Electricity bills of industrial units likely to witness steep jump
Spot market power is set to become costlier as state-owned power distribution companies have proposed a hefty increase in levies imposed on openmarket consumers in their tariff petitions for the coming year. Distribution companies (discoms) have proposed raising multifold cross-subsidy surcharges, network usage charges and imposing additional surcharges that could increase electricity bills of large consumers by upto 40 per cent. Experts say imposing high charges on spot market purchases will hurt growth of industries, rendering them uncompetitive and hurt the government’s Make In India campaign. State power discoms of Odisha have recommended raising network-wheeling charges on commercial consumers in FY18 to Rs 2.26 per unit from Rs 0.63 per unit. The cross-subsidy charges for large industrial consumers are proposped to be raised from Rs 1.91per unit to Rs 3.61per unit. The tariffs for large consumers in the state purchasing electricity from spot market are likely to rise by over 40 per cent. Karnataka power distribution companies propose to increase energy charges, wheeling charges and cross-subsidy charges on open market power consumers by close to 22 per cent. Power utilities of Madhya Pradesh seek to introduce an additional surcharge of Rs 1.2 per unit on the power procured form other sources, making such purchases costlier by about 24 per cent. Delhi discoms have proposed raising cross-subsidy charges but decreasing additional surcharges on open-market electricity deals, leading to a net increase of 30-40 paise per unit. The power distribution companies of Daman and Diu have proposed 36 paise increase in cross-subsidy charges and 11 paise increase in wheeling charges leading to a 12 per cent raise in cost of spot market power purchase by industrial and commercial consumers. Most states including Punjab, Maharashtra, Rajasthan and West Bengal already levy charges called ‘open access charges’ on their industrial and commercial consumers to deter them from buying from spot markets, and protect their power distribution companies. Open access is a reform announced in the Electricity Act 2003 that refers to enabling buyers to choose source of electricity and giving them right on transmission and distribution system for transfer of power. Stateowned power distribution companies fear losing their high-paying industrial consumers to spot markets though such transactions constitute only 1 per cent of the country’s total power consumption. The Economic Survey of 2016 had recommended that Indian industries should be relieved of the burden of subsidising electricity supply for agricultural and domestic consumers and allowed to procure power from the open market. India Energy Exchange director (business development) Rajesh K Mediratta said that in the long run, it is imporant for states to let the industries survive. “At this stage, it is not good to discourage open access if the country wants to encourage domestic manufacturing.” Electricity prices for industries in India are the highest in world as states offer free power to agricultural consumers and subsidised power to residential units. Adrian Clayborn Jersey
India may meet its energy needs from moon by 2030
India may be able to meet all its energy requirements from resources on the moon by 2030, a scientist associated with the ISRO said on Saturday. Sivathanu Pillai, a distinguished professor at the Indian Space Research Organisation (ISRO), said here that India’s all energy requirements can be met through Helium-3 mined from the moon. “By 2030, this process target will be met,” Pillai said while delivering the valedictory address at the three-day ORF-Kalpana Chawla Space Policy Dialogue, organised by Observer Research Foundation. Pillai, a former chief of BrahMos Aerospace, said mining lunar dust, which is rich in Helium-3 is a priority programme for the ISRO. According to an ORF release, Pillai said other countries are also working on the project and there is enough helium on the moon, which can meet the energy requirements of the world. “In a few decades, people will be going to the moon for honey-moon,” Pillai quipped. Lt. Gen. P.M. Bali, Director General, Perspective Planning, Indian Army, said the launch of GSAT-7, India’s first dedicated military satellite, is a testimony to the country’s outlook towards using the outer space for national security. He noted that India possesses one of the largest constellations of communication and remote sensing satellites covering Asia Pacific. Lt. Gen. Bali said although India continues with a civilian orientation to its space programme, the changing regional and global realities require it to also develop military assets in space and on ground as an emerging regional and global power. He said there is a need for a dedicated military space programme with adequate resources at its disposal because of “the changing realities in our neighbourhood”. Joe Montana Womens Jersey
