than short-term payments which require payments in advance. The success of direct money transfer schemes in other sectors needs to be replicated in electricity at the earliest to improve the cash flow. The most crucial factor for the success of the distribution system lies with an effective regulatory mechanism. Although it has been more than a year since its implementation, but the operational improvement has not been commensurate with the requirement. Financial re-engineering shall ease out the operation of discoms for some time, thus, time is running out to capture this advantage to a sustainable position. Chris Hubbard Authentic Jersey
Blackout in Bengaluru as power station collapses
Wednesday’s rain in several parts of the city resulted in the collapse of Hoody station of Karnataka Power Transmission Corporation Limited, plunging most areas in Bengaluru East and North into darkness for several hours from 6pm. With at least nine sub-stations supplying power to the city failing, some areas in West Bengaluru and the CBD too had no power from 8pm onwards. Hoody station, which supplies power to areas like Fraser Town, Cooke Town, Banaswadi, Kalyan Nagar, HRBR Layout, Hennur and even parts of Hebbal and surrounding areas, could not re solve the issue until late night. KPTCL cited the sudden downpour on Wednesday evening as the reason for the station collapse. Bescom said the sudden power outage was due to incoming supply failure from various MUSS linked to the 400KV Hoody station. “The lines tripped due to heavy wind followed by rain. We hope to restore power supply before midnight. But the continuous strong winds are a concern,“ an officer said on Wednesday night. People’s misery was compounded as a heavy downpour, accompanied by strong winds, started about 9.30pm. Darkness covered a large swathe of the city and its suburbs from Hoskote and Whitefield to Murugesh Palya, Indiranagar, Ulsoor, Vasanthnagar, Malleswaram, Lingarajapuram, Thanisandra, Nagawara, Sanjaynagar, Hebbal, and Shantinagar, Cubbonpet, Chamarajpet, City Market and Sampangiramnagar. Citizens flooded Bescom helplines with complaints through the night. “They haven’t told us when power will be restored… How can such a light shower disrupt power in so many areas? What will happen when the real monsoon hits the city next month?“ asked concerned residents. The power outage resulted in complete darkness on the streets, and collapse of traffic signals. Traffic clogs were reported on major link roads in East and North Bengaluru. “It took me two hours to cross a main road due to a huge pileup of traffic,“ said an office-goer in Marathahalli. The weatherman said Wednesday’s rain was normal, and was characterized by strong and gusty winds which are likely to continue for the coming 24-36 hours. Four trees uprooted: At least four trees were uprooted owing to late evening rain, accompanied by strong winds that hit Bengaluru city on Wednesday . According to BBMP, tree fall was reported from Cox Town, Commercial Street, Sulthan palya and the Orion Mall area.However, there were casualties. Michael Roberts Authentic Jersey
ISRO to help Adani Group hike solar power production
In a first, the Space Application Center (SAC) of Indian Space Research Organisation (ISRO) has signed an agreement with asubsidiary of the Adani Group to provide solar insolation data from its satellites. As per the agreement signed between SAC-ISRO and Adani Green Energy Limited, the former will provide information about daily solar radiation — including the quality and quantity of radiation — that is required for solar power generators to determine level of production. At present the company pays foreign companies for this data. In the agreement signed on May 13, SAC-ISRO will grant the company access to data from its Meteorological and Oceanographic Satellite Data archive center (MOSDAC). Confirming the signing, Tapan Misra, director of SAC said, “SAC will provide data collected from the INSAT-3DR, INSAT-3D and Kalpana-1 satellites to Adani Green Energy Limited, as per the agreement. The company will pay us for this data.” Sources from the company, meanwhile, said, “Since the company is working towards increasing solar power production, the data we receive from SAC-ISRO will help us maneuver the solar panels as per energy requirement. Solar power generators require data of radiation in order to maintain the temperature of solar panels at 35°Centigrade for optimum output. Excessive heating of solar panels causes reduction in power generation so having data in hand helps maintain the temperature.” Adani Green Energy Limited currently operates 760MW solar power plants spread across three locations in the country. The company intends to expand the same to 2000MW. Young Blood SAC is said to have tied up with 37 universities from the country, including the Indian Institute of Technology in Gandhinagar, to enlist students in the process of understanding, analysis and research of data collected by the IRNSS satellites. As part of the programme, students from the selected institutes will learn how to use and read the data.
