et 01 01 2014

5January 2014 | Electricals Today

EdiTor's NoTE

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Volume 1 | Issue 12 | January 2014

The New Year has brought the lost glee back to the power sector. I could feel a sense of optimism returning to developers and potential investors.

To substantiate the above said there are newspaper reports highlighting how domestic investors, who don’t have footprint in the power sector, are weighing their options. While this implies the return of investments and investor confidence in the power sector I am a bit pessimistic —till the investments are a reality.

This is not the only positive news for the sector though. In the last one year, we saw solutions for the following issues: a) the fuel supply constrains which plagued the sector was addressed; and b) shortlisting of tenders for Tamil Nadu and Odisha UMPPs been undertaken in a fast phased manner. These UMPPs are of 4,000 MW each. It is to be noted that all the 17 companies which bid for these projects are among the top companies which are known for their expertise in developing greenfield projects.

Though India, in the normal course, works on the financial year basis, the positive signs seen in the power sector in the last few months of 2013 has brought cheer to the stakeholders. The stage is set to embrace the New Year with hopes and vigour to roll out more power projects. Here's wishing the industry all the best.

Ray of hope

Renjini Liza Varghese, [email protected]

ETElEctricals todaythe Decisive tool for the power inDustry

Electricals Today | JANUARY 2014 6

BullETinGovernment workinG on separatinG content, carriaGe in power sector

In a move that could usher in more competition in the power sector, the government is working on a proposal where separate entities would handle electricity supply and distribution. Discussions are already progressing with various stakeholders, including state power utili-ties on the proposal. Amendments to the Electricity Act 2003 would have to be made to implement the idea, officials said.

Under the separate carriage and content model, one company would own the network while electricity sup-ply would be done by different entities. Similar business models are already in place in some countries, including the United Kingdom.

At present in India, power distribution companies (Discoms) supply as well as manage network that provides electricity for residential and commercial purposes.

p9

PFC shortlists all bidders For two UMPPsPower Finance Corporation (PFC), the power ministry’s arm managing the bidding for ultra mega power projects (UMPPs), said that it had short-listed all the 17 initial bidders for two projects of 4,000 MW each, to come up in Odisha and Tamil Nadu. “Based on evaluation, all the nine applicants for the Odisha UMPP and eight appli-

cants for the Cheyyur UMPP which have applied for RFQs have been shortlisted for issuance of requests for proposal,” PFC said.

The Odisha UMPP is a pit-head pro-ject, with an investment of Rs25,000 crore. Companies that have expressed interest in the project include NTPC, Tata Power, NHPC, Adani Power, JSW

Energy, Jindal Power, Sterlite Infraven-tures, CLP India and L&T. The Cheyyur UMPP is a coastal project based on imported coal, with an investment of Rs24,200 crore. Eight companies, Adani Power, CLP India, GMR Energy, Jindal Power, JSW Energy, L&T, NTPC, and Sterlite Infraventures, had applied for the project.

Separation of content, carriage will bring more competition.

7JANUARY 2014 | Electricals Today

BullETin

The first unit of the 2x700 MW super-criti-cal Rajpura thermal power plant of L&T was inaugurated by Punjab chief minister Parkash Singh Badal. The plant, located near Nalash village in Patiala district of Punjab, is the first major coal-fired power plant to be owned and operated by L&T through a SPV – Nabha Power Limited. Coal supply for the Rajpura power plant has been secured through a fuel supply agreement with South Eastern Coalfields. The entire power will be supplied to Punjab.

Nabha Power had placed the total EPC (engineering, procurement, construction) order on L&T Power. In addition to the supercritical boiler and turbine genera-tor manufactured in collaboration with the joint venture partner Mitsubishi Heavy Industries, Japan, L&T also supplied balance of plant equipment including electrostatic precipitators, coal and ash handling plants, chimney, cooling tower, control and automation, switchyard, etc.

punjab cm inauGurates rajpura thermal power plant

p 10

CERC issuEd dRaft on nEw noRms foR powER RatEs

alstom to HElp GEtCo to intEGRatE RE to wEstERn GRid

The Central Electricity Regulatory Commission (CERC) has announced a set of proposals for new five-year rate guidelines. If implemented, experts say, these could dent the earnings of power utilities but reduce consumer rates. Analysts projected a hit of up to 8% to the annual rev-enue of for government-owned NTPC, the largest generating company.

The new guidelines are to come into effect in April 2014. The draft seeks to tighten operating norms for generators, including param-eters governing heat and oil consumed to produce power, and to link incentives to the plant load factor (PLF). Generators will be incentivised for higher generation, reflected in PLF. There is also a disincentive, to be levied if plants are available for less than 85% of the time. The new regulations would not cover power projects bid out to companies which promise supply at lowest rates.

Alstom T&D India has been awarded two contracts from GETCO (Gujarat Energy Transmission Com-pany Limited) to supply 400kV/220kV/66kV AIS substations, located at Charanka and Sankhari, to evacuate power from Gujarat’s first dedicated solar park. The substations will also play a pivotal role in strengthening transmission network in Gujarat by acting as the evacuation and nodal grid substations. Additionally it will also improve the energy flow in the western region.

Both the orders, worth approximately Rs1,510 crore, involve manufacture, supply, erection, testing, and commissioning of 400 KV substations.

Total capacity of Rajpura thermal plant is 1,400 MW.


BullETin

anCHoR sEts up lEd liGHtinG CEntRE iex sees oversupply of electricity

One of India’s electrical solutions manufacturer - Anchor Electricals Pvt Ltd (a Panasonic Group Company), has opened its first LED lighting showroom in Mumbai. This showroom gives consumers a ‘see, touch and feel’ experience of a diverse range of world-class home deco-rative lighting concepts and functions. With an in-house simulation room, customers will be able to view the lighting effects of various kinds of lighting fixtures and installation options in different settings. The showroom brings alive, ample possibilities of LED lighting and helps customers understand how the integrated lighting solution works in a given home environment. It will also have a comprehensive range of lighting solutions for the entire home. The 47 new models that will be available at the showroom include large ceil-ing light, compact ceiling light, chandelling (chandelier-like decorative ceiling light), down light, line light and wall bracket models.

Indicating sluggish power demand, Indian Energy Exchange saw a decline in electric-ity trading volumes in November even as the availability continued to remain high. The fall in volumes was mainly on account of the onset of winter in the northern region where the demand for electricity fell as much as 25%.

November saw 2,481 MUs (million units) traded in the market, marking a decrease of around 6% from the 2,645 MUs traded in October, IEX said in a statement. Last month, total sell bids touched 4,239 MUs, while the buy bids were for around 3,660 MUs. According to the exchange, with winter season in northern India, the constituent states in the region traded almost 25% less power in November compared to the previous month. In the eastern region too, the demand reduced owing to heavy rainfall caused by cyclonic activities," it said. Besides, congestion in transmission network restricted inter-regional flow of electricity.

Top management of Anchor Electricals during inauguration.

odisha’s power demand to touch 7,023 mw by 2021-22Odisha's installed capacity needs to double to meet the rising demand.

According to the 18th Electric Power Survey (EPS) of India, the peak power demand of Odisha is projected to rise to 7,023 MW by 2021-22 as against 5,237 MW currently. To meet this projected demand, the state needs to have installed capacity of 10,505 MW. On the basis of the survey, the Central Electricity Authority (CEA) has envisaged the energy requirement of the state to be 42,097 million units (MU) in 2021-22.

The peak demand for 2013-14, 2014-15, 2015-16 and 2016-17 will be 5,237 MW, 5409 MW 5,594 MW and 5,786 MW respectively and the energy requirements will be 32,079 MU 2013-14, 32,895 MU 2014-15 and 34,683 MU in 2016-17.

Similarly, the state's installed capacity required for 2013-14, 2014-15, 2015-16 and 2016-17 has been pegged at 7,833 MW, 8,091 MW, 8,367 MW and 8,655 MW respectively.For meeting the surging demand of power, the state government has signed about 29 MoUs with the independent power producers (IPPs) for setting up projects with combined installed capacity of 38,000 MW. Odisha expects to get about 6,200 MW from this generation.

Electricals Today | JANUARY 2014 10

BullETin

Renewablestamil nadu to come up with solar power tariff soon

Though Tamil Nadu had earlier set a target of setting up 1,000 MW solar power in 2013 and implementing 3% solar purchase obligation (SPO), the state has missed the target for the first year due to various reasons, said S Nagalsamy, member, Tamil Nadu Electricity Regulatory Commission (TNERC). The Commission is looking at coming up with the rate fixed for solar energy soon, he added. Speaking at a conference on solar power generation organ-ised by the Confederation of Indian Industry (CII), he said, "Tamil Nadu had honestly taken steps to see that the policy was issued in October 2012, and also called for tenders for 1,000 MW for the current year. Once the plants are set up and start generating power, achieving the 3% SPO would not be a dif-ficult job. However, there was a delay in it due to administrative hurdles."