Subsidy extension unlikely for stranded and under-utilized gas-based power plants
The government is unlikely to extend the subsidy support scheme for stranded and under-utilised gas-based power stations. The scheme is due to end next month. The power ministry is of the view that a long-term solution should evolve for bailing out the 24,000 MW gas-based power stations languishing for want of fuel, sources in the know of the development said. Senior officials in the ministry of power declined to comment on the issue. Power companies have asked the government to extend the scheme for another two years. “We have been requesting to continue with this scheme as a short-term solution till a longterm solution can be evolved for making gas-based generation viable,” said Ashok Khuarana, director general at Association of Power Producers. “This present scheme helps stem interest accrual, thereby keeping capital cost under control. Non-extension of the scheme would result in continued accrual of interest, which may make it difficult to turn around the projects subsequently.” The power ministry held two rounds of imported gas auction starting from June 2015 to September 2015 and from October 2015 to May 2016. The bidders indicate the total incremental electricity they would generate using the e-bid regassified liquid natural gas (RLNG) as well as quote subsidy requirement. In the last round of auction held in March 2016, the bidders agreed to forego subsidy. Association of Power Producers has recommended continuation of the scheme to the ministry, arguing that it would be at zero cost for the government as subsidy determined in the third round was negative. The Union Cabinet in March 2015 approved the mechanism for importing gas for stranded and underutilised power plants, and supply of such electricity through a support. It was decided that to make gas affordable, states will forego taxes while gas transporters and import terminals will also offer discounts on charges for their services rendered to import LNG for this purpose. The Centre allocated `7,500 from the Power System Development Fund to support the scheme to help plants use 30-35% of their capacity and repay debt. The scheme was started in 2015-16 for stranded gasbased power plants and plants receiving inadequate domestic gas. The stranded plants were able to meet partial debt service obligations due to the scheme as they operated at low plant load factors of 30%-50%. However, of late, state distribution companies are averse to buying the gas-based generation as low cost power is available from renewable plants and spot markets. Steven Stamkos Authentic Jersey
Wind power installations may cross 5,000 MW this year
Sarvesh Kumark, Chairman of Indian Wind Turbine Manufacturers’ Association, is confident that wind power installations in India will cross the 5,000-MW-mark. The previous high was 3,472 MW of fresh capacity set up in 2015-16. The Association’s General Secretary, D V Giri, is a shade less optimistic. While 5,000 MW is not impossible, he says, upwards of 4,500 MW is certain. Year-end installations 5, 000 MW is a heady number — just two years back the sector struggled to achieve half of it. In the first ten months of the financial year, till January, the sector added 2,094 MW, which means close to 3 GW would need to be put up in just two months. However, a rush of activity towards the end of the year is not uncommon, as power producers hurry to finish the projects by March, so that they could avail themselves of the depreciation benefits and also be ready for the peak winds of summer. In 2015-16 installations of 3,472 MW, as much as 1,700 MW came in March alone. Further, the ‘generation-based incentive’ scheme, under which the government gives 50 paise a kWhr of electricity generated by wind turbines, expires this March. Year-end installations will therefore peak, as developers rush to meet the March deadline. This year, the highest installations are likely to come from Andhra Pradesh, around 2,500 MW, Sarvesh Kumar said. Gujarat (around 1,000 MW) and Karnataka (700 MW) were the bigger markets this year. Industry insiders feel that 2017-18 will be good too. One reason is that an additional demand for 1,000 MW will come from the ‘competitive bidding’ process that is under way, through which some developers will win mandates to sell wind power to the government-owned Solar Energy Corporation of India. At the end of January, India had 28,871 MW of wind capacity. It ranks fourth in the world after China (145,362 MW), US (74,470 MW) and Germany (44,947 MW). The government aims to see 60,000 MW by 2022. Hyun-Jin Ryu Womens Jersey
