Monthly Archives: February 2011

Japan plans new renewable tariffs from 2012

Japan plans to make the power sector buy electricity from a wider range of renewable energy sources than it does currently in a feed-in tariff incentive scheme from the year starting April 2012.

The government is expected to submit related bills for the new scheme during the current parliament session, aiming to make electricity low-carbon and to support a clean-energy market.

Currently, Japan’s 10 power companies are required to pay 48 yen ($60 cents) per kilowatt hour for surplus solar electricity from house owners and 24 yen per kwh for the surplus from small businesses and are allowed to add on the extra costs to users evenly.

Below are some of the main points that differentiate the existing scheme effective in the business year starting in April, from the new scheme based on a set of proposals a government advisory panel approved on Friday.

2011/2012

– 10 power companies only buy surplus solar from small-lot suppliers

– Prices for house owners will be cut to 42 yen per kwh as prices of solar panels are on the decline.

– Prices for small businesses will be raised to 40 yen per kwh to lessen the impact of the government’s ending subsidies for installation.

2012/2013 and onwards

– Not only 10 power companies but also independent power producers (IPP) will buy electricity from renewable sources.

– Their buying will last for 15 years.

– It will apply to electricity from solar, wind, biomass, small-scale hydro and geothermal power — except for surplus electricity only from household solar suppliers.

– Prices for wind, small-sized hydro, biomass, geothermal will be either 15 yen or 20 yen per kwh.

– Prices for solar are to be decided later.

– There will be no difference in surcharges from one company to another as power producers will pass their total payments to users evenly nationwide.

4000MW Bhedabahal UMPP in Odisha gets green nod

The union ministry of environment and forests has given the green signal for the 4000 MW Bedabahal ultra mega power project (UMPP) in Odisha, clearing the road for the power ministry to award the project. “We have got clearance for the Odisha UMPP. This would be the fifth UMPP that we would award in the past five years,” Sushil Kumar Shinde, union minister for power, said at press conference in New Delhi.

With the environment ministry continuing to soften its stand on environmental clearance for large projects, the power minister said he is hopeful of receiving the documents from the environment ministry soon.

Two of the three coal blocks associated with the Bedabahal UMPP – Meenakshi B and the ‘dipside’ of Meenakshi – had fallen in ‘no go’ areas, where the environment ministry had barred any mining activity.

This had led Power Finance Corporation, the nodal agency for implementation of UMPPs in the country, to postpone the process of inviting preliminary bids to next month – the seventh time bidding process for the project has had to be put off.

However, the environment ministry has said that only two projects could mine for coal from the blocks, categorised as no-go area. If the government proceeds with Bedabahal, either an NTPC project or an Odisha government project will not get coal.

Chhattisgarh to pump in Rs.17,000 cr in power sector

Raipur, Chhattisgarh government-run power companies will pump in Rs.17,000 crore in the state over the next three years to increase power production and also improve the power transmission and distribution infrastructure, Governor Shekhar Dutt told the state assembly Thursday.

‘State government-run power companies in Chhattisgarh would invest Rs.17,000 crore over the next three years, the entire investment would come up in power generation, transmission and distribution sector,” Dutt said in his address to the state assembly on the opening day of the budget session.

Referring to the Maoist menace in the state, the governor said ‘despite pressure mounted by the rebels, Chhattisgarh has been registering growth in all sectors. This proves that the common man is confident of the security system in the state”.

Source – IANS

REC may borrow up to $1.5 bn next year

One of the two largest lending organizations in the Indian power sector, state-owned Rural Electrification Corp. Ltd (REC), plans to raise up to $1.5 billion (Rs.6,810 crore) through a combination of external commercial borrowings (ECBs) and a corporate bond issue in the next fiscal year, said chairman and managing director J.M. Phatak.

“We plan to start with $1 billion. If we need more money, the borrowing could go up to $1.5 billion,” he said. “ECB is cheaper than corporate bonds. A single $1 billion corporate bond issue could be done in the US as compared to what we do in Singapore and London.”

