Accountability of regulators a serious crisis in India: Goyal

Stating that accountability of regulators was a very serious crisis that the country was facing, Union Minister Piyush Goyal today said very often they are not even able to justify many of their decisions.
“The one very, very serious crisis that the nation is facing today is the accountability of regulators. There is almost no accountability of regulators. And in the garb of independence of regulation, it occasionally goes to another extreme,” the Union Minister of State for Power, Coal, New and Renewable Energy and Mines said.
He was speaking at a seminar on ‘Ease of Doing Business- Regulators as Facilitators’ at Vibrant Gujarat Global Summit 2017 here.Pointing at regulation of environment sector as a case in point, he said the sector suffered due to “over regulation as regulators are not able to justify many decisions”.

“The environment sector has suffered due to over regulation and very often regulators are not able to justify many decisions. So, you have a situation, where there is nothing like forest for an area called forest, no satellite image, no ground report says there is a single tree in that area,” he said adding that seeking building permission or regulatory permission for such areas causes a lot of trouble.

Attending the seminar were chairman of Food Safety and Standards Authority of India (FSSAI) Ashish Bahuguna, chairman of Competition Commission of India (CCI) Devendra Kumar Sikri, and chairman of Central Electricity Regulatory Commission (CERC) Gireesh Pradhan, among others.

“Transparency is another area, when we look at the regulatory process. Regulators should be open about their working, hearings should as far as possible be more and more in public domain, and speaking orders, with a logical approach, should be available in public domain so that others should benchmark their business process to whatever is decided by regulators,” he told the audience.

“And regulators should also be user-friendly rather than being under the shroud of what really was the intent of regulators and intent of law. Lastly, it is important to target regulation on what the problem is, so that we don’t tend to go haywire and over-exceed our brief,” Goyal said.

“If we can keep the side effects of regulations minimum, it can help make regulators truly a facilitator person and help economic growth. We can then have a situation where people are not fearsome of regulators, we have to get fear out of regulation,” he said.

“In that sense, policy makers and regulators should work hand in hand. You can’t have a situation, where policy makers and regulators think differently,” he added.

View original post on Business standard: http://www.business-standard.com/article/pti-stories/accountability-of-regulators-a-serious-crisis-in-india-goyal-117011101448_1.html

Can India dump coal quite so easily?

(Getty Images)

