ADB to provide $800m loan for LNG-based power plant
The Asian Development Bank (ADB) has assured the official agency concerned of providing nearly US$800 million loan to it for setting up an 800-megawatt (MW) LNG-based power plant in Khulna, officials said Monday. Power Division officials said they held a meeting with the ADB Mission last week where the lender had assured them of the loan for the power plant project. A Consultation Mission from the ADB met the Power Division, Economic Relations Division (ERD) and other relevant agencies during its more than a week-long visit to Dhaka, they said. The North-West Power Generation Company Limited (NWPGCL) has taken the project to set up the power plant, to be run by liquefied natural gas (LNG). It will have dual-fuel provision so that the plant could also be operated by oil during any crisis of gas supply. A senior Power Division official said the power plant would cost nearly US$1.0 billion where the government’s contribution is expected to be $200 million. Bangladesh is heavily dependent on its limited natural gas for generating power over the years. Since gas is depleting fast against the backdrop of its growing demand every year, the government has decided to set up power plants based on imported LNG, coal and oil. “As part of the government policy, the NWPGCL has taken the power generation project in Khulna. The LNG to the proposed power plant is expected to be supplied from India,” said the Division official. He said the LNG will be imported through a pipeline from Digha in Kolkata. According to the NWPGCL, the LNG will be imported from India through a cross-border pipeline. To ensure uninterrupted fuel supply to the combined cycle power plant (CCPP), an 80-kilometre (km) gas transmission pipeline will be built under the project within the territory of Bangladesh. The project also includes construction of a 230 kilovolt (kV) switchyard at the CCPP site and a 30km high-capacity 230 kV and double-circuit transmission lines to deliver the generated power into the national power grid. Gas supply infrastructure within the territory of India will be constructed by H-Energy Private Limited and will not be a part of the project financed by the ADB, officials said. The Power Division official said once the fund is confirmed within the shortest possible time, the power plant will be set up by 2019. A high official of the ERD said they had a wrap-up meeting with the ADB mission Sunday last. Under the South Asia Sub-regional Economic Cooperation (SASEC) initiative, the Manila-based lender is expected to provide the fund, he said. “We expect the fund for the project to be confirmed within October this year,” he added. Detroit Lions Authentic Jersey
Solar tariffs to rise 10% if tax exemptions curtailed in GST roll out: CEEW
India’s emerging solar sector could see tariffs rise by nearly 10% if current tax exemptions were curtailed in the roll out of the Goods and Services Tax (GST), a study released by the Council on Energy, Environment and Water (CEEW) said. Multiple GST rates and their uncertain applicability to different equipment and services for solar projects is a growing concern from 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. CEEW study finds that GST could increase capital cost of a solar project by Rs 4.5 million per megawatt if current tax exemptions were curtailed, setting back the sector in terms of cost competitiveness by about 18 months. The key contributors to the increase in solar tariffs, as a result of GST, would include increase in operations and maintenance cost, panel costs, and financing costs. The increase in solar tariffs would also vary across states; higher for states 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. CEEW said 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. 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% of its total indirect tax collection from the solar sector. “With annual solar power capacity addition expected to be more than 12 GW in 2017-18, it is vital that major hurdles for deployment, such as the potential impact of GST on the sector, be ironed out as early as possible. GST offers many long term benefits, but the Ministry of New and Renewable Energy (MNRE), Solar Energy Corporation of India Limited (SECI) and other related agencies must provide clear guidelines regarding the applicable GST slab for upcoming solar power projects and introduce government mechanisms to offset the short term negative impacts of GST,” CEEW CEO Arunabha Ghosh 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, Ghosh said. The recent Budget propsoes to benefit 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% to 6% for parts used in the manufacture of tempered glass which is used in solar PV cells, modules, etc. Finance Minister Arun Jaitley announced last month that the GST may be implemented on 1 July 2017. Cordrea Tankersley Jersey
Message from Madhya Pradesh: Solar power is here to stay
