POWER MINISTRY MOOTS FUEL PLAN TO KEEP LIGHTS ON

NEW DELHI: Private-sector power plants with a combined capacity of over 1 lakh MW, including plants of 36,500 MW that have been deprived of their captive coal blocks thanks to a recent Supreme Court verdict will get “firm coal linkage” if the Cabinet approves a plan put forth by the power ministry.

Pooling of domestic (Coal India) and imported coal will be done to ensure these linkages; the mechanism will be available to all plants commissioned between 2009 and 2017 that have a fuel supply agreement (FSA) or a letter of agreement (LOA) with Coal India.

Besides, linkages helped by pooling will be assured to the all power plants that have now lost their captive coal blocks but are going on stream latest by March 2017, the end of current Five-year Plan, in case the firms concerned fail to regain the blocks in auction. The beneficiaries of the move include the Adani Group, Tata Group, KSK Energy, Reliance Power, CESC, DB Power and Monnet Ispat, apart from power projects of the Jindal, Essar, GMR and GVK groups (see table).

According to the power ministry’s proposal, in the case of power plants under the regulated (cost-plus) tariff mechanism — some 30% of the total capacity to benefit — Coal India will supply coal at prices that have factored in the pooling to meet 50% of the fuel needs of the plants to run them at a plant load factor of 85%.

As for the remaining projects that have either clinched power purchase agreements with buyers based on competitive bidding to determine tariffs or are slated to do so in future, CIL will fulfil the linkage obligation by stepping up the e-auction process for pooled coal. Of course, the cost of e-auction coal could be higher given the paucity of the fuel (currently, only 7% of Coal India’s output is sold through e-auction). Fuel linkage for plants that have lost captive coal blocks will be enough for 90% capacity utilisation.

The power ministry, sources said, tweaked an earlier proposal to give some kind of assured supply of coal for an additional 20,000 MW power capacity that have only signed MoUs with CIL and are without any FSA/LOA support.

Given the finance ministry’s objections to the proposal, FSA holders will continue to get priority in supply of coal over others who will now have to be content with a non-binding CIL initiative to supply coal to them on “best-effort basis”. Limiting the benefit of pooling to FSA holders and those plants that have lost their captive coal blocks could hit several power units including Bajaj Hindusthan’s 1,980 MW Lalitpur project, GMR Energy’s 1,370 MW Chhattisgarh project, Adani Power’s 1,320 MW Tiroda unit and Essar Power’s 1,200 MW Singrauli plant.

As coal pooling is proposed to be confined to post-2009 plants, in an an optimistic scenario, assuming enhanced local production of the fuel, the increase in cost of power generation for the units concerned would be an average of 74 paise per unit for 2014-15, 44 paise for 2015-16 and just 5 paise for 2016-17.

The plan to give coal linkage to units with 36,500 MW of capacity which have to part with their captive coal blocks mitigates the risks to the huge investments made in these plants. While they could lose out in the proposed auction process for reallocation of the cancelled blocks, at least they can get coal from Coal India under the pooling mechanism.

FE had reported earlier that while the new winners of the 74 blocks (including 42 producing ones and 32 about to start production) to be auctioned in the first phase will be allowed to swap the coal produced from these blocks among themselves to achieve operational efficiency. The swap facility, restricted to same end-use plants, will give relief to current holders of some of these blocks as it could somewhat offset the absence of right of first refusal for the blocks they had invested in.

The ordinance issued last week in this regard also states that companies with multiple end-use plants in the same category for instance, a company with two power plants in two different locations can divert coal to the plant not associated with the block.

(Source: The Financial Express, October 29, 2014)

CENTRE SET TO ROLL OUT POWER REFORMS TO ENHANCE TRANSMISSION, DISTRIBUTION NETWORK

NEW DELHI: The Centre is set to roll out a clutch of power reforms over the next few months including measures to fulfil the ruling BJP’s commitment to provide uninterrupted electricity supply in cooperation with state governments.

After dealing with the crucial ordinance for coal block e-auction, the government will start dealing with other long-pending issues to boost power sector, officials said, adding that power minister Piyush Goyal will start launching programmes for which the government has made budgetary allocations.

