Cross-subsidy of power tariffs lure businesses to solar energy

The fall in solar power generation cost has now made it attractive for businesses to go for captive solar power plan

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New Delhi: The practice of forcing industries to cross-subsidize household consumers’ power tariffs is leading to an unprecedented shift among businesses towards captive solar power with some committing to go fully reliant on clean energy.

Cost of producing solar power, which was over Rs12 per kilowatt hour (unit) in 2010, has dropped sharply over the years.

The latest auction, which was held in November, saw takers for solar power projects willing to sell power at Rs3 a unit.

The fall in solar power generation cost has now made it attractive for businesses to go for captive solar power plants, including rooftop plants that supply power cheaper than from the grid, which is expensive on account of the cross-subsidy that industrial consumers are saddled with.

Businesses, especially in the manufacturing sector, have long been complaining of high cost of power, exorbitant tax on diesel and escalating cost of capital as factors that render them less competitive in global markets where their peers enjoy low or negative cost of capital and in some cases, subsidies.

“Solar power is now available at Rs 4-4.5 a unit. In the future, it will cost much less because of technology improvement and possibly low cost of capital. In West Bengal, for instance, cost of power from the grid for industries ranges from Rs 6-8 per unit at present. In Maharashtra, it is Rs 6.5 a unit. Everywhere, except two or three states, tariffs are above Rs 5 a unit for industrial consumers. If you are able to get concessional finance from any multilateral agency and you can produce solar power at Rs 4 a unit consistently for 25 years, it can reduce cost of energy for the business and reduce carbon emissions,” said Mahendra Singhi, chief executive officer, Dalmia Cements (Bharat) Ltd.

Dalmia Cements’s short term goal is to raise the share of clean energy in its total electricity consumption fourfold from 7% at present and to go fully reliant on clean energy in the long term.

Multilateral agencies such as International Finance Corp. (IFC), the private investment arm of World Bank Group, US Exim Bank, the United States Agency for International Development (USAID), the Japan International Cooperation Agency and Germany’s KFW are bullish on India’s rapidly expanding renewable energy industry for investment opportunities.

“We already have $1 billion of investments in clean energy projects in India. We are open to scaling it up to $3-4 billion in coming years,” said Shalabh Tandon, India lead, climate business & clean energy, IFC.

IFC on Thursday announced an equity investment of $125 million in Hero Future Energies Private Ltd., a clean energy firm, for a minority stake. Tandon said that IFC does not invest in coal-based thermal power because of its commitment to climate change goals.

Companies like Apple Inc., IKEA Group, Nokia Oyj, Infosys Ltd and Tata Motors Ltd are among those committed to becoming fully reliant on clean energy.

The Economic Survey 2015-16 had suggested that the burden of subsidising poor consumers can shift from industrial consumers to rich individuals and that state electricity regulators should use income as a yardstick to fix the power tariff for individual consumers. The idea was to help businesses become more competitive.

India has a target of putting in place 175 gigawatt (GW) of renewable power capacity by 2022, out of which 100 GW is to come from solar. At the moment, the country has about 8.7 GW of solar power capacity.

One hurdle that companies face in going fully reliant on clean energy is that storage of energy is a costly proposition, which makes them rely on stable power from the grid for a significant part of their energy consumption when renewable energy is not available. Singhi of Dalmia Cements said that once power storage becomes a viable option, the company will be fully run on clean energy.

View original post on: http://www.livemint.com/Industry/hjuezPVDJdbEbipsCKavSN/Crosssubsidy-of-power-tariffs-lure-businesses-to-solar-ener.html

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

India Focus: Financing the renewables dream

India has surprised many with the speed and government commitment of its renewable energy programme. But what are the financial challenges behind taking the country’s clean energy ambitions to the next stage. 

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There are few countries in the world – and arguably none in the so-called developing world – that have renewable energy targets as ambitious as those of India.

