What's Next for Alternative Energy Technology?

The Future Is Closer Than You Think for Some Forms of Alternative Energy, Says The Boston Consulting Group

Advanced Biofuels, Concentrated Solar Power, and Solar Photovoltaic Power Are on Track to Change the Global Energy Landscape Far Earlier Than Many Assume.

For skeptics, alternative energy has long been more hype than genuine promise. Yet several alternative-energy technologies are approaching inflection points in their development, and the day when they could have a profound impact on the global energy landscapecould come far sooner than is commonly assumed, says a new report from The Boston Consulting Group (BCG). 

The report, released today and titled “What’s Next for Alternative Energy?,” examines the state of seven of the most significant alternative-energy technologies — advanced biofuels, electric vehicles (EVs), concentrated solar power (CSP), solar photovoltaic (PV), onshore wind, offshore wind, and clean coal through carbon capture and sequestration (CCS) — and assesses each one’s prospects in terms of three issues:

– Can it achieve cost competitiveness with conventional energy by 2020

and be economically viable without subsidies?

– Can it overcome barriers to rapid adoption once cost competitive?

– Can it reach penetration levels by 2025 that disrupt the status quo?

Among the report’s key findings:

– Advanced biofuels, CSP, and solar PV will see accelerating adoption

and growth and are on track to change the global energy mix far

earlier than is often assumed. Their costs are falling rapidly, and

they are on the path to becoming cost competitive within the next five

to ten years, if not sooner.

– Onshore wind power will see steady adoption and continued growth. It

is already cost competitive with conventional energy sources in some

instances, and its costs will continue to fall. Without breakthrough

declines in energy storage costs, however, the inherent challenges

posed by the intermittent nature of onshore wind and solar PV will

limit their ultimate penetration.

– EVs will also see steady adoption, becoming economically attractive

for lead segments by 2020. But broader adoption will require

significant declines in battery costs. Major infrastructure and other

hurdles will also have to be overcome.

– In contrast to onshore wind, offshore wind will struggle to move

beyond purely subsidy-driven growth. Offshore wind’s overall adoption

will be slow except in a few countries willing to continue heavy

subsidies.

– Clean coal through CCS will have very slow adoption and won’t be

viable for the next decade or two. The technology is vital for cutting

carbon emissions from coal-fired power plants. But it will develop

slowly for a number of reasons, including slow progress toward

demonstrating large-scale viability and moving down the cost curve.

“There is no question that conventional energy sources will constitute the bulk of the world’s energy for at least the next couple of decades,” said Balu Balagopal, a Houston-based senior partner at BCG and a coauthor of the report. “But a few of these green-energy technologies will make their presence felt very likely within the next few years. Their costs are falling quickly and significantly, pushing them closer to where they can compete on price — without subsidies — against fossil-fuel-based sources.”

As they become more cost-competitive, “their adoption will be constrained more by barriers such as the need for new supporting infrastructure. However, we believe these barriers will likely prove surmountable,” added Balagopal.

The report concludes with a discussion of the implications of these findings for oil and gas companies, utilities and power producers, emerging alternative-energy pure-play companies, industrial suppliers, and governments.

“Even in the relatively slow-moving energy industry, there are cautionary examples of how quickly fundamental assumptions can be overturned,” said Justin Rose, a Chicago-based principal and a coauthor of the report. “Shale gas in the United States and the adoption rate of flexible-fuel vehicles in Brazil come to mind. Companies need to be prepared for the opportunities as well as the risks.”

But the technologies are far from uniform in their near- to medium-term prospects, noted Petros Paranikas, a Chicago-based partner and a coauthor of the report. “It’s vital that companies, governments, investors, and other stakeholders in the energy ecosystem understand the differences among them, revisit assumptions, and redraw outdated plans and timetables. Making the wrong decisions in this space could prove costly.”

Source: Boston Consulting Group

Nagarjuna Construction: Power pangs

Performance of the core business is stable, but concerns persist about exposure to international real estate and power projects.

The satisfactory performance of Nagarjuna Construction Company (NCC) in the September quarter has come on a lower base. Revenues rose 13 per cent year-on-year (y-o-y) to Rs 1,201 crore, as compared to 1.1 per cent y-o-y growth in the corresponding quarter a year ago. Operating profit margin was maintained at 10.3 per cent despite higher costs, while net profit margin came at 3.8 per cent due to a seven-fold rise in other income at Rs 5.4 crore.