“Power ministry has availed most of the approvals from government departments concerned for strengthening transmission and distribution networks, separating feeders for agriculture and households in rural areas and promoting ultra mega solar power projects in four states. It is time for Goyal to bring state governments on board to engage them in Centre’s initiatives,” a power ministry official said.

The official, who did not wish to be named, added that the power ministry will start rolling out various initiatives within a month or two while work is also in progress for reforms in Electricity Act 2003.

The government has sought stakeholders’ feedback for the proposed amendments in Electricity Act by mid-November, ahead of the winter session of Parliament. “Fuel supply was one of the most crucial challenges that the power sector was facing.

The government has come up with a road map for e-auction of coal blocks and price pooling for fuels to ensure adequate coal and natural gas supplies for the power plants. While fuel supplies will improve gradually, it is time for the government to reduce commercial losses in the areas of electricity transmission and distribution,” said the official.

Finance minister Arun Jaitley had in July allocated Rs500 crore each for Deendayal Upadhyaya Gram Jyoti Yojana and ultra mega solar power projects besides Rs200 crore for strengthening Delhi’s transmission network, among other programmes.

Goyal, who was busy campaigning for Maharashtra assembly polls, will shortly initiate dialogues with various state governments to ensure “power for all”, officials said. Rajasthan, Andhra Pradesh and Delhi have already come on board for the programme while Goyal wants to cover as many states a possible before the next Union Budget, an official said.

Under the initiative, the Centre will provide financial assistance to improve power generation and strengthen transmission and distribution network besides funding energy saving systems.

(Source: The Economic Times, October 29, 2014)

A SMART ROUTE TO ELECTRICITY FOR ALL

Economy and industry observers would perhaps unanimously concur that the current central government’s agenda is striking the right chords. For India’s power sector, what ought to be music to their ears is the government’s promise to substantially augment power generation capacity and deliver 24 hour uninterrupted power supply to all houses by 2022.

Setting ambitious targets to augment power generation capacity is important for a country where tens of thousands of villages are still without an electricity connection. As the nation’s economy grows, electricity consumption by industrial and residential users will increase. Providing adequate generation capacity therefore becomes an important priority to meet the promise of 24-hour, uninterrupted electricity.

Yet, setting up new power plants is an expensive proposition, with high financial and environmental costs. Adding new power generation capacity is not the only means of providing reliable and uninterrupted power to all users. A pragmatic power policy balances the capacity increase with the reduction of avoidable losses from transmission and distribution (T&D). These losses correspond to technical losses from inadequate transmission infrastructure; commercial losses from electricity theft, inaccurate metering and tariffs that are kept artificially low.

Electricity across India is served by about 70 power utilities and the majority are state-owned. Many utilities are struggling to remain operational with ever-mounting losses –the total accumulated losses are reportedly nearing Rs 2.5 lakh crore. Revenue losses can be reduced by adopting smart metering technologies, which limit T&D losses.

Smart meters allow utilities to remotely identify and collect data from every meter and provide an effective means of curbing power theft and reducing unaccounted power usage. Utilities that employ smart metering can also encourage responsible power consumption by offering time-of-use-based tariffs—for example, lower tariff for off-peak hours would encourage households to use heavy appliances then.

The net outcome is a win-win for consumers and utilities. The ability to track all existing meters and their usage enables the utility to raise timely and accurate bills. The resultant revenue assurance is a strategic payout–as utilities’ financial health improves, they are able to reinvest in infrastructure to ensure uninterrupted and affordable electricity for all consumers.

Progressive countries around the world have shown an active interest in adopting smart meters. In Europe, Sweden has moved 100% to smart meters, while the French government has approved the implementation of 35 million smart meters by 2018. Over 40 million smart meters have been installed in Italy, while the UK’s department of energy and climate change aims to roll out 53 million smart meters by 2020. The US utilities targeted installing 15.5 million smart meters through 99 pilot projects nationwide, initiated in 2009. But the leader in smart meter adoption is China, with over 250 million smart meters installed.

In India, the Union power ministry under the previous regime had provided a smart grid adoption road map, envisioning a national smart grid rollout by 2027. The new government—with a defined focus on fast-tracking of major infrastructure projects–may choose to further compress this time-frame in the proposed National Energy Policy.

