World's 16 largest power grids need to invest $700 billion over the next 10 years

The world's 16 largest power grids need to invest $700 billion over the next 10 years to cope with a rising share of renewable energy in mature economies and with soaring demand in emerging nations, French power grid RTE said. 

The 16 grids, which transport 70 percent of the world's electricity demand, expect global demand to jump 50 percent by 2022, when renewable energy will equal the capacity of 250 medium-sized nuclear reactors.

"In North America and in Europe, the need for investment is a necessity to connect dozens of thousands of megawatts of solar and wind power," Dominique Maillard, head of RTE, said in an interview on the sidelines of a meeting of the GO 15 lobby, which unites grid operators from the United States, South Africa, China, France and other countries.

Coalgate: Double gain for power producers?

This is the question IIM-Ahmedabad director Samir Baruah, as an independent director on the CIL board, has raised ahead of a crucial management meeting on Friday to approve the model FSA.

"It would be myopic for (CIL) board to believe that coalgate has nothing to do with signing of FSAs. FSAs are clearly designed to bestow favours to chosen projects and producers of power. If they also appear to be those who received largesse from the government in terms of allotment of coal blocks then we would also be guilty of favours to the same set of projects/owners," Baruah wrote in an e-mail to CIL company secretary M Viswanathan on August 28.

The government had on April 3 taken the unusual step of issuing a presidential directive to CIL to sign FSAs with power projects guaranteeing to supply 80% of the contracted quantity or pay hefty penalty to project promoters. The directive was issued after the six independent directors, including Baruah, had blocked the FSA, doubting CIL's capability to meet the minimum supply guarantee.

Baruah has copied his e-mail to CIL chairman S Narsing Rao and other directors. He has also asked the company for "the entire list of power projects and owners of these projects who would be the customers for coal under FSAs" and another list of projects/owners who were allotted coal blocks by the government.

A comparison of the two lists would weed out whether same projects or promoters figure in the two lists and enjoying government largesse twice over. This is evident as Baruah puts the following posers before the CIL board:

a) "The conditions specified while allotting coal blocks - were they required to start production by certain date? What were these dates?

b) What is the status of these blocks? Has mining started in these blocks?

"There appears to be some confusion as to when these blocks were allotted. Were all the blocks allotted between 2006 and 2010, or were there some blocks that were allotted after 2010?"

The FSA and the minimum supply guarantee had been a contentious issue for the government. Pushed by private power producers, the Prime Minister's Office (PMO) has been pushing hard for signing of the FSA with the aim of rescuing projects that were either ready by December, 2010, or were expected to be commissioned by March, 2015, and have long-term power purchase agreements in place.

But opposition from independent directors and dispute with power producers over certain clauses has held up the agreements. Some 65 power projects with an aggregate 28,000 mw of generation capacity are awaiting agreement. The decision to ask CIL to sign the FSA was taken at the February 1st meeting of the PM's panel of secretaries set up to address power sector woes and was first reported by ToI on February 2nd .

France’s Alstom eyes more grid business revenue from India

Alstom T&D India, subsidiary of France-based Alstom, is targeting grid projects to increase its contribution to the Group’s grid sales revenue from current 15 per cent, Grégoire Poux-Guillaume, Alstom Grid President, told Business Line in Paris.

India would see more High-Voltage Direct Current (HVDC) transmission lines in the future, he said. 

At present , Alstom’s total sales revenue from grid business is €4 billion (Rs 28,000 crore). Of this, India contributes €600 million (Rs 4,000 crore).

Paris-headquartered Alstom is a leading global player in power generation, transmission and railway infrastructure. The group’s total sales revenue from all businesses is around €20 billion. Out of this, India contributes more than €1 billion.

Guillaume said that India is the largest single market for Alstom’s grid business and it continues to grow. He did not disclose an exact sales revenue figure the company targets to garner from India.

“We are moving fast with latest technologies and HVDC is going to see a growth in India,” said Rathin Basu, Country President and Managing Director of Alstom T&D India. Currently, India has 12,000-13,000 MW of power transmitted through HVDC lines out of 205,000 MW of total installed capacity.

By 2020, HVDC lines are expected to transmit around 30,000-40,000 MW, Basu said.

HVDC helps to transport bulk electricity to longer distances with less transmission losses. “HVDC lines are generally used for transporting power for more than 800 km. Alstom’s technology helps to transmit power will losses of just around 3 per cent,” Basu said.