NCC witnessed a slowdown of 13 per cent in its order book at Rs 16,075 crore. However, the company has maintained its earlier guidance of order inflows (Rs 10,000 crore), standalone sales (Rs 5,300 crore), consolidated sales (Rs 7,300 core) and operating profit margin (10-10.5 per cent).

Analysts don’t seem to be too worried about sales and margin targets, but are cautious about the order inflow guidance, as NCC needs orders worth Rs 5,500 crore in the remaining five months of 2010-11 (Rs 2,750 crore each in December and March quarters).

Also, if the government’s decision regarding the environmental clearance for the 1,320-Mw venture (expected in a month) goes against the company, it will have to look for alternative locations in Andhra Pradesh, delaying the project. The company has invested Rs 83 crore so far.

Investors also need to keenly track developments in the Dubai real estate project, as the West Asian economy is still not out of the woods. NCC has invested a total of Rs 130 crore in both these projects.

Though the stock, at Rs 152.45, trades at a reasonable 13 times 2011-12 estimated earnings (including value for build-operate-transfer and real estate projects), analysts are cautiously optimistic about the company’s prospects.

Azure Power to invest Rs. 750 crore in Gujarat for Solar installation

 Azure Power, an independent power producer (IPP), plans to pump in around Rs 750 crore for solar power generation and equipment manufacturing in Gujarat over the next three years. The company is already in the process of setting up 15 Mw solar power plant in the state.

Azure Power has selected Modasa area in Sabarkantha district to develop 15 Mw solar photovoltaic (PV) power project involving an investment of around Rs 215 crore. Apart from this, the company is also planning a solar power equipment manufacturing unit in Gujarat, for which it intends to infuse approximately Rs 300 crore.The proposed manufacturing unit will manufacture PV modules, structures and cables. "Azure Power intends to pump in Rs 2,000 crore over the period of next three years across India, of which Rs1,500 crore would be for power generation and Rs500 crore for equipment manufacturing. Gujarat alone will have Rs 750 crore investment from the company," said Inderpreet Wadhwa, CEO, Azure Power.

The company is eyeing a combined production capacity of 50 Mw by 2012 and 100 Mw by 2015.In order to raise funds for its projects, the company is also planning a public issue and it may also divest further stake to private equity players. Azure Power has tied-up with SMA Solar Technology, SunEdison and SunTech for supply of PV inverters, monitoring technologies andd PV modules respectively.

solar power plant in Punjab, has inked a 25 year power purchase agreement with Gujarat government. Its 15 Mw power plant is expected to be commissioned by mid 2011. In addition to this, another solar power project in the state is also on company's radar.

Are PPP's running out of steam?

Good in theory, but quite questionable in practice, is the Indian PPP story. In theory, PPPs are wonderful, because of appropriate risk transfers, efficiency improvements, additional financial resources, a whole life solution, and speedy implementation. In practice, apart from some notable exceptions, Indian PPPs have been about ‘bid and win now, renegotiate later’.

First, innovative financial engineering has ensured that risks remain with the government while private concessionaires take the upside. Renegotiations, cost escalations, and post-award deal sweeteners are quite common. 

Second, incremental private investment is minimal, not counting the inflated lending from public sector banks and IIFCL, or viability gap funding. Concessionaires, in a no-lose strategy, recover their equity contribution during the project implementation stage itself.

Third, easy exits for developers undermine better efficiency on account of whole life solutions. Fourth, prompt implementation is too closely linked to renegotiation and/or sweeteners. Emaar-MGF’s CWG Village is a good example of all the above. Given our governance structures, more of the same may be expected. Indeed, in the extreme view, PPPs are seen as a new ‘licence raj’ to enrich private concessionaires at the expense of the taxpayer. The private sector has done well in taking full advantage of PPP opportunities.

Sadly, infrastructure delivered by the public sector (over 70% of total) has become an orphan; this is similar to the nineties' focus on ‘adult literacy’ at the cost of primary education. The establishment wryly decries any possibility of improving public sector efficiencies. Some officials describe EPC as a clumsy method, but then every private sector concessionaire signs well-structured EPC contracts for project execution. What is stopping the government from doing the same?

