Power Insight (Feb-March 2012)

Vol.2 s No.6 s February - March 2012 s Mumbai

` 100RNI No.:MAHENG/2010/39548

Will it boost the poWer sector?

M S Unnikrishnan MD & CEO

Thermax Limited

Ramesh Chandak CEO & MD, KEC International

and President IEEMA

Anil Sardana MD, Tata Power

Ramesh Kymal Chairman and Managing Director, Gamesa India

Gopi Krishna AVP

SBI Capital Markets Limited

Special Comments

Sector Focus:

CoalCoal scarcity marring shadow on capacity addition

Renewable Focus:

SolaRJawaharlal Nehru National SolarMission & Its Success

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Power Insight | February - March 2012 | 1

T he Budget, as an event, is a great opportunity for the country to un-derstand the vision of the government. India’s power sector is the fifth largest in the world. The sector is high on India’s priority as it offers

tremendous potential for investing companies based on the sheer size of the market and the returns available on investment capital. Hence, the industry has certain expectations from the Union Budget 2012-13 which is scheduled to be presented in the parliament on March 16, 2012.

Power sector is one of the main consumer of non-coking coal and nearly two third of the power generation in the country is coal based. It said that a further reduction of customs duty from the imported coal is important as it discourages power projects based on imported coal. The country’s power sec-tor, which is expected to see a capacity addition of about 100,000 MW in the 12th Five-Year Plan, is grappling with various problems including acute fuel scarcity and spiralling of coal prices. The Association of Power Producers (APP), a grouping of about 22 companies including Reliance, Tata, Lanco, Adani, Jindal... accounting for over 95 per cent of power capacity in the pri-vate sector, presented a slew of proposals to be considered for the 2012-13 Budget, in this regard. Ahead of the Budget, the apex body of the domestic electrical equipment industry IEEMA sought extension of the tax exemp-tion to all power projects, including generation, transmission and distribu-tion. Ramesh Chandak, IEEMA President, stated that the domestic electrical equipment manufacturing industry suffers a substantial cost disadvantage of 14% vis-a-vis imports while supplying to power projects due to many local taxes such as VAT, entry tax / octroi; higher financing cost, etc. IEEMA has recommended that either there should be mandatory exemption of CST/VAT for mega / ultra mega power projects or these levies should be excluded for the purpose of bid evaluation. In the past few years, there has been consider-able growth in power plants based on renewable sources of energy. Though, MNRE through the Jawaharlal Nehru National Solar Mission (JNNSM) has accelerated the growth of the solar industry; there are some challenges for the manufacturers and developers of solar energy and associated activities in India. There is a need to provide fiscal measures to the Indian solar industry to enable a strong solar manufacturing base to develop in India. The import duty on raw materials / consumables for manufacturing the Solar PV Cells and Solar PV Modules in India is levied to the tune of 10 to 15%. This becomes an extra burden on the Indian manufacturers resulting in higher cost of indig-enously manufactured cells, modules and collectors, concentrators compared to the fully imported complete solar products. The import duty exemption should be removed from imported finished PV cells and modules, so as to bring Indian manufacturers at par with the global players. The MNRE is also seeking extension of existing incentives for the wind energy sector in the up-coming Union Budget. This would ensure growth momentum in the coming years after the sector added record 10,500 megawatt in the 11th five year plan.

Let’s hope that the Budget 2012-13 can bring in huge opportunity in restoring investor sentiments in power sector, such that shelved projects are brought back on track and the sector could get the required fillip along with offering necessary reforms to help electrical equipment industry in getting the level playing field.

Editor - in - Chief Pankaj V Chauhan Email : [email protected]

Editor-In-Chief: Pankaj V Chauhan

Consulting Editor: Renjini Liza Varghese

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Printed, Published, Edited and Owned by PANKAJ V CHAUHAN, Printed at MAGNA GRAPHICS (INDIA) LTD.,101, C & D GOVT. IND. ESTATE, KANDIVLI (WEST), MUMBAI 400 067 and Published from G-3A, JUNGLEE PEER DURGAH, K.A.GAFFARKHAN ROAD, WORLI, MUMBAI 400 018.

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Editor’s dEsk

Let’s Cross Fingers!

Power Insight | February - March 2012 |2 3

Contents

Cover story

18

44

26

Interactions:

Coloumn’s:

Press releases:

renewable Focus: Solar Power :

Vol.2 s No.6 s February - March 2012 s Mumbai

Budget2012-13

In this issueThermal News 04

Nuclear News 05

T & D News 08

Results Updates 10

Gas News 12

Coal News 14

Wind News 42

Solar News 43

Events Updates 40

Betagaurd MCB’s and DB’s from Siemens .................Pg 36

Skintop @ Solar ............................................................Pg 36

GE – Entelligaurd ..........................................................Pg 37

Largest Gas Turbine combined Cycle Project ............Pg 38

Alternative Energy Summit 2012 .................................Pg 38

Maktoum Solar Park – Dubai .......................................Pg 39

Ps.: Pictures are for reference only and bears no resembelance to any project or company.

Exploring overseas supply to increase coal e-auction: Mjunction

Vinaya Varma Vice President Mjunction Services Limited

30

Issues needs to be addressed

Shaji John Chief - Solar Initiatives at L & T

46

Solar PV As A Value Proposition

K Subramanya CEO – TATA BP Solar L&T

58

JNNSM: the lessons learned

Hari Kiran Chereddi Managing Director, Sujana Energy

48

Need to Electrify

Hemant Joshi Sr. VP Finance – CLP

22

JNNSM-Great begin-ning or False Start?

Madhavan Nambhoothiri Founder & Director, RE Solve Energy Consultants

49

Focus Power Sector

Gopi Krishna AVP – SBI Capital Market Ltd24

Increasing energy efficiency of Coal

Peter Gunn Director of Total Synergy International (TSI), Geo-CoalTM32

energy for allJnnSM & itS SucceSS

Coal sCarCity marring shadow on CapaCity addition

Sector focus

How far the PM’s intervention to increase coal supply to thermal power plants and Coal Ministry’s decision to reduce the quota of e-auction coal will help resolving the severe shortage

| February - March 2012 | Power Insight

While the previous year, it was the equipment supply and raising funds for the projects were the key high-lighted issues, this year, reduction in domestic coal production and volatility in imported coal pricing are adding fuel to the fire. Head-ing to another budget, the power sector players are expecting announcement, which could translates into an accelerated momentum in the sector.

Thrust on distributed generation to make electricity available for the remot-est village of the country and adding solar capacity, a well learned lesson in the first year of JNNSM....... more

| February - March 2012 | Power Insight Power Insight | February - March 2012 |4 5

Concerned over possible environment damage to be caused by working and upcoming private thermal power plants, the state energy secretary has writ-ten to the Forest and En-vironment Department to take initiatives to start op-eration of an Environment Management Fund (EMF) in Odisha.

“Forest and Environment Department is the nodal department for creating the EMF for receiving the

contribution and to work out the maintenance and expenditure of the fund. In view of the above, you are requested to kindly take necessary actions to cre-ate and manage the fund,” said B G Mathi Vathan, the state energy secretary in a letter to the Environment Department. The state has signed Memorandum of Understanding (MoU) with 29 companies to pro-duce about 37,000 MW electricity by the end of 2022.

Anticipating power short-fall in the upcoming sum-mer months, Grid Corpora-tion of Orissa (Gridco) is in the process of striking pow-er banking deals with other states to ensure uninterrupt-ed availability of power and tide over the deficit.

From April 1, Orissa is

set to get 200 MW from northern states like Him-achal Pradesh and Haryana through the power bank-ing route. Gridco, the bulk power purchaser, is also in talks with other states like West Bengal and Gujarat to procure power through this mode.

Jindal India Thermal Power Ltd (JIT-PL) has set target for commissioning of the first unit (600 MW) of its 1,200 MW plant proposed at Derang village in Angul district by December this year.

The company plans to operationalize its second unit of equivalent capacity by March 2013. “We had a meeting with top officials of JITPL recently. Their proposed coal-fired power plant is on the fast track and we are closely

monitoring the progress of the proj-ect. The company has expressed con-fidence in commissioning the first unit (600 MW) by December 2012,” said a senior official of state energy depart-ment.

Mired in legal tangle, coun-try’s largest power produc-er NTPC is unable to place equipment orders worth Rs 34,000 crore for four super-critical projects in the coun-try. The placement of these orders have been stranded since one of the participat-ing bidders -- Ansaldo Cal-daie Boilers (ACB) -- ap-proached the court after its bid was rejected by NTPC citing non-fulfillment of minimum criteria in the tender.

Due to the dispute, NTPC has not been able to place orders worth about Rs 34,000 crore for four proj-ects spread across Maha-rashtra, Bihar and Uttar Pradesh. The orders were to be placed for two units each of Solapur and Mouda projects in Maharashtra and two units of Meja plant in Uttar Pradesh. Each of these projects have a capac-ity of 1,320 MW. Another order was to be placed for three units of 1,980 MW Nabinagar plant in Bihar.

Jharkhand could have been a surplus state in power sector if a section of locals had not resisted setting up of two major power projects by the state-owned National Hy-droelectric Power Corporation (NHPC) and the National Thermal Power Corpora-tion (NTPC).

However, Jharkhand State Electric-ity Board (JSEB) now intends to attain a power surplus status within next five years. NHPC has struggled for over two decades to set up one hydel power plant — to the extent of 710 MW in the first stage and 2,200 MW in the second stage — harnessing water from South Koel riv-er and its tributary stream, North Karo, in Khunt and Torpa districts of the state.

Country’s largest power company NTPC is expected to follow the rehabilitation package offered by West Bengal Power Development Corporation for land acqui-sition for the proposed 1,600-MW Katwa thermal power project in the state.

NTPC had decided to go ahead with land acquisition directly from land owners, after the state government said it will not acquire any land for any commercial project. “We have deployed our officials who are making a survey of land for the Katwa thermal power project and we will be following the West Bengal Power Development Corporation (WBPDCL) package for acquisition,” an NTPC of-ficial said.

thermalgovt for early start of environ-ment management fund

legal tangle delays ntpC’s order placement

Jharkhand to have sur-plus power in 5 yrs

ntpC to follow wBpdCl’s rehabilitation package

orissa to get 200 mw through power banking

Jitpl to commission 600 mw by dec

US has approved construc-tion of two atomic reac-tors in the country, making them the first to be built in America in more than three decades despite objections from the nation’s top nucle-ar regulator.

Commissioners of the Nu-clear Regulatory Commis-sion (NRC) voted 4-1 to approve the construction of two 1,100 megawatt West-inghouse-Toshiba AP1000 at power generator at Vog-tle in Georgia.

The site for the proposed plant already has two old reactors. Only one mem-ber of the five-person NRC, Chairman Gregory Jaczko, dissented, citing safety concerns following a triple meltdown last year at the Fukushima Daiichi plant in Japan. He argued that the new licenses don’t go far enough in requiring the builders to incorporate lessons learned from the Japanese nuclear disaster last year.

Us approves first nuclear plant in 3 decades

NatioNal NEwsNatioNal NEws

nuClear


Nuclear Power Corpo-ration (NPC), which is operating plants with 4,780 Mw capacity in the country, has got yet another push, as it can now expedite talks with the US nuclear major Westinghouse Electric Company for the pro-curement of AP1000 re-actors for the proposed project at Mithi Virdhi, Gujarat. This was pos-sible as the US Nuclear Regulatory Commission last week has released the final safety evalua-

tion report on the techni-cal review of the AP1000 standard nuclear reactor design. Westinghouse Electric Company had submitted its application for the AP1000 design on March 28, 2002. The US nuclear regulator’s certi-fication would be ratified in due course of time by the US Senate.

NPC has already initi-ated pre-project activi-ties in Mithi Virdhi with ground breaking planned in the current year or ear-ly next year.

The Jaitapur nuclear power plant project, which is going to be built as part of the India-France civilian nuclear cooperation agreement, would take off soon, Bernard Bigot, chairman of the French Alternative Energies and Atomic En-ergy Commission said here on Wednesday.

“Progress is happening there. I am confident the project will take off soon. Ground breaking is a matter of time. This project will take off as soon as possible,” Bigot told reporters after his meeting with Srikumar Banerjee, secretary, de-partment of atomic ener-gy and chairman, Atomic Energy Commission.

Jaitapur nuclear plant mak-ing progress

nuClear

India is expected to get foreign direct investment (FDI) of over $100 billion in nuclear energy in the next 20 years, of which a quarter would come from France, according to Com-merce and Industry Minis-

ter Anand Sharma.

“In the coming two de-cades, India will see invest-ments in excess of $100 billion in the nuclear power sector alone and I am sure, at least, a quarter, will come from France,” Sharma said.

The Confederation of In-dian Industry wants clarity in some clauses of the Civil Liability for Nuclear Dam-age Act, 2011. Welcoming the notification of imple-mentation rules, the CII said a framework is in place for the first time, instituting strict liability for the opera-tor who has to pay damages of up to Rs 1,500 crore. A balanced legislation would send the right signals to investors and suppliers and expedite the country’s nuclear power programme,

it said.

“Section 46 states nothing in the civil liability law will prevent the operation of other laws in force in the country and makes clear that criminal liability in case of an accident remains, as indeed do tort claims. However, clarification is required to ensure that this provision does not alter the exclusive channeling of any claims for nuclear dam-age on a strict liability basis only to the operator who owns the plant,” it said.

india eyes Us $100 bn Fdi in nuke energy in 20 yrs

Cii for more clarity in nuclear damage law

NatioNal NEws

Us safety nod to westinghouse reactors for gujarat project


Distribution licensees will now have to pro-cure short-term power (less than or equal to one year) through competitive bidding say the draft guide-lines of the Power Finance Corporation (PFC). This is expect-ed to reduce the over-all cost of procure-ment of power.

The short-term pow-

er market presently comprises 10 per cent of the total electric-ity procured in India. PFC has convened a meeting with the rep-resentatives of distri-bution licensees on February 10 to discuss the modalities. Cur-rently, the per unit rate of short-term power procurement stands at Rs 3.80 to Rs 4.

State-owned transmis-sion utility Power Grid Corporation today said its board has approved two projects entailing a total investment of Rs 1,682.13 crore. The approvals were given at the company’s board meeting. In a filing to the Bombay Stock Ex-change (BSE), Power Grid said the board has given green signal for system strengthen-ing in Raipur-Wardha Corridor for IPP Proj-ects in Chhattisgarh, at an estimated cost of Rs 1,422.85 crore.

This project is expect-ed to be commissioned within 36 months from the date of investment approval.

In a bid to give a much needed boost to dis-tribution reforms, the power ministry has launched an ambi-tious action plan. It will revise Case I and Case II standard bid documents (SBDs), introduce a rating

methodology of utili-ties to enable them get loans, provide a reform-linked interest subsidy to utilities and promote distribution franchises to reduce aggregate transmis-sion and commercial (AT&C) losses.

These steps are cru-cial, as the cumulative losses of distribution companies increased sharply to Rs 1,06,347 crore as on March 31, 2010 from Rs 79,339 crore in the corre-sponding period of the previous year.

action plan to reform distribution

pFC issues draft guidelines for power drawl

Rating agency Fitch today said the losses of power distribution compa-nies in five states contributed to 80% of the total losses in the sector dur-ing 2009-10. “[Losses of] Distribution companies [discoms] in the five states -- Tamil Nadu, Uttar Pradesh, Madhya Pradesh, Jammu & Kashmir and Hary-ana, constituted 80% of the total losses of all discoms in the country in finan-cial ended March 2010,” Fitch said in a statement.

The weak financial profile of discoms is the primary cause of stress for state power utilities. They posted Rs 29,500 crore worth of losses in fiscal 2009-10 against Rs 7,000 crore in fiscal 2005-06.

