Power

India plans power sector overhaul to discourage Chinese imports

More tariff barriers, subsidised financing for encouraging domestic equipment usage, rigorous testing of foreign equipment and prior permission requirements for imports from adversary countries, are some of the focus areas of India’ proposed power sector overhaul currently in the works. This comes in the backdrop of India contemplating an economic response against China and is part of a wider decoupling exercise embarked on by the Indian government since the 15 June border clashes with China. Addressing the industry captains, power and new and renewable energy minister Raj Kumar Singh on Tuesday said that some countries who are adversaries or potential adversaries will be identified as “prior reference countries", and a prior government permission will be required before importing any equipment from there. As the first step, starting 1 August all imported solar cells, modules and inverters will attract a basic customs duty (BCD) as reported by Mint earlier. This will make imports from China expensive and will follow after the safeguard duty on solar cells and modules imported from China and Malaysia, currently in place, expires on 29 July. This may result in a 20 paise increase in solar tariffs for new contracts. Also, to ensure that the already bid out projects and the electricity tariffs quoted are not hit, the government plans to ‘grandfather’ such projects and is collating details along with the tentative equipment import date. Singh added that whatever is made in India will not be imported and said that an Indian is willing to pay more for power provided it is made in India

Power Ministry joins 'Make in India' pitch, calls for curbs on imports

The Ministry of Power, in a discussion with the electricity industry and key stakeholders of the sector, has asked for a renewed focus on domestic manufacturing and announced curbs on imports. R K Singh, the Union minister of state for power, new and renewable energy, announced that a basic customs duty (BCD) would be imposed on imports of solar cells and modules. The minister said the duty would take effect in August. A BCD of 20 per cent on solar imports was proposed in the Union Budget 2020-21. However, the ministry said it would remain zero. Solar cells and modules are exempt from any BCD, according to a 2005 notification of the department of revenue. “A clear trajectory of BCD would be declared so that there is no uncertainty about government policy,” said the public statement by the power ministry. It said the department would also issue an approved list of models and manufacturers in renewable energy effective from October 1. The minister also urged the industry not to import any equipment/materials/ goods in which there was sufficient domestic capacity.He further said for those goods and services where domestic capacity was not available. The minister also said prior approval from the ministry would be needed for importing power sector equipment. The public sector units have relied on BHEL for supplying boiler-turbine-generator (BTG) for their power generation units. However, thermal power units of leading private players such as Essar Power, Adani Power, Reliance Power, GMR Energy, and Sterlite Energy have Chinese companies as their BTG suppliers, according to the data by the Central Electricity Authority.

Power dept resumes work on projects as Government eases COVID lockdown

As the government has partially lifted the COVID19 lockdown, Power Development department has resumed work on several development projects. A senior official said that work on several projects at over 200 locations was halted in April owing to the lockdown. Chief Engineer, Projects JavaidYousuf Dar said the department has been able to resume over 70 percent of the work. He said most of these projects will be completed by October end. “The development work that our wing is looking after is mostly related to enhancing power distribution system across Kashmir,” said Dar. These development works include project under centrally sponsored schemes like RAPDRP, IPDS, PMDP and DDUGJY. Most of the projects under these schemes are related to augmentation and creation of new receiving stations, installation of transformers and laying down new cabling network to enhance power distribution infrastructure across the Valley, Dar said. He, however said around 45 locations were the work was halted fall under COVID19 red zones where the work was yet to be started. Another official said over 1,200 labourers have been hired to complete the work. He said most of the work force hired was local. Managing Director, Kashmir Power Distribution Corporation Limited (KPDCL), AijazAsad said finishing the ongoing projects on time would help improve power scenario in Kashmir.

Power demand slump narrows marginally to 9.76% in third week of June

Intense heat wave during the third week of June has helped further narrowing of power demand slump to 9.76 per cent from 10.5 per cent in the

previous week, showing commercial and industrial activities are yet to reach optimum levels. The slump in power demand in the first week of the June was recorded at 19.7 per cent. However, the decline so far is still higher than 8.8 per cent recorded in May. In the third week of June, the power demand has improved due to intensifying heat wave, and it hovered around 162 GW from June 15 onwards, and further shot up to 164.64 GW on June 19, as per the power ministry data. The peak power demand met stood at 163.30 gigawatts (GW) on June 11 and remained slightly lower at 158.02GW on June 12, 157.79 GW on 13th and 156.88 GW on 14th. The peak power demand of 164.64 GW this week is 9.76 per cent less than 182.45 (GW) recorded in June last year.

