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Power
THERMAL
India continuing to grapple with 'severe and protracted power crisis' after surge in coal prices
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India is continuing to grapple with a "severe and protracted" power crisis after a sustained surge in global coal prices in late-2021 was further aggravated by Russia's invasion of Ukraine in February. The global price pressure eroded India's import volumes and reduced its power plant stockpiles to critically low levels just as an unrelenting heat wave pushed demand to unprecedented levels. The crisis is so severe that government in India is planning to cut domestic coal supply to power plants that are reluctant to import coal at current elevated prices. The current deficit, the second such coal shortage since October 2021, was initially triggered by the sharp rise in global coal prices in mid-2021. The disruption in global coal supply has led to a near 30% surge in the grade's price to $86/mt as on June ’22. To meet India's rising power demand as Covid-19 restrictions eased, the government first tried to boost domestic coal production. The government has also tried divesting coal blocks to private companies in recent years to incentivize them to increase India's overall coal production. With the global coal supply expected to remain tight in H2 and winter still some months away, coal shortages and power outages may well remain a pressure point for India for the rest of the year.
India is to see the largest increase in energy demand worldwide over the next 20 years, according to a report by Infomerics Valuation and Rating Pvt Ltd, a SEBI-registered and RBI-accredited financial services credit rating company. India is the third-largest producer and the third-largest consumer of electricity in the world. With the increasing population, electricity demand is rising at a fast clip and India has improved its power generation capacity over the years. India has added more than 500 billion units until FY22 from FY10. The power generation capacity rose from 808.498 billion units (BU) in 2009-10 to 1,381.827 BU in 2019-20. The private power sector with 48.50% has the largest installed generation capacity followed by the Central sector (24.90%) and the state sector (26.70%). Fossil fuel has still higher installation, generating 2,35,929 MW of electricity, constituting nearly 60% of the total installed generation capacity. At present, over 150 thermal power plants have a coal shortage problem and the coal stock position of 173 power plants stood at the sub-optimal level of 21.93 million tonnes (MT), which is less than the regulatory requirements of 66.32 MT as of April 21, 2022.
Power demand rose 25% Y-o-Y while the economy grew by 8%: RK Singh
Highlighting the outcome of the initiatives taken by the government to ramp up India’s distribution and transmission sector, Power Minister RK Singh noted that the country’s electricity consumption rose by 25 per cent on a year-on-year basis, while the economy grew by 8 per cent. He noted that the efforts by the Centre to strengthen India’s debt-laden power sector have resulted in electricity demand growing from 3,500 million units (MU) per day to 4,500 MU. Singh pointed out that now companies transfer 1,12,000 megawatts (MW) of power from one corner to another. The government spent more than ₹2 lakh crore just on the power distribution segment. The government also added 2,950-odd new sub-stations and upgraded around 3,900 old substations to higher capacity. Low tension (LT) lines of up to 7.5 lakh circuit km as well as high tension (HT) lines of 2.5 lakh circuit km, along with 7.50 lakh transformers, were added.
Govt. to invite bids for power from 8,000 MW thermal capacities without PPAs
The government will invite bids from states to sell electricity generated from 8,000 megawatt (MW) thermal capacities without PPAs, Power Minister RK Singh has said. the minister informed that states have been asked to send their electricity requirement, and accordingly bids will be invited. "We will aggregate (their demand) and call on for bids and based on the bids, whoever puts in the lowest bids, PPAs will be signed. Once PPAs are signed, they (states) will get the power," he said. The minister said there are also some thermal capacities undergoing the National Company Law Tribunal (NCLT) proceedings, and the government has already taken several steps, including meeting with the bankers, to resolve the issue at the earliest so such plants can start operations.
Indian power plants blended 7 million tons of imported coal in April-June
Thermal power plants (TPPs) have blended around seven million tonnes of imported coal during the AprilJune period this year following the Centre’s directive for blending of foreign coal to overcome shortage. Till June 24, domestic coal based plants have reserve stock for more than nine days, while imported coal based plants have stocks for almost 12 days. For FY23, India is expected to import around 59 mt of coal for blending at power plants, while for June, the in-bound shipments are likely to be in the range of 4.8-5 mt. Earlier this month, State-run miner Coal India (CIL) floated a global tender to import 2.42 mt of the key commodity for July-September of FY23. Coal imports, which hit a peak of 248 mt in FY20, declined to 215 mt in FY21 and further to 209 mt in FY22. The decline in FY22 is largely due to a decline in imports by Power Sector, which came down from 69 mt in FY20 to 45 mt in FY21 and then further south to 27 mt in FY22.