Since the Paris Climate Conference in 2015, India vouched to increase its renewable energy production by 175 gigawatts. These broad claims made many wonder whether India would ever be able to achieve this feat, until now. The government’s energy advisory board in a statement said that India could meet its energy needs by 2022, without the need for more coal-powered plants.
The national electricity plan, the draft of which was released by the Central Electricity Authority on 12 December 2016, stated that the share of non-fossil fuel production capacity of the country was to increase to 46.8 per cent by 2022. It may further grow by close to 10 per cent in the subsequent five years. These figures also take into account another 50 GW of coal-based power plants that are in construction and would likely come online by 2022. “The study result for the period 2017–22 indicated that no coal-based capacity addition is required,” said the report.
It’s not just the Indians who are confident and invested in making India renewable energy-sufficient. The confidence comes from the fact that the demand for electricity in India is growing continuously. One quarter of India’s population, which equates to 300 million people, still has no access to electricity. KfW Development Bank, a unit of the German Federal Ministry for Economic Cooperation and Development, recently concluded a 0.5 billion-euro loan agreement with Powergrid, the Indian power transmission company. This is the first leg of a KfW 1 billion-euro loan for expanding Indian transmission lines.
This investment, along with other minor investments from other countries and banks, seems set to fuel India’s renewable energy production in the coming years. These investments, coupled with a billion dollars from the Indian government, are a part of the construction of “green-corridors”. These new transmission lines will feed on electricity obtained purely from renewable energy sources.
Similarly, there is another mega project to expand the transmission network in the States. The government has signed contracts for expanding the networks in Rajasthan and Tamil Nadu. 125 million euros were provided to each of these States’ power companies to finance the project. This will enable electricity to be transmitted in a much more efficient way. It would reduce power loss during transmission and reduce our carbon footprint. If India wants to see a noticeable reduction in its CO2 emissions, there needs to be at least a 15 per cent increase in its renewable energy production by 2022, to match the increase in demand through the years. The main issue with renewable energy is that the end customer will only be able to access power from these renewable energy sources if they are stable and efficient. Stability is not as much of a problem for hydro power plants as it is for solar power and wind.
Another issue is that solar and wind power plants are primarily located in only seven states in the country, that is, Gujarat, Andhra Pradesh, Himachal Pradesh, Maharashtra, Karnataka, Rajasthan and Tamil Nadu. Some of these are situated away from the financial centres that are the primary consumers of the power. Therefore, it is very important that the transmission lines be expanded and made efficient.
To increase renewable energy production by such a magnitude is a huge turnaround for one of the world’s largest greenhouse gas emitters that has thrived until now on cheap coal. The energy policy announced in 2006 said that coal would continue to dominate the energy production matrix of India till 2031-32 and maybe even beyond. It projected that India may need 2 billion tons of coal by 2032.
However, with this new turnaround, the new plan puts the total coal requirement for 2022 at 727 metric tons, and for 2027 at 901 metric tons, provided renewable energy targets of 175 gigawatts are achieved. This is after factoring in a 30 per cent reduction in hydropower generation due to monsoon failure being supplemented by coal-based generation.
This bold move has been inspired by, in part, the successful deployment of various renewable energy programmes, especially the Jawaharlal Nehru National Solar Mission that has added 10 GW of power in six years.
The Draft Electricity Plan is the only policy paper we have today that provides an insight into the government’s intentions on energy. Thus contradictory plans seem to flow with government intending to increase the supply of coal and at the same time reduce greenhouse gas emissions by turning to renewable energy.
First, coal output is not being curtailed. With Coal India ready to produce a billion tonnes and private coal mines another half a billion, India will have twice the coal it needs. This coal would have to be pushed for export, a wise thing to do as long as the coal markets are buoyant and profitable. This would help India earn foreign exchange and help the country’s negative balance of trade. Second, the government has no legal power to prevent private coal mine owners from setting up coal-based power plants. Power generation no longer requires a license after the Electricity Act of 2003 opened it up.
So we might see a shift from state-owned coal power to privately owned coal-power generating capacities. Coal power nevertheless will grow as coal mining continues to grow. About 83 GW of India’s thermal generation capacity of 214 GW and 130 GW of its total power generation capacity of 308 GW is already privately owned.
The government believes that renewables, especially hydro and even nuclear power would help overcome some of the key problems that have led to a persistent gap in energy access. Moreover, off-grid localized production is also under discussion. It may help ensure stability and efficiency that may be a problem with high transmission and distribution losses.
There is some scepticism about India’s renewable energy policy. India is almost as big as China in terms of population; however, it still is desperately poor and is determined to develop. The easiest way to get richer is to industrialise the nation. This would require more power, and the easiest way to get more power is to dig up coal and burn it, especially as India is endowed with very large coal deposits.
Increasing the renewable energy base is welcome for the fight against global warming. To prevent the adverse effects of climate change, India will have to industrialise differently from the way Europe and the US did. They industrialised by burning coal. India will have to skip most of the coal stage and go right to solar.
The falling cost of solar will help with that, obviously, but India’s unusually abundant, cheap coal resources mean it will not quickly convert from coal to solar power. Although the Narendra Modi administration has made big promises on cutting carbon emissions, many question the government’s ability and will to follow through, especially given the country’s traditional reluctance to address the issue.
This reluctance is understandable. India is very vulnerable to climate change, with long coastlines and a lot of poor people. Therefore, it needs to industrialise quickly and also fight global warming. It is manifestly unfair for India to hobble its growth when most other nations got rich by burning fossil fuels. That will create popular pressure for the government to do less than it should.
The simple solution then would seem to be for rich countries to pay India and other fast-developing nations to skip coal and go straight to solar. However, with European economies in the dumps and the US soon to be headed by the Trump administration, such a bargain seems unlikely.
A more realistic solution to our present situation is for India and other developing countries to receive trade investment, access and know-how from the developed countries. Ways need to be provided to India to ensure it receives the required inputs and the technology base at a competitive price so that it grows faster and does not have to rely on more coal. Additionally, India can impose a high tax on carbon, and adopt other incentives to substitute solar for coal more quickly.
To summarise, developed countries should also do two things. First, they should direct large amounts of investment India’s way, and drop trade barriers. Second, they should set up technology transfer programs that give away clean energy know-how.
This kind of grand bargain would satisfy Indians’ desire for fairness, while also helping them to industrialise quickly. It would also strike a big blow against climate change. This is something that Europe, Japan and other developed countries can do, even if the US opts out under Trump. Though solar has given humanity a possible window out of the climate change trap, bold policy is needed to take advantage of that window.

 

View original post on: http://www.thestatesman.com/opinion/can-india-dump-coal-quite-so-easily-1484422630.html

Electricity may get costlier as states demand higher royalty on coal: India Ratings

If the hike in royalty is accepted, it will lead to coal attracting the highest ad-valorem duty compared to all other minerals

Electricity may get costlier as states demand higher royalty on coal: India RatingsElectricity may get costlier as states demand higher royalty on coal: India Ratings - Image
New Delhi: Chhattisgarh’s request for a revision in royalty rates on coal to 30 per cent from the existing 14 per cent ad-valorem, will push up the cost of electricity by 7 per cent or 10-12paisa/kWh, India Ratings today said in a report.

The state government has constituted a study group to consider the revision in the royalty rates based on the request.

“Ind-Ra believes the royalty hike looks quite steep at 30 per cent, and if accepted, it will lead to coal attracting the highest ad-valorem duty compared to all other minerals,” the report said.

Assuming a pithead price of Rs 720 per tonne for coal, the royalty increase will also lead to a higher contribution towards district mineral foundation (DMF) at 30 per cent of royalty and National Mineral and Exploration Trust (NMET) at 2 per cent of royalty, which translates into a higher cost of electricity generation by 10-12paisa/kWh.