Iowa senator slams energy chief for grid study undermining wind energy
Iowa’s Republican senator on Wednesday raised concerns that U.S. Energy Secretary Rick Perry has commissioned a “hastily developed” study of the reliability of the electric grid that appears “geared to undermine” the wind energy industry. In a letter sent to Perry, Senator Chuck Grassley asked a series of questions about the 60-day study he commissioned. Grassley also said the results were pre-determined and would show that intermittent energy sources like wind make the grid unstable. Last month, Perry ordered the grid study and said Obama-era policies offering incentives for the deployment of renewable energy had come at the expense of energy sources like coal and nuclear. “I’m concerned that a hastily developed study, which appears to pre-determine that variable, renewable resources such as wind have undermined grid reliability, will not be viewed as credible, relevant or worthy of valuable taxpayer resources,” wrote Grassley, whose state is home to a booming wind energy industry. He pointed to a previous study conducted a few years ago by the Energy Department’s National Renewable Energy Laboratory, which took two years to complete, not two months. Grassley said Iowa gets 36 percent of its electricity from wind and that its largest utility, MidAmerican Energy Co, is on track to generate 90 percent of its electricity from wind in a few years. Grassley said MidAmerican has the ninth lowest electricity rates in the country. In the letter, Grassley also asked Perry which grid-reliability organizations and experts were involved in the study, how much it would cost taxpayers and whether the report would be open for public comment. Perry served as governor of Texas, a leading oil-producing state, from 2000 when he succeeded President George W. Bush until 2015. Under his tenure, Texas became the country’s leading wind energy producer. But Perry has also been a strong advocate of the fossil fuel industry. He told Department of Energy staff that he wanted them to examine whether environmental regulations and tax credit programs that bolster wind and solar energy are forcing coal and nuclear plants to shut down prematurely. Grassley has been a leading proponent in Congress for the continuation of a wind energy production tax credit. The current credit is due to phase out over the next few years before ending in 2020. Ted Hendricks Authentic Jersey
Energy storage market for off-grid renewable energy in India to touch Rs 16,500 crore by 2022: CEEW
The energy storage market for off-grid renewable energy in India would be worth Rs 16,500 crore by 2022, according to a report released by the Council on Energy, Environment and Water (CEEW) during the Solar India Expo 2017. CEEW, the policy and research partner for Solar India 2017, shared the key findings of the analysis at the Expo. “Rooftop solar will itself account for 80 per cent of the total energy storage market for off-grid renewables and will be worth INR 130 billion (USD 2 billion) in 2022,” the report said. The report adds that the Ministry of New and Renewable Energy’s target to install 10,000 micro-grid or 500 megawatt (MW) of micro and mini-grids will offer an additional opportunity to the tune of Rs 3,300 crore for battery manufacturers. ”Batteries are a critical component of micro/mini-grid systems, since 100 per cent backup is often required to supply electricity to rural households during evening hours,” the report noted. The analysis provides an overview of the current Indian energy storage market for off-grid solar segment, examining multiple storage technologies under development and assessing opportunities arising due to rapid adoption of off-grid renewable energy. “Though a number of projects for grid-connected storage are being called for, the markets that are served poorly by the existing grid – mobile towers in remote locations, petrol pumps, ATMs are easy pickings for storage systems to cater,” said Dr Arunabha Ghosh, Chief Executive Officer, CEEW. According to CEEW, higher cost of energy storage solutions limits rooftop solar system installation to cater to base load. “Solar PV systems with energy storage could be a potential replacement to existing diesel generators and it would also save about Rs 4-5 per unit of electricity, compared to diesel, for industrial and commercial consumers,” the report said. CEEW’s analysis finds that advanced battery technologies could support rapid deployment of rooftop solar installations in the commercial and industrial segment. Benoit Pouliot Authentic Jersey
India ranked second in renewable energy attractiveness index
India has moved up to the second spot from third position in this year’s ‘Renewable energy country attractiveness index’ released by EY. This is primarily due to a combination of strong government support and increasingly attractive economics, EY said in a statement. According to the statement, India continued its upward trend in the index to second position with the government’s programme to build 175 GW in renewable energy generation by 2022 and to have renewable energy account for 40 per cent of installed capacity by 2040. The country has added more than 10GW of solar capacity in the last three years – starting from a low base of 2.6 GW in 2014, it said. “In the medium term, as renewable energy penetration rates increase, the government will have to turn its attention to the ability of India’s grid to manage intermittent renewables, especially around the evening peak, when solar availability falls away,” Somesh Kumar, Partner & Leader, Power & Utilities, EY India, said in the statement. The cost and availability