Green Energy Projects in India preferred by Debt Syndicators over Thermal Power

7 Jan, 2012
Energy,Green Investing,Renewable Energy

Green Energy Projects in India have become more preferred for debt lenders than the conventional thermal power projects.See below for the problems besetting India’s thermal power project developers.  Note wind and solar power projects are seeing more interest from debt  syndication lenders like IDFC, IL&FS because of the following reasons

a) Strong support from state and federal governments which are going all out to support Renewable Energy through tax breaks,feed in tariffs,capital subsidy

b) Secure Power Purchase Agreements (PPA) by NVVN at even higher prices for green energy

c) No problems of fuel supply availability that plagues the coal and gas power plants in India

d) Lesser Environmental issues that beset the Coal Power and Nuclear Power Plants in India with local agitations

e) Land Acquisitions problems are also lower as solar and wind power plants don’t require prime land

Green Companies in India  are increasing rapidly in all sectors like Solar Energy, Wind Power etc taking advantage of India’s massive energy deficit.

India’s Power Industry Woes

India’s Power Industry is in the most severe crisis since the sector was reformed and private power sector companies were allowed. India’s electricity companies which were considered as a great investment with fancied valuations have now found the going tough.  A number of factors have converged to make the electricity industry go into the crisis mode. India faces a dark 2012 summer as the energy demand remains high and growing while power plants remain stuck due to absence of fuel and remunerative prices.  ith the Indian banks also looking at debt defaults, the government is trying to come up with a new plan.

India faces a Long and Dark Summer in 2012 with its Electricity Industry in Shambles. The list of woes is almost non-ending and the government is the biggest culprit.Locked in a policy paralysis due to its corruption taint,the authorities have failed to move.Indian Electricity Companies too are facing losses and may even default on some project debt. The state distribution companies already have racked up billion of dollar in losses due to total mismanagement of  tariffs and power theft. So the whole supply chain is in trouble with the Indian Banks also in trouble as they have lent billions to the power producers.

India is one of the biggest electricity consumers in the country.Despite massive demand,the supply is not coming up as the power plants are locked in litigation and protests by locals as well.Land acquisition has been a point of concern leading to deaths. Nuclear Power  Plants in Tamil Nadu and Maharashtra are not being built due to Fukushima dangers. Hydro Power Plants too face problems as people are concerned about the environmental impact. Coal India the monopoly producer has nto managed to meet targets.It keeps raising prices and lowering production while imported coal makes the electricity generated too costly to be sold.

India’s biggest solar farm/ installation of 40 MW completed in Kutch- What we need is Net Metering

6 Jan, 2012
Energy,Solar Energy

Solar Power in India is growing at a rapid pace boosted by state and federal government subsidies. Besides the large energy deficit and falling Indian solar panel prices are also helping. Adani Power which is one the biggest power producers in India has completed a 40 MW solar farm in Gujarat which makes it the largest /biggest solar farm in India right now.

Note the Indian solar projects are growing continuously and with the possible addition of 1000 mw of solar energy in 2012 we will see much larger solar installations with 100 MW solar farms being planned. Besides solar thermal power plants are bigger in size in general. While the growth of big solar installations is good, India really needs to move to rooftop small solar installations and off grid solar promotion.

Solar Energy incentives in most of the developed solar markets in Europe have clearly shifted their preference to distributed small rooftop solar installations on residences.This is because it reduces the need for expensive power generation infrastructure,improves reliability and puts money in the hands of the common citizens.Spain,Germany and Italy which are the 3 biggest markets in the world have done this.India however has not paid any focus to rooftop solar installations except for Delhi.Electricity in India is not only expensive but also highly unreliable and of low quality.Low voltages and blackouts of 10 hours are not uncommon. Having a reliable home based source of power would be attractive to most people in India even at higher costs (note electricity tariffs have been outgrowing inflation).It would also lead to reduced losses in the power transmission which is the highest in the world at around 30%. The advantages of promoting residential solar is much more however the policymakers have not given enough thought with half of the subsidies going to Solar Thermal Technology which is fast losing out to Solar PV technology. India’s solar policy makes it clear that the decision makers do not have enough knowledge about the developments in this fast paced solar energy sector to make the optimum decisions.