Since January 2015, coal consumers have been hit by rising prices due to the imposition of DMF and NMET (effective January 2015), taking the effective royalty rate up to 18.48 per cent from 14 per cent.

Additionally, if the royalty rates were to increase to 30 per cent, the effective royalty rate would be 39.6 per cent including DMF and NMET contribution.

Furthermore, the clean energy cess increased to Rs 400 per tonne from Rs 200 per tonne in the Union Budget 2016.

During May 2016, Coal India Limited (CIL) increased the run-of-the-mine prices for the most widely supplied grades of coal to the power sector by an average of 16 per cent. Similarly from 1 April 2015, freight charges for coal were hiked by 6.3 per cent.

Therefore, the variable cost of generation for a plant situated 500km from the mine which used to receive grade G13 coal, has increased by 24 per cent to Rs 1.69/kWh.

“If the revised royalty rates were to be accepted as proposed by the Chhattisgarh government, the variable cost of generation can increase by another 7 per cent,” India Ratings said.

It added that on the positive side, coal linkage rationalisation for companies has led to a decline in the transportation costs, thus easing some impact. Industrial power rates are a critical pre-investment consideration for manufacturers and given that bulk of the coal-based capacity in India is on a cost pass-through basis, the ultimate impact of such hikes is passed on to consumers. Such regular hikes in one form or the other are not a healthy sign for thermal power generators.

“Ind-Ra believes that as alternate sources of power namely solar see further reduction in tariffs, the competition between thermal and solar will intensify, with a high probability of solar winning. These price hikes have played out at a time when the all-India power situation continues to improve and CIL is looking at a coal surplus situation, with the possibility of coal also being exported,” it said.

Even after the hike, the coal supplied domestically by CIL continues to be cheaper than the imported coal. Coal has seen a change in royalty rate in 2012, with the royalty being changed to the ad valorem basis at 14 per cent from the earlier system of tonnage based and ad-valorem with royalty on Grade D/E coal being Rs 70 per tonne plus 5 per cent of CIL run of the mine price.

It furthr said the states will benefit at the expense of consumers paying more for electricity.

“Ind-Ra estimates that the increase in royalty up to 30 per cent for the top three states could result in an additional income between Rs 5 billion to Rs 39 billion, depending on the final royalty rate,” it said.

 

Has India’s Energy Sector Really Transformed?

SL Rao

Most importantly, Piyush Goyal, the Union Minister for Power and Renewable Energy, Coal, and Mines has cleared the coal sector’s Augean Stables, which were riddled with corruption, theft, and inefficiency. Coal is easily available today, imports have fallen, and global prices have fallen along with those of oil and gas.

Falling domestic demand has sent coal prices lower as well. Power is surplus despite power plants working at a low average plant load factor of 60 percent. But at the same time, around 30 crore people remain without electricity.

Does This Indicate A Transformation?

Not so much. On the positive side is the coal availability and price situation, increasing but still inadequate interstate transmission capacity, some reduction in transmission and collection losses.

But state-owned power distribution companies do not generate enough of their own funds to buy power from within the state or from outside. This is because tariffs remain uneconomical for the distribution companies.

States have violated the law that permits open access for distribution companies to purchase cheaper power from other states. Instead, they buy expensive power from within the state.

Ruling parties treat power as a public good which must be available to all, irrespective of their ability to pay. This has meant that power is given free or below cost to many households, for agriculture in many states, and to some other favoured consumers. Agricultural use of free or cheap power has led to a surge in water-intensive crops like rice and sugarcane, often on soil that is unsuitable. Outcomes range from saline soil to depleting groundwater and river water levels.

The government just ends up accumulating large stockpiles of rice. Compounding that, the Government of India has a minimum support price policy that encourages cereals even when the demand is falling. It has no relation to water availability and use for the crops.

There has been no improvement in gas supplies to operate stranded power generation capacity. Even when gas is available, demand may not be sufficient. Gas generation is flexible and can usefully back-up variable generation from renewables.

Renewable Energy And Efficient Appliances

Wind and solar renewable energy capacities have gone up significantly, as have some small hydro-electric projects. Governments incur subsidy expenditure in promoting renewable energy, but regulators have failed to enforce renewable energy obligations, resulting in a loss of revenue for the generators of clean power. State power distribution companies have not been compelled to meet renewable energy obligations in their total power supply mix.

Progress has been made on energy efficiency. The distribution of LED light bulbs has helped conserve a significant amount of power, as have other measures initiated by the Bureau of Energy Efficiency. This may well have resulted in some decline in demand for generated electricity.

UDAY Scheme: A Stop-Gap Fix

The power sector benefited from the Ujwal DISCOM Assurance Yojana (UDAY) scheme, which reduced debt on the books of state distribution companies by getting the corresponding state government to take over the debt. This, however, has not made any of the distribution companies profitable, but the saving in interest costs has freed some cash.

The UDAY scheme is the best that the Centre can do since electricity is a concurrent subject in the Constitution.

The scheme needs to be seen, not as a solution, but as short-term relief. Power distribution is a state subject, and ruling parties are populist about electricity pricing as they are able to woo large electoral voting blocs.

