BSES dues to NTPC, units swell to over ₹2,200 crore
BSES, a joint venture between Delhi government and Anil Ambani’s Reliance Infrastructure, cumulatively owes NTPC and its joint-venture power-generation firms ?2,265.35 crore. Out of these dues, BSES owes NTPC’s JV company Aravali Power Company Ltd (APCPL) ?1,562 crore as penalty, interest and power off-take charge. NTPC owns 50 per cent stake in APCPL, and Haryana Power Generation Company Ltd (a Haryana government company) and Indraprastha Power Generation Company Ltd (a Delhi government company) own 25 per cent each. Reliance Infrastructure distributes power in Delhi through its two subsidiaries — BSES Yamuna Power Limited (BYPL) and BSES Rajdhani Power Limited (BRPL). According to the BSES website, BRPL supplies power to 21 lakh customers in South and West Delhi, while BYPL caters to 14 lakh customers in Central and East Delhi. BSES’s net dues to APCPL stood at ?961 crore before power supply was clipped in September 2016. The company has paid back only ?158 crore of these dues till date, according to officials in the know. However, the total payout for BSES to APCPL has grown to ?1562 crore with the levy of penalty and interest for non-payment. Those associated with the development told BusinessLine that APCPL stopped supplying power to BSES companies from September 2016 due to the swelling dues. As of March 31, 2016, BRPL owed ?528 crore; these dues swelled to ?754 crore by September 2016. Of the total dues, BRPL has paid back ?142 crore. BYPL owed ?266 crore as of March 31, 2016; these dues in the current year stood at ?173 crore. BYPL has paid ?16 crore of these dues till date. Of the other dues the BSES companies owe to NTPC, BRPL owes ?346.56 crore — this is inclusive of the monthly bill of ?170 crore for February 2017. BYPL owes ?357 crore — this amount too is inclusive of the ?80 crore to be paid for February 2017. Financial stress In an emailed statement, BSES said the company is under huge financial stress due to non-liquidation of regulatory assets, which are over ?16,000 crore as on March 31, 2016. It said: “As compared to this, total over-dues (including Late Payment Surcharge) payable by BSES discoms to NTPC and APCPL are ?444 crore and ?1,490 crore, respectively. BSES discoms are also making concerted efforts to address the situation and clear pending dues in a just and equitable manner.” The payment of dues to power utilities by BSES discoms is sub judice in the Supreme Court. “We are awaiting the Supreme Court judgement, which will clear the path for recovery/liquidation of regulatory assets,” it said. Jason Myers Authentic Jersey
New solar model to carry on harvesting
The final year automobile engineering students of Rajiv Gandhi Government Polytechnic here, have developed a low cost-lightweight, environment-friendly manually operated solar paddy harvester (MOSPH) suitable for small farmers. The model has been developed under the guidance of in-charge, head of department, D Devarasiddappa. “The entire power source is packed and placed inside a bag. The harvester can be operated easily with power source unit carried on shoulder,” Devarasiddappa said here. The added advantage of the system is that it can also be used for domestic lighting when not being used for harvesting, he said. The overall cost of the developed model is approximately Rs. 14000. Unlike conventional paddy harvesters that require fossil fuel, MOSPH utilizes abundantly available solar energy to produce the required electrical energy to operate the paddy harvester. The model would be displayed at National Innovation Talent Contest for Polytechnics (NITCP) at NITTTR, Kolkata which is being sponsored by Sir Dorabji Tata Trust, Mumbai. A team of four students would participate in the event. Paul Richardson Authentic Jersey
Power capacity addition slows in Gujarat
Subdued demand coupled with surplus electricity availability has slowed down the addition of new capacity for generating power from conventional sources of energy such as coal and gas. The installed electricity generation capacity of non-renewable energy sources in Gujarat grew by just 0.7% in 2015-16. The growth was 6.2% and 5.2% in 2013-14 and 2014-15 respectively. According to data from the Union power ministry data, Gujarat’s installed power generation capacity from non-renewable energy sources stood at 20,765.82 MW in 2015-16 as against 20,611.30 MW in 2014-15, an annual addition of 154.52 MW. Power sector experts attribute the sluggish demand of power coupled with surplus electricity generation to slower growth in addition of new capacity for conventional power. “The power sector across the country is passing through tough times. Demand for power has not grown in proportion with new capacity added in the last few years. As a result, capacity addition has slowed down noticeably,” said K K Bajaj, a city-based energy expert. Melvin Gordon Womens Jersey