The historically low solar tariffs at Rewa
Solar energy has become the cheapest it has ever been in India, thanks to historically low tariffs achieved in the reverse auction bid for three units in the Rewa plant in Madhya Pradesh earlier this month. But what does this mean for the solar industry in India? What exactly happened? The two-day reverse auction bid for three 250 MW blocks in the Rewa solar plant in Madhya yielded a tariff of Rs 2.97 for each of the blocks and a levelised tariff of Rs 3.3 over the course of the 25-year power purchase agreement. The winners of each of the bids were Mahindra Renewables, ACME, and Solenberg Power. The Rewa plant is a joint venture of Solar Energy Corporation of India and Madhya Pradesh Urja Vikas Nigam (MPUVN). A reverse auction in such a scenario is basically a situation where companies bid for a unit by offering the lowest tariffs at which they will sell the energy generated from the unit. The lowest tariff wins the bid. How were such low rates achieved? Companies bidding for the Rewa units were able to commit to such low tariffs because of various factors, some to do with the industry, and others to do with the specific bid. The industry-related factors include the fact that solar energy producers in India have been able to greatly reduce their costs due to the import of cheap photovoltaic panels from China. In addition, in keeping with the government’s renewable energy push, especially its commitment to achieve 100 GW of solar energy by 2022, it has expedited the land acquisition process and has reduced excise duties on various components required to set up a solar plant. Specific to the Rewa bid, the Madhya Pradesh government implemented a few favourable and unique structures in the project power purchase agreements. For example, it included a state government guarantee for the contracted capacity by the utility as well as a compensation for deemed generation in case of non-availability of grid. These factors allowed the bidders to commit to lower tariffs than they would otherwise have been able to. What does this mean? While this does mean that solar energy will be cheaper, several industry experts have warned that, at such low tariffs, margins are also very slim. This could mean that even a slight increase in input prices—such as pricier imports from China—could push many of these projects into unprofitability. Jihad Ward Authentic Jersey
Government mulls 50 percent subsidy on solar powered cold storage facilities
To facilitate farmers store their horticulture produce for longer period, the Telangana government is considering provision of 50 % subsidy on ‘solar powered cold storage’ with the help of Central government assistance under MIDH (Mission for Integrated Development of Horticulture). According to officials, as part of its pilot project to help farmers store their horticulture produce including fruits and vegetables for selling it next day, the Horticulture Department has requested the Central government to allocate an amount of Rs 75.5 crore for 1000 units for the year 2017-18 under MIDH component special interventions in Post Harvest Management. Each unit will cost Rs 12 lakh. If the government assistance in the form of subsidy is available the burden will be reduced to half. “Mostly, small and marginal farmers cultivate horticulture crops in the State. But due to lack of facilities to store the produce and also to increase shelf life in different climatic conditions, about 30 percent of the produce is becoming stale each year. Because of this most of the farmers are not getting better prices, while on the other hand even the consumers failed to get fresh produce,” informed a high official of Horticulture Department. Telangana is the second largest producer of fruits and vegetables with 6.734 lakh hectares under different horticulture crops. The total production of horticulture crops is 81.65 lakh metric tonnes. Of this, fruits are grown in an area of 3.235 lakh hectares and vegetables on 1.718 lakh hectares with a yield of 41.97 lakh metric tonnes and 31.95 lakh metric tonnes respectively. The Solar power cold storage also called as ‘Portable Solar Micro Cold Room’ has been developed by a group of young IITians of Kharagpur under the brand name ‘Ecofrost’. The facility which is totally operated on solar energy has a storage capacity of 5 metric tonnes capacity. The official informed that the eco-friendly model has pre-cooler as well as cold storage components with a power back up of about 30 hours. Interestingly, it runs without any batteries and only with the help of solar panels. “What the IITians have developed is an innovation of its own in the entire Asia, state adopts it, we would be the first in availing this kind of technology for horticulture,” added the official. Agriculture Minister, Pocharam Srinivas who had recently launched the Portable Solar Micro Cold Room at Center of Excellence at Jeedimetla in Hyderabad, described this latest adoption of technology by some private firms in the State as a boon for the farmers. The Minister felt that the anxiety levels of farmers who fear rotting of their produce can now store it for longer period and avoid panic selling. Fozzy Whittaker Jersey
