Monthly Archives: November 2011
The renewable energy (RE) sector will soon be in for stricter grid laws and standards compliance regime, a member of Central Electricity Regulatory Commission said here today. CERC, a power sector regulator, also expressed concern over the high cost of wind power in the nation and blamed the wind equipment manufacturers for ‘exploiting’ the market, owing to lack of transparency. “The renewable energy sector must follow the grid laws and standards strictly. The metering at their end should be made proper, and they should follow the grid standards like unscheduled change charges etc..,” Member CERC V S Verma said. “They must invest in technology to predict right outputs. Then they will have to follow our scheduling and let us know like how much power they are going to produce tomorrow,” he said. “Certain margins will be given to them, but not forever,” Verma said adding that to start with we had relaxed the norms, the tariffs, but this is going to be tightened. “The plus minus thirty percent band variation given by the commission to power producers in renewable energy (on what they say and what actually they inject in the grid) shall be tightened for solar and wind power soon,” Verma said. “The wind and solar power generators must understand that if they have to inject into the grid they must follow all rules and regulations,” Verma told PTI, on sidelines of a conference-Powering Gujarat-organised here by Independent Power Producers Association of India (IPPAI). As we aim to have one frequency we are tightening the frequency pattern first. Presently it is between 49.5 to 50.2 hertz, we are very soon going to make it to 49.7 to 50.1 hertz, Verma said. “We shall tighten it further so that grid can operate at 50 hertz frequency,” he said
2011-11-28 – ABB in India has gained a considerable share of the solar inverter market in the booming Indian solar markets by securing several important contracts with major system integrators and EPCs (Engineering, Procurement and Construction) in the country.
The Indian solar power market is one of the most rapidly growing solar power markets in the world. To support this rapid growth, Indian Government recently introduced a new policy, the Jawaharlal Nehru National Solar Mission. The policy creates targets for the steady growth of solar power in India in the coming years. The new policy has also been a trigger for technological developments in the Indian solar power market. After the introduction of the new policy, the market players are set to provide high-quality technologies which enable cost-effective and long lasting solutions for the end-customers.
To seize this opportunity in a growing market, ABB has recently launched its central inverter, PVS800, on the Indian market. The launch was conducted right after the national policy was implemented. Since the launch, ABB India has seen a steady growth in solar inverter orders. Within a year, ABB’s solar inverter business in India has received orders worth a capacity of 90 MW. The major customers have been EPCs such as Tata BP and system integrators and developers with whom working relations have been established.
“Of the orders received so far, 80 MW will be supplied by the end of 2011, out of which 9 MW has been commissioned to date and is working at full capacity,” says Mr. D. Chawla, the local business unit manager for Low Voltage Drives in India. “Undoubtedly solar power is in one of the fastest growing markets in India and ABB is committed to being part of this new growth business. ABB’s decades of experience with power converter technology platforms and strong local presence in the country will support growth greatly,” D Chawla continues.
“Our complete product offering for the solar business is also one important aspect. ABB’s solar inverter offering is complemented with supporting solutions, such as junction boxes with string monitoring and SCADA monitoring, and a control system packaged with good service support, all of which helps ABB stand out from other inverter manufacturers,” says Mr. D Chawla. “We also work with ABB India’s eBoP (Electrical Balance of Plant) team and thus are able to offer total electrical EPC contracts in the solar power market. In addition, ABB can answer quickly to customers’ needs. On-time execution and delivery of projects is vitally important for customers, especially now when the market is booming”, says Mr. D Chawla.
The ABB central inverter, rated from 100 to 500 kW, is designed for multi-megawatt PV power plants and medium-sized power plants installed in industrial and commercial buildings. Based on ABB’s decades of experience with a proven power converter technology platform, the inverters provide a cost-effective and reliable solution with one of the highest efficiencies on the market for converting the direct current generated by solar modules into alternating current that can be fed into the power network.
The country’s fast growing power sectorhas the potential to create as many as six lakh jobs during the 12th Five-Year Plan period (2012-17), a top government official said.
The power sector, vital for good economic growth, is projected to see a capacity addition of about 1,00,000 MW during 2012-17 period.
“… to set up about 1,00,000 MW, we need about two lakh people for construction of power plants.
