Monthly Archives: November 2011

Essar Energy synchronises first unit of Salaya-I power project with grid

Essar Energy plc, the India-focused integrated energy company, on Thursday announced that the first of two 600 megawatt (MW) units at its Salaya-I power generation project in Jamnagar district of Gujarat has been synchronised with the transmission grid.

The coal-fired Salaya-I project, with a total of 1,200 MW capacity, is one of three power plants due to be fully commissioned by March 2012.
The others are the 1,200 MW Mahan-I project and the 510 MW Vadinar P2 project, the company said in a statement here.
Together, these three projects will add 2,910 MW to the existing capacity of 1,600 MW and take Essar Energy’s total installed capacity to 4,510 MW.
A further seven power projects are under construction which will take the total to 9,670 MW by the first quarter of 2014, Mr Naresh Nayyar, CEO, Essar Energy, said.
“The synchronisation of unit 1 at Salaya, together with the others due in the coming months, will almost triple our power generation capacity. The three generation projects, now nearing completion, will transform cash flows and profitability within our power business,” he added.
Work is in progress to prepare unit 2 at Salaya-I, also of 600 MW capacity, for synchronisation with the grid.

India: Why solar ‘migration’ projects missed deadline

CSP Today speaks to Bridge to India’s solar sector consultant Mohit Anand about why India’s early CSP projects have missed key deadlines and how developers can best surmount India’s unique challenges.

Interview by Rikki Stancich

India’s National Solar Mission policy framework has come under fire, following the announcement that several solar projects, including Entegra Ltd’s 10-megawatt solar-thermal plant in Rajasthan that were eligible for the JNNSM tariff structure, missed their October 15 deadline.

“16 projects in India totaling 84 MW were chosen for migration from other incentive programs to the nation’s Jawaharlal Nehru National Solar Mission (JNNSM), however only two projects totalling 4MW were completed by an October 15th, 2011 deadline,” says Bridge to India’ssenior consultant, Mohit Anand.

The Ministry of New and Renewable Energy’s joint secretary Tarun Kapoor today publicly confirmed that at least two projects were running behind schedule, naming, Entegra and Enterprise Business Solutions.

Entegra’s chairman Mukul S. Kasliwal told Bloomberg that “unreasonable” government restrictions (relating to special purpose vehicles for financing projects under the NSM) have made it difficult for the company to raise finance for its 2 billion rupee ($38 million) project. The company said it expects to resolve the issue and complete the plant within the 2013 deadline.

CSP Today speaks to Mohit Anand, Bridge to India’s senior solar consultant, to gain insight into why these projects missed their deadlines, and how further project delays can be avoided.

CSP TodayWhy does Bridge to India argue that it would be better for Indian government to cancel the remaining 80 MW of migration projects?

Mohit Anand:  Prior to the National Solar Mission, there were 16 projects, totalling 84MW of solar projects in the pipeline. Among those were two CSP projects, belonging to Dalmia Solar Power and Entegra.

These 84MW of projects were being built under a lower tariff than those under the JNNSM’s bidding process, and as such, the developers requested access to the higher tariff. The 84MW was subsequently ‘migrated in’ to JNNSM programme, as additional megawatts.

The Migration Scheme projects had an earlier project completion deadline, given that they had started earlier. The deadline was October 15, 2011, and some projects failed to meet the deadline.

The issue is that so far, the Ministry for New and Renewable Energy (MNRE) has not taken action on the delayed projects; they were supposed to penalise these projects, yet have not done so.

The Migration Scheme projects are among the best placed in India. The problem is that the many projects were taken up with no real intention of developing them; the intention was to flip them over to someone else to develop.

In other cases, it transpired that the developers were simply incapable of undertaking the projects and were consequently unable to raise the finance.

CSP TodayWhat are the likely repercussions? Will these projects eventually be developed?

Mohit Anand: The government might as well cancel those projects. The real risk is that the government’s inaction is setting poor precedent. There is real moral hazard in the market, a lot of players have come in looking to make a quick buck, and the only way to discourage this behaviour is to penalise heavily.

CSP TodayPresumably most of what you are saying applies to the PV projects. How are the CSP projects faring?

