Telangana is investing in Power and infrastructure for the future: Ajay Misrah.

OPTIMISM OVER REVIVAL IN POWER DEMAND Power News Commentary: November – December 2018


Trade volumes rose 19 percent at the IEX in the first six months of this financial year. This was aided by a pan-India 6.2 percent increase in electricity generation during the period. In all, 28,584 million units of power were traded between 1 April and 30 September, counting both the day-ahead and term-ahead markets. Total volume trade on IEX went up 34 percent, to 33,705 million units in the period. During the period, the market was congestion-free on most days. Volume curtailment due to congestion was only 0.6 percent.

Buoyed by a good response for the first tender of mid-term (3 years) PPA auction, the power ministry will bring its second round for 2,500 MW capacities to give relief to stressed power assets. A PPA is a prerequisite for getting coal supplies for power plants. Power sector is facing stress due to coal shortage and other issues. Many power projects are starving for coal in the absence of PPAs. The government’s scheme to auction 2,500 MW medium-term PPAs evoked good response and PPAs for 1,900 MW capacities were signed under the scheme last month. The power ministry in April 2018 had issued guidelines for a pilot scheme to facilitate aggregation of procurement of power (2,500 MW for 3 years) from commissioned coal-based power plants through competitive bidding. The power procuring distribution companies were Telangana and Tamil Nadu for 550 MW each, West Bengal and Bihar for 200 MW each. Haryana consented to sign for 400 MW.

Led by revival in electricity demand, Vedanta recorded a 19 percent rise in its commercial power sales during July-September quarter. Total power sales from all generating units during the period stood at 3,514 million units as against 2,950 million units in the comparable period of last fiscal year. Vedanta’s coal-fired generating unit at Jharsuguda of 600 MW and HZL unit were the key drivers of power sales. The Jharsuguda power station logged 35 percent year-on-year growth in power sales in Q2FY19 after a tepid performance in the last fiscal year. HZL’s power sales were up 29 percent in the period under review, according to an investor presentation by Vedanta. Total power generation capacity by Vedanta-owned units stands at 9,000 MW. Of this, 5,100 MW is meant for captive consumption and the rest for commercial sales.

Residents and commercial establishments, particularly those in rural areas across the state, will have to pay higher electricity bills from next year if a proposal as per the ARR petition of the Jharkhand Bijli Vitaran Nigam Ltd, the state owned power distribution company, is passed next year. The last time power tariffs were hiked was on 1 May, this year. As per the ARR petition, power tariffs for Kutir Jyoti or tribal beneficiaries below poverty line presently being fixed at Rs 4.40/kWh has been proposed to be hiked to Rs 6 /kWh, a jump of over 36 percent. Similarly fixed charges now at Rs 20/month has been proposed to be hiked to Rs 75/month. For other rural consumers, power tariff has been proposed to be hiked from the present Rs 4.75/kWh and a fixed charge of Rs 35/month, to Rs 6//kWh, with an enhanced fixed charge of Rs 75/month. For urban domestic consumers, the present tariff of Rs 5.50 /kWh has been proposed to be hiked to Rs 6.00 /kWh with no change in fixed charge of Rs 75 /month. Similarly for commercial establishments located in rural areas, the power tariff, standing at Rs 5.25 /kWh and a fixed charge of Rs 60 has been proposed to be hiked to Rs 7 /kWh and a fixed charge of Rs 225/month. For commercial establishments located in urban areas, the present tariff of Rs 6.00/kWh has been proposed to be hiked to Rs 7.00 /kWh with no change in fixed charge of Rs 225/month.