“This means that under the “cost-plus” tariff, generation and transmission com-panies are able to push their costs to the discoms, which are unable to recover the same from their consumers,” Salil Garg, Director in Fitch’s Asia Pacific Utilities team said.

Five states accounted for 80% of total dis-com loss

NatioNal NEws

power grid board okays two projects worth rs 1,682 cr

t & D


Independent Power Producers (IPPs) in Orissa may have to bear the cost of national grid trans-mission charges for providing electricity to the state, as Grid Corporation of Orissa

(Gridco) has objected to pay these charges.

In a recent meet-ing, Gridco officials pointed out that since private power producers have the option to connect

with the state grid, the state-owned util-ity should not pay for charges of transmis-sion made through Power Grid Corpo-ration of India Ltd (PGCIL) network.

ipps may have to pay central grid charges for state supply

Tata Power Company Ltd has posted a 40.6% de-cline in consolidated net profit for the quarter ended December 31, 2011 at Rs 262.67 crore, compared with Rs 442.37 crore in the corresponding quarter a year ago.The firm’s total income rose 57.45% to Rs 7,115.60 crore for the quar-ter under review, compared

with Rs 4,519.18 crore achieved a year ago.

On a standalone basis, the company’s net profit for the reporting quarter stood at Rs 422.88 crore, up almost three fold from Rs 154.07 crore a year ago. The firms total income was up 53.26%, from Rs 1,737.12 crore in December 2010 to Rs 2,662.34 crore in 2011.

Central transmission utility PowerGrid Corp, which re-ported 37% rise in Decem-ber quarter net profit at Rs 809 crore, aid it is likely to get a Rs 5,000-crore line of credit (LoC) from the State Bank of India (SBI).

“The State Bank has in-principle agreed to extend

a line of credit worth Rs 5,000 crore to us. We ex-pect to get the first tranche of the fund by the end of next month,” a company official told PTI on condi-tion of anonymity here on the sidelines of result an-nouncement event.

RPG group company, KEC International, is planning to take more of its business overseas, in hunt of more orders. The capital goods and con-struction company, which

already has presence in almost 40 countries, vows to slowly expand more di-visions of its business, to more number of countries.

“We are looking at the

whole world as a market. We are already present in the transmission sector in most of the countries.

But we plan to take each of our divisions like tower

systems, water, railways and telecom to more countries,” said Ramesh Chandak, the managing director and chief execu-tive officer of the com-pany.

tata power Q3 net down 41% to rs 263 cr

powergrid Q3 net soars 37% to rs 809 cr

KEC int’l keen to take more business abroad

NatioNal NEws

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results

t & D


State-run NTPC today paid an interim dividend of Rs 2,885.92 crore for the current fiscal. “NTPC paid the highest ever interim dividend of Rs 2,885.92 crore,” a compa-ny statement said. Interim dividend is a payment made before a company’s final financial statements. NTPC paid this divi-dend to the government,

which is the promoter of the company with 84.5% stake.

The company has paid interim dividend of Rs 3.50 per equity share be-ing 35% of the paid-up equity share capital of the company amounting to Rs 2,885.92 crore for the financial year 2011-12 on February 9, 2012, it said.

Planning Commission Deputy Chairman Montek Singh Ahluwalia has criti-cised the current gas pric-ing methodology where producers are asked to ‘dis-cover’ market price of the fuel by calling bids from consumers identified by the

government.

“We should decide now ab intio what should be the price of natural gas. What should be the principles, which should be applied,” he said at the launch of the book, “Natural Gas in India:

Liberalisation and Policy,” written by Anil K Jain, a se-nior bureaucrat and former joint secretary-exploration in the oil ministry. “On the one hand, we (advocate) freedom to price gas on an arm’s length basis. But on the other hand we also say

that (companies) must al-locate gas according to the government’s priorities,” he said citing example of fertilizer sector which can “bid for whatever price” because their input cost is pass through.

Iran has given a one-month ultimatum to an Indian consortium over the de-velopment of a gas field whose delay by India has been attributed to western pressure, the semi-official Fars news agency report-ed. “Iran has given a one-

month ultimatum to India over its decision on partici-pating in the development of Farzad-B gas field,” Fars quoted an unnamed oil of-ficial as saying.

“Possibly foreign pressures played a role in influencing

Indian’s delays to develop the field,” he said.

Iran said the field’s in-place gas reserves have been esti-mated at 21.7 trillion cubic feet (tcf), of which 12.5 tcf are recoverable.

The turnover of Nuclear Power Corporation (NPC) during April-December shot up 42 per cent at Rs 5,517 crore compared to Rs 3,885 crore during the cor-responding period last year. The state-run company’s total income rose 33.5 per cent at Rs 6,129 crore com-pared to Rs 4,590 crore. Its net soared to Rs 1,497 crore from Rs 715 crore, a rise of

110 per cent

NPC, which has supplied these provisional numbers, says the improved perfor-mance of 20 plants with installed capacity of 4,780 Mw was largely due to an increase in the availability of fuel for both domestic and foreign reactors, be-sides increased installed capacity.

results

Gas

ntpC pays rs 2,886-cr divi-dend for Fy12

montek flays current gas pricing methodology

iran issues ultimatum to india over gas field

npC net rises 110% to rs 1,497 cr in apr-dec

NatioNal NEws


NatioNal NEws

Petronet LNG, the coun-try’s biggest natural gas im-porter, is in talks with the Kerala government to set up a gas-based power plant at an investment of around Rs 3,000 crore. The plant may be set up adjacent to

the company’s upcoming regassification terminal at Kochi.

Petronet is investing Rs 4,500 crore in setting up the 5 million tonne terminal at Kochi. This will be the

company’s second termi-nal after Dahej in Gujarat. “The Kerala government wants us to set up a gas-based power plant in the state under a joint venture. We have asked the govern-ment to sign a power pur-

chase agreement before so that the anchor load is taken care of. Ideally, it should have a capacity of 750 Mw,” said A K Baly-an, managing director and CEO, Petronet LNG.

Gaspetronet in talks with Kerala govt for power plant at Kochi

pact for sourcing imported gas for its plants. The company is in initial talks with GAIL for sourcing gas, provided it finds buyers for the electricity pro-duced from those plants.

“We are talking to GAIL for sourc-ing gas through long term agreement only if we find buyers,” NTPC CMD Arup Roy Choudhury told. “If we have a long term buyer for electricity from those gas-based plants ...say 25 years then sourcing fuel through an agreement with GAIL is feasible,” he added.

With Prime Minister Man-mohan Singh’s office work-ing on urgent measures to address the ‘coal crisis’, the private power industry’s hue and cry over the issue seems to have subsided for now. Experts, however, say private developers have no right to complain, as they

have failed to develop their own captive coal reserves over the past two decades.

Currently, India requires 690 million tonnes (mt) of coal a year to fire plants, largely in the infrastruc-ture sectors of power and steel. Domestic production

was originally expected to touch 680 mt by the end of the current Plan period in March. This was scaled down to 630 mt in the mid-term appraisal and again to 554 mt at present, creating a 136 mt gap between de-mand and supply.

The government has rejected Reliance Indus-tries’ demand for a revision in the KG-D6 gas price, saying the $4.2 per mmBtu rate for five years was not only agreed to by the Mukesh Ambani-run firm but also upheld by the Su-preme Court.

The Ministry on January 30 wrote to RIL quoting from the May 7, 2010, Supreme Court judgement in the gas row between the company and Anil Ambani’s RNRL to assert that “any price revision proposal will be ex-amined by the government after expiry of five years from commencement of supply”.

ntpC in talks with gail for sourcing gas supplies

the coal crisis

govt rejects ril demand for gas price revision

State-run NTPC today said it is in talks with GAIL for signing a long-term term

Coal


NatioNal NEws

Coal

The government today said it has notified rules for allocation of coal blocks through competitive bid-ding process in order to bring transparency in al-lotment. The auction will be done by the Centre after fixing a minimum price for blocks on offer.

“In exercise of the pow-ers conferred by the Mines and Minerals [Develop-ment and Regulation] Act, 1957, the Central Govern-ment hereby makes the following Rules... Auction by Competitive Bidding of Coal,” the Coal Ministry said.

The government seems to be preparing the power sec-tor for low fuel availability. In the next Five-Year Plan, it is looking to reduce pow-er capacity from Coal India Limited (CIL)’s linkages. If the plan is carried out, the trend of huge capacity ad-ditions and low coal supply would be checked.

The move is being cheered by many in the sector, as reduced targets would lead

to more coal for a limited number of projects. While reduction in the power ca-pacity addition target might be a dampener for the sec-tor, industry experts say if befitting power projects re-ceive coal linkages, it could be good news. A number of companies, including Ad-ani Power, Tata Power and Larsen & Toubro, have said they would plan more proj-ects after there was more clarity on coal.

The government is consid-ering reserving forward e-auction of coal, exclusively for the power sector. The proposal could be part of the detailed road map be-ing finalised by the PMO

for the smooth sailing of power companies amid a severe coal crunch that is hurting investments worth thousands of crore.

The proposal is part of the discussions currently be-

ing held by the PMO with representatives of infra-structure sectors, including coal and power, for easing coal availability, according to sources. If implemented, it could make an additional

six-seven million tonne (mt) coal available for the power sector. Forward contracts account for 15 per cent of the 45 mt Coal India (CIL) sells through e-auction every year.

rules notified for competitive bidding for coal blocks

Fewer power projects may get more coal in 12th plan

Forward e-auction coal may be reserved for power firms

In a landmark development, the government has exempted pow-er sector companies from going through the auction route for the allocation of coal blocks for cap-tive use. The move comes even as the Supreme Court last week can-celled 122 telecom licences for not following auction as the method for allocation of second-generation (2G) spectrum, another scarce natural resource, used in mobile te-lephony. However, for users other

than power sector companies, the competitive bidding method would replace the current practice of al-locating blocks for notified captive use on the basis of recommenda-tions of an inter-ministerial com-mittee. The new system is expected to induce “transparency and objec-tivity” in the overall coal block al-location process. In the first phase, 54 blocks would be offered to both power and non-power users, under the new dispensation.

power sector exempted from coal block auctions


modernisation of existing network are eligible for exemption.

According to the rating agency Crisil, “There were no major announcements addressing the power sector in the Union Budget 2011-12. Sunset date for tax holiday under section 80IA for the sector has been extended by anoth-er year to March 31, 2012, which will encourage investments. The enhanced limit of USD 40 billion for Foreign Institution Investors (FIIs) investing in corporate bonds issued by infra-structure companies and the creation of infrastructure debt funds with tax benefits will improve availability of funds to the sector. Domestic equip-ment manufacturers for Mega Power Projects (MPPs) and Ultra Mega

Power Projects (UMPPs) have been exempted from central excise duty to bring them on an even platform with foreign suppliers who have a cost ad-vantage and also enjoy a concessional custom duty. However, this will have a marginally positive impact on do-mestic equipment manufacturers.”

Some of the market analyst sees the last year’s budget announcements to be inadequate in all respects to give the required lift up to the sector. Over the past few quarters, the power sec-tor has seen hard times given the se-vere liquidity crunch that hit existing as well as new projects. And as such, the sector once again saw capacity ad-dition that was way below the targets set out as part of the XIth Five Year

Plan. While the situation on the fund-ing side has improved considerably since the middle of 2008, companies are stepping up on new projects with utmost caution. This is especially given that linkage for fuel (especially coal and gas) is becoming a tough nut to crack. However, rural electrifica-tion continues to get a boost in each passing budget and so is the improve-ment in the T&D network. Budget 2011 was no different, as it allocated higher funds for the development of the power sector with a view of speed-ing up the expansion of new genera-tion capacities.

“The proposals in respect of the ener-gy sector - oil and gas, power and re-newables were as anticipated; the roll forward of the income tax holiday for power by a year, denial of tax holiday for the ongoing round of NELP and indirect tax concessions for renew-ables. These were quite predictable.” said BMR Advisors in their post bud-get analysis.

Now when we are days away from the D-day, all eyes are set on New Delhi. The step taken by the Prime Minister recently to ensure coal supply even before the budget was cheered by the industry. However, the expectation is that there could be announcements re-garding import duty on coal as the de-pendency on imported coal are on the rise. In a similar situation like that of a decade back, a section of the indus-try feels that there could be potential announcements to improve the health of DISCOMS. So it is wait and watch as of now.

Will it BooSt the Renjini Liza Varghese

Like the previous year, power sector continue to be under performer this year as well. While the previous year, it was the equipment supply con-cerns and raising funds for the projects were the key highlighted issues,

this year, one more got added to it, fuel supply constraints. Reduction in domestic coal production and volatility in imported coal pricing are adding fuel to the fire. Heading to another budget, here we are trying to give an outline of what the power sector players are expecting the government to announce, which in-turn translates into an accelerated momentum in the sector.

While extending the tax holiday for an year for power sector was last year’s budget highlight for the sector. However, many of the economists and the industry experts rated the power sector announcements to be a neutral one. The tax holiday was announced with the aim of boosting the power generation in the country to meet the growing needs and also bringing down the distribution losses.

The power sector is entitled to tax exemption, under section 80-IA of the Income Tax Act. The announcement was beneficial for projects that took off in the last one year, including the Ultra Mega Power Projects. Projects that start power gen-eration, distribution, transmission or that undertake substantial renovation and

• Tax Exemption for power sector extended for an year more

• Aimstoboostcapacityadditionplans

• Higherallocationforruralelec-trification

• ExcisedutyexemptionforUMPPequipments to aid fast-track creation of new large-scale power generation capacities.

• HigherFIIlimitforinvestmentincorporate bonds issued by in-frastructure companies to pro-vide additional funding to the power sector.

• Higher investment on rural in-frastructure to aid development of the rural power distribution

network.

• Higherallocationforinfrastruc-ture to aid the overall develop-ment of the power sector.

• Reductioninsurchargeof7.5%on domestic companies to 5%to aid net profits of power com-panies.

• Taxincentivesonforeignfundsfor financing of infrastructure to aid the sector’s financing needs.

• Customsdutyonsolarlanternsreduced to 5 percent from 10 percent.

• Customs duty on few inputsused in the manufacture of so-lar modules/ cells reduced to nil.

highlights of 2011-12 budget

CurtaiN raisErBudget 2012-13 Budget 2012-13

CurtaiN raisEr

poWer Sector?


“This budget should aim for a speedy recovery from the policy paralysis that has been troubling our econo-my. It is time to move ahead with policies that stimulate infrastruc-ture development. The Government needs to address power sector crisis as national energy security problem. As power availability impacts every other sector, specific measures need to be initiated:

Ensuring a level playing field to the Indian power equip-ment manufacturers vis-à-vis Chinese imports. I expect the government to introduce import duty which had been withdrawn earlier. Power projects need funds. High in-terest rates have put most projects on hold. We are hopeful that the government will have some stipulation made into the banking regulatory commission. Finally, we do hope post budget, the Government would pass the Act for land acquisition. This will make land available for coal mine opening as well as for setting up power plants.”

induStry WiSh liSt


CurtaiN raisEr

M S Unnikrishnan MD & CEO

Thermax Limited

“Even as the country’s power sector witnesses record capacity additions at over 50 GW in the current Five Year Plan, urgent policy initiatives are needed to address some of the key is-sues that are hindering the growth of this sector. We hope the coming Bud-get will attempt to address the issue

of improving the flow of funds by revising the sectoral lending limits of Banks, including the Power sector in any take–out scheme floated by the Govt., relaxation in RBI ECB guidelines for refinance of power projects by increas-ing the rupee debt percentage and raising the quantum of ECB funds for automatic approval. We urge the Govt to usher in Distribution reforms and include electricity under the purview of GST.” Anil Sardana

MD, Tata Power

The Indian electrical equipment industry is currently facing very challenging times. The indus-try has registered a moderate 9% growth in the first half (H1) of the current fi-nancial year, 2011-2012. The second quarter (Q2) FY’12

growth has decelerated to just 4.14% from 13.82% clocked in the first quarter (Q1) of FY’12.