The solar revolution in India marches on, with renewed momentum, if the recently concluded reverse bidding auction for a 750 MW Solar Park in Madhya Pradesh is any indication. While the rest of the world watched in disbelief, Mahindra Renewables Pvt. Ltd., Acme Solar Holdings Pvt. Ltd. and Sweden’s Solenergi Power Pvt. Ltd. successfully bid Rs 2.979/kWh, Rs 2.97/kWh and Rs 2.974/kWh to build 250MW plants each. These bids are the lowest in the history of solar tariffs in India. These bids are the lowest in the history of solar tariffs in India. The previous lowest bid was Rs 4.34/ kWh for a 70 MW unit in Rajasthan. A variety of reasons led to this unprecedented crash in solar tariffs, from reduced cost of photovoltaic (PV) modules to risk mitigation for developers and intricate financial planning. Chinese module manufacturers dropped module prices to less than Rs 20 per watt (30 cents) because of oversupply in the market. Reports say that manufacturers are selling below cost. With major manufacturers already having preferential rates for the Indian market, it is unlikely that module prices will go up significantly in India even after the glut clears out. Assuring developers of risk mitigation in terms of electricity offtake, by Rewa Ultra Mega Power Limited (a joint venture of Solar Energy Corporation of India Limited and Madhya Pradesh Urja Vikas Nigam Limited), also contributed to the drop. This risk mitigation aspect allows developers to access finance at lower costs and reduce their expectations on returns by a few percentage points as long as the project proves to be sustainable and financially viable. There is a clause which allows for a 5 paisa escalation per unit in this project for the next 15 years. The successful bidders must have taken this into consideration. The resultant levelised tariff over the lifetime of plants (approximately 28 years), with degradation, works out to around Rs 3.32/kWh. The remarkably low tariffs discovered in this auction will have far-reaching implications for the country’s solar landscape. With both international and domestic investors looking at India as a serious place to set up solar businesses, the 100 GW target is no longer being brushed aside as over-ambitious and unrealistic. The result is that developers are competing and bidding aggressively, with lower margins, to get their foot in the door in states with high solar potential. Grid parity of solar with conventional fossil fuel sources, such as coal, is no longer a distant dream and shatters most myths associated with the high cost of renewables. The model of price escalation aligns with increasing coal prices in the recent past. Large-scale solar is now in a strong position to compete with any other source of electricity in India, which is extremely encouraging for the National Democratic Alliance’s plans to promote solar both in India and in the International Solar Alliance proposed by Prime Minister Narendra Modi in 2015 and launched the same year at COP-22 in Paris. Domestic and international financial institutions will now have more confidence in lending to the Indian utility-scale solar market. Now that offtake risks are reduced because of joint ventures between state and central agencies, lower interest rates with longer tenures and lower hedging of currencies will be observed in the coming years. Engineering, Procurement and Construction (EPC) contractors will be under pressure because developers and investors will reduce costs in this aspect by either further reducing their margins or vertically integrating themselves to perform such tasks on their own. This is going to put intense pressure on EPCs to finish projects quickly whilst adhering to quality standards. Instead of taking a month to install 10 MW as was the norm two years ago, EPCs will have to finish 250 MW in less than six months to gain more contracts in one financial year and survive. Domestic manufacturers of PV modules will feel more threatened than earlier because of the tremendous rate cuts in imported modules. They are likely to seek further protection through subsidies from the government. However, considering the fact that India is already in troubled waters with the US in the World Trade Organisation (WTO) on the Domestic Content Requirement (DCR) clause for solar, it is unlikely that more measures will be taken by the government to carve out niche spaces beyond solar rooftop projects for domestic manufacturers. Overall, these record low prices in Madhya Pradesh will usher in an era which will be dominated by solar headlines at every auction henceforth. If these trends of oversupply of modules, access to low cost finance, highly effective and efficient EPCs and support and encouragement from both state and central governments spread to other states, then prices might fall even further in India. Solar power is here to stay and make significant contributions to the country’s energy mix at extremely competitive rates. The solar market is wide open for both domestic and international investors and the time is ripe for innovations in both technology and finance. Orlando Brown Jr. Jersey
New set of guidelines for power infra upkeep