From a policy perspective, a push for streamlining electricity distribution could help power infrastructure modernisation; for what we now need is infrastructure that is ‘future-ready’ for sustained economic growth over a long period of time.

(Source: The Financial Express, October 29, 2014)

SCHEDULED POWER RATE HIKE MAY BE PUT ON HOLD

NEW DELHI: The power tariff hike scheduled from next month may be shelved as Delhi Electricity Regulatory Commission (DERC) is first going to seek a clarification from the Election Commission due to the model code of conduct. A new power purchase adjustment charges (PPAC) surcharge is scheduled to be announced by the end of the month. If the EC gives a green signal, the surcharge expected to be announced by Friday will be implemented from November 1. Sources say a surcharge of 5-7 per cent could be likely.

The EC can notify bypolls on Tuesday following which the model code of conduct will be in place. “In this situation, the EC will bar any new announcements or schemes till the bypolls are over on November 25. DERC is waiting for a clarification before it proceeds with the PPAC announcement,” said sources.

Last week, discoms BSES Yamuna, BSES Rajdhani and Tata Power Delhi submitted their petition to the regulator for PPAC. BYPL has sought an increase of 17.1 per cent, BSES Rajdhani 7.26 per cent and Tata Power for 9 per cent due to fuel costs. The PPAC surcharge is for costs incurred by discoms between July-September 2014 and will be applicable in consumer bills from November 1 to January 31, 2015.

The discoms, particularly BRPL and BYPL, have been demanding significant hike in tariff citing rise in power purchase cost. Official figures show around 80-90 per cent of total revenue of discoms goes into purchasing power from central and state government entities through long-term power purchase agreements at rates determined by the central and state regulators. DERC had introduced PPAC in 2012 to help discoms recover additional cost due to increase in coal and gas prices.

(Source: The Economic Times, October 29, 2014)

ANDHRA PRADESH INITIATES PROCESS TO PROCURE 2,400 MW THERMAL POWER

HYDERABAD: Andhra Pradesh power utilities have initiated process for procurement of 2400 MW thermal power on long term basis through public private partnership on design, build, finance, operate and own (DBFOO) basis, Energy department officials said.

The move is part of efforts to meet the future needs by short-term and long-term bidding process.

To participate in the tender, plants need to have CIL linkage coal and has to be supplemented by imported coal and should have COD (Commercial Operation Declaration) before December 31, 2016, officials added.

The tenders are prepared as per the guidelines issued by MoP, GoI and Request For Qualification (RFQ) document was also uploaded on APTRANSCO (Transmission Corporation of Andhra Pradesh), APSPDCL and APEPDCL websites, they said.

APTRANSCO, in this connection, will hold a pre-application conference meeting with prospective thermal power developers here tomorrow, they said.

CMD of APTRANSCO, K Vijayanand said power developers can seek clarification, express their feedback and offer suggestions on the bidding documents.

(Source: The Economic Times, October 29, 2014)

BHEL WINS RS 422-CRORE ORDER FOR UTTARAKHAND HYDEL PROJECT

NEW DELHI: Bharat Heavy Electricals Ltd has received a contract worth Rs 422 crore related to 444 MW Vishnugad Pipalkoti hydel power project in Uttarakhand.

Located in Chamoli district, Vishnugad Pipalkoti project is on Alaknanda river. It comprises four hydro generating sets of 111 MW capacity each.

The order, valued at Rs 422 crore, is for setting up of hydro generating sets and associated electro-mechanical works for the Vishnugad Pipalkoti project, Bhel said in a statement on Tuesday.

The order has been awarded by THDCIL (formerly known as Tehri Hydro Development Corp Ltd).

The scope of work envisages ‘engineering, procurement and construction of all hydro generating sets and associated electro mechanical works and is to be executed in a tight schedule of 48 months’, the

statement said.

This is the second major order bagged by Bhel for a hydro power project in Uttarakhand this year.

Earlier, an order for the 2×60 MW Vyasi hydel project was received from Uttarakhand Jal Vidyut Nigam Limited (UJVNL) in March.

State-owned Bhel is executing hydro power projects having capacity of about 9,500 MW.