Mohit Anand: Players have underestimated the risk and challenges associated with CSP and the current outlook is extremely shaky.

However, CSP is quite different from the PV sector, insofar as there are fewer, bigger players with strong balance sheets. This is one of the few factors really working in CSP’s favour.

The CSP side has attracted some serious interest, but developers have underestimated the challenge of developing these projects.

CSP Today:  In your view, how could the overall framework be improved for the second batch of CSP projects to be developed under Phase 1 of the NSM?

Mohit Anand: At this point there is a lot of debate about re-evaluating the framework for CSP projects. It is widely recognised that it is unfair to place PV and CSP in the same page – the technologies are very different, they face a different set of challenges, and as such, require different polices that reflect this.

For example, the policies need to reflect the different project sizes, timelines and locations.

CSP Today: How is progress on the seven Batch 1 CSP projects so far?

Mohit Anand: We have seen promising movement with regard to two of the seven projects. Godavari & Ispat and Corporate Ispat Alloys (Abhijeet Group) are the two projects that are progressing well.  They are tied up with EPC contractors.

Of the remaining five, Reliance Power’s will likely succeed – it has the financial clout and reach. These companies are big players and are tied up with foreign EPC contractors, and their projects appear to be moving forward. I am not able to comment on the others.

CSP TodayWhat are the major hurdles faced by CSP developers in India?

Mohit Anand: CSP is expensive, and there are major water issues that will require CSP developers come up with creative plant cooling solutions. There is also consternation about the 30% local content mandate.

CSP technology is very nascent, and there is no CSP expertise in India. The [government] should have initially allowed the flexibility for innovative entrepreneurial players to freely enter the market.

CSP TodayIs the government likely to temper or even rescind the 30% local content mandate, in view of the challenges facing the CSP sector?

Mohit Anand: I can’t imagine the government would scale back the 30% requirement, particularly in view of the fact that several of these projects have moved forward. The local content requirement was a fundamental basis for the solar policy frameworks.

CSP TodayIs India likely to achieve its 2020 target of 20GW of grid-tied solar, and 2GW of off grid solar? How is progress so far?

Mohit Anand: I think India will overshoot its targets. And I mean India – not just the National Solar Mission, but also the independent targets set by Rajasthan, Gujurat and Karnataka.

As for the MSN, it’s a smart policy, perceptive to industry concerns, the approach is to learn and move forward, so there is no reason why it shouldn’t reach its target.

In January, 14MW of solar was installed. By November of this year, 75MW had been installed. Over the next year, 300-400MW will be installed.

Currently in India, there is 1.6GW of signed PPAs, 650MW of which is under the NSM, and 970MW  under Gujarat’s solar policy.

TNERC invites suggestions on revised tariff

Consumers can submit their views till December 31; public hearings planned across the State

Electricity consumers can submit their suggestions and views in writing to the Tamil Nadu Electricity Regulatory Commission (TNERC) on the tariff revision petition filed by the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) till December 31.

S. Kabilan, TNERC chairperson, toldThe Hinduon Friday that the Commission would later decide the dates of public hearing to be held in different parts of the State.

By participating in the public hearings, the consumers would have one more opportunity to express their views on the petition. On December 2, the text of abstract of the tariff petition would be published in leading dailies, the chairperson said.

Earlier, Mr Kabilan chaired a sitting of the Commission, which admitted the petition along with another filed by the Tamil Nadu Transmission Corporation (TANTRANSCO).

Both petitions have been hosted on the websites of the TNEB Limited (http://www.tneb.in/) and the TNERC (http://tnerc.tn.nic.in/).

The TANGEDCO has requested the Commission to give effect to the revised tariff from April 1, 2012 or earlier. Its tariff petition has proposed a steep revision, under the broad classification of low tension (LT) consumers, for the categories of domestic consumers, local bodies and places of worship.

In respect of domestic consumers, the lowest rate proposed is Rs. 1.50 per unit (only up to the consumption of 100 units in two months) and the highest rate is Rs. 5.75 per unit (for consumption of 501 units and above). If one consumes 101 units and more in two months, one has to pay a minimum of Rs. 2 per unit even for the consumption of up to 100 units.