The state government, for the first time in the country, had prescribed 3% SPO for 2013, and 6% from January 2014. Though it could not be achieved this year, but it was the state’s ambitious plan to encourage solar power generation. There were some doubts in the minds of the consumers as well as the power generation firms about the scheme and some of the consumer organisations approached the court against the order of TNERC on this.

aCmE to paRtnER witH Edf EnERGiEs nouvEllEs foR solaR

odisha Plans solar Power Plant at boUdhThe state energy department plans to set up a 50 MW solar power project at Manmunda in Boudh district at an investment of around Rs400 crore. The power plant will be set up by Green Energy Development Corporation of Odisha Ltd (GEDCOL). The deci-sion was taken at a high level meeting chaired by chief secretary, Jugal Kishare Mohapatra at the state secretariat where the energy secretary, Pradeep Kumar Jena outlined the broad features of the project. It may be noted that Solar Energy Corporation of India has proposed to set up solar projects of 750 MW in different parts of the country and GEDCOL will bid for 50 MW project to be set up in Odisha at the proposed site. State's nodal land acquisition agency Odisha Industrial Infrastructure Development Corporation (Idco) is requested to provide the land to GEDCOL for the project.

ACME Cleantech Solutions Ltd, an integrated energy generation, management and conservation company, has announced that it would partner French renew-able energy major EDF Energies Nouvelles (EDF EN), the renewable energy arm of state-run electric-ity utility Électricité de France S.A., and natural resources saving group EREN. This partnership will acquire 25% each in ACME Solar Energy Pri-vate Ltd (ACME Solar) to set up large scale solar projects in India.

ACME Solar, will be a joint venture between ACME Cleantech, EDF Energies Nouvelles and EREN. ACME Cleantech, with a current capacity of 17.5 MW of solar generation, is committed to creating credible solutions for the growth of the solar sector in India. ACME Solar is currently developing a 25 MW project in Madhya Pradesh and another 25 MW in Odisha. The joint venture plans to set up an initial portfolio of 200 MW of solar power projects in various phases.

Once the solar plants are set up, meeting the SPO target of 3% would be easy.

The solar plant will require an investment of Rs400 crore.


BULLETIN

ELECRAMA-2014Venue: BIEC, Bengaluru, KarnatakaDate: 8-12 January, 2014Elecrama-2014, the 11th edition of the world’s largest power T&D

confluence, will be hosted in Bengaluru this year. It is designed to

maximise the participant experience by its multilateral approach.

According to the organisers, the highlights of the show are:

international reverse buyer/seller meet, conference on transform-

ers, innovation day and students pavilion, CEO Nite with cross

stakeholder debate and awards ceremony.

ENERTECh WoRLd ExpoVenue: Bombay Convention & Exhibition Centre, Mumbai, Maharashtra Date: 10-12 February, 2014 EnerTech World Expo will be a three day event and will be an

ideal platform to showcase products such as transmission and

distribution equipment, rotating equipment, light fixture and

fittings, solar power equipment, pollution control equipment

and control gears. The participants will share their views on the

latest developments related to power sector. Product display,

conference, networking opportunities and meeting with industry

leaders will be some of the highlights of this show.

INTERNATIoNAL poWER TRANsMIssIoN ExpoVenue: Bombay Convention & Exhibition Centre, Mumbai, Maharashtra Date: 27 February-1 March, 2014 International Power Transmission Expo show ranks high on the

popularity count, with more than 2500 qualified visitors attending

the show on a regular basis. The latest developments and market

trends from this sector are discussed upon during the show. On the

side lines, topical business seminars are also organised. Exhibiting

companies from as many as seven different countries participate in

the event, showcasing a varied array of gear transmission products,

oils and adhesives, belt drives, cutting equipment, processing tools

and a host of other associated products.

poWER-GEN INdIAVenue: Pragati Maidan, New DelhiDate: 5-7 May, 2014

A landmark event in the Indian power sector, POWER-GEN India &

Central Asia 2014 will return to New Delhi, India’s power hub, where

the event was last held in 2012. This high-level conference and ex-

hibition is excited to present for the first time DistribuTECH India as

a new co-located event along with Renewable Energy World India

and HydroVision India ensuring complete coverage of the power

sector from generation to transmission & distribution.

EvENTsGAMESA bAGS 50 MW ordEr froM GrEEn InfrA

rEpoWEr bAGS tWo ordErS froM WInd fArMS In frAncE

Gamesa Wind Turbines Private Limited has bagged 50 MW wind project order with Green Infra Limited. Under the contract, Gamesa would be supplying 25 units G97-2.0 MW turbines at Kosegaon. The project is scheduled to be complete in two phases March and May 2014. Gamesa would be responsible for the full scope of site development, supply, commissioning and operation and maintenance for a period of 10 years.

“This business deal comes at a time when the wind industry is poised to bounce back in the light of government announc-ing restoration of Generation Based Incentive (GBI) to the wind industry,” said Ramesh Kymal, chairman and managing director, Gamesa. The Gamesa India-Green Infra deal is a clear indicator that IPP segment would be playing a pivotal role in the aug-mentation of Wind energy business in India.

Wind turbine maker Suzlon has said its arm REpower Systems has bagged two contracts for supplying 20 wind turbines in France. "REpower Systems SE, a wholly owned subsidiary of the Suzlon Group, bagged two contracts, totalling 40 MW, for the supply of 20 wind turbines with an output of 2.05 MW each," Suzlon Energy said in a statement. These turbines will be supplied to wind farms in France.

"REpower will provide with the full maintenance of these two wind farms for a minimum of five years," the statement said. The project deliveries, for the wind farm in Somme Soude, are planned for spring 2014, and commissioning for September, 2014.

Gamesa will be supplying 25 turbines to Green Infra.

Electricals Today | january 2014 12

Decommissioning of N-plants by robot

Split blade from Gamesa

With the aid of a new robot, called CHARLI, AREVA carried out laser cutting operations in the reactor vessel of the Super-phénix fast neutron reactor in Creys-Malville, France. It is the first time ever that both CHARLI and this type of laser cutting, performed in an environment for the extraction of sodium from a reactor, have been used. Work on the reactor, which is currently being dismantled, was carried out by AREVA for its customer, EDF.

Features:CHARLI is a small remote-operated vehicle (ROV) that is equipped with a robotic arm fitted with a laser cutting head and multiple vision cameras. It is specially designed to move around inside confined pipe work structures. It can also withstand high level radiations, high temperatures, and the presence of sodium, aerosols, and argon.

The technology development in wind energy in last decade has resulted in moving from KW tur-bines to MW turbine capacities. The sector faces substantial challenges in terms of logistics. Moving a 60+ metre wind turbines blades or tower is no small feat. As the wind turbine’s rotor goes up in size, its power increases as the square of the rotor, while its mass increases as the cube. This barrier was addressed by innovation in design and materi-als. Studies have shown that in recent years, blade mass has been scaling at roughly an exponent of 2.5 versus the expected 3.

Features:Blade is one of the key components of wind turbine with lot of challenges in logistic because of its length. To overcome challenges of logistics Gamesa launched split blade for its 4.5 / 5MW onshore / offshore model. This patent technology named as InnoBlade helps the transportation of blade in two parts using lighter and shorter trucks and later assembled in the field. The InnoBlade is set to hit the market by the end of 2014.

www.areva.com

www.gamesacorp.com

ProDucTS

13january 2014 | Electricals Today

ProDucTS

MHT series uPS from riello PcI

Preventing power leakage using mobiles

With its unbeatable performance concerning to quality, reli-ability and energy savings offered by the MHT (Master HP) series, Riello PCI has strengthened the HP series from 100 to 600 kVA .

Features:The MHT series provides maximum protection and power quality for data centres and industrial loads. The UPS has an IGBT-based rectifier, DSP (Digital Signal Processors) technol-ogy and provides true on-line, double conversion power protection, (VFI SS 11 - Voltage and Frequency Independent in accordance with IEC EN 62040-3). HP series also provides exceptional operating efficiency (over more conventional thy-ristor rectifier-based systems. The Master HP Series provides maximum protection and power quality for data centres and industrial loads.

The power sector, lately, has witnessed various reforms to help distribution companies curb losses. As per a report by the CEA, the T&D losses in the year 2010-11 amounted to 23.97 %. There have been increasing instances of frauds in electricity meter reading making it a usual phenomenon. In the past, many cases of individuals tampering with their electricity meter have been exposed, making it a serious concern.

Features:Today, in the technology savvy world, where mobile phone is acting as a multipurpose business operations management device, there is an app to curb this fraud in the power sector, as well. IMImobile, a provider of end-to-end mobile software and cost-effective mobile solution to ensure accurate read-ing of electricity meters with real time updates. It works on smartphone platforms like Android. What the on-field person-nel needs to do is enter the latest reading into the pre-loaded app and take a picture of the meter which is automatically sent to the main servers.

www.imimobile.com

www.riello-ups.in


ProDucTS


cPcB II norm compliant products from cummins

cost-effective rr Kabel cables

Cummins India Ltd, one of the largest manufacturers of diesel and natural gas engines for power generation, industrial and automotive applications, unveils a series of generator sets that are compliant with the new environmental norms (CPCB II). Working ahead of the lowered emissions implementation dates, the company is at the forefront of releasing fuel-efficient and smartly-designed auxiliary power solutions.

Features:The new series of generator sets are equipped with after-treatment systems that feature the most advanced exhaust emission-reduction technologies available today, not only exceeding the mandated emission standards, but also offer-ing improved energy efficiencies. In addition, technological innovation has eliminated the need for diesel particulate filters by deploying a high-pressure fuel injection system that signifi-cantly optimizes fuel efficiency.