Alstom on Monday announced winning of Rs 2,500-crore turnkey contract to set up converter stations at Champa in Chhattisgarh and Kurukshetra in Haryana. This is part of the 3,000 MW transmission line being set up by PowerGrid between these two States.

The Alstom converter station would collect electricity generated by independent power producers in Chhattisgarh, convert it to DC from AC. The transmission line, built by another company, would transport this DC power to Kurukshetra where the Alstom converter would change it to AC. The power would finally be injected to the Northern Grid.

“This advanced HVDC system will meet the bulk power transfer requirement from Chhattisgarh region - a hub of Independent Power Producers of thermal power - to the load centre located in the northern region of the country, through a 1,365 km transmission line, creating an “energy highway” of clean, efficient power,” the company said in a statement.

AP Govt will take steps necessary to increase power generation: CM

The Andhra Pradesh Chief Minister N. Kiran Kumar Reddy today said the Government will take all steps necessary to increase power generation in the State by sorting out problems.

Reviewing the status of thermal and mini-hydel power generation projects with developers and officials at Secretariat, he said that increase in capacity will benefit both the developers/entrepreneurs setting up projects and the State would also have access to power at reasonable rates.

The meeting was attended by the State Chief Secretary, Minnie Mathew, the Principal Secretary, Energy, M. Sahoo, Chairman of AP Transco, Hiralal Samariya, Managing Director of Nredcap, Kamalakar, and power project developers.

About 15 big thermal power projects are at various stages of implementation and expected to be ready during the XII Plan period. Together, they have total capacity of 24,120 MW. In some of them, work had commenced, for others land acquisition is under way.

Many mini-hydel project developers are ready to establish their projects once the policy and tariffs are finalised. The Chief Minister suggested the establishment of Natyramam Centre of Excellence for Performing Arts. The proposed centre will seek to preserve, enrich and promote the native art traditions while helping them to evolve and adopt to the modern times.

It will cover Kuchipudi, Andhranatyam, temple dances, Bharatnatyam, Yakshaganam, folk dances, dance, literature and music. It is proposed to develop Natyaramam as a University covering diploma courses, graduate and post-graduate degrees.

Suitable land would be allotted to this premier Institute near Taramati-Baradari located within city limits. He also agreed to constitute a committee to examine and suggest the measures to be taken up for resolving the weavers’ problems in the State.

L&T focuses on power gear, solar EPC to beat slowdown

Larsen & Toubro (L&T), India’s largest engineering and construction company, plans to focus on power equipment business, EPC services for solar power plants and ship fabrication to beat the slowdown in its core engineering and construction business.

AM Naik, chairman of L&T said even though the firm lost some of the power equipment bids from NTPC, the Bombay Stock Exchange (BSE) listed firm is well prepared and ‘there is no doubt on our competitiveness.’ “There are few bids for power equipment coming during next four to five months and we are well prepared for it. We have orders for 25,000 mw (mega watt) capacity till January 2013, and hope to earn a 15-16 per cent return on the capital employed,” said Naik.

He said India has the capacity to meet the power requirements for boiler, turbine and generator (BTG) segment to set up electricity generating units. “If the Chinese import stops, we have enough capacity to meet the local demand with better quality and cost,” added Naik.

The company is also very hopeful of demand for engineering, procurement and construction (EPC) services for solar power-based electricity projects with increasing capacity coming on stream. Solar power projects are going to be in demand in coming years with technological advancement bringing down the cost of solar power generation, feel experts.

“I think price parity with conventional power projects can be achieved in the next five to six years. We would be well prepared to take the EPC job as the demand increases. However, we will not go into generation business to avoid conflict with our customers,” Naik said. The company also does not plan to venture into manufacture of solar thin films for solar photovoltaic generation.

The company is extremely hopeful of capitalising on healthy demand in the defense business catering to warships, frigates, in addition to speed boats, for which, it already has received orders. “We have requested the government to allow the private sector to participate in development of these vessels. We expect that defense would be one of the brightest divisions of L&T in next five to six years and the results would be there to see after 2020,” said Naik.

The company is also planning to incorporate nano-technology for manufacturing highly classified missile system units and wind mill components.  It plans to fund its growth initiatives by unlocking value in some of its assets under its L&T Infrastructure Development Projects (IDPL) subsidiary, especially, Dhamra Port in the next three months time by selling part of the stake to strategic investors. 