When the country announced in 2015 that it was planning to have an installed renewable energy capacity of 175 GW by 2022, many industry observers believed this was simply undeliverable.

And yet the country is on track to beat that target by a couple of years, thanks to a raft of policy initiatives and financial backing, not least from domestic investors.

“India is absolutely committed to renewable energy targets and clean energy growth and nothing will stop that,” said Piyush Goyal, minister of state for Power, Coal New and Renewable Energy and Mines at the World Future Energy Summit in Abu Dhabi in January.

He said that today, “renewable energy stands on its own feet”.

“Gone are the days when governments need to provide support. It makes good economic sense to invest in clean energy and energy efficiency.”

Kishor Nair, chief operating officer of Welspun Energy, says that when Goyal took charge, “particularly in the first six months, he was having a lot of discussions with industry to understand the problems of developers in executing projects. The tariffs have come down because of a lot of enabling policies. A lot of initiatives were taken in cutting down the project costs, optimizing the projects earlier.”

Vikram Kailas is managing director of Mytrah Energy, which was formed in 2010, when it raised $80 million from institutional investors such as Capital Group, Blackrock and Henderson.

“So we have seen the transformation of the industry,” said Kailas at the World Future Energy Summit. “When we started the company, a seven-year loan was standard and interest rates were about 13 per cent. Today, 18-20 year loans are standard in India and interest rates have down to about 10 per cent.”

Mytrah Energy presently has a total wind portfolio capacity of 1000 MW across 15 wind farms in eight states – Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh, Telangana, Karnataka and Tamil Nadu.

Kailas says “India is going through a transformation” with, for the first time, 1000 MW of wind having been tendered. “It’s a good move for two reasons. One, it opens up the boundaries beyond state level and increases the demand, and I believe that it leads to transparent pricing. It’ll lead to a better price realization both for the state and for the industry.”

Vinjay Rustagi is managing director of Bridge to India, a renewables consulting and research company working with “everybody across the whole value chain”.

He said: “When you talk to major international investors about the Indian renewables sector, the fundamentals for the sector are compelling.”

“When you look at the imperative to reduce carbon emissions, the growing power demand, the desire to reduce energy costs, as well to provide power to people 24/7 across India, the fundamentals are so strong that we see a strongly growing renewable power sector for one or two or more decades in the future.”

Rustagi says that the key in India is that the renewables market “provides visibility, growth and strong government support which are huge positives for financiers in the sector”.

To deliver India’s big renewables ambitions is going to take big money. “We think that the total financing requirement for the sector is about $120 billion based on today’s cost of installing and setting up these systems,” says Rustagi. “That is spread between equity and debt in the ratio of 25 and 75 per cent. Most of that investment is geared towards power generation, which is being dominated by the private sector. And of course there needs to be a lot of ancillary investment in transmission and distribution and upgrading of the grid, which is currently led by the public sector.”

The scale and pace of India’s renewables rollout is vast and fast. “The key thing is, historically, the sector has been about 5 GW a year – going forward we want to scale that up to 10-15 GW a year,” explains Rustagi. “Is India and investors ready to make this sustainable on a long-term basis? Is there enough appetite in the financing market to support this growth?”

He said “the biggest risk for any entity that is setting up a renewable project is the ability of the grid to absorb and sell the power to consumers. A huge amount of work needs to go into making the grid strong and resilient enough to cope with the growing renewables capacity in the country.”

“If the Indian government wants to attract enough private investments, it needs to make sure that developers don’t have to take risks and that the transmission grid is capable of coping with the extra supply of renewables.”

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Minister Piyush Goyal: “It makes good economic sense to invest in clean energy.”

Credit: IRENA

Another risk which international investors are worried about in India is the country’s distribution companies. “There are companies which still by and large are government-owned and they have various pressures – political and regulatory – to keep tariffs low,” says Rustagi. “Their balance sheets are not very strong, so the question really is: can distribution companies make sure that they can absorb all this growing capacity in the country.”