Tangedco under pressure to buy power from private producers
Independent power producers (IPPs) in Tamil Nadu are pressurising the government to instruct Tangedco to evacuate power generated by them at Rs 5.50 per unit, which is much higher than the cost of electricity in power exchanges. Tangedco officials told TOI that IPPs were putting pressure through various ‘sources’ to evacuate power from them. But Tangedco has to go by the merit order released by TNERC on evacuating power, which says it has to utilize its potential fully before purchasing power from other sources. The utility also has to prefer cheapest sources to fulfil its needs. There is also pressure on the discom to import coal. The corporation has stopped import of coal to cut down costs and a section that was hugely benefitted from coal imports in the past is up against the corporation. “The total capacity of all IPPs within the state is around 4000MW. Most of them use coal as fuel. The maximum capacity per unit is 600MW. Power from these companies will be evacuated only when the demand exceeds 14000MW. Only during summer the demand crosses 15,000 MW,” a senior Tangedco official told TOI. As per the merit order issued by the TNERC, power at lower cost will come from Tangedco’s own units as it gets coal from Coal India Limited. “The cost at which we generate power comes to Rs 3. We will have to evacuate the entire capacity from our units and then look at other sources. Similarly, the cost is pretty cheap when we buy form Central units. Wind power between May and September costs less than Rs 4 per unit and nuclear power is available at Rs 4.50 per unit,” said the official. “We have invested several crores to set up our thermal units and we cannot keep the units in limbo. We are not pressurising Tangedco, but we are only asking Tangedco to evacuate power generated by us,” said MD of an IPP. Tangedco sources said the utility was all set to break even this year because of not purchasing power from IPPs. Except for the total outstanding debt, the Tangedco’s financials have been looking better in the last few years. “After a record loss of Rs 13,985.03 crore in 2013-14, the loss came down to Rs 5,000 crore in 2015-16. This year we have saved Rs 2,000 crore owing to stopping coal import,” the official said. Carl Soderberg Womens Jersey
Greece plans trading exchange to help reform power market
Greece plans to launch a power trading exchange next year to reform its electricity market in line with European plans for an interconnected energy grid which will help cut costs and improve energy security, it said on Tuesday. Greece’s wholesale electricity market is currently based on a mandatory pool system. Power producers may enter into bilateral contracts but those are constrained within the pool. The trading exchange would help boost competition, secure transparency in power sales and eventually lower prices for households and businesses, Energy Minister George Stathakis told a news conference. “We are hopeful that the transition to the new model will take place… in mid-2018,” he said. Greece and the European Commission have been preparing a study, expected to be ready by the end of the year, on how the new market will operate, he said. The country’s market operator (LAGIE) and the Athens Stock Exchange agreed last week to jointly help set up the exchange, which will be based on a day-ahead, an intraday, a forward and a balancing market. Initially, they plan to set up a clearing house. Chief Executive Officer at LAGIE, Michael Philippou, said the aim was also to boost liquidity for businesses which would be siphoned into investments. Under its bailout with euro zone lenders and the International Monetary Fund signed in 2015, Greece has agreed to open up its electricity market. Last year it launched power auctions to help cut the dominance of state-controlled power utility Public Power Corp. (PPC), which controls about 90 percent of the country’s retail market. The effectiveness of the measure has been a sticking point in drawn-out negotiations between Greece and its creditors for the conclusion of a bailout review, which is crucial for new funding for the cash-strapped nation. Rashard Robinson Authentic Jersey
Solar tariff crashes below grid power cost
