Monthly Archives: June 2012

Tata group asks MNRE to debar Moser Bear following its poor performance of solar projects

Tata Power DDL, (formerly North Delhi Power Ltd, in which Tata Power owns 51 per cent) has said in a letter to the Ministry of New and Renewable Energy (MNRE), that it had awarded three solar projects to Moser Baer Photo Voltaic Ltd, a unit of the Moser Baer group.

Actually the “Tata Power Delhi Distribution Ltd”, is a joint venture of Tata Power Company and the Delhi Government, has called for “debarring of Moser Baer Photo Voltaic Ltd for poor performance of solar projects.”

The letter explains the various reasons for this which is as follows.

“The performance of the solar plants installed by them has not been up to the industry standards”.

The letter also cites a number of failures, including

(1) Failure to adhere to contractual timelines leading to “tremendous delay” in commissioning of the projects,

(2) Poor engineering leading to “faulty design and frequent change in layouts”,

(3) Quality of workmanship and high system losses leading to actual electricity generation being much less than the guaranteed generation.

(4) Poor response, maintenance support

But what has irked the Tata Power DDL is the “poor response to client’s complaints for rectification of faults” and the “weak operations and maintenance support”.

The letter was issued on May 7),and The letter has been copied to as many as 87 people connected to the power industry, including the officials of the Ministry of Power, Ministry of New and Renewable Energy (MNRE) and the various state electricity regulatory commissions.

“We had been following it up with them (Moser Baer) for over one year but there was no proper response,” an official of Tata Power DDL told.

However, after the letter was issued there has been some action from Moser Baer side.

If the action is satisfactory from the Moser Baer side “we may withdraw the letter,” the official from the Tata Power DDL said.

According to a spokesperson of Moser Baer the Moser Baer has reached an agreement on resolving the issue and the same is under execution.

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German Companies now exploring Energy Opportunities in Kerala

A team of German experts visited the beach in Alappuzha, Kerala to explore the viability of setting up renewable energy-based power plants in the State with German cooperation.

The German team’s visit came in the wake of Mr. K.C. Venugopal Union Minister of State for Power request to German Federal Ministry of Economics and Technology to explore such possibilities when he visited to Germany in the first week of June.

It consisted of officials as Mr. Jens Burgtorf, Director, Indo-German Energy Programme (IGEP), and Hermann Herz, Deputy Director and technical expert of IGEP. Mr. Mohammed Hussain, senior scientist from the Centre for Wind Energy Technology, Chennai, and officials from the KSEB accompanied them.

It is searching for electricity production opportunity from solar, wind and biomass.

Germany is planning to increase the renewable energy contribution from present 20% to 50% in future. They have then plans to shut their nuclear plants in series.

According to sources 800 MW is the electricity production capacity of Kerala of which only 40 MW is exploited.

Till now high cost of installation and sustainability challenges were holding back the State from going for renewable resources. Therefore expectations are there from German team on subjects as technical support and knowledge sharing for cost-effective solutions.

 

(Author: Rochit)

(Source: The Hindu)

Solar Power Companies facing Legal battle with Gujarat Govt.

The Gujarat government and three solar power companies are in a legal tangle over the issue of ownership of the companies that are putting up the projects. All the three companies which are by the names of– Azure Power (Gujarat), Millennium Synergy and ESP Urja –are wholly owned by American solar power developer SunEdison.

The point under dispute is ON THE ISSUE OF THE VIOLATION OF THE PPA COVENANTS or which can be explained as whether or not these three companies are in breach of a covenant of the power purchase agreement which stipulates that the “power producer shall continue to hold at least 51 per cent of equity from the date of signing of this agreement”.

The installation capacities of the three companies, Azure Power (Gujarat) and ESP Urja have a 5 MW plant each, while Millennium runs a 10 MW plant.

Gujarat Urja Vikas Nigam Ltd (GUVNL) which is Gujarat’s nodal agency, had issued notices terminating the power purchase agreement for Azure Power (Gujarat) and had stopped making payments for the purchased power for the other two companies.

Azure Power India, a company whose various projects have been funded by the German development finance agency, DEG, the US Exim Bank and IFC (Washington) initially promoted the Azure Power (Gujarat).

All the above said three companies have petitioned the Gujarat Electricity Regulatory Commission (GERC). The Commission, in its orders passed recently, which says that “It is unfair and unjust that the generator is not paid for the power supplied by him to the distribution licensees,” The commission has stayed the operation of the termination notice served on Azure Power and has directed GUVNL to make the due payments to other two companies which are Millennium and ESP Urja.

