• CERC norms for renewable energy projects positive, need adequate transmission infra: ICRA

    •    Source: PTI, The Financial Express / New Delhi, 24th May 2018 Published on : 24th May 2018


      Power regulator CERC’s norms on inter-state connectivity for renewable energy (RE) projects are a positive for developers but adequacy of transmission infrastructure is critical, rating firm ICRA said today. The Central Electricity Regulatory Commission (CERC), on May 15, notified the procedure for grant of connectivity to RE-based projects proposing to use the inter-state transmission system (ISTS). The regulations have been notified amidst significant uncertainty over the grant of connectivity and long-term open access for winning developers in the recent wind power auctions held by the Solar Energy Corporation of India (SECI). “The notified regulations are positive for developers in the renewable energy sector, as they provide clarity on the procedure and timelines for securing approval for connectivity from the central transmission utility,” said Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings. “Moreover, the regulations accord priority to projects holding letter of award under the tariff-based competitive bidding for granting connectivity,” he said.

      ICRA said however that uncertainty on availability of adequate infrastructure to evacuate power from the wind power projects bid out by SECI over the past 15 months persists, given that the existing inter-state transmission infrastructure in the states with high wind potential may not be sufficient to provide connectivity to the 5.1 GW bid out by SECI so far. Further, the augmentation of transmission infrastructure would take about 24-36 months, whereas the winning developers must commission the wind power projects within 18 months from the date of issuance of letter of award/signing of PPAs (power purchase agreement), it added.

      The first wind auction scheme by the Ministry of New and Renewable Energy (MNRE) awarded in February 2017 created a rush of connectivity applicants at the Tirunelveli sub-station in Tamil Nadu and Bhuj sub-station in Gujarat, as most of the winners under this scheme propose to connect their projects to these substations. Since the applications received at both the substations were more than the capacity available and as connectivity is provided on first come first serve basis, the connectivity applicants that applied late would have been granted connectivity for an under-implementation or a new substation, it said.

      The construction of a new substation is expected to take much longer at 24-36 months against the SECI stipulated timeline of 18 months for commissioning the wind power projects, it added. “Thus, prolonged delays in securing connectivity would impact the project commissioning timelines and in turn viability of the projects for the winning developers, as delays beyond 6 months from scheduled commissioning date would result in reduction in PPA tariff,” Majumdar said.

  • CESC March quarter profit drops to Rs292 crore

    •    Source: Soumonty Kanungo, Live Mint / Kolkata, 24th May 2018 Published on : 24th May 2018


      Power utility provider CESC Ltd on Wednesday reported a marginal drop in its standalone net profit to Rs292 crore in the quarter ended March 2018, on the back of regulatory expenses. The company had reported a net profit of Rs295 crore a year ago.

      Revenue from operations increased 14% to Rs1,795 crore in the quarter against Rs1,572 crore in the same period the previous fiscal. Total expenses rose 10.29% to Rs1,757 crore from Rs1,593 crore.

      On Wednesday, the CESC board also appointed Debasish Banerjee as managing director (distribution) and Rabi Chowdhury as managing director (generation), both for a period of five years effective from 28 May. On expiry of his term as MD, Aniruddha Basu, has tendered his resignation as director with effect from 28 May.

      Williamson Magor group patriarch Brij Mohan Khaitan, an independent director, has also resigned from immediate effect, the company said in its regulatory filing with stock exchange. Profit before regulatory income/expense and tax stood at Rs86 crore in the January-March quarter compared to Rs38 crore in the same period last year, an increase of 126%. Net regulatory income during the quarter declined 16% to Rs286 crore as against Rs341 crore in the corresponding period.

      Regulatory expense as deferred tax in the fourth quarter stood at Rs95 crore compared to a regulatory income of Rs10 crore year ago.

      For 2017-18, the company reported a net profit of Rs871 crore compared to Rs863 crore in the previous fiscal. Revenue from operations during fiscal 2018 increased 7.65% to Rs7,773 crore compared to Rs7,220 crore in 2016-17.

      In a press statement, the company said its debt-equity ratio remained below 1, with transmission and distribution losses significantly lower than the previous fiscal. An interim dividend of Rs191.45 crore (Rs12 per equity share) was declared on 28 February 2018 and paid during the quarter.


  • Modi to lay foundation stones for AIIMS, power plant in Jharkhand

    •    Source: IANS, ETEnergyWorld / New Delhi, 24th May 2018 Published on : 24th May 2018


      Prime Minister Narendra Modi will on Friday lay the foundation stones for several projects, including an All India Institute of Medical Sciences (AIIMS) and a 4,000mw super thermal power plant, among others, an official said on Wednesday. The proposed projects involve a whopping Rs 27,212 crore.

      Modi would digitally lay foundation stone for 800x5mw super thermal power plant at Patratu in Ramgarh district. This will be joint venture between Patratu Thermal Power Plant Station (PTPS) and National Thermal Power Plant (NTPP). In the first phase, three units of 800mw each will be developed at a cost of Rs 18,668 crore. This will be completed by 2021-2022.