Solar power tariff is likely to come down closer to the cost of conventional power sources due to technological advancement and increase efficiency. Recently, Rewa Ultra Mega Solar Ltd (RUMSL) has bid a record low tariff of Rs 3.3/kwh — levelised over power purchase agreement PPA period of 25 years — for a 750 MW plant through a reverse-auction. Solar power prices have been coming down over the years from `6.5 per kilowatt hour (kwh) or a unit in 2014 to Rs 5/kwh in 2016. As against this, the average feed-in tariff for wind energy and competitively bid thermal tariff (in the last 24 months) remains at `4.8/kwh and `4-5/kwh respectively. According to ICRA, solar photovoltaic (PV) projects are also more attractive with their relatively shorter construction periods within the renewable energy segment, while conventional thermal projects face much higher execution risks because of the possible delays in acquiring land and statutory clearances. However, this competitiveness was predicated on the state government’s guarantee for the contracted capacity by power utility in the Madhya Pradesh and provision for providing compensation for the deemed generation in case of non-availability of grid which in turn provide a mitigation against counter-party credit risk and the risk of grid back down to a large extent, respectively. This coupled with a 30 per cent drop in the solar photovoltaic module price level and scale benefits arising from location in a solar park with relatively lower execution risk profile favour project developers. Private developers will have to depend on timely long tenure debt (up to 18-20 year after the project completion date) at cost-competitive rates as well as their ability to keep the cost of PV modules within the budgeted levels to achieve the Rs 3.3/kwh and improve the plant load factor level, says ICRA. Gustav Forsling Authentic Jersey
Petronas considers $1 billion stake sale in offshore gas project
Malaysian state-owned oil and gas firm Petronas is aiming to sell a large minority stake in a prized upstream local gas project for up to $1 billion as it seeks to raise cash and cut development costs, two sources familiar with the matter said. Petroliam Nasional Bhd (Petronas) is looking to sell a stake of as much as 49 percent in the SK316 offshore gas block in Malaysia`s Sarawak state, the sources told Reuters, a move that would be among its first major recent sales as it grapples with oil prices that have slumped by half over two-and-a-half years. That slide has squeezed the cash flows of Petronas, hurt its earnings and forced it a year ago to announce a 50 billion ringgit ($11.2 billion) cut in capital expenditure over four years. Petronas, which accounts for a third of Malaysia`s oil and gas revenue, has also cut its dividend. Sources had told Reuters in September it is considering selling its majority stake in a $27 billion Canadian liquefied natural gas (LNG) plant, although the company denied it. It is now working with an investment bank on the SK316 gas block stake sale and kicked off the process this month, one of the sources said. Petronas did not respond to a request for comment. Petronas is currently gauging interest from potential buyers, said the sources, who declined to be identified as they were not authorised to speak about the matter. Gas from the NC3 field in the SK316 block feeds Malaysia`s LNG export project, known as LNG 9, Petronas` joint venture with JX Nippon Oil & Energy Corp that started commercial production in January. The sources said the stake is expected to include a combination of the producing NC3 gas field, the potential development of the Kasawari field in the same block and other exploration acreage in the block. The funds raised could contribute to the future development of the Kasawari field, one of the largest non-associated gas fields in Malaysia, which has an estimated recoverable hydrocarbon resource of about three trillion standard cubic feet. Petronas put on hold plans to develop the field in 2015 after oil and gas prices fell, according to media reports. Prasanth Kakaraparthi, senior upstream research analyst at consultancy Wood Mackenzie said overall capital expenditure for the 316 block is estimated at around $4 billion, of which the upcoming phase of development accounts for nearly 50 to 60 percent. “Given that the second phase of development will involve a significant amount of capital commitment, it`s not completely out of the question to think that they might want to bring in some partners to sort of share some of that burden,” he said. The stake could appeal to firms such as Indonesia`s state-owned Pertamina, Thailand`s PTT Exploration and Production PCL and some Japanese companies, the sources said. They said it might also appeal to the Kuwait Foreign Petroleum Exploration Company, which snapped up Royal Dutch Shell`s stake in Thailand`s Bongkot gas field for $900 million last month. A PTTEP official said the company is keen to invest in Southeast Asia but did not specify if it will invest in the SK316 block. Pertamina did not immediately provide a comment. As huge production comes online in Australia and the United States, LNG markets are oversupplied, resulting in an almost 70 percent slump in Asian spot LNG prices since 2014. Despite this, Malaysia’s LNG assets are viewed as attractive thanks to comparatively low production costs and due to their proximity to North Asia`s big consumption hubs of Japan, China, and South Korea. Mark Barberio Womens Jersey