The biggest policy change that is needed in net metering which allows solar power generated at home to feed the grid.

Net Metering is a very important Electricity Policy for the promotion of Distributed Electricity Production from Renewable Energy Sources especially Solar Energy. All consumer establishments connected to the power grid have an electricity meter installed which measure the amount of power consumed during a month in Kilowatt Hours (KwH) which is known as one unit. The power utility compiles the data for power consumption during 1 month and sends a bill which is usually the number of KwH multiplied by the retail electricity rate which can vary widely from 10c/KwH to around 35c/KwH depending on the geography.

List of Indian Solar Projects

 

List of 10 Largest Photovoltaic Solar Farms in the World (in MW)

Sarnia Canada 97
Montalto di Castro Italy 84
Finsterwalde Solar Park Germany 81
Rovigo Photovoltaic Park Italy 70
Olmedilla Photovoltaic Park Spain 60
Strasskirchen Solar Park Germany 54
Lieberose Photovoltaic Park Germany 53
Puertollano Photovoltaic Park Spain 50
Moura Photovoltaic Park Portugal 46

5 Largest Proposed PV Solar Farms

Ordos Solar Project China 2000 Thin film CdTe from First Solar completion date 2019
Topaz Solar Farm USA 550 Thin film CdTe from First Solar
Desert Stateline USA 300 Scheduled to be completed in 2015
Desert Sunlight USA 300 Scheduled to be completed in 2015
Aqua Caliente USA 290 Scheduled to be completed in 2014

Read all about Solar Power in India

Biomass Plants in India Shutdown as Feedstock Costs Race ahead of Prices

5 Jan, 2012
Biomass Energy,Energy

Biomass Plants in India are shutting down as feedstock costs have increased rapidly while government regulated electricity tariffs have yet to increase.60% of India’s Biomass Plants have closed down as they are longer profitable.Note India has a massive growth target for biomass electricity capacity up from 1 GW at present (2 GW if you count cogeneration).A number of agricultural companies have set up a number of plants besides dedicated green utilities.However inflation in India has affected the operation of plants specially those who don’t have inhouse feedstock supply.

Green Companies in India are appealing to the electricity regulation CERC to increase the mandated tariffs which are different for different states.Like the thermal power generators increase in fuel prices had made operation unviable.The electricity sector in India is heavily regulation and lack of a free market causes these periodic booms and busts.

CERC Feed in Tariff for Biomass Produced Electricity for Different States

Note India’s Electricity Regulator gives a number of Incentives for Biomass Generated Electricity namely

1) Depreciation

2) Feed In Tariffs for 13 Years out of a useful life of 20 Years

3) Sharing of Carbon Credits under the CDM Protocol

4) Preferential Loan and Interest Rates

5) Payment Rebates by Utilities

Some of the state Feed in Tariffs

India does not have a centralized rate of FIT for Biomass Electricity and it is different for different states depending on the assumptions.Here is the FIT for a few of the major Biomass States in India

State                          Feed in Tariff (Rs./kWh)
Andhra Pradesh                  Rs4.15
Gujarat Cogeneration       Rs 5.17
Madhya Pradesh                 Rs3.93
Maharashtra                          Rs4.76
Maharashtra Cogeneration RS4.80
Punjab                                        Rs5.49
Rajasthan                                  Rs4.73
Tamil Nadu                              Rs5.08
West Bengal                             Rs4.88

Biomass Energy in India

India had set up around 500 MW of Biomass Capacity by 2007 and has increased it by almost 150 MW since then to reach around 1 GW capacity today.Most of Indias’ Biomass Electricity is being generated in Andhra Pradesh,Maharashtra,Tamil Nadu,Karnataka and Rajasthan.A lot of new capacity is being built in Punjab and Chattisgarh as well.India with a total biomass capacity of around 1 GW is planning to increase it by 10 times to 10 GW by 2020.Between 200-600 acres of land are required to support 1 Mw of Biomass Capacity .This is much more than what is required for even thin film solar energy which is around 10 acres.The large land requirements make Biomass Energy Scaling a difficult proposition,however it has a great use in niche applications where there is a large amount of crop and animal residue/waste

Shocking Land Degradation and Pollution against Environmental Norms by Coal India revealed