All product sectors have shown decline in their growth momentum in the second quarter (Q2) from first quar-ter (Q1) of FY’12. The data that we are receiving from the industry suggests that the slowdown is getting in-tensified and the third quarter (Q3) may witness even less than 4% growth. This indicates that the second half of the current financial year will show even lower growth than the first half, and this will translate into one of the lowest annual growths witnessed by our sector in recent years. Prices of key inputs / raw mate-rial, especially which are imported in large quantities,

Ramesh Chandak CEO & MD, KEC International

and President IEEMA

are on an upward trend. Stiff competition in the domestic market from foreign suppliers and also in global markets is eroding the price competitiveness of Indian manufac-turers.

Based on the projections of the government for capac-ity enhancement in power generation, transmission and distribution in the 10th, 11th and 12th Plans, the domestic electrical equipment manufacturing industry has made huge investments in doubling and, in some cases, even tripling its production capacity. However, this built-up capacity in the T&D equipment segment currently stands under-utilised across several products due to lack of de-mand and a surge in imports of electrical equipment in re-cent years, especially from China, with uncertain lifecy-cle and quality.Sufficient capacity has now been built up also by domestic manufacturers of main plant equipment (Boilers, Turbines, Generators) to meet the projected do-mestic requirements (15-16 GW per annum).

We need to provide a level playing field in the country for domestic manufacturers to compete with foreign, es-pecially Chinese manufacturers. The price differential between domestic companies vis-à-vis Chinese manufac-turers is mainly due to disadvantages faced by domestic manufacturers (State and local levies, higher financing costs, lack of quality infrastructure, dependence on for-

eign sources for critical inputs / raw material, etc.), as well as subsidies / incentives provided to the Chinese manufacturers by their government.

It is widely known that Chinese imports are relatively cheaper because equipment makers from China ben-efit from low interest rates and an undervalued currency, which in itself leads to cheaper exports. India now has adequate domestic capacity to fulfill the anticipated an-nual demand for power generation capacity augmenta-tion, which was not the case earlier. Therefore, the rec-ommendation of the Maira Committee to impose import duty on foreign power generation equipment is a step in the right direction. In addition, even the T&D equipment sector needs to be provided a level playing field.

Absence of a level playing field for the domestic indus-try to compete with imported electrical equipment, espe-cially from China, is a clear and present threat. Therefore, there should be no further reduction in the present level of import duty on electrical products. On the contrary, there is a strong case for increasing the duty in most cases. We have been also asking for protection of the domestic elec-trical equipment industry’s interests under different FTAs being signed.

(Continued on page 23...)



CurtaiN raisEr

need to ElectrifyIt is once again that time of the year when the eyes of the nation will be on Pranabda rather than on Dhoni and the men in blue. Many will be hoping that in these difficult times, the bud-get will bring more cheer to the power industry than the news from Austra-lia. The industry is facing its worst crisis since the Enron debacle back in the early 90’s. The recent meeting of the Prime Minister with the heads of various power companies was the

first major positive step seen by the industry. The Finance Minister in the current budget has a golden opportunity to take the process forward by announcing clear plans on a number of policy and fiscal issues.

One of the major incentives for investing in the infrastruc-ture space is the availability of 80 IA benefits. This benefit will lapse at the end of this fiscal year. In the absence of implementation of the Direct Tax Code, failure to extend 80 IA benefit will have a disastrous effect on the sector. The impact could be similar to the one witnessed in the oil and gas sector when the government abruptly withdrew fiscal incentives on gas exploration. Four years after the unexpected imposition, the sector is still facing issues at-tracting investors.

The other major issue facing the industry is talk about im-position of duties on import of equipment of up to 14%. Large projects such as MPP’s and UMPP’s are currently exempt from such duties. Any increase in costs will force the generators to pass it on raising the prices for consum-ers. In case the Finance Minister decides to impose duties, it should do so in a phased manner, say 5% per year after a cooling period of 1 year. Further projects currently un-der implementation should be exempt as these costs were not factored in during their construction and financing. Currently power projects face a myriad of indirect taxes. Some of the indirect taxes on projects can be reduced or eliminated to bring down the cost of generation.

Wind generation has been one of great successes of the XIth plan. The wind capacity added every year has steadi-ly increased. The profile of the players entering the indus-

try has also changed. While some of the older entrants were primarily tax driven, many of the recent players have been long term serious producers attracted to the industry by the Generation Based Incentive. This 50 paise adder to every unit has been instrumental in making the economics attractive and the projects financeable. This incentive set to expire at the end of this fiscal year needs to be extended by another 3-5 years. The industry expects the extension in some form and any surprises will cause a major disrup-tion to this bright spot in the Indian Utility space.

The recent Supreme Court ruling in the Vodafone case has ascertained the independence of the Indian judiciary in-creasing investor confidence. Any changes in the tax code to capture a similar transaction involving overseas investor needs to be offset by tax treaties with relevant countries to avoid double taxation. Double taxation is a great entry barrier in attracting foreign investment in a sector badly in need of credible foreign players.

There are two other issues facing the industry where the honorable Finance Minister can play an active leadership role. The first is the financial health of the DISCOMS. The issue has been festering for the past several years and has reached a crisis point. Already utilities have started deferring on payments and the issue will worsen. Consid-ering the political sensitivity, it is unlikely that the states will solve the issue on their own unless some comprehen-sive restructuring package and reforms are implemented across the country with central guidelines. Any restructur-ing will involve a large segment of the banking sector and leadership from the finance ministry will be required in this regard.

The second issue facing the industry is that of availability of funds. Many of the banks have reached sector limits and are unable to lend further. This will put the implementa-tion targets of the XIIth plan at risk. One major constraint in India is the absence of long term institutional money in funding power projects. Investment by insurance com-panies requires the project to be rated at high investment grade. In the current scenario of fuel uncertainty and poor health of the offtakers (DISCOMS), the project rating is barely investment grade even at commissioning, making capital market take out financing difficult. The Finance

Minister can increase the breadth of this market by allow-ing banks and NBFC’s to offer intermediate credit enhanc-ing schemes. This will free up funds in the traditional bank market to finance new greenfield projects.

The Prime Minister with his recent meetings has started the process of pulling out the power sector from the depths

it has sunk to in the last several months. The current budget offers a great platform for the honorable Finance Minister to demonstrate that the Government is serious about devel-oping a long term solution for the sector.

(The views expressed by the author are in his personal ca-pacity)

The MoF & MNRE should extent the GBI scheme with an incentive of INR 1.2/kWh with not cap (Currently INR 0.5/kWh with a cumulative cap of INR 62L per MW over 10 years)

Tax Holidays under the sec-

tion 80IA should be continued in 2012-13 and in DTC as well. This is essential to promote investment in essential infrastructure such as Power. Any additional burden will only pass on to the end consumer.

Priority Lending to RE projects should be considered. Govt could consider a SPV Finance/Guarantee lending to RE sector including Transmission infrastructure for RE projects.

Ramesh Kymal Chairman and Managing Director, Gamesa India

It has been estimated that India has got the potential of having Biomass Based Power Generation about 18000 MW and by 12th plan, our country should achieve 7500 MW in addition to the current installed capacity of 2665 MW as of 30.03.2011. (MNRE)

Current barriers for the slower pace of development for Biomass Power Generation on achieving the said tar-

get are as follows.

• Central Financial Assistance by way of capital subsidy is just 20 lakh X ( Capacity in MW)0.646

• which is not at all comparable with the support of Rs 8 Crore per project in the case of Bagasse Based Co Generation projects put up by cooperative /public sec-tor sugar mills. It is suggested to revise the same to at least Rs. 50 lacs per Mw not exceeding Rs.8 Crs.

• Over drawl / consumption of biomass by other sectors. Needs exclusivity for the biomass power generation.

• Steep rise in the fuel prices which is not proportion-

ately linked by the regulatory commissions for fixing the tariff. Recommend annual re set of fuel cost to sup-port industry.

• No uniform policy available for open access / Electric-ity Tax. Till the Industry matures to significant levels it is suggested to waive tax on Renewable Energy.

• Lack of Government Support for the Energy Planta-tions. Govt to support allocation of un used land at nominal lease cost to Biomass Power plants at 500 Hectares per Mw which will help in energy plantation efforts and fuel security partially. Similar support is given in our neighbouring country like Srilanka.

Wind Business Issues

1. Incentive for REPOWERING, interms of lesser inter-est rate for loan from IREDA / bank

2. To increase the GBI applicability from the present 61 lacs /mw to 100lacs /mw

3. Continue the GBI for coming years also

4. Incentives for indigenisation of components

5. Green cess collected must be used by MNRE to de-velop Infrastructure.

Krishna Kumar MD, OGPL

induStry WiSh liSt(Continued from page 21...)

Hemant Joshi Senior VP finance

CLP India


These schemes and capital outlay plans have no doubt helped the Gov-ernment encourage investments into the sector and resulted in adding around 50 GW of generation capacity over the XIth Five Year Plan. How-ever, the work is still half done as the country faces a base load deficit of more than 10% and the power demand is increasing. The Planning Commis-sion has proposed an ambitious target of 100 GW capacity addition over the XIIth Five Year Plan (FY 2012-17) and in order to achieve this target, it becomes important that the pace of reforms accelerates. Critical issues such as raw material supply, logistics infrastructure, and financial viability of Distribution Companies have to be resolved to further encourage invest-ments. It becomes imperative that the Annual Budget portrays the Govern-ment’s commitment to investments in the power sector as well as lay down the roadmap for resolution of prob-lems currently being faced.

Government needs to take steps that a) increase the depth of the market that provides funding for infra proj-ects esp. power and b) clear policy issues.

The current depth of the financial mar-kets is grossly inadequate considering the investments required for meeting the power demand. The setting up of the Infrastructure Debt Fund has re-cently gathered pace during FY12 and is expected that such funds will start operations this year. The infra debt funds have also become important in the wake of refinancing issues be-ing faced by the power developers in the current high interest rate scenario. Even the take-out financing scheme for infrastructure projects (to reduce the asset-liability mismatches for banks and to infuse liquidity into the system) is not benefiting the power

sector due to the systemic risks be-ing faced in the power sector. The sore point for investors i.e. withhold-ing tax on infra debt funds could be addressed in the coming budget. The government is also expected to heed to the demand of local power equip-ment manufacturers for imposing a Counter Vailing Duty on the import-ed power equipment. Other schemes and steps with respect to exemption in duties for capital goods as well as tax deduction for infrastructure bonds will be continued, the quantum would most probably be increased for in-frastructure bonds that could provide additional succour for individual tax payers.

On the policy front, there should be a commitment to pass the Land bill and the MMDR bill at the earliest. This will remove the uncertainty and pro-vide investors clarity on their returns and the associated time period. Par-ticularly the land acquisition process for power plants has become cumber-some and is turning investors away from setting up greenfield projects.

Although the go no-go classification has been removed, obtaining envi-ronmental and associated clearances is a long drawn process and should be simplified through a “Single Win-dow Clearance Mechanism” in a time bound manner. Setting up the Coal Regulatory Authority (CRA) is long overdue, it is a step which will not only lend a lot of credence to the whole coal allocation process and its implementation but will also speed up the process of setting up a trans-parent bidding mechanism for award of coal blocks. Ministry of Coal has recently agreed to sign FSA’s at 90% PLF which is a tremendously positive step but since coal production has not increased it remains to be seen how CIL meets this increased coal de-

mand. As per rough estimates taking into account the pending coal demand (to meet 90% PLF for LOA’s already signed) and future production targets of CIL; any new allocation of coal for new projects may not be feasibly un-til 2017, therefore requiring proactive steps for meeting the coal demand.

Power distribution is negatively af-fected due to a host of issues that has severely impaired the power sector. Power distribution is a significant link in the chain of power genera-tion and supply as financial viability of the entire power sector depends on the financial viability of this sector as it is solely responsible for collecting the energy charges from consumers. However, high commercial & techni-cal losses in the sector have always placed enormous financial burden on the State and Central Govt. The rising gap between tariff and the cost of sup-ply have increased the revenue defi-cits of Discoms resulting into huge unsustainable losses. Some immedi-ate steps need to be taken by the cen-tral/state government failing which it is not far when a huge bailout of gi-gantic proportions (approx Rs. One lakh crore) would be required to clean the discoms balance sheet, needless to say that it would severely impair the fiscal deficit position.

Although the above mentioned issues and reforms have been discussed time and again at various levels, the current times demand a speedy implementa-tion backed by transparency and commitment from the Government. However, it remains to be seen to what extent the Finance Minister will deliver when he stands up to deliver the Budget.

(Also contributed by Nikhil Gupta, Manager, SBI Capital Markets Lim-ited and All Views are Personal)

FoCUs powErsECtorGopi Krishna, AVP, SBI Capital Markets Limited

As our Finance Minister rises to present the Union Budget 2012-13, the economic en-

vironment that presents itself is quite challenging. The government is con-strained on more than one front and many a sector is looking for bailout/policy action (Aviation, Power, Tele-com etc.) from the government. The budget though is not a platform for addressing these issues; it provides a policy direction though announce-ment of measures and also gives an indication of the steps that could be taken over the next year.

Currently, the infrastructure space is in a state of slowdown and is plagued with lack of new orders, low investor confidence, inconsistency in policy and fall in credit. Power sector, es-pecially, is bearing the brunt of this slowdown and policy paralysis. A ma-jor part of any developing economy, the power sector plays the enabling role in the economy. However, the problems associated with this sector have come to a point where the entire value chain is in a critical state, start-ing from raw material production to

realization of revenues, power, rather than being an enabler has become a major pain point for the economy.

In the ensuing paragraphs we discuss the various measures taken by the Government over the past budgets, their impact and expectations from Budget 2012-13 for the Power Sector in India.

The XIth Plan Period (FY 2007-12) envisaged an addition of 78,000 MW of Generation Capacity, however, during the Mid-Term review, this tar-get was reduced to 62,000 MW and the actual capacity addition will be nearer to 52,000 MW only. The total outlay for the Power sector (Ministry of Coal, Ministry of Power and Min-istry of New & Renewable Energy) in the final year of the XIth Five Year Plan has increased to almost double the planned outlay in the first year of the Plan.

From an investment perspective, the goal of the annual budget is not only to allocate capital to various sectors but also to facilitate investments in

them. Investment in the sector was at-tracted through a variety of schemes, some of which are as under:

• Award of Ultra Mega Power Proj-ects

• Restructured Accelerated Power Development & Reforms Project

• Rajiv Gandhi Grameen Vidyuti-karan Yojana

• Mega Power Benefits (Full ex-emption from central excise duty)

• Provision for a parallel excise duty exemption for domestic sup-pliers in line with the concessional basic customs duty and full ex-emption from CVD for imported capital goods

• Evolution of the Takeout Financ-ing Scheme through IIFCL

• Proposal to setup a Coal Regula-tory Authority to facilitate resolu-tion of issues such as economic

pricing of coal and benchmarking

• Deduction in re-spect of long-term in-frastructure bonds for Tax Purposes

• Disinvestment of Public Sector Under-takings

Financial Year 2007-08 2008-09 2009-10 2010-11 2011-12

Ministry of Coal 5300 6897 5674 13518 9303

Ministry of Power 33153 40460 53126 60751 66383*

Ministry of New & Renewable Energy 1012 1267 1347 1950 2150

Total 39465 48624 60147 76219 77836

(Rs. in Crs.)