Perhaps the way forward for India is to embrace PPPs for better management of existing infrastructure, especially in health and education. Give out existing public assets, such as highways, power plants, airports, hospitals, colleges, schools, technical institutions and urban infrastructure, with existing cash flows, over to private O&M under PPP. New ‘build’ with early stage risk should be undertaken by the government. The above PPP of existing assets would release large funding for the public sector to create fresh infrastructure assets. However, such ‘build’ should be through SPVs, with suitably incentivised and empowered management teams.

Lanco to raise Power capacity to 4,000MW by March

Lanco Infratech, engaged in infrastructure construction, is looking to increase operating capacity of its power plants to 4,000 megawatt by March, a top official said on Friday. 

The company is also developing eight new projects, with a combined capacity of about 10,500 MW, Chief Financial Officer J Suresh Kumar told Reuters in an interview. 

At present, the company has an operating capacity of 2,100 MW, Kumar said. 

Earlier in the day, Lanco said profit for July-Sept fell 43 per cent, trailing estimates, hurt by higher depreciation charges and weak sales at its major construction unit.

NTPC board OKs investing Rs 31.9 billion in coal project

India's top power producer NTPC Ltd said on Friday its board had approved investing Rs 31.94 billion for a coal mining project in Jharkhand . 

The coal block, which was allotted to NTPC in October 2004, will start production in 2012, the firm added in a statement to the Bombay Stock Exchange.

Coal India bids for Colombian Coal assets

 The world's largest coal producer Coal India is learnt to have placed a bid for Colombian assets of US-based Drummond Co, as the PSU looks to buyout mines overseas as part of its Rs 6,000 crore global acquisition plan.

"The company had earlier this year placed a non-binding bid for some coal assets in Colombia which belong to Drummond business family," a person in the know of the development said. Some media reports suggested that Drummond Co has aimed to raise around USD 6 billion from sales of its assets in Colombia and had hired Bank of America-MerrillLynch for advisory services.

Neither Coal India nor Drummond Co could be contacted for comments.

In its efforts to acquire coal mines overseas and feed rising domestic demand of the fuel, the coal major has earmarked Rs 6,000 crore for acquiring assets overseas for the current fiscal.

At present, the company has shortlisted US firms Massey Energy and Peabody Energy, besides Indonesian Novem/Sinarma, for a possible partnership for their respective mines in Australia, Indonesia and the US. In another arrangement, CIL shortlisted Peabody Energy and 11 others as possible partners for sourcing coal to India.

Coal India, which has domestic market share of over 80 per cent, has maintained that it is sitting on a cash reserve of over Rs 30,000 crore to part-fund its growth projects.

"Coal India finds Drummond's valuation for the asset to be a costly proposition. Moreover, its emphasis is on buying stake in listed global companies," the source said, indicating that the navratna firm might not be aggressive on the buyout.

The company, which has plans to import six million tonnes of coal this fiscal for local firms, has targeted to produce 461.5 million tonnes of the fuel this fiscal as against 431.5 million tonnes last fiscal.

Coal India, which was recently listed on the bourses, on Tuesday closed at Rs 326.05 a share, down 1.33 per cent on the Bombay Stock Exchange from its previous close.

India explores off shore Wind Farms

With land acquisition and environmental clearances proving increasingly difficult for wind power projects, India is exploring the potential for offshore wind power generation.

Deepak Gupta, secretary, ministry of new and renewable energy, told FE that a study is being undertaken with the help of Chennai-based Centre for Wind Energy Technology (C-WET) to ascertain the feasibility of setting up wind farms in India’s offshore areas.”We expect to complete the study in 2-3 years,” he said.

Apart from hurdles in acquiring 4-5 acres to generate one mega watt of wind power, environmental clearances are not easy to come by. Offshore wind power projects are in vogue in many countries, especially in Europe. Recently, offshore wind farms have cropped up in the US and China as well.

“Unit size is high for offshore wind projects. Offshore wind is the next big thing for India’s renewable energy. However, we need to map our wind intensity scientifically,” said Charu Datta Palekar, principal consultant, energy advisory services, PWC.

GE, Vestas, Areva Renewables and Suzlon are key manufacturers of turbines for offshore wind power projects. C-WET has sought inputs from leading global suppliers of offshore wind power equipment, sources said. India's offshore areas, especially on the western coast, are believed to have good potential for wind power generation.