      "PM Modi He also lay foundation for Rs 1,103 crore AIIMS at Deoghar. The 750-bed AIIMS would be developed over 237 acres of land and it will be completed in next four years," Chief Minister Raghubar Das said.

      The Prime Minister will also lay foundation stone for renovating and restarting the urea plant of Hindustan Urbarak Rasayan Limited (HURL) at Sindri, Dhanbad. The estimated cost is around RS 700 crore. Besides, Modi will also lay foundation stones for Deoghar airport and a gas pipeline for distributing LPG in urban areas, and some other projects.

      "Prime Minister Narendra Modi's visit will prove to be a milestone in the history of development of Jharkhand," said Das. The Chief Minister on Wednesday visited Dhanbad to review the preparations ahead of Modi's visit on May 25.

  • Captive power players concerned over new draft rules for them

    •    Source: PTI, ETEnergyWorld / New Delhi, 24th May 2018 Published on : 24th May 2018


      Captive power producers body ICPPA today said the new draft rules for them are against the spirit and provisions of Electricity Act 2003 and deepen the woes of NPA-hit power sector.

      ICPPA said Electricity Act 2003 provided that Cross Subsidy Surcharge (CSS) should be abolished over the years. However, the proposed amendments are aimed at creating new avenue of earning CSS from captive users.

      "ICPPA welcomes the improvements from the draft of amendments issued in 2016. At the same time, the proposed changes in rules are in contradiction to basic spirit and provisions of Electricity Act-2003 and policies, and also other laws.

      "Applicability of these amendments on existing plants will make them sick while power sector is already struggling with NPAs (bad loans)," ICPPA Secretary Rajiv Agrawal told. The purpose of Group Captive Power Plants was to enable smaller industries without much financial power to get benefit of captive power, just like big industries, but the proposed amendments will stop that, he said.

      In a meeting with ICPPA in 2014, the power ministry agreed that the specific restrictive rule of proportionality needs repealing for making it practical because it forces multiple captive users linked to a CPP (captive power producer) to consume at least 51 per cent of generated power in proportion to its shareholding.

      On the contrary, Agrawal said, the proposed amendments make it draconian by imposing proportionality test on 100 per cent of power consumed by captive users even beyond 51 per cent power.

      "If any user is forced to draw lesser power share due to genuine reasons like closure of its end-use plant for maintenance then the whole power generated in a year will be treated as non-captive and state discoms will charge CSS on it.

      "It means all users of CPP will also have to pay the penalty, and thus the CPP may have to close down," he explained.  This is being done at the behest of state discoms who want that CPPs should close and captive users are forced to buy power from discoms at exorbitant rates. Already discoms employ tactics of restricting open access, he said.

      He was of the view that penalising and restricting captive power users and industries is not the solution to the financial mess of state power utilities.

      Indian Captive Power Producers Association (ICPPA) is in the process of firming up its feedback and comments on the draft amendments circulated by the power ministry. The ministry has sought comments on the draft till June 6, 2018.


  • New norms may lead to group captive plants equity, shareholding rejig

    •    Source: Sarita C Singh, ETEnergyWorld / New Delhi, 24th May 2018 Published on : 24th May 2018


      Over 5,000 Megawatt of existing captive power projects may have to correct their equity and shareholding structures after the government proposed to tighten guidelines following complaints of irregularities.

      The power ministry issued draft amendments in provisions relating to captive generating power plants on Tuesday evening. Experts said the ministry acted upon several complaints from stakeholders against dummy group captive plants. They said the government’s move is a key reform is to prevent misuse of particularly group captive power plants provisions. ET had on May 29 last year reported group captive power plants may have to rejig equity structure.

      Group captive power plants -- based on coal, solar and wind – are operational in large numbers in the states of Karnataka, Haryana, Rajasthan, Maharashtra and Tamil Nadu. The concept was evolved by industries to avoid the cross-subsidy charges levied on inter-state electricity sale and is seen as a threat to state discoms.

      Majority of the companies owning such group captive power plants, , particularly 5,000-mw renewable energy capacity in Tamil Nadu, might have to restructure their equity and shareholding pattern before April next year.

      The government has changed the definition of ‘Ownership’ for captive power plants that should now be in terms of value of capital along with the voting rights and not in terms of number of shares only.

      “For the purpose of assessing status as captive generating plant, a normative debt: equity ratio of 70:30 will be considered i.e. atleast 26% of the equity base of 30% of capital employed, in the form of equity share capital with voting rights (excluding equity share capital with differential voting rights) needs to be invested by captive users,” the proposed amendments read.

      The proposed amendments have huge implication on the captive power plants (CPPs) industry, Aditya Malpani, founder of Power Markets (India) said. “Among other proposed measures, consumer's equity contribution to be assessed on normative leverage of 70:30 may require existing CPPs to significantly change capital structure. In a progressive environment, may be government should let financing parameters to be guided by market forces,” he said.

      Former Central Electricity Authority Chairman Ravinder said, “This was a long due reform to prevent flagrant abuse of the intent of law to encourage group captive power plants by some IPPs, and it was causing financial loss to distribution companies.”

      The power ministry had received complaints from various sections that industries are misusing the concept by taking members through shallow investments of small amounts and without giving them voting rights.