A further concern – though perhaps less so now than in past years – is the Rupee risk. He said PPAs were all structured in Rupees and “when you’re coming from outside, there’s a genuine concern over what happens when the Rupee depreciates. The Rupee has been volatile over the last six-to-seven years. But I think over a period of time, driven by the attractiveness of the market, many international investors have got comfortable with the Rupee depreciation risk. This is something that you can build into your financial model – you can quantify it.”

The financial players

So who is playing in the Indian market? There is huge interest from both the international and the Indian community to finance projects: international developers, private equity and Indian corporates.

“The interesting thing,” says Rustagi, “is that it is the Indian corporates and private equity funds who have dominated the market. International investors bring big balance sheets, and cheaper cost of money, but we see that the India players have been the most aggressive in the market.”

However, he poses the question: “What happens to these investors over a period of time. Most Indian investors don’t arguably have a long-term view – they want to churn their assets, recycle their funding – so is there enough debt in the market to be able to absorb their funding on a long-term basis?”

Rustagi says debt for the sector is “mainly coming from Indian lenders who seem to have a huge appetite”.

“The India renewables market is very attractive. It offers multiple-decade growth and strong policies from the government. On the equity side, the key issue if scale of capital.”

Daanish Varma, director of Sustainable Investment Banking at Yes Bank, says “lenders have become much more comfortable with the solar story – they understand the technology”.

But he adds that once other capital-intensive infrastructure projects in India start picking up, renewables will have to compete for capital, “so we will have to watch out for that”.

He too says India is a bank-driven debt market. So how does the sector bring in the big bucks of the bond and pension markets. “Once we address the risk portion of it,” says Varma. “Once we are able to say that operating renewable assets in India is as secure as you can get, then you get the bond market and the pension investors coming into the process. You need to move from a private-equity play to a pension play for renewable assets.”

But Anand Rohtagi, managing director of Synergy Consulting, warns: “I don’t think India is ready for the equity capital needed for the quantum of solar technology you are looking at. If you see where India stands today, we have had domestic developers look at the market, international investors are standing behind the domestic developers – there is not a single international developer looking at the market. That’s where the issue lies.

“India today does not have access to long-term equity capital. Most of the capital you see is short term. For the sector to grow it needs long-term capital – it needs players who can hold equity for 15-to-20 years. So India is a long way from the equity-funding cycle.”

View original post on: http://www.powerengineeringint.com/articles/print/volume-25/issue-3/features/financing-the-renewables-dream.html

Wind power bids seem unrealistic

To operate at a tariff of, say, ₹3.50 a unit, projects need to achieve a plant load factor of 35 per cent, which is a tall order

The recent bid by the Solar Energy Corporation of India (SECI) to set up 1000 MW wind power plants saw tariffs drop to ₹3.46 per unit. This has set a new benchmark for wind power in India, bringing the overall cost of power down in a rapidly growing economy.

Despite being India’s first wind power project tender, SECI was oversubscribed 2.6 times. Bids were concentrated in three States; with Tamil Nadu receiving the highest share of 1794 MW, followed by Gujarat with 700 MW and Karnataka with 100 MW.

The tender was floated by the SECI to help non-windy States access wind power by linking them to the inter-state transmission system. Project developers will sign a 25-year PPA with the Power Trading Corporation of India, which, in turn, shall sign back-to-back arrangements with discoms /bulk customers of non-windy States. Waiver of inter-State transmission charges and compensation for system losses till the interconnection point by allowing for construction of 5 per cent additional capacity were also provided as part of the tender.

Until now, wind energy in India followed the feed-in-tariff (FIT) route with tariffs for long-term PPAs with State discoms ranging from ₹4- 6 per unit. With the SECI tender mitigating key risks of off-take, evacuation and payment and going by the recent solar bidding process which witnessed tariffs fall below the ₹3 mark, the level of interest observed shouldn’t come as a surprise.