GUVNL In the case of Millennium and ESP Urja, had raised the issue of compensation to be paid by the project developers for any violation of the PPA covenants. But the Commission dismissed it saying that was “not a subject matter of the present petition.

As far as the SunEdison is concerned the order explained relating to the Azure Power case, is that it signed the shareholder agreement – for taking over the ownership of the developer – prior to the signing of the PPA. The question as to whether or not there is a breach of the PPA with respect to the covenant relating to the shareholding pattern is yet to be decided by the Commission.

 

(Author: Mohd. Arif)

The new REC price band as revised by CERC

The Central Electricity Regulatory Commission(CERC) has announced the floor and forbearance prices to be used for solar/non-solar projects from the FY 2012-13 upto 2016-17. The prices set are shown in the table below

Non Solar (Rs.) Solar (Rs.)
Prices (2012-2017) Current % Reduction Prices (2012-2017) Current % Reduction
Forbearance Price 3300 3900 15.38 13400 17000 21.18
Floor Price 1500 1500 0.00 9300 12000 22.50

Background

Earlier, the CERC had proposed a few changes (refer table below) to be made to the REC prices and invited comments/suggestions on the same.

Non Solar (Rs.) Solar (Rs.)
Proposed Current % Reduction Proposed Current % Reduction
Forbearance Price 3480 3900 10.77 13690 17000 19.47
Floor Price 1400 1500 6.67 9880 12000 17.67

 

The final prices to be enforced from April 2012 were arrived at after considering the comments/views of stakeholders and participants at the public hearing on the proposed floor and forbearance prices. As can be seen, the final prices decided upon are considerably lower than the earlier proposed prices.

Analysis

Financial feasibility studies of power plants under the REC mechanism almost always consider the floor price for calculating returns. With this in mind, the evaluation of REC for the primary renewable energy generation systems looks quite healthy.

  • Non-solar – the floor price remains unchanged. Thus biomass/wind generators are expected to get the same minium revenue as they have been getting earlier.
  • Solar – the floor price has seen a cut of about 23% from current levels. Although this might seem drastic, it is not likely to have a significant impact on solar power projects (refer section below).

 

APPC – Non preferential tariff and REC

CERC stipulates that for a project to be eligible under the REC mechanism, the power producer has to sign a PPA with the state utilities at a price equal to the APPC price. The APPC price for a state for a particular time period is determined by the State Electricity Regulatory Commissions(SERC).

Looking at the current APPC prices in various states, a combination of REC and a PPA signed at APPC rates seems comparable with the preferential PPAs signed with the state utilities.

For example,  let us consider a solar PV plant to be setup in Tamil Nadu where the APPC price for 2011-12 is Rs. 3.38/kWh. Under REC regulations, if a RE developer were to get the floor price for the solar REC, the income for the solar PV plant would be Rs. 12.68 /kWh (Rs. 3.38 + Rs.9.3). Another case is Rajasthan, which has a very high potential for solar PV – where the income would be Rs. 11.9 /kWh. In comparison, under the phase 1 (batch 1) of JNNSM, the average price settled on through the reverse bidding process was  about Rs. 12.5 per kWh.

As can be seen, these prices are comparable to tariff set through reverse bidding under batch 1 of the JNNSM scheme.

Prices can only go higher

APPC prices are set based on the cost of power generation from fossil fuel based power plants. It is highly likely that this price would increase in the future due to the increase in fossil fuel prices and scarcity of supply. This ensures that the APPC prices would continue to increase for the foreseeable future, thus ensuring higher year on year returns under the REC mechanism provided the PPA signed with the state utilities has provisions for purchase at floating APPC prices rather than fixed price.

The table below gives a comparison between preferential tariff (reverse bidding under JNNSM) and REC mechanism for a plant in Tamil Nadu. The following assumptions were made for the sake of calculations

  • Average bid price under phase 1 batch 2 of JNNSM could be around Rs. 12.5 /kWh(on the higher side)
  • APPC prices could rise by 15% annually (base price used is that of Tamil Nadu) – reasons for this were mentioned earlier.
  • REC price after 2016-17 period (i.e. from FY 2017-18 onwards) is reduced by 25%

 

Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
JNNSM Tariff (average) (Rs. per kWh) 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5
APPC (Rs. per kWh) 3.38 3.89 4.38 5.04 5.38 6.19 6.38 7.34 7.38 8.49
REC (Rs. per kWh) 9.30 9.30 9.30 9.30 9.30 6.98 6.98 6.98 6.98 6.98
Total (Rs. per kWh) 12.68 13.19 13.68 14.34 14.68 13.16 13.36 14.31 14.36 15.46
REC mechanism’s Incremental revenue over PPA(Rs. per kWh) 0.18 0.69 1.18 1.84 2.18 0.66 0.86 1.81 1.86 2.96

Table: REC vs preferential PPA for 10 years post 2012

 

 

As can be seen from the above table, the REC mechanism is quite comparable, if not better when compared to the assured tariff provided by NVVN over 10 years of operation of the solar powerplant. Overall, the REC mechanism can clearly drive the solar market, provided the Renewable Purchase Obligation (RPO) is strictly enforced by the various SERCs.