NY adopts CO2 rules that limit new coal power plants

 New York environmental regulators on Thursday adopted carbon dioxide emissions (CO2) limits for new and expanded power plants that are slightly stricter than proposed federal limits and make it nearly impossible to build a new coal unit in the state.

There are no coal plants under active development in New York, which currently has about two dozen coal units -- some very old, small and rarely operated -- capable of generating about 2,800 megawatts (MW) of power.

"By preventing new high-carbon sources of energy, this performance standard will serve to further minimize the power sector's contribution to climate change, which poses a substantial threat to public health and the environment," Joseph Martens, Commissioner of the New York State Department of Environmental Conservation (DEC), said in a release.

The new regulation will take effect July 12.

The New York regulations establish CO2 emission limits for proposed new major power plants that have a generating capacity of at least 25 MW, and for increases in capacity of at least 25 MW at existing facilities.

One megawatt can power about 1,000 homes.

The New York regulations set a CO2 limit of 925 lbs per megawatt-hour for most new or expanded base load fossil fuel-fired plants, and a limit of 1450 lbs/MWh for simple-cycle combustion turbines.

Energy analysts have said coal plants produce more than 1000 lbs/MWh of CO2, so the rules would prevent the construction of new coal plants unless they had carbon capture and storage systems installed.

Base load plants, which have historically been coal and nuclear powered, usually operate 24 hours a day, seven days a week. Simple-cycle natural gas turbines generally operate during the summer and winter peaks.

But with natural gas prices touching 10-year lows this spring, many utilities have opted to turn to combined-cycle gas-fired units to generate around-the-clock power instead of coal.

After the DEC proposed its CO2 regulation in January, the U.S. EPA in April proposed a federal CO2 New Source Performance Standard under the federal Clean Air Act.

EPA's proposal contains a primary CO2 emission standard of 1000 lbs/MWh.

New York's biggest coal plants are owned by NRG Energy Inc , which is looking to repower or mothball its plants, and units of AES Corp and Dynegy Inc, which are involved in bankruptcy proceedings.

Renewables half of new power generation globally

A series of reports from the International Renewable Energy Agency (IRENA) show renewable power generation, including wind and solar PV, is becoming increasingly competitive and now accounts for half of all new electricity generation capacity additions worldwide 


One of a series of analyses released by IRENA at its Council meeting in Abu Dhabi states crystalline solar panel costs have plummeted 60% in the last two years and cumulative installed capacity for solar PV grew by over 70% in 2011. IRENA says if this growth maintained or increased, further cost reductions will occur.
In 2011, Germany had the lowest installed PV system costs in the small-scalehome solar power market, averaging $USD 3.80/Watt before subsidies for crystalline silicon solar panel based systems. In Italy, Spain, Portugal and the United States the average installed cost in 2011 before subsidies was between USD 5.7 to USD 5.8/W. 
  
While thin-film solar panel based utility-scale systems are often perceived to cost far less than facilities consisting of crystalline silicon modules, this is not always the case. Thin-film utility-scale systems had an average installed cost of around USD 3.9/W in 2010, not much less than the average cost of a residential solar power systems in Germany the following year.
  
In regard to wind power, IRENA states onshore wind has become a highly competitive, with the cost of electricity from prime sites in North America in the range of USD 0.04-0.05/kWh in 2010. The organisation says this is competitive with or cheaper than gas-fired generation and has been achieved even though in China wind turbine costs are 50-60% cheaper than in North America.

New utility for power transmission planning in Karnataka

The State is set to form a new utility for power transmission planning which will be carved out of Karnataka Power Transmission Corporation Limited (KPTCL). The new utility State Transmission Utility  will come into effect from January 6, 2013, according to KPTCL Managing Director P. Ravikumar.

Disclosing this to mediapersons after the public hearing held by the State power regulator in Bangalore on the transmission tariff hike plea sought by the KPTCL, Mr. Ravikumar pointed out that presently KPTCL was looking into transmission as well as transmission planning.

However, from next January, the STU will look into transmission planning. Other organisations including the KPTCL would have to bid for taking up transmission tasks, he noted.

Such a task had already been taken up at the national level, he said and noted that the States had been now given deadlines to implement the same.