Together with the Power Finance Corp. Ltd, REC accounts for 60% of all money loaned to the power sector, and has raised around $1 billion in the current fiscal year. Of this, $470 million has been through a syndicated loan and $500 million through a bond issue in the international market.

“We also plan to raise another $200 million before March through a syndicated loan,” said REC’s finance director H.D. Khunteta.

“We want to tap the US markets as well. In the coming financial year, everything depends on market conditions and the cost of borrowing. Everything will be subject to Reserve Bank of India (RBI) approval,” Khunteta said.

In order to access ECBs, REC will have to get permission from the finance ministry and the central bank. According to RBI’s balance of payments data, net ECBs in 2009-10 amounted to $2.5 billion.

REC wants to raise money through this route as it believes that ECBs offer the advantage to reduce interest rates and were attractive even after hedging.

“We have borrowed around $1 billion as ECBs in the current fiscal. We hope to exceed that in the next fiscal. It is cheaper to borrow from overseas,” said Phatak.

REC has disbursed loans to the tune of Rs.19,000 crore in the current fiscal year and plans to touch the Rs.22,000 crore mark by the end of the fiscal.

It has a total loan portfolio of Rs.70,000 crore and has sanctioned loans worthRs.40,000 crore in the current fiscal year with expectations to end the year atRs.45,000 crore of sanctions.

REC’s need to borrow also stems from the shortage of funds allocated for the power sector. India’s power sector, which is already struggling with funding shortfalls, will need $400 billion of investment during the 12th Five-Year Plan (2012-17).

The government is worried about the funding scarcity facing the power sector, which threatens to worsen an energy deficit that’s seen as a key bottleneck in efforts to sustain and boost economic growth.

Source – livemint

British civil nuclear trade delegation to visit India

Mumbai, A civil nuclear power trade delegation of eight leading UK-based companies, coordinated by the UK Nuclear Industry Association (NIA), will be visiting India next week.

The delegation will be led by UK Business Ambassador Lady Barbara Judge, Director and Former Chairman of the UK Atomic Energy Authority and a member of the UK Nuclear Development Forum, said a spokesperson of British Deputy High Commission.

NIA is a trade association and representative body of UK’s civil nuclear industry.

As a part of the visit, there will be a seminar in Mumbai on “Civil Nuclear Power: Opportunities for UK-India Collaborations” on February 22.

The half-a-day seminar will also explore the possibility of business partnerships.

Indian companies and organisations in the civil nuclear sector ranging from design consultancy, engineering, project management and training, will be attending the seminar.

Source – PTI

600 MW power plant to match steps with state grid soon

LUCKNOW: All eyes are set on the synchronisation of 600 MW unit of Anpara C thermal power plant with the state grid — a process which is likely to take place in a week’s time. To be set up by Hyderabad based Lanco Kondapalli, this would be the second power project, after Anil Dhirubhai Ambani promoted Rosa Power Plant, to come up in the private sector.

On Monday, chairman, UPPCL, Navneet Sehgal said that they have reviewed the progress of the plant. “The company has assured us of getting the plant synchronised soon,” he said, while speaking to TOI on Monday. Sehgal said that the company was supposed to initiate the synchronisation process by February 15, “however, there have been some initial glitches”.

As per sources in UP Power Corporation Limited, the deadline was missed as the company could not get adequate supply of oil to initiate the process. However, the company would be initiating synchronisation of the power plant in another two to three days’ time, sources claimed.

But, while the project gets synchronised with the state grid, it is the actual availability of power for the state — which faces a power crunch, especially during summers — that matters. So, even if the project is synchronised with the grid in the next few days, the 600 MW of power would be available only after two months, that is May. “Any project takes at least two months’ time to be operational after getting synchronised with the state grid,” Sehgal said.

Though it may not suffice given the heavy demand, the additional 600 MW would certainly ease the burden for the power corporation, which resorts to heavy withdrawal of power from the central grid during the period. During summers, the demand for power reaches to around 10,000 MW, while the availability from the state sector remains at a paltry 3,000 MW. Even after taking additional power from the central grid, the state faces a heavy power crunch with a yawning demand and supply gap of around 3,000 MW.