New projects coming on line to boost transmission utility Power Grid
Commissioning of a few big ticket projects this quarter is likely to improve the earnings visibility of India’s largest power transmission firm Power Grid Corporation (PGC). An increase in the capitalisation -with assets which were under expansion beginning to contribute to profits -boils down to higher profit through assured returns (that is linked to equity contribution towards total assets). PGC is entitled to 15.5% return on equity deployed in all nominated commissioned projects. This is called regulated equity. Higher regulated equity translates into higher earnings for the next year. In its recent analyst meet, senior officials said that PGC was targeting capitalisation of Rs 1.46 lakh crore (including Rs 28,000 crore in FY17) over the next four years. Similarly, its capital expenditure is expected to be Rs 1 lakh crore in the next four years. Due to a high capitalisation schedule, the company has high certainty of over 16% annualised earnings growth between FY16 and FY20. Due to a high capitalisation, net profit grew 20% to Rs 1,930 crore in the December quarter as revenues from ransmission business rose 21.6%. The company has given a guidance of Rs 22,500 crore and Rs 28,000 crore of capex and capitalisation, respectively, till March. In the first nine months of FY17, it has capitalised assets worth Rs 16,000 crore. This means nearly Rs 12,000 crore of assets will be capitalised in Q4. The company may meet its guidance as phase 1 of the Rs 6,500-crore ChampaKurukshetra High Voltage Direct Line is likely to commission in February 2017 and phase 2 of North East-Agra Line will start operations in Q4 of FY17. Since April 2016, PGC has commissioned projects worth Rs 20,700 crore and incurred capex of Rs 17,900 crore -maintaining capitalisation to capex ratio of more than one. Logan Thomas Authentic Jersey
Clean energy cess collections rise, but spending low
The government’s collections from the clean environment cess imposed on coal, lignite and peat in 2010 are likely to touch Rs 54,336 crore by March, according to a finance ministry document. However, only Rs 9,021 crore, or about 17% of the expected total, has been spent through the National Clean Energy Fund (NCEF) to which Rs 25,810 crore has been transferred from the amount collected. The spending falls short of the estimated Rs 34,811 crore needed to subsidise some 55 renewable energy projects, as recommended by an inter-ministerial group. Funds from the cess are routed through the NCEF to finance and promote clean energy initiatives and research & development. The inter-ministerial group decides how the money is to be used. According to a government statement, about Rs 9,021 crore has been spent through NCEF although Rs 17,500 crore has been allocated to various ministries over the years. About Rs 12,400 crore was allotted to the Ministry of New & Renewable Energy, while some Rs 3,500 crore has provided to the Ministry of Water Resources, River Development and Ganga Rejuvenation. The government introduced the clean energy cess in 2010 with a levy of Rs 50 on every tonne of coal sold. This was increased to Rs 100 per tonne in 201415, Rs 200 per tonne in 2015-16 and Rs 400 per tonne this financial year. The government collec ted Rs 12,600 crore from the cess in 2015-16 and is expected to garner Rs 26,148 crore in 2016-17. An industry executive said with renewable energy costs declining, there may no longer be a need for subsidy , known as viability gap funding, for such projects. The government had also planned to offer in centives to power distribution companies to purchase solar and wind energy . “However, a very small portion of the fund found its way into funding these projects. Now with tariffs for solar and wind power generation declining, the requirement of viability gap funding for these projects are losing relevance,” said the senior renewable energy industry executive. “The government, therefore, needs to develop suitable mechanisms to encourage discoms to buy renewable power and consider a mechanism for making timely payments,” he said. Procurement-based incentives can help bridge the difference between the cost of renewable power generation and average power purchase cost, said another executive. Josh Ferguson Authentic Jersey
