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Wind and Solar Met 9.8% of Global Electricity Production in H1 2020: Report

A new report has put the spotlight on how fast wind and solar energy have expanded over the last few years to become major sources of electricity generation in most countries around the world and have almost singlehandedly reduced coal burn throughout the world. The rise has been so rapid, that in the first half (H1) of 2020, wind and solar generation rose 14 percent compared to H1-2019, generating 9.8 percent or nearly one-tenth of global electricity. The data was revealed in a new half-year analysis issued by Ember. It aggregated national electricity generation for 48 countries making up 83 percent of global electricity production. The report found that in the 48 countries analysed, wind and solar generation rose from 992 terawatt-hours in 2019 to 1,129 terawatthours in H1-2020. That meant wind and solar’s share of global electricity has risen from 8.1 percent in 2019 to 9.8 percent in H12020; and their share more than doubled from 4.6 percent in 2015, when the Paris Climate Agreement was signed. The two sources generated almost as much CO2-free power as nuclear power plants, which generated 10.5 percent of global electricity in H1-2020 and whose share remained unchanged from 2019. The report then goes on to add that many key countries now generate around a tenth of their electricity from wind and solar. China (10 percent), the US (12 percent), India (10 percent), Japan Recent commencement of Change in Law payments by state power distribution companies (Discoms) and the Solar Energy Corporation of India (SECI) for Goods and Services Tax (GST) to solar power projects, comes as a shot in the arm for the sector. Together with safeguard duty (SGD) reimbursements, which also qualify under ‘Change in Law’, the payments will lead to Rs 4,000 crore cash inflow for the sector. This can restore project returns by as much as 220 basis points (bps) and is positive for credit quality, according to CRISIL. Earlier, the research and ratings agency had said that the imposition of SGD on import of solar cells and modules had increased the implementation cost of ~5.4 gigawatts (GW) projects by as much as 15 percent and compressed the returns of developers by 160 bps. Add to this the hike in GST levy on modules and balance of the plant, and returns reduced by a further 60 bps. While Central Electricity Regulatory Commission (CERC) was quick to recognise the SGD imposition as a Change in Law event, uncertainty prevailed over the timeliness and mechanism of its reimbursements. Now, counter-parties including SECI and Discoms such as Maharashtra State Electricity Distribution Company Ltd (MSEDCL) have started making payments towards GST reimbursements for their respective projects. To ensure returns don’t diminish because of delays in payment, the reimbursement is in the form of a 13-year

(10 percent), Brazil (10 percent) and Turkey (13 percent). The EU and UK were substantially higher with 21 percent and 33 percent respectively; within the EU, Germany rose to 42 percent. While at the other end of the spectrum, Russia is the largest country so far to shun wind and solar, with just 0.2 percent of its electricity from wind

Change-in-law Payments Worth an Additional Rs 4000 Cr for Solar Sector: CRISIL

and solar.

annuity and also factors in a carrying cost of 10.4 percent on a retrospective basis, in line with the CERC’s latest tariff orders. Manish Gupta, Senior Director, CRISIL Ratings said “these annuity flows are not conditional upon project performance and receipt of payments by central counter-parties from the underlying Discoms. This lends more stability to these cash flows and supports the credit quality of these projects.”

Offshore Wind to Surge to 234 GW by 2030, Create 900K Jobs: GWEC

Global offshore wind capacity will surge to over 234 GW by 2030 from 29.1 GW at the end of 2019, led by exponential growth in the Asia-Pacific region and continued strong growth in Europe, according to a new report from the Global Wind Energy Council (GWEC). GWEC has released the second edition of its Global Offshore Wind Report, which finds that 2019 was the best year on record for offshore wind, with 6.1 GW of new capacity added globally, bringing total global cumulative installations to 29.1 GW. China remained in the number one spot for the second year in a row for new installations, installing a record 2.4 GW, followed by the UK at 1.8 GW and Germany at 1.1 GW. The report goes on to highlight, that while Europe continues to be the leading region for offshore wind, countries in the Asia-Pacific region, such as Taiwan, Vietnam, Japan, and South Korea, as well as the US market are quickly picking up the pace and will be regions of significant growth in the next decade. It forecasts that through 2030, more than 205 GW of new offshore wind capacity will be added globally, including at least 6.2 GW of floating offshore wind. This represents a 15 GW increase from the forecasts in the pre-COVID forecast, demonstrating the resilience of the sector to play a major role in powering both the energy transition and green recovery. “The report shows that 900,000 jobs will be created in the offshore sector over the next decade – and this number can only increase if policymakers put in place recovery strategies that can further accelerate the growth of the sector. Furthermore, 1 GW of offshore wind power avoids 3.5 MT CO2 – making it the most effective available large-scale technology to avoid carbon emissions and displace fossil fuels in many geographies,” said Ben Blacwell, CEO of GWEC.