Declaring February and March as months of preventive maintenance, power discom DHBVN has directed the staff to undertake a widespread maintenance work across Gurugram circle for the next one and a half month till the infrastructure is moped clean of impurities and prepped up before peak load in summers begin. Though timely and sporadic maintenance works is normal for the DHBVN but this time, sources said, the order has come directly from the head office in Hisar. The drive comes on the heels of criticism discom faced following a spate of outage instances in the recent time that plunged the city into bouts of darkness, reaping embarrassment for the discom for failing to check power cuts. Sources informed TOI that the discom has laid down proper guidelines on how to eliminate weed, replace conductors and inspect high and low tension lines etc. “To ensure uninterrupted supply to the consumers during summer and improve the quality of maintenance of infrastructure i.e 33kV substation, HT, LT lines and distribution transformers shall be carried out accordingly,” reads the order copy. “The activity will be carried out during February and March, since these months have been declared as months of preventive maintenance.” As part of the guidelines, all 33kV substations across Gurgaon will be thermo-scanned, de-weeded and inspected to improve their efficiency. “The maintenance work is likely to reduce power cuts by 75%,” said RK Batra, director (operations), DHBVN. Bryan Anger Womens Jersey
Fresh power capacity from clean sources only after 2023-24
New capacity additions could all come from renewable sources like solar, wind and hydro power, but that is only after 2023-24, subject to cost competitiveness and the grid’s ability to handle clean energy, says a TERI report. According to the Energy and Resources Institute report released by Power Minister Piyush Goyal, new power generation capacity could be all renewables beyond 2023-24, based on cost competitiveness as well as the ability of the grid to absorb such a large amount of renewable energy together with battery-based balancing power. The report indicates that the current installed capacity and the one coming up will be able to meet demand till about 2026, keeping India power sufficient. It estimates that no new investments are likely to be made in coal-based power generation in the years prior to that. Speaking on occasion, Goyal in a statement said: “Universal access to electricity is one of the primary aims of the government, and meeting demand is a major facet of this initiative.” He further said, “We see India becoming the energy capital of the world. India is also committed to lowering the emission intensity of its development in line with our intended nationally-determined contributions (INDCs) towards the Paris agreement. We are looking at several initiatives towards making solar energy price competitive to coal.” TERI’s demand scenario analysis suggests that there will be no new coal-based capacity investment that will be approved till about years prior to that. Between 2014 and 2024 — the 10-year window — if the price of solar and battery reaches the Rs 5 per unit mark, all new capacity additions will be in renewables, it added. The study indicates that the electricity demand is likely to increase from 1,115 BU (billion units) in 2015-16 to 1,692 BU in 2022, 2,509 BU in 2027 and 3,175 BU in 2030. Andrus Peat Authentic Jersey
MNRE secretary says govt planning to compensate solar cos in case of back-down
The Ministry of New and Renewable Energy (MNRE) is working on a set of guidelines to provide compensation to solar power generators in case they are asked to back-down capacity by distribution companies. Talking on the sidelines of an industry event, MNRE secretary Rajeev Kapoor said the government is in the process of finalising guidelines on the solar power manufacturing and bidding and it includes a clause to compensate solar power companies. While he did not give details or the quantum of the compensation, he said the document should be finalised in a week’s time. Power distribution companies have often been blamed for arbitrarily cutting off solar and wind power or asking the power generators to back-down capacities which not only hurt the project developers but also investors. Backing-down usually happens when the power distribution companies have an option of buying cheaper power from some other sources. It can also happen if there is no proper evacuation or transmission infrastructure or if the grid does not have the power to buy more power. Also, poor financial health of power distribution companies leads to such situations. He added that while there is no provision of compensating wind power generation companies but the government is mulling a clause to compensate such companies as well. Clyde Drexler Womens Jersey
Allow PSUs to sell power on exchanges sans States’ nod: Piyush Goyal