Notably, the project happens to be the first such to come up on the basis of tariff based competitive bidding. The request for proposal (RFP) for the project in Sonbhadra district was opened on June 6, 2006 and the bids made by Lanco were found to be the lowest. The other bidders were Essar Power and Reliance Energy.

The unit would come up at an estimated cost of around Rs 2,000 crore. In all, the company would be setting up two units of 600 MW each at a projected cost of around Rs 4,000 crore. The company is reported to have told the UPPCL to begin the operation of the second unit by April this year.

The project attained all major approvals in 2006 only, including coal linkages. According to an agreement that the company reached with Northern Coal Fields Limited (NCL) in July 15, 2006, the public sector undertaking would supply around 35 lakh million tonnes of coal to Anpara C from the Kharia coal fields in Jharkhand.
Source – TOI

Bigger loan window for PFC & REC, tax breaks on ECBs sought

NEW DELHI: Power ministry will seek cabinet approval for foreign borrowings of $2 billion by state-run firms, and tax breaks for external commercial bonds , power secretary Uma Shankar told ET on Wednesday.

Power Finance Corporation and Rural Electrification Corporation plan to raise $1 billion each from external commercial borrowings. Currently, the two companies can raise ECBs to the extent of 50% of their net worth subject to a limit of $500 million per year. All interest payments on external commercial borrowings attract withholding tax resulting in higher cost of borrowing.

The move is based on recommendations submitted by a subcommittee of group of ministers on financial issues to the power sector headed by Planning Commission deputy chairman Montek Singh Ahluwalia. The panel has estimated that over 4,21,000 crore additional investments are required in the power sector. India hopes to add over 78,000 mw capacity during 2007-12 entailing an investment of 10,00,000 crore. Similar projections have been made for 12th five-year plan that begins next year.

Shankar said the subcommittee has also recommended higher exposure limits for banks for financing ultra mega power projects and exemption of customs duty on construction equipment used in hydropower projects. Presently, the exposure limit of a bank to a single private company and a group is 20% and 30% of net worth respectively.

“We have seen the recommendations. After consultations with concerned departments, we will move a note for consideration of the cabinet committee on infrastructure,” he said.

The power ministry has earlier urged finance ministry to increase exposure limits for banks to 40% and 80% of capital funds for single companies and a consortium of project developers.

Shankar said the subcommittee also recommended cheaper loans to hydropower projects and that only half of loans given by banks to PFC and REC be taken into account for calculating sectoral exposure limits.

The ministry would also seek waiver of custom duty on imported coal used for fueling power projects. Besides, it feels that excise and customs duties on energy-efficient equipment should be reduced.

Source – Economic Times

Punjab: 4 more years for power-surplus status

MUKTSAR: Punjab deputy chief minister Sukhbir Badal has now added another four years to fulfilling his promise of making Punjab a ‘power surplus’ state. If four years back, the SAD(B) chief had declared to make the “power-starved state” of Punjab into a “power surplus” one by the end of year 2009, now the new deadline is 2013.

Predicting a bright scenario on power generation front, the deputy CM said in Muktsar on Wednesday that by 2013, Punjab besides fulfilling the local demand of power, would emerge as biggest exporter of power. He said by exporting power to other states, Punjab would be able to subsidize power to state consumers, besides assuring them 24-hour quality power supply. Sukhbir was addressing a public gathering at Bhagsar village of Muktsar.

On a whirlwind tour of Muktsar district on Wednesday, Sukhbir inaugurated a Government Model Adarsh School, four reverse osmosis (RO) water purifier plants, laid the foundation stone of 66KV station at Bhagsar and two sewerage treatment plants and mini water works in the district.

Sukhbir claimed Rs 1 lakh crore investment in infrastructure during last four years in Punjab had a cascading effect on all sectors of economy including, service sector, power sector, tertiary sector besides opening new avenues of employment for thousands of skilled and unskilled youths.

Sukhbir claimed besides power, world class road infrastructure, three domestic and three international airports would make Punjab most-favoured destination in the country. He said Punjab has shown to the whole country that how a land locked state, surrounded by tax-free zones could make its niche in the most competitive investment scenario.