of energy storage technology could dictate how close India gets to meeting its renewable targets. Meanwhile, India’s regulators must be mindful of the erosion of electricity market peaks caused by growing volumes of renewables and storage – this can undermine the economics of thermal power plants, risking the stability of the system as a whole, he added. The report also noted that the Indian government needs to increase compliance with the Renewable Purchase Obligation (RPO) as well as ensure that India’s distribution companies, many of which are financially distressed, have the capacity to continue to purchase renewable electricity, especially if bid prices level off or rise. As the availability of capital remains a concern, the government could ease rules around tapping foreign debt. Also, the government’s additional emphasis on photo voltaic (PV) parks will help to plug the gap, but it needs to do more to encourage rooftop solar installations, it said. The report cites that China, which has been ranked first in the index, and India have surpassed the US, which fell for the first time since 2015 to third place in the ranking of top 40 countries, follows a marked shift in the US policy under the new administration. The report identifies the US government’s executive orders to rollback many of the past administration’s climate change policies, revive its coal industry and review the Clean Power Plan as key downward pressures on renewable investment attractiveness. Economically viable renewable energy alternatives coupled with security of supply concerns are encouraging more countries to support a clean energy future. Kazakhstan (37), Panama (38) and the Dominican Republic (39) have all entered the index for the first time, it added. Norman Powell Womens Jersey
Piyush Goyal wants no hindrance to possession of electricity connections
Power Minister Piyush Goyal today endorsed the idea of providing electricity connection to consumers other than property owners like tenants and said it does not create any right over ownership. “Electricity connection does not prove the ownership of the property. Some states are afraid that providing power connections would lead to claims over properties,” Goyal told reporters here after a press conference on this Austria and UK visit at FICCI. He further said, “The Uttar Pradesh government is working on norms for providing electricity connection to all (including tenants) in a way that it does not create ownership of the power customer. It is already there in Maharashtra. We cannot deprive of anybody from electricity supply.” About the RBI’s observation that issuance of bonds under UDAY scheme affecting state finances, he said, “I wish the RBI will apply little more logic to what they have said to them because ultimately it was the debt of the state only.” The UDAY scheme was launched in November 2015 for reviving the debt-stressed state power distribution utilities. Under the scheme, the state had to repay 75 per cent of the debt by issuing bonds. Elaborating further the minister said, “It was state discom debt which is taken over by the state. It was always a fact that it was state debt. I have made de facto into de jure. I have made it legally a state debt. I think we have done a good job and RBI will understand what we have done.” About the idea of taking over of Coal India Provident Fund merger with the Employees Provident Fund Organisation, he said, “We don’t do anything which is not in the interest of workers. Coal mines worker PF body is very small and does not have the required skill to get the best returns on investments.” He explained, “The EPFO looks after lakhs of crore workers fund. The have got skill sets and expertise to handle it. We (in Coal India) subcontract that to the lowest bidder. I don’t think that it is very efficient way to do it so better let the efficient people do the whole job.” Talking about the result of the interaction in Austria, he said it has resulted in a delegation coming from Austria to India in June. The minister expressed hope that they would invest and work in India to aid government’s Make in India programme. The minister lauded London Stock Exchange (LSE) as they demonstrated their commitment to India by advancing their launch of international securities market exchange. India raised $1.1 billion through NTPC’s masala bond at 7.25 per cent interest rate at the LSE. The minister had floated the NTPC bonds on the LSE last week. Joe Flacco Authentic Jersey
IIEST creates India’s first smart grid project
The Indian Institute of Engineering Science and Technology (IIEST) has successfully created the country’s first smart grid project, which will generate power from renewable sources of energy. The project will soon be inaugurated by President Pranab Mukherjee, IIEST Director Prof Ajoy Kumar Roy said. “The smart grid will be synchronised to generate power from solar, wind and vegetable waste resources, depending on the weather conditions and availability of waste products. It is the first of its kind in the country,” Roy said. “The power to be generated from solar energy depends on the availability of sunlight while wind energy will be produced during nor’wester and tropical storm. The power from biogas will be generated from vegetable waste collected from the campus kitchen and outside markets,” the professor said. “In the integrated project, by the Centre for Excellence for Green Energy Systems (CEGESS) of the institute, we are aiming to generate 32 kw of power from whichever resource available and synchronise the smart grid to take the power in the system for use. Thus we will not be depending on one resource,” Roy said. Roy added that the world will be faced with serious situation with the depletion of hydrocarbon source. “Since coal-hydrocarbon based energy technology leads to environmental degradation, the future lies in renewable energy based technology,” he said. The eminent scientist said, this being the age of smart technology, the institute needed to look forward. “The government planners and academicians should be involved in big way as technology is changing very very fast. “The next 50 years will witness unimaginable change in technology, which cannot be static,” he added. Deion Sanders Authentic Jersey