“For operation and maintenance, generation transmission and distribution, there is a requirement of four lakh people during the 12th Five-Year Plan,”Power Secretary P Uma Shankar said.
He was speaking at 27th Skoch Summit here. According to Uma Shankar, there is an estimated requirement of four lakh technical persons for the power sector during the 13th Five-Year Plan period (2018-22).
However, he noted that employment potential in the power sector is going to come down in the future due to automation and technical upgradation.
India has embarked on massive capacity addition plans in the power sector, which is expected to require about USD 300-400 billion investment during the 12th Five-Year Plan.
After unbundling Haryana State Electricity Board (HSEB), the Haryana government has in principle decided to outsource distribution of power supply in Gurgaon and Panipat to private companies, causing unrest among officials of Dakshin Haryana Bijli Vitran Nigam (DHBVN) and Uttar Haryana Bijli Vitran Nigam (UHBVN), while evoking mixed response from end users. The process to hand over supplies and operations to franchisees shall begin within a month, sources in power department said.
Both the cities are the major contributors to the monthly revenue of the distribution companies and contrary to assertions made by the state power minister Ajay Singh that it shall enhance the revenue generation, employees and officers’ union feel that the move would paralyse the distribution companies, which have already gone bankrupt.
Gurgaon, which falls under DHBVN, contributes a monthly revenue of Rs 214 crore against company’s entire monthly revenue of Rs 450 crore. Similarly, Panipat generates monthly revenue of Rs 35 crore out of the total Rs 315 crore revenue generated by UHBVN as of now. “We have the plan ready and some modalities are under review but there is stiff opposition from the unions of engineers as well as junior staff. We will take any step only after taking them into consideration, while keeping in view the best interest of the state as well as consumers,” Singh said.
Grid-connected solar power generation is set to get a boost in Karnataka in about six months as the State is expected to start allocation of 400-MW grid-connected solar power generation projects by then.
Disclosing this at an interaction meeting with the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) here on Tuesday, Karnataka Renewable Energy Development Ltd. (KREDL) Managing Director N.S. Prasanna Kumar noted that tenders had been floated for setting up projects with a total capacity of 80 MW. The allocation of projects with respect to these tenders would start in 15 days, he said.
The projects would be allocated under reverse bidding process, where a company which quotes a maximum quantum of discount to be offered in the tariff of Rs. 14.50 a unit, prescribed by the State regulator, would be chosen for implementation of the project, he said. Under the same model, projects with a total capacity of 120 MW would be allocated in about six months.
In addition to this, projects with a total capacity of 200 MW would be taken up under the Renewable Energy Certification Scheme of the Union Ministry of New and Renewable Energy in six months to a year, he said.
Appealing to individual households and industries to switch over to off-grid solar power to partially take care of their power requirements, Mr. Kumar maintained that it was possible to find a solution to the power crisis gripping the State within a year, if a majority of households opted for off-grid solar power.
According to the latest information available to BRIDGE TO INDIA, Juwi India Renewable Energies Pvt. Ltd., the Indian subsidiary of the Juwi Group, has completed the construction of three solar PV projects worth a cumulative 17.7MW in India. These projects are of 10MW in Rajkot and 2.5MW in Surendernagar, both in the western Indian state of Gujarat, and a 5.2MW plant located in Jodhpur in the western state of Rajasthan.
According to our information, the projects are yet to be officially commissioned by the developers. At the moment, they are in the process of obtaining the final clearances from the state authorities. As a result, the names of the developers have not been made public so far. Based on our assessment, the developers are Green Infra Ltd. for the 10MW plant in Rajkot and AES Solar for the 5.2MW plant in Jodhpur, while the developer for the Surendernagar project is unknown.
Juwi is one of the largest solar EPC companies in the world with INR48 billion (EUR800m) in revenues in 2010. Juwi India was established in the southern Indian city of Bangalore in February this year. The company opened another office in Delhi in May this year in order to focus on project opportunities in western and northern Indian states.
The completion of the 17.7MW worth of projects marks a crucial first step for JUWI in India. It has so far partnered with Lanco Solar for a 75MW PV plant in Maharashtra. The project is being developed by MAHAGENCO. Based on our information, Juwi’s role in this project is limited to the design and engineering of the plant. Besides this, it currently does not have any projects under construction in India.