This is made possible via the appointment of state regulators who are mostly compliant, often from the community of retired bureaucrats who have served in the same state. Until regulators are appointed for their independence, courage, and lack of subservience to ruling governments, there can be little change in the dire financial position of power distribution companies.

It is apparent that fundamental change still eludes the power sector.

UDAY is merely transferring some distribution debt to state governments. It does not tackle the problem of below-cost tariffs and significant inefficiency caused by government ownership.

The only way state governments can indefinitely continue taking on power distribution debt as it accumulates, is via the annual budgetary exercise. But doing so will divert funds from vital state spending – on human capital, law and order, and the building of infrastructure.

There is no option but to charge users a tariff that is remunerative to the company.

Regulate Well, Build Capacity, Store Better

Regulators must have the authority to punish those responsible for below-cost tariffs, and delays in Aggregate Revenue Requirement filings. Transmission and distribution losses, poor collection, and theft of electricity must be targeted, monitored and failures severely penalised.

Interstate and intrastate transmission capacities are grossly inadequate. Governments are the primary investors in this space, more so because private investors are put off by long and frequent government delays, and the consequent costs.

Delays in giving government clearances on land, environment, forest and others have held up many a project, keeping out subsequent private investment.

While India is taking rapid strides in renewable energy, and there are heavy government subsidies involved, there is little investment in backup storage capacity to make up for a shortfall when there is no sun or little wind.

This storage can be of water, batteries or as flexible generation capacities in gas or coal.

In sum, the energy and especially the power sector in India has experienced an uncoordinated set of policies that have left this vital sector largely in government hands and running at a loss. Foreign investment is most unlikely in such a sector. The domestic investment that has taken place is not very profitable. Their supply is either confined to large users or use other means to cover costs.

Huge investment has been made in the power sector, but it needs more. The present surplus is artificial and not due to demand satisfaction, as much as to poor revenues. The energy sector must be approached in its entirety, policies must be integrated for the private as well as public sector to run it in a way that is remunerative.

SL Rao is a Distinguished Fellow Emeritus at The Energy and Resources Institute (TERI), and was the first chairman of the Central Electricity Regulatory Commission.

(This article was originally published in BloombergQuint.)

 

View original Post on: https://www.thequint.com/environment/2017/04/03/energy-sector-transformation-renewable

Infrastructure: As far as private power producers are concerned, no light at the end of the tunnel

With around 45,000 MW of power capacity running at sub-60% Plant Load Factor (PLF), servicing their staggering debt of `1.9 trn has become a challenge for India’s thermal power producers.

With around 45,000 MW of power capacity running at sub-60% Plant Load Factor (PLF), servicing their staggering debt of `1.9 trn has become a challenge for India’s thermal power producers. To make matters worse, state discoms have been unwilling to sign power purchase agreements (PPAs) with private producers, opting for central and state power utilities instead. The PLF of the private sector’s coal-based plants fell to 56.45% in the ten months to January 2017 from 83.9% in FY10, as per data available with the Central Electricity Authority. The figure stood at 62.60% in January 2016.

The authority estimates that another 50,000 MW capacity would get commissioned over the FY18-22 period. The central and state utilities would account for 50% of this capacity and the private sector for 40%. Unfortunately, things are unlikely to get any better in the near future. “As the short-term power prices are likely to remain benign and discoms are unwilling to sign PPAs, capacities are unlikely to see an increase in PLF going forward,” Salil Garg, Director Corporate at India Ratings, says.

An analysis of the financials of power producers like GMR Infrastructure, GVK Power & Infrastructure, Lanco Infratech, KSK Energy, and Jindal India Power Ltd reveals the state of affairs as far as private power producers are concerned. GMR Infrastructure suffered a loss of `381 crore in the third quarter of FY17 compared with a profit of `40 crore a year ago. Two of its coal-based power plants—GMR Warora Energy Venture Ltd and GMR Kamalanga Energy Ltd—registered an accumulated loss of `3,022 crore as of December 31, 2016. GMR Chhattisgarh Energy, another subsidiary, saw lenders taking control of the project in February by converting `2,992 crore of the `8,800 crore debt into equity.

Lanco Infratech, an infrastructure-cum-power company, incurred a loss of `813 crore for the third quarter ended Dec 31 compared with a profit of `35.19 crore a year ago. The earnings before interest and tax (EBIT) for its power segment dropped 47.24% to `232.10 crore and the revenues fell around 20% to `1,190 crore. The company is looking at options to sell its operational assets. As for GVK Power & Infrastructure, it incurred a net loss of `71 lakh in Q3, compared to a loss of `6.80 crore a year ago. For its single coal-based power plant in the Taran Taran district of Punjab, the company is facing fuel supply issues.

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Another Hyderabad-based power producer, KSK Energy Ltd, saw its losses growing to `17 crore in the third quarter from `14 crore a year ago. The company is believed to be in talks with lenders to refinance its Mahanadi project debt—`11,691 crore of the total `19,000 crore—under the 5/25 scheme of the Reserve Bank of India.