Towards “Power For All”
Provisioning of continuous and quality power supply to more than 250 million households (families) in the country is indeed a great challenge. Though electricity falls under the concurrent list of the Indian constitution, the Union Government has taken up this challenge as an opportunity to get connected with every citizen. Various developmental measures in the power sector have been undertaken during the last three years of the present government and ‘power for all’ is one of the most ambitious programs, which addresses the cause of both welfare and inclusiveness. The program stands as a joint effort of both union and state governments to provide uninterrupted power supply to every household by 2019. Undoubtedly, the ‘power for all’ program appears to be a big task. There are millions of households in our country who do not have access to electricity in their houses. In fact, as per the last household consumption expenditure survey conducted by national sample survey organization (nsso) in 2011-12, twenty percent of households (roughly 50 million) are reported not to have consumed electricity at all. Over the last five years since the last survey conducted, if we assume an improvement of five percentage point in the proportion of households consuming electricity that still leaves fifteen percent of total households of the country without electricity supply. In order to bring these households into network of electricity consumption by 2019, there is need to have a strategic move by the Union and State Governments. First, rural areas need more attention, effort and resources as the situation is worse there compared to the urban areas. Ninety five prevent of total un-electrified households in the country belong to rural sector according to the survey. It would be difficult to accept the fact that in the modern age, more than fifty five million households in the rural sector uses kerosene to light their houses. Getting electricity connection is still perceived to be a sign of affluence. The Deen Dayal Upadhya Gram Jyoti Yojana (DDUGJY) launched by the Union Government has a significant impact on increasing rural electrification as the scheme envisages provision of free electricity connection to the rural people from below poverty line. However, the state transmission and distribution utilities with the help of state governments need to be pro-active in solving the problems such as grid extension, high cost transmission, lower recovery rate etc. which stand as barriers on the way complete rural electrification. Second, some states need to be more pro-active and aggressive in the direction of achieving the target of power for all. It has been substantiated from the survey that distribution of un-electrified houses is uneven across states. Thirty six percent of total un-electrified houses in the country are reported from Uttar Pradesh followed by twenty seven percent in Bihar. Among others, West Bengal, Assam, Odisha etc. too have a disproportionate share in total number of un-electrified households. The issue of electrification in these states needs a big push from the Union and the concerned state governments in order to achieve the goal. Two major states, Uttar Pradesh and Bihar assume the centre of debate so far as lack of adequate electricity supply is concerned. Sixty four percent of total households in Bihar and forty four percent in Uttar Pradesh are reported not to have electricity connection. However, both the states have shown determination and have signed memorandum of understanding (MOU) with the Union Government, though Uttar Pradesh signed little late i.e in Apri, 2017, just after the new government in the state took over to implement the program ‘power for all’. It is quite assuring to note that till today all the states and union territories have signed MOUs with the Union Government in the same cause. Third, a pro-poor tariff structure may help to sustain electricity supply to the households living below poverty line. Getting grid connectivity to the villages and providing free power connection to the families may not be adequate until the issue of affordable power supply is not properly addressed. It is found that forty percent of households not connected with electricity in India are rural poor, whose average monthly per-capita expenditure is less than Rs.816. Different state governments have their own cross-subsidy policies to address the issue of access to power supply for the rural poor. In Uttar Pradesh, a family in rural areas consuming up to 50 units of electricity a month has to pay Rs.200 while in Bihar it costs Rs.350. It should be noted that 37 percent of rural population in Uttar Pradesh and 41 percent in Bihar live below poverty line. A rural poor household in these two states would be forced to spend closer to 40 percent of its monthly per capita consumption expenditure only to light the house. These two states along with the others need to rationalize the tariff structure in order to sustain the power supply to the poor households. The distribution utilities in the states used to show differential response in supplying power to the rural sector, as tariff collection efficiency in the sector is relatively low. This inefficiency is found to be a demotivating factor for the distribution utilities to step up rural electrification. In order to achieve the success of ‘power for all’ the state governments need to direct the distribution utilities to be more active in the rural sector. A rational and pro-poor approach of the state governments along with the transmission and distribution utilities could help power to reach every household even before the specified time limit set by the Union Government. Mason Foster Authentic Jersey
