Power

Govt may extend safeguard duty on Chinese solar power equipment The government is planning to extend the safeguard duty imposed on imported solar power equipment from China, sources said. Domestic solar equipment manufacturers have met Union Commerce and Industry Minister Piyush Goyal and suggested the duty be retained. This comes at a time when the safeguard duty impacted addition in solar power generation capacity over the past two years.

The domestic manufacturing industry has argued China was actively looking to divert major export flows en-route to India after major buyers from the US cancelled bulk orders. The Donald Trump administration has ratcheted up tariffs on Chinese imports, especially in the electronics space, with Washington DC threatening in December that more restrictions might follow soon.

In 2018, the government announced imposition of safeguards duty on solar cells and modules for two years — 25 per cent in the first year, 20 per cent for six months and, thereafter, 15 per cent. Apart from Malaysia, the duty specifically impacted the exports coming from China, as more than 85 per cent of India’s solar capacity is built on Chinese panels. In the past one and a half years, imports of solar cells and modules have come down drastically. Imports of cells, pegged at $2.15 billion in 2018- 19, have gone down to $1.4 billion in the current financial year up to November. Cell imports had peaked at $3.83 billion in 2017-18. The paper recently reported India’s solar power target took a back seat because of imposition of safeguard duty on imported solar panels. Due to the uncertainty over the panel cost and final rates of power sale from their projects, many developers stalled the purchase of imported panels.

Power sector’s NPAs worth Rs one lakh crore may land in bankruptcy courts

As the January 7 deadline to resolve non-performing assets (NPAs) in the power sector has passed, around Rs 1 lakh crore of bad debt in the sector remains unresolved, according to banking sources. The banks may refer Coastal Energen, Rattan India (Nashik), Emco Energy, GVK Power (Goindwal Sahib), Simhapuri Thermal and Jaiprakash Power Ventures to the National Company Law Tribunal (NCLT). Lenders have already referred KSK Mahanadi and Meenakshi Energy to NCLT. The banks signed inter-creditor agreements (ICAs) to resolve power companies under Reserve Bank of India’s June 7 circular. However, only three power companies- Prayagraj Power, Rattan India (Amravati) and GMR Chhattisgarh was able to reach an out of court settlement.

Interestingly, banks have also written to the Reserve Bank of India asking it to extend the deadline for signing ICAs by another three months to buy some more time for resolution. The resolutions in some cases have been stalled because some banks have not yet signed the ICA and disagreed on the terms. After the successful resolution of Rattan India (Amravati), banks were hoping to close deal for Rattan India (Nashik) as well. However, no resolution could be finalised. Earlier, a consortium of lenders, led by Power Finance Corporation (PFC), had agreed to take a 38% haircut against their exposure of Rs 6,575 crore to Rattan India Power’s 1,350-MW Amravati plant. Some banks are also looking to sell their exposure in power NPAs. Union Bank has invited bids to sell its exposure of Rs 444 crore in GVK Power Goindwal Saheb. The subsidiary was unable to run the plant at optimal capacity during 2017-18 and 2018-19, primarily on account of low availability of fuel and, hence, defaulted on the repayment of dues to lenders.

Power Min seeks more time for coal plants to install emission cutting tools India's federal power ministry has proposed a new deadline for coal-fired power plants around New Delhi to install equipment to reduce emissions, a government official said. The ministry has said that the power plants be given deadlines starting July 2020 and ending December 2021 to install the equipment. The last deadline for installing such equipment ended on Dec. 31, 2019, with just one out of the 11 utilities in the national capital region having installed the equipment. The utilities could not meet the emissions standards of December 2017, which was then extended by another 2 years. The environment ministry will take the final call on the power ministry's proposal.

On Dec. 30 Reuters citing documents reported Indian Prime Minister Narendra Modi's office has proposed waiving a tax on coal to help finance pollution-curbing equipment.The official said that the finance ministry is considering waiving about $6 per ton of carbon tax on coal.