Retiring old Thermal Plants the 1st Hurdle in Reducing Discoms Debts: IEEFA

A new report by IEEFA proposes recommendations to reduce financial and operational inefficiencies across India’s power distribution sector, which as of May 2020 had accumulated massive overdue payment liabilities of Rs 116,340 crore to generation companies while already carrying total outstanding debt of Rs 478,000 crore (in FY2018/19). The report authored by Vibhuti Garg and Kashish Shah at IEEFA, recommends, among other strategies, that Discoms need to work with state governments to retire their old inefficient and expensive thermal power plants as a key pathway to reducing their average cost of power procurement and debts. “We suggest statebased discoms sit down with state generation utilities and review what old thermal power plants they can retire, given the state of surplus capacity,” said Garg. “Many thermal power stations are old and operating at well under half their capacity, yet the states are bound by contracts to continue to pay hefty capacity charges.” While there is no silver bullet to improve Discoms’ financial sustainability and viability, the report analyses three state-based case studies with respective recommendations on Maharashtra, Rajasthan, and Madhya Pradesh, while also focusing on actions the Government of India can make now to reduce the discom’s financial burden, including: •Resolving legacy contracts issues and closing inefficient plants will result in significant savings from fixed charge payments while reducing pollution and carbon footprints. •Reducing cross-subsidies to decrease the burden on C&I customers and increase healthy competition while allowing for the implementation of Direct Benefit Transfers (DBTs), solar irrigation pumps, and the adoption of policies favouring the uptake of solar rooftop systems. •Reducing unsustainably high AT&C losses through digitalisation including progressively installing smart and prepaid meters will help discoms manage their load better while reducing metering and billing losses and theft.

ICRA Predicts 120-125 GW RE Capacity in India by December 2022

According to ICRA, capacity addition in the renewable energy (RE) sector is expected to remain subdued at about 8 GW in FY2021 given the continued execution challenges amid COVID-19, because of disruption of the supply chain as well as labour availability issues. This has added to the woes of the sector which continues to remain plagued by issues such as delays in land acquisition and receipt of evacuation approvals, regulatory delays in tariff adoption and obtaining financial closure in a tight financing environment. Nonetheless, the overall medium to long term investment outlook for the renewable energy sector remains strong supported by highly competitive tariffs, policy support and new schemes such as peak supply, round-theclock supply and RE plus thermal blending, which mitigates the risk of intermittent RE supply to some extent. Sabyasachi Majumdar, Group Head & Senior Vice President – Corporate ratings, ICRA, said “the renewable energy-based capacity is likely to reach 120-125 GW by December-2022, with the solar capacity constituting 50 percent of the overall capacity followed by 38 percent from wind power segment and the balance from other sources. “While this is lower than the capacity target of 175 GW set by the Government of India (GoI), the incremental capacity addition is estimated to be healthy at 33-38 GW with an investment outlay of more than Rs 2 lakh crore over the next two and half years. ICRA expects this to be supported by a large pipeline of projects awarded by central nodal agencies and state distribution utilities (discoms) and likely improvement in execution timelines. Within the renewable segment, the utility-scale solar segment is expected to be very close to the 60 GW capacity target set by GoI, though there is likely to be a shortfall in the rooftop solar and the wind power segments.”

COVID-19 Lowers Solar Equipment Imports by 83 Percent

The COVID-19 pandemic has left a big mark on the Indian solar sectors’ imports from China, with data from the Ministry of Commerce suggesting that the Indian imports during the first quarter of the fiscal year i.e. in the months of April-June declined by over 83 percent. A role that the central government envisages its new initiatives and duties will have on imports from here on out. As per the Ministry of Commerce, the imports in the first quarter only amounted to USD 69 million (Rs 515 crore), down from USD 399 million (Rs 2970 crore) during the same period last year. These months saw the maximum impact of the pandemic with lockdowns in several parts of the country and economic activity coming to a grinding halt. On a quarter-on-quarter (QoQ) basis, Indian solar imports fell by 54 percent in the April-June quarter, from USD 150.5 million (Rs 1,120 crore) in the JanuaryMarch period. However, despite the big drop in Chinese imports, the government data still projects that a significant portion of Q1 imports in the solar sector continued from China – as it still accounted for 77 percent of the total imports in the April-June period. China was followed by Thailand at 7 percent, Vietnam at 5 percent, Singapore at 3.5 percent and Cambodia at 3 percent. China’s presence in Indian solar projects has remained strong despite actual imports falling on account of the pandemic. During the January-March period as well, China accounted for 79 percent of the total solar imports to India. This is the part where the government wants to interfere as it looks to check imports from

China and boost domestic manufacturing. The finance ministry has already notified that following the recommendations of the DGTR (Directorate General of Trade Remedies), the government has formally extended the Safeguard Duty (SGD) by a year on Chinese origin solar equipment. The extension, till July 29, 2021, seeks to protect Indian manufacturers from alleged dumping by Chinese firms.