Performance of concerted reforms: Arvind Panagariya on three years of Modi sarkar
After a pause of 10 years, economic reforms returned to the policy agenda in 2014. In the last three years, the Narendra Modi government has moved on nearly all fronts: macroeconomic stability, infrastructure, energy, corruption, direct and indirect taxes, foreign direct investment (FDI), closure of sick units, disinvestment, agriculture, urban development, cooperative federalism and social spending. Perhaps the most consequential reform since the new telecom policy launched by Prime Minister Atal Bihari Vajpayee has been the goods and services tax (GST). The reform replaces myriad indirect taxes, currently imposed by the Centre and states, by a single countrywide tax. It also ends the cascading of tax, whereby the current system imposes a tax on tax in many cases. The largest gain from the reform would come from the unification of fragmented localised and regional markets into a single national market for most products and services. Critics have made much of the differential rates structure whereby the GST imposes different tax rates on different commodities and services. But this misses the point that the first-order gains are to come from having a single tax rate on any given commodity or service across the entire nation. Moreover, there is no theorem in economics that says that a single tax rate on all commodities and services for raising revenue is optimal. The second major reform has been all-around improvement in the efficiency of social spending. The decision to retain Aadhaar and its rapid expansion, the successful launch of the Jan Dhan accounts, the passage of the Aadhaar Act, and seeding of bank accounts with Aadhaar numbers have made it possible to deliver many subsidies as direct benefit transfers (DBT). The result has been the elimination of millions of ghost and multiple accounts held by beneficiaries. The savings in liquefied petroleum gas (LPG) subsidy so generated, complemented by voluntary surrender of the subsidy by richer consumers following the ‘Give It Up’ call by the prime minister, has permitted the government to rapidly expand LPG distribution among below-poverty-line households in rural areas. Wages of workers under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme are now being paid into Aadhaar-seeded bank accounts, thus, curbing corruption. Employing labour to build private assets such as toilets and wells for the poor has further enhanced the efficiency of MGNREGA. Use of the socio-economic caste census to identify beneficiaries has resulted in better targeting in programmes such as ‘Housing for All’ in rural areas. Third, the Modi government has taken many specific initiatives to improve governance. Early in its term, it put an end to the paralysis in bureaucracy. The government went on to introduce self-certification of copies of certificated diplomas and degrees when submitting applications for jobs or other purposes. It also created a digital portal through which enterprises can self-certify compliance of many central labour laws. A concerted effort has been made to improve the ease of doing business at the level of the states. The government has repealed 1,175 redundant laws. It has replaced the Five-Year Plans by a Three-Year Action Agenda, seven-year strategy and 15-year vision. It also ended the distinction between Plan and non-Plan expenditures, merged the railway budget with the Union Budget, and advanced the date of the presentation of the Budget by a month to cut delays in the allocation of expenditures to ministries and states. Above all, a number of measures have been taken to curb corruption, with not a single case of highlevel corruption surfacing during the last three years under the current regime. Fourth, an effective programme of reforms has been launched with respect to public sector units (PSUs). After a pause of more than a decade, the Cabinet has approved the closure plans for nearly a dozen sick PSUs. The Cabinet has also approved a list of nearly 20 PSUs for strategic disinvestment on the recommendation of the Niti Aayog. The finance ministry is now looking for transaction advisers to complete these sales. Finally, a programme for listing currently unlisted PSUs is being actively pursued. This will open the door to strategic sales of many of these units. The government has taken decisive steps to tackle the problem of NPAs of banks head-on. Having passed a modern Insolvency and Bankruptcy Act, it has recently enacted an Ordinance empowering the Reserve Bank of India (RBI) to give direction to recalcitrant banks to take the necessary action to resolve their NPAs. The process of resolution of NPAs is now picking up momentum. Along with many other reforms by the Centre, states, too, have been introducing reforms in the state and concurrent list areas of the Constitution. No wonder the mood towards India as an investment destination is so upbeat. Cameron Wake Jersey