Power Minister Piyush Goyal on Monday called for the “immediate” implementation of a policy allowing public sector power generators like NTPC to sell surplus power on exchanges without waiting for permission from the State governments. “Can we have the policy implemented immediately, that if the State does not say ‘no’, then even NTPC should be allowed to sell surplus power on the exchange,” Mr. Goyal asked officials of his Ministry gathered for the Indian Power Stations Conference 2017 organised by NTPC. “That way, unless the State expressly objects, you have an automatic approval to sell the power.” The Power Minister said that he doesn’t expect States to object to the policy because it would only benefit them by reducing the costs and losses to the States. He further asked his Ministry officials to speak to the State government representatives as soon as possible and get the policy in place soon. “And with enough power on the exchange, should the States feel a need, then they can buy power from the exchange, it’s not a big deal,” Mr. Goyal said. “But more often than not, they will save money.” Mr. Goyal said that the decision to implement such a policy was made during the monsoon of last year. “And if it has taken five months to go ahead with it, then I am not happy,” he added. “The speed of decision making is the essence of good governance.” Plant renovation Mr. Goyal also said that NTPC should not incur any more expenditure on the renovation of power plants older than 25 years. He said that he had already asked NTPC to replace 11,000 MW worth of plant capacity that is older than 25 years. Mr. Goyal added that companies will incur only a nominal increase in their capital expenditure if they replace old plants with new ones with modern technology. “Power companies will not incur more than ?4,000 crore per megawatt if they replace old plants,” he said. Justin Schultz Jersey
By 2026 India’s power demand would be met: TERI
Current installed capacity and the capacity under construction would be able to meet India’s power demand till about 2026 and no new investments are likely to be made in coal-based power generation till that time, said a report released by The Energy and Resources Institute (TERI) on Monday. The report also estimates that beyond 2023-24, new power generation capacity could be all renewables, based on cost competitiveness of renewables as well as the ability of the grid to absorb large amounts of renewable energy together with battery-based balancing power. The report titled, ‘Transitions in the Indian Energy Sector – Macro Level Analysis of Demand and Supply Side Options’ was released by Piyush Goyal, minister for power, coal, new and renewable energy and mines, at a conference organised by TERI. TERI is a Delhi-based think tank working on environment and energy issues. “Universal access to electricity is one of the primary aims of the government, and meeting demand is a major facet of this initiative. We see India becoming the energy capital of the world. We are looking at several initiatives towards making solar energy price competitive to coal,” said Goyal, while speaking at the conference. The report also said that between 2014 and 2024, India has a 10-year window and during this if the price of solar and battery reaches the Rs5/unit mark, all new capacity additions would be in renewables. TERI director general Ajay Mathur, who was present on the occasion, said “the target to achieve the UNFCCC (United Nations Framework Convention on Climate Change) commitments presents tremendous opportunity to put India at the forefront of economies transitioning towards low carbon growth”. “This includes improving electricity access, clean technology development, manufacturing, and job creation. Our report shows that the cost of renewable electricity and its storage is on a steady decline and could stabilise at around Rs5 per KWh. This would enable India to move decisively towards renewables for future generation. What this means is that India has a 10-year window where no new investments are likely to be done in coal, gas, or nuclear energy generation,” Mathur said. “The decarbonisation of power generation is also an opportunity to move other carbon-based sectors like transport to electricity, thus multiplying the benefits of clean energy generation,” he added. India has an ambitious target of 175,000 MW of renewable power by 2022 including 100,000 MW of solar power. Doug Gilmour Womens Jersey
ODHISA:POWER TARIFF MAY SOAR TO RS 6.80 PER UNIT
The Odisha Electricity Consumers’ Association on Monday apprehended that domestic consumers would have to pay Rs 6.80 per unit against the existing tariff of Rs 4.80 this year due to the inefficiency of the State Government and the Odisha Electricity Regulatory Commission (OERC). “If we examine the power tariff hike proposals of the power distribution, generation and transmission companies submitted to the OERC, there may be a hike of Rs 6.80 per unit from this year. However, we strongly opposed it at the ongoing public hearing being held by the OERC,” said association president Ramesh Satpathy. He said the power distribution companies have been demanding before the OERC that nearly 65 lakh customers have used 24,550 units in 2016-17 and the demand would increase to 25,877 units in 2017-18. “However, only 50 per cent of the estimated power reaches the people due to the mismanagement and inefficiency of the State Government,” rued Satpathy. Holding the State Government solely responsible for the present power crisis and possible power tariff hike, Satpathy said though Odisha Hydro Power Corporation (OHPC) was