      A power ministry official said due to lacunae in policy, some captive power generators misused the provision by issuing shares of lower denominations to captive users and with differential voting rights, a power ministry official said. As a result, the so called captive users were supplied power pro-rata to number of shares owned and not proportional to equity capital invested. In fact such group captive users having a nominal equity capital had no virtually no stake in the group captive plant.

  • Ease of power cuts clouds business climate in Maharashtra

    •    Source: Krishna Thevar, ETEnergyWorld / New Delhi, 24th May 2018 Published on : 24th May 2018


      Companies in Maharashtra’s Pune-Chakan belt, one of the most industrialised regions in the country, have faced more than 400 instances of power cuts in the past four years, which reflects that the government’s ease of doing business initiative hasn’t reached to all parts of the state.

      Industries in Maharashtra’s Pune-Chakan belt have informed the state government about the problems they face while doing business during an interaction held early this month at Chakan. An MNC from Japan, which had been in the state for the past five years, had recently signed an MoU with the state to further invest another Rs150 crore, but said it is facing issues with sudden power cuts.

      “We have had 400 instances of power outages in the past four years, our equipment are getting damaged, our application to switch from 33kv to 132 kv current has been pending for the past four months,” said a company executive in the interactive session, which included Pune collector Naval Kishore Ram and other officials.

      Not just power, the company has been facing problems with water as well, claiming that it has been trying to get water supply for its plant for the past four months but MIDC has not been able to provide it with any water, forcing it buy a tanker of water every hour. Another company that supplies spare parts to a big auto major in the country said how its costly robotic arms were getting damaged due to power cuts.

      “The electronic chips in the robotic arms get fired during sudden power cuts or voltage fluctuations. Getting these chips is not easy and we have to wait for 3-4 days to procure them — this hampers our operations. We have to run our operations on DG sets due to issues with the power supply,” said a company official, adding that running the company on DG sets was proving to be a strain on the company’s resources.

      Sudhir Mittal, of the Chakan Industries Association, complained how MIDC has only given the land for building companies and nothing else. “There is simply no other amenity provided, not a single park has been built in the MIDC zones,” said Mittal in the meeting.

      Naval Kishore Ram asked MIDC and MSEDCL officials to sort out the thorny issues within a time limit, and told officials that ease of doing business was an ongoing process and officials need to work in close collaboration with Industry representatives to tackle the issues.

      ET had highlighted in March the complaints of industries in the Pune-Chakan belt, and the authorities had called a meeting to look into the issues. The Pune-Chakan belt is important for the state as most of Maharashtra’s industries — around 65% — are concentrated in and around this belt.

  • Retrospective charges irk green power companies in Karnataka

    •    Source: Kaavya Chandrasekaran, ETEnergyWorld / Bengaluru, 24th May 2018 Published on : 24th May 2018


      Renewable energy developers in Karnataka are agitated over an order passed by the state power regulator imposing “transmission and wheeling charges” on them retrospectively – on solar projects from end-March 2017, on wind projects from October 2013 and on mini hydel projects from January 2015. This applies, however, only to “open access” transmission – those selling the power directly to a corporate entity, and not to a state utility.

      They claim that earlier orders of the Karnataka Electricity Regulatory Commission (KERC) had made it clear there would be no change in transmission and wheeling charges till end-March 2018, and the new order is a breach of that promise.

      So far, solar developers using open access were fully exempted from paying transmission and wheeling charges, while non-solar renewable power generators paid 5% of the tariff they charged for their power. KERC has now decreed that they should all pay 25% of the charges applicable to conventional power transmission.

      In its new order, passed in mid-May, it has noted that its earlier orders on the matter starting June 2005 had exempted or provided concessions to renewable energy developers for the first 10 years after commissioning of their projects because they “cannot compete with conventional sources of energy”. But the order adds that the situation had since changed. “With the cost of wind and solar reducing substantially, renewable energy sources can compete with conventional sources of energy,” it says, emphasizing that concessions were only being partially discontinued, since renewable energy developers were being asked to pay only 25% of what conventional power producers did.

      The same order also states that renewable energy developers would have to pay for any “line losses” due to their inability to provide the power they had promised, which they did not have to earlier. While this will further add to renewable developers’ costs, the order notes the additional charges were being imposed following pleas from the state discoms which “had expressed that concessional wheeling and banking charges for renewable energy projects, fixed by this Commission, were resulting in a strain on their finances.”

      “The state had promised exemption in principle for 10 years from 2008,” said a leading solar developer. “All projects that came up were on the basis of this expectation. Putting the economics aside, if a government explicitly promises something, it is wrong to change later. This is what scares off investors and lenders. We set up projects, signed power purchase agreements and got financing on the basis of a policy, which is now being changed midstream. It’s a violation of the promise retrospectively.”

      The solar developer claimed that the new order would increase his costs by Rs 1.19 per unit of power produced. However, in its detailed order, KERC has calculated that the increase on the imposition of transmission and wheeling charges would be 37 paise, while line loss costs would be another 14 paise, both in “the worst case scenario”. The burden on non-solar renewable energy developers would be even less as they were already paying 5% of their tariff.