Central transmission utility hived off from Power Grid Corporation

In a landmark decision, the Centre has decided to hive off the Central Transmission Utility (CTU) function of state-owned Power Grid Corporation of India (PGCIL). Pending since 2015, this move has been taken to avoid conflict of interest while awarding power transmission projects. As PGCIL is also a power transmission construction company, it participates in tenders for competitive bidding for projects, alongside private players. This conflict of interest in PGCIL as both planner and participant in transmission projects has faced repeated criticism from the industry. In a letter to the chairman and managing director of PGCIL, the ministry of power has directed it to make CTU a 100 per cent subsidiary with separate accounting, board structure and carry out its statutory functions. “The aforesaid 100 per cent subsidiary company would be separated into a new CTU Limited, a wholly-owned government of India Company within six months or till completion of formalities for creation of new CTU Limited,” said the letter by power ministry. Business Standard has reviewed the letter. This follows hiving off the grid management function from Power Grid and creation of a separate company — Power Systems Operation Corporation (POSOCO) in 2014. Union petroleum minister Dharmendra Pradhan said the government is planning to unbundle state-owned GAIL into two companies for gas transmission and marketing business.

Power Ministry asks PGCIL to set up central transmission utility

The power ministry has asked state-owned Power Grid Corporation to set up a central transmission utility with separate accounting and board structure. PGCIL is engaged in power transmission business with the responsibility of planning, implementation, operation and maintenance of Inter-State Transmission System. There have been allegations that PGCIL is at advantage as developer of power transmission projects because it is a central transmission unit (CTU). "PGCIL shall immediately set up a CTU, a 100 per cent owned subsidiary of PGCIL with separate accounting and board structure, which would be responsible for carrying out statutory functions, as identified for CTU under the Electricity Act 2003,” the Ministry said in a letter. The subsidiary would be separated from the Power Grid Corporation of India Ltd (PGCIL) into a new CTU Ltd, a wholly-owned Government of India company, within six months or till the completion of formalities. As per the letter, the modalities of setting up of the subsidiary would be similar to those adopted during the formation of POSOCO as subsidiary company. Power System Operation Corp (POSOCO) was also set up as an independent company for ensuring neutrality of the transmission system operations.

Govt aims to complete privatisation of UT discoms by January 2021

Efforts would also be made to privatise a number of discoms in major states such as Uttar Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Jharkhand and Assam To usher in efficiency, the government is planning to privatise the electricity distribution companies (discoms) in Union Territories (UTs) by January 2021, sources said. Efforts would also be made to privatise a number of discoms in major states such as Uttar Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Jharkhand and Assam to improve the governance of these state-run entities. The Centre had announced in May that power departments and distribution utilities in Union Territories (UTs) will be privatised. Finance minister Nirmala Sitharaman had then said that the Centre hopes the privatisation of UT discoms will “provide a model for emulation by other utilities across the country”. Among all the discoms which supply power in the UTs, the largest is located in Jammu and Kashmir, which owed Rs 5,443 crore to power generators as on March-end. The aggregate technical and commercial losses — an indicator of power pilferage — of the recently formed UT stands at 48% against the national average of 19%.

The Centre’s discom liquidity package comes with many strings attached

Players in India’s power sector, who were in financial hot waters even prior to Covid, have sunk deeper into the quagmire lately with commercial buyers reducing their offtake during the lockdown. With revenues of State distribution companies (discoms) hit hard, their already large overdues to generation companies have mounted. An India Ratings report suggests that overdues from discoms to generation companies had vaulted from ₹55,300 crore in March last year to over ₹91,700 crore by March 2020. In the circumstances, the announcement of a ₹90,000 crore liquidity lifeline for discoms as a part of the Atmanirbhar Bharat package is welcome both for its intent and timing. This package doesn’t entail any direct outlays from the Centre but envisages Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) tapping market borrowings to raise the required ₹90,000 crore. The package, if implemented in full, can ease liquidity across the power value chain and prevent immediate defaults.

Green certificate sales down 55 pc to 3.33 lakh in May

Sales of renewable energy certificates dropped over 55 per cent to 3.33 lakh units in May compared to 7.5 lakh in the same month a year ago, according to official data. Renewable energy certificate (REC) is a type of market-based instrument. One REC is created when one megawatt hour of electricity is generated from an eligible renewable energy source. According to official data, a total of 2.78 lakh RECs were traded on the Indian Energy Exchange (IEX) in May, compared to 5.5 lakh in the same month of 2019. Power Exchange of India (PXIL) recorded sales of 0.55 lakh RECs in May as against around 2 lakh earlier. IEX and PXIL are engaged in trading of RECs and electricity. REC trading is conducted on the last Wednesday of every month. The IEX data showed that both non-solar and solar RECs witnessed higher supply, with sell bids exceeding buy bids. There were buy bids for over 2.8 lakh RECs against sell bids for over 31 lakh RECs in May this year. Similarly, the supply was high at PXIL. There were buy bids for over 0.55 lakh RECs and sell bids for over 16 lakh units for the month under review. Overall supply for RECs was high as the

total buy bids at both power exchanges was over 3.33 lakh units against sell bids of over 47 lakh units in May this year.