No such thing as a perfect renewable energy contract
India’s 175 GW renewable energy (RE) targets by 2022 are ambitious, to say the least. Compared to RE targets in Europe, China, or California that require 4-5% growth in RE capacity annually, Indian targets require 25% growth. This translates to enormous capital investment (well over $100 billion), including from global investors. RE investors used to complain that dealing with India was like dealing with 30 countries; each state had its own norms. The model bidding document across states took care of that complaint. This is now being supplemented by model power purchase agreements (PPAs), drafts of which have been circulated to stakeholders. While this is a positive step, it ignores a fundamental challenge: A “perfect” contract is only on paper. What happens when things don’t go as planned? RE is overwhelmingly in the hands of the private sector. Even the Solar Energy Corporation of India Ltd (Seci), NTPC Ltd, and other quasi-governmental RE programmes involve private developers. While all power producers face counter-party (off-taker) risk, i.e., risks from struggling state utilities (distribution companies, or discoms), this challenge is particularly acute for RE, which is volatile and expensive for discoms in the short term, at least on a cash basis. What happens when utilities don’t buy the power as they promised, despite a PPA? Or, worse, take the power but don’t pay? If states don’t offtake power, can developers easily sell this power to third parties? Due to scheduling and grid reasons, this is neither automatic nor easy. Worse, the prices available may be lower than contracted in the PPA, especially considering the low power exchange (spot) prices in the last few years. Yet, one doesn’t often hear of developers declaring defaulters, because doing so effectively severs the relationship, leaving few alternatives for the power projects. It also has a negative impact on investor sentiment. Instead, projects muddle along, else risk becoming political or murky, potentially attracting palm-greasing. What violates a contract? RE contracts, like most contracts, have fine print. Even the upcoming model contracts have conditions under which a utility may refuse to offtake power, ostensibly under grid security norms. Even if required, all such backing down must be transparent, and ideally declared by an independent system operator (ISO). The affected party should not be the one unilaterally determining when a force majeure (unexpected events that prevent the fulfilment of a contract) equivalent clause applies. Otherwise, we risk a charade similar to how airlines get to absolve themselves of any delays under the guise of “weather”. The risks of not buying will only increase as RE grows from today’s approximately 6% of power consumed to over 10% in just a few years. Even if the price premium comes down, the operational impacts are non-trivial—RE often helps with energy requirements but not power capacity requirements, since India’s peak power demand is mostly in the evening. Just like Open Access (retail choice) was mandated under the Electricity Act, 2003 but overtly and covertly resisted by utilities (also often under grid security claims), who feared losing their paying customers and disliked the operational and planning headaches, such a “go slow” mentality towards RE by states represents one of the largest risks for scaling up RE. Transparency is the first requirement When one doesn’t trust the buyer (or seller), a common mechanism has been the use of escrow accounts. For RE projects, pooled mechanisms such as the Payment Security Mechanism envisaged by Seci—the special purpose vehicle for buying and bundling RE across projects—have limits on the power capacity they can cover. Any amount could, in theory, be covered, but at a cost, which today is being borne by the Central government. Even with an escrow, if drawn down, how is this to be replenished or prevented from becoming a moral hazard? Instead of focusing on risk management, why not improve risk avoidance? The Clean Energy Finance Forum has suggested improved transparency for utilities as a key need, especially related to RE purchases. In fact, we don’t even have consistent, granular and timely data on RE production. For starters, stakeholders, especially developers, need to know quanta