4 Jan, 2012
Coal,Energy

Coal India the monopoly producer of Coal in India and responsible for providing almost half of India’s Energy Requirement is a very inefficient organization is well know.Corruption and pilferage of massive amounts of coal is a well known fact  to all industry participants.In fact stealing of coal is a  major livelihood for lakhs of poor Indians in coal belt areas.What is not well known is that Coal India has flouted all norms of environment and conservation.It has not restored sites of open cast and underground mining leading to massive losses for the local environment and citizens.Sand meant to fill up the old mines has been sold in the market for profits.RTI application has shown that this government maharatna has been negligent towards it duties in a huge scale.No wonder there are so many protests for land acquisitions by industry and the government given the degradation and pollution that these companies do.

The Disadvantages of Coal are many but still most of India’s power plants are being built using coal as fuel.Here is a recap of the major cons of Coal

Greenhouse Gas Emissions - One of the biggest cons of Coal Energy is that it releases Carbon Dioxide which has been sequestered for millions of years in the dead bodies of plant and animals.This transfer the Carbon from the Earth to the Environment leading to the Global Warming Effect.Global Treaties have failed in putting a Cost on this,though individual countries are tying to account for this through Carbon Taxes and Cap and Trade.

2) Coal Mining Deaths - Coal Mining has resulted in thousands of deaths each year ever since man discovered coal.Note Coal Deaths happen not only in countries which don’t have good safety regulations like China but also in developed countries like USA and New Zealand.

3) Devastation of Earth and Scenery Near Coal Mines – Open Cast Mining of Coal has resulted in destruction of the habitat and destruction of the scenery.It leads to removal of trees and pollution of air and water in areas surrounding the mines.Coal Mine Fires have burned for hundreds of year underground and make living in those areas hazardous.Those burning underground can be difficult to locate and many cannot be extinguished. Fires can cause the ground above to subside, their combustion gases are dangerous to life, and breaking out to the surface can initiate surface fires as well.

4) Displacement of Humans due to Mining Destruction - In West Bengal,India people are being displaced in huge numbers as the hollowing of the earth due to underground coal mining has made those places unsafe as the  Land Caves in without warning.

5) Emission of Harmful Substances like Sulfur Dioxide,Carbon Monoxide,Mercury,Selenium, Arsenic ,Acid Rain - Thermal Plants emit harmful substances such as Mercury and Sulfur Dioxide which cause health hazards among the surrounding population and Acid Rain.While modern equipment has reduced the emission of these harmful substances,it is still very harmful to humans.

DNA Investigations reveal Coal India flouted Environment Ministry guideline

Coal India Limited (CIL) and its subsidiaries have destroyed at least 60,000 hectares of land across these states. Properly reclaimed, this land could have been used to set up these projects.

According to documents in DNA’s possession, the total area covered by open-cast mines as of March 2011 was 35,570.21 hectares, but the area reclaimed was just 14,949.91 hectares. Replies to queries under the Right to Information (RTI) Act revealed that a majority of these mines were closed between 1980 and 2000.

A visit to some of ECL’s abandoned underground mines revealed that the company’s failure to properly fill the mines had resulted in the land sinking at several places. In some cases, officials were found to have sold the sand meant for refilling the mines.

According to the guidelines of the director general of mine safety (DGMS), land excavated for open-cast mines is to be filled with incombustible material after completion of mining operations and restored to the original level within three months. Voids created by excavation in the quarry are to be simultaneously filled with coal extraction.

 

Adani Power to set up 140 MW Solar PV Capacity in India even as it looks to grow in Africa

4 Jan, 2012
Energy,Solar Energy

Adani Power,which is a leading Indian electricity company and part of the Adani Group is set to invest big money in the solar power in India.The company plans to set up 140 MW of energy capacity according to news reports with an investment of $600 million.Given the current costs of solar equipment and solar panels ,the price tag looks high at almost $3.5 million/MW when the current prices are more like $2 million/MW for large power plants in low cost locations like India.