RR Kabel has a wide range of better and cost efficient electrical wires for building and telecommunication industry. It uses technologies like HFFR (Halogen free flame retardant) and Unilay as the utmost importance to safety.

Features:The range of products include HFFR insulation with Unilay conductor, FLAMEX-FRLSH, low smoke and flame retardant cables, SUPEREX and Unilay. This unique twin technology of HFFR and Unilay are RoHS compliant. These technologies ensures optimal current carrying capacity, safety, unmatched reliability and elimi-nates the risk of electrical fires.

www.cumminsindia.com

www.ramratna.com


ProDucTS


facIlITIES

Philips launches light lounge in Hyderabad

Boiler circulation pumps from Torishima

Philips Lighting India has launched its third Light Lounge and second LightSTUDIO in Hyderabad. With this launch, the company now has 93 Light Lounges, in addition to 1050 Light Shoppe. Philips differentiates its offerings through innovation in design, energy efficiency and application of its global lighting application expertise

Features: The Light Lounge spread across an area of 900 sq. ft., is an experi-ence zone which gives customers a see, touch and feel experi-ence of a diverse range of home decorative lighting concepts

from Philips. Located in the same facility, the LightSTUDIO, with an additional area of 500 sq. ft., showcases conventional and LED lights and fixtures that can help offices, factories and retail outlets reduce their costs. Philips is buoyant about its plans to consolidate its retail presence in Andhra Pradesh and will launch more Light Lounges and Light Shoppes (Shop-in-shops) in 2014.

Torishima Pump Mfg. Co. Ltd, a Japanese pumps manufacturing company, supply pumps for power generation, desalination plants, water works and petrochemical plants etc. This includes pumps for a broad range of applications and specialises in the design and manufacture boiler circulating pumps, boiler feed pumps, condensate extraction and cool-ing water pumps for thermal power stations and combined cycle power plants.

Features:In response to the customers’ needs of maintenance services, Torishima has launched a service facility in Bangalore. Range of services includes installation and commissioning, routine maintenance, repair and overhauls along with the supply of spares for both Torishima and non-Torishima pumps. Team of highly skilled and extremely dedicated field service engineers are available 24X7 to resolve any urgent and unexpected problems that might occur at the customer’s site.

www.lighting.philips.co.in

www.torishima.co.jp


ProDucTS

TuV SuD's testing laboratory

Schneider Electric launches renewable Energy Training centre

TÜV SÜD South Asia launched environmental testing labora-tory in Delhi. The NABL accredited laboratory is now recog-nised by the Ministry of Environment and Forests (MoEF) and the Central Pollution Control Board (CPCB).

Features:The laboratory is fully equipped to provide a wide range of services like air and water testing, waste water testing, pes-ticides residue in water, soil and waste, ambient air/ indoor air monitoring, compressed air testing, stack monitoring, soil analysis, sludge analysis, solid waste analysis, petroleum prod-ucts and solid and liquid fuels. The laboratory will also offer value added services like sampling pick-up, technical support and training support.

Schneider Electric India Foundation inaugurated its first Renewable Energy Training Centre at the Art of Living headquarter in Kanakpura - Bangalore Ashram in December. The Renewable Energy Training Centre has been setup to support new entrepreneurs from the “bottom of the pyramid” to start their business in renewable electrical market along the lines of Sch-neider Electrics’ CSR programme Business, Innovation, and People at the Base of the Pyramid (BipBop) which aims to provide reliable, affordable and clean energy for people with limited or no access to electricity.

Features:The Renewable Energy Training Centre RETC will play a vital role in training youth to distribute and manage electricity in rural parts in a sustainable manner. This RETC will create 150 livelihood opportunities per year in energy classification, basics of electrical engineer-ing, safety and health hazards, solar energy, micro grid installation and maintenance, solar water pumps installation and maintenance, battery management.

www.tuv-sud.in

www.sei-foundation.com

facIlITIES

Nagarajan, of schneider electric inaugurating the Centre in the presence of sri sri ravishankar

Electricals Today | january 201418

Draft CERC guidelines triggger debate on Plant Load Factor versus Plant Availability Factor

Salil Garg, Director-corporates, India Ratings & Research

CONTENTIOUS ISSUE

The release of draft CERC tariff regulations for 2014-19 caused a minor tremor on the Indian stock exchanges as NTPC, the largest Indian power generator, went into a tailspin and the usually stable stock lost more than 10% on

its listed price on 10th December 2013. A damage control exercise by NTPC has contained the situation for the time being, but the jury is still out on the draft regulations.

Before we come to the specifics, I must say that CERC guidelines have usually been transparent, stable and favourable to the generators. The recent draft regulations have maintained the basic philosophy of cost plus return on equity (ROE) at 15.5% for thermal generators. In keep-ing with its tariff philosophy of allowing all reasonable costs, CERC has proposed changes with respect to station

heat rate, O&M costs, water charges, and tax rate. What has kicked a debate is the proposal to change

the basis for determination of incentives. In the past, it was possible for regulated

power producers to earn ROEs of over 20% despite bench

mark ROE of 15.5%. This was possible, inter-alia, due to

allowance of incen-tives based on availability.

This could now change. Before we answer the big question, let

me recap that a regulated power plant might be notionally available for generating power based

on the fuel specified in power purchase agreements (PPAs); and in case the buyer backs down, it is obligatory for the buyer to pay for fixed costs in full in case plant availabil-ity touches 85%. Once the fixed costs are fully recovered, there is a justifiable reasoning to provide incentives to the

PLF should be

85%

column


column

meaning penalty on generators for lower availability would simply be double of what it was in the past.

Now this is a double whammy: lowering of incentives but increasing the disincentives.

At the heart of this are the rhetorical questions: Is It fair to switch to PLF for incentives from PAF? Is it fair to remain wedded to PAF for disincentives while shifting to PLF for incentives? Can disincentives and incentives be based on two different parameters? Should incentives and disincen-tives be based on a single factor either PLF or PAF? If yes, then what should that single factor be - availability or load?

The regulator has clearly answered all these questions by proposing that there should be two different considera-tions for incentives and disincentives, viz. load and avail-ability. It is easy to see the logic behind this. Currently, the generators are able to show availability, sometimes based on expensive fuel, consequently earn incentives without producing power, even when they have already been paid in full towards fixed costs. In such scenario, the Discoms and ultimately the consumers are paying for power which was neither produced nor used. As a result the consumers are bearing the actual load for notional availability. This burden will be reversed by the new guidelines.

At the same, time by linking the disincentives to PAF the consumers will continue to bear the burden for not off-taking power up to 85% of PLF as the generators have to be reimbursed in full for fixed costs for making the plant avail-able up to 85% of nameplate capacity. This is logical and acceptable given that generator has invested in the plant assuming the off-take of power for 85% of plant capacity. Without such a guarantee of recovery of full fixed costs, there would be little motivation to set up power plants.

Why should there be lower load but higher availability in a power deficit country is a topic for another discussion. Presently, the moot point is what will the regulator finally do? Will it stick to the principle of PLF for incentives and PAF for disincentives? Will it penalise the generators for lower PAF but not for lower PLF and at the same time will it incentivise then for higher PLF but not for higher PAF? My hunch is yes.

Incentives for power plants will be calculated on PLF from April 2014.

generators in order to reach and even breach the 100% capac-ity. In the current regulations, the basis for such incentives is plant availability factor (PAF) but this could be changed to Plant Load Factor (PLF) from April 1, 2014. It will be a shift from the notional to the actual. Hence, the generators who were earning incentives for power they had not produced might not be able to do so going forward.

At the same time the incentives for efficiency are balanced by disincentives, which are presently based on PAF. In case a gen-erator is unable to provide plant availability for less than 85% of installed capacity there is not only a pro-rata lower recovery of the fixed costs but there are disincentives for such lower avail-ability. The draft regulations propose tweaking with the formula for disincentives though the principle for disincentives remains the same viz. PAF. Presently, generators are penalised for lower availability by a factor of .5x while 50% availability is a given. Going forward, the factor for lower availability could be 1x

The recent draft regulations have maintained the basic philosophy of cost plus return on equity (ROE) at 15.5% for thermal generators.

cover story

electricals today | january 201420

cover story

BK Chaturvedi, MeMBer - energy, Planning CoMMission, on his role in addressing Key issues regarding the Country's energy seCurityBY RENJINI LIZA VARGHESE

the best known face for the power industry, BK Chaturvedi, Member - Energy, Planning Commis-sion, is synonymous with the power sector. A former Cabinet Secretary, he is well accepted both by the government and the industry stalwarts when it

comes to making changes to laws concerning the electricity sector in the country.