In the case of local bodies (public lighting and water supply), there will be no government subsidy. The rate will be flat, which is Rs. 5.50 per unit.

As for places of worship, the element of government subsidy has been proposed to be higher – Rs. 2.50 per unit from Rs. 1.50 for consumption of 120 units bi-monthly.

The energy charges will be Rs. 2.50 per unit. Once the places of worship cross this level, there will be no subsidy and they have to pay Rs. 5 per unit.

In respect of power looms, the government will continue to provide full subsidy for consumption up to 500 units bi-monthly. Though energy charges for huts and agriculturists have been revised, there will be no impact on them as the government will bear the entire burden.

Schools

While the separate category of government educational institutions and government-aided educational institutions has not been disturbed, the TANGEDCO has proposed to delink unaided private educational institutions from the category of cinema theatres and cinema studios. For every unit they consume, private educational institutions will pay 50 paise less than cinema theatres and cinema studios.

In the case of industrial units and commercial establishments, the Corporation has done away with the slab system for energy charges and proposed a flat rate of Rs.5.50 per unit and Rs. 7 per unit respectively.

HIGH TENSION

In the case of the other broad classification of high tension consumers, the Corporation has proposed a uniform demand charge of Rs. 300 per KVA per month.

The energy charges will vary from Rs. 3.50 per unit for lift irrigation to Rs. 4.50 per unit for places of worship and government educational institutions and government-aided educational institutions to Rs.5.50 for private unaided educational institutions to Rs. 6.8 per unit for cinema theatres and studios.

 

SunEdison puts seven India projects on the block

SunEdison, a solar power developer and a subsidiary of the US poly-silicon major MEMC, is looking to sell 49 per cent stake – the most allowed under the power purchase agreements – in seven of its solar projects in India. (Each project is under a company and SunEdison wants to sell 49 per cent in each.)

Sources close to the development say that a US-based company is in talks with SunEdison for this.

THE PROJECTS

Sources among investment bankers have told Business Line that these seven projects total to a capacity of 52 MW. The biggest of the seven is the 25-MW project in Patan, Gujarat. The others are: three in Surendranagar (Gujarat), Sirohi and Jodhpur in Rajasthan and Jhansi in Uttar Pradesh.

SunEdison estimates that over the lives of these projects, they would earn $140.69 million net cash, i.e., tariff and carbon credit revenues minus development costs, maintenance costs and taxes. Forty-nine per cent of this works out to $68.94 million.

Projects other than Patan (25 MW), Sirohi (1 MW) and Jhansi (1 MW) are jointly-owned. While IDFC is the co-owner of the Jodhpur project (5 MW), OPIC, a part of the US government and L&T Infra Finance are the co-investors of the Surendranagar projects.

Incidentally, only last week did SunEdison announce raising $110 million in debt from OPIC, L&T Infra and IDFC.

SIGNIFICANCE

These seven projects are in various stages of completion. All of them will be generating solar electricity by January 2012.

How the stake-sale pans out is a matter of great interest to the solar industry globally. This is because India is a very recent entrant in the solar power generation sector but is a big and growing market.

With sunshine all through the year, India is a promising solar nation, where the panels are expected to produce more than in, say, Europe or the US.

However, there are other issues such as difficulties in project implementation, and the absence of solar irradiance data. SunEdison’s success in putting through the stake-sale deal will kind of become a benchmark for others.

Further delay likely in bidding for Chhattisgarh UMPP

 

Bids for the 4,000 MW ultra mega power project at Surguja in Chhattisgarh may get delayed by at least six more months as validity of coal excavation from the mines allocated for the project expires in March 2012 and would require a fresh approval from the Coal Ministry.

As per the guidelines of power sector regulator Central Electricity Regulatory Commission, the exploration work at the coal blocks allotted for the UMPPs should start within 730 days of the Coal Ministry’s approval. The deadline for the Surguja coal blocks expires in March 2012.

“We cannot go ahead with the initial bids for the Surguja UMPP unless the Coal Ministry gives us the approval,” a Power Ministry official told PTI.