formed 20 years ago to generate more power by renovating Burla, Chipilima, Balimela, Rengali, Upperkolab, Upper Indravati and Macchakunda projects, but the corporation is yet to have a CMD to look into the daily affairs. He said this year OHPC has generated mere 5,800 million units against the 7,000 million units earlier. The OHPC currently places its electricity generation costs at Rs 1.82 per unit. However, it is supplying electricity at 83 paisa per unit. OPGC also batted for a tariff hike to Rs 2.2 from existing tariffs of Rs 1.9. Gridco has sought 46 per cent tariff hike. Projecting a revenue deficit of Rs 3214.39 crore at the existing bulk supply price (BSP) of power, the Grid Corporation of Odisha Limited (Gridco) has demanded 46 per cent hike in the BSP for 2017-18. Montae Nicholson Jersey
How BHEL stands to gain from the power ministry’s new equipment advisory
There appear to be sunny days ahead for India’s largest power equipment manufacturer Bharat Heavy Electricals Ltd (BHEL) which has been struggling with a broader slowdown in new orders for long. The power ministry has just extended an existing advisory that mandates state-run generators to insist on phased domestic manufacturing plan from supercritical equipment suppliers. Experts say the new guideline on indigenous manufacturing of supercritical equipment that also includes doing away with the Deed of Joint Undertaking (DJU) in case certain conditions are met is a major positive for the domestic Boiler-Turbine-Generator (BTG) manufacturers. “This advisory will have a trickle down benefit on the profitability of BTG manufacturers with a lag of around 1.5-2.5 years as the order execution cycle for BHEL is 36-48 months,” Vivek Jain, Associate Director at research firm India Ratings told ETEnergyWorld. The Cental Electricity Authority (CEA), the power ministry’s technical planning wing, has extended the earlier advisory for three years through October 2018. The advisory is applicable only to central and state utilities and the private sector firms are free to choose from the BTG suppliers. Analysts say the private sector’s participation will remain muted since they have been hit the most owing to muted demand and lack of Power Purchase Agreements (PPAs). Not surprisingly, the Plant Load Factor (PLF) of private sector coal-based plants has slumped to 56.3 per cent in the nine months ended December 2016 from 83.9 per cent in 2009-10. Therefore at a time when bulk of the fresh capacity orders will come from the central and state utilities, such an extension in the timelines is positive for BTG manufacturers, experts say. The benefit does not end here. The CEA advisory also stipulates the BTG manufacturers will not have to furnish a Declaration of Joint Undertaking (DJU) if they meet three conditions — eight supercritical boilers manufactured or supplied in India by the company have achieved commercial operation; four such boilers should have achieved commercial operation for a duration of at-least one year; and performance guarantee tests have been successfully completed by any two boilers. Under the DJU clause, the domestic manufacturer has to furnish a guarantee from one of its collaborators, generally a large international technology company. In order to provide guarantees, collaborators take a higher share of the orders, impacting the gross margins of BTG manufacturers. As of October 2016, BHEL commissioned 12 sets of supercritical boilers and 10 sets of supercritical turbine generators. BHEL’s gross margins have historically been stable due to the company’s indigenization efforts but declined to 36.6 per cent in April-December period current fiscal from 37.7 per cent in the corresponding period previous fiscal on account of higher share of contracts executed under DJU clause as the order book shifted towards supercritical projects. “The order book of BHEL now has supercritical set contracts with DJU clauses and thus the gross margin expansion is some time away. The execution of the new projects without DJU clause will begin to reflect in the gross margins only once BHEL wins new projects,” Jain said. Other experts were cautiously optimistic about the impact of the new guidelines. According to Sabyasachi Majumdar, Senior Vice President at ratings agency ICRA, the CEA advisory will result in increased market share for domestic BTG manufacturers and easing of competitive pressure from low-cost Chinese suppliers in the long run. “However, the real benefit could take 2-3 years to materialize because of other factors including the pace of demand pickup in the sector which will determine PLFs and also the impact of the new emission norms being worked upon,” he said. BHEL reported a net profit of Rs 93 crore for the quarter ended December 2016 as compared to a net loss of Rs 1,101 crore recorded in the corresponding quarter previous fiscal. Total income of the company rose 17.5 per cent to Rs 6,461 crore during the quarter from Rs 5,496 crore in the corresponding quarter. The company’s order book position has shrunk 11 per cent to Rs 98,400 crore at the end of December 2016 from Rs 110,730 crore in March 2016. Kyle Brodziak Womens Jersey