With this, the power reforms are proceeding one more step. It may be noted that the Karnataka Electricity Board which was looking into all aspects of electricity earlier was bifurcated to form the Karnataka Power Corporation Limited that looks into power generation. Later, the KEB was unbundled further to separate transmission from distribution.

This resulted in formation of KPTCL and five Escoms. Now the State Transmission Utility is set to be carved out of the KPTCL.

Meanwhile, participating at the hearing, Mr. Ravikumar noted that the corporation was facing several challenges including that of getting clearances for setting up new power lines. It was difficult to get land from individuals for setting up transmission lines.

Solar power is a bit dicey; it depends on the regulatory environment: S Ramakrishnan, TataPower

It is extremely difficult to tell somebody ‘please increase my rates'. We are trying to make them understand that without a tariff revision we would have to go strictly by the contract as per the legal requirement, which means we have to make the plant available only for 80 per cent of the time. — Mr S. Ramakrishnan, ED, Tata Power

Tata Power has commissioned the first ultra mega power project in the country. The first of the five 800 MW of the Mundra 4,000-MW power plant, based on imported coal, is operational. However, its profitability is expected to take a hit with Indonesia directing that all coal shipped out of the country be benchmarked to international prices (from September last year).

Mr S. Ramakrishnan, Executive Director, Tata Power, spoke to Business Line on the overall power scenario, the impact of coal, pricing and the steps taken by Tata Power to curb losses on the fuel front.

The Mundra project is said to be one of the best in terms of project funding. How did you go about it?

At that time, to raise a huge amount for one project was not easy. We had to use multilaterals such as IDFC and ADB to fund the project. We had a foreign exchange content of almost 60 per cent. Most of our imports were funded by forex loans.

You had said that a mix of low grade coal is being attempted at Mundra to bring down fuel cost?

We have just commissioned the plant and are using some low grade imported coal. But one has to see whether the low grade coal price will be set off by increased consumption. Now that we have commissioned the plant, we will know how much we lose in inefficiencies. We believe it will still be beneficial, but we have to wait and see.

What is the spread in your current portfolio?

Of 5,297 MW, hydro-electric is about 450 MW , wind-375 MW , solar-30 MW , gas-200 MW , and oil -500 MW. The rest is thermal.

And, the target Tata Power has set for solar and wind power…

Ideally, we wish to do 100 MW in wind a year. We had originally said we wanted to do 500 MW . Our idea now is to do 100-150 MW if the regulation and REC mechanism work favourably. Solar is a bit dicey. It depends on the regulatory environment. The Jawaharlal Nehru National Solar Mission is very competitive. I don't know whether we can make money. Moreover, State regulatory processes are being reset. Prices are being reset as State regulators have now found that the prices they have set are high. Also, some are thinking whether they should set a price or allow competitive bidding. Ideally, we want to do about 25 MW of solar every year.

What are the risks if tariffs keep dropping, as the older solar plants command a higher tariff?

The only risk is if the buyer of power does not want to honour your power purchase agreement. Then you have a problem, as others will ask you to supply at the current rates. However, Tata Power is only dealing with Gujarat and its own distribution companies.

So, Tata Power will not have any issues?

I hope so; even though we have tied up with our own companies, everything is regulated. Since the regulators have approved the power purchase agreements, they will honour the tariff commitments.

Will Tata Power hold back on solar for the time being?

We have set up 25 MW in Gujarat and it is doing well. We have three MW in Maharashtra where the tariff is good but generation has to pick up. We have bid for four or five MW in Karnataka. We have land in Rajasthan which does not have evacuation facilities. Once that is up, we will bid. And, we are also talking to Tata Chemicals for more land.

What are your expansion plans in Maithon and Mundra?

Land acquisition is time consuming. So, we are thinking of expanding in Maithon and Mundra where we have land. We are looking at two of 660 MW in Maithon and two of 800 MW in Mundra. Environment studies are on. Though the additional 1600 MW in Mundra will also be based on imported coal, we need not sell it Rs 2.26 per unit — the power purchase agreement tariff inked with the procurers. However, environment clearance for Mundra expansion is important. We have the in-principle approval to conduct environment studies.

You were talking of transfer of coal assets to Coastal Gujarat Power Ltd (SPV for Mundra) to provide the plant financial support. Has it happened?

We are studying the various implications. What we are trying to tell the lenders is that the financial strength of the coal holding company will be made available to Coastal Gujarat. Whether it can be made available through transfer of shares or some other method of providing the financial support is also being looked into. We are also talking to government to ensure we have an import policy on coal and how the pricing of power for coal projects can be done.