The feasibility study will examine key parameters like wind pattern and sea-bed quality, apart from ascertaining the types of soil testing required before setting up offshore wind power farms. Considering the vulnerability of offshore areas to natural calamities like tsunamis and cyclonic storms, the suitability of material and technology for power equipment would also be studied, sources said.

Analysts do not see any technology hurdles for offshore wind farms, since leading wind power MNCs like Areva Renewables have set up typhoon-resistant offshore wind farms. Speed of wind in offshore areas, though not steady, is much better compared to on-land. Wind could meet 12% of global power demand by 2020 and up to 22% by 2030, according to a recent study by the Global Wind Energy Council and Greenpeace International. Globally, India ranks fifth in terms of installed wind power generation capacity after US, Germany, Spain and China. However, it is yet to tap offshore potential for wind power generation.

Where is the money in solar?

 Indian policymakers have created a grand plan for solar power in the country, and the rubber is about to hit the road. In the first phase of the Jawaharlal Nehru National Solar Mission (NSM), about 650 MW will be distributed to the 40 most aggressive bidders from over 350 aspirants. Of this, 150 MW is solar photovoltaic (PV), which will go to the winning 30 participants from 300+ aspirants. Bids are due on November 16.

The Central Electricity Regulatory Commission (CERC) has set a price of Rs 17.91 per unit of PV power. In the NSM process, bidders have to indicate how much of a discount off this price would they be willing to accept for their projects. Those who are willing to take the biggest discounts will win.

The word on the street is that the bidding is going to be aggressive. With some bone-chilling numbers being bandied around informally in solar circles, the solar gold rush many had anticipated is fading fast like a desert mirage. Many cross-sectoral hopefuls, with little prior exposure to anything remotely connected to energy generation, had jumped onto the solar bandwagon, convinced that solar offered disproportionately high and stable 30-year returns. Now that they are faced with the reality of tariff bidding, most are wondering, where is the money in solar?

Let’s take a quick look at what drives PV economics. Since solar is considerably more expensive than conventional power, it requires a subsidy to drive demand and capacity. Once a subsidy mechanism is established (as it is with the NSM), allocations are awarded to developers, who in turn contract with manufacturers and EPC contractors to build the solar power plants. Once built, these plants need to be operated and maintained for 25-30 years. The economics of solar projects is driven by some select parameters: how good is solar radiation, how much does the power plant cost, what is the efficiency of the power plant, what is the cost of the financing and, of course, what is the tariff that supports all of these costs and leaves enough for a decent return?

Now let’s turn our attention to the varying objectives of the companies in the fray. Some companies very clearly want to be one of the five largest solar players in India over the long haul and have the financial capital to get there. Others are looking to build a decent-sized business that they could...

ONGC blocks $500 million payments to Cairn

Cairn Energy , struggling to get approval for its $9.6-billion deal to sell its Indian unit to Vedanta Resources , is getting mired in more problems as its day-to-day operations and expansion plans are suffering in the wake of simmering tensions with the oil ministry and state-owned partner Oil and Natural Gas Corp (ONGC). 

ONGC, which is the licensee and a 30% owner in the oil-rich Rajasthan block operated by Cairn, has held back $500 million to Cairn India alleging that the expenditure had been inflated, a director in the company, who did not want to be named because of the sensitivity of the matter, said. 

“Cairn spent money over and above the approved budget. ONGC is a PSU, it is public money. We can’t spend it without approvals,” he said. 

The money was spent by Cairn, the operator, on a particular pipeline as well as capital expenditure and operating costs. ONGC reimburses Cairn its share of the expenditure as it is a partner in the block. The state-owned firm has raised objections on several items in recent months and its share of the expenditure, which it has not paid so far, has accumulated to about $500 million now. 

“Both capital and operating expenditure are inflated under various heads, I don’t remember individual items. We are examining them and legitimate expenditures will be reimbursed,” the official said. 

Cairn India director (corporate affairs & CSR) Manu Kapoor, in an emailed response to ET, did not specifically comment on the payment issue. 

Mr Kapoor said: “We remain committed to maximising the resource and production potential from the Barmer basin working jointly with our joint venture partner ONGC and GoI (government of India). With active support from our joint venture partner ONGC, we have made very significant achievements — going from discovery to first oil in a little over five years, and we are currently producing at 125,000 barrels per day (bpd) with the potential to significantly enhance this production.” The ONGC spokeswoman declined comment. 