Discontinuing tax relief under GST may hike solar tariff: Study
The solar sector could see tariffs rise by around 10 per cent if current tax exemptions are curtailed in the roll out of GST, a Council on Energy, Environment and Water (CEEW) study has said. Multiple GST (Goods and Services Tax) rates and their uncertain applicability to different equipment and services for solar projects are a growing concern for solar project developers and investors. GST could also impact the pace of the second phase of solar park development for additional 20,000 MW capacity announced in the recent Budget, it said in a statement. According to the statement, the key contributors to the increase in solar tariffs as a result of GST would include increase in operations and maintenance cost, panel cost, and financing cost. The increase in solar tariffs would also vary from state to state; higher for those such as Rajasthan where VAT and Entry Tax exemptions are currently provided for solar equipment, as opposed to Andhra Pradesh and Gujarat where VAT and Entry Tax exemptions are not provided, it said. The CEEW study also finds that GST will give a boost to the government’s ‘Make in India’ initiative, improving competitiveness of Indian manufacturers of solar cells, panels and modules; eliminate the cascading effect of the existing tax structure and introduce an input tax credit. Increased competitiveness of domestic solar manufacturers could create an additional 37.000 new jobs in the solar manufacturing sector by 2022, it said. Even as India celebrates record low solar tariffs, the CEEW study finds that GST could possibly push up capital cost of a solar project by Rs 45 lakh per megawatt if current tax exemptions were curtailed, setting back the sector in terms of cost competitiveness by about 18 months, it said. Solar project developers have approached the government with requests to ensure that the current tax exemptions applicable to the sector continue so as to not negatively impact the efforts to achieve grid parity. The government currently collects less than 0.1 per cent of its total indirect tax from the solar sector, it added Dr Arunabha Ghosh, CEO, CEEW, said, “If current tax exemptions are curtailed, the impact of the increase in solar tariffs could be partially offset by policy instruments, such as Accelerated Depreciation benefits or Viability Gap Funding for projects incurring increased capital investments.” The recent Budget has already benefited domestic solar manufacturers with the reduction of basic customs duty to nil for tempered glass used in the manufacture of solar cells, panels and modules and the reduction of countervailing duty from 12.5 per cent to 6 per cent for parts used in the manufacture of tempered glass which is used in solar PV cells, modules, etc, it said. Finance Minister Arun Jaitley announced last month that the GST may be implemented on July 1, 2017, it added. Brian Bellows Authentic Jersey
Getting the solar power goal on track
One brief sentence in finance minister Arun Jaitley’s Budget speech hints at a potentially transformative strategy to rev up solar energy pan-India. The proposal to feed about 7,000 railway stations with solar power could go a long way in meeting, if not exceeding, the national goal to have 100 GW of functional solar generation capacity by 2022. If the Railways can gainfully leverage land and building space for, say , 20 MW of solar capacity in each of the 7,000 stations, it would greatly increase green, renewable power nationally . The Railways would be in a win-win situation in switching over to solar power. Given that the Railways pay for power at the highest, commercial rates, sourcing solar power on-site would save money and the environment. There is widespread energy poverty and the lack of quality power in large parts of India, and concurrently our greenhouse gas emissions are large and rising fast. The way ahead is to speedily concretise forward-looking plans for solar power at rail stations, and focus on meeting lighting demand in adjoining areas too, so as to reap economies of scale. It would gel well with the ongoing plan to revamp and upgrade railway stations. And for the solar assets, there would be much potential for unlocking value and divestment, following listing on the stock market, and sooner rather than later. The way forward for the Railways is to proactively access funds from the Clean Environment Cess corpus, seek accelerated depreciation, generation-based incentives, etc, and explore other innovative financing options to actualise its solar power targets in a time-bound fashion. The Railways have a path-breaking opportunity to adopt solar power for lighting purposes and, in the process, handsomely boost its market capitalisation. The track is clear, all the way home. Caleb Benenoch Jersey