Power Finance Corporation, the nodal agency for awarding these projects, is believed to have written to the Power Ministry requesting it to ask CERC for relaxation of the 730-day deadline. However, the Power Ministry is yet to communicate to CERC.

The Hasdeo-Arand coal blocks allotted to the Surguja UMPP were classified as “no-go” by the Ministry of Environment and Forests, which meant that they were not fit for mining as the mining work would have an adverse impact on the environment.

As a result, the invitation of bids or Request for Qualification (RFQ) for the Surguja UMPP got delayed several times.

However, a committee headed by Planning Commission Member, Mr B.K. Chaturvedi, in its report expressed reservations on the legal sanctity of “no-go”. A Group of Ministers (GOM) constituted for tackling environment issues impacting power projects accepted the suggestions of the Chaturvedi panel.

The Power Ministry has written to the Ministry of Environment and Forests (MOEF) stating it could now go ahead with the RFQ for Surguja. However, it can only do so once all the clearances are obtained from the Coal Ministry.

“We have written to the MoEF that we are going ahead with the invitation of bids for the Surguja UMPP but have to wait till Coal Ministry clears its stand on the coal blocks,” the official said.

On being asked how long the Coal Ministry will take to grant clearance, he said, “These matters take time…may be at least six months or so.”

Power companies fail to lift e-auctioned coal

50 lakh tonnes of coal offered by CIL in October remains unused.

A recent and shocking development in the Indian coal sector has brought planners and bureaucrats face-to-face with the stark policy conundrum afflicting the sector. It also brought to the fore the criticality of coal as an input for key infrastructure industries in the power, steel, sponge iron, cement and fertiliser sectors.

 

It all began last week when cabinet secretary Ajit Kumar Seth was chairing a high-level meeting on coal shortage. The huddle saw Coal India Ltd (CIL) revealing that power utilities failed to lift even a single tonne from the 50 lakh tonne of e-auction coal the state-owned miner offered it in October.

 

Such kind of a mute response from the power companies to the coal quantity specially earmarked for them on demand enabled CIL — the world’s largest coal miner — to emerge clean in the ongoing tussle with the power ministry over fuel shortage for power plants. The Kolkata-based company had offered the quantity in a one-of-its-kind experiment involving diversion of coal meant for spot sales to the power sector.

The ministry had accused the Maharatna of curtailing supply to power companies and selling coal on e-auction to fetch higher prices. E-auction had to be stopped for a few days to accommodate the diversion experiment which worked as a litmus test for the power sector’s offtake capacity.

“Just that power companies could not lift the offered coal proves that banning e-auction, as has been demanded, is not a solution,” a senior CIL official said on Thursday. “Coal India cannot be held responsible for the power sector’s woes on fuel crunch. We have enough coal to supply to power sector utilities, but they have failed to lift it,” he told Business Standard.

The primary reason for the subdued response by power utilities to e-auction coal is logistical difficulty. As a matter of policy, any coal quantity tied up at e-auction has to be lifted from mine heads, significantly increasing the buyer’s input cost. The cost of transporting coal through road is on an average at least five times higher than Indian Railways’ Rs 125-per-tonne-kilometer charges.

Besides, the quality of coal sold in the spot market is also a suspect, according to experts. “While e-auction coal was offered to us, we did not take part because of concerns on transportation and quality,” said a senior executive from NTPC Ltd, India’s largest power generator. The state-owned energy services provider requires over 160 million tonnes of coal by the end of this fiscal to run 36,000 Mw of its installed power capacity.

The Association of Power Producers said the e-auction offered only an ad-hoc window even as the power industry was looking for a long-term solution for coal shortage. “Also, the increased price of this coal owing to transport is not a pass through for private companies,” pointed out Ashok Khurana, director-general of the industry body. “Only when these two aspects are clear that the power industry will lift coal.”

For the record, the demand for coal in the country has grown at an annual rate exceeding 8.4 per cent over the past five years. The supply, on the other hand, has fallen grossly short of it, registering a dismal annual growth rate of 5.4 per cent during the same period. For the current financial year (2011-12), India’s coal demand is estimated at 696 mt, while a mere 554 mt is likely to be available. That leaves a gap of 142 mt — to be met through imports.