(Source: Millennium Post, October 29, 2014)

JINDAL STEEL & POWER LTD TO INVEST $2 BILLION FOR CAPACITY EXPANSION IN OMAN PLANT

NEW DELHI: Jindal Steel and Power today said it will invest around $ 2 billion to raise capacity of its Oman-based wholly-owned subsidiary Shadeed Iron and Steel LLC by 2.5 million tonnes per annum over the next 3-4 years.

Naveen Jindal-led JSPL had bought Shadeed Iron and Steel LLC (Jindal Shadeed) in July 2010 from Abu-Dhabi’s Al Ghaith Holdings for about $ 500 million. The capacity of the plant, third largest in the Middle East, now stands at 2 mtpa.

“We will raise the capacity of the plant by 2.5 mtpa. It will require around $ 2 billion investment,” JSPL’s Managing Director and Group CEO Ravi Uppal said here.

On the sidelines of an event after the signing of a $ 725 million syndicated term loan with Bank Muscat, Uppal said that work on the plant would start after getting the required from the local governments.

Jindal Shadeed’s Chief Executive Officer Naushad Ansari said environmental clearance for the proposed expansion of the plant was likely to come in next 8-9 months and after that the company would start placing orders with the hope of completing the expansion by end of 2017 or early 2018.

“We have sufficient land for moving ahead with the plant expansion and raw material is not an issue at all there,” he said.

JSPL foresees a tremendous surge in demand for iron and steel in the gulf markets on huge infrastructure spending. It is now producing billets and rounds at the Oman facility and on course to set up 1.6 mtpa rebar mill, which was expected to be commissioned by September-October next year.

JSPL today signed financial closure of $ 725 million syndicated term loan facility. It was oversubscribed with commitments in excess of $ 855 million. Bank Muscat with a consortium of 11 banks arranged the facility for Shadeed Iron and Steel. Naveen Jindal was also present in the occasion.

Abdul Razak Ali Issa, Chief Executive, Bank Muscat said: “Oman has always facilitated a conducive environment for several overseas investors, including Indian investors, to set up projects in the country and this has played a pivotal role in helping Oman to achieve its Vision 2020 of diversifying from oil as a major source of income to other allied activities such as metals, downstream oil and gas etc.

“Going forward, we anticipate there would be many such projects being set up by Indian corporates in Oman.”

(Source: The Economic Times, October 29, 2014)

KUDANKULAM TURBINE TO RUN WITH PARTS FROM ANOTHER UNIT

CHENNAI: Work on restarting the first atomic power unit’s turbine at Kudankulam has commenced by using the components taken from the second unit’s turbine, said sources.

“The first unit’s turbine would be restarted by taking out the components from the second unit’s turbine,” a Nuclear Power Corporation of India Ltd. official told IANS Tuesday, preferring anonymity.

“The replacement of damaged components in the first unit’s turbine with similar components taken out from the second unit’s turbine has begun. In all probability the first unit will be up and running this November end,” a source told IANS.

However, KNPP officials were not available for comments despite several attempts by IANS.

India’s atomic power plant operator NPCIL is setting up two 1,000 MW Russian reactors at Kudankulam in Tirunelveli district, 650 km from here. The total outlay for the project is over Rs.17,000 crore.

On Sep 26, the first unit’s turbine was found to have developed some problem and its running was stopped.

“The turbine of the first unit has developed some problem. It seems some component inside the turbine turned loose and damaged the turbine blades,” a source preferring anonymity told IANS Oct 20.

“The unit has been shut down to inspect turbine and its associated components before putting it for commercial operation. Maintenance activities are in progress before the unit is expected to be back in service. Some components of turbine need replacement, for which action has been initiated,” R.S.Sundar, site director, Kudankulam Nuclear Power Project, said in a statement Oct 20.

According to him, the first unit is expected to be back in service in six-to-eight weeks’ time.

The KNPP is India’s first pressurised water reactor belonging to the light water reactor category.

The first unit attained criticality July 2013, which is the beginning of the fission process. The unit has started power generation and has been connected to the southern grid.

The unit was expected to start commercial generation soon when the turbine problem cropped up.

“The damaged components of the first unit’s turbine will be repaired at Bharat Heavy Electricals Ltd’s (BHEL) unit at Hyderabad. The Russian experts have visited our unit at Hyderabad and found the facilities suitable for repairing the damaged components,” a BHEL official told IANS, preferring anonymity.