Though the power sector is one of the worst hit because of the economic sluggishness Chaturvedi, as part of Planning Commission, readily tossed numbers to point out achievements in the power sector in the last couple of years. These numbers, according to Chaturvedi, give the industry the confidence to achieve the capacity addition target for the 12th Plan Period.

capacity additions in the last Plan Period and the cur-rent Plan Period have taken a beating owing to various bottlenecks (fuel shortage, financing, clearances, equipment supply, etc.). How is the government plan-ning to address this? The capacity addition in the 11th Plan Period has been highest in any plan period. Though it could achieve nearly 90% of the MTA target of 62,000 MW but it is more than twice the addi-tion achieved in the 10th Plan Period. Considering the fact that there have been bottlenecks in delivering the fuels – both coal and gas – to the new power plants, these problems are being addressed by government in the current Plan Period. In this regard, Ministry of Coal has decided that for those plants which have been commissioned after April 1, 2009, the supply of coal would be given on the basis of Power Purchase Agreement

Torchbearer

21january 2014 | electricals today


cover story

Target for the current Five Year Plan is Rs1,00,000 crore.

signed with state power utilities. Further, it has been decided that CIL would supply 80% of ACQ required for the power plants with commitment to supply 65% from domestic sources. For the bal-ance requirement, CIL would be able to supply imported coal on cost plus basis or the developer can also import coal.

Do you feel the delay in completion of various power pro-jects could be curtailed? If so, what are the government plans for it?To ensure that the power projects are not delayed/stalled, the Government of India has constituted CCI to fast-track pro-jects in infrastructure and manufacturing sectors, which, inter alia, includes power sector projects. For this purpose, a cell in

the nature of Project Monitoring Group (PMG) in the Cabinet Secretariat has been constituted to monitor stalled projects for resolution of various issues involved therein. Cabinet Committee on Investment (CCI) is regularly monitoring the implementation of decision already taken in this regard. CCI is also monitoring the implementation of three critical railway lines, namely Tori-Sivpur (43 km), Jharsuguda-Barpalli-Sardega (53 km) and Bhupdevpur-Korichapar-Dharamjaigarh (180 km), quarterly for coal evacuation from North Karnpur and Mahanadi Coal Limited (MCL). In addition, Ministry of Coal is regularly monitoring the development of captive coal blocks to ensure that they supplement the efforts of public sector companies.

CIL would supply 80 % coal to those plants which have signed PPAs with 65% domestic coal.


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considering the current situation in the sector, plans of adding 75,000 MW in five years seem to be fairly ambi-tious. the first year of capacity addition witnessed only 59% of the target and second year was no different. If this is the pace at which it is moving, are we foreseeing a downward revision like the 11th Plan? What is the road map for achieving the 75,000 MW target?12th Plan is aimed to have addition of 88,537 MW. It has added 20622.8 MW in the first year (2012-13) of the 12th Plan Period against a target of 17956.3 MW achieving 115% of the target and not 59% as reported by your magazine. In the second year (2013-14), during the first six months (April-September, 2013) a capacity of 4798 MW (52.2%) was achieved against a target of 9196.3 MW. The cumulative capacity addition by the end of September, 2013 has been at 25,421 MW against the 12th Plan target of 88,537 MW. Considering the pro-gress so far, the capacity addition is expected to be achieved by the end of the 12th Plan Period. It is expected that out of the 78,000 MW planned till 2015, FSAs has been signed for more than 90% of the capacity by the respective generating companies. However, the issue of balance capacity beyond 2015 will be reviewed in consultation with the Ministry of Coal.

Do you feel that due to the severe problems in electric-ity sector, the country's image has taken a beating as an unsafe investment destination, if so what steps are being taken to revive the image? How crucial is foreign invest-ment in the power sector? This may not be correct as the current scenario in the power sector in the country has improved substantially. The gap between rising demand and supply of power has been reduc-ing. For fast track clearance of the power projects, CCI has set up Project Monitoring Group (PMG) as stated earlier. Simul-taneously, coal shortage has also been resolved by Ministry of Coal. Out of the 78,000 MW, more than 90% of the capacity FSAs have been signed by the state power generating compa-nies. With recent debt structuring scheme of the Discoms, the State Power Utilities are in a position to improve the physical as well as financial performance of their system. Also, FDI investment in the power sector is already allowed. Further, Ministry of Finance in consultation with the Ministry of Power reviews the FDI fund flow periodically.

How far is the slowdown in the power sector affecting the holistic growth of the economy? could you quantify please? conversely, if the sector picks up do you see a consequent rise in demand? If so, is anything being done to pump this demand? As stated earlier, the capacity addition in the first year of the 12th Plan Period has been more than 115% of the target. Thereby, electricity growth in the first half year (2013-14) has been more than 5% over the last year, whereas the GDP growth has been around 5% in the same period. The growth in generation (despite the large fall in availability of fuel – particularly gas) has resulted in reduction of energy shortage from about 8.5% to 4.8% and peak shortage from about 9% to 4.6% in the first half year (2013-14) compared to the same period last year.

India has added 20622.8 MW in the first year (2012-13) of the 12th Plan period against a target of 17956.3 MW, achieving 115% of the target.


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there is a new issue brewing in the power sector – there are no takers for electricity, as power became costly because of the fuel pass on. Discoms seem to be keeping away from procuring higher priced power though there is shortage. This issue has been raised by the developers. Most of the power plants commissioned after April, 2009, are getting assured coal supplies, though to the extent of 65% of ACQ. For the balance requirement, developers either import coal or procure through e-auction. Generation based on import or e-auction coal would be expensive. But with the restructuring of Discoms finances, now they are able to procure higher share of such power.

Lack of eHv/UHv transmission evacuation facility is a major hurdle faced by all segments of power producers. What are the steps taken to address this issue? EHV/UHV network in India is one of the best power systems in the world. As such the system has adequate redundancy and is able to evacuate additional power from the existing system. PGCIL is build-ing EHV 765 kV system for further augmentation of the capacity and facilitate transfer of power from one region to another.

Do you feel connecting the southern grid with the rest would address the problem of evacuation facility or will it aggravate the issue, as the gap in demand and supply is higher in southern grid?No, on the contrary, it would solve the current deficit situation in

southern region particularly in Tamil Nadu, as with connecting southern grid with the north- east- west grid would facilitate evacuation of surplus power, particularly from the western region.

elaborate on the progress of Discom debt restructuring plans announced by the government. recently, more states were brought under this. What is the time line that you are looking for a turnaround of Discoms? The scheme on debt restructuring scheme is under implemen-tation in Tamil Nadu, Rajasthan, Uttar Pradesh, Haryana and Himachal Pradesh. The State Utilities of Jharkhand, Bihar and Andhra Pradesh, which were facing financial difficulties and were keen to participate in the scheme, could not do so due to practical difficulties in meeting certain requirements of the FRP scheme. Recently, CCEA has approved the scheme for inclusion of these three states for participation under the scheme. As a result of the approval by the Cabinet, the cut-off date for reck-oning the eligible amount of short term liabilities for issuance of bonds / rescheduling by lenders has now been shifted to 31.03.2013 from 31.03.2012 (for these three states only).

Has the At&c loss reduction programme suddenly slowed down? The restructured APDRP programme is on actual, demon-strable performance in terms of AT&C loss reduction to 15%. Part-A of the programme focuses on establishing reliable and

53% of villages in the country has access to electricity.


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PGCIL is building EHV 765 KV system for further augmentation of the capacity and to facilitate transfer of power from one region to another.

90%capacities till 2015

has signed Fsas

automated system for sustained collection of accurate base-line data, thereby adopting IT in the areas of energy account-ing, auditing and consumer-based services, and is likely to be completed by 2015. Completion of part-A would lead to gradual reduction of AT&C losses by carrying out part-B of the scheme through strengthening of the distribution system which includes activities like automation and validation of baseline system, project evaluations, capacity building and development of franchisees.

elaborate on the roadmap envisaged for achieving 'power for all'? The Census 2011 has revealed that household electrification in the country has been at 67.2%. While the rural household has increased from 44% (2001 Census) to 55.3%, access for urban households increased from 87.6% in 2001 to 92.7% in 2011. The growth in rural electrification has been possible due to imple-mentation of RGGVY scheme which was launched in April, 2005. The RGGVY scheme is continuing during the 12th Plan period. It may be stated that RGGVY scheme is to provide access of elec-trification in the villages, however, for electricity connections other than BPL Household has to be availed by the consumers themselves.

though the suggestion of Plan Panel on coal banking is well received by the Ministry and the IPPs, clarity on who will act as a banker and the pricing methodology is yet to be known. could you please explain?The proposal is under consideration by the government.

A lot has been talked about achieving energy security. How-ever, we are far from that. Highlight the hitches and recom-mended roadmap by Planning commission in this regard?Energy Security involves ensuring uninterrupted supply of energy to support the economic and commercial activities nec-essary for sustained economic growth. The roadmap by Plan-ning Commission for ensuring energy security has been given in the report on the Integrated Energy Policy (2006) and more recently in the 12th Plan document under the Energy chapter.

These need to be implemented by the line Ministries dealing in the energy sector.

Is the progress of 14 smart grid pilots really slow? What do you feel could be the reasons for the same?The 14 smart grid pilots are aimed at integrating the consumer, operations and asset management domains of distribution sector to bring in efficiency and enhance reliability. In the first instance, outcome of these pilots will be evaluated for design of nationwide rollout plan for smart grid in India. Three out of 14 utilities, i.e. UGVCL in Gujarat, CESC in Mysore, and MSEDCL in Maharashtra, have floated tender for selection of system integrator for their pilot project.

At Puducherry, Power Grid in association with Pudduchery Electricity Board have started the work on PPP model, where around 1,300 smart meters have been installed on collaboration basis. Few monitoring units for distribution transformers and automatic power factor controller have also been installed for outage management and power quality management.