Private electricity generators object to the latest coal linkage auction Private electricity generators have expressed their concern over the latest auction for coal linkage being conducted by Coal India (CIL) for power plants without power purchase agreements (PPAs). In a letter to Union coal minister Pralhad Joshi, the Association of Power Producers (APP) has claimed that the auction methodology is not in line with the recommendations of the high-level empowered committee (HLEC) which was constituted to address issues of stressed thermal power projects. Power producers claim that there are “high risk” factors associated with the two-step auction process as only plants which manage to secure PPAs within two years after the auction will receive coal. There is a minimal possibility of any private power plant getting access to the coal awarded in this auction since there are no vis

ibility of PPAs in the near horizon. The last major bid for long term PPA was held in 2016 by Telangana. Power producers also said that the auction involves high risk of forfeiture of bid security, which is about Rs 1 crore per lakh tonne. A 600 MW coal-based plant, at 85% PLF, roughly uses 26-28 lakh tonne of coal every year. Union power minister RK Singh had earlier mentioned that such auctions is not a workable solution amid such dearth of PPAs. The industry also warned that the auction design “seeks to maximise the possibility of squeezing out irrational bids from developers who are desperate for coal to run their stranded projects”. The HLEC had recommended that “that for incremental coal production, the generator should be required to bid only once, for the procurement of PPA and the linkage may be granted at the notified price without any further bidding”.

Government cancels coal block allotted for power project in Jharkhand The government has cancelled the allotment of a coal block for the power project in Jharkhand, as even after a decade of allotment no significant progress was made to operationalise it. The coal block was allotted in 2009, to Karanpura Energy Ltd -- an SPV of erstwhile Jharkhand State Electricity Board (JSEB).

Due to long delays in development of coal block, show cause notices were served by the coal ministry to the company in December 2013, and September and October, 2019. The company in its reply to the ministry in November, 2019 cited non-availability of land, water and resistance from the local inhabitants as impediments in development of the coal block. The coal ministry, however, said that the reply “was not found satisfactory“.

As per the allocation letter, the ministry said, the mining lease of the block may be cancelled on the grounds, including unsatisfactory progress in the development of coal mining project and breach of any of the conditions of allocation.

Electricity Act may be amended to ensure discoms honour power pacts The government is planning to introduce a bill to amend the Electricity Act to prevent states from reneging on power pacts, particularly renewable energy contracts, and distribution companies from defaulting on bills.

It wants to ensure that renewable energy tariffs are not changed after execution of contracts, and electricity regulatory commissions have more teeth to enforce power purchase agreements between projects and distribution companies (discom), a senior government official said. Power minister RK Singh and top officials of his ministries have been asking Andhra Pradesh to refrain from renegotiating renewable power pacts to avoid sending wrong signals to domestic and global investors. Earlier, the power ministry was considering promulgating an ordinance as discom dues to power generating companies have swelled to `82,000 crore. The bill is likely to be introduced in the later part of the budget session once cleared by the Union Cabinet.

The amendments propose to alter the relevant sections of the legislation to ensure that parties to the contracts do not stop supplying or offtaking electricity even in case of a dispute, till the time it is settled. The Centre also proposes to address delays in tariff adoption by state and central electricity regulators. If concerned regulators do not adopt tariffs in two months, the power producers or the distribution companies will have the right to appeal to the Appellate Tribunal for Electricity. Proposal to set up a separate dispute resolution court to resolve issues between discoms and power generating companies in a time-bound manner is also being considered.

ICRA downgrades renewable energy sector to negative on rising headwinds

ICRA has revised the year-end outlook for the renewable energy (RE) sector, from stable to negative. The sector is facing headwinds because of the long delays in payments made by State distribution utilities, execution delays for projects bid out over the past two years due to challenges in completion, land acquisition difficulties, securing transmission connectivity and; financing in a timely manner.

Given the challenges, ICRA expects renewable energy capacity addition to remain at about 8.5- 9 GW for FY2020, which is similar to the capacity added in FY2019. The capacity addition would be primarily driven by the solar power segment. The share of renewable energy based generation in the overall generation mix at all India level is rising, as seen from an increase from 5.6 per cent in FY2015 to 9.2 per cent in FY2019. The share of renewable energy is expected to reach closer to 10 per cent in FY2020. This is owing to the large sized capacity addition witnessed in the wind and solar power segments during this period, driven by policy support from central and state governments as well as the significantly improved tariff competitiveness of wind and solar power vis-a-vis conventional power sources.

Clean power push: Govt adds over 50,000 MW in 5 years

The renewable energy sector has made rapid strides under the Modi government with 50 GW plus of new capacity coming into the grid in the last five years despite the doubts being raised over the government’s target of achieving of 175 GW by 2022.

The December quarter of 2019 saw India’s cumulative clean energy capacity cross 85,000 MW, of which more than 50,000 MW of new capacity addition was achieved in the past five years.

As on December 31, 2019, the total grid-connected installed renewable power capacity in India stood at 85,908 MW. Though the wind segment is still leading now with a total installed capacity of 37,505 MW as of now, solar is fast growing and is likely to overtake the wind sector in the next fiscal. The solar segment’s (which includes ground-mounted and rooftop) total capacity was 33,730 MW.