Source: Finance Ministry*Large part (more than 80%) of the plan allocation in power sector is met from internal accruals of the CPSU’s


CurtaiN raisEr


Coal CoalsECtor FoCus sECtor FoCus

How far the PM’s intervention to increase coal supply to thermal power plants and Coal Ministry’s decision to reduce the quota of e-auction coal will help resolving the severe shortage

Renjini Liza Varghese

Coal sCarCity marringshadow on CapaCity

addition

In the past one year, scarcity of coal for power plants had given sleepless nights to the gov-ernment officials and the utilities on an equal scale. As an answer to the shortage of the domestically supplied coal, the Indian power companies, both public and private sector, had turned to the international market. The climate in the international market was nei-ther favourable for them. Volatility in global coal pricing, new tax regimes implemented by Indonesia and logistical hassles are hitting the power utilities.

India the fifth largest energy consumer in the world has the supply predominantly coming from coal based Thermal Power Plants. With more Ultra Mega Power Projects planned over the next five year plan the demand for coal will further increase.

Fuel wise energy gener-ation during 2010-2011A country like India, where the esti-mated growth rate is kept around 9

per cent, the required energy growth will be around 15 per cent. In the cur-rent Five Year Plan, the power minis-try had revised its capacity addition plans from 75,000 Mw to 55,000 Mw. The addition of 55,000 Mw by itself is more than what the country has added post independence. In the next Five Year Plan (2012-2017) the country plans to add 100,000 Mw of generation capacity. The country still faces a peak hour deficit of 12 per cent.

reasons for shortfall in power generation tar-getsa. Loss of generation due to short-

age of coal

b. Loss of generation due to poor

quality coal

c. Loss of generation due to delay in commissioning/ Stabilization of new units during the year 2010-11

d. Loss of generation due to back-ing down/shut down of units on account of low schedule from beneficiary states

e. Loss of generation due to back-ing down/shut down of units on

account of low schedule from beneficiary states

all india thermal plF

Current Coal scenarioThe country is reeling under severe supply constrains owing to decrease in coal output. Some of the coal based power plants in the recent past had to stop power generation due to shortage of coal. Coal mining had hit the road blocks in various stages- getting the environmental clearance, land acquisition issues and low in-vestments. India has put in place the “go- no go area” to preserve its for-estry. It is easy to shift a manufactur-ing unit from a “no-go area” to an-other location. In case of a coal mine, there is no alternative available. The Ministry of Environment and Forest ( MoEF) must find a solution interms of faster environmental clearance for coal mining.

Country has 10 per cent of the world’s coal reserve. With the current rate of production at 550 million tonnes per year, India’s coal reserve is predicted to last for next 100 years. Coal India Limited (CIL), the state owned coal miner is the loner supplier of coal in the country. CIL is supposed to be supplying 80 per cent of the demand. However, it in the recent past was able to meet as low as 50 per cent of the demand. Recently, the coal ministry had asked CIL to increase its supply to 75 per cent under new fuel supply agreements. The gap in the demand and supply is expected to cross 200 million tonnes by the end of the 12th Plan period that ends in March 2017.

According to the latest reports from the Coal Ministry, the coal imports

66%

3.3%

12.1%

0.3%

0.4%

14.1%0.7%

3.2%

Year In % 2003-04 72.7 2004-05 74.8 2005-06 73.6 2006-07 76.8 2007-08 77.2 2008-09 78.6 2009-10 77.48 2010-11 75.07 2011-12 * 76.67Upto June 11 provisional*


for the current year are seen at close to 140 million tonnes as against 125 mil-lion tonnes in the previous year. It is observed in the past that the demand always overshot the estimated imports by the government. In the beginning of the current fiscal, the numbers were kept as 114 million tonnes of import. According to the statement made by the coal minister Shriprakash Jaiswal in Rajya Sabha in the winter session of Parliament, coal imports will go up in the coming years to meet the sup-ply demand gap. For the next finan-cial year starting from April 2012, the expectation is that the coal import will be over 140 million tonnes.

The words of BGR head resonates many of the private power producers in the country. “Acquisition of land and getting fuel supply is a concern. For the land, we are working closely with both the state governments. We are optimistic of finding the required land in the near future,” said Prabhu Srinivasan, VP Finance BGR Energy. Getting fuel supply for the plant in the current scenario where the country is going through a severe shortage of fuel for power seems to be a constant concern. The company is looking at setting up two power plants, one each in Tamil Nadu and Orissa, both of which will have a capacity of 1320 Mw (2×660 Mw).

From time to time Ministry of Coal

had issued s t a t e m e n t s clearly stating its inability to meet the grow-ing demand of coal. Coal Minister Srip-rakash Jaiswal in last Decem-ber said, “A large number of power plants are coming in

the country. We cannot meet the coal demand of the power companies.” He also pointed out that getting green nod for projects an issue.

Expressing concern over the increas-ing demand and supply gap, the min-ister said, “The gap in demand and domestic supply of coal has increased from about 50 million tonnes in 2007-08 to 83 million tonnes in 2010-11. Gap in the current year was envisaged to be 142 million tonnes.”

Jaiswal said not opening the coal sec-tor in the early 90s was a missed op-portunity to meet the country’s energy needs and Coal India is facing diffi-culty in supply. “Coal India Ltd. has its own limitations in augmenting pro-duction and satisfying the consumers as per the projected demand. Even the policy of captive mining has not

helped the sector to the desired ex-tent,” he said.

In one of the interviews to a busi-ness news paper the minister said “a number of new coal projects are be-ing taken up in the public sector coal companies and government had also allotted 195 coal blocks to both pub-lic and private firms for captive pur-poses and there is a huge potential of more than 400 million tonnes from these blocks. This will help to meet the growing demands of coal from the priority sector, power.”

Power generation utilities had more reason to cheer after the intervention of Prime Minister Manmohan Singh, the coal ministry had also issued di-rective to CIL to divert the coal from e- auction route to power companies. CIL supplies around 10 per cent of the coal to the e-auction route, which will be now reduced to 7 per cent. The PMO said that Coal India has been asked to sign long-term agree-ments to supply coal to operational and upcoming power projects with a total generation capacity of more than 50 gigawatts. It has also been asked to import coal if need be. Coal India said in October that it plans to sell up to 50 million tons via e-auctions this fiscal year ending March. In Febru-ary the coal ministry had scaled down coal production targets of CIL to 440

Year Demand Domestic Gap (In Million Production Tonnes)

2005-06 445.65 407.04 38.61 2006-07 474.18 430.83 43.35 2007-08 492.50 457.08 35.42 2008-09 550.00 492.76 57.24 2009-10 604.33 532.06 72.27 2010-11 656.31 533.08 123.23 2011-12 (est) 696.03 559.00 137.03

Source: PIB

million tonnes from the earlier 550 million tonnes.

However, Coal India is of the opinion that they needs more clarity on who will foot the bill for any imports be-fore it commits to major purchases needed to meet supply obligations to power producers.

“We have not been told anything about import liabilities, so the question of imports does not arise just yet,” said a senior Coal India official.”Let us see what the policy says about import cost pass through,” he said, referring to sharing of any financial burden with power producers.

The new PMO ruling applies to pow-er plants due to be commissioned by 2015 and have a pact with distribution utilities to sell power. A decision on imports by Coal India would also be influenced by other factors. A signifi-cant number of the upcoming plants do not have long-term power purchase agreements with distribution compa-nies. This means Coal India would not be under any obligation to sign supply deals with them immediately.

Besides, technology used at many of power stations prevents them from going beyond a certain limit for blending local and imported coal.

While the CIL is complaining of de-lays in getting MoEF clearance for mines even in the notified “go-area”, many of the private sector allottees is sitting on without developing the mines. This had prompted the coal ministry to take back the allotted cap-tive coal blocks from both the state owned companies like NTPC and the private power utilities. However, the ministry had revised its decision re-garding NTPC and re-allotted some blocks to the largest power generator in the country.

Coal map of india-major mines in the country

Coal CoalsECtor FoCus sECtor FoCus



Elaborate on the role played by Mjunction in coal e-auction?

Mjunction, the e- commerce com-pany handles procurement for various companies like steel, manufacturing and so on. Coal junction an arm of Mjunction carryout the e- auction of Coal from the state owned Coal India Limited. 10 per cent of Coal India produced coal is made available for the spot market through coal junction. The company, Mjunction was formed in 2001 as a JV between Sail and Tata Steel to speed up the procure-ment process of the promoters. Coal junction, the arm which deals with coal spot market was formed 6 years back when the demand for the fuel in-creased considerably.

What kind of growth have you wit-nessed in the e- auction segment of coal?

Private sector has invested a lot of money in the power segment believ-ing the rosy picture of capacity addi-tion put in front of them. But in real-ity, the investors are feeling the heat because of the scarcity of fuel. The existing power generation companies depend on spot market to meet the shortage. It is market driven price, which is normally above the notified price of coal. And e-auction also sees a lot of aggressive pricing when the

demand is higher due to supply defi-cit. In the past 6 years, coal junction had grown to a buyer base of 10000 plus. As of now it is one day spot mar-ket which is available. However, we are looking for provisioning forward option in spot market, which will be a reality in short term.

Explain the functioning of coal junction?

Currently the auction happens every alternate days. Anyone who is look-ing for coal can get oneself registered on coal junction and participate in the e-auction. Whoever buys the coal gets a confirmation about the quantity and the point of pick up through email. The minimum quantity is 50 metric tonnes and multiples of rakes there-after. The average sale in a month is between 5000- 6000 metric tonnes.

If you notice, the coal prices have gone up substantially in the last few

years. E –auction being the most transparent way, the power compa-nies resort to spot market to fulfill the short term deficit.

Does the company take the respon-sibility of transportation of the car-go to the customer?

Logistical arrangement for moving the consignment is the customer’s re-sponsibility. Neither Coal India, nor Mjunction is involved in the process. However, Buyjunction another arm of Mjunction can assist the customers in fixing the rail rakes and also dispatch-ing the cargo.

There is lot of complaints about the quality of coal supplied by Coal In-dia. How do you ensure the quality when available for e-auction?

Coal junction take into account the quality of coal indicated by the Coal India. And it is CIL which gives out the reserved price bracket for the available quantity of coal for e-auc-tion.

As of now, the supply comes from Cola India. Is the company explor-ing the possibility of getting coal supply from overseas companies for e-auction?

We are approached by many overseas coal companies in this regard. No

MJunction handles the e-auction of coal from CIL aims to increase the amount of coal available in the spot market. Excerpts from a telephonic interview with Vinaya Varma, Vice President, Mjunction Services Limited.


exploring overSeaS Supply to increaSe coal e-auction: MJunction

Vinaya Varma Vice President Mjunction Services Limited

doubt that the channel is available. The company has already started the process of evaluating couple of them. The visible hurdle is the sporadic sup-ply of coal from these companies. As the demand is increasing, we may even look at sourcing coal globally. Companies from countries like In-donesia and South Africa are the one who approached us.

Can you highlight any evolving pattern observed in the coal spot market? Do you look at demanding more coal for e-auction?

There is an overwhelming response for e-auction process of coal. As of now the supply is 10 per cent of the total production of CIL. We shared the demand increase, the aggressive pric-ing pattern and other statistics with

Coal India. They are in the know; an increase of another 10 per cent will be a good idea.

What are your growth targets?

The primary growth plan is to get substantial quantity of quality coal into the country. Make coal buying simpler for Indian buyers, more com-petitiveness in buying etc is also part of our growth plan. The transaction value last year (FY’11) total to Rs 25,000 crore, which included both buying and selling. The target is to cross Rs 50,000 crore by the end of financial year 2-13-2014.

Throw some light on company’s tie-ups and acquisition plans?

With the purpose of serving the re-

gional offices of the larger global companies, Mjunction have entered into tie up with EPSA/buy pro, a com-pany is sourcing in France.

What are the other business of mjunction ?

E procurement of equipments for power sector, acts as reverse auction platform etc. Equipment buy process in the traditional way is time consum-ing. An e-tender on the site, dissemi-nates the information to a larger au-dience. The cycle time of the process was cut down by 60 to 70 %, resulting in increasing the supply base. More-over the participation has gone up. The eligibility criteria are outlined by the companies and they take the responsibility of verifying the creden-tials of the participants.

MJunctioniNtErviEw

MJunctioniNtErviEw


When you say increasing energy efficiency, what are the processes involved?

Availability of coal is a growing con-cern for many countries which have increased dependency on the fuel for its energy needs. How do we increase the efficiency of coal, let me explain, it is a simple and economical process to upgrade the low energy content coal to a higher energy yield. The in-crease in efficiency is between 30 to 50 per cent in very low energy content coal. In some cases it is even 100 per cent more efficient. For a country like Indi, this technology is more apt as the energy efficiency of the domesti-cally produced coal is in the medium range. The basic treatment is to re-move up to 80 per cent of the moisture content from the raw low coal with super heated steam.

Where do to set up the up-grada-tion plant? What are the benefits?

It is ideal to set up the up-gradation plant near the mine output point. The major advantage is that the reduc-

tion in moisture content also reduces the weight of the coal. Thus, save the logistical cost. An increase in energy efficiency mean the plant load factor also increases tremendously. As any other technology, this also requires capital investments. But in the long run, the power producer reaps the benefits.

How much time will it take to set up a geo-thermal up-gradation plant? And how much time it requires to upgrade the low quality coal to higher energy efficiency?

To set up a plant it takes approximate-ly 6 months. And the up-gradation process takes a mere 30 minutes. So the up-gradation of coal practically does not cause any delay in shipment from the mines.

How environmental friendly are the processed coal?

In the process, the ash content and the sulphur content also gets reduced. The processed coal thus becomes less polluting. Globally, power plants

constitutes as the major emitters of carbon. And in the regions of coal based thermal power plants, fly ash is a major concern.

Which all countries adapted this technology from TSI?

Globally many countries have already started using this technology. Espe-cially in Indonesia, where the large amount of coal falls under the low energy efficiency (brown coal), this technology is making inroads in a faster way.

India is a cost sensitive country. Have you approached any of the In-dian power producers?

Agree, that India is a cost sensitive country. But in the past decade, Indian companies have been more receptive to newer technologies and adaptation of it. So we are optimistic that Indian companies will look at adopting this technology also. As of now, we have not got Indian clients. But we are con-fident to have Indian clients in the near future.

Other than coal, have you tried this technology in any other segment?

While it is largely applied on coal today, it can also be used for other organic materials such as bamboo, wood and even waste. So local body authorities in bigger cities, which plans to generate electricity out of municipal waste, this technology comes handy for them as well.

An up-gradation with latest technology can enhance the energy efficiency of coal to 30-50 per cent says Peter Gunn, Director of Total Synergy International (TSI), Geo-CoalTM.


increaSing energy efficiency of coal

Peter Gunn Director of Total Synergy International (TSI), Geo-CoalTM

CoalsECtor FoCus

concluSionCoal accounted for nearly half of the increase in global energy use over the past decade with the bulk of the growth coming from the power sector in emerging economies. According to the World Energy Outlook by IEA (International Energy Agency), the international coal markets and prices become increasingly sensitive to de-velopments in Asia. The rate at which the consumption is increasing it is im-minent that India surpasses China as the biggest coal importer soon after 2020. It is anticipated that by 2035, the coal use will further increase by 65%. This will surly overtake oil as the widely used fuel in the global en-ergy mix.

According to the IEA report, China’s consumption of coal is almost half of global demand and its Five-Year Plan for 2011 to 2015. China’s emergence

as a net coal importer in 2009 led to rising prices and new investment in exporting countries, including Austra-

lia, Indonesia, Russia and Mongolia.

India’s coal use doubles so that In-dia displaces the United States as the world’s second-largest coal consumer and becomes the largest coal importer in the 2020s. Coal remains the prima-ry fuel and the backbone of electricity generation in India. Widespread de-ployment of more efficient coal-fired power plants and carbon capture and

storage (CCS) technology could boost the long-term prospects for coal, but

there are still considerable hurdles. Opting for more efficient technology for new coal power plants would re-quire relatively small additional in-vestments, but improving efficiency levels at existing plants would come at a much higher cost.