Have you spoken to your power procurers for increase in tariff?

It is extremely difficult to tell somebody ‘please increase my rates'. We are trying to make them understand that without a tariff revision we would have to go strictly by the contract as per the legal requirement, which means we have to make the plant available only for 80 per cent of the time. We do not have to make it available for 92 per cent, which we can. We have told them, even if their power purchase cost of Rs 2.26 per unit becomes Rs 3, it still is competitive as far as tariffs go today.

India likely to see 76,000 MW capacity addition in 12th Plan

The country is projected to see capacity addition of 76,000 MW during the next Five-Year Plan period ending March 2017, Minister of State for Power K C Venugopal today said.

The power sector, grappling with acute fuel shortages, is expected to achieve capacity addition of around 54,000 MW in the 2007-12 Plan period."Looking ahead, it has been estimated that a capacity addition of about 76,000 MW is required during the12th Plan. Capacity addition envisaged during the 13th Plan is about 93,000 MW," Venugopal said at a function here to give away national awards for meritorious performance in power sector.

In the current Plan period, about 52,000 MW capacity has been added so far and another 2,000 MW is anticipated this month, he noted.

The government had earlier set a target for adding 78,577 MW of capacity in the 11th Five-Year Plan period and it was scaled down to 62,000 MW. Presently, the country has an installed power generation capacity of nearly 1,70,000 MW. Speaking on the occasion, Power Secretary P Uma Shankar said hydro power projects should be developed at a faster pace than being done at present.

Power Minister Sushilkumar Shinde was also present.

Gujarat has made remarkable achievements in the energy sector'

 Gujarat had made remarkable achievements in the energy sector in the last one decade, Minister of State for Energy, Saurabh Patel, claimed in the state Assembly.

"Gujarat is the only state where there is no load shedding. The policies framed for solar, wind, and tidal energy have helped the state become number one," Patel said, in reply to discussion on budgetary demands for Energy and Petroleum department.According to Patel, the state is set to have power production capacity of 18,457 MW by next year.

"By May this year, the state is expected to have 600 MW of solar power generation capacity, the highest by any state in the nation," Patel said.

The government had provided Rs 50 crore in FY 2012-13 budget for 50 MW power generation from tidal and geo-thermal sources, he said.

Patel also told the house that the state had installed capacity of 3,831 MW through gas-fired power plants. Due to shortfall in natural gas supply from Centre, the state was incurring losses to the tune of Rs 3,600 crore, he alleged.

Power situation in TN to improve in next 6 months

Power situation in Tamil Nadu is expected to ease in next six months with the commissioning of North Madras and third unit of Mettur thermal power stations, the Highways Minister, Mr Edapadi Palanisamy, has said.

Within six months, the North Madras power plant (first stage) would be commissioned contributing 600 MW to the state grid, he said at an AIADMK function in Mecheri after distributing welfare assistance to several people

Power output to top 14,300MW in 2 years: Haryana

The Haryana government on Thursday claimed that the state was hopeful of pushing its installed power generation capacity by around 5,000 megawatts in the next two years. It claimed that the capacity was likely to touch 14,374MW by 2013-14.

This was disclosed by Tarun Bajaj, managing director of the state's electricity transmission company, Haryana Vidyut Prasaran Nigam (HVPN), at the technical coordination sub-committee (TCC) meeting of the Northern Regional Power Committee. Bajaj said that the peak power demand in the state was hovering around 5,000MW at present, which translates into 1,000 lakh units a day.

By the end of March the demand is expected to increase to 11,155MW with a 15% annual growth. There are indications that the state's own generation capacity is likely to increase to 9,700MW by March end.

Bajaj claimed that the state has achieved the targets set in the 10th Five-Year Plan which shows that Haryana is moving ahead to become power-surplus. A government spokesperson said that the main reason behind high growth of power demand in Haryana and particularly in the NCR cities of Haryana is their proximity to Delhi.

Bajaj said that Haryana has entered a new phase of developing and augmenting power transmission system with the signing of the first ever transmission agreement in the country with viability gap funding (VGF) support from the Central government. This is also the first project in public-private-partnership mode in any sector in Haryana with VGF support.