A person close to Cairn said the company was facing several hurdles in its operations, as ONGC had even refused to sign the minutes of crucial meetings of the management committee while government authorities had not approved the company’s plans to ramp up production to 150,000 bpd from the current level of 125,000 bpd. 

The company is ready to raise output, which would boost its revenues significantly, he said. An official in the directorate general of hydrocarbon (DGH), the oil ministry’s arm that evaluates such proposals, said Cairn’s application for raising output was being studied. 

“We are examining the matter. No decision can be taken in haste. We have to make sure that extracting additional oil does not damage the reservoir,” the official, who did not want to be identified, said. 

DGH and the oil ministry are represented in the management committee of every oil and gas block. The management committee for the Rajasthan block, which also includes executives from Cairn and ONGC, approves budgets, development plans and other operational matters. 

Another official said DGH was also studying ONGC’s contention that Cairn had inflated expenditure on pipelines transporting oil by road to customers. Officials were also examining alleged violations in exploration expenditure. 

“One of such items was the pipeline. Cairn spent an additional $159 million on laying it to transport crude oil from the Barmer field to the Gujarat coast. The approved cost of the pipeline was $941 million,” a DGH official said requesting anonymity. 

Cairn has so far spent $2.6 billion on the Rajasthan oil field development, company executive director & chief financial officer Indrajit Banerjee had told analysts in a conference call on October 28.

ONGC climbs to highest ever global ranking

State-owned Oil and Natural Gas Corp (ONGC) has been ranked the world's top oil and gas exploration and production (E&P) firm by global energy research agency Platts , the company said in a statement here. 

ONGC was last year placed at the third position in the pure E&P category, behind Encana of Canada and China's Cnooc. China National Offshore Oil Corporation (CNOOC) was ranked second on the list for 2010. 

"In the pure E&P category, ONGC has achieved the distinction of Numero Uno ranking not only in Asia, but even on the global scale," the statement said. 

In the overall Platts Top 250 Global Energy Company Rankings that rated world's leading oil and gas, power and coal firms, ONGC climbed to the 18th slot from 26th position in 2009 rankings. 

"This is the highest ever ranking of ONGC in the list of Platts Top 250, ahead of global leaders like Cooco Phillips, Statoil, Cnooc, BG and others," ONGC said. 

Under the stewardship of R S Sharma, ONGC has steadily improved its fortunes during the past four years. 

With revenues of $ 22 billion, ONGC reported a profit of $ 4.24 billion in 2009-10, which forms the basis for the Platts rankings. It had assets worth $ 33.37 billion. 

Under Sharma, ONGC has been able to arrest decline in output from its ageing fields through innovative use of technology and has set the floor for reversing the declining trend of the past by fast-track development of new and marginal fields. 

Sharma will retire from the positions of chairman and managing director of ONGC on January 31, 2011, but the initiatives taken under him will see the company's oil production rise to 28 million tonnes in 2013-14, from currently over 25 million tonnes. 

Natural gas production is slated to rise to over 100 million standard cubic meters per day (mmscmd) by 2014-15, from current 58.86 mmscmd. 

Platts also ranked ONGC as the fastest growth company in Asia in the E&P sector. 

The global list headed by ExxonMobil Corp of the US, had billionaire Mukesh Ambani-run Reliance Industriesat the 13th position, Platts said. 

Reliance had assets of $55.94 billion and revenues of $ 43.63 billion. It had a profit of $ 5.24 billion. 

Embattled British energy giant BP Plc was placed second ahead of Gazprom OAO of Russia, Petrobras Brasileiro of Brazil, Total SA of France E.On AG of Germany, Petrochina Co, China Petroleum, Chevron Corp of US and Royal Dutch Shell.

R-Power's AP project gets gas allocation

Central Electricity Authority (CEA), the country’s apex power sector planning body, has given its nod for allocation of gas to Reliance Power’s 2,400 megawatt (mw) Samalkot project in Andhra Pradesh, allowing the power ministry to include it in the priority list of power projects that would need gas on an urgent basis. 

In a letter to the power ministry, senior officials in the CEA have said that Samalkot could be commissioned by March 2012 (within 11th Plan) as Reliance Power has already placed orders for all six gas turbines for the project with General Electric , who, in turn, have informed that all turbines will be synchronised by February 2012. 