Amendments in power policies by states pose regulatory risks to renewable energy developers: ICRA

Renewable energy developers that have significant third-party power-purchasing agreements are prone to regulatory risks, as States continue to amend their power policies which withdraw or reduce incentives, according to a report by ratings agency ICRA. Various states have taken such decisions to help their distribution companies, which often suffer from cash flow issues. Recently, the Maharashtra Electricity Regulatory Commission (MERC) decided to levy additional surcharge on group captive projects, which were exempted earlier. Further increases in open access charges are expected as States will look to mitigate some of the damage caused by the covid-19 to the discoms, said GirishkumarKadam, sector head for power and renewables and VP at ICRA. Another factor that will affect the developers is the increasingly competitive tariff pricing of solar and wind projects. "With the improved tariff competitiveness for wind and solar energy against the conventional power sources, the open access charges for renewable energy projects are likely to remain aligned as that for conventional power sources, going ahead," said Kadam.

Power markets prefer renewable energy amid falling demand: Moody's

The clean energy transition might be accelerated due to the covid-19 pandemic that has shown that power markets prefer renewable energy amidst falling demand, a Moody's report suggests. "Coal generation has continued to decline, while renewables have shown more resilience across major markets in the US, Europe, China and India," stated the report. The power demand in India has fallen by 20% due to the lockdown, with most of the impact on coal generation, they added. Both corporate as well as household power demand are expected to be heavily affected by recessionary growth and weaker long-term growth expectations. The production of conventional sources of energy such as coal and oil has also dropped, said the agency. Renewable energy made up the bulk of recent capacity additions both in India and the world over, which continues to displace thermal generation. With a sharp decrease in power demand due to the lockdown, this trend is expected to continue, said Moody's. "COVID-19 could have a ratchet effect, limiting any rebound in coal generation, and accelerating the decline of coal in the US and Europe by a few years," said the ratings agency.

Power ministry may consider extension of ISTS charges waiver beyond 2022

Union minster R K Singh said the power ministry may consider extending beyond 2022 the waiver of Inter-state Transmission System (ISTS) charges for renewable energy projects. Last year in November, the ministry had extended the ISTS charges waiver to wind and solar energy projects by nine months till December 2022. Under the waiver, all these projects commissioned by December 2022 are eligible for availing exemption of ISTS charges and losses on transmission of electricity for 25 years. Initially, the waiver was for the projects commissioned till March 31, 2022. Power minister Singh said his ministry "may consider to extend the ISTS waiver for renewable energy projects by at least six months", according to a statement issued by Ficci after a CEOs interactive session with the minster. Industry bodies are

pressing for the extension of at least one year beyond December 2022 in the wake of the COVID-19 pandemic.

About 15,000 MW of wind-solar hybrid capacity to come up in 5 years: Crisil

As the government continues to focus on increasing the share of renewable energy in the country, nearly 15,000 MW of wind-solar hybrid capacity is expected to come up over the next five years, Crisil said. Out of this 15,000 MW, works on nearly 10,000 MW are already either under construction or are being tendered and are expected to start feeding the grid by fiscal 2024. In the hybrid option, the system is designed using solar panels and small wind turbines generators for generating electricity. According to the ratings agency, since generation of solar energy tends to peak during the day and that of wind energy at night, the resulting intermittence in supply impacts grid resilience, making discoms reluctant to buy power from standalone wind and solar projects. "In the hybrid option, however, these two energy sources complement each other, which could help overcome the problems of variability of generation and grid security, and thereby discoms' reluctance," Crisil said. As of March 2020, India had 37,690 MW of standalone wind energy capacity and 35,000 MW of solar capacity.

Adani wins world's largest solar project order; to invest Rs 45,000 cr

Billionaire Gautam Adani's renewable energy firm Adani Green Energy on Tuesday said it has won the world's largest solar order to build 8 gigawatts of photovoltaic (PV) power plant along with a domestic solar panel manufacturing unit at an investment of Rs 45,000 crore. Under the offering of domestic manufacturinglined solar projects from state-owned renewable energy agency SECI (formerly Solar Energy Corp of India), Adani Energy will set up a domestic solar panel manufacturing capacity of 2 GW (2,000 megawatts) as well as built 8 gigawatts (GW) of generation projects. The firm will get a fixed tariff of Rs 2.92 per kilowatt-hour (per unit) from the power plant over a contract period of 25 years. With this contract, Adani Green now has a portfolio of 15 GW of renewable power generating assets. It hopes to win tenders for another 10 GW of capacity this year to help it achieve the 25 GW target, said Adani, who heads the USD 15-billion Adani Group -- a sprawling conglomerate with interests in energy, agri-business, real estate and defence, among others. The first 2 GW of generation capacity will start by 2022, with the rest installed in 2-GW annual increments through 2025, Adani said. While the company will build the projects at various locations, the solar manufacturing facility will be ready by 2022.