The fall in tariffs in solar and wind segments has compounded problems for thermal power producers. “The drop in tariff for solar projects to `2.97 per unit in the latest bidding in Madhya Pradesh and the levellised tariff of `3.34 per unit would be an additional burden for conventional power generators, as their cost of production has gone up due to cost overruns on fuel supply and environmental clearances,” an analyst with a Mumbai-based foreign brokerage says. The renewable segment is likely to see consolidation going ahead as the government’s target of attaining 175,000 MW of renewable energy capacity by 2022 approaches closer, he adds. As much as 15,000 MW of solar and 9,000 MW of wind capacity creation is likely to be targetted in the new financial year (FY18).

 

View original post on Financial Express: http://www.financialexpress.com/industry/infrastructure-as-far-as-private-power-producers-are-concerned-no-light-at-the-end-of-the-tunnel/612437/

The UK’s electrical grid is so overrun with renewable power, it may pay wind farms to stop producing it

Generating electricity from the sun and wind is great for the planet, but the infrastructure necessary to deal with these intermittent power sources is tricky. Too much or too little power can upset the balance of the grid, which has to be finely tuned to keep the voltage of the electricity it delivers to customers stable.

Without a means of storing renewable energy or handling huge variations in production, too much electricity surging into the grid can damage appliances or even cause outages. This is the problem that the UK may face this summer, the country’s grid operator says. When electricity demand naturally falls during the summer months, it is thinking about paying wind farms to stop generating so much power.

For the past few years, the UK has been ramping up renewable-energy production—especially wind power—in order to reduce its carbon emissions. Government subsidies have also encouraged homes and businesses to install rooftop solar panels, which can bypass the grid altogether.

Meanwhile, National Grid, which manages the UK’s electricity network, has been trying to update its aging infrastructure. Ofgem, the UK’s energy regulator, estimates that payments to balance electricity generation when it gets out of whack—either too much or too little to meet demand, from both renewable and (mostly) fossil-fuel generators—ran to about £354 million ($540 million) in 2015, or less than 1% of energy bills.

This summer, National Grid estimates that maximum and minimum energy demand from utilities is likely to fall to an all-time low (paywall). Peak demand is predicted to be 35.7 gigawatts, compared with 37.5 gigawatts in 2015, and minimum demand to be 18.1 gigawatts, compared with 18.4 gigawatts in 2015.

The UK’s electricity consumption has been falling in recent years. Some of the decline was down to the financial crisis, in addition to increased energy efficiency at homes and businesses, according to a National Grid spokesman.

Reduced energy demand and more prevalent renewable power is a good combination for the climate, but a headache for grid operators. These staid businesses are scrambling to balance their grids in response to a rapid energy transition. In the meantime, they may have to keep paying some power plants for, in effect, not doing their job.

 

View original post on: https://qz.com/952827/the-uks-electrical-grid-is-so-overrun-with-renewable-power-it-may-pay-wind-farms-to-stop-producing-it/

Opening up of coal sector may run into pricing hurdle

 

The government’s ambitious effort to open up coal mining to private and foreign players and end the virtual monopoly of Coal India Ltd (CIL) might come a cropper if some of the restrictive conditions put in the proposed guidelines are not reworked.

Private miners – Indian or foreign – would be allowed to sell coal mined by them only at a minimum price, which shouldn’t be less than 20% above the price that CIL currently charges, the draft rules now put out for discussion says.

The provision, which surreptitiously aims at protecting CIL’s interest, is being seen as restrictive defeating the very purpose of opening up the sector – to bring in greater efficiency and economy in mining through investment in state-of-the-art machinery, thereby bringing down costs leading to lowering of prices, feels industry experts.

 

“The condition of making the minimum selling price by a commercial miner fixed at 1.2 times the price at which CIL sells its coal is restrictive as it would discourage efficient mining. The whole purpose is to bring down costs and prices through higher mechanisation. Now that there is little scarcity of coal, why would anyone buy coal from a private miner if the same quality would be readily available from CIL at a lower price?” Partha Bhattacharya, former chairman of CIL and a key voice in the industry, told DNA Money.

“Making such a price the basis of a revenue sharing model makes the whole thing flawed,” he said.

“While the successful bidder would be free to decide its marketing and pricing strategy, the revenue sharing would be calculated on the basis of actual revenue or actual production multiplied by 1.2 times the CIL ROM price for the average grade of coal for the specific mine, whichever is higher,” the draft regulation says.

To begin with, the government plans to auction two to three large mines having peak-rated capacity of 30 million tonne a year and coal of grade-11 to grade 13 in the first phase, the discussion paper said.

“The minimum price fixed at 1.2 times is restrictive. Also, based on that, what would be the revenue sharing is still not clear,” V K Arora, chairman of mining and construction equipment committee of industry body CII and chairman of Indian Mining Federation, said.

While Bhattacharya believes a “tangible net worth” criteria of Rs 1,500 crore might keep away many experienced miners, Arora said it wouldn’t pose a problem as bidders can form joint venture even with foreign entities.

“You can have a joint venture with a partner, which could be a foreign entity having a combined mining experience of 25 million tonne. It is a reasonable condition and a welcome move,” Arora said of the minimum work experience criteria.