In addition, environment issues for the project have, by and large, been settled and the power evacuation plan is ready. 

“The power ministry may decide for allocation of 9.6 mmscmd of gas in light of the facts/progress submitted by the company,” the letter said. The empowered group of ministers, in its meeting in July, did not allocate gas to any new power plant and decided to ask fertiliser and power ministries to prepare a new list of projects that would require gas on an urgent basis. 

“The prioritisation is being done due to scaled-down projection of gas flows from the KG basin,” an oil ministry official said.

JSW Energy plans Rs 3,300-cr expansion

JSW Energy will invest Rs 3,300 crore to expand the capacity at its 860 megawatts (MW) power plant at Vijayanagar in Karnataka by 660 mw, the company said on Monday. 

The Vijayanagar expansion plan raises the company’s total expansion target for 2015 to 12,050 MW from 11,390 MW aimed earlier, said chief financial officer Pramod Menon. 

The company currently has an operational capacity of 1,430 MW. 

The Vijayanagar brownfield expansion would be financed with a debt-to-equity ratio of 3:1. Work on the thermal power plant would start in April and is expected to be completed in about 42 months, the Mumbai-headquartered company said. 
The company is working on financial closure of its upcoming units at Chhatisgarh (1,320 MW) and West Bengal (1,620 MW) and the financing of its Ratnagiri power project (3,200 MW). “West Bengal financial closure may happen by March. Financial closure of Chhatisgarh may get spilled over to June,” Mr Menon told reporters at a press meet. 

The company hopes to complete the refinancing loans worth Rs 3,375 crore raised for its 1,200-MW Ratnagiri power plant by December. “We hope to lower the interest rate by 100-150 basis points,” said joint managing director LK Gupta. 

The company sees its consolidated debt rising to Rs 9,250 crore by March from around Rs 8,500 crore now. 

The company reported a consolidated net profit of Rs 184.6 crore for the quarter ended September, clocking a modest growth of 6.1% year-on-year weighed by higher fuel cost. Company’s consolidated net sales rose to Rs 777.4 crore in the quarter from Rs 557.97 crore. The company saw a 7% y-o-y fall in average realisation per unit sales at Rs 4.3.

ONGC has no pre-emption rights: Cairn

In a strong rebuttal, Cairn Energy has told Oil and Natural Gas Corp (ONGC) that its decision to sell majority stake in its Indian unit to Vedanta Resources does not trigger the state-owned firm’s pre-emption rights. 

The proposed transaction, valued at $8.48 billion, “is at shareholder level involving the sale of 40-51% shares ofCairn India (and) there will be no change to, or assignment of, the participating interest” in any of the 10 properties held by the company, Cairn Energy wrote on October 29. 

ONGC had, on October 21, written to Cairn Energy saying that the “change of control of Cairn India and acquisition of majority stake therein by Vedanta Resources amounts to an effective assignment/transfer of participating interest” (or sale of stake in the asset like the Rajasthan block). 

ONGC is partner in all the three producing fields held by Cairn India and has interest in most of its seven exploration blocks, awarded under the New Exploration Licensing Policy (NELP). 

While the NELP blocks have explicit provisions for seeking government and partner nod for transfer of control in the company, the contracts for the three producing properties make that necessary only in case Cairn India was to sell its stake in them, individually, to a third party. 

“As previously stated, following review of contractual documentation, we have been advised by external legal advisers and senior counsel in India that the provisions you refer to in both the pre-NELP and NELP joint operating agreements do not apply in respect of a proposed sale of shares in Cairn India,” Cairn Energy said. 

As requested by ONGC, Cairn Energy provided a complete copy of the sale and purchase agreement. ONGC, on October 21, wrote to Cairn Energy, saying it had preemption rights and asked for value of each of the 10 assets held by the British firm’s Indian unit so as to enable it to “decide on the future course of action.” 

“As you will see from the agreement, there is no value assigned to individual (assets): the asset that is subject to the agreement is the shareholding in Cairn India, not the individual licence interests,” Cairn Energy wrote. It said “all of the Indian operating expertise of the Cairn Group resides within Cairn India, and not (in) Cairn Energy. This will remain the case even if Cairn Energy ceases to be the controlling shareholder.” 

“We can also confirm that there are no planned changes in the organisation, standards, policies and systems of the Cairn India Group,” it further said. 