Solar Panels can be bought in bulk for 90c/watt from high quality solar panel manufacturers around the world like Suntech,Trina and others.Adani Power like other power producers faces a torrid time as coal has become very difficult to get as Indonesia has imposed export duties on power.Adani Power which was in the race to become the biggest power utility in India is now looking to Africa to expand.The company which has all its capacity based on coal has to diversify to renewable energy given the CERC mandate to make India’s 15% Energy Generation.

Note the Adanis too followed the strategy of acquiring coal mines in Australia and Indonesia at high prices.Now these expensive M&A have become millstones as these countries have imposed conditionalities on export of coal which has made them very expensive to import.The price of imported coal is in fact so high that the companies can’t sell electricity at a profit.Read more below.

Another Coal Billion Dollar Acquisition as India’s Adani Group acquires Australian Coal Port Abbot Point

Coal M&A is picking up at a feverish pace as the demand and price of coal shoot through the roof.Note Coal is the cheapest fossil fuel and powers most of the world’s power plants despite its disadvantages.The abundance and cheapness of coal has managed to hide its deleterious effects.Indian and Chinese companies are gobbling up coal mines and companies globally as they rush to secure raw material for the growing thermal power plant capacity.Adani Power is part of Adani Group with capacity of 1980MW.The company currently operates India’s only supercritical power plant  in Gujarat. The company is currently implementing 16500 MW at different stages of construction..The company is currently implementing thermal projects of 3300MW at Maharashtra and 1320MW  at Rajasthan.

Australian,Indonesian,African Coal Mines Selling like Hot Cakes amongst Power Hungry Indian,Chinese Comanies

With domestic coal production rising at a snail’s pace,these companies are racing to secure coal supplies at whatever price they can get.Steel companies too are hungry for coal as it forms a major component of their product.Lanco Solar,Adani Power,Reliance Power,Tata Power,Tata Steel,Coal India have all bought or are in the process of buying coal mines and coal companies in foreign countries.Australian and Indonesian miners are minting top dollar as competition hots up with Rio and BHP Billtion also using thier massive cash hoard into play.Australian coal mining company Whitehaven Coal is the latest to put iself on the selling block with a price tag of more than $3 billion.More than 20 companies are set to be looking into entering the tendering process.

NVVN to sign PPA with Indian JNNSM Phase 2 Winners for 350 MW Solar Plants in Jan 2012

4 Jan, 2012
Energy,Solar Energy,Solar Panels

Solar Power in India will get a boost in 2012 with India’s state owned utility NTPC’s trading arm NTPC Vidyut Vyapar Nigam (NVVN) to sign the PPA with the winners of the Indian solar federal auction JNNSM Phase 2 for 350 MW of Solar PV Projects.The auction had resulted in some of the lowest bids in the world with the lowest at around Rs 7.5/kwh or 15c/kwh one of the lowest in the world so far.This is also lower than the lowest bid in JNNSM Phase 1 by around 30%.

JNNSM Phase 2 received almost 8 times the bids with 2500 MW worth of bids out of which around 350 MW was selected for providing Feed in Tariff with the average tariff of Rs 8.77 or 17.5c/Kwh .Note India’s execution record has not been great with only 400 MW  solar capacity reached in 2011 against a target of more than 1000 MW.However weaker and unknown players have gone out of this business and the winners this time look more likely to construct these solar power plants.No doubt a massive glut of solar panels in the world with prices as low as 80-90c/watt helping .Compare that to prices of solar panels which were more than $2/watt last time.

GAIL, Mahindra, Welspun to develop solar PV projects

The trading arm of NTPC has been designated as the nodal agency for sale and purchase of grid-connected solar power under the Phase-1 of the Jawaharlal Nehru National Solar Mission. Last December, NVVN had issued letters of intent to the short-listed developers for the second batch of Phase-1.

The other companies short-listed include Solairedirect SA, SunBorne Energy Services, Sujana Towers, and Green Infra Solar Farms. Of the 28 projects for which letters of intent have been issued to these companies, 24 are in Rajasthan, two in Maharashtra, and one each in Andhra Pradesh and Tamil Nadu.

Over 150 companies, including Reliance (Anil Ambani Group), Lanco, Moser Baer and the Tatas, had evinced interest in developing large solar photovoltaic projects of up to 20 MW under the second batch. Request for selections were received for 218 projects for over 2,500 MW, much higher than the 350 MW offered

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