Uttar Haryana Bijli Vitran Nigam said that they would provide a list of electricity defaulters to village Sarpanches and zila parishad members, as part of a new campaign to be launched in Jind district. He said that nearly Rs 15 bn is pending from unpaid electricity bills by more than 100,000 consumers in the district. Consumers can take advantage of the Bijli Niptan Yojna and pay in instalments and that interest on the pending bill would be waived off. The deadline for the scheme is 31 December. The government’s focus is on providing electricity connection to every household in the country under the Saubhagya scheme instead of achieving a set of numbers. It is said that household electrification has led to an increase in aggregate, technical and commercial losses of power distribution utilities. 21 million households have already connected and eight states have achieved 100 percent saturation (in household electrification)– Madhya Pradesh, Tripura, Bihar, Jammu & Kashmir, Mizoram, Sikkim, Telangana and West Bengal.  States that are close to achieving 100 percent household electrification are Maharashtra, Uttrakhand, Himachal Pradesh, Arunachal Pradesh and Chhattisgarh. Some states were already 100 percent electrified, inlcuding Gujarat, Goa, Andhra Pradesh, Tamil Nadu, Kerala, Punjab and the Union Territories.

In a relief to power consumers ahead of the general elections 2019, power discoms in Andhra Pradesh made it clear that there will be no increase in electricity tariff for the next year financial year 2019-20. Farmers will get seven hours of free power supply a day. The no-hike proposal comes in the wake of assurance by the state government that it will bear the additional financial burden in the form of subsidy to discoms. Charging stations for electric vehicles will get power at a reduced tariff.

Delhi BSES discoms expect peak hour electricity demand to scale upto 4,800 MW this winter and plan to buy short-term power from spot market in case of contingency. The discoms will resort to electricity banking and backdown techniques to dispose surplus electricity. Last year, winter electricity demand had peaked at 4511 MW. The peak winter power demand in BRPL and BYPL areas had reached 1,888 MW and 1,136 MW, respectively, during last winter. This year, it is expected to reach 1,950 MW and 1,225 MW for BRPL and BYPL respectively, it said. BSES discoms will bank surplus power with hilly states, which need additional power during the winter months. This banked power will be available during the summer months. BRPL will bank between 300-400 MW with states like Himachal Pradesh, Meghalaya, Manipur and Jammu and Kashmir. BYPL will return around 200 MW to states like Himachal Pradesh, from whom it had taken the quantum during the summer-months.

Just three months after it began operations, Adani Energy is drawing flak from consumers whose bills have shot up to unprecedented levels. Some consumers claim their bills for September and October have shot up by as much as 100 percent. Previously known as Reliance Energy, the Mumbai distribution company of Reliance Infrastructure, was acquired by the Adani Group earlier this year. The distribution company has been maintaining that the spike in bills was caused by a change in the weather condition, which in turn reportedly led to a change in the consumption pattern. According to consumer groups and analysts, an average tariff hike approved ranges from 2-8 percent depending on the distribution circle as well as the consumer category. However, the hike could be even more pronounced after April 2020. The protests has prompted Adani Electricity to set up a 24×7 helpline that has promised a response to all the queries related to billing within 24 hours. The company has also organised several camps to respond to queries related to billing.

The Uttar Pradesh Cabinet approved selection of Adani Transmission and Power Grid Corp for setting up transmission networks for evacuation of power from two thermal power projects —2×660 MW Obra-C project and 2×660 MW Jawaharpur project. Both these projects, which have been awarded through the tariff-based competitive bidding process, will bring an investment of Rs 14 bn in the state. Both the transmission projects are being primarily constructed to establish transmission system for evacuation of power from the projects once they are ready. Two 400 kV sub-stations are also being built. While the Obra-C project will also involve setting up of a 400 kV sub-station in Badaun, the Jawaharpur project will have a 400 kV sub-station in Firozabad.

The World Bank will extend $310 million loan for Jharkhand Power System Improvement Project to provide reliable, quality, and affordable 24×7 electricity in the state. An agreement in this regard was signed between the Centre, Jharkhand government and World Bank. The project will help bring in modern technology solutions such as automated sub-stations, and network analysis and planning tools to provide reliable power supply and enhance customer satisfaction. The project is part of the government’s power for all programme launched in 2014. The plan envisages addition of over 4.5 GW generation capacities by 2022 through a mix of private and public-sector investments. As per data from Jharkhand Distribution Company, more than 80 percent of people in the state have access to electricity. The per capita consumption of electricity in Jharkhand at 552 kilowatt hour at the end of 2015-16 is roughly half of the national average.