Centre claims 99.9% rural electrification, but 1.1 mn houses still in dark
Electricity is yet to reach at least 1.1 million rural
households across states, two years after the Centre claimed to have attained 99.9 per cent electrification under its Saubhagya scheme or Pradhan Mantri Sahaj Bijli Har Ghar Yojana. According to Business Standard report, a majority these households are from Assam and Uttar Pradesh, owners of which were earlier reluctant to set up metered connections, but now are willing to get connections. Officials said, several states are coming up with new data showing more households that are left to be electrified, even after the expiry of the deadline for the last round of electrification under the Centre’s Saubhagya scheme, in 2021. The Centre had sanctioned 4,100 crore for the fresh round of electrification keeping August 2021 as the deadline. Since then, 400,000 of the newly-identified 1.1 million rural households have been electrified, officials told BS.
Coal India ventures into power generation
In a first, the Chhattisgarh-based South Eastern Coalfield Limited (SECL), an undertaking of the stateowned Coal India Limited (CIL), has decided to venture into power production. SECL has signed an MoU with the Madhya Pradesh Power Generation Company Limited (MPPGCL) for setting up a 660-MW unit. The project will be expedited by setting up a joint venture between SECL and the MPPGCL. The coal-fired plant of the state-run MPPGCL will have an installed capacity of 660-MW, that will come near the existing Amarkantak Thermal Power Station at Chachai in Anuppur district of MP. The plant will be built with modern supercritical stateof-the-art technology. Air-cooled condenser technology will be used in the power unit, which will save water for power generation, officials said.
Coal stocks at power plants improve
The number of thermal power plants having critically low stocks of domestic coal has reduced significantly for the first time in nearly two months, implying higher production and improved transportation of coal in the country. Data from the Central Electricity Authority (CEA) showed that only 74 of 150 power plants running on domestic coal in the country had critically low coal levels as on June 20. The national peak demand on the same day was 183,850 MW, and the shortfall was merely 109 MW. In view of improved coal supplies, domestic coalbased (DCB) power plants generated a record highpower of 3.3 million units per day between June 1 and June 16, data showed. Increased electricity generation did not deplete coal stocks at these DCB power plants during the same period and the stocks increased from 21.85 MT (June 1) to 22.64 MT (June 16). The rake loading to the power sector increased from 215.8 rakes per day in 2020-21 to 271.9 rakes per day in 2021-22, registering a growth of 26%. In the current year also (till June 16, 2022), the rake supply from CIL to the power sector has increased by 25% as compared to the same period last year.
Nepal starts exporting 364 MW electricity to India
Nepal has started exporting the total approved 364 MW of electricity to India through its power exchange market. Buoyed by continuous rainfall this year, the Himalayan nation is exporting surplus electricity to India through its power exchange market for the second consecutive year, according to the Nepal Electricity Authority (NEA), the state-owned power utility body. The state-owned body is now selling 37.7 MW from Trishuli and Devighat Hydropower Projects, 140 MW from Kaligandaki Hydropower Project, 68 MW from Middle Marsyangdi, 67 MW from Marsyangdi and 51 MW from Likhu-4 developed by the private sector, according to Pradeep Thike, Deputy Managing Director of the NEA. After the NEA began selling 51 MW power from the Likhu-4 in the Indian market starting, a total of 364 MW, generated by six projects with approval for export from the Indian authorities, is now being sold to India.
Govt asks Gencos to buy rakes to ensure smooth coal supply during monsoon
The government has directed the power generation companies (GENCOS) to buy rakes for captive usage, a move which will ensure smooth supplies of coal during the monsoon season. There are actions which the Railways need to take to reduce the congestion so that more coal can be
evacuated from these places. In some areas, the Coal Ministry will have to up the production where enough rakes are available, Power Minister RK Singh said. "You can own rakes and you save on transport cost and that pays for itself in about 9-10 years and the rake itself runs for about 25-30 years. NTPC already owns rakes, they are going to increase their rakes. I have asked all state GENCOS to own rakes to reduce load on railways." He said. The Minister has also said that the government is gearing up to increase the stock of coal at power plants to 40 million tonnes (MT) during the monsoon season. At present, there are reserves of around 22.9 MT at the power plants.