Kerala Electricity Minister Aryadan Mohammed has said that hydel power is the best option for Kerala to meet its energy requirements. “But the fact is that the State is unable to go forward with hydro-electric projects because of strong opposition to such projects,” he said. The Minister was inaugurating the 17th State conference of the Kerala State Electricity Board Officers Association (KSEBOA) at Kollam on 26-11-2011. He said it was not right to blame the Central government for opposing the hydro-electric projects. The opposition was generated from the State itself.
Stating that he was a supporter of hydro-electric projects for Kerala, Mr. Mohammed said Kerala could progress only through the commissioning of more such projects. He suggested that an all-party meeting could address the issue and with the consensus arrived at such a meeting, the State could approach the Centre. “If there is unity in Kerala for hydel power projects, permission can be obtained,” he said.
By 2020-2021, the power requirement of the State would touch 6,000 MW. With strong opposition to the Cheemeni thermal power project from all sections in Kasaragod district, that project had been shelved. If the proposed thermal plant in Baitharani, Orissa, too failed by any chance, the State would have no other go but to depend on the costly power from the National Thermal Power Corporation.
In spite of the State’s poor power position, the electricity tariff here had not been increased since 2003. But the general concept that power tariff should not be raised should change. While the KSEB’s annual revenue stood at Rs.5,000 crore, its expenditure touched Rs.7,800 crore. More than Rs.3,000 crore was spent for purchase of power from outside, Mr. Mohammed said.
The Minister said he could in no way vouch that the KSEB would become a profit- making organisation. But it should at least be a financially viable organisation. The power consumption of the State was increasing at the rate of 10 per cent annually. But there was no corresponding increase in power generation in the State. “At present, we are generating only 40 per cent of our power requirement,” he said.
The net loss of the KSEB this year was Rs.1,200 crore. This was poised to go up further. In spite of all this, Kerala was among the few States in the country where load-shedding or power holiday had not been imposed. He said that under the Restructured Accelerated Power Development and Reforms Programme, underground cabling for power distribution was being augmented with the aim of reducing power interruptions.
KSEBOA president K.A. Sivadasan presided over the meeting. Former minister P.K. Gurudasan, MLA, spoke. Mayor Prasanna Earnest, who is the chairperson of the conference reception committee, welcomed the gathering. A women’s conference that followed was inaugurated by All India Democratic Women’s Organisation general secretary Sudha Sundararaman.
Prime Minister Manmohan Singh will conduct a meeting on 29-11-2011 with top officials of key ministries on the developing crisis in the power sector, differences between the Planning Commission and the coal ministry threaten to stall progress. The meeting, meant to take stock of the progress in ultra-mega power projects and the financial crisis in several electricity distribution companies across states, is likely to focus more on these differences instead.
The Planning Commission has proposed changing rules to assure more coal supply for power-generating companies from domestic or imported sources, which the coal ministry fears will adversely impact Coal India (CIL) and give an unfair advantage to those with captive coal blocks.
At stake are those like Tata Power’s and Adani’s projects (both at Mundra) and Reliance Power’s Krishnapatnam project. These have a combined capacity of 15,000 MW and have been hit hard by soaring global coal prices.
The meeting comes at a time when combined losses of distribution companies have crossed R1.5 lakh crore. The meeting at Singh’s residence will be attended by officials from ministries of power, coal, environment and forests and railways.
BK Chaturvedi, member (energy) in the Commission has argued that Coal India’s fuel supply agreements with power companies are not bankable as they guarantee only 50% supply. The agreements he has suggested, should provide for at least 80%. If domestic coal is not enough to meet commitments, CIL should import the rest.
In addition, domestic coal prices should be pooled and set 10% higher and this amount should be shared with power plants having coal linkage from CIL in pro rata manner of total imports and on kilo calories basis of imported coal. The existing 5% duty on coal imports should also be withdrawn, Chaturvedi has said in his report on the sector. He has also proposed setting up an expert committee to suggest policy changes to provide relief to the mega projects.
But the coal ministry has rejected the suggestion that allottees be allowed to sell surplus coal to other user industries. It is in favour of handing over the surplus to CIL, which can then sell it to utilities through e- auctions.