 

(Author: Suman)

Booming solar market expects grid –parity in very near future

Our capacity increased to 940 MW in 2011-2012 from just 20MW in 2010-2011. But why is such a sudden change? It is because the component which consumes half the cost of projects i.e. –panels, has cut down it’s price by 30% in  last year. It already showed a decline of 80% in the past 5 years. According to a CRISIL report “Capital costs fell by 30% from a year ago to Rs 10 crore per MW (megawatt) by the end of 2011. The fall was driven by 50% drop in prices of solar PV modules, which account for almost half the capital costs of a PV project. The sharp fall in capital costs has improved the returns from the projects that were commissioned in FY12”.

A latest report by Pew Charitable Trust says that the flow of private investments into the country’s solar sector has already seen a seven-fold jump to $4.2 billion in 2011.

But one crucial analysis from all this is that grid parity is very nearby, i.e. the cost of power from solar is on a par with the cost of power from new coal, wind and hydro-based plants. “If we compare the cost of power from new coal-based plants, it will be at par with that of solar. If one takes into account the total duration of the power purchasing agreement, which is 25 years, grid-parity is already there. Solar power needs only a one-time investment in the form of land and PV panels. Its fuel, which is sunshine, is free unlike coal where price will head only northwards,” said Gaurav Sood, MD, Solairedirect.

The reason for declining panel prices are heavy subsidies by China to its domestic manufacturers & recent reduction of subsidy to the sector by Germany, the largest solar power generator in the world.

But this has pressurised our module manufacturer, to compete with Chinese markets. This subsidy by China has already swallowed many leading global manufacturers such as Solyndra (US), Q Cells and Solar Millennium (both in Germany) which have filed for bankruptcy.

But the funding banks are still awaited for becoming open to solar sector. They are still reticent about still rock-bottom tariffs and higher debt levels. “We are keen to assist solar projects as they are pollution free. But we would prefer a lower debt-equity ratio in the range of 60:40,” said B K Batra, executive director, IDBI Bank. Other banks now financing for this sector are US EXIM bank, ADB and IFC

 

(Author: Rochit)

MP to buy 125MW green power under RPO

After the Central government’s advice to the state government of the MP that the state should make use of some environment friendly energy under RPO, the state government of the MP in collaboration with the Madhya Pradesh Power Management Company Limited (MPPMCL) is going ahead with a plan to buy 125 mega watt (MW) green energy from two upcoming solar projects in state of as many private companies – Welspun group and Alfa Infraprop Limited under Renewable Power Obligation (RPO).

The Managing DIRECTOR of MPPMCL Mr. Manu Shrivastava told “We have got the green light from board of directors to buy green energy from the two companies,” He also said that they were going to sign letter of intent (LoI) with the two companies to buy 105MW power from Welspun and remaining 20MW from Alpha respectively.

There is the difference between the rates for the two companies for buying the power as one of the officials explains that “We will get power Rs 7.90 per unit from one company and Rs 8.05 from other once. MP power regulatory commission has given its nod to buy the power and earmarked a maximum of Rs 15.35 per unit”.

The  solar power would cost them average of Rs 2.66 per unit from one company and Rs 2.70 from another one, given the rate Rs 7.90 per unit and Rs 8.05 per unit respectively would be the same for 25 years.

He also said that both the solar projects are likely to come up next fiscal.

 

(Author: Arif)

(Source: Times of India, Infraline)

Surat Municipal Corporation exhibited will for Solar power as well

Endeavoring   to go with green power , Surat Municipal Corporation (SMC) have called upon tender  for installation of a 100 KW  rooftop , atop its Science center building at City Light Road of the city .

“We have called for tenders for this 1.5 crore project of installation of 100KW capacity roof top panel. This will have a pay back period of seven years.” said Jatin shah, City Engineer of SMC.

SMC have plans to meet, at least15-30% of its energy requirement from renewable which includes solar and wind. It is already having a 3MWplant installed at Porbander and has decided to extend it by calling tenders for 7.5MW. The power produced will be sold to Torrent power, the sum generated will then be credited to SMC in its bills.

SMC also have plans to make Mughalsarsai office powered by solar. At present entire project is implemented on   trial basis. If the project achieves desired results, SMC has plans to frame a policy for usage of solar power at public buildings.