“We welcome this major move to open up the coal mining sector and believe some of the contentious provision might get amended after feedback of stakeholders are taken care of,” Subhasri Chaudhuri, Secretary General of Coal Consumers’ Association said.

WHAT THE DRAFT RULES STATE

  • Private miners’ selling price shouldn’t be less than 20% above Coal India’s
  • The Centre plans to auction 2-3 large mines having peak-rated capacity of 30 million tonne

 

View original post on DNA India: http://www.dnaindia.com/money/report-opening-up-of-coal-sector-may-run-into-pricing-hurdle-2397236

PM Narendra Modi may step in to resolve wrangling on NITI Aayog’s proposed National Energy Policy

ঘোষণা নীতি আয়োগ-এর

NEW DELHI: Prime Minister Narendra Modi is likely to intervene to resolve an inter-ministerial wrangling over NITI Aayog‘s proposed National Energy Policy to roll out the long-overdue power sector reforms.

Different stakeholder ministries, including those of power, coal, and new and renewable energy, have failed to come to a consensus on some points of the proposed policies, including freeing coal from price control, despite several rounds of consultations, said a senior government official who is aware of the deliberations on the matter.

“National Energy Policy is pending with PMO (prime minister’s office),” the official told ET. “The top office is now planning to convene a high-level meeting of all concerned ministers and secretaries to be chaired by the PM himself to suggest way forward to the policy,” the official said.

The first draft of the policy, framed by the Aayog after intense consultations over last one and a half year, was ready for seeking public comments by March. But that has been held back after concerned ministries raised objections with the PMO over certain proposals.

PM Narendra Modi may step in to resolve wrangling on NITI Aayog's proposed National Energy Policy



Coal ministry, for example, expressed reservations over the proposal to free up the commodity from any price control. Such a move would divest the ministry of its power to control coal prices and help maximise profit for Coal India.

However, NITI Aayog has largely stood by its reforms agenda. National Energy Policy has proposed comprehensive reforms to free sectors such as coal, electricity and fertilisers from subsidies and price controls, helping to produce more power by making electricity generation projects commercially viable for private companies.

The policy has outlined the need and measures to improve financial condition of power distribution companies (discoms), which are bogged down by debt, to make the sector profitable in the medium to long term.

Key suggestions being considered include overhauling the entire structural and functional capacity of discoms so that they operate more professionally.

In India, electricity and fertiliser sectors are heavily subsidised. The government feels there is a need to bring down subsides in such sectors and, hence, a clear roadmap for lowering subsidies and aligning their prices to that of the market has been laid out.

But this proposal hasn’t gone down well with concerned ministries.

National Energy Policy is aimed at curbing imports by increasing production of renewable energy in the country fivefold to 300 billion units by 2019 and tripling coal production to 1.5 billion tonnes. Coal imports are envisaged to come down by 10% by 2022 and by 50% by 2030.

NITI Aayog CEO Amitabh Kant had earlier told ET that differences are obvious as the policy proposes far reaching reforms to transform the power sector. “Wherever there are differences, we’ll pose them before the Prime Minister and let him take a call,” he had said earlier. Prime Minister is the chairman of the Aayog.

National Energy Policy will replace Integrated Energy Policy of the UPA regime that envisioned a roadmap for sustainable growth with energy security over a reasonable period of time.

NTPC awards the contract for Asia’s first integrated solar thermal power plant: Thermax and FRENELL to execute the project

NTPC awards the contract for Asia’s first integrated solar thermal power plant: Thermax and FRENELL to execute the project

Thermax, an Indian energy and environment company and FRENELL, a German concentrated solar power company, (through its wholly owned subsidiary Novatec Solar Espana, S.L) have been awarded by India’s state owned utility NTPC, to execute Asia’s first integrated solar thermal power plant at Dadri in Uttar Pradesh, India. The project involves the integration of a concentrated solar field into the Dadri coal fired power station. The ground breaking ceremony was celebrated on Friday, 4th of November 2016. The completion of the project is scheduled for September 2017.

The solar field will use FRENELL’s proprietary concentrated solar power (CSP) technology which is based on flat mirror Fresnel collector principle. On a surface of 33,000m2, the solar field will feed annually 14 gigawatt hours of solar thermal energy into the water-steam cycle of a 210 MW unit of the power station. The mirrors concentrate the sunlight on absorber tubes and heat the fluid up to 250°C which are the parameters required for the power station unit. The heat generated from the solar field will heat the feed water supplied to the steam generator, allowing for lower coal consumption and thereby reducing the emission of greenhouse gases.

In a competitive tender process among three international EPC companies, the Fresnel technology won out over parabolic trough and solar tower technology and the contract has been awarded to the consortium of Thermax and FRENELL. Thermax will be acting as the EPC contractor to NTPC and is responsible for design, engineering, procurement and supply of the entire solar thermal plant and balance- of- plant equipment as well as for the integration of the solar field into the coal fired power station. FRENELL will deliver its CSP technology as subcontractor and will execute the turnkey manufacturing and construction of the solar field.