The coal use in the country is expected to reach 880 Mtce by 2035. Stronger uptake of existing clean coal technol-ogies and carbon capture and storage could boost the long-term prospects for coal use. The global coal reserves total to 1 trillion tonnes. China con-tributes more than half of the increase in global supply to 2035; the bulk of the rest comes from India and Indone-sia. Australia is the only major OECD producer to increase production to 2035; output in the United States falls around 2020, while European output continues its historical decline.

Between 2005 and 2015 coal accounts for 400 Twh of power and the estimate is that by 2030 coal will be contribut-ing for more than 1000 Twh of power in the country.

So what are the possible solutions to meet the rising demands from the power sector in India. Opening up the sector for commercial mining is

Country 2008 2009 2010 2011 2012 China 2,726 3,152 3,499 3,779 4,043 US 1,017 908 971 1,010 1,040 EU 771 705 694 690 687 India 574 622 666 713 766 Russia 227 202 216 236 255 Japan 185 165 163 161 159 South Africa 194 181 189 197 205 Australia 143 136 143 150 157 Turkey 99 93 100 106 113 South Korea 100 103 108 113 117 World total 6,664 6,874 7,399 7,836 8,258 % change 4.2 3.2 7.6 5.9 5.4

world Coal Consumption (in million tonnes )

total synergy international (tsi)iNtErviEw

(Continued from page 29)


pointed out as the best solution. The allocation of captive coal blocks is the first step towards the bigger role, pointed out one of the private power producer. This is not all, faster envi-ronment clearance of the blocks clas-sified under “go areas” by the MoEF. With the projected demand of 2037 million tonnes by 2030, India needs to find the right way out to meet the demand –supply gap.

Plan Period Period power Non-power Total XI 2011/12 436 164 627 XII 2016/17 603 221 824 XIII 2021/22 832 299 1,131 XIV 2026/27 1,109 408 1,517 XV 2031/32 1,475 562 2,037

Source: Source: Integrated Energy Policy, Planning Commission

Coal demand projections (million tonnes)

• The dynamics of energy markets are determinedmore and more by the emerging economies.

• Overthenext25years,90%oftheprojectedgrowthin global energy demand comes from non-OECD economies;Chinaaloneaccountsformorethan30%,consolidating its position as the world’s largest en-ergyconsumer.In2035,Chinaconsumesnearly70%more energy than the United States, the second-largest consumer, even though, by then, per-capita energy consumption in China is still less than half the level in the United States. The rates of growth in en-ergy consumption in India, Indonesia, Brazil and the Middle East are even faster than in China. Emerging economies also dominate the expansion of supply: the world will rely increasingly on OPEC oil production as it grows to reach more than half of the global total in 2035. Non-OECD countries account for more than 70%ofglobalgasproductionin2035,focusedinthelargest existing gas producers, including Russia, the Caspian and Qatar.

• World demand grows for all energy sources. Theshare of fossil fuels in global primary energy con-sumption fallsslightly from81%in2010 to75% in2035. Natural gas is the only fossil fuel to increase its share in the global mix over the period to 2035. Abso-lute growth in natural gas demand is similar to that of oilandcoalcombined.Oildemandincreasesby15%and is driven by transport demand. Coal demand, dic-tated largely by emerging economies, increases for around the next ten years but then stabilises, ending

around17%higherthan2010.

• In the power sector, nuclear generation grows byabout70%,ledbyChina,KoreaandIndia.Renewableenergy technologies, led by hydropower and wind, ac-count for half of the new installed capacity to meet growing demand. Overall, modern renewables grow faster than any other energy form in relative terms, but in absolute terms total supply is still not close to the level of any single fossil fuel in 2035.

• Large-scale investment in future energy supply isneeded. In the New Policies Scenario, $38 trillion in global investment in energy-supply infrastructure is required from 2011 to 2035, an average of $1.5 trillion per year. Two-thirds of this is required in non-OECDcountries.Thepowersectorclaimsnearly$17trillion of the total investment. Oil and gas combined require nearly $20 trillion, increasing to reflect higher costs and a need for more upstream investment in the medium and long term. Coal and biofuels account for the remaining investment.

• Theenergyworldbecomesmoreinter-connectedandmore focused on Asia. More than half of world oil con-sumption is traded across regions in 2035, increas-ingbyaround30%inabsolutetermscomparedwithtoday. Trade in natural gas nearly doubles, with gas from Russia and the Caspian region going increas-ingly to Asia. India becomes the largest coal importer by around 2020, but China remains the determining factor in global coal markets.

highlights oF iEa’s world EnErgy oUtlooK 2011

CoalsECtor FoCus


used in the production of bulletproof glass, for example. Another feature is the high UV and weather resistance complying with UL F1 outdoor use. This guarantees an exceptionally long service life. These outstanding prop-ertiesmeanthatthenewSKINTOP®SOLARalsomeetsall requirements for the sale of photovoltaic products on the US market.

ThenewSKINTOP®SOLARalsomeetsmanyotherre-quirements for use under the harshest conditions. It is extremely flame retardant and self-extinguishing in case of fire. The temperature range is between -40 and +125°C, guaranteeing excellent weather resistance in hot condi-tions, ice, snow or rain. This is supplemented by outstanding strain relief. The cable can easily withstand even the strains caused by wind and ice. With its IP68 - 5 bar protection rat-ing, the cable gland offers optimum protection against water

and dust.

WiththenewSKINTOP®SOLARtheLappGroupisextendingits wide range of products for the photovoltaic industry. This range includes innovativeÖLFLEX®SOLARcables,EPIC®SOLARjunctionboxesandlow-resistanceEPIC®SOLAR4Thin connectors.

(Communication by the management of the company)

GE serves the energy sec-tor by providing technol-ogy and service solutions that are based on a com-mitment to quality and innovation. The company continues to invest in new technology solutions and grow through strategic

acquisitions to strengthen its local presence and better serve customers around the world.

GE Energy has launched a new air circuit breaker (ACB) designed specifically for the Indian market that pro-vides system protection in electrical distribution systems against overloads and short circuits.

TheEntelliGuardSL,designedanddevelopedbytheHy-derabad Technology Center Breakers team, is a compact, cost-effective ACB for 2000-4000A with 50/65kA inter-ruption. The circuit breaker features measurement and communication capabilities, and Zone selective interlock to address customers’ NextGEn requirements.

“This product launch adds a competitive, innovative new product to our portfolio of electrical distribution offerings,” saidAjayKumar,CEOforGEEnergy’sIndustrialSolutionsbusiness in India. “The product’s unique features are de-

signed to target the needs of India’s rapidly growing ACB market.”

PRODUCT BENEFITS

RANGE•Range400-4000A,50/65kA•CompactDimensions •MicroprocessorBasedTripUnits•OptionalMeasure-ment, Monitoring, CommunicationSAFETY•ClassIIFrontFacia•RELT•ZoneSelectiveInter-locking•ThermalMemoryATTRIBUTES•FrontAccessories•AluminumBusCompatibletermi-nals•FlexibleTerminations•Choiceoftripunits •Communication

GE businesses that comprise GE Energy—GE Power & Water, GE Energy Management and GE Oil & Gas—work together with more than 100,000 global employees and 2010 revenues of $38 billion, to provide integrated prod-uct and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renew-able resources such as water, wind, solar and biogas; as well as other alternative fuels and new grid modernization technologies to meet 21st century energy needs.


CoMMuNiCatioN FEaturE CoMMuNiCatioN FEaturE

sKintop® solar with cold shock guaranteeinnovative cable entry from lapp Kabel

Siemens has launched a new range of Miniature Circuit Beakers (MCBs) and Distribution Boards (DBs) under the Betagard range. The products have a lower wattage loss compared to prescribed standards with enhanced aes-thetics and user-friendly features. Betagard MCBs and DBs from Siemens are well-known for their quality, reli-ability and user friendly features. The range now offers more choices and incorporates aesthetics and design en-hancements based on customer feedback.

Among the unique features of MCBs from Siemens is the patented Slide Latch Release (SLR) feature for removal of MCB from DIN rail without use of any tools. The range is unique, presenting a highly effective touch protection against accidental contact, enabling easy firm mounting of bus bar with its wires in front for easy accessibility. Products are designed and manufactured in India in Sie-mens Aurangabad - a state of art, highly automated facto-ry.ThesenewlyintroducedproductsareROHS(restrictedof hazardous substances) compliant.

The MCB range from Siemens:

•Range:0.5to63A•Characteristics:BandC •SinglePole,DoublePole,TriplePole,FourPole

Siemens Betagard DBs have various features and en-hanced aesthetics which make it highly presentable, user-friendly, are easy to install and reduces downtime during maintenance. The range offers options such as Single Door, Double Door and Double Door with Acrylic Window.

A range of ac-cessories like Wire Way Boxes and PPI assembly set provides users the flexibility of converting the DBs to of-fer higher degree of protection and amend configurations at site with ease. In addition, the detachable DIN Rail as-sembly enables easy mounting of devices, neat wiring and comfort in modification.

The DB range from Siemens:

•MetalEnclosures•SPNSingleDoorIP20DBs •SPNMetalDoubleIP43DoorDBs•SPNAcrylicDoubleDoorIP43DBs•SPNSingleDoorIP20DBs •SPNMetalDoubleDoorIP43DBs•SPNAcrylicDoubleDoorIP43DBs•WireWayBoxesforIP20andIP43DBs•TPNtoPPIConversionassemblyset

DBs are type tested at 3rd Party Government and Neutral Testing laboratories for Ingress protection (IP), Mechanical ImpactIndex(IK),ShortCircuitWithstandCapacity(CSC)and Resistance to corrosion as per IEC 61439 -1.Alsoseries of tests are performed at internal laboratories for achieving conformance to IEC standards.


Betagard mCBs and dBs from siemens

gE launched Entelliguard sl air Circuit Breaker

Headquartered inStuttgart,Germany, the LappGroup is aleading supplier of integrated wire, cabling and connector productsandsolutions. In1996,LAPPIndiastartedopera-tions at Bangalore with a manufacturing unit and today it is the third largest manufacturing facility of the Lapp Group. LAPP India now operates through a trained regional market-ingorganisationinDelhi,Kolkata,Mumbai,Pune,Bangaloreand Chennai with 23 sales offices and a strong network of dealers throughout the country. The global organization well known for its bold initiatives to bring in innovations over the yearshaslaunchedSKINTOP®SOLARwhichsatisfiesallofthe requirements for global use in photovoltaic systems

The requirements for the use of photovoltaic junction boxes are becoming increasingly strict. Accordingly, test criteria for compliance with the new DIN EN 50548 standard were recently made much more stringent. The Lapp Group’s new SKINTOP®SOLARcableglandforphotovoltaicjunctionbox-es meets all the conditions of the new standard.

The most important test criterion is the increased cold shock resistanceinlinewithUL1703/UL746C.OnthenewSKIN-TOP®SOLARcablegland,thisshockresistanceisachievedby using a polycarbonate compound specially developed to meet these requirements. Polycarbonates like this are also


HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, The Supreme Council of Energy (SCE) for Dubai has launched the Mohammed bin Rashid Al Maktoum So-lar Park. This is a leading project implemented by the SCE and managed and operated by Dubai Electricity and Water Authority (DEWA).

This is the first utility-scale production capacity park of its kind in the region. HH Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, said, “ UAE is striving to develop and boost its rich resources and expertise in the international energy markets and enhance its leading role as a world center for renewable energy research and de-velopment.”

HH Sheikh Mohammed bin Rashid Al Maktoum, said “We recognize that preserving our energy resources will be one of the greatest challenges in our drive towards sustainable development.

This, however, will not materialize unless the different fac-ets of our society adopt energy conservation principles in their core values. The future generations will be the chief beneficiary of our achievements and the best judge of what we accomplish in this field.”

The first project of the park will witness the production of power using photovoltaic cell technology, with a produc-tion capacity of 10MW by 2013. By 2030, the park will produce 1,000MW on the completion of all its phases.

mohammEd Bin rashid al maKtoUm solar parK laUnChEd in dUBai

CoMMuNiCatioN FEaturE CoMMuNiCatioN FEaturE

Reliance had selected GE’s flexible, efficient power gen-eration technology for a 2,400-megawatt expansion of the Samalkot Power Plant, representing the largest gas turbine combined-cycle project in India’s history. GE accelerated the delivery of six gas turbines and deployed a large pool of spe-cialized experts in field engineering, product services and qualityengineeringona24x7basis tomeetcustomerex-pectations for testing and commissioning at the power plant site.Thefuelforthe9FAGasTurbinecombined-cycleblocksat the Samalkot Plant expansion will be natural gas, which is one of the cleaner fossil fuels used for power generation.

John Flannery, president and CEO, GE India commented, “To-day the world is facing energy challenges like never before and the demand for efficient, reliable energy continues to grow. GE is continuing to ensure that all efforts are directed to delivering our customers in India more value while help-ing them meet their challenges. GE is committed and well positioned to support India’s power generation needs. With these gas turbines at the Samalkot site, Reliance is closer to its objectives of powering up the power-starved Southern region of India.”

Under thecontract,GEwillsupplysixFrame9FAGasTur-bines, three D-11 Steam Turbines, along with technical di-rection for installation, training and performance testing for theproject.Theexpandedpowerplantwillfeature24x7re-

mote monitoring and diagnostics at GE’s operation centers in Bangalore and Atlanta, USA. In addition to supplying equip-ment, GE signed a 15-year contractual service agreement (CSA) for the Samalkot project that includes performance guarantees. GE’s CSAs are structured to provide customers with predictable maintenance costs, while ensuring a steady flow of revenue from power plant operations. GE currently haslong-termagreementsinplaceatmorethan700sitesworldwide.

GE’s9FAcombined-cycle technology is proven in applica-tions worldwide. In a combined-cycle configuration, exhaust gas from a gas turbine-generator is converted to steam, which is used to drive a steam turbine-generator, enabling the plant to produce additional power without an increase in fuelconsumption.The9FAGasTurbineispartofGE’sfamilyof Frame F turbines. More than 1,080 GE F-technology gas turbines have been installed worldwide and have compiled more than 41 million operating hours. GE’s F-class turbines offer flexible fuel handing that accommodates a wide range of fuels including natural gas, distillate oil, high hydrogen syngas, and naphtha. Samalkot Power project will help India meet its continuing demand for reliable electricity and sup-port its rapidly growing economy.


largest gas turbine Combined-Cycle project in india’s history

alternative Energy india summit - 2012In view of the unprecedented growth and potential in the alternative energy market in India, niSpana is organis-ingAlternativeEnergyIndiaSummitfrom9th–10thApril’2012 in New Delhi India. The event will bring together the Ministry of New & Renewable Energy (Government of In-dia), leading energy and renewable energy companies in the world, other government bodies and consultants to discuss the latest trends, best practices and assess the current scenario for the future development of alternative energy in India at the two-day conference. The agenda of the conference also includes critical topics like Public-Private Partnership (PPP) in the energy sector, regulatory challenges and energy management with focus sessions on wind and solar energy. In addition to the focus sessions on the solar and the wind sector, the conference will also highlight the new developments in niche areas of Geo-

thermal,HydroandBiomass.HonorableMrs.SheilaDixit(CM of Delhi) is to inaugurate the event and the Embassy of Norway and Switzerland to be part of this esteemed summit.

Our prestigious speaker panel includes:

•Dr.B.Bandyopadhyay,Advisor,MinistryofNewandRe-newableEnergy,Govt.ofIndia•Dr.S.Gomathinayagam,ExecutiveDirector, C-WET,Chennai • Dr.AnumakondaJagadeesh,Head-Centre forEnergyandSustainableRe-sources, R.M.K. Engineering College, India • Mr.AmitKumar,DirectorandSeniorFellow,Energy-EnvironmentTechnology Development, TERI.

We cordially invite you to be on board as a supporting part-ner for the event.