But, having lived through a situation where aggressive bidding in infrastructure projects has not worked in the industry’s favour, it does make us wonder about the strength of the underlying assumptions made in these bids.

A basic number crunching carried out with a tariff of ₹3.46 per unit at prevalent industry conditions – Central Electricity Regulatory Commission (CERC) estimated project cost of about ₹6.2 crore per MW, debt to equity of 70:30, financing at 9.5-10 per cent – indicates that Plant Load Factors (PLFs) of about 33-35 per cent may be required to fetch investors reasonable returns of 15-16 per cent.

Standing on shaky ground

Going by the historically available PLF data of wind power plants in India and limited availability of high wind density sites, achieving such PLFs consistently for the 25-year life of the plant seems far-fetched. Unlike solar energy, wind farms in India are concentrated in a few high wind States such as Tamil Nadu, Maharashtra, Karnataka, Andhra Pradesh, Gujarat and Rajasthan. Even within these States, only selective sites offer high wind energy potential.

The Indian market is moving towards adopting higher capacity wind energy generators (WTGs) with hub height of more than 100 metres. Global players such as GE have come out with advanced technology turbines designed to offer increased swept area, facilitating higher generation in low wind density sites. While this will improve the project economics for developers, implementation remains largely untested.

Alternatively, lower PLFs need to be compensated by either cutting down the project cost substantially, or by obtaining best deals for operation and maintenance (O&M) of the wind turbines, or by locking-in low cost funds, most often a combination of all of these. Clearly, higher capacity wind turbines are going to come at a cost and there are limitations to the concessions that can be obtained from O&M players.

Despite the interest rate cuts and falling MCLRs of banks, securing low cost funding in today’s market will largely depend on promoter strength and credit rating. Without a substantial database of PLFs of 35 per cent available in India today and given the first time deployment of next generation wind turbines, lenders, having burnt their fingers more than once, might choose to play it safe this time around.

Solar was a different story

Unlike Ultra Mega Solar Parks (UMSP), for the SECI wind projects, project land and evacuation infrastructure up to the point of interconnection at the ISTS need to be put up by the developers. In India, these things come at a cost. Right or wrong, these unstated costs need to be factored in the project cost estimates.

Further, the drop in prices of WTGs has been very different from what has been seen in solar power. Since 2009, solar PV module prices have fallen by 80 per cent as compared to a 30-40 per cent fall in wind turbine prices. Solar module costs fell by about 26 per cent in 2016 alone and are likely to fall further this year, due to oversupply in the Chinese and European markets. Considering the low lead time in procuring solar panels and low time required for commissioning, the bidders for Rewa UMSP would have had sufficient buffer to factor in another round of drop in solar module prices.

No such cushion is available for wind. Bidders would have had to rely upon pre-bid tie ups with WTG manufacturers to work out their project cost estimates. In a way, the aggressive bidding would have trickled backwards and caused a fair share of competition among turbine manufacturers.

More uncertainties loom

From April 1, 2017, the tax relaxation for infrastructure projects under 80IA shall cease. Further, wind power plants commissioned after this financial year will not be eligible for generation based incentives. Accelerated depreciation will reduce from 80 per cent to 40 per cent.

Also, the cloud of uncertainties that the implementation of GST poses needs to be factored for any reasonable viability assessment. Most wind turbines are domestically made. Currently, there is no excise duty to be paid for WTGs and renewable energy components attract a VAT of 0-5 per cent in most States. According to a report published by the Ministry of New and Renewable Energy, GST is likely to cause an increase of 11-15 per cent in project cost of wind power projects.

One can only hope that all these risks were adequately factored by the bidders. This kind of aggressive bidding is not new to us. Starting from BoT road projects awarded a decade back, to coal mining, telecom spectrum and more recently, solar power and hybrid annuity model (HAM) projects in the road sector, this issue has been ingrained in the system.

While it is good to see such investor interest in India’s infrastructure space, it is absolutely essential to tread carefully. Let us not forget all the BoT projects which became distressed assets in the books of lenders due to optimistic traffic projections or higher revenue shares promised during a competitive bidding war.