“This project is of high strategic importance for India as it introduces a new option for power generating companies to improve the efficiency of their coal fired power stations. This solution will also contribute to the national target of at least 3% solar share of total power generation by 2022,” says M.S. Unnikrishnan, CEO of Thermax. “Compared to green field CSP plants, this is a cost efficient application as the existing thermal power station infrastructure can be used. The total market potential of this solution in India is estimated to be 1,700 MW and Thermax is prepared to continue the lead in offering such integrated solutions,” he adds.

“We are very proud to have been selected by NTPC to deliver our CSP technology to this flagship project,” says Martin Selig, CEO of FRENELL. “We share Thermax’s view that there is a significant market potential for CSP brown field solutions in India. In order to further increase our cost advantage over competitors in future CSP tenders, we are planning to localize our solar field component manufacturing and supply chain in India. The required temperature for this project is 250°C. Our solar field is designed for up to 550°C. We are keen to show case in future projects our high temperature solution which is also capable to store high temperature energy for solar power generation during night time,” he adds.

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All bets are off: 4 takeaways on what President Trump means for the power sector

The paradigm of decarbonization that’s guided utility sector investments for the past decade is now up in the air. How will the Trump victory impact other industries? Here’s what we know about the President-elect. 

After a long election night, the American public elected real estate magnate and reality TV star Donald Trump as the 45th president of the United States. The Republican nominee’s win shocked political commentators across the spectrum, as most election models predicted a victory for his Democratic rival Hillary Clinton in the hours before polls closed.

For the power sector, Trump’s election is likely an unwelcome development. U.S. utility companies gave more money to Clinton than any other candidate this election cycle, while none made sizeable donations to Trump. 

Much of that support came from the fact that Clinton is more of a known quantity to the power sector. Because they invest in multi-decade assets, utilities desire certainty and predictability out of policymaking, and the Clinton campaign laid out a full energy platform promising to build on the model of carbon regulation and renewable energy supports pushed by President Obama.

The Trump campaign, by contrast, was hard to predict: Beyond promises to roll back EPA regulations and support fossil fuels, he laid out few concrete energy policy proposals. And because energy and climate policy rarely featured on the campaign trail this cycle, the details of how a Trump administration would plan to transform U.S. energy production remain unclear. 

In the coming weeks, much effort will be spent trying to decipher who Trump will appoint and how his team will handle the specifics of energy policy. But given that President Trump will likely come into office with a GOP-controlled Congress and a vacancy to fill on the Supreme Court, there are some broad conclusions for the power sector that we can already draw. 

1. The Clean Power Plan — and other air regulations — are in danger 

One of the most immediate impacts of Donald Trump’s election is that the Clean Power Plan now appears much more likely to be struck down. 

The CPP is the EPA’s first set of federal carbon regulations and seeks to cut CO2 emissions from the power sector 32% by 2032. Though the utility industry is largely on board with the plan, a group of conservative states and fossil fuel interests challenged the rules, saying they constitute an overreach of EPA’s authority. 

Those arguments came to a head in September, when the D.C. Circuit Court held an en banc hearing on the regulations. Due to the composition of the court — six Democratic appointees and four from Republicans — legal experts largely expect the rules to be upheld there

But the Supreme Court could be a different story. No matter who prevails at the D.C. Circuit, the high court is expected to take up the Clean Power Plan next year. The justices have already shown interest in the case, placing an unprecedented judicial hold on compliance until court challenges are concluded. 

After Justice Antonin Scalia’s death earlier this year, the Supreme Court has a vacancy, and Republican senators have refused to confirm President Obama’s nominee, Judge Merrick Garland.

If the Supreme Court were to hear the Clean Power Plan case with one seat vacant, energy lawyers told Utility Dive that a 4-4 split would be plausible, which would uphold the D.C. Circuit decision. But if Trump puts another conservative on the court — as he has promised — it could potentially give CPP opponents the five skeptical judges they would need to overturn the Clean Power Plan. 

Given that Trump will come into office with a GOP-controlled Senate, that judicial outcome is now much more likely. But even if the Supreme Court upholds the plan, a Trump administration and Republican Congress could still scuttle it by defunding the agency or simply halting implementation work. 

And while the Clean Power Plan is the highest-profile EPA air pollution rule at risk in a new Trump presidency, it is not the only one. Fossil fuel interests still bristle at rules like the Mercury and Air Toxics Standards (MATS), which regulates harmful coal power pollution, and the EPA’s new source pollution rules, which govern emissions from new power plants. 

Trump has indicated that he wants to overhaul the EPA. With him in the White House, the future of any clean air or water regulation remains uncertain. 

2. Renewable energy subsidies could be on the chopping block

EPA regulations are a relatively easy way for Donald Trump to weaken President Obama’s clean energy legacy, since many of them are facing current court challenges or could simply not be enforced. 

Renewable energy subsidies would take more of an effort to revoke. At the end of last year, Congress reached a deal to extend supports for wind and solar energy into the early 2020s, with subsidy levels decreasing over time. That tax credit extension is fueling a boom in deployment, with renewables expected to add the vast majority of generating capacity for the remainder of the decade. 

That could change quickly. Though Trump hasn’t laid out a policy position on renewable subsidies, wind and solar have been the target of frequent ridicule from the president elect. In one speech designated for energy policy, Trump lambasted solar energy as “very expensive” and accused wind turbines of “killing all the eagles.” 