EvENts CalENdErJanuary - december 2012 rENEwaBlE iNsight

Event & proposed date proposed Venue organisers Conferences

3rdInternationalWind 5th-7thFeb’12 CODISSIATradeFairComplex, IndiaWindPowerAssocation Conference & Exhibitions Coimbatore

Energy Tech India 2012 10th-12th Feb’12 Pragati Maidan, New Delhi India Trade Promotion Organisation

RenewableAsia2012 16th-19thFeb’12 PalaceGrounds,Bengaluru TriuneExhibitorsPrivateLimited

2nd India Solar Energy 23rd-24th Feb’12 New Delhi Noppen (Shanghai) Co Ltd Summit 2012

AES2012-Alternative 9th-10thApril’12 NewDelhi niSpanaInnovativePlatforms Energy Summit 2012 Pvt Ltd

IndiaWindEnergy 19th-20thApril’12 Chennai Noppen(Shanghai)CoLtd Summit 2012

PowerGenIndia& 19th-21stApril’12 PragatiMaidan,NewDelhi InterAds Central Asia

WorldRenewableEnergy 25th-27thApril’12 ConventionCentre-NDCC, EnergyandEnvironment Technology Congress & Parliament Street, New Delhi Foundation Expo’2012

NuclearEnergy2012 25th-27thSep’12 BombayExhibitionCentre,Mumbai UBMIndiaPvtLtd

RenewtechIndia2012 25th-27thOct’12 BombayExhibitionCentre,Mumbai MCO-WinmarkExhibitionsPvt.Ltd

Power India 2012 6th-8th Nov’12 Bombay Exhibition Centre, Mumbai MCO-Winmark Exhibitions Pvt. Ltd

Intersolar India 2012 6th-8th Nov’12 Bombay Exhibition Centre, Mumbai MMI India Pvt. Ltd

6thRenewableEnergy 7th-9thNov’12 NationalCapitalRegionofDelhi ExhibitionsIndia India 2012

4th Renewable Energy 16th Nov’12 The Residency, Coimbatore Exhibitions India 2012 Conference

Wind Power India 2012 28th-30th Nov’12 Chennai Trade Centre Complex, WISE Chennai

Ps: The above mentioned Venues and Dates are subjected to change depending upon the final call being taken by the Organiser of the event. solar powEr


rENEwaBlE updatEs rENEwaBlE updatEs

The world’s fifth largest wind turbine maker, Su-zlon Group, today widened losses in the December quarter at Rs 286.5 crore due to higher tax outgo and forex losses, primarily by its overseas subsidiary RE-power.

The loss stood at Rs 253.6 crore in the year-ago period.The company also slashed its Q4 revenue guidance by over 10 per cent to Rs 21,000-22,000 crore from its earlier target, due to the poor volumes from India and China in Q3.

Hubli-based transport ma-jor VRL Logistics Ltd (VRL) has firmed up plans to sell its wind power and cement business units and concentrate on its core busi-ness. The company, which operates India’s largest fleet of trucks, is re-entering the media business with a new Kannada newspaper in the pipeline.

“Wind power is not our

core business area. We are not happy with the way the state government treats pri-vate producers. The utili-ties are not making timely payment for the power we produce and there are two to three months of out-standing dues always. We are in advanced talks with a few buyers to exit the wind power business shortly,” Vijay Sankeshwar, Chair-man, VRL Logistics said.

In a major set back for so-lar power developers in Gujarat, the state power regulator, Gujarat Electric-ity Regulatory Commis-sion (GERC) on Friday dismissed all petitions filed for extension of the control period. The regulator, in its order announced on Friday, rejected the petitions stat-ing that the same were not made on strong grounds.

“None of the petitioners

indicated any ground what-soever which is of univer-sal application either in the state of Gujarat or a major part thereof by which all the projects are affected by such factors. In view of the above analysis, we decide that the petitioners have not succeeded in making out a case for invoking the inher-ent power of the Commis-sion to extend the control period,” GERC stated in its 53-page order.

Welspun Energy Ltd. (WEL) has inked an MoU with the Government of Andhra Pradesh for install-ing 500 MW of wind power projects. WEL is the lat-

est entrant in the booming wind energy sector in India. As a leading player in so-lar energy with a portfolio of 500 MW under differ-ent stages of development,

Welspun Energy has been aggressively moving for-ward in the renewable en-ergy space. The company was recently awarded the largest solar project in India

of 50 MW in a single loca-tion under the prestigious Jawaharlal Nehru National Solar Mission (JNNSM).

Private power firm Welspun Energy today said it has bagged a contract worth Rs 950 crore from the Andhra Pradesh government to set

up a 100 MW solar power plant in Anantpur.

“Welspun Energy signed an agreement with the Andhra

Pradesh government to set up a 100 MW solar power plant worth Rs 950 crore in Anantpur,” the company said in statement. It said the

company had entered into the agreement with the state government in January, this year, and will complete the project by 2013.

suzlon loss widens to rs 286.5cr trims Q4 outlook

Vrl logistics set to exit wind power, cement businesses

gErC dismisses ‘control period’ extension plea of solar developers

Wind turbine-maker Suzlon today said it has bagged an over Rs 600 crore contract from CLP India, the Indian subsidiary of Hongkong-based power company CLP, for setting up a 100-MW project in Rajasthan.

Suzlon Group has signed

a contract for a 100-MW wind power project with CLP, India. The project, which would be set up in Rajasthan, comprises 48 wind turbines. It is sched-uled to be commissioned by January, 2013, a com-pany statement said.

suzlon bags rs 600 cr contract from Clp india

welspun Energy signs moU for 500 mw wind power

welspun bags rs 950 cr solar power project from ap

A little-known dispute between a US renewable energy company and its Chinese customer over the theft of trade secrets could prove to be a significant test of China’s intellectual property laws, and the suc-cess of Western companies in pursuing claims in Chi-na.

American Superconductor Corp, which makes wind

turbine components and transmission grid systems, is seeking to recover $1.2 billion from Chinese wind turbine maker Sinovel Wind Group Co Ltd in four separate legal actions in China. The US company has accused its former big-gest customer of stealing the software AMSC makes to power wind turbines and illegally canceling con-tracts.

wind energy dispute may test Us-China ip resolve

The government today said it would order an in-quiry into the allegations of NGO, the Centre for Science and Environment (CSE), that Lanco Infrat-ech flouted rules in bag-ging projects under the National Solar Mission.

“We will be ordering an enquiry into the is-

sue. The inquiry will be conducted by an indi-vidual or a panel,” Tarun Kapoor, Joint Secretary at the Ministry of New and Renewable Energy (MNRE), said.

“If any violations are found, strict action will be taken,” Kapoor said.

govt to order inquiry into CsE allegations on solar mission

In a first of its kind proj-ect by a state government, the Government of Gujarat is setting up 5 megawatt (Mw) of solar power gen-eration capacities on a pilot basis using rooftops of the commercial, residential and government buildings in Gandhinagar. Four compa-nies including SunEdison, Lanco Infratech Limited, Azure Power and Mahindra Solar have submitted their bids, which are likely to be

opened in a week’s time.

Two bidders will be select-ed for the project and will be awarded 2.5 Mw each for building and operat-ing the rooftop solar pho-tovoltaic (SPV) systems for a period of 25 years. The total cost of the public private partnership (PPP) project for setting up of 5 Mw rooftop solar power units is estimated at around Rs 100 crore.

Abound Solar, a US-based manufacturer of thin-film photovoltaic (PV) mod-ules, and Solar Integra-tions Systems India Private Limited (Solarsis), a city-based company that offers ‘concept-to-completion’ services for grid-connected and off-grid systems using solar PV technology, have commissioned a 1Mw solar PV plant at Kadiri in An-antapur district of Andhra Pradesh.

The project was commis-sioned under the Rooftop and Other Small Solar Gen-eration Plant (RPSSGP) scheme administered by the Indian Renewable En-ergy Development Agency under the Jawaharlal Ne-hru National Solar Mis-sion. It is the first project in the state to use Abound’s Cadmium Telluride (CdTe) thin-film modules.

Four companies in fray for solar rooftop project in gandhinagar

abound-solarsis sets up 1mw plant in ap

WInD solar


Thrust on distributed generation to make electricity available for the re-motest village of the country and adding solar capacity, a well learned lesson in the first year of JNNSM


energy for all JnnSM & itS SucceSS

UN has declared 2012 as a year of sustainable energy for all. An international movement

like this was much needed as the world is striving to attain energy sus-tainability with more thrust on green energy initiatives. India, though was racing far behind to its global peers has laid the foundation of increasing the renewable energy contribution with the announcement of Jawaha-rlal Nehru National Solar Mission (JNNSM) in 2010. Though with skep-ticism, we saw more and more players foraying into the solar segment.

Energy is the key to overall develop-ment of the country. Access to energy also improves quality of life. There is vast gap between the demand and supply. While the peak hour deficit is in two digits, the overall deficit posi-tions itself below 10 per cent. Recall-ing Mahatma Gandhi’s, the father of

the nation, words here, “India lives in her villages.” However more than 1,00,000 villages in the country have no access to electricity yet. The pos-sible solution, the country thought for this mass is the deployment of solar energy, which is largely available and also with zero carbon emission.

A country with diversified geographi-cal structure, India being a tropical country has more than 300 sunny days an year. The JNNSM was launched with the aim of serving the popula-tion where there is no grid available. In distributed generation, the quality of power from solar is much higher. So the country has divided its mis-sion into three phases with the target of adding 20,000 Mw grid connected solar power by 2022. One and a half year after the launch of JNNSM, we here take a look at the lessons learned from the first year of implementation.

JNNSM Target Year of Implementation Off Grid Grid connected First phase—2013 200 Mw 1,000 Mw Second Phase—2017 1,000 Mw 3,000+ Mw Third Phase –2022 2,000 Mw 20,000 Mw

solar powEr solar powEr




In order to promote the use of solar energy for power generation and other uses, the Government of India had launched the Jawaharlal Nehru National Solar Mission (JNNSM) during November 2009 which was envisaged under National Action plan for Climate Change (NAPCC). The JNNSM would be implemented in 3 phases and aims to have an installed capacity of 20 GW by the end of the 13th Five Year Plan in 2022. The mission focuses on build-ing the generation capacity as well as strengthening the manufacturing and research infrastructure.

For utility scale power plants, NTPC VidyutVyapar Nigam (NVVN), the trading subsidiary of NTPC, is the nodal agency for purchase of 1,000 MW capacity of grid solar power under Phase 1. The solar power would be purchased from the project developers under a 25 year PPA at a tariff arrived after bidding for discounts on tariff fixed by Cen-tral Electricity Regulatory Commission (CERC) (reverse bidding process). NVVN will sell solar power bundled with unallocated thermal power available from NTPC sta-tions to the state utilities. Generation based incentives for

rooftop grid connected power, Capital subsidy & soft loans for off-grid applications and SEZ like benefits for manufacturing are some of the other key elements of JNNSM.

The first batch of Phase 1 utility scale projects were allocated in January 2011 and 36 solar power developers were selected for 620 MW of solar power (Solar PV – 150 MW, Solar Thermal – 470 MW). These projects are to be set up on a build, operate and own basis. The capacity of each solar PV project awarded was 5 MW. For solar thermal, the projects mini-mum capacity was at 5 MW and maximum at 100 MW each. The range of tariff quoted during the batch 1 bidding was Rs 10.95/ kWh – Rs 12.76/kWh against the benchmark tariff of Rs 17.91/ kWh for Solar PV. For So-lar Thermal, against the reference price of Rs 15.31/ kWh the range was fromRs10.49 / kWh to Rs 12.24 / kWh. Around 80% of the total 150 MW of Solar PV allotted during batch 1 got completed by their January 2012 deadline. Five of the seven solar thermal projects devel-oped under the NSM are situated in Rajasthan,

and are to be completed by their 31st March 2013 dead-line. Future CSP development in India will greatly depend on the successful completion of these projects within time and cost.

The bidding for projects under the Batch 2 of Phase 1 hap-pened in December 2011 for projects of 350 MW of total capacity of Solar PV.Increase in size per project from 5MW to 20 MW, higher allocation opportunities per company for up to 50MW and the significant drop in module prices

to less than $1.00/Wp were the conditions under which bidding happened. The aggressive compe-tition seen in the first batch continued in the sec-ond batch too where the application obtained was nine times the allotment. Nearly 22 bidders were shortlisted with the winning bids ranging between Rs 7.49 / kWh - 9.39 kW/hagainst the benchmark tariff of Rs15.39/unitfixed by CERC. 27 out of the 28 projects allotted belonged to Rajasthan, while Maharashtra, Tamil Nadu and Andhra Pradesh have 1 project each. 873 MW out of the 1100 MW in Phase 1 of NSM has been allotted to Rajasthan.

MNRE had expected around 400 MW of solar power flowing to the grid by December 2011. It is important to state that although the initiatives with regards to the development of solar energy at Centraland State level has taken place, yet there are certain issues associated with the implemen-tation which needs to be tackled. Since Solar is an evolving sector, it is difficult to get the confi-

dence of financial institutions especially for solar thermal projects where there is limited experience in the country. Banks take a cautious approach with high equity partici-pation requirement by the owners and non-recourse rupee financing of debt. Viability of the projects with the current tariffs is under contention. Land acquisition for the project and grid availability after the project completion is some of the infrastructural issues faced by the developers.

rENEwaBlE FEaturE solar power solar power

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10.95-12.76Tariff

Rs / kWh

Total Allocations

Solar PV Phase 1 Batch 1

Solar PV Phase 1 Batch 2

Solar Thermal Phase 1 Batch 2

150 MW 350 MW 470 MW

7.49-9.39

10.49-12.24

Targets set by the mission (Cumulative)

GW

GW

Million sq metres

100 MW rooftop 20

2.0

20

2010-2013 2013-2017 2017-22

4-10

1.0

15

1.1

0.2

7

Grid solar power incl. roof top

Off-grid solar applications incl. rural

Solar Collectors

Timeline Milestone

November 2009 JNNSM Launched May 2010 Batch 1 Phase I Guidelines issued December 2010 Batch 1 Projects allocated: Solar PV – 150 MW Solar Thermal – 470 MW

June 2011 Batch 2 Phase I Guidelines issued December 2011 Batch 2 Phase 1 – Project allocation Solar PV – 350 MW

April 2012 – Phase II Proposed March 2017 1500 MW: Solar PV 1500 MW: Solar thermal

April 2017 – Phase III Proposed March 2022 8000 MW: Solar PV 8000 MW: Solar thermal

iSSueS needS to Be addreSSed

Shaji John Chief - Solar Initiatives at L & T


JnnSM: the leSSonS learned

Hari Kiran Chereddi Managing Director, Sujana Energy

The Indian solar industry saw the JNNSM coming out as a forward looking policy and it is in all stakeholders’ interest to make solar power a viable alternative energy in India to meet the tremendous capacity growth that will be experienced in the near future. In 2011, 180 MW of grid-connected solar power projects have been commis-sioned in India and this figure will cross 500 MW by the end of this financial year. While the government had the best intentions and laid down a well-defined plan for both Solar Thermal and Solar PV Technologies, it has already run into problems.

Apart from larger policy related issues that the industry would like addressed, Solar Projects have faced problems in sourcing finance, local clearances, man power issues, etc., contributing to project delays. One policy related is-sue that has come under debate is that JNNSM is trying to encourage the development of both PV and CSP technolo-gies by giving each equal weight. However, by allotting specific quotas for each technology, the JNNSM is dictat-ing the ratio of technology that can be built rather than allowing the market to select the most efficient and cost effective technology for India. JNNSM left acquisition of permissions for land acquisition, water issues, etc to be decided at the state level, which adds an extra layer of pro-cesses which can potentially delay projects.