View original post on Hindu Business Line: http://www.thehindubusinessline.com/opinion/wind-power-bids-in-india-are-unrealistic/article9618027.ece

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/

Solar tenders, auctions slowing down in India: Report

While solar installations in India have picked up speed, tenders and auctions have been slowing down over the past couple of quarters, according to a Mercom Capital report. About 1.9 GW of solar power was tendered in Q1 2017 (1 GW of this was a retender) compared to 3.4 GW in Q4 last year. There was 1.3 GW of solar projects auctioned in Q1 2017 compared to 255 MW in Q4 2016. The slowdown in activity has been disconcerting to developers and manufacturers who have been gearing up for more activity based on India’s solar installation goal of 100 GW by 2022.

As per the target set by the government, India needs to instal 18 GW of solar power every year till 2022. If the government wants to meet its solar installation goals, the pace of tenders and auctions must pick up quickly. Companies, who have invested hundreds of millions to expand to meet the demand and build projects, are anxiously waiting for the activity to pick up.

 

According to the report, “Some of the reasons for decline in tender and auction activity include poor financial condition of distribution companies (DISCOMs), transmission issues, weaker power demand and increases in captive generation by commercial and industrial companies. DISCOMs that are continuing to struggle financially are not taking on new generation that is more expensive than coal, which is leading to curtailment of solar and wind projects as well as payment delays to developers.”

The World Trade Organization (WTO) ruling against India’s domestic content requirement (DCR) has resulted in continuous cancellations and postponements of planned DCR tenders.

“In some states, weak power demand is removing the urgency to speed up the pace of solar tenders and auctions. Increases in captive generation by industrial customers have compounded the situation since they are requiring less power generation from DISCOMs,” the report adds.

The recent record low bid of Rs 3.30 (approximately $0.494)/kWh at the REWA solar park auction is playing a big role in the slowdown of auction activity as government agencies and states are stalling to renegotiate PPAs that are more expensive than the bids received at REWA.

For DISCOMs, coal is still the cheapest option available.  According to Mercom’s December Solar Quarterly Report, DISCOMs have resorted to sporadic curtailment from some solar projects in Rajasthan and Tamil Nadu because cheaper power is available on the power exchanges. Even when there is demand, several states have complained that the DISCOMs are resorting to power cuts instead of buying power on the exchanges to save on costs.

Several other developers told Mercom that as of now Bihar, Jharkhand, Tamil Nadu, Rajasthan and Maharashtra are the problem states. According to Mercom’s Solar Project Tracker, tendering activity has declined in these states with most of the old tenders being continually extended.

 

“We hope this is a short-term issue which, once resolved, will see tariffs get down to realistic levels and there will be a big spurt in activity. However, if some of these pressing issues are not resolved quickly, growth will stall,” said Raj Prabhu, CEO of Mercom Capital Group. “There needs to be a policy mechanism put in place to avoid the stop and start in tender activity every time there is an outlier in terms of a low bid. However, if states revise their tenders to include all of the positive aspects of the REWA tender, it can be a win-win for all,” he added.

View original post on Business Today: http://www.businesstoday.in/

India plans Renewable Energy Management Centres for Green Corridors

Existing control centres, known as state load dispatch centres (SLDCs) currently lack renewable energy forecasting systems. Flickr: Tapas GaneshExisting control centres, known as state load dispatch centres (SLDCs) currently lack renewable energy forecasting systems. Flickr: Tapas Ganesh

As part of India’s Green Energy Corridor scheme, the Ministry of Power has proposed setting up a host of Renewable Energy Management Centres (REMCs) across the country to help integrate renewables as their penetration increases. The centres will cost around INR4.09 billion (US$63.5 million).

With a 160GW target of solar and wind by 2022, the ministry is concerned about grid stability and security. It noted that seven states will account for 104GW (65%) of this capacity including: Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Gujarat and Rajasthan.