“The transaction will have no effect upon the knowledge and experience of the Cairn India Group as a PSC contractor, or that of Cairn India Group, operating in line with accepted international petroleum industry practice.”

CERC to launch renewable energy certificate trading soon

Renewable generation in the country is set to get a major boost, with the Central Electricity Regulatory Commission (CERC) planning to launch power exchange-based trading of renewable energy certificates (RECs) soon. RECs will be issued to renewable power generators by national load despatch centre (NLDC) against power supplied to discoms at their average pool purchase cost. Discoms in renewable power-deficit states can buy these instruments against their renewable power purchase obligations (RPO).

Trading will create liquidity in the market and make cost economics of renewable power projects more attractive for financiers. "We are going to launch soon formal trading of RECs soon. We are currently in the process of finalising a date," CERC chairman Pramod Deo said.

Under the national action plan on climate change, India has envisaged meeting 15% of its electricity requirement from renewable sources by 2015.

Concerned state electricity regulatory commission (SERC) is mandated to decide quantum of RPO for states. A roadmap on RPO has already been envisaged for each state in the Forum of Regulators, which comprises chairpersons of all electricity regulatory commissions and headed by the CERC chairman.

Since renewable power is costly, SERCs will look at factors like potential impact on electricity tariff the state and availability of renewable power while deciding quantum of RPO for the state.

The country's renewable power generation potential is concentrated in a few states like Rajasthan, Tmil Nadu and Karnataka. Renewable power accounts for a relatively high share of these states' electricity consumption. However, these states are not keen to take more renewable power as it is costly.

For example, Tamil Nadu already meets more than 10% of its electricity requirement from wind power projects but still has untapped potential to generate electricity from wind. On the other hand, there are states like Delhi and Bihar which have very little potential for generating renewable power but are required by the National Electricity Policy to enhance share of renewable electricity consumption.

To address this mismatch, the Forum of Regulators has evolved REC mechanism under which the renewable power is to be split into two components - electricity and the green attribute. The electricity component can be sold to local distribution utilities at a price of conventional electricity and the green attribute is converted into REC which the generator can sell to renewable power-deficit states like Delhi.

R-Power places Rs. 3400 crore order with GE

rore order with General Electric, expects its association with American firms will generate manufacturing exports worth over $2 billion from the United States into India, the company's chairman Anil Ambani said at a function during the visit of US President Barack Obama. Reliance's order for equipment from GE will help it build its Rs 10,000 crore power project in Andhra Pradesh. The contract entails supply of six gas turbines, three steam turbines, training and long-term services for the project.

In addition to supplying equipment, GE also has signed a 15-year Contractual Service Agreement for the Samalkot project, Reliance Power said in a statement.

Reliance Power's 2,400 megawatts (mw) gas-based power project at Samalkot in Andhra Pradesh is expected to be commissioned by 2012. "Reliance Power's partnership with GE and other US companies to result in over $2 billion of manufacturing exports from US to India over next 24 months," the statement quoted Mr Ambani as saying.

Reliance Power plans to scale up its capacity to 25,000 mw by 2015. Currenlty, the company has an operational capacity of 600 mw at its 1,200 mw Rosa Power Project in Uttar Pradesh and has also acquired operational capacity totalling 433 mw from group company Reliance Infrastructure .

"The `10,000 crore ($2.5 billion) Samalkot Project will represent the largest gas turbine combined cycle power project in India's history and will help India meet its continuing demand for reliable electricity to support its rapidly growing economy," Reliance Power said.

$175 million worth deals on clean energy signed with US

Even as India and the U.S. on 08-11-2010 inked an agreement to establish a bilateral energy cooperation programme to promote clean and energy-efficient businesses, Indian and U.S. companies inked joint venture deals worth $175 million in the renewable energy sector. According to the Assistant Secretary of Commerce and Director General for the Foreign Commercial Service at the U.S. Department of Commerce, Suresh Kumar, the partnership between the two countries in the renewable energy sector was all set to take a huge stride. "India provides biggest opportunities in the renewable energy sector and the Jawaharlal Nehru Solar Mission 2020 is an initiative which the U.S. companies would like to be part of. Around 35 U.S. companies recently participated in the Delhi Renewable Energy Conference and exhibited their technology and products,'' he remarked.