Using RE to Power LNG Plants Could Reduce Emissions by 8% in APAC: WoodMac

Using renewable energy (RE) to power liquefied natural gas (LNG) plants in Asia Pacific (APAC) could reduce emissions by about 8 percent, according to an analysis by Wood Mackenzie. Asia Pacific produces over a third of the world’s LNG, but also generates over 50 million tonnes of carbon dioxide equivalent (MtCO2e) of emissions during liquefaction. Australian LNG projects account for over half or 29 MtCO2e of liquefaction emissions from LNG projects in the region. Many of Asia Pacific’s LNG facilities are located in remote areas, far from the power grid. As a result, feed-gas is used to generate electricity to run the plant and fuel the liquefaction process. Typically, 8 percent to 12 percent of feed-gas is consumed at the plant to run these processes. Older, more inefficient plants, as well as nascent floating LNG (FLNG) vessels operate with far higher losses. “Three main decarbonisation levers could help reduce emissions at LNG plants, namely operational efficiency, design changes, and the use of renewable energy, which could be sourced from the grid or generated onsite,” said Jamie Taylor, Senior Analyst at Wood Mackenzie. Feed-gas is used to fuel gas turbines to generate electricity to power the plant. Replacing these gas turbines with electricity could greatly reduce emissions, assuming the grid

power is less carbon intensive. The other option is to install on-site renewable power, in particular solar. “If a solar plant or a hybrid solar plus battery storage plant is installed at the LNG facility, backup generators could be switched off and renewable electricity could be used to meet the power load. As costs continue to decline and technology improves, renewable plus battery storage could become an alternative in the future, especially for new LNG plants.

Solar Capacity Momentum Dies Completely Post Covid in India

Two latest reports by independent research agencies in the Indian renewable energy segment have revealed that the first half of the year (H1 2020) only saw a total of between 1 GW and 1.3 GW of new solar installations in India. While the full year installations expected to reach 3.5 GW (4.5 GW with rooftop) to 4 GW (utility-scale plus rooftop) with a slight jump in installations in the second half of the year.

Solar Installations:

The first report by JMK Research has reported that COVID-19 has ravaged installation numbers, with India is expected to commission only about 2.2 GW to 2.5 GW of new solar projects in the second half (H1) of the year. While also adding that the second half would almost double the installations reported in the first half, during which period India only managed to add about 1 GW of new utility-scale solar capacity, a 70 percent drop compared to the same period last year. Total utility-scale installations in the year are expected to reach 3.5 GW, according to the report. The numbers make sense, when one considers how leading developers like Azure Power have reported nil to minimal progress in April-June this year on their projects pipeline. The second report by Mercom India Research, found that solar installations in the first half of 2020 totaled 1.016 GW (1.3 GW with rooftop installations), witnessing a 59 percent decrease compared to 3.2 GW (total) of capacity added in H1 of 2019.

The report goes on to add that it expects approximately 4 GW of solar to be added in 2020, which was the worst-case scenario laid out in its previous report.

Rooftop Solar:

The JMK report also added that the rooftop solar industry is worst-hit by the COVID-19 pandemic. In 2020, and it has estimated that about 1 GW to 1.2 GW of total rooftop however, no numbers were provided for the installations so far in the half year analysis. The Mercom report found that there were about 85 MW of rooftop solar installations, a decline of 56 percent compared to 194 MW installed in the last quarter, as rooftop installations declined by 71 percent compared to Q2 2019. However, the report has not presented with estimated installations in the segment for the entire year.

Pipeline:

The JMK report details all the tenders and auctions issued and completed in the period, with Q2 2020 seeing 27 new tenders aggregating to a total capacity of 5.23 GW of new solar capacity tendered across utility solar, rooftop solar and floating solar segments. It further added that of the 5.23 GW tendered in Q2, 4.49 GW of tenders’ auction was completed; out of which about 4.48 GW was allocated. The report also stated that the current pipeline of projects stands at 47 GW while another 24 GW of projects are under bidding phase where tenders have been issued but auctions are yet to complete. However, that’s for all solar, wind and hybrid projects. The Mercom report also mentions that despite the decrease in solar installations,

solar is likely to be added in the entire year, there are currently 41.7 GW of large-scale projects under development, “giving the industry a glimmer of hope for recovery.” And that there are also another 32.4 GW of projects tendered and awaiting auction.

2021:

The JMK report goes on to add that with the recovery in sight and industry picking up the lost pace, the solar installations in 2021 would bounce back from the slump caused by COVID, and expects 7.7 GW of new solar installations to be added to the grid in the next year. Mercom report does not include the predicted installations for the next year in its half-yearly analysis. While the numbers are expectedly poor, care needs to be taken not to blame everything on COVID-19. The fact of the matter is, capacity additions, notwithstanding a bulging pipeline of tendered projects, were already in the slow lane, well before COVID-19 stuck. Installations have been on a downward curve since the peak in 2017, and 2020 has simply made it a steeper drop. Nowhere is this more apparent than the appalling numbers in rooftop solar, where the target of 40 GW is a joke today. It will need strong policy interventions, as well as a major dent on the discom financial crisis to make things change there.