During April-December 2019 period, the renewable energy segment added 7,592 MW of new capacity when compared with 5,002 MW of new capacity in the year-ago period, an increase of 52 per cent.

The solar energy segment continues to be the key driver of new capacity growth with an addition of 5,013 MW of new capacity through ground-mounted projects and 537 MW of capacity by way of rooftop projects. The wind sector doubled its addition to capacity at 1,879 MW when compared with 993 MW.

The MNRE has fixed a total capacity addition target of 11,802 MW for 2019-20 (15,602 MW in 2018-19) and solar is expected to be the highest contributor with about 8,500 MW followed by wind (3,000 MW), biomass (250 MW) and small hydro (50 MW).

Some SE Asian nations dither on joining India-based solar alliance

The India-headquartered International Solar Alliance’s (ISA’s) drive to co-opt countries from South-East Asia is facing problems with some countries holding back because of New Delhi’s decision to not join the Regional Comprehensive Economic Partnership (RCEP) trade deal, said two people aware of the development.

Vietnam, Malaysia, Singapore, Philippines, Thailand, Brunei, Indonesia, and Laos are yet to become a signatory of the ISA, the first treatybased international government organization headquartered in India. Myanmar has signed and ratified the agreement, while Cambodia is yet to ratify it and has the status of observer.

This comes against the backdrop of China’s attempts to co-opt countries into its ambitious One Belt One Road initiative, a programme to

invest billions of dollars in infrastructure projects, including railways, ports and power grids, across Asia, Africa and Europe.

As many as 84 countries have signed the framework ISA agreement, of these 63 have ratified it.

The ISA has become India’s calling card on climate change and is increasingly seen as a foreign policy tool. ISA was termed as a political project by France at the solar alliance’s second general assembly held in New Delhi from 30 October to 2 November last year.

Initially, ISA envisaged 121 sunshine countries situated between the tropics of Cancer and Capricorn as its members. Prime Minister Narendra Modi later announced the “universalization" of membership with India moving the proposal to make all United Nations members eligible for ISA membership.

Proposed carbon tax waiver on coal may pose risks to India's renewables growth: Fitch Fitch Solutions on Monday said that the centre's proposed carbon tax waiver on coal may pose substantial downside risks to India's renewable sector growth.

In a bid to alleviate significant debt levels in the power industry, India has proposed to waive carbon taxes on coal (Rs 400 rupees/tonne), it said. This comes at a time where aggressive bidding and rapid fall in tariff prices in country's renewable power auctions have squeezed profit margins for project developers and threatened the economic feasibility of the project pipeline in the renewables sector. The proposed carbon tax waiver on coal will "weigh on renewables growth," Fitch Solutions said, adding that the carbon tax waiver was likely to make coal-fired power cheaper, increasing the use of coal.

Most notably, Tamil Nadu, one of India's largest renewable energy states, has decided to cease wind and solar auctions for the time being due to under subscription in the previous two.

Railways push to green energy to cut carbon footprint The Railways is accelerating its efforts to install and use renewable energy as part of its objective to reduce carbon its footprint and cut power costs. It aims to source about 1,000 MW of solar power and about 200 MW of wind power by 2021- 22.

Currently, it consumes 200 MW of clean energy. The Railways’ total power requirement is estimated at about 2000 MW. Railways is working on solar rooftop, groundmounted and wind power projects on railway buildings, stations, hospitals and vacant railway land lying with different zones. Railways is planning to install 500-MW solar plants on the roof top of railway buildings through the public-private partnership mode with 25-years agreements, which will be used to meet non-traction loads at railway stations.

Of this, 96.84 MW of solar plants have already been installed and 16 stations have been declared green railway stations across zones. These green stations meet their entire energy needs either through solar or wind power. Work is in progress in about 111 MW Solar plants, while tenders for 93 MW solar plants have recently been awarded by REMCL. It is also planning about 500 MW groundmounted solar plants to meet traction and nontraction requirements. Of this about 3 MW has already been installed at the Modern Coach Factory, Rae Bareilly.

In the wind energy sector, the Railways has already installed 103.4 MW of the targeted capacity of 200 MW. Windmill plants of 21 MW (for non-traction) capacity in Tamil Nadu, 26 MW (for traction) capacity in Rajasthan, 6 MW (for non-traction) and 50.4 MW (for traction) capacity in Maharashtra have been installed.

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