The ministry also rejected Planning Commission’s idea of pool pricing of coal, saying it would not be practical as there is no single destination or same variety for imported coal.
To reduce the drag on discoms, the Chaturvedi report has suggested that states be asked to ensure their discoms stick to financial discipline. However, this should be done in a phased manner so states are not forced to make sharp tariff hikes. After a recent directive from the Reserve Bank, banks have stopped short-term loans to discoms, following which seven states including Uttar Pradesh, Tamil Nadu and Rajasthan have sought central bailouts.
There are other important suggestions like asking the Centre to act as the broker between power-buying states and producers to discuss tariff revision in supply contracts. For smaller state-level projects, he has recommended, tariff revision is better left to power-buying states as power purchase agreements provide for changes in any provisions of the contract by mutual agreement by the two sides with the regulator’s approval.
Towards implementing open access, Chaturvedi has suggested that at least a quarter of the 15% power available to the Centre from central utilities like NTPC and NHPC for discretionary allocation be earmarked for supply to open access customers. Discoms are required to comply with open access which facilitates power supply to customers with demand above 1 MW at negotiated prices.
The prime minister is set to consider a proposal to allow owners of captive coal blocks to sell excess production to state-run Coal India, a move being opposed by the coal ministry.
Companies that generate power are not the only ones hurt by environmental hurdles, fuel problems and the poor health of State electricity boards. Companies that ensure last-mile power connectivity to your home – power transmission and distribution (T&D) firms, too, have been hit by these setbacks.
In the six months ended September 2011, 12 leading listed T&D players (excluding diversified ones) saw a combined 25 per cent drop in their profits even as sales grew 12 per cent.
Power T&D players are today plagued by poor capacity utilisation, falling profit margins and stretched working capital. Stock markets have beaten down these companies by anywhere between 26-65 per cent so far in 2011.
HEAVY INVESTMENT, IDLING CAPACITY
Expecting to generate big business from the upcoming power capacities, a number of transformer, sub-station and tower makers invested heavily in capacity building after 2007. With new generation capacities now stalled, they have been idling a good part of their capacity.
Mid-sized power equipment maker Emco doubled its transformer capacities in 2008, but used a little less than 50 per cent of its capacity in FY-11. A small player like Indotech Transformers utilised just a third of its installed transformer capacity last fiscal.
Anaemic orders flows from private clients and delayed orders from the Power Grid Corporation cut down demand.
Even as demand dried up, the entry of more players compounded the problem. Excess capacity has been aggravated by strong competition from overseas manufacturers particularly China and Korea, a factor highlighted by Emco in its 2011 annual report. The impact is continued to be felt in the current year as well. Emco’s sales for six months ended September 2011 remained lower than year ago sales.
As domestic players bid aggressively to compete, profit margins have taken a hit. Operating profit margins for the transmission players slipped to 6.9 per cent for the six months ending September 2011 from 9 per cent a year ago.
Bigger players in the transformer/substation segment were no exception to this trend. Players such as Siemens and Crompton Greaves, who have earlier enjoyed 15-18 per cent in their T&D operating margins, have seen this dwindle to 8-9 per cent.
Power engineering, procurement and construction players such as KEC International and Kalpataru Power on the other hand, saw less of a margin dip, thanks to their overseas operations and less intense competition in this segment.
Net profit margins too saw a sharp compression from 5.3 per cent to 3.4 per cent, owing to higher interest costs. With delayed payments from clients, especially SEBs, many players have been forced to resort to short-term credit thus increasing interest costs.
This said, the silver lining in the last three months is the pick-up in orders from Power Grid Corporation. Orders awarded by this state-run firm jumped 170 per cent between April and October 2011, compared to a year ago, to Rs 7,900 crore.
A sample check (September and October 2011) of contracts from PGCIL suggests that while the Chinese players are not out of the race, they have put in fewer bids. Their absence in the transformer space is also conspicuous.
A 14-per cent depreciation of the rupee against the yuan between September and now could be one reason for less enthusiastic participation. However, setting up of shop by Chinese transformer player TBEA in India suggests that competition is here to stay. Higher order flow from PGCIL and SEBs could be the only way out for the domestic T&D players to ensure volume-driven growth.