For the project planning a study was carried out by the civic body. Initially it was planning for 50 &25 KW rooftop but since it was to be connected to grid, hence 100Kw single plant was found more viable. It was concluded that with the increasing heat levels, Solar panels will prove to be beneficial deal for the civic body in long run. From last one year SMC has been mooting the installation of Solar panels for its vital and important buildings.

(Author: Rochit)

(Source: DNA India)

Loan Distribution easy in Renewable sector as said by Power Finance Corp.

Power Finance Corp. (POWF), , India’s largest state lender to electricity utilities, said a renewable-energy boom will support growth in loans as the country seeks to double clean-power capacity by 2017.

The Chairman Satnam Singh said in an interview in London that the Loan disbursal at Power Finance increased 31 percent in the year through March, compared with a 25 percent gain the previous year,. The lender expects to maintain that pace as growth in renewable energy counters a decline in coal-power projects.

As the most of the energy requirement in India is largely based on coal for most of its electricity output, has spurred development of its solar, wind and hydropower industries by offering federal and state incentives.

The Indian Prime Minister Manmohan Singh has earmarked more than $300 billion to expand the country’s electricity system, and the large amount of that investment will fund clean-power projects as lenders shun new fossil-fuel plants amid rising fuel costs. This shows that the shining days for the Renewables (Solar, hydro and wind etc.) sectors are approaching.

The process of loan distribution is QUICKER for the SOLAR and WIND sector as compared to the THERMAL-power plant as the Solar and wind energy plants are quicker to build, Mr. Satnam singh said and he also explained that the Loans granted by the Power Finance are counted as income-earning assets when they are disbursed. This is all because of the High Momentum gain of the Renewables projects in India.

Power Finance’s renewable-energy loans, less than 2 percent of its total loan book last year, may rise to about 10 or 12 percent in five years, Singh said.

Loan Disbursal

Power Finance has disbursed $418 million of loans to date. The New Delhi-based lender approved about $189 million of loans for renewables in fiscal 2011, according to Singh. Loans approved and still to be distributed in fiscal 2012 total $187 million, on top of $52 million already paid out, he said.

Taking a forecast of 9% economic growth our country India is seeking to increase clean-power capacity to almost 53,000 megawatts by 2017. Utilities are adding renewables projects as a hedge against inadequate fossil-fuel supplies in a nation where 56 percent of electricity is generated from coal.

To encourage the projects in the renewable energy sector the Power Finance is able to make loans for renewables at rates that are 25 basis points below the “normal” rates, Mr. Singh said.

The chairman Mr. Singh was in London for talks with banks to raise $250 million, which includes a $100 million three-year loan with a $150 million so-called greenshoe option, whereby amounts may be increased, he said.

 

(Author: Arif)

(Source: Indian Power Sector)

BHEL to develop photo voltaic (PV) cells and solar panels plant

The industrial player is now coming up in renewable energy sector in a big way. It is planning to set up, the first of its kind project for both   photovoltaic (PV) cells and solar panels plant. About 1000 crore investments will be done for the fabrication plant to be established in the first phase. This is an extension of the Trichy unit of BHEL to increase the capacities. The second phase will involve the establishment of solar cell unit for an investment of about 3000 crore.

It is to be noted that the plant is in Sakoli which is in Bhandara, the constituency of  Union heavy industries Minister Praful Patel.

The land is to be acquired on Mouda-NTPC model, estimated to be about 500 acre

The information was passed on  by Mr Patel when he was in Bhandara to inaugurate the ‘mega job fair’ where 3500 pass-outs from ITIs and polytechnics are to be interviewed by 110 representatives of automobile industries.

 

(Author: Rochit)

(Source: Times of India)

4000acre solar park only for photovoltaics

The State Government is planning a 4,000-acre solar park in Bijapur district..i.e government will be starting with 80-100MW and will be completing within 18 months. “Basic infrastructure like power evacuation support, water and roads will be provided,” Mr Kumar MD,KREDL  said.

KREDL is the state nodal agency for promoting renewable energy in the State, and will be involved in allotting projects at the park and facilitate implementation of projects.

Most projects that will come up there would be of private developers, Mr Kumar said, adding that the park would only have solar photovoltaic projects.

“We have also received about 500 MW worth applications to set up projects under the REC (Renewable Energy Certificates) mechanism and some of these projects will also come up in the park,” Mr Kumar added.

The State plans to add about 4,300 MW under the Karnataka Renewable Energy Policy 2009-14,  and proposes to bring in Rs 23,890 crore of investments.

 

(Author: Rochit)

(Source: The Business Line)