He said that the mounting demand of power, expanding network, voltage upgradation and technological sophistication called for bigger financial commitments. The need was felt for attracting private finance and technical inputs by taking the PPP route for development construction and operation and maintenance of power projects.

Later in the day, Haryana Governor Jagannath Pahadia also told the state Assembly that a nuclear power plant of 2,800MW capacity (four units with 700MW each) is being set up at Gorakhpur village in Fatehabad district. The Nuclear Power Corporation of India Ltd (NPCIL) has undertaken pre-project activities for two units of 700MW each which are proposed to be set up in Phase I of the project. The land acquisition proceedings are in progress.

Pahadia, who was delivering his address at the opening of the budget session of Haryana Vidhan Sabha said that there has been a huge increase in the supply of power to consumers on an average daily basis as it has increased to 1,009 lakh units as against 578 lakh units in 2004-05.

Captive power units: Ministry urges CEA to get details

 

To gauge the progress of captive power plants, the Government has asked developers to furnish information regarding sourcing of equipment, and land and water requirement for these projects by February 29. The Ministry of Power has asked the Central Electricity Authority (CEA) to gather updated information regarding land acquisition and order for main plant equipment from all the developers of captive power plants by February 29, as per information on the CEA website.

Captive Power Plants (CPP) are the plants which core sector industries, like steel and cement, build to meet their own electricity needs.

The details sought by the government include size of the land for the proposed CPP, requirement of end-use plant in acres, besides water needed for the proposed CPP in cusecs. It also includes status of the EPC (engineering procurement construction) contract indicating actual or proposed dates of notice inviting tenders, award of contracts etc.

The developers have to provide details of existing coal linkage and whether the company has applied for any additional coal requirement for the CPP.

CEA should also furnish details from the company regarding financial closure or further investment in the project.

“If the company plans to connect the plant to the National Grid or not, a disclosure has to be made in that regard as well,” it added.

Power sector looking better, says Tecpro chief

Things are looking better in the power sector, says Mr A. K. Bishnoi, Chairman and Managing Director of Tecpro Systems Ltd, a large supplier of ‘balance of plant' equipment to power projects.

To substantiate this, he points to the fact that three tenders for power projects, in three different states, were opened in the last one month Singareni Colleries (2 x 660 MW), Bhusawal, Mahagenco (1 x 600 MW) and Shri Singaji Thermal Power (2 x 66 MW) in Madhya Pradesh.

This upbeat statement comes on the back of the company booking orders worth close to Rs 1,800 crore in the first nine months of the current year, most of them from the power sector. Tecpro has orders on hand worth Rs 4,600 crore. Mr Bishnoi said that the company was L1 (the best bidder) in tenders worth Rs 750 crore.

In addition, the ‘live tenders'  or the tenders the company is participating in  add up to Rs 10,000 crore. Most of these, but not all, are from the power sector.

“It has to happen,” Mr Bishnoi told Business Line, referring to the inevitability of the power sector picking up. In this context, he also pointed out that the judgement had been reserved at the Supreme Court in the case relating to NTPC Ltd's first batch tender for equipment for 9 units of 660 MW. The issue has got stuck because a company that lost out in the tendering  Ansaldo decided to settle the matter in the Courts.

When this comes out, it would be a further fillip to the power sector, Mr Bishnoi said.

Tecpro on Tuesday announced its third quarter results. The company made a net profit of Rs 14.68 crore on a turnover of Rs 626 crore compared with Rs 20 crore on Rs 462 crore. For the nine-month period ended December 31, Techpro's turnover was Rs 1,429 crore (Rs 1,013 crore), and net profit, Rs 29 crore (Rs 26.5 crore).

Mr Bishnoi said that the company's topline would grow 35 per cent in 2011-12.

Smart Grid Investments to Jump in 2012

U.S. utility executives expect investment in so-called "smart grid" technologies and services to rise in 2012, reflecting market-wide interest in driving more efficient and sustainable energy consumption.

According to a survey released this week by research firm Zpryme, 80 percent of energy and utility executives believe overall investment in smart grid technologies will grow this year. Even more (90 percent) believe that support from the federal government is "very important" to the development of a national smart grid infrastructure.

"Utility investments will increase because smart grid technology is the only rational long term strategy to manage the complex requirements of renewables integration, government regulation, emissions requirements and increased stakeholder demands," Phil Davis, senior manager at Schneider Electric Demand Response Resource Center, told Zpryme.