The Smart Grid Vision and roadmap document for India was released during Power Minister’s Conference on September 10, 2013. Activities for planning the launch of National Smart Grid Mission have been initiated.

Do you feel that the renewable energy certificate (rec) scheme has come to a standstill? If so, what are the reasons? Renewable Energy Certificate (REC) is a policy mecha-nism to promote renewable energy-based power generation in India. Technologies such as wind, solar PV, solar thermal, biomass and hydro are eligible to earn RECs. It is a fact that for trading, REC has not developed as desired because of non-implementation of Renewable Purchase Obligation (RPO). However, MNRE is taking measures and pursuing with the State Electricity Regulators for opera-tionalisation of RPO. The government is contemplat-ing changes in the Electricity Act 2003, too in this regard.

Demand side Management (DsM) projects are not con-sidered as an alternative to supply side additions. What, according to you, are the barriers for various DsM schemes? Improving energy efficiency is an important instrument for containing the demand for energy and several initiatives are being taken in this regard by BEE. BEE has initiated number of schemes for promotion of energy efficiency in the country. These include standards and labelling, energy conservation building code, Bachat Lamp Yojana, energy efficiency in small and medium enterprises, agriculture and municipal demand side management and NMEEE. As per BEE, these schemes are estimated to have achieved savings equivalent to 11, 000 MW of avoided power capacity.


Raj Eswaran, IEEMA president on his expectations from Elecrama-2014 and what the government needs to do to revive the electrical sector

The red carpeTBy Renjini Liza VaRghese

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Expectations are taking the front seat rather than confidence with Elecrama-2014 organisers, IEEMA. In their own words, “this year’s event will provide enough business to our exhibitors and further expand the networking and technology platform

to help build a more robust Indian electrical industry.” In an interview with ET, Raj Eswaran elaborated on the plans and expectations for this year’s Elecrama-2014. He said, “We have six halls having a gross area of 70,000 square metres, 1,200 exhibitors from 30 countries, 1,25,000 footfalls expected from more than 120 countries. With the host state’s utilities BESCOM and KPTCL being partner utilities, this is a first for Elecrama.

In addition to the main event, there are events like TRAFO-TECH international conference on transformers for smart grid, CIGRE technical session, discussion on latest trends in HV/MV equipment, international T&D conclave which will have a panel discussion on the trends/demand for electrical equipment, CEO summit – a networking event, technical session on the latest HTLS conductors, etc. Reverse buyer seller meet with Ministry of Commerce and Industry. "

This is the first time Elecrama has moved out of its home ground Mumbai to Bengaluru. According to Eswaran, “Despite a global slowdown and negative growth of the industry, we have exceeded space sales by almost 11% over the previous Elecrama held at Mumbai. Our decision to shift the event to BIEC Bengaluru has, hence, been vindicated by the overwhelming response from the exhibitors and resulted in the entire space being sold out in less than three months.”

Power sector, especially the component segment, is feel-ing the heat of the slow down. Please comment.The industry has built up capacities on the anticipated demand which has not fully materialised apart from cash crunch faced by the industry. Exports, too, are down due to prevailing global condition, unbridled imports are also hurting the industry, and this is triple whammy. However, the Indian industry is resilient and recently we have seen some improvement in demand in some select segments, giving rise to some optimism.

Though the government and industry spell out the road-map for the making india export oriented, there seems to be some barriers. List out the concerns and how does the industry expect to overcome this?The various challenges faced by the Indian industry are: multi-plicity of taxes and procedures which slowdown the industry further. Surprisingly, inspector Raj is making a comeback in India, while the world is moving towards fewer controls. Infrastructure status and deemed export status still remain a pipe dream for the electrical industry. The precarious health of the Discoms across the country has led to a cash crunch and lower demand Imports without adequate controls and huge procurement from overseas has put the domestic industry on a back foot. IEEMA is actively working to address all these challenges.

iEEMA as an industry body has been taking represen-tation to the government. What according to you has changed in the past decade?IEEMA is now focused on improving on its engagement with the government and its various departments through representations and awareness meetings, etc. to address the various challenges.

The precarious health of Discoms across the country has led to a cash crunch and lower demand. Imports without adequate controls and huge procurement from overseas have put domestic industry on the back foot.

Raj Eswaran


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The reforms have slowed down and need to be speeded up. The financial condition of the Discoms has further deteriorated over the years. The industry capacity is currently under utilised. Imports are increasing. Defective FTAs and RTAs are also hitting the domestic industry. Implementation of GST, which would have provided relief from the multiplicity of taxes and increased costs, is highly desirable. All in all, the government has tight-ened its stranglehold on the industry instead of freeing it.

in 2008 during the global recession, india had taken a severe hit on the supply chain side. There is a similar situ-ation prevailing now. Your comment.Yes, the Indian electrical industry has been badly hit; however, this is a matured industry. Hence, the government needs to ensure its viability and provide a level playing field in the form of imposi-tion of taxes and duties on imports. The binding import tariffs should not be lowered further without consulting the domes-tic industry and also restrain from new FTAs and RTAs till the affected industry been taken on board. Domestic demand needs to be accelerated by further reforming and modernising the Discoms. The government also needs to debottleneck the energy sector to quickly restart the stalled power projects, provide RoI and environmental clearances expeditiously. Also, adequate checks and balances need to be put in place to curb injurious and unnecessary imports.

The minister, during iEEMA AGM press conference, had mentioned about taking action to prevent small compa-nies shutting shop. Any action from the government in this regard?As per reports, the government is considering restructuring of corporate debt for MSMEs so that the trend towards these units

The government needs to ensure its viability and provide a level playing field in the form of imposition of similar levels of taxes and duties on imports. The binding import tariffs should not be lowered further without consulting the domestic industry

To revive Indian electricity segment, the government needs to curtail imports.


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tives are under planning: a) Collaboration with the Ministry of Heavy Industry under the Electrical Industry Mission Plan 2012-2022; b) Skill Development Council; c) A proposed finishing school for fresh engineers and ITI pass outs; d) IEEMA training and certification facility for electricians in association with the central government.

Are you looking at Elecrama as a yearly affair from the cur-rent biennial programme?Elecrama started as a triennial affair in 1990 and shifted to being a biennial affair from 2002 onwards based on the exhibitors’ feedback and pace of technology change. Making Elecrama a yearly affair needs to be studied in detail. However, recognising the faster pace of technology change the need for providing a showcase/networking platform we are proposing a new exhibition INTELECT on the fast moving and emerging sub 1 kV electricals and electronics segment all under one roof – is scheduled to be held at Bombay Exhibition Centre in January 2015 in Mumbai, on Sub 1 kV electricals which will encompass the fast growing home and building automation segment.

11% more space booking for this year's

Elecrama

becoming financially unviable and closing down can be arrested. However, no concrete steps seem to have been undertaken at the ground level. The focus appears to be more towards increasing the pace of recovery of loans that have gone bad so that the increasing non-performing assets (NPAs) in the banking sector are reversed.

In my view, the increasing NPAs in the banking sector are directly correlated to the economic downturn, and the govern-ment needs to focus all their energies on reviving economic growth. To accelerate demand for the domestic electrical equipment industry, the government should expeditiously address the challenges confronting the country’s power sector, including the problems in fuel linkages, land acquisition, envi-ronmental and other clearances, precarious financial health of utilities, etc. The power sector needs the highest attention of the government. The government has to provide more encourage-ment to indigenous manufacturing as practiced by several other countries, including China.

There is a growing demand that the industry should actively look at developing skilled personnel as per the industry requirements. Elaborate on the initiatives taken by the association.The association is fully appraised of the urgent need of skill development for taking the industry forward, following initia-

Restructuring of bad loans for SME and MSME sector will be helpful for the electrical segment.

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mAADhAv DigrAsKAr, mD AnD ceo, cAble corPorAtion oF inDiA

Cable industry is the crucial infrastructure backbone of any economy. Over the past two decades, the Indian wire and cable industry has undergone a major shift from unorganised to organised sector, with still about 35% of the market con-tinuing to fall under the unorganised sector today.

The cable industry can be broadly divided into three major sectors: power cables, control cables and telecommunication cables. The size of the Indian cable industry is estimated at approximately Rs15,000 crore (excluding building wires and railway signalling cables), comprising of 40% of the electrical industry. The wire and cable industry is expected to grow two-fold in the next five years.

The cable industry constitutes of about 27.5% of the overall electrical industry. Demand has slowed down in the

last couple of years and the electrical equipment industry witnessed negative growth in FY13 for the first time in last decade. As per IEEMA estimates, the industry witnessed a negative growth of 8% in FY13 vis-à-vis 6.6% growth in FY12. The cable industry too showed negative growth of 25.7% in 2012-13 (April-March).

Due to the subdued growth of the electrical equipment sector the cable industry is facing multiple challenges. Various manufacturers had undertaken huge expansions to capaci-ties, has resulted into under-utilisation of capacities.

While exporting to other countries, the Indian manu-facturers have the cable type tested from the approved laboratory from the respective countries. Similarly, the Indian government undertakings and power utilities should also incorporate type test approval certificate of Indian National Laboratory such as CPRI and approval from Indian Standards Organisation for foreign bidders to qualify to bid.