Proposed discom dues liquidation scheme to help realise Rs 9,000 crore receivables for RE sector
The Ministry of Power scheme to liquidate overdues that distribution companies (discoms) owe generation companies (gencos) can release the past receivables of the renewable energy (RE) sector of Rs 9,000 crore1 over the next two fiscals. That could improve the receivables period of leading RE gencos by 40-50 days from the current ~180 days, and improve the equity returns of some projects by up to 1 percentage point, a CRISIL Ratings analysis shows. Payment stretch has been one of the key risks for the RE sector. Under the proposed scheme, dues including late payment surcharge as on the cut-off date of June 3, 2022, will be converted into monthly instalments that discoms will pay over the following 12-48 months. That would translate to immediate liquidity gains for RE gencos, and can lead to better payment profiles. Of the 40-50 days improvement envisaged in the receivables cycle of RE projects, nearly half is expected to be because of this dues liquidation scheme.
PFC, REC working on loans for state power discoms
Power sector financiers Power Finance Corp (PFC) and REC Ltd are working on loans for state electricity distribution companies to help them pay their electricity dues. The state power distribution companies have 1.18 lakh crore electricity dues to power producers. The medium- to long-term loans from these financiers will be made available to states that participate in the power ministry's dues liquidation scheme, a senior official said. Interest rates for the revolving credit would vary depending on the credit rating of the borrowers. The two financiers have sought the Reserve Bank of India's nod for a special dispensation while financing power distribution companies' dues. According to the RBI's prudential norms, a lender's credit exposure to single borrowers shall not exceed 25% of its net worth. The RBI's relaxation from the exposure limits to the power sector expired in March this year. As per the new relief scheme, total waiver by the power-generating companies will be 19,833 crore in the next 12 to 48 months. States like Tamil Nadu and Maharashtra that have large outstanding dues will save over 4,500 crore each through this relief package. Uttar Pradesh would save around 2,500 crore while others like Andhra Pradesh, Jammu and Kashmir, Rajasthan and Telangana will pay 1,100 crore to 1,700 crore less.
Power exchanges can trade contracts up to 3 months now
Power exchanges will be able to trade contracts up to three months following approval from the Central Electricity Regulatory Commission (CERC). The approval is expected to bring a landmark change in the power markets as a major chunk of bilateral trade is expected to shift from bilateral contracts to power exchanges. Of the 660 power tenders between January 2020 and April 2022, 396 tenders (60%) were for monthly procurement of power. This indicates preference for monthly contracts among stakeholders. The power ministry had said the order will deepen the power market to a volume of 25% by 2024-25 from the present level of 5.5% of the volume. Experts said the move would enable state power distribution companies to tie-up short-term power supply for up to three months on power exchanges at a better and transparent price. Approval is granted for daily contracts, weekly contracts, monthly contracts and any day single sided contracts (based on reverse auction methodology) to be traded at petitioner's exchange, CERC said.
RENEWABLES
Green goals face capex challenge
India will require $223 billion of investment between 2022 and 2029 in order to meet its goal of wind and solar capacity installations by 2030, according to a report by research company Bloomberg NEF In 2020 and 2021, new solar and wind power projects together have secured $17.4 billion of asset financing. But over the next eight years, an average of $27.9 billion is required annually to meet the 2030 targets. “Scaling up financing to meet 2030 goals requires independent power producers to tap into new or underutilised sources of capital. This could be revolving construction debt, infrastructure investment trusts, and funding from retail investors, insurance companies and pension funds, researchers say. The report pointed out that power purchase negotiations, land acquisition and payments delays are among the key risks cited by the industry. In the short term, rising interest rates, a depreciating rupee and high inflation will create challenges.
MSMEs require least investment to go green
Small and medium businesses are the top priority for Bureau of Energy Efficiency (BEE) as they require least investment for transition to cleaner forms of energy, a senior official said. "India cannot achieve net-zero emissions by 2070 without addressing the energy needs and clean energy challenges of the country's 63 million strong small businesses community. Solutions for this sector would also make them globally competitive, as ever more multinational corporations look to decarbonizing their supply chains," OP Agarwal, CEO, WRII said. Highlighting the need for a just transition in this sector, he also opined that moving to cleaner energy and low carbon operations will enhance the sector's competitiveness and profit margins.
India needs to form Green Hydrogen Corridors and governments can look at providing grants to startups as well as support entrepreneurs to promote green hydrogen, NITI Aayog said. "Three hydrogen corridors should be developed across the country based on state grand challenges. The governments can provide grants and loans to startups and projects, support entrepreneurs through incubators and investor networks, and put in place regulations that manage first-mover risks, "the report said. The government can also use public procurement and purchase incentives (for green hydrogen) to create demand in niche markets and crowd in private investment, it added. The report suggested that the government should promote export of green hydrogen and green hydrogen-embedded products through a global hydrogen alliance. The report predicted that hydrogen demand in India could grow more than fourfold by 2050, representing almost 10 per cent of global hydrogen demand. In the longer term, steel and heavy-duty trucking are likely to drive the majority of demand growth, accounting for almost 52 per cent of total demand by 2050.