of backing down, along with a reason (if declared). Importantly, we need to have transparent data on payments made to RE (and all) power projects. Delays cannot be swept under the rug, masking under-performing assets that will also never be declared non-performing. The ultimate need for RE and other infrastructure is “patient capital”, which is low-interest-rate funding seeking modest yields over time, like a home rental, instead of capital willing to take on higher risks but expecting higher returns, like an equity developer interested in asset appreciation or resale. Patient capital is held by sovereign, pension and insurance funds, which seek governance, predictability, and then returns. The sooner we recognize that improved contracts are necessary but not sufficient, the sooner we can tackle risks not addressed by the contracts, either because they are outside the scope of the contract, or because the contracts only cover the risks in theory but not in practice. Chris Chelios Womens Jersey
Non-renewable power capacity addition slows down
Subdued demand coupled with surplus electricity availability has slowed down the addition of new capacity for generating power from conventional sources of energy such as coal and gas. The installed electricity generation capacity of non-renewable energy sources in Gujarat grew by just 0.7% in 2015-16. The growth was 6.2% and 5.2% in 2013-14 and 2014-15 respectively. According to data from the Union power ministry data, Gujarat’s installed power generation capacity from non-renewable energy sources stood at 20,765.82 MW in 2015-16 as against 20,611.30 MW in 2014-15, an annual addition of 154.52 MW. Power sector experts attribute the sluggish demand of power coupled with surplus electricity generation to slower growth in addition of new capacity for conventional power. “The power sector across the country is passing through tough times. Demand for power has not grown in proportion with new capacity added in the last few years. As a result, capacity addition has slowed down noticeably,” said K K Bajaj, a city-based energy expert. Industries and agriculture are among the major consumers of power in state. “If the manufacturing sector grows, demand for power picks up. However, reduced manufacturing activities has affected electricity demand. Gujarat ends up with around 1,500-2,000 MW of surplus power every day,” said a source who is closely monitoring the power scenario in the state. “Considering the current demand-supply situation, no new capacity is being planned and work on power projects already taken up is currently going on,” the source added. According to experts, increased usage of power efficient equipment in industries, agriculture and homes has also contributed to the rationalization of electricity consumption. “On the other hand, power from renewable energy sources, especially solar, is giving tough competition to conventional energy,” added Bajaj. Sluggish demand has prompted power generators to divert surplus power to the open market, which has further resulted in easing of power tariffs in the market. Matt Dumba Jersey
Capacity utilisation at coal-fired power plants touches 60 per cent
Capacity utilisation of coal-fired power plants has risen to 60.5 per cent in December from a low of 52 per cent in August, a significant growth after years of decline, official data shows Plants owned by states saw capacity utilisation jump almost 18.5 per cent during the same period in 2016 against a small 5.7 per cent growth in the corresponding previous period, data from the Central Electricity Authority showed. Analysts say power plants may find it difficult to repay debts if capacity utilisation falls below 60 per cent. Thermal capacity utilisation had fallen earlier in the year as good monsoon rainfall reduced agricultural demand and increased hydroelectric supply. “Hydel power is way cheaper than thermal power and distribution companies prefer hydel power since it reduces their costs,” said Rajesh K Mediratta, director-business development at Indian Energy Exchange. Spot prices had fallen to about Rs 2 per unit, he said. Santosh Kamath, partner at KPMG in India, said higher hydel generation hits power plants of states because they charge higher tariffs than central sector supply. “This monsoon, distribution companies bought more hydel power and drastically reduced state sector power intake. As monsoons ended, they restored their purchase from the state sector leading to the 18.5 per cent growth,” he said. “Nevertheless, a 60.5 per cent capacity utilisation for coal-fired plants may be comfortable in developed countries but it may not be so in India specially with plants that do not have longterm supply agreement with consumers,” he said. Howie Long Jersey