The PSPCL earned Rs 9.75 bn up to 31 October this fiscal by selling over 1,800 million units of surplus power to discoms of other states. The additional revenue may have come as a relief for the power discom as the state government is yet to pay for subsidies offered to various categories of consumers. The PSPCL is also yet to get a payment of over Rs 12 bn for outstanding power bills of various government departments. The power corporation sold the surplus power at an average cost of Rs 5.4 /kWh in the open exchange from June to October. However, with fall in prices at the open exchange, the corporation has switched to power-banking arrangements to bring down fixed charges that it has to pay for installed power-generation capacity of IPPs. Under power banking, a state’s discom supplies power to the power company of another state free of cost and then takes free supply from that company during its peak season. Power demand had dropped to 5,000 MW during the day and 3,000 MW during the night in Punjab. The demand in peak month, June, was 13,000 MW. The PSPCL has to buy power from IPPs or pay them fixed charges against the installed capacity. At present, it is selling 1,600 MW of surplus power to Andhra Pradesh, Maharashtra, Uttarakhand, and Jammu and Kashmir to topple the fall in power prices in the open exchange.

Rest of the World

French independent power vendors association ANODE is considering making a legal challenge to a government freeze on state-owned EDF’s electricity prices, it said. ANODE president Fabien Chone said the proposed freeze on EDF’s regulated tariffs threatens the survival of some of its members. These operators all compete against EDF, which has an 80 percent share of the retail power market. The government should lower power taxes or introduce support measures for ANODE’s members, it said. From 15 December to 1 March the government would organize a nationwide debate on energy and that power and gas prices would not increase in the meantime. Retail services specialist Colombus Consulting expects French power prices to rise by between 2 percent and 8 percent next year. Even at 5 percent, it would be the highest increase in years.

A nationwide strike reduced French electricity production by 5.5 GW, mostly at state-controlled utility EDF’s nuclear, coal and hydro power plants, power grid operator RTE said. The energy branch of France’s CGT union had called the strike in protest over stalled wage negotiations and a possible government-led restructuring of EDF. The RTE said electricity generation was reduced at EDF-operated Paluel 1, Chinon 1 and St. Laurent 1 nuclear reactors. Power output had also been reduced to zero at EDF’s Cordemais 4 and 5 coal-fired plants, while an ongoing strike at the Havre 4 coal power plant that began on 27 October was extended by 24 hours until 14 November, the RTE said. Electricity generation was reduced by around 1,950 MW at EDF’s hydro power stations across France, the RTE said.

An unspecified number of power stations in Germany will be shut down by 2022 in agreement with their operators, according to a draft document from a government commission tasked with creating a roadmap for phasing out coal. The document said agreement with the operators should happen on the basis of contracts which include rules for possible compensation for operators. It said finances needed to be set aside for the recommended measures and there would not be a levy on the electricity price.

Britain must halt a back-up power scheme aimed at avoiding electricity shortages pending a further investigation by EU regulators, an EU court ruled, which sent shares in UK energy companies tumbling. The judgment by the EU’s General Court annuls a decision by the European Commission, which had said Britain’s so-called power capacity market was compatible with EU state aid rules. Britain began power capacity auctions in 2014, offering to pay providers for making supplies available at short notice, and so avoid shortages that might occur as coal plants close and low prices dissuade investors from building new power plants. National Grid said it has been asked to postpone indefinitely upcoming auctions for capacity to be delivered in the winter of 2022/23 and a nearer-term one for 2019/20.