There is sluggishness in demand for not just cables, but the entire electrical equipment industry. Due to overall slump in GDP, the domestic electrical industry reported a 6.9% growth in FY12, as compared to 13.7% in 2010-11. Sluggish growth in power sector and escalating imports are impacting the com-mercial viability of domestic industry.

There are many diminutive and small cable companies who compromise on quality and supply sub-standard products.

In certain segments small local producers may be encour-aged by legitimate tactics like price preferences, but in most segments there is breach of even basic standards. Standard regulations followed by medium and large scale manufacturers are bypassed by most small ones. Those operating in the unor-ganised sector may take advantage of the unmetered power supplies for agricultural use or avoid paying duties and taxes.

While tenders are being floated for EHV cables that stipu-late certain criteria, it is seen that there is lack of standardisa-tion across the country. Though product specifications differ from utility to utility, cheaper imports from manufacturers

whose credentials are unproven will create a zero entry barrier for these products leaving the local industry exposed to unfair competition. Technically competent Indian companies will be facing a problem of demand.

On the commercial front too, foreign suppliers are favoured with payments in the form of secured letter of credit whereas the domestic industry faces unfavourable open credit terms of payments from the users and SEBs.

In a matured market like Western Europe, products such as building wire are generally regarded as commodities and quality is a secondary consideration. In India, however, the market situation is different: consumers are quality conscious, aware of brands and quality of products. In such situation, unscrupulous producers try to sell counterfeit cables.

The growth of cable industry is synonymous to the growth in overall electrical equipment sector. Manufacturers and

contractors should be made to adhere to stringent BIS-PQ guidelines to ensure quality and facilitate wire and cable industry to see a significant rise in efficiency. Preference for domestic suppliers is one of the most important measures that the government needs to take. Most countries impose as much as 25% duty on import of cables, while there is hardly any duty levied in our country. This is advantageous to interna-tional players as they are able to sell cheaper than the Indian manufacturers. In today’s scenario, Indian imports are much higher than the exports. Appropriate government interven-tion is, therefore, crucial for the growth of the domestic busi-ness. For instance, instead of allowing free imports from other countries, the government can insist international players to manufacture locally either to collaborate with Indian players or invest here.

Along with that the government needs to ensure effective implementation of tamper-proof meters, insulated conduc-tor, and regular patrolling of lines to bring down the T&D losses in power.

The Indian wire and cable industry is now in dire need of a catalyst to spur growth. The State Electricity Boards can induce growth by strengthening the power network and reducing transmission and distribution losses, which will in turn lead to rise in demand for electrical equipment like cables.

Last year, the cable industry has registered negative growth.


Feeder separation and building IT capabilities through R-APDRP initiatives are forming a strong

foundation for a secure distribution network

Robust gRid

BY MohaMMad Saif

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The distribution end of the Indian power sector caters to approximately 200 million consumers with a connected load of about 400 GW, positioning the country among the largest electricity consumer bases in the world.

The consumers are served by around 73 distribution utilities – 13 electricity departments, 17 private distribution com-panies, 40 corporatised distribution companies and 3 State Electricity Boards.

The viability of the entire power sector value chain depends significantly on the performance at the distribution end. It, therefore, becomes imperative to keep the distribution end financially sound and operationally efficient.

Over the last 15 years, majority of states have unbundled the state electricity boards (SEBs) to create distribution utilities and subsequently worked to improve electricity access and reduce distribution losses through state level initiatives and central sector schemes like RGGVY, APDRP (erstwhile APDP) etc.

The last five year plan witnessed the launch of R-APDRP, a distribution focused programme to build IT capabilities in the Discoms and improving the distribution network infrastructure. The financial restructuring programme (FRP) was also intro-duced to help in fund arrangements for the loss making distri-bution utilities. Further, the launch of the National Electricity Fund (NEF) was directed towards promoting the much needed capital expenditure in power distribution.

The central sector schemes are further complemented by state specific initiatives like feeder segregation, load segrega-tion, HVDS, relocation and replacement of energy meters etc.

These initiatives are ushering in a slow but definite change, helping push the sector towards higher benchmarks for improvement.

In this light, it is essential to build a vision for a future distri-bution utility that is commercially self-sustainable and

operationally superior to the contemporary utilities. The vision can easily be built by borrowing

some of the already proven indigenous best practices in the country on

key business areas like:; Enhancing Customer

service ; Stringent regulatory compliances

; Building a green and cost efficient power portfolio

; Improving IT penetration

This article shares improvement opportunities in the aforemen-tioned areas backed by a relevant success story.

Enhancing customer serviceIn recent times, India has seen a marked shift towards consumer orientated service delivery in sectors like telecom and health. The power sector cannot remain untouched for long by these shifting paradigms in the service industry. Initiatives like open access and the recently issued draft amendments to the Electricity Act, 2003 on separation of carriage and content are

noteworthy steps in this regard. Globally, too, improving the consumer relationship manage-

ment (CRM) is among top priorities of the distribution utilities.

The same is substantiated by the results of a recent global survey conducted by PwC.

The Maharashtra Electricity Regulatory Commission order has allowed choice of supplier to a certain set of LT consum-ers in Mumbai, thereby empowering the end consumers to choose from the two private distribution licensees on the basis of supply tariffs and service delivery standards. The initiative itself has made the distribution utilities to compete primar-ily on consumer service levels to protect and enhance their consumer bases.

stringent regulatory complianceThe building blocks for the regulatory framework in the Indian power sector are laid down by the EA2003. However, even after a decade of formation of the State Electricity Commis-sions, the power distribution utilities cannot be termed 100% compliant to the provisions of the respective State Regulatory Commissions, especially in the standards of performance.

A key reason for majority of non compliances can be attributed to the lack of necessary infrastructure within the distribution utilities. However, it is essential to move towards a regulatory regime that promotes a stringent system of incen-tives and penalties.

There have been standalone instances of regulatory asser-tiveness in the country but the time is ripe enough to trigger a complete shift towards a stringent regulatory regime that shall

400 GW of generation capacity in the country

Source: PwC global utility Survey, 2013

0%

Asset performance management

Asset risk management

Customer service and relations

Capital project risk management

R&D effectiveness

PeRfoRmAnCe of ReSPonDentS SAying theRe iS high oR veRy high SCoPe foR imPRovement

40% 80%


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drive the sector toward better results.The Uttar Pradesh Electricity Regulatory Commission has

recently adopted a tough stand against the problems faced by consumers who were unable to pay their electricity bills on time on account of slow internet connection at the Discoms’ cash collection centre. The Commission has directed the Dis-coms not to levy any late payment penalty on such consumers.

building a green and cost efficient power portfolioPower procurement is presently the highest cost contributor to the Indian power distribution. Volatile market prices, depleting domestic fossil fuel reserves and supply risks for imported coal are further pushing the power costs to the ceiling. Further, increasing environmental awareness has resulted in introducing mandatory ‘Renewable Purchase Obligations’ for the power distribution utili-ties, contributing to an initially high cost power portfolio.

It is therefore essential for the distribution utilities to build a power procurement portfolio that optimises cost and at the

Even after a decade of formation of the State Electricity Regulatory Commissions, the power distribution utilities cannot be termed 100% compliant to the provisions of the respective State Regulatory Commissions, especially in the standards of performance.

improved and efficient equipment helped the power sector to bring down t&D losses.


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ment, and because of the use of the word “prescribed”, the Cen-tral Government will have to issue rules/regulations. Thereafter, the Government will consult with MNRE. Once the consultation is done, the Government will have to issue draft regulations/rules for public consultation. And only after receipt of suggestions and comments, the Central Government will publish the rules/regulations in the official gazette. This obviously means a huge possibility of delay and injustice to those entities who wish to have their technologies to be treated as “renewable energy sources” so as to obtain benefits under the Electricity Act, 2003. The good part is that instead of making people amenable to diverse interpretations and diverse treatments by different State Commissions in the country at least the proposed amendments indicate a uniformity in approach with the power being given to the Central Government to confirm whether a new technology/source to be renewable source or not.

Step to stop curbing of export of power: Proposed amend-ment to Section 11It also appears that with the proposed amendments, the Ministry of Power has attempted to address some of those larger issues that are currently pending decision of the Apex Court. By proposing an amendment to Section 11, the Ministry seeks to protect power plants that have committed capacities under PPAs and have secured inter or intra State open access, from any direction by the State Government to curb the export of power during shortages. The issue that is pending in the Apex Court is whether Section 11 authorises a State Government to compel the generators to supply to the state grid during shortages. This has not been addressed in the proposed amendments. But, what has been sought to be addressed is to protect the capacities of power plants that had already committed under PPAs in order to insulate them from the operation of Section 11. This will beg the question as to whether the Government could discriminate between power plants that have PPAs and power plants that do not have PPAs from the applicability of Section 11. The real issue is what is the exact scope of operation of Section 11? This is a special provision which gives overriding powers to the Government to control generating stations in such a manner that would advance safety aspects when there are circumstances arising out of a threat to security of the State, public order, or a natural calamity, etc. The proposed amendments do not augur with the exact scope of Section 11 and there would be no logic in the indication that the Government could be made to pay damages for losses of generation and such other like conse-quential damages, if the Government were to direct generat-ing stations to remain closed down for sometime in extraordi-nary circumstances.