Sukhbir said PPCC chief Amarinder Singh should not make any comments on development of the state as he had failed to lay a single brick of any development project during his five-year rule.

Source – TOI

NALCO seeks consultant to help bid for UMPPs

DNA India reported that NALCO, the government owned aluminum major which announced a foray into the power sector in October 2010 is looking for consultants to help the company bid for the upcoming 4,000 MW ultra mega power projects.

NALCO has shown interest in the upcoming Orissa UMPP and is also planning to bid for the next one expected to come up in Jharkhand, according to a source familiar with the development. The company had invited expression of interest from consultants across the country in the end of January and is likely to finalize an advisor by the end of the current financial year.

A company official said that if you want to bid you have to do it in the right earnest and with complete preparation. The whole UMPP exercise is very competitive and calls for a huge investment. So far only private players had been able to go through the strict scrutiny and have managed to quote the lowest tariffs.

The source said that is the reason why Nalco is looking for consultants to assist it as aggressively as any private player would. A UMPP is a mega single location power plant with the ability to generate 4000 mw of electricity per day. It typically has eight boilers of 500 MW each or six boilers of 660 MW each. It is either built on the coastal areas to be able to run on imported coal or in land locked areas using high quality coal to run the plants.

These plants usually use supercritical technology for power generation, which makes the entire process more environment friendly and more efficient. To set up a UMPP, a company needs to invest approximately INR 20,000 crore. Since it is based on international competitive bidding process, the company which quotes the lowest tariff wins the bid to set up the power plant.

An official working in one of the consultancy firms which has submitted EoI with Nalco said that during the entire bidding process, there are a lot of technical formalities that needs to be addressed. Besides, the nodal agency has several queries based on the bidding document which needs to be answered right so as to not lose the contract. Hence, these players for whom power is not the core business always prefer having a consultant on their sides to take care of the intricacies.

He said that the bidding process requires a dedicated team specializing in power which a company like Nalco is not expected to have being an aluminum player. They also need the consultants to suggest whether a particular project, requiring crore of investment, would actually be feasible for the company or not.

Source – dnaindia.com

World Bank to double clean energy lending

The World Bank and its associate body, the International Finance Corporation (IFC), will double loans given to renewable energy projects to $2 billion (Rs9,103 crore) in the next three years, a senior official from the World Bank said here on Tuesday.

The lending will primarily be for power generation and energy efficiency projects.

The World Bank largely funds government projects while the IFC caters to the private sector.

Ashish Khanna, senior energy specialist, South Asia Sustainable Development, World Bank, said that in the short run, biomass and small hydro projects will be most viable in the green energy space.

“Later on, big hydro and solar projects can also help in a big way. Solar technologies will first stabilise in urban areas and then move to villages,” he added.

Small hydro projects are thosewith a capacity of up to 25 megawatt (mw).

One of the first renewable energy projects the World Bank funded was the 1,500 mw Nathpa-Jhakri hydro project in Himachal Pradesh.

The project has been developed by state-run Sutluj Jal Vidyut Nigam (SJVNL).

Khanna also said the two international funding bodies were in talks with the government for an initiative to fund and assist financial institutions in setting up arms dedicated to renewable energy sector lending.

“They are more comfortable funding one big project than, say, 100 small projects,” he stated.

The government has been setting ambitious targets for renewable energy capacity addition, especially solar power.

Though green energy currently accounts for just over 10% of India’s total installed capacity of about 1,60,000 mw—and just 4% of actual power generated—the government plans to take it to 72,400 mw by 2022.

Similarly, the government, under the Jawaharlal Nehru National Solar Mission, aims to add a solar capacity of 1,300 mw in the next three years and reach 20,000 mw by 2022, from the current capacity of less than 50 mw.

Khanna said the World Bank’s loans outstanding to the overall power sector in the country are at $3.4 billion and the IFC’s at about $1 billion.

“We (the World Bank) are looking at (funding) conventional energy projects of $1.5-2 billion in the next three years,” he noted.

Source – DNA

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