More than 80 per cent of India’s annual 530 mt of coal production comes from CIL. The 1975-founded company sold around 10 per cent of its 431 mt production through e-auction last fiscal, while 18 per cent of its revenue came from the scheme. For, coal was sold at e-auction at a premium of a whopping 81 per cent over the notified price of Rs 900 per tonne. This compelled the buyers to opt for the costly e-auction coal, thanks to historic shortages.

Despite reporting flat production in 2010-11, the company denies any lag in output. another senior CIL official said it “isn’t the power ministry’s business” to question the company’s production. “They should only ask for supply. We are providing it,” he said. Further, “thanks to evacuation constraints, we have more than 50 mt stock at the moment. But this is prone to catching fire. Thus, increasing production beyond a point will only add to stocks.”

A majority of coal transport in the country occurs through the rail route. The coal ministry had identified two chief reasons for last month’s severe coal crunch: lack of adequate rail connectivity to major coalfields and unavailability of railway rakes. That had brought a third of the total 81 power stations with a capacity of 87,000 Mw on the brink of closure. Adding to the travails were heavy rainfall disrupting transportation and a simmering unrest in Telangana region that supplies coal in a big way.

While CIL requires 200 rakes for daily offtake, the availability is only less than 180. Of these, an average 127 rakes were used for despatch of the material to power utilities in October. The coal ministry has been trying to push rakes availability to 180 for the sector.

As for the planning commission, it has identified another major bottleneck in the movement of coal to end-users: the time taken by the Railways for building critical rail links. Four rail links were identified as critical for the evacuation of coal from CIL’s coalfields during the current Plan period. This included Tori-Shivpur rail link in North Karanpura (Jharkhand), Gopalpur-Jharsuguda (Orissa) in Ib Valley, Baroud-Bijuri in Mand-Raigadh (Chhattisgarh) and Sattupalli-Bhadrachalam link (Andhra Pradesh) in Singareni Collieries Company command area.

The commissioning of these lines was expected to enable movement of 130 mt of coal to end-users, much more than the current domestic shortage of 86 mt. However, none of the links has been commissioned so far. In fact, the Jharkhand government recently rejected forest clearance for the Tori-Shivpur link.

India Smart Grid Task Force & India Smart Grid Forum

For the systemic growth of the Smart Grid in the country, India Smart Grid Task Force and India Smart Grid Forum have been set up under the aegis of the Ministry of Power.

 

India Smart Grid Task Force:

India Smart Grid Task Force is an Inter-Ministerial Group and will serve as Government’s focal point for activities related to smart grid and to evolve the road map for implementation of smart grids in our country. Shri Sam Pitroda, Adviser to Prime Minister on Public Information Infrastructure and Innovation is leading the India Smart Grid Task Force.  Members of Smart Grid Task Force have been selected from concerned Ministries (Home, Defence, Communications & IT, New and Renewable Energy, Environment and Forest and Finance etc.) and organizations (Planning Commission, Department of Science and Technology, CERC, CEA, CPRI, BEE, NTPC, PGCIL, BIS, PFC & REC etc.).

 

The main functions of the Smart Grid Task Force is  to ensure awareness, co-ordination and integration of the diverse activities related to  Smart Grid technologies, practices and services for Smart Grid Research and Development; Co-ordinate and integrate other relevant inter-governmental activities, Collaborate on interoperability frame work, Review and validate the recommendations from Smart Grid Forum etc.

 

In the first meeting of India Smart Grid Task Force  held in September, 2010 under the chairmanship of Shri Sam Pitroda, Adviser to Prime Minister on Public Information Infrastructure & Innovation, it was decided to constitute  5 working groups to focus on various aspects of implementation of Smart Grid in India as under-

 

 

Working Group Area
Working Group -1 Methodology for selecting   pilots to be taken up under Smart Grid in the country
Working Group -2 Loss reduction and theft control including data gathering an analytics.