(Source: The Economic Times, October 29, 2014)

ANDHRA PRADESH AND TELANGANA SET THE TONE FOR SOLAR POWER RESURGENCE IN THE COUNTRY

The newly carved states of Andhra Pradesh and Telangana could well show the way for solar power development in the country. To tide over the wide peaking power deficit, made worse by stranded gas plants, both states have embarked on a programme to build solar power capacities of 500 MW each.

The beauty of solar power projects is that these can come up pretty quickly, and start generation within eight months to one year. Moreover, unlike before, solar power has become cheaper than gas-based power. Upbeat solar power developers believe the two states could herald the beginning of similar initiatives from other states.

In Andhra Pradesh, ACME group emerged as the biggest winner with 160 MW capacity of 500 MW on offer. The bidding saw hectic competition among several players, with Wellspun, FirstSolar and Sun Edison, among others, bagging the rest of the capacity on offer.

Telangana has also floated the tender, and the bidding results are expected to be out next month.

Andhra Pradesh floated the tenders last month for 13 districts while Telangana followed on the heels and issued tenders earlier this month for a solar park of 500 MW capacity in Mahbubnagar district.

In Andhra Pradesh, NTPC is also setting up a 1 GW solar park.

“The bid structure in both states is attractive although with subtle differences, for example, developers must balance their ability to raise finance for the project and against tariff profile to be quoted. The developers’ success and the ability of state to implement this capacity hinges on getting this balance right,” said Kameswara Rao, leader, power and mining, PwC, India

Andhra Pradesh and Telangana have been pushed into looking for alternatives to replace idle gas-based power plants to bridge the peak power deficit. Both states have found solar to be an ideal option, especially after the Centre rejected a proposal for slapping anti-dumping duty on solar equipment, creating a viable environment for developers who can keep their tariff down.

In September, Andhra Pradesh Chief Minister Chandrababu Naidu had written to the PM asking for expediting gas pooling and providing natural gas to the state on priority as close to 7000 MW of gas-based power generation capacity is lying idle in the state due to a steep decline in gas output from Reliance Industries-operated Krishna-Godavari fields.

The solar power tender document for Andhra Pradesh said that the state has a large agriculture demand and power supply is usually given to agricultural consumers in two spells, one each during day and night. Distributed solar power can help meet the demand during daytime.

“Solar Power is available during daytime so it will definitely be used to bridge the peak demand-supply gap”, S. Narsing Rao, principal secretary to the chief minister of Telangana and former Coal India chairman, said.

Solar developers say that even if there was gas availability, creating solar power capacity makes sense as it is less expensive and faster to develop. The deadline for commissioning in Telangana is ten months from the signing of the power purchase agreement while it is 12 months in Andhra Pradesh.

“As far as installation time is concerned, some developers have said the plants can be built and put on line in as little time as eight months,” Rao added.

“Solar power right now has reached this stage where it is cheaper than gas-based power plants. Andhra Pradesh and Telangana have peaking power in the day time, and cost R12.5 per unit in day time, solar power costs in the region of R7-7.50 per unit. It is better to invest in solar that has a fixed cost for this”, Manoj Kumar Upadhyay, chairman and managing director of ACME, said.

India currently has installed solar capacity of 2400 MW, with over 1,900 MW of capacity in the pipeline. Apart from Andhra Pradesh and Telangana, Haryana (50 MW), Uttarakhand (50 MW) and Maharashtra (75 MW) will add more solar capacity near-term.

(Source: The Financial Express, October 29, 2014)

SUNEDISON INC SIGNS MOU WITH RAJASTHAN GOVERNMENT

JAIPUR: Global solar technology manufacturer and provider of solar energey services SunEdison Inc today signed an MoU with the state government of Rajasthan to establish 5,000 MW capacity of solar power in next five years.

Under the project, multiple mega solar power projects will be set up on estimate 25,000 acres of land in the state.

Capacity of most of the projects will be 500 MW, Pashupathy Gopalan, President and MD – Asia Operations of the company told reporters here.

The company would also work with the state government to design a programme for slowly and steady shifting of electric irrigation pumps, which are around 11 lakh in the state, to solar pumps which would not only provide power to the farmers to pump water during the day time but also feeding electricity to feeder when not pumping, he said.