Sounding upbeat on the future of the relationship between Indian and U.S. companies in the renewable energy field, Mr. Kumar said a dozen-odd joint ventures had been signed between companies of the two countries totalling around $175-million worth of business in the renewable energy sector where the U.S. had the hi-tech technology to fuel the growth in the energy sector to meet the rising demand of the growing Indian economy.

U.S.-based Ascent Solar and The Energy and Resources Institute (India) have entered into a memorandum of understanding (MoU) to collaborate on off-grid solar charging solutions for rural electrification using Ascent solar modules. Nearly $15-30 million in U.S. exports are projected under this pact. Similarly, the other agreements include U.S.-based Team Sustain and UB Engineering Limited (India) signing an MoU to collaborate setting up large grid tie solar photovoltaic power plants in India which could generate business to around $84 million in U.S. exports. Azure Power (U.S.) and the Gujarat Energy Development Agency (India) have announced an investment of $40 million for a 15 MW solar power plant in Gujarat, a deal which could generate around $24 million of U.S. exports. Ice Solar (U.S.) and Race Power (India) have signed an MoU to collaborate on setting up a solar photovoltaic project in Rajasthan which could generate business worth $15 million in U.S. exports. On the other hand, the India-U.S. Energy Cooperation Programme will mobilise private sector expertise and resources.

Uttarakhand approves open access system for industries

Uttarakhand Electricity Regulatory Commission (UERC) has given its go ahead to the open access system under which power can be purchased from any power distribution company in the country.With the industrial output being affected due to 10 to 12 hour long power cut, few industries had approached the UERC to buy power from other than the Uttarakhand Power Corporation Limited (UPCL) under the open access system. UERC had already approved terms and conditions for open access. However, the state did not witness any single case for open access during the past few years.

But this year, some industries approached the commission and sought permission to purchase power from outside the state.

The hallmark of the open access is that consumers will not (not) have to pay the transmission charges, wheeling charges, cross subsidy and additional charges if they purchase electricity during the load-shedding period, said UERC Chairman V J Talwar. "So far, nearly 10-12 industries like La Opala and Greenply have approached us," said Talwar.

Under the new system, open access has been permitted to any consumer which is connected to distribution system of UPCL at 11 KVA and above.

The access has been divided in three broader categories viz short term ranging from the day to one month, medium term open access ranging from 3 months to 3 years and long term ranging from 12 years to 25 years.

All open access customers would have to bear average transmission losses as specified in the tariff orders from time to time.

Power Grid to shutdown JV with IL&FS

Power Grid Corporation of India Ltd said on Tuesday it has decided to shutdown its 50:50 joint venture power transmission consultancy business with IL&FS. 

"We have decided to make Powergrid IL&FS Transmission Private Ltd a defunct company and have already filed an application with the RoC to allow us to declare it as a defunct company," PGCIL director I S Jha said when asked.

Declining to be identified, sources said the company, which is the third largest transmission company in the country, did not find the expertise provided by IL&FS to the consultancy business up to the mark and accordingly, decided to end the JV.

PIPTL was formed just two years ago, in 2008.

Revenue from the consultancy business accounts for 3.6 per cent of PGCIL's revenue. The Navratna company is in the process of executing a pilot project for the world's first 1,200-Kv transmission line, which will have the capacity to carry upto 6,500MW of power. 

"We have formed a consortium of 33 vendors to execute 1,200-kv lines and after pilot is success, first project of 320 km connecting Aurangabad will be executed," Jha said.

This high tension line would cost around Rs 2.5 crore (Rs 25 million) per km, as against Rs 1.25-1.5 crore (Rs 12.5-15 million) for traditional 400-kv lines.

Speaking about plans to lease out the transmission towers for telecom infrastructure, Jha said tendering was underway to lease out towers in the states of Punjab, Harayana, Himachal Pradesh and Jammu and bids would be opened on November 22.

Six or seven service providers and tower infrastructure companies have shown interest in the tender, he added.

The company will require Rs 22,649.39 crore (Rs 226.49 billion) to meet the capital requirement the implementation of 12 identified projects.

The transmission projects are expected to enhance the length of the power distribution network in the country by 18,711 circuit kilometres.

The company will also pump Rs 58,000 crore (Rs 580 billion) during the 12th Five-Year Plan (2012-17) into nine transmission corridors for evacuation of power for private power projects.

Meanwhile, Powergrid's follow-on public offer, which opened today, received a healthy response and was oversubscribed 0.90 times.