Proposed amendment to Section 15(8) The draft amendment seeks to take away the mandatory period of any license of 25 years. This may result in different licenses of different business segments being issued for different tenures. It is not clear as to how the Regulatory Commissions will decide on the tenure of the licenses. This may lead to one Regulatory

in the first part the article which appeared in the last year, was focused primarily on the legal implications of the draft Amendments on power generated from thermal sources. In this second part, the amendments for renew-able energy segment are being discussed.

renewable Energy: Proposed addition of Section 2(57a)Another area which has now been given to the Central Gov-ernment’s ambit is how renewable energy sources would be defined. Different States have different renewable energy sources. It should be, therefore, entirely up to the State machin-ery to decide as to on what source would be a renewable energy source, so that associated environmentally benign policies could be made in relation thereto. Also, the draft amendments do not recognise that other than “renewable energy source” there may also be non-conventional technologies irrespective of the type of fuel used, which are environment-friendly. Hence, not only “renewable energy source” needs to be promoted but also “non-conventional technologies” irrespective of fuel used must be promoted, as they both are environmentally benign.

Any new technology that desires to be given the status of “renewable energy sources”, other than the sources stated in the proposed definition, will have to approach the Central Govern-

Evacuation facilities for renewable energy has improved in the recent past.


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It has been proposed that a dedicated transmission line shall not form a loop with the grid and shall not be shared, except with the prior approval of the appropriate commission.

Commission granting, say for example, a transmission license for 10 years whereas another Regulatory Commission granting a transmission license for 40 years. Same goes with distribution, supply and trading licenses. There will be no uniformity of in approach in the country and this will give out signals of uncer-tainty or tentativeness.

Proposed amendment to section 20(2) The Ministry has also tried to address the ongoing stalemate between the Maharashtra State Discom and Mula Pravara Elec-tric Co-operative Society by adding a provision that would ena-ble the former to take over the distribution assets of the latter in Shrirampur district at perhaps zero amount, because under the newly amended section 20(2) the assets of a distribution licensee on expiry of its license (as in the case of Mula Pravara) can be sold to another entity “subject to such adjustments” to take care of the humongous arrears that are owed by the elec-tric co-operative society to the Maharashtra Discom. However,

The Amendment proposed to take away the 25 years mandatory of licence.


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both the sides who are on a bitter war amongst each other. In the meanwhile, the draft amendments have included “forward markets” in the ambit of the Electricity Regulators. A word of caution, this runs the risk of the amendment act, if passed, being challenged in view of the serious long standing impasse.

Dedicated Transmission Lines: Proposed amendment to Sec 2(16)Another area of amendment as proposed by the Ministry which is in response to various litigations pending before various forums is to prohibit the sharing of dedicated transmission lines. It has been proposed that a dedicated transmission line shall not form a loop with the grid and shall not be shared except with the prior approval of the appropriate commission. Perhaps in proposing this amendment, the Ministry has lost sight of the certain benefits of sharing the resources of a dedicated trans-mission line, such as if every generating station in the nearby vicinity were to set up their own dedicated transmission lines, there will be several issues of right of way and several operat-ing permissions may be required. Sharing of transmission lines would help in the evacuation of power from generating stations within the same vicinity so that the ultimate consumers get the benefit of the power so generated.

Cross Subsidy Surcharge: proposed amendment to sec-tions 38, 39 and 40 There is an indication that cross subsidy surcharge would be “if any, determined”. In case if the cross subsidy surcharge is not determined, this might lead to a very difficult situation, because it might may possibly lead to the lower-end consumers’ tariff undergo tremendous spike as the high-end consumers may go out of the system by not paying cross subsidy surcharge.

addition of Section 51H This provision does not enable the licensee to make a represen-tation from the order of the Forum for Redressal of Grievances to the Ombudsman. This has its consequences viz., (i) this is in iniquitous; (ii) an unfavourable order of the Forum compels the distribution licensee to file a writ petition in the High Court; (iii) it is a known fact that proceedings take several years to be decided by the High Court; (iv) the High Court has no expertise on electricity related matters. Therefore, to balance both inter-ests, the licensee should also be allowed to file representation to the Ombudsman.

Binding nature of Competitive Bidding: Proposed amend-ment to Section 62(1)(a) second provisionOne area of stalemate between the Ministry of Power and the Appellate Tribunal for Electricity is when the latter held in a judgment that competitive procurement of power by distribu-tion companies is not a mandatory requirement as it cannot be mandated under the tariff policy made by the Central Govern-ment. It was also held that competitive bidding would be an option as would be direct bilateral sales. The Ministry preferred a civil appeal before the Supreme Court which is pending. In the proposed amendment, if the Central Government directs

for other distribution licensees in the country, these wordings will still perhaps appear to be uncertain and mysterious.

Forward Markets: Proposed amendment to Sec.66The draft amendments also address the ongoing stalemate between the Forward Markets Commission and the Ministry of Consumer Affairs on one hand and the CERC and the Ministry of Power on the other hand, on the issue as to who would be better placed to regulate forward contracts in electricity. The matter is pending before the Apex Court on civil appeals from

By proposing an amendment to Section 11, the ministry seeks to protect power plants that have committed capacities under PPAs and have secured inter or intra State open access, from any direction by the State government, to curb the export of power during shortages.

State governments are proposing more projects in renewable energy.


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that competitive bidding would be mandatory, that would be the order of the day. However, so long as the legislature retains section 62, i.e., provision of direct bilateral sale by generating stations to distribution licensees, it is not known as to clear how the Ministry proposes to defend the directions, if any, of the Central Government mandating procurement of power through competitive bidding, while whereas at the same time section 62 would still enable bilateral sale.

Performance review of regulators: Proposed amendment to Section 121(3abc)The amendment seeks a review of the performance of the Regulators. When the Regulatory Commissions have the powers of the Civil Court under section 94, would it be appropriate to subject them to a performance review and that also by an Appellate Tribunal?

areas not addressed in the proposed amendmentsCertain important areas have gone unnoticed and have not been addressed by the Ministry in the draft amendments. One is reminded of the legal conundrum that occurred nearly a decade ago in the case of Dabhol Power Company owing to the inability of the State Electricity Boards to honour their contractual obligations, had shaken the very foundation of investment in the power generation segment in the country. Today, we are at yet another juncture where there is a legal and commercial conundrum posing danger to the financial viability and the very existence of large independent power generators. Due to uncertainty of supply of domestic coal by Coal India Ltd, affecting deterring the generators to from honouring their PPAs at the competitively bid tariffs, there is a need of clarity on how

the Regulatory Commissions would handle any extraordinary situation that necessitates any re-visitation to the tariff that has already been adopted pursuant to the competitive bidding process. The dilemma to of reopening signed PPAs is at the crux of the controversy which many Regulatory Commissions in the country are faced with. The short answer is to build a proviso underneath the current wordings of section 63 (determination of tariff by bidding process) of the following words “Provided that the Appropriate Commission may revise the tariff so adopted if the exigencies of the situation so require”. This will be an enabling provision which could set at rest the scope, ambit and the depth of the powers of the Regulatory Commissions to revisit the competitively bid tariffs. Insolvency of the distribu-tion segment or the provision of free power are no reasons as to why the price inflexibility be kept iron clad. The upshot is that the domestic position of coal availability needs to be given a practical view and import should be supported.

In the distribution segment, the State-owned distribution companies are taking a hard stand to thwart the provision of distribution open access. The provision relating to “introduce open access” would need to be made watertight rather than giving any leeway to sit over introducing open access. Another related point is to enable the provision of distribution open access to all consumers rather than indicating the threshold of contract demand of 1 MW and above.

In transmission, to let the state transmission utility oper-ate the State Load Dispatch Centres (SLDC) will have to go if ring fencing and complete autonomy is to be ensured for independent operation of load dispatch centres. Section 31 of the 2003 Act will need to be amended to provide for constitution and operation of SLDCs by a company specially focussed and devoted for the purpose of independent and impartial load dispatch operations with provision for retain-ing talented manpower.

On the consumption side, there is no provision in the statute for mandating demand side management and energy effi-ciency. These provisions need serious attention as every unit of power saved is a unit of power generated.

In the interest of consumers, and also to make the provi-sions equitable, the distribution companies should be allowed to make representations before the Electricity Ombudsman if they are aggrieved, instead of driving them to the High Courts and initiate proceedings where the hapless poor consumer has no wherewithal to sustain the delay in the rendering of justice, in light of the huge backlog of cases in the High Court. Also, the High Courts are not geared up to address complex and technical electricity related issues.

The general Lok Sabha 2014 elections being round the cor-ner, at the moment there is no 2/3rd majority for the amend-ments to the Electricity Act, 2003 to fly through, it is rather an inopportune time chosen to propose the amendments. Instead of rushing the amendments, a holistic view of the experience gained in the last decade needs careful considera-tion so that the very many lacunae are addressed properly by amending the 2003 Act in a balanced manner.

(The writer is Principal, PA Legal)

Maximum contribution comes from wind energy in renewables.


rEnEwablEs


rEnEwablEs

To accelerate growth, the industry demands subsidy support for biomass generated electricity till it achieves 9,000 MW capacity

Greener Power

By Renjini Liza VaRghese

biomass is the smallest component in the renew-able energy basket in comparison to wind (which leads the pack), solar and small hydro. Though the country started harnessing the biomass segment a decade ago, lack of awareness is a dampening the

sector. While in some states, power generated from biomass as part of cogeneration has picked up well. Best example is the state of Maharashtra where biomass power plants are very common in the sugarcane belt. Punjab and Tamil Nadu are the other states which are active in the biomass segment.

