INDIAN POWER SECTOR

Indian Power Sector- October 2021

The Indian power sector has witnessed a multifaceted growth in its entire spectrum during that last month compared to the previous year. The peak demand for electricity is 175GW as per the statistics of the National Load Despatch Centre (NLDC) which facilitates competitive and efficient wholesale electricity markets and administers settlement systems in India. The latest data shows the peak demand is higher by 3% than that of the previous year. Similar growth is observed for electricity consumption also which reached 114Billion Units. The quantum of electricity traded during this period including the green market trade of 375 MU comes to 9165MU. This has shown a substantial increase of 36% compared to that of the same period in 2020.

A new process ‘Green Day-ahead Market (GDAM), a marketplace for trading renewable power on a day-ahead basis has been commenced on 25th October 2021, to achieve a trade of green energy to the tune of 450GW by 2030. The day market recorded trade of 6568MU in October 2021, which is 19% higher than the previous year. The average price of electricity was INR 8/unit (0.11 USD) though the average for the first two weeks was INR 12. (0.16 USD) More Availability of domestic coal has helped a correction in average price in two weeks’ time. Power Purchase Agreement (PPA) for the term ahead market was 225 MU during this period. A similar increase has been recorded in the open market, with an increase of 149% figuring 1999MU, priced at an average of INR 6.91(0.092 USD) per unit.373 MU electricity agreement was executed in the green market during this month, of which 24.8 MU was under Green Day Ahead Market. This also shows an upward trend of 67% and 46 distribution companies in India mainly from the states of West Bengal. Bihar, Haryana, Telangana, Karnataka, Uttar Pradesh, Maharashtra, Punjab Tamil Nadu, Madhya Pradesh gained the advantage of the Green Market. The Power Exchange has started trading energy savings certificates in October achieving more than forty-three thousand certificates.
Regulations
India is witnessing an increase in Renewable Energy (RE) sources in large quantum and grid security is of prime importance. The Discoms has another target of meeting RPO obligation and hence tie-up to create a win-win proposition with Thermal Stations and Renewable Energy sources and also operating battery storage system in tandem with RE sources. New Regulations covering the above process has been released by the Ministry of Power, Government of India. The revised guidelines will enable to schedule RE prudently and may result in the reduction of carbon emission. Another regulation issued by the Government of India during this period is the proper utilization of fly ash released by the Thermal Power Stations. According to the guidelines, now in force, the thermal power stations follow a transparent bidding process to transport fly ash to the bidder and should supply fly ash free of cost if transportation is arranged by the bidder. This is to avoid bulk storage of fly ash at Thermal Power Stations.
The increase in the price of both domestic and imported coal, increased generation cost by way of higher fuel cost, the expenditure increase of DIscoms in power-purchase expense etc. has crippled the Indian Power Sector to a great extent and draft guidelines of Ministry of Power suggested a consequential increase in electricity tariff on account of the crisis in the coal sector. Another development during the period was to dissolve the five Regional Power Committee (Transmission-Planning) for planning and processing interstate transmission networks aimed for the development of this sector. Hitherto before implementing the inter-state transmission system (ISTS), discussions were carried out with RPC and RPC(Txn.-Plg.).This situation is believed to have resulted in delaying the planning and approval of projects. The Government of India has concluded that this would not suit the Renewable Energy development of the country and decided to dispense with the practice of processing at five RPO(Txn.-Plg.).For ISTS, planning and execution discussion etc will be arranged with RPCs in future.
Economic Issues of Power Sector in India.
The Mini Ratna Company, NHPC Ltd has recorded an increase of 10% in the net income during the first half of the year, ending on 30th September 2021 achieving 22.17 Billion INR (306 Million USD) as against 20.2 Billion INR(270 Million USD) during the first half of the previous year. Another state-owned company that elevated its status to a Maharatna Company, the Power Finance Corporation Ltd.(PFC) recorded an increase in profit after Tax (PAT) by 22% and NPA has been reduced from 2.6% to 1.7%. The net income of Power Grid Corporation of India Limited(POWERGRID), a ‘Maharatna’ Public Sector Enterprise of Govt. of India has recorded at 33.76 Billion INR(448.1 Million USD) with an increase of 9.12% that of the last year.
The Tamil Nadu Electricity Regulatory Commission(TNERC) has fixed generic tariffs for grid-connected solar plants up to 10KW as INR 3.61/unit (0.048USD) and that for plants having a capacity 11KW to 150 KW as INR 3.37/Unit. (0.045USD) This rate has validity up to March 31, 2023, and does not apply to the PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) Scheme aimed at ensuring energy security for farmers in India, along with honouring India’s commitment to increase the share of installed capacity of electricity from non-fossil-fuel sources to 40% by 2030, for which separate tariff orders will be issued by the TNERC.
Generation-Transmission-Distribution