Reliability & quality of power to urban areas

Working Group -3 Access of power to rural areas
Working Group -4 Distributed generation and renewable
Working Group -5 Physical, cyber security, standards and spectrum

 

 

 

India Smart Grid Forum:

 

India Smart Grid Forum has been launched by Hon’ble Union Power Minister on 26-05-2010. It is a non-profit voluntary consortium of public and private stakeholders, research institutes and selected utilities with the prime objective of accelerating development of Smart Grid technologies in India Power Sector. The goal of the Forum is to help the Indian power sector to deploy Smart Grid technologies in an efficient, cost-effective, innovative and scalable manner by bringing together all the key stakeholders and enabling technologies. The India Smart Grid Forum will coordinate and cooperate with relevant global and Indian bodies to leverage global experience and standards where ever available or helpful, and will highlight any gaps in the same from an Indian perspective.

 

Forum is open for voluntary memberships from all appropriate interested entities. There will be different categories of membership with different rights and responsibilities based on the entity size and other status such as government, regulator, non-profit organisations, industry, utility etc. Initially the Forum is open by invitation and Invitations have been sent to selected state power utilities, private power utilities, power sector PSUs, empanelled System Integrators, SCADA Consultants and Implementing Agencies of R-APDRP, selected educational and research institutes, NGOs, CEA, CERC, CPRI, FICCI and NASSCOM etc.

 

Under the Smart Grid Forum, the following Eight Working Groups have been formed-

 

WG1 -             Advanced Transmission (incl. PMU, WAMS, FACTS etc.)

WG2 -             Advanced Distribution (incl. SCADA / DMS, Distribution / Substation automation, Power Electronics, FLISR, islanding, self-healing, distributed generation/renewables, etc)

WG 3 -            Communications

WG4 -             Metering

WG5-                          Consumption and Load Control (Demand Response, Home Automation,  Appliances, Storage, Vehicles etc.)

WG6 -             Policy and Regulations (incl. Tariffs, Finance etc.)

WG7-                          Architecture and Design (Standards, Interoperability, Security, CIM etc.)

WG8-                          Smart Grid Business Model.

Karnataka Renewable Energy receives 22 bids for setting up solar projects

 

Karnataka Renewable Energy Development Ltd (KREDL) has received 22 bids for setting up solar power projects under the ‘Karnataka solar policy’.

 

 

Today was the last day for submitting the bids. Mr N S Prasanna Kumar, Managing Director, KREDL, told Business Line.

As part of its 350 MW programme, KREDL had floated a tender inviting bids for setting up projects that total to 80 MW.

 

The projects would be allocated under ‘reverse bidding’ process. They will be allocated to bidders who have quoted the steepest discounts to the tariff fixed by KREDL (Rs 14.50).

 

Mr Kumar however declined to comment on the other details such as the total capacity of all the bids submitted and the prices offered.

 

“We cannot check the technical details of the bids till the RFP (request for proposals) for bidders under the Phase I Batch II of the National Solar Mission is closed,” Mr Kumar pointed out. (The last date for submission of bids under the Batch II of NSM is December 2. Disclosing the winning tariffs in Karnataka would influence the bidding process under NSM.)

 

The allocation of projects with respect to these tenders would start soon, he said. The government has identified land to set up the 80 MW of solar plants, which would be allotted for a period of 30 years of lease, Mr Kumar said.

However, it is learnt from sources that only two bids, totalling 20 MW, have been received for ‘solar thermal’ projects. KREDL had invited bids for 30 MW of solar thermal and 50 MW of photo voltaic. While the ‘thermal’ part of it has been under-bid, the PV portion has received bids for substantially more than 50 MW.

 

 

Apart from the projects under the solar policy, Mr Kumar had recently said that projects with a total capacity of 200 MW would be taken up under the REC scheme of the Ministry of New and Renewable Energy (MNRE).

 

 

“Some companies have already applied for projects under REC mechanism and we will allot the ‘REC mechanism projects’ very shortly,” Mr Kumar said. For these, however, there is no deadline as it is a “continuous process”.

Shares of power cos take a beating as bank loans to discoms dry up

Alarmed by the critical financial condition of state-owned power distribution companies, investors have started dumping shares of power companies putting downward pressure on their prices. The decline in power companies’ share prices is much steeper than the general fall in stock prices. This is evident if one goes by the NSE’s infrastructure index which comprises power companies.