The newly proposed REMCs would therefore be separated into the Southern, Western and Northern regions across the seven major resource rich states and various projects of the Green Energy Corridor scheme.

Existing control centres, known as state load dispatch centres (SLDCs) currently lack renewable energy forecasting systems, scheduling, monitoring and reserve management abilities.

To alleviate this problem, India aims to emulate state-of-the-art renewables forecasting and monitoring systems already successfully operating in countries like Spain, Germany, US, Denmark, Belgium and Australia.

The REMCs’ functions include:

  • Forecast renewable energy generation at state and regional levels
  • Schedule renewable generation with real time tracking and SCADA systems
  • Coordinate with the relevant load dispatch centre

Power Grid Corporation of India Limited (PGCIL) has already worked on similar control centre projects and has therefore been assigned the implementation role. On completion, PGCIL will hand the REMCs over to the states.

The projects are to be implemented within 15 months of award and commissioned progressively through 2018/19.

PGCIL recently entered in to a loan agreement of up to US$500 million with the Asian Development Bank (ADB) partly for one of its Green Energy Corridor projects.

View original post on: https://www.pv-tech.org/news/india-plans-renewable-energy-management-centres-for-green-corridors

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.

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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India Wavers on Emissions as Power Plants Balk at Price Tag

India may ease a deadline to cut pollution from coal-fired power plants blamed for causing the world’s worst air quality amid pressure from generators who say it’s too difficult to implement the $37 billion reforms.

The deadline to meet all the new standards may be pushed back beyond the original December 2017 target, said S.D. Dubey, chairman of the Central Electricity Authority and head of the panel drafting the road map for power producers to meet the new guidelines. Prime Minister Narendra Modi’s government proposed the limits on toxic emissions in December 2015.

The delay highlights the challenge facing Modi’s administration to provide cleaner air alongside affordable and reliable power to all of the country’s 1.3 billion people. Limiting emissions would take longer than the government’s original two-year deadline and cost as much as 2.5 trillion rupees ($37.4 billion), the Association of Power Producers, a lobby group of non-state generators, said in March.

The new goals may be implemented “in a phased manner,” Dubey said in a phone interview. “Particulate matter emissions should be addressed in the first phase. The next step would be sulfur dioxide emissions and later on oxides of nitrogen. That’s the direction we are moving in.”

The office of Federal Environment Secretary A.N. Jha, whose ministry originally proposed the standards, didn’t respond to e-mails seeking comment.

India’s 187 gigawatts of coal-fired power capacity, which generate more than 75 percent of the nation’s electricity, contribute to the air pollution that makes India home to what the World Health Organization has determined are 11 of the top 20 cities on the planet with the worst air quality. The plants account for 61 percent of its generation capacity, according to the Central Electricity Authority.

India must first establish monitoring systems at all plants to establish an emissions baseline, determine what technologies will be appropriate and then install them at the plants, said Leslie Sloss, an analyst with the IEA Clean Coal Centre, a technology cooperation program of the Paris-based International Energy Agency.

“The time frame for the new norms is extremely challenging and probably not possible in practice,” Sloss said. “The new norms equate to India complying with emissions standards within a few years that Western economies have worked up to over decades. ”

Coal-fired power plants contribute to the release of about 60 percent of India’s industrial particulate matter, as much as half of the sulfur dioxide and 30 percent of oxides of nitrogen, the New Delhi-based Centre for Science and Environment said in a report in December, weeks after the new standards were announced.

“The emission norms require capital expenditure, which will lead to an increase in tariffs and burden the already weak financials of state power retailers,” said Sachin Mehta, an analyst at Mumbai-based Centrum Broking Ltd. “The plan is fraught with challenges. It is impossible to meet the current deadline.”

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http://www.bloomberg.com/news/articles/2016-11-02/india-wavers-on-emissions-goal-as-power-plants-balk-at-price-tag