Simultaneously, Davis added, utility companies will need to maintain a degree of reliability and predictability that customers, employees and investors have come to expect.

These imperatives are enhanced by growing demand for clean energy. In California, for example, state utilities are now required to cull one-third of their energy from renewable sources by 2020.

Power Finance Corporation issues draft guidelines for power drawal

Distribution licensees will now have to procure short-term power (less than or equal to one year) through competitive bidding say the draft guidelines of the Power Finance Corporation (PFC). This is expected to reduce the overall cost of procurement of power.

The short-term power market presently comprises 10 per cent of the total electricity procured in India. PFC has convened a meeting with the representatives of distribution licensees on February 10 to discuss the modalities. Currently, the per unit rate of short-term power procurement stands at Rs 3.80 to Rs 4.

The draft guidelines, however, do not include the power exchanges. The Indian Energy Exchange has asked PFC to make power exchanges the preferred platform for transaction under competitive bidding in short-term power market for the period when the exchange contracts are available.

A PFC official told Business Standard: “Provisions of Electricity Act, 2003, are meant to encourage competition in the power sector. Cost of power purchase constitutes the largest cost element for distribution licensees which are currently reeling under heavy losses. Short-term procurement is crucial to the overall power purchase costs. The draft guidelines are issued with an objective to facilitate transparency and fairness in procurement processes; facilitate reduction of information and approach asymmetries for various bidders; and harness diverse sources of power such as co-generation, captive, wind power.”
The official said the guidelines have been issued under the provisions of Section 63 of the Electricity Act, 2003.
According to the draft guidelines, the minimum number of bidders should be two other than genco(s) owned (51 per cent or more) by the state governments. If the number of bidders responding to the request for proposal is less than two and procurer still wants to continue with the bidding process, the same may be done with the consent of the appropriate commission. This is to ensure competitiveness.
Maharashtra State Electricity Distribution Company welcomed the draft guidelines and clarified that it was procuring short-term power through competitive bidding and not through negotiations route.
“These guidelines will be applicable purely to those distribution licensees which are still resorting to negotiations route for short-term power purchases instead of competitive bidding,” the official observed.

Five thrust areas identified to ease power sector woes

The secretarial panel looking into the woes of the power sector has identified five key issues, including fuel supply constraints, for immediate execution to resolve the crisis.

A power sector official said approximately 18,500 megawatt of projects commissioned after March 2009 are likely to generate only 55 per cent of their actual output due to fuel (coal) supply crunch.

The Committee of Secretaries (CoS) headed by the Principal Secretary to the Prime Minister, Mr M. Pulok Chatterjee, was constituted following a meeting of the private power sector honchos on January 18. For the core areas identified, the panel will review the events that take place on or before February end, an official said.

Securing adequate coal and gas and getting compensation by way of fuel (coal/gas) acquired through e-auction and/or imports for power generation, is the most critical challenge faced by the developers today, the official said.

On the domestic coal supply situation, the panel will review the status on fuel supply agreements to be signed by Coal India for all projects up to the 11th Plan period (March 31, 2012).

Coal India has been unwilling to commit delivery of coal confirming to sanctioned linkage quantity for the last two years, the official said, adding no new Fuel Supply Agreement has been signed with the private developers since March 2009.

For allocation of gas for gas-based power plants, the power sector has been seeking a meeting of the empowered group of ministers (EGoM) on gas which has not met for more than two years. Nearly 8,000 megawatt of gas-based power projects ready for commissioning in 11th Plan was awaiting allocation. The group is to meet on February 13.

The power sector players were also seeking meeting of EGoM on UMPP to consider imported coal issues for Tata's Mundra 4,000 megawatt project and Reliance's (Anil Ambani Group) Krishnapatanam 4,000 megawatt project as well as for modifications of standard bid documents for forthcoming UMPPs. Sources said the EGoM is expected to meet either on February 20 or 24.

The sector also pressed for a meeting of Group of Ministers on Coal to consider final forest clearances for eight different blocks recommended by Prime Minister's Office in 2010, which includes Chhatrasal block linked with Sasan UMPP and Mahan block for Essar and Birla group.

Besides, they also wanted the Government to consider a policy of maximising coal production from captive coal blocks to enhance domestic production.

The Prime Minister's Office recently had directed the Ministry of Coal to put its suo motu policy for use of surplus coal on hold and asked it to hold inter-ministerial consultations to finalise the same.