The hardest hit are companies engaged in power trading business. The poor finances of state utilities have led investors to sell off stocks of power companies as a precaution, which has resulted in decline in prices. For example, the share price of PTC India fell by as much as 32% between August 22 and November 22 at the NSE. Lanco Infratech’s share price declined 27% during the same period. Adani Power’s stock price declined 12% while NTPC’s lost 11% during the period. While PTC India is directly exposed to risks in the power trading business, Lanco, Adani and NTPC undertake power trading business through subsidiaries. Share prices of Reliance Power and PowerGrid have not seen any sharp declines during the period but their scrip has remained under pressure.

Power trading companies like PTC India and NTPC Vidyut Vyapar Nigam are unable to get timely payment from states like Tamil Nadu and Uttar Pradesh, where discoms’ losses have reached unmanageable levels. These discoms owe more than R1,000 crore to PTC India alone for power supplied by it. This has forced power traders to raise fresh capital for meeting their working capital requirement.

This despite the fact that in a watershed development, state electricity regulatory commissions (SERCs) have recently given undertaking to ensure annual tariff revision ,if necessary, by using their suo motu powers. The apex electricity regulator Appellate Tribunal for Electricity has also ruled that SERCs do have suo motu powers to revise tariff and they must exercise that authority.

Tamil Nadu discom has sought 38% hike in tariff, which should lead to additional cash flow of R8,200 crore to the discom. Uttar Pradesh has assured bankers that it would increase tariff by more than 30% once assembly polls are over.

Industry experts say that investors have overreacted in panic as the fundamentals of the sector remain robust despite the problems in power distribution. PTC India has been trading power since 2000. Till March this year, it was able to recover 100% of its R4,000 crore dues.

“Financial health of discoms will improve due to the recent policy and regulatory initiatives,” Pramod Deo, chairman, central electricity regulatory authority, told FE.

“Policy makers have begun work on structural solutions to pressing issues. But these could take a while to implement,” RBS Bank said in a recent update to investors.

“Share prices of power companies are under pressure as payment to private power generators from discoms is not smooth. However, the scenario could change if reforms are implemented by states in the true spirit,” HD Khunteta, chairman and managing director, Rural Electrification Corporation, said.

“Scenario regarding concern on account of receivables from distribution utilities should soon change in view of SERCs taking steps to increase tariff. Also, APTEL’s judgement, based on power ministry’s request, exhorting SERCs to suo motu initiate proceedings for tariff revision in case there is delay in tariff filing is very welcome step in this regard,” Tantra Narayan Thakur, chairman and MD, told FE.

Due to pressure from state governments, discoms are reluctant to approach regulators for tariff revision.

Renewable energy ministry seeks 10-fold increase in fund outlay

The renewable energy ministry has sought a 10-fold increase in fund outlay for the next five years. The ministry estimates requirement of Rs 40,000 crore to ramp up its capacity to 30,000 mw by 2017.

An outlay of Rs 4,000 crore was earmarked for development of renewable energy in the 11plan period of 2007-12. India’s present renewable energy capacity is over 20,000 mw of which wind farms alone generate 14,000 mw while the rest is shared between biomass, small hydro and urban-industrial waste.Solar energy capacity currently stands at 35 mw.

“The progress in the renewable energy sector is happening at a fast pace but it’s not so impressive. Road-map for the next five years is very crucial for its growth,” renewable secretary GB Pradhan said at 11th Sustainable Energy Summit on Wedenesday.

The ministry also has plans to achieve grid parity in the solar energy sector by 2017, which means that electricity generated by solar plants would be sold at the same rate as conventional electricity. Along side, it will also increase the quantum of grid connected solar power aiming at 20,000 mw.

“To achieve it, we need a strong domestic manufacturing base which can absorb technology advancement,” said Pradhan. In just two years, capacity of grid connected solar power has increased from 2 mw to 35 mw in 2011. By the end of 11th plan, ministry hopes it will reach 300 mw.

The government is also encouraging solar power with its Jawaharlal Nehru National Solar Mission, which aims to tap solar power in India, estimated to be around 5,000 trillion kWh per year energy.

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