Project developers without any experience in Solar PV Plants, the lowest bid, regardless of experience, has ended up with projects on hand. This can potentially cause simi-lar problems as seen in Spain where a lot of projects were not developed or were of poor quality. The Indian financ-ing community has long known to be reserved and watch-ful about funding newer projects & especially solar power projects, which was mainly due to the lack of familiarity

& maturity with the industry. In such a scenario, the steep fall in the solar FiT (Feed in Tariff) due to big discounts offered by developers which has created a serious debate as to whether investors would be optimistic about funding these low FiT projects. The past one – two years have been an excellent learning phase for the investor community and slowly have understood the potential to scale solar en-ergy up to becoming a mainstream source of power in the next 5 to 10 years.

Learning during the first phase and state policy projects has surely given financial institutions a sense of commit-ment beyond being mere debt providers Financial Institu-tions here in India are certainly willing to invest in solar power projects and this has seen them playing a key role in shaping up the solar ecosystem in India. While low bid prices are as a factor that impact the viability of project, there are a lot of other factors including technology that a developer can control to make projects more viable and re-liable. Authentic data on irradiation, realistic and properly vetted proposals, competency and track record of the EPC companies are areas where the Solar fraternity learnt quite a lot over the last one year. Measures like MNRE’s efforts to set up solar radiation measurement stations at various regions are helping developers get around with realistic modelling of solar power production. It is noteworthy that a number of international financial institutions like Exim Bank, Asian Development Bank and KFW have been very active funding solar energy in India. In the last 15 years India has fallen behind with power capacity addition by more than 50% of targeted goals. I hope that the Ministry of New and Renewable Energy continues to keep up the good work for addition of Solar Power capacity in the next couple of years.

JnnSM--great Beginning or falSe Start?

Madhavan Nambhoothiri Founder & Director, RE Solve Energy Consultants

What a difference a year can make. 2011 was a year in which solar sector in India evolved so rapidly from being a new-born baby to a grown up adult. From a few MW, it grew to multi MW. The question is, how healthy is this grown up adult? Has the JNNSM succeeded in jump-starting the sector? Have the short term objectives of the MNRE been met? Is the JNNSM on track to achieve its targets?

a recap – 2009 & 2010It all began in late 2009 when the Ministry announced the launch of the Jawaharlal National Solar Mission (JNNSM). The mission targets a cumulative installed capacity of 20 GW of grid-connected solar by 2022. This targeted to be implemented in three phases. The installation targets for each phase are given below.

Timeframe Cumulative Installed capacity

Phase 1 2010-2013 1000 - 2000 MW

Phase 2 2013-2017 4000 - 10000 MW

Phase 3 2017-2022 20000 MW

According to the mission document, the Phase 1 of the mission targets will be achieved by providing preferential tariffs for solar power projects whereas the Phase 2 will rely mostly on Renewable Purchase Obligations (RPO) backed with preferential tariffs. The ministry anticipated that solar power will achieve grid parity by the end of the mission period -2022, but interestingly, there are already talks that solar will achieve grid parity by 2016-17 or ear-lier.

During the middle of 2010 MNRE announced the guide-lines for selection of grid-connected solar projects for the Phase 1 of the mission and also for the projects under the

Rooftop PV & Small Solar Power Generation Programme (RPSSGP). The allotment of PV projects for the Phase 1 of the mission was split into two parts – Batch 1 and Batch 2. For the Batch 1 of the Phase 1, the mission mandated the use of PV modules that are made in India and for Batch 2, the local content mandate was extended to PV cells. The solar thermal projects were allotted in a single batch and there the local content requirement was to use at least 30% of the components that are made in India. For solar PV projects in Batch 1 of the Phase 1, the project size was 5 MWp per project.

A total of 78 projects totalling 98 MW were allotted un-der the RPSSGP and Power Purchase Agreements (PPAs) were signed with the project proponents in September 2010. In December 2010, MNRE allotted solar projects worth 630 MW to 37 developers through a reverse bidding process. This included 150 MW of PV projects to 30 de-velopers and 480 MW of Solar Thermal (CSP) projects to 7 developers. The reverse bidding was extremely aggres-sive and resulted in about 30% discount from the reference price set by MNRE.

2011The aggressive reverse bidding and the lack of prior ex-perience of the winning project developers caused a lot of apprehension among the various stakeholders about the vi-ability of these projects. The banks were unwilling to offer project financing to these projects for various legitimate reasons. Some of them include

• There was no reliable ground measured solar irradia-tion data. The project developers had to rely on sat-ellite information from sources like NASA, NREL among others.


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• The Feed-in-Tariff realised after the reverse bidding affected the financial returns of the project.

• Lenders did not have the confidence the buyer of power, National Vidyut Vyapar Nigam (NVVN), will be able to pay the developers for the electricity that is produced.

These factors caused considerable delay for the project de-velopers in achieving financial closure. The government stepped in with two things.

a. It created a payment security mechanism by which NVVN had access to a fund from which it can pay the developers in the event of default by the power pur-chaser.

b. The MNRE clarified on the financial closure clause whereby more project developers where deemed to have achieved financial closure.

In addition to this, the falling capital costs (especially PV modules) and lower quotes for execution of projects due to the intense competition among Engineering, Procure-ment and Construction (EPC) companies to bag the orders helped the project developers in reducing their overall costs.

Of the 30 solar PV projects that were successful in the bid-ding, one project could not get land and another project could not achieve financial closure. The remaining 28 proj-ects (140 MWp total) need to be commissioned projects by end of February 2012 in order to avoid any financial penal-ties. As of 31 January 2012, only a handful of projects have been commissioned.

One interesting development of the Batch 1 projects was the role of multilateral financing. The MNRE had mandated the use of Indian made Solar PV modules for crystalline Silicon technology. This Local Content Requirement(LCR) was put in place to help the growth of an Indian PV manufacturing eco-system. However, this LCR was not applicable for Thin Film technologies, mainly because there is hardly any manufactur-ing of Thin Films in India. Due to the exemption of LCR for thin

films, about half of the project proponents opted for im-ported thin films, because that gave them access to lower interest rate funds from abroad (External Commercial Bor-rowing – ECB). The EXIM bank of USA financed quote a few projects that used US made components of the sys-tem like First Solar and Abound Thin Film modules and Power-One inverters(just to name a few examples). While on one hand, the multilateral financing helped in reducing borrowing costs for the developers, it significantly reduced the effectiveness of the Local Content Requirement.

In the case of Solar Thermal projects(CSP), the project developers have longer time periods for exectution of the projects and at the time of writing, the developers have started ordering turbines and other equipments from global majors like Siemens and Areva. Due to the falling price in Solar PV modules, globally quite a significant number of CSP projects switched over the Solar PV. Even in Gu-jarat, one of the developers(Sunbourne Energy) who was awareded a CSP project under the state policy switched over the PV. The response for allocation of CSP projects in Karnataka was also lukewarm.

Batch 2 of phase 1Based on its experience gained from the allotment of 150 MWp during the Batch 1 of the Phase 1 of the mission, the MNE announced the guidelines for the selection of Solar PV projects under the Batch 2 of the Phase 1 in August 2011. The major differences are given below.


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The reverse bidding for batch 2 was more aggressive than batch 1 and the lowest winning bid price was Rs. 7.49/kWh, which represents a 51% discount. The average bid price was Rs. 8.80/kWh, a discount of about 42%. Some of the major reasons cited for the aggressive bidding are

a. The steady drop in module prices resulted in low-er capital costs. It is estimated that the capita cost dropped from 15 crore/MW during mid-2010 to about 8-9 Crore/MW by December 2011.

b. Quite a significant number of winning project develop-ers had created a portfolio of solar PV projects under various policies – state policies of Gujarat, Rajasthan and Karnataka, projects under the REC mechanism – which gave them enormous leverage in procuring the capital goods at very competitive rates. They used this advantage to quote very low.

c. Another calculation that probably went into the bid-ding strategy was the availability of lower cost financ-ing option from the EXIM bank of USA and other mul-tilateral agencies.

A total of 27 projects were awarded in the Batch 2 of al-lotment, and 20 developers shared these projects among themselves. Since the project size was increased from 5 MWp to 20 MWp, the number of project winners reduced to 27 from 30 from the earlier round.

Most of the winning project developers have signed PPAs with NVVN as of January 31, 2012. These projects are scheduled to be commissioned the latest by February 28,2013.

gujarat state policyThe discussion of the JNNSM is incomplete without a comparison with Gujarat Solar Policy. The state had an-

nounced its policy almost the same time as the JNNSM, but was quicker in allocating projects and signing PPAs. One of the reasons they could do that was because Gujarat did not follow the reverse-bidding process for project al-lotment and instead went for a first-come-first-basis mod-el. Gujarat awarded projects close to 1000 MW, but at the time of writing, it is expected that only about 300 MW will be commissioned as per schedule. However, that still is a very good number compared to about 150 MW that will be commissioned under the various policies of JNNSM. In addition, the projects under the Gujarat Policy get higher tariff, thereby making it more lucrative.

status of the projects:The deadline for commissioning the 28 projects is fast ap-proaching (February 2012) and by January 31, 2012, about 4-5 projects have been commissioned. Another 20 proj-ects (of the total 78 projects) under the RPGSSP have also been commissioned. In Gujarat, about 300 MWp of the projects are expected to be commissioned by March 2012.

Conclusion:The Indian Solar industry has come a long way since the announced of the JNNSM in 2009. From an installed ca-pacity of less than 5 MW of grid connected Solar projects in 2009, it has jumped to close to 500 MWp by March 2012. With more and more state governments jumping onto the Solar bandwagon and the enforcement of the Renewable Purchase Obligations, the expectation is that India will tap its solar resources in a significant way. Look-ing at the results so far and the outlook for the future, it can be concluded that MNRE has done its job quite well, with some fantastic support from the state of Gujarat. The sun is rising on India.

Round 1 Round 2

Bidding completed in December 2010 December 2011

Total volume of allotment 150 MW 350 MW

Maximum size of project 5 MW 20 MW

Maximum number of 1 3 projects per bidder

Total capacity per bidder 5 MWp 50 MWp

Responsibility of setting up The State Transmission The project developer transmission line to the Utility(STU) nearest substation

Reference price/kWh Rs.17.91 Rs. 15.39

Project commissioning 12 months from date 13 months from date timeline of signing Power of signing Power Purchase Purchase Agreement(PPA) Agreement(PPA)


Theoretically, about 5000 trillion kWh/m2 of solar energy is incident across the entire area of the country, with daily averages of incident radia-tion falling between 4 and 7 kWh/m2/day. While the theoretical potential stated seems like a large number, the actual potential is significantly lower due to various constraints such as:

• Available area for plant develop-ment

• Useful solar energy capture area within the power plant

• Theoretical conversion efficiency limits for solar PV based systems

resource assessmentAccording to a report published by EAI, the solar resource map of In-dia has been developed using data extrapolated from satellite imagery. The areas with the highest potential for solar based power generation are concentrated in the peninsular region of the country – with Rajasthan being the only noteworthy exception. About 1.75 million sq. km of land receives an annual irradiation of about 5.5 to 6 kWh/m2/day. In addition to this, about 1.1 million sq. km of land re-ceives irradiation between 5 and 5.5 kWh/m2/day putting the total avail-able (optimal) area for setting up so-lar power plants at about 1.85 million square km.

phase 1 Batch 1 In the first phase of JNNSM which was launched in 2010 targets to add 1300 Mw. Out of which 800 Mw will be from PV and 500 Mw from CSP. As on 31st October 2011, 81.5Mw commissioned and under the ‘Roof-top & Small Solar Power Generation Programme’ (RPSSGP)- 11Mw, the state of Gujarat added 41Mw and Demonstration Program- 15Mw. By

end of March this year, it is expected that the total grid connected capac-ity will go above 500 Mw. However, there reports delays in implementa-tion of the projects. The company has to make a hefty fine payment, if there is a delay in completing the projects.

This fine amount could be anywhere between 17 and 30 per cent of the cost of the project.

The phase 1 was divided into two batches. 150Mw of Solar PV and 470Mw of Solar Thermal were up for allotment under the first batch. Proj-


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mission target from the document • To create an enabling policy

framework for the deployment of 20,000 MW of solar power by 2022.

• Torampupcapacityofgrid-con-nected solar power generation to 1000 MW within three years – by 2013; an additional 3000 MW by2017throughthemandatoryuse of the renewable purchase obligation by utilities backed with a preferential tariff. This ca-pacity can be more than doubled – reaching 20,000MW installed power by 2017 or more, basedon the enhanced and enabled international finance and tech-nology transfer. The ambitious target for 2022 of 20,000 MW or more, will be dependent on the ‘learning’ of the first two phases, which if successful, could lead to conditions of grid-competitive solar power. The transition could be appropriately up scaled, based on availability of interna-tional finance and technology.

• To create favourable conditionsfor solar manufacturing capabil-ity, particularly solar thermal for indigenous production and mar-ket leadership.

• Topromoteprogrammes for offgrid applications, reaching 1000 MW by 2017 and 2000 MW by2022 To achieve 15 million sq. meters solar thermal collector areaby2017and20millionby2022.

• Todeploy20millionsolarlight-ing systems for rural areas by 2022.

the phase one mechanism has the following highlighted features• Predictable income stream-

CERC estimated 2009/10 base25 year fixed tariff

• Distributedriska)5MwCaponPV Projects b) 100 Mw cap on CSP

• Single window for IIP’s- NVVNmanages all NSM PPA’s for mi-gration and project under phase one

• Sole window for purchasers-utilities meet RPOs by acquiring from NVVN solar power blended with unallocated conventional power

• REC’stradableamongutilitiestomeet RPO’s

• Generationbasedcontractsandpenalties for implementation delays

ect size per IPP was fixed at 5MW for Solar PV and 100MW for Solar Ther-mal projects. . The final 30 solar PV projects had bids between Rs 10.95 to Rs 12.75 per unit. The Solar Thermal projects selected had bids between Rs 10.24 to Rs 12.24 per unit. Under the mission the target is to achieve grid parity in 2022. On the one hand, de-velopers were concerned about the higher cost involved in setting up a solar plant. If we may recall Prime Minister’s words during the launch of the mission in 2008, “The aim is to bring down the cost with scalability and newer technologies.”

NTPC’s wholly owned subsidiary company NTPC Vidyut Vyapar Ni-gam Ltd (NVVN) is designated as nodal agency for entering into a Power Purchase Agreement (PPA) to purchase solar power. In this process, the Ministry of Power will allocate equivalent power from the Central unallocated quota, for bundling to-gether with solar power. NVVN will undertake the sale of the bundled power to State utilities at the rates determined as per CERC regulations. The above arrangement would be sub-ject to review by Government, in case of, significant price movement in the market. The above arrangement will

be limited to utility scale solar power generated from a maximum anticipat-ed capacity of 1000 MW in the first phase.

The phase 1 also steer the dream of popularising solar lanterns and solar lighting systems in the rural areas of the country where there is nil access to commercial grid power. While in conversation with one of the leading developers in the country, who is tak-

ing initiatives to be part of the rural mission puts across a very valid point, where the government needs to im-prove the awareness programme. Ac-cording to him, “In villages electric-ity means which transmits through a grid and reaches their homes directly. Solar, according villagers, does not fall under the category of electricity.” This call for the dire need to make the right kind of information reaches the villages. He continued that, “how can

MW scale Grid Solar Power Plants Commissioned as of 24 November 2011

Sr No State/UT Capacity Mw PV/ST

1 Andhra Pradesh 3 PV 2 Chhattisgarh 4 PV 3 Delhi 2 PV 4 Gujarat 51 PV 5 Haryana 2 PV 6 Karnataka 6 PV 7 Maharashtra 18 PV 8 Orissa 3 PV 9 Punjab 3 PV 10 Rajasthan 40 PV Rajasthan 2.5 CSP Tower 11 Tamil Nadu 7 PV 12 West Bengal 1 PV

TOTAL 143.5

(Continued from page 45)


than the CERC bench mark, which shows that it is economical viable even at this lower pricing. So it is, from skepticism on pricing to certain-ty of decrease in developing a project.

phase 1 Batch 2The scenario took a different direc-tion all together after an year of start-ing JNNSM. In December 2011 the bidding for the second batch of phase 1 happened. As expected by some quarters, the fierce bidding result in a price as low as Rs. 7.49 per unit. This is 50 per cent less than the bench mark price set by the Central Electric-ity Regulatory Authority at Rs 15.39 per unit. So, now it is believed that the country may achieve grid parity even before the targeted 2022. This means that India will realise its dream of be-coming world leader in solar energy sooner than expected.