According to the Ministry of New and Renewable Energy (MNRE) the Country’s estimated biomass potential is 18,000 MW. However, the operating capacity is less than 500 MW. There are many challenges faced by those who have put up biomass plants. First and foremost is the escalating fuel cost, second is scarcity of fuel, third lack of subsidy support from the govern-ment. Unlike solar and wind, in biomass there is a fuel cost (fuel in biomass is predominantly agricultural waste). For a 1 MW biomass plant, it requires 6,000 to 8,000 tonnes of raw material.

After every crop season, farmers either burn off the agri- waste or throw it off. This is the practice with sugarcane farmers, rice farmers, coconut farmers etc. The lack of awareness about using this waste material as fuel for generating electricity has resulted in burning off the agri-waste. However, state like Punjab has started preventing farmers from burning the waste. As there is no ready market, and it consumes larger space for storage, the farmers still continue to burn off the agri- waste.

“When we started, we used to acquire the agri-waste with Rs500-600 per tonne. But, now, with increasing demand, the prices have climbed to the range of Rs2,000-2,500 per tonne. This is adding up the overall cost. This price constitutes 75% of the tariff what you get. So at the current tariff levels the projects


rEnEwablEs

He was quick to add, in addition to GBI, the government also should look at a debt restructuring of biomass power develop-ers. In many a cases the interest rates are 15-17% and at these levels, it is difficult to repay the debts. Venkatachalam pointed out, “Recently, there was an issue in UP with bad loans. The government stepped in and announced a package of Rs7,000 crore with minimum interest rate. A similar move is required for biomass segment to tide over the present crisis.”

Coming back to the lack of fuel availability, R Kulothungan, VP-Projects, Orient Green Power Company Limited said, “We are looking at growing energy vegetation. OGPL has started approaching those farmers who are passive to grow these energy vegetation/plants in their land. The returns from energy vegetation are higher than sugarcane. While sugarcane gives a return of Rs500-600 per acre, the return from energy crops are higher than Rs1,000 per acre. To put it in percentage terms the return per acre from energy vegetation is 20% higher than sugarcane crops.

This is under the long term planning the company has put in place to address the higher fuel cost. The target is to source 20% of the fuel from energy plants by end of 2014 and increasing the percentage every year after that.”Keeping the escalating cost in mind the Central Electricity Regulatory Commission has revised the cost per MW from Rs545 lakh to Rs580 lakh.

While this reflects the state of the biomass sector, the devel-opers are optimistic about the near future. Though the tariff seems to concern, Venkatachalam hopes that the policy makers and the regulators will work out a favourable tariff mechanism for biomass industry. And he concluded that a National Bio-energy Mission can change the fortune of the sector.

Wood waste stored for using in biomass plant.

become unviable because of the fuel pricing,” said S Venka-tachalam, MD, Orient Green Power Company Limited. This Chen-nai based company is active both in wind and biomass. OGPL has an installed capacity of 106 MW in biomass.

In the recent past, there have been a lot of initiatives for the promotion of renewable energy from MNRE, the parent ministry. Wind energy and small hydro has been there for a longer time. Solar is the new entrant. Unlike biomass, the other three—wind, solar and small hydro—are getting subsidy support. Especially in the case of solar energy, the impetus from the government, from the time of its inception through National Solar Mission has been higher.

“First and foremost we are looking for policy support in the form of Generation Based Incentive (GBI) for biomass generated power. Of the 18,000 MW, it is crucial that the government support the bio-mass segment with subsidy till it crosses the 9,000 MW mark. The recommendations have been taken up with the finance ministry by MNRE. We are hopeful that the next budget will have a favour-able decision in this regard,” added Venkatachalam.

Keeping the escalating cost in mind the Central Electricity Regulatory Commission has revised the cost per MW from Rs545 lakh to Rs580 lakh.

Electricals Today | JANUARY 201448

markET daTa

The Day-Ahead Market (DAM) at IEX traded 82.69 MUs (Million KWh) of electricity on an average daily basis in the month of November’13. on a cumulative basis, 2.48 BUs (billion KWh) were traded across the month. The average unconstrained price, i.e. price discovered before accounting for transmission congestion, increased to Rs2.78 per kWh in November, up from Rs2.71 per kWh last month, highlighting a marginal increase of 3%.

In the month of November, Hydro registered 110% in capacity addition where in thermal power addition was close to 96% of the target (thermal added 95% of capacity in the previous month). Nuclear also kept in pace with thermal by meeting 93% of the planned addition.

While nuclear plants registered 85% in Plant Load Factor (PLF), thermal plants could only register 65% in PLF. It is believed that going forward, the PLF of thermal power plants as there is surety on fuel supply now.

Capacity addition neutral

Power trading data

1st November 8th November 15th November 22nd November 29th November

IEX Price and Volume in Day Ahead Market - November13

NoVEMbEr 2013 cAPAcIty ADDItIoN

SUMMAry - ALL INDIA AN oVErVIEW

cAtEgory MoNItorED cAPAcIty (MW)

tArgEt APr 2013 to MAr-14

gENErAtIoN (gWH) NoV-13

ProgrAM ActUAL * ActUAL SAME MoNtH 2012 - 13

1 2 3 4 5

THERMAL 156784.42 812737 68154 65199.32 63090.25

NUCLEAR 4780 35200 3116 2909.2 2856.13

HYDRO 39896.4 122263 7954 8823.2 6830.1

BHUTAN IMP 0 4800 299 322.46 188.82

TOTAL 201460.82 975000 79523 77254.18 72965.3

* PROVISIONAL BASED ON ACTUAL-CUM-ASSESMENT

markET daTa


markET daTamarkET daTa

The lack of non-solar RPO compliance by the obligated entities was evident in the form of excess supply and low demand in the market which has been trading at floor price since August last year

IEX continues to be a market leader in the Solar REC Market, consistently clocking a higher share of the total volume traded on both the power exchanges. Also, the lack of solar RPO compliance by the obligated entities was evident in the form of excess supply and low demand in the market which has been trading at floor price since June 2013.

IEX Non-Solar rEc Market: trade Details

IEX Solar rEc Market: trade Details


Delhi has recently released the draft of net metering policy for distributed solar power generation in the state

Sanjeev AggarwalManaging director, Amplus Infrastructure

A New experimeNt

During the pre-election campaigning, when quizzed about how that chief-ministerial candidate intended to bring down prices; solar power was cited as one of the solutions. Absolutely on the spot! Solar power when

generated on the spot (distributed generation) will be cheaper than the grid prices for most of the large commercial and industrial consumers.

Now, DERC has come out with the draft of Net Metering Policy for distributed solar power generation. This is bound to be a successful model given the government support and regulatory direction. However, there are few kinks that need to be straightened to make the policy a workable solution. Some of the important points are highlighted in the follow-ing paragraphs:

Third Party ModelThe draft proposal restricts the third party ownership model to leasing companies by using the words 'third party lease.' It will serve a great purpose if it is clarified that the intention is to allow third party ownership of rooftop solar systems, in which case, the means/instrument of third party ownership should not be restricted.

Generation companies are best placed at operating and maintaining solar plants, by virtue of it being their core com-petency. A third party ownership under the PPA model is one where instead of fixed lease rentals, the rooftop owner pays the third party on a per unit (kWh) basis. In addition to broad basing the net-metering model, the PPA model would also ensure that the technology and performance risk does not lie with the rooftop owner but with the installer. This would also ensure better performance as compared to a self-owned system or a fixed-rental leased system; the per-formance risk in both cases not being with the installer.

Capital Subsidy, Accelerated Depreciation and GBIAn incentive that will make the proposal really attractive

for the individual consumers is the provision for Genera-tion Based Incentive rather than the Accelerated Depre-ciation. Individuals and certain other corporate entities cannot take advantage of accelerated depreciation. The government and the regulators shall consider extending benefit to the entities that do not avail of the accelerated depreciation benefit in the form of GBI.

Similarly, Capital Subsidy available under MNRE is a flawed scheme as it focuses on capacity creation rather than generation. We have seen the results of similar schemes in wind sector, where eventually the AD got replaced by GBI. The regulator ought to focus on increasing the generation from solar sources which can only be achieved when a proper system is installed with focus on long term performance rather than availing the capital subsidy.

An additional GBI shall be allocated for installations that do not take advantage of capital subsidy scheme and ide-ally the regulator should replace the same.

Applicability of Cross-Subsidy chargesThe draft proposal suggests that cross-subsidy charges may be applicable on third-party owned systems and hence proposes an exemption. In this case, cross-subsidy charges shall not be applicable to third party owned roof-top solar systems for the following reasons: (a) Rooftop systems do not use Discom wires at all. It is

equivalent to reduction of load. (b) The generation of solar power is counted towards

meeting the Discom’s RPO and the rooftop system owner does not get REC benefit. As per REC regula-tions, on payment of the cross-subsidy charges, the system owner would have been issued the RECs.

Addressing the above commercial issues will help Delhi becoming a really environment-friendly solar city and will go a long way in restraining the power prices in the city.

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et 01 01 2014

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