“This is also a part of the MoU and we will work with the government to design such programme,” he said.

“Rajasthan has the potential to become solar hub of the world. Cost of solar energy is coming down significantly and it can play important role in addressing the need of power in the country,” Gopalan, whose company already has a project in the state, said.

He informed that the government would facilitate the identification of the land suitable for the development of solar PV projects as well as allot land on a long term lease in accordance with the state policies.

Additionally, the government would also create and provide the necessary electricity interconnection infrastructure.

(Source: The Economic Times, October 29, 2014)

GOVERNMENT APPOINTS PANEL TO ASSESS COAL BLOCKS COMPENSATION: REPORT

NEW DELHI: Days after promulgating an Ordinance to e-auction the coal blocks cancelled by the Supreme Court, the government has formed a committee headed by former Central Vigilance Commissioner Pratyush Sinha to assess compensation to be paid for taking over running or ready-to-produce mines.

The panel, which will also comprise officials of ministries of coal, power, finance and law, will submit its recommendations by November 10, sources with direct knowledge of the development said.

The Supreme Court had on September 24 cancelled allocation of 204 coal blocks to various companies between 1993 and 2009. Of which, 37 are running coal mines and another five are ready to produce by April.

Unlike others, their cancellation is to take effect from April 2015.

The sources said the committee has been asked to value assets of each of these 42 coal blocks for mining infrastructure such as tangible assets used for coal mining operations, fixed installations and land.

“The Committee shall recommend the value of the assets to be paid for acquisition,” one of the sources said.

Also, the panel would carry out assessment of the liabilities associated with the operations of the mine. The committee has been authorised to engage experts/consultants for valuation of running coal mines.

Sources said the government wants to clear all roadblocks and meet conditions precedent for the new owner of the mines, which will be decided through an e-auction, to take over operations of the 42 mines from April next year.

The 37 running mines in 2013-14 produced about 38.14 million tonnes of coal while the five others are likely to chip in with another 5.85 million tons.

Keen to avoid any supply disruption, the government on October 21 promulgated an Ordinance to revert half of these 42 mines to the government entities that were original allottees. The remaining 21 will be put on auction in the first phase of bidding that will be open for end users in power, cement and steel sectors.

If the winner of these 21 mines is different than the one already operating, the existing owner will be paid compensation and operations handed over to the winner, they said.

(Source: The Financial Express, October 29, 2014)

CENTRE FORMS PANEL TO ASSESS COMPENSATION FOR COAL BLOCKS

NEW DELHI: Days after promulgating an ordinance to e-auction Supreme Court-cancelled coal blocks, the government has formed a committee headed by former CVC Pratyush Sinha to assess compensation to be paid for taking over running or ready to produce mines.

The panel, which will also comprise officials of ministries of coal, power, finance and law, will submit its recommendations by 10 November, sources with direct knowledge of the development said.

The Supreme Court had on 24 September cancelled allocation of 204 coal blocks to various companies between 1993 and 2009. Out of these, 37 are running coal mines and another five are ready to produce by April.

Unlike others, their cancellation is to take effect from April 2015. The sources said the committee has been asked to value assets of each of these 42 coal blocks for mining infrastructure such as tangible assets used for coal mining operations, fixed installations and land.

‘The committee shall recommend the value of the assets to be paid for acquisition,’ one of the sources said.

Also, the panel would carry out assessment of the liabilities associated with the operations of the mine. The committee has been authorised to engage experts/ consultants for valuation of running coal mines.

Sources said the government wants to clear all roadblocks and meet conditions precedent for the new owner of the mines, which will be decided through an e-auction, to takeover operations of the 42 mines from April next year. The 37 running mines in 2013-14 produced about 38.14 million tonnes of coal while the five others are likely to chip in with another 5.85 million tonnes.

Keen to avoid any supply disruption, the government on 21 October promulgated an ordinance to revert half of these 42 mines to the government entities that were original allottees.

The remaining 21 will be put on auction in the first phase of bidding that will be open for end users in power, cement and steel sectors.

If the winner of these 21 mines is different than the one already operating, the existing owner will be paid compensation and operations handed over to the winner, they said.

(Source: Millennium Post, October 29, 2014)