Because the renewable energy supports are already in place, revoking them would take a legislative effort. That’s a heavier lift than in the past, since many Republican officials have renewable energy facilities or manufacturing in their states, boosting support for the industry among conservative lawmakers. 

But there’s also appetite in some circles to get rid of renewable energy subsidies altogether. Some fossil fuel and nuclear generators complain that the production tax credit for wind lets these facilities to bid into the market at lower prices, pushing down electricity prices and preventing their baseload plants from competing. 

If Trump’s energy team will listen to clean energy opponents remains to be seen. The president elect has also said he is “for” renewable energy on many occasions, even while criticizing it in the next breath. But whether he opts for a full-frontal attack on wind and solar subsidies or will simply turn his attention to boosting fossil fuels, the future for renewables in a Trump administration does not look as bright as it would under a Clinton administration. 

3. Fossil fuels will likely get a boost

If Donald Trump has sent mixed messages about renewables, no one can mistake his support for fossil fuels. 

Trump made the plight of the fossil fuel worker a centerpiece of his campaign, lambasting EPA regulations he claims are “destroying our energy companies” and promising to put coal miners, oil drillers and power plant operators back to work. 

As elsewhere, the details of how Trump would do that are scant, but he has promised to increase U.S. production of oil, natural gas and coal.

Energy analysts point out that’s likely impossible, since coal’s decline in the U.S. is chiefly attributable to competition from cheap natural gas. But there are things Trump could do to open up new production areas, such as lifting restrictions on offshore drilling and fossil fuel production on federal lands. 

On the flip side, a Trump administration is likely to rebuff any environmentalist efforts to restrict domestic fossil fuel production or transport — a recent priority for green groups, which have sought to halt the expansion of oil and gas pipelines. 

Taken together, those two factors mean a much friendlier market for U.S. fossil fuel extraction and the generators that burn that fuel, even if the details are yet to be filled in. As one industry analyst told the Wall Street Journal this morning, “U.S. oil companies have a better future today than yesterday.” 

4. The paradigm of decarbonization may shatter

More important than any particular policy proposal is the paradigm shift that Trump’s election represents for the power sector. 

For the past few years — particularly since Obama’s reelection — the narrative for the future of the U.S. power sector was clear: Utilities would have to decarbonize their power plant portfolios quickly, first turning to natural gas as a bridge from coal and then ultimately to a greater reliance on renewables, energy efficiency and advanced technologies like storage. 

The Clean Power Plan underpins much of this narrative, pushing the states with the most coal power to shift to cleaner sources in the coming decades. Through those rules, the Obama administration sought to show the world the U.S. was serious about combating climate change and provide a stable policymaking environment for utilities to make investments. 

With the world’s largest economy committed to decarbonization, over 190 nations signed a landmark climate accord in Paris last year to limit global climate change to 2 degrees Centigrade this century. And not only did U.S. utilities sign on to support the CPP in court, they began using the temporary extension of wind and solar tax credits to make unprecedented investments in renewables. 

For the first time, it appeared a new climate consensus was forming — that U.S. and global policymakers not only accepted the realities of global warming, but were seeking to craft international efforts to stop it. 

Now, that consensus may be gone. Trump has said he would pull the U.S. out of the Paris accord and openly disavows the concept of human-caused climate change, once calling it a hoax perpetrated by the Chinese government. How Trump’s election affects other nations’ decarbonization plans remains to be seen, but his disavowal of climate policy creates deep uncertainty for the power sector. 

From plants to pipelines, utility assets last for decades, meaning the investments companies make in the next few years will shape the power mix for decades to come. Under the CPP and current renewables incentives, most U.S. utilities are opting to replace retiring coal plants with wind and solar facilities.

But without those programs, the investment situation may start to look different for many utilities. Whereas Hillary Clinton was likely to build upon existing regulations on power sector pollution, the promise of less stringent rules could increase the appeal of fossil fuel assets. 

If that happens, it could scuttle any remaining chance of meeting the Paris Accord. Already this year, Oxford researchers estimated if we want to meet the 2 degree goal, “no new investment in fossil electricity infrastructure (without carbon capture) is feasible from 2017 at the latest.” Given that the transport and industrial sectors continue to increase emissions, researchers said that “2 degree capital stock” is likely already depleted. 

In other words, scientists say the world is already behind the needed trajectory of emissions reduction to meet the Paris goal, and investments in more long-lived fossil fuel assets could commit the world to see the most catastrophic consequences of climate change if they are not retired early. 

But it may not all be bad news for renewables. Wind and solar have come down precipitously in price over the past decade, and energy storage costs are declining quickly as well. Even with Trump in the White House, renewables will likely continue to enjoy strong growth and grow their portion of the U.S. power mix. 

Even if that’s the case, wind and solar growth in the U.S. can’t make up for the possible end of a global climate consensus and the enhanced appeal of fossil fuel assets at home and abroad.

Unlike political paradigms, the scientific one won’t change when Trump walks into 1600 Pennsylvania Ave. on January 20.

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