The Government has directed to shut down operations of six Thermal Power Stations located around Delhi as a measure to control air pollution. The Ministry of Environment has also directed restrictions on truck movement to the National Capital Region of Delhi (NCR- Delhi) except that carrying essential commodities and encourage officials to pursue work from home again. The Apex Court in India has called for restrictions on vehicular movement and industrial activities in and around the capital city on the same issue.
During this period, Bharat Heavy Electricals Ltd.(BHEL) an engineering and manufacturing company in India engaged in the design, engineering, construction, testing, commissioning and servicing of power plant has invited tender to operate and maintain 1.1MW Rooftop Solar Plants(RTS) in Uttar Pradesh and Jharkhand This includes 630KW RTS in Kanpur,75KW at Meerut and 400KW at Ranchi. The prospective bidders have to calibrate their testing pieces of equipment at National Accreditation Board for Testing and Calibration Laboratories (NABL, A Constituent Board of Quality Council of India) once a year as a measure to standardise the power sector. Another achievement is the signing of PPA by Solar Energy Corporation of India Ltd (SECI, the only Central PSU dedicated to the solar energy sector in India.) for a capacity of 5.28GW up to October,31,2021 in the RE sector. The capacity of total signed PPA comes to 30GW and recorded almost a growth of 100% yearly. As per PPA, provision for RE power of 19 Billion Units to eight states in India for the next 25 years is envisaged. Another major initiative of SECI was starting the pilot project of a battery Energy storage system having a capacity of 1GW. For this, Both SECI and MNRE has conducted a combined brainstorming session culminating in various decisions. Project bidders and Original Equipment Manufacturers (OEM) also participated in the deliberations.
Meanwhile, the Prime Minister of India has attended the meeting at the Conference of the Parties (Cop-26). 26th confirmation of the Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC)brings together the 197 members of the convention to take a concerted effort on climate change. Prime Minister has announced the target of India to reach zero carbon emission by 2070. By 2030, it is expected to get 50% of energy needs from RE sources reducing 1 billion carbon equivalents. Greenhouse gas (GHG) reducing carbon emission is also envisaged. Also, by 2030, the Renewable energy share would be increased to 500 GW as against the earlier target of 450GW. Guidelines to achieve these targets will be released by the Government of India soon. Based on the RE target of 500GW, by the Prime minister, the Ministry of Power has decided to Extend the RPO obligation target up to 2030, from the present target date of 2022. It is expected to add RE sources in the Solar and wind sector and 70-100GW from the hydroelectric sector. Presently India has a Renewable Energy capacity of 149GW including hydroelectric stations and another 63 GW in pipeline.
Inox Wind has successfully done bid for 150MW wind energy from NTPC Renewable Energy Ltd. This will be executed at the Dayapar site in District Bhuj in the State of Gujarat on a turnkey basis and would be commissioned by 2023. The infrastructure for evacuation of power with ISTS network and 220 KV substation at Dayapar, have been completed. The project would be implemented as plug and play basis.O&M of the project will be undertaken by Inox Wind.
Coal Sector.
The share of coal to the Power sector during October 2020 was 46.98 Million tonnes and this year it was 59.73million tonnes. However, the coal allocation to sponge Iron has been reduced by 29% resulting in 0.46 Million tonnes only, so is the reduction in the cement manufacturing sector. Ministry of Power has directed Coal India Ltd and its subsidiaries to ensure that a sufficient quantity of coal for at least 18 days of operation has to be kept as reserve.
Thermal
Another PSU in India GAIL(India) Ltd expresses that Saving the environment is not an additional task for them and considers their commitment and responsibility to ensure survival. Taking a cue from this moto, GAIL is on the process of developing the Green Hydrogen plant from its natural gas business as a carbon-free fuel. NTPC Vidyut Vyapar Nigam (NVVN) Limited, a wholly-owned subsidiary of NTPC Ltd, has signed an agreement with NTPC Vidyut Vyapar Nigam (NVVN) Limited for setting up a Waste to Energy (WTE) plant estimating 1.8 Billion INR (25Million USD) As per the proposal, the plant can segregate 600-800 tonne waste/day. The refined waste would be processed, feed to reactor, producing torrefied Coal. This call can be blended with ordinary coal in use for thermal power stations for generating electricity. The plant once commissioned would be a 10MW capacity and is expected to be commissioned within a year. Varanasi Nagar Nigam has earmarked about 20 acres of land at Ramana In Madhyapradesh. for setting up the plant.
The Electricity Act, 2003, was a milestone in the reform journey. The major change the power sector looking forward is a change in policy only and resources are plenty and underutilized. However, power distribution continues to be the weakest link in the supply chain of the power sector, with many Discoms facing bankruptcy. The multifaceted issue of losses and Power theft has crippled the sector and growing as a cancerous element and expected that a new perception would emerge in the Distribution sector to strengthen the last constituent, but the least attended component of the sector. India needs progressive change in policies and privatisation is not a panacea for the ailment of the sector. It is expected that the Government would extend equal concentration to this sector also as did for Renewable Energy sector in previous years.

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