Total capacity of 350 Mw was up for bidding in batch 2. Out of which 295 Mw went to Rajasthan, 25 Mw in Maharashtra, 20 Mw in Andhra Pradesh and 10 in Tamil Nadu. The lower bidding price reflected the low-ering of solar power components in the country after the announcements of the JNNSM, points out the experts.

While the dip in prices is a welcome move for the consumers, but some of the developers are of the opinion that these kind of aggressive bidding can ruin the market.

The ministry of new and renewable energy was successful in making in-roads in lighting up the rural area with solar power. The following table will give an overall picture of the current scene in the renewable energy sector including solar.

What is the possible reason behind the aggressive bidding in the batch of Phase 1. Probably the plunge in Solar PV panels in the last one year. The prices came down more than 50% in 2011 alone. Technically if we take into consideration the tenure of PPA’s (25years), solar power can be said to be attained grid parity even now. The average of Rs 9 per unit in the second batch is more or less that of the merchant power price in the spot market.

India also saw a varied develop-ment in terms of technology after the first phase of implementa-tion started. The two technologies which took the lead are crystalline and Thin Films. World over, it is Crystalline Silicon are more popu-

lar and widely in use. When the Solar Mission was announced, the Indian developers were rather apprehensive about the technological model to be adopted. As there was no one single model which could be replicated in India, in the beginning, some of the companies had resort in adopting the discarded technology in some other country. It is true that, the technology was not matured for the Indian mar-ket when the mission implementation began.

However, it is commendable that the Indian companies started investing in R&D to develop the technology suit-able for Indian conditions. As one of the developers pointed out “though the companies started importing tech-nologies, but it was necessary to make it compatible to Indian conditions. Now many of the companies utilise a sizable amount of investments in R&D, which is a welcome move.”

In the PV space crystalline silicon is likely to continue the leadership po-sition. It is also likely that it is hard to replace the C silicon market in the near future. Slowly the thin film PV (TFPV) is steadily growing. TFPV is cheaper comparing to crystalline sili-con PV, the former is low in energy efficiency as well.

a player like me who enters the village to say distribute lanterns to convince the villager that solar is also electric-ity. The government should take nec-essary steps to create more awareness

among the villagers.”

Though the CERC has fixed the bench mark pricing for the first phase at Rs 15.39 per unit, a state like Gujarat was successful in signing PPA’s Rs

3-4 lower than this price. P K Mishra, Chairman of the Gujarat Electricity Regulatory Commission pointed out that, if the developer is willing to en-ter into a PPA at much lower pricing


rENEwaBlE FEaturE

Cumulative deployment of various Renewable Energy Systems/ Devices as on 31/01/2012

Renewable Energy Programme/ Systems Target for Achievement Total Cumulative 2011-12 during the achievement achievement month during up to January, 2012 2011-12 31.01.2012

I. POWER FROM RENEWABLES: A. GRID-INTERACTIVE POWER (CAPACITIES IN MW) Wind Power 2400 101.00 2023.00 16179.00 Small Hydro Power 350 48.00 257.50 3300.13 Biomass Power 460 25.00 145.50 1142.60 Bagasse Cogeneration 20.00 285.00 1952.53 Waste to Power - Urban 25 1.20 1.20 20.20 - Industrial - - 53.46 Solar Power (SPV) 200 291.60 445.55 481.48

Total 3435 485.60 3157.75 23129.40

B. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ) Waste to Energy - Urban - Industrial 15.00 - - 3.50 0.94 27.31 89.43 Biomass(non-bagasse) Cogeneration 80.00 4.4 51.89 347.85 Biomass Gasifiers - Rural - Industrial 3.00 0.192 1.642 15.99 10.00 1.00 10.89 132.27 Aero-Genrators/Hybrid systems 0.50 0.06 0.33 1.45 SPV Systems (>1kW) 20.00 5.02 11.00 81.01 Water mills/micro hydel 400 Nos. 52 nos. 350 Nos. 2025 Nos.

Total 128.50 11.61 103.06 671.50

II. REMOTE VILLAGE ELECTRIFICATION No. of Remote Village/Hamlets provided with RE Systems 500 25.00 905.00 9009.00

III. OTHER RENEWABLE ENERGY SYSTEMS Family Biogas Plants (No. in lakhs) 1.50 0.21 0.70 44.75 Solar Water Heating - Coll. Areas (Million m2) 0.60 0.10 0.52 4.98

Source. MNRE


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So what are the concerns or lesson learned from the first phase of imple-mentation of JNNSM? The first con-cern is the delay in commissioning of projects on time. When the solar mission was announced, it was clearly stated that there will be policy support to attain the set target in the mission. Despite the fact that we are an year away from the end of the first phase of Solar Mission, the policy makers and the developers have identified the hurdles in the sector in a bigger way. The government, according to the Solar Mission continues to shower incentives as promised.

learning from phase 1a) The size of the project was limited

to 5 Mwb) Financing was on the balance

sheet fundingc) The time given for financial clo-

sure was 18 months

d) No direct funding support from government—through bundling of power

However, in the second batch bidding

a) Project size increased from 5 Mw to 25 Mw

b) Financial closure tenure increased by 1 month

c) Commissioning tenure also in-creased by 1 month

“There is limited clarity in policy beyond 2013, pauses a challenge to the developers,” said Dr Pramod Deo, Chairman CERC. In phase 2 of JNNSM, no bundling of power, but it will be direct subsidy for the devel-opers. When we move into phase 2, it is expected that the roof top solar put together will be producing more than 100 Mw. The next step will be towards get it connected to the grid. To make it happen, two way metering is necessary. CERC has already noti-fied the tariff in this regard.

The two mechanisms announced by the government, REC and RPO needs to be implemented in a stricter way to reap the fruit as designed while an-nouncing the JNNSM. It all depends on how strict you can implement the RPO and force the discoms to buy them. The suggestion is that solar power should have a separate RPO and this RPO has to be met with only from solar power can make a huge difference, continued Dr. Deo.

The target is to generate 15 per cent of its total electricity output from Re-newable energy by 2020. This is pos-sible as the country on one hand is ag-gressively supporting the developers by resolving the hitches in the Phase 1 implementation. On the other hand, it is also developing a value chain to bring down the cost to achieve grid parity, by making it mandatory for de-velopers to source 30 per cent of the components domestically.

rENEwaBlE FEaturE solar power


“Solar pv aS a value propoSition”

Photovoltaics (PV) is a means for generating electricity. Us-ing semi-conductor technol-

ogy, it converts solar radiation into direct current (DC) electricity. Solar panels are used and these have solar cells that use semi-conductor materi-al. The generated DC electricity can be used to recharge batteries and used for off-grid battery-based systems. Alternatively, the generated DC elec-tricity can be fed into battery-less sys-tems like solar water pumps. In de-veloping countries like India, where grid access is still a problem in remote geographical areas, many solar power solutions are still off-grid. However, in developed countries, it tends to be on-grid and battery-less. This means that the DC electricity has to be con-verted into alternating current (AC) using inverters that are connected to the grid.

Why is solar power attractive? Be-cause there is plenty of it and conven-tional energy will not last for years. Even within renewable energy, the potential for solar power is huge. As the graph shows, coal, uranium, pe-troleum and natural gas will not last for ages and the circles in the graph are for total recoverable reserves of these. In contrast, the circles for re-newable energy are annual figures.

While the cost of conventional power has been increasing, the cost of solar power has been declining and that explains the growth in solar PV. At the end of 2011, there was a total global solar installed capacity of 67 GW. This is only 0.5% of the world’s electricity demand, but it is increas-ing. More than a hundred countries in the world use solar PV, though not all have been able to introduce subsidies

or preferential feed-in tariffs that feed into the grid.

PV is a value proposi-tion for India. There is plenty of solar en-ergy resource. With about 300 clear and sunny days in a year, India’s theoretical so-lar power reception is huge, though there are regional varia-tions in this. Even if the efficiency of PV modules is only 10%,

that po-tent ia l t r a n s -lates into energy generation that is a thousand times more than the total domestic electricity demand projected for 2015. The National Solar Mission recognizes this.

Why is PV a value proposition? Be-cause the prices of PV panels has dropped, driven partly by economies of scale. And because the cost of grid-based power has been increasing. Since income and demand growth have led to an energy deficit, and this is bound to continue, the government has been encouraging the adoption of solar power, though subsidies are not on the scale that developed countries have been able to offer. The objec-tive of the National Solar Mission is to make India a global leader in solar energy. The drop in wholesale prices for thin film and crystalline PV mod-ules has been quite sharp, so that one almost has equalization now with the prices of grid-based power.

Tata BP Solar is in the business of converting PV’s value proposition into a business venture. From grid-tied solar power projects to off-grid solar products such as solar lanterns, home lightings systems and solar-powered irrigation pumps, we touch people’s lives in a number of ways.

Tata BP Solar is a fully vertically in-tegrated solar solution provider. Tata BP Solar has pioneered grid-connect

systems in India and one such exam-ple is at Walwan near Pune, set up in 1996. Tata BP Solar’s modules have a degradation of only 15% over the 25-year life span, which is much bet-ter than the degradations permitted in the IEC 61215 specification. Tata BP Solar has completed two large proj-ects of 1 and 3 megawatts in Delhi and Maharashtra respectively. In the context of the new policy regime in to promote grid-connected solar power plants, Tata BP Solar has completed work on executing a large number of megawatt-scale projects in India. Apart from grid-connect systems, Tata BP Solar has the highest number of solar installations, for various ap-plications like village electrification, pumping, health care, basic lighting and education. The lighting systems are not only cost-effective. They also last for a long time, even in rugged terrain like Ladakh, where more than 14,000 lighting systems have im-proved the lives of more than 100,000 people. The money that villagers spent on kerosene lamps is now used to pay monthly instalments for solar loans. Health has improved, because kerosene fumes have been displaced by solar lights. With an increased number of working hours, families have become more productive, lead-ing to more incomes. Village-level solar power plants have been set up in

Chhattisgarh, in collaboration with the Chhattisgarh Renew-able Energy Development Authority (CREDA) and with more than 400 tribal villages electrified, more than 100,000 people have been empowered. Banks have been offered con-nectivity through reliable so-lar power in remote and rural areas. This is most visible in Uttar Pradesh, the most popu-lous state in India. There are plenty of such instances of rural transformation. Tata BP Solar runs an awareness campaign called “Arunoda-ya”. But this is more than an awareness campaign. The rising sun has transformed people’s lives in a lit-eral sense.

While launching India’s National Ac-tion Plan on Climate Change on June

30, 2008, the Prime Min-ister stated, “Our vision is to make India’s economic development energy-ef-ficient. Over a period of time, we must pioneer a graduated shift from eco-nomic activity based on fossil fuels to one based on non-fossil fuels and from reliance on non-renewable and depleting sources of

energy to renewable sources of en-ergy. In this strategy, the sun occupies centre-stage, as it should, being liter-ally the original source of all energy. We will pool our scientific, technical and managerial talents, with suffi-cient financial resources, to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people. Our success in this endeavour will change the face of India. It would also enable India to help change the destinies of people around the world.” That’s our vision and dream too. That’s the reason PV is a value proposition for Tata BP Solar and also for the country. There is no contradiction between the two objectives.

K Subramanya CEO, Tata BP Solar

“Comparing finite and renewable planetary energy reserves (Terawatt - years). Total recoverable reserves are shown for the finite resources. Yearly potential is shown for the renewables.” (source: Perez & Perez, 2009a)


rENEwaBlE FEaturE

price trends January 2012 Module type, origin € / Wp Trend since Trend since 2011-12 2010-11

CrystallineGermany 1.07 -4.5% -37.3%

CrystallineChina 0.79 -2.5% -46.3%

CrystallineJapan 1.05 -4.5% -35.6%

ThinfilmCdS/CdTe 0.68 -6.8% -45.5%

Thinfilma-Si 0.60 -6.3% -44.2%

Thinfilma-Si/µ-Si 0.76 -7.3% -39.8%

(All net prices in € per Wp. Source: www.pvXchange.com)

Source : Jawaharlal_Nehru_National_Solar_Mission_Solarishi

| February - March 2012 | Power Insight60

last word

All is not well with the power sector. While the generation sector is fighting with the fuel sup-ply constraints, the distribution segment es-

pecially the state electricity boards (SEBs) are sitting on a live volcano. According to the official figure, the financial loss of the distribution segment is Rs 1.2 lakh crores. And this is not all; a sect argues that the real losses are double of the official numbers given out. In many a state, the banks have stopped lending to the Discoms. Fearing that complete financial “black out” from the banks, the numbers must have been given out in a controlled manner.

It all started with buoyancy with the Electricity Act of 2003. Curbing political interventions or say depoliticiz-ing, a regulator in every state, unbundling of power, allowing open access and above all the beginning of operation of the power exchanges, are what we saw in the last decade as reforms in the sector. However, the reforms helped the SEBs only a little. Distribution of free power continued to woo the vote bank. The state regulators were reduced as the mere implementers of the direction from the babus. And we have seen the Discoms refusing to lift power the exchanges at a higher cost.

The state regulatory boards are entitled with the respon-sibility to revise tariffs from time to time in consultation with the state governments. However, many a state in the country never had any tariff revision in past 7 years, owing to the political pressure. This gives a clear picture that the state regulatory boards work according to the whims of the political leadership in the state.

There are exemptions and examples that can be sighted here. Gujarat is a state is one of such examples. The state had commendably segregated and put into operations the three feed supply system- commercial, domestic and ag-riculture lines. It also ensures power supply 24X7, from a power deficit to a power surplus state in few years. The state of Maharashtra is the first one to implement open access to ensure quality power supply.

Allowing privatization helped the sector in a bigger way. Bhivandi in Mumbai is a classic successful example. Al-lowing a private segment player in this area improved the

quality of power supply owing to the recovery of pend-ing collections. But the same company, the Ahmad-abad based Torrent Power failed to replicate the suc-cess in the other part of the country where they entered.

Analysts see this as a successful model as the major consumers in Bhvandi was classified under the SMEs. One argument is that the recovery from commercial or-ganization is easier than residential. To an extent all buy this argument as in many cases the private distrib-uters are struggling to see results.

The Centre Electricity Regulatory Commission (CERC), the apex body of the electricity sector, how-ever cannot direct the SERCs for tariff revisions. It lim-its its involvement as facilitator regarding tariff regula-tions, but execution remains a state prerogative. This gives the ample leg room for the states to tweak in their interests in the electricity sector. None of the political party in the country likes to let go the vote banks they hold by providing free electricity.

It is not free electricity supply which is causing the financial burden; theft is another major issue both in commercial and the residential segment. It is true that the theft in the commercial segment also have open po-litical support. Curbing theft, which normally is figured under the transmission losses need to be addressed with more seriousness, if the government wants to revive the health of Discoms.

The possible solution seems to be a write off of the SEB losses and reviving the health by inducing fresh liquid-ity, similar to that of what the government did for agri-culture sector through a budgetary announcement in the recent past. It is high time, that the government learn the basics of having political will to implement the policy reforms. Otherwise, you and me the tax payers of the country will be the victims, facing power shedding in the near future.

Renjini Liza Varghese Consulting Editor

Discoms - The Mess

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Power Insight (Feb-March 2012)

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Transcript of Power Insight (Feb-March 2012)