Russia may delay until March the official launch of its power stations in Crimea, the stations’ engineering firm said, the latest hitch to the plants where Russia is accused of installing German-designed electricity turbines in contravention of sanctions. Russia began building two power stations on Crimea to provide electricity to the peninsula which it annexed from Ukraine in 2014, but the facilities became embroiled in a row over sanctions. The company, Tekhnopromeksport, said the first stage of the power stations will be ready by the end of this year, but that it had requested that the launch of the second phase be delayed until to March.

South Africa faces more power cuts, electricity utility Eskom warned as it sought to prevent the collapse of its power grid in a test for reforms. Eskom implemented a fifth day of controlled power cuts, putting more strain on an economy already mired in recession only months before a national election. Eskom, which is battling a severe financial crisis, coal shortages and breakdowns of its power plants, said it would cut up to 2,000 MW power from the grid. Reforming Eskom has been hampered by fiscal constraints in a blow to the plan to woo investors who can help grow the economy ahead of an election likely to be held in May next year. Prolonged power cuts would likely hurt economic growth in the first quarter of 2019, although a slowdown in manufacturing over the Christmas period will buy Eskom some time.

South African power utility Eskom cut 1,000 MW of electricity from the strained national power grid after high unplanned outages, the company said. Eskom had implemented stage 1 controlled power cuts that shed up to 1,000 MW from the grid. The power cuts are implemented to prevent the grid from being overwhelmed after unplanned outages. Eskom, which supplies more than 90 percent of South Africa’s power, warned of potential outages amid low coal inventories after a major supplier cut supplies and sought insolvency protection.

Power-hungry Vietnam, one of Asia’s fastest-growing economies and a production hub for global companies such as Samsung Electronics, needs to raise up to $150 billion by 2030 to develop its energy sector, according to World Bank. Vietnam has been struggling to develop its energy industry due to a lack of state funds. The Southeast Asian country’s hydropower potential has almost been fully exploited, oil and gas reserves are running low, and Vietnam recently went from a net exporter to net importer of coal. Electricity demand in Vietnam will grow by about 8 percent a year for the next decade. Vietnam plans to more than triple the amount of electricity it produces from renewable sources and push for a 26 percent increase in household solar energy usage by 2030. Vietnam has not been able to reduce its reliance on coal energy, which will account for 53 percent of all energy generated in the country by 2030, according to its trade ministry.

Niger is on track to nearly double power production in the next six years, a development that could boost industry in one of the world’s poorest countries. The government is in talks with three Chinese companies to develop a 200 MW coal-fired power plant in the centre of the country by 2024. The government also plans to open a 7 MW solar power plant by the end of the year, and another in 2020 with about 20 MW of capacity. The three projects in total would in six years add 227 MW of power to a grid that now supplies about 250 MW.

China’s power generation rose 7.2 percent year-on-year in the first 10 months of 2018. In October alone, China generated 533 billion kWh of power, up 4.8 percent year on year, faster than the 4.6-percent growth in September, according to the National Bureau of Statistics. The average daily power generation reached 17.2 billion kWh, edging down from 18.3 billion kWh in September. In the January-October period, new energy power generation accounted for 10.2 percent of the total power generation.

With drive to boost power generation, Nigerian government and key international donor agencies are finalising arrangements to sign a $956 million (N347.362 billion) deal for three key transmission projects for the TCN within the last 18 days of November. A report obtained on the proceeding of a meeting held by TCN and officials of the donor agencies indicates that the EU, JICA and the AFD – French Development Agency are expected to endorse the projects. The Federal Executive Council on its part this month will give approval for the execution of the World Bank funded projects. A breakdown of the report mentioned the project to be the Nigeria Electricity Transmission Access Project. It is valued at $486 mn and is being financed by the World Bank. The $200 mn Lagos/Ogun Transmission Project is the second on the list and is being financed by JICA while the Northern Corridor Transmission Project has funding of $245 mn and €25 million by AFD and the EU.[Energy News Monitor | Volume XV; Issue 27 | ORF]

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