Cabinet gives post facto approval to pact with International Renewable Energy Agency
The Union Cabinet gave post facto approval to the strategic partnership agreement with the International Renewable Energy Agency (IRENA) which will help India in green energy transition. Agreement was signed in January 2022. The aim of the Agreement is to drive ambition, leadership and knowledge on green energy transitions based on renewable energy in India. It also stated that the Union Cabinet has approved the strategic partnership agreement. The Agreement will help India's energy transition efforts and will also help the world in combating climate change. The areas of cooperation as envisaged in the Strategic Partnership Agreement will support India in achieving its ambitious target of 500 GW of installed non-fossil fuel electricity capacity by 2030. The pact will also focus on moving towards cost-effective decarbonisation through catalysing development and deployment of green hydrogen. Last mile reach was a challenge in several pockets of the country, especially in areas which have been “left uncensored by the state government or are on contentious land patches.” Besides, areas of which
state government or state electricity departments have not submitted proper documentation, have remained out of the ambit of the scheme.
Duty on Solar Modules, Cells To Continue; Don't Want Imports: Power Minister
There are "no plans" to review the basic customs duty (BCD) levied on solar modules and cells, Union Power Minister R K Singh has said as the Government does not encourage Chinese imports in this regard. Last year, the government had announced imposing 40 per cent BCD on solar modules and 25 per cent on solar cells with effect from April 1, 2022. The domestic manufacturing capacity of modules and cells has started going up. However, developers of renewable energy projects have been raising concerns that the domestic capacity is not enough to meet their needs of modules and cells, and were expecting relief from the government. According to research firm Mercom India Research, the domestic module manufacturing capacity was around 18-20 GW as of March 2022.
An investment platform PYSE has launched India's first fractionally-owned solar power plant in Karnataka. The platform helps retail investors to invest in sustainable projects that create social and environmental impacts from a ticket size as low as Rs 5,000. According to the statement, the solar power plant is Rs 26 crore project with an average investor ticket size of Rs 25,000. The project has been strategically divided into four tranches with the first three tranches worth Rs 16 crore. Tranche 1, 2, and 3 had been oversubscribed by 2.5 times and the money was raised on an average of 3 days. The project is backed by more than 600 retail investors and is equipped to supply solar power to marquee clients operating manufacturing plants. PYSE will launch the fourth and final tranche with a minimum investment of Rs. 5,00,000. The plant is set to be commissioned by the end of July and is designed to offset 65 lakh kgs of carbon footprint every year for the next twenty-five years.
Siemens Gamesa signs deal
for a 133 MW wind project in Karnataka
Siemens Gamesa has signed a deal with Vena Energy to supply its 3.X platform turbines to a 133 MW wind project in Koppal District, Karnataka, India. In total, the company will deliver 37 SG 3.6-145 wind turbines for this project with installation expected during Siemens Gamesa’s financial year 2023. Siemens Gamesa and Vena Energy first partnered in 2015 with a 154 MW wind farm in the state of Andhra Pradesh. Since then, Vena Energy has added over 300 MW of wind power projects in the states of Madhya Pradesh, Maharashtra and Gujarat. Following this latest order for the SG 3.6-145 turbines, Vena Energy’s portfolio with Siemens Gamesa in India will stand close to 600 MW underscoring its long-term commitment to the Indian market. Siemens Gamesa launched this new platform in 2020 in the face of an ongoing pandemic and announced orders totalling 925 MW last year. This new deal takes order entry for the Siemen Gamesa 3.X platform in India past the 1 GW mark, helping to confirm its competitiveness in the Indian market.
TN power utility to conduct feasibility study for 2500 MW hydropower projects
Tamil Nadu Generation and Distribution Company (Tangedco) is conducting a feasibility study on three hydropower projects that will generate 2500 MW of power. The Tangedco has asked a private consultant to conduct a study and prepare an initial report to establish 1000 MW capacity Pumped Storage Hydropower Stations each in Upper Bhavani and Sandy Nalla. The consultant has also provided a project report for a 500 MW hydropower project in Sigur in the Nilgiris.
The state power utility will be vetting the proposal submitted by the consultant for the three hydropower projects totalling 2500 MW power and prepare a detailed project report. The DPR will be submitted to the state government for approval. In addition to the three hydropower projects totaling 2500 MW, Tangedco is planning 7500 MW power projects in Nilgiris, Tirunelvelli, Kanniyakumari, Coimbatore, Dindigul, Theni, and Salem districts. In the first phase, the Tangedco will commence work in the Nilgiris while the other districts will be taken up during the second and third phases.
